Restructuring, Impairment and Integration Charges

In 2012, we incurred restructuring charges of $279 million ($215 million after-tax or $0.14 per share) in conjunction with our Productivity Plan. In 2011, we incurred restructuring charges of $383 million ($286 million after-tax or $0.18 per share) in conjunction with our Productivity Plan. 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. The 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 Productivity Plan is expected to enhance PepsiCo’s cost-competitiveness, provide a source of funding for future brand-building and innovation initiatives, and serve as a financial cushion for potential macroeconomic uncertainty.

A summary of our Productivity Plan charges in 2012 was as follows:



	Severance and Other Employee Costs			Asset Impairments		Other Costs		Total
FLNA	$	14		$	8	$	16	$	38
QFNA	—			—		9		9
LAF	15			8		27		50
PAB	34			43		25		102
Europe	14			16		12		42
AMEA	18			—		10		28
Corporate	(6		)	—		16		10
	$	89		$	75	$	115	$	279

A summary of our Productivity Plan charges in 2011 was as follows:



	Severance and Other Employee Costs		Other Costs		Total
FLNA	$	74	$	2	$	76
QFNA	18		—		18
LAF	46		2		48
PAB	75		6		81
Europe	65		12		77
AMEA	9		—		9
Corporate	40		34		74
	$	327	$	56	$	383

A summary of our Productivity Plan activity in 2011 and 2012 was 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

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. The majority of cash payments related to these charges were paid by the end of 2012.

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. Substantially all cash payments related to the above charges were made by the end of 2011.

In 2010, we incurred merger and integration charges of $799 million related to our acquisitions of PBG and PAS, as well as advisory fees in connection with our acquisition of WBD. $467 million of these charges were recorded in the PAB segment, $111 million recorded in the Europe segment, $191 million recorded in corporate unallocated expenses and $30 million recorded in interest expense. All of these charges, other than the interest expense portion, were recorded in selling, general and administrative expenses. The merger and integration charges related to our acquisitions of PBG and PAS were incurred to help create a more fully integrated supply chain and go-to-market business model, to improve the effectiveness and efficiency of the distribution of our brands and to enhance our revenue growth. These charges also include closing costs, one-time financing costs and advisory fees related to our acquisitions of PBG and PAS. In addition, we recorded $9 million of merger-related charges, representing our share of the respective merger costs of PBG and PAS, in bottling equity income. Substantially all cash payments related to the above charges were made by the end of 2011. In total, these charges had an after-tax impact of $648 million or $0.40 per share.

A summary of our merger and integration activity was as follows:



	Severance and Other Employee Costs			Asset Impairments			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	(36		)	(34		)	19			(51		)
Liability as of December 31, 2011	98			—			7			105
2012 merger and integration charges	(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