Restructuring, Impairment and Integration Charges
2014 Productivity Plan
The 2014 Productivity Plan includes the next generation of productivity initiatives that we believe will strengthen our food, snack and beverage businesses by accelerating our investment in manufacturing automation; further optimizing our global manufacturing footprint, including closing certain manufacturing facilities; re-engineering our go-to-market systems in developed markets; expanding shared services; and implementing simplified organization structures to drive efficiency. The 2014 Productivity Plan is in addition to the productivity plan we began implementing in 2012 and is expected to continue the benefits of that plan.
In 2013, we incurred restructuring charges of $53 million ($39 million after-tax or $0.02 per share) in conjunction with our 2014 Productivity Plan. All of these charges were recorded in selling, general and administrative expenses and primarily relate to severance and other employee related costs. Substantially all of the restructuring accrual at December 28, 2013 is expected to be paid by the end of 2014.
A summary of our 2014 Productivity Plan charges in 2013 is as follows:
|
| | | | | | | | | | | |
| Severance and Other
Employee Costs | | Other Costs | | Total |
FLNA | $ | 11 |
| | $ | — |
| | $ | 11 |
|
QFNA | 3 |
| | — |
| | 3 |
|
LAF | 5 |
| | — |
| | 5 |
|
PAB | 10 |
| | — |
| | 10 |
|
Europe | 10 |
| | — |
| | 10 |
|
AMEA | 1 |
| | — |
| | 1 |
|
Corporate | 12 |
| | 1 |
| | 13 |
|
| $ | 52 |
| | $ | 1 |
| | $ | 53 |
|
A summary of our 2014 Productivity Plan activity is as follows:
|
| | | | | | | | | | | |
| Severance and Other
Employee Costs | | Other Costs | | Total |
2013 restructuring charges | $ | 52 |
| | $ | 1 |
| | $ | 53 |
|
Non-cash charges | (22 | ) | | — |
| | (22 | ) |
Liability as of December 28, 2013 | $ | 30 |
| | $ | 1 |
| | $ | 31 |
|
2012 Productivity Plan
The 2012 Productivity Plan includes actions in every aspect of our business that we believe will strengthen our complementary food, snack and beverage businesses by leveraging new technologies and processes across PepsiCo’s operations, go-to-market and information systems; heightening the focus on best practice sharing across the globe; consolidating manufacturing, warehouse and sales facilities; and implementing simplified organization structures, with wider spans of control and fewer layers of management. The 2012 Productivity Plan continues to enhance PepsiCo’s cost-competitiveness and provide a source of funding for future brand-building and innovation initiatives.
In 2013, we incurred restructuring charges of $110 million ($90 million after-tax or $0.06 per share) in conjunction with our 2012 Productivity Plan. In 2012 and 2011, we incurred restructuring charges of $279 million ($215 million after-tax or $0.14 per share) and $383 million ($286 million after-tax or $0.18 per share) in conjunction with our 2012 Productivity Plan, respectively. All of these charges were recorded in selling, general and administrative expenses and primarily relate to severance and other employee related costs, asset impairments, and consulting and contract termination costs. Substantially all of the restructuring accrual at December 28, 2013 is expected to be paid by the end of 2014.
A summary of our 2012 Productivity Plan charges is as follows:
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 2013 | | 2012 | | 2011 |
| Severance and Other
Employee Costs | | Asset Impairments | | Other Costs | | Total | | Severance and Other
Employee Costs | | Asset Impairments | | Other Costs | | Total | | Severance and Other
Employee Costs | | Other Costs | | Total |
FLNA | $ | 4 |
| | $ | — |
| | $ | 4 |
| | $ | 8 |
| | $ | 14 |
| | $ | 8 |
| | $ | 16 |
| | $ | 38 |
| | $ | 74 |
| | $ | 2 |
| | $ | 76 |
|
QFNA | — |
| | — |
| | 1 |
| | 1 |
| | — |
| | — |
| | 9 |
| | 9 |
| | 18 |
| | — |
| | 18 |
|
LAF | 5 |
| | 2 |
| | — |
| | 7 |
| | 15 |
| | 8 |
| | 27 |
| | 50 |
| | 46 |
| | 2 |
| | 48 |
|
PAB | 8 |
| | — |
| | 13 |
| | 21 |
| | 34 |
| | 43 |
| | 25 |
| | 102 |
| | 75 |
| | 6 |
| | 81 |
|
Europe | 36 |
| | 2 |
| | 12 |
| | 50 |
| | 14 |
| | 16 |
| | 12 |
| | 42 |
| | 65 |
| | 12 |
| | 77 |
|
AMEA | 21 |
| | 2 |
| | 2 |
| | 25 |
| | 18 |
| | — |
| | 10 |
| | 28 |
| | 9 |
| | — |
| | 9 |
|
Corporate (a) | — |
| | — |
| | (2 | ) | | (2 | ) | | (6 | ) | | — |
| | 16 |
| | 10 |
| | 40 |
| | 34 |
| | 74 |
|
| $ | 74 |
| | $ | 6 |
| | $ | 30 |
| | $ | 110 |
| | $ | 89 |
| | $ | 75 |
| | $ | 115 |
| | $ | 279 |
| | $ | 327 |
| | $ | 56 |
| | $ | 383 |
|
(a) Income amounts represent adjustments of previously recorded amounts.
A summary of our 2012 Productivity Plan activity is as follows:
|
| | | | | | | | | | | | | | | |
| Severance and Other
Employee Costs | | Asset Impairments | | Other Costs | | Total |
2011 restructuring charges | $ | 327 |
| | $ | — |
| | $ | 56 |
| | $ | 383 |
|
Cash payments | (1 | ) | | — |
| | (29 | ) | | (30 | ) |
Non-cash charges | (77 | ) | | — |
| | — |
| | (77 | ) |
Liability as of December 31, 2011 | 249 |
| | — |
| | 27 |
| | 276 |
|
2012 restructuring charges | 89 |
| | 75 |
| | 115 |
| | 279 |
|
Cash payments | (239 | ) | | — |
| | (104 | ) | | (343 | ) |
Non-cash charges | (8 | ) | | (75 | ) | | (2 | ) | | (85 | ) |
Liability as of December 29, 2012 | 91 |
| | — |
| | 36 |
| | 127 |
|
2013 restructuring charges | 74 |
| | 6 |
| | 30 |
| | 110 |
|
Cash payments | (89 | ) | | — |
| | (44 | ) | | (133 | ) |
Non-cash charges | (8 | ) | | (6 | ) | | (5 | ) | | (19 | ) |
Liability as of December 28, 2013 | $ | 68 |
| | $ | — |
| | $ | 17 |
| | $ | 85 |
|
Merger and Integration Charges
In 2013, we incurred merger and integration charges of $10 million ($8 million after-tax or $0.01 per share) related to our acquisition of WBD, all of which were recorded in selling, general and administrative expenses in the Europe segment. Substantially all of the merger and integration accrual at December 28, 2013 is expected to be paid by the end of 2014.
In 2012, we incurred merger and integration charges of $16 million ($12 million after-tax or $0.01 per share) related to our acquisition of WBD, including $11 million recorded in the Europe segment and $5 million recorded in interest expense. All of these net charges, other than the interest expense portion, were recorded in selling, general and administrative expenses.
In 2011, we incurred merger and integration charges of $329 million ($271 million after-tax or $0.17 per share) related to our acquisitions of PBG, PAS and WBD, including $112 million recorded in the PAB segment, $123 million recorded in the Europe segment, $78 million recorded in corporate unallocated expenses and $16 million recorded in interest expense. All of these net charges, other than the interest expense portion, were recorded in selling, general and administrative expenses. These charges also include closing costs and advisory fees related to our acquisition of WBD.
A summary of our merger and integration activity is as follows:
|
| | | | | | | | | | | | | | | |
| Severance and Other
Employee Costs | | Asset Impairments | | Other Costs | | Total |
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 | (36 | ) | | (34 | ) | | 19 |
| | (51 | ) |
Liability as of December 31, 2011 | 98 |
| | — |
| | 7 |
| | 105 |
|
2012 merger and integration charges (a) | (3 | ) | | 1 |
| | 18 |
| | 16 |
|
Cash payments | (65 | ) | | — |
| | (18 | ) | | (83 | ) |
Non-cash charges | (12 | ) | | (1 | ) | | (1 | ) | | (14 | ) |
Liability as of December 29, 2012 | 18 |
| | — |
| | 6 |
| | 24 |
|
2013 merger and integration charges (a) | (2 | ) | | 7 |
| | 5 |
| | 10 |
|
Cash payments | (14 | ) | | — |
| | (11 | ) | | (25 | ) |
Non-cash charges | (2 | ) | | (7 | ) | | 4 |
| | (5 | ) |
Liability as of December 28, 2013 | $ | — |
| | $ | — |
| | $ | 4 |
| | $ | 4 |
|
(a) Income amounts represent adjustments of previously recorded amounts.
