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Restructuring | 6 Months Ended
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Nov. 30, 2020
Restructuring And Related Activities [Abstract] |
Restructuring | NOTE 3 — RESTRUCTURING We record restructuring charges associated with management-approved restructuring plans to either reorganize one or more of our business segments, or to remove duplicative headcount and infrastructure associated with our businesses. Restructuring charges can include severance costs to eliminate a specified number of employees, infrastructure charges to vacate facilities and consolidate operations, contract cancellation costs and other costs. Restructuring charges are recorded based upon planned employee termination dates and site closure and consolidation plans. The timing of associated cash payments is dependent upon the type of restructuring charge and can extend over a multi-year period. We record the short-term portion of our restructuring liability in Other Accrued Liabilities and the long-term portion, if any, in Other Long-Term Liabilities in our Consolidated Balance Sheets. MAP to Growth Between May and August 2018, we approved and implemented the initial phases of a multi-year restructuring plan, which was originally referred to as the 2020 Margin Acceleration Plan (“2020 MAP to Growth”). The initial phases of our 2020 MAP to Growth affected all of our reportable segments, as well as our corporate/nonoperating segment, and focused on margin improvement by simplifying business processes; reducing inventory categories and rationalizing SKUs; eliminating underperforming businesses; reducing headcount and working capital; and improving operating efficiency. The activities included in the initial phases of the restructuring activities have been substantially completed. The disruption caused by the outbreak of Covid-19 (“Covid”) delayed the finalization of our 2020 MAP to Growth past the original target completion date of December 31, 2020. In recognition of the fact our restructuring plan extends past calendar year 2020, we will now refer to it simply as “MAP to Growth.” We now expect to utilize the remainder of fiscal year 2021 to achieve the goals originally set forth in our MAP to Growth. Certain of these projects may not be finalized until fiscal year 2022 and we would expect to continue to recognize restructuring expense throughout fiscal year 2022, as projects related to our MAP to Growth are executed and completed. As such, the final implementation and total expected costs are subject to change. Our execution of the MAP to Growth will continue to drive the de-layering and simplification of management and businesses associated with group realignment. We have implemented four center-led functional areas including manufacturing and operations; procurement and supply chain; information technology; and accounting and finance. Our MAP to Growth optimizes our manufacturing facilities and will ultimately provide more efficient plant and distribution facilities. Through the balance sheet date, in association with our MAP to Growth, we have completed, or are in the process of completing, the planned closure of 25 plants and 27 warehouses. We also expect to incur additional severance and benefit costs as part of our planned closure of these facilities. Throughout the remainder of our MAP to Growth, we will continue to assess and find areas of improvement and cost savings. As such, the final implementation and total expected costs are subject to change. In addition to the announced plan, we have continued to broaden the scope of our MAP to Growth, specifically in consolidation of the general and administrative areas, potential outsourcing, as well as additional future plant closures and consolidations; the estimated costs of which have not yet been finalized. The current total expected costs associated with this plan are outlined in the table below and decreased by approximately $3.4 million compared to our previous estimate, primarily attributable to decreases in expected severance and benefit charges of $4.5 million, partially offset by increases in expected facility closure and other related costs of $0.6 million and $0.5 million of other restructuring costs. Following is a summary of the charges recorded in connection with restructuring by reportable segment:
|  | Three Months Ended |  |  | Six Months Ended |  |  | Cumulative Costs |  |  | Total Expected |
(In thousands) |  | November 30, 2020 |  |  | November 30, 2020 |  |  | to Date |  |  | Costs |
Construction Products Group ("CPG") Segment: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Severance and benefit costs (a) |  | $ | 1,394 |  |  | $ | 1,574 |  |  | $ | 19,668 |  |  | $ | 20,568 |
Facility closure and other related costs |  |  | 440 |  |  |  | 808 |  |  |  | 5,285 |  |  |  | 6,503 |
Other restructuring costs |  |  | 62 |  |  |  | 99 |  |  |  | 2,039 |  |  |  | 2,634 |
Total Charges |  | $ | 1,896 |  |  | $ | 2,481 |  |  | $ | 26,992 |  |  | $ | 29,705 |
Performance Coatings Group ("PCG") Segment: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Severance and benefit costs (b) |  | $ | 802 |  |  | $ | 1,841 |  |  | $ | 15,226 |  |  | $ | 16,714 |
Facility closure and other related costs |  |  | 556 |  |  |  | 844 |  |  |  | 6,191 |  |  |  | 7,905 |
Other restructuring costs |  |  | 184 |  |  |  | 213 |  |  |  | 814 |  |  |  | 824 |
Total Charges |  | $ | 1,542 |  |  | $ | 2,898 |  |  | $ | 22,231 |  |  | $ | 25,443 |
Consumer Segment: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Severance and benefit costs (c) |  | $ | (4 | ) |  | $ | 786 |  |  | $ | 11,253 |  |  | $ | 11,253 |
Facility closure and other related costs |  |  | 785 |  |  |  | 1,382 |  |  |  | 10,319 |  |  |  | 12,719 |
Other restructuring costs |  |  | 204 |  |  |  | 302 |  |  |  | 4,421 |  |  |  | 4,481 |
Total Charges |  | $ | 985 |  |  | $ | 2,470 |  |  | $ | 25,993 |  |  | $ | 28,453 |
Specialty Products Group ("SPG") Segment: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Severance and benefit costs (d) |  | $ | (57 | ) |  | $ | 411 |  |  | $ | 7,341 |  |  | $ | 8,012 |
Facility closure and other related costs |  |  | 507 |  |  |  | 775 |  |  |  | 4,941 |  |  |  | 6,204 |
Other restructuring costs |  |  | 45 |  |  |  | 116 |  |  |  | 1,238 |  |  |  | 1,238 |
Total Charges |  | $ | 495 |  |  | $ | 1,302 |  |  | $ | 13,520 |  |  | $ | 15,454 |
Corporate/Other Segment: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Severance and benefit costs |  | $ | - |  |  | $ | - |  |  | $ | 13,347 |  |  | $ | 13,347 |
Total Charges |  | $ | - |  |  | $ | - |  |  | $ | 13,347 |  |  | $ | 13,347 |
Consolidated: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Severance and benefit costs |  | $ | 2,135 |  |  | $ | 4,612 |  |  | $ | 66,835 |  |  | $ | 69,894 |
Facility closure and other related costs |  |  | 2,288 |  |  |  | 3,809 |  |  |  | 26,736 |  |  |  | 33,331 |
Other restructuring costs |  |  | 495 |  |  |  | 730 |  |  |  | 8,512 |  |  |  | 9,177 |
Total Charges |  | $ | 4,918 |  |  | $ | 9,151 |  |  | $ | 102,083 |  |  | $ | 112,402 |
(a) | Severance and benefit costs are associated with the elimination of 12 positions and 21 positions during the three and six months ended November 30, 2020, respectively.
(b) | Severance and benefit costs are associated with the elimination of 11 position and 50 positions during the three and six months ended November 30, 2020, respectively.
(c) | Severance and benefit recoveries are associated with the adjustment of estimated severance accruals for the three months ended November 30, 2020. Severance and benefit costs for the six months ended November 30, 2020 are associated with the elimination of three positions partially offset by the adjustment in severance accruals during the period.
(d) | Severance and benefit recoveries for the three months ended November 30, 2020 are associated with the reversal of severance accruals made for five positions which will no longer be eliminated, partially offset by the charges incurred related to the elimination of one position. Severance and benefit charges for the six months ended November 30, 2020 are associated with the elimination of 24 positions.
|  | Three Months Ended |  |  | Six Months Ended |
(In thousands) |  | November 30, 2019 |  |  | November 30, 2019 |
CPG Segment: |  |  |  |  |  |  |  |
Severance and benefit costs (e) |  | $ | 1,447 |  |  | $ | 1,607 |
Facility closure and other related costs |  |  | 110 |  |  |  | 798 |
Other restructuring costs |  |  | 39 |  |  |  | 39 |
Total Charges |  | $ | 1,596 |  |  | $ | 2,444 |
PCG Segment: |  |  |  |  |  |  |  |
Severance and benefit costs (f) |  | $ | 431 |  |  | $ | 2,931 |
Facility closure and other related costs |  |  | 636 |  |  |  | 745 |
Other restructuring costs |  |  | 172 |  |  |  | 172 |
Total Charges |  | $ | 1,239 |  |  | $ | 3,848 |
Consumer Segment: |  |  |  |  |  |  |  |
Severance and benefit costs (g) |  | $ | 780 |  |  | $ | 1,547 |
Facility closure and other related costs |  |  | 344 |  |  |  | 860 |
Other restructuring costs |  |  | - |  |  |  | - |
Total Charges |  | $ | 1,124 |  |  | $ | 2,407 |
Specialty Segment: |  |  |  |  |  |  |  |
Severance and benefit costs (h) |  | $ | 48 |  |  | $ | 414 |
Facility closure and other related costs |  |  | 731 |  |  |  | 2,190 |
Other restructuring costs |  |  | 40 |  |  |  | 104 |
Total Charges |  | $ | 819 |  |  | $ | 2,708 |
Corporate/Other Segment: |  |  |  |  |  |  |  |
Severance and benefit costs |  | $ | 23 |  |  | $ | 16 |
Total Charges |  | $ | 23 |  |  | $ | 16 |
Consolidated: |  |  |  |  |  |  |  |
Severance and benefit costs |  | $ | 2,729 |  |  | $ | 6,515 |
Facility closure and other related costs |  |  | 1,821 |  |  |  | 4,593 |
Other restructuring costs |  |  | 251 |  |  |  | 315 |
Total Charges |  | $ | 4,801 |  |  | $ | 11,423 |
(e) | Severance and benefit costs are associated with the elimination of 25 positions and 46 positions during the three and six months ended November 30, 2019, respectively.
(f) | Severance and benefit costs are associated with the elimination of 18 position and 69 positions during the three and six months ended November 30, 2019, respectively.
(g) | Severance and benefit costs are associated with the elimination of 9 positions and 11 positions during the three and six months ended November 30, 2019, respectively.
(h) | Severance and benefit costs are associated with the elimination of 49 positions and 59 positions during the three and six months ended November 30, 2019, respectively.
A summary of the activity in the restructuring reserves related to our MAP to Growth is as follows:
(in thousands) |  | Severance and Benefits Costs |  |  | Facility Closure and Other Related Costs |  |  | Other Restructuring Costs |  |  | Total |
Balance at August 31, 2020 |  | $ | 4,893 |  |  | $ | 6,138 |  |  | $ | - |  |  | $ | 11,031 |
Additions charged to expense |  |  | 2,135 |  |  |  | 2,288 |  |  |  | 495 |  |  |  | 4,918 |
Cash payments charged against reserve |  |  | (2,373 | ) |  |  | (2,530 | ) |  |  | (335 | ) |  |  | (5,238 | )
Non-cash charges included above (i) |  |  | - |  |  |  | - |  |  |  | (160 | ) |  |  | (160 | )
Balance at November 30, 2020 |  | $ | 4,655 |  |  | $ | 5,896 |  |  | $ | - |  |  | $ | 10,551 |
(In thousands) |  | Severance and Benefits Costs |  |  | Facility Closure and Other Related Costs |  |  | Other Restructuring Costs |  |  | Total |
Balance at June 1, 2020 |  | $ | 7,357 |  |  | $ | 5,880 |  |  | $ | - |  |  |  | 13,237 |
Additions charged to expense |  |  | 4,612 |  |  |  | 3,809 |  |  |  | 730 |  |  |  | 9,151 |
Cash payments charged against reserve |  |  | (7,314 | ) |  |  | (3,793 | ) |  |  | (335 | ) |  |  | (11,442 | )
Non-cash charges included above (i) |  |  | - |  |  |  | - |  |  |  | (395 | ) |  |  | (395 | )
Balance at November 30, 2020 |  | $ | 4,655 |  |  | $ | 5,896 |  |  | $ | - |  |  | $ | 10,551 |
(In thousands) |  | Severance and Benefits Costs |  |  | Facility Closure and Other Related Costs |  |  | Other Restructuring Costs |  |  | Total |
Balance at August 31, 2019 |  | $ | 2,946 |  |  | $ | 9,430 |  |  | $ | - |  |  | $ | 12,376 |
Additions charged to expense |  |  | 2,729 |  |  |  | 1,821 |  |  |  | 251 |  |  |  | 4,801 |
Cash payments charged against reserve |  |  | (2,109 | ) |  |  | (5,016 | ) |  |  | - |  |  |  | (7,125 | )
Non-cash charges included above (i) |  |  | - |  |  |  | (155 | ) |  |  | (251 | ) |  |  | (406 | )
Balance at November 30, 2019 |  | $ | 3,566 |  |  | $ | 6,080 |  |  | $ | - |  |  | $ | 9,646 |
(In thousands) |  | Severance and Benefits Costs |  |  | Facility Closure and Other Related Costs |  |  | Other Restructuring Costs |  |  | Total |
Balance at June 1, 2019 |  | $ | 4,837 |  |  | $ | 7,857 |  |  | $ | - |  |  | $ | 12,694 |
Additions charged to expense |  |  | 6,515 |  |  |  | 4,593 |  |  |  | 315 |  |  |  | 11,423 |
Cash payments charged against reserve |  |  | (7,786 | ) |  |  | (5,350 | ) |  |  | - |  |  |  | (13,136 | )
Non-cash charges included above (i) |  |  | - |  |  |  | (1,020 | ) |  |  | (315 | ) |  |  | (1,335 | )
Balance at November 30, 2019 |  | $ | 3,566 |  |  | $ | 6,080 |  |  | $ | - |  |  | $ | 9,646 |
(i) | Non-cash charges primarily include accelerated vesting of equity awards and asset-write offs.
In connection with our MAP to Growth, during the three months ended November 30, 2019, we incurred approximately $6.3 million and $1.0 million of inventory-related charges at our Consumer and PCG segments, respectively. During the six months ended November 30, 2019, we incurred approximately $7.2 million, $3.1 million, and $0.3 million of inventory-related charges at our Consumer, PCG and CPG segments, respectively. The charges incurred during the three and six months ended November 30, 2020 were immaterial. All of the aforementioned inventory-related charges are recorded in cost of sales in our Consolidated Statements of Income. These inventory charges were the result of the exit of a business or product line and SKU rationalization initiatives in connection with our overall plan of restructuring.

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- Definition The entire disclosure for restructuring and related activities. Description of restructuring activities such as exit and disposal activities, include facts and circumstances leading to the plan, the expected plan completion date, the major types of costs associated with the plan activities, total expected costs, the accrual balance at the end of the period, and the periods over which the remaining accrual will be settled. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 420 -URI http://asc.fasb.org/topic&trid=2175745 + Details
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