UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)


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

For the quarterly period ended ~~September 5, 2020 (36~~March 20, 2021 (12 weeks)


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

For the transition period from to

Commission file number 1-1183


PepsiCo, Inc.

(Exact Name of Registrant as Specified in its Charter)



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


(Address of principal executive offices and Zip Code)

(914) 253-2000


Registrant's telephone number, including area code

N/A


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

Securities registered pursuant to Section 12(b) of the Securities Exchange Act of 1934:

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

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No x No ¨

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No x No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


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

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No x☒

Number of shares of Common Stock outstanding as of ~~September 24, 2020~~April 8, 2021 was ~~1,381,956,485.~~

1,381,631,264.

Table of Contents

PepsiCo, Inc. and Subsidiaries

Table of Contents


		Page No.
Part I Financial Information
Item 1.	Condensed Consolidated Financial Statements	3
	Condensed Consolidated Statement of Income – 12 ~~and 36~~ Weeks Ended ~~September 5,~~March 20, 2021 and March 21, 2020 ~~and September 7, 2019~~	3
	Condensed Consolidated Statement of Comprehensive Income – 12 ~~and 36~~ Weeks Ended ~~September 5,~~March 20, 2021 and March 21, 2020 ~~and September 7, 2019~~	4
	Condensed Consolidated Statement of Cash Flows – 3612 Weeks Ended ~~September 5,~~March 20, 2021 and March 21, 2020 ~~and September 7, 2019~~	5
	Condensed Consolidated Balance Sheet – ~~September 5, 2020~~March 20, 2021 and December ~~28, 2019~~26, 2020	7
	Condensed Consolidated Statement of Equity – 12 ~~and 36~~ Weeks Ended ~~September 5,~~March 20, 2021 and March 21, 2020 ~~and September 7, 2019~~	8
	Notes to the Condensed Consolidated Financial Statements	9
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2824
Report of Independent Registered Public Accounting Firm			5341
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	5442
Item 4.	Controls and Procedures	5442
Part II Other Information
Item 1.	Legal Proceedings	5543
Item 1A.	Risk Factors	5543
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	5843
Item 6.	Exhibits	5843

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						36 Weeks Ended					12 Weeks Ended
		9/5/2020		9/7/2019		9/5/2020		9/7/2019			3/20/2021		3/21/2020
Net Revenue	Net Revenue	$	18,091	$	17,188	$	47,917	$	46,521	Net Revenue	$	14,820	$	13,881
Cost of sales	Cost of sales	8,156		7,694		21,371		20,786		Cost of sales	6,671		6,127
Gross profit	Gross profit	9,935		9,494		26,546		25,735		Gross profit	8,149		7,754
Selling, general and administrative expenses	Selling, general and administrative expenses	6,924		6,639		19,292		18,143		Selling, general and administrative expenses	5,837		5,830
Operating Profit	Operating Profit	3,011		2,855		7,254		7,592		Operating Profit	2,312		1,924
Other pension and retiree medical benefits income	Other pension and retiree medical benefits income	86		38		247		163		Other pension and retiree medical benefits income	120		77
Net interest expense and other	Net interest expense and other	(264)		(224)		(789)		(651)		Net interest expense and other	(258)		(290)
Income before income taxes	Income before income taxes	2,833		2,669		6,712		7,104		Income before income taxes	2,174		1,711
Provision for income taxes	Provision for income taxes	526		559		1,396		1,529		Provision for income taxes	451		360
Net income	Net income	2,307		2,110		5,316		5,575		Net income	1,723		1,351
Less: Net income attributable to noncontrolling interests	Less: Net income attributable to noncontrolling interests	16		10		41		27		Less: Net income attributable to noncontrolling interests	9		13
Net Income Attributable to PepsiCo	Net Income Attributable to PepsiCo	$	2,291	$	2,100	$	5,275	$	5,548	Net Income Attributable to PepsiCo	$	1,714	$	1,338
Net Income Attributable to PepsiCo per Common Share	Net Income Attributable to PepsiCo per Common Share									Net Income Attributable to PepsiCo per Common Share
Basic	Basic	$	1.66	$	1.50	$	3.80	$	3.96	Basic	$	1.24	$	0.96
Diluted	Diluted	$	1.65	$	1.49	$	3.79	$	3.94	Diluted	$	1.24	$	0.96
Weighted-average common shares outstanding	Weighted-average common shares outstanding									Weighted-average common shares outstanding
Basic	Basic	1,384		1,397		1,387		1,401		Basic	1,380		1,390
Diluted	Diluted	1,390		1,405		1,393		1,409		Diluted	1,387		1,396

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						36 Weeks Ended					12 Weeks Ended
		9/5/2020		9/7/2019		9/5/2020		9/7/2019			3/20/2021		3/21/2020
Net income	Net income	$	2,307	$	2,110	$	5,316	$	5,575	Net income	$	1,723	$	1,351
Other comprehensive income/(loss), net of taxes:	Other comprehensive income/(loss), net of taxes:									Other comprehensive income/(loss), net of taxes:
Net currency translation adjustment	Net currency translation adjustment	414		(159)		(1,136)		(51)		Net currency translation adjustment	131		(754)
Net change on cash flow hedges	Net change on cash flow hedges	11		(38)		(37)		(71)		Net change on cash flow hedges	72		(61)
Net pension and retiree medical adjustments	Net pension and retiree medical adjustments	(1)		56		119		115		Net pension and retiree medical adjustments	27		57
Other	Other	(3)		(1)		(3)		0		Other	0		1
		421		(142)		(1,057)		(7)			230		(757)
Comprehensive income	Comprehensive income	2,728		1,968		4,259		5,568		Comprehensive income	1,953		594
Comprehensive income attributable to noncontrolling interests		(16)		(10)		(41)		(27)
Less: Comprehensive income attributable to noncontrolling interests										Less: Comprehensive income attributable to noncontrolling interests	9		13
Comprehensive Income Attributable to PepsiCo	Comprehensive Income Attributable to PepsiCo	$	2,712	$	1,958	$	4,218	$	5,541	Comprehensive Income Attributable to PepsiCo	$	1,944	$	581

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)


		36 Weeks Ended							12 Weeks Ended
		9/5/2020		9/7/2019			3/20/2021		3/21/2020
Operating Activities	Operating Activities					Operating Activities
Net income	Net income	$	5,316	$	5,575	Net income	$	1,723	$	1,351
Depreciation and amortization	Depreciation and amortization	1,731		1,634		Depreciation and amortization	560		533
Share-based compensation expense	Share-based compensation expense	186		169		Share-based compensation expense	79		61
Restructuring and impairment charges	Restructuring and impairment charges	124		282		Restructuring and impairment charges	43		38
Cash payments for restructuring charges	Cash payments for restructuring charges	(166)		(248)		Cash payments for restructuring charges	(49)		(60)
Inventory fair value adjustments and merger and integration charges		286		46
Merger and integration (credits)/charges						Merger and integration (credits)/charges	(10)		25
Cash payments for merger and integration charges	Cash payments for merger and integration charges	(97)		(4)		Cash payments for merger and integration charges	(7)		(38)
Pension and retiree medical plan expenses	Pension and retiree medical plan expenses	121		165		Pension and retiree medical plan expenses	21		40
Pension and retiree medical plan contributions	Pension and retiree medical plan contributions	(501)		(391)		Pension and retiree medical plan contributions	(413)		(234)
Deferred income taxes and other tax charges and credits	Deferred income taxes and other tax charges and credits	96		195		Deferred income taxes and other tax charges and credits	108		25
Net tax related to the Tax Cuts and Jobs Act (TCJ Act)		0		(29)
Tax payments related to the TCJ Act		(78)		(393)

Change in assets and liabilities:	Change in assets and liabilities:					Change in assets and liabilities:
Accounts and notes receivable	Accounts and notes receivable	(1,430)		(1,716)		Accounts and notes receivable	(455)		(784)
Inventories	Inventories	(549)		(573)		Inventories	(397)		(312)
Prepaid expenses and other current assets	Prepaid expenses and other current assets	(202)		(264)		Prepaid expenses and other current assets	(210)		(263)
Accounts payable and other current liabilities	Accounts payable and other current liabilities	289		80		Accounts payable and other current liabilities	(1,906)		(1,419)
Income taxes payable	Income taxes payable	583		347		Income taxes payable	227		204
Other, net	Other, net	414		188		Other, net	(33)		84
Net Cash Provided by Operating Activities		6,123		5,063
Net Cash Used for Operating Activities						Net Cash Used for Operating Activities	(719)		(749)

Investing Activities	Investing Activities					Investing Activities
Capital spending	Capital spending	(2,074)		(1,959)		Capital spending	(471)		(484)
Sales of property, plant and equipment	Sales of property, plant and equipment	26		63		Sales of property, plant and equipment	5		5
Acquisitions, net of cash acquired, and investments in noncontrolled affiliates	Acquisitions, net of cash acquired, and investments in noncontrolled affiliates	(6,373)		(2,628)		Acquisitions, net of cash acquired, and investments in noncontrolled affiliates	(13)		(454)
Divestitures	Divestitures	4		253		Divestitures	35		0
Short-term investments, by original maturity:	Short-term investments, by original maturity:					Short-term investments, by original maturity:
More than three months - purchases		(400)		0

More than three months - maturities	More than three months - maturities	0		8		More than three months - maturities	535		0
More than three months - sales		0		3

Three months or less, net	Three months or less, net	23		13		Three months or less, net	3		7
Other investing, net	Other investing, net	33		(38)		Other investing, net	0		1
Net Cash Used for Investing Activities		(8,761)		(4,285)

Financing Activities
Proceeds from issuances of long-term debt		10,564		3,098
Payments of long-term debt		(814)		(2,954)
Short-term borrowings, by original maturity:
More than three months - proceeds		4,069		6
More than three months - payments		(1,801)		0
Three months or less, net		(11)		94
Cash dividends paid		(4,094)		(3,971)
Share repurchases - common		(1,543)		(2,268)

Net Cash Provided by/(Used for) Investing Activities						Net Cash Provided by/(Used for) Investing Activities	94		(925)

(Continued on following page)

Table of Contents

Proceeds from exercises of stock options 145 282
Withholding tax payments on restricted stock units (RSUs) and performance stock units (PSUs) converted (86) (100)
Other financing (18) (16)
Net Cash Provided by/(Used for) Financing Activities 6,411 (5,829)
Effect of exchange rate changes on cash and cash equivalents and restricted cash (184) (11)
Net Increase/(Decrease) in Cash and Cash Equivalents and Restricted Cash 3,589 (5,062)
Cash and Cash Equivalents and Restricted Cash, Beginning of Year 5,570 10,769
Cash and Cash Equivalents and Restricted Cash, End of Period $ 9,159 $ 5,707
Supplemental Non-Cash Activity
Right-of-use assets obtained in exchange for lease obligations $ 431 $ 304
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)					(Unaudited)
		9/5/2020		12/28/2019			3/20/2021		12/26/2020
ASSETS	ASSETS					ASSETS
Current Assets	Current Assets					Current Assets
Cash and cash equivalents	Cash and cash equivalents	$	9,094	$	5,509	Cash and cash equivalents	$	5,661	$	8,185
Short-term investments	Short-term investments	611		229		Short-term investments	964		1,366

Accounts and notes receivable, less allowance: 9/20 - $220 and 12/19 - $105		9,295		7,822
Accounts and notes receivable, less allowance: 3/21 - $192 and 12/20 - $201						Accounts and notes receivable, less allowance: 3/21 - $192 and 12/20 - $201	8,885		8,404
Inventories:	Inventories:					Inventories:
Raw materials and packaging	Raw materials and packaging	1,798		1,395		Raw materials and packaging	1,827		1,720
Work-in-process	Work-in-process	275		200		Work-in-process	308		205
Finished goods	Finished goods	2,062		1,743		Finished goods	2,421		2,247
		4,135		3,338			4,556		4,172
Prepaid expenses and other current assets	Prepaid expenses and other current assets	925		747		Prepaid expenses and other current assets	1,130		874
Total Current Assets	Total Current Assets	24,060		17,645		Total Current Assets	21,196		23,001
Property, plant and equipment	Property, plant and equipment	44,116		43,003		Property, plant and equipment	46,544		46,340
Accumulated depreciation	Accumulated depreciation	(24,390)		(23,698)		Accumulated depreciation	(25,295)		(24,971)
Property, Plant and Equipment, net	Property, Plant and Equipment, net	19,726		19,305		Property, Plant and Equipment, net	21,249		21,369
Amortizable Intangible Assets, net	Amortizable Intangible Assets, net	1,515		1,433		Amortizable Intangible Assets, net	1,690		1,703
Goodwill	Goodwill	18,603		15,501		Goodwill	18,779		18,757
Other indefinite-lived intangible assets		17,671		14,610
Indefinite-Lived Intangible Assets		36,274		30,111
Other Indefinite-Lived Intangible Assets						Other Indefinite-Lived Intangible Assets	17,641		17,612

Investments in Noncontrolled Affiliates	Investments in Noncontrolled Affiliates	2,752		2,683		Investments in Noncontrolled Affiliates	2,777		2,792
Deferred Income Taxes	Deferred Income Taxes	4,357		4,359		Deferred Income Taxes	4,370		4,372
Other Assets	Other Assets	3,357		3,011		Other Assets	3,522		3,312
Total Assets	Total Assets	$	92,041	$	78,547	Total Assets	$	91,224	$	92,918

LIABILITIES AND EQUITY	LIABILITIES AND EQUITY					LIABILITIES AND EQUITY
Current Liabilities	Current Liabilities					Current Liabilities
Short-term debt obligations	Short-term debt obligations	$	6,692	$	2,920	Short-term debt obligations	$	4,674	$	3,780
Accounts payable and other current liabilities	Accounts payable and other current liabilities	19,317		17,541		Accounts payable and other current liabilities	18,019		19,592
Total Current Liabilities	Total Current Liabilities	26,009		20,461		Total Current Liabilities	22,693		23,372
Long-Term Debt Obligations	Long-Term Debt Obligations	37,879		29,148		Long-Term Debt Obligations	38,991		40,370
Deferred Income Taxes	Deferred Income Taxes	4,217		4,091		Deferred Income Taxes	4,491		4,284
Other Liabilities	Other Liabilities	10,341		9,979		Other Liabilities	10,996		11,340
Total Liabilities	Total Liabilities	78,446		63,679		Total Liabilities	77,171		79,366
Commitments and contingencies	Commitments and contingencies					Commitments and contingencies
PepsiCo Common Shareholders’ Equity	PepsiCo Common Shareholders’ Equity					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: 1,383 and 1,391 shares, respectively)		23		23
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)						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	Capital in excess of par value	3,848		3,886		Capital in excess of par value	3,800		3,910
Retained earnings	Retained earnings	63,013		61,946		Retained earnings	63,740		63,443
Accumulated other comprehensive loss	Accumulated other comprehensive loss	(15,357)		(14,300)		Accumulated other comprehensive loss	(15,246)		(15,476)
Repurchased common stock, in excess of par value (484 and 476 shares, respectively)		(38,044)		(36,769)
Repurchased common stock, in excess of par value (485 and 487 shares, respectively)						Repurchased common stock, in excess of par value (485 and 487 shares, respectively)	(38,370)		(38,446)
Total PepsiCo Common Shareholders’ Equity	Total PepsiCo Common Shareholders’ Equity	13,483		14,786		Total PepsiCo Common Shareholders’ Equity	13,947		13,454
Noncontrolling interests	Noncontrolling interests	112		82		Noncontrolling interests	106		98
Total Equity	Total Equity	13,595		14,868		Total Equity	14,053		13,552
Total Liabilities and Equity	Total Liabilities and Equity	$	92,041	$	78,547	Total Liabilities and Equity	$	91,224	$	92,918

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										36 Weeks Ended								12 Weeks Ended
		9/5/2020				9/7/2019					9/5/2020				9/7/2019				3/20/2021			3/21/2020
		Shares	Amount		Shares	Amount		Shares	Amount		Shares	Amount				Shares	Amount		Shares	Amount

Common Stock	Common Stock													Common Stock
Balance, beginning of period	Balance, beginning of period	1,385	$	23	1,399	$	23	1,391	$	23	1,409	$	23	Balance, beginning of period		1,380	$	23	1,391	$	23
Change in repurchased common stock	Change in repurchased common stock	(2)	0		(3)	0		(8)	0		(13)	0		Change in repurchased common stock		2	0		(2)	0
Balance, end of period	Balance, end of period	1,383	23		1,396	23		1,383	23		1,396	23		Balance, end of period		1,382	23		1,389	23
Capital in Excess of Par Value	Capital in Excess of Par Value													Capital in Excess of Par Value
Balance, beginning of period	Balance, beginning of period		3,772			3,796			3,886			3,953		Balance, beginning of period			3,910			3,886
Share-based compensation expense	Share-based compensation expense		85			51			186			170		Share-based compensation expense			80			62

Stock option exercises, RSUs and PSUs converted	Stock option exercises, RSUs and PSUs converted		(2)			(5)			(138)			(181)		Stock option exercises, RSUs and PSUs converted			(119)			(131)
Withholding tax on RSUs and PSUs converted	Withholding tax on RSUs and PSUs converted		(7)			0			(86)			(100)		Withholding tax on RSUs and PSUs converted			(71)			(76)

Balance, end of period	Balance, end of period		3,848			3,842			3,848			3,842		Balance, end of period			3,800			3,741
Retained Earnings	Retained Earnings													Retained Earnings
Balance, beginning of period	Balance, beginning of period		62,145			60,752			61,946			59,947		Balance, beginning of period			63,443			61,946
Cumulative effect of accounting changes	Cumulative effect of accounting changes		0			0			(34)			8		Cumulative effect of accounting changes			0			(34)
Net income attributable to PepsiCo	Net income attributable to PepsiCo		2,291			2,100			5,275			5,548		Net income attributable to PepsiCo			1,714			1,338
Cash dividends declared – common ^(a)	Cash dividends declared – common ^(a)		(1,423)			(1,338)			(4,174)			(3,989)		Cash dividends declared – common (a)			(1,417)			(1,330)

Balance, end of period	Balance, end of period		63,013			61,514			63,013			61,514		Balance, end of period			63,740			61,920
Accumulated Other Comprehensive Loss	Accumulated Other Comprehensive Loss													Accumulated Other Comprehensive Loss
Balance, beginning of period	Balance, beginning of period		(15,778)			(14,984)			(14,300)			(15,119)		Balance, beginning of period			(15,476)			(14,300)
Other comprehensive income/(loss) attributable to PepsiCo	Other comprehensive income/(loss) attributable to PepsiCo		421			(142)			(1,057)			(7)		Other comprehensive income/(loss) attributable to PepsiCo			230			(757)
Balance, end of period	Balance, end of period		(15,357)			(15,126)			(15,357)			(15,126)		Balance, end of period			(15,246)			(15,057)
Repurchased Common Stock	Repurchased Common Stock													Repurchased Common Stock
Balance, beginning of period	Balance, beginning of period	(482)	(37,671)		(468)	(35,635)		(476)	(36,769)		(458)	(34,286)		Balance, beginning of period		(487)	(38,446)		(476)	(36,769)
Share repurchases	Share repurchases	(3)	(400)		(4)	(551)		(12)	(1,559)		(19)	(2,301)		Share repurchases		(1)	(106)		(4)	(602)
Stock option exercises, RSUs and PSUs converted	Stock option exercises, RSUs and PSUs converted	1	27		1	62		4	284		6	463		Stock option exercises, RSUs and PSUs converted		3	182		2	209

Balance, end of period	Balance, end of period	(484)	(38,044)		(471)	(36,124)		(484)	(38,044)		(471)	(36,124)		Balance, end of period		(485)	(38,370)		(478)	(37,162)
Total PepsiCo Common Shareholders’ Equity	Total PepsiCo Common Shareholders’ Equity		13,483			14,129			13,483			14,129		Total PepsiCo Common Shareholders’ Equity			13,947			13,465
Noncontrolling Interests	Noncontrolling Interests													Noncontrolling Interests
Balance, beginning of period	Balance, beginning of period		96			85			82			84		Balance, beginning of period			98			82
Net income attributable to noncontrolling interest	Net income attributable to noncontrolling interest		16			10			41			27		Net income attributable to noncontrolling interest			9			13
Distributions to noncontrolling interests			0			0			(15)			(15)

Acquisitions			0			0			5			0

Other, net	Other, net		0			0			(1)			(1)		Other, net			(1)			(1)
Balance, end of period	Balance, end of period		112			95			112			95		Balance, end of period			106			94
Total Equity	Total Equity		$	13,595		$	14,224		$	13,595		$	14,224	Total Equity			$	14,053		$	13,559

(a)Cash dividends declared per common share were $1.0225 and $0.955 for the 12 weeks ended ~~September 5,~~March 20, 2021 and March 21, 2020, ~~and September 7, 2019, respectively, and $3.00 and $2.8375 for the 36 weeks ended September 5, 2020 and September 7, 2019,~~ respectively.

See accompanying notes to the condensed consolidated financial statements.

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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 36~~ weeks ended ~~September 5, 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 June, July and August are reflected in our results for the 12 weeks ended September 5, 2020, and the months of January through August are reflected in our results for the 36 weeks ended September 5, 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.

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Our Divisions

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;

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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						36 Weeks Ended					12 Weeks Ended
		9/5/2020		9/7/2019		9/5/2020		9/7/2019			3/20/2021		3/21/2020
FLNA	FLNA	$	4,399	$	4,105	$	12,746	$	11,930	FLNA	$	4,236	$	4,074
QFNA	QFNA	608		576		1,906		1,710		QFNA	646		634
PBNA	PBNA	5,958		5,643		15,766		15,475		PBNA	5,074		4,838
LatAm	LatAm	1,654		1,904		4,531		5,031		LatAm	1,242		1,310
Europe	Europe	3,323		3,222		7,887		7,842		Europe	1,795		1,839
AMESA ^(a)	AMESA ^(a)	1,252		957		2,866		2,533		AMESA (a)	883		631
APAC(b)	APAC(b)	897		781		2,215		2,000		APAC(b)	944		555
Total	Total	$	18,091	$	17,188	$	47,917	$	46,521	Total	$	14,820	$	13,881

(a)The increase ~~in net revenue~~ primarily reflects our acquisition of Pioneer Food Group Ltd. (Pioneer Foods). See Note 12 for further information.

~~Table~~(b)The increase primarily reflects our acquisition of ~~Contents~~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:

12 Weeks Ended
9/5/2020 9/7/2019
Beverage^(a)
Food/Snack
Beverage^(a)
Food/Snack
LatAm 10 % 90 % 10 % 90 %
Europe 55 % 45 % 55 % 45 %
AMESA ^(b)
30 % 70 % 45 % 55 %
APAC 25 % 75 % 30 % 70 %
PepsiCo 45 % 55 % 50 % 50 %


		36 Weeks Ended															12 Weeks Ended
		9/5/2020						9/7/2019							3/20/2021				3/21/2020
		Beverage^(a)		Food/Snack		Beverage^(a)		Food/Snack			Beverage(a)		Food/Snack		Beverage(a)		Food/Snack
LatAm	LatAm	10	%	90	%	10	%	90	%	LatAm	10	%	90	%	10	%	90	%
Europe	Europe	55	%	45	%	55	%	45	%	Europe	50	%	50	%	55	%	45	%
AMESA ^(b)	AMESA ^(b)	35	%	65	%	45	%	55	%	AMESA ^(b)	30	%	70	%	35	%	65	%
APAC	APAC	25	%	75	%	25	%	75	%	APAC	15	%	85	%	20	%	80	%
PepsiCo	PepsiCo	45	%	55	%	45	%	55	%	PepsiCo	45	%	55	%	45	%	55	%

(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.~~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.

~~(b)The increase in the approximate percentage of net revenue generated by the food/snack business primarily reflects our acquisition of Pioneer Foods. See Note 12 for further information.~~

~~Operating profit of each division is as follows:~~

12 Weeks Ended 36 Weeks Ended
9/5/2020 9/7/2019 9/5/2020 9/7/2019
FLNA $ 1,353 $ 1,286 $ 3,833 $ 3,694
QFNA 145 126 491 391
PBNA 697 640 1,391 1,719
LatAm 250 277 700 785
Europe 480 455 977 909
AMESA 193 210 386 551
APAC 163 166 494 388
Total division $ 3,281 $ 3,160 $ 8,272 $ 8,437
Corporate unallocated expenses (270) (305) (1,018) (845)
Total $ 3,011 $ 2,855 $ 7,254 $ 7,592

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Operating profit inof 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

(a)During the 12 ~~and 36~~ weeks ended ~~September 5, 2020~~March 20, 2021, we recorded a pre-tax unrealized gain of $108 million ($82 million after-tax or $0.06 per share) on our short-term investment in a publicly traded company, based on the quoted active market price as of market close on March 19, 2021, the last trading day of our first quarter of 2021. The gain was recorded in selling, general and administrative expenses within corporate unallocated expenses. See Note 9 for further information. We subsequently sold all of these shares during the second quarter of 2021. We will record a related pre-tax loss of $39 million ($30 million after-tax), net of discounts, on the sale in our 12 weeks ending June 12, 2021 in selling, general and administrative expenses within corporate unallocated expenses.

Operating profit 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 9/5/2020																											12 Weeks Ended 3/20/2021
		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			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)	FLNA(f)	$	0	$	0	$	1	$	24	$	16	$	0	$	41	FLNA(f)	$	(4)	$	0	$	0	$	18	$	9	$	1	$	24
QFNA	QFNA	0		0		0		1		1		1		3		QFNA	0		0		0		1		1		0		2
PBNA(f)	PBNA(f)	3		0		1		14		12		20		50		PBNA(f)	(4)		1		0		12		5		(1)		13
LatAm	LatAm	0		0		6		19		6		1		32		LatAm	0		0		0		12		2		1		15
Europe	Europe	1		1		0		8		6		0		16		Europe	0		0		0		3		3		0		6
AMESA(f)	AMESA(f)	0		0		0		1		2		3		6		AMESA(f)	0		0		(2)		0		0		1		(1)
APAC ^(g)	APAC ^(g)	0		0		2		(5)		1		1		(1)		APAC ^(g)	0		0		0		0		0		2		2

Total	Total	$	4	$	1	$	10	$	62	$	44	$	26	$	147	Total	$	(8)	$	1	$	(2)	$	46	$	20	$	4	$	61


		36 Weeks Ended 9/5/2020																							12 Weeks Ended 3/21/2020
		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			Allowances for Expected Credit Losses(a)		Upfront Payments to Customers(b)		Inventory Write-Downs and Product Returns(g)		Other(e)		Total
FLNA	FLNA	$	19	$	0	$	8	$	124	$	49	$	3	$	203	FLNA	$	21	$	0	$	3	$	3	$	27
QFNA	QFNA	2		0		0		7		2		1		12		QFNA	2		0		0		0		2
PBNA	PBNA	48		46		30		98		43		30		295		PBNA	41		44		22		1		108
LatAm		1		0		12		35		14		4		66

Europe	Europe	5		2		10		17		14		17		65		Europe	4		0		0		0		4
AMESA		1		0		1		8		6		7		23

APAC ^(g)	APAC ^(g)	0		0		3		(3)		2		2		4		APAC ^(g)	0		0		1		1		2

Total	Total	$	76	$	48	$	64	$	286	$	130	$	64	$	668	Total	$	68	$	44	$	26	$	5	$	143

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

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

(c)~~Includes a reserve for product returns of $3 million and $19 million in the 12 and 36 weeks ended September 5, 2020, respectively.~~

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

~~(e)~~Table of Contents

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

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

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

(g)Includes a ~~social welfare relief credit~~reserve for product returns of $7 ~~million in the 12 and 36 weeks ended September 5, 2020.~~million.

Note 2 - Recently Issued Accounting Pronouncements

Adopted

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.

~~Table of Contents~~

~~Not Yet Adopted~~

~~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 guidance is effective in the first quarter of 2021 with early adoption permitted.~~ We ~~will adopt~~adopted the guidance ~~when it becomes effective~~ in the first quarter of 2021. The ~~guidance is~~adoption did not ~~expected to~~ have a material impact on our condensed consolidated financial statements 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						36 Weeks Ended					12 Weeks Ended
		9/5/2020		9/7/2019		9/5/2020		9/7/2019			3/20/2021		3/21/2020
Cost of sales	Cost of sales	$	1	$	10	$	4	$	100	Cost of sales	$	2	$	2
Selling, general and administrative expenses	Selling, general and administrative expenses	59		83		112		182		Selling, general and administrative expenses	35		30
Other pension and retiree medical benefits expense	Other pension and retiree medical benefits expense	1		5		8		0		Other pension and retiree medical benefits expense	6		6
Total restructuring and impairment charges	Total restructuring and impairment charges	$	61	$	98	$	124	$	282	Total restructuring and impairment charges	$	43	$	38
After-tax amount	After-tax amount	$	48	$	82	$	101	$	225	After-tax amount	$	35	$	32
Net income attributable to PepsiCo per common share	Net income attributable to PepsiCo per common share	$	0.03	$	0.06	$	0.07	$	0.16	Net income attributable to PepsiCo per common share	$	(0.03)	$	(0.02)

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		12 Weeks Ended						36 Weeks Ended					Plan to Date			12 Weeks Ended				Plan to Date
		9/5/2020		9/7/2019		9/5/2020		9/7/2019		through 9/5/2020				3/20/2021		3/21/2020		through 3/20/2021
FLNA	FLNA	$	2	$	16	$	9	$	22	$	62	FLNA		$	15	$	5	$	151
QFNA	QFNA	0		2		1		2		8		QFNA		0		1		12
PBNA	PBNA	29		26		32		42		123		PBNA		4		3		142
LatAm	LatAm	5		22		14		43		85		LatAm		2		5		104
Europe	Europe	13		15		29		74		134		Europe		11		8		164
AMESA	AMESA	2		5		9		21		50		AMESA		1		2		56
APAC	APAC	1		4		4		41		53		APAC		0		0		54
Corporate	Corporate	8		3		18		37		72		Corporate		4		8		94
		60		93		116		282		587				37		32		777
Other pension and retiree medical benefits expense	Other pension and retiree medical benefits expense	1		5		8		0		45		Other pension and retiree medical benefits expense		6		6		63
Total	Total	$	61	$	98	$	124	$	282	$	632	Total		$	43	$	38	$	840


		12 Weeks Ended						36 Weeks Ended					Plan to Date			12 Weeks Ended				Plan to Date
		9/5/2020		9/7/2019		9/5/2020		9/7/2019		through 9/5/2020				3/20/2021		3/21/2020		through 3/20/2021
Severance and other employee costs	Severance and other employee costs	$	23	$	65	$	47	$	105	$	333	Severance and other employee costs		$	34	$	22	$	478
Asset impairments	Asset impairments	15		3		20		87		112		Asset impairments		0		1		125
Other costs ^(a)	Other costs ^(a)	23		30		57		90		187		Other costs ^(a)		9		15		237
Total	Total	$	61	$	98	$	124	$	282	$	632	Total		$	43	$	38	$	840

~~(a)~~Severance~~Includes~~and 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 summary of our 2019 Productivity Plan activity for the 3612 weeks ended ~~September 5, 2020~~March 20, 2021 is as follows:

Severance and Other Employee Costs Asset
Impairments Other Costs Total
Liability as of December 28, 2019 $ 128 $ 0 $ 21 $ 149
2020 restructuring charges 47 20 57 124
Cash payments ^(a)
(92) 0 (74) (166)
Non-cash charges and translation (10) (20) 4 (26)
Liability as of September 5, 2020 $ 73 $ 0 $ 8 $ 81

~~(a)Excludes cash expenditures of $1 million reported in the cash flow statement in pension and retiree medical contributions.~~


	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 ~~September 5, 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.

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Note 4 - Intangible Assets

A summary of our amortizable intangible assets is as follows:

9/5/2020 12/28/2019
Gross Accumulated Amortization Net Gross Accumulated Amortization Net
Acquired franchise rights $ 845 $ (167) $ 678 $ 846 $ (158) $ 688
Reacquired franchise rights 106 (106) 0 106 (105) 1
Brands 1,317 (1,082) 235 1,326 (1,066) 260
Other identifiable intangibles ^(a)
941 (339) 602 810 (326) 484
Total $ 3,209 $ (1,694) $ 1,515 $ 3,088 $ (1,655) $ 1,433

~~(a)The change in other identifiable intangibles primarily reflects our acquisitions of Pioneer Foods and Hangzhou Haomusi Food Co., Ltd. (Be & Cheery).~~


	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

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


		Balance 12/28/2019		Acquisitions		Translation and Other		Balance 9/5/2020			Balance 12/26/2020		Acquisitions		Translation and Other		Balance 3/20/2021
																			Translation and Other	Balance 3/20/2021
FLNA^(a)	FLNA^(a)									FLNA (a)
Goodwill	Goodwill	$	299	$	163	$	0	$	462	Goodwill	$	465	$	(8)	$	4	$	461
Brands	Brands	162		179		(1)		340		Brands	340		0		1		341
Total	Total	461		342		(1)		802		Total	805		(8)		5		802
QFNA	QFNA									QFNA
Goodwill	Goodwill	189		0		0		189		Goodwill	189		0		—		189
Brands		11		0		0		11
Total	Total	200		0		0		200		Total	189		0		0		189
PBNA ^(b)
PBNA										PBNA
Goodwill	Goodwill	9,898		2,241		0		12,139		Goodwill	12,189		0		15		12,204
Reacquired franchise rights	Reacquired franchise rights	7,089		0		0		7,089		Reacquired franchise rights	7,107		0		23		7,130
Acquired franchise rights	Acquired franchise rights	1,517		142		0		1,659		Acquired franchise rights	1,536		0		6		1,542
Brands^(c)		763		2,400		(41)		3,122
Brands										Brands	3,122		0		0		3,122
Total	Total	19,267		4,783		(41)		24,009		Total	23,954		0		44		23,998
LatAm	LatAm									LatAm
Goodwill	Goodwill	501		0		(57)		444		Goodwill	458		0		(11)		447
Brands	Brands	125		0		(21)		104		Brands	108		0		(5)		103
Total	Total	626		0		(78)		548		Total	566		0		(16)		550
Europe ^(d)
Europe										Europe
Goodwill	Goodwill	3,961		16		(175)		3,802		Goodwill	3,806		0		7		3,813
Reacquired franchise rights	Reacquired franchise rights	505		0		(10)		495		Reacquired franchise rights	496		0		(2)		494
Acquired franchise rights	Acquired franchise rights	157		0		10		167		Acquired franchise rights	172		0		(2)		170
Brands	Brands	4,181		0		(135)		4,046		Brands	4,072		0		(3)		4,069
Total	Total	8,804		16		(310)		8,510		Total	8,546		0		0		8,546
AMESA ^(e)
AMESA										AMESA
Goodwill	Goodwill	446		521		24		991		Goodwill	1,096		0		6		1,102
Brands	Brands	—		208		11		219		Brands	214		0		3		217
Total	Total	446		729		35		1,210		Total	1,310		0		9		1,319
APAC ^(f)
APAC										APAC
Goodwill	Goodwill	207		357		12		576		Goodwill	554		0		9		563
Brands	Brands	100		307		12		419		Brands	445		0		8		453
Total	Total	307		664		24		995		Total	999		0		17		1,016

Total goodwill	Total goodwill	15,501		3,298		(196)		18,603		Total goodwill	18,757		(8)		30		18,779
Total reacquired franchise rights	Total reacquired franchise rights	7,594		0		(10)		7,584		Total reacquired franchise rights	7,603		0		21		7,624
Total acquired franchise rights	Total acquired franchise rights	1,674		142		10		1,826		Total acquired franchise rights	1,708		0		4		1,712
Total brands	Total brands	5,342		3,094		(175)		8,261		Total brands	8,301		0		4		8,305
Total	Total	$	30,111	$	6,534	$	(371)	$	36,274	Total	$	36,369	$	(8)	$	59	$	36,420

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

~~(b)The change in acquisitions primarily reflects our acquisition of Rockstar Energy Beverages (Rockstar).~~

~~(c)In the 12 and 36 weeks ended September 5, 2020, we recorded an impairment charge of $41 million related to a coconut water brand.~~

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

~~(e)The change in acquisitions primarily reflects our acquisition of Pioneer Foods.~~

~~(f)The change in acquisitions primarily reflects our acquisition of Be & Cheery.~~

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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 36 weeks ended September 5, 2020 related to the TCJ Act. In the 36 weeks ended September 7, 2019, we recognized tax benefits of $29 million ($0.02 per share) related to the TCJ Act.

~~For further information and discussion of the impact of the TCJ Act, refer to 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 Federal Act on Tax Reform and AHV Financing (TRAF), effective January 1, 2020. InThe enactment of certain provisions of the ~~12 and 36 weeks ended September 5,~~TRAF resulted in adjustments to our deferred taxes. During 2020, we recorded a net tax ~~benefits~~benefit of ~~$77~~$72 million ~~primarily~~ related to the adoption of the TRAF in the SwissCanton of ~~Bern in the third quarter of 2020. In the 12 and 36 weeks ended September 7, 2019, we recorded net~~Bern. There were 0 income tax ~~benefits of $45 million and $33 million, respectively,~~adjustments related to the ~~TRAF.~~TRAF recorded in either of the 12 weeks ended March 20, 2021 or March 21, 2020. While the accounting for the impacts of the TRAF are deemed to be complete, further adjustments to our financial statements and related disclosures could be made in future quarters, including in connection with final tax return ~~filings~~.filings.

For further information and discussion of 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. Estimated federal income tax payments and mandatory transition tax payments under the TCJ Act were made in the third quarter of 2020 and are no longer deferred. Additionally, we expect to pay the previously deferred payroll taxes in the fourth quarter of 2020. 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 36 Weeks Ended
9/5/2020 9/7/2019 9/5/2020 9/7/2019
Share-based compensation expense - equity awards $ 85 $ 51 $ 186 $ 169
Share-based compensation expense - liability awards 3 3 10 7
Restructuring charges 0 0 0 1
Total ^(a)
$ 88 $ 54 $ 196 $ 177

~~(a)Primarily~~expense, which is primarily recorded in selling and general and administrative ~~expenses.~~expenses:

~~Table of Contents~~


	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:


		36 Weeks Ended											12 Weeks Ended
		9/5/2020				9/7/2019						3/20/2021			3/21/2020
		Granted^(a)	Weighted-Average Grant Price		Granted^(a)	Weighted-Average Grant Price			Granted(a)	Weighted-Average Grant Price		Granted(a)	Weighted-Average Grant Price
Stock options	Stock options	1.8	$	131.45	1.2	$	117.21	Stock options	1.8	$	131.25	1.6	$	131.25
RSUs and PSUs	RSUs and PSUs	2.5	$	131.18	2.8	$	116.05	RSUs and PSUs	2.6	$	131.25	2.4	$	131.28

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

~~For the 12 weeks ended September 5, 2020 and September 7, 2019, our grants of stock options, RSUs, PSUs and long-term cash awards were nominal.~~

We granted long-term cash awards to certain executive officers and other senior executives with an aggregate target value of ~~$19~~$17 million and ~~$16~~$18 million during the 3612 weeks ended ~~September 5,~~March 20, 2021 and March 21, 2020, ~~and September 7, 2019,~~ respectively.

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


		36 Weeks Ended							12 Weeks Ended
		9/5/2020		9/7/2019			3/20/2021		3/21/2020
Expected life	Expected life	6 years		5 years		Expected life	7 years		6 years
Risk-free interest rate	Risk-free interest rate	0.9	%	2.5	%	Risk-free interest rate	1.1	%	1.0	%
Expected volatility	Expected volatility	14	%	14	%	Expected volatility	14	%	14	%
Expected dividend yield	Expected dividend yield	3.4	%	3.1	%	Expected dividend yield	3.1	%	3.5	%

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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
9/5/2020 9/7/2019 9/5/2020 9/7/2019 9/5/2020 9/7/2019
U.S. International
Service cost $ 100 $ 87 $ 22 $ 18 $ 6 $ 5
Other pension and retiree medical benefits expense/(income):
Interest cost 100 125 21 24 6 9
Expected return on plan assets (214) (205) (52) (46) (3) (4)
Amortization of prior service cost/(credits) 3 2 0 0 (3) (4)
Amortization of net losses/(gains) 45 37 16 8 (6) (7)
Settlement losses 0 15 0 3 0 0
Special termination benefits 1 5 0 0 0 0
Total other pension and retiree medical benefits income (65) (21) (15) (11) (6) (6)
Total $ 35 $ 66 $ 7 $ 7 $ 0 $ (1)

~~Table of Contents~~


		36 Weeks Ended																							12 Weeks Ended
		Pension																Retiree Medical					Pension				Retiree Medical
		U.S.						International													U.S.				International
		9/5/2020		9/7/2019		9/5/2020		9/7/2019		9/5/2020		9/7/2019			3/20/2021		3/21/2020		3/20/2021		3/21/2020		3/20/2021		3/21/2020
Service cost	Service cost	$	300	$	263	$	59	$	49	$	17	$	16	Service cost	$	120	$	100	$	19	$	17	$	8	$	6
Other pension and retiree medical benefits expense/(income):
Other pension and retiree medical benefits income:														Other pension and retiree medical benefits income:
Interest cost	Interest cost	300		376		58		64		17		25		Interest cost	75		100		13		16		3		6
Expected return on plan assets	Expected return on plan assets	(643)		(617)		(138)		(124)		(11)		(12)		Expected return on plan assets	(224)		(214)		(41)		(37)		(4)		(4)
Amortization of prior service cost/(credits)		8		7		0		0		(8)		(13)
Amortization of prior service (credits)/cost														Amortization of prior service (credits)/cost	(7)		3		0		0		(2)		(3)
Amortization of net losses/(gains)	Amortization of net losses/(gains)	136		111		42		21		(16)		(19)		Amortization of net losses/(gains)	51		45		13		10		(3)		(5)
Settlement losses		0		15		0		3		0		0

Special termination benefits	Special termination benefits	8		0		0		0		0		0		Special termination benefits	6		6		0		0		0		0
Total other pension and retiree medical benefits income	Total other pension and retiree medical benefits income	(191)		(108)		(38)		(36)		(18)		(19)		Total other pension and retiree medical benefits income	(99)		(60)		(15)		(11)		(6)		(6)
Total	Total	$	109	$	155	$	21	$	13	$	(1)	$	(3)	Total	$	21	$	40	$	4	$	6	$	2	$	0

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. ~~In addition, lump sum payments may result in settlement charges that would be reflected as an item affecting comparability in future periods.~~ During the 3612 weeks ended ~~September 5, 2020,~~March 20, 2021, we made discretionary contributions of ~~$325~~$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 3612 weeks ended ~~September 7, 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 3612 weeks ended ~~September 5, 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

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

~~The net proceeds from the issuances of the above notes~~March 20, 2021, there were ~~used for general corporate purposes, including the repayment of commercial paper.~~

~~In the 36 weeks ended September 5, 2020, $750 million~~0 maturities or prepayments of senior ~~notes matured and were paid.~~notes.

As of ~~September 5, 2020,~~March 20, 2021, we had ~~$2.1 billion of~~0 commercial paper outstanding.

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In the second quarter 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 September 5, 2020, there were no outstanding borrowings under either the 364-Day Credit Agreement or the Five-Year Credit Agreement.

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.

In the fourth quarter of 2020, we paid $1.1 billion to redeem all $1.1 billion outstanding principal amount of our 2.15% senior notes due October 2020 and terminated associated interest rate swaps with a notional amount of $0.8 billion.

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 3612 weeks ended ~~September 5, 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 ~~September 5, 2020~~March 20, 2021 was ~~$376~~$262 million. We have posted no0 collateral under these contracts and no credit-risk-related contingent features were triggered as of ~~September 5, 2020.~~

March 20,

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2021.

The notional amounts of our financial instruments used to hedge the above risks as of ~~September 5, 2020~~March 20, 2021 and December ~~28, 2019~~26, 2020 are as follows:


		Notional Amounts^(a)							Notional Amounts(a)
		9/5/2020		12/28/2019			3/20/2021		12/26/2020
Commodity	Commodity	$	1.0	$	1.1	Commodity	$	1.1	$	1.1
Foreign exchange	Foreign exchange	$	2.0	$	1.9	Foreign exchange	$	2.0	$	1.9
Interest rate	Interest rate	$	4.2	$	5.0	Interest rate	$	3.0	$	3.0
Net investment ^(b)	Net investment ^(b)	$	2.6	$	2.5	Net investment (b)	$	2.7	$	2.7

(a)In billions.

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

As of ~~September 5, 2020,~~March 20, 2021, approximately ~~10%~~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.

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Fair Value Measurements

The fair values of our financial assets and liabilities as of ~~September 5, 2020~~March 20, 2021 and December ~~28, 2019~~26, 2020 are categorized as follows:


			9/5/2020						12/28/2019								3/20/2021				12/26/2020
		Fair Value Hierarchy Levels	Assets^(a)		Liabilities^(a)		Assets^(a)		Liabilities^(a)			Fair Value Hierarchy Levels(a)	Assets(a)		Liabilities(a)		Assets(a)		Liabilities(a)

Short-term investments:
Equity securities (b)											Equity securities (b)	1	$	124	$	0	$	0	$	0
Index funds ^(b)(c)	Index funds ^(b)(c)	1	$	211	$	0	$	229	$	0	Index funds ^(b)(c)	1	$	240	$	0	$	231	$	0
Time deposits ^(c)		2	400		0		0		0
			$	611	$	0	$	229	$	0
Prepaid forward contracts ^(d)	Prepaid forward contracts ^(d)	2	$	17	$	0	$	17	$	0	Prepaid forward contracts (d)	2	$	17	$	0	$	18	$	0
Deferred compensation ^(e)	Deferred compensation ^(e)	2	$	0	$	449	$	0	$	468	Deferred compensation (e)	2	$	0	$	488	$	0	$	477
Contingent consideration ^(f)	Contingent consideration ^(f)	3	$	0	$	874	$	0	$	0	Contingent consideration (f)	3	$	0	$	847	$	0	$	861
Derivatives designated as fair value hedging instruments:	Derivatives designated as fair value hedging instruments:										Derivatives designated as fair value hedging instruments:
Interest rate ^(g)	Interest rate ^(g)	2	$	4	$	0	$	0	$	5	Interest rate (g)	2	$	1	$	0	$	2	$	0
Derivatives designated as cash flow hedging instruments:	Derivatives designated as cash flow hedging instruments:										Derivatives designated as cash flow hedging instruments:
Foreign exchange ^(h)	Foreign exchange ^(h)	2	$	21	$	41	$	5	$	32	Foreign exchange (h)	2	$	7	$	68	$	9	$	71
Interest rate ^(h)	Interest rate ^(h)	2	0		366		0		390		Interest rate (h)	2	28		304		13		307
Commodity ⁽ⁱ⁾	Commodity ⁽ⁱ⁾	1	0		0		2		5		Commodity (i)	2	59		0		32		0
Commodity ^(j)		2	8		6		2		5
			$	29	$	413	$	9	$	432			$	94	$	372	$	54	$	378
Derivatives not designated as hedging instruments:	Derivatives not designated as hedging instruments:										Derivatives not designated as hedging instruments:
Foreign exchange ^(h)	Foreign exchange ^(h)	2	$	26	$	3	$	3	$	2	Foreign exchange (h)	2	$	5	$	5	$	4	$	8
Commodity ⁽ⁱ⁾	Commodity ⁽ⁱ⁾	1	0		0		23		7		Commodity (i)	2	32		10		19		7
Commodity ^(j)		2	11		24		6		24
			$	37	$	27	$	32	$	33			$	37	$	15	$	23	$	15
Total derivatives at fair value ^(k)			$	70	$	440	$	41	$	470
Total derivatives at fair value (j)											Total derivatives at fair value (j)		$	132	$	387	$	79	$	393
Total	Total		$	698	$	1,763	$	287	$	938	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.

~~Table~~(b)Based on the price of ~~Contents~~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.

~~(b)~~(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.

~~(c)Time deposits classified as short-term investments approximate fair value due to their short-term maturity.~~

(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 ~~$100~~$110 million, with an average of $70 million. The probability, in any given year, that the option to accelerate will be exercised ranges from 03 to 1025 percent, with a weighted-average payment period of approximately 73 years. The discount rates range from less than 1 percent to 5 percent, with a weighted average of 23 percent. The contingent consideration measured at fair value using unobservable inputs as of ~~September 5, 2020~~March 20, 2021 is ~~$874~~$847 million, comprised of an ~~$848~~$861 million liability ~~recognized at the acquisition date~~as of ~~Rockstar~~December 26, 2020, and a fair value ~~increase~~decrease of ~~$10 million and $26~~$14 million in the 12 ~~and 36~~ weeks ended ~~September 5, 2020, respectively,~~March 20, 2021, recorded in selling, general and administrative expenses.

(g)Based on London Interbank Offered Rate forward rates. ~~As of September 5, 2020 and December 28, 2019, the~~The carrying amount of hedged fixed-rate debt was ~~$1.5~~$0.2 billion as of March 20,

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2021 and ~~$2.2 billion, respectively,~~December 26, 2020 and classified on our balance sheet within short-term ~~and long-term~~ debt obligations. As of ~~September 5, 2020~~March 20, 2021 and December ~~28, 2019,~~26, 2020, the cumulative amount of fair value hedging adjustments to hedged fixed-rate debt was a $4$1 million gain and a $5$2 million ~~loss,~~gain, respectively. As of ~~September 5, 2020 and December 28, 2019,~~March 20, 2021, the cumulative amount of fair value hedging adjustments on discontinued hedges was a ~~$28~~$14 million net loss, ~~and a $49 million loss, respectively,~~ which is being amortized over the remaining life of the related debt obligations.

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

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

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

~~(k)~~(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 ~~September 5, 2020~~March 20, 2021 and December ~~28, 2019~~26, 2020 were not material. Collateral received or posted against our asset or liability positions was not material. ~~Collateral posted of $61 million~~Exchange-traded commodity futures are cash-settled on a daily basis and, ~~$58 million as of September 5, 2020 and December 28, 2019, respectively, is classified as restricted cash.~~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 ~~September 5, 2020~~March 20, 2021 and December ~~28, 2019~~26, 2020 was ~~$50~~$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)
9/5/2020 9/7/2019 9/5/2020 9/7/2019 9/5/2020 9/7/2019
Foreign exchange $ (10) $ 11 $ 31 $ (2) $ (22) $ 4
Interest rate 4 (12) (117) 65 (102) 38
Commodity (37) 27 (29) 32 24 1
Net investment 0 0 118 (40) 0 0
Total $ (43) $ 26 $ 3 $ 55 $ (100) $ 43

~~Table of Contents~~


		36 Weeks Ended																							12 Weeks Ended
		Fair Value/Non- designated Hedges						Cash Flow and Net Investment Hedges															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)					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)
		9/5/2020		9/7/2019		9/5/2020		9/7/2019		9/5/2020		9/7/2019			3/20/2021		3/21/2020		3/20/2021		3/21/2020		3/20/2021		3/21/2020
Foreign exchange	Foreign exchange	$	(11)	$	15	$	(47)	$	16	$	(37)	$	0	Foreign exchange	$	4	$	(11)	$	11	$	(51)	$	13	$	4
Interest rate	Interest rate	(8)		(62)		(24)		117		(73)		54		Interest rate	1		(11)		(18)		223		(4)		150
Commodity	Commodity	120		16		48		19		40		3		Commodity	(81)		166		(90)		64		(10)		3
Net investment	Net investment	0		0		159		(55)		0		0		Net investment	0		0		(63)		(84)		0		0
Total	Total	$	101	$	(31)	$	136	$	97	$	(70)	$	57	Total	$	(76)	$	144	$	(160)	$	152	$	(1)	$	157

(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 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.

Based on current market conditions, we expect to reclassify net ~~losses~~gains of ~~$46~~$76 million related to our cash flow hedges from accumulated other comprehensive loss into net income during the next 12 months.

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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
9/5/2020 9/7/2019
Income
Shares^(a)
Income
Shares^(a)
Basic net income attributable to PepsiCo per common share $ 1.66 $ 1.50
Net income available for PepsiCo common shareholders $ 2,291 1,384 $ 2,100 1,397
Dilutive securities:
Stock options, RSUs, PSUs and other ^(b)
0 6 0 8
Diluted $ 2,291 1,390 $ 2,100 1,405
Diluted net income attributable to PepsiCo per common share $ 1.65 $ 1.49


		36 Weeks Ended												12 Weeks Ended
		9/5/2020					9/7/2019					3/20/2021			3/21/2020
		Income		Shares^(a)	Income		Shares^(a)		Income		Shares(a)	Income		Shares(a)

Basic net income attributable to PepsiCo per common share	Basic net income attributable to PepsiCo per common share	$	3.80		$	3.96		Basic net income attributable to PepsiCo per common share	$	1.24		$	0.96
Net income available for PepsiCo common shareholders	Net income available for PepsiCo common shareholders	$	5,275	1,387	$	5,548	1,401	Net income available for PepsiCo common shareholders	$	1,714	1,380	$	1,338	1,390
Dilutive securities:	Dilutive securities:							Dilutive securities:
Stock options, RSUs, PSUs and other ^(b)	Stock options, RSUs, PSUs and other ^(b)	0		6	0		8	Stock options, RSUs, PSUs and other (b)	0		7	0		6
Diluted	Diluted	$	5,275	1,393	$	5,548	1,409	Diluted	$	1,714	1,387	$	1,338	1,396
Diluted net income attributable to PepsiCo per common share	Diluted net income attributable to PepsiCo per common share	$	3.79		$	3.94		Diluted net income attributable to PepsiCo per common share	$	1.24		$	0.96

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

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

~~Table~~The weighted-average amount of ~~Contents~~

~~Out-of-the-money options~~antidilutive securities excluded from the calculation of diluted earnings per common share ~~are as follows:~~

12 Weeks Ended 36 Weeks Ended
9/5/2020 9/7/2019 9/5/2020 9/7/2019
Out-of-the-money options ^(a)
0.1 0 0.6 0.4
Average exercise price per option $ 137.25 $ 0 $ 131.76 $ 115.98

~~(a)In millions.~~was immaterial for both the 12 weeks ended March 20, 2021 and March 21, 2020.

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			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)
Balance as of December 26, 2020 (a)												Balance as of December 26, 2020 (a)	$	(11,940)	$	4	$	(3,520)	$	(20)	$	(15,476)
Other comprehensive (loss)/income before reclassifications ^(b)	Other comprehensive (loss)/income before reclassifications ^(b)	(735)		(236)		21		1		(949)		Other comprehensive (loss)/income before reclassifications (b)	128		97		(20)		0		205
Amounts reclassified from accumulated other comprehensive loss	Amounts reclassified from accumulated other comprehensive loss	0		157		50		0		207		Amounts reclassified from accumulated other comprehensive loss	18		(1)		52		0		69
Net other comprehensive (loss)/income	Net other comprehensive (loss)/income	(735)		(79)		71		1		(742)		Net other comprehensive (loss)/income	146		96		32		0		274
Tax amounts	Tax amounts	(19)		18		(14)		0		(15)		Tax amounts	(15)		(24)		(5)		0		(44)
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		0		(127)		57		0		(70)
Net other comprehensive (loss)/income		(827)		17		82		(1)		(729)
Tax amounts		31		(4)		(19)		0		8
Balance as of June 13, 2020 ^(a)		$	(12,840)	$	(51)	$	(2,868)	$	(19)	$	(15,778)
Other comprehensive (loss)/income before reclassifications ^(d)		385		115		(59)		(3)		438
Amounts reclassified from accumulated other comprehensive loss		0		(100)		55		0		(45)
Net other comprehensive (loss)/income		385		15		(4)		(3)		393
Tax amounts		29		(4)		3		0		28
Balance as of September 5, 2020 ^(a)		$	(12,426)	$	(40)	$	(2,869)	$	(22)	$	(15,357)
Balance as of March 20, 2021 (a)												Balance as of March 20, 2021 (a)	$	(11,809)	$	76	$	(3,493)	$	(20)	$	(15,246)

(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.

(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, $1,337 million as of June 13, 2020 and $1,340 million as of September 5,~~ 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.~~

~~(d)Currency translation adjustment primarily reflects appreciation of the Pound sterling, Canadian dollar and Australian dollar, partially offset by the depreciation of the Russian ruble.~~

~~Table of Contents~~

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) 0 439
Amounts reclassified from accumulated other comprehensive loss 0 (15) 34 0 19
Net other comprehensive (loss)/income 475 (35) 18 0 458
Tax amounts (2) 8 (1) 0 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 0 29 37 0 66
Net other comprehensive (loss)/income (365) (8) 53 1 (319)
Tax amounts 0 2 (11) 0 (9)
Balance as of June 15, 2019 ^(a)
$ (11,810) $ 54 $ (3,212) $ (16) $ (14,984)
Other comprehensive (loss)/income before reclassifications ^(d)
(149) (95) 19 (1) (226)
Amounts reclassified from accumulated other comprehensive loss 0 43 54 0 97
Net other comprehensive (loss)/income (149) (52) 73 (1) (129)
Tax amounts (10) 14 (17) 0 (13)
Balance as of September 7, 2019 ^(a)
$ (11,969) $ 16 $ (3,156) $ (17) $ (15,126)

~~(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 and $1,437 million as of September 7, 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.~~

~~(d)Currency translation adjustment primarily reflects depreciation of the Pound sterling, Russian ruble 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						36 Weeks Ended						12 Weeks Ended
		9/5/2020		9/7/2019		9/5/2020		9/7/2019		Affected Line Item in the Income Statement		3/20/2021		3/21/2020		Affected Line Item in the Income Statement

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

Cash flow hedges:	Cash flow hedges:										Cash flow hedges:
Foreign exchange contracts	Foreign exchange contracts	$	0	$	0	$	0	$	1	Net revenue	Foreign exchange contracts	$	1	$	0	Net revenue
Foreign exchange contracts	Foreign exchange contracts	(22)		4		(37)		(1)		Cost of sales	Foreign exchange contracts	12		4		Cost of sales
Interest rate derivatives	Interest rate derivatives	(102)		38		(73)		54		Net interest expense and other	Interest rate derivatives	(4)		150		Net interest expense and other
Commodity contracts	Commodity contracts	22		0		36		2		Cost of sales	Commodity contracts	(11)		3		Cost of sales
Commodity contracts	Commodity contracts	2		1		4		1		Selling, general and administrative expenses	Commodity contracts	1		0		Selling, general and administrative expenses
Net (gains)/losses before tax	Net (gains)/losses before tax	(100)		43		(70)		57			Net (gains)/losses before tax	(1)		157
Tax amounts	Tax amounts	25		(11)		17		(13)			Tax amounts	1		(39)
Net (gains)/losses after tax		$	(75)	$	32	$	(53)	$	44
Net losses after tax											Net losses after tax	$	0	$	118

Pension and retiree medical items:	Pension and retiree medical items:										Pension and retiree medical items:
Amortization of prior service credits	Amortization of prior service credits	$	0	$	(2)	$	0	$	(6)	Other pension and retiree medical benefits income	Amortization of prior service credits	$	(9)	$	0	Other pension and retiree medical benefits income
Amortization of net losses	Amortization of net losses	55		38		162		113		Other pension and retiree medical benefits income	Amortization of net losses	61		50		Other pension and retiree medical benefits income
Settlement losses		0		18		0		18		Other pension and retiree medical benefits income

Net losses before tax	Net losses before tax	55		54		162		125			Net losses before tax	52		50
Tax amounts	Tax amounts	(12)		(12)		(34)		(27)			Tax amounts	(11)		(11)
Net losses after tax	Net losses after tax	$	43	$	42	$	128	$	98		Net losses after tax	$	41	$	39

Total net (gains)/losses reclassified, net of tax		$	(32)	$	74	$	75	$	142
Total net losses reclassified, net of tax											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 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 billion and property, plant and equipment of $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 ~~$0.5~~$0.4 billion as of the ~~end of the third quarter of 2020,~~acquisition date, in value for the benefit of our employees, agricultural development, education, developing Pioneer Foods’ operations and enterprise ~~development programs in South Africa. Included in this commitment is 2.2 billion South~~

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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 is an irrevocable condition of the ~~acquisition and will primarily be settled within the twelve-month period from the acquisition date.~~acquisition. This commitment was recorded in selling, general and administrative expenses in the ~~36 weeks~~year ended ~~September 5, 2020.~~December 26, 2020 and is expected to be settled primarily in the 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 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 ~~$4.6~~$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. in the second quarter of 2020 for us and our bottlers to exclusively distribute Bang Energy drinks in the United States.

Acquisition of Hangzhou Haomusi Food Co., Ltd.

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. The total consideration transferred was approximately $0.7 billion. ~~The purchase price will 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, 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 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)~~Merger and Integration Charges/Credits

~~On December 5, 2018, we acquired all~~A summary of our merger and integration charges/credits is as follows:


	12 Weeks Ended
		3/20/2021		3/21/2020		Acquisition
FLNA		$	2	$	23	BFY Brands
PBNA		1		0		Rockstar

AMESA		1		2		Pioneer Foods
Corporate (a)		(14)		0		Rockstar
Total		$	(10)	$	25
After-tax amount		$	(7)	$	22
Net income attributable to PepsiCo per common share		$	0.01	$	(0.02)

(a)In 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 finalized12 weeks ended March 20, 2021, the income amount relates to the change in the ~~fourth quarter~~fair value of ~~2019. See Note 14 to~~contingent consideration associated with our ~~consolidated financial statements in our 2019 Form 10-K for further information.~~acquisition of Rockstar.

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

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

12 Weeks Ended 36 Weeks Ended
9/5/2020 9/7/2019 9/5/2020 9/7/2019
Cost of sales $ 11 $ 0 $ 30 $ 34
Selling, general and administrative expenses 32 7 256 12
Total $ 43 $ 7 $ 286 $ 46
After-tax amount $ 27 $ 6 $ 254 $ 38
Net income attributable to PepsiCo per common share $ 0.02 $ 0 $ 0.18 $ 0.03

~~Inventory fair value adjustments and 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 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). Merger and integration charges also include liabilities to support socioeconomic programs in South Africa (recorded in selling, general and administrative expenses). Inventory fair value adjustments and merger and integration charges by division are as follows:

12 Weeks Ended 36 Weeks Ended
9/5/2020 9/7/2019 9/5/2020 9/7/2019 Acquisition
FLNA $ 1 $ 0 $ 26 $ 0 BFY Brands
PBNA 17 0 60 0 Rockstar
Europe 0 5 0 43 SodaStream
AMESA 10 2 169 2 Pioneer Foods
APAC 5 0 5 0 Be & Cheery
Corporate 10 0 26 1 Rockstar, SodaStream
Total $ 43 $ 7 $ 286 $ 46

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.

~~Table of Contents~~

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~~

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~~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~~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 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~~business, which may result in ~~which our products are made, manufactured, distributed or sold continue to operate in varying stages of restrictions and re-opening to address the COVID-19 pandemic.~~ While some of these restrictions have been lifted or eased in certain jurisdictions, other jurisdictions have seen increases in new COVID-19 cases resulting in restrictions being reinstated, or new restrictions imposed in these jurisdictions. There continues to be considerable uncertainty regarding how current and future health and safety measures implemented in response to the pandemic will impact our business, including whether they will result i~~n 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 experienced employee absenteeism which has resulted in reduced manufacturing capacity at certain of our facilities and 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 and increased sanitation, allowances for credit losses, upfront payment write-offs

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~~and inventory write-offs, which have negatively impacted and may continue to negatively impact our profitability.~~ In addition, measures that impact our ability to access our offices ~~(some~~(several of which remain closed), plants, warehouses, distribution centers or other facilities, 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 safet~~y protocols at our facilities, including temperature checks, health screening, providing personal protective equipment, increased sanitation, requiring the use of masks and facilitating social distancing in work and dining spaces, and have been working and will continue to work closely with our business partners on contingency planning i~~n 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 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 continue 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 governmental restrictions ~~continue to be~~are 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, as a result of COVID-19, certain jurisdictions, such as certain states in Mexico, have enacted or are considering enacting new or expanded product labeling or warning requirements or limitations on the marketing or sale of certain of our products as a result of ingredients or substances contained in such products. 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 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.

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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.

~~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. Estimated federal income tax payments and mandatory transition tax payments under the TCJ Act were made in the third quarter of 2020 and are no longer deferred. Additionally, we expect to pay the previously deferred payroll taxes in the fourth quarter of 2020. 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 ~~September 5, 2020, substantially all of our financial results outside of North America reflect the months of June, July and August. In the 36 weeks ended September 5, 2020,~~March 20, 2021, substantially all of our financial results outside of North America reflect the months of January ~~through August.~~and February. In the 3612 weeks ended ~~September 5, 2020,~~March 20, 2021, our operations outside of the United States generated ~~40%~~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 ~~each of~~ the 12 ~~and 36~~ weeks ended ~~September 5, 2020,~~March 20, 2021, unfavorable foreign exchange reduced net revenue growth by 20.5 percentage points, 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 ~~September 5, 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~~

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~~“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 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 the IRS impacted 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. In the 12 and 36 weeks ended September 5, 2020, we recorded net tax benefits of $77 million primarily related to the adoption of the TRAF in the SwissCanton of Bern in the third quarter of 2020. In the 12 and 36 weeks ended September 7, 2019, we recorded net tax benefits of $45 million and $33 million, respectively, related to the TRAF. While the accounting for the impacts of the TRAF are deemed to be complete, further adjustments to our financial statements and related disclosures could be made in future quarters, including in connection with final tax return filings.

~~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.~~

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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 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 ~~September 5, 2020 include beverage volume outside of North America for the months of June, July and August. The 36 weeks ended September 5, 2020~~March 20, 2021 include beverage volume outside of North America for the months of January ~~through August.~~

~~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. The revised guidelines have been retrospectively applied to our prior-year servings. For the 12 and 36 weeks ended September 5, 2020, total servings increased 13% and 7%, respectively, primarily reflecting the contributions from our recent acquisitions. See Note 12 to our condensed consolidated financial statements for further information.February.

Consolidated Net Revenue and Operating Profit


		12 Weeks Ended														36 Weeks Ended									12 Weeks Ended
		9/5/2020			9/7/2019			Change		9/5/2020			9/7/2019			Change			3/20/2021			3/21/2020			Change
Net revenue	Net revenue	$	18,091		$	17,188		5	%	$	47,917		$	46,521		3	%	Net revenue	$	14,820		$	13,881		7	%
Operating profit	Operating profit	$	3,011		$	2,855		5.5	%	$	7,254		$	7,592		(4.5)	%	Operating profit	$	2,312		$	1,924		20	%
Operating profit margin	Operating profit margin	16.6		%	16.6		%	—		15.1		%	16.3		%	(1.2)		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 grew 20% and operating profit margin increased 1.7 percentage points. Operating profit growth was primarily driven by effective net pricing and productivity savings, partially offset by certain

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~~12 Weeks~~

~~Operating profit grew 5.5% and operating profit margin was flat. Operating profit growth was primarily driven by productivity savings and net revenue growth, partially offset by certain~~ operating cost ~~increases.~~increases, a 5-percentage-point impact of higher commodity costs and a decrease in organic volume.

~~A favorable~~Higher mark-to-market ~~net impact~~gains on commodity derivatives included in “Items Affecting Comparability” contributed 312 percentage points to operating profit 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 ~~reduced~~contributed 4 percentage points to operating profit ~~growth by 5 percentage points.~~growth. See Note 1 ~~to our condensed consolidated financial statements for further information.~~

~~36 Weeks~~

~~Operating profit decreased 4.5%~~ and operating profit margin decreased 1.2 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 3 percentage points. Additionally, the charges taken as a result of the COVID-19 pandemic negatively impacted operating profit performance by 8 percentage points. See Note ~~1 to our condensed consolidated financial statements~~9 for further information.

Results of Operations – Division Review

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 ~~June, July~~January and ~~August~~February are reflected in our results for the 12 weeks ended ~~September 5, 2020, and the months of January through August are reflected in our results for the 36 weeks ended September 5, 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.

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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 9/5/2020
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 % — (1) 6 % 3 4
QFNA 6 % — — 6 % 4 2
PBNA 6 % — (2.5) 3 % (1.5) 5
LatAm (13) % 14 — 1 % 1 —
Europe 3 % 3.5 — 7 % 5 1
AMESA 31 % 2 (35) (2) % 1 (2.5)
APAC 15 % — (10) 5 % 5 —
Total 5 % 2 (3) 4 % 2 3


		36 Weeks Ended 9/5/2020																12 Weeks Ended 3/20/2021
				Impact of						Impact of					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		Reported % Change, GAAP Measure		Foreign exchange translation	Acquisitions and divestitures		Organic % Change, Non-GAAP Measure(a)			Organic Volume(b)	Effective net pricing
FLNA	FLNA	7	%	—	(0.5)	7	%	4	2	FLNA	4	%	—	(0.5)		3	%		(1)	4
QFNA	QFNA	11	%	—	—	12	%	13	(1)	QFNA	2	%	(0.5)	—		1	%		(4)	5
PBNA	PBNA	2	%	—	(1.5)	0.5	%	(2)	3	PBNA	5	%	—	(3)		2	%		(4.5)	6
LatAm	LatAm	(10)	%	12	—	2	%	1	2	LatAm	(5)	%	8	—		3	%		(2)	4
Europe	Europe	1	%	4	—	5	%	4	1	Europe	(2)	%	2	—		—	%		—	(1)
AMESA	AMESA	13	%	1	(14)	—	%	(1)	0.5	AMESA	40	%	1	(42)		(1)	%		2	(3)
APAC	APAC	11	%	2	(4)	9	%	6	3	APAC	70	%	(8)	(44)		18	%		17	2
Total	Total	3	%	2	(2)	4	%	2	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 ~~varies~~on net revenue growth differs from the ~~amounts~~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)~~, 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.

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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.”

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Operating Profit and Operating Profit Adjusted for Items Affecting Comparability

12 Weeks Ended 9/5/2020
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)
FLNA $ 1,353 $ — $ 2 $ 1 $ 1,356
QFNA 145 — — — 145
PBNA 697 — 29 17 743
LatAm 250 — 5 — 255
Europe 480 — 13 — 493
AMESA 193 — 2 10 205
APAC 163 — 1 5 169
Corporate unallocated expenses (270) (71) 8 10 (323)
Total $ 3,011 $ (71) $ 60 $ 43 $ 3,043


		12 Weeks Ended 9/7/2019																			12 Weeks Ended 3/20/2021
				Items Affecting Comparability^(a)															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			Reported, GAAP Measure(b)		Mark-to-market net impact		Restructuring and impairment charges		Merger and integration charges/(credits)			Core, Non-GAAP Measure(b)
FLNA	FLNA	$	1,286	$	—	$	16	$	—	$	1,302	FLNA	$	1,240	$	—	$	15	$	2		$	1,257
QFNA	QFNA	126		—		2		—		128		QFNA	150		—		—		—			150
PBNA	PBNA	640		—		26		—		666		PBNA	366		—		4		1			371
LatAm	LatAm	277		—		22		—		299		LatAm	218		—		2		—			220
Europe	Europe	455		—		15		5		475		Europe	131		—		11		—			142
AMESA	AMESA	210		—		5		2		217		AMESA	138		—		1		1			140
APAC	APAC	166		—		4		—		170		APAC	208		—		—		—			208
Corporate unallocated expenses	Corporate unallocated expenses	(305)		4		3		—		(298)		Corporate unallocated expenses	(139)		(75)		4		(14)			(224)
Total	Total	$	2,855	$	4	$	93	$	7	$	2,959	Total	$	2,312	$	(75)	$	37	$	(10)		$	2,264

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36 Weeks Ended 9/5/2020
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)
FLNA $ 3,833 $ — $ 9 $ 26 $ 3,868
QFNA 491 — 1 — 492
PBNA 1,391 — 32 60 1,483
LatAm 700 — 14 — 714
Europe 977 — 29 — 1,006
AMESA 386 — 9 169 564
APAC 494 — 4 5 503
Corporate unallocated expenses (1,018) 26 18 26 (948)
Total $ 7,254 $ 26 $ 116 $ 286 $ 7,682


		36 Weeks Ended 9/7/2019																			12 Weeks Ended 3/21/2020
				Items Affecting Comparability^(a)															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			Reported, GAAP Measure(b)		Mark-to-market net impact		Restructuring and impairment charges		Merger and integration charges		Core, Non-GAAP Measure(b)
FLNA	FLNA	$	3,694	$	—	$	22	$	—	$	3,716	FLNA	$	1,202	$	—	$	5	$	23	$	1,230
QFNA	QFNA	391		—		2		—		393		QFNA	150		—		1		—		151
PBNA	PBNA	1,719		—		42		—		1,761		PBNA	297		—		3		—		300
LatAm	LatAm	785		—		43		—		828		LatAm	231		—		5		—		236
Europe	Europe	909		—		74		43		1,026		Europe	146		—		8		—		154
AMESA	AMESA	551		—		21		2		574		AMESA	134		—		2		2		138
APAC	APAC	388		—		41		—		429		APAC	142		—		—		—		142
Corporate unallocated expenses	Corporate unallocated expenses	(845)		(50)		37		1		(857)		Corporate unallocated expenses	(378)		142		8		—		(228)
Total	Total	$	7,592	$	(50)	$	282	$	46	$	7,870	Total	$	1,924	$	142	$	32	$	25	$	2,123

(a)See “Items Affecting Comparability.”

(b)Operating profit for the 12 ~~and 36~~ weeks ended ~~September 5,~~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.

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

12 Weeks Ended 9/5/2020

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 5 % — (1) — 4 % — 4 %
QFNA 15 % — (2) — 14 % — 14 %
PBNA 9 % — — 2 11 % — 12 %
LatAm (10) % — (5) — (15) % 15 0.5 %
Europe 5 % — — (1) 4 % 4.5 8 %
AMESA (9) % — (2) 5 (6) % 1 (5) %
APAC (1.5) % — (2) 3 — % (0.5) (1) %
Corporate unallocated expenses (12) % 25 (2) (3) 8 % — 8 %
Total 5.5 % (3) (1) 1 3 % 2 5 %


		36 Weeks Ended 9/5/2020																			12 Weeks Ended 3/20/2021
				Impact of Items Affecting Comparability^(a)										Impact of				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)			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	FLNA	4	%	—	—	1	4	%	—	4	%	FLNA	3		%	—	1	(2)	2	%	—	2	%
QFNA	QFNA	26	%	—	—	—	25	%	—	25	%	QFNA	—		%	—	—	—	—	%	—	(1)	%
PBNA	PBNA	(19)	%	—	(1)	4	(16)	%	—	(16)	%	PBNA	23		%	—	—	—	24	%	(0.5)	23	%
LatAm	LatAm	(11)	%	—	(3)	—	(14)	%	12	(2)	%	LatAm	(6)		%	—	(1)	—	(7)	%	8	1	%
Europe	Europe	7	%	—	(5)	(5)	(2)	%	5	3	%	Europe	(10)		%	—	3	—	(7)	%	3	(4)	%
AMESA	AMESA	(30)	%	—	(2)	30	(2)	%	—	(2)	%	AMESA	4		%	—	(1)	(1)	1.5	%	—	2	%
APAC	APAC	27	%	—	(12)	2	17	%	1	19	%	APAC	47		%	—	(1)	—	46	%	(7)	39	%
Corporate unallocated expenses	Corporate unallocated expenses	20	%	(9)	2	(3)	11	%	—	11	%	Corporate unallocated expenses	(63)		%	57	1	4	(1)	%	—	(1)	%
Total	Total	(4.5)	%	1	(2)	3	(2)	%	2	—	%	Total	20		%	(12)	—	(2)	7	%	—	7	%

(a)See “Items Affecting Comparability” for further information.

(b)Amounts may not sum due to rounding.

FLNA

Net revenue grew 4%, primarily driven by effective net pricing, partially offset by a decrease in organic volume. Unit volume declined slightly, primarily driven by mid-single-digit declines in trademark 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 dips.

Operating profit increased 3%, primarily reflecting the effective net pricing and productivity savings, partially offset by certain operating cost increases.

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

QFNA

Net revenue grew 2%, primarily driven by favorable pricing, partially offset by a decrease in organic volume. Unit volume declined 4%, primarily driven by a mid-single-digit decline in oatmeal and high-single-digit declines in pancake syrup and mix and in bars, partially offset by double-digit growth in lite snacks.

Operating profit experienced a slight decline, primarily reflecting certain operating cost increases, the decrease in organic volume and a 5-percentage-point impact of higher commodity costs, largely offset by the favorable pricing and productivity savings.

PBNA

Net revenue increased 5%, primarily driven by effective net pricing, partially offset by a decrease in organic volume.In addition, acquisitions contributed 3 percentage points to net revenue growth.Unit volume decreased 2%, driven by a 2% decrease in carbonated soft drink (CSD) volume and a 1.5% decrease in non-carbonated beverage (NCB) volume. The NCB volume decrease primarily reflected a double-digit decrease in our overall water portfolio and a high-single-digit decrease in our juice and juice

Table of Contents

~~FLNA~~

~~12 Weeks~~

Net revenue grew 7% and volume grew 3%. The net revenue growth was primarily driven by effective net pricing and volume growth. The volume growth primarily reflects double-digit growth in variety packs and dips, high-single-digit growth in trademark Tostitos and mid-single-digit growth in trademark Ruffles, drinks portfolio,partially offset by ~~a low-single-digit decline in trademark Lay’s and a mid-single-digit decline in trademark Fritos.~~

Operating profit increased 5%, primarily reflecting the net revenue growth and productivity savings, partially offset by certain operating cost increases and higher advertising and marketing expenses. Additionally, the charges taken as a result of the COVID-19 pandemic reduced operating profit growth by 3 percentage points.

~~36 Weeks~~

Net revenue grew 7% and volume grew 4%. The net revenue growth was primarily driven by volume growth and effective net pricing. The volume growth primarily reflects double-digit growth in variety packs, dips and trademark Tostitos, partially offset by a double-digit decline in nuts and seeds and a low-single-digit decline in trademark Lay’s.

Operating profit grew 4%, primarily reflecting the net revenue growth 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 by 5.5 percentage points.

~~QFNA~~

~~12 Weeks~~

Net revenue increased 6% and volume increased 4%. The net revenue growth reflects volume growth, favorable net pricing and favorable mix. The volume growth was driven by double-digit growth in rice/pasta and lite snacks and mid-single-digit growth in oatmeal, partially offset by a mid-single-digit decline in bars. 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 15%, reflecting the net revenue growth and productivity savings, partially offset by certain operating cost increases and higher advertising and marketing expenses. Additionally, the charges taken as a result of the COVID-19 pandemic reduced operating profit growth by 2.5 percentage points.

~~36 Weeks~~

Net revenue increased 11% and volume increased 13%. The net revenue growth reflects volume growth and favorable net pricing, partially offset by unfavorable mix. The volume growth was 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 26%, reflecting the net revenue growth and productivity savings, partially offset by certain operating cost increases and higher advertising and marketing expenses. Additionally, the charges taken as a result of the COVID-19 pandemic reduced operating profit growth by 3 percentage points.

~~Table of Contents~~

~~PBNA~~

~~12 Weeks~~

Net revenue increased 6%, driven by effective net pricing, partially offset by a decrease in volume. Volume decreased slightly, driven by a 3% decrease in carbonated soft drink (CSD) volume largely offset by a 3% increase in non-carbonated beverage (NCB) volume. The NCB volume increase primarily reflected a mid-single-digit increase in Gatorade sports drinks and a double-digit increase in our energy portfolio, ~~partially offset by~~primarily due to acquisitions, and a low-single-digit ~~decrease~~increase in ~~our overall water portfolio. In addition, acquisitions contributed 2.5 percentage points to net revenue growth.~~Gatorade sports drinks.

Operating profit increased 9%23%, ~~primarily~~ reflecting the effective net pricing, ~~productivity savings, lower advertising and marketing expenses and~~ a ~~4-percentage-point~~32-percentage-point impact of lower commodity costs, partially offset by certain operating cost increases, including incremental information technology costs, the volume decrease and an 8-percentage-point impact of the charges taken as a result of the COVID-19 pandemic. Impairment charges associated with a coconut water brand and a prior-year gain associated with an insurance recovery reduced operating profit growth by 5 percentage points and 4.5 percentage points, respectively. In addition, acquisitions contributed 6 percentage points to operating profit growth.

~~36 Weeks~~

Net revenue increased 2%, driven by effective net pricing, largely offset by a decrease in volume. Volume decreased 2%, driven by a 5% decrease in CSDs, partially offset by a 2% increase in NCB volume. The NCB volume increase primarily reflected a mid-single-digit increase in Gatorade sports drinks, a double-digit increase in our energy portfolio, and a low-single-digit increase in our overall water portfolio, partially offset by a mid-single-digit decrease in our juice and juice drinks portfolio and a low-single-digit decrease in Lipton ready-to-drink teas. In addition, acquisitions contributed 1.5 percentage points to net revenue growth.

~~Operating profit decreased 19%, reflecting certain operating cost increases, including incremental information technology costs, a 17-percentage-point impact of the~~ charges taken as a result of the COVID-19 pandemic, and ~~the volume decrease.~~productivity savings. These impacts were partially offset by ~~productivity savings,~~certain operating cost increases, including incremental transportation and information technology costs, the ~~effective net pricing, lower advertising and marketing expenses~~organic volume decrease, and a 4-percentage-point impact of ~~lower~~higher commodity costs. ~~Impairment charges associated with a coconut water brand, a prior-year gain associated with a sale~~Favorable settlements of ~~an asset, and a prior-year gain associated with an insurance recovery each negatively impacted operating profit performance by 2 percentage points. In addition, acquisitions positively contributed 3~~promotional spending accruals compared to the prior yearcontributed 5 percentage points to operating profit ~~performance.~~growth. In addition, acquisitions contributed 11 percentage points to operating profit growth.

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

LatAm

~~12 Weeks~~

Net revenue decreased ~~13%~~5%, primarily reflecting ~~a 14-percentage-point~~an 8-percentage-point impact of unfavorable foreign exchange and a net organic volume decline, partially offset by effective net ~~volume growth.~~pricing.

Snacks unit volume ~~grew~~declined 2%, primarily reflecting ~~double-digit growth~~low-single-digit declines in Brazil ~~partially offset by~~and Mexico.

Beverage unit volume declined 4%, primarily reflecting a double-digit decline in Brazil and a low-single-digit decline in ~~Mexico.~~

~~Beverage volume declined 7%, reflecting double-digit declines in Colombia and Argentina, a high-single-digit decline in Honduras and mid-single-digit declines in Guatemala and~~ Mexico, partially offset by high-single-digit growth in Argentina, mid-single-digit growth in Chile and low-single-digit growth in ~~Brazil.~~Guatemala. The COVID-19 pandemic contributed to a decrease in consumer demand, which had a negative impact on beverage unit volume performance.

~~Table of Contents~~

Operating profit decreased ~~10%~~6%, primarily reflecting ~~certain operating cost increases and~~ a ~~7-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 the effective net pricing, productivity savings and ~~a 5-percentage-point impact of~~ lower ~~restructuring~~advertising and ~~impairment charges. A current-year insurance settlement recovery related to a production facility fire in Mexico in 2018 positively contributed 6 percentage points to operating profit performance.~~marketing 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 158 percentage points and 116 percentage points, respectively.

~~36 Weeks~~

Europe

Net revenue decreased ~~10%~~2%, primarily reflecting a ~~12-percentage-point~~2-percentage-point impact of unfavorable foreign ~~exchange,~~exchange. SodaStream International Ltd. (SodaStream) negatively impacted net 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 4%, primarily reflecting double-digit growth in Turkey and high-single-digit growth in Russia, partially offset by ~~effective net pricing and net volume growth.~~

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

~~Beverage volume declined 5%, reflecting double-digit declines in Colombia and Argentina,~~ a mid-single-digit decline in ~~Honduras,~~Spain and low-single-digit declines in ~~Chile, Guatemala,~~France and ~~Brazil.~~the Netherlands. Additionally, ~~Mexico was even with~~ the ~~prior year. The COVID-19 pandemic contributed to~~United Kingdom and Poland each experienced low-single-digit growth.

Beverage unit volume grew 7%, primarily reflecting double-digit growth in Germany, Russia and Turkey, partially offset by a ~~decrease~~double-digit decline in ~~consumer demand, which had~~France and a ~~negative impact on volume performance.~~low-single-digit decline in the United Kingdom.

Operating profit decreased ~~11%~~10%, primarily reflecting certain operating cost increases, a ~~7-percentage-point~~21-percentage-point impact of higher commodity costs ~~largely due to~~driven by transaction-related foreign exchange and a ~~4-percentage-point~~3-percentage-point impact of ~~a prior-year insurance settlement recovery related to the 2017 earthquake in Mexico.~~higher restructuring and impairment charges. These impacts were partially offset by productivity savings, the effective net pricing and a 2.5-percentage-point impact of a current-year insurance settlement recovery related to a production facility fire in Mexico in 2018. Additionally, unfavorable foreign exchange and the charges taken as a result of the COVID-19 pandemic negatively impacted operating profit performance by 12 percentage points and 8 percentage points, respectively.

~~Europe~~

~~12 Weeks~~

~~Net revenue increased 3%, reflecting volume growth and effective net pricing, partially offset by a 3.5-percentage-point impact of unfavorable foreign exchange.~~

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

Beverage volume grew 11%, reflecting double-digit growth in Germany and France, partially offset by a mid-single-digit decline in Turkey and a high-single-digit decline in Poland. Additionally, Russia and the United Kingdom each experienced mid-single-digit growth.

~~Operating profit increased 5%, primarily reflecting the volume growth and productivity savings, partially offset by certain operating cost increases, higher~~lower advertising and marketing expenses and a 2-percentage-point impact of higher commodity costs, largely due to transaction-related foreign exchange. Additionally, unfavorable foreign exchange and the charges taken as a result of the COVID-19 pandemic reduced operating profit growth by 4.5 percentage points and 3.5 percentage points, respectively.

effective net pricing.

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~~36 Weeks~~Additionally, unfavorable foreign exchange translation negatively impacted operating profit performance by 3 percentage points.

AMESA

Net revenue increased 1%40%, primarily reflecting a 42-percentage-point impact of our Pioneer Foods acquisition and organic volume growth, partially offset by ~~a 4-percentage-point impact of unfavorable foreign exchange.~~

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

Beverage volume grew 8%, reflecting double-digit growth in Germany and France, partially offset by a double-digit decline in Poland and a mid-single-digit decline in Turkey. Additionally, Russia experienced slight growth and the United Kingdom experienced mid-single-digit growth.

Operating profit increased 7%, primarily reflecting the volume growth, productivity savings, a 5-percentage-point impact of lower restructuring and impairment charges, a 5-percentage-point impact of the prior-year inventory fair value adjustments and merger and integration charges primarily associated with our SodaStream acquisition and a 3.5-percentage-point impact of a gain on an asset sale. These impacts were partially offset by certain operating cost increases, higher advertising and marketing expenses and unfavorable net pricing. ~~Additionally, the charges taken as a result of the COVID-19 pandemic and unfavorable foreign exchange reduced operating profit growth by 6 percentage points and 5 percentage points, respectively.~~

~~AMESA~~

~~12 Weeks~~

~~Net revenue increased 31%~~Snacks unit volume grew 232%, primarily reflecting a ~~36-percentage-point~~228-percentage-point impact of ~~the Pioneer Foods acquisition, partially offset by unfavorable net pricing. Net revenue was also negatively impacted by the COVID-19 pandemic.~~

~~Snacks volume grew 289%, primarily reflecting a 282-percentage-point impact of the~~our Pioneer Foods acquisition, double-digit growth in Pakistan and high-single-digit growth in ~~India. Additionally, South Africa experienced slight growth and the Middle East experienced mid-single-digit growth.~~

~~Beverage volume declined 4%, primarily reflecting a double-digit decline in~~ India, ~~a mid-single-digit decline in Pakistan and~~partially offset by a low-single-digit decline in the Middle ~~East, partially offset by mid-single-digit growth in Nigeria. The~~East. Additionally, South Africa (excluding our Pioneer Foods ~~acquisition positively contributed 2 percentage points to beverage~~acquisition) experienced low-single-digit growth.

Beverage unit volume ~~performance. The COVID-19 pandemic contributed to a decrease in consumer demand, which had a negative impact on volume performance.~~

Operating profit decreased 9%, primarily reflecting the net volume performance, certain operating cost increases and the unfavorable net pricing, partially offset by productivity savings, lower advertising and marketing expenses and a 3-percentage-point impact of lower commodity costs. The Pioneer Foods acquisition positively contributed 8 percentage points to operating profit performance and was partially offset by the related merger and integration charges, which negatively impacted operating profit performance by 5 percentage points. Additionally, the charges taken as a result of the COVID-19 pandemic negatively impacted operating profit performance by 3 percentage points.

~~Table of Contents~~

~~36 Weeks~~

~~Net revenue increased 13%~~grew 5.5%, primarily reflecting a ~~19-percentage-point~~4-percentage-point impact of ~~the~~our Pioneer Foods acquisition ~~partially offset by a 4-percentage-point impact of the prior-year refranchising of a portion of our beverage business in India. Net revenue was also negatively impacted by the COVID-19 pandemic.~~

~~Snacks volume grew 158%, primarily reflecting a 154-percentage-point impact of the Pioneer Foods acquisition, high-single-digit growth in the Middle East~~ and ~~double digit~~double-digit growth in Pakistan, partially offset by a ~~low-single-digit~~mid-single-digit decline ~~in India. Additionally, South Africa experienced low-single-digit growth.~~

~~Beverage volume declined 10%, primarily reflecting double-digit declines~~ in India and ~~Pakistan and~~ a ~~low-single-digit~~slight 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.~~East. Additionally, Nigeria experienced slight growth.

Operating profit ~~decreased 30%~~increased 4%, primarily reflecting ~~certain operating cost increases and a 2-percentage-point impact of a prior-year gain on the refranchising of a portion of our beverage business in India, partially offset by~~ productivity savings, a 7-percentage-point contribution from our Pioneer Foods acquisition and lower advertising and marketing expenses, and a 3-percentage-point impact of lower commodity costs. The merger and integration charges associated with the Pioneer Foods acquisition negatively impacted operating profit performance by 30 percentage points and were partially offset by ~~Pioneer Foods’ 4-percentage-point positive contribution to operating profit performance. Additionally,~~ the ~~charges taken as a result of the COVID-19 pandemic negatively impacted operating profit performance by 4 percentage points.~~unfavorable net pricing.

APAC

~~12 Weeks~~

Net revenue increased ~~15%~~70%, primarily reflecting a ~~10-percentage-point~~44-percentage-point impact of ~~the~~our Be & Cheery acquisition, organic volume growth and ~~volume~~effective net pricing. Favorable foreign exchange contributed 8 percentage points to net revenue growth.

Snacks unit volume grew ~~18%~~59%, primarily reflecting ~~an 11-percentage-point~~a 45-percentage-point impact of ~~the~~our Be & Cheery acquisition and double-digit growth in ~~Australia.~~China (excluding our Be & Cheery acquisition). Additionally, ~~China, Indonesia and Taiwan each~~Australia experienced low-single-digit growth, Thailand and ~~Thailand~~Indonesia each experienced ~~mid-single-digit~~high-single-digit growth and Taiwan experienced double-digit growth.

Beverage unit volume grew 6%15%, primarily reflecting ~~double-digit~~double digit growth in China, partially offset by a double-digit decline in the Philippines and a mid-single-digit decline in ~~Vietnam.~~Thailand. Additionally, ~~Thailand~~Vietnam experienced ~~low-single-digit~~mid-single-digit growth.

Operating profit ~~decreased 1.5%~~increased 47%, primarily reflecting the organic volume growth, a 10-percentage-point contribution from our Be & Cheery acquisition and productivity savings, partially offset by higher advertising and marketing expenses and certain operating cost increases and a 3-percentage-point impact of merger and integration charges associated with the Be & Cheery acquisition. These impacts were partially offset by productivity savings and the net revenue growth.

~~36 Weeks~~

~~Net revenue increased 11%, primarily reflecting net volume growth, a 4-percentage-point impact of the Be & Cheery acquisition and effective net pricing.~~

Snacks volume grew 13%, primarily reflecting a 4-percentage-point impact of the Be & Cheery acquisition and double-digit growth in Indonesia, partially offset by a slight decline in Thailand. Additionally, Taiwan experienced mid-single-digit growth and China and Australia each experienced high-single-digitincreases. Favorable foreign exchange contributed 7 percentage points to operating profit growth.

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Beverage volume declined 1%, primarily reflecting a double-digit decline in the Philippines, and mid-single-digit declines in Thailand and Vietnam, partially offset by mid-single-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 27%, primarily reflecting the net revenue growth, productivity savings and a 12-percentage-point impact of lower restructuring and impairment charges, partially offset by certain operating cost increases and higher advertising and marketing expenses.

Other Consolidated Results

12 Weeks Ended 36 Weeks Ended
9/5/2020 9/7/2019 Change 9/5/2020 9/7/2019 Change
Other pension and retiree medical benefits income $ 86 $ 38 $ 48 $ 247 $ 163 $ 84
Net interest expense and other $ (264) $ (224) $ (40) $ (789) $ (651) $ (138)
Tax rate 18.6 % 21.0 % 20.8 % 21.5 %
Net income attributable to PepsiCo $ 2,291 $ 2,100 9 % $ 5,275 $ 5,548 (5) %
Net income attributable to PepsiCo per common share – diluted $ 1.65 $ 1.49 10 % $ 3.79 $ 3.94 (4) %
Mark-to-market net impact (0.04) — 0.01 (0.03)
Restructuring and impairment charges 0.03 0.06 0.07 0.16
Inventory fair value adjustments and merger and integration charges 0.02 — 0.18 0.03
Net tax related to the TCJ Act — — — (0.02)
Net income attributable to PepsiCo per common share – diluted, excluding above items ^(a)
$ 1.66

$ 1.56
^(b)
7 % $ 4.05

$ 4.07
^(b)
(0.5) %
Impact of foreign exchange translation 3 2
Growth in net income attributable to PepsiCo per common share – diluted, excluding above items, on a constant currency basis ^(a)
9 %
^(b)

2 %
^(b)

~~(a)See “Non-GAAP Measures.”~~

~~(b)Does not sum due to rounding.~~

~~12 Weeks~~


	12 Weeks Ended
		3/20/2021			3/21/2020			Change
Other pension and retiree medical benefits income		$	120		$	77		$	43
Net interest expense and other		$	(258)		$	(290)		$	32
Tax rate		20.7		%	21.0		%
Net income attributable to PepsiCo		$	1,714		$	1,338		28		%
Net income attributable to PepsiCo per common share – diluted		$	1.24		$	0.96		29		%

Other pension and retiree medical benefits income increased ~~$48~~$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 discretionary plan contributions, ~~and higher prior-year settlement losses,~~ partially offset by the decrease in ~~discount rates.~~the expected rate of return on plan assets.

Net interest expense and other ~~increased $40~~decreased $32 million, primarily due to ~~higher average debt balances and lower interest rates on cash, partially offset by lower interest rates on debt, higher average cash balances and higher~~ gains on the market value of investments used to economically hedge a portion of our deferred compensation ~~liability.~~

~~The reported tax rate decreased 2.4 percentage points, primarily reflecting the net tax benefits related to the TRAF.~~

Net income attributable to PepsiCo increased 9% and net income attributable to PepsiCo per common share increased 10%. Items affecting comparability (see “Items Affecting Comparability”) positively contributed 4 percentage points to both net income attributable to PepsiCo growth and net income attributable to PepsiCo per common share growth. Additionally, the charges taken as a result of the

~~Table of Contents~~

~~COVID-19 pandemic negatively impacted both net income attributable to PepsiCo growth and net income attributable to PepsiCo per common share growth by 5 percentage points.~~

~~36 Weeks~~

Other pension and retiree medical benefits income increased $84 million, reflecting the recognition of fixed income gains on plan assets, the impact of approved discretionary plan contributions and higher prior-year settlement losses, partially offset by the decrease in discount rates.

~~Net interest expense and other increased $138 million, primarily due to higher average debt balances,~~liability, lower interest rates on average debt balances and higher average cash ~~as well as lower gains on the market value of investments used to economically hedge a portion of our deferred compensation liability.~~balances. These impacts were partially offset by higher average debt balances, as well as lower interest rates on ~~debt and higher~~ average cash balances.

The reported tax rate decreased ~~0.7~~0.3 percentage points, primarily reflecting ~~a prior-year increase~~the decrease in reserves for uncertain tax positions in foreign jurisdictions and the net tax benefits related to the TRAF. These impacts were partially offset by 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 5% and net income attributable to PepsiCo per common share decreased 4%. 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 3 percentage points. Additionally, the charges taken as a result of the ~~COVID-19 pandemic negatively impacted both net income attributable to PepsiCo performance~~expiration of the statute of limitations in certain domestic and ~~net income attributable to PepsiCo per common share performance by 9 percentage points.~~foreign jurisdictions.

Non-GAAP Measures

Certain financial measures contained in this Form 10-Q adjust for the impact of specified items and are not in accordance with U.S. GAAP. We use non-GAAP financial measures internally to make operating and strategic decisions, including the preparation of our annual operating plan, evaluation of our overall business performance and as a factor in determining compensation for certain employees. We believe presenting non-GAAP financial measures in this Form 10-Q provides additional information to facilitate comparison of our historical operating results and trends in our underlying operating results and provides additional transparency on how we evaluate our business. We also believe presenting these measures in this Form 10-Q allows investors to view our performance using the same measures that we use in evaluating our financial and business performance and trends.

We consider quantitative and qualitative factors in assessing whether to adjust for the impact of items that may be significant or that could affect an understanding of our ongoing financial and business performance or trends. Examples of items for which we may make adjustments include: amounts related to mark-to-market gains or losses (non-cash); charges related to restructuring plans; amounts associated with mergers, acquisitions, divestitures and other structural changes; pension and retiree medical related items; charges or adjustments related to the enactment of new laws, rules or regulations, such as significant tax law changes; amounts related to the resolution of tax positions; tax benefits related to reorganizations of our operations; debt redemptions, cash tender or exchange offers; asset impairments (non-cash); and remeasurements of net monetary assets. See below and “Items Affecting Comparability” for a description of adjustments to our U.S. GAAP financial measures in this Form 10-Q.

Non-GAAP information should be considered as supplemental in nature and is not meant to be considered in isolation or as a substitute for the related financial information prepared in accordance with U.S. GAAP. In addition, our non-GAAP financial measures may not be the same as or comparable to similar non-GAAP measures presented by other companies.

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The following non-GAAP financial measures contained in this Form 10-Q are discussed below:

Cost of sales, gross profit, selling, general and administrative expenses, other pension and retiree medical benefits income, provision for income taxes ~~net income attributable to noncontrolling interests~~ and net income attributable to PepsiCo, each adjusted for items affecting comparability, operating profit and net income attributable to PepsiCo per common share – diluted, each adjusted for items affecting comparability, and the corresponding constant currency growth rates

These measures exclude the net impact of mark-to-market gains and losses on centrally managed commodity derivatives that do not qualify for hedge accounting, restructuring and impairment charges related to our 2019 Productivity Plan, ~~inventory fair value adjustments and~~ merger and integration ~~charges~~charges/credits associated with our acquisitions ~~and net tax related to the TCJ Act~~ (see “Items Affecting Comparability” for a detailed description of each of these items). We also evaluate performance on operating profit ~~adjusted for items affecting comparability~~ and net income attributable to PepsiCo per common share – diluted, each adjusted for items affecting comparability ~~each~~ on a constant currency basis, which measure our financial results assuming constant foreign currency exchange rates used for translation based on the rates in effect for the comparable prior-year period. In order to compute our constant currency results, we multiply or divide, as appropriate, our current-year U.S. dollar results by the current-year average foreign exchange rates and then multiply or divide, as appropriate, those amounts by the prior-year average foreign exchange rates. We believe these measures provide useful information in evaluating the results of our business because they exclude items that we believe are not indicative of our ongoing performance.

Organic revenue growth

We define organic revenue growth as net revenue growth adjusted for the impact of foreign exchange translation, as well as the impact from acquisitions, divestitures and other structural changes. We believe organic revenue growth provides useful information in evaluating the results of our business because it excludes items that we believe are not indicative of ongoing performance or that we believe impact comparability with the prior year.

See “Net Revenue and Organic Revenue Growth” in “Results of Operations – Division Review” for further information.

Free cash flow

We define free cash flow as net cash ~~provided by~~used for operating activities less capital spending, plus sales of property, plant and equipment. Since net capital spending is essential to our product innovation initiatives and maintaining our operational capabilities, we believe that it is a recurring and necessary use of cash. As such, we believe investors should also consider net capital spending when evaluating our cash from operating activities. Free cash flow is used by us primarily for acquisitions and financing activities, including debt repayments, dividends and share repurchases. Free cash flow is not a measure of cash available for discretionary expenditures since we have certain non-discretionary obligations such as debt service that are not deducted from the measure.

See “Free Cash Flow” in “Our Liquidity and Capital Resources” for further information.

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Items Affecting Comparability

Our reported financial results in this Form 10-Q are impacted by the following items in each of the following periods:


		12 Weeks Ended 9/5/2020																									12 Weeks Ended 3/20/2021
		Cost of sales		Gross profit		Selling, general and administrative expenses		Operating profit		Other pension and retiree medical benefits income		Provision for income taxes^(a)		Net income attributable to PepsiCo			Cost of sales		Gross profit		Selling, general and administrative expenses		Operating profit		Other pension and retiree medical benefits income		Provision for income taxes(a)		Net income attributable to PepsiCo
Reported, GAAP Measure	Reported, GAAP Measure	$	8,156	$	9,935	$	6,924	$	3,011	$	86	$	526	$	2,291	Reported, GAAP Measure	$	6,671	$	8,149	$	5,837	$	2,312	$	120	$	451	$	1,714
Items Affecting Comparability	Items Affecting Comparability															Items Affecting Comparability
Mark-to-market net impact	Mark-to-market net impact	38		(38)		33		(71)		—		(16)		(55)		Mark-to-market net impact	36		(36)		39		(75)		—		(17)		(58)
Restructuring and impairment charges	Restructuring and impairment charges	(1)		1		(59)		60		1		13		48		Restructuring and impairment charges	(2)		2		(35)		37		6		8		35
Inventory fair value adjustments and merger and integration charges		(11)		11		(32)		43		—		16		27

Merger and integration credits																Merger and integration credits	—		—		10		(10)		—		(3)		(7)

Core, Non-GAAP Measure	Core, Non-GAAP Measure	$	8,182	$	9,909	$	6,866	$	3,043	$	87	$	539	$	2,311	Core, Non-GAAP Measure	$	6,705	$	8,115	$	5,851	$	2,264	$	126	$	439	$	1,684

12 Weeks Ended 9/7/2019
Cost of sales Gross profit Selling, general and administrative expenses Operating profit Other pension and retiree medical benefits income
Provision for income
taxes^(a)
Net income attributable to PepsiCo
Reported, GAAP Measure $ 7,694 $ 9,494 $ 6,639 $ 2,855 $ 38 $ 559 $ 2,100
Items Affecting Comparability
Mark-to-market net impact (13) 13 9 4 — 1 3
Restructuring and impairment charges (10) 10 (83) 93 5 16 82
Inventory fair value adjustments and merger and integration charges — — (7) 7 — 1 6
Core, Non-GAAP Measure $ 7,671 $ 9,517 $ 6,558 $ 2,959 $ 43 $ 577 $ 2,191

36 Weeks Ended 9/5/2020
Cost of sales Gross profit Selling, general and administrative expenses Operating profit Other pension and retiree medical benefits income
Provision for income taxes^(a)
Net income attributable to PepsiCo
Reported, GAAP Measure $ 21,371 $ 26,546 $ 19,292 $ 7,254 $ 247 $ 1,396 $ 5,275
Items Affecting Comparability
Mark-to-market net impact 14 (14) (40) 26 — 8 18
Restructuring and impairment charges (4) 4 (112) 116 8 23 101
Inventory fair value adjustments and merger and integration charges (30) 30 (256) 286 — 32 254
Core, Non-GAAP Measure $ 21,351 $ 26,566 $ 18,884 $ 7,682 $ 255 $ 1,459 $ 5,648

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		36 Weeks Ended 9/7/2019																											12 Weeks Ended 3/21/2020
		Cost of sales		Gross profit		Selling, general and administrative expenses		Operating profit		Provision for income taxes^(a)		Net income attributable to noncontrolling interests		Net income attributable to PepsiCo			Cost of sales		Gross profit		Selling, general and administrative expenses		Operating profit		Other pension and retiree medical benefits income		Provision for income taxes(a)			Net income attributable to PepsiCo
Reported, GAAP Measure	Reported, GAAP Measure	$	20,786	$	25,735	$	18,143	$	7,592	$	1,529	$	27	$	5,548	Reported, GAAP Measure	$	6,127	$	7,754	$	5,830	$	1,924	$	77	$	360		$	1,338
Items Affecting Comparability	Items Affecting Comparability															Items Affecting Comparability
Mark-to-market net impact	Mark-to-market net impact	19		(19)		31		(50)		(12)		—		(38)		Mark-to-market net impact	(38)		38		(104)		142		—		35			107
Restructuring and impairment charges	Restructuring and impairment charges	(100)		100		(182)		282		57		4		221		Restructuring and impairment charges	(2)		2		(30)		32		6		6			32
Inventory fair value adjustments and merger and integration charges		(34)		34		(12)		46		8		—		38
Net tax related to the TCJ Act		—		—		—		—		29		—		(29)
Merger and integration charges																Merger and integration charges	—		—		(25)		25		—		3			22
Core, Non-GAAP Measure	Core, Non-GAAP Measure	$	20,671	$	25,850	$	17,980	$	7,870	$	1,611	$	31	$	5,740	Core, Non-GAAP Measure	$	6,087	$	7,794	$	5,671	$	2,123	$	83	$	404		$	1,499

(a)Provision for income taxes is the expected tax charge/benefit on the underlying item based on the tax laws and income tax rates applicable to the underlying item in its corresponding tax jurisdiction.


	12 Weeks Ended
		3/20/2021			3/21/2020			Change
Net income attributable to PepsiCo per common share – diluted, GAAP measure		$	1.24		$	0.96		29	%
Mark-to-market net impact		(0.04)			0.08
Restructuring and impairment charges		0.03			0.02
Merger and integration (credits)/charges		(0.01)			0.02


Core net income attributable to PepsiCo per common share – diluted, non-GAAP measure		$	1.21	(a)	$	1.07	(a)	13	%
Impact of foreign exchange translation								—
Growth in core net income attributable to PepsiCo per common share – diluted, on a constant currency basis, non-GAAP measure								14	%	(a)

(a)Does not sum due to rounding.

Mark-to-Market Net Impact

We centrally manage commodity derivatives on behalf of our divisions. These commodity derivatives include ~~energy,~~ agricultural products, energy and metals. Commodity derivatives that do not qualify for hedge accounting treatment are marked to market each period with the resulting gains and losses recorded in corporate unallocated expenses as either cost of sales or selling, general and administrative expenses, depending on the underlying commodity. These gains and losses are subsequently reflected in division results when the divisions recognize the cost of the underlying commodity in operating profit. Therefore, the divisions realize the economic effects of the derivative without experiencing any resulting mark-to-market volatility, which remains in corporate unallocated expenses.

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Restructuring and Impairment Charges

2019 Multi-Year Productivity Plan

In connection with our 2019 Productivity Plan, we expect to incur pre-tax charges of approximately $2.5 billion, ~~of which we have incurred $632 million plan to date through September 5, 2020, and~~including cash expenditures of approximately $1.6 ~~billion, of which~~billion. Plan to date through March 20, 2021, we have incurred ~~approximately $428~~pre-tax charges of $840 million, ~~plan to date through September 5, 2020. We~~including cash expenditures of $567 million. For the remainder of 2021, we expect to incur pre-tax charges of approximately ~~$150~~$400 million, ~~and~~including cash expenditures of approximately ~~$100~~$300 million, ~~for the remainder of 2020,~~ with the balance to be reflected in our ~~2021 through~~2022 and 2023 financial results. These charges will be funded primarily through cash from operations. We expect to incur the majority of the remaining pre-tax charges and cash expenditures in our 2021 and 2022 results.

See Note 3 to our condensed consolidated financial statements in this Form 10-Q, as well as Note 3 to our consolidated financial statements in our ~~2019~~2020 Form 10-K, for further information related to our 2019 Productivity Plan.

We regularly evaluate productivity initiatives beyond the productivity plan and other initiatives discussed above and in Note 3 to our condensed consolidated financial statements.

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

In the 12 ~~and 36~~ weeks ended ~~September 5, 2020,~~March 20, 2021, we recorded ~~inventory fair value adjustments and~~ merger and integration ~~charges~~charges/credits related to our acquisitions of ~~$43 million ($27 million after-tax or $0.02 per share)~~BFY Brands, Rockstar and ~~$286 million ($254 million after-tax or $0.18 per share), respectively. Inventory fair value adjustments and merger~~Pioneer Foods. Merger and integration ~~charges~~charges/credits primarily include ~~fair value adjustments to the acquired inventory included in the acquisition-date balance sheets, and closing costs, employee-related costs,~~ changes in the fair value of contingent consideration, employee-related costs and ~~contract termination costs~~other integration costs.

In the 12 weeks ended March 21, 2020, we recorded merger and integration charges related to our acquisitions of BFY Brands ~~Rockstar, Pioneer~~

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~~Foods~~ and ~~Be & Cheery. Merger and integration charges also include liabilities to support socioeconomic programs in South Africa related to our acquisition of~~ Pioneer Foods.

In the 12 and 36 weeks ended September 7, 2019, we recorded inventory fair value adjustments and merger and integration charges of $7 million ($6 million after-tax with a nominal amount per share) and $46 million ($38 million after-tax or $0.03 per share), respectively. These charges primarily relate to ~~SodaStream’s acquired inventory included in the acquisition-date balance sheet, as well as merger~~contract termination and ~~integration charges, including~~ employee-related costs.

See Note 12 ~~to our condensed consolidated financial statements for further information.~~

~~Net Tax Related to the TCJ Act~~

During the fourth quarter of 2017, the TCJ Act was enacted in the United States. We recognized tax benefits of $29 million ($0.02 per share) in the 36 weeks ended September 7, 2019 related to the TCJ Act.

~~See Note 5~~ to our condensed consolidated financial statements for further information.

Our Liquidity and Capital Resources

We believe that our cash generating capability and financial condition, together with our revolving credit facilities, working capital lines and other available methods of debt financing, such as commercial paper borrowings and long-term debt financing, will be adequate to meet our operating, investing and financing ~~needs.~~needs, including with respect to our net capital spending plans. Our primary sources of cash available to fund cash outflows, such as our anticipated ~~share repurchases,~~ dividend payments, debt repayments, payments for acquisitions, including the contingent consideration related to Rockstar, and the transition tax liability under the ~~TCJ~~Tax Cuts and Jobs Act (TCJ Act), include cash from operations, proceeds obtained from issuances of commercial paper and long-term debt and cash and cash equivalents. See “Our Business Risks” and Note 8 to our condensed consolidated financial statements included in this Form 10-Q and “Item 1A. Risk Factors,” “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations – Our Business Risks” and Note 8 to our consolidated financial statements included in our 2020 Form 10-K for further information.

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Our sources and uses of cash were not materially adversely impacted by COVID-19 in the 3612 weeks ended ~~September 5, 2020~~March 20, 2021 and, to date, we have not identified any material liquidity deficiencies as a result of the COVID-19 pandemic. Based on the information currently available to us, we do not expect the impact of the COVID-19 pandemic to have a material impact on our liquidity. We will continue to monitor and assess the impact the COVID-19 pandemic may have on our business and financial results. See ~~“Item 1A. Risk Factors,”~~ “Our Business Risks” and Note 81 to our condensed consolidated financial statements ~~included~~ in this Form 10-Q and “Item 1A. Risk ~~Factors” and~~Factors,” “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations – Our Business ~~Risks,” as well as~~Risks” and Note 81 to our consolidated financial statements included in our ~~2019~~2020 Form 10-K for further ~~information.~~information related to the impact of the COVID-19 pandemic on our business and financial results.

As of ~~September 5, 2020,~~March 20, 2021, cash, cash equivalents and short-term investments in our consolidated subsidiaries subject to currency controls or currency exchange restrictions were not material.

The TCJ Act imposed a mandatory one-time transition tax on undistributed international earnings. As of ~~September 5, 2020,~~March 20, 2021, our mandatory transition tax liability was $3.2 billion, which must be paid through 2026 under the provisions of the TCJ Act. See “Our Liquidity and Capital Resources,” “Our Critical Accounting Policies” and Note 5 to our ~~condensed~~ consolidated financial statements included in our 2020 Form 10-K for further discussion of the TCJ Act.

~~The CARES Act was enacted~~As of March 20, 2021, we had $3.7 billion of non-cancelable purchasing commitments, reflecting an increase of $1.4 billion from December 26, 2020, primarily due to new purchasing contracts and the timing of entering into contract renewals. For further information on ~~March 27,~~our long-term contractual commitments, see “Credit Facilities and Long-Term Contractual Commitments” in “Our Liquidity and Capital Resources” in our 2020 inForm 10-K.

As part of our evolving market practices, we work with our suppliers to optimize our terms and conditions, which include 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 thatextension of payment terms. Our current payment terms with a majority of our suppliers generally range from 60 to 90 days, which we ~~are deferring~~deem to future periods. Estimated federal income tax payments and mandatory transition tax payments under the TCJ Act were made in the third quarter of 2020 and are no longer deferred. Additionally, we expect to pay the previously deferred payroll taxes in the fourth quarter of 2020.be commercially reasonable. We will continue to monitor economic conditions and ~~assess~~market practice working with our suppliers to adjust as necessary. We also maintain voluntary supply chain finance agreements with several participating global financial institutions. Under these agreements, our suppliers, at their sole discretion, may elect to sell their accounts receivable with PepsiCo to these participating global financial institutions. Supplier participation in these financing arrangements is voluntary. Our suppliers negotiate their financing agreements directly with the ~~impact~~respective global financial institutions and we are not a party to these agreements. These financing arrangements allow participating suppliers to leverage PepsiCo’s creditworthiness in establishing credit spreads and associated costs, which generally provides our suppliers with more favorable terms than they would be able to secure on their own. Neither PepsiCo nor any of its subsidiaries provide any guarantees to any third party in connection with these financing arrangements. We have no economic interest in our suppliers’ decision to participate in these agreements. Our obligations to our suppliers, including amounts due and scheduled payment terms, are not impacted. All outstanding amounts related to suppliers participating in such financing arrangements are recorded within accounts payable and other current liabilities in our consolidated balance sheet. We have been informed by the ~~CARES Act~~participating financial institutions that as of March 20, 2021 and ~~similar legislation~~December 26, 2020, $1.1 billion and $1.2 billion, respectively, of our accounts payable to suppliers who participate in ~~other countries may~~these financing arrangements are outstanding. These supply chain finance arrangements did not have a material impact on our ~~business~~liquidity or capital resources in the periods presented and ~~financial results.~~we do not expect such arrangements to have a material impact on our liquidity or capital resources for the foreseeable future.

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Operating Activities

During the 3612 weeks ended ~~September 5, 2020,~~March 20, 2021, net cash ~~provided by operating activities was $6.1 billion, compared to net cash provided by~~used for operating activities of ~~$5.1~~$0.7 billion inwas even with the ~~prior-year period. The operating cash flow performance primarily reflects favorable net working capital comparisons to 2019 and lower net cash tax payments in the current~~prior year.

Investing Activities

During the 3612 weeks ended ~~September 5, 2020,~~March 20, 2021, net cash ~~used for~~provided by investing activities was ~~$8.8~~$0.1 billion, primarily reflecting ~~net cash paid in connection~~maturities of short-term investments with ~~our acquisitions~~maturities of ~~RockStar~~greater than three months of ~~$3.85~~$0.5 billion, ~~Pioneer Foods of $1.2 billion and Be & Cheery of $0.7 billion, as well as~~largely offset by net capital spending of ~~$2.0~~$0.5 billion.

~~For 2020, we now expect~~We regularly review our plans with respect to net capital spending, ~~to be approximately $4 billion, a reduction from our previously announced net capital spending expectation of approximately $5 billion,~~including in light of the ongoing uncertainty caused by the COVID-19 ~~pandemic.~~pandemic on our business, and believe that we have sufficient liquidity to meet our net capital spending needs.

Financing Activities

During the 3612 weeks ended ~~September 5, 2020,~~March 20, 2021, net cash ~~provided by~~used for financing activities was ~~$6.4~~$1.9 billion, primarily reflecting ~~proceeds from issuances of long-term debt of $10.6 billion and net proceeds of short-term borrowings of $2.3 billion, partially offset by~~ the return of operating cash flow to our shareholders primarily through dividend payments ~~and share repurchases~~ of ~~$5.6~~$1.4 billion and payments of ~~long-term debt~~short-term borrowings of ~~$0.8~~$0.4 billion.

We annually review our capital structure with our Board of Directors, including our dividend policy and share repurchase activity. On February 13, 2018, we announced the 2018 share repurchase program providing for the repurchase of up to $15.0 billion of PepsiCo common stock which commenced on July 1, 2018 and will expire on June 30, 2021. OnIn addition, on February ~~13, 2020,~~11, 2021, we announced a 7%5% increase in our annualized dividend to ~~$4.09~~$4.30 per share from ~~$3.82~~$4.09 per share, effective with the dividend expected to be paid in June ~~2020.~~2021. We expect to return a total of approximately ~~$7.5~~$5.9 billion to shareholders in ~~2020 through~~2021, comprised of dividends of approximately $5.8 billion and share repurchases of ~~approximately $2 billion~~$106 million. We completed our share repurchase activity during the 12 weeks ended March 20, 2021 and ~~dividends~~do not expect to repurchase any additional shares for the balance of ~~approximately $5.5 billion.~~2021. See Part II, “Item 2. Unregistered Sales of Equity Securities and Use of Proceeds” for a description of our share repurchase program.

Free Cash Flow

The table below reconciles net cash ~~provided by~~used for operating activities, as reflected on our cash flow statement, to our free cash flow. Free cash flow is a non-GAAP financial measure. For further information on free cash flow see “Non-GAAP Measures.”

36 Weeks Ended
9/5/2020 9/7/2019
Net cash provided by operating activities, GAAP measure $ 6,123 $ 5,063
Capital spending (2,074) (1,959)
Sales of property, plant and equipment 26 63
Free cash flow, non-GAAP measure $ 4,075 $ 3,167

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	12 Weeks Ended
	3/20/2021		3/21/2020
Net cash used for operating activities, GAAP measure	$	(719)	$	(749)
Capital spending	(471)		(484)
Sales of property, plant and equipment	5		5
Free cash flow, non-GAAP measure	$	(1,185)	$	(1,228)

We use free cash flow primarily for acquisitions and financing activities, including debt repayments, dividends and share repurchases. We expect to continue to return free cash flow to our shareholders primarily through dividends ~~and share repurchases~~ while maintaining Tier 1 commercial paper access, which we believe will facilitate appropriate financial flexibility and ready access to global capital and credit markets at favorable interest rates. See “Our Business Risks” included in this Form 10-Q and “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, for certain factors that may impact our credit ratings or our operating cash flows.

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Any downgrade of our credit ratings by a credit rating agency, especially any downgrade to below investment grade, whether or not as a result of our actions or factors which are beyond our control, could increase our future borrowing costs and impair our ability to access capital and credit markets on terms commercially acceptable to us, or at all. In addition, any downgrade of our current short-term credit ratings could impair our ability to access the commercial paper market with the same flexibility that we have experienced historically, and therefore require us to rely more heavily on more expensive types of debt financing. See Note 8 to our condensed consolidated financial statements ~~“Item 1A. Risk Factors”~~ and “Our Business Risks” included in this Form 10-Q, as well as “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 for further information.

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Report of Independent Registered Public Accounting Firm

To the Shareholders and Board of Directors

PepsiCo, Inc.:

Results of Review of Interim Financial Information

We have reviewed the Condensed Consolidated Balance Sheet of PepsiCo, Inc. and subsidiaries (the Company) as of ~~September 5, 2020,~~March 20, 2021, the related Condensed Consolidated Statements of Income, Comprehensive Income, Cash Flows and Equity for the twelve ~~and thirty-six~~ weeks ended ~~September 5,~~March 20, 2021 and March 21, 2020, ~~and September 7, 2019, the related Condensed Consolidated Statement of Cash Flows for the thirty-six weeks ended September 5, 2020 and September 7, 2019,~~ and the related notes (collectively, the consolidated interim financial information). Based on our reviews, we are not aware of any material modifications that should be made to the consolidated interim financial information for it to be in conformity with U.S. generally accepted accounting principles.

We have previously audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Consolidated Balance Sheet of the Company as of December ~~28, 2019,~~26, 2020, and the related Consolidated Statements of Income, Comprehensive Income, Cash Flows and Equity for the year then ended (not presented herein); and in our report dated February ~~13, 2020,~~10, 2021, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying Condensed Consolidated Balance Sheet as of December ~~28, 2019,~~26, 2020, is fairly stated, in all material respects, in relation to the Consolidated Balance Sheet from which it has been derived.

Basis for Review Results

This consolidated interim financial information is the responsibility of the Company’s management. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our reviews in accordance with the standards of the PCAOB. A review of consolidated interim financial information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with the standards of the PCAOB, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.

/s/ KPMG LLP

New York, New York

~~September 30, 2020~~April 14, 2021

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ITEM 3. Quantitative and Qualitative Disclosures About Market Risk.

See ~~“Item 1A. Risk Factors” and~~ “Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations – Our Business Risks.” In addition, see “Item 1A. Risk Factors,” “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations – Our Business Risks” and Note 9 to our consolidated financial statements in our ~~2019~~2020 Form 10-K.

ITEM 4. Controls and Procedures.

As of the end of the period covered by this report, we carried out an evaluation under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures, as such term is defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended (the Exchange Act). Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that as of the end of the period covered by this report our disclosure controls and procedures were effective to ensure that information required to be disclosed by us in reports we file or submit under the Exchange Act is (1) recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and (2) accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

There were no changes in our internal control over financial reporting during our ~~third~~first quarter of ~~2020~~2021 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

During our ~~third~~first quarter of ~~2020,~~2021, we continued migrating certain of our financial processing systems to an enterprise-wide systems solution. These systems implementations are part of our ongoing global business transformation initiative, and we plan to continue implementing such systems throughout other parts of our businesses. In addition, in connection with our 2019 Productivity Plan, we continue to migrate to shared business service models across our operations to further simplify, harmonize and automate processes. In connection with these implementations and resulting business process changes, we continue to enhance the design and documentation of our internal control over financial reporting processes to maintain effective controls over our financial reporting. These transitions have not materially affected, and we do not expect them to materially affect, our internal control over financial reporting.

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PART II OTHER INFORMATION

ITEM 1. Legal Proceedings.

The following information should be read in conjunction with the discussion set forth under Part I, “Item 3. Legal Proceedings” in our ~~2019~~2020 Form 10-K.

We and our subsidiaries are party to a variety of litigation, claims, legal or regulatory proceedings, inquiries and investigations. While the results of such litigation, claims, legal or regulatory proceedings, inquiries and investigations cannot be predicted with certainty, management believes that the final outcome of the foregoing will not have a material adverse effect on our financial condition, results of operations or cash flows. See also “Item ~~1A. Risk Factors” in this Form 10-Q and “Item~~ 1. Business – Regulatory Matters” and “Item 1A. Risk Factors” in our ~~2019~~2020 Form 10-K.

ITEM 1A. Risk Factors.

The following additional risk factor relating to COVID-19 should be read in conjunction with the risk factors set forth under “Item 1A. Risk Factors” in our 2019 Form 10-K and our Form 10-Qs for the fiscal quarter ended March 21, 2020 (Q1 2020 Form 10-Q) and the fiscal quarter ended June 13, 2020 (Q2 2020 Form 10-Q) . The developments described in this additional risk factor have heightened, or in some cases manifested, certain of the risks disclosed in the risk factor section of our 2019 Form 10-K, and such risk factors are further qualified by the information relating to COVID-19 that is described in this Form 10-Q and our Q1 2020 Form 10-Q and Q2 2020 Form 10-Q, including in the additional risk factor below. Except as described herein and in our Q1 2020 Form 10-Q and Q2 2020 Form 10-Q, thereThere have been no material changes with respect to the risk factors disclosed in our ~~2019~~2020 Form 10-K.

You should carefully consider the risks described below and in our 2019 Form 10-K, Q1 2020 Form 10-Q and Q2 2020 Form 10-Q in addition to the other information set forth in this Form 10-Q, our Q2 2020 Form 10-Q, our Q1 2020 Form 10-Q and in our 2019 Form 10-K, including the Management’s Discussion and Analysis of Financial Condition and Results of Operations sections and the consolidated financial statements and related notes. These risks, some of which have occurred and any of which may occur in the future, can have a material adverse effect on our business, financial condition, results of operations or the prices of our publicly traded securities. The risks described below and in our 2019 Form 10-K, our Q1 2020 Form 10-Q and our Q2 2020 Form 10-Q are not the only risks we face. Additional risks and uncertainties not currently known to us, or that we currently deem to be immaterial, may occur or become material in the future and adversely affect our business, reputation, financial condition, results of operations or the prices of our publicly traded securities. Therefore, historical operating results, financial and business performance, events and trends are often not a reliable indicator of future operating results, financial and business performance, events or trends.

~~The impact of the spread of COVID-19 continues to create significant uncertainty for our business, financial condition and results of operations and for the prices of our publicly traded securities.~~

The extent of the impact of the COVID-19 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 market, including the duration and scope of the pandemic, 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.

Our global operations continue to expose us to risks associated with the COVID-19 pandemic, which continues to result in challenging operating environments. COVID-19 continues to spread across the globe to almost all of the countries and territories in which our products are made, manufactured, distributed or

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~~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 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 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 parties with whom we do business. The countries and territories in which our products are made, manufactured, distributed or sold continue to operate in varying stages of restrictions and re-opening to address the COVID-19 pandemic. While some of these restrictions have been lifted or eased in certain jurisdictions, other jurisdictions have seen increases in new COVID-19 cases resulting in restrictions being reinstated, or new restrictions imposed in these jurisdictions. There continues to be considerable uncertainty regarding how current and future health and safety measures implemented in response to the pandemic will impact our business, including whether they will 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 costs or otherwise), how they will further impact our supply chain and whether they will result in further reduced availability of air or other commercial transport, port closures or border restrictions, each or all of which can impact our ability to make, manufacture, distribute and sell our products. To date, we have experienced employee absenteeism which has resulted in reduced manufacturing capacity at certain of our facilities and 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 and ~~increased sanitation, allowances for credit losses, upfront payment write-offs and inventory write-offs, which have negative~~ly impacted and may continue to negatively impact our profitability. In addition, measures that impact our ability to access our offices (some of which remain closed), plants, warehouses, distribution centers or other facilities, 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 of our and their employees, many of whom are not able to perform their job functions remotely. If a significant percentage of our or our business partners’ workforce is unable to work, including because of illness, facility closures, quarantine, curfews, shelter in place orders, travel restrictions, social distancing requirements or other governmental restrictions or voluntarily adopted practices, our operations will be negatively impacted. Any sustained interruption in our or our business partners’ operations, distribution network or supply chain or any significant continuous shortage of raw materials or other supplies as a result of these measures, restrictions or disruptions, including as a result of increased demand for certain products, can impair our ability to make, manufacture, distribute or sell our products. Compliance with governmental measures imposed in response to COVID-19 has caused and will continue to cause us to incur additional costs, and any inability to comply with such measures can subject us to restrictions on our business activities, fines, and other penalties, any of which can adversely affect our business. In addition, the increase in certain of our employees working remotely has amplified certain risks to our business, including increased demand on our information technology resources and systems, increased phishing, business email compromise and other cybersecurity attacks, including increased introduction of malware, as cybercriminals try to exploit the uncertainty surrounding the COVID-19 pandemic, and an increase in the number of points of potential attack, such as laptops and mobile devices (both of which are now being used in increased numbers), to be secured, and any failure to effectively manage these risks, including to timely identify and appropriately respond to any cyberattacks or other disruption to our technology infrastructure, may ~~adversely affect our business.~~

~~Public concern regarding the risk of contracting COVID-19 has impacted and may continue to impact demand from consumers, including due to consumers not leaving their homes or leaving their homes less~~

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often than they did prior to the start of the pandemic or otherwise shopping 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 continue 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 governmental restrictions continue to be relaxed and economies gradually partially or fully reopen in certain of these 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, as a result of COVID-19, certain jurisdictions, such as certain states in Mexico, have enacted or are considering enacting new or expanded product labeling or warning requirements or limitations on the marketing or sale of certain of our products as a result of ingredients or substances contained in such products. 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 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 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 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 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 on our employees and our business, there can be no assurance that we will be successful in our efforts, and as a result, our business, financial condition and results of operations and the prices of our publicly traded securities may be adversely affected.

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ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds.

A summary of our common stock repurchases (in millions, except average price per share) during the ~~third~~first quarter of ~~2020~~2021 is set forth in the table below.

Issuer Purchases of Common Stock

Period
Total
Number of
Shares
Repurchased^(a)
Average Price
Paid Per Share Total Number
of Shares
Purchased as
Part of Publicly
Announced
Plans or
Programs Maximum
Number (or
Approximate
Dollar Value) of
Shares That May Yet Be
Purchased
Under the Plans
or Programs
6/13/2020 $ 9,925
6/14/2020 - 7/11/2020 1.1 $ 131.76 1.1 (141)
9,784
7/12/2020 - 8/8/2020 0.7 $ 136.75 0.7 (100)
9,684
8/9/2020 - 9/5/2020 1.1 $ 137.92 1.1 (159)
Total 2.9 $ 135.40 2.9 $ 9,525


Period	Total Number of Shares Repurchased(a)	Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Maximum Number (or Approximate Dollar Value) of Shares That May Yet Be Purchased Under the Plans or Programs
12/26/2020					$	9,084

12/27/2020 - 1/23/2021	0.4	$	141.69	0.4	(57)
					9,027
1/24/2021 - 2/20/2021	0.4	$	139.28	0.4	(49)
					8,978
2/21/2021 - 3/20/2021	—	$	—	—	—
Total	0.8	$	140.58	0.8	$	8,978

(a)All shares were repurchased in open market transactions pursuant to the $15 billion share repurchase program authorized by our Board of Directors and publicly announced on February 13, 2018, which commenced on July 1, 2018 and will expire on June 30, 2021. Shares repurchased under this program may be repurchased in open market transactions, in privately negotiated transactions, in accelerated stock repurchase transactions or otherwise.

ITEM 6. Exhibits.


See “Index to Exhibits” on page 5944.

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INDEX TO EXHIBITS

ITEM 6


EXHIBIT
Exhibit 3.1			Amended and Restated Articles of Incorporation of PepsiCo, Inc., effective as of May 1, 2019, which are incorporated herein by reference to Exhibit 3.1 to PepsiCo, Inc.’s Current Report on Form 8-K filed with the Securities and Exchange Commission on May 3, 2019.
Exhibit 3.2			By-Laws of PepsiCo, Inc., as amended and restated, effective as of April 15, 2020, which are incorporated herein by reference to Exhibit 3.2 to PepsiCo, Inc.’s Current Report on Form 8-K filed with the Securities and Exchange Commission on April 16, 2020.
Exhibit 10.1			Form of Annual Long-Term Incentive Agreement.
Exhibit 15			Letter re: Unaudited Interim Financial Information.
Exhibit 31			Certifications of Chief Executive Officer and Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
Exhibit 32			Certifications of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
Exhibit 101			The following materials from PepsiCo, Inc.’s Quarterly Report on Form 10-Q for the quarter ended ~~September 5, 2020~~March 20, 2021 formatted in iXBRL (Inline eXtensible Business Reporting Language): (i) the Condensed Consolidated Statement of Income, (ii) the Condensed Consolidated Statement of Comprehensive Income, (iii) the Condensed Consolidated Statement of Cash Flows, (iv) the Condensed Consolidated Balance Sheet, (v) the Condensed Consolidated Statement of Equity, and (vi) Notes to the Condensed Consolidated Financial Statements.
Exhibit 104			The cover page from the Company’s Quarterly Report on Form 10-Q for the quarter ended ~~September 5, 2020,~~March 20, 2021, formatted in iXBRL and contained in Exhibit 101.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.



		PepsiCo, Inc.
		(Registrant)

Date:	~~September 30, 2020~~April 14, 2021	/s/ Marie T. Gallagher
		Marie T. Gallagher
		Senior Vice President and Controller
		(Principal Accounting Officer)

Date:	~~September 30, 2020~~April 14, 2021	/s/ David ~~Yawman~~Flavell
		David ~~Yawman~~Flavell
		Executive Vice President, General Counsel and Corporate Secretary
		(Duly Authorized Officer)

6045


	Severance and Other Employee Costs		Asset Impairments		Other Costs		Total
Liability as of December 28, 2019	$	128	$	0	$	21	$	149
2020 restructuring charges	47		20		57		124
Cash payments ^(a)	(92)		0		(74)		(166)
Non-cash charges and translation	(10)		(20)		4		(26)
Liability as of September 5, 2020	$	73	$	0	$	8	$	81


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


	12 Weeks Ended 9/5/2020
			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)
FLNA	$	1,353	$	—	$	2	$	1	$	1,356
QFNA	145		—		—		—		145
PBNA	697		—		29		17		743
LatAm	250		—		5		—		255
Europe	480		—		13		—		493
AMESA	193		—		2		10		205
APAC	163		—		1		5		169
Corporate unallocated expenses	(270)		(71)		8		10		(323)
Total	$	3,011	$	(71)	$	60	$	43	$	3,043


Period	Total Number of Shares Repurchased^(a)	Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Maximum Number (or Approximate Dollar Value) of Shares That May Yet Be Purchased Under the Plans or Programs
6/13/2020					$	9,925

6/14/2020 - 7/11/2020	1.1	$	131.76	1.1	(141)
					9,784
7/12/2020 - 8/8/2020	0.7	$	136.75	0.7	(100)
					9,684
8/9/2020 - 9/5/2020	1.1	$	137.92	1.1	(159)
Total	2.9	$	135.40	2.9	$	9,525