Restructuring Charges and Cost Savings Initiatives

12 Months Ended

Jul. 28, 2024

Restructuring Charges [Abstract]

Restructuring Charges

Restructuring Charges, Cost Savings Initiatives and Other Optimization Initiatives

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

Continuing Operations

Beginning in 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 continued 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.

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

(Millions)	2024		2023		2022		Recognized as of July 28, 2024
Restructuring charges	$	17	$	16	$	5	$	297
Administrative expenses	54		24		20		437
Cost of products sold	26		18		5		128
Marketing and selling expenses	4		5		1		23
Research and development expenses	3		3		—		10
Total pre-tax charges	$	104	$	66	$	31	$	895

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

(Millions)	Recognized as of July 28, 2024
Severance pay and benefits	$	253
Asset impairment/accelerated depreciation	134
Implementation costs and other related costs	508
Total	$	895

Of the aggregate $895 million pre-tax costs incurred to date, approximately $720 million were cash expenditures. In addition, we invested $543 million in capital expenditures as of July 28, 2024. The capital expenditures primarily related to a U.S. warehouse optimization project, improvement of quality, safety and cost structure across the Snyder’s-Lance manufacturing network, optimization of production within our Meals & Beverages 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 July 28, 2024, is as follows:

(Millions)	Severance Pay and Benefits		Implementation Costs and Other Related Costs(3)	Asset Impairment/Accelerated Depreciation	Other Non-Cash Exit Costs(4)	Total Charges
Accrued balance at July 31, 2022	$	7
2023 charges	13		26	24	3	$	66
2023 cash payments	(7)
Accrued balance at July 30, 2023(1)	$	13
2024 charges	13		41	28	22	$	104
2024 cash payments	(8)
Accrued balance at July 28, 2024(2)	$	18

_______________________________________

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

(2)Includes $7 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 reserves in the Consolidated Balance Sheets. 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.

(4)Includes non-cash costs that are not reflected in the restructuring reserves in the Consolidated Balance Sheets.

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:

(Millions)	2024		Costs Incurred to Date
Meals & Beverages	$	37	$	288
Snacks	38		383
Corporate	29		224
Total	$	104	$	895

As of July 28, 2024, we have substantially completed the multi-year cost saving initiatives and Snyder's-Lance cost transformation program and integration. Certain phases that have not been fully implemented will be incorporated into the new cost savings initiatives described below.

Sovos Brands Integration Initiatives

On March 12, 2024, we completed the acquisition of Sovos Brands. See Note 3 for additional information. We have identified opportunities for cost synergies as we integrate Sovos Brands.

In 2024, we recorded Restructuring charges of $21 million related to initiatives to achieve the synergies. The charges incurred in 2024 were associated with the Meals & Beverages segment.

A summary of the restructuring activity and related reserves associated with the Sovos Brands integration at July 28, 2024, is as follows:

(Millions)	Severance Pay and Benefits
2024 charges	$	21
2024 cash payments	(3)
Accrued balance at July 28, 2024(1)	$	18

__________________________________ 

(1)Includes $5 million of severance pay and benefits recorded in Other liabilities in the Consolidated Balance Sheet.

Beginning in 2025, the initiatives to achieve synergies will be incorporated into the new cost savings initiatives described below.

2025 Cost Savings Initiatives

On September 10, 2024, we announced plans to implement new cost savings initiatives beginning in 2025, including initiatives to further optimize our supply chain and manufacturing network, optimization of our information technology infrastructure and targeted cost management. We also identified additional opportunities for cost synergies as we integrate Sovos Brands. As mentioned above, we substantially completed our existing multi-year cost savings initiatives and Snyder's-Lance cost transformation program and integration. Certain initiatives from that program have been incorporated into our new cost savings initiatives. Cost estimates for these new initiatives, as well as timing for certain activities, are continuing to be developed.

The total estimated pre-tax costs for actions that have been identified to date are approximately $180 million and we expect to incur substantially all of the costs through 2028. These estimates will be updated as the detailed plans are developed. We expect the costs for the actions that have been identified to date to consist of the following: approximately $25 million in severance pay and benefits; approximately $45 million in asset impairment and accelerated depreciation; and approximately $110 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 80%; Snacks - approximately 5% and Corporate - approximately 15%. Of the aggregate $180 million of pre-tax costs identified to date, we expect approximately $135 million will be cash expenditures. In addition, we expect to invest approximately $235 million in capital expenditures.

Other Optimization Initiatives

In the second quarter of 2024, we began implementation of a new initiative to improve the effectiveness of our Snacks direct-store-delivery route-to-market network. Pursuant to this initiative we will purchase certain Pepperidge Farm and Snyder's-Lance routes where there are opportunities to unlock greater scale in select markets, combine them and sell the combined routes to independent contractor distributors. We expect to execute this program in a staggered rollout and to incur expenses of up to approximately $115 million through 2029. In 2024, we incurred $5 million in Marketing and selling expenses related to this initiative.