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"). In the second quarter of fiscal 2016, we announced plans to realize efficiency benefits through a combination of reductions in selling, general and administrative expenses and enhancements to trade spend processes and tools, which plans were included as part of the SCAE Plan. Although the divestiture of the Private Brands business was completed in the third quarter of fiscal 2016, resulting in the sale of substantially all the Ralcorp operations, we will continue to implement the SCAE Plan, including work related to optimizing our supply chain network, the pursuit of cost reductions through our selling, general and administrative functions, enhancements to trade spend processes and tools, and productivity improvements.

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 fiscal 2017, 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 May 28, 2017, our Board of Directors has approved the incurrence of up to $880.5 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 $446.2 million of charges ($299.2 million of cash charges and $147.0 million of non-cash charges) for actions identified to date under the SCAE Plan related to our continuing operations. We recognized charges of $63.6 million, $281.8 million, and $47.7 million in relation to the SCAE Plan related to our continuing operations in fiscal 2017, 2016, and 2015, respectively. 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 to May 28, 2017):



	Grocery & Snacks		Refrigerated & Frozen		International		Foodservice		Corporate		Total
Pension costs	$	32.9	$	1.5	$	—	$	—	$	—	$	34.4
Accelerated depreciation	38.9		18.6		—		—		1.2		58.7
Other cost of goods sold	6.0		2.1		—		—		—		8.1
Total cost of goods sold	77.8		22.2		—		—		1.2		101.2
Severance and related costs, net	24.9		10.3		2.5		7.9		102.1		147.7
Fixed asset impairment (net of gains on disposal)	7.3		6.9		—		—		6.8		21.0
Accelerated depreciation	—		—		—		—		4.1		4.1
Contract/lease cancellation expenses	0.8		0.6		0.6		—		72.6		74.6
Consulting/professional fees	1.0		0.4		0.1		—		52.7		54.2
Other selling, general and administrative expenses	13.5		3.2		—		—		26.7		43.4
Total selling, general and administrative expenses	47.5		21.4		3.2		7.9		265.0		345.0
Consolidated total	$	125.3	$	43.6	$	3.2	$	7.9	$	266.2	$	446.2

During fiscal 2017, we recognized the following pre-tax expenses for the SCAE Plan related to our continuing operations:



	Grocery & Snacks		Refrigerated & Frozen			International		Foodservice		Corporate		Total
Pension costs	$	3.1	$	—		$	—	$	—	$	—	$	3.1
Accelerated depreciation	9.6		1.2			—		—		—		10.8
Other cost of goods sold	3.1		0.2			—		—		—		3.3
Total cost of goods sold	15.8		1.4			—		—		—		17.2
Severance and related costs, net	3.3		(0.2		)	0.3		1.8		5.1		10.3
Fixed asset impairment (net of gains on disposal)	0.1		3.3			—		—		6.0		9.4
Accelerated depreciation	—		—			—		—		1.3		1.3
Contract/lease cancellation expenses	—		0.1			0.6		—		9.6		10.3
Consulting/professional fees	0.3		—			—		—		0.4		0.7
Other selling, general and administrative expenses	5.8		1.6			—		—		7.0		14.4
Total selling, general and administrative expenses	9.5		4.8			0.9		1.8		29.4		46.4
Consolidated total	$	25.3	$	6.2		$	0.9	$	1.8	$	29.4	$	63.6

Included in the above table are $38.8 million of charges that have resulted or will result in cash outflows and $24.8 million in non-cash charges.

We recognized the following cumulative (plan inception to May 28, 2017) pre-tax expenses for the SCAE Plan related to our continuing operations in our Consolidated Statements of Operations:



	Grocery & Snacks		Refrigerated & Frozen		International		Foodservice		Corporate		Total
Pension costs	$	32.9	$	1.5	$	—	$	—	$	—	$	34.4
Accelerated depreciation	31.0		18.6		—		—		1.2		50.8
Other cost of goods sold	5.0		2.1		—		—		—		7.1
Total cost of goods sold	68.9		22.2		—		—		1.2		92.3
Severance and related costs, net	23.9		10.3		2.5		7.9		101.5		146.1
Fixed asset impairment (net of gains on disposal)	7.3		6.9		—		—		6.8		21.0
Accelerated depreciation	—		—		—		—		2.6		2.6
Contract/lease cancellation expenses	0.8		0.6		0.6		—		71.3		73.3
Consulting/professional fees	0.9		0.4		0.1		—		51.2		52.6
Other selling, general and administrative expenses	11.2		3.2		—		—		20.0		34.4
Total selling, general and administrative expenses	44.1		21.4		3.2		7.9		253.4		330.0
Consolidated total	$	113.0	$	43.6	$	3.2	$	7.9	$	254.6	$	422.3

Included in the above results are $285.5 million of charges that have resulted or will result in cash outflows and $136.8 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 and $2.1 million of pre-tax expenses (all resulting in cash charges) related to Lamb Weston.

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 canceled. 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.

Liabilities recorded for the SCAE Plan related to our continuing operations and changes therein for fiscal 2017 were as follows:



	Balance at May 29, 2016		Costs Incurred and Charged to Expense		Costs Paid or Otherwise Settled			Changes in Estimates			Balance at May 28, 2017
Pension costs	$	40.7	$	1.1	$	(12.0	)	$	2.0		$	31.8
Severance and related costs	47.2		12.2		(43.7		)	(1.9		)	13.8
Consulting/professional fees	4.7		0.9		(4.8		)	(0.2		)	0.6
Contract/lease cancellation	6.3		14.5		(7.5		)	(1.7		)	11.6
Other costs	0.5		14.5		(13.1		)	—			1.9
Total	$	99.4	$	43.2	$	(81.1	)	$	(1.8	)	$	59.7