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				36 Weeks Ended
	9/9/2023		9/3/2022		9/9/2023		9/3/2022
Net Revenue	$	23,453	$	21,971	$	63,621	$	58,396
Cost of sales	10,675		10,308		28,784		27,156
Gross profit	12,778		11,663		34,837		31,240
Selling, general and administrative expenses	8,757		8,295		24,528		22,262
Gain associated with the Juice Transaction (a)	—		14		—		(3,321)
Impairment of intangible assets (see Notes 1 and 4)	6		1		6		1,602
Operating Profit	4,015		3,353		10,303		10,697
Other pension and retiree medical benefits income	62		36		183		168
Net interest expense and other	(201)		(190)		(602)		(666)
Income before income taxes	3,876		3,199		9,884		10,199
Provision for income taxes	760		475		2,053		1,756
Net income	3,116		2,724		7,831		8,443
Less: Net income attributable to noncontrolling interests	24		22		59		51
Net Income Attributable to PepsiCo	$	3,092	$	2,702	$	7,772	$	8,392
Net Income Attributable to PepsiCo per Common Share
Basic	$	2.25	$	1.96	$	5.64	$	6.07
Diluted	$	2.24	$	1.95	$	5.62	$	6.04
Weighted-average common shares outstanding
Basic	1,376		1,380		1,377		1,382
Diluted	1,383		1,387		1,384		1,389

(a)In the 36 weeks ended September 3, 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				36 Weeks Ended
	9/9/2023		9/3/2022		9/9/2023		9/3/2022
Net income	$	3,116	$	2,724	$	7,831	$	8,443
Other comprehensive (loss)/income, net of taxes:
Net currency translation adjustment	2		(324)		(431)		390
Net change on cash flow hedges	(11)		(113)		(46)		(109)
Net pension and retiree medical adjustments	(8)		108		(18)		(129)

Other	3		2		3		3
	(14)		(327)		(492)		155
Comprehensive income	3,102		2,397		7,339		8,598
Less: Comprehensive income attributable to noncontrolling interests	24		22		59		51
Comprehensive Income Attributable to PepsiCo	$	3,078	$	2,375	$	7,280	$	8,547

See accompanying notes to the condensed consolidated financial statements.

Condensed Consolidated Statement of Cash Flows

PepsiCo, Inc. and Subsidiaries

(in millions, unaudited)


	36 Weeks Ended
	9/9/2023		9/3/2022
Operating Activities
Net income	$	7,831	$	8,443
Depreciation and amortization	1,973		1,854
Gain associated with the Juice Transaction	—		(3,321)
Impairment and other charges	102		1,877
Operating lease right-of-use asset amortization	384		346
Share-based compensation expense	267		233
Restructuring and impairment charges	287		126
Cash payments for restructuring charges	(283)		(134)
Acquisition and divestiture-related charges	20		69
Cash payments for acquisition and divestiture-related charges	(15)		(41)
Pension and retiree medical plan expenses	93		235
Pension and retiree medical plan contributions	(374)		(335)
Deferred income taxes and other tax charges and credits	343		(322)
Tax expense related to the Tax Cuts and Jobs Act (TCJ Act)	—		86
Tax payments related to the TCJ Act	(309)		(309)
Change in assets and liabilities:
Accounts and notes receivable	(1,699)		(2,258)
Inventories	(473)		(837)
Prepaid expenses and other current assets	(242)		(124)
Accounts payable and other current liabilities	(859)		426
Income taxes payable	512		718
Other, net	72		(426)
Net Cash Provided by Operating Activities	7,630		6,306

Investing Activities
Capital spending	(2,537)		(2,556)
Sales of property, plant and equipment	131		228
Acquisitions, net of cash acquired, investments in noncontrolled affiliates and purchases of intangible and other assets	(132)		(804)
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	(555)		(46)
More than three months - maturities	554		—
More than three months - sales	12		—
Three months or less, net	24		9
Other investing, net	49		7
Net Cash (Used for)/Provided by Investing Activities	(2,379)		309

(Continued on following page)

Condensed Consolidated Statement of Cash Flows (continued)

PepsiCo, Inc. and Subsidiaries

(in millions, unaudited)


	36 Weeks Ended
	9/9/2023		9/3/2022
Financing Activities
Proceeds from issuances of long-term debt	$	2,986	$	3,377
Payments of long-term debt	(2,253)		(1,653)
Debt redemptions	—		(1,550)
Short-term borrowings, by original maturity:
More than three months - proceeds	4,688		1,947
More than three months - payments	(1,037)		(1,932)
Three months or less, net	1,395		(45)

Cash dividends paid	(4,941)		(4,586)
Share repurchases - common	(751)		(1,156)
Proceeds from exercises of stock options	100		113
Withholding tax payments on restricted stock units (RSUs) and performance stock units (PSUs) converted	(135)		(97)
Other financing	(18)		(25)
Net Cash Provided by/(Used for) Financing Activities	34		(5,607)
Effect of exchange rate changes on cash and cash equivalents and restricted cash	(254)		(197)
Net Increase in Cash and Cash Equivalents and Restricted Cash	5,031		811
Cash and Cash Equivalents and Restricted Cash, Beginning of Year	5,100		5,707
Cash and Cash Equivalents and Restricted Cash, End of Period	$	10,131	$	6,518

Supplemental Non-Cash Activity
Right-of-use assets obtained in exchange for lease obligations	$	705	$	560
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)
	9/9/2023		12/31/2022
ASSETS
Current Assets
Cash and cash equivalents	$	10,017	$	4,954
Short-term investments	266		394

Accounts and notes receivable, less allowance ($188 and $150, respectively)	11,782		10,163
Inventories:
Raw materials and packaging	2,456		2,366
Work-in-process	119		114
Finished goods	2,983		2,742
	5,558		5,222
Prepaid expenses and other current assets	1,026		806

Total Current Assets	28,649		21,539
Property, plant and equipment	51,585		49,784
Accumulated depreciation	(26,732)		(25,493)
Property, Plant and Equipment, net	24,853		24,291
Amortizable Intangible Assets, net	1,208		1,277
Goodwill	17,892		18,202
Other Indefinite-Lived Intangible Assets	14,293		14,309

Investments in Noncontrolled Affiliates	2,955		3,073
Deferred Income Taxes	4,165		4,204
Other Assets	5,938		5,292
Total Assets	$	99,953	$	92,187

LIABILITIES AND EQUITY
Current Liabilities
Short-term debt obligations	$	8,937	$	3,414
Accounts payable and other current liabilities	23,723		23,371

Total Current Liabilities	32,660		26,785
Long-Term Debt Obligations	35,837		35,657
Deferred Income Taxes	4,047		4,133
Other Liabilities	8,439		8,339
Total Liabilities	80,983		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: 1,375 and 1,377 shares, respectively)	23		23
Capital in excess of par value	4,154		4,134
Retained earnings	70,479		67,800
Accumulated other comprehensive loss	(15,794)		(15,302)
Repurchased common stock, in excess of par value (492 and 490 shares, respectively)	(40,056)		(39,506)
Total PepsiCo Common Shareholders’ Equity	18,806		17,149
Noncontrolling interests	164		124
Total Equity	18,970		17,273
Total Liabilities and Equity	$	99,953	$	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						36 Weeks Ended
	9/9/2023			9/3/2022			9/9/2023			9/3/2022
	Shares	Amount		Shares	Amount		Shares	Amount		Shares	Amount










Common Stock
Balance, beginning of period	1,377	$	23	1,381	$	23	1,377	$	23	1,383	$	23
Change in repurchased common stock	(2)	—		(2)	—		(2)	—		(4)	—
Balance, end of period	1,375	23		1,379	23		1,375	23		1,379	23
Capital in Excess of Par Value
Balance, beginning of period		4,082			3,970			4,134			4,001
Share-based compensation expense		88			77			267			236

Stock option exercises, RSUs and PSUs converted		3			1			(108)			(102)
Withholding tax on RSUs and PSUs converted		(16)			(10)			(135)			(97)
Other		(3)			(2)			(4)			(2)
Balance, end of period		4,154			4,036			4,154			4,036
Retained Earnings
Balance, beginning of period		69,135			67,763			67,800			65,165

Net income attributable to PepsiCo		3,092			2,702			7,772			8,392
Cash dividends declared – common (a)		(1,748)			(1,593)			(5,093)			(4,685)

Balance, end of period		70,479			68,872			70,479			68,872
Accumulated Other Comprehensive Loss
Balance, beginning of period		(15,780)			(14,416)			(15,302)			(14,898)
Other comprehensive (loss)/income attributable to PepsiCo		(14)			(327)			(492)			155
Balance, end of period		(15,794)			(14,743)			(15,794)			(14,743)
Repurchased Common Stock
Balance, beginning of period	(490)	(39,775)		(486)	(38,787)		(490)	(39,506)		(484)	(38,248)
Share repurchases	(2)	(293)		(3)	(448)		(5)	(759)		(7)	(1,179)
Stock option exercises, RSUs and PSUs converted	—	11		1	23		3	208		3	215
Other	—	1		—	1		—	1		—	1
Balance, end of period	(492)	(40,056)		(488)	(39,211)		(492)	(40,056)		(488)	(39,211)
Total PepsiCo Common Shareholders’ Equity		18,806			18,977			18,806			18,977
Noncontrolling Interests
Balance, beginning of period		140			121			124			108
Net income attributable to noncontrolling interest		24			22			59			51
Distributions to noncontrolling interests		—			(6)			(15)			(20)

Acquisitions		—			21			—			21
Other, net		—			—			(4)			(2)
Balance, end of period		164			158			164			158
Total Equity		$	18,970		$	19,135		$	18,970		$	19,135

(a)Cash dividends declared per common share were $1.265 and $1.15 for the 12 weeks ended September 9, 2023 and September 3, 2022, respectively, and $3.68 and $3.375 for the 36 weeks ended September 9, 2023 and September 3, 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 36 weeks ended September 9, 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 June, July and August are reflected in our results for the 12 weeks ended September 9, 2023 and September 3, 2022, and the months of January through August are reflected in our results for the 36 weeks ended September 9, 2023 and September 3, 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				36 Weeks Ended
	9/9/2023		9/3/2022		9/9/2023		9/3/2022
FLNA	$	5,954	$	5,563	$	17,441	$	15,583
QFNA	747		713		2,208		2,101
PBNA	7,161		6,635		19,714		18,108
LatAm	3,055		2,517		7,688		6,406
Europe	3,704		3,646		9,018		8,466
AMESA	1,615		1,726		4,202		4,426
APAC	1,217		1,171		3,350		3,306
Total	$	23,453	$	21,971	$	63,621	$	58,396

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
	9/9/2023				9/3/2022
	Beverages(a)		Convenient Foods		Beverages(a)		Convenient Foods
LatAm	10	%	90	%	10	%	90	%
Europe	50	%	50	%	55	%	45	%
AMESA	30	%	70	%	35	%	65	%
APAC	25	%	75	%	25	%	75	%
PepsiCo	45	%	55	%	45	%	55	%


	36 Weeks Ended
	9/9/2023				9/3/2022
	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	%

(a)Beverage revenue from company-owned bottlers, which primarily includes our consolidated bottling operations in our PBNA and Europe divisions, is over 35% of our consolidated net revenue in the 12 weeks ended September 9, 2023, approximately 35% of our consolidated net revenue in the 36 weeks ended September 9, 2023, and approximately 40% of our consolidated net revenue in the 12 and 36 weeks ended September 3, 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				36 Weeks Ended
	9/9/2023		9/3/2022		9/9/2023		9/3/2022
FLNA	$	1,669	$	1,588	$	4,915	$	4,332
QFNA	135		122		452		416
PBNA (a) (b) (c)	970		784		2,176		4,869
LatAm (d)	593		463		1,549		1,206
Europe (a) (e) (f)	659		564		1,206		(369)
AMESA	238		268		656		738
APAC	239		199		689		620
Total divisions	4,503		3,988		11,643		11,812
Corporate unallocated expenses (g) (h)	(488)		(635)		(1,340)		(1,115)
Total	$	4,015	$	3,353	$	10,303	$	10,697

(a)In the 12 weeks ended September 3, 2022, we recorded a charge of $8 million and $6 million in our PBNA and Europe divisions, respectively, associated with the Juice Transaction. The total after-tax amount was $11 million or $0.01 per share. In the 36 weeks ended September 3, 2022, we recorded a gain of $3,029 million and $292 million in our PBNA and Europe divisions, respectively, associated with the Juice Transaction. The total after-tax amount was $2,869 million or $2.07 per share. See Note 12 for further information.

(b)In the 36 weeks ended September 3, 2022, we terminated our agreement with Vital Pharmaceuticals, Inc. (Vital) to distribute Bang Energy drinks in our PBNA division. As a result, in the 12 weeks ended September 3, 2022, we recognized pre-tax brand portfolio impairment charges of $9 million ($7 million after-tax or $0.01 per share) related to the write-down of inventory in cost of sales. In the 36 weeks ended September 3, 2022, we recognized pre-tax brand portfolio impairment charges of $150 million ($114 million after-tax or $0.08 per share) primarily related to the write-off of distribution rights, with $17 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 36 weeks ended September 9, 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 36 weeks ended September 3, 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 September 3, 2022, we recognized net pre-tax income of $4 million ($5 million after-tax with a nominal amount per share) as a result of the Russia-Ukraine conflict, with $5 million of income recorded in selling, general and administrative expenses, partially offset by $1 million of expense recorded in cost of sales. The amounts recorded in selling, general and administrative expenses represent recovery of previously recorded amounts for allowance for expected credit losses of $9 million, partially offset by pre-tax impairment charges related to property, plant and equipment of $2 million and other costs of $2 million. The amount recorded in cost of sales represents allowance for inventory write-downs. In the 36 weeks ended September 3, 2022, we recognized pre-tax charges of $1,402 million ($1,163 million after-tax or $0.84 per share) as a result of the Russia-Ukraine conflict, with $134 million recorded in cost of sales, $70 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 $125 million, allowance for expected credit losses of $17 million, allowance for inventory write-downs of $26 million and other costs of $36 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 36 weeks ended September 3, 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 36 weeks ended September 9, 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 36 weeks ended September 3, 2022, we recorded a pre-tax loss on certain equity investments of $68 million ($51 million after-tax or $0.04 per share) in selling, general and administrative expenses.

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


	12 Weeks Ended				36 Weeks Ended
	9/9/2023		9/3/2022		9/9/2023		9/3/2022

Russia-Ukraine conflict impairment charges	$	—	$	—	$	—	$	1,198
Brand portfolio impairment charges	—		1		—		404
Other impairment charges	6		—		6		—
Total	$	6	$	1	$	6	$	1,602

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				36 Weeks Ended
	9/9/2023		9/3/2022		9/9/2023		9/3/2022
Cost of sales	$	4	$	1	$	10	$	6
Selling, general and administrative expenses	79		50		278		117
Other pension and retiree medical benefits (income)/expense (a)	—		—		(1)		3
Total restructuring and impairment charges	$	83	$	51	$	287	$	126
After-tax amount	$	67	$	40	$	228	$	101
Impact on net income attributable to PepsiCo per common share	$	(0.05)	$	(0.03)	$	(0.16)	$	(0.07)


	12 Weeks Ended				36 Weeks Ended				Plan to Date
	9/9/2023		9/3/2022		9/9/2023		9/3/2022		through 9/9/2023
FLNA	$	6	$	4	$	19	$	10	$	229
QFNA	—		1		—		1		19
PBNA	8		4		18		9		244
LatAm	8		3		19		17		190
Europe	44		21		185		40		528
AMESA	5		—		10		5		92
APAC	2		4		7		8		84
Corporate	10		14		30		33		259
	83		51		288		123		1,645
Other pension and retiree medical benefits (income)/expense (a)	—		—		(1)		3		97
Total	$	83	$	51	$	287	$	126	$	1,742

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


	12 Weeks Ended				36 Weeks Ended				Plan to Date
	9/9/2023		9/3/2022		9/9/2023		9/3/2022		through 9/9/2023
Severance and other employee costs	$	39	$	10	$	181	$	41	$	988
Asset impairments	1		7		1		7		191
Other costs	43		34		105		78		563
Total	$	83	$	51	$	287	$	126	$	1,742

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 36 weeks ended September 9, 2023 is as follows:


	Severance and Other Employee Costs		Asset Impairments		Other Costs		Total
Liability as of December 31, 2022	$	188	$	—	$	8	$	196
2023 restructuring charges	181		1		105		287
Cash payments	(174)		—		(109)		(283)
Non-cash charges and translation	(8)		(1)		1		(8)
Liability as of September 9, 2023	$	187	$	—	$	5	$	192

The majority of the restructuring accrual at September 9, 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 36 weeks ended September 3, 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 36 weeks ended September 3, 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 36 weeks ended September 3, 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:


	9/9/2023						12/31/2022
	Gross		Accumulated Amortization		Net		Gross		Accumulated Amortization		Net
Acquired franchise rights	$	833	$	(207)	$	626	$	837	$	(200)	$	637
Customer relationships	550		(249)		301		571		(237)		334
Brands	1,084		(978)		106		1,097		(973)		124
Other identifiable intangibles	444		(269)		175		447		(265)		182
Total	$	2,911	$	(1,703)	$	1,208	$	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 9/9/2023

FLNA
Goodwill	$	451	$	—	$	(1)	$	450
Brands	251		—		—		251
Total	702		—		(1)		701
QFNA
Goodwill	189		—		—		189
Total	189		—		—		189
PBNA
Goodwill	11,947		4		(4)		11,947
Reacquired franchise rights	7,061		36		(8)		7,089
Acquired franchise rights (a)	1,758		12		(40)		1,730
Brands	2,508		—		—		2,508
Total	23,274		52		(52)		23,274
LatAm
Goodwill	436		—		23		459
Brands	75		—		7		82
Total	511		—		30		541
Europe
Goodwill (b)	3,646		—		(277)		3,369
Reacquired franchise rights	421		—		(16)		405
Acquired franchise rights	148		—		3		151
Brands	1,664		—		23		1,687
Total	5,879		—		(267)		5,612
AMESA
Goodwill	1,015		34		(63)		986
Brands	156		—		(21)		135
Total	1,171		34		(84)		1,121
APAC
Goodwill	518		—		(26)		492
Brands	267		—		(12)		255
Total	785		—		(38)		747

Total goodwill	18,202		38		(348)		17,892
Total reacquired franchise rights	7,482		36		(24)		7,494
Total acquired franchise rights	1,906		12		(37)		1,881
Total brands	4,921		—		(3)		4,918
Total	$	32,511	$	86	$	(412)	$	32,185

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

(b)Translation and other primarily reflects the depreciation of the Russian ruble.

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, resulting in a net non-cash tax benefit of $198 million ($0.14 per share) in the 12 and 36 weeks ended September 3, 2022. 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 new tax amounts recognized in the 12 and 36 weeks ended September 9, 2023 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				36 Weeks Ended
	9/9/2023		9/3/2022		9/9/2023		9/3/2022
Share-based compensation expense – equity awards	$	88	$	77	$	267	$	233
Share-based compensation expense – liability awards	7		4		19		16
Acquisition and divestiture-related charges	—		—		—		3

Total	$	95	$	81	$	286	$	252

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


	36 Weeks Ended
	9/9/2023			9/3/2022
	Granted(a)	Weighted-Average Grant Price		Granted(a)	Weighted-Average Grant Price
Stock options	2.1	$	171.83	2.3	$	163.46
RSUs and PSUs	2.1	$	171.11	2.3	$	163.01

(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 36 weeks ended September 9, 2023 and September 3, 2022, respectively.

For the 12 weeks ended September 9, 2023 and September 3, 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:


	36 Weeks Ended
	9/9/2023		9/3/2022
Expected life	7 years		7 years
Risk-free interest rate	4.2	%	1.8	%
Expected volatility	16	%	16	%
Expected dividend yield	2.7	%	2.5	%

Note 7 - Pension and Retiree Medical Benefits

In the 12 and 36 weeks ended September 3, 2022, we recognized pre-tax settlement charges of $59 million ($46 million after-tax or $0.03 per share) and $190 million ($147 million after-tax or $0.11 per share), respectively, primarily related to 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. Related plan assets and benefit obligations were remeasured using remeasurement date assumptions.

In the 36 weeks ended September 3, 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
	9/9/2023		9/3/2022		9/9/2023		9/3/2022		9/9/2023		9/3/2022
Service cost	$	76	$	111	$	10	$	13	$	7	$	8
Other pension and retiree medical benefits income:
Interest cost	137		111		34		23		7		5
Expected return on plan assets	(197)		(206)		(45)		(55)		(3)		(4)
Amortization of prior service credits	(6)		(6)		(1)		(1)		(1)		(2)
Amortization of net losses/(gains)	16		35		3		8		(6)		(3)
Settlement/curtailment losses	—		59		—		—		—		—

Total other pension and retiree medical benefits income	(50)		(7)		(9)		(25)		(3)		(4)
Total	$	26	$	104	$	1	$	(12)	$	4	$	4


	36 Weeks Ended
	Pension								Retiree Medical
	U.S.				International
	9/9/2023		9/3/2022		9/9/2023		9/3/2022		9/9/2023		9/3/2022
Service cost	$	227	$	340	$	28	$	47	$	20	$	25
Other pension and retiree medical benefits income:
Interest cost	411		286		93		63		24		13
Expected return on plan assets	(590)		(637)		(126)		(153)		(9)		(11)
Amortization of prior service credits	(18)		(19)		(1)		(1)		(4)		(6)
Amortization of net losses/(gains)	48		103		8		20		(18)		(9)
Settlement/curtailment losses/(gains)	—		190		—		—		—		(16)
Special termination benefits	(1)		9		—		—		—		—
Total other pension and retiree medical benefits income	(150)		(68)		(26)		(71)		(7)		(29)
Total	$	77	$	272	$	2	$	(24)	$	13	$	(4)

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

In the 36 weeks ended September 9, 2023 and September 3, 2022, we made discretionary contributions of $250 million and $150 million, respectively, to our U.S. qualified defined benefit plans, and $17 million and $10 million, respectively, to our international defined benefit plans.

Note 8 - Debt Obligations

In the 36 weeks ended September 9, 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 36 weeks ended September 9, 2023, $2.3 billion of U.S. dollar-denominated senior notes matured and were paid. In addition, in the 36 weeks ended September 9, 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 September 9, 2023, we had $5.1 billion of commercial paper outstanding, excluding discounts.

In the 36 weeks ended September 9, 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 36 weeks ended September 9, 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 September 9, 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 36 weeks ended September 9, 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 September 9, 2023 was $219 million. We have posted no collateral under these contracts and no credit-risk-related contingent features were triggered as of September 9, 2023.

The notional amounts of our financial instruments used to hedge the above risks as of September 9, 2023 and December 31, 2022 are as follows:


	Notional Amounts(a)
	9/9/2023		12/31/2022
Commodity	$	1.6	$	1.8
Foreign exchange	$	2.9	$	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 September 9, 2023, approximately 13% 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 September 9, 2023. Impairment charges related to our investments for the 36 weeks ended September 9, 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 36 weeks ended September 9, 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 September 9, 2023 and December 31, 2022 are categorized as follows:


		9/9/2023				12/31/2022
	Fair Value Hierarchy Levels(a)	Assets(a)		Liabilities(a)		Assets(a)		Liabilities(a)

Available-for-sale debt securities (b)	2	$	558	$	—	$	660	$	—
Index funds (c)	1	$	265	$	—	$	257	$	—
Prepaid forward contracts (d)	2	$	14	$	—	$	14	$	—
Deferred compensation (e)	2	$	—	$	439	$	—	$	434

Derivatives designated as cash flow hedging instruments:
Foreign exchange (f)	2	$	11	$	37	$	24	$	22
Interest rate (f)	2	—		161		—		164
Commodity (g)	2	—		49		2		60
		$	11	$	247	$	26	$	246
Derivatives not designated as hedging instruments:
Foreign exchange (f)	2	$	18	$	18	$	21	$	21
Commodity (g)	2	10		17		11		51
		$	28	$	35	$	32	$	72
Total derivatives at fair value (h)		$	39	$	282	$	58	$	318
Total		$	876	$	721	$	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 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 September 9, 2023, $558 million were classified as other assets. 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 September 9, 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 September 9, 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)
	9/9/2023		9/3/2022		9/9/2023		9/3/2022
Foreign exchange	$	15	$	(31)	$	26	$	1
Interest rate	23		81		31		94
Commodity	65		141		24		(51)
Net investment	(68)		(144)		—		—
Total	$	35	$	47	$	81	$	44


		36 Weeks Ended
	Losses/(Gains) Recognized in Accumulated Other Comprehensive Loss			Losses/(Gains) Reclassified from Accumulated Other Comprehensive Loss into Income Statement(a)
		9/9/2023		9/3/2022		9/9/2023		9/3/2022
Foreign exchange		$	74	$	(13)	$	41	$	(20)
Interest rate		(3)		160		4		175
Commodity		115		(49)		61		(203)
Net investment		40		(283)		—		—
Total		$	226	$	(185)	$	106	$	(48)

(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 $136 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
	9/9/2023						9/3/2022
	Cost of sales		Selling, general and administrative expenses		Total		Cost of sales		Selling, general and administrative expenses		Total
Foreign exchange	$	—	$	(7)	$	(7)	$	—	$	(60)	$	(60)
Commodity	(9)		(65)		(74)		(2)		55		53
Total	$	(9)	$	(72)	$	(81)	$	(2)	$	(5)	$	(7)


	36 Weeks Ended
	9/9/2023						9/3/2022
	Cost of sales		Selling, general and administrative expenses		Total		Cost of sales		Selling, general and administrative expenses		Total
Foreign exchange	$	(1)	$	32	$	31	$	(3)	$	(52)	$	(55)
Commodity	27		(12)		15		(136)		(158)		(294)
Total	$	26	$	20	$	46	$	(139)	$	(210)	$	(349)

Note 10 - Net Income Attributable to PepsiCo per Common Share

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


	12 Weeks Ended
	9/9/2023			9/3/2022
	Income		Shares(a)	Income		Shares(a)





Basic net income attributable to PepsiCo per common share	$	2.25		$	1.96
Net income available for PepsiCo common shareholders	$	3,092	1,376	$	2,702	1,380
Dilutive securities:
Stock options, RSUs, PSUs and other (b)	—		7	—		7
Diluted	$	3,092	1,383	$	2,702	1,387
Diluted net income attributable to PepsiCo per common share	$	2.24		$	1.95


	36 Weeks Ended
	9/9/2023			9/3/2022
	Income		Shares(a)	Income		Shares(a)





Basic net income attributable to PepsiCo per common share	$	5.64		$	6.07
Net income available for PepsiCo common shareholders	$	7,772	1,377	$	8,392	1,382
Dilutive securities:
Stock options, RSUs, PSUs and other (b)	—		7	—		7
Diluted	$	7,772	1,384	$	8,392	1,389
Diluted net income attributable to PepsiCo per common share	$	5.62		$	6.04

(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 36 weeks ended September 9, 2023 and September 3, 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)
Other comprehensive income/(loss) before reclassifications (e)	19		(96)		(15)		3		(89)
Amounts reclassified from accumulated other comprehensive loss	—		81		5		—		86
Net other comprehensive income/(loss)	19		(15)		(10)		3		(3)
Tax amounts	(17)		4		2		—		(11)
Balance as of September 9, 2023 (a)	$	(13,379)	$	(45)	$	(2,379)	$	9	$	(15,794)

(a)Pension and retiree medical amounts are net of taxes of $1,184 million as of both December 31, 2022 and March 25, 2023, $1,187 million as of June 17, 2023 and $1,189 million as of September 9, 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.

(e)Currency translation adjustment primarily reflects appreciation of the euro, Mexican peso and South African rand, partially offset by the 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)
Other comprehensive (loss)/income before reclassifications (d)	(292)		(191)		50		2		(431)
Amounts reclassified from accumulated other comprehensive loss	—		44		90		—		134
Net other comprehensive (loss)/income	(292)		(147)		140		2		(297)
Tax amounts	(32)		34		(32)		—		(30)
Balance as of September 3, 2022 (a)	$	(11,919)	$	50	$	(2,879)	$	5	$	(14,743)

(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, $1,352 million as of June 11, 2022 and $1,320 million as of September 3, 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.

(d)Currency translation adjustment primarily reflects depreciation of the South African rand, Mexican peso and British pound sterling.

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


	12 Weeks Ended				36 Weeks Ended
	9/9/2023		9/3/2022		9/9/2023		9/3/2022		Affected Line Item in the Income Statement



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

Cash flow hedges:
Foreign exchange contracts	$	—	$	(5)	$	(3)	$	(9)	Net revenue
Foreign exchange contracts	26		6		44		(11)		Cost of sales
Interest rate derivatives	31		94		4		175		Selling, general and administrative expenses
Commodity contracts	23		(45)		61		(191)		Cost of sales
Commodity contracts	1		(6)		—		(12)		Selling, general and administrative expenses
Net losses/(gains) before tax	81		44		106		(48)
Tax amounts	(20)		(12)		(27)		5
Net losses/(gains) after tax	$	61	$	32	$	79	$	(43)

Pension and retiree medical items:
Amortization of prior service credits	$	(8)	$	(9)	$	(23)	$	(26)	Other pension and retiree medical benefits income
Amortization of net losses	13		40		38		114		Other pension and retiree medical benefits income
Settlement/curtailment losses	—		59		—		188		Other pension and retiree medical benefits income
Net losses before tax	5		90		15		276
Tax amounts	(1)		(19)		(3)		(60)
Net losses after tax	$	4	$	71	$	12	$	216






Total net losses reclassified, net of tax	$	65	$	103	$	199	$	173

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 36 weeks ended September 3, 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 36 weeks ended September 9, 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, primarily consulting, advisory and other professional fees.

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


	12 Weeks Ended				36 Weeks Ended
	9/9/2023		9/3/2022		9/9/2023		9/3/2022

PBNA	$	2	$	3	$	12	$	42
Europe (a)	—		—		(2)		13
AMESA	—		2		1		2

Corporate	9		—		9		6

Total (b)	11		5		20		63
Other pension and retiree medical benefits expense	—		—		—		6
Total acquisition and divestiture-related charges	$	11	$	5	$	20	$	69
After-tax amount	$	9	$	3	$	16	$	57
Impact on net income attributable to PepsiCo per common share	$	(0.01)	$	—	$	(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 September 9, 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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