Item 1. Condensed Consolidated Financial Statements.

Condensed Consolidated Statement of Income

PepsiCo, Inc. and Subsidiaries

(in millions except per share amounts, unaudited)

									12 Weeks Ended
															3/25/2023						3/19/2022
Net Revenue															$	17,846					$	16,200
Cost of sales															7,988						7,433
Gross profit															9,858						8,767
Selling, general and administrative expenses															7,229						6,580
Gain associated with the Juice Transaction (a)															—						(3,322)
Impairment of intangible assets (see Notes 1 and 4)															—						242
Operating Profit															2,629						5,267
Other pension and retiree medical benefits income															61						134
Net interest expense and other															(200)						(240)
Income before income taxes															2,490						5,161
Provision for income taxes															546						888
Net income															1,944						4,273
Less: Net income attributable to noncontrolling interests															12						12
Net Income Attributable to PepsiCo															$	1,932					$	4,261
Net Income Attributable to PepsiCo per Common Share
Basic															$	1.40					$	3.08
Diluted															$	1.40					$	3.06
Weighted-average common shares outstanding
Basic															1,378						1,383
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 $3.5 billion in cash and a 39% noncontrolling interest in a joint venture, Tropicana Brands Group (TBG), operating across North America and Europe (Juice Transaction). See Note 12 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
															3/25/2023						3/19/2022
Net income															$	1,944					$	4,273
Other comprehensive loss, net of taxes:
Net currency translation adjustment															(235)						(560)
Net change on cash flow hedges															(59)						106
Net pension and retiree medical adjustments															(4)						13
Other															(1)						(4)
															(299)						(445)
Comprehensive income															1,645						3,828
Less: Comprehensive income attributable to noncontrolling interests															12						12
Comprehensive Income Attributable to PepsiCo															$	1,633					$	3,816

See accompanying notes to the condensed consolidated financial statements.

Condensed Consolidated Statement of Cash Flows

PepsiCo, Inc. and Subsidiaries

(in millions, unaudited)

			12 Weeks Ended
			3/25/2023						3/19/2022
Operating Activities
Net income			$	1,944					$	4,273
Depreciation and amortization			590						555
Gain associated with the Juice Transaction			—						(3,322)
Impairment and other (credits)/charges			(13)						482
Operating lease right-of-use asset amortization			116						103
Share-based compensation expense			93						81
Restructuring and impairment charges			112						27
Cash payments for restructuring charges			(64)						(32)
Acquisition and divestiture-related charges			2						56
Cash payments for acquisition and divestiture-related charges			(4)						(17)
Pension and retiree medical plan expense/(income)			30						(1)
Pension and retiree medical plan contributions			(175)						(178)
Deferred income taxes and other tax charges and credits			78						257
Change in assets and liabilities:
Accounts and notes receivable			(348)						(837)
Inventories			(542)						(549)
Prepaid expenses and other current assets			(288)						(190)
Accounts payable and other current liabilities			(2,259)						(1,238)
Income taxes payable			290						489
Other, net			46						(133)
Net Cash Used for Operating Activities			(392)						(174)
Investing Activities
Capital spending			(581)						(522)
Sales of property, plant and equipment			19						3
Acquisitions, net of cash acquired, investments in noncontrolled affiliates and purchases of intangible and other assets			(16)						(13)
Proceeds associated with the Juice Transaction			—						3,456
Other divestitures, sales of investments in noncontrolled affiliates and other assets			85						5
Short-term investments, by original maturity:
More than three months - purchases			(158)						—
More than three months - maturities			100						—
Three months or less, net			19						22
Other investing, net			—						4
Net Cash (Used for)/Provided by Investing Activities			(532)						2,955

(Continued on following page)

Condensed Consolidated Statement of Cash Flows (continued)

PepsiCo, Inc. and Subsidiaries

(in millions, unaudited)

			12 Weeks Ended
			3/25/2023						3/19/2022
Financing Activities
Proceeds from issuances of long-term debt			$	2,986					$	—
Payments of long-term debt			(1,251)						(1,251)
Short-term borrowings, by original maturity:
More than three months - proceeds			393						559
More than three months - payments			(1)						—
Three months or less, net			491						647
Cash dividends paid			(1,608)						(1,505)
Share repurchases - common			(160)						(193)
Proceeds from exercises of stock options			46						49
Withholding tax payments on restricted stock units (RSUs) and performance stock units (PSUs) converted			(116)						(85)
Other financing			(3)						(1)
Net Cash Provided by/(Used for) Financing Activities			777						(1,780)
Effect of exchange rate changes on cash and cash equivalents and restricted cash			(116)						(17)
Net (Decrease)/Increase in Cash and Cash Equivalents and Restricted Cash			(263)						984
Cash and Cash Equivalents and Restricted Cash, Beginning of Year			5,100						5,707
Cash and Cash Equivalents and Restricted Cash, End of Period			$	4,837					$	6,691
Supplemental Non-Cash Activity
Right-of-use assets obtained in exchange for lease obligations			$	213					$	100

See accompanying notes to the condensed consolidated financial statements.

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.

Condensed Consolidated Statement of Equity

PepsiCo, Inc. and Subsidiaries

(in millions, except per share amounts, unaudited)

									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.

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 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 31, 2022 (2022 Form 10-K). This report should be read in conjunction with our 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 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, all of our international operations are reported on a monthly calendar basis 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.

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 Russia-Ukraine conflict and the 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.

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
															3/25/2023						3/19/2022
FLNA															$	5,583					$	4,839
QFNA															777						713
PBNA															5,798						5,353
LatAm															1,777						1,474
Europe															1,886						1,797
AMESA															1,019						1,004
APAC															1,006						1,020
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
			3/25/2023												3/19/2022
			Beverages**(a)**						Convenient Foods						Beverages(a)						Convenient Foods
LatAm			10		%				90		%				10		%				90		%
Europe			45		%				55		%				50		%				50		%
AMESA			30		%				70		%				30		%				70		%
APAC			15		%				85		%				15		%				85		%
PepsiCo			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% of our consolidated net revenue in each of the 12 weeks ended March 25, 2023 and March 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.

Operating profit of each division is as follows:

									12 Weeks Ended
															3/25/2023						3/19/2022
FLNA															$	1,599					$	1,296
QFNA															188						159
PBNA (a)															483						3,434
LatAm															364						323
Europe (a) (b)															71						(136)
AMESA															168						180
APAC															227						215
Total divisions															3,100						5,471
Corporate unallocated expenses															(471)						(204)
Total															$	2,629					$	5,267

(a)In the 12 weeks ended March 19, 2022, we recorded a gain of $3,024 million and $298 million in our PBNA and Europe divisions, respectively, associated with the Juice Transaction. The total after-tax amount was $2,870 million or $2.06 per share. See Note 12 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 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 of $241 million ($193 million after-tax or $0.14 per share) in impairment of intangible assets related to the repositioning or discontinuation of certain juice and dairy brands in Russia. See Note 4 for further information. For information on indefinite-lived intangible assets, see 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 program, including a description of the payment terms, payment timing and assets pledged as security or other forms of guarantees provided to the finance provider or intermediary. Other requirements include the disclosure of the amount that remains unpaid as of the end of 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 2023, except for the rollforward, which is effective in fiscal year 2024 with early adoption permitted. We currently plan to adopt the rollforward guidance when effective. See Note 13 for disclosures currently required under this guidance.

Note 3 - Restructuring and Impairment Charges

2019 Multi-Year Productivity Plan

We publicly announced a multi-year productivity plan on February 15, 2019 (2019 Productivity Plan) that will leverage new technology and business models to further simplify, harmonize and automate processes; re-engineer our go-to-market and information systems, including deploying the right automation for each market; and simplify our organization and optimize our manufacturing and supply chain footprint. To build on the successful implementation of the 2019 Productivity Plan, in 2022, we expanded and extended the plan through the end of 2028 to take advantage of additional opportunities within the initiatives described above. As a result, we expect to incur pre-tax charges of approximately $3.65 billion, including cash expenditures of approximately $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 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
															3/25/2023						3/19/2022
Cost of sales															$	3					$	5
Selling, general and administrative expenses															110						22
Other pension and retiree medical benefits income (a)															(1)						—
Total restructuring and impairment charges															$	112					$	27
After-tax amount															$	98					$	21
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.

									12 Weeks Ended												Plan to Date
															3/25/2023						3/19/2022						through 3/25/2023
Severance and other employee costs															$	92					$	11					$	899
Asset impairments															—						—						190
Other costs															20						16						478
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 25, 2023 is as follows:

			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 25, 2023 is expected to be paid by the end of 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.

See Notes 1 and 4 for impairment and other charges/credits taken related to the Russia-Ukraine conflict and brand portfolio impairment charges.

Note 4 - Intangible Assets

During the 12 weeks ended March 19, 2022, we repositioned or discontinued certain juice and dairy brands in Russia in our Europe division. As a result, we recognized pre-tax impairment charges (included in 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. See Note 1 for further information.

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

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

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

			Balance 12/31/2022																		Translation and Other						Balance 3/25/2023
FLNA
Goodwill			$	451																	$	(2)					$	449
Brands			251																		—						251
Total			702																		(2)						700
QFNA
Goodwill			189																		—						189
Total			189																		—						189
PBNA
Goodwill			11,947																		(7)						11,940
Reacquired franchise rights			7,061																		(12)						7,049
Acquired franchise rights			1,758																		(2)						1,756
Brands			2,508																		1						2,509
Total			23,274																		(20)						23,254
LatAm
Goodwill			436																		7						443
Brands			75																		2						77
Total			511																		9						520
Europe
Goodwill			3,646																		(56)						3,590
Reacquired franchise rights			421																		(8)						413
Acquired franchise rights			148																		(1)						147
Brands			1,664																		(1)						1,663
Total			5,879																		(66)						5,813
AMESA
Goodwill			1,015																		(52)						963
Brands			156																		(13)						143
Total			1,171																		(65)						1,106
APAC
Goodwill			518																		(3)						515
Brands			267																		(2)						265
Total			785																		(5)						780
Total goodwill			18,202																		(113)						18,089
Total reacquired franchise rights			7,482																		(20)						7,462
Total acquired franchise rights			1,906																		(3)						1,903
Total brands			4,921																		(13)						4,908
Total			$	32,511																	$	(149)					$	32,362

Note 5 - 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. In 2022, we came to an agreement with the IRS to settle one of the issues assessed in the 2014 through 2016 tax audit. The agreement covers tax years 2014 through 2019. As a result, we adjusted our reserves for uncertain tax positions, including any correlating adjustments impacting the mandatory transition tax liability under the Tax Cuts and Jobs Act (TCJ Act). Tax years 2014 through 2019 remain under audit for other issues. See Note 5 to our consolidated financial statements in 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 from this agreement.

Note 6 - 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
															3/25/2023						3/19/2022
Share-based compensation expense – equity awards															$	93					$	81
Share-based compensation expense – liability awards															6						5
Acquisition and divestiture-related charges															—						3
Restructuring charges															1						(1)
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
			3/25/2023												3/19/2022
			Granted**(a)**						Weighted-Average Grant Price						Granted(a)						Weighted-Average Grant Price
Stock options			2.0						$	171.00					2.1						$	163.00
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 $19 million and $18 million during the 12 weeks ended March 25, 2023 and March 19, 2022, respectively.

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

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

Note 7 - Pension and Retiree Medical Benefits

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

			12 Weeks Ended
			Pension																								Retiree Medical
			U.S.												International
			3/25/2023						3/19/2022						3/25/2023						3/19/2022						3/25/2023						3/19/2022
Service cost			$	76					$	114					$	8					$	17					$	6					$	8
Other pension and retiree medical benefits income:
Interest cost			137						88						25						17						8						4
Expected return on plan assets			(197)						(215)						(35)						(42)						(3)						(3)
Amortization of prior service credits			(6)						(6)						—						—						(1)						(2)
Amortization of net losses/(gains)			16						33						2						5						(6)						(3)
Settlement/curtailment gains			—						—						—						—						—						(16)
Special termination benefits			(1)						6						—						—						—						—
Total other pension and retiree medical benefits income			(51)						(94)						(8)						(20)						(2)						(20)
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 25, 2023 and March 19, 2022, we made discretionary contributions of $125 million and $75 million, respectively, to our U.S. qualified defined benefit plans, and $17 million and $10 million, respectively, to our international defined benefit plans. We expect to make an additional discretionary contribution of $125 million to our U.S. qualified defined benefit plans in the third quarter of 2023.

Note 8 - Debt Obligations

In the 12 weeks ended March 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 25, 2023, we discharged via legal defeasance $94 million outstanding principal amount of certain notes originally issued by our subsidiary, The Quaker Oats Company, following the deposit of $102 million of U.S. government securities with the Bank of New York Mellon, as trustee, in the fourth quarter of 2022.

As of March 25, 2023, we had $800 million of commercial paper outstanding, excluding discounts.

Note 9 - Financial Instruments

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

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

• foreign exchange rates and currency restrictions; and

• interest rates.

There have been no material changes during the 12 weeks ended March 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 2022 Form 10-K.

Certain of our agreements with our counterparties require us to post full collateral on derivative instruments in a net liability position if our credit rating is at A2 (Moody’s Investors Service, Inc.) or A (S&P Global Ratings) and we have been placed on credit watch for possible downgrade or if our credit rating falls below either of these levels. The fair value of all derivative instruments with credit-risk-related contingent features that were in a net liability position as of March 25, 2023 was $228 million. We have posted no collateral under these contracts and no credit-risk-related contingent features were triggered as of March 25, 2023.

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

			Notional Amounts**(a)**
			3/25/2023						12/31/2022
Commodity			$	1.8					$	1.8
Foreign exchange			$	2.8					$	3.0
Interest rate			$	1.3					$	1.3
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 25, 2023, approximately 4% of total debt, after the impact of the related interest rate derivative instruments, was subject to variable rates, compared to 1% as of December 31, 2022.

Debt Securities

Available-for-Sale

Investments in available-for-sale debt securities are reported at fair value. Changes in the fair value 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 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 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.

Fair Value Measurements

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

									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.

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

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

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

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

(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 our balance sheet as of March 25, 2023 and December 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 25, 2023 and December 31, 2022 was $39 billion and $35 billion, respectively, based upon prices of identical or similar instruments in the marketplace, which are considered Level 2 inputs.

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

															12 Weeks Ended
									Losses/(Gains) Recognized in Accumulated Other Comprehensive Loss												Losses/(Gains) Reclassified from Accumulated Other Comprehensive Loss into Income Statement**(a)**
															3/25/2023						3/19/2022						3/25/2023						3/19/2022
Foreign exchange															$	16					$	(8)					$	1					$	(4)
Interest rate															11						(3)						3						20
Commodity															65						(189)						9						(78)
Net investment															37						(51)						—						—
Total															$	129					$	(251)					$	13					$	(62)

(a)Foreign exchange derivative losses/(gains) are 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) 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 losses of $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 10 - Net Income Attributable to PepsiCo per Common Share

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

			12 Weeks Ended
			3/25/2023												3/19/2022
			Income						Shares**(a)**						Income						Shares(a)
Basic net income attributable to PepsiCo per common share			$	1.40											$	3.08
Net income available for PepsiCo common shareholders			$	1,932					1,378						$	4,261					1,383
Dilutive securities:
Stock options, RSUs, PSUs and other (b)			—						6						—						8
Diluted			$	1,932					1,384						$	4,261					1,391
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.

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

Note 11 - Accumulated Other Comprehensive Loss Attributable to PepsiCo

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

			Currency Translation Adjustment						Cash Flow Hedges						Pension and Retiree Medical												Other						Accumulated Other Comprehensive Loss Attributable to PepsiCo
Balance as of December 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.

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

												12 Weeks Ended
																		3/25/2023						3/19/2022						Affected Line Item in the Income Statement
Currency translation:
Divestitures																		$	108					$	—					Selling, general and administrative expenses
Cash flow hedges:
Foreign exchange contracts																		$	(2)					$	(2)					Net revenue
Foreign exchange contracts																		3						(2)						Cost of sales
Interest rate derivatives																		3						20						Selling, general and administrative expenses
Commodity contracts																		10						(76)						Cost of sales
Commodity contracts																		(1)						(2)						Selling, general and administrative expenses
Net losses/(gains) before tax																		13						(62)
Tax amounts																		(4)						10
Net losses/(gains) after tax																		$	9					$	(52)
Pension and retiree medical items:
Amortization of prior service credits																		$	(7)					$	(8)					Other pension and retiree medical benefits income
Amortization of net losses																		12						35						Other pension and retiree medical benefits income
Settlement/curtailment gains																		—						(2)						Other pension and retiree medical benefits income
Net losses before tax																		5						25
Tax amounts																		(1)						(6)
Net losses after tax																		$	4					$	19
Total net losses/(gains) reclassified, net of tax																		$	121					$	(33)

Note 12 - Acquisitions and Divestitures

Juice Transaction

In the 12 weeks ended March 19, 2022, we sold our Tropicana, Naked and other select juice brands to PAI Partners for $3.5 billion in cash and a 39% noncontrolling interest in TBG, operating across North America and Europe. In the United States, PepsiCo acts as the exclusive distributor for TBG’s portfolio of brands for small-format and foodservice customers with chilled direct-store-delivery. We have significant influence over our investment in 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.

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.

Acquisition and Divestiture-Related Charges

Acquisition and divestiture-related charges include merger and integration charges and costs associated with divestitures. 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
															3/25/2023						3/19/2022
PBNA															$	2					$	37
Europe															—						10
Corporate															—						3
Total (a)															2						50
Other pension and retiree medical benefits expense															—						6
Total acquisition and divestiture-related charges															$	2					$	56
After-tax amount															$	1					$	47
Impact on net income attributable to PepsiCo per common share															$	—					$	(0.03)

(a)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.