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## Note D: Restructuring 

During fiscal 2003, the Company announced its plan to restructure certain operations as part of its ongoing efforts to optimize its production capacity, improve productivity and operating efficiencies, and lower the Company’s overall cost base. These initiatives include reducing the Company’s involvement in fruit processing, centralizing production and distribution of the Uncrustables product line, and significantly reducing the number of items available for sale. The program calls for the closing of three of the Company’s plants —Watsonville, California; Woodburn, Oregon; and West Fargo, North Dakota. The closings will result in the elimination of approximately 335 full-time positions. 

The Company expects to record a restructuring charge of approximately $18,000,000, of which $2,537,000 was recorded in fiscal 2003. The balance of the charge will be incurred over the next two fiscal years, with approximately $12,000,000 to be recorded in fiscal 2004. 

The following table summarizes the activity with respect to the restructuring and asset impairment charges recorded and reserves established during fiscal 2003 and the total amount expected to be incurred in connection with the initiative: 

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Approximately $1,256,000 of the total restructuring charge of $2,537,000 was reported in costs of products sold in the accompanying Statements of Consolidated Income, while the remaining charges were reported in other restructuring costs. In accordance with Statement of Financial Accounting Standards No. 146, Accounting for Costs Associated with Exit or Disposal Activities , expected employee separation costs of approximately $8,068,000 are being recognized over the future service period. 

Long-lived asset charges include accelerated depreciation related to machinery and equipment that will be used by the production facilities until they close. 

During fiscal 2001, the Company finalized the sale of the Pottstown manufacturing facility, representing a continuation of the Company’s divestiture of the Mrs. Smith’s pie business. In connection with this sale, the Company recorded a non- cash restructuring charge of $2,152,000. 

## Note E: Reportable Segments 

Effective June 1, 2002, the Company realigned its business segment structure in recognition of the changes resulting from the addition of the Jif and Crisco businesses. Prior year segment information has been restated to conform to the new structure. 

The Company operates in one industry: the manufacturing and marketing of food products. The Company has two reportable segments: U.S. retail market and special markets. The U.S. retail market segment includes the consumer and the consumer oils businesses. This segment represents the primary strategic focus area for the Company—the sale of branded food products with leadership positions to consumers through mainstream domestic retail outlets. The special markets segment represents the aggregation of the foodservice, international, industrial, and beverage businesses. Special markets segment products are distributed through foreign countries, foodservice distributors and operators (i.e., restaurants, schools and universities, health care operations), other food manufacturers, and health and natural food stores. 

