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RESTRUCTURING INITIATIVES
6 Months Ended
Nov. 29, 2015
Restructuring Initiatives [Abstract]  
Restructuring Initiatives

(3) Restructuring Initiatives

 

We are currently pursuing several multi-year restructuring initiatives designed to increase our efficiency and focus our business behind our key growth strategies. Charges related to these activities were as follows:

 Quarter Ended  Quarter Ended
 Nov. 29, 2015 Nov. 23, 2014
In Millions Severance Asset Write-offs Pension Related Accelerated Depreciation Other Total  Severance Asset Write-offs Pension Related Accelerated Depreciation Other Total
Project Compass$ 2.2$ -$ (0.2)$ -$ 0.1$ 2.1 $ -$ -$ -$ -$ -$ -
Project Century  25.8  10.1  19.1  21.2  4.8  81.0   21.7  32.6  15.6  12.6  6.4  88.9
Project Catalyst  -  -  -  -  -  -   145.0  -  -  -  -  145.0
Combination of certain operational facilities  -  -  -  -  -  -   (0.1)  -  -  -  -  (0.1)
Charges associated with restructuring actions previously announced  -  -  -  -  -  -   (0.6)  -  -  -  -  (0.6)
Total$ 28.0$ 10.1$ 18.9$ 21.2$ 4.9$ 83.1 $ 166.0$ 32.6$ 15.6$ 12.6$ 6.4$ 233.2
                          
 Six-Month Period Ended  Six-Month Period Ended
 Nov. 29, 2015 Nov. 23, 2014
In Millions Severance Asset Write-offs Pension Related Accelerated Depreciation Other Total  Severance Asset Write-offs Pension Related Accelerated Depreciation Other Total
Project Compass$ 47.1$ -$ (0.2)$ -$ 6.7$ 53.6 $ -$ -$ -$ -$ -$ -
Project Century  28.1  12.5  19.1  42.6  8.9  111.2   21.7  32.6  15.6  12.6  6.4  88.9
Project Catalyst  0.2  -  -  -  -  0.2   145.0  -  -  -  -  145.0
Combination of certain operational facilities  -  -  -  -  -  -   13.0  0.7  -  -  0.2  13.9
Charges associated with restructuring actions previously announced  -  -  -  -  -  -   (0.6)  -  -  -  -  (0.6)
Total$ 75.4$ 12.5$ 18.9$ 42.6$ 15.6$ 165.0 $ 179.1$ 33.3$ 15.6$ 12.6$ 6.6$ 247.2

In the first quarter of fiscal 2016, we approved Project Compass, a restructuring plan designed to enable our International segment to accelerate long-term growth through increased organizational effectiveness and reduced administrative expense. In connection with this project, we expect to eliminate approximately 725 to 775 positions. We expect to incur approximately $62 to $65 million of net expenses relating to this action of which approximately $61 million will be cash. We recorded $2.1 million of restructuring charges in the second quarter of fiscal 2016 and $53.6 million in the six-month period ended November 29, 2015 relating to this action. We expect this action to be completed by the end of fiscal 2017.

Project Century (Century) began in fiscal 2015 as a review of our North American manufacturing and distribution network to streamline operations and identify potential capacity reductions. In the second quarter of fiscal 2016, we broadened the scope of Project Century to identify opportunities to streamline our supply chain outside of North America. As part of the expanded project, we notified employees and their representatives of the proposal, pending consultation, to close the manufacturing facility in our International segment supply chain located in Berwick, United Kingdom. If implemented, this action would affect approximately 265 positions. We would expect, subject to the proposal proceeding, to incur total restructuring charges of approximately $46 to $51 million, including approximately $10 million of severance expense and $36 million to $41 million of other charges, primarily fixed asset write-offs. These expenses include cash charges of approximately $21 million. We would expect to record approximately $24 to $29 million pre-tax of restructuring charges in the third quarter of fiscal 2016 and we would expect these actions to be completed by the end of fiscal 2017.

As part of Century, in the second quarter of fiscal 2016, we notified the employees and their representatives of our decision to close our manufacturing facility in East Tamaki, New Zealand in our International segment supply chain. This action will affect approximately 20 positions, and we expect to incur less than $1 million of net expenses relating to this action, most of which will be cash. We recorded $0.4 million of restructuring charges in the second quarter of fiscal 2016 relating to this action. We expect these actions to be completed by the end of fiscal 2017.

As part of Century, in the first quarter of fiscal 2016, we notified the union member employees and union representatives at our West Chicago, Illinois facility of our decision to close this cereal and dry dinner manufacturing plant in our U.S. Retail segment supply chain. This action will affect approximately 500 positions, and we expect to incur approximately $123 million of net expenses relating to this action, of which approximately $55 million will be cash. We recorded $64.0 million of restructuring charges in the second quarter of fiscal 2016 and the six-month period ended November 29, 2015 relating to this action. We expect this action to be completed by the end of fiscal 2019.

As part of Century, in the first quarter of fiscal 2016, we notified the employees at our snacks manufacturing facility in Joplin, Missouri of our decision to close this plant in our U.S. Retail segment supply chain. This action will affect approximately 120 positions, and we expect to incur approximately $12 million of net expenses relating to this action, of which approximately $5 million will be cash. We recorded $2.9 million of restructuring charges in the second quarter of fiscal 2016 and $7.8 million in the six-month period ended November 29, 2015 relating to this action. We expect this action to be completed by the end of fiscal 2018.

As part of Century, in the second quarter of fiscal 2015, we approved a restructuring plan to consolidate yogurt manufacturing capacity and exit our Methuen, Massachusetts facility in our U.S. Retail segment and Convenience Stores and Foodservice segment supply chains. This action will affect approximately 250 positions. We expect to incur approximately $65 million of net expenses relating to this action of which approximately $14 million will be cash. We recorded $3.3 million of restructuring charges in the second quarter of fiscal 2016 and $15.2 million in the six-month period ended November 29, 2015 relating to this action. We recorded $25.7 million of restructuring charges in the quarter and six-month periods ended November 23, 2014 relating to this action. We expect this action to be completed by the end of fiscal 2016.

As part of Century, in the second quarter of fiscal 2015, we approved a restructuring plan to eliminate excess cereal and dry mix capacity and exit our Lodi, California facility in our U.S. Retail supply chain. This action will affect approximately 430 positions. We expect to incur approximately $102 million of net expenses relating to this action of which approximately $38 million will be cash. We recorded $7.9 million of restructuring charges in the second quarter of fiscal 2016 and $17.0 million in the six-month period ended November 29, 2015 relating to this action. We recorded $44.8 million of restructuring charges in the quarter and six-month periods ended November 23, 2014 relating to this action. We expect this action to be completed by the end of fiscal 2016.

In addition, we recorded restructuring charges of $2.5 million in the second quarter of fiscal 2016, $6.8 million in the six-month period ended November 29, 2015, and $18.4 million in the quarter and six-month period ended November 23, 2014 relating to other Century actions previously announced.

During the second quarter of fiscal 2015, we approved Project Catalyst, a restructuring plan to increase organizational effectiveness and reduce overhead expense. In connection with this project, we expect to eliminate approximately 800 positions primarily in the United States. We expect to incur approximately $149 million of net expenses relating to these actions of which approximately $118 million will be cash. We recorded $0.2 million of restructuring charges in the six-month period ended November 29, 2015 relating to these actions. These actions were largely completed in fiscal 2015.

During the first quarter of fiscal 2015, we approved a plan to combine certain Yoplait and General Mills operational facilities within our International segment to increase efficiencies and reduce costs. This action will affect approximately 240 positions. We expect to incur approximately $15 million of net expenses relating to this action of which approximately $12 million will be cash. These actions were largely completed in fiscal 2017.

During the six-month period ended November 29, 2015, we paid $75.2 million in cash relating to restructuring initiatives.

In addition to restructuring charges, we expect to incur approximately $105 million of additional project-related costs, which will be recorded in cost of sales, all of which will be cash. We recorded project-related costs in cost of sales of $16.2 million in the second quarter of fiscal 2016 and $29.3 million in the six-month period ended November 29, 2015.

Restructuring charges and project-related costs are recorded in our Consolidated Statements of Earnings as follows:

  Quarter Ended  Six-Month Period Ended
In Millions Nov. 29, 2015 Nov. 23, 2014  Nov. 29, 2015 Nov. 23, 2014
Cost of sales$ 21.8$ 18.6 $ 43.6$ 18.6
Restructuring, impairment, and other exit costs  61.3  214.6   121.4  228.6
Total restructuring charges  83.1  233.2   165.0  247.2
Project-related costs classified in cost of sales$ 16.2$ - $ 29.3$ -

The roll forward of our restructuring and other exit cost reserves, included in other current liabilities, is as follows:

In Millions Severance Contract Termination Other Exit Costs Total
Reserve balance as of May 31, 2015$ 118.6$ 0.6$ 1.6$ 120.8
Fiscal 2016 charges, including foreign currency translation  72.5  1.5  4.1  78.1
Utilized in fiscal 2016  (59.2)  (0.4)  (4.1)  (63.7)
Reserve balance as of Nov. 29, 2015$ 131.9$ 1.7$ 1.6$ 135.2

The charges recognized in the roll forward of our reserves for restructuring and other exit costs do not include items charged directly to expense (e.g., asset impairment charges, the gain or loss on the sale of restructured assets, and the write-off of spare parts) and other periodic exit costs recognized as incurred, as those items are not reflected in our restructuring and other exit cost reserves on our Consolidated Balance Sheets.