Restructuring Charges

2013 Initiatives

In the second and third quarters of 2013, the company recorded restructuring charges of $7 ($5 after tax or $.02 per share) associated with commercial arrangements with third-party providers to expand the company's access to manufacturing and distribution capabilities in Mexico. The third-party providers will produce and distribute the company's beverages, soups, broths and sauces throughout the Mexican market. As a result of these agreements, the company will close its plant in Villagrán, Mexico, in 2014 and eliminate approximately 260 positions. The charge consisted of $3 related to pension benefits (See Note 10), $1 related to employee severance and benefit costs, and $3 related to asset impairment. The company expects to incur an additional $1 of accelerated depreciation and $1 of other exit costs related to this initiative. Of the aggregate $9 of pre-tax costs, the company expects approximately $4 will be cash expenditures. These charges are associated with the International Simple Meals and Beverages segment. Segment operating results do not include restructuring charges as segment performance is evaluated excluding such charges.

In the first quarter of 2013, the company announced several initiatives to improve its U.S. supply chain cost structure and increase asset utilization across its U.S. thermal plant network. The company expects to eliminate approximately 727 positions in connection with the initiatives, which include the following:

•

The company will close its thermal plant in Sacramento, California, which produces soups, sauces and beverages. The closure will result in the elimination of approximately 700 full-time positions and will be completed in phases, with plans to cease operations in July 2013. The company plans to shift the majority of Sacramento's soup, sauce and beverage production to its thermal plants in Maxton, North Carolina; Napoleon, Ohio; and Paris, Texas.


•	The company will also close its spice plant in South Plainfield, New Jersey, which will result in the elimination of 27 positions. The company will consolidate spice production at its Milwaukee, Wisconsin, plant in 2013.

In the nine-month period ended April 28, 2013, the company recorded a restructuring charge of $24 related to these initiatives. In addition, approximately $81 of costs related to these initiatives were recorded in Cost of products sold, representing accelerated depreciation and other exit costs. The aggregate after-tax impact of restructuring charges and related costs was $66, or $.21 per share. A summary of the pre-tax costs and remaining costs associated with the U.S. supply chain initiatives is as follows:



	Total Program		Recognized as of April 28, 2013			Remaining Costs to be Recognized
Severance pay and benefits	$	22	$	(22	)	$	—
Accelerated depreciation	86		(80		)	6
Other exit costs	12		(3		)	9
Total	$	120	$	(105	)	$	15

In the third quarter, the company increased the estimate of the total anticipated pre-tax costs to approximately $120 from $115, primarily due to increases in expected asset charges related to property, plant and equipment, partially offset by lower severance pay and benefits, and other exit costs. Of the aggregate $120 of pre-tax costs, the company expects approximately $32 will be cash expenditures. In addition, the company expects to invest approximately $27 in capital expenditures, primarily to relocate and refurbish a beverage filling and packaging line.

A summary of the restructuring activity and related reserves associated with these U.S. supply chain initiatives at April 28, 2013 is as follows:



			Nine Months Ended
			April 28, 2013
	Accrued Balance at				Cash			Accrued Balance at
	July 29, 2012		Charges		Payments			April 28, 2013
Severance pay and benefits	$	—	$	22	$	(5	)	$	17
Other exit costs	—		—		—			—
	$	—	22		$	(5	)	$	17
Accelerated depreciation			80
Other non-cash exit costs			3
Total charges			$	105

A summary of restructuring charges related to these U.S. supply chain initiatives incurred to date associated with segments is as follows:



	U.S. Simple Meals		U.S. Beverages		Total
Severance pay and benefits	$	17	$	5	$	22
Accelerated depreciation	59		21		80
Other exit costs	2		1		3
	$	78	$	27	$	105

The company expects to incur additional pre-tax costs of approximately $15 by segment as follows: U.S. Simple Meals - $12; and U.S. Beverages - $3. Segment operating results do not include restructuring charges as segment performance is evaluated excluding such charges.

2011 Initiatives

In the fourth quarter of 2011, the company announced a series of initiatives to improve supply chain efficiency and reduce overhead costs across the organization to help fund plans to drive the growth of the business. The company also announced its intent to exit the Russian market. Details of the initiatives include:

•

In Australia, the company is investing in a new system to automate packing operations at its biscuit plant in Virginia. This investment continued through the third quarter of 2013 and will result in the elimination of approximately 190 positions. The initiative is now expected to be substantially completed by December 2013. Further, the company improved asset utilization in the U.S. by shifting production of ready-to-serve soups from Paris, Texas, to other facilities in 2012. In addition, the manufacturing facility in Marshall, Michigan, was closed in 2011, and manufacturing of Campbell’s Soup at Hand microwavable products was consolidated at the Maxton, North Carolina, plant in 2012.

•

The company streamlined its salaried workforce by approximately 510 positions around the world, including approximately 130 positions at its world headquarters in Camden, New Jersey. These actions were substantially completed in 2011. As part of this initiative, the company outsourced a larger portion of its U.S. retail merchandising activities to its current retail sales agent, Acosta Sales and Marketing, and eliminated approximately 190 positions.


•	In connection with exiting the Russian market, the company eliminated approximately 50 positions. The exit process commenced in 2011 and was substantially completed in 2012.

In 2012, the company recorded a restructuring charge of $10 ($6 after tax or $.02 per share) related to these initiatives. Of the amount recorded in 2012, $9 ($6 after tax or $.02 per share) was recorded through the end of the third quarter. In the fourth quarter of 2011, the company recorded a restructuring charge of $63 ($41 after tax or $.12 per share). A summary of the pre-tax charges and remaining costs associated with the initiatives is as follows:



	Total Program		Recognized as of April 28, 2013			Remaining Costs to be Recognized
Severance pay and benefits	$	41	$	(41	)	$	—
Asset impairment/accelerated depreciation	23		(23		)	—
Other exit costs	10		(9		)	1
Total	$	74	$	(73	)	$	1

Of the aggregate $74 of pre-tax costs, approximately $50 represents cash expenditures, the majority of which was spent in 2012. In addition, the company expects to invest approximately $40 in capital expenditures in connection with the actions, of which approximately $31 has been invested as of April 28, 2013.

A summary of the restructuring activity and related reserves associated with these initiatives at April 28, 2013 is as follows:



			Nine Months Ended
			April 28, 2013
	Accrued Balance at				Cash			Foreign Currency Translation		Accrued Balance at
	July 29, 2012		Charges		Payments			Adjustment		April 28, 2013
Severance pay and benefits	$	14	$	—	$	(9	)	$	—	$	5
Other exit costs	2		—		—			—		2
	$	16	$	—	$	(9	)	$	—	$	7

A summary of restructuring charges incurred to date associated with each segment is as follows:



	U.S. Simple Meals		Global Baking and Snacking		International Simple Meals and Beverages		U.S. Beverages		Bolthouse and Foodservice		Corporate		Total
Severance pay and benefits	$	10	$	14	$	11	$	3	$	1	$	2	$	41
Asset impairment/accelerated depreciation	20		—		3		—		—		—		23
Other exit costs	2		—		3		—		—		4		9
	$	32	$	14	$	17	$	3	$	1	$	6	$	73

The company expects to incur additional pre-tax costs of approximately $1 in the U.S. Simple Meals segment. Segment operating results do not include restructuring charges as segment performance is evaluated excluding such charges.