Restructuring Charges and Cost Savings Initiatives

2015 Initiatives

In fiscal 2015, we implemented initiatives to reduce costs and to streamline our organizational structure. 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.

In February 2017, we announced that we were expanding these 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. In January 2018, as part of the expanded initiatives, we authorized additional pre-tax costs to improve the operational efficiency of our thermal supply chain network in North America by closing our manufacturing facility in Toronto, Ontario, and to optimize our information technology infrastructure by migrating certain applications to the latest cloud technology platform. In August 2018, we announced that we will continue to streamline our organization, expand our zero-based budgeting efforts and optimize our manufacturing network. We extended the time horizon for the initiatives to 2022. Cost estimates for these expanded initiatives, as well as timing for certain activities, are continuing to be developed.

A summary of the restructuring charges and charges recorded in Administrative expenses, Cost of products sold, and Marketing and selling expenses related to the initiatives is as follows:



	2018		2017		2016		2015
Restructuring charges	$	49	$	18	$	35	$	102
Administrative expenses	88		36		47		22
Cost of products sold	45		4		—		—
Marketing and selling expenses	3		—		—		—
Total pre-tax charges	$	185	$	58	$	82	$	124

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



	Recognized as of July 29, 2018
Severance pay and benefits	$	180
Asset impairment/accelerated depreciation	45
Implementation costs and other related costs	224
Total	$	449

The total estimated pre-tax costs for actions that have been identified are approximately $570 to $605 and we expect to incur the remaining costs through 2020. This estimate 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 the following: approximately $195 in severance pay and benefits; approximately $95 in asset impairment and accelerated depreciation; and approximately $280 to $315 in implementation costs and other related costs.We expect these pre-tax costs to be associated with our segments as follows: Americas Simple Meals and Beverages - approximately 45%; Global Biscuits and Snacks - approximately 30%; Campbell Fresh - approximately 3%; and Corporate - approximately 22%.

Of the aggregate $570 to $605 of pre-tax costs identified to date, we expect approximately $465 to $500 will be cash expenditures. In addition, we expect to invest approximately $250 in capital expenditures through 2020 primarily related to the U.S. warehouse optimization project, transition of production of the Toronto manufacturing facility to our U.S. thermal plants, insourcing of manufacturing for certain simple meal products and optimization of information technology infrastructure and applications, of which we invested approximately $114 as of July 29, 2018.

A summary of the restructuring activity and related reserves associated with the initiatives at July 29, 2018, is as follows:



	Severance Pay and Benefits			Other Restructuring Costs			Non-Cash Benefits⁽⁵⁾	Implementation Costs and Other Related Costs⁽⁶⁾	Asset Impairment/Accelerated Depreciation	Other Non-Cash Exit Costs⁽⁷⁾	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		$	—
2017 charges	7			—			—	39	12	—	$	58
2017 cash payments	(54		)	—
Accrued balance at July 30, 2017⁽³⁾	$	26		$	—
2018 charges	43			—			2	104	33	3	$	185
2018 cash payments	(31		)	—
Foreign currency translation adjustment	(1		)	—
Accrued balance at July 29, 2018⁽⁴⁾	$	37		$	—

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


⁽⁴⁾	Includes $23 of severance pay and benefits recorded in Other liabilities in the Consolidated Balance Sheet.


⁽⁵⁾	Represents postretirement and pension curtailment costs and pension special termination benefits. See Note 10 for additional information.


⁽⁶⁾	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, Cost of products sold, and Marketing and selling expenses in the Consolidated Statements of Earnings.


⁽⁷⁾	Includes non-cash costs that are not reflected in the restructuring reserve in the Consolidated Balance Sheet.

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:



	2018		Costs Incurred to Date
Americas Simple Meals and Beverages	$	86	$	178
Global Biscuits and Snacks	73		151
Campbell Fresh	5		11
Corporate	21		109
Total	$	185	$	449

Snyder's-Lance Cost Transformation Program and Integration

On March 26, 2018, we completed the acquisition of Snyder's-Lance. Prior to the acquisition, in April 2017, Snyder's-Lance launched a cost transformation program following a comprehensive review of its operations with the goal of significantly improving its financial performance. We expect to continue to implement this program and to achieve a majority of the program's targeted savings. In addition, we have identified opportunities for additional cost synergies as we integrate Snyder's-Lance.

We are developing the detailed plans to implement the Snyder's-Lance cost transformation program and to achieve the cost synergies and therefore we cannot reasonably estimate the total expected pre-tax costs and timing of when we expect to incur those costs, as well as the expected future cash expenditures. We expect the pre-tax costs to be associated primarily with Global Biscuits and Snacks.

In 2018, we recorded a restructuring charge of $13 and incurred $12 in Administrative expenses related to the integration of Snyder's-Lance.

A summary of the restructuring activity and related reserves associated with the Snyder's-Lance integration at July 29, 2018, is as follows:



	Severance Pay and Benefits			Implementation and Integration Costs⁽¹⁾	Total Charges
2018 charges	$	13		12	$	25
2018 cash payments	(4		)
Accrued balance at July 29, 2018⁽²⁾	$	9

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⁽¹⁾	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.


⁽²⁾	Includes $1 of severance pay and benefits recorded in Other liabilities in the Consolidated Balance Sheet.

Segment operating results do not include restructuring charges, nor implementation and integration costs because we evaluate segment performance excluding such charges. The pre-tax costs of $25 incurred in 2018 were associated with the Global Biscuits and Snacks segment.

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.

In 2016, we recorded a reduction to restructuring charges of $4 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.