Note 5: Restructuring

In calendar 2010, the Company announced its plan to restructure its coffee, fruit spreads, and Canadian pickle and condiments operations as part of its ongoing efforts to enhance the long-term strength and profitability of its leading brands. The initiative includes capital investments for a new state-of-the-art food manufacturing facility in Orrville, Ohio; consolidation of coffee production in New Orleans, Louisiana; and the transition of the Company’s pickle and condiments production to third-party manufacturers.

Upon completion, the restructuring plan will result in a reduction of approximately 850 full-time positions and the closing of six of the Company’s facilities – Memphis, Tennessee; Ste. Marie, Quebec; Sherman, Texas; Kansas City, Missouri; Dunnville, Ontario; and Delhi Township, Ontario. The Sherman, Dunnville, Delhi Township, and Kansas City facilities have been closed and approximately 75 percent of the 850 full-time positions have been reduced as of October 31, 2012.

The Company expects to incur restructuring costs of approximately $245.0 million, of which $213.6 million has been incurred through October 31, 2012. The majority of the remaining costs are anticipated to be recognized through fiscal 2014.

The following table summarizes the restructuring activity, including the reserves established and the total amount expected to be incurred.

	Long-Lived		Site Preparation
	Asset	Employee	and Equipment	Production
	Charges	Separation	Relocation	Start-up	Other Costs	Total
Total expected restructuring charge	$ 105,000	$ 66,000	$ 35,000	$ 29,000	$ 10,000	$ 245,000
Balance at May 1, 2011	$ 0	$ 10,198	$ 0	$ 0	$ 0	$ 10,198
Charge to expense	34,195	20,364	12,963	10,689	2,930	81,141
Cash payments	0	(13,754)	(12,963)	(10,689)	(2,930)	(40,336)
Noncash utilization	(34,195)	(8,030)	0	0	0	(42,225)
Balance at April 30, 2012	$ 0	$ 8,778	$ 0	$ 0	$ 0	$ 8,778
Charge to expense	4,785	2,786	8,509	7,303	1,374	24,757
Cash payments	0	(1,721)	(8,509)	(7,303)	(1,374)	(18,907)
Noncash utilization	(4,785)	(6)	0	0	0	(4,791)
Balance at October 31, 2012	$ 0	$ 9,837	$ 0	$ 0	$ 0	$ 9,837
Remaining expected restructuring charge	$ 8,581	$ 5,701	$ 6,929	$ 5,798	$ 4,425	$ 31,434

During the three and six months ended October 31, 2012, total restructuring charges of $10.3 million and $24.8 million, respectively, were reported in the Condensed Statements of Consolidated Income. Of the total restructuring charges, $2.0 million and $5.6 million were reported in cost of products sold in the three and six months ended October 31, 2012, respectively, while the remaining charges were reported in other restructuring and merger and integration costs. During the three and six months ended October 31, 2011, total restructuring charges of $22.2 million and $41.7 million, respectively, were reported in the Condensed Statements of Consolidated Income. Of the total restructuring charges, $11.8 million and $21.5 million were reported in cost of products sold in the three and six months ended October 31, 2011, respectively, while the remaining charges were reported in other restructuring and merger and integration costs. The restructuring costs classified as cost of products sold primarily include long-lived asset charges for accelerated depreciation related to property, plant, and equipment that will be used at the affected production facilities until they are closed or sold.

Employee separation costs include severance, retention bonuses, and pension costs. Severance costs and retention bonuses are being recognized over the estimated future service period of the affected employees. The obligation related to employee separation costs is included in other current liabilities in the Condensed Consolidated Balance Sheets. For additional information on the impact of the restructuring plan on defined benefit pension and other postretirement benefit plans, see Note 11: Pensions and Other Postretirement Benefits.

Other costs include professional fees, costs related to closing the facilities, and miscellaneous expenditures associated with the Company’s restructuring initiative and are expensed as incurred.