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57PepsiCo, Inc. 2008 Annual Report
will increase cost competitiveness across the supply chain,
upgrade and streamline our product portfolio, and simplify the
organization for more effective and timely decision-making. In
connection with this program, we expect to incur an additional
pre-tax charge of approximately $30 million to $60 million in 2009.
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.
In 2006, we incurred a charge of $67 million ($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 rationalizing other assets, to increase manufacturing
productivity and supply chain efciencies.

In 2007, we recognized $129 million ($0.08 per share) of non-
cash tax benets related to the favorable resolution of certain
foreign tax matters.
In 2006, we recognized non-cash tax benets of $602 million
($0.36 per share), substantially all of which related to the Internal
Revenue Service’s (IRS) examination of our consolidated tax
returns for the years 1998 through 2002.


In 2008, PBG implemented a restructuring initiative across all
of its geographic segments. In addition, PBG recognized an asset
impairment charge related to its business in Mexico.
Consequently, a non-cash charge of $138 million was included in
bottling equity income ($114 million after-tax or $0.07 per share)
as part of recording our share of PBG’s nancial results.

In 2006, the IRS concluded its examination of PBG’s consolidated
income tax returns for the years 1999 through 2000. Consequently,
a non-cash benet of $21 million was included in bottling equity
income ($18 million after-tax or $0.01 per share) as part of
recording our share of PBG’s nancial results.

In the discussions of net revenue and operating prot below,
effective net pricing reects the year-over-year impact of discrete
pricing actions, sales incentive activities and mix resulting from
selling varying products in different package sizes and in different
countries. Additionally, acquisitions reect all mergers and acqui-
sitions activity, including the impact of acquisitions, divestitures
and changes in ownership or control in consolidated subsidiaries.
The impact of acquisitions related to our non-consolidated equity
investees is reected in our volume and, excluding our anchor
bottlers, in our operating prot.

Since our divisions each use different measures of physical unit
volume (i.e., kilos, gallons, pounds and case sales), a common
servings metric is necessary to reect our consolidated physical
unit volume. Our divisions’ physical volume measures are con-
verted into servings based on U.S. Food and Drug Administration
guidelines for single-serving sizes of our products.
In 2008, total servings increased 3% compared to 2007, as
servings for both beverages and snacks worldwide grew 3%. In
2007, total servings increased over 4% compared to 2006, as
servings for beverages worldwide grew 4% and servings for
snacks worldwide grew 6%.

Change
2008 2007 2006 2008 2007
Total net revenue $43,251 $39,474 $35,137 10% 12%
Operating prot
FLNA $÷2,959 $÷2,845 $÷2,615 4% 9%
QFNA 582 568 554 2.5% 2.5%
LAF 897 714 655 26% 9%
PAB 2,026 2,487 2,315 (19)«% 7%
UKEU 811 774 700 5% 11%
MEAA 667 535 401 25% 34%
Corporate – net impact
of mark-to-market on
commodity hedges (346) 19 (18) n/m n/m
Corporate – other (661) (772) (720) (14)«% 7%
Total operating prot $÷6,935 $÷7,170 $÷6,502 (3)«% 10%
Total operating prot margin 16.0% 18.2% 18.5% (2.2)« (0.3)
n/m represents year-over-year changes that are not meaningful.
2008
Total operating prot decreased 3% and margin decreased
2.2 percentage points. The unfavorable net mark-to-market
impact of our commodity hedges and increased restructuring
and impairment charges contributed 11 percentage points to
the operating prot decline and 1.9 percentage points to the
margin decline. Leverage from the revenue growth was offset by
the impact of higher commodity costs. Acquisitions and foreign
currency each positively contributed 1 percentage point to
operating prot performance.