SPECIAL CHARGES

Capacity Rationalization Charges

On May 30, 2012, we announced the planned relocation of production of our industrial floor absorbent and cat litter products from our facility located in Mounds, Illinois (“Mounds”), to our plants located in Mississippi. This decision was made due to the continued decline in the coarse cat litter market and after a comprehensive evaluation of our manufacturing operations and cost structure, including state regulatory requirements.

We incurred a pre-tax charge of $1,623,000 related to these actions during fiscal 2012 consisting of pre-tax asset write-offs of $1,187,000 and severance and other employee-related costs of $436,000. These costs are shown as “Capacity Rationalization Charges” on the Consolidated Statements of Operations. Allocation of these expenses between operating segments is impracticable due to the shared nature of our production facilities. In addition, we expect to incur an additional estimated $57,000 expense for asset write-offs and employee relocation to be recognized in the first quarter of fiscal 2013.

Following is a rollforward of the reserve included in Other Accrued Expenses on the Consolidated Balance Sheets as of July 31, 2012 (in thousands). These amounts are expected to be incurred during the first quarter of fiscal 2013.



	Asset write-offs			Severance and other employee related costs			Total
Charges recognized in fiscal year	$	1,187		$	436		$	1,623
Charges incurred to date	$	(1,187	)	$	(23	)	$	(1,210	)
Reserve balance at July 31, 2012	$	—		$	413		$	413