Restructuring Charges and Cost Savings Initiatives

12 Months Ended

Aug. 01, 2021

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.

A summary of the pre-tax charges recorded in Earnings from continuing operations related to these initiatives is as follows:


	2021		2020		2019		Recognized as of August 1, 2021
Restructuring charges	$	21	$	9	$	31	$	259
Administrative expenses	28		48		62		339
Cost of products sold	3		9		18		79
Marketing and selling expenses	1		2		7		13
Research and development expenses	—		1		3		4
Total pre-tax charges	$	53	$	69	$	121	$	694

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


	Recognized as of August 1, 2021
Severance pay and benefits	$	222
Asset impairment/accelerated depreciation	82
Implementation costs and other related costs	390
Total	$	694

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


	Recognized as of August 1, 2021
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.

The total estimated pre-tax costs for actions associated with continuing operations are approximately $710 to $730. This estimate will be updated as costs continue to be developed. The majority of the remaining costs will be incurred in 2022.

We expect the costs for actions associated with continuing operations to consist of the following: approximately $220 to $225 in severance pay and benefits; approximately $85 in asset impairment and accelerated depreciation; and approximately $405 to $420 in implementation costs and other related costs. We expect these pre-tax costs to be associated with our segments as follows: Meals & Beverages - approximately 31%; Snacks - approximately 45%; and Corporate - approximately 24%.

Of the aggregate $710 to $730 of pre-tax costs associated with continuing operations, we expect approximately $610 to $630 will be cash expenditures. In addition, we expect to invest approximately $435 in capital expenditures through 2022, of which we invested $401 as of August 1, 2021. 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 our existing SAP enterprise-resource planning system for Snyder's-Lance, transition of production of the Toronto manufacturing facility to our U.S. thermal plants, optimization of information technology infrastructure and applications 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 August 1, 2021, is as follows:


	Severance Pay and Benefits		Implementation Costs and Other Related Costs(4)	Asset Impairment/Accelerated Depreciation	Other Non-Cash Exit Costs(5)	Total Charges
Accrued balance at July 28, 2019(1)	$	37
2020 charges	9		56	4	—	$	69
2020 cash payments	(31)

Accrued balance at August 2, 2020(2)	$	15
2021 charges	6		27	15	5	$	53
2021 cash payments	(14)

Accrued balance at August 1, 2021(3)	$	7

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(1)Includes $8 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 $1 of severance pay and benefits recorded in Other liabilities in the Consolidated Balance Sheet.

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

(5)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 in Earnings from continuing operations associated with segments is as follows:


	2021		Costs Incurred to Date
Meals & Beverages	$	3	$	223
Snacks	48		299
Corporate	2		172
Total	$	53	$	694

In addition, in the second quarter of 2021, we recorded a $19 deferred tax charge in connection with a legal entity reorganization as part of the continued integration of Snyder's-Lance.