Restructuring Charges

2013 Initiatives

In 2013, the company implemented the following initiatives to improve supply chain efficiency, expand access to manufacturing and distribution capabilities, and reduce costs:

•

The company implemented initiatives to improve its U.S. supply chain cost structure and increase asset utilization across its U.S. thermal plant network, including closing its thermal plant in Sacramento, California, which produced soups, sauces and beverages. The closure resulted in the elimination of approximately 700 full-time positions and was completed in phases. Most of the positions were eliminated in 2013 and operations ceased in August 2013. The company shifted the majority of Sacramento's soup, sauce and beverage production to its thermal plants in Maxton, North Carolina; Napoleon, Ohio; and Paris, Texas. The company also closed its spice plant in South Plainfield, New Jersey, which resulted in the elimination of 27 positions. The company consolidated spice production at its Milwaukee, Wisconsin, plant in 2013.

•

In Mexico, the company entered into commercial arrangements with third-party providers to expand access to manufacturing and distribution capabilities. The third-party providers will produce and distribute the company's beverages, soups, broths and sauces throughout the Mexican market. As a result of these agreements, the company will close its plant in Villagrán, Mexico, in 2014 and eliminate approximately 260 positions.


•	The company will improve its Pepperidge Farm bakery supply chain cost structure by closing its plant in Aiken, South Carolina in 2014. The company will shift the majority of Aiken's bread production to its bakery plant in Lakeland, Florida. Approximately 110 positions will be eliminated as a result of the plant closure.


•	The company streamlined its salaried workforce in U.S. Simple Meals, North America Foodservice and U.S. Beverages by approximately 70 positions. This action was substantially completed in August 2013.

In 2013, the company recorded a restructuring charge of $51 related to these initiatives. In addition, approximately $91 of costs related to these initiatives were recorded in Cost of products sold, representing accelerated depreciation and other exit costs. The aggregate after-tax impact of restructuring charges and related costs was $90, or $.28 per share. A summary of the pre-tax costs and remaining costs associated with the initiatives is as follows:



	Total Costs		Recognized as of July 28, 2013			Remaining Costs to be Recognized
Severance pay and benefits	$	37	$	(35	)	$	2
Accelerated depreciation/asset impairment	99		(99		)	—
Other exit costs	14		(8		)	6
Total	$	150	$	(142	)	$	8

Of the aggregate $150 of pre-tax costs, the company expects approximately $47 will be cash expenditures. In addition, the company expects to invest approximately $31 in capital expenditures, primarily to relocate and refurbish a beverage filling and packaging line, and relocate bread production, of which approximately $12 has been invested as of July 28, 2013. The outstanding aspects of these restructuring initiatives are expected to be completed in 2014.

A summary of the restructuring activity and related reserves associated with the initiatives at July 28, 2013 is as follows:



	Accrued Balance at		2013		2013 Cash			Accrued Balance at
	July 29, 2012		Charges		Payments			July 28, 2013
Severance pay and benefits	$	—	$	32	$	(15	)	$	17
Accelerated depreciation/asset impairment			99
Non-cash benefits ⁽¹⁾			3
Other exit costs ⁽²⁾			8
Total charges			$	142

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⁽¹⁾	Represents pension curtailment costs. See Note 11.


⁽²⁾	Includes non-cash costs and other exit costs recognized as incurred that are not reflected in the restructuring reserve in the Consolidated Balance Sheet.

A summary of the 2013 restructuring charges and related costs incurred to date associated with segments is as follows:



	U.S. Simple Meals		Global Baking and Snacking		International Simple Meals and Beverages		U.S. Beverages		Bolthouse and Foodservice		Total
Severance pay and benefits	$	20	$	2	4		$	7	2		$	35
Accelerated depreciation/asset impairment	64		10		3		22		—		99
Other exit costs	5		—		1		2		—		8
	$	89	$	12	$	8	$	31	$	2	$	142

The company expects to incur additional pre-tax costs of approximately $8 by segment as follows: U.S. Simple Meals - $2; Global Baking and Snacking - $4; and International Simple Meals and Beverages - $2. Segment operating results do not include restructuring charges as segment performance is evaluated excluding such charges.

2011 Initiatives

In the fourth quarter of 2011, the company announced a series of initiatives to improve supply chain efficiency and reduce overhead costs across the organization to help fund plans to drive the growth of the business. The company also announced its exit from the Russian market. Details of the initiatives include:

•

In Australia, the company is investing in a new system to automate packing operations at its biscuit plant in Virginia. This investment continued through the fourth quarter of 2013 and will result in the elimination of approximately 190 positions. The initiative is now expected to be substantially completed by December 2013. Further, the company improved asset utilization in the U.S. by shifting production of ready-to-serve soups from Paris, Texas, to other facilities in 2012. In addition, the manufacturing facility in Marshall, Michigan, was closed in 2011, and manufacturing of Campbell’s Soup at Hand microwavable products was consolidated at the Maxton, North Carolina, plant in 2012.

•

The company streamlined its salaried workforce by approximately 510 positions around the world, including approximately 130 positions at its world headquarters in Camden, New Jersey. These actions were substantially completed in 2011. As part of this initiative, the company outsourced a larger portion of its U.S. retail merchandising activities to its retail sales agent, Acosta Sales and Marketing, and eliminated approximately 190 positions.


•	In connection with exiting the Russian market, the company eliminated approximately 50 positions. The exit process commenced in 2011 and was substantially completed in 2012.

In 2012, the company recorded a restructuring charge of $10 ($6 after tax or $.02 per share) related to these initiatives. Of the amount recorded in 2012, $3 related to discontinued operations. In the fourth quarter of 2011, the company recorded a restructuring charge of $63 ($41 after tax or $.12 per share). Of the amount recorded in 2011, $3 related to discontinued operations. A summary of the pre-tax charges and remaining costs associated with the initiatives is as follows:



	Total Program		Recognized as of July 28, 2013			Remaining Costs to be Recognized
Severance pay and benefits	$	41	$	(41	)	$	—
Accelerated depreciation/asset impairment	23		(23		)	—
Other exit costs	10		(9		)	1
Total	$	74	$	(73	)	$	1

Of the aggregate $74 of pre-tax costs, approximately $50 represents cash expenditures, the majority of which was spent in 2012. In addition, the company expects to invest approximately $40 in capital expenditures in connection with the actions, of which approximately $33 has been invested as of July 28, 2013.

A summary of the restructuring activity and related reserves associated with the 2011 initiatives at July 28, 2013 is as follows:



	Accrued Balance at							Foreign Currency			Accrued Balance at							Foreign Currency			Accrued Balance at
	July 31, 2011		2012 Charges		2012 Cash Payments			Translation Adjustment			July 29, 2012		2013 Charges		2013 Cash Payments			Translation Adjustment			July 28, 2013
Severance pay and benefits	35		4		(24		)	(1		)	$	14	$	—	$	(10	)	$	(1	)	$	3
Other exit costs	4		2		(4		)	—			2		—		(1		)	—			1
	$	39	6		$	(28	)	$	(1	)	$	16	—		$	(11	)	$	(1	)	$	4
Accelerated depreciation/asset impairment			1
Other non-cash exit costs			3
Total charges			$	10									$	—

A summary of restructuring charges incurred to date associated with each segment is as follows:



	U.S. Simple Meals		Global Baking and Snacking		International Simple Meals and Beverages		U.S. Beverages		Bolthouse and Foodservice		Corporate		Total
Severance pay and benefits	$	10	$	14	$	11	$	3	$	1	$	2	$	41
Accelerated depreciation/asset impairment	20		—		3		—		—		—		23
Other exit costs	2		—		3		—		—		4		9
	$	32	$	14	$	17	$	3	$	1	$	6	$	73

The company expects to incur additional pre-tax costs of approximately $1 in the U.S. Simple Meals segment. Segment operating results do not include restructuring charges as segment performance is evaluated excluding such charges.