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Stock Keeping Unit Rationalization And Reorganization

12 Months Ended

Jun. 30, 2011

Stock Keeping Unit Rationalization And Reorganization

Stock Keeping Unit Rationalization And Reorganization

4. STOCK KEEPING UNIT RATIONALIZATION AND REORGANIZATION

The Company periodically assesses its operations to ensure that they are efficient, aligned with market conditions and responsive to customer needs.

In the third quarter of fiscal 2011 we initiated a plan to close our Manchester, United Kingdom non-dairy beverage facility. For the year ended June 30, 2011, we recorded $321 of costs associated with this plan, including $116 for employee terminations and $205 for other exit costs.

During the first quarter of fiscal 2010 we initiated a plan to consolidate the production of our fresh food-to-go products in the United Kingdom into our Luton facility. As a result, we recorded costs of $3,740 for the year ended June 30, 2010 related to this plan, including $2,910 for severance and benefits and $830 of other exit costs. In addition, in connection with our acquisition of Churchill Food Products Ltd, in June 2010 (see Note 5) we recorded employee termination and exit costs of $516. In the year ended June 30, 2011, we recorded an additional $465 of employee termination costs.

During fiscal 2009, the Company undertook several actions to improve performance and position the Company for future growth. We implemented a Stock Keeping Unit ("SKU") rationalization, principally in our Celestial Seasonings tea products, to eliminate SKUs based on low sales volume or insufficient margins, and position the Celestial Seasonings line for increased consumption and sales growth and improved profitability. We also initiated a plan to streamline and integrate the back office and warehousing operations of our personal care operations into other locations we operate. With this activity, we also completed the SKU rationalization of our personal care products begun in fiscal 2008. These actions collectively resulted in pre-tax charges of $12,708, which included $8,563 charged to cost of sales for inventory and related items and $4,145 charged to general and administrative expenses for severance and other costs.

The changes in the liability for the reorganization and restructuring activities for the years ended June 30, 2009, 2010 and 2011 were as follows:


	Asset write downs			Severance			Other Exit Costs			Total
Liability balance June 30, 2008		—		$	1,165			—		$	1,165
Charges	$	1,055			3,012		$	815			4,882
Amounts utilized		(1,055	)		(3,858	)		(695	)		(5,608	)

Liability balance June 30, 2009		—			319			120			439
Charges		266			3,316			830			4,412
Amounts utilized		(266	)		(3,061	)		(309	)		(3,636	)

Liability balance June 30, 2010		—			574			641			1,215
Charges		—			581			205			786
Amounts utilized		—			(976	)		(397	)		(1,373	)

Liability balance June 30, 2011		—		$	179		$	449		$	628

- Definition

The entire disclosure for restructuring and related activities. Description of restructuring activities such as exit and disposal activities, include facts and circumstances leading to the plan, the expected plan completion date, the major types of costs associated with the plan activities, total expected costs, the accrual balance at the end of the period, and the periods over which the remaining accrual will be settled.

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