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 March ~~19, 2022~~25, 2023 (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

~~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

3.200% Senior Notes Due 2029

PEP29

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

0.750% Senior Notes Due 2033

PEP33

The Nasdaq Stock Market LLC

3.550% Senior Notes Due 2034

PEP34

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 ¨

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 ¨

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	☒	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 ☒

Number of shares of Common Stock outstanding as of April ~~19, 2022~~18, 2023 was ~~1,382,683,559.~~1,377,693,115.

Table of Contents

PepsiCo, Inc. and Subsidiaries

Table of Contents


		Page No.
Part I Financial Information
Item 1.	Condensed Consolidated Financial Statements	32
	Condensed Consolidated Statement of Income – 12 Weeks ~~Ended~~ End ed March ~~19, 2022~~25 , 202 3 and March 19 , 20 ~~2021~~2 2	32
	Condensed Consolidated Statement of Comprehensive Income – 12 Weeks Ended March ~~19, 2022~~2 5 , 202 3 and March 19 , 20 ~~2021~~2 2	43
	Condensed Consolidated Statement of Cash Flows – 12 Weeks Ended March ~~19, 2022~~25 , 202 3 and March ~~20, 2021~~19 , 202 2	54
	Condensed Consolidated Balance Sheet – March ~~19, 2022~~25 , 202 3 and December ~~25, 2021~~31 , 202 2	76
	Condensed Consolidated Statement of Equity – 12 Weeks Ended March ~~19, 2022~~25 , 202 3 and March ~~20, 2021~~19 , 202 2	87
	Notes to the Condensed Consolidated Financial Statements	98
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2422
Report of Independent Registered Public Accounting Firm		4340
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	4441
Item 4.	Controls and Procedures	4441
Part II Other Information
Item 1.	Legal Proceedings	4542
Item 1A.	Risk Factors	4542
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	4642
Item 6.	Exhibits	4642

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						12 Weeks Ended
			3/19/2022		3/20/2021				3/25/2023		3/19/2022
Net Revenue	Net Revenue		$	16,200	$	14,820	Net Revenue		$	17,846	$	16,200
Cost of sales	Cost of sales		7,433		6,671		Cost of sales		7,988		7,433
Gross profit	Gross profit		8,767		8,149		Gross profit		9,858		8,767
Selling, general and administrative expenses	Selling, general and administrative expenses		6,822		5,837		Selling, general and administrative expenses		7,229		6,580
Gain associated with the Juice Transaction (a)	Gain associated with the Juice Transaction (a)		(3,322)		—		Gain associated with the Juice Transaction (a)		—		(3,322)
Impairment of intangible assets (see Notes 1 and 4)							Impairment of intangible assets (see Notes 1 and 4)		—		242
Operating Profit	Operating Profit		5,267		2,312		Operating Profit		2,629		5,267
Other pension and retiree medical benefits income	Other pension and retiree medical benefits income		134		120		Other pension and retiree medical benefits income		61		134
Net interest expense and other	Net interest expense and other		(240)		(258)		Net interest expense and other		(200)		(240)
Income before income taxes	Income before income taxes		5,161		2,174		Income before income taxes		2,490		5,161
Provision for income taxes	Provision for income taxes		888		451		Provision for income taxes		546		888
Net income	Net income		4,273		1,723		Net income		1,944		4,273
Less: Net income attributable to noncontrolling interests	Less: Net income attributable to noncontrolling interests		12		9		Less: Net income attributable to noncontrolling interests		12		12
Net Income Attributable to PepsiCo	Net Income Attributable to PepsiCo		$	4,261	$	1,714	Net Income Attributable to PepsiCo		$	1,932	$	4,261
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		$	3.08	$	1.24	Basic		$	1.40	$	3.08
Diluted	Diluted		$	3.06	$	1.24	Diluted		$	1.40	$	3.06
Weighted-average common shares outstanding	Weighted-average common shares outstanding						Weighted-average common shares outstanding
Basic	Basic		1,383		1,380		Basic		1,378		1,383
Diluted	Diluted		1,391		1,387		Diluted		1,384		1,391

(a)In the 12 weeks ended March 19, 2022, we sold our Tropicana, Naked and other select juice brands to PAI Partners for ~~approximately~~ $3.5 billion in cash and a 39% noncontrolling interest in a ~~newly formed~~ joint venture, ~~(Tropicana JV)~~Tropicana Brands Group (TBG), operating across North America and Europe (Juice Transaction). See Note 1112 for further information.

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						12 Weeks Ended
			3/19/2022		3/20/2021				3/25/2023		3/19/2022
Net income	Net income		$	4,273	$	1,723	Net income		$	1,944	$	4,273
Other comprehensive (loss)/income, net of taxes:
Other comprehensive loss, net of taxes:							Other comprehensive loss, net of taxes:
Net currency translation adjustment	Net currency translation adjustment		(560)		131		Net currency translation adjustment		(235)		(560)
Net change on cash flow hedges	Net change on cash flow hedges		106		72		Net change on cash flow hedges		(59)		106
Net pension and retiree medical adjustments	Net pension and retiree medical adjustments		13		27		Net pension and retiree medical adjustments		(4)		13

Other	Other		(4)		—		Other		(1)		(4)
			(445)		230				(299)		(445)
Comprehensive income	Comprehensive income		3,828		1,953		Comprehensive income		1,645		3,828
Less: Comprehensive income attributable to noncontrolling interests	Less: Comprehensive income attributable to noncontrolling interests		12		9		Less: Comprehensive income attributable to noncontrolling interests		12		12
Comprehensive Income Attributable to PepsiCo	Comprehensive Income Attributable to PepsiCo		$	3,816	$	1,944	Comprehensive Income Attributable to PepsiCo		$	1,633	$	3,816

See accompanying notes to the condensed consolidated financial statements.

Table of Contents

Condensed Consolidated Statement of Cash Flows

PepsiCo, Inc. and Subsidiaries

(in millions, unaudited)


		12 Weeks Ended					12 Weeks Ended
		3/19/2022		3/20/2021			3/25/2023		3/19/2022
Operating Activities	Operating Activities					Operating Activities
Net income	Net income	$	4,273	$	1,723	Net income	$	1,944	$	4,273
Depreciation and amortization	Depreciation and amortization	555		560		Depreciation and amortization	590		555
Gain associated with the Juice Transaction	Gain associated with the Juice Transaction	(3,322)		—		Gain associated with the Juice Transaction	—		(3,322)
Brand portfolio impairment charges		241		—
Russia-Ukraine conflict charges		241		—

Impairment and other (credits)/charges						Impairment and other (credits)/charges	(13)		482
Operating lease right-of-use asset amortization	Operating lease right-of-use asset amortization	103		99		Operating lease right-of-use asset amortization	116		103
Share-based compensation expense	Share-based compensation expense	81		79		Share-based compensation expense	93		81
Restructuring and impairment charges	Restructuring and impairment charges	27		43		Restructuring and impairment charges	112		27
Cash payments for restructuring charges	Cash payments for restructuring charges	(32)		(49)		Cash payments for restructuring charges	(64)		(32)
Acquisition and divestiture-related charges	Acquisition and divestiture-related charges	56		(10)		Acquisition and divestiture-related charges	2		56
Cash payments for acquisition and divestiture-related charges	Cash payments for acquisition and divestiture-related charges	(17)		(7)		Cash payments for acquisition and divestiture-related charges	(4)		(17)
Pension and retiree medical plan (income)/expense		(1)		21
Pension and retiree medical plan expense/(income)						Pension and retiree medical plan expense/(income)	30		(1)
Pension and retiree medical plan contributions	Pension and retiree medical plan contributions	(178)		(413)		Pension and retiree medical plan contributions	(175)		(178)
Deferred income taxes and other tax charges and credits	Deferred income taxes and other tax charges and credits	257		108		Deferred income taxes and other tax charges and credits	78		257

Change in assets and liabilities:	Change in assets and liabilities:					Change in assets and liabilities:
Accounts and notes receivable	Accounts and notes receivable	(837)		(455)		Accounts and notes receivable	(348)		(837)
Inventories	Inventories	(549)		(397)		Inventories	(542)		(549)
Prepaid expenses and other current assets	Prepaid expenses and other current assets	(190)		(210)		Prepaid expenses and other current assets	(288)		(190)
Accounts payable and other current liabilities	Accounts payable and other current liabilities	(1,238)		(1,906)		Accounts payable and other current liabilities	(2,259)		(1,238)
Income taxes payable	Income taxes payable	489		227		Income taxes payable	290		489
Other, net	Other, net	(133)		(132)		Other, net	46		(133)
Net Cash Used for Operating Activities	Net Cash Used for Operating Activities	(174)		(719)		Net Cash Used for Operating Activities	(392)		(174)

Investing Activities	Investing Activities					Investing Activities
Capital spending	Capital spending	(522)		(471)		Capital spending	(581)		(522)
Sales of property, plant and equipment	Sales of property, plant and equipment	3		5		Sales of property, plant and equipment	19		3
Acquisitions, net of cash acquired, and investments in noncontrolled affiliates		(13)		(13)
Acquisitions, net of cash acquired, investments in noncontrolled affiliates and purchases of intangible and other assets						Acquisitions, net of cash acquired, investments in noncontrolled affiliates and purchases of intangible and other assets	(16)		(13)
Proceeds associated with the Juice Transaction	Proceeds associated with the Juice Transaction	3,456		—		Proceeds associated with the Juice Transaction	—		3,456
Other divestitures and sales of investments in noncontrolled affiliates		5		35
Other divestitures, sales of investments in noncontrolled affiliates and other assets						Other divestitures, sales of investments in noncontrolled affiliates and other assets	85		5
Short-term investments, by original maturity:	Short-term investments, by original maturity:					Short-term investments, by original maturity:

More than three months - purchases						More than three months - purchases	(158)		—
More than three months - maturities	More than three months - maturities	—		535		More than three months - maturities	100		—

Three months or less, net	Three months or less, net	22		3		Three months or less, net	19		22
Other investing, net	Other investing, net	4		—		Other investing, net	—		4
Net Cash Provided by Investing Activities		2,955		94
Net Cash (Used for)/Provided by Investing Activities						Net Cash (Used for)/Provided by Investing Activities	(532)		2,955

(Continued on following page)

Table of Contents

Condensed Consolidated Statement of Cash Flows (continued)

PepsiCo, Inc. and Subsidiaries

(in millions, unaudited)


		12 Weeks Ended					12 Weeks Ended
		3/19/2022		3/20/2021			3/25/2023		3/19/2022
Financing Activities	Financing Activities					Financing Activities

Proceeds from issuances of long-term debt						Proceeds from issuances of long-term debt	$	2,986	$	—
Payments of long-term debt	Payments of long-term debt	(1,251)		(1)		Payments of long-term debt	(1,251)		(1,251)

Short-term borrowings, by original maturity:	Short-term borrowings, by original maturity:					Short-term borrowings, by original maturity:
More than three months - proceeds	More than three months - proceeds	559		—		More than three months - proceeds	393		559
More than three months - payments	More than three months - payments	—		(396)		More than three months - payments	(1)		—
Three months or less, net	Three months or less, net	647		53		Three months or less, net	491		647

Cash dividends paid	Cash dividends paid	(1,505)		(1,429)		Cash dividends paid	(1,608)		(1,505)
Share repurchases - common	Share repurchases - common	(193)		(106)		Share repurchases - common	(160)		(193)

Proceeds from exercises of stock options	Proceeds from exercises of stock options	49		62		Proceeds from exercises of stock options	46		49
Withholding tax payments on restricted stock units (RSUs) and performance stock units (PSUs) converted	Withholding tax payments on restricted stock units (RSUs) and performance stock units (PSUs) converted	(85)		(71)		Withholding tax payments on restricted stock units (RSUs) and performance stock units (PSUs) converted	(116)		(85)
Other financing	Other financing	(1)		—		Other financing	(3)		(1)
Net Cash Used for Financing Activities		(1,780)		(1,888)
Net Cash Provided by/(Used for) Financing Activities						Net Cash Provided by/(Used for) Financing Activities	777		(1,780)
Effect of exchange rate changes on cash and cash equivalents and restricted cash	Effect of exchange rate changes on cash and cash equivalents and restricted cash	(17)		(10)		Effect of exchange rate changes on cash and cash equivalents and restricted cash	(116)		(17)
Net Increase/(Decrease) in Cash and Cash Equivalents and Restricted Cash		984		(2,523)
Net (Decrease)/Increase in Cash and Cash Equivalents and Restricted Cash						Net (Decrease)/Increase in Cash and Cash Equivalents and Restricted Cash	(263)		984
Cash and Cash Equivalents and Restricted Cash, Beginning of Year	Cash and Cash Equivalents and Restricted Cash, Beginning of Year	5,707		8,254		Cash and Cash Equivalents and Restricted Cash, Beginning of Year	5,100		5,707
Cash and Cash Equivalents and Restricted Cash, End of Period	Cash and Cash Equivalents and Restricted Cash, End of Period	$	6,691	$	5,731	Cash and Cash Equivalents and Restricted Cash, End of Period	$	4,837	$	6,691

Supplemental Non-Cash Activity	Supplemental Non-Cash Activity					Supplemental Non-Cash Activity
Right-of-use assets obtained in exchange for lease obligations	Right-of-use assets obtained in exchange for lease obligations	$	100	$	167	Right-of-use assets obtained in exchange for lease obligations	$	213	$	100

See accompanying notes to the condensed consolidated financial statements.

Table of Contents

Condensed Consolidated Balance Sheet

PepsiCo, Inc. and Subsidiaries

(in millions except per share amounts)


	(Unaudited)
	3/25/2023		12/31/2022
ASSETS
Current Assets
Cash and cash equivalents	$	4,770	$	4,954
Short-term investments	434		394

Accounts and notes receivable, less allowance ($184 and $150, respectively)	10,469		10,163
Inventories:
Raw materials and packaging	2,435		2,366
Work-in-process	115		114
Finished goods	3,147		2,742
	5,697		5,222
Prepaid expenses and other current assets	1,057		806

Total Current Assets	22,427		21,539
Property, plant and equipment	50,022		49,784
Accumulated depreciation	(25,794)		(25,493)
Property, Plant and Equipment, net	24,228		24,291
Amortizable Intangible Assets, net	1,250		1,277
Goodwill	18,089		18,202
Other Indefinite-Lived Intangible Assets	14,273		14,309

Investments in Noncontrolled Affiliates	3,123		3,073
Deferred Income Taxes	4,211		4,204
Other Assets	5,441		5,292
Total Assets	$	93,042	$	92,187

LIABILITIES AND EQUITY
Current Liabilities
Short-term debt obligations	$	4,281	$	3,414
Accounts payable and other current liabilities	21,556		23,371

Total Current Liabilities	25,837		26,785
Long-Term Debt Obligations	37,486		35,657
Deferred Income Taxes	4,039		4,133
Other Liabilities	8,505		8,339
Total Liabilities	75,867		74,914
Commitments and contingencies
PepsiCo Common Shareholders’ Equity
Common stock, par value 12/3¢ per share (authorized 3,600 shares; issued, net of repurchased common stock at par value: 1,378 and 1,377 shares, respectively)	23		23
Capital in excess of par value	3,996		4,134
Retained earnings	68,142		67,800
Accumulated other comprehensive loss	(15,601)		(15,302)
Repurchased common stock, in excess of par value (489 and 490 shares, respectively)	(39,518)		(39,506)
Total PepsiCo Common Shareholders’ Equity	17,042		17,149
Noncontrolling interests	133		124
Total Equity	17,175		17,273
Total Liabilities and Equity	$	93,042	$	92,187

See accompanying notes to the condensed consolidated financial statements.

Table of Contents

Condensed Consolidated ~~Balance Sheet~~Statement of Equity

PepsiCo, Inc. and Subsidiaries

(in millions, except per share ~~amounts)~~amounts, unaudited)

(Unaudited)
3/19/2022 12/25/2021
ASSETS
Current Assets
Cash and cash equivalents $ 6,561 $ 5,596
Short-term investments 343 392
Accounts and notes receivable, less allowance: 3/22 - $192 and 12/21 - $147 9,424 8,680
Inventories:
Raw materials and packaging 2,017 1,898
Work-in-process 154 151
Finished goods 2,591 2,298
4,762 4,347
Prepaid expenses and other current assets 1,252 980
Assets held for sale — 1,788
Total Current Assets 22,342 21,783
Property, plant and equipment 46,533 46,828
Accumulated depreciation (24,516) (24,421)
Property, Plant and Equipment, net 22,017 22,407
Amortizable Intangible Assets, net 1,497 1,538
Goodwill 18,112 18,381
Other Indefinite-Lived Intangible Assets 16,603 17,127
Investments in Noncontrolled Affiliates 3,595 2,627
Deferred Income Taxes 4,301 4,310
Other Assets 4,495 4,204
Total Assets $ 92,962 $ 92,377
LIABILITIES AND EQUITY
Current Liabilities
Short-term debt obligations $ 5,459 $ 4,308
Accounts payable and other current liabilities 20,365 21,159
Liabilities held for sale — 753
Total Current Liabilities 25,824 26,220
Long-Term Debt Obligations 34,590 36,026
Deferred Income Taxes 5,072 4,826
Other Liabilities 9,156 9,154
Total Liabilities 74,642 76,226
Commitments and contingencies
PepsiCo Common Shareholders’ Equity
Common stock, par value 12/3¢ per share (authorized 3,600 shares; issued, net of repurchased common stock at par value: 1,384 and 1,383 shares, respectively)
23 23
Capital in excess of par value 3,893 4,001
Retained earnings 67,934 65,165
Accumulated other comprehensive loss (15,343) (14,898)
Repurchased common stock, in excess of par value (483 and 484 shares, respectively) (38,305) (38,248)
Total PepsiCo Common Shareholders’ Equity 18,202 16,043
Noncontrolling interests 118 108
Total Equity 18,320 16,151
Total Liabilities and Equity $ 92,962 $ 92,377


	12 Weeks Ended
		3/25/2023	3/19/2022
			Shares	Amount		Shares	Amount










Common Stock
Balance, beginning of period			1,377	$	23	1,383	$	23
Change in repurchased common stock			1	—		1	—
Balance, end of period			1,378	23		1,384	23
Capital in Excess of Par Value
Balance, beginning of period				4,134			4,001
Share-based compensation expense				94			83

Stock option exercises, RSUs and PSUs converted				(116)			(106)
Withholding tax on RSUs and PSUs converted				(116)			(85)

Balance, end of period				3,996			3,893
Retained Earnings
Balance, beginning of period				67,800			65,165

Net income attributable to PepsiCo				1,932			4,261
Cash dividends declared – common (a)				(1,590)			(1,492)

Balance, end of period				68,142			67,934
Accumulated Other Comprehensive Loss
Balance, beginning of period				(15,302)			(14,898)
Other comprehensive loss attributable to PepsiCo				(299)			(445)
Balance, end of period				(15,601)			(15,343)
Repurchased Common Stock
Balance, beginning of period			(490)	(39,506)		(484)	(38,248)
Share repurchases			(1)	(174)		(1)	(213)
Stock option exercises, RSUs and PSUs converted			2	162		2	156

Balance, end of period			(489)	(39,518)		(483)	(38,305)
Total PepsiCo Common Shareholders’ Equity				17,042			18,202
Noncontrolling Interests
Balance, beginning of period				124			108
Net income attributable to noncontrolling interest				12			12
Distributions to noncontrolling interests				(1)			—


Other, net				(2)			(2)
Balance, end of period				133			118
Total Equity				$	17,175		$	18,320

(a)Cash dividends declared per common share were $1.15 and $1.075 for the 12 weeks ended March 25, 2023 and March 19, 2022, respectively.

See accompanying notes to the condensed consolidated financial statements.

Table of Contents

~~Condensed Consolidated Statement of Equity~~

~~PepsiCo, Inc. and Subsidiaries~~

~~(in millions, except per share amounts, unaudited)~~

12 Weeks Ended
3/19/2022 3/20/2021
Shares Amount Shares Amount
Common Stock
Balance, beginning of period 1,383 $ 23 1,380 $ 23
Change in repurchased common stock 1 — 2 —
Balance, end of period 1,384 23 1,382 23
Capital in Excess of Par Value
Balance, beginning of period 4,001 3,910
Share-based compensation expense 83 80
Stock option exercises, RSUs and PSUs converted (106) (119)
Withholding tax on RSUs and PSUs converted (85) (71)
Balance, end of period 3,893 3,800
Retained Earnings
Balance, beginning of period 65,165 63,443
Net income attributable to PepsiCo 4,261 1,714
Cash dividends declared – common (a)
(1,492) (1,417)
Balance, end of period 67,934 63,740
Accumulated Other Comprehensive Loss
Balance, beginning of period (14,898) (15,476)
Other comprehensive (loss)/income attributable to PepsiCo (445) 230
Balance, end of period (15,343) (15,246)
Repurchased Common Stock
Balance, beginning of period (484) (38,248) (487) (38,446)
Share repurchases (1) (213) (1) (106)
Stock option exercises, RSUs and PSUs converted 2 156 3 182
Balance, end of period (483) (38,305) (485) (38,370)
Total PepsiCo Common Shareholders’ Equity 18,202 13,947
Noncontrolling Interests
Balance, beginning of period 108 98
Net income attributable to noncontrolling interest 12 9
Other, net (2) (1)
Balance, end of period 118 106
Total Equity $ 18,320 $ 14,053

~~(a)Cash dividends declared per common share were $1.075 and $1.0225 for the 12 weeks ended March 19, 2022 and March 20, 2021, respectively.~~

~~See accompanying notes to the condensed consolidated financial statements.~~

~~Table of Contents~~

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 ~~25, 2021~~31, 2022 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 ~~25, 2021 (2021~~31, 2022 (2022 Form 10-K). This report should be read in conjunction with our ~~2021~~2022 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 weeks ended March ~~19, 2022~~25, 2023 are not necessarily indicative of the results expected for any future period or the full year.

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.

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 are reported on a monthly calendar basis prior to the fourth quarter of 2021. Beginning in the fourth quarter of 2021, all of our international operations reported on a monthly calendar basis. This change did not have a material impact on our condensed consolidated financial statements. For our international operations,for which the months of January and February are reflected in our results for the 12 weeks endedMarch 25, 2023 and March 19, 2022.

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. Additionally, the business and economic uncertainty resulting from the ~~novel coronavirus (COVID-19) pandemic~~Russia-Ukraine conflict and the ~~deadly conflict in Ukraine~~high interest rate and inflationary cost environment has made such estimates and assumptions more difficult to calculate. Accordingly, actual results and outcomes could differ from those estimates.

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.

Our Divisions

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

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

Table of Contents

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

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

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

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

6)Africa, Middle East and South Asia (AMESA), which includes all of our beverage and convenient food 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 and convenient food businesses in Asia Pacific, Australia and New Zealand, and China region.

Net revenue of each division is as follows:


		12 Weeks Ended						12 Weeks Ended
			3/19/2022		3/20/2021				3/25/2023		3/19/2022
FLNA	FLNA		$	4,839	$	4,236	FLNA		$	5,583	$	4,839
QFNA	QFNA		713		646		QFNA		777		713
PBNA	PBNA		5,353		5,074		PBNA		5,798		5,353
LatAm	LatAm		1,474		1,242		LatAm		1,777		1,474
Europe	Europe		1,797		1,795		Europe		1,886		1,797
AMESA	AMESA		1,004		883		AMESA		1,019		1,004
APAC	APAC		1,020		944		APAC		1,006		1,020
Total	Total		$	16,200	$	14,820	Total		$	17,846	$	16,200

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


		12 Weeks Ended									12 Weeks Ended
		3/19/2022				3/20/2021					3/25/2023				3/19/2022
		Beverages(a)		Convenient Foods		Beverages(a)		Convenient Foods			Beverages(a)		Convenient Foods		Beverages(a)		Convenient Foods
LatAm	LatAm	10	%	90	%	10	%	90	%	LatAm	10	%	90	%	10	%	90	%
Europe	Europe	50	%	50	%	50	%	50	%	Europe	45	%	55	%	50	%	50	%
AMESA	AMESA	30	%	70	%	30	%	70	%	AMESA	30	%	70	%	30	%	70	%
APAC	APAC	15	%	85	%	15	%	85	%	APAC	15	%	85	%	15	%	85	%
PepsiCo ~~(b)~~	PepsiCo ~~(b)~~	40	%	60	%	45	%	55	%	PepsiCo ~~(b)~~	40	%	60	%	40	%	60	%

(a)Beverage revenue from company-owned bottlers, which primarily includes our consolidated bottling operations in our PBNA and Europe divisions, is approximately 35% ~~and 40%~~ of our consolidated net revenue in each of the 12 weeks ended March ~~19, 2022~~25, 2023 and March ~~20, 2021, respectively.~~19, 2022. Generally, our finished goods beverage operations produce higher net revenue but lower operating margin as compared to concentrate sold to authorized bottling partners for the manufacture of finished goods beverages.

~~(b)The decrease in the percentage of net revenue generated by our beverage business in the 12 weeks ended March 19, 2022 primarily reflects the Juice Transaction. See Note 11 for further information.~~

109

Table of Contents

Operating profit of each division is as follows:


		12 Weeks Ended						12 Weeks Ended
			3/19/2022		3/20/2021				3/25/2023		3/19/2022
FLNA	FLNA		$	1,296	$	1,240	FLNA		$	1,599	$	1,296
QFNA	QFNA		159		150		QFNA		188		159
PBNA (a)	PBNA (a)		3,434		366		PBNA (a)		483		3,434
LatAm	LatAm		323		218		LatAm		364		323
Europe (a) (b)	Europe (a) (b)		(136)		131		Europe (a) (b)		71		(136)
AMESA	AMESA		180		138		AMESA		168		180
APAC	APAC		215		208		APAC		227		215
Total divisions	Total divisions		5,471		2,451		Total divisions		3,100		5,471
Corporate unallocated expenses ~~(c)~~	Corporate unallocated expenses ~~(c)~~		(204)		(139)		Corporate unallocated expenses ~~(c)~~		(471)		(204)
Total	Total		$	5,267	$	2,312	Total		$	2,629	$	5,267

(a)In the 12 weeks ended March 19, 2022, we recorded a gain of ~~$3.0 billion~~$3,024 million and $298 million in our PBNA and Europe divisions, respectively, associated with the Juice Transaction. The total after-tax amount was ~~$2.9 billion~~$2,870 million or $2.06 per share. See Note 1112 for further information.

(b)In the 12 weeks ended March 19, 2022, we recognized impairment and other charges/credits as follows:

(1)Pre-tax charges of $241 million ($241 million after-tax or $0.17 per share), as a result of the Russia-Ukraine conflict, including impairment related to property, plant and equipment, allowance for expected credit losses, inventory write downs and other charges, with $140 million recorded ~~pre-tax~~in cost of sales, $100 million recorded in selling, general and administrative expenses and $1 million recorded in impairment of intangible assets.

(2)Pre-tax brand portfolio impairment charges ~~(Brand Portfolio Impairment Charges)~~ of $241 million ($193 million after-tax or $0.14 per share) in ~~selling, general and administrative expenses~~impairment of intangible assets related to the ~~discontinuation~~repositioning or ~~repositioning~~discontinuation of certain juice and dairy brands in Russia. See Note 34 for further information. ~~Also~~For information on indefinite-lived intangible assets, see ~~below for charges taken as a result~~Notes 2 and 4 to our consolidated financial statements in our 2022 Form 10-K.

Note 2 - Recently Issued Accounting Pronouncements

Adopted

In September 2022, the Financial Accounting Standards Board issued guidance to enhance the transparency of supplier finance programs to allow financial statement users to understand the effect on working capital, liquidity and cash flows. The new guidance requires disclosure of key terms of the ~~Russia-Ukraine conflict.~~

~~(c)~~Inprogram, including a description of the ~~12 weeks ended March 20, 2021, we recorded a pre-tax unrealized gain~~payment terms, payment timing and assets pledged as security or other forms of ~~$108 million ($82 million after-tax~~guarantees provided to the finance provider or ~~$0.06 per share) on our short-term investment in a publicly traded company, based on~~intermediary. Other requirements include the ~~quoted active market price~~disclosure of the amount that remains unpaid as of ~~market close on March 19, 2021,~~ the ~~last trading day~~end of ~~our~~the reporting period, a description of where these obligations are presented in the balance sheet and a rollforward of the obligation during the annual period. We adopted the guidance in the first quarter of ~~2021. The gain was recorded~~2023, except for the rollforward, which is effective in ~~selling, general and administrative expenses within corporate unallocated expenses.~~fiscal year 2024 with early adoption permitted. We ~~sold all of these shares during~~currently plan to adopt the ~~second quarter of 2021.~~

~~Operating profit includes certain pre-tax charges in our Europe division, taken as a result of the Russia-Ukraine conflict. These pre-tax charges are as follows:~~

~~12 Weeks Ended 3/19/2022~~

~~Impairment charges related to property, plant and equipment~~

~~123~~

~~Allowance for expected credit losses~~

~~Inventory write-downs~~

~~Other~~

~~Total~~ ~~(a)~~

~~241~~

~~After-tax amount~~

~~241~~

~~Impact on net income attributable to PepsiCo per common share~~

~~(0.17)~~

~~(a)~~rollforward guidance when effective. ~~Includes $140 million recorded in cost of sales and $101 million recorded in selling, general and administrative expenses.~~See Note 13 for disclosures currently required under this guidance.

1110

Table of Contents

Operating profit includes certain pre-tax charges taken as a result of the COVID-19 pandemic, primarily related to incremental employee compensation costs, such as certain leave benefits and labor costs, and employee protection costs. These pre-tax charges by division are as follows:

12 Weeks Ended
3/19/2022 3/20/2021
FLNA $ 14 $ 24
QFNA 1 2
PBNA 10 13
LatAm 6 15
Europe 1 6
AMESA (a)
2 (1)
APAC 2 2
Total $ 36 $ 61

~~(a)Income amount primarily relates to a true-up of inventory write-downs.~~

Note 23 - 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. To build on the successful implementation of the 2019 Productivity Plan, in ~~2021,~~2022, we expanded and extended the plan through the end of ~~2026~~2028 to take advantage of additional opportunities within the initiatives described above. As a result, we expect to incur pre-tax charges of approximately ~~$3.15~~$3.65 billion, including cash expenditures of approximately ~~$2.4~~$2.9 billion. These pre-tax charges are expected to consist of approximately 55% of severance and other employee-related costs, 10% for asset impairments (all non-cash) resulting from plant closures and related actions, and 35% for other costs associated with the implementation of our initiatives.

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	15	%	1	%	25	%	10	%	25	%	5	%	4	%	15	%

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


		12 Weeks Ended						12 Weeks Ended
			3/19/2022		3/20/2021				3/25/2023		3/19/2022
Cost of sales	Cost of sales		$	5	$	2	Cost of sales		$	3	$	5
Selling, general and administrative expenses	Selling, general and administrative expenses		22		35		Selling, general and administrative expenses		110		22
Other pension and retiree medical benefits expense			—		6
Other pension and retiree medical benefits income (a)							Other pension and retiree medical benefits income (a)		(1)		—
Total restructuring and impairment charges	Total restructuring and impairment charges		$	27	$	43	Total restructuring and impairment charges		$	112	$	27
After-tax amount	After-tax amount		$	21	$	35	After-tax amount		$	98	$	21
Impact on net income attributable to PepsiCo per common share	Impact on net income attributable to PepsiCo per common share		$	(0.02)	$	(0.03)	Impact on net income attributable to PepsiCo per common share		$	(0.07)	$	(0.02)


	12 Weeks Ended			Plan to Date
		3/25/2023		3/19/2022		through 3/25/2023
FLNA		$	7	$	3	$	217
QFNA		—		—		19
PBNA		5		3		231
LatAm		5		6		176
Europe		89		7		432
AMESA		5		2		87
APAC		1		1		78
Corporate		1		5		230
		113		27		1,470
Other pension and retiree medical benefits (income)/expense (a)		(1)		—		97
Total		$	112	$	27	$	1,567

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

1211

Table of Contents

12 Weeks Ended Plan to Date
3/19/2022 3/20/2021 through 3/19/2022
FLNA $ 3 $ 15 $ 167
QFNA — — 12
PBNA 3 4 161
LatAm 6 2 145
Europe 7 11 241
AMESA 2 1 72
APAC 1 — 62
Corporate 5 4 144
27 37 1,004
Other pension and retiree medical benefits expense — 6 67
Total $ 27 $ 43 $ 1,071


		12 Weeks Ended			Plan to Date					12 Weeks Ended	Plan to Date
			3/19/2022		3/20/2021		through 3/19/2022				3/25/2023		3/19/2022		through 3/25/2023
Severance and other employee costs	Severance and other employee costs		$	11	$	34	$	575	Severance and other employee costs		$	92	$	11	$	899
Asset impairments	Asset impairments		—		—		157		Asset impairments		—		—		190
Other costs	Other costs		16		9		339		Other costs		20		16		478
Total	Total		$	27	$	43	$	1,071	Total		$	112	$	27	$	1,567

Severance 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 12 weeks ended March ~~19, 2022~~25, 2023 is as follows:

Severance and Other Employee Costs Other Costs Total
Liability as of December 25, 2021 $ 64 $ 7 $ 71
2022 restructuring charges 11 16 27
Cash payments (16) (16) (32)
Liability as of March 19, 2022 $ 59 $ 7 $ 66


	Severance and Other Employee Costs		Other Costs		Total
Liability as of December 31, 2022	$	188	$	8	$	196
2023 restructuring charges	92		20		112
Cash payments	(44)		(20)		(64)
Non-cash charges and translation	(4)		—		(4)
Liability as of March 25, 2023	$	232	$	8	$	240

Substantially all of the restructuring accrual at March ~~19, 2022~~25, 2023 is expected to be paid by the end of ~~2022.~~2023.

Other Productivity Initiatives

There were no 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.

~~For information on other impairment charges, see~~See Notes 1 and 34 for ~~Brand Portfolio Impairment Charges~~impairment and ~~Note 1 for~~other charges/credits taken related to the Russia-Ukraine ~~Conflict Charges.~~

conflict and brand portfolio impairment charges.

~~Table of Contents~~

Note 34 - Intangible Assets

During the 12 weeks ended March 19, 2022, we ~~discontinued~~repositioned or ~~repositioned~~discontinued certain juice and dairy brands in Russia in our Europe division. As a result, we recognized pre-tax impairment charges ~~(Brand Portfolio Impairment Charges)~~(included in brand portfolio impairment charges) of $241 million ($193 million after-tax or $0.14 per share) in ~~selling, general and administrative expenses,~~impairment of intangible assets, primarily related to indefinite-lived intangible assets. ~~In light of the current political and economic environment, we will continue to review and analyze our brand portfolio worldwide.~~See Note 1 for further information.

For further information on ~~our policies for~~ indefinite-lived intangible assets, ~~refer to Note~~see Notes 2 and 4 to our consolidated financial statements in our ~~2021~~2022 Form 10-K.

~~A summary of our amortizable intangible assets is as follows:~~

3/19/2022 12/25/2021
Gross Accumulated Amortization Net Gross Accumulated Amortization Net
Acquired franchise rights (a)
$ 975 $ (189) $ 786 $ 976 $ (187) $ 789
Customer relationships 608 (222) 386 623 (227) 396
Brands
1,120 (984) 136 1,151 (989) 162
Other identifiable intangibles 450 (261) 189 451 (260) 191
Total $ 3,153 $ (1,656) $ 1,497 $ 3,201 $ (1,663) $ 1,538

~~(a)~~Acquired franchise rights includes our distribution agreement with Vital Pharmaceuticals, Inc., with an expected residual value higher than our carrying value. In the fourth quarter of 2020, we received notice of termination without cause, which would end our distribution rights, effective in the fourth quarter of 2023. The distribution agreement’s useful life is ~~three~~ ~~years, in accordance with the three-year termination notice issued.~~

1412

Table of Contents

A summary of our amortizable intangible assets is as follows:


	3/25/2023						12/31/2022
	Gross		Accumulated Amortization		Net		Gross		Accumulated Amortization		Net
Acquired franchise rights	$	833	$	(202)	$	631	$	837	$	(200)	$	637
Customer relationships	563		(240)		323		571		(237)		334
Brands	1,085		(969)		116		1,097		(973)		124
Other identifiable intangibles	445		(265)		180		447		(265)		182
Total	$	2,926	$	(1,676)	$	1,250	$	2,952	$	(1,675)	$	1,277

Table of Contents

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


		Balance 12/25/2021			Translation and Other			Balance 3/19/2022				Balance 12/31/2022						Translation and Other		Balance 3/25/2023
				Balance 3/19/2022			Balance 12/31/2022								Translation and Other		Balance 3/25/2023
FLNA	FLNA
Goodwill	Goodwill	$	458		$	2				$	460			Goodwill		$	451			$	(2)	$	449
Brands	Brands	340			—			340			Brands	251						—		251
Total	Total	798			2			800			Total	702						(2)		700
QFNA	QFNA										QFNA
Goodwill	Goodwill	189			—			189			Goodwill	189						—		189
Total	Total	189			—			189			Total	189						—		189
PBNA	PBNA										PBNA
Goodwill	Goodwill	11,974			6			11,980			Goodwill	11,947						(7)		11,940
Reacquired franchise rights	Reacquired franchise rights	7,107			13			7,120			Reacquired franchise rights	7,061						(12)		7,049
Acquired franchise rights	Acquired franchise rights	1,538			2			1,540			Acquired franchise rights	1,758						(2)		1,756
Brands	Brands	2,508			—			2,508			Brands	2,508						1		2,509
Total	Total	23,127			21			23,148			Total	23,274						(20)		23,254
LatAm	LatAm										LatAm
Goodwill	Goodwill	433			15			448			Goodwill	436						7		443
Brands	Brands	100			5			105			Brands	75						2		77
Total	Total	533			20			553			Total	511						9		520
Europe ~~(a)~~	Europe ~~(a)~~										Europe ~~(a)~~
Goodwill	Goodwill	3,700			(308)			3,392			Goodwill	3,646						(56)		3,590
Reacquired franchise rights	Reacquired franchise rights	441			(36)			405			Reacquired franchise rights	421						(8)		413
Acquired franchise rights	Acquired franchise rights	158			(2)			156			Acquired franchise rights	148						(1)		147
Brands	Brands	4,254			(513)			3,741			Brands	1,664						(1)		1,663
Total	Total	8,553			(859)			7,694			Total	5,879						(66)		5,813
AMESA	AMESA										AMESA
Goodwill	Goodwill	1,063			16			1,079			Goodwill	1,015						(52)		963
Brands	Brands	205			6			211			Brands	156						(13)		143
Total	Total	1,268			22			1,290			Total	1,171						(65)		1,106
APAC	APAC										APAC
Goodwill	Goodwill	564			—			564			Goodwill	518						(3)		515
Brands	Brands	476			1			477			Brands	267						(2)		265
Total	Total	1,040			1			1,041			Total	785						(5)		780

Total goodwill	Total goodwill	18,381			(269)			18,112			Total goodwill	18,202						(113)		18,089
Total reacquired franchise rights	Total reacquired franchise rights	7,548			(23)			7,525			Total reacquired franchise rights	7,482						(20)		7,462
Total acquired franchise rights	Total acquired franchise rights	1,696			—			1,696			Total acquired franchise rights	1,906						(3)		1,903
Total brands	Total brands	7,883			(501)			7,382			Total brands	4,921						(13)		4,908
Total	Total	$	35,508		$	(793)		$	34,715		Total	$	32,511					$	(149)	$	32,362

~~(a)The change in translation and other primarily represents the depreciation of the Russian ruble and the Brand Portfolio Impairment Charges.~~

1514

Table of Contents

Note 45 - Income Taxes

In 2021, we received a final assessment from the Internal Revenue Service (IRS) audit for the tax years 2014 through 2016. The assessment included both agreed and unagreed issues. On October 29, 2021, we filed a formal written protest of the assessment and requested an appeals conference. ~~As a result~~In 2022, we came to an agreement with the IRS to settle one of the ~~analysis of~~issues assessed in the 2014 through 2016 ~~final assessment,~~tax audit. The agreement covers tax years 2014 through 2019. As a result, we ~~remeasured all applicable~~adjusted our reserves for uncertain tax positions, ~~for all years open under the statute of limitations,~~ including any correlating adjustments impacting the mandatory transition tax liability under the Tax Cuts and Jobs Act (TCJ Act)~~, resulting~~. Tax years 2014 through 2019 remain under audit for other issues. See Note 5 to our consolidated financial statements in ~~a net non-cash tax expense of $112 million in 2021.~~our 2022 Form 10-K for further information. There were no tax amounts recognized in the 12 weeks ended March 25, 2023 and March 19, 2022 ~~and March 20, 2021~~ from this ~~assessment.~~agreement.

Note 56 - Share-Based Compensation

The following table summarizes our total share-based compensation expense, which is primarily recorded in selling, general and administrative expenses:


		12 Weeks Ended						12 Weeks Ended
			3/19/2022		3/20/2021				3/25/2023		3/19/2022
Share-based compensation expense – equity awards	Share-based compensation expense – equity awards		$	81	$	79	Share-based compensation expense – equity awards		$	93	$	81
Share-based compensation expense – liability awards	Share-based compensation expense – liability awards		5		4		Share-based compensation expense – liability awards		6		5
Acquisition and divestiture-related charges	Acquisition and divestiture-related charges		3		—		Acquisition and divestiture-related charges		—		3
Restructuring charges	Restructuring charges		(1)		1		Restructuring charges		1		(1)
Total	Total		$	88	$	84	Total		$	100	$	88

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


		12 Weeks Ended							12 Weeks Ended
		3/19/2022			3/20/2021				3/25/2023			3/19/2022
		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	2.1	$	163.00	1.8	$	131.25	Stock options	2.0	$	171.00	2.1	$	163.00
RSUs and PSUs	RSUs and PSUs	2.3	$	163.00	2.6	$	131.25	RSUs and PSUs	2.1	$	171.00	2.3	$	163.00

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

We granted long-term cash awards to certain executive officers and other senior executives with an aggregate target value of ~~$18~~$19 million and ~~$17~~$18 million during the 12 weeks ended March ~~19, 2022~~25, 2023 and March ~~20, 2021,~~19, 2022, respectively.

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


		12 Weeks Ended					12 Weeks Ended
		3/19/2022		3/20/2021			3/25/2023		3/19/2022
Expected life	Expected life	7 years		7 years		Expected life	7 years		7 years
Risk-free interest rate	Risk-free interest rate	1.7	%	1.1	%	Risk-free interest rate	4.2	%	1.7	%
Expected volatility	Expected volatility	16	%	14	%	Expected volatility	16	%	16	%
Expected dividend yield	Expected dividend yield	2.5	%	3.1	%	Expected dividend yield	2.7	%	2.5	%

1615

Table of Contents

Note 67 - Pension and Retiree Medical Benefits

In the 12 weeks ended March 19, 2022, we transferred pension and retiree medical obligations of approximately $145 million and related assets to the Tropicana JV in connection with the Juice Transaction. See Note 11 for further information.

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


		12 Weeks Ended													12 Weeks Ended
		Pension								Retiree Medical					Pension								Retiree Medical
		U.S.				International									U.S.				International
		3/19/2022		3/20/2021		3/19/2022		3/20/2021		3/19/2022		3/20/2021			3/25/2023		3/19/2022		3/25/2023		3/19/2022		3/25/2023		3/19/2022
Service cost	Service cost	$	114	$	120	$	17	$	19	$	8	$	8	Service cost	$	76	$	114	$	8	$	17	$	6	$	8
Other pension and retiree medical benefits income:	Other pension and retiree medical benefits income:													Other pension and retiree medical benefits income:
Interest cost	Interest cost	88		75		17		13		4		3		Interest cost	137		88		25		17		8		4
Expected return on plan assets	Expected return on plan assets	(215)		(224)		(42)		(41)		(3)		(4)		Expected return on plan assets	(197)		(215)		(35)		(42)		(3)		(3)
Amortization of prior service credits	Amortization of prior service credits	(6)		(7)		—		—		(2)		(2)		Amortization of prior service credits	(6)		(6)		—		—		(1)		(2)
Amortization of net losses/(gains)	Amortization of net losses/(gains)	33		51		5		13		(3)		(3)		Amortization of net losses/(gains)	16		33		2		5		(6)		(3)
Settlement/curtailment gains	Settlement/curtailment gains	—		—		—		—		(16)		—		Settlement/curtailment gains	—		—		—		—		—		(16)
Special termination benefits	Special termination benefits	6		6		—		—		—		—		Special termination benefits	(1)		6		—		—		—		—
Total other pension and retiree medical benefits income	Total other pension and retiree medical benefits income	(94)		(99)		(20)		(15)		(20)		(6)		Total other pension and retiree medical benefits income	(51)		(94)		(8)		(20)		(2)		(20)
Total	Total	$	20	$	21	$	(3)	$	4	$	(12)	$	2	Total	$	25	$	20	$	—	$	(3)	$	4	$	(12)

We regularly evaluate opportunities to reduce risk and volatility associated with our pension and retiree medical plans.

During the 12 weeks ended March ~~19, 2022~~25, 2023 and March ~~20, 2021,~~19, 2022, we made discretionary contributions of ~~$75~~$125 million and ~~$300~~$75 million, respectively, to our U.S. qualified defined benefit plans, and ~~$10~~$17 million and ~~$25~~$10 million, respectively, to our international defined benefit plans. We expect to make an additional discretionary contribution of ~~$75~~$125 million to our U.S. qualified defined benefit plans in the third quarter of ~~2022.~~2023.

Note 78 - Debt Obligations

In the 12 weeks ended March ~~19, 2022,~~25, 2023, we issued the following notes:


Interest Rate		Maturity Date	Principal Amount(a)
Floating rate		February 2026	$	350
4.550	%	February 2026	$	500
4.450	%	May 2028	$	650
4.450	%	February 2033	$	1,000
4.650	%	February 2053	$	500

(a)Excludes debt issuance costs, discounts and premiums.

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

In the 12 weeks ended March 25, 2023, $1.3 billion of USD-denominated senior notes matured and were paid. Subsequent to March ~~19, 2022,~~25, 2023, we ~~paid $750 million to redeem all $750~~discharged via legal defeasance $94 million outstanding principal amount of certain notes originally issued by our ~~2.25% senior notes due May 2022, and we gave notice to early redeem all $800~~subsidiary, The Quaker Oats Company, following the deposit of $102 million ~~outstanding principal amount~~ of ~~our 3.10% senior notes due July~~U.S. government securities with the Bank of New York Mellon, as trustee, in the fourth quarter of 2022.

As of March ~~19, 2022,~~25, 2023, we had ~~$1.4 billion~~$800 million of commercial paper ~~outstanding.~~outstanding, excluding discounts.

Table of Contents

Note 89 - 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 12 weeks ended March ~~19, 2022~~25, 2023 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 ~~2021~~2022 Form

~~Table of Contents~~

10-K. ~~We continue to evaluate our hedging strategies related to our Russian business based on the impact of the Russia-Ukraine conflict on financial markets.~~

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 March ~~19, 2022~~25, 2023 was ~~$219~~$228 million. We have posted no collateral under these contracts and no credit-risk-related contingent features were triggered as of March ~~19, 2022.~~25, 2023.

The notional amounts of our financial instruments used to hedge the above risks as of March ~~19, 2022~~25, 2023 and December ~~25, 2021~~31, 2022 are as follows:


		Notional Amounts(a)					Notional Amounts(a)
		3/19/2022		12/25/2021			3/25/2023		12/31/2022
Commodity	Commodity	$	1.6	$	1.6	Commodity	$	1.8	$	1.8
Foreign exchange	Foreign exchange	$	2.6	$	2.8	Foreign exchange	$	2.8	$	3.0
Interest rate	Interest rate	$	2.1	$	2.1	Interest rate	$	1.3	$	1.3
Net investment (b)	Net investment (b)	$	2.1	$	2.1	Net investment (b)	$	2.9	$	2.9

(a)In billions.

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

As of March ~~19, 2022,~~25, 2023, approximately 5%4% of total debt, after the impact of the related interest rate derivative instruments, was subject to variable rates, compared to 2%1% as of December ~~25, 2021.~~31, 2022.

~~Held-to-Maturity~~ Debt Securities

Available-for-Sale

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 commercial paper. As of March 19, 2022 and December 25, 2021, we had $244 million and $130 million of investments in commercial paper recorded in cash and cash equivalents, respectively. Held-to-maturityavailable-for-sale debt securities are ~~recorded~~reported at ~~amortized cost, which approximates~~fair value. Changes in the fair value ~~and realized gains~~of available-for-sale debt securities are generally recognized in accumulated other comprehensive loss within common shareholders’ equity. Changes in the fair value of available-for-sale debt securities impact earnings only when such securities are sold, or ~~losses are reported in earnings. Our investments mature in less than one year. As of March 19, 2022 and December 25, 2021, gross unrecognized gains and losses and the~~an allowance for expected credit losses or impairment is recognized. We regularly evaluate our investment portfolio for expected credit losses and impairment. In making this judgment, we evaluate, among other things, the extent to which the fair value of a debt security is less than its amortized cost; the financial condition of the issuer, including the credit quality, and any changes thereto; and our intent to sell, or whether we will more likely than not be required to sell, the debt security before recovery of its amortized cost basis. Our assessment of whether a debt security has a credit loss or is impaired could change in the future due to new developments or changes in assumptions related to any particular debt security. There were ~~not material.~~no unrealized gains and losses on our investments as of March 25, 2023. There were no impairment charges related to our investments for the 12 weeks ended March 25, 2023.

1817

Table of Contents

Fair Value Measurements

The fair values of our financial assets and liabilities as of March ~~19, 2022~~25, 2023 and December ~~25, 2021~~31, 2022 are categorized as follows:

3/19/2022 12/25/2021

Fair Value Hierarchy Levels(a)
Assets(a)
Liabilities(a)
Assets(a)
Liabilities(a)
Index funds (b)
1 $ 297 $ — $ 337 $ —
Prepaid forward contracts (c)
2 $ 20 $ — $ 21 $ —
Deferred compensation (d)
2 $ — $ 480 $ — $ 505
Derivatives designated as cash flow hedging instruments:
Foreign exchange (e)
2 $ 43 $ 16 $ 29 $ 14
Interest rate (e)
2 28 275 14 264
Commodity (f)
2 119 1 70 5
$ 190 $ 292 $ 113 $ 283
Derivatives not designated as hedging instruments:
Foreign exchange (e)
2 $ 39 $ 22 $ 19 $ 7
Commodity (f)
2 56 12 35 22
$ 95 $ 34 $ 54 $ 29
Total derivatives at fair value (g)
$ 285 $ 326 $ 167 $ 312
Total $ 602 $ 806 $ 525 $ 817


		3/25/2023				12/31/2022
	Fair Value Hierarchy Levels(a)	Assets(a)		Liabilities(a)		Assets(a)		Liabilities(a)

Available-for-sale debt securities (b)	2	$	658	$	—	$	660	$	—
Index funds (c)	1	$	250	$	—	$	257	$	—
Prepaid forward contracts (d)	2	$	14	$	—	$	14	$	—
Deferred compensation (e)	2	$	—	$	432	$	—	$	434

Derivatives designated as cash flow hedging instruments:
Foreign exchange (f)	2	$	23	$	34	$	24	$	22
Interest rate (f)	2	—		175		—		164
Commodity (g)	2	2		50		2		60
		$	25	$	259	$	26	$	246
Derivatives not designated as hedging instruments:
Foreign exchange (f)	2	$	17	$	17	$	21	$	21
Commodity (g)	2	9		45		11		51
		$	26	$	62	$	32	$	72
Total derivatives at fair value (h)		$	51	$	321	$	58	$	318
Total		$	973	$	753	$	989	$	752

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

(b)Primarily related to our investment in Celsius Holdings, Inc. convertible preferred stock. The fair value of our investment approximates the transaction price and any accrued dividends, as well as the amortized cost. As of March 25, 2023, $99 million and $559 million were classified as short-term investments and other assets, respectively. As of December 31, 2022, $3 million, $104 million and $553 million were classified as cash equivalents, short-term investments and other assets, respectively.

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

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

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

~~(f)~~(g)Primarily based on recently reported market transactions of swap arrangements.

~~(g)~~(h)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~~our balance sheet as of March ~~19, 2022~~25, 2023 and December ~~25, 2021~~31, 2022 were not material. Collateral received or posted against our asset or liability positions was not material. Exchange-traded commodity futures are cash-settled on a daily basis and, therefore, not included in the table.

The carrying amounts of our cash and cash equivalents and short-term investments recorded at amortized cost approximate fair value (classified as Level 2 in the fair value hierarchy) due to their short-term maturity. The fair value of our debt obligations as of March ~~19, 2022~~25, 2023 and December ~~25, 2021~~31, 2022 was ~~$38~~$39 billion and ~~$43~~$35 billion, respectively, based upon prices of identical or similar instruments in the marketplace, which are considered Level 2 inputs.

1918

Table of Contents

Losses/(gains) on our ~~hedging instruments~~cash flow and net investment hedges are categorized as follows:


		12 Weeks Ended
		Non- designated Hedges				Cash Flow and Net Investment Hedges										12 Weeks Ended
		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 Accumulated Other Comprehensive Loss			Losses/(Gains) Reclassified from Accumulated Other Comprehensive Loss into Income Statement(a)
		3/19/2022		3/20/2021		3/19/2022		3/20/2021		3/19/2022		3/20/2021				3/25/2023		3/19/2022		3/25/2023		3/19/2022
Foreign exchange	Foreign exchange	$	(16)	$	4	$	(8)	$	11	$	(4)	$	13	Foreign exchange		$	16	$	(8)	$	1	$	(4)
Interest rate	Interest rate	—		1		(3)		(18)		20		(4)		Interest rate		11		(3)		3		20
Commodity	Commodity	(166)		(81)		(189)		(90)		(78)		(10)		Commodity		65		(189)		9		(78)
Net investment	Net investment	—		—		(51)		(63)		—		—		Net investment		37		(51)		—		—
Total	Total	$	(182)	$	(76)	$	(251)	$	(160)	$	(62)	$	(1)	Total		$	129	$	(251)	$	13	$	(62)

(a)Foreign exchange derivative losses/~~gains~~(gains) are ~~primarily~~included in net revenue and cost of sales. Interest rate derivative losses/(gains) are included in selling, general and administrative expenses. Commodity derivative losses/~~gains~~(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 on cross-currency interest rate swaps are included in selling, general and administrative expenses. Commodity derivative losses/gains are included in either cost of sales or selling, general and administrative expenses, depending on the underlying commodity. See Note 11 for further information.

Based on current market conditions, we expect to reclassify net ~~gains~~losses of ~~$275~~$119 million related to our cash flow hedges from accumulated other comprehensive loss within common shareholders’ equity into net income during the next 12 months.

Losses/(gains) recognized in the income statement related to our non-designated hedges are categorized as follows:


	12 Weeks Ended
	3/25/2023						3/19/2022
	Cost of sales		Selling, general and administrative expenses		Total		Cost of sales		Selling, general and administrative expenses		Total
Foreign exchange	$	(1)	$	(5)	$	(6)	$	11	$	(27)	$	(16)
Commodity	31		50		81		(74)		(92)		(166)
Total	$	30	$	45	$	75	$	(63)	$	(119)	$	(182)

Note 910 - 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							12 Weeks Ended
		3/19/2022			3/20/2021				3/25/2023			3/19/2022
		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	$	3.08		$	1.24		Basic net income attributable to PepsiCo per common share	$	1.40		$	3.08
Net income available for PepsiCo common shareholders	Net income available for PepsiCo common shareholders	$	4,261	1,383	$	1,714	1,380	Net income available for PepsiCo common shareholders	$	1,932	1,378	$	4,261	1,383
Dilutive securities:	Dilutive securities:							Dilutive securities:
Stock options, RSUs, PSUs and other (b)	Stock options, RSUs, PSUs and other (b)	—		8	—		7	Stock options, RSUs, PSUs and other (b)	—		6	—		8
Diluted	Diluted	$	4,261	1,391	$	1,714	1,387	Diluted	$	1,932	1,384	$	4,261	1,391
Diluted net income attributable to PepsiCo per common share	Diluted net income attributable to PepsiCo per common share	$	3.06		$	1.24		Diluted net income attributable to PepsiCo per common share	$	1.40		$	3.06

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

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

Table of Contents

The weighted-average amount of antidilutive securities excluded from the calculation of diluted earnings per common share was 3 million and immaterial for ~~both~~ the 12 weeks ended March 25, 2023 and March 19, 2022, ~~and March 20, 2021.~~

respectively.

~~Table of Contents~~

Note 1011 - Accumulated Other Comprehensive Loss Attributable to PepsiCo

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


	Currency Translation Adjustment		Cash Flow Hedges		Pension and Retiree Medical		Other		Accumulated Other Comprehensive Loss Attributable to PepsiCo
Balance as of December 31, 2022 (a)	$	(12,948)	$	1	$	(2,361)	$	6	$	(15,302)
Other comprehensive (loss) before reclassifications (b)	(350)		(92)		(9)		(1)		(452)
Amounts reclassified from accumulated other comprehensive loss (c)	108		13		5		—		126
Net other comprehensive (loss)	(242)		(79)		(4)		(1)		(326)
Tax amounts	7		20		—		—		27
Balance as of March 25, 2023 (a)	$	(13,183)	$	(58)	$	(2,365)	$	5	$	(15,601)

(a)Pension and retiree medical amounts are net of taxes of $1,184 million as of both December 31, 2022 and March 25, 2023.

(b)Currency translation adjustment primarily reflects depreciation of the Egyptian pound and Russian ruble.

(c)Release of currency translation adjustment is in relation to the sale of a non-strategic brand and an investment within our AMESA division.


	Currency Translation Adjustment		Cash Flow Hedges		Pension and Retiree Medical		Other		Accumulated Other Comprehensive Loss Attributable to PepsiCo
Balance as of December 25, 2021 (a)	$	(12,309)	$	159	$	(2,750)	$	2	$	(14,898)
Other comprehensive (loss)/income before reclassifications (b)	(549)		200		(8)		—		(357)
Amounts reclassified from accumulated other comprehensive loss	—		(62)		25		—		(37)
Net other comprehensive (loss)/income	(549)		138		17		—		(394)
Tax amounts	(11)		(32)		(4)		(4)		(51)
Balance as of March 19, 2022 (a)	$	(12,869)	$	265	$	(2,737)	$	(2)	$	(15,343)

(a)Pension and retiree medical amounts are net of taxes of $1,283 million as of December 25, 2021 and $1,279 million as of March 19, 2022.

(b)Currency translation adjustment primarily reflects depreciation of the Russian ruble, partially offset by the appreciation of the South African rand, Brazilian real and Canadian dollar.

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

2120

Table of Contents

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


		12 Weeks Ended							12 Weeks Ended
			3/19/2022		3/20/2021		Affected Line Item in the Income Statement			3/25/2023		3/19/2022		Affected Line Item in the Income Statement

Currency translation:	Currency translation:							Currency translation:
Divestiture			$	—	$	18	Selling, general and administrative expenses
Divestitures								Divestitures		$	108	$	—	Selling, general and administrative expenses

Cash flow hedges:	Cash flow hedges:							Cash flow hedges:
Foreign exchange contracts	Foreign exchange contracts		$	(2)	$	1	Net revenue	Foreign exchange contracts		$	(2)	$	(2)	Net revenue
Foreign exchange contracts	Foreign exchange contracts		(2)		12		Cost of sales	Foreign exchange contracts		3		(2)		Cost of sales
Interest rate derivatives	Interest rate derivatives		20		(4)		Selling, general and administrative expenses	Interest rate derivatives		3		20		Selling, general and administrative expenses
Commodity contracts	Commodity contracts		(76)		(11)		Cost of sales	Commodity contracts		10		(76)		Cost of sales
Commodity contracts	Commodity contracts		(2)		1		Selling, general and administrative expenses	Commodity contracts		(1)		(2)		Selling, general and administrative expenses
Net gains before tax			(62)		(1)
Net losses/(gains) before tax								Net losses/(gains) before tax		13		(62)
Tax amounts	Tax amounts		10		1			Tax amounts		(4)		10
Net gains after tax			$	(52)	$	—
Net losses/(gains) after tax								Net losses/(gains) after tax		$	9	$	(52)

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		$	(8)	$	(9)	Other pension and retiree medical benefits income	Amortization of prior service credits		$	(7)	$	(8)	Other pension and retiree medical benefits income
Amortization of net losses	Amortization of net losses		35		61		Other pension and retiree medical benefits income	Amortization of net losses		12		35		Other pension and retiree medical benefits income
Settlement/curtailment gains	Settlement/curtailment gains		(2)		—		Other pension and retiree medical benefits income	Settlement/curtailment gains		—		(2)		Other pension and retiree medical benefits income
Net losses before tax	Net losses before tax		25		52			Net losses before tax		5		25
Tax amounts	Tax amounts		(6)		(11)			Tax amounts		(1)		(6)
Net losses after tax	Net losses after tax		$	19	$	41		Net losses after tax		$	4	$	19

Total net (gains)/losses reclassified, net of tax			$	(33)	$	59
Total net losses/(gains) reclassified, net of tax								Total net losses/(gains) reclassified, net of tax		$	121	$	(33)

Note 1112 - Acquisitions and Divestitures

~~2020 Acquisitions~~

In 2020, we acquired Pioneer Food Group Ltd. (Pioneer Foods), Rockstar Energy Beverages (Rockstar) and Hangzhou Haomusi Food Co., Ltd. The purchase price allocations for each of these acquisitions were finalized in the second quarter of 2021. See Note 13 to our consolidated financial statements in our 2021 Form 10-K for further information.

Juice Transaction

In the 12 weeks ended March 19, 2022, we sold our Tropicana, Naked and other select juice brands to PAI Partners for ~~approximately~~ $3.5 billion in cash and a 39% noncontrolling interest in ~~the Tropicana JV,~~TBG, operating across North America and Europe. ~~The North America portion of the transaction was completed on January 24, 2022 and the Europe portion of the transaction was completed on February 1, 2022.~~ In the ~~U.S.,~~United States, PepsiCo acts as the exclusive distributor for ~~Tropicana JV’s~~TBG’s portfolio of brands for small-format and foodservice customers with chilled direct-store-delivery. We have significant influence over our investment in ~~the Tropicana JV~~TBG and account for our investment under the equity method, recognizing our proportionate share of TBG’s earnings on our income statement (recorded in selling, general and administrative expenses).

As a result of this transaction, in the year ended December 31, 2022, we recorded a pre-tax gain of $3.3 billion ($2.9 billion after-tax or $2.08 per share) in our PBNA and Europe divisions, including $520 million related to the remeasurement of our 39% ownership in TBG at fair value using a combination of the transaction price, discounted cash flows and an option pricing model related to our liquidation preference in TBG. See Note 13 to our consolidated financial statements in our 2022 Form 10-K for further information.

2221

Table of Contents

~~proportionate share of Tropicana JV’s earnings within our income statement (recorded in selling, general and administrative expenses).~~

~~As a result of this transaction, in~~In the 12 weeks ended March 19, 2022, we recorded a pre-tax gain of $3.3 billion ($2.9 billion after-tax or $2.06 per share) in our PBNA and Europe divisions, including $520 million related to the remeasurement of our 39% ownership in the Tropicana JV at fair value using a combination of the transaction price, discounted cash flows and an option pricing model related to our liquidation preference in the Tropicana JV. Subsequent to the transaction close date, the purchase price will be adjusted for net working capital and net debt amounts as of the transaction close date compared to targeted amounts set forth in the purchase agreement.

~~A summary of income statement activity related to the Juice Transaction in the 12 weeks ended March 19, 2022 is as follows:~~

PBNA Europe Corporate PepsiCo
Provision for income taxes(a)
Net income attributable to PepsiCo Impact on net income attributable to PepsiCo per common share
Gain associated with the Juice Transaction $ (3,024) $ (298) $ — $ (3,322) $ 452 $ (2,870) $ 2.06
Acquisition and divestiture-related charges 37 10 3 50 (8) 42 (0.03)
Operating profit $ (2,987) $ (288) $ 3 (3,272) 444 (2,828) 2.03
Other pension and retiree medical benefits income (b)
(10) 3 (7) 0.01
Total Juice Transaction $ (3,282) $ 447 $ (2,835) $ 2.04

~~(a)Includes $194 million of deferred tax expense related to the recognition of our investment in the Tropicana JV.~~

~~(b)Includes $16 million curtailment gain, partially offset by $6 million special termination benefits.~~

In connection with the sale, we entered into a transition services agreement with PAI Partners, under which we will provide certain services to the Tropicana JV to help facilitate an orderly transition of the business following the sale. In return for these services, the Tropicana JV is required to pay certain agreed upon fees to reimburse us for our costs without markup.divisions.

Acquisition and Divestiture-Related Charges

Acquisition and divestiture-related charges ~~primarily~~ include merger and integration charges and costs associated with divestitures. ~~Merger and integration charges include changes in fair value of contingent consideration, employee-related costs, contract termination costs and other integration costs.~~ Divestiture-related charges reflect transaction expenses, including consulting, advisory and other professional fees.

~~Table of Contents~~

A summary of our acquisition and divestiture-related charges is as follows:


		12 Weeks Ended							12 Weeks Ended
			3/19/2022		3/20/2021		Transaction			3/25/2023		3/19/2022
FLNA			$	—	$	2	BFY Brands, Inc.

PBNA	PBNA		37		1		Juice Transaction, Rockstar	PBNA		$	2	$	37
Europe	Europe		10		—		Juice Transaction	Europe		—		10
AMESA			—		1		Pioneer Foods

Corporate ~~(a)~~	Corporate ~~(a)~~		3		(14)		Juice Transaction, Rockstar	Corporate ~~(a)~~		—		3
Total (b)			50		(10)

Total (a)								Total (a)		2		50
Other pension and retiree medical benefits expense	Other pension and retiree medical benefits expense		6		—		Juice Transaction	Other pension and retiree medical benefits expense		—		6
Total acquisition and divestiture-related charges	Total acquisition and divestiture-related charges		$	56	$	(10)		Total acquisition and divestiture-related charges		$	2	$	56
After-tax amount	After-tax amount		$	47	$	(7)		After-tax amount		$	1	$	47
Impact on net income attributable to PepsiCo per common share	Impact on net income attributable to PepsiCo per common share		$	(0.03)	$	0.01		Impact on net income attributable to PepsiCo per common share		$	—	$	(0.03)

(a)~~Income amount primarily relates to changes in fair value of the contingent consideration in connection with our acquisition of Rockstar.~~

~~(b)~~Recorded in selling, general and administrative expenses.

Note 13 - Supply Chain Financing Arrangements

As part of our evolving market practices, we work with our suppliers to optimize our terms and conditions, which include the extension of payment terms. Our current payment terms with a majority of our suppliers generally range from 60 to 90 days, which we deem to be commercially reasonable. We will continue to monitor economic conditions and 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 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 condensed consolidated balance sheet. As of March 25, 2023 and December 31, 2022, $1.9 billion and $1.7 billion, respectively, of our accounts payable are to suppliers participating in these financing arrangements.

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.

Table of Contents

Our Critical Accounting Policies and Estimates

The critical accounting policies and estimates below should be read in conjunction with those outlined in our ~~2021~~2022 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 once reconciled and settled.

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

~~Table of Contents~~

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 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.

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

Table of Contents

to: the risks associated with the deadly conflict in Ukraine; ~~the impact of COVID-19;~~ future demand for PepsiCo’s products; damage to PepsiCo’s reputation or brand image; product recalls or other issues or concerns with respect to product quality and safety; PepsiCo’s ability to compete effectively; PepsiCo’s ability to attract, develop and maintain a highly skilled and diverse workforce or effectively manage changes in our workforce; water scarcity; changes in the retail landscape or in sales to any key customer; disruption of PepsiCo’s manufacturing operations or supply chain, including continued increased commodity, packaging, transportation, labor and other input costs; political or social conditions 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; changes in economic conditions in the countries in which PepsiCo operates; future cyber incidents and other ~~disruptions;~~disruptions to our information systems; failure to successfully complete or manage strategic transactions; PepsiCo’s reliance on third-party service providers and enterprise-wide systems; climate change or measures to address climate change; strikes or 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 materials; failure to comply with personal data protection and privacy laws; increase in income tax rates, changes in income tax laws or disagreements with tax authorities; failure to adequately protect PepsiCo’s intellectual property rights or infringement on 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 risks and uncertainties including those described in “Item 1A. Risk Factors” and “Item 7. Management’s Discussion and Analysis of Financial Condition and

~~Table of Contents~~

Results of Operations – Our Business Risks,” included in our ~~2021~~2022 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. Numerous measures have been implemented around the world to try to reduce the spread of the virus and these measures have impacted and will continue to impact us, our business partners and our customers. The COVID-19 pandemic, including these measures, may continue to result in changes in demand for our products, increases in employee and other operating costs or supply chain disruptions, any of which can impact our ability to operate our business. In addition, we may continue to experience business disruptions resulting from the temporary closures of our facilities or facilities of our business partners or the inability of a significant portion of our or our business partners’ workforce to work because of illness, absenteeism, quarantine, vaccine mandates, or travel or other governmental restrictions.

Even as governmental restrictions are relaxed and economies gradually, partially, or fully reopen in certain jurisdictions and markets, the ongoing economic impacts and health concerns associated with the pandemic may continue to affect consumer behavior, including changes in product and channel preferences that result in reduced sales or profit from the sale of our products. In addition, 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 has resulted and may continue to result in our recording additional charges for our inability to recover or collect any accounts receivable, owned or leased assets, including certain foodservice, vending and other equipment, or prepaid expenses.

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 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 possible emergence and spread of new variants of the virus, the availability, administration and effectiveness of treatments and vaccines, 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.

Risks Associated with Commodities and Our Supply Chain

During the 12 weeks ended March 25, 2023, we continued to experience significantly higher operating costs, including on transportation, labor and commodity (including energy) costs, which we expect to continue for the remainder of 2023. Many of the commodities used in the production and transportation of our products are purchased in the open market. The prices we pay for such items are subject to fluctuation, and we manage this risk through the use of fixed-price contracts and purchase orders, pricing agreements and derivative instruments, including swaps and futures. ~~During the 12 weeks ended March 19, 2022, we continued to experience inflationary pressures on transportation and~~ ~~commodity costs, which we expect to continue for the remainder of 2022.~~ A number of external factors, including the deadly conflict in Ukraine, the ~~COVID-19 pandemic,~~inflationary cost environment, adverse weather conditions, supply chain disruptions (including raw material shortages) and labor shortages, have impacted and may continue to impact transportation, labor and commodity availability costs. When prices increase, we may or may not pass on such increases to our customers without suffering reduced volume, revenue, margins and operating results.

~~Table of Contents~~

See Note 89 to our condensed consolidated financial statements in this Form 10-Q and Note 9 to our consolidated financial statements in our ~~2021~~2022 Form 10-K for further information on how we manage our exposure to commodity prices.

Table of Contents

Risks Associated with Climate Change

Certain jurisdictions in which our products are made, manufactured, distributed or sold have either imposed, or are considering imposing, new or increased legal and regulatory requirements to reduce or mitigate the potential effects of climate change, including regulation of greenhouse gas emissions and potential carbon pricing programs. These new or increased legal or regulatory requirements, along with initiatives to meet our sustainability goals, could result in significant increased costs ~~of compliance~~ and additional investments in facilities and equipment. However, we are unable to predict the scope, nature and timing of any new or increased environmental laws and regulations and therefore cannot predict the ultimate impact of such laws and regulations on our business or financial results. We continue to monitor existing and proposed laws 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 laws or regulations.

Risks Associated with International Operations

In the 12 weeks ended March ~~19, 2022,~~25, 2023, our financial results outside of North America reflect the months of January and February. In the 12 weeks ended March ~~19, 2022,~~25, 2023, our operations outside of the United States generated ~~37%~~36% of our consolidated net revenue, with Mexico, Canada, China, Russia, the United Kingdom and ~~South Africa~~Brazil comprising approximately 20% of our consolidated net revenue. As a result, we are exposed to foreign exchange risk in the international markets in which our products are made, manufactured, distributed or sold. In the 12 weeks ended March ~~19, 2022,~~25, 2023, unfavorable foreign exchange reduced net revenue growth by 12.5 percentage ~~point,~~points primarily due to declines in the Egyptian pound, Turkish lira, ~~euro, Russian ruble~~Canadian dollar and Chinese yuan, partially offset by an appreciation of the Mexican ~~peso.~~peso. 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, Pakistan, Russia, Turkey and Ukraine, 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, including risks of additional impairments or ~~write offs,~~write-offs, and to identify actions to potentially mitigate any unfavorable impacts on our future results.

See Notes 1 and 4 to our consolidated financial statements in our 2022 Form 10-K for a discussion of the Russia-Ukraine conflict charges, including impairment charges. Also see Note 1 to our condensed consolidated financial statements in this Form 10-Q for charges taken as a result of the Russia-Ukraine conflict in the 12 weeks ended March 19, 2022.

See Note 89 to our condensed consolidated financial statements in this Form 10-Q for the fair values of our financial instruments as of March ~~19, 2022~~25, 2023 and December ~~25, 2021~~31, 2022 and Note 9 to our consolidated financial statements in our ~~2021~~2022 Form 10-K for a discussion of these items.

Risks Associated with the Deadly Conflict in Ukraine

In addition to the risks associated with international operations discussed above, we continue to face risks associated with the deadly conflict in Ukraine. The conflict has ~~resulted~~continued to result in worldwide geopolitical and macroeconomic uncertainty, and ~~led us to suspend the majority~~certain of our operations in ~~Ukraine.~~ Ukraine remain suspended. We ~~are in the process of suspending~~have suspended sales to our customers of Pepsi-Cola and certain of our other global beverage brands, our discretionary capital investments and advertising and promotional activities in Russia, which has

Table of Contents

negatively impacted and could continue to negatively impact our business. We continue to offer our other products in Russia. Our operations in Russia and Ukraine, respectively, accounted for 4% and 0.5% of our consolidated net revenue for the year ended December 25, 2021 and 3% and 0.4% of our consolidated net revenue for both the 12 weeks ended March 19, 2022 and the 12 weeks ended March 20, 2021. Our assets

~~Table of Contents~~

~~in Russia and Ukraine, respectively, were 5% and 0.3% of our consolidated assets as of December 25, 2021 and 4% and 0.1% of our consolidated assets as of March 19, 2022.~~

The conflict has resulted and could continue to result in volatile commodity markets, supply chain disruptions, increased risk of cyber incidents or other disruptions to our information systems, reputational risks, heightened risks to employee safety, business disruptions (including labor shortages), significant volatility of the Russian ruble, limitations on access to credit markets and other corporate banking services, including working capital facilities, reduced availability and increased ~~operating~~ costs ~~(including fuel~~for transportation, energy, packaging, raw materials and other input ~~costs),~~costs, environmental, health and safety risks related to securing and maintaining facilities, additional sanctions, export controls and other legislation or regulations (including restrictions on the transfer of funds to and from Russia). The ongoing conflict could result in the temporary or permanent loss of assets or ~~result in~~ additional impairment charges. We cannot predict how and the extent to which the conflict will continue to affect our employees, customers, operations or business partners or our ability to achieve certain of our sustainability goals. The conflict has adversely affected and could continue to adversely affect demand for our products and our global business. See Notes 1 and 4 to our consolidated financial statements in our 2022 Form 10-K, for a discussion of the Russia-Ukraine conflict charges, including impairment charges. Also see Note 1 to our condensed consolidated financial statements in this Form 10-Q for charges taken as a result of the Russia-Ukraine conflict in the 12 weeks ended March 19, 2022.

The extent of the impact of these tragic events on our business remains uncertain and will continue to depend on numerous evolving factors that we are not able to accurately predict, including the duration and scope of the ~~conflict.~~conflict, regional instability and ongoing and additional financial and economic sanctions, export controls and other legislation imposed by governments. We will continue to monitor and assess the situation as circumstances evolve and to identify actions to potentially ~~mitigate~~mitigate any unfavorable impacts on our 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 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.

We sell a wide variety of beverages and convenient foods 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.

Table of Contents

OECD Global Minimum Tax

Numerous countries have agreed to a statement in support of the Organization for Economic Co-operation and Development (OECD) model rules that propose a global minimum tax rate of 15% and European Union member states have agreed to implement the global minimum tax. Certain countries, including European Union member states, are expected to enact legislation to be effective as early as 2024, with widespread implementation of a global minimum tax expected by 2025. As the legislation becomes effective in countries in which we do business, our taxes could increase and negatively impact our provision for income taxes. We will continue to monitor pending legislation and implementation by individual countries and evaluate the potential impact on our business in future periods.

Retail Landscape

Our industry continues to be affected by disruption of the retail landscape, including the ~~rapid~~continued 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.~~consumers. We continue to monitor changes in the retail landscape and seek to identify actions we may take to build our

~~Table of Contents~~

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.

Cautionary statements included above and in “Item 1A. Risk Factors” and “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations – Our Business Risks” in our ~~2021~~2022 Form 10-K should be considered when evaluating our trends and future results.

Results of Operations – Consolidated Review

Consolidated Results

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~~See “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations – Our Financial Results – Volume” included in our ~~2021~~2022 Form 10-K for further information on volume. ~~Beginning in the first quarter of 2022, unit~~Unit volume growth adjusts for the impacts of acquisitions and divestitures. Acquisitions and divestitures, when used in this report, reflect mergers and acquisitions activity, as well as divestitures and other structural ~~changes.~~changes, including changes in ownership or control in consolidated subsidiaries and nonconsolidated equity investees. Further, unit volume growth ~~will exclude~~excludes the impact of an additional week of results every five or six years ~~(53~~rd(53rd reporting week), where applicable, including in our fourth quarter 2022 financial results.

We ~~reported substantially~~report all of our international ~~volume on a monthly calendar basis prior to the fourth quarter of 2021, and beginning in the fourth quarter of 2021, all of our international~~ operations ~~report~~ on a monthly calendar basis. The 12 weeks ended March 25, 2023 and March 19, 2022 include volume outside of North America for the months of January and February.

Table of Contents

Consolidated Net Revenue and Operating Profit


		12 Weeks Ended							12 Weeks Ended
			3/19/2022			3/20/2021				Change			3/25/2023			3/19/2022			Change
Net revenue	Net revenue		$	16,200		$	14,820			9	%	Net revenue	$	17,846		$	16,200		10	%
Operating profit	Operating profit		$	5,267		$	2,312			128	%	Operating profit	$	2,629		$	5,267		(50)	%
Operating margin	Operating margin		32.5		%	15.6		%		16.9		Operating margin	14.7		%	32.5		%	(17.8)

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

Operating profit ~~grew 128%~~decreased 50% and operating margin ~~improved 16.9~~decreased 17.8 percentage points. Operating profit ~~growth~~performance was primarily driven by a ~~144-percentage-point~~73-percentage-point unfavorable impact of the gain associated with the Juice Transaction in the prior year, certain operating cost increases, a 33-percentage-point impact of higher commodity costs, a decrease in organic volume and a 4-percentage-point impact of higher mark-to-market losses on commodity derivatives. These impacts were partially offset by effective net pricing, productivity savings, and a 5-percentage-point impact each of the charges associated with the Russia-Ukraine conflict and the ~~Brand Portfolio Impairment Charges~~impairment of intangible assets related to the repositioning or discontinuation of certain juice and dairy brands in ~~Russia, each of which reduced operating profit growth by 10 percentage points.~~

Operating profit growth was also driven by net revenue growth and productivity savings, partially offset by certain operating cost increases and a 29-percentage-point impact of higher commodity costs. A prior-year gain on an investment reduced operating profit growth by 5 percentage points.Russia. The operating margin ~~improvement~~decline primarily reflects ~~the impact of~~ the gain associated with the Juice ~~Transaction.~~Transaction in the prior year.

Other Consolidated Results

~~Table of Contents~~


	12 Weeks Ended
		3/25/2023			3/19/2022			Change
Other pension and retiree medical benefits income		$	61		$	134		$	(73)
Net interest expense and other		$	(200)		$	(240)		$	40
Tax rate		21.9		%	17.2		%
Net income attributable to PepsiCo (a)		$	1,932		$	4,261		(55)		%
Net income attributable to PepsiCo per common share – diluted (a)		$	1.40		$	3.06		(54)		%

(a)

~~Juice Transaction~~

InFor the 12 weeks ended March 19, 2022, ~~we sold our Tropicana, Naked~~the gain associated with the Juice Transaction contributed to both net income attributable to PepsiCo and ~~other select juice brands~~net income attributable to PAI Partners, while retaining a 39% noncontrolling interest in the Tropicana JV, operating across North America and Europe. These juice businesses delivered approximately $3 billion in net revenue in 2021. In the U.S., PepsiCo ~~acts as the exclusive distributor for Tropicana JV’s portfolio of brands for small-format and foodservice customers with chilled direct-store-delivery.~~per common share. See Note 1112 to our condensed consolidated financial statements for further information.

Other pension and retiree medical benefits income decreased $73 million, primarily due to higher interest cost and recognition of fixed income losses on plan assets, partially offset by lower amortization of net losses on pension obligations and higher rate on expected return on plan assets, all driven primarily by higher interest rates.

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

The reported tax rate increased 4.7 percentage points, primarily reflecting the prior-year impact of the Juice Transaction.

Results of Operations – Division Review

While our financial results in North America are reported on a 12-week basis, ~~substantially~~ all of our international operations are reported on a monthly calendar basis prior to the fourth quarter of 2021. Beginning in the fourth quarter of 2021, all of our international operations reported on a monthly calendar basis. This change did not have a material impact on our condensed consolidated financial statements. For our international operations,for which the months of January and February are reflected in our results for the 12 weeks ended March 25, 2023 and March 19, 2022.

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~~countries.

Table of ~~list price changes, weight changes per package, discounts and allowances.~~Contents

See “Our Business Risks,” “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.

Net Revenue and Organic Revenue Growth

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


		12 Weeks Ended 3/19/2022						12 Weeks Ended 3/25/2023
				Impact of					Impact of						Impact of					Impact of
		Reported % Change, GAAP Measure		Foreign exchange translation	Acquisitions and divestitures	Organic % Change, Non-GAAP Measure(a)				Organic volume(b)	Effective net pricing		Reported % Change, GAAP Measure			Foreign exchange translation	Acquisitions and divestitures	Organic % Change, Non-GAAP Measure(a)			Organic volume(b)	Effective net pricing
FLNA	FLNA	14	%	—	—	14	%			2	12	FLNA	15	%		—	—	16	%		—	16
QFNA	QFNA	11	%	—	—	11	%			(1.5)	12	QFNA	9	%		1	—	10	%		(5)	15
PBNA	PBNA	5.5	%	—	7	13	%			4	8	PBNA	8	%		—	3	12	%		(3)	15
LatAm	LatAm	19	%	3	1	22	%			6	16	LatAm	21	%		(6)	1	16	%		1	15
Europe	Europe	—	%	8	2	11	%			—	11	Europe	5	%		5	4	14	%		(9)	23
AMESA	AMESA	14	%	2	2	18	%			11	7	AMESA	2	%		28	—	29	%		(2)	31
APAC	APAC	8	%	1	0.5	9	%			2	8	APAC	(1)	%		6	—	4	%		2	2.5
Total	Total	9	%	1	3	14	%			3	10	Total	10	%		2.5	2	14	%		(2)	16

(a)Amounts may not sum due to rounding.

(b)Excludes the impact of acquisitions ~~divestitures~~ and ~~other structural changes.~~divestitures. In certain instances, the impact of organic volume ~~growth~~ on net revenue growth differs from the unit volume ~~growth~~change disclosed in the following divisional discussions due to the impacts of product mix, nonconsolidated joint venture volume, and, for our franchise-owned beverage businesses, temporary timing differences between bottler case sales and concentrate shipments and equivalents (CSE). We report net revenue from our franchise-owned beverage businesses based on CSE. The volume sold by our nonconsolidated joint ventures has no direct impact on our net revenue.

~~Table of Contents~~

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.”

Operating Profit and Operating Profit Adjusted for Items Affecting Comparability


		12 Weeks Ended 3/19/2022																	12 Weeks Ended 3/25/2023
				Items Affecting Comparability(a)																	Items Affecting Comparability(a)
		Reported, GAAP Measure(b)		Mark-to-market net impact		Restructuring and impairment charges		Acquisition and divestiture-related charges		Gain associated with the Juice Transaction		Russia-Ukraine conflict charges		Brand Portfolio Impairment Charges		Core, Non-GAAP Measure(b)			Reported, GAAP Measure		Mark-to-market net impact		Restructuring and impairment charges		Acquisition and divestiture-related charges		Impairment and other charges/credits(b)		Core, Non-GAAP Measure
FLNA	FLNA	$	1,296	$	—	$	3	$	—	$	—	$	—	$	—	$	1,299	FLNA	$	1,599	$	—	$	7	$	—	$	—	$	1,606
QFNA	QFNA	159		—		—		—		—		—		—		159		QFNA	188		—		—		—		—		188
PBNA	PBNA	3,434		—		3		37		(3,024)		—		—		450		PBNA	483		—		5		2		—		490
LatAm	LatAm	323		—		6		—		—		—		—		329		LatAm	364		—		5		—		—		369
Europe	Europe	(136)		—		7		10		(298)		241		241		65		Europe	71		—		89		—		—		160
AMESA	AMESA	180		—		2		—		—		—		—		182		AMESA	168		—		5		—		(13)		160
APAC	APAC	215		—		1		—		—		—		—		216		APAC	227		—		1		—		—		228
Corporate unallocated expenses	Corporate unallocated expenses	(204)		(112)		5		3		—		—		—		(308)		Corporate unallocated expenses	(471)		71		1		—		—		(399)
Total	Total	$	5,267	$	(112)	$	27	$	50	$	(3,322)	$	241	$	241	$	2,392	Total	$	2,629	$	71	$	113	$	2	$	(13)	$	2,802

12 Weeks Ended 3/20/2021
Items Affecting Comparability(a)
Reported,
GAAP Measure(b)
Mark-to-market net impact Restructuring
and impairment charges
Acquisition and divestiture-related charges(c)
Core,
Non-GAAP Measure(b)
FLNA $ 1,240 $ — $ 15 $ 2 $ 1,257
QFNA 150 — — — 150
PBNA 366 — 4 1 371
LatAm 218 — 2 — 220
Europe 131 — 11 — 142
AMESA 138 — 1 1 140
APAC 208 — — — 208
Corporate unallocated expenses (139) (75) 4 (14) (224)
Total $ 2,312 $ (75) $ 37 $ (10) $ 2,264

~~(a)See “Items Affecting Comparability.”~~

~~(b)Includes the charges taken as a result of the COVID-19 pandemic. See Note 1 to our condensed consolidated financial statements for further information.~~

~~(c)Income amount primarily relates to changes in fair value of the contingent consideration in connection with our acquisition of Rockstar.~~

3129

Table of Contents


	12 Weeks Ended 3/19/2022
			Items Affecting Comparability(a)
	Reported, GAAP Measure		Mark-to-market net impact		Restructuring and impairment charges		Acquisition and divestiture-related charges		Gain associated with the Juice Transaction		Impairment and other charges/credits		Core, Non-GAAP Measure
FLNA	$	1,296	$	—	$	3	$	—	$	—	$	—	$	1,299
QFNA	159		—		—		—		—		—		159
PBNA	3,434		—		3		37		(3,024)		—		450
LatAm	323		—		6		—		—		—		329
Europe	(136)		—		7		10		(298)		482		65
AMESA	180		—		2		—		—		—		182
APAC	215		—		1		—		—		—		216
Corporate unallocated expenses	(204)		(112)		5		3		—		—		(308)
Total	$	5,267	$	(112)	$	27	$	50	$	(3,322)	$	482	$	2,392

(a)See “Items Affecting Comparability.”

(b)The income amount reflects adjustments to the charges recorded in the prior year related to the sale of a non-strategic brand.

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


		12 Weeks Ended 3/19/2022											12 Weeks Ended 3/25/2023
				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	Acquisition and divestiture-related charges	Gain associated with the Juice Transaction	Russia-Ukraine conflict charges	Brand Portfolio Impairment 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	Acquisition and divestiture-related charges	Gain associated with the Juice Transaction	Impairment and other charges/credits	Core % Change, Non-GAAP Measure(b)		Foreign exchange translation	Core Constant Currency % Change, Non-GAAP Measure(b)
FLNA	FLNA	4.5	%	—	(1)	—	—	—	—	3	%	—		3	%	FLNA	23	%	—	—	—	—	—	24	%	—	24	%
QFNA	QFNA	6	%	—	—	—	—	—	—	6	%	—		6	%	QFNA	18	%	—	—	—	—	—	18	%	—	19	%
PBNA	PBNA	839	%	—	(1)	10	(827)	—	—	21	%	—		21	%	PBNA	(86)	%	—	—	(1)	96	—	9	%	1	10	%
LatAm	LatAm	48	%	—	2	—	—	—	—	50	%	3.5		53	%	LatAm	13	%	—	(1)	—	—	—	12	%	(6)	6	%
Europe	Europe	(204)	%	—	(3)	8	(234)	189	189	(55)	%	5		(50)	%	Europe	n/m		—	n/m	n/m	n/m	n/m	148	%	11	159	%
AMESA	AMESA	30	%	—	—	—	—	—	—	30	%	1.5		32	%	AMESA	(6)	%	—	2	—	—	(7)	(12)	%	23	11	%
APAC	APAC	3	%	—	1	—	—	—	—	4	%	1		5	%	APAC	5.5	%	—	1	(1)	—	—	5.5	%	6	11	%
Corporate unallocated expenses	Corporate unallocated expenses	46	%	(15)	—	7	—	—	—	37	%	—		37	%	Corporate unallocated expenses	132	%	(105)	3	1	—	—	30	%	—	30	%
Total	Total	128	%	(2)	—	3	(144)	10	10	6	%	1		6	%	Total	(50)	%	4	2	(1)	73	(11)	17	%	2	19	%

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

(b)Amounts may not sum due to rounding.

n/m - Not meaningful due to the impact of impairment and other charges in 2022.

FLNA

Net revenue grew ~~14%~~15%, primarily driven by effective net ~~pricing and organic volume growth.~~ pricing.

Unit volume ~~grew 1%,~~declined slightly, primarily ~~reflecting~~driven by a high-single-digit ~~growth~~decline in ~~variety packs and~~dips, a mid-single-digit ~~growth~~decline in trademark ~~Lay’s, partially offset by~~Tostitos and a double-digit decline in our Sabra joint venture ~~products.~~

Operating profit increased 4.5%, primarily reflecting the net revenue growth and productivity savings. These impacts were partially offset by certain operating cost increases, including strategic initiatives and incremental transportation costs, and a 13-percentage-point impact of higher commodity costs, primarily cooking oil and packaging material.

~~QFNA~~

Net revenue grew 11%, driven by effective net pricing, partially offset by a decrease in organic volume. Unit volume declined 1.5%, primarily reflecting a double-digit decline in pancake syrups and mixes, a low-single-digit decline in oatmeal and a mid-single-digit decline in ready-to-eat cereals,products, partially offset by double-digit growth in ~~rice/pasta sides~~trademark Chester’s and ~~trademark Gamesa.~~Fritos.

Operating profit ~~grew 6%~~increased 23%, primarily reflecting the effective net pricing and productivity savings. These impacts were partially offset by certain operating cost increases, including ~~incremental transportation costs,~~strategic initiatives, a ~~13-percentage-point~~15-percentage-point impact of higher commodity costs, primarily ~~oats,~~cooking oil, potatoes and ~~a 3-percentage-point impact of less favorable settlements of promotional spending accruals compared to the prior year.~~ingredients, and higher advertising and marketing expenses.

~~PBNA~~QFNA

Net revenue ~~increased 5.5%~~grew 9%, primarily driven by effective net pricing, ~~and an increase~~partially offset by a decrease in organic volume. ~~The Juice Transaction reduced net revenue growth by 7 percentage points.~~

Unit volume increased 3%, driven by a 7% increase in non-carbonated beverage (NCB) volume while carbonated soft drink volume was even. The NCB volume increase primarily reflected double-digit increases in Gatorade sports drinks and in our overall water portfolio and a high-single-digit increase in our energy portfolio.

3230

Table of Contents

~~Operating profit increased 839%~~Unit volume declined 5%, primarily reflecting ~~a gain of $3.0 billion associated with the Juice Transaction, partially offset by related transaction costs of $37 million.~~ double-digit declines in oatmeal and rice/pasta sides.

Operating profit ~~also~~ grew ~~due to~~18%, primarily reflecting the effective net ~~revenue growth~~pricing and productivity savings. These impacts were partially offset by certain operating cost increases, a 17-percentage-point impact of higher commodity costs, primarily grains, higher advertising and marketing expenses and the decrease in organic volume.

PBNA

Net revenue increased 8%, primarily driven by effective net pricing, partially offset by a decrease in organic volume. The Juice Transaction reduced net revenue growth by 3 percentage points.

Unit volume decreased 2%, driven by a 4% decrease in non-carbonated beverage (NCB) volume and a 1% decrease in carbonated soft drink volume. The NCB volume decrease primarily reflected a high-single-digit decrease in Gatorade sports drinks and mid-single-digit decreases in our overall water portfolio and our Lipton ready-to-drink tea portfolio, partially offset by a double-digit increase in our juice and juice drinks portfolio (adjusted for the impact of the Juice Transaction).

Operating profit decreased 86%, primarily reflecting a 96-percentage-point impact of the prior-year gain of $3.0 billion associated with the Juice Transaction. Operating profit also decreased due to certain operating cost increases, including ~~incremental transportation and~~ information technology costs, ~~and~~ a ~~49-percentage-point~~45-percentage-point impact of higher commodity costs, including ~~aluminum~~energy, sweeteners and ~~resin. The~~packaging materials, the decrease in organic volume, and higher advertising and marketing expenses. Additionally, net unfavorable insurance adjustments and the loss ofin net revenue due to the Juice Transaction ~~reduced~~negatively impacted operating profit ~~growth~~performance by 168 percentage ~~points. Additionally, less favorable settlements of promotional spending accruals compared to~~points and 6 percentage points, respectively. These impacts were partially offset by the effective net pricing and productivity savings. Certain costs associated with remediating a service disruption from a third-party payroll service provider in the prior year ~~and unfavorable insurance adjustments reduced~~positively contributed 7 percentage points to operating profit ~~growth by 6 percentage points and 4 percentage points, respectively.~~performance.

LatAm

Net revenue increased ~~19%~~21%, primarily reflecting effective net pricing and ~~organic volume growth, partially offset by~~ a ~~3-percentage-point~~6-percentage-point impact of ~~unfavorable~~favorable foreign exchange.

Convenient foods unit volume grew 4%1%, primarily reflecting mid-single-digit growth in Mexico and low-single-digit growth in Brazil.

Beverage unit volume grew 7%5%, primarily reflecting double-digit growth in ~~Argentina~~Brazil and ~~Peru. Additionally,~~Peru, high-single-digit growth in Mexico and Guatemala and mid-single-digit growth in Colombia, partially offset by a mid-single-digit decline in Argentina. Additionally, Chile experienced mid-single-digit ~~growth, Guatemala experienced low-single-digit growth and Brazil experienced high-single-digit~~ growth.

Operating profit increased 48%, primarily reflecting the net revenue growth and productivity savings. These impacts were partially offset by a 41-percentage-point impact of higher commodity costs, primarily cooking oil and packaging material, certain operating cost increases, a 3.5-percentage-point impact of unfavorable foreign exchange and higher advertising and marketing expenses. The recognition of certain indirect tax credits in Brazil and lower charges taken as a result of the COVID-19 pandemic contributed 4.5 percentage points and 4 percentage points, respectively, to operating profit growth.

~~Europe~~

~~Net revenue was flat, reflecting effective net pricing, offset by an 8-percentage-point impact of unfavorable foreign exchange and a 2-percentage-point unfavorable impact of the Juice Transaction.~~

Convenient foods unit volume grew 1%, primarily reflecting mid-single-digit growth in Turkey, the Netherlands and France and low-single-digit growth in the United Kingdom, partially offset by a double-digit decline in Poland and a low-single-digit decline in Russia.

Beverage unit volume declined 1%, primarily reflecting double-digit declines in Germany and Turkey, partially offset by mid-single-digit growth in Russia and the United Kingdom and high-single-digit growth in France.

Operating profit decreased 204%, primarily reflecting the Brand Portfolio Impairment Charges in Russia and charges associated with the Russia-Ukraine conflict, each of which negatively impacted operating profit performance by 189 percentage points, partially offset by a 234-percentage-point impact of the gain associated with the Juice Transaction. Additionally, operating profit performance was negatively impacted by a 103-percentage-point impact of higher commodity costs, primarily packaging material, raw milk and cooking oil, certain operating cost increases and a 17-percentage-point impact of payments to employees for a change in pension benefits. These impacts were partially offset by the effective net pricing, productivity savings and lower advertising and marketing expenses.

~~AMESA~~

~~Net revenue increased 14%, primarily reflecting organic volume growth and effective net pricing.~~

~~Table of Contents~~

Convenient foods unit volume grew 10%, primarily reflecting double-digit growth in the Middle East and Pakistan. Additionally, South Africa experienced mid-single-digit growth and India experienced high-single-digit growth.

Beverage unit volume grew 7%, primarily reflecting double-digit growth in Pakistan and high-single-digit growth in the Middle East and India, partially offset by a high-single-digit decline in Nigeria.

Operating profit increased 30%, primarily reflecting the net revenue growth and productivity savings. These impacts were partially offset by a 38-percentage-point impact of higher commodity costs, primarily cooking oil and packaging material, and certain operating cost increases.

~~APAC~~

~~Net revenue increased 8%, primarily reflecting effective net pricing and organic volume growth.~~

Convenient foods unit volume declined 1%, primarily reflecting a low-single-digit decline in China, partially offset by double-digit growth in Thailand and mid-single-digit growth in Australia and Indonesia.

Beverage unit volume grew 15%, primarily reflecting double-digit growth in China and the Philippines. Additionally, Vietnam experienced low-single-digit growth and Thailand experienced double-digit growth.

~~Operating profit increased 3%~~13%, primarily reflecting the net revenue growth and productivity savings. These impacts were partially offset by certain operating cost increases, an 18-percentage-point impact of higher commodity costs, primarily cooking oil and grains, higher advertising and marketing expenses and a 3-percentage-point unfavorable impact of certain indirect tax credits in Brazil compared to the prior year. Favorable foreign exchange contributed 6 percentage points to operating profit growth.

Europe

Net revenue increased 5%, reflecting effective net pricing, partially offset by an ~~8-percentage-point~~organic volume decline, a 5-percentage-point impact of unfavorable foreign exchange and a 2-percentage-point unfavorable impact of the Juice Transaction.

Table of Contents

Convenient foods unit volume declined 5%, primarily reflecting a double-digit decline in Ukraine and high-single-digit declines in Russia and the United Kingdom, partially offset by high-single-digit growth in France and slight growth in Turkey. Additionally, the Netherlands declined slightly.

Beverage unit volume declined 11%, primarily reflecting double-digit declines in Russia, Germany and Ukraine, partially offset by low-single-digit growth in Turkey. Additionally, the United Kingdom and France experienced mid-single-digit declines.

Operating profit improvement primarily reflects the favorable impact of prior-year charges associated with the Russia-Ukraine conflict and impairment of intangible assets related to the repositioning or discontinuation of certain juice and dairy brands in Russia (brand portfolio impairment charges), the effective net pricing, productivity savings and a 39-percentage-point favorable impact of higher ~~commodity costs.~~

~~Other Consolidated Results~~

12 Weeks Ended
3/19/2022 3/20/2021 Change
Other pension and retiree medical benefits income $ 134 $ 120 $ 14
Net interest expense and other $ (240) $ (258) $ 18
Tax rate 17.2 % 20.7 %
Net income attributable to PepsiCo (a)
$ 4,261 $ 1,714 149 %
Net income attributable to PepsiCo per common share – diluted (a)
$ 3.06 $ 1.24 148 %

~~(a)For~~payments to employees for a change in pension benefits in the ~~12 weeks ended March 19, 2022,~~prior year. These impacts were partially offset by the unfavorable impact of the prior-year gain associated with the Juice Transaction ~~contributed to both net income attributable to PepsiCo growth~~ and ~~net income attributable to PepsiCo per common share growth. See Note~~higher restructuring and impairment charges. Additionally, operating profit improvement was negatively impacted by certain operating cost increases, a 238-percentage-point impact of higher commodity costs, primarily cooking oil, sweeteners and ingredients, the organic volume decline and higher advertising and marketing expenses. Unfavorable foreign exchange negatively impacted operating profit improvement by 11 ~~to our condensed consolidated financial statements for further information.~~percentage points.

~~Other pension and retiree medical benefits income~~

AMESA

Net revenue increased ~~$14 million,~~2%, primarily reflecting ~~curtailment gains.~~

~~Net interest expense and other decreased $18 million,~~effective net pricing, partially offset by an organic volume decline. Unfavorable foreign exchange reduced net revenue growth by 28 percentage points, primarily due to ~~lower average debt balances, lower interest rates on average debt balances~~weakening of the Egyptian pound.

Convenient foods unit volume declined 8%, primarily reflecting a double-digit decline in South Africa, partially offset by double-digit growth in the Middle East. Additionally, India and Pakistan each experienced a low-single-digit decline.

Beverage unit volume grew 15%, primarily reflecting double-digit growth in India, partially offset by a low-single-digit decline in Nigeria. Additionally, the Middle East experienced high-single-digit growth and Pakistan experienced double-digit growth.

Operating profit decreased 6%, primarily reflecting a 77-percentage-point impact of higher commodity costs, primarily cooking oil and packaging materials, certain operating cost increases and higher ~~interest rates on average cash balances.~~advertising and marketing expenses. These impacts were partially offset by ~~losses on~~ the ~~market value~~effective net pricing, productivity savings and a 7-percentage-point favorable impact of ~~investments used~~adjustments to ~~economically hedge~~the charges recorded in the prior year related to the sale of a ~~portion of our deferred compensation liability as well as lower average cash balances.~~

~~The reported tax rate decreased 3.5~~non-strategic brand. Unfavorable foreign exchange negatively impacted operating profit performance by 23 percentage points, primarily due to weakening of the Egyptian pound.

APAC

Net revenue decreased 1%, reflecting ~~the~~a 6-percentage-point impact of ~~the Juice Transaction,~~unfavorable foreign exchange, partially offset by ~~valuation allowances recorded as~~effective net pricing and organic volume growth.

Convenient foods unit volume grew 4%,primarily reflecting high-single-digit growth in China, partially offset by a ~~result~~double-digit decline in Thailand and a mid-single-digit decline in Australia.

Beverage unit volume grew 2%, primarily reflecting double-digit growth in Vietnam and low-single-digit growth in China, partially offset by a double-digit decline in the Philippines and a slight decline in Thailand.

Operating profit increased 5.5%, primarily reflecting the effective net pricing and productivity savings. These impacts were partially offset by a 12-percentage-point impact of ~~the Russia-Ukraine conflict.~~higher commodity costs, primarily

Table of Contents

cooking oil and potatoes, and certain operating cost increases. Unfavorable foreign exchange reduced operating profit growth by 6 percentage points.

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 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

~~Table of Contents~~

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; ~~costs~~charges associated with ~~mergers,~~ acquisitions ~~divestitures~~ and ~~other structural changes;~~divestitures; gains associated with divestitures; asset impairment charges (non-cash); pension and retiree medical-related amounts, ~~(including~~including all settlement and curtailment gains and ~~losses);~~losses; charges or adjustments related to the enactment of new laws, rules or regulations, such as 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; and remeasurements of net monetary assets. Prior to the fourth quarter of 2021, certain immaterial pension and retiree medical-related settlement and curtailment gains and losses were not considered items affecting comparability. Pension and retiree medical-related service cost, interest cost, expected return on plan assets, and other net periodic pension costs will continue to be reflected in our core results. See below and “Items Affecting Comparability” for a description of adjustments to our 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 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.

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, gain associated with the Juice Transaction, impairment of intangible assets, 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, ~~costs~~charges associated with our acquisitions and divestitures, the gain associated with the Juice Transaction, impairment and other charges/credits comprised of Russia-Ukraine conflict charges ~~Brand Portfolio Impairment Charges,~~and brand portfolio impairment charges, and the impact of settlement and curtailment gains and losses related to pension and retiree medical plans (see “Items Affecting Comparability” for a detailed description of each of these items). We also evaluate performance on operating profit and net income attributable to PepsiCo per common share – diluted, each adjusted for items affecting comparability 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

Table of Contents

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 or that we believe impact comparability with the prior year.

Organic revenue growth

We define organic revenue growth as a measure that adjusts for the impacts of foreign exchange translation, acquisitions ~~divestitures~~ and ~~other structural changes,~~divestitures and where applicable, the impact of the

~~Table of Contents~~

53rd reporting week, including in our fourth quarter 2022 financial results. 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 ~~used for~~from 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.

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 3/19/2022														12 Weeks Ended 3/25/2023
		Cost of sales		Gross profit		Selling, general and administrative expenses		Gain associated with the Juice Transaction		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 noncontrolling interests		Net income attributable to PepsiCo
Reported, GAAP Measure	Reported, GAAP Measure	$	7,433	$	8,767	$	6,822	$	(3,322)	$	5,267	$	134	$	888		$	4,261	Reported, GAAP Measure	$	7,988	$	9,858	$	7,229	$	2,629	$	61	$	546	$	12	$	1,932
Items Affecting Comparability	Items Affecting Comparability																		Items Affecting Comparability
Mark-to-market net impact	Mark-to-market net impact	33		(33)		79		—		(112)		—		(26)			(86)		Mark-to-market net impact	(14)		14		(57)		71		—		17		—		54
Restructuring and impairment charges	Restructuring and impairment charges	(5)		5		(22)		—		27		—		6			21		Restructuring and impairment charges	(3)		3		(110)		113		(1)		14		1		97
Acquisition and divestiture-related charges	Acquisition and divestiture-related charges	—		—		(50)		—		50		6		9			47		Acquisition and divestiture-related charges	—		—		(2)		2		—		1		—		1
Gain associated with the Juice Transaction		—		—		—		3,322		(3,322)		—		(452)			(2,870)
Russia-Ukraine conflict charges		(140)		140		(101)		—		241		—		—			241
Brand Portfolio Impairment Charges		—		—		(241)		—		241		—		48			193
Pension and retiree medical-related impact		—		—		—		—		—		(16)		(4)			(12)

Impairment and other charges/credits																			Impairment and other charges/credits	4		(4)		9		(13)		—		—		—		(13)

Core, Non-GAAP Measure	Core, Non-GAAP Measure	$	7,321	$	8,879	$	6,487	$	—	$	2,392	$	124	$	469		$	1,795	Core, Non-GAAP Measure	$	7,975	$	9,871	$	7,069	$	2,802	$	60	$	578	$	13	$	2,071

3634

Table of Contents


		12 Weeks Ended 3/20/2021												12 Weeks Ended 3/19/2022
		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		Gain associated with the Juice Transaction		Impairment of intangible assets		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	$	6,671	$	8,149	$	5,837	$	2,312	$	120	$	451		$	1,714	Reported, GAAP Measure	$	7,433	$	8,767	$	6,580	$	(3,322)	$	242	$	5,267	$	134	$	888	$	4,261
Items Affecting Comparability	Items Affecting Comparability																Items Affecting Comparability
Mark-to-market net impact	Mark-to-market net impact	36		(36)		39		(75)		—		(17)			(58)		Mark-to-market net impact	33		(33)		79		—		—		(112)		—		(26)		(86)
Restructuring and impairment charges	Restructuring and impairment charges	(2)		2		(35)		37		6		8			35		Restructuring and impairment charges	(5)		5		(22)		—		—		27		—		6		21
Acquisition and divestiture-related charges	Acquisition and divestiture-related charges	—		—		10		(10)		—		(3)			(7)		Acquisition and divestiture-related charges	—		—		(50)		—		—		50		6		9		47
Gain associated with the Juice Transaction																	Gain associated with the Juice Transaction	—		—		—		3,322		—		(3,322)		—		(452)		(2,870)
Impairment and other charges/credits																	Impairment and other charges/credits	(140)		140		(100)		—		(242)		482		—		48		434

Pension and retiree medical-related impact																	Pension and retiree medical-related impact	—		—		—		—		—		—		(16)		(4)		(12)
Core, Non-GAAP Measure	Core, Non-GAAP Measure	$	6,705	$	8,115	$	5,851	$	2,264	$	126	$	439		$	1,684	Core, Non-GAAP Measure	$	7,321	$	8,879	$	6,487	$	—	$	—	$	2,392	$	124	$	469	$	1,795

(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							12 Weeks Ended
			3/19/2022		3/20/2021			Change			3/25/2023		3/19/2022		Change
Net income attributable to PepsiCo per common share – diluted, GAAP measure	Net income attributable to PepsiCo per common share – diluted, GAAP measure		$	3.06	$	1.24		148	%	Net income attributable to PepsiCo per common share – diluted, GAAP measure	$	1.40	$	3.06	(54)	%
Mark-to-market net impact	Mark-to-market net impact		(0.06)		(0.04)					Mark-to-market net impact	0.04		(0.06)
Restructuring and impairment charges	Restructuring and impairment charges		0.02		0.03					Restructuring and impairment charges	0.07		0.02
Acquisition and divestiture-related charges	Acquisition and divestiture-related charges		0.03		(0.01)					Acquisition and divestiture-related charges	—		0.03
Gain associated with the Juice Transaction	Gain associated with the Juice Transaction		(2.06)		—					Gain associated with the Juice Transaction	—		(2.06)
Russia-Ukraine conflict charges			0.17		—
Brand Portfolio Impairment Charges			0.14		—
Impairment and other charges/credits										Impairment and other charges/credits	(0.01)		0.31

Pension and retiree medical-related impact	Pension and retiree medical-related impact		(0.01)		—					Pension and retiree medical-related impact	—		(0.01)

Core net income attributable to PepsiCo per common share – diluted, non-GAAP measure	Core net income attributable to PepsiCo per common share – diluted, non-GAAP measure		$	1.29	$	1.21	(a)	6	%	Core net income attributable to PepsiCo per common share – diluted, non-GAAP measure	$	1.50	$	1.29	16	%
Impact of foreign exchange translation	Impact of foreign exchange translation							1		Impact of foreign exchange translation					2
Growth in core net income attributable to PepsiCo per common share – diluted, on a constant currency basis, non-GAAP measure	Growth in core net income attributable to PepsiCo per common share – diluted, on a constant currency basis, non-GAAP measure							7	%	Growth in core net income attributable to PepsiCo per common share – diluted, on a constant currency basis, non-GAAP measure					18	%

~~(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.

Restructuring and Impairment Charges

2019 Multi-Year Productivity Plan

The 2019 Productivity Plan, publicly announced on February 15, 2019, 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. To build on the successful implementation of the 2019 Productivity Plan, in ~~the second quarter of 2021,~~2022, we expanded and extended the ~~program~~plan through the

Table of Contents

end of ~~2026~~2028 to take advantage of additional opportunities within the initiatives ~~of the 2019 Productivity Plan.~~described above. As a result, we expect to incur pre-tax charges of approximately ~~$3.15~~$3.65 billion, including cash expenditures of approximately ~~$2.4~~$2.9 billion. Plan to date through March ~~19, 2022,~~25, 2023, we have incurred pre-tax charges of ~~$1.1~~$1.6 billion, including cash expenditures of ~~$808 million.~~$1.1 billion. For the remainder of ~~2022,~~2023, we expect to incur pre-tax charges of approximately ~~$325~~$475 million, and cash expenditures of approximately ~~$275~~$500 million. These charges will be funded primarily through cash from operations. We expect to incur the majority of the remaining pre-tax

~~Table of Contents~~

charges and cash expenditures in our ~~2022 and~~ 2023 through 2024 financial results, with the balance to be incurred through ~~2026.~~2028. Charges include severance and other employee costs, asset impairments and other costs.

See Note 23 to our condensed consolidated financial statements in this Form 10-Q, as well as Note 3 to our consolidated financial statements in our ~~2021~~2022 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 23 to our condensed consolidated financial statements.

Acquisition and Divestiture-Related Charges

See Note 1112 to our condensed consolidated financial statements for further information.

Gain Associated with the Juice Transaction

We recognized a gain associated with the Juice Transaction in our PBNA and Europe divisions.

See Note 1112 to our condensed consolidated financial statements for further information.

Impairment and Other Charges/Credits

We recognized Russia-Ukraine conflict charges and brand portfolio impairment charges as described below.

Russia-Ukraine Conflict Charges

In connection with the deadly conflict in Ukraine, we recognized charges related to property, plant and equipment impairment, allowance for expected credit losses, inventory write-downs and other costs. See Note 1 to our condensed consolidated financial statements for further information.

Brand Portfolio Impairment Charges

We recognized asset impairment charges as a result of management’s decision to ~~discontinue~~reposition or ~~reposition~~discontinue certain brands. We also recognized adjustments to the charges recorded in the prior year related to the sale of a non-strategic brand. See ~~Note 3~~Notes 1 and 4 to our condensed consolidated financial statements for further information.

Pension and Retiree Medical-Related Impact

Pension and retiree medical-related impact relates to curtailment gains resulting from the Juice Transaction.

~~See Note 6 and Note 11 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

Table of Contents

needs, including with respect to our net capital spending plans. Our primary sources of liquidity include cash from operations, ~~pre-tax cash proceeds of approximately $3.5 billion from the Juice Transaction,~~proceeds obtained from issuances of commercial paper and long-term debt, and cash and cash equivalents. These sources of cash are available to fund cash outflows that have both a short- and long-term component, including debt repayments and related interest payments; payments for acquisitions; operating leases; purchase, marketing, and other contractual commitments, including capital expenditures and the transition tax liability under the TCJ Act. In addition, these sources of cash fund other cash outflows including anticipated dividend payments and share repurchases. We do not have guarantees or off-balance sheet financing arrangements, including variable interest entities, that we believe could have a material impact on our liquidity. See “Our Business Risks” and ~~Note 7~~Notes 8 and ~~Note 11~~12 to our condensed consolidated

~~Table of Contents~~

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 ~~2021~~2022 Form 10-K for further information.

Our sources and uses of cash were not materially adversely impacted by the Russia-Ukraine conflict in the 12 weeks ended March ~~19, 2022~~25, 2023 and, to date, we have not identified any material liquidity deficiencies as a result of the conflict. Based on the information currently available to us, we do not expect the impact of the Russia-Ukraine conflict to have a material impact on our future liquidity. We will continue to monitor and assess the impact the Russia-Ukraine conflict may have on our business and financial results. See “Our Business Risks,” Note 1 to our condensed consolidated financial statements and “Item 1A. Risk Factors” included in ~~this~~our 2022 Form ~~10-Q~~10-K for further information related to the impact of the Russia-Ukraine conflict on our business and financial results.

Our sources and uses of cash were not materially adversely impacted by COVID-19 in the 12 weeks ended March 19, 2022 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 future liquidity. We will continue to monitor and assess the impact the COVID-19 pandemic may have on our business and financial results. See “Our Business Risks” and Note 1 to our condensed consolidated financial statements 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 1 to our consolidated financial statements included in our 2021 Form 10-K for further information related to the impact of the COVID-19 pandemic on our business and financial results.

As of March ~~19, 2022,~~25, 2023, 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 one-time mandatory transition tax on undistributed international earnings. As of March ~~19, 2022,~~25, 2023, our mandatory transition tax liability was ~~$2.9~~$2.6 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 consolidated financial statements included in our ~~2021~~2022 Form 10-K for further discussion of the TCJ Act.

As part of our evolving market practices, we work with our suppliers to optimize our terms and conditions, which include the extension of payment terms. Our current payment terms with a majority of our suppliers generally range from 60 to 90 days, which we deem to be commercially reasonable. We will continue to monitor economic conditions and market practice working with our suppliers to adjust as necessary. We also maintain voluntary supplySupply 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 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 condensed consolidated balance sheet. We were informed by the participating financial institutions that as of March 19, 2022 and December 25, 2021, $1.3 billion and $1.5 billion, respectively, of our accounts payable to suppliers who participate in these

~~Table of Contents~~

~~financing arrangements are outstanding. These supply chain finance~~ arrangements did not have a material impact on our liquidity or capital resources in the periods presented and we do not expect such arrangements to have a material impact on our liquidity or capital resources for the foreseeable future. See Note 13 to our condensed consolidated financial statements for further discussion of supply chain financing arrangements.

Operating Activities

During the 12 weeks ended March ~~19, 2022,~~25, 2023, net cash used for operating activities was ~~$0.2~~$0.4 billion, compared to net cash used for operating activities of ~~$0.7~~$0.2 billion in the prior-year period. The ~~increase~~decrease in operating cash flow primarily reflects ~~lower pre-tax pension and retiree medical plan contributions, as well as~~unfavorable working capital comparisons, partially offset by favorable operating profit performance ~~and working capital comparisons.~~in the current year.

Investing Activities

During the 12 weeks ended March ~~19, 2022,~~25, 2023, net cash ~~provided by~~used for investing activities was ~~$3.0~~$0.5 billion, primarily reflecting ~~proceeds associated with the Juice Transaction of $3.5 billion, partially offset by~~ net capital spending of ~~$0.5~~$0.6 billion.

We regularly review our plans with respect to ~~net~~net capital spending, including in light of the ongoing uncertainty caused by the Russia-Ukraine conflict ~~and by the COVID-19 pandemic~~ on our business, and believe that we have sufficient liquidity to meet our net capital spending needs.

Table of Contents

Financing Activities

During the 12 weeks ended March ~~19, 2022,~~25, 2023, net cash ~~used for~~provided by financing activities was ~~$1.8~~$0.8 billion, primarily reflecting proceeds from issuances of long-term debt of $3.0 billion and net proceeds of short-term borrowings of $0.9 billion, partially offset by the return of operating cash flow to our shareholders through dividend payments of ~~$1.5~~$1.6 billion and share repurchases of $0.2 billion and payments of long-term debt borrowings of $1.3 ~~billion, partially offset by net proceeds of short-term borrowings of $1.2~~ billion.

We annually review our capital structure with our Board of Directors, including our dividend policy and share repurchase activity. On February 10, 2022, we announced a share repurchase program providing for the repurchase of up to $10.0 billion of PepsiCo common stock which commenced on February 11, 2022 and will expire on February 28, 2026. In addition, on February ~~10, 2022,~~9, 2023, we announced a 7%10% increase in our annualized dividend to ~~$4.60~~$5.06 per share from ~~$4.30~~$4.60 per share, effective with the dividend expected to be paid in June ~~2022.~~2023. We expect to return a total of approximately $7.7 billion to shareholders in ~~2022,~~2023, comprising dividends of approximately ~~$6.2~~$6.7 billion and share repurchases of approximately ~~$1.5~~$1.0 billion.

Free Cash Flow

The table below reconciles net cash 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.”


		12 Weeks Ended					12 Weeks Ended
		3/19/2022		3/20/2021			3/25/2023		3/19/2022
Net cash used for operating activities, GAAP measure	Net cash used for operating activities, GAAP measure	$	(174)	$	(719)	Net cash used for operating activities, GAAP measure	$	(392)	$	(174)
Capital spending	Capital spending	(522)		(471)		Capital spending	(581)		(522)
Sales of property, plant and equipment	Sales of property, plant and equipment	3		5		Sales of property, plant and equipment	19		3
Free cash flow, non-GAAP measure	Free cash flow, non-GAAP measure	$	(693)	$	(1,185)	Free cash flow, non-GAAP measure	$	(954)	$	(693)

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 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

~~Table of Contents~~

Business Risks,” included in our ~~2021~~2022 Form 10-K, for certain factors that may impact our credit ratings or our operating cash flows.

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 78 to our condensed consolidated financial statements 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 ~~2021~~2022 Form 10-K for further information.

Table of Contents

Material Changes in Line Items in Our Condensed Consolidated Financial Statements

Material changes in line items in our condensed consolidated statement of income are discussed in “Results of Operations – Consolidated Review,” “Results of Operations – Division Review” and “Items Affecting Comparability.”

Material changes in line items in our condensed consolidated statement of cash flows are discussed in “Our Liquidity and Capital Resources.”

Material changes in line items in our condensed consolidated balance sheet are discussed below:

Total Assets

As of March ~~19, 2022,~~25, 2023, total assets were $93.0 billion, compared to ~~$92.4~~$92.2 billion as of December 31, 2022. In the 12-weeks ended March 25, ~~2021. The increase~~2023, there were no material changes in ~~total assets is primarily driven by the following~~these line ~~items:~~


	~~Change(a)~~		~~Reference~~
~~Cash and cash equivalents~~	$	~~1.0~~	~~Condensed Consolidated Statement of Cash Flows~~
~~Accounts and notes receivable, less allowance~~	$	~~0.7~~	~~(b)~~
~~Assets held for sale~~	$	~~(1.8)~~	~~(c)~~
~~Other indefinite-lived intangible assets~~	$	~~(0.5)~~	~~Note 3~~
~~Investments in noncontrolled affiliates~~	$	~~1.0~~	~~Note 11~~

items.

Total Liabilities

As of March ~~19, 2022,~~25, 2023 total liabilities were ~~$74.6~~$75.9 billion, compared to ~~$76.2~~$74.9 billion as of December ~~25, 2021.~~31, 2022. The ~~decrease~~increase in total liabilities is primarily driven by the following line items:


	Change(a)		Reference
Short-term debt obligations	$	~~1.2~~0.9	~~(d)~~(b)
Accounts payable and other current liabilities	$	~~(0.8)~~	~~(e)~~
~~Liabilities held for sale~~	$	~~(0.8)~~(1.8)	(c)
Long-term debt obligations	$	~~(1.4)~~1.8	~~Note 7~~(d)

(a)In billions.

(b)~~Reflects favorable operating performance.~~

~~(c)Reflects closing~~Primarily reflects issuances of ~~the Juice Transaction.~~commercial paper. See Note 118 to our condensed consolidated financial statements ~~included in this Form 10-Q and Note 13 to our consolidated financial statements included in our 2021 Form 10-K~~ for further information.

~~(d)~~(c)~~Reflects issuance~~Primarily reflects payments of ~~commercial paper.~~

~~(e)Reflects payment of 2021~~2022 production and capital expenditure payables across a number of our divisions.

~~Table~~(d)Primarily reflects issuances of ~~Contents~~long-term debt, partially offset by debt maturities. See Note 8 to our condensed consolidated financial statements for further information.

Total Equity

Refer to our condensed consolidated statement of equity ~~for material changes in equity line items.~~and Notes 9 and 11 to our condensed consolidated financial statements.

4239

Table of Contents

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 March ~~19, 2022,~~25, 2023, the related Condensed Consolidated Statements of Income, Comprehensive Income, Cash Flows and Equity for the twelve weeks ended March ~~19, 2022~~25, 2023 and March ~~20, 2021,~~19, 2022, 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 ~~25, 2021,~~31, 2022, and the related Consolidated Statements of Income, Comprehensive Income, Cash Flows and Equity for the fiscal year then ended (not presented herein); and in our report dated February ~~9, 2022,~~8, 2023, 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 ~~25, 2021,~~31, 2022, 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

April ~~25, 2022~~24, 2023

4340

Table of Contents

ITEM 3. Quantitative and Qualitative Disclosures About Market Risk.

See “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 ~~2021~~2022 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.

During the 12 weeks ended March ~~19, 2022,~~25, 2023, we continued migrating certain of our financial processing systems to an Enterprise Resource Planning (ERP) system. 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 phases over the next several years. In connection with these ERP implementations, we are updating and will continue to update our internal control over financial reporting, as necessary, to accommodate modifications to our business processes and accounting procedures. During the 12 weeks ended March ~~19, 2022,~~25, 2023, we continued implementing these systems, resulting in changes that materially affected our internal control over financial reporting. These system implementations did not have an adverse effect, nor do we expect will have an adverse effect, on our internal control over financial reporting. In addition, in connection with our 2019 multi-year productivity plan, we continue to migrate to shared business models across our operations to further simplify, harmonize and automate processes. In connection with this multi-year productivity plan 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 business process changes have not materially affected, and we do not expect them to materially affect, our internal control over financial reporting.

Except with respect to the continued implementation of ERP systems, there have been no changes in our internal control over financial reporting during ~~our~~ the 12 weeks ended March ~~19, 2022~~25, 2023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. We will continue to assess the impact on our internal control over financial reporting as we continue to implement our ERP solution and our 2019 multi-year productivity plan.

4441

Table of Contents

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 ~~2021~~2022 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 1. Business – Regulatory Matters” and “Item 1A. Risk Factors” in our ~~2021~~2022 Form 10-K.

ITEM 1A. Risk Factors.

~~The following additional risk factor should be read in conjunction~~There have been no material changes with respect to the risk factors ~~set forth under “Item 1A. Risk Factors”~~disclosed in our ~~2021~~2022 Form 10-K. The developments described below have heightened, or in some cases manifested, certain of the risks disclosed in the risk factor section of our 2021 Form 10-K, and such risk factors are further qualified by the information relating to our operations in Russia and Ukraine as described in this Form 10-Q, including in the additional risk factor below.

You should carefully consider the risks described below and in our 2021 Form 10-K in addition to the other information set forth in this Form 10-Q and in our 2021 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 or financial performance, which in turn can affect the price of our publicly traded securities. The risks described below and in our 2021 Form 10-K are not the only risks we face. There may be other risks we are not currently aware of or that we currently deem not to be material but that may become material in the future. 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.

~~Risks associated with the deadly conflict in Ukraine~~

The deadly conflict in Ukraine has resulted in worldwide geopolitical and macroeconomic uncertainty and led us to suspend the majority of our operations in Ukraine. We are in the process of suspending sales of Pepsi-Cola and certain of our other global beverage brands, our discretionary capital investments and advertising and promotional activities in Russia. We plan to continue to offer our other products in Russia. The conflict has resulted and could continue to result in volatile commodity markets, supply chain disruptions, increased risk of cyber incidents or other disruptions to our information systems, reputational risk, heightened risks to employee safety, significant volatility of the Russian ruble, limitations on access to credit markets, including working capital facilities, increased operating costs (including fuel and other input costs), environmental, health and safety risks related to securing and maintaining facilities, additional sanctions and other regulations (including restrictions on the transfer of funds to and from Russia). The ongoing conflict could result in loss of assets or result in additional impairment charges. We cannot predict how and the extent to which the conflict will affect our operations, customers or business partners or our ability to achieve certain of our sustainability goals. The conflict has adversely affected and could continue to adversely affect demand for our products and our global business.

~~Table of Contents~~

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 12 weeks ended March ~~19, 2022~~25, 2023 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
12/26/2021 - 1/22/2022 — $ — — $ —
10,000
1/23/2022 - 2/19/2022 — $ — — —
10,000
2/20/2022 - 3/19/2022 1.3 $ 161.08 1.3 (213)
Total 1.3 $ 161.08 1.3 $ 9,787


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
12/31/2022					$	8,500
1/1/2023 - 1/28/2023	—	$	—	—	—
					8,500
1/29/2023 - 2/25/2023	0.2	$	175.93	0.2	(27)
					8,473
2/26/2023 - 3/25/2023	0.8	$	174.40	0.8	(147)


Total	1.0	$	174.63	1.0	$	8,326

(a)All shares were repurchased in open market transactions pursuant to the $10 billion share repurchase program authorized by our Board of Directors and publicly announced on February 10, 2022, which commenced on February 11, 2022 and will expire on February 28, 2026. 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 4743.

4642

Table of Contents

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 March ~~19, 2022~~25, 2023 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 March ~~19, 2022,~~25, 2023, formatted in iXBRL and contained in Exhibit 101.

4743

Table of Contents

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:	April ~~25, 2022~~24, 2023	/s/ Marie T. Gallagher
		Marie T. Gallagher
		Senior Vice President and Controller
		(Principal Accounting Officer)

Date:	April ~~25, 2022~~24, 2023	/s/ David Flavell
		David Flavell
		Executive Vice President, General Counsel and Corporate Secretary
		(Duly Authorized Officer)

4844


	12 Weeks Ended 3/20/2021
			Items Affecting Comparability(a)
	Reported, GAAP Measure(b)		Mark-to-market net impact		Restructuring and impairment charges		Acquisition and divestiture-related charges(c)		Core, Non-GAAP Measure(b)
FLNA	$	1,240	$	—	$	15	$	2	$	1,257
QFNA	150		—		—		—		150
PBNA	366		—		4		1		371
LatAm	218		—		2		—		220
Europe	131		—		11		—		142
AMESA	138		—		1		1		140
APAC	208		—		—		—		208
Corporate unallocated expenses	(139)		(75)		4		(14)		(224)
Total	$	2,312	$	(75)	$	37	$	(10)	$	2,264