Exit, Disposal and Restructuring Activities Exit, Disposal and Restructuring Activities (Notes)

12 Months Ended

Jun. 28, 2014

Restructuring and Related Activities [Abstract]

Restructuring and Related Activities Disclosure [Text Block]

Exit, Disposal and 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 determine where they are classified in the financial statements. Our restructuring activities are recorded in one of two areas:

1. 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

On April 4, 2014, the company announced that it will discontinue all production at its Florence, Alabama facility by December 30, 2014. As a result of the facility closure, the company expects to incur cash charges of approximately $12.6 million. These costs include cash severance charges of approximately $9.6 million, all of which have been recognized within Net charges for exit activities, asset and business dispositions in the Consolidated Statements of Income as of June 28, 2014. Other cash closure costs of approximately $3.0 million are expected to be incurred prior to the end of 2016. 

2. Costs Recognized in Selling, General and Administrative Expenses

These amounts primarily relate to:

• Expenses associated with the installation of information systems related to ongoing restructuring activities

• Consulting costs related to restructuring activities

• 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 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 pursuant to the accounting rules for exit and disposal activities. However, management believes that the disclosure of these charges provides the reader with greater transparency to the total cost of the initiatives.

The following is a summary of the expenses associated with all exit, disposal and ongoing restructuring actions, as well as where the costs are reflected in the Consolidated Statements of Income:

In millions	2014		2013		2012
Exit and business dispositions	$	14	$	9	$	81
Selling, general and administrative expenses	44		39		115
Decrease in income from continuing operations before income taxes	$	58	$	48	$	196

The impact of these actions on the company's business segments and unallocated corporate expenses is summarized as follows:

In millions	2014		2013			2012
Retail	$	9	$	(1	)	$	14
Foodservice/Other	2		(2		)	4
Expense (income) in operating segments	11		(3		)	18
General corporate expenses	47		51			178
Total	$	58	$	48		$	196

The following table summarizes the activity during 2014 related to exit, disposal and restructuring related actions and the status of the related accruals as of June 28, 2014. The accrued amounts remaining represent the estimated cash expenditures necessary to satisfy remaining obligations. The majority of the cash payments to satisfy the accrued costs 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 (income) recognized during 2014	13			44			1			58
Cash payments	(9		)	(42		)	(19		)	(70		)
Noncash charges	—			(1		)	—			(1		)
Accrued costs as of June 28, 2014	$	14		$	6		$	5		$	25