Restructuring

9 Months Ended

Feb. 29, 2020

Restructuring And Related Activities [Abstract]

Restructuring

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 quarter ended November 30, 2018, we formally announced the remainder 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 originally expected to be implemented between September 2018 and December 2020.  Recently, however, the disruption caused by the outbreak of COVID-19 is expected to delay our implementation of our 2020 MAP to Growth past the original target completion date of December 31, 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 have implemented four center-led functional areas including manufacturing and operations; procurement and supply chain; information technology; and accounting and finance.

Our 2020 MAP to Growth optimizes our manufacturing facilities and will ultimately provide more efficient plant and distribution facilities.  Through the balance sheet date, in association with our 2020 MAP to Growth initiative, we have completed, or are in the process of completing, the planned closure of 19 plants and 24 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 $7.5 million compared to our previous estimate, primarily attributable to increases in expected severance and benefit charges of $4.6 million, facility closure and other related costs of $2.5 million and $0.4 million of other asset write-offs.  

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

	Three Months Ended		Nine Months Ended		Cumulative Costs		Total Expected
(In thousands)	February 29, 2020		February 29, 2020		to Date		Costs
Construction Products Group ("CPG") Segment:
Severance and benefit costs (a)	$	2,018	$	3,625	$	14,854	$	26,155
Facility closure and other related costs		484		1,282		4,251		8,094
Other asset write-offs		232		271		1,862		2,614
Total Charges	$	2,734	$	5,178	$	20,967	$	36,863
Performance Coatings Group ("PCG") Segment:
Severance and benefit costs (b)	$	477	$	3,408	$	9,821	$	14,631
Facility closure and other related costs		762		1,507		4,981		5,920
Other asset write-offs		122		294		645		645
Total Charges	$	1,361	$	5,209	$	15,447	$	21,196
Consumer Segment:
Severance and benefit costs (c)	$	445	$	1,992	$	9,370	$	12,138
Facility closure and other related costs		563		1,423		8,115		9,615
Other asset write-offs		8		8		32		32
Total Charges	$	1,016	$	3,423	$	17,517	$	21,785
Specialty Segment:
Severance and benefit costs (d)	$	643	$	1,057	$	6,393	$	10,434
Facility closure and other related costs		356		2,546		3,790		6,159
Other asset write-offs		-		104		1,107		1,140
Total Charges	$	999	$	3,707	$	11,290	$	17,733
Corporate/Other Segment:
Severance and benefit costs (e)	$	1,233	$	1,249	$	13,369	$	13,369
Total Charges	$	1,233	$	1,249	$	13,369	$	13,369
Consolidated:
Severance and benefit costs	$	4,816	$	11,331	$	53,807	$	76,727
Facility closure and other related costs		2,165		6,758		21,137		29,788
Other asset write-offs		362		677		3,646		4,431
Total Charges	$	7,343	$	18,766	$	78,590	$	110,946

(a) Severance and benefit costs are associated with the elimination of 27 positions and 73 positions during the three and nine months ended February 29, 2020, respectively.  

(b) Severance and benefit costs are associated with the elimination of one position and 70 positions during the three and nine months ended February 29, 2020, respectively.

(c) Severance and benefit costs are associated with the elimination of five positions and 16 positions during the three and nine months ended February 29, 2020, respectively.

(d) Severance and benefit costs are associated with the elimination of four positions and 63 positions during the three and nine months ended February 29, 2020, respectively.

(e) Severance and benefit costs are associated with the elimination of two positions during the three and nine months ended February 29, 2020, respectively.

	Three Months Ended			Nine Months Ended
(In thousands)	February 28, 2019			February 28, 2019
CPG Segment:
Severance and benefit costs (f)	$	1,315		$	7,308
Facility closure and other related costs		737			1,134
Other asset write-offs		5			371
Total Charges	$	2,057		$	8,813
PCG Segment:
Severance and benefit costs (g)	$	398		$	5,167
Facility closure and other related costs		2,491			3,397
Other asset write-offs		(84	)		276
Total Charges	$	2,805		$	8,840
Consumer Segment:
Severance and benefit costs (h)	$	374		$	1,470
Facility closure and other related costs		830			935
Other asset write-offs		24			24
Total Charges	$	1,228		$	2,429
Specialty Segment:
Severance and benefit costs (i)	$	1,308		$	4,985
Facility closure and other related costs		279			344
Other asset write-offs		977			983
Total Charges	$	2,564		$	6,312
Corporate/Other Segment:
Severance and benefit costs (j)	$	25		$	10,085
Total Charges	$	25		$	10,085
Consolidated:
Severance and benefit costs	$	3,420		$	29,015
Facility closure and other related costs		4,337			5,810
Other asset write-offs		922			1,654
Total Charges	$	8,679		$	36,479

(f) Severance and benefit costs are associated with the elimination of three positions and 71 positions during the three and nine months ended February 28, 2019, respectively.  Additionally, $0.2 million included in the charges incurred during the nine months ended February 28, 2019 are associated with the prior elimination of one position within the legal function during fiscal 2018.

(g) Severance and benefit costs are associated with the elimination of one position and 103 positions during the three and nine months ended February 28, 2019, respectively.

(h) Severance and benefit costs are associated with the elimination of nine positions and 18 positions during the three and nine months ended February 28, 2019, respectively.

(i) Severance and benefit costs are associated with the elimination of 10 positions and 130 positions during the three and nine months ended February 28, 2019, respectively.

(j) 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 November 30, 2019	$	3,566		$	6,080		$	-		$	9,646
Additions charged to expense		4,816			2,165			362			7,343
Cash payments charged against reserve		(3,182	)		(2,578	)		-			(5,760	)
Non-cash charges included above (k)		(161	)		-			(362	)		(523	)
Balance at February 29, 2020	$	5,039		$	5,667		$	-		$	10,706
(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		11,331			6,758			677			18,766
Cash payments charged against reserve		(10,968	)		(7,928	)		-			(18,896	)
Non-cash charges included above (k)		(161	)		(1,020	)		(677	)		(1,858	)
Balance at February 29, 2020	$	5,039		$	5,667		$	-		$	10,706
(In thousands)	Severance and Benefits Costs			Facility Closure and Other Related Costs			Other Asset Write-Offs			Total
Balance at November 30, 2018	$	10,427		$	2,535		$	-		$	12,962
Additions charged to expense		3,420			4,337			922			8,679
Cash payments charged against reserve		(4,975	)		(1,872	)		-			(6,847	)
Non-cash charges included above (k)		-			(6	)		(922	)		(928	)
Balance at February 28, 2019	$	8,872		$	4,994		$	-		$	13,866
(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		29,015			5,810			1,654			36,479
Cash payments charged against reserve		(23,563	)		(3,620	)		-			(27,183	)
Non-cash charges included above (k)		(6,537	)		(3,380	)		(3,027	)		(12,944	)
Balance at February 28, 2019	$	8,872		$	4,994		$	-		$	13,866

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

In connection with our 2020 MAP to Growth, during the three months ended February 29, 2020, we incurred inventory-related charges of approximately $0.2 million at our Consumer segment and $0.1 of inventory-related charges at each of our PCG, CPG and Specialty segments. During the nine months ended February 29, 2020, we incurred $7.4 million, $3.2 million, $0.3 million and $0.1 million of inventory-related charges at our Consumer, PCG, CPG and Specialty segments, respectively.  During the three months ended February 28, 2019, we incurred approximately $0.9 million, $0.8 million and $0.2 million of inventory-related charges at our PCG, Consumer and CPG segments, respectively.  During the nine months ended February 28, 2019, we incurred $7.5 million, $2.1 million and $0.7 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 the exit of a business or product line and SKU rationalization initiatives in connection with our overall plan of restructuring.