HOG PRODUCTION COST SAVINGS INITIATIVE

In the fourth quarter of fiscal 2010, we announced a plan to improve the cost structure and profitability of our domestic hog production operations (the Cost Savings Initiative). The plan includes a number of undertakings designed to improve operating efficiencies and productivity. These consist of farm reconfigurations and conversions, termination of certain high cost, third party hog grower contracts and breeding stock sourcing contracts, as well as a number of other cost reduction activities. We expect the Cost Savings Initiative to be substantially complete by the end of fiscal 2013.

The following table summarizes the balance of accrued expenses and related activity associated with the Cost Savings Initiative by major type of cost. All of the charges presented have been recorded in cost of sales in the Hog Production segment.



	Accrued Balance May 1, 2011		1st Quarter FY 2012 Expense		2nd Quarter FY 2012 Expense		3rd Quarter FY 2012 Expense		Payments			Accrued Balance January 29, 2012		Cumulative Expense-to-Date		Estimated Remaining Expense
	(in millions)
Cost savings activities:
Contract terminations	$	0.8	$	0.1	$	0.3	$	0.1	$	(1.2	)	$	0.1	$	22.7	$	2.9
Other associated costs	1.6		0.9		0.9		0.4		(3.8		)	—		9.1		0.3
Total cost savings activities	$	2.4	1.0		1.2		0.5		$	(5.0	)	$	0.1	31.8		3.2

Other charges:
Accelerated depreciation			0.1		—		—							5.6		—
Impairment			—		—		—							2.5		—
Total other charges			0.1		—		—							8.1		—
Total cost savings activities and other charges			$	1.1	$	1.2	$	0.5						$	39.9	$	3.2