RESTRUCTURING INITIATIVES

3 Months Ended

Aug. 27, 2017

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. 27, 2017											Aug. 28, 2016
In Millions		Severance		Asset Write-offs		Accelerated Depreciation		Other		Total		Severance		Asset Write-offs		Accelerated Depreciation		Other		Total
Global reorganization	$	0.4	$	0.1	$	-	$	0.3	$	0.8	$	-	$	-	$	-	$	-	$	-
Closure of Melbourne, Australia plant		0.6		-		1.5		-		2.1		-		-		-		-		-
Restructuring of certain international product lines		-		-		-		-		-		2.3		33.6		-		0.5		36.4
Closure of Vineland, New Jersey plant		0.2		0.1		10.6		2.5		13.4		12.4		-		7.0		1.5		20.9
Project Compass		(0.2)		-		-		-		(0.2)		-		-		0.2		0.8		1.0
Project Century		0.1		0.9		-		0.4		1.4		0.3		3.1		9.2		1.6		14.2
Total	$	1.1	$	1.1	$	12.1	$	3.2	$	17.5	$	15.0	$	36.7	$	16.4	$	4.4	$	72.5

In the third quarter of fiscal 2017, we approved restructuring actions designed to better align our organizational structure with our strategic initiatives. This action will affect approximately 600 positions and we expect to incur approximately $75 million of net expenses relating to these actions, all of which will be cash. We recorded $0.8 million of restructuring charges in the first quarter of fiscal 2018 relating to these actions. We expect these actions to be completed by the end of fiscal 2018.

In the second quarter of fiscal 2017, we notified the employees and their representatives of our decision to close our pasta manufacturing facility in Melbourne, Australia in our Europe & Australia segment to improve our margin structure. This action will affect approximately 350 positions, and we expect to incur approximately $34 million of net expenses relating to this action, of which approximately $3 million will be cash. We recorded $2.1 million of restructuring charges in the first quarter of fiscal 2018 relating to this action. We expect this action to be completed by the end of fiscal 2019.

In the first quarter of fiscal 2017, we announced a plan to restructure certain product lines in our Asia & Latin America segment. To eliminate excess capacity, we closed our snacks manufacturing facility in Marília, Brazil and ceased production operations for meals and snacks at our facility in São Bernardo do Campo, Brazil. We also ceased production of certain underperforming snack products at our facility in Nanjing, China. These and other actions will affect approximately 420 positions in our Brazilian operations and approximately 440 positions in our Greater China operations. We expect to incur approximately $42 million of net expenses related to these actions, most of which will be non-cash. We recorded $36.4 million of restructuring charges in the first quarter of fiscal 2017 relating to these actions. We expect these actions to be completed by the end of fiscal 2019.

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 North America Retail segment. This action affected 380 positions, and we expect to incur approximately $55 million of net expenses, of which approximately $12 million will be cash. We recorded $13.4 million of restructuring charges in the first quarter of fiscal 2018 and $20.9 million in the first quarter of 2017 relating to this action. We expect this action to be completed by the end of fiscal 2019.

We paid $26.7 million in cash relating to restructuring initiatives in the first quarter of fiscal 2018 and $15.9 million in first quarter of fiscal 2017.

In addition to restructuring charges, we recorded $1.2 million of project-related costs in cost of sales in the first quarter of fiscal 2018 and $13.8 million in the first quarter of fiscal 2017. We paid $2.7 million in cash in the first quarter of fiscal 2018 and $16.7 million in the same period of fiscal 2017 for project-related costs. We expect to incur approximately $12 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. 27, 2017		Aug. 28, 2016
Cost of sales	$	12.3	$	13.6
Restructuring, impairment, and other exit costs		5.2		58.9
Total restructuring charges		17.5		72.5
Project-related costs classified in cost of sales	$	1.2	$	13.8

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 28, 2017	$	81.8	$	0.7	$	2.5	$	85.0
Fiscal 2018 charges, including foreign currency translation		1.9		-		-		1.9
Utilized in fiscal 2018		(23.8)		(0.3)		(0.4)		(24.5)
Reserve balance as of Aug. 27, 2017	$	59.9	$	0.4	$	2.1	$	62.4

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, accelerated depreciation, 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.