Restructuring Charges and Cost Savings Initiatives

2015 Initiatives

On January 29, 2015, we announced plans to implement a new enterprise design focused mainly on product categories. Under the new structure, which we fully implemented at the beginning of 2016, our businesses are organized in the following divisions: Americas Simple Meals and Beverages, Global Biscuits and Snacks, and Campbell Fresh.

In support of the new structure, we designed and implemented a new Integrated Global Services organization to deliver shared services across the company. We also streamlined our organizational structure. We are pursuing other initiatives to reduce costs and increase effectiveness, such as adopting zero-based budgeting over time.

As part of these initiatives, we commenced a voluntary employee separation program available to certain U.S.-based salaried employees nearing retirement who met age, length-of-service and business unit/function criteria. A total of 471 employees elected the program. The electing employees remained with us through at least July 31, 2015, with some remaining beyond July 31. We also implemented an initiative to reduce overhead across the organization by eliminating approximately 250 positions. In 2016, we recorded a restructuring charge of $35 related to these initiatives. In 2015, we recorded a restructuring charge of $102 related to these initiatives.

In 2016, we also incurred charges of $47 recorded in Administrative expenses related to the implementation of the new organizational structure and cost savings initiatives. In 2015, we incurred charges of $22 recorded in Administrative expenses related to these initiatives.

The aggregate after-tax impact of restructuring charges, implementation costs and other related costs recorded in 2016 was $52, or $.17 per share. The aggregate after-tax impact of restructuring charges and implementation and other costs recorded in 2015 was $78, or $.25 per share. A summary of the pre-tax costs associated with the 2015 initiatives is as follows:



	Recognized as of July 31, 2016
Severance pay and benefits	$	128
Implementation costs and other related costs	78
Total	$	206

The total estimated pre-tax costs for the 2015 initiatives are approximately $250 to $300. We expect to incur these costs through 2018.

We expect the costs to consist of approximately $135 to $145 in severance pay and benefits, and approximately $115 to $155 in implementation costs and other related costs.We expect the total pre-tax costs related to the 2015 initiatives will be associated with segments as follows: Americas Simple Meals and Beverages - approximately 30%; Global Biscuits and Snacks - approximately 32%; Campbell Fresh - approximately 3%; and Corporate - approximately 35%.

A summary of the restructuring activity and related reserves associated with the 2015 initiatives at July 31, 2016, is as follows:



	Severance Pay and Benefits			Other Restructuring Costs			Non-Cash Benefits⁽³⁾	Implementation Costs and Other Related Costs⁽⁴⁾	Total Charges
Accrued balance at August 3, 2014	$	—		$	—
2015 charges	87			8			7	22	$	124
2015 cash payments	(1		)	—
Foreign currency translation adjustment	(1		)	—
Accrued balance at August 2, 2015⁽¹⁾	$	85		$	8
2016 charges	34			1			—	47	$	82
2016 cash payments	(46		)	(9		)
Accrued balance at July 31, 2016⁽²⁾	$	73		$	—

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⁽¹⁾	Includes $45 of severance pay and benefits recorded in Other liabilities in the Consolidated Balance Sheet.


⁽²⁾	Includes $17 of severance pay and benefits recorded in Other liabilities in the Consolidated Balance Sheet.


⁽³⁾	Represents postretirement and pension curtailment costs. See Note 11.


⁽⁴⁾	Includes other costs recognized as incurred that are not reflected in the restructuring reserve in the Consolidated Balance Sheet. The costs are included in Administrative expenses in the Consolidated Statements of Earnings.

Segment operating results do not include restructuring charges, implementation costs and other related costs because we evaluate segment performance excluding such charges. A summary of the pre-tax costs associated with segments is as follows:



	2016		Costs Incurred to Date
Americas Simple Meals and Beverages	$	17	$	71
Global Biscuits and Snacks	22		66
Campbell Fresh	1		2
Corporate	42		67
Total	$	82	$	206

2014 Initiatives

In 2014, we implemented initiatives to reduce overhead across the organization, restructure manufacturing and streamline operations for our soup and broth business in China and improve supply chain efficiency in Australia. Details of the 2014 initiatives include:


•	We streamlined our salaried workforce in North America and our workforce in the Asia Pacific region. Approximately 250 positions were eliminated.


•	Together with our joint venture partner Swire Pacific Limited, we restructured manufacturing and streamlined operations for our soup and broth business in China. As a result, certain assets were impaired, and approximately 100 positions were eliminated.


•	In Australia, we commenced an initiative to improve supply chain efficiency by relocating production from our biscuit plant in Marleston to Huntingwood. The relocation will continue through 2017 and will result in the elimination of approximately 45 positions.


•	We implemented an initiative to reduce overhead across the organization by eliminating approximately 85 positions. The actions were completed in 2015.

In 2016, we recorded a reduction to restructuring charges of $4 ($3 after tax, or $.01 per share) related to the 2014 initiatives. In 2014, we recorded a restructuring charge of $54 ($33 after tax, or $.10 per share, in earnings from continuing operations attributable to Campbell Soup Company) related to the 2014 initiatives. As of July 31, 2016, we incurred substantially all of the costs related to the 2014 initiatives. A summary of the pre-tax costs associated with the 2014 initiatives is as follows:



	Total Program⁽¹⁾		Change in Estimate			Recognized as of July 31, 2016
Severance pay and benefits	$	41	$	(4	)	$	37
Asset impairment	12		—			12
Other exit costs	1		—			1
Total	$	54	$	(4	)	$	50

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⁽¹⁾	Recognized as of August 2, 2015.

A summary of the restructuring activity and related reserves associated with the 2014 initiatives at July 31, 2016, is as follows:



	Severance Pay and Benefits			Asset Impairment	Other Exit Costs⁽¹⁾	Total Charges
Accrued balance at July 28, 2013	$	—
2014 charges	41			12	1	$	54
2014 cash payments	(13		)
Accrued balance at August 3, 2014	$	28
2015 cash payments	(16		)
Foreign currency translation adjustment	(2		)
Accrued balance at August 2, 2015⁽²⁾	$	10
2016 reduction to charges	(4		)	—	—	$	(4	)
2016 cash payments	(4		)
Foreign currency translation adjustment	(1		)
Accrued balance at July 31, 2016	$	1

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


⁽²⁾	Includes $4 of severance pay and benefits recorded in Other liabilities in the Consolidated Balance Sheet.

Segment operating results do not include restructuring charges because we evaluate segment performance excluding such charges. A summary of restructuring charges associated with segments is as follows:



	2016			Total Program
Americas Simple Meals and Beverages	$	(1	)	$	13
Global Biscuits and Snacks	(3		)	35
Campbell Fresh	—			1
Corporate	—			1
Total	$	(4	)	$	50

2013 Initiatives

In 2013, we implemented initiatives to improve supply chain efficiency, expand access to manufacturing and distribution capabilities and reduce costs.

In 2014, we recorded a restructuring charge of $1 related to the 2013 initiatives. In addition, we recorded approximately $3 of costs related to the 2013 initiatives in Cost of products sold, representing other exit costs. The aggregate after-tax impact of restructuring charges and related costs recorded in 2014 was $3, or $.01 per share.

A summary of the pre-tax costs associated with the 2013 initiatives recognized is as follows:



	Total Program
Severance pay and benefits	$	31
Accelerated depreciation/asset impairment	99
Other exit costs	12
Total	$	142

In 2015, we substantially completed the 2013 initiatives.