Productivity Initiatives

6 Months Ended

Oct. 26, 2011

Restructuring and Related Activities [Abstract]

The Company announced on May 26, 2011 that it will invest in productivity initiatives during Fiscal 2012 designed to increase manufacturing effectiveness and efficiency as well as accelerate overall productivity on a global scale. The Company originally anticipated investing at least $130 million of cash and $160 million of pre-tax income ($0.35 per share) on these initiatives during Fiscal 2012. These initiatives included:

•The establishment of a European supply chain hub in the Netherlands in order to consolidate and centrally lead procurement, manufacturing, logistics and inventory control,

•The exit of at least five factories, including two in Europe, two in the U.S., and one in Asia/Pacific in order to enhance manufacturing effectiveness and efficiency, and

•A reduction of the global workforce by approximately 800 to 1,000 positions.

The Company continues to look for opportunities to drive shareholder value in this difficult economic environment, and on November 9, 2011, the Company's Board of Directors gave its approval for the Company to invest an incremental $20 million cash and $55 million of pre-tax income ($0.15 per share) on additional productivity initiatives during Fiscal 2012. These projects are expected to result in the closure of another three factories worldwide and a further reduction of the global workforce up to 1,000 employees. Certain projects included in the plan are subject to consultation and any necessary agreements being reached with appropriate employee representative bodies, trade unions, and works councils.

The Company recorded costs related to these productivity initiatives of $37.3 million pre-tax ($25.5 million after-tax or $0.08 per share) during the second quarter ended October 26, 2011 and $77.8 million pre-tax ($54.0 million after-tax or $0.17 per share) during the six months ended October 26, 2011, all of which were reported in the Non-Operating segment. These pre-tax costs were comprised of the following:

•$11.8 million and $28.6 million for the second quarter and six months ended October 26, 2011, respectively, relating to asset write-offs and accelerated depreciation for the closure of five factories, including two in Europe, two in the U.S. and one in Asia/Pacific,

•$14.1 million and $29.0 million for the second quarter and six months ended October 26, 2011, respectively, for severance and employee benefit costs relating to the reduction of the global workforce by approximately 450 positions through the six months ended October 26, 2011, and

•$11.4 million and $20.2 million for the second quarter and six months ended October 26, 2011, respectively, associated with other implementation costs, primarily for professional fees and relocation costs for the establishment of the European supply chain hub.

Of the $37.3 million total pre-tax charges for the second quarter ended October 26, 2011, $27.5 million was recorded in cost of products sold and $9.9 million in selling, general and administrative expenses (“SG&A”). Of the $77.8 million total pre-tax charges for the six months ended October 26, 2011, $58.8 million was recorded in cost of products sold and $19.0 million in SG&A.

The Company does not include restructuring charges in the results of its reportable segments. The pre-tax impact of allocating such charges to segment results would have been as follows:



	Fiscal 2012
	Second Quarter Ended October 26, 2011		Six Months Ended October 26, 2011
	(Millions of Dollars)
North American Consumer Products	$	2.6	$	3.4
Europe	7.2		14.4
Asia/Pacific	13.7		31.9
U.S. Foodservice	12.0		26.1
Rest of World	1.8		2.0
Total restructuring charges	$	37.3	$	77.8

Activity and other accrued liability balances for restructuring charges were as follows:



(Millions of Dollars)

Reserve balance at April 27, 2011	$	—
Cash payments	(29.1		)
Restructuring charges	49.3
Reserve balance at October 26, 2011	$	20.2

The amount included in other accrued liabilities at October 26, 2011 related to these initiatives is expected to be paid in the second half of Fiscal 2012.