Restructuring Charges and Cost Savings Initiatives

2015 Initiatives

In fiscal 2015, we implemented initiatives to reduce costs and to streamline our organizational structure. 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.

In February 2017, we announced that we were expanding these 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 extended the time horizon for the initiatives from 2018 to 2020. In January 2018, as part of the expanded initiatives, we authorized additional pre-tax costs to improve the operational efficiency of our thermal supply chain network in North America by closing our manufacturing facility in Toronto, Ontario, and to optimize our information technology infrastructure by migrating certain applications to the latest cloud technology platform. Cost estimates for these expanded initiatives, as well as timing for certain activities, are continuing to be developed.

A summary of the restructuring charges and charges recorded in Administrative expenses, Cost of products sold, and Marketing and selling expenses related to the initiatives is as follows:



	Three Months Ended				Nine Months Ended				Year Ended
	April 29, 2018		April 30, 2017		April 29, 2018		April 30, 2017		July 30, 2017		July 31, 2016		August 2, 2015
Restructuring charges	$	14	$	—	$	49	$	—	$	18	$	35	$	102
Administrative expenses	30		7		68		18		36		47		22
Cost of products sold	14		—		20		—		4		—		—
Marketing and selling expenses	2		—		2		—		—		—		—
Total pre-tax charges	$	60	$	7	$	139	$	18	$	58	$	82	$	124

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



	Recognized as of April 29, 2018
Severance pay and benefits	$	180
Asset impairment/accelerated depreciation	31
Implementation costs and other related costs	192
Total	$	403

The total estimated pre-tax costs for actions that have been identified are approximately $535 to $580. 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 $180 in severance pay and benefits; approximately $90 in asset impairment and accelerated depreciation; and approximately $265 to $310 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 43%; Global Biscuits and Snacks - approximately 31%; Campbell Fresh - approximately 4%; and Corporate - approximately 22%.

Of the aggregate $535 to $580 of pre-tax costs identified to date, we expect approximately $435 to $480 will be cash expenditures. In addition, we expect to invest approximately $250 in capital expenditures through 2020 primarily related to the U.S. warehouse optimization project, transition of production of the Toronto manufacturing facility to our U.S. thermal plants, insourcing of manufacturing for certain simple meal products and optimization of information technology infrastructure and applications, of which we invested approximately $56 as of April 29, 2018.

A summary of the restructuring activity and related reserves associated with the initiatives at April 29, 2018, is as follows:



	Severance Pay and Benefits			Non-Cash Benefits⁽³⁾	Implementation Costs and Other Related Costs⁽⁴⁾	Asset Impairment/Accelerated Depreciation	Other Non-Cash Exit Costs⁽⁵⁾	Total Charges
Accrued balance at July 30, 2017⁽¹⁾	$	26
2018 charges	43			2	72	19	3	$	139
2018 cash payments	(23		)
Foreign currency translation adjustment	(1		)
Accrued balance at April 29, 2018⁽²⁾	$	45

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


⁽²⁾	Includes $29 of severance pay and benefits recorded in Other liabilities in the Consolidated Balance Sheet.


⁽³⁾	Represents pension termination benefits. See Note 10 for additional information.


⁽⁴⁾	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, Cost of products sold, and Marketing and selling expenses in the Consolidated Statements of Earnings.


⁽⁵⁾	Includes non-cash costs that are not reflected in the restructuring reserve in the Consolidated Balance Sheet.

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:



	April 29, 2018
	Three Months Ended		Nine Months Ended		Costs Incurred to Date
Americas Simple Meals and Beverages	$	16	$	56	$	148
Global Biscuits and Snacks	36		63		141
Campbell Fresh	1		4		10
Corporate	7		16		104
Total	$	60	$	139	$	403

Snyder's-Lance Cost Transformation Program and Integration

On March 26, 2018, we completed the acquisition of Snyder's-Lance. Prior to the acquisition, in April 2017, 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 expect to continue to implement this program and to achieve a majority of the program's targeted savings. In addition, we have identified opportunities for additional cost synergies as we integrate Snyder's-Lance.

We are developing the detailed plans to implement the Snyder's-Lance cost transformation program and to achieve the cost synergies and therefore we cannot reasonably estimate the total expected pre-tax costs and timing of when we expect to incur those costs, as well as the expected future cash expenditures. We expect the pre-tax costs to be associated primarily with Global Biscuits and Snacks.

In the three-month period ended April 29, 2018, we recorded a restructuring charge of $10 and incurred $6 in Administrative expenses related to the integration of Snyder's-Lance.

A summary of the restructuring activity and related reserves associated with the Snyder's-Lance integration at April 29, 2018, is as follows:



	Severance Pay and Benefits		Implementation and Integration Costs⁽¹⁾	Total Charges
2018 charges	$	10	6	$	16
2018 cash payments	—
Accrued balance at April 29, 2018	$	10

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⁽¹⁾	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, nor implementation and integration costs because we evaluate segment performance excluding such charges. The pre-tax costs of $16 incurred in the three-month period ended April 29, 2018 were associated with the Global Biscuits and Snacks segment.