Restructuring

6 Months Ended

Nov. 30, 2019

Restructuring And Related Activities [Abstract]

NOTE 4 — RESTRUCTURING

We record restructuring charges associated with management-approved restructuring plans to either reorganize one or more of our business segments, or to remove duplicative headcount and infrastructure associated with our businesses. Restructuring charges can include severance costs to eliminate a specified number of employees, infrastructure charges to vacate facilities and consolidate operations, contract cancellation costs and other costs. Restructuring charges are recorded based upon planned employee termination dates and site closure and consolidation plans. The timing of associated cash payments is dependent upon the type of restructuring charge and can extend over a multi-year period. We record the short-term portion of our restructuring liability in Other Accrued Liabilities and the long-term portion, if any, in Other Long-Term Liabilities in our Consolidated Balance Sheets.

2020 MAP to Growth

Between May and August 2018, we approved and implemented the initial phases of a multi-year restructuring plan, the 2020 Margin Acceleration Plan (“2020 MAP to Growth”). The initial phases of our 2020 MAP to Growth affected all of our reportable segments, as well as our corporate/nonoperating segment, and focused on margin improvement by simplifying business processes; reducing inventory categories and rationalizing SKUs; eliminating underperforming businesses; reducing headcount and working capital; and improving operating efficiency. The majority of the activities included in the initial phases of the restructuring activities have been completed.

During the second quarter ended November 30, 2018, we formally announced the final phases of our 2020 MAP to Growth. This multi-year restructuring is expected to increase operational efficiency while maintaining our entrepreneurial growth culture and will include three additional phases between September 2018 and December 2020. Our execution of the 2020 MAP to Growth will continue to drive the de-layering and simplification of management and businesses associated with group realignment. We will implement four center-led functional areas including manufacturing and operations; procurement and supply chain; information technology; and accounting and finance.

Our 2020 MAP to Growth will optimize our manufacturing facilities and will ultimately provide more efficient plant and distribution facilities. To date, in association with our 2020 MAP to Growth initiative, we have completed, or are in the process of completing, the planned closure of 18 plants and 23 warehouses. We also expect to incur additional severance and benefit costs as part of our planned closure of these facilities.

Throughout the additional phases of our 2020 MAP to Growth initiative, we will continue to assess and find areas of improvement and cost savings. As such, the final implementation of the aforementioned phases and total expected costs are subject to change. In addition to the announced plan, we have continued to broaden the scope of our 2020 MAP to Growth initiative, specifically in consolidation of the general and administrative areas, potential outsourcing, as well as additional future plant closures and consolidations; the estimated costs of which have not yet been finalized. The current total expected costs associated with this plan are outlined in the table below and increased by approximately $4.6 million compared to our previous estimate, primarily attributable to increases in expected severance and benefit charges of $4.6 million. Most activities under our 2020 MAP to Growth are anticipated to be completed by the end of calendar year 2020.

Following is a summary of the charges recorded in connection with restructuring by reportable segment:

	Three Months Ended		Six Months Ended		Cumulative Costs		Total Expected
(in thousands)	November 30, 2019		November 30, 2019		to Date		Costs
Construction Products Group (“CPG”) Segment:
Severance and benefit costs (a)	$	1,447	$	1,607	$	12,836	$	22,146
Facility closure and other related costs		110		798		3,767		4,597
Other asset write-offs		39		39		1,629		2,151
Total Charges	$	1,596	$	2,444	$	18,232	$	28,894

Performance Coatings Group (“PCG”) Segment:
Severance and benefit costs (b)	$	431	$	2,931	$	9,344	$	14,765
Facility closure and other related costs		636		745		4,219		6,638
Other asset write-offs		172		172		523		528
Total Charges	$	1,239	$	3,848	$	14,086	$	21,931

Consumer Group (“Consumer”) Segment:
Severance and benefit costs (c)	$	780	$	1,547	$	8,925	$	12,424
Facility closure and other related costs		344		860		7,552		9,352
Other asset write-offs		-		-		25		25
Total Charges	$	1,124	$	2,407	$	16,502	$	21,801

Specialty Products Group (“Specialty”) Segment:
Severance and benefit costs (d)	$	48	$	414	$	5,750	$	10,640
Facility closure and other related costs		731		2,190		3,434		6,697
Other asset write-offs		40		104		1,107		1,334
Total Charges	$	819	$	2,708	$	10,291	$	18,671

Corporate/Other Segment:
Severance and benefit costs	$	23	$	16	$	12,136	$	12,136
Total Charges	$	23	$	16	$	12,136	$	12,136

Consolidated:
Severance and benefit costs	$	2,729	$	6,515	$	48,991	$	72,111
Facility closure and other related costs		1,821		4,593		18,972		27,284
Other asset write-offs		251		315		3,284		4,038
Total Charges	$	4,801	$	11,423	$	71,247	$	103,433

(a)	Severance and benefit costs are associated with the elimination of 25 positions and 46 positions during the three and six months ended November 30, 2019, respectively.

(b)	Severance and benefit costs are associated with the elimination of 18 positions and 69 positions during the three and six months ended November 30, 2019, respectively.

(c)	Severance and benefit costs are associated with the elimination of 9 positions and 11 positions during the three and six months ended November 30, 2019, respectively.

(d)	Severance and benefit costs are associated with the elimination of 49 positions and 59 positions during the three and six months ended November 30, 2019, respectively.

	Three Months Ended		Six Months Ended
(in thousands)	November 30, 2018		November 30, 2018

Construction Products Group (“CPG”) Segment:
Severance and benefit costs (e)	$	3,574	$	5,993
Facility closure and other related costs		384		397
Other asset write-offs		3		368
Total Charges	$	3,961	$	6,758

Performance Coatings Group (“PCG”) Segment:
Severance and benefit costs (f)	$	364	$	4,769
Facility closure and other related costs		483		906
Other asset write-offs		146		359
Total Charges	$	993	$	6,034

Consumer Group (“Consumer”) Segment:
Severance and benefit costs (g)	$	76	$	1,095
Facility closure and other related costs		105		105
Other asset write-offs		-		-
Total Charges	$	181	$	1,200

Specialty Products Group (“Specialty”) Segment:
Severance and benefit costs (h)	$	1,458	$	3,678
Facility closure and other related costs		65		65
Other asset write-offs		5		5
Total Charges	$	1,528	$	3,748

Corporate/Other Segment:
Severance and benefit costs (i)	$	1,061	$	10,060
Total Charges	$	1,061	$	10,060

Consolidated:
Severance and benefit costs	$	6,533	$	25,595
Facility closure and other related costs		1,037		1,473
Other asset write-offs		154		732
Total Charges	$	7,724	$	27,800

(e)

Severance and benefit costs are associated with the elimination of 37 positions and 68 positions during the three and six months ended November 30, 2018, respectively. Additionally, $0.2 million included in the charges incurred during the six months ended November 30, 2018 are associated with the prior elimination of one position within the legal function during fiscal 2018.

(f)	Severance and benefit costs are associated with the elimination of 17 positions and 102 positions during the three and six months ended November 30, 2018, respectively.

(g)	Severance and benefit costs are associated with the elimination of 9 positions during the six months ended November 30, 2018.

(h)	Severance and benefit costs are associated with the elimination of 95 positions and 120 positions during the three and six months ended November 30, 2018, respectively.

(i)	Reflects charges related to the severance of two corporate executives, as well as accelerated vesting of equity awards for two corporate executives, four Specialty segment executives and three CPG segment executives in connection with the aforementioned restructuring activities.

A summary of the activity in the restructuring reserves related to our 2020 MAP to Growth is as follows:

(in thousands)	Severance and Benefits Costs			Facility Closure and Other Related Costs			Other Asset Write-Offs			Total
Balance at August 31, 2019	$	2,946		$	9,430		$	-		$	12,376
Additions charged to expense		2,729			1,821			251			4,801
Cash payments charged against reserve		(2,109	)		(5,016	)		-			(7,125	)
Non-cash charges included above (j)		-			(155	)		(251	)		(406	)
Balance at November 30, 2019	$	3,566		$	6,080		$	-		$	9,646

(in thousands)	Severance and Benefits Costs			Facility Closure and Other Related Costs			Other Asset Write-Offs			Total
Balance at June 1, 2019	$	4,837		$	7,857		$	-			12,694
Additions charged to expense		6,515			4,593			315			11,423
Cash payments charged against reserve		(7,786	)		(5,350	)		-			(13,136	)
Non-cash charges included above (j)		-			(1,020	)		(315	)		(1,335	)
Balance at November 30, 2019	$	3,566		$	6,080		$	-		$	9,646

(in thousands)	Severance and Benefits Costs			Facility Closure and Other Related Costs			Other Asset Write-Offs			Total
Balance at August 31, 2018	$	10,960		$	5,364		$	-		$	16,324
Additions charged to expense		6,533			1,037			154			7,724
Cash payments charged against reserve		(6,013	)		(1,330	)		-			(7,343	)
Non-cash charges included above (j)		(1,053	)		(2,536	)		(154	)		(3,743	)
Balance at November 30, 2018	$	10,427		$	2,535		$	-		$	12,962

(in thousands)	Severance and Benefits Costs			Facility Closure and Other Related Costs			Other Asset Write-Offs			Total
Balance at June 1, 2018	$	9,957		$	6,184		$	1,373		$	17,514
Additions charged to expense		25,595			1,473			732			27,800
Cash payments charged against reserve		(18,588	)		(1,748	)		-			(20,336	)
Non-cash charges included above (j)		(6,537	)		(3,374	)		(2,105	)		(12,016	)
Balance at November 30, 2018	$	10,427		$	2,535		$	-		$	12,962

(j)	Non-cash charges primarily include accelerated vesting of equity awards and asset-write offs.

In connection with our 2020 MAP to Growth, during the second quarter of fiscal 2020, we incurred approximately $6.3 million and $1.0 million of inventory-related charges at our Consumer and PCG segments, respectively. During the first half of fiscal 2020, we incurred $7.2 million, $3.1 million and $0.3 million of inventory-related charges at our Consumer, PCG, and CPG segments, respectively. During the second quarter of fiscal 2019, we incurred approximately $2.3 million, $1.0 million and $0.3 million of inventory-related charges at our PCG, Consumer and CPG segments, respectively. During the first half of fiscal 2019, we incurred $6.6 million, $1.3 million and $0.5 million of inventory-related charges at our PCG, Consumer and CPG segments, respectively. The fiscal 2019 inventory-related charges were partially offset by a favorable adjustment of approximately $0.2 million to the fiscal 2018 inventory write-off at our Consumer segment. All of the aforementioned inventory-related charges are recorded in cost of sales in our Consolidated Statements of Income. These inventory charges were the result of product line and SKU rationalization initiatives in connection with our overall plan of restructuring.