Note 2 - Restructuring Activities

9 Months Ended

Feb. 26, 2023

Notes to Financial Statements

Restructuring and Related Activities Disclosure [Text Block]

2. RESTRUCTURING ACTIVITIES

Conagra Restructuring Plan

In fiscal 2019, senior management initiated a restructuring plan for costs incurred in connection with actions taken to improve selling, general and administrative ("SG&A") expense effectiveness and efficiencies and to optimize our supply chain network (the "Conagra Restructuring Plan"). Although we remain unable to make good faith estimates relating to the entire Conagra Restructuring Plan, we are reporting on actions initiated through the end of the third quarter of fiscal 2023, including the estimated amounts or range of amounts for each major type of costs expected to be incurred, and the charges that have resulted or will result in cash outflows. As of February 26, 2023, we had approved the incurrence of $185.0 million ($57.2 million of cash charges and $127.8 million of non-cash charges) for several projects associated with the Conagra Restructuring Plan. As of February 26, 2023, we had incurred or expected to incur $154.4 million of charges ($51.4 million of cash charges and $103.0 million of non-cash charges) for actions identified as of such date under the Conagra Restructuring Plan. In the third quarter and first three quarters of fiscal 2023, we recognized charges of $1.6 million and $7.5 million, respectively, in connection with the Conagra Restructuring Plan. In the third quarter and first three quarters of fiscal 2022, we recognized charges of $10.5 million and $25.6 million, respectively, in connection with the Conagra Restructuring Plan. We expect to incur costs related to the Conagra Restructuring Plan over a multi-year period.

We anticipate that we will recognize the following pre-tax expenses in association with the Conagra Restructuring Plan (amounts include charges recognized from plan inception through the third quarter of fiscal 2023):

	Grocery & Snacks		Refrigerated & Frozen		International		Foodservice		Corporate		Total
Accelerated depreciation	$	33.2	$	40.5	$	—	$	—	$	—	$	73.7
Other cost of goods sold		8.7		2.5		—		—		—		11.2
Total cost of goods sold		41.9		43.0		—		—		—		84.9
Severance and related costs		11.5		1.2		1.3		0.3		4.8		19.1
Asset impairment (net of gains on disposal)		21.9		0.9		0.1		—		—		22.9
Contract/lease termination		0.5		0.1		—		—		0.1		0.7
Consulting/professional fees		0.6		2.4		—		—		5.7		8.7
Other SG&A		12.9		4.1		—		—		0.5		17.5
Total SG&A		47.4		8.7		1.4		0.3		11.1		68.9
Total	$	89.3	$	51.7	$	1.4	$	0.3	$	11.1	$	153.8
Pension and postretirement non-service income												0.6
Consolidated total											$	154.4

During the third quarter of fiscal 2023, we recognized the following pre-tax expenses for the Conagra Restructuring Plan:

	Grocery & Snacks			Refrigerated & Frozen		Corporate		Total
Accelerated depreciation	$	—		$	0.3	$	—	$	0.3
Other cost of goods sold		—			0.1		—		0.1
Total cost of goods sold		—			0.4		—		0.4
Severance and related costs		(0.2	)		—		(0.2)		(0.4)
Consulting/professional fees		0.3			0.1		0.1		0.5
Other SG&A		0.1			1.1		(0.1)		1.1
Total SG&A		0.2			1.2		(0.2)		1.2
Total	$	0.2		$	1.6	$	(0.2)	$	1.6

Included in the above results are $1.3 million of charges that have resulted or will result in cash outflows and $0.3 million in non-cash charges.

During the first three quarters of fiscal 2023, we recognized the following pre-tax expenses for the Conagra Restructuring Plan:

	Grocery & Snacks		Refrigerated & Frozen		Corporate		Total
Accelerated depreciation	$	—	$	0.3	$	—	$	0.3
Other cost of goods sold		—		0.3		—		0.3
Total cost of goods sold		—		0.6		—		0.6
Severance and related costs		(0.2)		—		0.5		0.3
Contract/lease termination		0.1		0.1		—		0.2
Consulting/professional fees		0.3		0.1		3.5		3.9
Other SG&A		0.2		2.2		0.1		2.5
Total SG&A		0.4		2.4		4.1		6.9
Total	$	0.4	$	3.0	$	4.1	$	7.5

Included in the above results are $7.2 million in charges that have resulted or will result in cash outflows and $0.3 million in non-cash charges.

We recognized the following cumulative (plan inception to February 26, 2023) pre-tax expenses for the Conagra Restructuring Plan in our Condensed Consolidated Statement of Earnings:

	Grocery & Snacks		Refrigerated & Frozen		International		Foodservice		Corporate		Total
Accelerated depreciation	$	33.2	$	39.9	$	—	$	—	$	—	$	73.1
Other cost of goods sold		8.7		2.6		—		—		—		11.3
Total cost of goods sold		41.9		42.5		—		—		—		84.4
Severance and related costs		11.4		1.2		1.3		0.3		4.9		19.1
Asset impairment (net of gains on disposal)		21.9		0.8		0.1		—		—		22.8
Contract/lease termination		0.5		0.1		—		—		0.1		0.7
Consulting/professional fees		0.3		0.1		—		—		5.2		5.6
Other SG&A		12.8		3.3		—		—		0.4		16.5
Total SG&A		46.9		5.5		1.4		0.3		10.6		64.7
Total	$	88.8	$	48.0	$	1.4	$	0.3	$	10.6	$	149.1
Pension and postretirement non-service income												0.6
Consolidated total											$	149.7

Included in the above results are $47.4 million of charges that have resulted or will result in cash outflows and $102.3 million in non-cash charges.

Liabilities recorded for the Conagra Restructuring Plan and changes therein for the first three quarters of fiscal 2023 were as follows:

	Balance at May 29, 2022		Costs Incurred and Charged to Expense		Costs Paid or Otherwise Settled			Changes in Estimates			Balance at February 26, 2023
Severance and related costs	$	3.2	$	1.3	$	(2.8	)	$	(1.0	)	$	0.7
Contract/lease termination		—		0.2		(0.2	)		—			—
Consulting/professional fees		1.7		3.9		(5.4	)		—			0.2
Other costs		0.2		2.8		(3.0	)		—			—
Total	$	5.1	$	8.2	$	(11.4	)	$	(1.0	)	$	0.9

Pinnacle Integration Restructuring Plan

As of the end of the first quarter of fiscal 2023, we had substantially completed our restructuring and integration plan related to our acquisition of Pinnacle Foods, Inc. ("Pinnacle") in 2018 for the purpose of achieving significant cost synergies (the "Pinnacle Integration Restructuring Plan"). In the third quarter and first three quarters of fiscal 2023, we recognized charges of $0.9 million and $1.7 million, respectively, in connection with the Pinnacle Integration Restructuring Plan. In the third quarter and first three quarters of fiscal 2022, we recognized charges of $0.2 million and $13.3 million, respectively, in connection with the Pinnacle Integration Restructuring Plan.

We had recognized $295.0 million in pre-tax expenses ($13.0 million in cost of goods sold and $282.0 million in SG&A expenses) from the inception of this plan through  February 26, 2023, related to our continuing operations. Included in these results were $266.9 million of cash charges and $28.1 million of non-cash charges. Our total pre-tax expenses for the Pinnacle Integration Restructuring Plan related to our continuing operations are expected to be $346.4 million ($284.7 million of cash charges and $61.7 million of non-cash charges). The remaining charges relate primarily to certain leased facilities that are not expected to be used in their current capacity through the contractual lease term.