Facility Consolidation and Other Costs

3 Months Ended

Mar. 31, 2012

Facility Consolidation and Other Costs

Facility Consolidation and Other Costs

Note 3 — 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, the Company 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 $29.1 million in employee costs, $33.5 million in fixed asset accelerated depreciation and write-downs, and $20.8 million in other facility consolidation costs.  The program is expected to be completed in the first half of 2013.

Charges associated with the facility consolidation and other costs totaled $8.3 million in the first quarter of 2012, including $1.2 million of employee-related costs including severance and other termination benefits, $5.9 million of fixed assets accelerated depreciation and write-downs, and $1.2 million of other exit costs including costs to move and reinstall equipment.  Cash payments in the first quarter of 2012 totaled $5.8 million for employee related costs and $2.2 million for fixed asset related and other exit costs, including costs to dismantle equipment.  Cash payments for the balance of 2012 are expected to be approximately $24 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 facility consolidation and other costs, by reportable segment, follows:

				Fixed						Total Facility
	Employee			Asset			Other			Consolidation
(in thousands)	Costs			Related			Costs			and Other Costs
Reserve balance at December 31, 2011	$	23,043		$	—		$	227		$	23,270
Total net expense accrued
Flexible Packaging	1,106			5,906			1,246			8,258
Pressure Sensitive	16			—			—			16
Corporate	74			—			—			74
Utilization (cash payments or otherwise settled)
Flexible Packaging	(2,882		)	(5,906		)	(1,473		)	(10,261		)
Pressure Sensitive	(2,329		)	—			—			(2,329		)
Corporate	(605		)	—			—			(605		)
Reserve balance at March 31, 2012	$	18,423		$	—		$	—		$	18,423

Total facility consolidation and other costs incurred since the beginning of the program, by reportable segment, follows:

			Fixed				Total Facility
	Employee		Asset		Other		Consolidation
(in thousands)	Costs		Related		Costs		and Other Costs
Flexible Packaging	$	24,216	$	17,596	$	1,380	$	43,192
Pressure Sensitive	2,760		—		—		2,760
Corporate	519		234		—		753
Total costs incurred through March 31, 2012	$	27,495	$	17,830	$	1,380	$	46,705