Pepsi 2008 Annual Report Download - page 77

75PepsiCo, Inc. 2008 Annual Report
A summary of the restructuring and impairment charge is
as follows:
Severance
and Other
Employee
Costs
Asset
Impairments
Other
Costs Total
FLNA $÷48 $÷38 $÷22 $108
QFNA 14 3 14 31
LAF 30 8 2 40
PAB 68 92 129 289
UKEU 39 6 5 50
MEAA 11 2 2 15
Corporate 2 – 8 10
$212 $149 $182 $543
Severance and other employee costs primarily reect termina-
tion costs for approximately 3,500 employees. Asset impairments
relate to the closure of 6 plants and changes to our beverage
product portfolio. Other costs include contract exit costs and third-
party incremental costs associated with upgrading our product
portfolio and our supply chain.
A summary of our Productivity for Growth program activity is
as follows:
Severance
and Other
Employee
Costs
Asset
Impairments
Other
Costs Total
2008 restructuring and
impairment charge $212 $«149 $«182 $«543
Cash payments (50) – (109) (159)
Non-cash charge (27) (149) (9) (185)
Currency translation (1) – – (1)
Liability at
December 27, 2008 $134 $÷÷«– $÷«64 $«198
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, LAF, PAB, UKEU and MEAA. The charge was
recorded in selling, general and administrative expenses. All cash
payments related to this charge were paid by the end of 2008.
A summary of the restructuring and impairment charge is
as follows:
Severance
and Other
Employee
Costs
Asset
Impairments
Other
Costs Total
FLNA $÷– $19 $÷9 $÷28
LAF 14 25 – 39
PAB 12 – – 12
UKEU 2 4 3 9
MEAA 5 9 – 14
$33 $57 $12 $102
Severance and other employee costs primarily reect termina-
tion costs for approximately 1,100 employees.
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 consolidating the
manufacturing network at FLNA by closing two plants in the U.S.,
and rationalizing other assets, to increase manufacturing produc-
tivity and supply chain efciencies. The charge was comprised of
$43 million of asset impairments, $14 million of severance and
other employee costs and $10 million of other costs. Severance
and other employee costs primarily reect the termination costs
for approximately 380 employees. All cash payments related to
this charge were paid by the end of 2007.
Note 4 Property, Plant and Equipment and
Intangible Assets
Average
Useful Life 2008 2007 2006
Property, plant and
equipment, net
Land and improvements 10–34 yrs. $÷÷÷868 $÷÷÷864
Buildings and
improvements 20–44 4,738 4,577
Machinery and equipment,
including eet and
software 5–14 15,173 14,471
Construction in progress 1,773 1,984
22,552 21,896
Accumulated depreciation (10,889) (10,668)
$«11,663 $«11,228
Depreciation expense $÷«1,422 $÷«1,304 $1,182
Amortizable intangible
assets, net
Brands 5–40 $÷«1,411 $÷«1,476
Other identiable
intangibles 10–24 360 344
1,771 1,820
Accumulated amortization (1,039) (1,024)
$÷÷÷732 $÷÷÷796
Amortization expense $÷÷÷÷64 $÷÷÷÷58 $÷«162
Property, plant and equipment is recorded at historical cost.
Depreciation and amortization are recognized on a straight-line
basis over an asset’s estimated useful life. Land is not depreci-
ated and construction in progress is not depreciated until ready
for service. Amortization of intangible assets for each of the next
ve years, based on average 2008 foreign exchange rates, is
expected to be $64 million in 2009, $63 million in 2010, $62 mil-
lion in 2011, $60 million in 2012 and $56 million in 2013.