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Restructuring Programs
9 Months Ended
Sep. 30, 2019
Restructuring and Related Activities [Abstract]  
Restructuring Programs
3. RESTRUCTURING PROGRAMS

The Company’s restructuring and margin improvement activities are part of an enterprise-wide transformation to improve long-term profitability of the Company. These activities are aggregated into three categories: (1) TreeHouse 2020 – a long-term growth and margin improvement strategy; (2) Structure to Win – an operating expenses improvement program; and (3) other restructuring and plant closing costs (collectively the “Restructuring Programs”).
 
The costs by activity for the Restructuring Programs are outlined below:
 
 
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
 
 
2019
 
2018
 
2019
 
2018
 
 
(In millions)
TreeHouse 2020
 
$
21.9

 
$
34.4

 
$
76.5

 
$
85.0

Structure to Win
 
2.4

 
5.3

 
13.4

 
30.8

Other restructuring and plant closing costs
 

 
1.0

 

 
4.3

Total Restructuring Programs
 
$
24.3

 
$
40.7

 
$
89.9

 
$
120.1


 
Expenses associated with these programs are in Cost of sales, General and administrative, and Other operating expense, net in the Condensed Consolidated Statements of Operations.  The Company does not allocate costs associated with Restructuring Programs to reportable segments when evaluating the performance of its segments.  As a result, costs associated with Restructuring Programs are not presented by reportable segment. Refer to Note 19 for more information. 
 
Below is a summary of costs by line item for the Restructuring Programs:
 
 
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
 
 
2019
 
2018
 
2019
 
2018
 
 
(In millions)
Cost of sales
 
$
0.6

 
$
4.4

 
$
3.8

 
$
8.6

General and administrative
 

 
1.0

 
1.7

 
3.3

Other operating expense, net
 
23.7

 
35.3

 
84.4

 
108.2

Total
 
$
24.3

 
$
40.7

 
$
89.9

 
$
120.1


 
The table below presents the activity of the liabilities associated with the Restructuring Programs as of September 30, 2019:  
 
 
Severance
 
Other Costs
 
Total Liabilities
 
 
(In millions)
Balance as of December 31, 2018
 
$
19.3

 
$
2.6

 
$
21.9

Expenses recognized
 
8.4

 

 
8.4

Cash payments
 
(19.0
)
 

 
(19.0
)
Reclassification due to adoption of ASU 2016-02
 

 
(2.6
)
 
(2.6
)
Balance as of September 30, 2019
 
$
8.7

 
$

 
$
8.7


 
Liabilities as of September 30, 2019 associated with total exit cost reserves primarily relate to severance. The severance liability is included in Accrued expenses in the Condensed Consolidated Balance Sheets. Other costs represent early lease termination liabilities. As part of the Company's adoption of ASU 2016-02, these lease termination liabilities were offset with the initial right-of-use asset at transition. Refer to Note 4 for additional information.
 
(1) TreeHouse 2020
 
In the third quarter of 2017, the Company announced TreeHouse 2020, a program intended to accelerate long-term growth through optimization of our manufacturing network, transformation of our mixing centers and warehouse footprint, and leveraging of systems and processes to drive performance.  The Company’s workstreams related to these activities and selling, general, and administrative cost reductions will increase our capacity utilization, expand operating margins, and streamline our plant structure to optimize our supply chain. This program began in 2017 and will be executed through 2020. The table below shows key information regarding the Company's announced plant closures, a component of the broader TreeHouse 2020 program:

Facility Location
 
Date of Closure
Announcement
 

Closure Status
 
Primary Products
Produced
 
Primary Segment
Affected
 
Total
Costs to
Close
 
Total Cash
Costs to
Close
 
 
 
 
 
 
 
 
 
 
(In millions)
Brooklyn Park, Minnesota
 
August 3, 2017
 
Completed in Q4 2017
 
Dry dinners
 
Meal Solutions
 
$
16.1

 
$
9.6

Plymouth, Indiana
 
August 3, 2017
 
Completed in Q4 2017
 
Pickles
 
Meal Solutions
 
9.3

 
3.8

Visalia, California
 
February 15, 2018
 
Completed in Q1 2019
 
Pretzels
 
Baked Goods
 
22.1

 
8.8

 
 
 
 
 
 
 
 
 
 
$
47.5

 
$
22.2



Expenses associated with the Company's Dothan, Alabama; Battle Creek, Michigan; and Minneapolis, Minnesota facility closures are classified within Net loss from discontinued operations and are excluded from the table above. Total costs to close these three facilities were $29.7 million.

During the third quarter of 2018, the Company announced the closure of its Omaha, Nebraska office by January 31, 2019. This closure was completed during the first quarter of 2019.

Below is a summary of the overall TreeHouse 2020 program costs by type: 
 
 
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
 
Cumulative Costs To Date
 
Total Expected Costs
 
 
2019
 
2018
 
2019
 
2018
 
 
 
 
(In millions)
Asset-related
 
$
(0.1
)
 
$
4.4

 
$
2.4

 
$
3.9

 
$
44.6

 
$
46.3

Employee-related
 
3.1

 
9.1

 
10.5

 
24.8

 
55.8

 
65.8

Other costs
 
18.9

 
20.9

 
63.6

 
56.3

 
145.9

 
186.5

Total
 
$
21.9

 
$
34.4

 
$
76.5

 
$
85.0

 
$
246.3

 
$
298.6


 
For the three and nine months ended September 30, 2019 and 2018, asset-related costs primarily consisted of accelerated depreciation; employee-related costs primarily consisted of dedicated project employee cost and severance; and other costs primarily consisted of consulting costs.  Asset-related costs were recognized in Cost of sales while employee-related and other costs were primarily recognized in Other operating expense, net of the Condensed Consolidated Statement of Operations.

(2) Structure to Win

In the first quarter of 2018, the Company announced an operating expenses improvement program (“Structure to Win”) designed to align our organization structure with strategic priorities.  The program is intended to drive operational effectiveness, cost reduction, and position the Company for growth with a focus on a lean customer focused go-to-market team, centralized supply chain, and streamlined administrative functions.  

Below is a summary of costs by type associated with the Structure to Win program:
 
 
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
 
Cumulative Costs
To Date
 
Total Expected Costs
 
 
2019
 
2018
 
2019
 
2018
 
 
 
 
(In millions)
Asset-related
 
$
0.2

 
$

 
$
1.8

 
$
2.2

 
$
4.0

 
$
4.0

Employee-related
 
1.1

 
3.4

 
3.7

 
12.3

 
24.9

 
25.9

Other costs
 
1.1

 
1.9

 
7.9

 
16.3

 
28.5

 
29.6

Total
 
$
2.4

 
$
5.3

 
$
13.4

 
$
30.8

 
$
57.4

 
$
59.5


 
For the three and nine months ended September 30, 2019 and 2018, asset-related costs primarily consisted of accelerated depreciation; employee-related costs primarily consisted of severance; and other costs primarily consisted of consulting services. Asset-related costs are included in General and administrative expense and the employee-related and other costs are included in Other operating expense, net of the Condensed Consolidated Statements of Operations.  

During the first quarter of 2019, the Company announced the closure of its St. Louis, Missouri office by June 28, 2019. This closure was completed during the second quarter of 2019.

(3) Other Restructuring and Plant Closing Costs
 
The Company continually analyzes its plant network to align operations with the current and future needs of its customers. Facility closure decisions are made when the Company identifies opportunities to lower production costs or eliminate excess manufacturing capacity while maintaining a competitive cost structure, service levels, and product quality. Expenses associated with facility closures are primarily aggregated in Other operating expense, net of the Condensed Consolidated Statements of Operations, with the exception of asset-related costs, which are recognized in Cost of sales.

Other restructuring and plant closing costs were $1.0 million and $4.3 million for the three and nine months ended September 30, 2018, respectively. There were no costs associated with other restructuring and plant closing costs during the three and nine months ended September 30, 2019.