Restructuring Charges and Cost Savings Initiatives

3 Months Ended

Oct. 29, 2023

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. In the second quarter of 2023, we announced plans to consolidate our Snacks offices in Charlotte, North Carolina, and Norwalk, Connecticut, into our headquarters in Camden, New Jersey. 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 29, 2023		October 30, 2022		Recognized as of October 29, 2023
Restructuring charges	$	2	$	—	$	282
Administrative expenses	5		3		388
Cost of products sold	3		—		105
Marketing and selling expenses	2		—		21
Research and development expenses	1		—		8
Total pre-tax charges	$	13	$	3	$	804

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


(Millions)	Recognized as of October 29, 2023
Severance pay and benefits	$	242
Asset impairment/accelerated depreciation	111
Implementation costs and other related costs	451
Total	$	804

The total estimated pre-tax costs for actions that have been identified are approximately $885 million to $905 million and we expect to incur substantially all of the costs through 2025. 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 $245 million to $250 million in severance pay and benefits; approximately $135 million in asset impairment and accelerated depreciation; and approximately $505 million to $520 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 32%; Snacks - approximately 43%; and Corporate - approximately 25%.

Of the aggregate $885 million to $905 million of pre-tax costs identified to date, we expect approximately $710 million to $730 million will be cash expenditures. In addition, we expect to invest approximately $620 million in capital expenditures, of which we invested $482 million as of October 29, 2023. We expect to invest in substantially all of the capital expenditures through 2025. The capital expenditures primarily relate to optimization of production within our Meals & Beverages manufacturing network, a U.S. warehouse optimization project, improvement of quality, safety and cost structure across the Snyder’s-Lance manufacturing network, optimization of information technology infrastructure and applications, implementation of our existing SAP enterprise-resource planning system for Snyder's-Lance, enhancements to our headquarters in Camden, New Jersey, and optimization of the Snyder’s-Lance warehouse and distribution network.

A summary of the restructuring activity and related reserves at October 29, 2023, is as follows:


(Millions)	Severance Pay and Benefits		Implementation Costs and Other Related Costs(3)	Asset Impairment/Accelerated Depreciation	Total Charges
Accrued balance at July 30, 2023(1)	$	13
2024 charges	2		6	5	$	13
2024 cash payments	(2)

Accrued balance at October 29, 2023(2)	$	13

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(1)Includes $7 million of severance pay and benefits recorded in Other liabilities in the Consolidated Balance Sheet.

(2)Includes $5 million 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 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.

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 29, 2023
(Millions)	Three Months Ended		Costs Incurred to Date
Meals & Beverages	$	4	$	255
Snacks	6		351
Corporate	3		198
Total	$	13	$	804