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 structure, which we fully implemented at the beginning of 2016, our businesses are organized in the following divisions: Americas Simple Meals and Beverages, Global Biscuits and Snacks, and Campbell Fresh.

In support of the new structure, we designed and implemented a new Integrated Global Services organization to deliver shared services across the company. We also streamlined our organizational structure, implemented an initiative to reduce overhead across the organization and are pursuing other initiatives to reduce costs and increase effectiveness. As part of these initiatives, we commenced a voluntary employee separation program 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. The electing employees remained with us through at least July 31, 2015, with some remaining beyond that date.

In February 2017, we announced that we are expanding these cost savings initiatives by further optimizing our supply chain network, primarily in North America, continuing to evolve our operating model to drive efficiencies, and more fully integrating our recent acquisitions. We have extended the time horizon for the initiatives from 2018 to 2020. Cost estimates for these expanded initiatives, as well as timing for certain activities, are being developed.

A summary of the restructuring charges we recorded and charges incurred in Administrative expenses and Cost of products sold related to the implementation of the new organizational structure and costs savings initiatives is as follows:



	Three Months Ended				Year Ended
	October 29, 2017		October 30, 2016		July 30, 2017		July 31, 2016		August 2, 2015
Restructuring charges	$	2	$	1	$	18	$	35	$	102
Administrative expenses	12		8		36		47		22
Cost of products sold	5		—		4		—		—
Total pre-tax charges	$	19	$	9	$	58	$	82	$	124

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



	Recognized as of October 29, 2017
Severance pay and benefits	$	137
Asset impairment/accelerated depreciation	17
Implementation costs and other related costs	129
Total	$	283

The total estimated pre-tax costs for actions that have been identified are approximately $380 to $420. We expect to incur substantially all of the costs through 2019. This estimate will be updated as costs for the expanded initiatives are developed.

We expect the costs for actions that have been identified to date to consist of the following: approximately $140 in severance pay and benefits; approximately $20 in asset impairment and accelerated depreciation; and approximately $220 to $260 in implementation costs and other related costs.We expect these pre-tax costs to be associated with our segments as follows: Americas Simple Meals and Beverages - approximately 30%; Global Biscuits and Snacks - approximately 38%; Campbell Fresh - approximately 4%; and Corporate - approximately 28%.

Of the aggregate $380 to $420 of pre-tax costs identified to date, we expect approximately $350 to $390 will be cash expenditures. In addition, we expect to invest approximately $180 in capital expenditures through 2019 primarily related to the construction of a network of distribution centers for our U.S. thermal plants and insourcing of manufacturing for certain simple meal products, of which we invested approximately $22 as of October 29, 2017.

A summary of the restructuring activity and related reserves associated with the initiatives at October 29, 2017, is as follows:



	Severance Pay and Benefits			Implementation Costs and Other Related Costs⁽³⁾	Asset Impairment/Accelerated Depreciation	Total Charges
Accrued balance at July 30, 2017⁽¹⁾	$	26
2018 charges	2			12	5	$	19
2018 cash payments	(10		)
Accrued balance at October 29, 2017⁽²⁾	$	18

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⁽¹⁾	Includes $2 of severance pay and benefits recorded in Other liabilities in the Consolidated Balance Sheet.


⁽²⁾	Includes $2 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 and Cost of products sold 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, 2017
	Three Months Ended		Costs Incurred to Date
Americas Simple Meals and Beverages	$	7	$	99
Global Biscuits and Snacks	6		84
Campbell Fresh	1		7
Corporate	5		93
Total	$	19	$	283