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Notes to Consolidated Financial Statements

Note 3. Restructuring and Impairment Charges

2008 Restructuring and Impairment Charge

In 2008, we incurred a charge of $543 million ($408 million after-tax or $0.25 per share) in conjunction with our Productivity for Growth program. The program includes actions in all divisions of the business that we believe 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. Approximately $455 million of the charge was recorded in selling, general and administrative expenses, with the remainder recorded in cost of sales. Substantially all cash payments related to this charge are expected to be paid by the end of 2009.

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 reflect termination 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 reflect termination 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 productivity and supply chain efficiencies. 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 reflect the termination costs for approximately 380 employees. All cash payments related to this charge were paid by the end of 2007.