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Restructuring Charges and Cost Savings Initiatives
3 Months Ended
Oct. 28, 2018
Restructuring Charges [Abstract]  
Restructuring Charges
Restructuring Charges and Cost Savings Initiatives
2015 Initiatives and Snyder's-Lance Cost Transformation Program and Integration
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.
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.
Cost estimates, 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 both programs is as follows:
 
Three Months Ended
 
 
 
October 28,
2018
 
October 29,
2017
 
Recognized as of October 28, 2018(1)
Restructuring charges
$
19

 
$
2

 
$
236

Administrative expenses
13

 
12

 
218

Cost of products sold
12

 
5

 
61

Marketing and selling expenses
2

 

 
5

Total pre-tax charges
$
46

 
$
19

 
$
520

_______________________________________
(1)  
Includes $13 of Restructuring charges and $12 of Administrative expenses associated with the Snyder's-Lance cost transformation program and integration recognized in 2018.
A summary of the pre-tax costs associated with both programs is as follows:
 
Recognized as of
October 28, 2018
Severance pay and benefits(1)
$
212

Asset impairment/accelerated depreciation
58

Implementation costs and other related costs(2)
250

Total
$
520

_______________________________________
(1)  
Includes $13 of charges associated with the Snyder's-Lance cost transformation program and integration recognized in 2018.
(2)  
Includes $12 of charges associated with the Snyder's-Lance cost transformation program and integration recognized in 2018.
The total estimated pre-tax costs for actions that have been identified under both programs are approximately $640 to $685 and we expect to incur substantially all of the 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 under both programs to consist of the following: approximately $220 in severance pay and benefits; approximately $95 in asset impairment and accelerated depreciation; and approximately $325 to $370 in implementation costs and other related costs.We expect these pre-tax costs to be associated with our segments as follows: Meals and Beverages - approximately 40%; Global Biscuits and Snacks - approximately 36%; Campbell Fresh - approximately 2%; and Corporate - approximately 22%.
Of the aggregate $640 to $685 of pre-tax costs identified to date, we expect approximately $535 to $580 will be cash expenditures. In addition, we expect to invest approximately $355 in capital expenditures through 2021 primarily related to the U.S. warehouse optimization project, improvement of quality, safety and cost structure across the Snyder’s-Lance manufacturing network, transition of production of the Toronto manufacturing facility to our U.S. thermal plants, optimization of the Snyder’s-Lance warehouse and distribution network, insourcing of manufacturing for certain simple meal products and optimization of information technology infrastructure and applications, of which we invested approximately $145 as of October 28, 2018.
A summary of the restructuring activity and related reserves associated with both programs at October 28, 2018, is as follows:
 
 
Severance Pay and Benefits
 
Implementation Costs and Other Related Costs(3)
 
Asset Impairment/Accelerated Depreciation
 
Total Charges
Accrued balance at July 29, 2018(1)
 
$
46

 
 
 
 
 
 
2019 charges
 
19

 
14

 
13

 
$
46

2019 cash payments
 
(6
)
 
 
 
 
 
 
Accrued balance at October 28, 2018(2)
 
$
59

 
 
 
 
 
 
_______________________________________
(1)  
Includes $24 of severance pay and benefits recorded in Other liabilities in the Consolidated Balance Sheet, $1 of which is associated with the Snyder's-Lance cost transformation program and integration. Of total accrued balance, $9 is associated with the Snyder's-Lance cost transformation program and integration.
(2) 
Includes $20 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 Sheets. The costs are included in Administrative expenses, Cost of products sold, and Marketing and selling 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:
 
October 28, 2018
 
Three Months Ended
 
Costs Incurred to Date(1)
Meals and Beverages
$
23

 
$
201

Global Biscuits and Snacks
9

 
185

Campbell Fresh
3

 
14

Corporate
11

 
120

Total
$
46

 
$
520


_______________________________________
(1)  
Includes $25 of pre-tax costs associated with the Global Biscuits and Snacks segment recognized in 2018 related to the Snyder's-Lance cost transformation program and integration.