BUSINESS REALIGNMENT ACTIVITIES

3 Months Ended

Mar. 31, 2024

Restructuring and Related Activities [Abstract]

We periodically undertake business realignment activities designed to increase our efficiency and focus our business in support of our key growth strategies. Costs associated with business realignment activities are classified in our Consolidated Statements of Income as follows:


	Three Months Ended
		March 31, 2024		April 2, 2023
Cost of sales		$	2,612	$	1,050
Selling, marketing and administrative expense		14,054		488
Business realignment costs		—		811
Costs associated with business realignment activities		$	16,666	$	2,349

Costs recorded by program during the three months ended March 31, 2024 and April 2, 2023 related to these activities were as follows:


	Three Months Ended
		March 31, 2024		April 2, 2023
Advancing Agility & Automation Initiative:

Other program costs		16,666		—
International Optimization Program:
Severance and employee benefit costs		$	—	$	811
Other program costs		—		1,538
Total		$	16,666	$	2,349

Amounts classified as liabilities qualifying as exit and disposal costs primarily represent employee-related and certain third-party service provider charges, however, such amounts at March 31, 2024 are not significant.

Advancing Agility & Automation Initiative

On February 2, 2024, the Board of Directors of the Company approved a multi-year productivity initiative (“Advancing Agility & Automation” or "AAA") to improve supply chain and manufacturing-related spend, optimize selling, general and administrative expenses, leverage new technology and business models to further simplify and automate processes, and generate long-term savings.

The Company estimates that the AAA Initiative will result in total pre-tax costs of $200,000 to $250,000 from inception through 2026. This estimate primarily includes program office execution and third-party costs supporting the design and implementation of the new organizational structure of $100,000 to $120,000, as well as implementation and technology capability costs of $55,000 to $70,000. Additionally, we expect to incur employee severance and related separation benefits of $45,000 to $60,000 as we facilitate workforce reductions and reallocate resources to further drive the Company’s strategic priorities. The cash portion of the total cost is estimated to be $175,000 to $225,000. At the conclusion of the program in 2026, ongoing annual savings are expected to be approximately $300,000.

Since inception through March 31, 2024, we recognized total costs associated with the AAA Initiative of $16,666. These charges predominantly included third-party costs supporting the design and implementation of the new organizational structure, as well as technology capability costs. The costs and related benefits of the AAA Initiative relate to the North America Confectionery segment and Corporate. However, segment operating results do not include these business realignment expenses because we evaluate segment performance excluding such costs.

2020 International Optimization Program

In the fourth quarter of 2020, we commenced a program (“International Optimization Program”) to streamline resources and investments in select international markets, including the optimization of our China operating model that will improve our operational efficiency and provide for a strong, sustainable and simplified base going forward.

The International Optimization Program was originally expected to total pre-tax costs of $50,000 to $75,000, with cash costs in the range of $40,000 to $65,000, primarily related to workforce reductions of approximately 350 positions outside of the United States, costs to consolidate and relocate production, and third-party costs incurred to execute these activities. The costs and related benefits of the International Optimization Program relate to the International segment. However, segment operating results do not include these business realignment expenses because we evaluate segment performance excluding such costs. For the three months ended April 2, 2023, we recognized total costs associated with the International Optimization Program of $2,349. From program inception in 2020 through completion in 2023, we incurred pre-tax charges to execute the program totaling $53,799.