Pepsi 2011 Annual Report Download - page 64

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A summary of our merger and integration activity is as follows:
Severance
and Other
Employee Costs
Asset
Impairment
Other
Costs Total
2010 merger and
integration charges $ 396 $ 132 $ 280 $ 808
Cash payments (114) – (271) (385)
Non- cash charges (103) (132) 16 (219)
Liability as of
December25, 2010 179 – 25 204
2011 merger and
integration charges 146 34 149 329
Cash payments (191) – (186) (377)
Non- cash charges (88) (34) 19 (103)
Liability as of
December31, 2011 $ 46 $ – $ 7 $ 53
In 2009, we incurred $50million of charges related to the merger
of PBG and PAS, of which substantially all was paid in 2009. In 2009,
we also incurred charges of $36million ($29million after- tax or $0.02
per share) in conjunction with our Productivity for Growth program
that began in 2008. The program included actions in all divisions
of the business, including the closure of six plants, to increase cost
competitiveness across the supply chain, upgrade and streamline
our product portfolio, and simplify the organization for more eec-
tive and timely decision- making. These charges were recorded in
selling, general and administrative expenses. This program was
completed in the second quarter of 2009 and substantially all cash
payments related to these charges were made by the end of 2010.
A summary of our Productivity for Growth charges in 2009 is
as follows:
Severance and Other
Employee Costs
Other
Costs Total
FLNA $ – $ 1 $ 1
QFNA – 2 2
LAF 3 – 3
PAB 6 10 16
Europe 2 – 2
AMEA 6 6 12
$ 17 $ 19 $ 36
A summary of our Productivity for Growth activity is as follows:
Severance
and Other
Employee Costs
Asset
Impairment
Other
Costs Total
Liability as of
December27, 2008 $ 134 $ – $ 64 $ 198
2009 restructuring and
impairment charges 17 12 7 36
Cash payments (128) – (68) (196)
Currency translation (14) (12) 25 (1)
Liability as of
December26, 2009 9 – 28 37
Cash payments (6) – (25) (31)
Non- cash charges (2) – (1) (3)
Currency translation – – (1) (1)
Liability as of
December25, 2010 $ 1 $ – $ 1 $ 2
Note 4
Property, Plant and Equipment and
Intangible Assets
Average
Useful Life
(years) 2010 2009
2011
Property, plant and
equipment, net
Land and improvements 10 – 34 $ 1,951 $ 1,976
Buildings and improvements 15 – 44 7,565 7,054
Machinery and equipment,
including eet and software 5 –15 23,798 22,091
Construction in progress 1,826 1,920
35,140 33,041
Accumulated depreciation (15,442) (13,983)
$ 19,698 $ 19,058
Depreciation expense $ 2,476 $ 2,124 $ 1,500
Amortizable intangible
assets, net
Acquired franchise rights 56 – 60 $ 916 $ 949
Reacquired franchise rights 1–14 110 110
Brands 5 – 40 1,417 1,463
Other identiable intangibles 10 – 24 777 747
3,220 3,269
Accumulated amortization (1,332) (1,244)
$ 1,888 $ 2,025
Amortization expense $ 133 $ 117 $ 63
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 depreciated
and construction in progress is not depreciated until ready for
service. Amortization of intangible assets for each of the next ve
years, based on existing intangible assets as of December31, 2011
and using average 2011 foreign exchange rates, is expected to be
$122million in 2012, $113million in 2013, $98million in 2014, $89mil-
lion in 2015 and $81million in 2016.
Depreciable and amortizable assets are only evaluated for impair-
ment upon a signicant change in the operating or macroeconomic
environment. In these circumstances, if an evaluation of the undis-
counted cash ows indicates impairment, the asset is written down
to its estimated fair value, which is based on discounted future cash
ows. Useful lives are periodically evaluated to determine whether
events or circumstances have occurred which indicate the need
for revision. For additional unaudited information on our policies
for amortizable brands, see “Our Critical Accounting Policies” in
Management’s Discussion and Analysis.
PepsiCo, Inc.  Annual Report

Notes to Consolidated Financial Statements