Restructuring Charges and Cost Savings Initiatives

3 Months Ended

Nov. 01, 2020

Restructuring Charges and Cost Savings Initiatives

Multi-year Cost Savings Initiatives and Snyder's-Lance Cost Transformation Program and Integration

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

In recent years, we expanded these initiatives by further optimizing our supply chain and manufacturing networks, including closing our manufacturing facility in Toronto, Ontario, as well as our information technology infrastructure.

On March 26, 2018, we completed the acquisition of Snyder's-Lance. Prior to the acquisition, 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 continue to implement this program. 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 pre-tax charges recorded in Earnings from continuing operations related to these initiatives is as follows:


	Three Months Ended
		November 1, 2020		October 27, 2019		Recognized as of November 1, 2020
Restructuring charges		$	1	$	3	$	239
Administrative expenses		4		8		315
Cost of products sold		1		—		77
Marketing and selling expenses		—		—		12
Research and development expenses		—		—		4
Total pre-tax charges		$	6	$	11	$	647

A summary of the pre-tax costs in Earnings (loss) from discontinued operations associated with these initiatives is as follows:


	Recognized as of November 1, 2020
Severance pay and benefits	$	19
Implementation costs and other related costs	4
Total	$	23

As of April 28, 2019, we incurred substantially all of the costs for actions associated with discontinued operations. All of the costs were cash expenditures.

A summary of the pre-tax costs in Earnings from continuing operations associated with the initiatives is as follows:


	Recognized as of November 1, 2020
Severance pay and benefits	$	215
Asset impairment/accelerated depreciation	67
Implementation costs and other related costs	365
Total	$	647

The total estimated pre-tax costs for actions associated with continuing operations that have been identified are approximately $700 to $730 and we expect to incur the costs through 2022. This estimate will be updated as costs for the expanded initiatives are developed.

We expect the costs for actions associated with continuing operations that have been identified to date to consist of the following: approximately $220 to $225 in severance pay and benefits; approximately $90 in asset impairment and accelerated depreciation; and approximately $390 to $415 in implementation costs and other related costs. We expect these pre-tax costs to be associated with our segments as follows: Meals & Beverages - approximately 32%; Snacks - approximately 44%; and Corporate - approximately 24%.

Of the aggregate $700 to $730 of pre-tax costs associated with continuing operations identified to date, we expect approximately $595 to $625 will be cash expenditures. In addition, we expect to invest approximately $455 in capital expenditures through 2022, of which we invested $351 as of November 1, 2020. The capital expenditures primarily relate to a U.S. warehouse optimization project, improvement of quality, safety and cost structure across the Snyder’s-Lance manufacturing network, implementation of an SAP enterprise-resource planning system for Snyder's-Lance, optimization of information technology infrastructure and applications, 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 the Snyder’s-Lance warehouse and distribution network.

A summary of the restructuring activity and related reserves associated with continuing operations at November 1, 2020, is as follows:


	Severance Pay and Benefits		Implementation Costs and Other Related Costs(2)	Total Charges
Accrued balance at August 2, 2020(1)	$	15
2021 charges	1		5	$	6
2021 cash payments	(6)

Accrued balance at November 1, 2020(1)	$	10

__________________________________

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

(2)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 and Cost of products sold 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 in Earnings from continuing operations associated with segments is as follows:


	November 1, 2020
	Three Months Ended		Costs Incurred to Date
Meals & Beverages	$	—	$	220
Snacks	5		256
Corporate	1		171
Total	$	6	$	647