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, implemented an initiative to reduce overhead across the organization and 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 that date.

In February 2017, we announced that we are expanding these cost savings initiatives by further optimizing our supply chain network, primarily in North America, continuing to evolve our operating model to drive efficiencies, and more fully integrating our recent acquisitions. We have extended the time horizon for the initiatives from 2018 to 2020. Cost estimates for these expanded initiatives, as well as timing for certain activities, are being developed.

A summary of the restructuring charges we recorded and charges incurred in Administrative expenses related to the implementation of the new organizational structure and costs savings initiatives is as follows:



	Three Months Ended				Nine Months Ended				Year Ended
	April 30, 2017		May 1, 2016		April 30, 2017		May 1, 2016		July 31, 2016		August 2, 2015
Restructuring charges	$	—	$	2	$	—	$	35	$	35	$	102
Administrative expenses	7		13		18		35		47		22
Total pre-tax charges	$	7	$	15	$	18	$	70	$	82	$	124

Aggregate after-tax impact	$	4	$	9	$	11	$	44	$	52	$	78
Per share impact	$	.01	$	.03	$	.04	$	.14	$	.17	$	.25

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



	Recognized as of April 30, 2017
Severance pay and benefits	$	128
Implementation costs and other related costs	96
Total	$	224

The total estimated pre-tax costs for the initiatives for actions that have been identified are approximately $250 to $270. We expect to incur these costs through 2019. The estimates will be updated as costs for the expanded initiatives are developed.

We expect the costs for actions that have been identified to date to consist of approximately $130 in severance pay and benefits, and approximately $120 to $140 in implementation costs and other related costs.We expect these total pre-tax costs related to the initiatives will be associated with segments as follows: Americas Simple Meals and Beverages - approximately 33%; Global Biscuits and Snacks - approximately 32%; Campbell Fresh - approximately 3%; and Corporate - approximately 32%.

We expect substantially all costs to be cash expenditures, except for $7 of non-cash postretirement and pension curtailment costs incurred in 2015. In addition, we expect to invest approximately $105 in capital expenditures through 2019 related to the construction of a network of distribution centers for our U.S. thermal plants, of which we invested approximately $1 as of April 30, 2017.

A summary of the restructuring activity and related reserves associated with the initiatives at April 30, 2017, is as follows:



	Severance Pay and Benefits			Implementation Costs and Other Related Costs⁽³⁾	Total Charges
Accrued balance at July 31, 2016⁽¹⁾	$	73
2017 charges	—			18	$	18
2017 cash payments	(42		)
Accrued balance at April 30, 2017⁽²⁾	$	31

_______________________________________


⁽¹⁾	Includes $17 of severance pay and benefits recorded in Other liabilities in the Consolidated Balance Sheet.


⁽²⁾	Includes $3 of severance pay and benefits recorded in Other liabilities in the Consolidated Balance Sheet.


⁽³⁾	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:



	April 30, 2017
	Three Months Ended		Nine Months Ended		Costs Incurred to Date
Americas Simple Meals and Beverages	$	1	$	1	$	72
Global Biscuits and Snacks	2		4		70
Campbell Fresh	—		—		2
Corporate	4		13		80
Total	$	7	$	18	$	224

2014 Initiatives

In 2016, we recorded a reduction to restructuring charges of $4 ($3 after tax, or $.01 per share) related to the 2014 initiatives. Of the amounts recorded in 2016, $3 ($2 after tax, or $.01 per share) was recorded in the nine-month period ended May 1, 2016 related to the 2014 initiative to improve supply chain efficiency in Australia. 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

_______________________________________


⁽¹⁾	Recognized as of August 2, 2015.