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RESTRUCTURING ACTIVITIES
3 Months Ended
Aug. 26, 2018
Restructuring and Related Activities [Abstract]  
RESTRUCTURING ACTIVITIES
RESTRUCTURING ACTIVITIES
Supply Chain and Administrative Efficiency Plan
In May 2013, we announced the Supply Chain and Administrative Efficiency Plan (the "SCAE Plan"), our plan to integrate and restructure the operations of our Private Brands business, improve SG&A effectiveness and efficiencies, and optimize our supply chain network, manufacturing assets, dry distribution centers, and mixing centers. In the second quarter of fiscal 2016, we announced plans to realize efficiency benefits by reducing SG&A expenses and enhancing trade spend processes and tools, which plans were included as part of the SCAE Plan. Although we divested the Private Brands business, we have continued to implement the SCAE Plan, including by working to optimize our supply chain network, pursue cost reductions through our SG&A functions, enhance trade spend processes and tools, and improve productivity.
Although we remain unable to make good faith estimates relating to the entire SCAE Plan, we are reporting on actions initiated through the end of the first quarter of fiscal 2019, including the estimated amounts or range of amounts for each major type of costs expected to be incurred, and the charges that have resulted or will result in cash outflows. As of August 26, 2018, our Board of Directors has approved the incurrence of up to $900.9 million of expenses in connection with the SCAE Plan, including expenses allocated for the Private Brands and Lamb Weston operations. We have incurred or expect to incur approximately $469.8 million of charges ($322.0 million of cash charges and $147.8 million of non-cash charges) for actions identified to date under the SCAE Plan related to our continuing operations. In the first quarter of fiscal 2019 and 2018, we recognized charges of $0.6 million and $11.4 million, respectively, in association with the SCAE Plan related to our continuing operations. We expect to incur costs related to the SCAE Plan over a multi-year period.
We anticipate that we will recognize the following pre-tax expenses in association with the SCAE Plan related to our continuing operations (amounts include charges recognized from plan inception through the first quarter of fiscal 2019):
 
Grocery & Snacks
 
Refrigerated & Frozen
 
International
 
Foodservice
 
Corporate
 
Total
Multi-employer pension costs
$
32.5

 
$

 
$

 
$

 
$

 
$
32.5

Accelerated depreciation
37.2

 
18.6

 

 

 
1.2

 
57.0

Other cost of goods sold
11.6

 
2.1

 

 

 

 
13.7

    Total cost of goods sold
81.3

 
20.7

 

 

 
1.2

 
103.2

Severance and related costs, net
26.3

 
10.3

 
3.9

 
7.9

 
102.1

 
150.5

Fixed asset impairment (net of gains on disposal)
5.2

 
6.9

 

 

 
11.2

 
23.3

Accelerated depreciation

 

 

 

 
4.1

 
4.1

Contract/lease termination expenses
1.0

 
0.6

 
0.9

 

 
85.0

 
87.5

Consulting/professional fees
1.0

 
0.4

 
0.1

 

 
53.8

 
55.3

Other selling, general and administrative expenses
16.3

 
3.5

 

 

 
23.8

 
43.6

    Total selling, general and administrative expenses
49.8

 
21.7

 
4.9

 
7.9

 
280.0

 
364.3

       Total
$
131.1

 
$
42.4

 
$
4.9

 
$
7.9

 
$
281.2

 
$
467.5

Pension and postretirement non-service income

 
 
 
 
 
 
 
 
 
 
2.3

       Consolidated total
 
 
 
 
 
 
 
 
 
 
$
469.8

During the first quarter of fiscal 2019, we recognized the following pre-tax expenses for the SCAE Plan related to our continuing operations:
 
Grocery & Snacks
 
International
 
Corporate
 
Total
Multi-employer pension costs
$
0.2

 
$

 
$

 
$
0.2

Accelerated depreciation
1.4

 

 

 
1.4

Other cost of goods sold
0.7

 

 

 
0.7

    Total cost of goods sold
2.3

 

 

 
2.3

Severance and related costs, net
(1.3
)
 
0.2

 
(0.6
)
 
(1.7
)
Fixed asset impairment (net of gains on disposal)
(0.9
)
 

 

 
(0.9
)
Contract/lease termination expenses

 

 
0.5

 
0.5

Consulting/professional fees

 

 
0.1

 
0.1

Other selling, general and administrative expenses

 

 
0.9

 
0.9

    Total selling, general and administrative expenses
(2.2
)
 
0.2

 
0.9

 
(1.1
)
       Total
$
0.1


$
0.2


$
0.9


$
1.2

Pension and postretirement non-service income
 
 
 
 
 
 
(0.6
)
       Consolidated total
 
 
 
 
 
 
$
0.6

Included in the above table are $0.1 million of charges that have resulted or will result in cash outflows and $0.5 million in non-cash charges.
We recognized the following cumulative (plan inception to August 26, 2018) pre-tax expenses related to the SCAE Plan related to our continuing operations in our Condensed Consolidated Statements of Earnings:
 
Grocery & Snacks
 
Refrigerated & Frozen
 
International
 
Foodservice
 
Corporate
 
Total
Multi-employer pension costs
$
32.5

 
$

 
$

 
$

 
$

 
$
32.5

Accelerated depreciation
34.4

 
18.6

 

 

 
1.2

 
54.2

Other cost of goods sold
11.0

 
2.1

 

 

 

 
13.1

    Total cost of goods sold
77.9

 
20.7

 

 

 
1.2

 
99.8

Severance and related costs, net
25.2

 
10.3

 
3.9

 
7.9

 
101.3

 
148.6

Fixed asset impairment (net of gains on disposal)
5.2

 
6.9

 

 

 
11.2

 
23.3

Accelerated depreciation

 

 

 

 
4.1

 
4.1

Contract/lease termination expenses
1.0

 
0.6

 
0.9

 

 
84.8

 
87.3

Consulting/professional fees
1.0

 
0.4

 
0.1

 

 
52.3

 
53.8

Other selling, general and administrative expenses
15.8

 
3.3

 

 

 
22.6

 
41.7

    Total selling, general and administrative expenses
48.2

 
21.5

 
4.9

 
7.9

 
276.3

 
358.8

       Total
$
126.1

 
$
42.2

 
$
4.9

 
$
7.9

 
$
277.5

 
$
458.6

Pension and postretirement non-service income
 
 
 
 
 
 
 
 
 
 
2.3

       Consolidated total
 
 
 
 
 
 
 
 
 
 
$
460.9


Included in the above results are $316.2 million of charges that have resulted or will result in cash outflows and $144.7 million in non-cash charges. Not included in the above results are $130.2 million of pre-tax expenses ($84.5 million of cash charges and $45.7 million of non-cash charges) related to the Private Brands operations, which we sold in the third quarter of fiscal 2016, and $2.1 million of pre-tax expenses (all resulting in cash charges) related to Lamb Weston.
Liabilities recorded for the SCAE Plan related to our continuing operations and changes therein for the first quarter of fiscal 2019 were as follows:
 
Balance at May 27, 2018
 
Costs Incurred
and Charged
to Expense
 
Costs Paid
or Otherwise Settled
 
Changes in Estimates
 
Balance at August 26, 2018
Multi-employer pension costs
$
32.3

 
$

 
$

 
$
0.2

 
$
32.5

Severance and related costs
6.3

 

 
(3.6
)
 
(1.7
)
 
1.0

Consulting/professional fees
0.1

 
0.1

 
(0.2
)
 

 

Contract/lease termination
4.9

 

 
(1.6
)
 
0.5

 
3.8

Other costs
0.2

 
1.6

 
(1.1
)
 

 
0.7

Total
$
43.8

 
$
1.7

 
$
(6.5
)
 
$
(1.0
)
 
$
38.0