Restructuring Charges

2014 Initiatives

In the second quarter of 2014, the company and its joint venture partner Swire Pacific Limited agreed to restructure manufacturing and streamline operations for its soup and broth business in China. As a result, certain assets were impaired, and approximately 110 positions will be eliminated. The company recorded a restructuring charge of $14 ($6 after tax or $.02 per share in earnings from continuing operations attributable to Campbell Soup Company) related to this initiative. The company does not expect additional charges.

A summary of the restructuring activity and related reserve associated with this initiative at April 27, 2014 is as follows:



			Nine Months Ended
			April 27, 2014
	Accrued Balance at July 28, 2013		Charges		Cash Payments		Accrued Balance at April 27, 2014
Severance pay and benefits	$	—	$	2	$	—	$	2
Other exit costs ⁽¹⁾			1
Asset impairment			11
Total charges			$	14

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⁽¹⁾	Includes non-cash costs that are not reflected in the restructuring reserve in the Consolidated Balance Sheet.

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 2014, the company implemented initiatives to streamline its salaried workforce in North America and its workforce in the Asia Pacific region. Approximately 250 positions were eliminated. The actions were substantially completed in October 2013. The company recorded a restructuring charge of $20 ($13 after tax or $.04 per share) associated with this initiative for severance and benefit costs. The company does not expect additional charges. The company expects the total pre-tax costs of this initiative to represent cash expenditures, the majority of which will be spent in 2014.

A summary of the restructuring reserve associated with this workforce-related initiative at April 27, 2014 is as follows:



			Nine Months Ended
			April 27, 2014
	Accrued Balance at July 28, 2013		Charges		Cash Payments			Foreign Currency Translation Adjustment		Accrued Balance at April 27, 2014
Severance pay and benefits	$	—	$	20	$	(9	)	$	—	$	11

The total pre-tax costs of $20 associated with each segment are as follows: U.S. Simple Meals - $5; Global Baking and Snacking - $9; International Simple Meals and Beverages - $3; U.S. Beverages - $1; Bolthouse and Foodservice - $1; and Corporate - $1. Segment operating results do not include restructuring charges as segment performance is evaluated excluding such charges.

2013 Initiatives

In 2013, the company implemented the following initiatives to improve supply chain efficiency, expand access to manufacturing and distribution capabilities, and reduce costs:

•

The company implemented initiatives to improve its U.S. supply chain cost structure and increase asset utilization across its U.S. thermal plant network, including closing its thermal plant in Sacramento, California, which produced soups, sauces and beverages. The closure resulted in the elimination of approximately 700 full-time positions and was completed in phases. Most of the positions were eliminated in 2013 and operations ceased in August 2013. The company shifted 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 also closed its spice plant in South Plainfield, New Jersey, which resulted in the elimination of 27 positions. The company consolidated spice production at its Milwaukee, Wisconsin, plant in 2013.

•

In Mexico, the company entered into commercial arrangements with third-party providers to expand access to manufacturing and distribution capabilities. 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 closed its plant in Villagrán, Mexico, and eliminated approximately 260 positions in the first quarter of 2014.


•	The company implemented an initiative to improve its Pepperidge Farm bakery supply chain cost structure by closing its plant in Aiken, South Carolina. The plant was closed in May 2014. The company shifted the majority of Aiken's bread production to its bakery plant in Lakeland, Florida. Approximately 110 positions were eliminated as a result of the plant closure.


•	The company streamlined its salaried workforce in U.S. Simple Meals, North America Foodservice and U.S. Beverages by approximately 70 positions. This action was substantially completed in August 2013.

In the nine-month period ended April 27, 2014, the company recorded a restructuring charge of $1 related to the 2013 initiatives. In addition, approximately $2 of costs related to the 2013 initiatives were recorded in Cost of products sold, representing other exit costs. The aggregate after-tax impact of restructuring charges and related costs recorded in the nine-month period ended April 27, 2014 was $2, or $.01 per share. In 2013, the company recorded a restructuring charge of $51. In addition, approximately $91 of costs related to these initiatives were recorded in 2013 in Cost of products sold, representing accelerated depreciation and other exit costs. The aggregate after-tax impact of restructuring charges and related costs recorded in 2013 was $90, or $.28 per share. Of the amounts recorded in 2013, $31 of restructuring charges were recorded in the nine-month period ended April 28, 2013, and 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 recorded in the nine-month period ended April 28, 2013 was $71, or $.22 per share. A summary of the pre-tax costs and remaining costs associated with the initiatives is as follows:



	Total Program		Recognized as of April 27, 2014			Remaining Costs to be Recognized
Severance pay and benefits	$	35	$	(35	)	$	—
Accelerated depreciation/asset impairment	99		(99		)	—
Other exit costs	14		(11		)	3
Total	$	148	$	(145	)	$	3

Of the aggregate $148 of pre-tax costs, the company expects approximately $46 will be cash expenditures. In addition, the company expects to invest approximately $31 in capital expenditures, primarily to relocate and refurbish a beverage filling and packaging line, and relocate bread production, of which approximately $26 has been invested as of April 27, 2014. The outstanding aspects of the 2013 initiatives are expected to be completed in 2014.

A summary of the restructuring activity and related reserves associated with the 2013 initiatives at April 27, 2014 is as follows:



			Nine Months Ended
			April 27, 2014
	Accrued Balance at July 28, 2013		Charges		Cash Payments			Accrued Balance at April 27, 2014
Severance pay and benefits	$	17	$	—	$	(12	)	$	5
Other exit costs ⁽¹⁾			3
Total charges			$	3

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⁽¹⁾	Includes non-cash costs and other exit costs recognized as incurred that are not reflected in the restructuring reserve in the Consolidated Balance Sheet.

A summary of restructuring charges and related costs incurred to date associated with segments is as follows:



	U.S. Simple Meals		Global Baking and Snacking		International Simple Meals and Beverages		U.S. Beverages		Bolthouse and Foodservice		Total
Severance pay and benefits	$	19	$	2	5		$	7	2		$	35
Accelerated depreciation/asset impairment	64		10		3		22		—		99
Other exit costs	7		1		1		2		—		11
	$	90	$	13	$	9	$	31	$	2	$	145

The company expects to recognize additional pre-tax costs of approximately $3 in the Global Baking and Snacking segment. 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 exit from the Russian market. Details of the 2011 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 2014 and resulted in the elimination of approximately 190 positions in 2014. The company expects to continue investing in the new system through 2015. 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 action, the company outsourced a larger portion of its U.S. retail merchandising activities to its 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 the 2011 initiatives. Of the amount recorded in 2012, $3 related to discontinued operations. In the fourth quarter of 2011, the company recorded a restructuring charge of $63 ($41 after tax or $.12 per share). Of the amount recorded in 2011, $3 related to discontinued operations. A summary of the pre-tax charges recognized is as follows:



	Total Program
Severance pay and benefits	$	41
Asset impairment/accelerated depreciation	23
Other exit costs	9
Total	$	73

As of January 26, 2014, the 2011 initiatives were substantially completed. Of the aggregate $73 of pre-tax costs, approximately $50 represented cash expenditures, the majority of which was spent in 2012. In addition, the company expects to invest approximately $45 in capital expenditures in connection with the actions, of which approximately $37 has been invested as of April 27, 2014.

A summary of the restructuring activity and related reserves associated with the 2011 initiatives at April 27, 2014 is as follows:



			Nine Months Ended
			April 27, 2014
	Accrued Balance at July 28, 2013		Charges		Cash Payments			Foreign Currency Translation Adjustment		Accrued Balance at April 27, 2014
Severance pay and benefits	$	3	$	—	$	(2	)	$	—	$	1
Other exit costs	1		—		—			—		1
	$	4	$	—	$	(2	)	$	—	$	2

A summary of restructuring charges 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

Segment operating results do not include restructuring charges as segment performance is evaluated excluding such charges.