RESTRUCTURING INITIATIVES

3 Months Ended

Aug. 28, 2016

Restructuring Initiatives [Abstract]

(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
	Aug. 28, 2016											Aug. 30, 2015
In Millions		Severance		Asset Write-offs		Accelerated Depreciation		Other		Total		Severance		Asset Write-offs		Accelerated Depreciation		Other		Total
Restructuring of certain International product lines	$	2.3	$	33.6	$	-	$	0.5	$	36.4	$	-	$	-	$	-	$	-	$	-
Closure of Vineland, New Jersey plant		12.4		-		7.0		1.5		20.9		-		-		-		-		-
Project Compass		-		-		0.2		0.8		1.0		44.9		-		-		6.6		51.5
Project Century		0.3		3.1		9.2		1.6		14.2		2.3		2.4		21.4		4.1		30.2
Project Catalyst		-		-		-		-		-		0.2		-		-		-		0.2
Total	$	15.0	$	36.7	$	16.4	$	4.4	$	72.5	$	47.4	$	2.4	$	21.4	$	10.7	$	81.9

In the first quarter of fiscal 2017, we announced a plan to restructure certain product lines in our International segment. To eliminate excess capacity, we will close our snacks manufacturing facility in Marília, Brazil and cease production operations for meals and snacks at our facility in São Bernardo do Campo, Brazil. We will also cease production of certain underperforming snack products at our facility in Nanjing, China. These and other actions, which are subject to appropriate consultation with employees and their representatives where required by law or practice, will affect approximately 420 positions in our Brazilian operations and approximately 440 positions in our Greater China operations. In the first quarter of fiscal 2017, we recorded $36.4 million of these charges, including $2.3 million of severance charges and $33.6 million of impairment charges to write down assets to their net realizable value. We expect these actions to be completed by the end of fiscal 2017 with total charges of approximately $43 million, of which approximately $8 million will be cash.

In the first quarter of fiscal 2017, we approved a plan to close our Vineland, New Jersey facility to eliminate excess soup capacity in our U.S. Retail Segment supply chain. This action will affect approximately 370 positions, and we recorded a charge of $20.9 million, including $12.4 million of severance charges and $7.0 million of accelerated depreciation in the first quarter of fiscal 2017. We expect to record approximately $27 million of additional expense in fiscal 2017, primarily accelerated depreciation. We expect this action to be completed by the end of fiscal 2019 with total charges of approximately $66 million, of which approximately $23 million will be cash.

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 $60 million of net expenses, all of which will be cash. We recorded $1.0 million of restructuring charges in the first quarter of fiscal 2017 and $51.5 million of restructuring charges in the first quarter of fiscal 2016 relating to this action, which we expect to be completed by the end of fiscal 2017.

Project Century (Century) began in fiscal 2015 and is a review of our manufacturing and distribution network to streamline operations and identify potential capacity reductions. As part of Century, in the first quarter of fiscal 2016, we approved a restructuring plan to close our cereal and dry dinner manufacturing plant in West Chicago, Illinois in our U.S. Retail segment supply chain. This action will affect approximately 500 positions, and we expect to incur approximately $117 million of net expenses relating to this action, of which approximately $53 million will be cash. We recorded $7.4 million of restructuring charges in the first quarter of fiscal 2017 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 approved a restructuring plan to close our snacks manufacturing facility in Joplin, Missouri in our U.S. Retail segment supply chain. This action affected approximately 120 positions, and we incurred $6.3 million of net expenses relating to this action including $4.9 million in the first quarter of fiscal 2016, of which less than $1 million was cash. This action was completed in fiscal 2016.

In addition, we recorded restructuring charges of $6.8 million in the first quarter of fiscal 2017 and $25.3 million in first quarter of fiscal 2016 relating to other Century actions previously announced.

We paid $15.9 million in cash relating to restructuring initiatives in the first quarter of fiscal 2017 and $34.3 million in first quarter of fiscal 2016.

In addition to restructuring charges, we recorded $13.8 million of project-related costs in cost of sales in the first quarter of fiscal 2017 and $13.1 million in the first quarter of 2016. We paid $16.7 million in cash in the first quarter of fiscal 2017 and $12.2 million in the same period of fiscal 2016 for project-related costs. We expect to incur approximately $38 million of project-related costs in future periods related to our restructuring initiatives.

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

		Quarter Ended
In Millions		Aug. 28, 2016		Aug. 30, 2015
Cost of sales	$	13.6	$	21.8
Restructuring, impairment, and other exit costs		58.9		60.1
Total restructuring charges		72.5		81.9
Project-related costs classified in cost of sales	$	13.8	$	13.1

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

In Millions		Severance		Contract Termination		OtherExit Costs		Total
Reserve balance as of May 29, 2016	$	73.6	$	1.5	$	1.5	$	76.6
Fiscal 2017 charges, including foreign currency translation		14.9		-		0.8		15.7
Utilized in fiscal 2017		(19.8)		(0.6)		(0.1)		(20.5)
Reserve balance as of Aug. 28, 2016	$	68.7	$	0.9	$	2.2	$	71.8

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.