Pepsi 2007 Annual Report Download - page 66

Other Significant Accounting Policies
Our other signifi cant accounting policies
are disclosed as follows:
Property, Plant and Equipment and
•
Intangible Assets — Note 4, and for
additional unaudited information on
brands and goodwill, see “Our Critical
Accounting Policies” in Management’s
Discussion and Analysis.
Income Taxes — Note 5, and for
•
additional unaudited information, see
“Our Critical Accounting Policies” in
Management’s Discussion and Analysis.
Pension, Retiree Medical and Savings
•
Plans — Note 7, and for additional
unaudited information, see “Our
Critical Accounting Policies” in
Management’s Discussion and Analysis.
Risk Management — Note 10, and for
•
additional unaudited information, see
“Our Business Risks” in Management’s
Discussion and Analysis.
Recent Accounting Pronouncements
In September 2006, the SEC issued SAB
108 to address diversity in practice in
quantifying fi nancial statement misstate-
ments. SAB 108 requires that we quantify
misstatements based on their impact
on each of our fi nancial statements and
related disclosures. On December 30,
2006, we adopted SAB 108. Our adoption
of SAB 108 did not impact our fi nancial
statements.
In September 2006, the FASB issued
SFAS 157 which defi nes fair value, estab-
lishes a framework for measuring fair
value, and expands disclosures about fair
value measurements. The provisions of
SFAS 157 are effective as of the beginning
of our 2008 fi scal year. However, the FASB
has deferred the effective date of SFAS
157, until the beginning of our 2009 fi scal
year, as it relates to fair value measure-
ment requirements for nonfi nancial assets
and liabilities that are not remeasured
at fair value on a recurring basis. We
are currently evaluating the impact of
adopting SFAS 157 on our fi nancial state-
ments. We do not expect our adoption to
have a material impact on our fi nancial
statements.
In February 2007, the FASB issued SFAS
159 which permits entities to choose
to measure many fi nancial instruments
and certain other items at fair value. The
provisions of SFAS 159 are effective as of
the beginning of our 2008 fi scal year. Our
adoption of SFAS 159 will not impact our
fi nancial statements.
In December 2007, the FASB issued
SFAS 141R and SFAS 160 to improve,
simplify, and converge internationally the
accounting for business combinations and
the reporting of noncontrolling interests
in consolidated fi nancial statements. The
provisions of SFAS 141R and SFAS 160 are
effective as of the beginning of our 2009
fi scal year. We are currently evaluating the
impact of adopting SFAS 141R and SFAS
160 on our fi nancial statements.
2007 Restructuring and
Impairment Charge
In 2007, we incurred a charge of $102 million
($70 million after-tax or $0.04 per share)
in conjunction with restructuring actions
primarily to close certain plants and
rationalize other production lines across
FLNA, PBNA and PI. The charge was
comprised of $57 million of asset impair-
ments, $33 million of severance and other
employee-related costs and $12 million of
other costs and was recorded in selling,
general and administrative expenses in
our income statement. Employee-related
costs primarily refl ect the termination
costs for approximately 1,100 employees.
Substantially all cash payments related to
this charge are expected to be paid by the
end of 2008.
2006 Restructuring and
Impairment Charge
In 2006, we incurred a charge of
$67 million ($43 million after-tax or $0.03
per share) in conjunction with consolidat-
ing the manufacturing network at FLNA
by closing two plants in the U.S., and
rationalizing other assets, to increase
manufacturing productivity and sup-
ply chain effi ciencies. The charge was
comprised of $43 million of asset impair-
ments, $14 million of severance and other
employee-related costs and $10 million
of other costs. Employee-related costs
primarily refl ect the termination costs for
approximately 380 employees. All cash
payments related to this charge were paid
by the end of 2007.
Note 3 — Restructuring and Impairment Charges
A summary of the restructuring and impairment charge by division is as follows:
Severance and Other
Asset Impairments Employee Costs Other Costs Total
FLNA $ 19 $ – $ 9 $ 28
PBNA – 11 – 11
PI 38 22 3 63
$57 $33 $12 $102
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