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
	6/17/2023		6/11/2022		6/17/2023		6/11/2022
Net Revenue	$	22,322	$	20,225	$	40,168	$	36,425
Cost of sales	10,121		9,415		18,109		16,848
Gross profit	12,201		10,810		22,059		19,577
Selling, general and administrative expenses	8,542		7,387		15,771		13,967
Gain associated with the Juice Transaction (a)	—		(13)		—		(3,335)
Impairment of intangible assets (see Notes 1 and 4)	—		1,359		—		1,601
Operating Profit	3,659		2,077		6,288		7,344
Other pension and retiree medical benefits income/(expense)	60		(2)		121		132
Net interest expense and other	(201)		(236)		(401)		(476)
Income before income taxes	3,518		1,839		6,008		7,000
Provision for income taxes	747		393		1,293		1,281
Net income	2,771		1,446		4,715		5,719
Less: Net income attributable to noncontrolling interests	23		17		35		29
Net Income Attributable to PepsiCo	$	2,748	$	1,429	$	4,680	$	5,690
Net Income Attributable to PepsiCo per Common Share
Basic	$	1.99	$	1.03	$	3.40	$	4.11
Diluted	$	1.99	$	1.03	$	3.38	$	4.09
Weighted-average common shares outstanding
Basic	1,378		1,382		1,378		1,383
Diluted	1,384		1,389		1,384		1,390

(a)In the 24 weeks ended June 11, 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				24 Weeks Ended
	6/17/2023		6/11/2022		6/17/2023		6/11/2022
Net income	$	2,771	$	1,446	$	4,715	$	5,719
Other comprehensive (loss)/income, net of taxes:
Net currency translation adjustment	(198)		1,274		(433)		714
Net change on cash flow hedges	24		(102)		(35)		4
Net pension and retiree medical adjustments	(6)		(250)		(10)		(237)

Other	1		5		—		1
	(179)		927		(478)		482
Comprehensive income	2,592		2,373		4,237		6,201
Less: Comprehensive income attributable to noncontrolling interests	23		17		35		29
Comprehensive Income Attributable to PepsiCo	$	2,569	$	2,356	$	4,202	$	6,172

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
	6/17/2023		6/11/2022
Operating Activities
Net income	$	4,715	$	5,719
Depreciation and amortization	1,268		1,195
Gain associated with the Juice Transaction	—		(3,335)
Impairment and other charges	97		1,871
Operating lease right-of-use asset amortization	248		223
Share-based compensation expense	179		156
Restructuring and impairment charges	204		75
Cash payments for restructuring charges	(187)		(82)
Acquisition and divestiture-related charges	9		64
Cash payments for acquisition and divestiture-related charges	(10)		(34)
Pension and retiree medical plan expenses	62		139
Pension and retiree medical plan contributions	(209)		(214)
Deferred income taxes and other tax charges and credits	270		49

Tax payments related to the Tax Cuts and Jobs Act (TCJ Act)	(309)		(309)
Change in assets and liabilities:
Accounts and notes receivable	(1,330)		(1,753)
Inventories	(851)		(990)
Prepaid expenses and other current assets	(271)		(186)
Accounts payable and other current liabilities	(1,960)		(990)
Income taxes payable	100		608
Other, net	(6)		(325)
Net Cash Provided by Operating Activities	2,019		1,881

Investing Activities
Capital spending	(1,513)		(1,499)
Sales of property, plant and equipment	122		222
Acquisitions, net of cash acquired, investments in noncontrolled affiliates and purchases of intangible and other assets	(83)		(29)
Proceeds associated with the Juice Transaction	—		3,456
Other divestitures, sales of investments in noncontrolled affiliates and other assets	75		15
Short-term investments, by original maturity:
More than three months - purchases	(435)		—
More than three months - maturities	363		—
Three months or less, net	16		8
Other investing, net	32		(1)
Net Cash (Used for)/Provided by Investing Activities	(1,423)		2,172

(Continued on following page)

Condensed Consolidated Statement of Cash Flows (continued)

PepsiCo, Inc. and Subsidiaries

(in millions, unaudited)


	24 Weeks Ended
	6/17/2023		6/11/2022
Financing Activities
Proceeds from issuances of long-term debt	$	2,986	$	—
Payments of long-term debt	(2,252)		(1,652)
Debt redemptions	—		(1,550)
Short-term borrowings, by original maturity:
More than three months - proceeds	1,660		1,935
More than three months - payments	(26)		—
Three months or less, net	2,023		844

Cash dividends paid	(3,199)		(2,997)
Share repurchases - common	(453)		(699)

Proceeds from exercises of stock options	86		89
Withholding tax payments on restricted stock units (RSUs) and performance stock units (PSUs) converted	(119)		(87)
Other financing	(16)		(15)
Net Cash Provided by/(Used for) Financing Activities	690		(4,132)
Effect of exchange rate changes on cash and cash equivalents and restricted cash	(144)		(83)
Net Increase/(Decrease) in Cash and Cash Equivalents and Restricted Cash	1,142		(162)
Cash and Cash Equivalents and Restricted Cash, Beginning of Year	5,100		5,707
Cash and Cash Equivalents and Restricted Cash, End of Period	$	6,242	$	5,545

Supplemental Non-Cash Activity
Right-of-use assets obtained in exchange for lease obligations	$	439	$	428
Debt discharged via legal defeasance	$	94	$	—

See accompanying notes to the condensed consolidated financial statements.

Condensed Consolidated Balance Sheet

PepsiCo, Inc. and Subsidiaries

(in millions except per share amounts)


	(Unaudited)
	6/17/2023		12/31/2022
ASSETS
Current Assets
Cash and cash equivalents	$	6,116	$	4,954
Short-term investments	338		394

Accounts and notes receivable, less allowance ($193 and $150, respectively)	11,456		10,163
Inventories:
Raw materials and packaging	2,638		2,366
Work-in-process	110		114
Finished goods	3,221		2,742
	5,969		5,222
Prepaid expenses and other current assets	1,075		806

Total Current Assets	24,954		21,539
Property, plant and equipment	50,804		49,784
Accumulated depreciation	(26,304)		(25,493)
Property, Plant and Equipment, net	24,500		24,291
Amortizable Intangible Assets, net	1,232		1,277
Goodwill	17,997		18,202
Other Indefinite-Lived Intangible Assets	14,330		14,309

Investments in Noncontrolled Affiliates	3,038		3,073
Deferred Income Taxes	4,186		4,204
Other Assets	5,669		5,292
Total Assets	$	95,906	$	92,187

LIABILITIES AND EQUITY
Current Liabilities
Short-term debt obligations	$	7,613	$	3,414
Accounts payable and other current liabilities	22,005		23,371

Total Current Liabilities	29,618		26,785
Long-Term Debt Obligations	36,008		35,657
Deferred Income Taxes	4,113		4,133
Other Liabilities	8,342		8,339
Total Liabilities	78,081		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: 1,377 shares)	23		23
Capital in excess of par value	4,082		4,134
Retained earnings	69,135		67,800
Accumulated other comprehensive loss	(15,780)		(15,302)
Repurchased common stock, in excess of par value (490 shares)	(39,775)		(39,506)
Total PepsiCo Common Shareholders’ Equity	17,685		17,149
Noncontrolling interests	140		124
Total Equity	17,825		17,273
Total Liabilities and Equity	$	95,906	$	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						24 Weeks Ended
	6/17/2023			6/11/2022			6/17/2023			6/11/2022
	Shares	Amount		Shares	Amount		Shares	Amount		Shares	Amount










Common Stock
Balance, beginning of period	1,378	$	23	1,384	$	23	1,377	$	23	1,383	$	23
Change in repurchased common stock	(1)	—		(3)	—		—	—		(2)	—
Balance, end of period	1,377	23		1,381	23		1,377	23		1,381	23
Capital in Excess of Par Value
Balance, beginning of period		3,996			3,893			4,134			4,001
Share-based compensation expense		85			76			179			159

Stock option exercises, RSUs and PSUs converted		5			3			(111)			(103)
Withholding tax on RSUs and PSUs converted		(3)			(2)			(119)			(87)
Other		(1)			—			(1)			—
Balance, end of period		4,082			3,970			4,082			3,970
Retained Earnings
Balance, beginning of period		68,142			67,934			67,800			65,165

Net income attributable to PepsiCo		2,748			1,429			4,680			5,690
Cash dividends declared – common (a)		(1,755)			(1,600)			(3,345)			(3,092)

Balance, end of period		69,135			67,763			69,135			67,763
Accumulated Other Comprehensive Loss
Balance, beginning of period		(15,601)			(15,343)			(15,302)			(14,898)
Other comprehensive (loss)/income attributable to PepsiCo		(179)			927			(478)			482
Balance, end of period		(15,780)			(14,416)			(15,780)			(14,416)
Repurchased Common Stock
Balance, beginning of period	(489)	(39,518)		(483)	(38,305)		(490)	(39,506)		(484)	(38,248)
Share repurchases	(2)	(292)		(3)	(518)		(3)	(466)		(4)	(731)
Stock option exercises, RSUs and PSUs converted	1	35		—	36		3	197		2	192

Balance, end of period	(490)	(39,775)		(486)	(38,787)		(490)	(39,775)		(486)	(38,787)
Total PepsiCo Common Shareholders’ Equity		17,685			18,553			17,685			18,553
Noncontrolling Interests
Balance, beginning of period		133			118			124			108
Net income attributable to noncontrolling interest		23			17			35			29
Distributions to noncontrolling interests		(14)			(14)			(15)			(14)


Other, net		(2)			—			(4)			(2)
Balance, end of period		140			121			140			121
Total Equity		$	17,825		$	18,674		$	17,825		$	18,674

(a)Cash dividends declared per common share were $1.265 and $1.15 for the 12 weeks ended June 17, 2023 and June 11, 2022, respectively and $2.415 and $2.225 for the 24 weeks ended June 17, 2023 and June 11, 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 and 24 weeks ended June 17, 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 March, April and May are reflected in our results for the 12 weeks ended June 17, 2023 and June 11, 2022, and the months of January through May are reflected in our results for the 24 weeks ended June 17, 2023 and 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 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				24 Weeks Ended
	6/17/2023		6/11/2022		6/17/2023		6/11/2022
FLNA	$	5,904	$	5,181	$	11,487	$	10,020
QFNA	684		675		1,461		1,388
PBNA	6,755		6,120		12,553		11,473
LatAm	2,856		2,415		4,633		3,889
Europe	3,428		3,023		5,314		4,820
AMESA	1,568		1,696		2,587		2,700
APAC	1,127		1,115		2,133		2,135
Total	$	22,322	$	20,225	$	40,168	$	36,425

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
	6/17/2023				6/11/2022
	Beverages(a)		Convenient Foods		Beverages(a)		Convenient Foods
LatAm	10	%	90	%	10	%	90	%
Europe	50	%	50	%	50	%	50	%
AMESA	30	%	70	%	35	%	65	%
APAC	25	%	75	%	25	%	75	%
PepsiCo	40	%	60	%	45	%	55	%


	24 Weeks Ended
	6/17/2023				6/11/2022
	Beverages(a)		Convenient Foods		Beverages(a)		Convenient Foods
LatAm	10	%	90	%	10	%	90	%
Europe	50	%	50	%	50	%	50	%
AMESA	30	%	70	%	30	%	70	%
APAC	20	%	80	%	20	%	80	%
PepsiCo	40	%	60	%	45	%	55	%

(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 the 12 and 24 weeks ended June 17, 2023, and over 35% of our consolidated net revenue in the 12 and 24 weeks ended June 11, 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				24 Weeks Ended
	6/17/2023		6/11/2022		6/17/2023		6/11/2022
FLNA	$	1,647	$	1,448	$	3,246	$	2,744
QFNA	129		135		317		294
PBNA (a) (b) (c)	723		651		1,206		4,085
LatAm (d)	592		420		956		743
Europe (a) (e) (f)	476		(797)		547		(933)
AMESA	250		290		418		470
APAC	223		206		450		421
Total divisions	4,040		2,353		7,140		7,824
Corporate unallocated expenses (g) (h)	(381)		(276)		(852)		(480)
Total	$	3,659	$	2,077	$	6,288	$	7,344

(a)In the 24 weeks ended June 11, 2022, we recorded a gain of $3,037 million and $298 million in our PBNA and Europe divisions, respectively, associated with the Juice Transaction. The total after-tax amount was $2,880 million or $2.07 per share. See Note 12 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 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.

(c)In the 12 and 24 weeks ended June 17, 2023, we recorded our proportionate share of TBG’s earnings, which includes an impairment of TBG’s indefinite-lived intangible assets, and recorded an other-than-temporary impairment of our investment, both of which resulted in pre-tax impairment charges of $113 million ($86 million after-tax or $0.06 per share), recorded in selling, general and administrative expenses. See Note 9 for further information.

(d)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 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.

(e)In the 12 weeks ended June 11, 2022, we recognized net pre-tax charges of $1,165 million ($927 million after-tax or $0.67 per share) as a result of the Russia-Ukraine conflict, with $1,197 million recorded in impairment of intangible assets, partially offset by $7 million and $25 million of income recorded in cost of sales and selling, general and administrative expenses, respectively. The income amounts recorded in cost of sales and selling, general and administrative expenses represent changes in estimates of previously recorded amounts for allowance for expected credit losses of $11 million, allowance for inventory write-downs of $8 million and other costs of $13 million. In the 24 weeks ended June 11, 2022, we recognized pre-tax charges of $1,406 million ($1,168 million after-tax or $0.84 per share) as a result of the Russia-Ukraine conflict, with $133 million recorded in cost of sales, $75 million recorded in selling, general and administrative expenses and $1,198 million recorded in impairment of intangible assets. The amounts recorded in cost of sales and selling, general and administrative expenses include impairment charges related to property, plant and equipment of $123 million, allowance for expected credit losses of $26 million, allowance for inventory write-downs of $25 million and other costs of $34 million. 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.

(f)In the 24 weeks ended June 11, 2022, we recognized 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.

(g)In the 12 and 24 weeks ended June 17, 2023, we recorded a pre-tax gain of $85 million ($65 million after-tax or $0.05 per share) in selling, general and administrative expenses as a result of the sale of a corporate asset.

(h)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.

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

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				24 Weeks Ended
	6/17/2023		6/11/2022		6/17/2023		6/11/2022
Cost of sales	$	3	$	—	$	6	$	5
Selling, general and administrative expenses	89		45		199		67
Other pension and retiree medical benefits expense/(income) (a)	—		3		(1)		3
Total restructuring and impairment charges	$	92	$	48	$	204	$	75
After-tax amount	$	63	$	40	$	161	$	61
Impact on net income attributable to PepsiCo per common share	$	(0.05)	$	(0.03)	$	(0.12)	$	(0.04)


	12 Weeks Ended				24 Weeks Ended				Plan to Date
	6/17/2023		6/11/2022		6/17/2023		6/11/2022		through 6/17/2023
FLNA	$	6	$	3	$	13	$	6	$	223
QFNA	—		—		—		—		19
PBNA	5		2		10		5		236
LatAm	6		8		11		14		182
Europe	52		12		141		19		484
AMESA	—		3		5		5		87
APAC	4		3		5		4		82
Corporate	19		14		20		19		249
	92		45		205		72		1,562
Other pension and retiree medical benefits expense/(income) (a)	—		3		(1)		3		97
Total	$	92	$	48	$	204	$	75	$	1,659

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


	12 Weeks Ended				24 Weeks Ended				Plan to Date
	6/17/2023		6/11/2022		6/17/2023		6/11/2022		through 6/17/2023
Severance and other employee costs	$	50	$	20	$	142	$	31	$	949
Asset impairments	—		—		—		—		190
Other costs	42		28		62		44		520
Total	$	92	$	48	$	204	$	75	$	1,659

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 17, 2023 is as follows:


	Severance and Other Employee Costs		Other Costs		Total
Liability as of December 31, 2022	$	188	$	8	$	196
2023 restructuring charges	142		62		204
Cash payments	(120)		(67)		(187)
Non-cash charges and translation	(7)		—		(7)
Liability as of June 17, 2023	$	203	$	3	$	206

The majority of the restructuring accrual at June 17, 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, 4 and 9 for impairment and other charges/credits taken related to the Russia-Ukraine conflict, brand portfolio impairment charges and other impairment charges.

Note 4 - Intangible Assets

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 exceeded 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 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:


	6/17/2023						12/31/2022
	Gross		Accumulated Amortization		Net		Gross		Accumulated Amortization		Net
Acquired franchise rights	$	840	$	(206)	$	634	$	837	$	(200)	$	637
Customer relationships	555		(245)		310		571		(237)		334
Brands	1,085		(974)		111		1,097		(973)		124
Other identifiable intangibles	443		(266)		177		447		(265)		182
Total	$	2,923	$	(1,691)	$	1,232	$	2,952	$	(1,675)	$	1,277

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


	Balance 12/31/2022		Acquisitions		Translation and Other		Balance 6/17/2023

FLNA
Goodwill	$	451	$	—	$	3	$	454
Brands	251		—		—		251
Total	702		—		3		705
QFNA
Goodwill	189		—		—		189
Total	189		—		—		189
PBNA
Goodwill	11,947		3		10		11,960
Reacquired franchise rights	7,061		62		20		7,143
Acquired franchise rights (a)	1,758		—		(34)		1,724
Brands	2,508		—		—		2,508
Total	23,274		65		(4)		23,335
LatAm
Goodwill	436		—		17		453
Brands	75		—		4		79
Total	511		—		21		532
Europe
Goodwill	3,646		—		(132)		3,514
Reacquired franchise rights	421		—		(10)		411
Acquired franchise rights	148		—		—		148
Brands	1,664		—		10		1,674
Total	5,879		—		(132)		5,747
AMESA
Goodwill	1,015		—		(91)		924
Brands	156		—		(23)		133
Total	1,171		—		(114)		1,057
APAC
Goodwill	518		—		(15)		503
Brands	267		—		(8)		259
Total	785		—		(23)		762

Total goodwill	18,202		3		(208)		17,997
Total reacquired franchise rights	7,482		62		10		7,554
Total acquired franchise rights	1,906		—		(34)		1,872
Total brands	4,921		—		(17)		4,904
Total	$	32,511	$	65	$	(249)	$	32,327

(a)Translation and other primarily reflects adjustments to previously recorded amounts related to our agreement with Celsius Holdings, Inc. to distribute Celsius energy drinks in the United States.

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 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 24 weeks ended June 17, 2023 and June 11, 2022 associated with 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				24 Weeks Ended
	6/17/2023		6/11/2022		6/17/2023		6/11/2022
Share-based compensation expense – equity awards	$	86	$	75	$	179	$	156
Share-based compensation expense – liability awards	6		7		12		12
Acquisition and divestiture-related charges	—		—		—		3
Restructuring charges	(1)		1		—		—
Total	$	91	$	83	$	191	$	171

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


	24 Weeks Ended
	6/17/2023			6/11/2022
	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	$	171.11	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 $20 million and $18 million during the 24 weeks ended June 17, 2023 and June 11, 2022, respectively.

For the 12 weeks ended June 17, 2023 and June 11, 2022, 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
	6/17/2023		6/11/2022
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

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.

In the 24 weeks ended June 11, 2022, we transferred pension and retiree medical obligations of $145 million and related assets to TBG in connection with the Juice Transaction and, as a result, recognized a pre-tax curtailment gain of $16 million in a U.S. retiree medical plan.

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
	6/17/2023		6/11/2022		6/17/2023		6/11/2022		6/17/2023		6/11/2022
Service cost	$	75	$	115	$	10	$	17	$	7	$	9
Other pension and retiree medical benefits (income)/expense:
Interest cost	137		87		34		23		9		4
Expected return on plan assets	(196)		(216)		(46)		(56)		(3)		(4)
Amortization of prior service credits	(6)		(7)		—		—		(2)		(2)
Amortization of net losses/(gains)	16		35		3		7		(6)		(3)
Settlement/curtailment losses	—		131		—		—		—		—
Special termination benefits	—		3		—		—		—		—
Total other pension and retiree medical benefits (income)/expense	(49)		33		(9)		(26)		(2)		(5)
Total	$	26	$	148	$	1	$	(9)	$	5	$	4


	24 Weeks Ended
	Pension								Retiree Medical
	U.S.				International
	6/17/2023		6/11/2022		6/17/2023		6/11/2022		6/17/2023		6/11/2022
Service cost	$	151	$	229	$	18	$	34	$	13	$	17
Other pension and retiree medical benefits income:
Interest cost	274		175		59		40		17		8
Expected return on plan assets	(393)		(431)		(81)		(98)		(6)		(7)
Amortization of prior service credits	(12)		(13)		—		—		(3)		(4)
Amortization of net losses/(gains)	32		68		5		12		(12)		(6)
Settlement/curtailment losses	—		131		—		—		—		(16)
Special termination benefits	(1)		9		—		—		—		—
Total other pension and retiree medical benefits income	(100)		(61)		(17)		(46)		(4)		(25)
Total	$	51	$	168	$	1	$	(12)	$	9	$	(8)

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

During the 24 weeks ended June 17, 2023 and June 11, 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 24 weeks ended June 17, 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 24 weeks ended June 17, 2023, $2.3 billion of U.S. dollar-denominated senior notes matured and were paid. In addition, in the 12 weeks ended June 17, 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 June 17, 2023, we had $3.6 billion of commercial paper outstanding, excluding discounts.

In the 12 and 24 weeks ended June 17, 2023, we entered into a new five-year unsecured revolving credit agreement (Five-Year Credit Agreement), which expires on May 26, 2028. The Five-Year Credit Agreement enables us and our borrowing subsidiaries to borrow up to $4.2 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 $4.95 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 $3.8 billion five-year credit agreement, dated as of May 27, 2022.

Also in the 12 and 24 weeks ended June 17, 2023, we entered into a new 364-day unsecured revolving credit agreement (364-Day Credit Agreement), which expires on May 24, 2024. The 364-Day Credit Agreement enables us and our borrowing subsidiaries to borrow up to $4.2 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 $4.95 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 $3.8 billion 364-day credit agreement, dated as of May 27, 2022.

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 17, 2023, there were no outstanding borrowings under the Five-Year Credit Agreement or the 364-Day Credit Agreement.

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 24 weeks ended June 17, 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 June 17, 2023 was $203 million. We have posted no collateral under these contracts and no credit-risk-related contingent features were triggered as of June 17, 2023.

The notional amounts of our financial instruments used to hedge the above risks as of June 17, 2023 and December 31, 2022 are as follows:


	Notional Amounts(a)
	6/17/2023		12/31/2022
Commodity	$	1.7	$	1.8
Foreign exchange	$	2.8	$	3.0
Interest rate	$	1.3	$	1.3
Net investment (b)	$	3.0	$	2.9

(a)In billions.

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

As of June 17, 2023, approximately 10% 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 June 17, 2023. Impairment charges related to our investments for the 24 weeks ended June 17, 2023 were not material.

TBG Investment

In the first quarter of 2022, we sold our Tropicana, Naked and other select juice brands to PAI Partners, while retaining a 39% noncontrolling interest in TBG, operating across North America and Europe. 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). See Note 12 for further information.

In the 12 and 24 weeks ended June 17, 2023, we recorded our proportionate share of TBG’s earnings, which includes an impairment of TBG’s indefinite-lived intangible assets, and recorded an other-than-temporary impairment of our investment, both of which resulted in pre-tax impairment charges of $113 million ($86 million after-tax or $0.06 per share), recorded in selling, general and administrative expenses in our PBNA division. We estimated the fair value of our ownership in TBG using discounted cash flows and an option pricing model related to our liquidation preference in TBG, which we categorized as Level 3 (significant unobservable inputs) in the fair value hierarchy.

Fair Value Measurements

The fair values of our financial assets and liabilities as of June 17, 2023 and December 31, 2022 are categorized as follows:


		6/17/2023				12/31/2022
	Fair Value Hierarchy Levels(a)	Assets(a)		Liabilities(a)		Assets(a)		Liabilities(a)

Available-for-sale debt securities (b)	2	$	574	$	—	$	660	$	—
Index funds (c)	1	$	273	$	—	$	257	$	—
Prepaid forward contracts (d)	2	$	14	$	—	$	14	$	—
Deferred compensation (e)	2	$	—	$	447	$	—	$	434

Derivatives designated as cash flow hedging instruments:
Foreign exchange (f)	2	$	5	$	43	$	24	$	22
Interest rate (f)	2	6		144		—		164
Commodity (g)	2	—		58		2		60
		$	11	$	245	$	26	$	246
Derivatives not designated as hedging instruments:
Foreign exchange (f)	2	$	9	$	37	$	21	$	21
Commodity (g)	2	7		33		11		51
		$	16	$	70	$	32	$	72
Total derivatives at fair value (h)		$	27	$	315	$	58	$	318
Total		$	888	$	762	$	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 June 17, 2023, $16 million and $558 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 June 17, 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 June 17, 2023 and December 31, 2022 was $40 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)
	6/17/2023		6/11/2022		6/17/2023		6/11/2022
Foreign exchange	$	43	$	26	$	14	$	(17)
Interest rate	(37)		82		(30)		61
Commodity	(15)		(1)		28		(74)
Net investment	71		(88)		—		—
Total	$	62	$	19	$	12	$	(30)


		24 Weeks Ended
	Losses/(Gains) Recognized in Accumulated Other Comprehensive Loss			Losses/(Gains) Reclassified from Accumulated Other Comprehensive Loss into Income Statement(a)
		6/17/2023		6/11/2022		6/17/2023		6/11/2022
Foreign exchange		$	59	$	18	$	15	$	(21)
Interest rate		(26)		79		(27)		81
Commodity		50		(190)		37		(152)
Net investment		108		(139)		—		—
Total		$	191	$	(232)	$	25	$	(92)

(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 $107 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
	6/17/2023						6/11/2022
	Cost of sales		Selling, general and administrative expenses		Total		Cost of sales		Selling, general and administrative expenses		Total
Foreign exchange	$	—	$	44	$	44	$	(14)	$	35	$	21
Commodity	5		3		8		(60)		(121)		(181)
Total	$	5	$	47	$	52	$	(74)	$	(86)	$	(160)


	24 Weeks Ended
	6/17/2023						6/11/2022
	Cost of sales		Selling, general and administrative expenses		Total		Cost of sales		Selling, general and administrative expenses		Total
Foreign exchange	$	(1)	$	39	$	38	$	(3)	$	8	$	5
Commodity	36		53		89		(134)		(213)		(347)
Total	$	35	$	92	$	127	$	(137)	$	(205)	$	(342)

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
	6/17/2023			6/11/2022
	Income		Shares(a)	Income		Shares(a)





Basic net income attributable to PepsiCo per common share	$	1.99		$	1.03
Net income available for PepsiCo common shareholders	$	2,748	1,378	$	1,429	1,382
Dilutive securities:
Stock options, RSUs, PSUs and other (b)	—		6	—		7
Diluted	$	2,748	1,384	$	1,429	1,389
Diluted net income attributable to PepsiCo per common share	$	1.99		$	1.03


	24 Weeks Ended
	6/17/2023			6/11/2022
	Income		Shares(a)	Income		Shares(a)





Basic net income attributable to PepsiCo per common share	$	3.40		$	4.11
Net income available for PepsiCo common shareholders	$	4,680	1,378	$	5,690	1,383
Dilutive securities:
Stock options, RSUs, PSUs and other (b)	—		6	—		7
Diluted	$	4,680	1,384	$	5,690	1,390
Diluted net income attributable to PepsiCo per common share	$	3.38		$	4.09

(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 17, 2023 and June 11, 2022.

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)
Other comprehensive (loss)/income before reclassifications (d)	(215)		19		(14)		1		(209)
Amounts reclassified from accumulated other comprehensive loss	—		12		5		—		17
Net other comprehensive (loss)/income	(215)		31		(9)		1		(192)
Tax amounts	17		(7)		3		—		13
Balance as of June 17, 2023 (a)	$	(13,381)	$	(34)	$	(2,371)	$	6	$	(15,780)

(a)Pension and retiree medical amounts are net of taxes of $1,184 million as of both December 31, 2022 and March 25, 2023 and $1,187 million as of June 17, 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.

(d)Currency translation adjustment primarily reflects depreciation 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 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 the appreciation of the South African rand, Brazilian real and Canadian dollar.

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

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


	12 Weeks Ended				24 Weeks Ended
	6/17/2023		6/11/2022		6/17/2023		6/11/2022		Affected Line Item in the Income Statement



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

Cash flow hedges:
Foreign exchange contracts	$	(1)	$	(2)	$	(3)	$	(4)	Net revenue
Foreign exchange contracts	15		(15)		18		(17)		Cost of sales
Interest rate derivatives	(30)		61		(27)		81		Selling, general and administrative expenses
Commodity contracts	28		(70)		38		(146)		Cost of sales
Commodity contracts	—		(4)		(1)		(6)		Selling, general and administrative expenses
Net losses/(gains) before tax	12		(30)		25		(92)
Tax amounts	(3)		7		(7)		17
Net losses/(gains) after tax	$	9	$	(23)	$	18	$	(75)

Pension and retiree medical items:
Amortization of prior service credits	$	(8)	$	(9)	$	(15)	$	(17)	Other pension and retiree medical benefits income/(expense)
Amortization of net losses	13		39		25		74		Other pension and retiree medical benefits income/(expense)
Settlement/curtailment losses	—		131		—		129		Other pension and retiree medical benefits income/(expense)
Net losses before tax	5		161		10		186
Tax amounts	(1)		(35)		(2)		(41)
Net losses after tax	$	4	$	126	$	8	$	145






Total net losses reclassified, net of tax	$	13	$	103	$	134	$	70

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 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.

In the 12 and 24 weeks ended June 17, 2023, we recognized impairment charges related to our TBG investment. See Note 9 for further information.

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				24 Weeks Ended
	6/17/2023		6/11/2022		6/17/2023		6/11/2022

PBNA	$	8	$	2	$	10	$	39
Europe (a)	(2)		3		(2)		13
AMESA	1		—		1		—

Corporate	—		3		—		6

Total (b)	7		8		9		58
Other pension and retiree medical benefits expense	—		—		—		6
Total acquisition and divestiture-related charges	$	7	$	8	$	9	$	64
After-tax amount	$	6	$	7	$	7	$	54
Impact on net income attributable to PepsiCo per common share	$	—	$	(0.01)	$	—	$	(0.04)

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

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

Note 13 - Supply Chain Financing Arrangements

As part of our evolving market practices, we work with our suppliers to optimize our terms and conditions, which include the extension of payment terms. Our current payment terms with a majority of our suppliers generally range from 60 to 90 days, which we deem to be commercially reasonable. We will continue to monitor economic conditions and market practice working with our suppliers to adjust as necessary. We also maintain voluntary supply chain finance agreements with several participating global financial institutions. Under these agreements, our suppliers, at their sole discretion, may elect to sell their accounts receivable with PepsiCo to these participating global financial institutions. Supplier participation in these financing arrangements is voluntary. Our suppliers negotiate their financing agreements directly with the respective global financial institutions and we are not a party to these agreements. These financing arrangements allow participating suppliers to leverage PepsiCo’s creditworthiness in establishing credit spreads and associated costs, which generally provides our suppliers with more favorable terms than they would be able to secure on their own. Neither PepsiCo nor any of its subsidiaries provide any guarantees to any third party in connection with these financing arrangements. We have no economic interest in our suppliers’ decision to participate in these agreements. Our obligations to our suppliers, including amounts due and scheduled payment terms, are not impacted. All outstanding amounts related to suppliers participating in such financing arrangements are recorded within accounts payable and other current liabilities in our condensed consolidated balance sheet. As of June 17, 2023 and December 31, 2022, $1.8 billion and $1.7 billion, respectively, of our accounts payable are to suppliers participating in these financing arrangements.

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