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Restructuring
12 Months Ended
May 31, 2020
Restructuring And Related Activities [Abstract]  
Restructuring

NOTE B — 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 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 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 the finalization 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, we have completed, or are in the process of completing, the planned closure of 22 plants and 25 warehouses.  We also expect to incur additional severance and benefit costs as part of our planned closure of these facilities.

 

Throughout the remaining phases of our 2020 MAP to Growth, we will continue to assess and identify 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, 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 remained flat compared to our prior quarter estimate, reflecting decreases in expected severance and benefit costs of approximately $4.3 million, offset by increases in expected other asset write-offs and facility closure and other related costs of $3.8 million and $0.5 million, respectively.  

 

A summary of the charges recorded in connection with restructuring by reportable segment during is as follows:

 

 

 

Year Ended

 

Year Ended

 

Year Ended

 

Cumulative

Costs

 

Total

Expected

 

(in thousands)

 

May 31, 2020

 

May 31, 2019

 

May 31, 2018

 

to Date

 

Costs

 

CPG Segment:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Severance and benefit costs (a)

 

$

6,866

 

$

9,459

 

$

1,769

 

$

18,094

 

$

22,243

 

Facility closure and other related costs

 

 

1,508

 

 

1,924

 

 

1,045

 

 

4,477

 

 

7,140

 

Other asset write-offs

 

 

352

 

 

215

 

 

1,373

 

 

1,940

 

 

2,024

 

Total Charges

 

$

8,726

 

$

11,598

 

$

4,187

 

$

24,511

 

$

31,407

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

PCG Segment:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Severance and benefit costs (b)

 

$

6,973

 

$

6,012

 

$

400

 

$

13,385

 

$

17,073

 

Facility closure and other related costs

 

 

1,873

 

 

3,474

 

 

-

 

 

5,347

 

 

7,349

 

Other asset write-offs

 

 

248

 

 

353

 

 

-

 

 

601

 

 

908

 

Total Charges

 

$

9,094

 

$

9,839

 

$

400

 

$

19,333

 

$

25,330

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consumer Segment:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Severance and benefit costs (c)

 

$

3,089

 

$

1,726

 

$

5,652

 

$

10,467

 

$

11,493

 

Facility closure and other related costs

 

 

2,245

 

 

1,553

 

 

5,139

 

 

8,937

 

 

10,137

 

Other asset write-offs

 

 

4,094

 

 

25

 

 

-

 

 

4,119

 

 

4,119

 

Total Charges

 

$

9,428

 

$

3,304

 

$

10,791

 

$

23,523

 

$

25,749

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

SPG Segment:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Severance and benefit costs (d)

 

$

1,592

 

$

5,338

 

$

-

 

$

6,930

 

$

8,267

 

Facility closure and other related costs

 

 

2,922

 

 

1,244

 

 

-

 

 

4,166

 

 

5,649

 

Other asset write-offs

 

 

119

 

 

1,003

 

 

-

 

 

1,122

 

 

1,170

 

Total Charges

 

$

4,633

 

$

7,585

 

$

-

 

$

12,218

 

$

15,086

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Corporate/Other Segment:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Severance and benefit costs (e)

 

$

1,227

 

$

9,984

 

$

2,136

 

$

13,347

 

$

13,347

 

Total Charges

 

$

1,227

 

$

9,984

 

$

2,136

 

$

13,347

 

$

13,347

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consolidated:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Severance and benefit costs

 

$

19,747

 

$

32,519

 

$

9,957

 

$

62,223

 

$

72,423

 

Facility closure and other related costs

 

 

8,548

 

 

8,195

 

 

6,184

 

 

22,927

 

 

30,275

 

Other asset write-offs

 

 

4,813

 

 

1,596

 

 

1,373

 

 

7,782

 

 

8,221

 

Total Charges

 

$

33,108

 

$

42,310

 

$

17,514

 

$

92,932

 

$

110,919

 

 

a)

Severance and benefit costs are associated with the elimination of 112 positions, 109 positions and 27 positions during fiscal 2020, 2019 and 2018, respectively.   Additionally, $0.2 million included in the fiscal year 2019 charges are associated with the prior elimination of one position within the legal function during fiscal 2018.

b)

Severance and benefit costs are associated with the elimination of 161 positions, 114 positions and one position during fiscal 2020, 2019 and 2018, respectively.

c)

Severance and benefit costs are associated with the elimination of 92 positions, 21 positions and 155 positions during fiscal 2020, 2019 and 2018, respectively.

d)

Severance and benefit costs are associated with the elimination of 94 positions and 130 positions during fiscal 2020 and 2019, respectively. There were no such charges in fiscal 2018.

e)

Severance and benefit costs are associated with the elimination of two positions during fiscal 2020.  Also reflects fiscal 2019 charges related to the severance of two corporate executives, as well as accelerated vesting of equity awards for two corporate executives, four SPG segment executives and three CPG segment executives in connection with the aforementioned restructuring activities. There were no such charges in fiscal 2018.

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

 

(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

 

32,519

 

 

8,195

 

 

1,596

 

 

42,310

 

Cash payments charged against reserve

 

(31,219

)

 

(3,019

)

 

-

 

 

(34,238

)

Non-cash charges included above (f)

 

(6,420

)

 

(3,503

)

 

(2,969

)

 

(12,892

)

Balance at May 31, 2019

$

4,837

 

$

7,857

 

$

-

 

$

12,694

 

Additions charged to expense

 

19,747

 

 

8,548

 

 

4,813

 

 

33,108

 

Cash payments charged against reserve

 

(17,038

)

 

(9,239

)

 

-

 

 

(26,277

)

Non-cash charges included above (f)

 

(189

)

 

(1,286

)

 

(4,813

)

 

(6,288

)

Balance at May 31, 2020

$

7,357

 

$

5,880

 

$

-

 

$

13,237

 

 

(f)

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

 

In connection with our 2020 MAP to Growth, during fiscal 2020, we incurred approximately $16.3 million, $3.2 million, $0.7 million and $0.1 million of inventory-related charges at our Consumer, PCG, CPG and SPG segments, respectively.  All of the aforementioned inventory-related 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, and are recorded in cost of sales in our Consolidated Statements of Income.

 

In connection with our 2020 MAP to Growth, during fiscal 2019, we incurred approximately $1.0 million, $9.0 million and $2.1 million of inventory-related charges at our CPG, PCG and Consumer segments, respectively.  The inventory-related charges are partially offset by a favorable adjustment of approximately $0.2 million to the previous write-off at our Consumer segment.  All of the aforementioned inventory-related 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, and are recorded in cost of sales in our Consolidated Statements of Income. 

 

In connection with the 2020 MAP to Growth, during fiscal 2018, we incurred approximately $36.5 million of inventory-related charges at our Consumer segment and approximately $1.2 million at our CPG segment, all of which were recorded in cost of sales in our Consolidated Statements of Income.  These inventory charges were the result of product line and SKU rationalization that was initiated in the fourth quarter of fiscal 2018 by new leadership within the Consumer segment. Refer to Note A(10) for additional information.