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Restructuring Charges and Cost Savings Initiatives
12 Months Ended
Jul. 31, 2022
Restructuring Charges [Abstract]  
Restructuring Charges Restructuring Charges and Cost Savings Initiatives
Multi-year Cost Savings Initiatives and Snyder's-Lance Cost Transformation Program and Integration
Beginning in fiscal 2015, we implemented initiatives to reduce costs and to streamline our organizational structure.
Over the years, we expanded these initiatives by continuing to optimize our supply chain and manufacturing networks, including closing our manufacturing facility in Toronto, Ontario, as well as our information technology infrastructure.
On March 26, 2018, we completed the acquisition of Snyder's-Lance. Prior to the acquisition, 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 continued to implement this program and identified opportunities for additional cost synergies as we integrated Snyder's-Lance.
In 2022, we expanded these initiatives as we continue to pursue cost savings by further optimizing our supply chain and manufacturing network and through effective cost management. Cost estimates for these expanded initiatives, as well as timing for certain activities, are continuing to be developed.
A summary of the pre-tax charges recorded in Earnings from continuing operations related to these initiatives is as follows:
(Millions)202220212020
Recognized as of July 31, 2022
Restructuring charges$5 $21 $$264 
Administrative expenses20 28 48 359 
Cost of products sold5 84 
Marketing and selling expenses1 14 
Research and development expenses — 
Total pre-tax charges$31 $53 $69 $725 
A summary of the pre-tax costs in Earnings from continuing operations associated with the initiatives is as follows:
(Millions)
Recognized as of
July 31, 2022
Severance pay and benefits
$227 
Asset impairment/accelerated depreciation82 
Implementation costs and other related costs
416 
Total$725 
The total estimated pre-tax costs for actions associated with continuing operations that have been identified are approximately $735 million to $740 million and we expect to incur the costs through 2023. These estimates will be updated as the expanded initiatives are developed.
We expect the costs for actions associated with continuing operations that have been identified to date to consist of the following: approximately $230 million in severance pay and benefits; approximately $85 million in asset impairment and accelerated depreciation; and approximately $420 million to $425 million in implementation costs and other related costs. We expect these pre-tax costs to be associated with our segments as follows: Meals & Beverages - approximately 31%; Snacks - approximately 44%; and Corporate - approximately 25%.
Of the aggregate $735 million to $740 million of pre-tax costs associated with continuing operations identified to date, we expect approximately $635 million to $640 million will be cash expenditures. In addition, we expect to invest approximately $445 million in capital expenditures through 2023, of which we invested $440 million as of July 31, 2022. The capital expenditures primarily relate to a U.S. warehouse optimization project, improvement of quality, safety and cost structure across the Snyder’s-Lance manufacturing network, implementation of our existing SAP enterprise-resource planning system for Snyder's-Lance, transition of production of the Toronto manufacturing facility to our U.S. thermal plants, optimization of information technology infrastructure and applications and optimization of the Snyder’s-Lance warehouse and distribution network.
A summary of the restructuring activity and related reserves associated with continuing operations at July 31, 2022, is as follows:
(Millions)Severance Pay and Benefits
Implementation Costs and Other Related Costs(3)
Asset Impairment/Accelerated Depreciation
Other Non-Cash Exit Costs(4)
Total Charges
Accrued balance at August 2, 2020(1)
$15 
2021 charges
27 15 $53 
2021 cash payments
(14)
Accrued balance at August 1, 2021(2)
$
2022 charges
5 26   $31 
2022 cash payments
(5)
Accrued balance at July 31, 2022
$7 
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(1)Includes $3 million of severance pay and benefits recorded in Other liabilities in the Consolidated Balance Sheet.
(2)Includes $1 million 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, Cost of products sold and Marketing and selling expenses in the Consolidated Statements of Earnings.
(4)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 in Earnings from continuing operations associated with segments is as follows:
(Millions)2022
Costs Incurred to Date
Meals & Beverages$$225 
Snacks22 321 
Corporate179 
Total$31 $725 
In addition, in the second quarter of 2021, we recorded a $19 million deferred tax charge in connection with a legal entity reorganization as part of the continued integration of Snyder's-Lance.