Pepsi 2006 Annual Report Download - page 64

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Average Useful Life 2006 2005 2004
Property, plant and equipment, net
Land and improvements 10 – 30 yrs. $ 756 $ 685
Buildings and improvements 20 – 44 4,095 3,736
Machinery and equipment, including fleet and software 5 – 15 12,768 11,658
Construction in progress 1,439 1,066
19,058 17,145
Accumulated depreciation (9,371) (8,464)
$ 9,687 $ 8,681
Depreciation expense $1,182 $1,103 $1,062
Amortizable intangible assets, net
Brands 5 – 40 $1,288 $1,054
Other identifiable intangibles 3 – 15 290 257
1,578 1,311
Accumulated amortization (941) (781)
$ 637 $ 530
Amortization expense $162 $150 $147
Note 4 — Property, Plant and Equipment and Intangible Assets
Note 3 — Restructuring and Impairment Charges
62
2006 Restructuring and
Impairment Charges
In 2006, we incurred a charge of $67 mil-
lion ($43 million after-tax or $0.03 per
share) in conjunction with consolidating
the manufacturing network at FLNA by
closing two plants in the U.S., and ratio-
nalizing other assets, to increase
manufacturing productivity and supply
chain efficiencies. The charge was com-
prised of $43 million of asset
impairments, $14 million of severance
and other employee costs and $10 million
of other costs. Employee-related costs
primarily reflect the termination costs for
approximately 380 employees. We expect
all of the cash payments related to this
charge to be paid by the end of 2007.
2005 Restructuring Charges
In 2005, we incurred a charge of $83 mil-
lion ($55 million after-tax or $0.03 per
share) in conjunction with actions taken
to reduce costs in our operations, princi-
pally through headcount reductions. Of
this charge, $34 million related to FLNA,
$21 million to PBNA, $16 million to PI
and $12 million to Corporate. Most of
this charge related to the termination
of approximately 700 employees. As of
December 30, 2006, all terminations
had occurred and substantially no
accrual remains.
2004 Restructuring and
Impairment Charges
In 2004, we incurred a charge of $150
million ($96 million after-tax or $0.06 per
share) in conjunction with the consolida-
tion of FLNA’s manufacturing network as
part of its ongoing productivity
program. Of this charge, $93 million
related to asset impairments, primarily
reflecting the closure of four U.S. plants.
Production from these plants was rede-
ployed to other FLNA facilities in the U.S.
The remaining $57 million included
employee-related costs of $29 million,
contract termination costs of $8 million
and other exit costs of $20 million.
Employee-related costs primarily reflect
the termination costs for approximately
700 employees. As of December 30,
2006, all terminations had occurred and
substantially no accrual remains.
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