HOG PRODUCTION COST SAVINGS INITIATIVE

In 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 activities associated with the Cost Savings Initiative to be substantially complete by the end of fiscal 2013.

The following presents the cumulative expenses incurred in each of the last three fiscal years related to 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.

There are no significant expenses remaining and there were no accrued liabilities for charges incurred under the Cost Savings Initiative as of April 29, 2012.



	Fiscal Years
	2012		2011		2010		Cumulative
	(in millions)
Cost savings activities:
Contract terminations	$	0.5	$	19.4	$	2.8	$	22.7
Other associated costs	2.5		6.9		—		9.4
Accelerated depreciation	0.1		1.7		3.8		5.6
Impairment	—		—		2.5		2.5
Total charges	$	3.1	$	28.0	$	9.1	$	40.2

In addition to the charges presented in the table above, we expect capital expenditures associated with the Cost Savings Initiative to total approximately $86 million. As of April 29, 2012 we had incurred $77.2 million in capital expenditures.