Restructuring Charges and Cost Savings Initiatives

3 Months Ended

Oct. 30, 2022

Restructuring Charges and Cost Savings Initiatives

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

Continuing Operations

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

Over the years, we expanded these initiatives by continuing to optimize our supply chain and manufacturing networks, 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.

In 2022, we expanded these initiatives as we continue to pursue cost savings by further optimizing our supply chain and manufacturing network and through effective cost management. Cost estimates for these expanded initiatives, as well as timing for certain activities, are continuing to be developed.

A summary of the pre-tax charges recognized in the Consolidated Statements of Earnings related to these initiatives is as follows:


	Three Months Ended
(Millions)	October 30, 2022		October 31, 2021		Recognized as of October 30, 2022
Restructuring charges	$	—	$	—	$	264
Administrative expenses	3		2		362
Cost of products sold	—		2		84
Marketing and selling expenses	—		—		14
Research and development expenses	—		—		4
Total pre-tax charges	$	3	$	4	$	728

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


(Millions)	Recognized as of October 30, 2022
Severance pay and benefits	$	227
Asset impairment/accelerated depreciation	82
Implementation costs and other related costs	419
Total	$	728

The total estimated pre-tax costs for actions that have been identified are approximately $735 million to $740 million and we expect to incur the costs through 2023. These estimates will be updated as the expanded initiatives are developed.

We expect the costs for actions that have been identified to date to consist of the following: approximately $230 million in severance pay and benefits; approximately $85 million in asset impairment and accelerated depreciation; and approximately

$420 million to $425 million in implementation costs and other related costs. We expect these pre-tax costs to be associated with our segments as follows: Meals & Beverages - approximately 30%; Snacks - approximately 44%; and Corporate - approximately 26%.

Of the aggregate $735 million to $740 million of pre-tax costs identified to date, we expect approximately $635 million to $640 million will be cash expenditures. In addition, we expect to invest approximately $450 million in capital expenditures, of which we invested $440 million as of October 30, 2022. We expect to invest in substantially all of the capital expenditures through 2023. 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 within our Meals & Beverages manufacturing network, 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 at October 30, 2022, is as follows:


(Millions)	Severance Pay and Benefits		Implementation Costs and Other Related Costs(1)	Total Charges
Accrued balance at July 31, 2022	$	7
2023 charges	—		3	$	3
2023 cash payments	(2)

Accrued balance at October 30, 2022	$	5

__________________________________

(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.

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 30, 2022
(Millions)	Three Months Ended		Costs Incurred to Date
Meals & Beverages	$	—	$	225
Snacks	—		321
Corporate	3		182
Total	$	3	$	728