FACILITY CONSOLIDATION AND OTHER COSTS

12 Months Ended

Dec. 31, 2011

FACILITY CONSOLIDATION AND OTHER COSTS

FACILITY CONSOLIDATION AND OTHER COSTS

Note 4— FACILITY CONSOLIDATION AND OTHER COSTS

During the fourth quarter of 2011, the Company initiated a facility consolidation program to improve efficiencies and reduce fixed costs. As a part of this program, both administrative and production workforce levels were reduced during the fourth quarter. The Company has also announced the planned closure of five facilities, two of which were completed by early January 2012. Most of the production from these five facilities will be transferred to other facilities.  The total estimated program costs of $83.4 million, the majority of which relate to our Flexible Packaging segment, include $28.5 million employee costs, $30.8 million fixed asset accelerated depreciation and writedowns, and $24.1 million other facility consolidation costs.

Charges associated with the facility consolidation and other costs totaled $38.4 million or $0.24 per share in the fourth quarter of 2011, including $26.3 million of employee-related costs including severance, pension and other termination benefits, $11.8 million of fixed assets accelerated depreciation and writedowns, and $0.3 million of other exit costs.  Included in the 2011 employee-related costs is a partial withdrawal liability provision which represents management’s best estimate for the cost to exit a multiemployer pension plan related to a facility which is scheduled to cease operations in 2012.  Management expects to recognize additional pre-tax charges related to these efforts of approximately $45 million over the next 15 months, primarily associated with accelerated depreciation, equipment relocation, and lease termination expenses.  Cash payments in 2012 are expected to be approximately $35 million.  The costs related to facility consolidation activities have been recorded on the consolidated statement of income as facility consolidation and other costs.

An analysis of the 2011 facility consolidation and other costs activity follows:

				Fixed						Total Facility
	Employee			Asset			Other			Consolidation
(in thousands)	Costs			Related			Costs			and Other Costs
2011 Activity
Total net expense accrued
Flexible Packaging	$	23,115		$	11,575		$	242		$	34,932
Pressure Sensitive	2,744			—			—			2,744
Corporate	445			234			—			679
Charges to accrual account
Flexible Packaging	(3,389		)	(11,575		)	(15		)	(14,979		)
Pressure Sensitive	(199		)	—			—			(199		)
Corporate	327			(234		)	—			93
Reserve balance at December 31, 2011	$	23,043		$	—		$	227		$	23,270