Restructuring, Impairment, and Other Exit Costs

12 Months Ended

May 26, 2024

Restructuring, Impairment, and Other Exit Costs [Abstract]

Restructuring, Impairment, and Other Exit Costs

NOTE 4. RESTRUCTURING, IMPAIRMENT, AND OTHER EXIT COSTS 

INTANGIBLE ASSET IMPAIRMENTS

In fiscal 2024, we recorded a $

117.1

 million non-cash goodwill impairment charge related to our Latin America reporting unit. Please

see Note 6 for additional information.

In fiscal 2024, we recorded $

103.1

 million of non-cash impairment charges related to our

Top Chews

,

True Chews

,

and

EPIC

 brand

intangible assets. Please see Note 6 for additional information. 

RESTRUCTURING INITIATIVES

We view our restructuring activities as actions that help us meet our long-term growth targets and are evaluated against internal rate of

return and net present value targets. Each restructuring action normally takes one to two years to complete. At completion (or as each

major stage is completed in the case of multi-year programs), the project begins to deliver cash savings and/or reduced depreciation.

These activities result in various restructuring costs, including asset write-offs, exit charges including severance, contract termination

fees, and decommissioning and other costs. Accelerated depreciation associated with restructured assets, as used in the context of our

disclosures regarding restructuring activity, refers to the increase in depreciation expense caused by shortening the useful life or

updating the salvage value of depreciable fixed assets to coincide with the end of production under an approved restructuring plan.

Any impairment of the asset is recognized immediately in the period the plan is approved.

Restructuring charges recorded in fiscal 2024 were as follows:

In Millions

Commercial strategy actions

$

18.6

Charges associated with restructuring actions previously announced

20.2

Total restructuring charges

$

38.8

In fiscal 2024, we approved restructuring actions to enhance the go-to-market commercial strategy and related organizational structure

of our Pet segment. We expect to incur approximately $

24

 million of restructuring charges and project-related costs related to these

actions, of which approximately $

2

 million will be cash. These charges are expected to consist of approximately $

15

 million of

accelerated depreciation and $

9

 million of other costs, including severance. We recognized $

13.7

 million of accelerated depreciation

and $

4.9

 million of other costs in fiscal 2024. We expect these actions to be completed by the end of fiscal 2026.

In fiscal 2024, we increased the estimate of restructuring charges that we expect to incur related to our previously announced actions

in the International segment to drive efficiencies in manufacturing and logistics operations. As a result, we recorded a $

3.4

 million

long-lived asset impairment charge. We have incurred approximately $

42

 million of restructuring charges and project-related costs

related to these actions, of which approximately $

14

 million was cash. These charges consisted of approximately $

12

 million of

severance and $

30

 million of other costs, primarily asset write-offs. We expect to pay approximately $

4

 million in cash related to

these actions and record immaterial charges in fiscal 2025. 

Certain actions are subject to union negotiations and works counsel consultations, where required.

We paid net $

35.5

 million of cash related to restructuring actions in fiscal 2024. We paid net $

36.6

 million of cash in fiscal 2023.

Restructuring charges recorded in fiscal 2023 were as follows:

Fiscal Year

In Millions

2024

2023

2022

Restructuring, impairment, and other exit costs (recoveries)

$

241.4

$

56.2

$

(26.5)

Cost of sales

17.6

4.8

3.3

Total restructuring and impairment charges (recoveries)

259.0

61.0

(23.2)

Project-related costs classified in cost of sales

$

2.0

$

2.4

$

-

In Millions

Global supply chain actions

$

36.2

Network optimization actions

6.4

Charges associated with restructuring actions previously announced

18.4

Total restructuring charges

$

61.0

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

In Millions

Severance

Other Exit

Costs

Total

Reserve balance as of May 30, 2021

$

147.3

$

1.5

$

148.8

Fiscal 2022 charges, including foreign currency translation

2.2

1.2

3.4

Reserve adjustment

(34.0)

-

(34.0)

Utilized in fiscal 2022

(80.1)

(1.3)

(81.4)

Reserve balance as of May 29, 2022

35.4

1.4

36.8

Fiscal 2023 charges, including foreign currency translation

41.6

0.1

41.7

Utilized in fiscal 2023

(29.4)

(1.4)

(30.8)

Reserve balance as of May 28, 2023

47.6

0.1

47.7

Fiscal 2024 charges, including foreign currency translation

-

0.1

0.1

Utilized in fiscal 2024

(32.8)

(0.2)

(33.0)

Reserve balance as of May 26, 2024

$

14.8

$

-

$

14.8

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.

Restructuring charges recorded in fiscal 2022 were as follows:

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

In Millions

International manufacturing and logistics operations

$

15.0

Net recoveries associated with restructuring actions previously announced

(38.2)

Total net restructuring recoveries

$

(23.2)