Restructuring Charges and Cost Savings Initiatives

2015 Initiatives

On January 29, 2015, we announced plans to implement a new enterprise design focused mainly on product categories. Under the new design, our businesses will be organized in the following three new divisions: Americas Simple Meals and Beverages, Global Biscuits and Snacks, and Campbell Fresh. We are in the process of implementing plans for this new enterprise design.

To support our new enterprise design, we are designing and implementing a new Integrated Global Services organization to reduce our costs, improve our capabilities by establishing dedicated centers of excellence, and improve our efficiency. We are still in the process of designing this organization.

We are pursuing additional initiatives to reduce costs and to streamline our organizational structure. In the third quarter of 2015, we commenced a voluntary employee separation program and recorded a restructuring charge of $9 related to the program for severance pay and benefits. The program was available to certain U.S.-based salaried employees nearing retirement who met age, length-of-service and business unit/function criteria. A total of 471 employees elected the program. Most of the electing employees will remain with the company through July 31, 2015, with some remaining with the company beyond July 31.

Finally, we incurred charges of $9 recorded in Administrative expenses related to the implementation of the new organizational structure and cost reduction initiatives.

The aggregate after-tax impact of restructuring charges and implementation costs recorded in 2015 was $11, or $.04 per share. A summary of the pre-tax costs and remaining costs associated with the 2015 initiatives is as follows:



	Total Program		Recognized as of May 3, 2015			Remaining Costs to be Recognized
Severance pay and benefits	$	109	$	(9	)	$	100
Implementation costs	22		(9		)	13
Total	$	131	$	(18	)	$	113

Of the aggregate $131 of pre-tax costs, approximately $124 represents cash expenditures. We expect to incur the majority of these costs in the fourth quarter of 2015.

A summary of the restructuring activity and related reserves associated with the 2015 initiatives at May 3, 2015, is as follows:



			Nine Months Ended May 3, 2015
	Accrued Balance at August 3, 2014		Charges		Cash Payments		Accrued Balance at May 3, 2015
Severance pay and benefits	$	—	$	2	$	—	$	2
Non-cash benefits⁽¹⁾			7
Implementation costs⁽²⁾			9
Total charges			$	18

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


⁽²⁾	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 and implementation costs because we evaluate segment performance excluding such charges. A summary of restructuring charges and implementation costs incurred to date associated with segments is as follows:



	U.S. Simple Meals		Global Baking and Snacking		U.S. Beverages		Corporate		Total
Severance pay and benefits	$	3	$	4	$	1	$	1	$	9
Implementation costs	—		—		—		9		9
	$	3	$	4	$	1	$	10	$	18

We expect additional pre-tax costs of approximately $113 associated with segments as follows: U.S. Simple Meals - $37; Global Baking and Snacking - $45; U.S. Beverages - $9; Bolthouse and Foodservice - $5; and Corporate - $17.

2014 Initiatives

In 2014, we implemented initiatives to reduce overhead across the organization, restructure manufacturing and streamline operations for our soup and broth business in China and improve supply chain efficiency in Australia. Details of the 2014 initiatives include:


•	We streamlined our salaried workforce in North America and our workforce in the Asia Pacific region. Approximately 250 positions were eliminated.


•	Together with our joint venture partner Swire Pacific Limited, we agreed to restructure manufacturing and streamline operations for our soup and broth business in China. As a result, certain assets were impaired, and approximately 100 positions were eliminated.


•	In Australia, we implemented an initiative to improve supply chain efficiency by relocating production from our biscuit plant in Marleston to Huntingwood. The relocation will continue through the second quarter of 2016 and will result in the elimination of approximately 90 positions.


•	We implemented an initiative to reduce overhead across the organization by eliminating approximately 85 positions. The actions will be completed in 2015.

In 2014, we recorded a restructuring charge of $54 ($33 after tax or $.10 per share in earnings from continuing operations attributable to Campbell Soup Company) related to the 2014 initiatives. Of the amounts recorded in 2014, $34 ($19 after tax or $.06 per share in earnings from continuing operations attributable to Campbell Soup Company) was recorded in the nine-month period ended April 27, 2014. A summary of the pre-tax costs and remaining costs associated with the 2014 initiatives is as follows:



	Total Program		Recognized as of May 3, 2015			Remaining Costs to be Recognized
Severance pay and benefits	$	42	$	(41	)	$	1
Asset impairment	12		(12		)	—
Other exit costs	2		(1		)	1
Total	$	56	$	(54	)	$	2

Of the aggregate $56 of pre-tax costs, approximately $43 represents cash expenditures. In addition, we expect to invest approximately $6 in capital expenditures, primarily to relocate biscuit production and packaging capabilities, of which we invested approximately $1 as of May 3, 2015. We expect to complete the remaining aspects of the 2014 initiatives through 2016.

A summary of the restructuring activity and related reserves associated with the 2014 initiatives at May 3, 2015, is as follows:



			Nine Months Ended May 3, 2015
	Accrued Balance at August 3, 2014		Charges		Cash Payments			Foreign Currency Translation Adjustment			Accrued Balance at May 3, 2015
Severance pay and benefits	$	28	$	—	$	(15	)	$	(2	)	$	11

Segment operating results do not include restructuring charges because we evaluate segment performance excluding such charges. A summary of restructuring charges 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		Corporate		Total
Severance pay and benefits	$	7	$	23	$	6	$	2	$	2	$	1	$	41
Asset impairment	1		—		11		—		—		—		12
Other exit costs	—		—		1		—		—		—		1
	$	8	$	23	$	18	$	2	$	2	$	1	$	54

We expect additional pre-tax costs of approximately $2 associated with segments as follows: U.S. Simple Meals - $1 and Global Baking and Snacking - $1.

2013 Initiatives

In 2013, we implemented initiatives to improve supply chain efficiency, expand access to manufacturing and distribution capabilities and reduce costs. Details of the 2013 initiatives include:

•

We implemented initiatives to improve our U.S. supply chain cost structure and increase asset utilization across our U.S. thermal plant network, including closing our Sacramento, California, thermal plant, 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. We shifted the majority of Sacramento's soup, sauce and beverage production to our thermal plants in Maxton, North Carolina; Napoleon, Ohio; and Paris, Texas. We also closed our South Plainfield, New Jersey, spice plant, which resulted in the elimination of 27 positions. We consolidated spice production at our Milwaukee, Wisconsin, plant in 2013.

•

In Mexico, we entered into commercial arrangements with third-party providers to expand access to manufacturing and distribution capabilities. The third-party providers produce and distribute our beverages, soups, broths and sauces throughout the Mexican market. As a result of these agreements, we closed our plant in Villagrán, Mexico, and eliminated approximately 260 positions in the first quarter of 2014.


•	We implemented an initiative to improve our Pepperidge Farm bakery supply chain cost structure by closing our plant in Aiken, South Carolina. The plant was closed in May 2014. We shifted the majority of Aiken's bread production to our bakery plant in Lakeland, Florida. Approximately 110 positions were eliminated as a result of the plant closure.


•	We streamlined our 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 2014, we recorded a restructuring charge of $1 related to the 2013 initiatives. In addition, we recorded approximately $3 of costs related to the 2013 initiatives in Cost of products sold, representing other exit costs. The aggregate after-tax impact of restructuring charges and related costs recorded in 2014 was $3, or $.01 per share. Of the amounts recorded in 2014, a restructuring charge of $1 was recorded in the nine-month period ended April 27, 2014, and approximately $2 of costs related to these initiatives were recorded in Cost of products sold, representing other exit costs. The aggregate after-tax impact of restructuring charges and related costs recorded in the nine-month period ended April 27, 2014, was $2, or $.01 per share. In 2013, we recorded a restructuring charge of $51. In addition, we recorded approximately $91 of costs related to these initiatives in 2013 in Cost of products sold, representing accelerated depreciation and other exit costs. The aggregate after-tax impact of restructuring charges and related costs recorded in 2013 was $90, or $.28 per share. A summary of the pre-tax costs and remaining costs associated with the 2013 initiatives is as follows:



	Total Program		Recognized as of May 3, 2015			Remaining Costs to be Recognized
Severance pay and benefits	$	35	$	(35	)	$	—
Accelerated depreciation/asset impairment	99		(99		)	—
Other exit costs	14		(12		)	2
Total	$	148	$	(146	)	$	2

Of the aggregate $148 of pre-tax costs, approximately $46 represents cash expenditures. In addition, we expect to invest approximately $31 in capital expenditures, primarily to relocate and refurbish a beverage filling and packaging line, and relocate bread production, of which we invested approximately $29 as of May 3, 2015. We expect to complete the remaining aspects of the 2013 initiatives in 2015.

A summary of the restructuring activity and related reserves associated with the 2013 initiatives at May 3, 2015, is as follows:



			Nine Months Ended May 3, 2015
	Accrued Balance at August 3, 2014		Charges		Cash Payments			Accrued Balance at May 3, 2015
Severance pay and benefits	$	3	$	—	$	(2	)	$	1

Segment operating results do not include restructuring charges and related costs because we evaluate segment performance excluding such charges. A summary of 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	$	19	$	2	$	5	$	7	$	2	$	35
Accelerated depreciation/asset impairment	64		10		3		22		—		99
Other exit costs	7		2		1		2		—		12
	$	90	$	14	$	9	$	31	$	2	$	146

We expect additional pre-tax costs of approximately $2 associated with the Global Baking and Snacking segment.