Restructuring Charges and Cost Savings Initiatives

3 Months Ended

Oct. 31, 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.

Over the 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 continued to implement this program and identified opportunities for additional cost synergies as we integrated Snyder's-Lance.

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


	Three Months Ended
		October 31, 2021		November 1, 2020		Recognized as of October 31, 2021
Restructuring charges		$	—	$	1	$	259
Administrative expenses		2		4		341
Cost of products sold		2		1		81
Marketing and selling expenses		—		—		13
Research and development expenses		—		—		4
Total pre-tax charges		$	4	$	6	$	698

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


	Recognized as of October 31, 2021
Severance pay and benefits	$	222
Asset impairment/accelerated depreciation	82
Implementation costs and other related costs	394
Total	$	698

The total estimated pre-tax costs for actions associated with continuing operations are approximately $715 to $730. 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 $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 $715 to $730 of pre-tax costs associated with continuing operations, we expect approximately $615 to $630 will be cash expenditures. In addition, we expect to invest approximately $450 in capital expenditures through 2022, of which we invested $415 as of October 31, 2021. The capital expenditures primarily relate to improvement of quality, safety and cost structure across the Snyder’s-Lance manufacturing network, a U.S. warehouse optimization project, 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 October 31, 2021, is as follows:


	Severance Pay and Benefits		Implementation Costs and Other Related Costs(2)	Total Charges
Accrued balance at August 1, 2021(1)	$	7
2022 charges	—		4	$	4
2022 cash payments	(1)

Accrued balance at October 31, 2021(1)	$	6

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(1)Includes $1 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:


	October 31, 2021
	Three Months Ended		Costs Incurred to Date
Meals & Beverages	$	1	$	224
Snacks	3		302
Corporate	—		172
Total	$	4	$	698

Through April 28, 2019, we incurred pre-tax charges of $23 in Earnings from discontinued operations consisting of $19 of severance pay and benefits and $4 of implementation costs and other related costs. All of the costs were cash expenditures.

Expanded Initiatives in 2022

We continue to pursue cost savings initiatives by further optimizing our supply chain and manufacturing network and through effective cost management. Cost estimates will be updated as the expanded initiatives are developed.