SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549



☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934



☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934



North Carolina		13-1584302
~~North Carolina~~	~~13-1584302~~
(State or Other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification No.)

700 Anderson Hill Road, Purchase, New York 10577



(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)

Title of each class

Trading Symbols

Name of each exchange on which registered

Common Stock, par value 1-2/3 cents per share

PEP

The Nasdaq Stock Market LLC

1.750% Senior Notes Due 2021

PEP21a

The Nasdaq Stock Market LLC

2.500% Senior Notes Due 2022

PEP22a

The Nasdaq Stock Market LLC

0.250% Senior Notes Due 2024

PEP24

The Nasdaq Stock Market LLC

2.625% Senior Notes Due 2026

PEP26

The Nasdaq Stock Market LLC

0.750% Senior Notes Due 2027

PEP27

The Nasdaq Stock Market LLC

0.875% Senior Notes Due 2028

PEP28

The Nasdaq Stock Market LLC

0.500% Senior Notes Due 2028

PEP28a

The Nasdaq Stock Market LLC

1.125% Senior Notes Due 2031

PEP31

The Nasdaq Stock Market LLC

0.400% Senior Notes Due 2032

PEP32

The Nasdaq Stock Market LLC

0.875% Senior Notes Due 2039

PEP39

The Nasdaq Stock Market LLC

1.050% Senior Notes Due 2050

PEP50

The Nasdaq Stock Market LLC

Number of shares of Common Stock outstanding as of ~~July 6, 2020~~April 8, 2021 was ~~1,384,632,842.~~1,381,631,264.

Table of Contents

PepsiCo, Inc. and Subsidiaries

Table of Contents


		Page No.
			~~Page No.~~
Part I Financial Information
Item 1.	Condensed Consolidated Financial Statements	3
	Condensed Consolidated Statement of Income – 12 ~~and 24~~ Weeks Ended ~~June 13,~~March 20, 2021 and March 21, 2020 ~~and June 15, 2019~~	3
	Condensed Consolidated Statement of Comprehensive Income – 12 ~~and 24~~ Weeks Ended ~~June 13,~~March 20, 2021 and March 21, 2020 ~~and June 15, 2019~~	4
	Condensed Consolidated Statement of Cash Flows – 2412 Weeks Ended ~~June 13,~~March 20, 2021 and March 21, 2020 ~~and June 15, 2019~~	5
	Condensed Consolidated Balance Sheet – ~~June 13, 2020~~March 20, 2021 and December ~~28, 2019~~26, 2020	67
	Condensed Consolidated Statement of Equity – 12 ~~and 24~~ Weeks Ended ~~June 13,~~March 20, 2021 and March 21, 2020 ~~and June 15, 2019~~	78
	Notes to the Condensed Consolidated Financial Statements	89
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2524
Report of Independent Registered Public Accounting Firm		4941
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	5042
Item 4.	Controls and Procedures	5042
Part II Other Information
Item 1.	Legal Proceedings	5143
Item 1A.	Risk Factors	5143
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	5443
Item 6.	Exhibits	5443

Table of Contents

PART I FINANCIAL INFORMATION

ITEM 1. Condensed Consolidated Financial Statements.

Condensed Consolidated Statement of Income

PepsiCo, Inc. and Subsidiaries

(in millions except per share amounts, unaudited)


	12 Weeks Ended
		3/20/2021		3/21/2020
Net Revenue		$	14,820	$	13,881
Cost of sales		6,671		6,127
Gross profit		8,149		7,754
Selling, general and administrative expenses		5,837		5,830
Operating Profit		2,312		1,924
Other pension and retiree medical benefits income		120		77
Net interest expense and other		(258)		(290)
Income before income taxes		2,174		1,711
Provision for income taxes		451		360
Net income		1,723		1,351
Less: Net income attributable to noncontrolling interests		9		13
Net Income Attributable to PepsiCo		$	1,714	$	1,338
Net Income Attributable to PepsiCo per Common Share
Basic		$	1.24	$	0.96
Diluted		$	1.24	$	0.96
Weighted-average common shares outstanding
Basic		1,380		1,390
Diluted		1,387		1,396

12 Weeks Ended 24 Weeks Ended
6/13/2020
6/15/2019
6/13/2020
6/15/2019
Net Revenue $ 15,945
$ 16,449
$ 29,826
$ 29,333
Cost of sales 7,088
7,404
13,215
13,092
Gross profit 8,857
9,045
16,611
16,241
Selling, general and administrative expenses 6,538
6,316
12,368
11,504
Operating Profit 2,319
2,729
4,243
4,737
Other pension and retiree medical benefits income 84
61
161
125
Net interest expense and other (235 ) (223 ) (525 ) (427 )
Income before income taxes 2,168
2,567
3,879
4,435
Provision for income taxes 510
524
870
970
Net income 1,658
2,043
3,009
3,465
Less: Net income attributable to noncontrolling interests 12
8
25
17
Net Income Attributable to PepsiCo $ 1,646
$ 2,035
$ 2,984
$ 3,448
Net Income Attributable to PepsiCo per Common Share
Basic $ 1.19
$ 1.45
$ 2.15
$ 2.46
Diluted $ 1.18
$ 1.44
$ 2.14
$ 2.44
Weighted-average common shares outstanding
Basic 1,387
1,401
1,389
1,403
Diluted 1,393
1,409
1,395
1,411

See accompanying notes to the condensed consolidated financial statements.

Table of Contents

Condensed Consolidated Statement of Comprehensive Income

PepsiCo, Inc. and Subsidiaries

(in millions, unaudited)


	12 Weeks Ended
		3/20/2021		3/21/2020
Net income		$	1,723	$	1,351
Other comprehensive income/(loss), net of taxes:
Net currency translation adjustment		131		(754)
Net change on cash flow hedges		72		(61)
Net pension and retiree medical adjustments		27		57
Other		0		1
		230		(757)
Comprehensive income		1,953		594
Less: Comprehensive income attributable to noncontrolling interests		9		13
Comprehensive Income Attributable to PepsiCo		$	1,944	$	581

12 Weeks Ended 24 Weeks Ended
6/13/2020
6/15/2019
6/13/2020
6/15/2019
Net income $ 1,658
$ 2,043
$ 3,009
$ 3,465
Other comprehensive (loss)/income, net of taxes:
Net currency translation adjustment (796 ) (365 ) (1,550 ) 108
Net change on cash flow hedges 13
(6 ) (48 ) (33 )
Net pension and retiree medical adjustments 63
42
120
59
Other (1 ) 1
—
1
(721 ) (328 ) (1,478 ) 135
Comprehensive income 937
1,715
1,531
3,600
Comprehensive income attributable to noncontrolling interests (12 ) (8 ) (25 ) (17 )
Comprehensive Income Attributable to PepsiCo $ 925
$ 1,707
$ 1,506
$ 3,583

See accompanying notes to the condensed consolidated financial statements.

Table of Contents

Condensed Consolidated Statement of Cash Flows

PepsiCo, Inc. and Subsidiaries

(in millions, unaudited)


	12 Weeks Ended
	3/20/2021		3/21/2020
Operating Activities
Net income	$	1,723	$	1,351
Depreciation and amortization	560		533
Share-based compensation expense	79		61
Restructuring and impairment charges	43		38
Cash payments for restructuring charges	(49)		(60)
Merger and integration (credits)/charges	(10)		25
Cash payments for merger and integration charges	(7)		(38)
Pension and retiree medical plan expenses	21		40
Pension and retiree medical plan contributions	(413)		(234)
Deferred income taxes and other tax charges and credits	108		25


Change in assets and liabilities:
Accounts and notes receivable	(455)		(784)
Inventories	(397)		(312)
Prepaid expenses and other current assets	(210)		(263)
Accounts payable and other current liabilities	(1,906)		(1,419)
Income taxes payable	227		204
Other, net	(33)		84
Net Cash Used for Operating Activities	(719)		(749)

Investing Activities
Capital spending	(471)		(484)
Sales of property, plant and equipment	5		5
Acquisitions, net of cash acquired, and investments in noncontrolled affiliates	(13)		(454)
Divestitures	35		0
Short-term investments, by original maturity:

More than three months - maturities	535		0

Three months or less, net	3		7
Other investing, net	0		1
Net Cash Provided by/(Used for) Investing Activities	94		(925)

(Continued on following page)

Table of Contents

24 Weeks Ended
6/13/2020
6/15/2019
Operating Activities
Net income $ 3,009
$ 3,465
Depreciation and amortization 1,122
1,056
Share-based compensation expense 101
118
Restructuring and impairment charges 63
184
Cash payments for restructuring charges (109 ) (153 )
Pension and retiree medical plan expenses 80
98
Pension and retiree medical plan contributions (293 ) (317 )
Deferred income taxes and other tax charges and credits 109
221
Net tax related to the Tax Cuts and Jobs Act (TCJ Act) —
(29 )
Tax payments related to the TCJ Act —
(393 )
Change in assets and liabilities:
Accounts and notes receivable (1,101 ) (1,372 )
Inventories (827 ) (872 )
Prepaid expenses and other current assets (251 ) (336 )
Accounts payable and other current liabilities (1,336 ) (521 )
Income taxes payable 448
202
Other, net 447
37
Net Cash Provided by Operating Activities 1,462
1,388

Investing Activities
Capital spending (1,188 ) (1,167 )
Sales of property, plant and equipment 18
42
Acquisitions, net of cash acquired, and investments in noncontrolled affiliates (5,649 ) (2,424 )
Divestitures 4
270
Short-term investments, by original maturity:
More than three months - maturities —
4
More than three months - sales —
2
Three months or less, net 18
8
Other investing, net 35
(6 )
Net Cash Used for Investing Activities (6,762 ) (3,271 )

Financing Activities
Proceeds from issuances of long-term debt 10,564
1,122
Payments of long-term debt (752 ) (2,953 )
Short-term borrowings, by original maturity:
More than three months - proceeds 3,663
6
More than three months - payments (1,176 ) —
Three months or less, net 461
652
Cash dividends paid (2,677 ) (2,635 )
Share repurchases - common (1,137 ) (1,726 )
Proceeds from exercises of stock options 120
210
Withholding tax payments on restricted stock units (RSUs) and performance stock units (PSUs) converted (79 ) (100 )
Other financing (16 ) (15 )
Net Cash Provided by/(Used for) Financing Activities 8,971
(5,439 )
Effect of exchange rate changes on cash and cash equivalents and restricted cash (252 ) 24
Net Increase/(Decrease) in Cash and Cash Equivalents and Restricted Cash 3,419
(7,298 )
Cash and Cash Equivalents and Restricted Cash, Beginning of Year 5,570
10,769
Cash and Cash Equivalents and Restricted Cash, End of Period $ 8,989
$ 3,471

Supplemental Non-Cash Activity
Right-of-use assets obtained in exchange for lease obligations $ 302
$ 170
Condensed Consolidated Statement of Cash Flows (continued)

PepsiCo, Inc. and Subsidiaries

(in millions, unaudited)


	12 Weeks Ended
	3/20/2021		3/21/2020
Financing Activities
Proceeds from issuances of long-term debt	0		6,429
Payments of long-term debt	(1)		(1)
Short-term borrowings, by original maturity:
More than three months - proceeds	0		164
More than three months - payments	(396)		(2)
Three months or less, net	53		2,794
Cash dividends paid	(1,429)		(1,349)
Share repurchases - common	(106)		(573)

Proceeds from exercises of stock options	62		78
Withholding tax payments on restricted stock units (RSUs) and performance stock units (PSUs) converted	(71)		(76)
Other financing	0		(2)
Net Cash (Used for)/Provided by Financing Activities	(1,888)		7,462
Effect of exchange rate changes on cash and cash equivalents and restricted cash	(10)		(66)
Net (Decrease)/Increase in Cash and Cash Equivalents and Restricted Cash	(2,523)		5,722
Cash and Cash Equivalents and Restricted Cash, Beginning of Year	8,254		5,570
Cash and Cash Equivalents and Restricted Cash, End of Period	$	5,731	$	11,292

Supplemental Non-Cash Activity
Right-of-use assets obtained in exchange for lease obligations	$	167	$	148

See accompanying notes to the condensed consolidated financial statements.

Table of Contents

Condensed Consolidated Balance Sheet

PepsiCo, Inc. and Subsidiaries

(in millions except per share amounts)


	(Unaudited)
	3/20/2021		12/26/2020
ASSETS
Current Assets
Cash and cash equivalents	$	5,661	$	8,185
Short-term investments	964		1,366

Accounts and notes receivable, less allowance: 3/21 - $192 and 12/20 - $201	8,885		8,404
Inventories:
Raw materials and packaging	1,827		1,720
Work-in-process	308		205
Finished goods	2,421		2,247
	4,556		4,172
Prepaid expenses and other current assets	1,130		874
Total Current Assets	21,196		23,001
Property, plant and equipment	46,544		46,340
Accumulated depreciation	(25,295)		(24,971)
Property, Plant and Equipment, net	21,249		21,369
Amortizable Intangible Assets, net	1,690		1,703
Goodwill	18,779		18,757
Other Indefinite-Lived Intangible Assets	17,641		17,612

Investments in Noncontrolled Affiliates	2,777		2,792
Deferred Income Taxes	4,370		4,372
Other Assets	3,522		3,312
Total Assets	$	91,224	$	92,918

LIABILITIES AND EQUITY
Current Liabilities
Short-term debt obligations	$	4,674	$	3,780
Accounts payable and other current liabilities	18,019		19,592
Total Current Liabilities	22,693		23,372
Long-Term Debt Obligations	38,991		40,370
Deferred Income Taxes	4,491		4,284
Other Liabilities	10,996		11,340
Total Liabilities	77,171		79,366
Commitments and contingencies
PepsiCo Common Shareholders’ Equity
Common stock, par value 12/3¢ per share (authorized 3,600 shares; issued, net of repurchased common stock at par value: 1,382 and 1,380 shares, respectively)	23		23
Capital in excess of par value	3,800		3,910
Retained earnings	63,740		63,443
Accumulated other comprehensive loss	(15,246)		(15,476)
Repurchased common stock, in excess of par value (485 and 487 shares, respectively)	(38,370)		(38,446)
Total PepsiCo Common Shareholders’ Equity	13,947		13,454
Noncontrolling interests	106		98
Total Equity	14,053		13,552
Total Liabilities and Equity	$	91,224	$	92,918

(Unaudited)

6/13/2020
12/28/2019
ASSETS
Current Assets
Cash and cash equivalents $ 8,927
$ 5,509
Short-term investments 196
229
Accounts and notes receivable, less allowance: 6/20 - $235 and 12/19 - $105 8,780
7,822
Inventories:
Raw materials and packaging 1,869
1,395
Work-in-process 344
200
Finished goods 2,101
1,743
4,314
3,338
Prepaid expenses and other current assets 972
747
Total Current Assets 23,189
17,645
Property, plant and equipment 43,018
43,003
Accumulated depreciation (23,831 ) (23,698 )
Property, Plant and Equipment, net 19,187
19,305
Amortizable Intangible Assets, net 1,465
1,433
Goodwill 17,845
15,501
Other indefinite-lived intangible assets 17,530
14,610
Indefinite-Lived Intangible Assets 35,375
30,111
Investments in Noncontrolled Affiliates 2,715
2,683
Deferred Income Taxes 4,351
4,359
Other Assets 3,243
3,011
Total Assets $ 89,525
$ 78,547

LIABILITIES AND EQUITY
Current Liabilities
Short-term debt obligations $ 6,607
$ 2,920
Accounts payable and other current liabilities 17,220
17,541
Total Current Liabilities 23,827
20,461
Long-Term Debt Obligations 38,371
29,148
Deferred Income Taxes 4,203
4,091
Other Liabilities 10,537
9,979
Total Liabilities 76,938
63,679
Commitments and contingencies
PepsiCo Common Shareholders’ Equity
Common stock, par value 1²/₃¢ per share (authorized 3,600 shares; issued, net of repurchased common stock at par value: 1,385 and 1,391 shares, respectively)
23
23
Capital in excess of par value 3,772
3,886
Retained earnings 62,145
61,946
Accumulated other comprehensive loss (15,778 ) (14,300 )
Repurchased common stock, in excess of par value (482 and 476 shares, respectively) (37,671 ) (36,769 )
Total PepsiCo Common Shareholders’ Equity 12,491
14,786
Noncontrolling interests 96
82
Total Equity 12,587
14,868
Total Liabilities and Equity $ 89,525
$ 78,547

See accompanying notes to the condensed consolidated financial statements.

Table of Contents

Condensed Consolidated Statement of Equity

PepsiCo, Inc. and Subsidiaries

(in millions, except per share amounts, unaudited)


	12 Weeks Ended
		3/20/2021	3/21/2020
			Shares	Amount		Shares	Amount










Common Stock
Balance, beginning of period			1,380	$	23	1,391	$	23
Change in repurchased common stock			2	0		(2)	0
Balance, end of period			1,382	23		1,389	23
Capital in Excess of Par Value
Balance, beginning of period				3,910			3,886
Share-based compensation expense				80			62

Stock option exercises, RSUs and PSUs converted				(119)			(131)
Withholding tax on RSUs and PSUs converted				(71)			(76)

Balance, end of period				3,800			3,741
Retained Earnings
Balance, beginning of period				63,443			61,946
Cumulative effect of accounting changes				0			(34)
Net income attributable to PepsiCo				1,714			1,338
Cash dividends declared – common (a)				(1,417)			(1,330)

Balance, end of period				63,740			61,920
Accumulated Other Comprehensive Loss
Balance, beginning of period				(15,476)			(14,300)
Other comprehensive income/(loss) attributable to PepsiCo				230			(757)
Balance, end of period				(15,246)			(15,057)
Repurchased Common Stock
Balance, beginning of period			(487)	(38,446)		(476)	(36,769)
Share repurchases			(1)	(106)		(4)	(602)
Stock option exercises, RSUs and PSUs converted			3	182		2	209

Balance, end of period			(485)	(38,370)		(478)	(37,162)
Total PepsiCo Common Shareholders’ Equity				13,947			13,465
Noncontrolling Interests
Balance, beginning of period				98			82
Net income attributable to noncontrolling interest				9			13



Other, net				(1)			(1)
Balance, end of period				106			94
Total Equity				$	14,053		$	13,559

12 Weeks Ended 24 Weeks Ended
6/13/2020 6/15/2019 6/13/2020 6/15/2019
Shares Amount Shares Amount Shares Amount Shares Amount
Common Stock
Balance, beginning of period 1,389
$ 23
1,404
$ 23
1,391
$ 23
1,409
$ 23
Change in repurchased common stock (4 ) —
(5 ) —
(6 ) —
(10 ) —
Balance, end of period 1,385
23
1,399
23
1,385
23
1,399
23
Capital in Excess of Par Value
Balance, beginning of period 3,741
3,753
3,886
3,953
Share-based compensation expense 39
62
101
119
Stock option exercises, RSUs and PSUs converted (5 ) (12 ) (136 ) (176 )
Withholding tax on RSUs and PSUs converted (3 ) (7 ) (79 ) (100 )
Balance, end of period 3,772
3,796
3,772
3,796
Retained Earnings
Balance, beginning of period 61,920
60,060
61,946
59,947
Cumulative effect of accounting changes —
—
(34 ) 8
Net income attributable to PepsiCo 1,646
2,035
2,984
3,448
Cash dividends declared – common ^(a)
(1,421 ) (1,343 ) (2,751 ) (2,651 )
Balance, end of period 62,145
60,752
62,145
60,752
Accumulated Other Comprehensive Loss
Balance, beginning of period (15,057 ) (14,656 ) (14,300 ) (15,119 )
Other comprehensive (loss)/income attributable to PepsiCo (721 ) (328 ) (1,478 ) 135
Balance, end of period (15,778 ) (14,984 ) (15,778 ) (14,984 )
Repurchased Common Stock
Balance, beginning of period (478 ) (37,162 ) (463 ) (34,978 ) (476 ) (36,769 ) (458 ) (34,286 )
Share repurchases (5 ) (557 ) (6 ) (779 ) (9 ) (1,159 ) (15 ) (1,750 )
Stock option exercises, RSUs and PSUs converted 1
48
1
122
3
257
5
401
Balance, end of period (482 ) (37,671 ) (468 ) (35,635 ) (482 ) (37,671 ) (468 ) (35,635 )
Total PepsiCo Common Shareholders’ Equity 12,491
13,952
12,491
13,952
Noncontrolling Interests
Balance, beginning of period 94
94
82
84
Net income attributable to noncontrolling interests 12
8
25
17
Distributions to noncontrolling interests (15 ) (15 ) (15 ) (15 )
Acquisitions 6
—
6
—
Other, net (1 ) (2 ) (2 ) (1 )
Balance, end of period 96
85
96
85
Total Equity $ 12,587
$ 14,037
$ 12,587
$ 14,037

(a)Cash dividends declared per common share were $1.0225 and $0.955 for the 12 weeks ended March 20, 2021 and March 21, 2020, respectively.

See accompanying notes to the condensed consolidated financial statements.

Notes to the Condensed Consolidated Financial Statements

Note 1 - Basis of Presentation and Our Divisions

Basis of Presentation

When used in this report, the terms “we,” “us,” “our,” “PepsiCo” and the “Company” mean PepsiCo, Inc. and its consolidated subsidiaries, collectively.

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. Generally Accepted Accounting Principles (GAAP) for interim financial information and with the rules and regulations for reporting the Quarterly Report on Form 10-Q (Form 10-Q). Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. The condensed consolidated balance sheet at December ~~28, 2019~~26, 2020 has been derived from the audited consolidated financial statements at that date, but does not include all of the information and footnotes required by GAAP for complete financial statements. These financial statements have been prepared on a basis that is substantially consistent with the accounting principles applied in our Annual Report on Form 10-K for the fiscal year ended December ~~28, 2019 (2019~~26, 2020 (2020 Form 10-K)~~, as modified to reflect the adoption of the recently issued accounting pronouncement disclosed in Note 2 in this Form 10-Q.~~. This report should be read in conjunction with our ~~2019~~2020 Form 10-K. In our opinion, these financial statements include all normal and recurring adjustments necessary for a fair presentation. The results for the 12 ~~and 24~~ weeks ended ~~June 13, 2020~~March 20, 2021 are not necessarily indicative of the results expected for any future period or the full year.

~~Preparation~~While our financial results in the United States and Canada (North America) are reported on a 12-week basis, substantially all of our international operations report on a monthly calendar basis for which the months of January and February are reflected in our results for the 12 weeks ended March 20, 2021.

The preparation of our condensed consolidated financial statements requires management to make estimates and assumptions that affect the amounts reported in our condensed consolidated financial statements and related disclosures. The business and economic uncertainty resulting from the novel coronavirus (COVID-19) pandemic has made such estimates and assumptions more difficult to calculate. Accordingly, actual results and outcomes could differ from those estimates.

~~While our financial results in~~ ~~the United States and Canada (North America~~) ~~are reported on a 12-week basis, substantially all of our international operations report on a monthly calendar basis for which the months of~~ ~~March, April and May~~ ~~are reflected in our results for the~~ ~~12 weeks endedJune 13, 2020, and the months of~~ ~~January through May~~ ~~are reflected in our results for the~~ ~~24 weeks endedJune 13, 2020~~.

Our significant interim accounting policies include the recognition of a pro rata share of certain estimated annual sales incentives and certain advertising and marketing costs in proportion to revenue or volume, as applicable, and the recognition of income taxes using an estimated annual effective tax rate. Raw materials, direct labor and plant overhead, as well as purchasing and receiving costs, costs directly related to production planning, inspection costs and raw materials handling facilities, are included in cost of sales. The costs of moving, storing and delivering finished product, including merchandising activities, are included in selling, general and administrative expenses.

Unless otherwise noted, tabular dollars are in millions, except per share amounts. All per share amounts reflect common per share amounts, assume dilution unless otherwise noted, and are based on unrounded amounts. Certain reclassifications were made to the prior year’s financial statements to conform to the current year presentation.

As previously disclosed in our 2019 Form 10-K, during the fourth quarter of 2019, we realigned certain of our reportable segments to be consistent with a strategic realignment of our organizational structure and how our Chief Executive Officer assesses the performance of, and allocates resources to, our reportable segments. Our historical segment reporting presented in this report has been retrospectively revised to reflect the new organizational structure. These changes did not impact our consolidated financial results. See Note 1 to our consolidated financial statements in our 2019 Form 10-K for further information.

We are organized into ~~seven~~7 reportable segments (also referred to as divisions), as follows:

1)Frito-Lay North America (FLNA), which includes our branded food and snack businesses in the United States and Canada;

2)Quaker Foods North America (QFNA), which includes our cereal, rice, pasta and other branded food businesses in the United States and Canada;

3)PepsiCo Beverages North America (PBNA), which includes our beverage businesses in the United States and Canada;

4)Latin America (LatAm), which includes all of our beverage, food and snack businesses in Latin America;

5)Europe, which includes all of our beverage, food and snack businesses in Europe;

6)Africa, Middle East and South Asia (AMESA), which includes all of our beverage, food and snack businesses in Africa, the Middle East and South Asia; and

7)Asia Pacific, Australia and New Zealand and China region (APAC), which includes all of our beverage, food and snack businesses in Asia Pacific, Australia and New Zealand, and China region.

Net revenue of each division is as follows:

12 Weeks Ended 24 Weeks Ended
6/13/2020
6/15/2019
6/13/2020
6/15/2019
FLNA $ 4,273
$ 4,010
$ 8,347
$ 7,825
QFNA 664
540
1,298
1,134
PBNA 4,970
5,322
9,808
9,832
LatAm 1,567
1,886
2,877
3,127
Europe 2,725
3,000
4,564
4,620
AMESA 983
997
1,614
1,576
APAC 763
694
1,318
1,219
Total $ 15,945
$ 16,449
$ 29,826
$ 29,333

(b)The increase primarily reflects our acquisition of Hangzhou Haomusi Food Co., Ltd. (Be & Cheery). See Note 12 for further information.

Our primary performance obligation is the distribution and sales of beverage and food and snack products to our customers. The following tables reflect the approximate percentage of net revenue generated between our beverage business and our food and snack business for each of our international divisions, as well as our consolidated net revenue:

(a)Beverage revenue from company-owned bottlers, which primarily includes our consolidated bottling operations in our PBNA and Europe segments, is approximately 40% of our consolidated net revenue in both the 12 weeks ended March 20, 2021 and March 21, 2020. Generally, our finished goods beverage operations produce higher net revenue but lower operating margins as compared to concentrate sold to authorized bottling partners for the manufacture of finished goods beverages.

12 Weeks Ended
6/13/2020 6/15/2019

Beverage^(a)
Food/Snack
Beverage^(a)
Food/Snack
LatAm 10 % 90 % 10 % 90 %
Europe 50 % 50 % 55 % 45 %
AMESA 40 % 60 % 45 % 55 %
APAC 25 % 75 % 30 % 70 %
PepsiCo 45 % 55 % 45 % 55 %

Operating profit of each division is as follows:


	12 Weeks Ended
		3/20/2021		3/21/2020
FLNA		$	1,240	$	1,202
QFNA		150		150
PBNA		366		297
LatAm		218		231
Europe		131		146
AMESA		138		134
APAC		208		142
Total divisions		$	2,451	$	2,302
Corporate unallocated expenses (a)		(139)		(378)
Total		$	2,312	$	1,924

12 Weeks Ended 24 Weeks Ended
6/13/2020
6/15/2019
6/13/2020
6/15/2019
FLNA $ 1,278
$ 1,249
$ 2,480
$ 2,408
QFNA 196
127
346
265
PBNA 397
690
694
1,079
LatAm 219
278
450
508
Europe 351
339
497
454
AMESA 59
236
193
341
APAC 189
116
331
222
Total division $ 2,689
$ 3,035
$ 4,991
$ 5,277
Corporate unallocated expenses (370 ) (306 ) (748 ) (540 )
Total $ 2,319
$ 2,729
$ 4,243
$ 4,737

Operating profit ~~in the 12 and 24 weeks ended June 13, 2020~~ includes certain pre-tax charges taken as a result of the COVID-19 pandemic. These pre-tax charges by division are as follows:


	12 Weeks Ended 3/20/2021
	Allowances for Expected Credit Losses(a)		Upfront Payments to Customers(b)		Inventory Write-Downs and Product Returns		Employee Compensation Expense(c)		Employee Protection Costs(d)		Other(e)		Total
FLNA (f)	$	(4)	$	0	$	0	$	18	$	9	$	1	$	24
QFNA	0		0		0		1		1		0		2
PBNA (f)	(4)		1		0		12		5		(1)		13
LatAm	0		0		0		12		2		1		15
Europe	0		0		0		3		3		0		6
AMESA (f)	0		0		(2)		0		0		1		(1)
APAC	0		0		0		0		0		2		2

Total	$	(8)	$	1	$	(2)	$	46	$	20	$	4	$	61

(a)Reflects the expected impact of the global economic uncertainty caused by COVID-19, leveraging estimates of creditworthiness and projections of default and recovery rates for certain of our customers, including foodservice and vending businesses.

(b)Relates to promotional spending for which benefit is not expected to be received.

(c)Includes incremental frontline incentive pay, crisis child care and other leave benefits and labor costs.

(d)Includes costs associated with personal protective equipment, temperature scans, cleaning and other sanitization services.

(e)Includes reserves for property, plant and equipment, donations of cash and product and other costs.

(f)Income amounts represent adjustments for changes in estimates of previously recorded amounts.

(g)Includes a reserve for product returns of $7 million.

24 Weeks Ended 6/13/2020

Allowances for Expected Credit Losses^(a)

Upfront Payments to Customers^(b)

Inventory Write-Downs and Product Returns^(c)

Employee Compensation Expense^(d)

Employee Protection Costs^(e)

Other^(f)
Total
FLNA $ 19
$ —
$ 7
$ 100
$ 33
$ 3
$ 162
QFNA 2
—
—
6
1
—
9
PBNA 45
46
29
84
31
10
245
LatAm 1
—
6
16
8
3
34
Europe 4
1
10
9
8
17
49
AMESA 1
—
1
7
4
4
17
APAC —
—
1
2
1
1
5
Total $ 72
$ 47
$ 54
$ 224
$ 86
$ 38
$ 521

Note 2 - Recently Issued Accounting Pronouncements

In ~~2016,~~2019, the Financial Accounting Standards Board (FASB) issued guidance that changes the impairment model used to measure credit losses for most financial assets. For our trade receivables, certain other receivables and certain other financial instruments, we are required to use a new forward-looking expected credit loss model that replaced the existing incurred credit loss model. The new model generally results in earlier recognition of allowances for credit losses. We adopted this guidance in the first quarter of 2020 and the adoption did not have a material impact on our condensed consolidated financial statements or disclosures. On initial recognition, we recorded an after-tax cumulative effect decrease to retained earnings of $34 million ($44 million pre-tax) as of the beginning of 2020.

~~In 2019, the FASB~~ issued guidance to simplify the accounting for income taxes. The guidance primarily addresses how to (1) recognize a deferred tax liability after we transition to or from the equity method of accounting, (2) evaluate if a step-up in the tax basis of goodwill is related to a business combination or is a separate transaction, (3) recognize all of the effects of a change in tax law in the period of enactment, including adjusting the estimated annual tax rate, and (4) include the amount of tax based on income in the income tax provision and any incremental amount as a tax not based on income for hybrid tax regimes. ~~The~~We adopted the guidance ~~is effective~~ in the first quarter of ~~2021 with early~~2021. The adoption ~~permitted. We are currently evaluating the~~did not have a material impact ~~of this guidance~~ on our condensed consolidated financial statements ~~and the timing of adoption.~~or related disclosures.

Note 3 - Restructuring and Impairment Charges

2019 Multi-Year Productivity Plan

We publicly announced a multi-year productivity plan on February 15, 2019 (2019 Productivity Plan) that will leverage new technology and business models to further simplify, harmonize and automate processes; re-engineer our go-to-market and information systems, including deploying the right automation for each market; and simplify our organization and optimize our manufacturing and supply chain footprint. In connection with this plan, we expect to incur pre-tax charges of approximately $2.5 billion, ~~and~~including cash expenditures of approximately $1.6 billion. These pre-tax charges are expected to consist of approximately ~~70%~~65% of severance and other employee-related costs, 15% for asset impairments (all non-cash) resulting from plant closures and related actions, and ~~15%~~20% for other costs associated with the implementation of our initiatives. We expect to complete this plan by 2023.

The total expected plan pre-tax charges are expected to be incurred by division approximately as follows:

FLNA QFNA PBNA LatAm Europe AMESA APAC Corporate
Expected pre-tax charges 11 % 2 % 30 % 10 % 25 % 8 % 5 % 9 %


	FLNA		QFNA		PBNA		LatAm		Europe		AMESA		APAC		Corporate
Expected pre-tax charges	15	%	1	%	30	%	10	%	25	%	5	%	3	%	11	%

A summary of our 2019 Productivity Plan charges is as follows:


	12 Weeks Ended
		3/20/2021		3/21/2020
Cost of sales		$	2	$	2
Selling, general and administrative expenses		35		30
Other pension and retiree medical benefits expense		6		6
Total restructuring and impairment charges		$	43	$	38
After-tax amount		$	35	$	32
Net income attributable to PepsiCo per common share		$	(0.03)	$	(0.02)

12 Weeks Ended 24 Weeks Ended
6/13/2020
6/15/2019
6/13/2020 6/15/2019
Cost of sales $ 1
$ 82
$ 3
$ 90
Selling, general and administrative expenses 23
76
53
99
Other pension and retiree medical benefits expense/(income) ^(a)
1
—
7
(5 )
Total restructuring and impairment charges $ 25
$ 158
$ 63
$ 184
After-tax amount $ 21
$ 120
$ 53
$ 143
Net income attributable to PepsiCo per common share $ 0.02
$ 0.08
$ 0.04
$ 0.10


~~(a)~~	~~Income amount represents adjustments for changes in estimates of previously recorded amounts.~~

12 Weeks Ended 24 Weeks Ended Plan to Date
6/13/2020
6/15/2019
6/13/2020
6/15/2019
through 6/13/2020
FLNA $ 2
$ 6
$ 7
$ 6
$ 60
QFNA —
—
1
—
8
PBNA —
10
3
16
94
LatAm 4
21
9
21
80
Europe 8
53
16
59
121
AMESA 5
8
7
16
48
APAC 3
34
3
37
52
Corporate 2
26
10
34
64
24
158
56
189
527
Other pension and retiree medical benefits expense/(income) ^(a)
1
—
7
(5 ) 44
Total $ 25
$ 158
$ 63
$ 184
$ 571


~~(a)~~	~~Income amount represents adjustments for changes in estimates of previously recorded amounts.~~

Table of Contents


	12 Weeks Ended			Plan to Date
		3/20/2021		3/21/2020		through 3/20/2021
FLNA		$	15	$	5	$	151
QFNA		0		1		12
PBNA		4		3		142
LatAm		2		5		104
Europe		11		8		164
AMESA		1		2		56
APAC		0		0		54
Corporate		4		8		94
		37		32		777
Other pension and retiree medical benefits expense		6		6		63
Total		$	43	$	38	$	840


	12 Weeks Ended			Plan to Date
		3/20/2021		3/21/2020		through 3/20/2021
Severance and other employee costs		$	34	$	22	$	478
Asset impairments		0		1		125
Other costs		9		15		237
Total		$	43	$	38	$	840

12 Weeks Ended 24 Weeks Ended Plan to Date
6/13/2020
6/15/2019
6/13/2020
6/15/2019
through 6/13/2020
Severance and other employee costs $ 2
$ 43
$ 24
$ 40
$ 310
Asset impairments 4
76
5
84
97
Other costs ^(a)
19
39
34
60
164
Total $ 25
$ 158
$ 63
$ 184
$ 571
Severanceand other employee costs primarily include severance and other termination benefits, as well as voluntary separation arrangements. Other costs primarily include costs associated with the implementation of our initiatives, including contract termination costs, consulting and other professional fees.


~~(a)~~	~~Includes other costs associated with the implementation of our initiatives, including contract termination costs, consulting and other professional fees.~~

A summary of our 2019 Productivity Plan activity for the 2412 weeks ended ~~June 13, 2020~~March 20, 2021 is as follows:

Severance and Other Employee Costs
Asset
Impairments
Other Costs Total
Liability as of December 28, 2019 $ 128
$ —
$ 21
$ 149
2020 restructuring charges 24
5
34
63
Cash payments (59 ) —
(50 ) (109 )
Non-cash charges and translation (11 ) (5 ) 3
(13 )
Liability as of June 13, 2020 $ 82
$ —
$ 8
$ 90


	Severance and Other Employee Costs		Other Costs		Total
Liability as of December 26, 2020	$	122	$	5	$	127
2021 restructuring charges	34		9		43
Cash payments	(37)		(12)		(49)
Non-cash charges and translation	(6)		1		(5)
Liability as of March 20, 2021	$	113	$	3	$	116

Substantially all of the restructuring accrual at ~~June 13, 2020~~March 20, 2021 is expected to be paid by the end of ~~2020.~~2021.

Other Productivity Initiatives

There were ~~no material~~0 charges related to other productivity and efficiency initiatives outside the scope of the 2019 Productivity Plan.

We regularly evaluate different productivity initiatives beyond the productivity plan and other initiatives described above.

Table of Contents

Note 4 - Intangible Assets

A summary of our amortizable intangible assets is as follows:


	3/20/2021						12/26/2020
	Gross		Accumulated Amortization		Net		Gross		Accumulated Amortization		Net
Acquired franchise rights	$	982	$	(177)	$	805	$	976	$	(173)	$	803
Customer relationships	641		(209)		432		642		(204)		438
Brands	1,348		(1,104)		244		1,348		(1,099)		249
Other identifiable intangibles	473		(264)		209		474		(261)		213
Total	$	3,444	$	(1,754)	$	1,690	$	3,440	$	(1,737)	$	1,703

6/13/2020 12/28/2019
Gross Accumulated Amortization Net Gross Accumulated Amortization Net
Acquired franchise rights $ 838
$ (162 ) $ 676
$ 846
$ (158 ) $ 688
Reacquired franchise rights 105
(105 ) —
106
(105 ) 1
Brands 1,300
(1,061 ) 239
1,326
(1,066 ) 260
Other identifiable intangibles 873
(323 ) 550
810
(326 ) 484
Total $ 3,116
$ (1,651 ) $ 1,465
$ 3,088
$ (1,655 ) $ 1,433

The change in the book value of indefinite-lived intangible assets is as follows:


	Balance 12/26/2020		Acquisitions		Translation and Other		Balance 3/20/2021

FLNA (a)
Goodwill	$	465	$	(8)	$	4	$	461
Brands	340		0		1		341
Total	805		(8)		5		802
QFNA
Goodwill	189		0		—		189
Total	189		0		0		189
PBNA
Goodwill	12,189		0		15		12,204
Reacquired franchise rights	7,107		0		23		7,130
Acquired franchise rights	1,536		0		6		1,542
Brands	3,122		0		0		3,122
Total	23,954		0		44		23,998
LatAm
Goodwill	458		0		(11)		447
Brands	108		0		(5)		103
Total	566		0		(16)		550
Europe
Goodwill	3,806		0		7		3,813
Reacquired franchise rights	496		0		(2)		494
Acquired franchise rights	172		0		(2)		170
Brands	4,072		0		(3)		4,069
Total	8,546		0		0		8,546
AMESA
Goodwill	1,096		0		6		1,102
Brands	214		0		3		217
Total	1,310		0		9		1,319
APAC
Goodwill	554		0		9		563
Brands	445		0		8		453
Total	999		0		17		1,016

Total goodwill	18,757		(8)		30		18,779
Total reacquired franchise rights	7,603		0		21		7,624
Total acquired franchise rights	1,708		0		4		1,712
Total brands	8,301		0		4		8,305
Total	$	36,369	$	(8)	$	59	$	36,420

Balance
12/28/2019
Acquisitions Translation
and Other
Balance
6/13/2020

FLNA^(a)

Goodwill $ 299
$ 160
$ (4 ) $ 455
Brands 162
176
(1 ) 337
Total 461
336
(5 ) 792
QFNA
Goodwill 189
—
—
189
Brands 11
—
—
11
Total 200
—
—
200
PBNA ^(b)

Goodwill 9,898
1,968
(16 ) 11,850
Reacquired franchise rights 7,089
—
(28 ) 7,061
Acquired franchise rights 1,517
141
(6 ) 1,652
Brands 763
2,700
1
3,464
Total 19,267
4,809
(49 ) 24,027
LatAm
Goodwill 501
—
(58 ) 443
Brands 125
—
(21 ) 104
Total 626
—
(79 ) 547
Europe ^(c)

Goodwill 3,961
(3 ) (216 ) 3,742
Reacquired franchise rights 505
—
(30 ) 475
Acquired franchise rights 157
—
(1 ) 156
Brands 4,181
—
(211 ) 3,970
Total 8,804
(3 ) (458 ) 8,343
AMESA ^(d)

Goodwill 446
533
(10 ) 969
Brands —
208
(3 ) 205
Total 446
741
(13 ) 1,174
APAC
Goodwill 207
—
(10 ) 197
Brands 100
—
(5 ) 95
Total 307
—
(15 ) 292

Total goodwill 15,501
2,658
(314 ) 17,845
Total reacquired franchise rights 7,594
—
(58 ) 7,536
Total acquired franchise rights 1,674
141
(7 ) 1,808
Total brands 5,342
3,084
(240 ) 8,186
Total $ 30,111
$ 5,883
$ (619 ) $ 35,375

The change in acquisitions primarily reflects our acquisition of BFY Brands, Inc. (BFY Brands).

Note 5 - Income Taxes

~~Tax Cuts and Jobs Act~~

~~During the fourth quarter of 2017, the TCJ Act was enacted in the United States. The related provisional measurement period allowed by the~~ ~~U.S. Securities and Exchange Commission (SEC) ended in the fourth quarter of 2018.~~ While our accounting for the recorded impact of the TCJ Act was deemed to be complete, additional guidance issued by the Internal Revenue Service (IRS) impacted our recorded amounts after December 29, 2018.

~~There were no tax amounts recognized in the 24 weeks ended June 13, 2020 related to the TCJ Act.~~ ~~In the 24 weeks ended~~ ~~June 15, 2019, we recognized tax benefits of~~ ~~$29 million~~ (~~$0.02~~ ~~per share) related to the TCJ Act.~~

~~Other Tax Matters~~

For further information and discussion of ~~the impacts of the TCJ Act and~~ the TRAF, refer to Note 5 to our consolidated financial statements in our ~~2019~~2020 Form 10-K.

~~The Coronavirus Aid, Relief, and Economic Security Act (CARES Act)~~ was enacted on March 27, 2020 in the United States. The CARES Act and related notices include several significant provisions, including delaying certain payroll tax payments, mandatory transition tax payments under the TCJ Act, and estimated income tax payments that we are deferring to future periods. We do not currently expect the CARES Act to have a material impact on our financial results, including on our annual estimated effective tax rate or on our liquidity.~~We will continue to monitor and assess the impact the CARES Act and similar legislation in other countries may have on our business and financial results.~~

Note 6 - Share-Based Compensation

The following table summarizes our total share-based compensation ~~expense:~~

12 Weeks Ended 24 Weeks Ended
6/13/2020
6/15/2019
6/13/2020
6/15/2019
Share-based compensation expense - equity awards $ 40
$ 61
$ 101
$ 118
Share-based compensation expense - liability awards 4
3
7
4
Restructuring charges (1 ) 1
—
1
Total ^(a)
$ 43
$ 65
$ 108
$ 123


	12 Weeks Ended
		3/20/2021		3/21/2020
Share-based compensation expense - equity awards		$	79	$	61
Share-based compensation expense - liability awards		4		3
Restructuring charges		1		1
Total		$	84	$	65

The following table summarizes share-based awards granted under the terms of the PepsiCo, Inc. Long-Term Incentive Plan:


	12 Weeks Ended
	3/20/2021			3/21/2020
	Granted(a)	Weighted-Average Grant Price		Granted(a)	Weighted-Average Grant Price
Stock options	1.8	$	131.25	1.6	$	131.25
RSUs and PSUs	2.6	$	131.25	2.4	$	131.28

24 Weeks Ended
6/13/2020 6/15/2019

Granted^(a)
Weighted-Average Grant Price
Granted^(a)
Weighted-Average Grant Price
Stock options 1.6
$ 131.25
1.1
$ 116.00
RSUs and PSUs 2.5
$ 131.20
2.7
$ 116.03

We granted long-term cash awards to certain executive officers and other senior executives with an aggregate target value of ~~$18~~$17 million and ~~$16~~$18 million during the 2412 weeks ended ~~June 13,~~March 20, 2021 and March 21, 2020, ~~and June 15, 2019,~~ respectively.

Our weighted-average Black-Scholes fair value assumptions are as follows:


	12 Weeks Ended
	3/20/2021		3/21/2020
Expected life	7 years		6 years
Risk-free interest rate	1.1	%	1.0	%
Expected volatility	14	%	14	%
Expected dividend yield	3.1	%	3.5	%

24 Weeks Ended
6/13/2020
6/15/2019
Expected life 6 years
5 years
Risk-free interest rate 1.0 % 2.6 %
Expected volatility 14 % 14 %
Expected dividend yield 3.5 % 3.1 %

Note 7 - Pension and Retiree Medical Benefits

In 2020, we adopted an amendment, effective December 31, 2025, to the U.S. defined benefit pension plans to freeze benefit accruals for salaried participants, which will decrease pre-tax pension benefits expense by approximately $70 million in 2021, primarily impacting corporate unallocated expenses. In 2020, we also approved an amendment, effective January 1, 2021, to reorganize the U.S. qualified defined benefit pension plans that resulted in the transfer of certain participants from the PepsiCo Employees Retirement Plan A (Plan A) to the PepsiCo Employees Retirement Plan I and to a newly created plan, PepsiCo Employees Retirement Plan H (Plan H), with no material impact to pre-tax pension benefits expense. In addition, in 2020, we adopted an amendment, effective January 1, 2021, to enhance the pay credits of certain participants in Plan H, which will increase pre-tax pension benefits expense by approximately $45 million in 2021, primarily impacting service cost expense. For further information on plan changes, refer to Note 7 to our consolidated financial statements in our 2020 Form 10-K.

The components of net periodic benefit cost/(income) for pension and retiree medical plans are as follows:


	12 Weeks Ended
	Pension								Retiree Medical
	U.S.				International
	3/20/2021		3/21/2020		3/20/2021		3/21/2020		3/20/2021		3/21/2020
Service cost	$	120	$	100	$	19	$	17	$	8	$	6
Other pension and retiree medical benefits income:
Interest cost	75		100		13		16		3		6
Expected return on plan assets	(224)		(214)		(41)		(37)		(4)		(4)
Amortization of prior service (credits)/cost	(7)		3		0		0		(2)		(3)
Amortization of net losses/(gains)	51		45		13		10		(3)		(5)

Special termination benefits	6		6		0		0		0		0
Total other pension and retiree medical benefits income	(99)		(60)		(15)		(11)		(6)		(6)
Total	$	21	$	40	$	4	$	6	$	2	$	0

12 Weeks Ended
Pension Retiree Medical
6/13/2020
6/15/2019
6/13/2020
6/15/2019
6/13/2020
6/15/2019
U.S. International
Service cost $ 100
$ 88
$ 20
$ 18
$ 5
$ 6
Other pension and retiree medical benefits expense/(income):
Interest cost 100
126
21
23
5
8
Expected return on plan assets (215 ) (206 ) (49 ) (45 ) (4 ) (4 )
Amortization of prior service cost/(credits) 2
3
—
—
(2 ) (5 )
Amortization of net losses/(gains) 46
37
16
8
(5 ) (6 )
Special termination benefits 1
—
—
—
—
—
Total other pension and retiree medical benefits income (66 ) (40 ) (12 ) (14 ) (6 ) (7 )
Total $ 34
$ 48
$ 8
$ 4
$ (1 ) $ (1 )

24 Weeks Ended
Pension Retiree Medical
U.S. International
6/13/2020
6/15/2019
6/13/2020
6/15/2019
6/13/2020
6/15/2019
Service cost $ 200
$ 176
$ 37
$ 31
$ 11
$ 11
Other pension and retiree medical benefits expense/(income):
Interest cost 200
251
37
40
11
16
Expected return on plan assets (429 ) (412 ) (86 ) (78 ) (8 ) (8 )
Amortization of prior service cost/(credits) 5
5
—
—
(5 ) (9 )
Amortization of net losses/(gains) 91
74
26
13
(10 ) (12 )
Special termination benefits ^(a)
7
(5 ) —
—
—
—
Total other pension and retiree medical benefits income (126 ) (87 ) (23 ) (25 ) (12 ) (13 )
Total $ 74
$ 89
$ 14
$ 6
$ (1 ) $ (2 )

We continue to monitor the impact of the COVID-19 pandemic and related global economic conditions and uncertainty on the net unfunded status of our pension and retiree medical plans. We also regularly evaluate opportunities to reduce risk and volatility associated with our pension and retiree medical plans. During the 2412 weeks ended ~~June 13, 2020,~~March 20, 2021, we made a discretionary ~~contribution~~contributions of ~~$150~~$300 million to ~~the PepsiCo Employees Retirement~~ Plan ~~A (Plan A)~~H in the United States and ~~$14~~$25 million to our international plans. We expect to make an additional discretionary contribution of $200 million to our U.S. qualified defined benefit plans in the third quarter of 2021. During the 2412 weeks ended ~~June 15, 2019,~~March 21, 2020, we made discretionary contributions of $150 million to Plan A in the United ~~States and $17 million to our international plans.~~States.

Note 8 - Debt Obligations

In the 2412 weeks ended ~~June 13, 2020, we issued the following senior notes:~~

Interest Rate
Maturity Date
Amount^(a)

2.250 % March 2025 $ 1,500
2.625 % March 2027 $ 500
2.750 % March 2030 $ 1,500
3.500 % March 2040 $ 750
3.625 % March 2050 $ 1,500
3.875 % March 2060 $ 750
0.750 % May 2023 $ 1,000
1.625 % May 2030 $ 1,000
0.250 % May 2024 € 1,000
0.500 % May 2028 € 1,000

~~The net proceeds from the issuances of the above notes will be used for general corporate purposes, including the repayment of commercial paper.~~

~~In the 24 weeks ended June 13, 2020, $750 million~~March 20, 2021, there were 0 maturities or prepayments of senior ~~notes matured and were paid.~~

As of ~~June 13, 2020,~~March 20, 2021, we had ~~$2.8 billion of~~0 commercial paper outstanding.

~~In the second quarter~~

Table of 2020, we entered into a new 364-day unsecured revolving credit agreement (364-Day Credit Agreement) which expires on May 31, 2021. The 364-Day Credit Agreement enables us and our borrowing subsidiaries to borrow up to $3.75 billion in U.S. dollars and/or euros, subject to customary terms and conditions. We may request that commitments under this agreement be increased up to $4.5 billion in U.S. dollars and/or euros. We may request renewal of this facility for an additional 364-day period or convert any amounts outstanding into a term loan for a period of up to one year, which term loan would mature no later than the anniversary of the then effective termination date. The 364-Day Credit Agreement replaced our $3.75 billion 364-day credit agreement, dated as of June 3, 2019. Funds borrowed under the 364-Day Credit Agreement may be used for general corporate purposes. Subject to certain conditions, we may borrow, prepay and reborrow amounts under this agreement. The 364-Day Credit Agreement is in addition to our existing $3.75 billion unsecured revolving credit agreement which expires on June 3, 2024 (Five-Year Credit Agreement). As of June 13, 2020, there were no outstanding borrowings under either the 364-Day Credit Agreement or the Five-Year Credit Agreement.Contents

On March 12, 2020, one of our international consolidated subsidiaries borrowed 21.7 billion South African rand, or approximately $1.3 billion, from our two unsecured bridge loan facilities (Bridge Loan Facilities) to fund our acquisition of Pioneer Foods. These borrowings were fully repaid in April 2020 and no further borrowings under these Bridge Loan Facilities are permitted.

Note 9 - Financial Instruments

We are exposed to market risks arising from adverse changes in:

•commodity prices, affecting the cost of our raw materials and energy;

•foreign exchange rates and currency restrictions; and

•interest rates.

There have been no material changes during the 2412 weeks ended ~~June 13, 2020~~March 20, 2021 with respect to our risk management policies or strategies and valuation techniques used in measuring the fair value of the financial assets or liabilities disclosed in Note 9 to our consolidated financial statements in our ~~2019~~2020 Form 10-K.

Certain of our agreements with our counterparties require us to post full collateral on derivative instruments in a net liability position if our credit rating is at A2 (Moody’s Investors Service, Inc.) or A (S&P Global Ratings), and we have been placed on credit watch for possible downgrade or if our credit rating falls below either of these levels. The fair value of all derivative instruments with credit-risk-related contingent features that were in a net liability position as of ~~June 13, 2020~~March 20, 2021 was ~~$530~~$262 million. We have posted no0 collateral under these contracts and no credit-risk-related contingent features were triggered as of ~~June 13, 2020.~~March 20, 2021.

The notional amounts of our financial instruments used to hedge the above risks as of ~~June 13, 2020~~March 20, 2021 and December ~~28, 2019~~26, 2020 are as follows:


	Notional Amounts(a)
	3/20/2021		12/26/2020
Commodity	$	1.1	$	1.1
Foreign exchange	$	2.0	$	1.9
Interest rate	$	3.0	$	3.0
Net investment (b)	$	2.7	$	2.7

Notional Amounts^(a)
6/13/2020
12/28/2019
Commodity $ 1.1
$ 1.1
Foreign exchange $ 2.1
$ 1.9
Interest rate $ 4.3
$ 5.0
Net investment ^(b)
$ 2.5
$ 2.5
(a)In billions.


~~(a)~~	~~In billions.~~


~~(b)~~	~~The total notional of our net investment hedge consists of non-derivative debt instruments.~~

(b)The total notional of our net investment hedge consists of non-derivative debt instruments.

As of ~~June 13, 2020,~~March 20, 2021, approximately ~~12%~~2% of total debt, after the impact of the related interest rate derivative instruments, was subject to variable rates, compared to approximately 9%3% as of December ~~28, 2019.~~26, 2020.

Held-to-Maturity Debt Securities

Investments in debt securities that we have the positive intent and ability to hold until maturity are classified as held-to-maturity. Highly liquid debt securities with original maturities of three months or less are recorded as cash equivalents. Our held-to-maturity debt securities consist of U.S. Treasury securities and commercial paper. As of March 20, 2021, we had 0 investments in U.S. Treasury securities. As of December 26, 2020, we had $2.1 billion of investments in U.S. Treasury securities with $2.0 billion recorded in cash and cash equivalents and $0.1 billion in short-term investments. As of March 20, 2021, we had $525 million of investments in commercial paper with $375 million recorded in cash and cash equivalents and $150 million in short-term investments. As of December 26, 2020, we had $260 million of investments in commercial paper with $75 million recorded in cash and cash equivalents and $185 million in short-term investments. Held-to-maturity debt securities are recorded at amortized cost, which approximates fair value, and realized gains or losses are reported in earnings. Our investments mature in less than one year. As of March 20, 2021 and December 26, 2020, gross unrecognized gains and losses and the allowance for expected credit losses were not material.

Table of Contents

Fair Value Measurements

The fair values of our financial assets and liabilities as of ~~June 13, 2020~~March 20, 2021 and December ~~28, 2019~~26, 2020 are categorized as follows:


		3/20/2021				12/26/2020
	Fair Value Hierarchy Levels(a)	Assets(a)		Liabilities(a)		Assets(a)		Liabilities(a)

Equity securities (b)	1	$	124	$	0	$	0	$	0
Index funds (c)	1	$	240	$	0	$	231	$	0
Prepaid forward contracts (d)	2	$	17	$	0	$	18	$	0
Deferred compensation (e)	2	$	0	$	488	$	0	$	477
Contingent consideration (f)	3	$	0	$	847	$	0	$	861
Derivatives designated as fair value hedging instruments:
Interest rate (g)	2	$	1	$	0	$	2	$	0
Derivatives designated as cash flow hedging instruments:
Foreign exchange (h)	2	$	7	$	68	$	9	$	71
Interest rate (h)	2	28		304		13		307
Commodity (i)	2	59		0		32		0
		$	94	$	372	$	54	$	378
Derivatives not designated as hedging instruments:
Foreign exchange (h)	2	$	5	$	5	$	4	$	8
Commodity (i)	2	32		10		19		7
		$	37	$	15	$	23	$	15
Total derivatives at fair value (j)		$	132	$	387	$	79	$	393
Total		$	513	$	1,722	$	328	$	1,731

(a)Fair value hierarchy levels are categorized consistently by Level 1 (quoted prices in active markets for identical assets), Level 2 (significant other observable inputs) and Level 3 (significant unobservable inputs) in both years. Unless otherwise noted, financial assets are classified on our balance sheet within prepaid expenses and other current assets and other assets. Financial liabilities are classified on our balance sheet within accounts payable and other current liabilities and other liabilities.

(b)Based on the price of common stock. These are equity securities with readily determinable fair values and are classified as short-term investments. As of December 26, 2020, these equity securities did not have a readily determinable fair value. During the 12 weeks ended March 20, 2021, we recorded a pre-tax unrealized gain on equity securities of $108 million ($82 million after-tax or $0.06 per share). These equity securities were subsequently sold in the second quarter of 2021. See Note 1 for further information.

(c)Based on the price of index funds. These investments are classified as short-term investments and are used to manage a portion of market risk arising from our deferred compensation liability.

(d)Based primarily on the price of our common stock.

(e)Based on the fair value of investments corresponding to employees’ investment elections.

(f)In connection with our acquisition of Rockstar Energy Beverages (Rockstar), we recorded a liability for tax-related contingent consideration payable over up to 15 years, with an option to accelerate all remaining payments, with estimated maximum payments of approximately $1.1 billion, using current tax rates. The fair value of the liability is estimated using probability-weighted, discounted future cash flows at current tax rates. The significant unobservable inputs (Level 3) used to estimate the fair value include the expected future tax benefits associated with the acquisition, the probability that the option to accelerate all remaining payments will be exercised and discount rates. These unobservable inputs did not materially differ from those used as of December 26, 2020. The expected annual future tax benefits range from approximately $40 million to $110 million, with an average of $70 million. The probability, in any given year, that the option to accelerate will be exercised ranges from 3 to 25 percent, with a weighted-average payment period of approximately 3 years. The discount rates range from less than 1 percent to 5 percent, with a weighted average of 3 percent. The contingent consideration measured at fair value using unobservable inputs as of March 20, 2021 is $847 million, comprised of an $861 million liability as of December 26, 2020, and a fair value decrease of $14 million in the 12 weeks ended March 20, 2021, recorded in selling, general and administrative expenses.

(g)Based on London Interbank Offered Rate forward rates. The carrying amount of hedged fixed-rate debt was $0.2 billion as of March 20,

6/13/2020 12/28/2019
Fair Value Hierarchy Levels
Assets^(a)

Liabilities^(a)

Assets^(a)

Liabilities^(a)
Short-term investments ^(b)
1 $ 196
$ —
$ 229
$ —
Prepaid forward contracts ^(c)
2 $ 16
$ —
$ 17
$ —
Deferred compensation ^(d)
2 $ —
$ 428
$ —
$ 468
Contingent consideration ^(e)
3 $ —
$ 864
$ —
$ —
Derivatives designated as fair value hedging instruments:
Interest rate ^(f)
2 $ 7
$ —
$ —
$ 5
Derivatives designated as cash flow hedging instruments:
Foreign exchange ^(g)
2 $ 54
$ 20
$ 5
$ 32
Interest rate ^(g)
2 —
483
—
390
Commodity ^(h)
1 —
—
2
5
Commodity ⁽ⁱ⁾
2 1
27
2
5
$ 55
$ 530
$ 9
$ 432
Derivatives not designated as hedging instruments:
Foreign exchange ^(g)
2 $ 10
$ 8
$ 3
$ 2
Interest rate ^(j)
2 —
1
—
—
Commodity ^(h)
1 —
—
23
7
Commodity ⁽ⁱ⁾
2 15
42
6
24
$ 25
$ 51
$ 32
$ 33
Total derivatives at fair value ^(k)
$ 87
$ 581
$ 41
$ 470
Total $ 299
$ 1,873
$ 287
$ 938


~~(a)~~	Unless otherwise noted, financial assets are classified on our balance sheet within prepaid expenses and other current assets and other assets. Financial liabilities are classified on our balance sheet within accounts payable and other current liabilities and other liabilities.


~~(b)~~	~~Based on the price of index funds. These investments are classified as short-term investments and are used to manage a portion of market risk arising from our deferred compensation liability.~~


~~(c)~~	~~Based primarily on the price of our common stock.~~


~~(d)~~	~~Based on the fair value of investments corresponding to employees’ investment elections.~~

~~(e)~~

In connection with our acquisition of Rockstar, we recorded a liability for tax-related contingent consideration payable over up to 15 years, with an option to accelerate all remaining payments, with estimated maximum payments of approximately $1.1 billion, using current tax rates. The fair value of the liability is estimated using probability-weighted, discounted future cash flows at current tax rates. The significant unobservable inputs (Level 3) used to estimate the fair value include the expected future tax benefits associated with the acquisition, the probability that the option to accelerate all remaining payments will be exercised and discount rates. The expected annual future tax benefits range from approximately $40 million to $100 million, with an average of $70 million. The probability, in any given year, that the option to accelerate will be exercised ranges from 0 to 10 percent, with a weighted average payment period of approximately 7 years. The discount rates range from less than 1 percent to 5 percent, with a weighted average of 2 percent. The contingent consideration measured at fair value using unobservable inputs for the 24 weeks ended June 13, 2020 is $864 million, comprised of an $848 million liability recognized at the acquisition date of Rockstar and a fair value increase of $16 million recorded in the 12 and 24 weeks ended June 13, 2020 in selling, general and administrative expenses.

~~(f)~~

Based on London Interbank Offered Rate forward rates. As of June 13, 2020 and December 28, 2019, the carrying amount of hedged fixed-rate debt was $1.5 billion and $2.2 billion, respectively, and classified on our balance sheet within short-term and long-term debt obligations. As of June 13, 2020 and December 28, 2019, the cumulative amount of fair value hedging adjustments to hedged fixed-rate debt was a $7 million gain and a $5 million loss, respectively. As of June 13, 2020 and December 28, 2019, the cumulative amount of fair value hedging adjustments on discontinued hedges was a $35 million loss and a $49 million loss, respectively, which is being amortized over the remaining life of the related debt obligations.


~~(g)~~	~~Based on recently reported market transactions of spot and forward rates.~~


~~(h)~~	~~Based on quoted contract prices on futures exchange markets.~~

Table of Contents

2021 and December 26, 2020 and classified on our balance sheet within short-term debt obligations. As of March 20, 2021 and December 26, 2020, the cumulative amount of fair value hedging adjustments to hedged fixed-rate debt was a $1 million gain and a $2 million gain, respectively. As of March 20, 2021, the cumulative amount of fair value hedging adjustments on discontinued hedges was a $14 million net loss, which is being amortized over the remaining life of the related debt obligations.


~~(i)~~	~~Based on recently reported market transactions of swap arrangements.~~


~~(j)~~	~~Based on Johannesburg Interbank Average Rate forward rates.~~

~~(k)~~

Derivative assets and liabilities are presented on a gross basis on our balance sheet. Amounts subject to enforceable master netting arrangements or similar agreements which are not offset on the balance sheet as of June 13, 2020 and December 28, 2019 were not material. Collateral received or posted against our asset or liability positions was not material. Collateral posted of $64 million and $58 million as of June 13, 2020 and December 28, 2019, respectively, is classified as restricted cash.

(h)Based on recently reported market transactions of spot and forward rates.

(i)Based on recently reported market transactions of swap arrangements.

(j)Derivative assets and liabilities are presented on a gross basis on our balance sheet. Amounts subject to enforceable master netting arrangements or similar agreements which are not offset on the balance sheet as of March 20, 2021 and December 26, 2020 were not material. Collateral received or posted against our asset or liability positions was not material. Exchange-traded commodity futures are cash-settled on a daily basis and, therefore, not included in the table.

The carrying amounts of our cash and cash equivalents and short-term investments recorded at amortized cost approximate fair value due to their short-term maturity. Our cash equivalents and short-term investments recorded at amortized cost, are classified as Level 2 in the fair value hierarchy. The fair value of our debt obligations as of ~~June 13, 2020~~March 20, 2021 and December ~~28, 2019~~26, 2020 was ~~$51~~$46 billion and ~~$34~~$50 billion, respectively, based upon prices of similar instruments in the marketplace, which are considered Level 2 inputs.

Losses/(gains) on our hedging instruments are categorized as follows:


	12 Weeks Ended
	Fair Value/Non- designated Hedges				Cash Flow and Net Investment Hedges
	Losses/(Gains) Recognized in Income Statement(a)				Losses/(Gains) Recognized in Accumulated Other Comprehensive Loss				Losses/(Gains) Reclassified from Accumulated Other Comprehensive Loss into Income Statement(b)
	3/20/2021		3/21/2020		3/20/2021		3/21/2020		3/20/2021		3/21/2020
Foreign exchange	$	4	$	(11)	$	11	$	(51)	$	13	$	4
Interest rate	1		(11)		(18)		223		(4)		150
Commodity	(81)		166		(90)		64		(10)		3
Net investment	0		0		(63)		(84)		0		0
Total	$	(76)	$	144	$	(160)	$	152	$	(1)	$	157

12 Weeks Ended
Fair Value/Non-
designated Hedges Cash Flow and Net Investment Hedges

Losses/(Gains)
Recognized in
Income Statement^(a)
Losses/(Gains)
Recognized in
Accumulated Other
Comprehensive Loss
Losses/(Gains)
Reclassified from
Accumulated Other
Comprehensive Loss
into Income
Statement^(b)
6/13/2020
6/15/2019
6/13/2020
6/15/2019
6/13/2020
6/15/2019
Foreign exchange $ 10
$ 7
$ (27 ) $ (13 ) $ (19 ) $ 1
Interest rate (1 ) (22 ) (130 ) 59
(121 ) 27
Commodity (9 ) 31
13
(9 ) 13
1
Net investment —
—
125
(5 ) —
—
Total $ —
$ 16
$ (19 ) $ 32
$ (127 ) $ 29
(a)Foreign exchange derivative losses/gains are primarily included in selling, general and administrative expenses. Interest rate derivative losses/gains are primarily from fair value hedges and are included in net interest expense and other. These losses/gains are substantially offset by decreases/increases in the value of the underlying debt, which are also included in net interest expense and other. Commodity derivative losses/gains are included in either cost of sales or selling, general and administrative expenses, depending on the underlying commodity.

24 Weeks Ended
Fair Value/Non-
designated Hedges Cash Flow and Net Investment Hedges

Losses/(Gains)
Recognized in
Income Statement^(a)
Losses/(Gains)
Recognized in
Accumulated Other
Comprehensive Loss
Losses/(Gains)
Reclassified from
Accumulated Other
Comprehensive Loss
into Income Statement^(b)
6/13/2020
6/15/2019
6/13/2020
6/15/2019
6/13/2020
6/15/2019
Foreign exchange $ (1 ) $ 4
$ (78 ) $ 18
$ (15 ) $ (4 )
Interest rate (12 ) (50 ) 93
52
29
16
Commodity 157
(11 ) 77
(13 ) 16
2
Net investment —
—
41
(15 ) —
—
Total $ 144
$ (57 ) $ 133
$ 42
$ 30
$ 14

(b)Foreign exchange derivative losses/gains are primarily included in cost of sales. Interest rate derivative losses/gains are included in net interest expense and other. Commodity derivative losses/gains are included in either cost of sales or selling, general and administrative expenses, depending on the underlying commodity.

~~(a)~~

Foreign exchange derivative losses/gains are primarily included in selling, general and administrative expenses. Interest rate derivative losses/gains are primarily from fair value hedges and are included in net interest expense and other. These losses/gains are substantially offset by decreases/increases in the value of the underlying debt, which are also included in net interest expense and other. Commodity derivative losses/gains are included in either cost of sales or selling, general and administrative expenses, depending on the underlying commodity.


~~(b)~~	Foreign exchange derivative losses/gains are included in cost of sales. Interest rate derivative losses/gains are included in net interest expense and other. Commodity derivative losses/gains are included in either cost of sales or selling, general and administrative expenses, depending on the underlying commodity.

Based on current market conditions, we expect to reclassify net ~~losses~~gains of ~~$43~~$76 million related to our cash flow hedges from accumulated other comprehensive loss into net income during the next 12 months.

Table of Contents

Note 10 - Net Income Attributable to PepsiCo per Common Share

The computations of basic and diluted net income attributable to PepsiCo per common share are as follows:


	12 Weeks Ended
	3/20/2021			3/21/2020
	Income		Shares(a)	Income		Shares(a)





Basic net income attributable to PepsiCo per common share	$	1.24		$	0.96
Net income available for PepsiCo common shareholders	$	1,714	1,380	$	1,338	1,390
Dilutive securities:
Stock options, RSUs, PSUs and other (b)	0		7	0		6
Diluted	$	1,714	1,387	$	1,338	1,396
Diluted net income attributable to PepsiCo per common share	$	1.24		$	0.96

12 Weeks Ended
6/13/2020 6/15/2019
Income
Shares^(a)
Income
Shares^(a)
Basic net income attributable to PepsiCo per common share $ 1.19
$ 1.45

Net income available for PepsiCo common shareholders $ 1,646
1,387
$ 2,035
1,401
Dilutive securities:
Stock options, RSUs, PSUs and other ^(b)
—
6
—
8
Diluted $ 1,646
1,393
$ 2,035
1,409
Diluted net income attributable to PepsiCo per common share $ 1.18
$ 1.44

(a)Weighted-average common shares outstanding (in millions).

24 Weeks Ended
6/13/2020 6/15/2019
Income
Shares^(a)
Income
Shares^(a)
Basic net income attributable to PepsiCo per common share $ 2.15
$ 2.46

Net income available for PepsiCo common shareholders $ 2,984
1,389
$ 3,448
1,403
Dilutive securities:
Stock options, RSUs, PSUs and other ^(b)
—
6
—
8
Diluted $ 2,984
1,395
$ 3,448
1,411
Diluted net income attributable to PepsiCo per common share $ 2.14
$ 2.44

(b)The dilutive effect of these securities is calculated using the treasury stock method.


~~(a)~~	~~Weighted-average common shares outstanding (in millions).~~


~~(b)~~	~~The dilutive effect of these~~ The weighted-average amount of antidilutive securities ~~is calculated using the treasury stock method.~~

~~Out-of-the-money options~~ excluded from the calculation of diluted earnings per common share ~~are as follows:~~was immaterial for both the 12 weeks ended March 20, 2021 and March 21, 2020.

12 Weeks Ended 24 Weeks Ended
6/13/2020
6/15/2019
6/13/2020
6/15/2019
Out-of-the-money options ^(a)
1.7
—
0.8
0.6
Average exercise price per option $ 131.53
$ —
$ 131.53
$ 115.98


~~(a)~~	~~In millions.~~

~~Table of Contents~~

Note 11 - Accumulated Other Comprehensive Loss Attributable to PepsiCo

The changes in the balances of each component of accumulated other comprehensive loss attributable to PepsiCo are as follows:


	Currency Translation Adjustment		Cash Flow Hedges		Pension and Retiree Medical		Other		Accumulated Other Comprehensive Loss Attributable to PepsiCo
Balance as of December 26, 2020 (a)	$	(11,940)	$	4	$	(3,520)	$	(20)	$	(15,476)
Other comprehensive (loss)/income before reclassifications (b)	128		97		(20)		0		205
Amounts reclassified from accumulated other comprehensive loss	18		(1)		52		0		69
Net other comprehensive (loss)/income	146		96		32		0		274
Tax amounts	(15)		(24)		(5)		0		(44)
Balance as of March 20, 2021 (a)	$	(11,809)	$	76	$	(3,493)	$	(20)	$	(15,246)

Currency Translation Adjustment Cash Flow Hedges Pension and Retiree Medical Other Accumulated Other Comprehensive Loss Attributable to PepsiCo
Balance as of December 28, 2019 ^(a)
$ (11,290 ) $ (3 ) $ (2,988 ) $ (19 ) $ (14,300 )
Other comprehensive (loss)/income before reclassifications ^(b)
(735 ) (236 ) 21
1
(949 )
Amounts reclassified from accumulated other comprehensive loss —
157
50
—
207
Net other comprehensive (loss)/income (735 ) (79 ) 71
1
(742 )
Tax amounts (19 ) 18
(14 ) —
(15 )
Balance as of March 21, 2020 ^(a)
$ (12,044 ) $ (64 ) $ (2,931 ) $ (18 ) $ (15,057 )
Other comprehensive (loss)/income before reclassifications ^(c)
(827 ) 144
25
(1 ) (659 )
Amounts reclassified from accumulated other comprehensive loss —
(127 ) 57
—
(70 )
Net other comprehensive (loss)/income (827 ) 17
82
(1 ) (729 )
Tax amounts 31
(4 ) (19 ) —
8
Balance as of June 13, 2020 ^(a)
$ (12,840 ) $ (51 ) $ (2,868 ) $ (19 ) $ (15,778 )


~~(a)~~	~~Pension and retiree medical amounts are net of taxes of $1,370 million as of December 28, 2019, $1,356 million as of March 21, 2020 and $1,337 million as of June 13, 2020.~~


~~(b)~~	~~Currency translation adjustment primarily reflects depreciation of the Russian ruble, Canadian dollar and Mexican peso.~~


~~(c)~~	~~Currency translation adjustment primarily reflects depreciation of the Mexican peso, Russian ruble and euro.~~

Currency Translation Adjustment Cash Flow Hedges Pension and Retiree Medical Other Accumulated Other Comprehensive Loss Attributable to PepsiCo
Balance as of December 29, 2018 ^(a)
$ (11,918 ) $ 87
$ (3,271 ) $ (17 ) $ (15,119 )
Other comprehensive (loss)/income before reclassifications ^(b)
475
(20 ) (16 ) —
439
Amounts reclassified from accumulated other comprehensive loss —
(15 ) 34
—
19
Net other comprehensive (loss)/income 475
(35 ) 18
—
458
Tax amounts (2 ) 8
(1 ) —
5
Balance as of March 23, 2019 ^(a)
$ (11,445 ) $ 60
$ (3,254 ) $ (17 ) $ (14,656 )
Other comprehensive (loss)/income before reclassifications ^(c)
(365 ) (37 ) 16
1
(385 )
Amounts reclassified from accumulated other comprehensive loss —
29
37
—
66
Net other comprehensive (loss)/income (365 ) (8 ) 53
1
(319 )
Tax amounts —
2
(11 ) —
(9 )
Balance as of June 15, 2019 ^(a)
$ (11,810 ) $ 54
$ (3,212 ) $ (16 ) $ (14,984 )

(a)Pension and retiree medical amounts are net of taxes of $1,514 million as of December 26, 2020 and $1,509 million as of March 20, 2021.


~~(a)~~	~~Pension and retiree medical amounts are net of taxes of $1,466 million as of December 29, 2018, $1,465 million as of March 23, 2019 and $1,454 million as of June 15, 2019.~~


~~(b)~~	~~Currency translation adjustment primarily reflects appreciation of the Russian ruble, Mexican peso and Pound sterling.~~


~~(c)~~	~~Currency translation adjustment primarily reflects depreciation of the euro, Mexican peso and Swiss franc.~~

(b)Currency translation adjustment primarily reflects appreciation of the Canadian dollar, Pound sterling and Russian ruble.


	Currency Translation Adjustment		Cash Flow Hedges		Pension and Retiree Medical		Other		Accumulated Other Comprehensive Loss Attributable to PepsiCo
Balance as of December 28, 2019 (a)	$	(11,290)	$	(3)	$	(2,988)	$	(19)	$	(14,300)
Other comprehensive (loss)/income before reclassifications (b)	(735)		(236)		21		1		(949)
Amounts reclassified from accumulated other comprehensive loss	0		157		50		0		207
Net other comprehensive (loss)/income	(735)		(79)		71		1		(742)
Tax amounts	(19)		18		(14)		0		(15)
Balance as of March 21, 2020 (a)	$	(12,044)	$	(64)	$	(2,931)	$	(18)	$	(15,057)

(a)Pension and retiree medical amounts are net of taxes of $1,370 million as of December 28, 2019 and $1,356 million as of March 21, 2020.

(b)Currency translation adjustment primarily reflects depreciation of the Russian ruble, Canadian dollar and Mexican peso.

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The reclassifications from accumulated other comprehensive loss to the income statement are summarized as follows:

12 Weeks Ended 24 Weeks Ended
6/13/2020
6/15/2019
6/13/2020
6/15/2019
Affected Line Item in the Income Statement
Cash flow hedges:
Foreign exchange contracts $ —
$ 1
$ —
$ 1
Net revenue
Foreign exchange contracts (19 ) —
(15 ) (5 ) Cost of sales
Interest rate derivatives (121 ) 27
29
16
Net interest expense and other
Commodity contracts 11
1
14
2
Cost of sales
Commodity contracts 2
—
2
—
Selling, general and administrative expenses
Net (gains)/losses before tax (127 ) 29
30
14

Tax amounts 31
(6 ) (8 ) (2 )
Net (gains)/losses after tax $ (96 ) $ 23
$ 22
$ 12

Pension and retiree medical items:
Amortization of prior service credits $ —
$ (2 ) $ —
$ (4 ) Other pension and retiree medical benefits income
Amortization of net losses 57
39
107
75
Other pension and retiree medical benefits income
Net losses before tax 57
37
107
71

Tax amounts (11 ) (8 ) (22 ) (15 )
Net losses after tax $ 46
$ 29
$ 85
$ 56

Total net (gains)/losses reclassified, net of tax $ (50 ) $ 52
$ 107
$ 68


	12 Weeks Ended
		3/20/2021		3/21/2020		Affected Line Item in the Income Statement



Currency translation:
Divestiture		$	18	$	0	Selling, general and administrative expenses

Cash flow hedges:
Foreign exchange contracts		$	1	$	0	Net revenue
Foreign exchange contracts		12		4		Cost of sales
Interest rate derivatives		(4)		150		Net interest expense and other
Commodity contracts		(11)		3		Cost of sales
Commodity contracts		1		0		Selling, general and administrative expenses
Net (gains)/losses before tax		(1)		157
Tax amounts		1		(39)
Net losses after tax		$	0	$	118

Pension and retiree medical items:
Amortization of prior service credits		$	(9)	$	0	Other pension and retiree medical benefits income
Amortization of net losses		61		50		Other pension and retiree medical benefits income

Net losses before tax		52		50
Tax amounts		(11)		(11)
Net losses after tax		$	41	$	39






Total net losses reclassified, net of tax		$	59	$	157

Note 12 - Acquisitions and Divestitures

Acquisition of Pioneer Food Group Ltd.

On March 23, 2020, we acquired all of the outstanding shares of Pioneer Foods, a food and beverage company in South Africa with exports to countries across the globe, for 110.00 South African rand per share in cash. The total consideration transferred was approximately ~~$1.2~~$1.2 billion and was funded by ~~the Bridge Loan Facilities~~two unsecured bridge loan facilities entered into by one of our international consolidated ~~subsidiaries.~~ ~~See Note 8 for further information.~~subsidiaries, which were fully repaid in April 2020.

We accounted for the transaction as a business combination. We recognized and measured the identifiable assets acquired and liabilities assumed at their estimated fair values on the date of acquisition, in our AMESA segment. The assets acquired and liabilities assumed in Pioneer Foods as of the acquisition date, which primarily include goodwill and other intangible assets of ~~$0.8~~$0.8 billion and property, plant and equipment of ~~$0.4~~$0.4 billion,, are based on preliminary estimates that are subject to revisions and may result in adjustments to preliminary values as valuations are finalized. We ~~expect to~~will finalize these amounts ~~as soon as possible, but no later than~~in the second quarter of 2021.

In connection with our acquisition of Pioneer Foods, we have made certain commitments to the South Africa Competition Commission, including a commitment to provide the equivalent of 7.7 billion South African rand, or approximately $0.4 billion as of the ~~end of the second quarter of 2020,~~acquisition date, in value for the benefit of our employees, agricultural development, education, developing Pioneer Foods’ operations and enterprise

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development programs in South Africa. Included in this commitment is 2.2 billion South African rand, or approximately $0.1 billion, relating to the implementation of an employee ownership plan and an agricultural, entrepreneurship and educational development fund, which ~~was recorded in selling, general and~~

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~~administrative expenses in the 12 and 24 weeks ended June 13, 2020 since it~~ is an irrevocable condition of the ~~acquisition~~acquisition. This commitment was recorded in selling, general and ~~will primarily~~administrative expenses in the year ended December 26, 2020 and is expected to be settled ~~within~~primarily in the ~~twelve-month period from the acquisition date.~~second half of 2021. The remaining commitment of 5.5 billion South African rand, or approximately $0.3 billion as of the acquisition date, relates to capital expenditures and/or business-related costs which will be incurred and recorded over a five-year period from the acquisition date.

Acquisition of Rockstar Energy Beverages

On April 24, 2020, we acquired Rockstar, an energy drink maker with whom we had a distribution agreement prior to the acquisition, for an upfront cash payment of approximately ~~$3.85~~$3.85 billion and contingent consideration related to estimated future tax benefits associated with the acquisition of approximately ~~$0.85~~$0.9 billion. See Note 9 for further information about the contingent consideration. ~~The purchase price will also be adjusted for net working capital amounts as of the acquisition date compared to targeted amounts set forth in the acquisition agreement.~~

We accounted for the transaction as a business combination. We recognized and measured the identifiable assets acquired and liabilities assumed at their estimated fair values on the date of acquisition, primarily in our PBNA segment. The assets acquired and liabilities assumed in Rockstar as of the acquisition date, which primarily include goodwill and other intangible assets of $4.7 billion, are based on preliminary estimates that are subject to revisions and may result in adjustments to preliminary values as valuations are finalized. We ~~expect to~~will finalize these amounts ~~as soon as possible, but no later than~~in the second quarter of 2021.

In addition to our acquisition of Rockstar, as part of our overall energy strategy, we entered into an agreement with Vital Pharmaceuticals, Inc. for us and our bottlers to exclusively distribute Bang Energy drinks in the United States.

Acquisition of Hangzhou Haomusi Food Co., Ltd. ~~(Be & Cheery)~~

On June 1, 2020, we acquired all of the outstanding shares of Be & Cheery, one of the largest online snacks companies in China, from Haoxiangni Health Food Co., Ltd. for ~~cash~~.cash. The total consideration transferred was approximately ~~$0.7 billion. The purchase price will be adjusted for net working capital and net debt amounts as of the acquisition date compared to targeted amounts set forth in the acquisition agreement.~~$0.7 billion.

We ~~will account~~accounted for the transaction as a business ~~combination in the third quarter of 2020.~~combination. We ~~will recognize~~recognized and ~~measure~~measured the identifiable assets acquired and liabilities assumed at their estimated fair values on the date of acquisition, in our APAC segment. The assets acquired and liabilities assumed in Be & Cheery as of the acquisition date, which primarily include goodwill and other intangible assets ~~will be~~of $0.7 billion, are based on preliminary estimates that are subject to revisions and may result in adjustments to preliminary values as valuations are finalized. We expect to finalize these amounts as soon as possible, but no later than the third quarter of 2021.

~~Acquisition of SodaStream International Ltd. (SodaStream)~~

On December 5, 2018, we acquired all of the outstanding shares of SodaStream, a manufacturer and distributor of sparkling water makers, for $144.00 per share in cash, in a transaction valued at approximately $3.3 billion. The total consideration transferred was $3.3 billion (or $3.2 billion, net of cash and cash equivalents acquired). The purchase price allocation was finalized in the fourth quarter of 2019. See Note 14 to our consolidated financial statements in our 2019 Form 10-K for further information.

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~~Inventory Fair Value Adjustments and~~ Merger and Integration ~~Charges~~Charges/Credits

A summary of our ~~inventory fair value adjustments and~~ merger and integration ~~charges~~charges/credits is as follows:


										12 Weeks Ended
	12 Weeks Ended				24 Weeks Ended						3/20/2021		3/21/2020		Acquisition
FLNA									FLNA		$	2	$	23	BFY Brands
PBNA									PBNA		1		0		Rockstar
	6/13/2020		6/15/2019		6/13/2020		6/15/2019
Cost of sales	19		20		19		34
Selling, general and administrative expenses	199		4		224		5
AMESA									AMESA		1		2		Pioneer Foods
Corporate (a)									Corporate (a)		(14)		0		Rockstar
Total	$	218	$	24	$	243	$	39	Total		$	(10)	$	25
After-tax amount	$	205	$	19	$	227	$	32	After-tax amount		$	(7)	$	22
Net income attributable to PepsiCo per common share	$	0.15	$	0.01	$	0.16	$	0.02	Net income attributable to PepsiCo per common share		$	0.01	$	(0.02)

~~Inventory~~(a)In the 12 weeks ended March 20, 2021, the income amount relates to the change in the fair value ~~adjustments and merger~~of contingent consideration associated with our acquisition of Rockstar.

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Merger and integration ~~charges~~charges/credits include ~~fair value adjustments to the acquired inventory included in the acquisition-date balance sheets~~ ~~(recorded in cost of sales)~~ ~~and liabilities to support socioeconomic programs in South Africa, as well as closing~~employee-related costs, ~~employee-related~~contract termination costs, changes in the fair value of contingent consideration and ~~contract termination~~other integration costs (recorded in selling, general and administrative expenses). ~~Inventory fair value adjustments and merger and integration charges by division are as follows:~~

12 Weeks Ended 24 Weeks Ended

6/13/2020
6/15/2019
6/13/2020

6/15/2019

Acquisition
FLNA $ 2
$ —
$ 25
$ —

BFY Brands
PBNA 43
—
43
—

Rockstar
Europe —
23
—
38
SodaStream
AMESA 157
—
159
—

Pioneer Foods
Corporate 16
1
16
1
Rockstar, SodaStream
Total $ 218
$ 24
$ 243
$ 39

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

FINANCIAL REVIEW

Our discussion and analysis is intended to help the reader understand our results of operations and financial condition and is provided as an addition to, and should be read in connection with, our condensed consolidated financial statements and the accompanying notes. Unless otherwise noted, tabular dollars are presented in millions, except per share amounts. All per share amounts reflect common stock per share amounts, assume dilution unless otherwise noted, and are based on unrounded amounts. Percentage changes are based on unrounded amounts.

Our Critical Accounting Policies

The critical accounting policies below should be read in conjunction with those outlined in our ~~2019~~2020 Form 10-K.

Total Marketplace Spending

We offer sales incentives and discounts through various programs to customers and consumers. Total marketplace spending includes sales incentives, discounts, advertising and other marketing activities. Sales incentives and discounts are primarily accounted for as a reduction of revenue. A number of our sales incentives, such as bottler funding to independent bottlers and customer volume rebates, are based on annual targets, and accruals are established during the year, as products are delivered, for the expected payout, which may occur after ~~year-end~~year end once reconciled and settled.

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These accruals are based on contract terms and our historical experience with similar programs and require management judgment with respect to estimating customer and consumer participation and performance levels. Differences between estimated expense and actual incentive costs are normally insignificant and are recognized in earnings in the period such differences are determined. In addition, certain advertising and marketing costs are also based on annual targets and recognized during the year as incurred.

For interim reporting, our policy is to allocate our forecasted full-year sales incentives for most of our programs to each of our interim reporting periods in the same year that benefits from the programs. The allocation methodology is based on our forecasted sales incentives for the full year and the proportion of each interim period’s actual gross revenue or volume, as applicable, to our forecasted annual gross revenue or volume, as applicable. Based on our review of the forecasts at each interim period, any changes in estimates and the related allocation of sales incentives are recognized beginning in the interim period that they are identified. In addition, we apply a similar allocation methodology for interim reporting purposes for certain advertising and other marketing activities.

Income Taxes

In determining our quarterly provision for income taxes, we use an estimated annual effective tax rate which is based on our expected annual income, statutory tax rates and tax ~~planning strategies~~structure and transactions, including transfer pricing arrangements, available to us in the various jurisdictions in which we operate. Significant judgment is required in determining our annual tax rate and in evaluating our tax positions. Subsequent recognition, derecognition and measurement of a tax position taken in a previous period are separately recognized in the quarter in which they occur.

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Our Business Risks

This Form 10-Q contains statements reflecting our views about our future performance that constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 (Reform Act). Statements that constitute forward-looking statements within the meaning of the Reform Act are generally identified through the inclusion of words such as “aim,” “anticipate,” “believe,” “drive,” “estimate,” “expect,” “expressed confidence,” “forecast,” “future,” “goal,” “guidance,” “intend,” “may,” “objective,” “outlook,” “plan,” “position,” “potential,” “project,” “seek,” “should,” “strategy,” “target,” “will” or similar statements or variations of such words and other similar expressions. All statements addressing our future operating performance, and statements addressing events and developments that we expect or anticipate will occur in the future, are forward-looking statements within the meaning of the Reform Act. These forward-looking statements are based on currently available information, operating plans and projections about future events and trends. They inherently involve risks and uncertainties that could cause actual results to differ materially from those predicted in any such forward-looking statement. Such risks and uncertainties include, but are not limited to: the impact of ~~the spread of~~ COVID-19; future demand for PepsiCo’s ~~products, as a result of changes in consumer preferences~~products; damage to PepsiCo’s reputation or ~~otherwise; changes in laws related~~brand image; issues or concerns with respect to ~~the use or disposal of plastics or other packaging of PepsiCo’s products; changes in, or failure to comply with, applicable laws~~product quality and ~~regulations; imposition or proposed imposition of new or increased taxes aimed at PepsiCo’s products; imposition of labeling or warning requirements on PepsiCo’s products;~~safety; PepsiCo’s ability to compete effectively; ~~failure~~PepsiCo’s ability to ~~realize anticipated benefits from~~attract, develop and maintain a highly skilled and diverse workforce; water scarcity; changes in the retail landscape or in sales to any key customer; disruption of PepsiCo’s ~~productivity~~supply chain; political or ~~reinvestment initiatives or operating model; political~~social conditions ~~civil unrest or other developments and risks~~ in the markets where PepsiCo’s products are made, manufactured, distributed or sold; PepsiCo’s ability to grow its business in developing and emerging markets; ~~uncertain or unfavorable~~changes in economic conditions in the countries in which PepsiCo operates; ~~the ability to protect information systems against, or effectively respond to, a cybersecurity incident or other disruption; increased costs, disruption of supply or shortages of raw materials~~future cyber incidents and other ~~supplies; water scarcity; business~~ disruptions; ~~product contamination or tampering or issues or concerns with respect to product quality, safety and integrity; damage to PepsiCo’s reputation or brand image;~~ failure to successfully complete ~~integrate~~ or manage ~~acquisitions and joint ventures into~~

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strategic transactions; PepsiCo’s ~~existing operations~~reliance on third-party service providers; climate change or measures to ~~complete~~address climate change; strikes or ~~manage divestitures or refranchisings; changes~~work stoppages; failure to realize benefits from PepsiCo’s productivity initiatives; deterioration in estimates and underlying assumptions regarding future performance that can result in an impairment charge; fluctuations or other changes in exchange rates; any downgrade or potential downgrade of PepsiCo’s credit ratings; imposition or proposed imposition of new or increased taxes aimed at PepsiCo’s products; imposition of limitations on the marketing or sale of PepsiCo’s products; changes in laws and regulations related to the use or disposal of plastics or other packaging of PepsiCo’s products; failure to comply with personal data protection and privacy laws; increase in income tax rates, changes in income tax laws ~~including as a result of enactment and implementation of the TRAF,~~ or disagreements with tax authorities; PepsiCo’s ability to recruit, hire or retain key employees or a highly skilled and diverse workforce; loss of, or a significant reduction in sales to, any key customer; disruption to the retail landscape, including rapid growth in e-commerce channel and hard discounters; any downgrade or potential downgrade of PepsiCo’s credit ratings; PepsiCo’s ability to implement shared services or utilize information technology systems and networks effectively; fluctuations or other changes in exchange rates; climate change or legal, regulatory or market measures to address climate change; failure to successfully negotiate collective bargaining agreements, or strikes or work stoppages; failure to adequately protect ~~our~~PepsiCo’s intellectual property rights or infringement ofon intellectual property rights of others; failure to comply with applicable laws and regulations; and potential liabilities and costs from litigation, claims, legal or regulatory proceedings, inquiries or investigations; and other ~~factors that may adversely affect the price of PepsiCo’s publicly traded securities~~risks and ~~financial performance~~uncertainties including those described in “Item 1A. Risk Factors” and “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations – Our Business Risks,” included in our ~~2019~~2020 Form 10-K and in “Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations – Our Business Risks” ~~and “Item 1A. Risk Factors”~~ of this Form 10-Q. Investors are cautioned not to place undue reliance on any such forward-looking statements, which speak only as of the date they are made. We undertake no obligation to update any forward-looking statement, whether as a result of new information, future events or otherwise.

COVID-19

Our global operations continue to expose us to risks associated with the COVID-19 pandemic, which ~~has continued~~continues to result in challenging operating environments and has affected almost all of the more than 200 countries and territories in which our products are made, manufactured, distributed or sold. ~~Authorities in many of these markets have implemented numerous and varying measures to stall the spread and ameliorate the impact of COVID-19, including travel~~Travel bans and restrictions, quarantines, curfews, restrictions on public gatherings, shelter in place and safer-at-home orders, business shutdowns and closures ~~and have also implemented multi-step policies with the goal~~continue in many of ~~re-opening~~ these markets. These measures have impacted and will continue to impact us, our customers (including ~~our~~ foodservice customers), consumers, employees, bottlers, contract manufacturers, distributors, joint venture partners, suppliers and other third

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parties with whom we do ~~business. The countries and territories in~~business, which our products are made, manufactured, distributed or sold are in varying stages of restrictions and re-opening to address the COVID-19 pandemic. Certain jurisdictions have begun re-opening only to return to restrictions in the face of increases in new COVID-19 cases. There is considerable uncertainty regarding how current and future health and safety measures implemented in response to the pandemic will impact our business, including whether they willmay result in ~~further~~ changes in demand for our products, ~~further~~ increases in operating costs (whether as a result of changes to our supply chain or increases in employee costs, ~~operating~~including expanded benefits and frontline incentives, costs associated with the provision of personal protective equipment and increased sanitation, or otherwise), ~~how they will further impact~~or adverse impacts to our supply chain ~~and whether they will result in further~~through reduced availability of air or other commercial transport, port closures or border restrictions, ~~each or all~~any of which can impact our ability to make, manufacture, distribute and sell our products. To date, we have incurred increased costs as a result of COVID-19, including increased employee costs, such as expanded benefits and frontline incentives, and other operating costs, such as costs associated with the provision of personal protective equipment, allowances for credit losses, upfront payment write-offs and inventory write-offs, which have negatively impacted our profitability. In addition, measures that impact our ability to access our offices (several of which remain closed), plants, warehouses, distribution centers or other facilities, ~~(some of which are currently closed),~~ or that impact the ability of our customers (including our foodservice customers), consumers, bottlers, contract manufacturers, distributors, joint venture partners, suppliers and other third parties to do the same, may continue to impact the availability or productivity of our and their employees, many of whom are not able to perform their job functions remotely. ~~We continue to implement safety protocols at our facilities~~

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and have been working and will continue to work closely with our business partners on contingency planning in an effort to maintain supply. To date, we have not experienced a material disruption to our operations or supply chain, although we can reasonably envision that possibility.

Public concern regarding the risk of contracting COVID-19 ~~impacts~~has impacted and may continue to impact demand from consumers, including due to consumers not leaving their homes or leaving their homes less often than they did prior to the start of the pandemic or otherwise shopping for and consuming food and beverage products in a different manner than they historically have or because some of our consumers have lower discretionary income due to unemployment or reduced or limited work as a result of measures taken in response to the pandemic. Changes in consumer demand as a result of COVID-19 continues to vary in scope and timing by jurisdiction as we sell a wide variety of beverages, foods and snacks and the amount of revenue attributable to such products varies across these markets. Even as ~~government~~governmental restrictions are ~~lifted~~relaxed and economies gradually, partially, or fully reopen in certain of these jurisdictions and markets, the ongoing economic impacts and health concerns associated with the pandemic may continue to affect consumer behavior, spending levels and shopping and consumption preferences. ~~In addition, changes~~Changes in consumer purchasing and consumption patterns may increase demand for our products in one quarter, resulting in decreased ~~consumer~~ demand for our products in subsequent quarters, or in ~~one~~a lower-margin sales channel resulting in potentially reduced profit from sales of our products. We continue to see shifts in product and channel preferences as markets move through varying stages of restrictions and re-opening at different times, including changes in at-home consumption, in immediate consumption and away-from-home channels, such as convenience and gas and foodservice. In addition, we continue to see ~~a rapid~~an increase in demand in the e-commerce and online-to-offline channels and any failure to capitalize on this demand could adversely affect our ability to maintain and grow sales or category share and erode our competitive position.

Any reduced demand for our products or change in consumer purchasing and consumption patterns, as well as continued economic uncertainty, can adversely affect our customers’ and business partners’ financial condition, which can result in bankruptcy filings and/or an inability to pay for our products, reduced or canceled orders of our products, continued or additional closing of restaurants, stores, entertainment or sports complexes, schools or other venues in which our products are sold, or reduced capacity at any of the foregoing, or our business partners’ inability to supply us with ingredients or other items necessary for us to make, manufacture, distribute or sell our products. Such adverse changes in our customers’ or business partners’ financial condition have also resulted and may ~~also~~continue to result in our recording additional ~~impairment~~ charges for our inability to recover or collect any accounts receivable, owned or leased assets, including certain foodservice and vending and other equipment, or prepaid expenses. In addition, continued economic uncertainty associated with the COVID-19 pandemic has resulted in volatility in the global capital and credit markets which can impair our ability to access these markets on terms commercially acceptable to us, or at all.

While we have developed and implemented and continue to develop and implement health and safety protocols, business continuity plans and crisis management protocols in an effort to ~~try to~~ mitigate the negative impact of COVID-19 to our employees and our business, the extent of the impact of the pandemic on our business and financial results will continue to depend on numerous evolving factors that we are not able to accurately predict and which will vary by jurisdiction and market, including the duration and scope of the pandemic, the emergence of new variants of the virus, the likelihood of a resurgence of positive cases, the

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development and availability of effective treatments and vaccines, the speed at which such vaccines are administered, global economic conditions during and after the pandemic, governmental actions that have been taken, or may be taken in the future, in response to the pandemic and changes in consumer behavior in response to the pandemic, some of which may be more than just temporary.

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~~Coronavirus Aid, Relief, and Economic Security Act~~

~~The CARES Act~~ was enacted on March 27, 2020 in the United States. The CARES Act and related notices include several significant provisions, including delaying certain payroll tax payments, mandatory transition tax payments under the TCJ Act, and estimated income tax payments that we are deferring to future periods. We do not currently expect the CARES Act to have a material impact on our financial results, including on our annual estimated effective tax rate or on our liquidity.~~We will continue to monitor and assess the impact the CARES Act and similar legislation in other countries may have on our business and financial results.~~

~~Refer to the COVID-19 discussion above and Note 5 to our condensed consolidated financial statements for further information.~~

Risks Associated with International Operations

In the 12 weeks ended ~~June 13, 2020, substantially all of our financial results outside of North America reflect the months of~~ March ~~April and May. In the 24 weeks ended June 13, 2020~~20, 2021, substantially all of our financial results outside of North America reflect the months of January ~~through May.~~and February. In the 2412 weeks ended ~~June 13, 2020,~~March 20, 2021, our operations outside of the United States generated ~~39%~~37% of our consolidated net revenue, with ~~Brazil,~~ Canada, China, Mexico, Russia, South Africa and the United Kingdom comprising approximately ~~20%~~21% of our consolidated net revenue. As a result, we are exposed to foreign exchange risk in the international markets in which our products are made, manufactured, distributed or sold. In the 12 ~~and 24~~ weeks ended ~~June 13, 2020,~~March 20, 2021, unfavorable foreign exchange ~~negatively impacted~~reduced net revenue ~~performance~~growth by 40.5 percentage points, ~~and 2 percentage points, respectively,~~ primarily due to declines in the ~~Mexican peso,~~Russian ruble and Brazilian real, ~~and Russian ruble.~~partially offset by an appreciation of the euro. Currency declines against the U.S. dollar which are not offset could adversely impact our future financial results.

In addition, volatile economic, political and social conditions and civil unrest in certain markets in which our products are made, manufactured, distributed or sold, including in Argentina, Brazil, China, Mexico, the Middle East, Russia and Turkey, and natural disasters, debt and credit issues and currency controls or fluctuations in certain of these international markets, continue to, and the threat or imposition of new or increased tariffs or sanctions or other impositions in or related to these international markets may, result in challenging operating environments.

We continue to monitor the economic, operating and political environment in these markets closely and to identify actions to potentially mitigate any unfavorable impacts on our future results. We also continue to monitor the economic and political developments related to the United Kingdom’s withdrawal from the European Union (Brexit), including ~~how~~the effects of the post-Brexit trade deal entered into between the United Kingdom ~~will interact with other~~and the European Union ~~countries following its departure,~~in December 2020, as well as the economic, operating and political environment in Russia and the potential impact for ~~the~~our Europe segment and ~~our~~ other businesses.

See Note 9 to our condensed consolidated financial statements in this Form 10-Q for the fair values of our financial instruments as of ~~June 13, 2020~~March 20, 2021 and December ~~28, 2019~~26, 2020 and Note 9 to our consolidated financial statements in our ~~2019~~2020 Form 10-K for a discussion of these items. Cautionary statements included above and in “Item 1A. Risk Factors” ~~in this Form 10-Q,~~ and ~~in “Item 1A. Risk Factors” and in~~ “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations – Our Business Risks” in our ~~2019~~2020 Form 10-K should be considered when evaluating our trends and future results.

Imposition of Taxes and Regulations on our Products

Certain jurisdictions in which our products are made, manufactured, distributed or sold have either imposed, or are considering imposing, new or increased taxes or regulations on the manufacture, distribution or sale of our products or their packaging, ingredients or substances contained in, or attributes of, our products or their packaging, commodities used in the production of our products or their packaging or the recyclability or recoverability of our packaging. These taxes and regulations vary in scope and form. For example, some taxes apply to all beverages, including non-caloric beverages, while others apply only to beverages with a caloric sweetener (e.g., sugar). In addition, COVID-19 has resulted in increased regulatory focus on labeling in certain jurisdictions, including in Mexico which recently enacted product labeling requirements and limitations on the marketing of certain of our products as a result of ingredients or substances contained in such products. Further, some regulations apply to all products using certain types of packaging (e.g., plastic), while others are designed to increase the sustainability of packaging, encourage

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waste reduction and increased recycling rates or facilitate the waste management process or restrict the sale of products in certain packaging.

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We sell a wide variety of beverages, foods and snacks in more than 200 countries and territories and the profile of the products we sell, the amount of revenue attributable to such products and the type of packaging used vary by jurisdiction. Because of this, we cannot predict the scope or form potential taxes, regulations or other limitations on our products or their packaging may take, and therefore cannot predict the impact of such taxes, regulations or limitations on our financial results. In addition, taxes, regulations and limitations may impact us and our competitors differently. We continue to monitor existing and proposed taxes and regulations in the jurisdictions in which our products are made, manufactured, distributed and sold and to consider actions we may take to potentially mitigate the unfavorable impact, if any, of such taxes, regulations or limitations, including advocating alternative measures with respect to the imposition, form and scope of any such taxes, regulations or limitations.

~~Tax Cuts and Jobs Act~~

~~During the fourth quarter of 2017, the TCJ Act was enacted in the United States. The related provisional measurement period allowed by the~~ ~~SEC ended in the fourth quarter of 2018.~~ ~~While our accounting for the recorded impact of the TCJ Act was deemed to be complete, additional guidance issued by theIRSimpacted our recorded amounts after December 29, 2018.~~ For further information on the impact of the TCJ Act, see Note 5 to our condensed consolidated financial statements and “Our Liquidity and Capital Resources” in this Form 10-Q, as well as Note 5 to our consolidated financial statements in our 2019 Form 10-K.

~~Other Tax Matters~~

~~On May 19, 2019, a public referendum held in Switzerland passed the TRAF, effective January 1, 2020.~~ There were no income tax adjustments recorded in the 24 weeks ended June 13, 2020 related to the TRAF. Enactment of additional TRAF provisions subsequent to June 13, 2020 is expected to result in adjustments to our financial statements and related disclosures in future periods. The future impact of the TRAF cannot currently be reasonably estimated; we will continue to monitor and assess the impact the TRAF may have on our business and financial results.

~~See Note 5 to our condensed consolidated financial statements in this Form 10-Q, as well as Note 5 to our consolidated financial statements in our 2019 Form 10-K for further information.~~

Retail Landscape

~~Additionally, our~~Our industry continues to be affected by disruption of the retail landscape, including the rapid growth in sales through e-commerce websites and mobile commerce applications, including through subscription services, the integration of physical and digital operations among retailers and the international expansion of hard discounters. We have seen and expect to continue to see a further shift to e-commerce, online-to-offline and other online purchasing by consumers, including as a result of the COVID-19 pandemic. We continue to monitor changes in the retail landscape and seek to identify actions we may take to build our global e-commerce and digital capabilities, such as expanding our direct-to-consumer business, and distribute our products effectively through all existing and emerging channels of trade and potentially mitigate any unfavorable impacts on our future results.

Results of Operations – Consolidated Review

Consolidated Results

Volume

~~Volume~~Physical or unit volume is one of the key metrics management uses internally to make operating and strategic decisions, including the preparation of our annual operating plan and the evaluation of our business performance. We believe volume provides additional information to facilitate the comparison of our historical operating

~~Table of Contents~~

performance and underlying trends and provides additional transparency on how we evaluate our business because it measures demand for our products at the consumer level. Refer to “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations – Our Financial Results – Volume” included in our ~~2019~~2020 Form 10-K for further information on volume.

We report substantially all of our international beverage volume on a monthly calendar basis. The 12 weeks ended ~~June 13, 2020 include beverage volume outside of North America for the months of~~ March ~~April and May. The 24 weeks ended June 13, 2020~~20, 2021 include beverage volume outside of North America for the months of January ~~through May.~~and February.

Our divisions’ physical volume measures are converted into servings based on U.S. Food and Drug Administration (FDA) recommended guidelines for single-serving sizes of food and beverage products. The FDA revised the guidelines on recommended serving size for beverage products, effective January 1, 2020. Previously, FDA guidelines recommended a serving size of 8 fluid ounces for all beverages. The revised guidelines recommend a serving size of 8 fluid ounces for beverages that consist of milk, fruit juices, nectars and fruit drinks and 12 fluid ounces for other beverages. No changes were recommended to the serving size of food products. For the 12 and 24 weeks ended June 13, 2020, total servings increased 1% and 3.5%, respectively, which reflects the impact of the revised guidelines on our prior-year servings.

Consolidated Net Revenue and Operating Profit


	12 Weeks Ended								24 Weeks Ended									12 Weeks Ended
	6/13/2020			6/15/2019			Change		6/13/2020			6/15/2019			Change				3/20/2021			3/21/2020			Change
Net revenue	$	15,945		$	16,449		(3	)%	$	29,826		$	29,333		2	%	Net revenue		$	14,820		$	13,881		7	%
Operating profit	$	2,319		$	2,729		(15	)%	$	4,243		$	4,737		(10	)%	Operating profit		$	2,312		$	1,924		20	%
Operating profit margin	14.5		%	16.6		%	(2.1	)	14.2		%	16.1		%	(1.9	)	Operating profit margin		15.6		%	13.9		%	1.7

See “Results of Operations – Division Review” for a tabular presentation and discussion of key drivers of net revenue.

Operating profit ~~decreased 15%~~grew 20% and operating profit margin ~~decreased 2.1~~increased 1.7 percentage points. Operating profit ~~performance~~growth was primarily driven by effective net pricing and productivity savings, partially offset by certain

operating cost increases, a ~~net volume decline~~5-percentage-point impact of higher commodity costs and a ~~3-percentage-point impact of unfavorable foreign exchange, partially offset by productivity savings, lower advertising and marketing expenses and effective net pricing.~~decrease in organic volume.

Higher ~~inventory fair value adjustments and merger and integration charges~~mark-to-market gains on commodity derivatives included in “Items Affecting Comparability” ~~negatively impacted operating profit performance by 25~~contributed 12 percentage points and were largely offset by lower restructuring and impairment charges and a favorable mark to market net impact on commodity derivatives which positively contributed 17 percentage points and 6 percentage points, respectively, to operating profit ~~performance.~~growth. An unrealized pre-tax gain of $108 million on our short-term investment in a publicly traded company also contributed 5 percentage points to operating profit growth. Additionally, lower charges compared to the ~~charges~~prior year taken as a result of the COVID-19 pandemic ~~negatively impacted~~contributed 4 percentage points to operating profit ~~performance by 13 percentage points.~~growth. See Note 1 ~~to our condensed consolidated financial statements~~and Note 9 for further information.

Operating profit decreased 10% and operating profit margin decreased 1.9 percentage points. Operating profit performance was primarily driven by certain operating cost increases, partially offset by productivity savings and net revenue growth.

Higher inventory fair value adjustments and merger and integration charges included in “Items Affecting Comparability” negatively impacted operating profit performance by 4.5 percentage points. Additionally,

the charges taken as a result of the COVID-19 pandemic negatively impacted operating profit performance by 11 percentage points. See Note 1 to our condensed consolidated financial statements for further information.

As previously disclosed in our 2019 Form 10-K, our historical segment reporting presented in this report has been retrospectively revised to reflect the new organizational structure. These changes did not impact our consolidated financial results.

While our financial results in North America are reported on a 12-week basis, substantially all of our international operations report on a monthly calendar basis for which the months of ~~March, April~~ January and ~~May~~February are reflected in our results for the 12 weeks ended~~June 13, 2020, and the months of~~ ~~January through May~~ ~~are reflected in our results for the~~ ~~24 weeks endedJune 13, 2020~~. March 20, 2021.

See “Non-GAAP Measures” and “Items Affecting Comparability” for a discussion of items to consider when evaluating our results and related information regarding measures not in accordance with GAAP.

In the discussions of net revenue and operating profit below, “effective net pricing” reflects the year-over-year impact of discrete pricing actions, sales incentive activities and mix resulting from selling varying products in different package sizes and in different countries and “net pricing” reflects the year-over-year combined impact of list price changes, weight changes per package, discounts and allowances. Additionally, “acquisitions and divestitures” reflect all mergers and acquisitions activity, including the impact of acquisitions, divestitures and changes in ownership or control in consolidated subsidiaries and nonconsolidated equity investees.

Net Revenue and Organic Revenue Growth

Organic revenue growth is a non-GAAP financial measure. For further information on this measure see “Non-GAAP Measures.”


	12 Weeks Ended 3/20/2021
			Impact of				Impact of
	Reported % Change, GAAP Measure		Foreign exchange translation	Acquisitions and divestitures	Organic % Change, Non-GAAP Measure(a)			Organic Volume(b)	Effective net pricing
FLNA	4	%	—	(0.5)	3	%		(1)	4
QFNA	2	%	(0.5)	—	1	%		(4)	5
PBNA	5	%	—	(3)	2	%		(4.5)	6
LatAm	(5)	%	8	—	3	%		(2)	4
Europe	(2)	%	2	—	—	%		—	(1)
AMESA	40	%	1	(42)	(1)	%		2	(3)
APAC	70	%	(8)	(44)	18	%		17	2
Total	7	%	0.5	(5)	2	%		(1)	4

(a)Amounts may not sum due to rounding.

(b)Excludes the impact of acquisitions and divestitures. In certain instances, the impact of organic volume growth on net revenue growth differs from the unit volume growth disclosed in the following divisional discussions due to product mix, nonconsolidated joint venture volume, and, for our beverage businesses, temporary timing differences between bottler case sales and concentrate shipments and equivalents (CSE). Our net revenue excludes nonconsolidated joint venture volume, and, for our franchise-owned beverage businesses, is based on CSE.

12 Weeks Ended 6/13/2020
Impact of Impact of

Reported
% Change, GAAP Measure
Foreign exchange translation Acquisitions and divestitures
Organic
% Change, Non-GAAP Measure^(a)

Volume^(b)
Effective net pricing
FLNA 7 % — (0.5 ) 6 % 4
2
QFNA 23 % — —
23 % 26
(3 )
PBNA (7 )% — (1 ) (7 )% (11 ) 3
LatAm (17 )% 17 —
— % (1 ) 1
Europe (9 )% 7 —
(2.5 )% (1 ) (2 )
AMESA (1 )% 2 (7 ) (7 )% (8 ) 1.5
APAC 10 % 5 —
15 % 11
3
Total (3 )% 4 (1 ) — % (2 ) 1.5

Table of Contents

24 Weeks Ended 6/13/2020
Impact of Impact of

Reported
% Change, GAAP Measure
Foreign exchange translation Acquisitions and divestitures
Organic
% Change, Non-GAAP Measure^(a)

Volume^(b)
Effective net pricing
FLNA 7 % — —
7 % 4.5
2
QFNA 14 % — —
15 % 17
(2 )
PBNA — % — (1 ) (1 )% (3 ) 2
LatAm (8 )% 11 —
3 % 1
2
Europe (1 )% 4 —
3 % 3
—
AMESA 2 % 1 (2 ) 1 % (1 ) 2
APAC 8 % 3 —
11 % 7
5
Total 2 % 2 (0.5 ) 3 % 2
2


~~(a)~~	~~Amounts may not sum due to rounding.~~

~~(b)~~

Excludes the impact of acquisitions and divestitures. In certain instances, volume growth varies from the amounts disclosed in the following divisional discussions due to nonconsolidated joint venture volume, and, for our beverage businesses, temporary timing differences between bottler case sales and concentrate shipments and equivalents (CSE), as well as the mix of beverage volume sold by our company-owned and franchise-owned bottlers. Our net revenue excludes nonconsolidated joint venture volume, and, for our franchise-owned beverage businesses, is based on CSE.

Operating Profit, Operating Profit Adjusted for Items Affecting Comparability and Operating Profit Growth Adjusted for Items Affecting Comparability on a Constant Currency Basis

Operating profit adjusted for items affecting comparability and operating profit growth adjusted for items affecting comparability on a constant currency basis are both non-GAAP financial measures. For further information on these measures see “Non-GAAP Measures” and “Items Affecting Comparability.”

~~Table of Contents~~

Operating Profit and Operating Profit Adjusted for Items Affecting Comparability


	12 Weeks Ended 6/13/2020														12 Weeks Ended 3/20/2021
				Items Affecting Comparability^(a)													Items Affecting Comparability(a)
	Reported, GAAP Measure^(b)			Mark-to-market net impact			Restructuring and impairment charges		Inventory fair value adjustments and merger and integration charges		Core, Non-GAAP Measure^(b)				Reported, GAAP Measure(b)		Mark-to-market net impact		Restructuring and impairment charges		Merger and integration charges/(credits)		Core, Non-GAAP Measure(b)
FLNA	$	1,278		$	—		$	2	$	2	$	1,282		FLNA	$	1,240	$	—	$	15	$	2	$	1,257
QFNA	196			—			—		—		196			QFNA	150		—		—		—		150
PBNA	397			—			—		43		440			PBNA	366		—		4		1		371
LatAm	219			—			4		—		223			LatAm	218		—		2		—		220
Europe	351			—			8		—		359			Europe	131		—		11		—		142
AMESA	59			—			5		157		221			AMESA	138		—		1		1		140
APAC	189			—			3		—		192			APAC	208		—		—		—		208
Corporate unallocated expenses	(370		)	(45		)	2		16		(397		)	Corporate unallocated expenses	(139)		(75)		4		(14)		(224)
Total	$	2,319		$	(45	)	$	24	$	218	$	2,516		Total	$	2,312	$	(75)	$	37	$	(10)	$	2,264

12 Weeks Ended 6/15/2019

Items Affecting Comparability^(a)

Reported,
GAAP Measure
Mark-to-market net impact
Restructuring
and impairment charges

Inventory
fair value adjustments
and merger and integration charges

Core,
Non-GAAP Measure
FLNA $ 1,249
$ —
$ 6
$ —
$ 1,255
QFNA 127
—
—
—
127
PBNA 690
—
10
—
700
LatAm 278
—
21
—
299
Europe 339
—
53
23
415
AMESA 236
—
8
—
244
APAC 116
—
34
—
150
Corporate unallocated expenses (306 ) 6
26
1
(273 )
Total $ 2,729
$ 6
$ 158
$ 24
$ 2,917


	24 Weeks Ended 6/13/2020													12 Weeks Ended 3/21/2020
				Items Affecting Comparability^(a)												Items Affecting Comparability(a)
	Reported, GAAP Measure^(b)			Mark-to-market net impact		Restructuring and impairment charges		Inventory fair value adjustments and merger and integration charges		Core, Non-GAAP Measure^(b)				Reported, GAAP Measure(b)		Mark-to-market net impact		Restructuring and impairment charges		Merger and integration charges		Core, Non-GAAP Measure(b)
FLNA	$	2,480		$	—	$	7	$	25	$	2,512		FLNA	$	1,202	$	—	$	5	$	23	$	1,230
QFNA	346			—		1		—		347			QFNA	150		—		1		—		151
PBNA	694			—		3		43		740			PBNA	297		—		3		—		300
LatAm	450			—		9		—		459			LatAm	231		—		5		—		236
Europe	497			—		16		—		513			Europe	146		—		8		—		154
AMESA	193			—		7		159		359			AMESA	134		—		2		2		138
APAC	331			—		3		—		334			APAC	142		—		—		—		142
Corporate unallocated expenses	(748		)	97		10		16		(625		)	Corporate unallocated expenses	(378)		142		8		—		(228)
Total	$	4,243		$	97	$	56	$	243	$	4,639		Total	$	1,924	$	142	$	32	$	25	$	2,123

(a)See “Items Affecting Comparability.”

(b)Operating profit for the 12 weeks ended March 20, 2021 and March 21, 2020 includes the charges taken as a result of the COVID-19 pandemic. See Note 1 to our condensed consolidated financial statements for further information.

12 Weeks Ended 6/13/2020

Impact of Items Affecting Comparability^(a)
Impact of
Reported % Change, GAAP Measure Mark-to-market net impact Restructuring and impairment charges
Inventory
fair value adjustments and
merger and integration charges

Core
% Change, Non-GAAP Measure^(b)
Foreign exchange translation
Core Constant Currency
% Change, Non-GAAP Measure^(b)
FLNA 2 % —
—
—
2 % —
2 %
QFNA 55 % —
—
—
55 % —
55 %
PBNA (42 )% —
(1.5 ) 7
(37 )% —
(37 )%
LatAm (22 )% —
(4 ) —
(25 )% 18
(8 )%
Europe 3 % —
(11 ) (6 ) (14 )% 6
(7 )%
AMESA (75 )% —
(1 ) 67
(9 )% —
(9 )%
APAC 63 % —
(35 ) —
28 % 4
31 %
Corporate unallocated expenses 21 % 20
10
(6 ) 45 % —
45 %
Total (15 )% (6 ) (17 ) 25
(14 )% 3
(11 )%

~~Table of Contents~~(a)See “Items Affecting Comparability” for further information.

(b)Amounts may not sum due to rounding.

Net revenue ~~increased 7% and volume increased~~grew 4%~~. The net revenue growth was~~, primarily driven by ~~the volume growth and~~ effective net ~~pricing. The~~pricing, partially offset by a decrease in organic volume. Unit volume ~~growth~~declined slightly, primarily ~~reflects double-digit growth in dips and trademark Tostitos, high-single-digit growth~~driven by mid-single-digit declines in trademark ~~Ruffles~~Cheetos and Fritos and a low-single-digit decline in trademark Lay’s, partially offset by high-single-digit-growth in variety packs and mid-single-digit growth in ~~trademark Doritos and Cheetos, partially offset by a double-digit decline in nuts and seeds and trademark Smartfood.~~dips.

Operating profit increased 2%3%, primarily reflecting the effective net ~~revenue growth~~pricing and productivity savings, partially offset by certain operating cost increases. ~~Additionally, the charges taken as a result of the COVID-19 pandemic reduced operating profit growth~~

Furthermore, performance was negatively impacted by ~~10 percentage points.~~weather-related business disruptions.

Net revenue ~~increased 7% and volume increased 4.5%. The net revenue growth was~~grew 2%, primarily driven by the volume growth and effective net pricing. The volume growth primarily reflects double-digit growth in dips and trademark Tostitos, high-single-digit growth in trademark Cheetos and in variety packs and mid-single-digit growth in trademark Doritos,favorable pricing, partially offset by a ~~double-digit~~decrease in organic volume. Unit volume declined 4%, primarily driven by a mid-single-digit decline in ~~nuts~~oatmeal and ~~seeds~~high-single-digit declines in pancake syrup and ~~trademark Smartfood.~~mix and in bars, partially offset by double-digit growth in lite snacks.

Operating profit ~~increased 3%,~~experienced a slight decline, primarily reflecting ~~the net revenue growth and productivity savings, partially offset by~~ certain operating cost ~~increases. Additionally,~~increases, the ~~charges taken as~~decrease in organic volume and a ~~result~~5-percentage-point impact of higher commodity costs, largely offset by the ~~COVID-19 pandemic reduced operating profit growth by 6 percentage points.~~favorable pricing and productivity savings.

Net revenue increased ~~23% and volume increased 26%. The net revenue growth reflects the volume growth and favorable~~5%, primarily driven by effective net pricing, partially offset by ~~unfavorable mix. The volume growth was broad-based across our product portfolio, and was primarily driven by double-digit growth~~a decrease in ~~oatmeal, Aunt Jemima syrup and~~

~~mix, and ready-to-eat cereals. The COVID-19 pandemic drove an increase in consumer demand, which had a positive impact on both~~In addition, acquisitions contributed 3 percentage points to net revenue ~~and~~growth.Unit volume ~~growth.~~

Operating profit grew 55%, reflecting the net revenue growth and productivity savings, partially offset by certain operating cost increases, higher advertising and marketing expenses, a 6-percentage-point impact of an asset write-off and a 4-percentage-point impact of higher commodity costs. Additionally, the charges taken as a result of the COVID-19 pandemic reduced operating profit growth by 6 percentage points.

Net revenue increased 14% and volume increased 17%. The net revenue growth reflects the volume growth and favorable net pricing, partially offset by unfavorable mix. The volume growth was broad-based across our product portfolio, and was primarily driven by double-digit growth in oatmeal, Aunt Jemima syrup and mix, and ready-to-eat cereals. The COVID-19 pandemic drove an increase in consumer demand, which had a positive impact on both net revenue and volume growth.

Operating profit grew 31%, reflecting the net revenue growth and productivity savings, partially offset by certain operating cost increases, higher advertising and marketing expenses and a 3-percentage-point impact of an asset write-off. Additionally, the charges taken as a result of the COVID-19 pandemic reduced operating profit growth by 3 percentage points.

~~Net revenue~~ decreased 7%2%, driven by a ~~decrease in volume, partially offset by effective net pricing. Volume decreased 10%, driven by an 11%~~2% decrease in carbonated soft drink (CSD) volume and ~~an 8%~~a 1.5% decrease in non-carbonated beverage (NCB) volume. The NCB volume decrease primarily reflected a double-digit ~~decreases~~decrease in our overall water portfolio ~~Lipton ready-to-drink teas,~~ and a high-single-digit decrease in our juice and juice

drinks portfolio, ~~as well as~~partially offset by a ~~mid-single-digit decrease~~double-digit increase in our energy portfolio, primarily due to acquisitions, and a low-single-digit increase in Gatorade sports drinks.

Operating profit increased 23%, reflecting the effective net pricing, a 32-percentage-point impact of lower charges taken as a result of the COVID-19 pandemic, and productivity savings. These impacts were partially offset by certain operating cost increases, including incremental transportation and information technology costs, the organic volume decrease, and a 4-percentage-point impact of higher commodity costs. Favorable settlements of promotional spending accruals compared to the prior yearcontributed 5 percentage points to operating profit growth. In addition, acquisitions contributed 11 percentage points to operating profit growth.

Furthermore, performance was negatively impacted by weather-related business disruptions.

Net revenue decreased 5%, primarily reflecting an 8-percentage-point impact of unfavorable foreign exchange and a net organic volume decline, partially offset by effective net pricing.

Snacks unit volume declined 2%, primarily reflecting low-single-digit declines in Brazil and Mexico.

Beverage unit volume declined 4%, primarily reflecting a double-digit decline in Brazil and a low-single-digit decline in Mexico, partially offset by high-single-digit growth in Argentina, mid-single-digit growth in Chile and low-single-digit growth in Guatemala. The COVID-19 pandemic contributed to a decrease in consumer demand, which had a negative impact on ~~both net revenue and volume performance. In addition, acquisitions positively contributed 1 percentage point to the net revenue performance.~~

Operating profit decreased 42%, primarily reflecting the volume decrease and a 20-percentage-point impact of the charges taken as a result of the COVID-19 pandemic. In addition, certain operating cost increases, including incremental information technology costs, were partially offset by productivity savings, the effective net pricing, lower advertising and marketing expenses and a 7-percentage-point impact of lower commodity costs. A prior-year gain associated with a sale of an asset negatively impacted operating profit performance by 5 percentage points and was partially offset by favorable insurance adjustments compared to the prior year, which positively contributed 3 percentage points to operating profit performance.

Net revenue decreased slightly, driven by a decrease in volume, partially offset by effective net pricing. Volume decreased 2.5%, driven by a 6% decrease in CSDs, partially offset by a 1% increase in NCB volume. The NCB volume increase primarily reflected a mid-single-digit increase in our overall water portfolio and a low-single-digit increase in Gatorade sports drinks, partially offset by mid-single-digit decreases in our juice and juice drinks portfolio and Lipton ready-to-drink teas. The COVID-19 pandemic contributed to a decrease in consumer demand, which had a negative impact on both net revenue and volume performance. In addition, acquisitions positively contributed 1 percentage point to the net revenue performance.

Operating profit decreased 36%, primarily reflecting a 22-percentage-point impact of the charges taken as a result of the COVID-19 pandemic and the related volume decrease. In addition, certain operating cost increases, including incremental information technology costs, were partially offset by productivity savings, lower advertising and marketing expenses, the effective net pricing and a 4-percentage-point impact of lower commodity costs. A prior-year gain associated with a sale of an asset negatively impacted operating profit performance by 3 percentage points and was partially offset by favorable insurance adjustments compared to the prior year, which positively contributed 2 percentage points to operating profit performance.

~~Net revenue decreased 17%, reflecting a 17-percentage-point impact of unfavorable foreign exchange and a net volume decline, partially offset by effective net pricing.~~

~~Snacks volume was flat, reflecting low-single-digit growth in Mexico and Brazil, offset by broad-based declines across several smaller markets.~~

Beverage volume declined 9%, reflecting double-digit declines in Colombia and Argentina, high-single-digit declines in Brazil and Chile, a mid-single-digit decline in Honduras, and a low-single-digit decline in Guatemala, partially offset by low-single-digit growth in Mexico. The COVID-19 pandemic contributed to a decrease in consumer demand, which had a negative impact onbeverage unit volume performance.

Operating profit decreased ~~22%~~6%, primarily reflecting ~~certain operating cost increases,~~ a ~~10-percentage-point~~19-percentage-point impact of higher commodity costs, largely due to transaction-related foreign exchange, certain operating cost increases and the net organic volume decline. These impacts were partially offset by ~~productivity savings,~~ the effective net pricing, productivity savings and lower advertising and marketing ~~expenses and a 4-percentage-point impact of lower restructuring and impairment charges.~~expenses. Additionally, unfavorable foreign exchange translation and ~~the~~certain charges taken as a result of the COVID-19 pandemic negatively impacted operating profit performance by ~~18 percentage points and 11 percentage points, respectively.~~

~~Net revenue decreased 8%, reflecting an 11-percentage-point impact of unfavorable foreign exchange, partially offset by effective net pricing and net volume growth.~~

~~Snacks volume grew 1%, reflecting low-single-digit growth in Mexico and Brazil.~~

Beverage volume declined 3.5%, reflecting a double-digit decline in Colombia, a high-single-digit decline in Argentina, mid-single-digit declines in Brazil and Honduras, and a low-single-digit decline in Guatemala, partially offset by low-single-digit growth in Mexico and Chile. The COVID-19 pandemic contributed to a decrease in consumer demand, which had a negative impact on volume performance.

Operating profit decreased 12%, primarily reflecting certain operating cost increases, a 7-percentage-point impact of higher commodity costs, largely due to transaction-related foreign exchange, and a 6-percentage-point impact of a prior-year insurance settlement recovery related to the 2017 earthquake in Mexico. These impacts were partially offset by productivity savings and the effective net pricing. Additionally, unfavorable foreign exchange and the charges taken as a result of the COVID-19 pandemic negatively impacted operating profit performance by 108 percentage points and 6 percentage points, respectively.

Net revenue decreased 9%2%, primarily reflecting a ~~7-percentage-point~~2-percentage-point impact of unfavorable foreign ~~exchange and unfavorable~~exchange. SodaStream International Ltd. (SodaStream) negatively impacted net ~~pricing.~~revenue performance by 2 percentage points, primarily reflecting the prior-year benefit of an extra month of sales as we aligned SodaStream’s reporting calendar with that of our Europe division in the first quarter of 2020. Since being acquired in the fourth quarter of 2018, SodaStream had been reporting on a one-month lag.

Snacks unit volume grew 2%4%, primarily reflecting double-digit growth in Turkey and high-single-digit growth in Russia, partially offset by a mid-single-digit decline in Spain and low-single-digit declines in France and the Netherlands. Additionally, the United Kingdom ~~high-single-digit~~and Poland each experienced low-single-digit growth.

Beverage unit volume grew 7%, primarily reflecting double-digit growth in ~~France~~Germany, Russia and ~~low-single-digit growth in the Netherlands,~~Turkey, partially offset by a double-digit decline in ~~Turkey, a mid-single-digit decline in Poland and a low-single-digit decline in Spain. Additionally, Russia experienced low-single-digit growth.~~

~~Beverage volume grew 2%, reflecting double-digit growth in Germany and~~ France ~~partially offset by double-digit declines in Poland and Turkey, a mid-single-digit decline in Russia~~ and a low-single-digit decline in the United Kingdom.

Operating profit ~~increased 3%~~decreased 10%, primarily reflecting productivity savings, an 11-percentage-point impact of lower restructuring and impairment charges, a 9-percentage-point impact of a gain on an asset sale, a 6-percentage-point impact of the prior-year inventory fair value adjustments and merger and integration charges associated with the SodaStream acquisition and lower advertising and marketing expenses. These impacts were offset by certain operating cost increases, ~~and unfavorable net pricing. Additionally, the charges taken as~~ a ~~result~~21-percentage-point impact of ~~the COVID-19 pandemic and unfavorable~~higher commodity costs driven by transaction-related foreign exchange ~~reduced operating profit growth by 11 percentage points and 6 percentage points, respectively.~~

~~Net revenue decreased 1%, reflecting a 4-percentage-point impact of unfavorable foreign exchange, partially offset by volume growth.~~

Snacks volume grew 3%, reflecting high-single-digit growth in the United Kingdom and France, partially offset by low-single-digit declines in Turkey and Poland. Additionally, Russia, Spain and the Netherlands each experienced low-single-digit growth.

Beverage volume grew 5%, reflecting double-digit growth in Germany and France, partially offset by mid-single-digit declines in Russia and Turkey and a double-digit decline in Poland. Additionally, the United Kingdom experienced low-single-digit growth.

Operating profit increased 9%, primarily reflecting productivity savings, a 9-percentage-point impact of lower restructuring and impairment charges, an 8-percentage-point impact of the prior-year inventory fair value adjustments and merger and integration charges associated with the SodaStream acquisition, a 6-percentage-point impact of a gain on an asset sale and a 3.5-percentage-point impact of lower commodity costs. These impacts were partially offset by certain operating cost increases, unfavorable net pricing, and a 3-percentage-point impact of ~~a prior-year insurance settlement recovery in Russia. Additionally, the charges taken as a result of the COVID-19 pandemic~~higher restructuring and ~~unfavorable foreign exchange reduced operating profit growth by 9 percentage points and 5 percentage points, respectively.~~

Net revenue decreased 1%, primarily reflecting a net volume decline and a 6-percentage-point impact of a prior-year refranchising of a portion of our beverage business in India, partially offset by a 13-percentage-point impact of the Pioneer Foods acquisition. Net revenue was also negatively impacted by the COVID-19 pandemic.

Snacks volume grew 117%, primarily reflecting a 124-percentage-point impact of the Pioneer Foods acquisition, mid-single-digit growth in the Middle East and Pakistan and low-single-digit growth in South Africa, partially offset by a double-digit decline in India.

Beverage volume declined 25%, reflecting double-digit declines in India and Pakistan, a low-single-digit decline in Nigeria and a high-single-digit decline in the Middle East. The COVID-19 pandemic contributed to a decrease in consumer demand, which had a negative impact on volume performance.

Operating profit decreased 75%, primarily reflecting a 67-percentage-point impact of merger and integration charges associated with the Pioneer Foods acquisition, the net revenue performance, certain operating cost increases and a 4.5-percentage-point impact of a prior-year gain on the refranchising of a portion of our beverage business in India. These impacts were partially offset by lower advertising and marketing expenses, productivity savings and a 3-percentage-point impact of lower commodity costs. Additionally, the charges taken as a result of the COVID-19 pandemic negatively impacted operating profit performance by 7 percentage points.

Net revenue increased 2%, reflecting an 8-percentage-point impact of the Pioneer Foods acquisition and effective net pricing, partially offset by a 6-percentage-point impact of the prior-year refranchising of a portion of our beverage business in India and a net volume decline. Net revenue was also negatively impacted by the COVID-19 pandemic.

Snacks volume grew 76%, primarily reflecting a 74-percentage-point impact of the Pioneer Foods acquisition, high-single-digit growth in the Middle East and Pakistan and low-single-digit growth in South Africa, partially offset by a high-single-digit decline in India.

Beverage volume declined 14%, reflecting double-digit declines in India and Pakistan and a low-single-digit decline in the Middle East, partially offset by low-single-digit growth in Nigeria. The COVID-19 pandemic contributed to a decrease in consumer demand, which had a negative impact on volume performance.

Operating profit decreased 43%, primarily reflecting a 46-percentage-point impact of merger and integration charges associated with the Pioneer Foods acquisition, certain operating cost increases and a 3-percentage-point impact of a prior-year gain on the refranchising of a portion of our beverage business in India.impairment charges. These impacts were partially offset by productivity savings, lower advertising and marketing expenses and ~~a 3-percentage-point impact~~effective net pricing.

Additionally, ~~the charges taken as a result of the COVID-19 pandemic~~unfavorable foreign exchange translation negatively impacted operating profit performance by 53 percentage points.

Net revenue increased ~~10%~~40%, primarily reflecting a 42-percentage-point impact of our Pioneer Foods acquisition and organic volume growth, partially offset by unfavorable net pricing.

Snacks unit volume grew 232%, primarily reflecting a 228-percentage-point impact of our Pioneer Foods acquisition, double-digit growth in Pakistan and high-single-digit growth in India, partially offset by a low-single-digit decline in the Middle East. Additionally, South Africa (excluding our Pioneer Foods acquisition) experienced low-single-digit growth.

Beverage unit volume grew 5.5%, primarily reflecting a 4-percentage-point impact of our Pioneer Foods acquisition and double-digit growth in Pakistan, partially offset by a mid-single-digit decline in India and a slight decline in the Middle East. Additionally, Nigeria experienced slight growth.

Operating profit increased 4%, primarily reflecting productivity savings, a 7-percentage-point contribution from our Pioneer Foods acquisition and lower advertising and marketing expenses, partially offset by the unfavorable net pricing.

Net revenue increased 70%, primarily reflecting a 44-percentage-point impact of our Be & Cheery acquisition, organic volume growth and effective net ~~pricing, partially offset by~~pricing. Favorable foreign exchange contributed 8 percentage points to net revenue growth.

Snacks unit volume grew 59%, primarily reflecting a ~~5-percentage-point~~45-percentage-point impact of ~~unfavorable foreign exchange.~~

~~Snacks volume grew 14%, reflecting~~our Be & Cheery acquisition and double-digit growth in China (excluding our Be & Cheery acquisition). Additionally, Australia experienced low-single-digit growth, Thailand and Indonesia ~~partially offset by a high-single-digit decline in Thailand. Additionally, Australia~~each experienced high-single-digit growth and Taiwan experienced double-digit growth.

Beverage unit volume ~~declined 8%~~grew 15%, primarily reflecting ~~double-digit declines in the Philippines, Vietnam and Thailand, partially offset by low-single-digit~~double digit growth in ~~China. The COVID-19 pandemic contributed to a decrease in consumer demand, which had a negative impact on volume performance.~~

Operating profit increased 63%, reflecting the net revenue growth, a 35-percentage-point impact of lower restructuring and impairment charges, productivity savings and a 3-percentage-point impact of lower commodity costs, partially offset by certain operating cost increases and a 4-percentage-point impact of unfavorable foreign exchange.

~~Net revenue increased 8%, reflecting net volume growth and effective net pricing,~~China, partially offset by a ~~3-percentage-point impact of unfavorable foreign exchange.~~

~~Snacks volume grew 10%, reflecting~~ double-digit ~~growth~~decline in ~~Indonesia~~the Philippines and ~~China, partially offset by~~ a mid-single-digit decline in Thailand. Additionally, ~~Australia and Taiwan each~~Vietnam experienced ~~high-single digit~~mid-single-digit growth.

Beverage volume declined 5%, reflecting a double-digit decline in the Philippines, a high-single-digit decline in Thailand, a mid-single-digit decline in Vietnam and a low-single-digit decline in China. The COVID-19 pandemic contributed to a decrease in consumer demand, which had a negative impact on volume performance.

Operating profit increased ~~49%~~47%, primarily reflecting the ~~net revenue~~organic volume growth, a ~~20-percentage-point impact of lower restructuring~~10-percentage-point contribution from our Be & Cheery acquisition and ~~impairment charges,~~ productivity savings, ~~and a 3-percentage-point impact of lower commodity costs,~~ partially offset by higher advertising and marketing expenses and certain operating cost ~~increases and a 3-percentage-point impact~~increases. Favorable foreign exchange contributed 7 percentage points to operating profit growth.

Other Consolidated Results

Other pension and retiree medical benefits income increased ~~$23~~$43 million, primarily reflecting the recognition of fixed income gains on plan assets, the impact of plan changes approved in 2020, as discussed in Note 7 to our condensed consolidated financial statements, and the impact of ~~approved~~ discretionary plan contributions, partially offset by the decrease in ~~discount rates.~~the expected rate of return on plan assets.

Net interest expense and other ~~increased $12~~decreased $32 million, primarily ~~reflecting higher interest expense~~ due to ~~higher average debt balances. This impact was partially offset by~~ gains on the market value of investments used to economically hedge a portion of our deferred compensation liability, ~~as well as higher~~lower interest ~~income due to~~rates on average debt balances and higher average cash ~~balances~~balances. These impacts were partially offset by ~~lower interest rates.~~

The reported tax rate increased 3.1 percentage points, primarily reflecting a prior-year tax benefit related to an international restructuring and current-year non-deductible expenses related to an acquisition.

Net income attributable to PepsiCo decreased 19% and net income attributable to PepsiCo per common share decreased 18%. Items affecting comparability (see “Items Affecting Comparability”) negatively impacted both net income attributable to PepsiCo performance and net income attributable to PepsiCo per common share performance by 4 percentage points. Additionally, the charges taken as a result of the COVID-19 pandemic negatively impacted both net income attributable to PepsiCo performance and net income attributable to PepsiCo per common share performance by approximately 15 percentage points.

Other pension and retiree medical benefits income increased $36 million, reflecting the recognition of fixed income gains on plan assets and the impact of approved discretionary plan contributions, partially offset by the decrease in discount rates.

Net interest expense and other increased $98 million, reflecting losses on the market value of investments used to economically hedge a portion of our deferred compensation liability, higher interest expense due to higher average debt balances, ~~partially offset by lower interest rates,~~ as well as lower interest ~~income due to lower interest~~ rates ~~partially offset by higher~~on average cash balances.

The reported tax rate ~~increased 0.5~~decreased 0.3 percentage points, primarily reflecting ~~a prior-year tax benefit related to an international restructuring, current-year non-deductible expenses related to an acquisition, as well as~~ the ~~prior-year net tax related to the TCJ Act. These impacts were partially offset by a prior-year increase~~decrease in reserves for uncertain tax positions ~~in foreign jurisdictions.~~



Large accelerated filer	x☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐



	(Unaudited)
	6/13/2020			12/28/2019
ASSETS
Current Assets
Cash and cash equivalents	$	8,927		$	5,509
Short-term investments	196			229
Accounts and notes receivable, less allowance: 6/20 - $235 and 12/19 - $105	8,780			7,822
Inventories:
Raw materials and packaging	1,869			1,395
Work-in-process	344			200
Finished goods	2,101			1,743
	4,314			3,338
Prepaid expenses and other current assets	972			747
Total Current Assets	23,189			17,645
Property, plant and equipment	43,018			43,003
Accumulated depreciation	(23,831		)	(23,698		)
Property, Plant and Equipment, net	19,187			19,305
Amortizable Intangible Assets, net	1,465			1,433
Goodwill	17,845			15,501
Other indefinite-lived intangible assets	17,530			14,610
Indefinite-Lived Intangible Assets	35,375			30,111
Investments in Noncontrolled Affiliates	2,715			2,683
Deferred Income Taxes	4,351			4,359
Other Assets	3,243			3,011
Total Assets	$	89,525		$	78,547

LIABILITIES AND EQUITY
Current Liabilities
Short-term debt obligations	$	6,607		$	2,920
Accounts payable and other current liabilities	17,220			17,541
Total Current Liabilities	23,827			20,461
Long-Term Debt Obligations	38,371			29,148
Deferred Income Taxes	4,203			4,091
Other Liabilities	10,537			9,979
Total Liabilities	76,938			63,679
Commitments and contingencies
PepsiCo Common Shareholders’ Equity
Common stock, par value 1²/₃¢ per share (authorized 3,600 shares; issued, net of repurchased common stock at par value: 1,385 and 1,391 shares, respectively)	23			23
Capital in excess of par value	3,772			3,886
Retained earnings	62,145			61,946
Accumulated other comprehensive loss	(15,778		)	(14,300		)
Repurchased common stock, in excess of par value (482 and 476 shares, respectively)	(37,671		)	(36,769		)
Total PepsiCo Common Shareholders’ Equity	12,491			14,786
Noncontrolling interests	96			82
Total Equity	12,587			14,868
Total Liabilities and Equity	$	89,525		$	78,547


~~(a)~~			Cash dividends declared per common share were $1.0225 and $0.955 for the 12 weeks ended June 13, 2020 and June 15, 2019, respectively, and $1.9775 and $1.8825 for the 24 weeks ended June 13, 2020 and June 15, 2019, respectively.


1)	~~Frito-Lay North America (FLNA), which includes our branded food and snack businesses in the United States and Canada;~~


2)	~~Quaker Foods North America (QFNA), which includes our cereal, rice, pasta and other branded food businesses in the United States and Canada;~~


3)	~~PepsiCo Beverages North America (PBNA), which includes our beverage businesses in the United States and Canada;~~


4)	~~Latin America (LatAm), which includes all of our beverage, food and snack businesses in Latin America;~~


5)	~~Europe, which includes all of our beverage, food and snack businesses in Europe;~~


6)	~~Africa, Middle East and South Asia (AMESA), which includes all of our beverage, food and snack businesses in Africa, the Middle East and South Asia; and~~


7)	~~Asia Pacific, Australia and New Zealand and China region (APAC), which includes all of our beverage, food and snack businesses in Asia Pacific, Australia and New Zealand, and China region.~~



	24 Weeks Ended 6/13/2020
	Allowances for Expected Credit Losses^(a)		Upfront Payments to Customers^(b)		Inventory Write-Downs and Product Returns^(c)		Employee Compensation Expense^(d)		Employee Protection Costs^(e)		Other^(f)		Total
FLNA	$	19	$	—	$	7	$	100	$	33	$	3	$	162
QFNA	2		—		—		6		1		—		9
PBNA	45		46		29		84		31		10		245
LatAm	1		—		6		16		8		3		34
Europe	4		1		10		9		8		17		49
AMESA	1		—		1		7		4		4		17
APAC	—		—		1		2		1		1		5
Total	$	72	$	47	$	54	$	224	$	86	$	38	$	521



(Address of principal executive offices and Zip Code)



Registrant's telephone number, including area code


~~(a)~~	Allowances reflect the expected impact of the global economic uncertainty caused by COVID-19, leveraging estimates of credit worthiness, default and recovery rates for certain of our customers, including foodservice and vending businesses.


~~(b)~~	~~Upfront payments relate to promotional spending for which benefit will not be received.~~


~~(c)~~	~~Inventory write-downs and product returns include a reserve for product returns of $9 million and $16 million in the 12 and 24 weeks ended June 13, 2020, respectively.~~


~~(d)~~	~~Includes incremental frontline incentive pay, crisis child care and other leave benefits and labor costs.~~


~~(e)~~	~~Includes costs associated with personal protective equipment, temperature scans, cleaning and other sanitization services.~~


~~(f)~~	~~Includes write-downs of property, plant and equipment, donations of cash and product and other certain costs.~~



	Severance and Other Employee Costs			Asset Impairments			Other Costs			Total
Liability as of December 28, 2019	$	128		$	—		$	21		$	149
2020 restructuring charges	24			5			34			63
Cash payments	(59		)	—			(50		)	(109		)
Non-cash charges and translation	(11		)	(5		)	3			(13		)
Liability as of June 13, 2020	$	82		$	—		$	8		$	90



	Balance 12/28/2019		Acquisitions			Translation and Other			Balance 6/13/2020

FLNA^(a)
Goodwill	$	299	$	160		$	(4	)	$	455
Brands	162		176			(1		)	337
Total	461		336			(5		)	792
QFNA
Goodwill	189		—			—			189
Brands	11		—			—			11
Total	200		—			—			200
PBNA ^(b)
Goodwill	9,898		1,968			(16		)	11,850
Reacquired franchise rights	7,089		—			(28		)	7,061
Acquired franchise rights	1,517		141			(6		)	1,652
Brands	763		2,700			1			3,464
Total	19,267		4,809			(49		)	24,027
LatAm
Goodwill	501		—			(58		)	443
Brands	125		—			(21		)	104
Total	626		—			(79		)	547
Europe ^(c)
Goodwill	3,961		(3		)	(216		)	3,742
Reacquired franchise rights	505		—			(30		)	475
Acquired franchise rights	157		—			(1		)	156
Brands	4,181		—			(211		)	3,970
Total	8,804		(3		)	(458		)	8,343
AMESA ^(d)
Goodwill	446		533			(10		)	969
Brands	—		208			(3		)	205
Total	446		741			(13		)	1,174
APAC
Goodwill	207		—			(10		)	197
Brands	100		—			(5		)	95
Total	307		—			(15		)	292

Total goodwill	15,501		2,658			(314		)	17,845
Total reacquired franchise rights	7,594		—			(58		)	7,536
Total acquired franchise rights	1,674		141			(7		)	1,808
Total brands	5,342		3,084			(240		)	8,186
Total	$	30,111	$	5,883		$	(619	)	$	35,375


~~(a)~~	~~The change in acquisitions primarily reflects our acquisition of BFY Brands, Inc. (BFY Brands).~~


~~(c)~~	~~The change in translation and other primarily reflects the depreciation of the Russian ruble.~~


~~(a)~~	~~Primarily recorded in selling, general and administrative expenses.~~


~~(a)~~	~~In millions. All grant activity is disclosed at target.~~



Interest Rate		Maturity Date	Amount^(a)
2.250	%	March 2025	$	1,500
2.625	%	March 2027	$	500
2.750	%	March 2030	$	1,500
3.500	%	March 2040	$	750
3.625	%	March 2050	$	1,500
3.875	%	March 2060	$	750
0.750	%	May 2023	$	1,000
1.625	%	May 2030	$	1,000
0.250	%	May 2024	€	1,000
0.500	%	May 2028	€	1,000


~~(a)~~	~~Represents gross proceeds from issuances of long-term debt excluding debt issuance costs, discounts and premiums.~~



	Notional Amounts^(a)
	6/13/2020		12/28/2019
Commodity	$	1.1	$	1.1
Foreign exchange	$	2.1	$	1.9
Interest rate	$	4.3	$	5.0
Net investment ^(b)	$	2.5	$	2.5



		6/13/2020				12/28/2019
	Fair Value Hierarchy Levels	Assets^(a)		Liabilities^(a)		Assets^(a)		Liabilities^(a)
Short-term investments ^(b)	1	$	196	$	—	$	229	$	—
Prepaid forward contracts ^(c)	2	$	16	$	—	$	17	$	—
Deferred compensation ^(d)	2	$	—	$	428	$	—	$	468
Contingent consideration ^(e)	3	$	—	$	864	$	—	$	—
Derivatives designated as fair value hedging instruments:
Interest rate ^(f)	2	$	7	$	—	$	—	$	5
Derivatives designated as cash flow hedging instruments:
Foreign exchange ^(g)	2	$	54	$	20	$	5	$	32
Interest rate ^(g)	2	—		483		—		390
Commodity ^(h)	1	—		—		2		5
Commodity ⁽ⁱ⁾	2	1		27		2		5
		$	55	$	530	$	9	$	432
Derivatives not designated as hedging instruments:
Foreign exchange ^(g)	2	$	10	$	8	$	3	$	2
Interest rate ^(j)	2	—		1		—		—
Commodity ^(h)	1	—		—		23		7
Commodity ⁽ⁱ⁾	2	15		42		6		24
		$	25	$	51	$	32	$	33
Total derivatives at fair value ^(k)		$	87	$	581	$	41	$	470
Total		$	299	$	1,873	$	287	$	938



	12 Weeks Ended 6/15/2019
				Items Affecting Comparability^(a)
	Reported, GAAP Measure			Mark-to-market net impact		Restructuring and impairment charges		Inventory fair value adjustments and merger and integration charges		Core, Non-GAAP Measure
FLNA	$	1,249		$	—	$	6	$	—	$	1,255
QFNA	127			—		—		—		127
PBNA	690			—		10		—		700
LatAm	278			—		21		—		299
Europe	339			—		53		23		415
AMESA	236			—		8		—		244
APAC	116			—		34		—		150
Corporate unallocated expenses	(306		)	6		26		1		(273		)
Total	$	2,729		$	6	$	158	$	24	$	2,917



	24 Weeks Ended 6/15/2019
				Items Affecting Comparability^(a)
	Reported, GAAP Measure			Mark-to-market net impact			Restructuring and impairment charges		Inventory fair value adjustments and merger and integration charges		Core, Non-GAAP Measure
FLNA	$	2,408		$	—		$	6	$	—	$	2,414
QFNA	265			—			—		—		265
PBNA	1,079			—			16		—		1,095
LatAm	508			—			21		—		529
Europe	454			—			59		38		551
AMESA	341			—			16		—		357
APAC	222			—			37		—		259
Corporate unallocated expenses	(540		)	(54		)	34		1		(559		)
Total	$	4,737		$	(54	)	$	189	$	39	$	4,911


~~(b)~~	Operating profit for the 12 and 24 weeks ended June 13, 2020 includes the charges taken as a result of the COVID-19 pandemic. See Note 1 to our condensed consolidated financial statements for further information.


	12 Weeks Ended 3/20/2021
			Impact of Items Affecting Comparability(a)					Impact of
	Reported % Change, GAAP Measure		Mark-to-market net impact	Restructuring and impairment charges	Merger and integration credits/charges	Core % Change, Non-GAAP Measure(b)		Foreign exchange translation	Core Constant Currency % Change, Non-GAAP Measure(b)
FLNA	3	%	—	1	(2)	2	%	—	2	%
QFNA	—	%	—	—	—	—	%	—	(1)	%
PBNA	23	%	—	—	—	24	%	(0.5)	23	%
LatAm	(6)	%	—	(1)	—	(7)	%	8	1	%
Europe	(10)	%	—	3	—	(7)	%	3	(4)	%
AMESA	4	%	—	(1)	(1)	1.5	%	—	2	%
APAC	47	%	—	(1)	—	46	%	(7)	39	%
Corporate unallocated expenses	(63)	%	57	1	4	(1)	%	—	(1)	%
Total	20	%	(12)	—	(2)	7	%	—	7	%