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Restructuring and Cost Reduction Activities
 12 Months Ended
Jan. 02, 2021
Restructuring and Related Activities [Abstract]  
Restructuring and Related Activities
RESTRUCTURING PROGRAMS

The Company views its restructuring and cost reduction activities as part of its operating principles to provide greater visibility in achieving its long-term profit growth targets. Initiatives undertaken are currently expected to recover cash implementation costs within a 3 to 5-year period of completion. Upon completion (or as each major stage is completed in the case of multi-year programs), the project begins to deliver cash savings and/or reduced depreciation.

During 2019, the Company announced a reorganization plan for its European reportable segment designed to simplify the organization, increase organizational efficiency, and enhance key processes. The Company recorded total net charges of $(1) million related to this initiative during 2020, with $7 million recorded in SG&A expense and $(8) million recorded in OIE. Since inception, the project resulted in cumulative pretax net charges of approximately $37 million, including certain non-cash credits. Total cash costs were approximately $50 million. The total charges include severance and other termination benefits and charges related to relocation, pension curtailment gains, third party legal and consulting fees, and contract termination costs. This project is substantially complete as of the end of fiscal year 2020. Total charges and cash costs were in line with expectations.

Also during 2019, the Company announced a reorganization plan which primarily impacted the North America reportable segment. The reorganization plan is designed to simplify the organization that supports the remaining North America reportable segment after the divestiture and related transition. The Company recorded total charges of $2 million related to this initiative during 2020. These charges were recorded in SG&A expense. Since inception, the project has resulted in cumulative pretax charges of approximately $23 million. Total charges include severance and other termination benefits and charges related to third party consulting fees. The project is substantially complete as of the end of fiscal year 2020. Total charges and cash costs were in line with expectations.

In addition to the projects discussed above, during 2020 the Company incurred restructuring costs in each of its reportable segments related to various reorganization and simplification initiatives and supply chain optimization projects. The Company recorded total charges of $28 million related to these initiatives, including $6 million in COGS and $22 million in SG&A expense. These costs primarily relate to severance and other termination benefits.
Project K
As of the end of 2019, the Company completed implementation of all Project K initiatives. Total project charges, after-tax cash costs and annual savings delivered by Project K were in line with expectations.
The total program resulted in pre-tax charges, of approximately $1.6 billion, with after-tax cash costs, including incremental capital expenditures, of approximately $1.2 billion. Total project charges consist of asset-related costs of approximately $500 million which consists primarily of asset impairments, accelerated depreciation and other exit-related costs; employee-related costs of approximately $400 million which includes severance, pension and other termination benefits; and other costs of approximately $700 million which consists primarily of charges related to the design and implementation of global business capabilities and a more efficient go-to-market model.
Total pre-tax charges related to Project K impacted reportable segments as follows: North America (approximately 65%), Europe (approximately 21%), Latin America (approximately 4%), AMEA (approximately 6%), and Corporate (approximately 4%).
The Company recognized charges of $1,574 million attributed to the Project K, with the charges comprised of $6 million recorded as a reduction of revenue, $928 million recorded in COGS, $807 million recorded in SGA and $(167) million recorded in OIE.

Total programs
The tables below provide the details for the charges incurred during 2020, 2019 and 2018 and program costs to date for all programs currently active as of January 2, 2021.
 
Program costs to date
(millions)202020192018January 2, 2021
Employee related costs$29 $49 $63 $79 
Pension curtailment (gain) loss, net(8)(5)(30)(13)
Asset related costs2 21 16 2 
Asset impairment— — 14 — 
Other costs6 48 80 20 
Total$29 $113 $143 $88 
  
  
  
  
Program costs to date
(millions)202020192018January 2, 2021
North America$8 $50 $107 $29 
Europe3 47 3 41 
Latin America5 15 15 5 
AMEA12 3 11 12 
Corporate1 (2)7 1 
Total$29 $113 $143 $88 
During 2020, the Company recorded total charges of $29 million across all restructuring programs. The charges were comprised of $6 million recorded in COGS, $31 million recorded in SG&A expense and $(8) million recorded in OIE.
The Company recorded $113 million of charges in 2019 associated with all restructuring programs. The charges were comprised of $35 million expense being recorded in COGS, a $83 million expense recorded in SG&A, and $(5) million recorded in OIE.

The Company recorded $143 million of costs in 2018 associated with all restructuring programs. The charges were comprised of $99 million being recorded in COGS, $74 million recorded SG&A and $(30) million recorded in OIE.
Employee related costs consisted of severance and pension charges. Pension curtailment (gain) loss consists of curtailment gains or losses that resulted from project initiatives. Asset impairments were recorded for fixed assets that were determined to be impaired and were written down to their estimated fair value. See Note 14 for more information. Asset related costs consist primarily of accelerated depreciation. Other costs incurred consist primarily of lease termination costs as well as third-party incremental costs related to the development and implementation of global business capabilities and a more efficient go-to-market model.
 
At January 2, 2021 total project reserves were $28 million, related to severance payments and other costs of which a substantial portion will be paid in 2021. The following table provides details for exit cost reserves. 
(millions)Employee
Related
Costs		Curtailment Gain Loss, netAsset
Impairment		Asset Related
Costs		Other
Costs		Total
Liability as of December 29, 2018$62 $— $— $1 $10 $73 
2019 restructuring charges49 (5)— 21 48 113 
Cash payments(74)— — (10)(57)(141)
Non-cash charges and other — 5 — (12)— (7)
Liability as of December 28, 2019$37 $— $— $— $1 $38 
2020 restructuring charges29 (8)— 2 6 29 
Cash payments(38)— — — (7)(45)
Non-cash charges and other — 8 — (2)— 6 
Liability as of January 2, 2021$28 $— $— $— $— $28