Exit, Disposal and Other Restructuring Activities

3 Months Ended

Sep. 28, 2013

Restructuring and Related Activities [Abstract]

Exit, Disposal and Other Restructuring Activities

The company has incurred exit, disposition and restructuring charges for initiatives designed to improve its operational performance and reduce cost. The nature of the costs incurred under these plans includes the following:

Exit Activities, Asset and Business Disposition Actions – These amounts primarily relate to:


•	Employee termination costs


•	Lease and contractual obligation exit costs


•	Gains or losses on the disposition of assets or asset groupings that do not qualify as discontinued operations

Costs recognized in Cost of sales and Selling, general and administrative expenses – These primarily relate to:


•	Expenses associated with the installation of information systems


•	Consulting costs


•	Costs associated with the renegotiation of contracts for services with outside third-party vendors as part of the spin-off of the international coffee and tea operations

These costs are recognized in Cost of sales or Selling, general and administrative expenses in the Consolidated Statements of Income as they do not qualify for treatment as an exit activity or asset and business disposition under the accounting rules for exit and disposal activities. However, management believes the disclosure of these charges provides the reader greater transparency to the total cost of the initiatives.

The following is a summary of the (income) expense associated with ongoing actions, which also highlights where the costs are reflected in the Consolidated Statements of Income:



	Quarter Ended
(In millions)	September 28, 2013		September 29, 2012
Cost of Sales	$	—	$	1
Selling, general and administrative expenses	14		8
Exit activities, asset and business dispositions	3		(3		)
Decrease in income from continuing operations before income taxes	17		6

The impact of these actions on the company’s business segments and general corporate expense is summarized as follows:



	Quarter Ended
(In millions)	September 28, 2013		September 29, 2012
Retail	$	2	$	(3	)
Foodservice/Other	1		(2		)
Decrease (Increase) in operating segment income	3		(5		)
Increase in general corporate expenses	14		11
Total	$	17	$	6

The following table summarizes the activity for the first quarter of 2014 related to exit, disposal and restructuring related actions and the status of the related accruals as of September 28, 2013. The 2014 exit, disposal and restructuring related actions include recognized third party consulting costs related to cost saving and efficiency process and IT initiatives and recognized severance charges associated with planned employee terminations. The accrued amounts remaining represent the estimated cash expenditures necessary to satisfy remaining obligations and are expected to be paid in the next 12 months.



(In millions)	Employee termination and other benefits			IT and other costs			Non-cancellable leases/ Contractual obligations			Total
Accrued Costs as of June 29, 2013	$	10		$	5		$	23		$	38
Exit, disposal and other costs recognized during 2014	3			14			—			17
Cash payments	(3		)	(10		)	(8		)	(21		)
Accrued costs as of September 28, 2013	$	10		$	9		$	15		$	34

- Definition

The entire disclosure for restructuring and related activities. Description of restructuring activities such as exit and disposal activities, include facts and circumstances leading to the plan, the expected plan completion date, the major types of costs associated with the plan activities, total expected costs, the accrual balance at the end of the period, and the periods over which the remaining accrual will be settled.

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