RESTRUCTURING ACTIVITIES

Supply Chain and Administrative Efficiency Plan

We previously announced a plan for the integration and restructuring of the operations of Ralcorp Holdings, Inc. ("Ralcorp"), optimization of the entire Company's supply chain network, manufacturing assets, and dry distribution and mixing centers, and improvement of selling, general and administrative effectiveness and efficiencies, which we refer to as the Supply Chain and Administrative Efficiency Plan (the "SCAE Plan"). Although the divestiture of the Private Brands business was completed in the third quarter of fiscal 2016, we will continue to implement portions of the SCAE Plan, including work related to optimizing our supply chain network and pursue cost reductions through our selling, general and administrative functions and productivity improvements. The SCAE Plan also includes plans announced in the second quarter of fiscal 2016 to realize efficiency benefits through a combination of reductions in selling, general and administrative expenses and enhancements to trade spend processes and tools.

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 third quarter of fiscal 2016, 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 February 28, 2016, our Board of Directors has approved the incurrence of up to $739.0 million of expenses in connection with the SCAE Plan, including expenses allocated for the Private Brands operations. We have incurred or expect to incur approximately $525.3 million of charges ($395.5 million of cash charges and $129.8 million of non-cash charges) for actions identified to date under the SCAE Plan related to our continuing operations. In the third quarter and first three quarters of fiscal 2016, we recognized charges of $109.1 million and $259.5 million, respectively, in relation to the SCAE Plan related to our continuing operations. In the third quarter and first three quarters of fiscal 2015, we recognized charges of $9.9 million and $35.9 million, respectively, in relation to 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 three quarters of fiscal 2016):



	Consumer Foods		Commercial Foods		Corporate		Total
Multi-employer pension costs	$	31.3	$	—	$	—	$	31.3
Accelerated depreciation	55.7		—		1.2		56.9
Other cost of goods sold	8.9		—		—		8.9
Total cost of goods sold	95.9		—		1.2		97.1
Severance and related costs, net	34.5		8.1		177.2		219.8
Fixed asset impairment/Net gain on disposal	7.1		—		—		7.1
Accelerated depreciation	—		—		1.5		1.5
Contract/Lease cancellation expenses	1.2		—		60.2		61.4
Consulting/Professional fees	1.1		—		64.2		65.3
Other selling, general and administrative expenses	14.6		—		58.5		73.1
Total selling, general and administrative expenses	58.5		8.1		361.6		428.2
Consolidated total	$	154.4	$	8.1	$	362.8	$	525.3

During the third quarter of fiscal 2016, we recognized the following pre-tax expenses for the SCAE Plan related to our continuing operations:



	Consumer Foods		Commercial Foods		Corporate		Total
Multi-employer pension costs	$	29.8	$	—	$	—	$	29.8
Accelerated depreciation	4.9		—		—		4.9
Other cost of goods sold	1.2		—		—		1.2
Total cost of goods sold	35.9		—		—		35.9
Severance and related costs, net	5.6		—		33.6		39.2
Fixed asset impairment	6.1		—		—		6.1
Accelerated depreciation	—		—		0.2		0.2
Contract/Lease cancellation expenses	—		—		7.2		7.2
Consulting/Professional fees	0.1		—		17.7		17.8
Other selling, general and administrative expenses	0.5		—		2.2		2.7
Total selling, general and administrative expenses	12.3		—		60.9		73.2
Consolidated total	$	48.2	$	—	$	60.9	$	109.1

Included in the above table are $89.5 million of charges that have resulted or will result in cash outflows and $19.6 million in non-cash charges. Not included in the above amounts are $1.4 million of pre-tax expenses related to the Private Brands operations we divested in the third quarter of fiscal 2016.

During the second quarter of fiscal 2016, we entered into a series of related transactions in which we exchanged a warehouse we owned in Indiana for two buildings and parcels of land that we leased as part of our Omaha corporate offices. Concurrent with the asset exchange, leases on the two Omaha corporate buildings were cancelled. We have recognized aggregate charges of $55.6 million for the early termination of these leases. We also entered into a lease for the warehouse in Indiana and we recorded a financing lease obligation of $74.2 million.

During the first three quarters of fiscal 2016, we recognized the following pre-tax expenses for the SCAE Plan related to our continuing operations:



	Consumer Foods				Commercial Foods		Corporate		Total
Multi-employer pension costs	$	29.8			$	—	$	—	$	29.8
Accelerated depreciation	13.8				—		0.2		14.0
Other cost of goods sold	1.6				—		—		1.6
Total cost of goods sold	45.2			45.2	—		0.2		45.4
Severance and related costs, net	10.7				0.1		89.0		99.8
Fixed asset impairment/Net gain on disposal	6.0				—		—		6.0
Accelerated depreciation	—				—		0.3		0.3
Contract/Lease cancellation expenses	(0.7		)		—		59.0		58.3
Consulting/Professional fees	0.1				—		42.9		43.0
Other selling, general and administrative expenses	3.0				—		3.7		6.7
Total selling, general and administrative expenses	19.1				0.1		194.9		214.1
Consolidated total	$	64.3			$	0.1	$	195.1	$	259.5

Included in the above table are $181.9 million of charges that have resulted or will result in cash outflows and $77.6 million in non-cash charges. Not included in the above table are $11.8 million of pre-tax expenses related to the Private Brands operations we sold in the third quarter of fiscal 2016.

We recognized the following cumulative (plan inception to February 28, 2016) pre-tax expenses related to the SCAE Plan related to our continuing operations in our Condensed Consolidated Statements of Operations:



	Consumer Foods		Commercial Foods		Corporate		Total
Multi-employer pension costs	$	31.3	$	—	$	—	$	31.3
Accelerated depreciation	35.3		—		1.2		36.5
Other cost of goods sold	3.7		—		—		3.7
Total cost of goods sold	70.3		—		1.2		71.5
Severance and related costs (recoveries)	32.3		8.1		96.8		137.2
Contract/Lease cancellation expenses	0.7		—		59.3		60.0
Consulting/Professional fees	1.1		—		45.7		46.8
Fixed asset impairment / Net gain on disposal	7.1		—		—		7.1
Accelerated depreciation	—		—		1.1		1.1
Other selling, general and administrative expenses	6.2		—		8.6		14.8
Total selling, general and administrative expenses	47.4		8.1		211.5		267.0
Consolidated total	$	117.7	$	8.1	$	212.7	$	338.5

Included in the above table are $234.7 million of charges that have resulted or will result in cash outflows and $103.8 million in non-cash charges. Not included in the above table 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.

Liabilities recorded for the SCAE Plan related to our continuing operations and changes therein for the first three quarters of fiscal 2016 were as follows:



	Balance at May 31, 2015		Costs Incurred and Charged to Expense		Costs Paid or Otherwise Settled			Changes in Estimates			Balance at February 28, 2016
Multi-employer pension costs	$	11.4	$	30.0	$	(0.7	)	$	—		$	40.7
Severance	16.4		78.6		(28.8		)	(1.6		)	64.6
Consulting	0.2		43.1		(19.4		)	—			23.9
Contract cancellation	3.1		3.3		(1.7		)	(0.5		)	4.2
Other costs	1.2		6.0		(5.9		)	—			1.3
Total	$	32.3	$	161.0	$	(56.5	)	$	(2.1	)	$	134.7