Property, Plant And Equipment

12 Months Ended

May 31, 2014

Property, Plant And Equipment [Abstract]

Property, Plant And Equipment

7. Property, Plant and Equipment

Property, plant and equipment consisted of the following (in thousands):

		May 31		June 1
		2014		2013
Land and improvements	$	74,999	$	71,815
Buildings and improvements		244,782		223,745
Machinery and equipment		323,117		288,391
Construction-in-progress		32,826		16,094
		675,724		600,045
Less: accumulated depreciation		360,789		334,037
	$	314,935	$	266,008

Depreciation expense was $33.5 million, $31.2 million and $28.3 million in fiscal years 2014,  2013 and 2012, respectively.

The Company maintains insurance for both property damage and business interruption relating to catastrophic events, such as the fires.  Insurance recoveries received for property damage and business interruption in excess of the net book value of damaged assets, clean-up and demolition costs, and post-event costs are recognized as income in the period received or committed when all contingencies associated with the recoveries are resolved. Gains on insurance recoveries related to business interruption are recorded within “Cost of sales” and any gains or losses related to property damage are recorded within “Other income (expense).” Insurance recoveries related to business interruption are classified as operating cash flows and recoveries related to property damage are classified as investing cash flows in the statement of cash flows.  Insurance claims incurred or finalized during the fiscal years ended 2014, 2013, and 2012 are discussed below.

In the second quarter of fiscal 2014, a contract producer owned pullet complex in Florida was damaged by fire.  The fire destroyed two contract producer owned pullet houses that contained the Company’s flocks.  In the third quarter of fiscal 2014, the Company’s Shady Dale, Georgia complex was damaged by a fire.  The fire destroyed two pullet houses.  The Company intends to seek reimbursement for all of its insured losses, including lost profits and expenses.  The Company believes the effects of lost production and additional expenses related to both fires that will be incurred will be substantially covered by the Company’s insurance policies. Any gains resulting from recoveries from the insurance carriers will be recognized when the claims are ultimately settled.  These fires did not have a material impact on the results of operations in fiscal 2014.

The Company’s Shady Dale, Georgia complex was also damaged by fire in the first quarter of fiscal 2011, and the claim was finalized in fiscal 2012.  The Company received $3.7 million from insurance carriers as full settlement of the claim.  The Company recorded proceeds received for business interruption losses of $1.6 million as a reduction to “Cost of sales” in fiscal 2012.  The Company recorded a gain of $1.0 million during fiscal year 2012 due to the property damage claim, which was recorded in “Other income (expense).” The remaining portion of the insurance proceeds, $1.1 million, was used to reimburse the Company for the book value of damaged inventory written off and other out of pocket expenses.