Document and Company Informatio
Document and Company Information (USD $) | |||
12 Months Ended
Dec. 26, 2009 | Feb. 12, 2010
| Jun. 12, 2009
| |
Entity Registrant Name | PEPSI BOTTLING GROUP INC | ||
Entity Central Index Key | 0001076405 | ||
Document Type | 10-K | ||
Document Period End Date | 2009-12-26 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --12-26 | ||
Entity Well-known Seasoned Issuer | Yes | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Large Accelerated Filer | ||
Entity Public Float | $4,858,397,101 | ||
Entity Common Stock, Shares Outstanding | 221,798,326 | ||
Class B Common Stock | |||
Entity Common Stock, Shares Outstanding | 100,000 |
Consolidated Statements of Oper
Consolidated Statements of Operations (USD $) | |||
In Millions, except Per Share data | 12 Months Ended
Dec. 26, 2009 | 12 Months Ended
Dec. 27, 2008 | 12 Months Ended
Dec. 29, 2007 |
Consolidated Statements of Operations | |||
Net Revenues | $13,219 | $13,796 | $13,591 |
Cost of sales | 7,379 | 7,586 | 7,370 |
Gross Profit | 5,840 | 6,210 | 6,221 |
Selling, delivery and administrative expenses | 4,792 | 5,149 | 5,150 |
Impairment charges | 0 | 412 | 0 |
Operating Income | 1,048 | 649 | 1,071 |
Interest expense, net | 303 | 290 | 274 |
Other non-operating (income) expenses, net | (4) | 25 | (6) |
Income Before Income Taxes | 749 | 334 | 803 |
Income tax expense | 43 | 112 | 177 |
Net Income | 706 | 222 | 626 |
Less: Net income attributable to noncontrolling interests | 94 | 60 | 94 |
Net Income Attributable to PBG | $612 | $162 | $532 |
Earnings per Share Attributable to PBG's Common Shareholders | |||
Basic Earnings per Share | 2.84 | 0.75 | 2.35 |
Weighted-average shares outstanding | 216 | 216 | 226 |
Diluted Earnings per Share | 2.77 | 0.74 | 2.29 |
Weighted-average shares outstanding | 221 | 220 | 233 |
Dividends Declared per Common Share | 0.71 | 0.65 | 0.53 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows (USD $) | |||
In Millions | 12 Months Ended
Dec. 26, 2009 | 12 Months Ended
Dec. 27, 2008 | 12 Months Ended
Dec. 29, 2007 |
Cash Flows - Operations | |||
Net income | $706 | $222 | $626 |
Adjustments to reconcile net income to net cash provided by operations: | |||
Depreciation and amortization | 637 | 673 | 669 |
Deferred income taxes | 88 | (47) | (42) |
Share-based compensation | 58 | 56 | 62 |
Impairment charges | 0 | 412 | 0 |
Defined benefit pension and postretirement expenses | 98 | 114 | 121 |
Casualty self-insurance expense | 76 | 87 | 90 |
Net other non-cash charges and credits | 52 | 95 | 79 |
Changes in operating working capital, excluding effects of acquisitions: | |||
Accounts receivable, net | (67) | 40 | (110) |
Inventories | (46) | 3 | (19) |
Prepaid expenses and other current assets | (26) | 10 | (17) |
Accounts payable and other current liabilities | 55 | (134) | 185 |
Income taxes payable | (147) | 14 | 9 |
Net change in operating working capital | (231) | (67) | 48 |
Casualty insurance payments | (70) | (79) | (70) |
Pension contributions to funded plans | (229) | (85) | (70) |
Other operating activities, net | (77) | (97) | (76) |
Net Cash Provided by Operations | 1,108 | 1,284 | 1,437 |
Cash Flows - Investments | |||
Capital expenditures | (556) | (760) | (854) |
Acquisitions, net of cash acquired | (112) | (279) | (49) |
Investments in noncontrolled affiliates | (2) | (742) | 0 |
Proceeds from sale of property, plant and equipment | 15 | 24 | 14 |
Issuance of note receivable from noncontrolled affiliate | (92) | 0 | 0 |
Repayments of note receivable from noncontrolled affiliate | 28 | 0 | 0 |
Other investing activities, net | 5 | (1) | 6 |
Net Cash Used for Investments | (714) | (1,758) | (883) |
Cash Flows - Financing | |||
Short-term borrowings, net-three months or less | 66 | (108) | (106) |
Proceeds from short-term borrowings - more than three months | 0 | 117 | 167 |
Payments of short-term borrowings - more than three months | 0 | (91) | (211) |
Proceeds from issuances of long-term debt | 741 | 1,290 | 24 |
Payments of long-term debt | (1,330) | (10) | (42) |
Distribution to noncontrolling interest holder | (30) | (73) | (17) |
Dividends paid | (150) | (135) | (113) |
Excess tax benefit from the exercise of equity awards | 10 | 2 | 14 |
Proceeds from the exercise of stock options | 202 | 42 | 159 |
Share repurchases | 0 | (489) | (439) |
Contributions from noncontrolling interest holder | 33 | 308 | 0 |
Other financing activities, net | (12) | (3) | 0 |
Net Cash (Used for) Provided by Financing | (470) | 850 | (564) |
Effect of Exchange Rate Changes on Cash and Cash Equivalents | 17 | (57) | 28 |
Net (Decrease) Increase in Cash and Cash Equivalents | (59) | 319 | 18 |
Cash and Cash Equivalents - Beginning of Year | 966 | 647 | 629 |
Cash and Cash Equivalents - End of Year | $907 | $966 | $647 |
Consolidated Balance Sheets
Consolidated Balance Sheets (USD $) | ||
In Millions | Dec. 26, 2009
| Dec. 27, 2008
|
Current Assets | ||
Cash and cash equivalents | $907 | $966 |
Accounts receivable, net | 1,491 | 1,371 |
Inventories | 600 | 528 |
Prepaid expenses and other current assets | 414 | 276 |
Total Current Assets | 3,412 | 3,141 |
Property, plant and equipment, net | 3,899 | 3,882 |
Other intangible assets, net | 3,941 | 3,751 |
Goodwill | 1,506 | 1,434 |
Investments in noncontrolled affiliates | 627 | 619 |
Other assets | 185 | 155 |
Total Assets | 13,570 | 12,982 |
Current Liabilities | ||
Accounts payable and other current liabilities | 1,762 | 1,675 |
Short-term borrowings | 188 | 103 |
Current maturities of long-term debt | 15 | 1,305 |
Total Current Liabilities | 1,965 | 3,083 |
Long-term debt | 5,449 | 4,784 |
Other liabilities | 1,162 | 1,658 |
Deferred income taxes | 1,285 | 966 |
Total Liabilities | 9,861 | 10,491 |
Equity | ||
Common stock, par value $0.01 per share: authorized 900 shares, issued 310 shares | 3 | 3 |
Additional paid-in capital | 1,861 | 1,851 |
Retained earnings | 3,585 | 3,130 |
Accumulated other comprehensive loss | (596) | (938) |
Treasury stock: 89 shares and 99 shares in 2009 and 2008, respectively, at cost | (2,436) | (2,703) |
Total PBG Shareholders' Equity | 2,417 | 1,343 |
Noncontrolling interests | 1,292 | 1,148 |
Total Equity | 3,709 | 2,491 |
Total Liabilities and Equity | $13,570 | $12,982 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) (USD $) | ||
Share data in Millions | Dec. 26, 2009
| Dec. 27, 2008
|
Equity | ||
Common stock, par value | 0.01 | 0.01 |
Common stock, authorized shares | 900 | 900 |
Common stock, issued shares | 310 | 310 |
Treasury stock, shares | 89 | 99 |
Consolidated Statements of Chan
Consolidated Statements of Changes in Shareholders Equity (USD $) | ||||||||
In Millions | Total PBG Shareholders' Equity
| Additional Paid-In Capital
| Retained Earnings
| Accumulated Other Comprehensive Loss
| Treasury Stock
| Noncontrolling Interests
| Common Stock
| Total
|
Beginning Balance at Dec. 30, 2006 | $2,084 | $1,751 | $2,708 | ($361) | ($2,017) | $540 | $3 | $2,624 |
Comprehensive Income (Loss): | ||||||||
Net Income | 532 | 532 | 94 | 626 | ||||
Net currency translation adjustment | 220 | 220 | 15 | 235 | ||||
Cash flow hedge adjustment, net of tax of $(1), $24 and $(43) for 2007, 2008 and 2009, respectively | (1) | (1) | 0 | (1) | ||||
Pension and postretirement medical benefit plans adjustment, net of tax of $(61), $204 and $(78) for 2007, 2008 and 2009, respectively | 94 | 94 | 11 | 105 | ||||
Total comprehensive income (loss) | 965 | |||||||
Equity awards exercises: 7 shares, 2 shares and 10 shares for 2007, 2008 and 2009, respectively | 159 | (28) | 187 | 159 | ||||
Tax benefit - equity awards | 22 | 22 | 22 | |||||
Share repurchases: 13 shares and 15 shares for 2007 and 2008, respectively | (439) | (439) | (439) | |||||
Share-based compensation | 60 | 60 | 60 | |||||
Impact from the adoption of new income tax standard | 5 | 5 | (3) | 2 | ||||
Dividends declared on common stock and equity awards (per share $0.53), (per share $0.65) and (per share $0.71) for 2007, 2008 and 2009, respectively | (121) | (121) | (121) | |||||
Distribution to noncontrolling interest holders | (17) | (17) | ||||||
Contributions from noncontrolling interest holder | 333 | 333 | ||||||
Ending Balance at Dec. 29, 2007 | 2,615 | 1,805 | 3,124 | (48) | (2,269) | 973 | 3 | 3,588 |
Comprehensive Income (Loss): | ||||||||
Net Income | 162 | 162 | 60 | 222 | ||||
Net currency translation adjustment | (554) | (554) | (109) | (663) | ||||
Cash flow hedge adjustment, net of tax of $(1), $24 and $(43) for 2007, 2008 and 2009, respectively | (33) | (33) | (4) | (37) | ||||
Pension and postretirement medical benefit plans adjustment, net of tax of $(61), $204 and $(78) for 2007, 2008 and 2009, respectively | (322) | (322) | (38) | (360) | ||||
Total comprehensive income (loss) | (838) | |||||||
Pension and postretirement measurement date adjustment, net of tax of $(5) | 3 | (16) | 19 | 3 | ||||
Equity awards exercises: 7 shares, 2 shares and 10 shares for 2007, 2008 and 2009, respectively | 42 | (13) | 55 | 42 | ||||
Tax benefit and withholding tax - equity awards | 2 | 2 | 2 | |||||
Share repurchases: 13 shares and 15 shares for 2007 and 2008, respectively | (489) | (489) | (489) | |||||
Share-based compensation | 57 | 57 | 57 | |||||
Dividends declared on common stock and equity awards (per share $0.53), (per share $0.65) and (per share $0.71) for 2007, 2008 and 2009, respectively | (140) | (140) | (140) | |||||
Distribution to noncontrolling interest holders | (73) | (73) | ||||||
Contributions from noncontrolling interest holder | 339 | 339 | ||||||
Ending Balance at Dec. 27, 2008 | 1,343 | 1,851 | 3,130 | (938) | (2,703) | 1,148 | 3 | 2,491 |
Comprehensive Income (Loss): | ||||||||
Net Income | 612 | 612 | 94 | 706 | ||||
Net currency translation adjustment | 160 | 160 | 3 | 163 | ||||
Cash flow hedge adjustment, net of tax of $(1), $24 and $(43) for 2007, 2008 and 2009, respectively | 63 | 63 | 7 | 70 | ||||
Pension and postretirement medical benefit plans adjustment, net of tax of $(61), $204 and $(78) for 2007, 2008 and 2009, respectively | 119 | 119 | 14 | 133 | ||||
Total comprehensive income (loss) | 1,072 | |||||||
Equity awards exercises: 7 shares, 2 shares and 10 shares for 2007, 2008 and 2009, respectively | 202 | (65) | 267 | 202 | ||||
Tax benefit - equity awards | 21 | 21 | 21 | |||||
Withholding tax - equity awards | (7) | (7) | (7) | |||||
Share-based compensation | 55 | 55 | 55 | |||||
Dividends declared on common stock and equity awards (per share $0.53), (per share $0.65) and (per share $0.71) for 2007, 2008 and 2009, respectively | (151) | 6 | (157) | (151) | ||||
Distribution to noncontrolling interest holders | (30) | (30) | ||||||
Contributions from noncontrolling interest holder | 56 | 56 | ||||||
Ending Balance at Dec. 26, 2009 | $2,417 | $1,861 | $3,585 | ($596) | ($2,436) | $1,292 | $3 | $3,709 |
1_Consolidated Statements of Ch
Consolidated Statements of Changes in Equity (Parenthetical) (USD $) | |||
In Millions, except Per Share data | 12 Months Ended
Dec. 26, 2009 | 12 Months Ended
Dec. 27, 2008 | 12 Months Ended
Dec. 29, 2007 |
Pension and postretirement medical benefit plans adjustment, tax effect | ($78) | $204 | ($61) |
Cash flow hedge adjustment, tax effect | (43) | 24 | (1) |
Pension and postretirement measurement date adjustment, tax effect | (5) | ||
Equity awards exercises, Shares | 10 | 2 | 7 |
Share repurchases, Shares | 15 | 13 | |
Dividends Declared per Common Share | 0.71 | 0.65 | 0.53 |
Total PBG Shareholders' Equity | |||
Pension and postretirement medical benefit plans adjustment, tax effect | (78) | 204 | (61) |
Cash flow hedge adjustment, tax effect | (43) | 24 | (1) |
Pension and postretirement measurement date adjustment, tax effect | (5) | ||
Equity awards exercises, Shares | 10 | 2 | 7 |
Share repurchases, Shares | 15 | 13 | |
Dividends Declared per Common Share | 0.71 | 0.65 | 0.53 |
Additional Paid-In Capital | |||
Equity awards exercises, Shares | 10 | 2 | 7 |
Dividends Declared per Common Share | 0.71 | ||
Retained Earnings | |||
Pension and postretirement measurement date adjustment, tax effect | (5) | ||
Dividends Declared per Common Share | 0.71 | 0.65 | 0.53 |
Accumulated Other Comprehensive Loss | |||
Pension and postretirement medical benefit plans adjustment, tax effect | (78) | 204 | (61) |
Cash flow hedge adjustment, tax effect | (43) | 24 | (1) |
Pension and postretirement measurement date adjustment, tax effect | (5) | ||
Treasury Stock | |||
Equity awards exercises, Shares | 10 | 2 | 7 |
Share repurchases, Shares | 15 | 13 | |
Noncontrolling Interests | |||
Pension and postretirement medical benefit plans adjustment, tax effect | (78) | 204 | (61) |
Cash flow hedge adjustment, tax effect | (43) | 24 | (1) |
Comprehensive Income | |||
Pension and postretirement medical benefit plans adjustment, tax effect | (78) | 204 | (61) |
Cash flow hedge adjustment, tax effect | ($43) | $24 | ($1) |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income (Loss) (USD $) | |||
In Millions | 12 Months Ended
Dec. 26, 2009 | 12 Months Ended
Dec. 27, 2008 | 12 Months Ended
Dec. 29, 2007 |
Consolidated Statements of Comprehensive Income (Loss) | |||
Net Income | $706 | $222 | $626 |
Net currency translation adjustment | 163 | (663) | 235 |
Cash flow hedge adjustment, net of tax | 70 | (37) | (1) |
Pension and postretirement medical benefit plans adjustment, net of tax | 133 | (360) | 105 |
Comprehensive income (loss) | 1,072 | (838) | 965 |
Less: Comprehensive income (loss) attributable to noncontrolling interests | 118 | (91) | 120 |
Comprehensive income (loss) attributable to PBG | $954 | ($747) | $845 |
Basis of Presentation
Basis of Presentation | |
12 Months Ended
Dec. 26, 2009 USD / shares | |
Basis of Presentation [Abstract] | |
BASIS OF PRESENTATION | Note 1BASIS OF PRESENTATION The Pepsi Bottling Group, Inc. is the worlds largest manufacturer, seller and distributor of Pepsi-Cola beverages. We have the exclusive right to manufacture, sell and distribute Pepsi-Cola beverages in all or a portion of the U.S., Mexico, Canada, Spain, Russia, Greece and Turkey. When used in these Consolidated Financial Statements, PBG, we, our, us and the Company each refers to The Pepsi Bottling Group, Inc. and, where appropriate, to Bottling Group, LLC (Bottling LLC), our principal operating subsidiary. At December26, 2009, PepsiCo, Inc. (PepsiCo) owned 70,166,458 shares of our common stock, consisting of 70,066,458 shares of common stock and all 100,000 authorized shares of ClassB common stock. This represents approximately 31.7percent of our outstanding common stock and 100percent of our outstanding ClassB common stock, together representing 38.6percent of the voting power of all classes of our voting stock. In addition, PepsiCo owns approximately 6.6percent of the equity of Bottling LLC and 40percent of PR Beverages Limited (PR Beverages), a consolidated venture for our Russian operations, which was formed on March1, 2007. The common stock and ClassB common stock both have a par value of $0.01 per share and are substantially identical, except for voting rights. Holders of our common stock are entitled to one vote per share and holders of our ClassB common stock are entitled to 250 votes per share. Each share of ClassB common stock is convertible into one share of common stock. Holders of our common stock and holders of our ClassB common stock share equally on a per-share basis in any dividend distributions. Our Board of Directors has the authority to provide for the issuance of up to 20,000,000 shares of preferred stock, and to determine the price and terms, including, but not limited to, preferences and voting rights of those shares without stockholder approval. At December26, 2009, there was no preferred stock outstanding. On August3, 2009, PBG and PepsiCo entered into a definitive merger agreement, under which PepsiCo will acquire all outstanding shares of PBG common stock it does not already own for the price of $36.50 in cash or 0.6432 shares of PepsiCo common stock, subject to proration such that the aggregate consideration to be paid to PBG shareholders shall be 50percent in cash and 50 percent in PepsiCo common stock. At a special meeting of our shareholders held on February17, 2010, our shareholders adopted the merger agreement. The transaction is subject to certain regulatory approvals and is expected to be finalized by the end of the first quarter of 2010. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | |
12 Months Ended
Dec. 26, 2009 USD / shares | |
Summary of Significant Accounting Policies [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | Note 2SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The preparation of our Consolidated Financial Statements in conformity with accounting principles generally accepted in the U.S. (GAAP) often requires management to make judgments, estimates and assumptions that affect the reported amounts included in our Consolidated Financial Statements and related disclosures. We evaluate our estimates on an on-going basis using our historical experience as well as other factors we believe appropriate under the circumstances, such as current economic conditions, and adjust or revise our estimates as circumstances change. As future events and their effect cannot be determined with precision, actual results may differ from these estimates. In preparation of these financial statements, we have evaluated and assessed all events occurring subsequent to December26, 2009 and through February22, 2010, which is the date our financial statements were issued. Basis of Consolidation We consolidate in our financial statements entities in which we have a controlling financial interest, as well as variable interest entities where we are the primary beneficiary. Noncontrolling interests in earnings and ownership has been recorded for the percentage of these entities not owned by PBG. In addition, we use the equity method of accounting to recognize investments in and income from entities where we have significant influence, but do not have a controlling financial interest. We have eliminated all intercompany accounts and transactions in consolidation. Fiscal Year Our U.S. and Canadian operations report using a fiscal year that consists of 52 weeks, ending on the last Saturday in December. Every five or six years a 53rd week is added. Fiscal years 2009, 2008 and 2007 consisted of 52weeks. Our remaining countries report on a calendar-year basis. Accordingly, we recognize our quarterly business results as outlined below: Quarter U.S. Canada Mexico Europe First Quarter 12weeks January and February Second Quarter 12weeks March, April and May Third Quarter 12weeks June, July and August Fourth Quarter 16weeks September, October, November and December Revenue Recognition Revenue, net of sales returns, is recognized when our products are delivered to customers in accordance with the written sales terms. We offer certain sales incentives on a local and national level through various customer trade agreements designed to enhance the growth of our revenue, market share and consumer brand awareness. Customer trade agreements are accounted for as a reduction to our revenues. Customer trade agreements with our customers include payments for in-store displays, volume rebates, equipment placements, featured advertising and other growth incentives. A number of our customer trade agreements are based on quarterly and annual targets that generally do not exceed one year. Amounts recognized in our financial statements are based on amounts estimated to be paid to our customers depending upon current performance, historical experience, actual and forecasted volume and other performance criteria. Advertis |
Earnings per Share
Earnings per Share | |
12 Months Ended
Dec. 26, 2009 USD / shares | |
Earnings per Share [Abstract] | |
EARNINGS PER SHARE | Note 3EARNINGS PER SHARE The following table reconciles the shares outstanding and net income attributable to PBG used in the computations of both basic and diluted earnings per share attributable to PBGs common shareholders: Shares in millions Fiscal Year Ended 2009 2008 2007 Net income attributable to PBG $ 612 $ 162 $ 532 Weighted-average shares outstanding during period on which basic earnings per share is calculated 216 216 226 Effect of dilutive shares Incremental shares under stock compensation plans 5 4 7 Weighted-average shares outstanding during period on which diluted earnings per share is calculated 221 220 233 Earnings per share attributable to PBGs common shareholders Basic earnings per share $ 2.84 $ 0.75 $ 2.35 Diluted earnings per share $ 2.77 $ 0.74 $ 2.29 Basic earnings per share are calculated by dividing the net income attributable to PBG by the weighted-average number of shares outstanding during each period. Diluted earnings per share reflects the potential dilution that could occur if stock options or other equity awards from our stock compensation plans were exercised and converted into common stock that would then participate in net income. Diluted earnings per share for the fiscal years ended 2009 and 2008 exclude the dilutive effect of 8.4million and 11.6million stock options, respectively. These shares were excluded from the diluted earnings per share computation because for the years noted, the exercise price of the stock options was greater than the average market price of the Companys common shares during the related periods and the effect of including the stock options in the computation would be anti-dilutive. For the fiscal year ended 2007, there were no stock options excluded from the diluted earnings per share calculation. |
Share-Based Compensation
Share-Based Compensation | |
12 Months Ended
Dec. 26, 2009 USD / shares | |
Share-Based Compensation [Abstract] | |
SHARE-BASED COMPENSATION | Note 4SHARE-BASED COMPENSATION Accounting for Share-Based Compensation Effective January1, 2006, the Company began recognizing compensation expense for equity awards over the vesting period based on their grant-date fair value. The Company uses the modified prospective approach. Under this transition method, the measurement and our method of amortization of costs for share-based payments granted prior to, but not vested as of January1, 2006, would be based on the same estimate of the grant-date fair value and the same amortization method that was previously used in our pro forma disclosure. Results for prior periods have not been restated as provided for under the modified prospective approach. For equity awards granted after the date of adoption, we amortize share-based compensation expense on a straight-line basis over the vesting term. Compensation expense is recognized only for share-based payments expected to vest. We estimate forfeitures, both at the date of grant as well as throughout the vesting period, based on the Companys historical experience and future expectations. Total share-based compensation expense recognized in the Consolidated Statements of Operations is as follows: Fiscal Year Ended 2009 2008 2007 Total share-based compensation expense $ 58 $ 56 $ 62 Income tax benefit (17 ) (16 ) (17 ) Noncontrolling interests (5 ) (3 ) (5 ) Net income attributable to PBG impact $ 36 $ 37 $ 40 Share-Based Long-Term Incentive Compensation Plans We grant a mix of stock options and restricted stock units to middle and senior management employees and our Board of Directors under our incentive plans. Shares available for future issuance to employees and our Board of Directors under existing plans were 9.5million at December26, 2009. The fair value of PBG stock options was estimated at the date of grant using the Black-Scholes-Merton option-valuation model. The table below outlines the weighted-average assumptions for options granted during years ended December26, 2009, December27, 2008 and December29, 2007: 2009 2008 2007 Risk-free interest rate 2.2 % 2.8 % 4.5 % Expected term (in years) 5.3 5.3 5.6 Expected volatility 30 % 24 % 25 % Expected dividend yield 2.8 % 2.0 % 1.8 % The risk-free interest rate is based on the implied yield available on U.S. Treasury zero-coupon issues with an equivalent remaining expected term. The expected term of the options represents the estimated period of time employees will retain their vested stocks until exercise. Due to the lack of historical experience in stock option exercises, we estimate expected term utilizing a combination of the simplified method and historical experience of similar awards, giving consideration to the contractual terms, vesting schedules and expectations of future employee behavior. Expected stock price volatility is based on a combination of historical volatility of the Companys stock and the |
Balance Sheet Details
Balance Sheet Details | |
12 Months Ended
Dec. 26, 2009 USD / shares | |
Balance Sheet Details [Abstract] | |
BALANCE SHEET DETAILS | Note 5BALANCE SHEET DETAILS 2009 2008 Accounts Receivable, net Trade accounts receivable $ 1,278 $ 1,208 Allowance for doubtful accounts (69 ) (71 ) Accounts receivable from PepsiCo 210 154 Other receivables 72 80 $ 1,491 $ 1,371 Inventories Raw materials and supplies $ 220 $ 185 Finished goods 380 343 $ 600 $ 528 Prepaid Expenses and Other Current Assets Prepaid expenses $ 317 $ 244 Other current assets 97 32 $ 414 $ 276 Property, Plant and Equipment, net(1) Land $ 306 $ 300 Buildings and improvements 1,704 1,542 Manufacturing and distribution equipment 4,192 3,999 Marketing equipment 2,192 2,246 Capital leases(2) 46 23 Other 153 154 8,593 8,264 Accumulated depreciation (4,694 ) (4,382 ) $ 3,899 $ 3,882 (1) Pursuant to the terms of an industrial revenue bond, we transferred title of certain fixed assets with a net book value of $70million to a state governmental authority in the U.S. to receive a property tax abatement. The title to these assets will revert back to PBG upon retirement or cancellation of the bond. These fixed assets are still recognized in the Companys Consolidated Balance Sheets as all risks and rewards remain with the Company. (2) Capital leases primarily represent manufacturing and office equipment. 2009 2008 Other Assets Note receivable from noncontrolled affiliate $ 73 $ Other assets 112 155 $ 185 $ 155 2009 2008 Accounts Payable and Other Current Liabilities Accounts payable $ 497 $ 444 Accounts payable to PepsiCo 204 217 Trade incentives 232 189 Accrued compensation and benefits 256 240 Other accrued taxes 121 128 Accrued interest 86 85 Other current liabilities 366 372 $ 1,762 $ 1,675 |
Other Intangible Assets, net an
Other Intangible Assets, net and Goodwill | |
12 Months Ended
Dec. 26, 2009 USD / shares | |
Other Intangible Assets, net and Goodwill [Abstract] | |
OTHER INTANGIBLE ASSETS, NET AND GOODWILL | Note 6OTHER INTANGIBLE ASSETS, NET AND GOODWILL The components of other intangible assets are as follows: 2009 2008 Intangibles subject to amortization: Gross carrying amount: Customer relationships and lists $ 47 $ 45 Franchise and distribution rights 79 41 Other identified intangibles 26 34 152 120 Accumulated amortization: Customer relationships and lists (18 ) (15 ) Franchise and distribution rights (36 ) (31 ) Other identified intangibles (7 ) (21 ) (61 ) (67 ) Intangibles subject to amortization, net 91 53 Intangibles not subject to amortization: Carrying amount: Franchise rights 3,390 3,244 Licensing rights 315 315 Distribution rights 52 49 Brands 40 39 Other identified intangibles 53 51 Intangibles not subject to amortization 3,850 3,698 Total other intangible assets, net $ 3,941 $ 3,751 During the second quarter of 2009, we acquired a Pepsi-Cola and Dr Pepper franchise bottler serving portions of central Texas. As a result of this acquisition we recorded approximately $56 million of non-amortizable franchise rights and $8million of non-compete agreements, with a weighted-average amortization period of 5years. During the third quarter of 2009, we acquired a Pepsi-Cola franchise bottler serving northeastern Massachusetts. As a result of this acquisition we recorded approximately $24million of non-amortizable franchise rights and $1million of non-compete agreements, with a weighted-average amortization period of 5years. During 2009, we acquired distribution rights for certain energy drinks in the United States, Canada and Mexico, and protein-enhanced functional beverages in the United States. As a result of these acquisitions we recorded approximately $36million of amortizable distribution rights, with a weighted-average amortization period of 10years. During 2009, we acquired rights to manufacture and distribute Crush brands in portions of the United States and recorded approximately $4million of non-amortizable franchise rights. During the first quarter of 2008, we acquired a Pepsi-Cola franchise bottler serving certain New York counties in whole or in part. As a result of the acquisition we recorded approximately $18 million of non-amortizable franchise rights and $4million of non-compete agreements, with a weighted-average amortization period of 10years. During the first quarter of 2008, we acquired distribution rights for SoBe brands in portions of Arizona and Texas and recorded approximately $6million of non-amortizable distribution rights. During the fourth quarter of 2008, we acquired a Pepsi-Cola franchise bottler serving portions of Colorado, Arizona and New Mexico. As a result of the acquisition we recorded approximately $176 million of non-amortizable franchise rights. The total cost of |
Fair Value Measurements
Fair Value Measurements | |
12 Months Ended
Dec. 26, 2009 USD / shares | |
Fair Value Measurements [Abstract] | |
FAIR VALUE MEASUREMENTS | Note 7FAIR VALUE MEASUREMENTS During 2008, the Company began disclosing the fair value of all financial instruments valued on a recurring basis, at least annually. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. It also establishes a three level fair value hierarchy that prioritizes the inputs used to measure fair value. The three levels of the hierarchy are defined as follows: Level 1 Unadjusted quoted prices in active markets for identical assets or liabilities. Level 2 Observable inputs other than quoted prices included in Level 1, such as quoted prices for identical assets or liabilities in non-active markets, quoted prices for similar assets or liabilities in active markets and inputs other than quoted prices that are observable for substantially the full term of the asset or liability. Level 3 Unobservable inputs reflecting managements own assumptions about the input used in pricing the asset or liability. If the inputs used to measure the financial instruments fall within different levels of the hierarchy, the categorization is based on the lowest level input that is significant to the fair value measurement of the instrument. The following table summarizes the financial assets and liabilities we measure at fair value on a recurring basis as of December26, 2009 and December27, 2008: Level 2 2009 2008 Financial Assets: Commodity contracts(1) $ 81 $ Foreign currency contracts (1) 13 Prepaid forward contracts (2) 15 13 Interest rate swaps (3) 8 $ 96 $ 34 Financial Liabilities: Commodity contracts (1) $ 3 $ 57 Foreign currency contracts (1) 6 6 Interest rate swaps (3) 64 1 $ 73 $ 64 (1) Based primarily on the forward rates of the specific indices upon which contract settlement is based. (2) Based primarily on the value of our stock price. (3) Based primarily on the London Inter-Bank Offer Rate (LIBOR) index. Other Financial Assets and Liabilities Financial assets with carrying values approximating fair value include cash and cash equivalents and accounts receivable. Financial liabilities with carrying values approximating fair value include accounts payable and other accrued liabilities and short-term debt. The carrying values of these financial assets and liabilities approximates fair value due to their short maturities and since interest rates approximate current market rates for short-term debt. Long-term debt, which includes the current maturities of long-term debt, at December26, 2009, had a carrying value and fair value of $5.5billion and $6.1billion, respectively and at December 27, 2008, had a carrying value and fair value of $6.1billion and $6.4billion, respectively. The fair value is based on interest rates that are currently available to us for issuance of debt with similar terms and remaining matur |
Short-term Borrowings and Long-
Short-term Borrowings and Long-term Debt | |
12 Months Ended
Dec. 26, 2009 USD / shares | |
Short-term Borrowings and Long-term Debt [Abstract] | |
SHORT-TERM BORROWINGS AND LONG-TERM DEBT | Note 8SHORT-TERM BORROWINGS AND LONG-TERM DEBT 2009 2008 Short-term borrowings Current maturities of long-term debt $ 15 $ 1,305 Other short-term borrowings 188 103 $ 203 $ 1,408 Long-term debt 5.63% (5.0% effective rate) (2) (3) senior notes due 2009 $ $ 1,300 4.63% (4.6% effective rate) (3) senior notes due 2012 1,000 1,000 5.00% (5.2% effective rate) senior notes due 2013 400 400 6.95% (7.4% effective rate) (3) senior notes due 2014 1,300 1,300 4.13% (4.4% effective rate) senior notes due 2015 250 250 5.50% (5.3% effective rate) (2) senior notes due 2016 800 800 5.125% (4.9% effective rate) (2) senior notes due 2019 750 7.00% (7.1% effective rate) senior notes due 2029 1,000 1,000 Capital lease obligations (Note 9) 25 8 Other (average rate 3.8%) 16 37 5,541 6,095 Fair value hedge adjustment (1) (64 ) 6 Unamortized discount, net (13 ) (12 ) Current maturities of long-term debt (15 ) (1,305 ) $ 5,449 $ 4,784 (1) The portion of our fixed-rate debt obligations that is hedged is reflected in our Consolidated Balance Sheets as an amount equal to the sum of the debts carrying value plus a fair value adjustment, representing changes recorded in the fair value of the hedged debt obligations attributable to movements in market interest rates. (2) Effective interest rates include the impact of the gain/loss realized on swap instruments and represent the rates that were achieved in 2009. (3) These notes are guaranteed by PepsiCo. Aggregate Maturities Long-Term Debt Aggregate maturities of long-term debt as of December26, 2009 are as follows: 2010: $8 million, 2011: $8million, 2012: $1,000million, 2013: $400million, 2014: $1,300million, 2015 and thereafter: $2,800million. The maturities of long-term debt do not include the capital lease obligations, the non-cash impact of the fair value hedge adjustment and the interest effect of the unamortized discount. On January14, 2009, we issued $750million in senior notes, with a coupon rate of 5.125 percent, maturing in 2019. The net proceeds of the offering, together with a portion of the proceeds from the offering of our senior notes issued in the fourth quarter of 2008, were used to repay our senior notes due in 2009, at their scheduled maturity on February17, 2009. Any excess proceeds of this offering were used for general corporate purposes. The next significant scheduled debt maturity is not until 2012. On October24, 2008, we issued $1.3billion of 6.95percent senior notes due 2014 (the Notes). The Notes were guaranteed by PepsiCo on February17, 2009. A portion of the proceeds of this debt was used to finance acquisitions and repay short-term commercial paper debt. 2009 Short-Term Debt Activities We have a committed credit facility of $1.2billion and an uncommitted credit facility of $500 |
Leases
Leases | |
12 Months Ended
Dec. 26, 2009 USD / shares | |
Leases [Abstract] | |
LEASES | Note 9LEASES We have non-cancelable commitments under both capital and long-term operating leases, principally for real estate and manufacturing and office equipment. Certain of our operating leases for real estate contain escalation clauses, holiday rent allowances and other rent incentives. We recognize rent expense on our operating leases, including these allowances and incentives, on a straight-line basis over the lease term. Capital and operating lease commitments expire at various dates through 2072. Most leases require payment of related executory costs, which include property taxes, maintenance and insurance. The cost of manufacturing and office equipment under capital leases is included in the Consolidated Balance Sheets as PPE. Amortization of assets under capital leases is included in depreciation expense. Capital lease additions totaled $25million, $4million and $7million for 2009, 2008 and 2007, respectively. The future minimum lease payments by year and in the aggregate, under capital leases and non-cancelable operating leases consisted of the following at December26, 2009: Leases Capital Operating 2010 $ 8 $ 56 2011 7 34 2012 6 27 2013 5 18 2014 13 Thereafter 2 101 $ 28 $ 249 Less: amount representing interest 3 Present value of net minimum lease payments 25 Less: current portion of net minimum lease payments 7 Long-term portion of net minimum lease payments $ 18 The total minimum rentals to be received in the future from our non-cancelable subleases were $3million at December26, 2009. Components of Net Rental Expense Under Operating Leases 2009 2008 2007 Minimum rentals $ 107 $ 120 $ 114 Sublease rental income (2 ) (1 ) (2 ) Net rental expense $ 105 $ 119 $ 112 |
Financial Instruments and Risk
Financial Instruments and Risk Management | |
12 Months Ended
Dec. 26, 2009 USD / shares | |
Financial Instruments and Risk Management [Abstract] | |
FINANCIAL INSTRUMENTS AND RISK MANAGEMENT | Note 10FINANCIAL INSTRUMENTS AND RISK MANAGEMENT We are subject to the risk of loss arising from adverse changes in commodity prices, foreign currency exchange rates, interest rates and our stock price. In the normal course of business, we manage these risks through a variety of strategies, including the use of derivatives. Our corporate policy prohibits the use of derivative instruments for trading or speculative purposes, and we have procedures in place to monitor and control their use. We are exposed to counterparty credit risk on all of our derivative financial instruments. We have established and maintain counterparty credit guidelines and only enter into transactions with financial institutions of investment grade or better. We monitor our counterparty credit risk and utilize numerous counterparties to minimize our exposure to potential defaults. We do not require collateral under these transactions. Commodity We use forward and option contracts to hedge the risk of adverse movements in commodity prices related primarily to anticipated purchases of raw materials and energy used in our operations. These contracts generally range from one to 24months in duration. Our open commodity derivative contracts that qualify for cash flow hedge accounting have a notional value, based on the contract price, of $347million as of December26, 2009. Our open commodity derivative contracts that act as economic hedges but do not qualify for hedge accounting have a notional value, based on the contract price, of $50million as of December26, 2009. Foreign Currency We are subject to foreign currency transactional risks in certain of our international territories primarily for the purchase of commodities that are denominated in currencies that are different from their functional currency. We enter into forward contract agreements to hedge a portion of this foreign currency risk. These contracts generally range from one to 24months in duration. Our open foreign currency derivative contracts that qualify for cash flow hedge accounting have a notional value, based on the contract price, of $150million as of December26, 2009. We have foreign currency derivative contracts to economically hedge the foreign currency risk associated with certain assets on our balance sheet, which have a notional value, based on the contract price, of $40million as of December26, 2009. Additionally, we fair value certain vendor and customer contracts that have embedded foreign currency derivative components. These contracts generally range from one year to three years and as of December26, 2009 have a notional value, based on the contract price, of $10million. Interest We have entered into treasury rate lock agreements to hedge against adverse interest rate changes relating to the issuance of certain fixed rate debt financing arrangements. The settled gains and losses from these treasury rate lock agreements that were considered effective were deferred in AOCL and are being amortized to interest expense over the duration of the debt term. The Company has a $3million net deferred gain in AOCL related to these instruments, which will be amortized over the next |
Pension and Postretirement Medi
Pension and Postretirement Medical Benefit Plans | |
12 Months Ended
Dec. 26, 2009 USD / shares | |
Pension and Postretirement Medical Benefit Plans [Abstract] | |
PENSION AND POSTRETIREMENT MEDICAL BENEFIT PLANS | Note 11PENSION AND POSTRETIREMENT MEDICAL BENEFIT PLANS Employee Benefit Plans We sponsor both pension and other postretirement medical benefit plans in various forms in the United States and other similar pension plans in our international locations, covering employees who meet specified eligibility requirements. The assets, liabilities and expense associated with our international plans were not significant to our results of operations and are not included in the tables and discussion presented below. Defined Benefit Pension Plans In the U.S., we sponsor non-contributory defined benefit pension plans for certain full-time salaried and hourly employees. Benefits are generally based on years of service and compensation, or stated amounts for each year of service. Effective January1, 2007, newly hired salaried and non-union hourly employees are not eligible to participate in these plans. Additionally, effective April1, 2009, benefits from these plans are no longer accrued for certain salaried and non-union employees that did not meet specified age and service requirements. Postretirement Medical Plans Our postretirement medical plans provide medical and life insurance benefits principally to U.S. retirees and their dependents. Employees are eligible for benefits if they meet age and service requirements. The plans are not funded and since 1993 have included retiree cost sharing. Defined Contribution Benefits Nearly all of our U.S. employees are eligible to participate in our defined contribution plans, which are voluntary defined contribution savings plans. We make matching contributions to the defined contribution savings plans on behalf of participants eligible to receive such contributions. Additionally, employees not eligible to participate in the defined benefit pension plans and employees whose benefits have been frozen as of April1, 2009, are currently receiving additional retirement contributions under the defined contribution plans. Defined contribution expense was $42million, $29million and $27million in 2009, 2008 and 2007, respectively. Components of Net Pension Expense and Other Amounts Recognized in Other Comprehensive (Income) Loss Pension Net pension expense 2009 2008 2007 Service cost $ 45 $ 51 $ 55 Interest cost 104 100 90 Expected return on plan assets (income) (120 ) (116 ) (102 ) Amortization of net loss 35 15 38 Amortization of prior service amendments 6 7 7 Settlement / curtailment charges 1 20 Special termination benefits 7 4 Net pension expense for the defined benefit plans 71 84 92 Other comprehensive (income)loss Prior service cost arising during the year 7 14 8 Net (gain)loss arising during the year (147 ) 619 (114 ) Amortization of net loss (36 ) (15 ) (38 ) Amortization of prior service amendments (1) (6 ) (27 ) (7 ) Total recognized in other c |
Income Taxes
Income Taxes | |
12 Months Ended
Dec. 26, 2009 USD / shares | |
Income Taxes [Abstract] | |
INCOME TAXES | Note 12INCOME TAXES The details of our income tax provision are set forth below: Expense\(Benefit) 2009 2008 2007 Current: Federal $ (24 ) $ 93 $ 168 Foreign (26 ) 46 25 State 5 20 26 (45 ) 159 219 Deferred: Federal 77 56 (41 ) Foreign 3 (96 ) 5 State 8 (7 ) (6 ) 88 (47 ) (42 ) $ 43 $ 112 $ 177 In 2009, our tax provision includes the following significant items: Tax audit resolutions We finalized various audits in the United States and in our international jurisdictions which resulted in a net tax provision benefit of $85million and $73million, respectively. Valuation allowances We reversed valuation allowances on some of our deferred tax assets, as we anticipate receiving future benefit from these tax assets, which resulted in a benefit to the tax provision of $39million. Tax law changes Mexico and Canada enacted tax law changes in the fourth quarter of 2009 which required us to re-measure our deferred tax assets and liabilities resulting in a net provision expense of $65million. In 2008, our tax provision included the following significant items: Tax impact from impairment charge During 2008, we recorded a deferred tax benefit of $115million associated with impairment charges primarily related to our business in Mexico. Tax impact from restructuring We incurred restructuring charges in the fourth quarter of 2008 which resulted in a tax benefit of $21million. In 2007, our tax provision included higher taxes on higher international earnings, as well as the following significant items: Valuation allowances During 2007, we reversed valuation allowances on some of our deferred tax assets resulting in an $11million tax benefit. Tax audit settlement The statute of limitations for the IRS audit of our 2001-2002 tax returns closed on June30, 2007, and we reversed approximately $46million in tax reserves relating to such audit. Tax law changes During 2007, changes to the income tax laws in Canada, Mexico and certain state jurisdictions in the U.S. were enacted. These law changes required us to re-measure our net deferred tax assets and liabilities which resulted in a net decrease to our income tax expense of approximately $13million before the impact of noncontrolling interests. Our U.S. and foreign income before income taxes is set forth below: 2009 2008 2007 U.S. $ 441 $ 466 $ 543 Foreign 308 (132 ) 260 $ 749 $ 334 $ 803 Below is the reconciliation of our income tax rate from the U.S. federal statutory rate to our effective tax rate: 2009 2008 2007 Income taxes computed at the U.S. federal statutory rate 35.0 % 35.0 % 35.0 % State income tax |
Segment Information
Segment Information | |
12 Months Ended
Dec. 26, 2009 USD / shares | |
Segment Information [Abstract] | |
SEGMENT INFORMATION | Note 13SEGMENT INFORMATION We operate in one industry, carbonated soft drinks and other ready-to-drink beverages, and all of our segments derive revenue from these products. PBG has three reportable segments U.S. Canada, Europe (which includes Spain, Russia, Greece and Turkey) and Mexico. Operationally, the Company is organized along geographic lines with specific regional management teams having responsibility for the financial results in each reportable segment. We evaluate the performance of these segments based on operating income or loss. Operating income or loss is exclusive of net interest expense, noncontrolling interests, other non-operating (income) expenses, net and income taxes. The Companys corporate headquarters centrally manages commodity derivatives on behalf of our segments. During 2009, we expanded our hedging program to mitigate price changes associated with certain commodities utilized in our production process. These derivatives hedge the underlying price risk associated with the commodity and are not entered into for speculative purposes. Certain commodity derivatives do not qualify for hedge accounting treatment. Others receive hedge accounting treatment but may have some element of ineffectiveness based on the accounting standard. These commodity derivatives are marked-to-market each period until settlement, resulting in gains and losses being reflected in corporate headquarters results. The gains and losses are subsequently reflected in the segment results when the underlying commoditys cost is recognized. Therefore, segment results reflect the contract purchase price of these commodities. The Company did not have any comparable mark-to-market commodity derivative activity in prior years. The following tables summarize select financial information related to our reportable segments: Net Revenues 2009 2008 2007 U.S. Canada $ 10,315 $ 10,300 $ 10,336 Europe 1,755 2,115 1,872 Mexico 1,149 1,381 1,383 Worldwide net revenues $ 13,219 $ 13,796 $ 13,591 Net revenues in the U.S. were $9,201million, $9,097million and $9,202million in 2009, 2008 and 2007, respectively. In 2009, sales to Wal-Mart Stores, Inc. and its affiliated companies were 11percent of our revenues, primarily as a result of transactions in the U.S. Canada segment. In 2008 and 2007, the Company did not have one individual customer that represented 10percent of total revenues. Operating Income (Loss) 2009 2008 2007 U.S. Canada $ 868 $ 886 $ 893 Europe 112 101 106 Mexico 56 (338 ) 72 Total segments 1,036 649 1,071 Corporate net impact of mark-to-market on commodity hedges 12 Worldwide operating income 1,048 649 1,071 Interest expense, net 303 290 274 Other non-operating (income)expenses, net (4 ) 25 (6 ) Income before income taxes $ 749 $ 334 |
Related Party Transactions
Related Party Transactions | |
12 Months Ended
Dec. 26, 2009 USD / shares | |
Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS | Note 14RELATED PARTY TRANSACTIONS PepsiCo is a related party due to the nature of our franchise relationship and its ownership interest in our Company. The most significant agreements that govern our relationship with PepsiCo consist of: (1) Master Bottling Agreement for cola beverages bearing the Pepsi-Cola and Pepsi trademarks in the U.S.; bottling agreements and distribution agreements for non-cola beverages; and a master fountain syrup agreement in the U.S.; (2) Agreements similar to the Master Bottling Agreement and the non-cola agreement for each country in which we operate, as well as a fountain syrup agreement for Canada; (3) A shared services agreement where we obtain various services from PepsiCo and provide services to PepsiCo; (4) Russia Venture Agreement related to the formation of PR Beverages; and (5) Russia Snack Food Distribution Agreement pursuant to which our PR Beverages venture purchases snack food products from Frito-Lay, Inc. (Frito), a subsidiary of PepsiCo, for sale and distribution in the Russian Federation. The Master Bottling Agreement provides that we will purchase our entire requirements of concentrates for the cola beverages from PepsiCo at prices and on terms and conditions determined from time to time by PepsiCo. Additionally, we review our annual marketing, advertising, management and financial plans each year with PepsiCo for its approval. If we fail to submit these plans, or if we fail to carry them out in all material respects, PepsiCo can terminate our beverage agreements. If our beverage agreements with PepsiCo are terminated for this or for any other reason, it would have a material adverse effect on our business and financial results. On March1, 2007, together with PepsiCo, we formed PR Beverages, a venture that enables us to strategically invest in Russia to accelerate our growth. PBG contributed its business in Russia to PR Beverages, and PepsiCo entered into bottling agreements with PR Beverages for PepsiCo beverage products sold in Russia on the same terms as in effect for PBG immediately prior to the venture. PR Beverages has an exclusive license to manufacture and sell PepsiCo concentrate for such products. PR Beverages has contracted with a PepsiCo subsidiary to manufacture such concentrate. The following income (expense)amounts are considered related party transactions as a result of our relationship with PepsiCo and its affiliates: 2009 2008 2007 Net revenues: Bottler incentives and other arrangements (1) $ 100 $ 93 $ 66 Cost of sales: Purchases of concentrate and finished products, and royalty fees (2) $ (3,225 ) $ (3,451 ) $ (3,406 ) Bottler incentives and other arrangements (1) 476 542 582 Total cost of sales $ (2,749 ) $ (2,909 ) $ (2,824 ) Selling, delivery and administrative expenses: Bottler incentives and other arrangements (1) $ 47 $ 56 $ 66 Fountain service fee (3) 205 |
Restructuring Charges
Restructuring Charges | |
12 Months Ended
Dec. 26, 2009 USD / shares | |
Restructuring Charges [Abstract] | |
RESTRUCTURING CHARGES | Note 15RESTRUCTURING CHARGES On November18, 2008, we announced a restructuring program to enhance the Companys operating capabilities in each of our reporting segments with the objective to strengthen customer service and selling effectiveness; simplify decision making and streamline the organization; drive greater cost productivity to adapt to current macroeconomic challenges; and rationalize the Companys supply chain infrastructure. As part of the restructuring program, we eliminated approximately 4,000 positions across all reporting segments, we closed four facilities in the United States and three plants and 17 distribution centers in Mexico and we eliminated 534 routes in Mexico. In addition, the Company modified its U.S. defined benefit pension plans, which will generate long-term savings and significantly reduce future financial obligations. The program was substantially complete in December of 2009 and certain restructuring actions previously planned for 2010 have been cancelled as a result of the pending merger with PepsiCo. The Company recorded pre-tax charges of $107million over the course of the restructuring program which were primarily for severance and related benefits, pension and other employee-related costs and other charges including employee relocation and asset disposal costs. These charges were recorded in SDA. The Company expects about $80million in pre-tax cash expenditures from these restructuring actions, of which $75million has been paid since the inception of the program, with the balance expected to occur in 2010. This includes $8million of employee benefit payments made through 2009, pursuant to existing unfunded termination indemnity plans. These benefit payments have been accrued for in previous periods, and therefore, are not included in our cost for this program and are not included in the tables below. The following tables summarize the pre-tax costs associated with the restructuring program: By Reportable Segment U.S. Worldwide Canada Mexico Europe Costs incurred through December27, 2008 $ 83 $ 53 $ 3 $ 27 Costs incurred during the year ended December26, 2009 24 10 14 Total costs incurred $ 107 $ 63 $ 17 $ 27 By Activity: Asset Pension Disposal, Severance Other Employee Related Related Relocation Total Benefits Costs Other Costs incurred through December27, 2008 $ 83 $ 47 $ 29 $ 7 Cash payments (11 ) (10 ) (1 ) Non-cash settlements (30 ) (1 ) (23 ) (6 ) Remaining costs accrued at December27, 2008 42 36 6 Costs incurred during the year ended December26, 2009 24 8 3 13 Cash payments (56 ) (40 ) (7 ) (9 ) Non-cash settlements (5 ) (1 ) (4 ) Remaining costs accrued at |
Accumulated Other Comprehensive
Accumulated Other Comprehensive Loss | |
12 Months Ended
Dec. 26, 2009 USD / shares | |
Accumulated Other Comprehensive Loss [Abstract] | |
ACCUMULATED OTHER COMPREHENSIVE LOSS | Note 16ACCUMULATED OTHER COMPREHENSIVE LOSS The year-end balances related to each component of AOCL were as follows: 2009 2008 2007 Net currency translation adjustment $ (195 ) $ (355 ) $ 199 Cash flow hedge adjustment (1) 40 (23 ) 10 Pension and postretirement medical benefit plans adjustment (2) (441 ) (560 ) (257 ) Accumulated other comprehensive loss $ (596 ) $ (938 ) $ (48 ) (1) Net of noncontrolling interests and taxes of $(30) million in 2009, $20million in 2008 and $(8) million in 2007. (2) Net of noncontrolling interests and taxes of $329million in 2009, $421million in 2008 and $195 million in 2007. |
Supplemental Cash Flow Informat
Supplemental Cash Flow Information | |
12 Months Ended
Dec. 26, 2009 USD / shares | |
Supplemental Cash Flow Information [Abstract] | |
SUPPLEMENTAL CASH FLOW INFORMATION | Note 17SUPPLEMENTAL CASH FLOW INFORMATION The table below presents the Companys supplemental cash flow information: 2009 2008 2007 Non-cash investing and financing activities: Increase (Decrease) in accounts payable related to capital expenditures $ 14 $ (67 ) $ 15 Acquisition of intangible asset $ $ $ 315 Liabilities assumed in conjunction with acquisition of bottlers $ 34 $ 22 $ 1 Capital-in-kind contributions $ 24 $ 34 $ 15 Share-based compensation $ 19 $ 4 $ |
Contingencies
Contingencies | |
12 Months Ended
Dec. 26, 2009 USD / shares | |
Contingencies [Abstract] | |
CONTINGENCIES | Note 18CONTINGENCIES We are subject to various claims and contingencies related to lawsuits, environmental and other matters arising out of the normal course of business. We believe that the ultimate liability arising from such claims or contingencies, if any, in excess of amounts already recognized is not likely to have a material adverse effect on our results of operations, financial position or liquidity. On April19, 2009, PBG received an unsolicited proposal from PepsiCo to acquire all of the outstanding shares of the Companys common stock not already owned by PepsiCo for $29.50 per share. The proposal consisted of $14.75 in cash plus 0.283 shares of PepsiCo common stock for each share of PBG common stock. Immediately following receipt of the proposal, PBGs Board of Directors formed a special committee to review the adequacy of the proposal. On May4, 2009, our Board of Directors rejected the proposal. On August3, 2009, PBG and PepsiCo entered into a definitive merger agreement, under which PepsiCo will acquire all outstanding shares of PBG common stock it does not already own for the price of $36.50 in cash or 0.6432 shares of PepsiCo common stock, subject to proration such that the aggregate consideration to be paid to PBG shareholders shall be 50percent in cash and 50 percent in PepsiCo common stock. At a special meeting of our shareholders held on February17, 2010, our shareholders adopted the merger agreement. The transaction is subject to certain regulatory approvals and is expected to be finalized by the end of the first quarter of 2010. As discussed below, we and members of our Board of Directors have been named in a number of lawsuits relating to the PepsiCo proposal. Delaware Actions Beginning on April22, 2009, seven putative stockholder class action complaints challenging the April19 proposal were filed against the Company and the individual members of the Board of Directors of the Company in the Court of Chancery of the State of Delaware (the Delaware Lawsuits). The complaints alleged, among other things, that the defendants had breached or would breach their fiduciary duties owed to the public stockholders of the Company in connection with the April19 proposal. The Delaware Lawsuits were consolidated on June5, 2009, and an amended complaint was filed on June19, 2009. The amended complaint seeks, among other things, damages and declaratory, injunctive, and other equitable relief alleging, among other things, that the defendants have breached or will breach their fiduciary duties owed to the public stockholders of the Company, that the April19 proposal and the transactions contemplated thereunder were not entirely fair to the public stockholders, that PepsiCo had retaliated or would retaliate against the Company for rejecting the April19 proposal, and that certain provisions of the Companys certificate of incorporation are invalid and/or inapplicable to the April19 proposal and the pending merger. On July23, 2009, motions for partial summary judgment were filed concerning the plaintiffs allegations relating to the Companys certificate of incorporation. On August31, 2009, the Court of Chancery entered a |
Stockholders Rights Agreement
Stockholders Rights Agreement | |
12 Months Ended
Dec. 26, 2009 USD / shares | |
Stockholders Rights Agreement [Abstract] | |
STOCKHOLDERS' RIGHTS AGREEMENT | Note 19 STOCKHOLDERS RIGHTS AGREEMENT During the second quarter of 2009, the Company declared a dividend payable to stockholders of record on May28, 2009, of one right (a Right) per each share of outstanding Common Stock and ClassB Common Stock to purchase 1/1,000th of a share of SeriesA Preferred Stock of the Company (the Preferred Stock), at a price of $100 per share (the Purchase Price). In connection with the declaration of the dividend, the Company entered into a Rights Agreement, dated May18, 2009 (the Rights Agreement), with Mellon Shareholder Services LLC, as the Rights Agent (Mellon). On August3, 2009, the Company and PepsiCo entered into a Merger Agreement, under which PepsiCo will acquire all of the outstanding shares of Company Common Stock that it does not already own (the Pending Merger). On the same date, the Company and Mellon entered into Amendment 1 to the Rights Agreement (the Rights Amendment), which provides that none of the actions taken by PepsiCo in connection with the Pending Merger shall trigger the exercisability of the Rights. Additionally, the Rights Amendment provides that the Rights will expire if and when the Pending Merger is finalized. Under the Rights Agreement, as amended, the Rights will become exercisable upon the earliest of (i)the date that a person or group other than PepsiCo has obtained beneficial ownership of more than 15percent of the outstanding shares of Common Stock, or (ii)a date determined by the PBG Board of Directors after a person or group commences (or publicly discloses an intent to commence) a tender or exchange offer that would result in such person or group becoming the beneficial owner of more than 15percent of the outstanding shares of Common Stock. Except as provided under the Rights Amendment, the Rights will expire on May18, 2010, unless earlier redeemed or canceled by the Company. Each right, if and when it becomes exercisable, will entitle the holder (other than the person or group whose action triggered the exercisability of the Rights (the Acquiring Person)) to receive, upon exercise of the Right and the payment of the Purchase Price, that number of 1/1,000ths of a share of Preferred Stock equal to the number of shares of Common Stock which at the time of the applicable triggering transaction would have a market value of twice the Purchase Price. In the event the Company is acquired in a merger or other business combination that triggers the exercisability of the Rights, or 50percent or more of the Companys assets are sold in a transaction that triggers the exercisability of the Rights, each Right will entitle its holder (other than an Acquiring Person) to purchase common shares in the surviving entity at 50percent of market price. |
Selected Quarterly Financial Da
Selected Quarterly Financial Data (unaudited) | |
12 Months Ended
Dec. 26, 2009 USD / shares | |
Selected Quarterly Financial Data (unaudited) [Abstract] | |
SELECTED QUARTERLY FINANCIAL DATA | Note 20SELECTED QUARTERLY FINANCIAL DATA (unaudited) Quarter to quarter comparisons of our financial results are impacted by our fiscal year cycle and the seasonality of our business. The seasonality of our operating results arises from higher sales in the second and third quarters versus the first and fourth quarters of the year, combined with the impact of fixed costs, such as depreciation and interest, which are not significantly impacted by business seasonality. First Second Third Fourth 2009(1) Quarter Quarter Quarter Quarter Full Year Net revenues $ 2,507 $ 3,274 $ 3,633 $ 3,805 $ 13,219 Gross profit $ 1,104 $ 1,444 $ 1,621 $ 1,671 $ 5,840 Operating income $ 117 $ 309 $ 436 $ 186 $ 1,048 Net income $ 58 $ 238 $ 310 $ 100 $ 706 Net income attributable to PBG $ 57 $ 211 $ 254 $ 90 $ 612 Diluted earnings per share (2) $ 0.27 $ 0.96 $ 1.14 $ 0.40 $ 2.77 First Second Third Fourth 2008(1) Quarter Quarter Quarter Quarter Full Year Net revenues $ 2,651 $ 3,522 $ 3,814 $ 3,809 $ 13,796 Gross profit $ 1,169 $ 1,606 $ 1,737 $ 1,698 $ 6,210 Operating income (loss) $ 108 $ 350 $ 455 $ (264 ) $ 649 Net income (loss) $ 31 $ 204 $ 274 $ (287 ) $ 222 Net income (loss) attributable to PBG $ 28 $ 174 $ 231 $ (271 ) $ 162 Diluted earnings (loss)per share (2) $ 0.12 $ 0.78 $ 1.06 $ (1.28 ) $ 0.74 (1) For additional unaudited information see Items affecting comparability of our financial results in Managements Financial Review in Item7. (2) Diluted earnings per share are computed independently for each of the periods presented. |
Subsequent Event
Subsequent Event | |
12 Months Ended
Dec. 26, 2009 USD / shares | |
Subsequent Event [Abstract] | |
SUBSEQUENT EVENT | Note 21SUBSEQUENT EVENT On February12, 2010, the Company purchased Ab-Tex Beverage, Ltd. With nearly 450 employees, Ab-Tex bottles, packages and distributes several leading beverage brands, including Pepsi-Cola, Dr Pepper, Mountain Dew, 7UP, and Sunkist throughout central Texas. |
Valuation and Qualifying Accoun
Valuation and Qualifying Accounts | |
12 Months Ended
Dec. 26, 2009 USD / shares | |
Valuation and Qualifying Accounts [Abstract] | |
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS | Schedule Of Valuation And Qualifying Accounts Disclosure SCHEDULE II VALUATION AND QUALIFYING ACCOUNTS THE PEPSI BOTTLING GROUP, INC. Balance at Charges to Accounts Foreign Balance at Beginning Cost and Written Currency End of In millions of Period Expenses Off Translation Period Fiscal Year Ended December26, 2009 Allowance for losses on trade accounts receivable $ 71 $ 11 $ (13 ) $ $ 69 Fiscal Year Ended December27, 2008 Allowance for losses on trade accounts receivable $ 54 $ 30 $ (9 ) $ (4 ) $ 71 Fiscal Year Ended December29, 2007 Allowance for losses on trade accounts receivable $ 50 $ 11 $ (10 ) $ 3 $ 54 |