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RESTRUCTURING ACTIVITIES
12 Months Ended
May 29, 2016
Restructuring and Related Activities [Abstract]  
RESTRUCTURING ACTIVITIES
RESTRUCTURING ACTIVITIES
Supply Chain and Administrative Efficiency Plan
We previously announced a plan for the integration and restructuring of the operations of Ralcorp Holdings, Inc. ("Ralcorp"), optimization of the entire Company's supply chain network, manufacturing assets, and dry distribution and mixing centers, and improvement of selling, general and administrative effectiveness and efficiencies, which we refer to as the Supply Chain and Administrative Efficiency Plan (the "SCAE Plan"). Although the divestiture of the Private Brands business was completed in the third quarter of fiscal 2016, we will continue to implement portions of the SCAE Plan, including work related to optimizing our supply chain network and pursue cost reductions through our selling, general and administrative functions and productivity improvements. The SCAE Plan also includes plans announced in the second quarter of fiscal 2016 to realize efficiency benefits through a combination of reductions in selling, general and administrative expenses and enhancements to trade spend processes and tools.
Although we remain unable to make good faith estimates relating to the entire SCAE Plan, we are reporting on actions initiated through the end of fiscal 2016, 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 May 29, 2016, our Board of Directors has approved the incurrence of up to $739.0 million of expenses in connection with the SCAE Plan, including expenses allocated for the Private Brands operations. We have incurred or expect to incur approximately $443.9 million of charges, which includes $315.5 million of cash charges and $128.4 million of non-cash charges, for actions identified to date under the SCAE Plan related to our continuing operations. We recognized charges of $281.8 million, $47.7 million, and $31.3 million in relation to the SCAE Plan related to our continuing operations in fiscal 2016, 2015, and 2014, respectively. We expect to incur costs related to the SCAE Plan over a multi-year period.
We anticipate that we will recognize the following pre-tax expenses associated with the SCAE Plan related to our continuing operations (amounts include charges recognized from plan inception to May 29, 2016):
 
Consumer Foods
 
Corporate
 
Commercial Foods
 
Total
Multi-employer pension costs
$
31.3

 
$

 
$

 
$
31.3

Accelerated depreciation
50.9

 
1.2

 

 
52.1

Other cost of goods sold
7.8

 

 

 
7.8

    Total cost of goods sold
90.0

 
1.2

 

 
91.2

Severance and related costs
35.4

 
99.7

 
8.1

 
143.2

Accelerated depreciation
0.1

 
1.5

 

 
1.6

Consulting/Professional fees
1.1

 
63.2

 

 
64.3

Fixed asset impairment /Net loss on disposal
10.8

 
0.8

 

 
11.6

Contract/Lease termination expenses
1.3

 
64.1

 

 
65.4

Other selling, general and administrative expenses
15.7

 
50.9

 

 
66.6

    Total selling, general and administrative expenses
64.4

 
280.2

 
8.1

 
352.7

        Consolidated total
$
154.4

 
$
281.4

 
$
8.1

 
$
443.9

During fiscal 2016, we recognized the following pre-tax expenses for the SCAE Plan related to our continuing operations:
 
Consumer Foods
 
Corporate
 
Commercial Foods
 
Total
Multi-employer pension costs
$
29.8

 
$

 
$

 
$
29.8

Accelerated depreciation
17.3

 
0.2

 

 
17.5

Other cost of goods sold
1.7

 

 

 
1.7

Total cost of goods sold
48.8

 
0.2

 

 
49.0

Severance and related costs
11.8

 
88.6

 
0.1

 
100.5

Accelerated depreciation

 
0.5

 

 
0.5

Consulting/Professional fees
0.1

 
48.0

 

 
48.1

Fixed asset impairment /Net loss on disposal
9.7

 
0.8

 

 
10.5

Contract/Lease termination expenses (recoveries)
(0.1
)
 
61.4

 

 
61.3

Other selling, general and administrative expenses
3.8

 
8.1

 

 
11.9

Total selling, general and administrative expenses
25.3

 
207.4

 
0.1

 
232.8

Consolidated total
$
74.1

 
$
207.6

 
$
0.1

 
$
281.8


Included in the above results are $195.7 million of charges that have resulted or will result in cash outflows and $86.2 million in non-cash charges. Not included in the above amounts are $11.8 million of pre-tax expenses related to the Private Brands operations we sold in the third quarter of fiscal 2016.
During the second quarter of fiscal 2016, we entered into a series of related transactions in which we exchanged a warehouse we owned in Indiana for two buildings and parcels of land that we leased as part of our Omaha corporate offices. Concurrent with the asset exchange, leases on the two Omaha corporate buildings were canceled. We have recognized aggregate charges of $55.6 million for the early termination of these leases. We also entered into a lease for the warehouse in Indiana and we recorded a financing lease obligation of $74.2 million.
We recognized the following cumulative (plan inception to May 29, 2016) pre-tax expenses related to the SCAE Plan in our Consolidated Statement of Operations related to our continuing operations:
 
Consumer Foods
 
Corporate
 
Commercial Foods
 
Total
Multi-employer pension costs
$
31.3

 
$

 
$

 
$
31.3

Accelerated depreciation
38.8

 
1.2

 

 
40.0

Other cost of goods sold
3.8

 

 

 
3.8

Total cost of goods sold
73.9

 
1.2

 

 
75.1

Severance and related costs
33.4

 
96.4

 
8.1

 
137.9

Accelerated depreciation

 
1.3

 

 
1.3

Consulting/Professional fees
1.1

 
50.8

 

 
51.9

Fixed asset impairment / Net loss on disposal
10.8

 
0.8

 

 
11.6

Contract/Lease termination expenses
1.3

 
61.7

 

 
63.0

Other selling, general and administrative expenses
7.0

 
13.0

 

 
20.0

Total selling, general and administrative expenses
53.6

 
224.0

 
8.1

 
285.7

Consolidated total
$
127.5

 
$
225.2

 
$
8.1

 
$
360.8


Included in the above results are $248.8 million of charges that have resulted or will result in cash outflows and $112.0 million in non-cash charges. Not included in the above table are $130.2 million of pre-tax expenses ($84.5 million of cash charges and $45.7 million of non-cash charges) related to the Private Brands operations which we sold in the third quarter of fiscal 2016.
Liabilities recorded for the SCAE Plan and changes therein for fiscal 2016 were as follows:
 
Balance at May 31,
2015
 
Costs Incurred
and Charged
to Expense
 
Costs Paid
or  Otherwise Settled
 
Changes  in
Estimates
 
Balance at
May 29,
2016
Multi-employer pension costs
$
11.4

 
$
30.0

 
$
(0.7
)
 
$

 
$
40.7

Severance and related costs
16.4

 
84.8

 
(46.5
)
 
(7.5
)
 
47.2

Consulting
0.2

 
48.2

 
(43.7
)
 

 
4.7

Contract termination
3.1

 
6.0

 
(2.5
)
 
(0.3
)
 
6.3

Other costs
1.2

 
10.5

 
(11.2
)
 

 
0.5

Total
$
32.3

 
$
179.5

 
$
(104.6
)
 
$
(7.8
)
 
$
99.4


Acquisition-related Restructuring Costs
During fiscal 2012, we started incurring costs in connection with actions taken to attain synergies when integrating businesses acquired prior to the third quarter of fiscal 2013. These costs, collectively referred to as "acquisition-related restructuring costs", include severance and other costs associated with consolidating facilities and administrative functions. In connection with the acquisition-related restructuring costs, we have incurred charges of $23.7 million, $15.8 million of which are charges that have resulted or will result in cash outflows and $7.9 million of which are non-cash charges. At the end of fiscal 2014, the acquisition-related restructuring costs were substantially complete.
During fiscal 2015 and 2014, we recognized $0.2 million and $9.4 million, respectively, of pre-tax expenses for acquisition-related restructuring costs, primarily representing impairment of equipment, all within our Consumer Foods segment.