Item 1. Condensed Consolidated Financial Statements.

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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				24 Weeks Ended
	6/11/2022		6/12/2021		6/11/2022		6/12/2021
Net Revenue	$	20,225	$	19,217	$	36,425	$	34,037
Cost of sales	9,415		8,880		16,848		15,551
Gross profit	10,810		10,337		19,577		18,486
Selling, general and administrative expenses	7,387		7,208		13,967		13,045
Gain associated with the Juice Transaction (a)	(13)		—		(3,335)		—
Impairment of intangible assets (see Notes 1 and 3)	1,359		—		1,601		—
Operating Profit	2,077		3,129		7,344		5,441
Other pension and retiree medical benefits (expense)/income	(2)		126		132		246
Net interest expense and other	(236)		(241)		(476)		(499)
Income before income taxes	1,839		3,014		7,000		5,188
Provision for income taxes	393		642		1,281		1,093
Net income	1,446		2,372		5,719		4,095
Less: Net income attributable to noncontrolling interests	17		14		29		23
Net Income Attributable to PepsiCo	$	1,429	$	2,358	$	5,690	$	4,072
Net Income Attributable to PepsiCo per Common Share
Basic	$	1.03	$	1.71	$	4.11	$	2.95
Diluted	$	1.03	$	1.70	$	4.09	$	2.94
Weighted-average common shares outstanding
Basic	1,382		1,382		1,383		1,381
Diluted	1,389		1,388		1,390		1,387

(a)In the 24 weeks ended June 11, 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) operating across North America and Europe (Juice Transaction). See Note 11 for further information.

See accompanying notes to the condensed consolidated financial statements.

Condensed Consolidated Statement of Comprehensive Income

PepsiCo, Inc. and Subsidiaries

(in millions, unaudited)


	12 Weeks Ended				24 Weeks Ended
	6/11/2022		6/12/2021		6/11/2022		6/12/2021
Net income	$	1,446	$	2,372	$	5,719	$	4,095
Other comprehensive income, net of taxes:
Net currency translation adjustment	1,274		268		714		399
Net change on cash flow hedges	(102)		93		4		165
Net pension and retiree medical adjustments	(250)		24		(237)		51
Other	5		2		1		2
	927		387		482		617
Comprehensive income	2,373		2,759		6,201		4,712
Less: Comprehensive income attributable to noncontrolling interests	17		14		29		23
Comprehensive Income Attributable to PepsiCo	$	2,356	$	2,745	$	6,172	$	4,689

See accompanying notes to the condensed consolidated financial statements.

Condensed Consolidated Statement of Cash Flows

PepsiCo, Inc. and Subsidiaries

(in millions, unaudited)


	24 Weeks Ended
	6/11/2022		6/12/2021
Operating Activities
Net income	$	5,719	$	4,095
Depreciation and amortization	1,195		1,213
Gain associated with the Juice Transaction	(3,335)		—
Brand portfolio impairment charges	465		—
Russia-Ukraine conflict charges	1,406		—
Operating lease right-of-use asset amortization	223		220
Share-based compensation expense	156		144
Restructuring and impairment charges	75		77
Cash payments for restructuring charges	(82)		(104)
Acquisition and divestiture-related charges	64		15
Cash payments for acquisition and divestiture-related charges	(34)		(14)
Pension and retiree medical plan expenses	139		48
Pension and retiree medical plan contributions	(214)		(461)
Deferred income taxes and other tax charges and credits	49		220

Tax payments related to the Tax Cuts and Jobs Act (TCJ Act)	(309)		(309)
Change in assets and liabilities:
Accounts and notes receivable	(1,753)		(1,214)
Inventories	(990)		(810)
Prepaid expenses and other current assets	(186)		(40)
Accounts payable and other current liabilities	(990)		(1,114)
Income taxes payable	608		516
Other, net	(325)		(142)
Net Cash Provided by Operating Activities	1,881		2,340

Investing Activities
Capital spending	(1,499)		(1,305)
Sales of property, plant and equipment	222		22
Acquisitions, net of cash acquired, and investments in noncontrolled affiliates	(29)		(22)
Proceeds associated with the Juice Transaction	3,456		—
Other divestitures and sales of investments in noncontrolled affiliates	15		120
Short-term investments, by original maturity:

More than three months - maturities	—		1,135

Three months or less, net	8		(67)
Other investing, net	(1)		1
Net Cash Provided by/(Used for) Investing Activities	2,172		(116)

(Continued on following page)

Condensed Consolidated Statement of Cash Flows (continued)

PepsiCo, Inc. and Subsidiaries

(in millions, unaudited)


	24 Weeks Ended
	6/11/2022		6/12/2021
Financing Activities

Payments of long-term debt	(1,652)		(1,696)
Debt redemptions	(1,550)		—
Short-term borrowings, by original maturity:
More than three months - proceeds	1,935		—
More than three months - payments	—		(397)
Three months or less, net	844		89

Cash dividends paid	(2,997)		(2,842)
Share repurchases - common	(699)		(106)

Proceeds from exercises of stock options	89		100
Withholding tax payments on restricted stock units (RSUs) and performance stock units (PSUs) converted	(87)		(73)
Other financing	(15)		(19)
Net Cash Used for Financing Activities	(4,132)		(4,944)
Effect of exchange rate changes on cash and cash equivalents and restricted cash	(83)		12
Net Decrease in Cash and Cash Equivalents and Restricted Cash	(162)		(2,708)
Cash and Cash Equivalents and Restricted Cash, Beginning of Year	5,707		8,254
Cash and Cash Equivalents and Restricted Cash, End of Period	$	5,545	$	5,546

Supplemental Non-Cash Activity
Right-of-use assets obtained in exchange for lease obligations	$	428	$	319

See accompanying notes to the condensed consolidated financial statements.

Condensed Consolidated Balance Sheet

PepsiCo, Inc. and Subsidiaries

(in millions except per share amounts)


	(Unaudited)
	6/11/2022		12/25/2021
ASSETS
Current Assets
Cash and cash equivalents	$	5,405	$	5,596
Short-term investments	287		392

Accounts and notes receivable, less allowance: 6/22 - $185 and 12/21 - $147	10,498		8,680
Inventories:
Raw materials and packaging	2,403		1,898
Work-in-process	158		151
Finished goods	2,726		2,298
	5,287		4,347
Prepaid expenses and other current assets	1,156		980
Assets held for sale	—		1,788
Total Current Assets	22,633		21,783
Property, plant and equipment	47,902		46,828
Accumulated depreciation	(25,208)		(24,421)
Property, Plant and Equipment, net	22,694		22,407
Amortizable Intangible Assets, net	1,348		1,538
Goodwill	18,547		18,381
Other Indefinite-Lived Intangible Assets	15,743		17,127

Investments in Noncontrolled Affiliates	3,519		2,627
Deferred Income Taxes	4,345		4,310
Other Assets	4,274		4,204
Total Assets	$	93,103	$	92,377

LIABILITIES AND EQUITY
Current Liabilities
Short-term debt obligations	$	6,032	$	4,308
Accounts payable and other current liabilities	21,191		21,159
Liabilities held for sale	—		753
Total Current Liabilities	27,223		26,220
Long-Term Debt Obligations	33,247		36,026
Deferred Income Taxes	4,838		4,826
Other Liabilities	9,121		9,154
Total Liabilities	74,429		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: 1,381 and 1,383 shares, respectively)	23		23
Capital in excess of par value	3,970		4,001
Retained earnings	67,763		65,165
Accumulated other comprehensive loss	(14,416)		(14,898)
Repurchased common stock, in excess of par value (486 and 484 shares, respectively)	(38,787)		(38,248)
Total PepsiCo Common Shareholders’ Equity	18,553		16,043
Noncontrolling interests	121		108
Total Equity	18,674		16,151
Total Liabilities and Equity	$	93,103	$	92,377

See accompanying notes to the condensed consolidated financial statements.

Condensed Consolidated Statement of Equity

PepsiCo, Inc. and Subsidiaries

(in millions, except per share amounts, unaudited)


	12 Weeks Ended						24 Weeks Ended
	6/11/2022			6/12/2021			6/11/2022			6/12/2021
	Shares	Amount		Shares	Amount		Shares	Amount		Shares	Amount










Common Stock
Balance, beginning of period	1,384	$	23	1,382	$	23	1,383	$	23	1,380	$	23
Change in repurchased common stock	(3)	—		—	—		(2)	—		2	—
Balance, end of period	1,381	23		1,382	23		1,381	23		1,382	23
Capital in Excess of Par Value
Balance, beginning of period		3,893			3,800			4,001			3,910
Share-based compensation expense		76			65			159			145

Stock option exercises, RSUs and PSUs converted		3			—			(103)			(119)
Withholding tax on RSUs and PSUs converted		(2)			(2)			(87)			(73)

Balance, end of period		3,970			3,863			3,970			3,863
Retained Earnings
Balance, beginning of period		67,934			63,740			65,165			63,443

Net income attributable to PepsiCo		1,429			2,358			5,690			4,072
Cash dividends declared – common (a)		(1,600)			(1,493)			(3,092)			(2,910)

Balance, end of period		67,763			64,605			67,763			64,605
Accumulated Other Comprehensive Loss
Balance, beginning of period		(15,343)			(15,246)			(14,898)			(15,476)
Other comprehensive income attributable to PepsiCo		927			387			482			617
Balance, end of period		(14,416)			(14,859)			(14,416)			(14,859)
Repurchased Common Stock
Balance, beginning of period	(483)	(38,305)		(485)	(38,370)		(484)	(38,248)		(487)	(38,446)
Share repurchases	(3)	(518)		—	—		(4)	(731)		(1)	(106)
Stock option exercises, RSUs and PSUs converted	—	36		—	37		2	192		3	219

Balance, end of period	(486)	(38,787)		(485)	(38,333)		(486)	(38,787)		(485)	(38,333)
Total PepsiCo Common Shareholders’ Equity		18,553			15,299			18,553			15,299
Noncontrolling Interests
Balance, beginning of period		118			106			108			98
Net income attributable to noncontrolling interest		17			14			29			23
Distributions to noncontrolling interests		(14)			(19)			(14)			(20)


Other, net		—			(2)			(2)			(2)
Balance, end of period		121			99			121			99
Total Equity		$	18,674		$	15,398		$	18,674		$	15,398

(a)Cash dividends declared per common share were $1.15 and $1.075 for the 12 weeks ended June 11, 2022 and June 12, 2021, respectively and $2.225 and $2.0975 for the 24 weeks ended June 11, 2022 and June 12, 2021, respectively.

See accompanying notes to the condensed consolidated financial statements.

Notes to the Condensed Consolidated Financial Statements

Note 1 - Basis of Presentation and Our Divisions

Basis of Presentation

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

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. Generally Accepted Accounting Principles (GAAP) for interim financial information and with the rules and regulations for reporting the Quarterly Report on Form 10-Q (Form 10-Q). Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. The condensed consolidated balance sheet at December 25, 2021 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 Form 10-K). This report should be read in conjunction with our 2021 Form 10-K. In our opinion, these financial statements include all normal and recurring adjustments necessary for a fair presentation. The results for the 12 and 24 weeks ended June 11, 2022 are not necessarily indicative of the results expected for any future period or the full year.

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 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, the months of March, April and May are reflected in our results for the 12 weeks ended June 11, 2022, and the months of January through May are reflected in our results for the 24 weeks ended June 11, 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 and the Russia-Ukraine conflict 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 seven 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;

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				24 Weeks Ended
	6/11/2022		6/12/2021		6/11/2022		6/12/2021
FLNA	$	5,181	$	4,552	$	10,020	$	8,788
QFNA	675		575		1,388		1,221
PBNA	6,120		6,156		11,473		11,230
LatAm	2,415		1,967		3,889		3,209
Europe	3,023		3,286		4,820		5,081
AMESA	1,696		1,602		2,700		2,485
APAC	1,115		1,079		2,135		2,023
Total	$	20,225	$	19,217	$	36,425	$	34,037

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
	6/11/2022				6/12/2021
	Beverages(a)		Convenient Foods		Beverages(a)		Convenient Foods
LatAm	10	%	90	%	10	%	90	%
Europe	50	%	50	%	55	%	45	%
AMESA	35	%	65	%	35	%	65	%
APAC	25	%	75	%	25	%	75	%
PepsiCo	45	%	55	%	45	%	55	%


	24 Weeks Ended
	6/11/2022				6/12/2021
	Beverages(a)		Convenient Foods		Beverages(a)		Convenient Foods
LatAm	10	%	90	%	10	%	90	%
Europe	50	%	50	%	55	%	45	%
AMESA	30	%	70	%	30	%	70	%
APAC	20	%	80	%	20	%	80	%
PepsiCo	45	%	55	%	45	%	55	%

(a)Beverage revenue from company-owned bottlers, which primarily includes our consolidated bottling operations in our PBNA and Europe divisions, is over 35% of our consolidated net revenue in the 12 and 24 weeks ended June 11, 2022, and approximately 40% of our consolidated net revenue in the 12 and 24 weeks ended June 12, 2021. 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.

Operating profit of each division is as follows:


	12 Weeks Ended				24 Weeks Ended
	6/11/2022		6/12/2021		6/11/2022		6/12/2021
FLNA	$	1,448	$	1,382	$	2,744	$	2,622
QFNA	135		128		294		278
PBNA (a) (b)	651		809		4,085		1,175
LatAm (c)	420		356		743		574
Europe (a) (d)	(797)		405		(933)		536
AMESA	290		256		470		394
APAC	206		192		421		400
Total divisions	2,353		3,528		7,824		5,979
Corporate unallocated expenses (e) (f)	(276)		(399)		(480)		(538)
Total	$	2,077	$	3,129	$	7,344	$	5,441

(a)In the 24 weeks ended June 11, 2022, we recorded a gain of $3.0 billion and $298 million in our PBNA and Europe divisions, respectively, associated with the Juice Transaction. The total after-tax amount was $2.9 billion or $2.07 per share. See Note 11 for further information.

(b)In the 12 and 24 weeks ended June 11, 2022, we decided to terminate our agreement with Vital Pharmaceuticals, Inc. (Vital) to distribute Bang Energy drinks in our PBNA division. As a result, we recognized pre-tax impairment and other charges (Brand Portfolio Impairment Charges) of $141 million ($107 million after-tax or $0.08 per share) primarily related to the write-off of distribution rights, with $8 million recorded in cost of sales, $7 million recorded in selling, general and administrative expenses and $126 million recorded in impairment of intangible assets. See Note 3 for further information.

(c)In the 12 and 24 weeks ended June 11, 2022, we made the decision to sell or discontinue certain non-strategic brands in our LatAm division. As a result, we recognized pre-tax impairment and other charges (Brand Portfolio Impairment Charges) of $83 million ($56 million after-tax or $0.04 per share) primarily related to property, plant and equipment and intangible assets, with $47 million recorded in selling, general and administrative expenses and $36 million recorded in impairment of intangible assets. See Note 3 for further information.

(d)In the 24 weeks ended June 11, 2022, we recorded pre-tax impairment charges (Brand Portfolio Impairment Charges) of $241 million ($193 million after-tax or $0.14 per share) in impairment of intangible assets related to the discontinuation or repositioning of certain juice and dairy brands in Russia. See Note 3 for further information. Also see below for charges taken as a result of the Russia-Ukraine conflict.

(e)In the 12 weeks ended June 11, 2022, we recorded a pre-tax loss on certain equity investments of $56 million ($42 million after-tax or $0.03 per share) in selling, general and administrative expenses. In the 24 weeks ended June 11, 2022, we recorded a pre-tax loss on certain equity investments of $64 million ($48 million after-tax or $0.03 per share) in selling, general and administrative expenses.

(f)In the 12 weeks ended June 12, 2021, we sold our short-term investment in a publicly traded company and recorded a pre-tax loss on the sale of $39 million ($30 million after-tax or $0.02 per share), net of discounts, in selling, general and administrative expenses. The 24 weeks ended June 12, 2021 include a pre-tax net gain of $69 million ($52 million after-tax or $0.04 per share) associated with this sale.

A summary of pre-tax charges taken in our Europe division as a result of the Russia-Ukraine conflict is as follows:



	6/11/2022
	12 Weeks Ended		24 Weeks Ended
Impairment charges related to intangible assets (a)	$	1,197	$	1,198
Impairment charges related to property, plant and equipment	—		123

(Recovery of)/allowance for expected credit losses (b)	(11)		26
(Recovery of)/allowance for inventory write-downs (b)	(8)		25



Other (b)	(13)		34
Total	$	1,165	$	1,406
After-tax amount	$	927	$	1,168
Impact on net income attributable to PepsiCo per common share	$	(0.67)	$	(0.84)


	6/11/2022
	12 Weeks Ended		24 Weeks Ended
Cost of sales (b)	$	(7)	$	133
Selling, general and administrative expenses (b)	(25)		75
Impairment of intangible assets (a)	1,197		1,198
Total	$	1,165	$	1,406

(a)See Note 3 for further information. For information on our policies for indefinite-lived intangible assets, refer to Note 2 to our consolidated financial statements in our 2021 Form 10-K.

(b)Income amounts primarily relate to changes in estimates.

A summary of pre-tax charges related to the impairment of intangible assets is as follows:


	6/11/2022
	12 Weeks Ended		24 Weeks Ended
Russia-Ukraine conflict impairment charges	$	1,197	$	1,198
Brand Portfolio Impairment Charges	162		403
Total	$	1,359	$	1,601

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				24 Weeks Ended
	6/11/2022		6/12/2021		6/11/2022		6/12/2021
FLNA	$	5	$	14	$	19	$	38
QFNA	—		1		1		3
PBNA (a)	1		(11)		11		2
LatAm	4		17		10		32
Europe	2		9		3		15
AMESA	1		3		3		2
APAC	11		2		13		4
Total	$	24	$	35	$	60	$	96

(a)Income amount primarily relates to allowances for expected credit losses and upfront payments to customers, due to improved projected default rates and lower at-risk balances.

Note 2 - 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, we expanded and extended the plan through the end of 2026 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 billion, including cash expenditures of approximately $2.4 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				24 Weeks Ended
	6/11/2022		6/12/2021		6/11/2022		6/12/2021
Cost of sales	$	—	$	2	$	5	$	4
Selling, general and administrative expenses	45		33		67		68
Other pension and retiree medical benefits expense/(income)	3		(1)		3		5
Total restructuring and impairment charges	$	48	$	34	$	75	$	77
After-tax amount	$	40	$	29	$	61	$	64
Impact on net income attributable to PepsiCo per common share	$	(0.03)	$	(0.02)	$	(0.04)	$	(0.05)


	12 Weeks Ended				24 Weeks Ended				Plan to Date
	6/11/2022		6/12/2021		6/11/2022		6/12/2021		through 6/11/2022
FLNA	$	3	$	3	$	6	$	18	$	170
QFNA	—		—		—		—		12
PBNA	2		1		5		5		163
LatAm	8		6		14		8		153
Europe	12		15		19		26		253
AMESA	3		3		5		4		75
APAC	3		1		4		1		65
Corporate	14		6		19		10		158
	45		35		72		72		1,049
Other pension and retiree medical benefits expense/(income)	3		(1)		3		5		70
Total	$	48	$	34	$	75	$	77	$	1,119


	12 Weeks Ended				24 Weeks Ended				Plan to Date
	6/11/2022		6/12/2021		6/11/2022		6/12/2021		through 6/11/2022
Severance and other employee costs	$	20	$	15	$	31	$	49	$	595
Asset impairments	—		1		—		1		157
Other costs	28		18		44		27		367
Total	$	48	$	34	$	75	$	77	$	1,119

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 24 weeks ended June 11, 2022 is as follows:


	Severance and Other Employee Costs		Other Costs		Total
Liability as of December 25, 2021	$	64	$	7	$	71
2022 restructuring charges	31		44		75
Cash payments	(37)		(45)		(82)
Non-cash charges and translation	(3)		(1)		(4)
Liability as of June 11, 2022	$	55	$	5	$	60

Substantially all of the restructuring accrual at June 11, 2022 is expected to be paid by the end of 2022.

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 Notes 1 and 3 for Brand Portfolio Impairment Charges and Russia-Ukraine Conflict Charges.

Note 3 - Intangible Assets

Indefinite-lived intangible assets are not amortized and are assessed for impairment at least annually, using either a qualitative or quantitative approach. We perform this annual assessment during our third quarter, or more frequently if circumstances indicate that the carrying value may not be recoverable. Where we use the qualitative assessment, first we determine if, based on qualitative factors, it is more likely than not that an impairment exists. If the qualitative assessment indicates that it is more likely than not that an impairment exists, then a quantitative assessment is performed. In the quantitative assessment for indefinite-lived intangible assets, an assessment is performed to determine the fair value of the indefinite-lived intangible asset. Estimated fair value is determined using discounted cash flows and requires an analysis of several estimates including future cash flows or income consistent with management’s strategic business plans, annual sales growth rates, perpetuity growth assumptions and the selection of assumptions underlying a discount rate (weighted-average cost of capital) based on market data available at the time. Significant management judgment is necessary to estimate the impact of competitive operating, macroeconomic and other factors (including those related to the Russia-Ukraine conflict) to estimate future levels of sales, operating profit or cash flows. All assumptions used in our impairment evaluations for indefinite-lived intangible assets, such as forecasted growth rates (including perpetuity growth assumptions) and weighted-average cost of capital, are based on the best available market information and are consistent with our internal forecasts and operating plans. A deterioration in these assumptions could adversely impact our results.

During the 12 weeks ended June 11, 2022, macroeconomic factors, sanctions and other regulations as a result of the Russia-Ukraine conflict indicated a material deterioration of the significant inputs used to determine the fair value of our indefinite-lived intangible assets in Russia, primarily assumptions underlying the weighted-average cost of capital. These factors required us to perform a quantitative assessment, despite the absence of a material adverse impact on these assets’ financial performance (e.g., sales, operating profit, cash flows).

The fair value of our indefinite-lived intangible assets in Russia was estimated using discounted cash flows under the income approach, which we consider to be a Level 3 measurement. We determined that the carrying value exceeds the fair value, with the decrease in the fair value primarily attributable to a significant increase in the weighted-average cost of capital, which reflects the macroeconomic uncertainty in Russia. As a result of the quantitative assessment, in the 12 and 24 weeks ended June 11, 2022, we recorded pre-tax impairment charges of $1.2 billion ($958 million after-tax or $0.69 per share) in impairment of intangible assets, related to our juice and dairy brands in Russia in our Europe division. See Note 1 for further information.

During the 24 weeks ended June 11, 2022, we discontinued or repositioned certain juice and dairy brands in Russia in our Europe division. As a result, we recognized pre-tax impairment charges (Brand Portfolio Impairment Charges) of $241 million ($193 million after-tax or $0.14 per share) in 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 2 to our consolidated financial statements in our 2021 Form 10-K.

A summary of our amortizable intangible assets is as follows:


	6/11/2022						12/25/2021
	Gross		Accumulated Amortization		Net		Gross		Accumulated Amortization		Net
Acquired franchise rights (a)	$	851	$	(196)	$	655	$	976	$	(187)	$	789
Customer relationships	617		(243)		374		623		(227)		396
Brands	1,119		(983)		136		1,151		(989)		162
Other identifiable intangibles	444		(261)		183		451		(260)		191
Total	$	3,031	$	(1,683)	$	1,348	$	3,201	$	(1,663)	$	1,538

(a)Decrease is primarily due to the write-off of our distribution rights for Bang Energy drinks. Subsequent to June 11, 2022, we came to an agreement with Vital to terminate the distribution agreement. See Note 1 for further information.

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


	Balance 12/25/2021		Impairment		Translation and Other		Balance 6/11/2022

FLNA
Goodwill	$	458	$	—	$	1	$	459
Brands	340		—		—		340
Total	798		—		1		799
QFNA
Goodwill	189		—		—		189
Total	189		—		—		189
PBNA
Goodwill	11,974		—		1		11,975
Reacquired franchise rights	7,107		—		6		7,113
Acquired franchise rights	1,538		—		—		1,538
Brands	2,508		—		—		2,508
Total	23,127		—		7		23,134
LatAm
Goodwill	433		—		27		460
Brands (a)	100		(29)		10		81
Total	533		(29)		37		541
Europe (b)
Goodwill	3,700		—		159		3,859
Reacquired franchise rights	441		—		4		445
Acquired franchise rights	158		—		(8)		150
Brands (c)	4,254		(1,420)		67		2,901
Total	8,553		(1,420)		222		7,355
AMESA
Goodwill	1,063		—		2		1,065
Brands	205		—		4		209
Total	1,268		—		6		1,274
APAC
Goodwill	564		—		(24)		540
Brands	476		—		(18)		458
Total	1,040		—		(42)		998

Total goodwill	18,381		—		166		18,547
Total reacquired franchise rights	7,548		—		10		7,558
Total acquired franchise rights	1,696		—		(8)		1,688
Total brands	7,883		(1,449)		63		6,497
Total	$	35,508	$	(1,449)	$	231	$	34,290

(a)Impairment reflects our decision to sell or discontinue certain non-strategic brands. See Note 1 for further information.

(b)Translation and other primarily represents the appreciation of the Russian ruble.

(c)Impairment represents decrease in fair value as a result of the Russia-Ukraine conflict and the discontinuation or repositioning of certain juice and dairy brands in Russia.

Note 4 - Income Taxes

In 2021, we received a final assessment from the Internal Revenue Service 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 of the analysis of the 2014 through 2016 final assessment, we remeasured all applicable 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 TCJ Act, resulting in a net non-cash tax expense of $112 million in 2021. There were no tax amounts recognized in the 24 weeks ended June 11, 2022 and June 12, 2021 from this assessment.

Note 5 - 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				24 Weeks Ended
	6/11/2022		6/12/2021		6/11/2022		6/12/2021
Share-based compensation expense – equity awards	$	75	$	65	$	156	$	144
Share-based compensation expense – liability awards	7		—		12		4
Acquisition and divestiture-related charges	—		—		3		—
Restructuring charges	1		—		—		1
Total	$	83	$	65	$	171	$	149

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


	24 Weeks Ended
	6/11/2022			6/12/2021
	Granted(a)	Weighted-Average Grant Price		Granted(a)	Weighted-Average Grant Price
Stock options	2.1	$	163.00	1.8	$	131.25
RSUs and PSUs	2.3	$	163.00	2.6	$	131.27

(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 million and $17 million during the 24 weeks ended June 11, 2022 and June 12, 2021, respectively.

For the 12 weeks ended June 11, 2022 and June 12, 2021, our grants of stock options, RSUs, PSUs and long-term cash awards were nominal.

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


	24 Weeks Ended
	6/11/2022		6/12/2021
Expected life	7 years		7 years
Risk-free interest rate	1.7	%	1.1	%
Expected volatility	16	%	14	%
Expected dividend yield	2.5	%	3.1	%

Note 6 - Pension and Retiree Medical Benefits

In the 12 and 24 weeks ended June 11, 2022, we recognized a pre-tax settlement charge of $131 million ($101 million after-tax or $0.07 per share) in a U.S. qualified defined benefit pension plan due to lump sum distributions to retired or terminated employees. The settlement charge was triggered when the cumulative lump sum distributions exceeded the total annual service and interest cost in 2022. As a result, related plan assets and benefit obligations were remeasured using assumptions as of June 11, 2022, the remeasurement date. The weighted-average discount rate for the U.S. defined benefit plans’ projected benefit obligations increased from 2.9% to 3.4% as a result of the remeasurement. In addition, the U.S. defined benefit pension plans’ weighted-average interest cost discount rate and expected return on plan assets used to determine 2022 net periodic benefit cost/(income) increased from 2.4% and 6.3% to 3.1% and 6.7%, respectively.

For further information on our policies for pension, retiree-medical and savings plans, refer to Note 7 to our consolidated financial statements in our 2021 Form 10-K.

In the 24 weeks ended June 11, 2022, we transferred pension and retiree medical obligations of $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
	Pension								Retiree Medical
	U.S.				International
	6/11/2022		6/12/2021		6/11/2022		6/12/2021		6/11/2022		6/12/2021
Service cost	$	115	$	120	$	17	$	25	$	9	$	7
Other pension and retiree medical benefits expense/(income):
Interest cost	87		74		23		19		4		4
Expected return on plan assets	(216)		(224)		(56)		(57)		(4)		(3)
Amortization of prior service credits	(7)		(7)		—		(1)		(2)		(3)
Amortization of net losses/(gains)	35		52		7		19		(3)		(3)
Settlement/curtailment losses	131		—		—		5		—		—
Special termination benefits	3		(1)		—		—		—		—
Total other pension and retiree medical benefits expense/(income)	33		(106)		(26)		(15)		(5)		(5)
Total	$	148	$	14	$	(9)	$	10	$	4	$	2


	24 Weeks Ended
	Pension								Retiree Medical
	U.S.				International
	6/11/2022		6/12/2021		6/11/2022		6/12/2021		6/11/2022		6/12/2021
Service cost	$	229	$	240	$	34	$	44	$	17	$	15
Other pension and retiree medical benefits income:
Interest cost	175		149		40		32		8		7
Expected return on plan assets	(431)		(448)		(98)		(98)		(7)		(7)
Amortization of prior service credits	(13)		(14)		—		(1)		(4)		(5)
Amortization of net losses/(gains)	68		103		12		32		(6)		(6)
Settlement/curtailment losses/(gains)	131		—		—		5		(16)		—
Special termination benefits	9		5		—		—		—		—
Total other pension and retiree medical benefits income	(61)		(205)		(46)		(30)		(25)		(11)
Total	$	168	$	35	$	(12)	$	14	$	(8)	$	4

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

During the 24 weeks ended June 11, 2022 and June 12, 2021, we made discretionary contributions of $75 million and $300 million, respectively, to our U.S. qualified defined benefit plans, and $10 million and $25 million, respectively, to our international defined benefit plans. We expect to make an additional discretionary contribution of $75 million to our U.S. qualified defined benefit plans in the third quarter of 2022.

Note 7 - Debt Obligations

In the 24 weeks ended June 11, 2022, $1.7 billion of U.S. dollar-denominated senior notes matured and were paid. In addition, in the 24 weeks ended June 11, 2022, we paid $750 million to redeem all $750 million outstanding principal amount of our 2.25% senior notes due May 2022, and we paid $800 million to redeem all $800 million outstanding principal amount of our 3.10% senior notes due July 2022.

As of June 11, 2022, we had $2.8 billion of commercial paper outstanding.

In the second quarter of 2022, we entered into a new five-year unsecured revolving credit agreement (Five-Year Credit Agreement), which expires on May 27, 2027. The Five-Year Credit Agreement enables us and our borrowing subsidiaries to borrow up to $3.8 billion in U.S. dollars and/or euros, including a $0.75 billion swing line subfacility for euro-denominated borrowings permitted to be borrowed on a same-day basis, subject to customary terms and conditions. We may request that commitments under this agreement be increased up to $4.5 billion (or the equivalent amount in euros). Additionally, we may, once a year, request renewal of the agreement for an additional one-year period. The Five-Year Credit Agreement replaced our $3.75 billion five-year credit agreement, dated as of May 28, 2021.

Also in the second quarter of 2022, we entered into a new 364-day unsecured revolving credit agreement (364-Day Credit Agreement), which expires on May 26, 2023. The 364-Day Credit Agreement enables us and our borrowing subsidiaries to borrow up to $3.8 billion in U.S. dollars and/or euros, subject to customary terms and conditions. We may request that commitments under this agreement be increased up to $4.5 billion (or the equivalent amount in euros). We may request renewal of this facility for an additional 364-day period or convert any amounts outstanding into a term loan for a period of up to one year, which term loan would mature no later than the anniversary of the then effective termination date. The 364-Day Credit Agreement replaced our $3.75 billion 364-day credit agreement, dated as of May 28, 2021.

Funds borrowed under the Five-Year Credit Agreement and the 364-Day Credit Agreement may be used for general corporate purposes. Subject to certain conditions, we may borrow, prepay and reborrow amounts under these agreements. As of June 11, 2022, there were no outstanding borrowings under the Five-Year Credit Agreement or the 364-Day Credit Agreement.

Note 8 - 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 24 weeks ended June 11, 2022 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 Form 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 June 11, 2022 was $353 million. We have posted no collateral under these contracts and no credit-risk-related contingent features were triggered as of June 11, 2022.

The notional amounts of our financial instruments used to hedge the above risks as of June 11, 2022 and December 25, 2021 are as follows:


	Notional Amounts(a)
	6/11/2022		12/25/2021
Commodity	$	1.7	$	1.6
Foreign exchange	$	2.3	$	2.8
Interest rate	$	2.1	$	2.1
Net investment (b)	$	2.0	$	2.1

(a)In billions.

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

As of June 11, 2022, approximately 8% of total debt, after the impact of the related interest rate derivative instruments, was subject to variable rates, compared to 2% as of December 25, 2021.

Held-to-Maturity Debt Securities

Investments in debt securities that we have the positive intent and ability to hold until maturity are classified as held-to-maturity. Highly liquid debt securities with original maturities of three months or less are recorded as cash equivalents. As of June 11, 2022, we had no investments in debt securities. As of December 25, 2021, we had $130 million of investments in commercial paper recorded in cash and cash equivalents. Held-to-maturity debt securities are recorded at amortized cost, which approximates fair value, and realized gains or losses are reported in earnings. As of December 25, 2021, gross unrecognized gains and losses and the allowance for expected credit losses were not material.

Fair Value Measurements

The fair values of our financial assets and liabilities as of June 11, 2022 and December 25, 2021 are categorized as follows:


		6/11/2022				12/25/2021
	Fair Value Hierarchy Levels(a)	Assets(a)		Liabilities(a)		Assets(a)		Liabilities(a)

Index funds (b)	1	$	279	$	—	$	337	$	—
Prepaid forward contracts (c)	2	$	13	$	—	$	21	$	—
Deferred compensation (d)	2	$	—	$	440	$	—	$	505

Derivatives designated as cash flow hedging instruments:
Foreign exchange (e)	2	$	14	$	42	$	29	$	14
Interest rate (e)	2	20		349		14		264
Commodity (f)	2	22		30		70		5
		$	56	$	421	$	113	$	283
Derivatives not designated as hedging instruments:
Foreign exchange (e)	2	$	6	$	9	$	19	$	7
Commodity (f)	2	46		25		35		22
		$	52	$	34	$	54	$	29
Total derivatives at fair value (g)		$	108	$	455	$	167	$	312
Total		$	400	$	895	$	525	$	817

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

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

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

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

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

(g)Derivative assets and liabilities are presented on a gross basis on our balance sheet. Amounts subject to enforceable master netting arrangements or similar agreements which are not offset on the balance sheet as of June 11, 2022 and December 25, 2021 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 June 11, 2022 and December 25, 2021 was $37 billion and $43 billion, respectively, based upon prices of similar instruments in the marketplace, which are considered Level 2 inputs.

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


	12 Weeks Ended
	Fair Value/Non- designated Hedges				Cash Flow and Net Investment Hedges
	Losses/(Gains) Recognized in Income Statement(a)				Losses/(Gains) Recognized in Accumulated Other Comprehensive Loss				Losses/(Gains) Reclassified from Accumulated Other Comprehensive Loss into Income Statement(b)
	6/11/2022		6/12/2021		6/11/2022		6/12/2021		6/11/2022		6/12/2021
Foreign exchange	$	21	$	6	$	26	$	27	$	(17)	$	27
Interest rate	—		—		82		(46)		61		(47)
Commodity	(181)		(70)		(1)		(156)		(74)		(33)
Net investment	—		—		(88)		55		—		—
Total	$	(160)	$	(64)	$	19	$	(120)	$	(30)	$	(53)


	24 Weeks Ended
	Fair Value/Non- designated Hedges				Cash Flow and Net Investment Hedges
	Losses/(Gains) Recognized in Income Statement(a)				Losses/(Gains) Recognized in Accumulated Other Comprehensive Loss				Losses/(Gains) Reclassified from Accumulated Other Comprehensive Loss into Income Statement(b)
	6/11/2022		6/12/2021		6/11/2022		6/12/2021		6/11/2022		6/12/2021
Foreign exchange	$	5	$	10	$	18	$	38	$	(21)	$	40
Interest rate	—		1		79		(64)		81		(51)
Commodity	(347)		(151)		(190)		(246)		(152)		(43)
Net investment	—		—		(139)		(8)		—		—
Total	$	(342)	$	(140)	$	(232)	$	(280)	$	(92)	$	(54)

(a)Foreign exchange derivative losses/gains are primarily 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.

(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.

Based on current market conditions, we expect to reclassify net gains of $137 million related to our cash flow hedges from accumulated other comprehensive loss into net income during the next 12 months.

Note 9 - 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
	6/11/2022			6/12/2021
	Income		Shares(a)	Income		Shares(a)




Basic net income attributable to PepsiCo per common share	$	1.03		$	1.71
Net income available for PepsiCo common shareholders	$	1,429	1,382	$	2,358	1,382
Dilutive securities:
Stock options, RSUs, PSUs and other (b)	—		7	—		6

Diluted	$	1,429	1,389	$	2,358	1,388
Diluted net income attributable to PepsiCo per common share	$	1.03		$	1.70


	24 Weeks Ended
	6/11/2022			6/12/2021
	Income		Shares(a)	Income		Shares(a)





Basic net income attributable to PepsiCo per common share	$	4.11		$	2.95
Net income available for PepsiCo common shareholders	$	5,690	1,383	$	4,072	1,381
Dilutive securities:
Stock options, RSUs, PSUs and other (b)	—		7	—		6
Diluted	$	5,690	1,390	$	4,072	1,387
Diluted net income attributable to PepsiCo per common share	$	4.09		$	2.94

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

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

The weighted-average amount of antidilutive securities excluded from the calculation of diluted earnings per common share was immaterial for both the 12 and 24 weeks ended June 11, 2022 and June 12, 2021.

Note 10 - 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 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)
Other comprehensive income/(loss) before reclassifications (c)	1,298		(107)		(484)		5		712
Amounts reclassified from accumulated other comprehensive loss	—		(30)		161		—		131
Net other comprehensive income/(loss)	1,298		(137)		(323)		5		843
Tax amounts	(24)		35		73		—		84
Balance as of June 11, 2022 (a)	$	(11,595)	$	163	$	(2,987)	$	3	$	(14,416)

(a)Pension and retiree medical amounts are net of taxes of $1,283 million as of December 25, 2021, $1,279 million as of March 19, 2022 and $1,352 million as of June 11, 2022.

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

(c)Currency translation adjustment primarily reflects appreciation of the Russian ruble.


	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)
Other comprehensive income/(loss) before reclassifications (c)	255		175		(28)		2		404
Amounts reclassified from accumulated other comprehensive loss	—		(53)		57		—		4
Net other comprehensive income	255		122		29		2		408
Tax amounts	13		(29)		(5)		—		(21)
Balance as of June 12, 2021 (a)	$	(11,541)	$	169	$	(3,469)	$	(18)	$	(14,859)

(a)Pension and retiree medical amounts are net of taxes of $1,514 million as of December 26, 2020, $1,509 million as of March 20, 2021 and $1,504 million as of June 12, 2021.

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

(c)Currency translation adjustment primarily reflects appreciation of the South African rand, Canadian dollar and Russian ruble.

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


	12 Weeks Ended				24 Weeks Ended
	6/11/2022		6/12/2021		6/11/2022		6/12/2021		Affected Line Item in the Income Statement



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

Cash flow hedges:
Foreign exchange contracts	$	(2)	$	3	$	(4)	$	4	Net revenue
Foreign exchange contracts	(15)		24		(17)		36		Cost of sales
Interest rate derivatives	61		(47)		81		(51)		Selling, general and administrative expenses
Commodity contracts	(70)		(32)		(146)		(43)		Cost of sales
Commodity contracts	(4)		(1)		(6)		—		Selling, general and administrative expenses
Net gains before tax	(30)		(53)		(92)		(54)
Tax amounts	7		12		17		13
Net gains after tax	$	(23)	$	(41)	$	(75)	$	(41)

Pension and retiree medical items:
Amortization of prior service credits	$	(9)	$	(11)	$	(17)	$	(20)	Other pension and retiree medical benefits (expense)/income
Amortization of net losses	39		68		74		129		Other pension and retiree medical benefits (expense)/income
Settlement/curtailment losses	131		—		129		—		Other pension and retiree medical benefits (expense)/income
Net losses before tax	161		57		186		109
Tax amounts	(35)		(12)		(41)		(23)
Net losses after tax	$	126	$	45	$	145	$	86






Total net losses reclassified, net of tax	$	103	$	4	$	70	$	63

Note 11 - 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. (Be & Cheery). 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, subject to purchase price adjustments, and a 39% noncontrolling interest in the Tropicana JV, 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., PepsiCo acts as the exclusive distributor for Tropicana JV’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 and account for our

investment under the equity method, recognizing our 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 the 24 weeks ended June 11, 2022, we recorded a pre-tax gain of $3.3 billion ($2.9 billion after-tax or $2.07 per share) in our PBNA and Europe divisions, including $525 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. In the 12 weeks ended June 11, 2022, we recorded certain purchase price adjustments for net working capital and net debt amounts, which resulted in an increase in the transaction price and the recognition of an incremental pre-tax gain of $13 million ($10 million after-tax or $0.01 per share) in our PBNA division. The purchase price will continue to 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 24 weeks ended June 11, 2022 is as follows:


	PBNA		Europe		Corporate		Total 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	$	(3,037)	$	(298)	$	—	$	(3,335)	$	455	$	(2,880)	$	2.07
Acquisition and divestiture-related charges	39		13		6		58		(10)		48		(0.04)
Operating profit	$	(2,998)	$	(285)	$	6	(3,277)		445		(2,832)		2.04		(c)
Other pension and retiree medical benefits income (b)							(10)		3		(7)		0.01
Total Juice Transaction							$	(3,287)	$	448	$	(2,839)	$	2.04	(c)

(a)Includes $195 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.

(c)Does not sum due to rounding.

In connection with the sale, we entered into a transition services agreement with PAI Partners, under which we 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.

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, liabilities to support socioeconomic programs in South Africa, employee-related costs, contract termination costs and other integration costs. Divestiture-related charges reflect transaction expenses, including consulting, advisory and other professional fees.

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


	12 Weeks Ended				24 Weeks Ended
	6/11/2022		6/12/2021		6/11/2022		6/12/2021		Transaction
FLNA	$	—	$	—	$	—	$	2	BFY Brands, Inc.
PBNA	2		1		39		2		Juice Transaction, Rockstar
Europe	3		—		13		—		Juice Transaction
AMESA	—		6		—		7		Pioneer Foods
APAC	—		3		—		3		Be & Cheery
Corporate	3		15		6		1		Juice Transaction, Rockstar
Total (a)	$	8	$	25	$	58	$	15
Other pension and retiree medical benefits expense	—		—		6		—		Juice Transaction
Total acquisition and divestiture-related charges	$	8	$	25	$	64	$	15
After-tax amount	$	7	$	21	$	54	$	14
Impact on net income attributable to PepsiCo per common share	$	(0.01)	$	(0.02)	$	(0.04)	$	(0.01)

(a)Recorded primarily in selling, general and administrative expenses.

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