Item 1. Condensed Consolidated Financial Statements.

101K characters. Original on sec.gov · Markdown

Item 1. Condensed Consolidated Financial Statements.

Condensed Consolidated Statement of Income

PepsiCo, Inc. and Subsidiaries

(in millions, except per share amounts, unaudited)


	12 Weeks Ended
		3/21/2026		3/22/2025
Net Revenue		$	19,443	$	17,919
Cost of sales		8,712		7,926
Gross profit		10,731		9,993
Selling, general and administrative expenses		7,518		7,410


Operating Profit		3,213		2,583
Other pension and retiree medical benefits income		58		23
Net interest expense and other		(301)		(264)
Income before income taxes		2,970		2,342
Provision for income taxes		632		499
Net income		2,338		1,843
Less: Net income attributable to noncontrolling interests		11		9
Net Income Attributable to PepsiCo		$	2,327	$	1,834
Net Income Attributable to PepsiCo per Common Share
Basic		$	1.70	1.34
Diluted		$	1.70	1.33
Weighted-average common shares outstanding
Basic		1,367		1,372
Diluted		1,371		1,376

See accompanying notes to the condensed consolidated financial statements.

Condensed Consolidated Statement of Comprehensive Income

PepsiCo, Inc. and Subsidiaries

(in millions, unaudited)


	12 Weeks Ended
		3/21/2026		3/22/2025
Net income		$	2,338	$	1,843
Other comprehensive income/(loss), net of taxes:
Net currency translation adjustment		719		436
Net change on cash flow hedges		55		22
Net pension and retiree medical adjustments		6		10

Net change on available-for-sale debt securities and other		(98)		66
Total other comprehensive income, net of taxes		682		534
Comprehensive income		3,020		2,377
Less: Comprehensive income attributable to noncontrolling interests		11		9
Comprehensive Income Attributable to PepsiCo		$	3,009	$	2,368

See accompanying notes to the condensed consolidated financial statements.

Condensed Consolidated Statement of Cash Flows

PepsiCo, Inc. and Subsidiaries

(in millions, unaudited)


	12 Weeks Ended
	3/21/2026		3/22/2025
Operating Activities
Net income	$	2,338	$	1,843
Depreciation and amortization	742		684




Operating lease right-of-use asset amortization	162		145
Share-based compensation expense	93		77
Restructuring and impairment charges	133		213
Cash payments for restructuring charges	(145)		(232)
Acquisition and divestiture-related charges/credits	(113)		25
Cash payments for acquisition and divestiture-related charges	(14)		(13)
Pension and retiree medical plan expenses	13		48
Pension and retiree medical plan contributions	(270)		(317)
Deferred income taxes and other tax charges and credits	226		111


Change in assets and liabilities:
Accounts and notes receivable	(530)		(318)
Inventories	(315)		(238)
Prepaid expenses and other current assets	(406)		(307)
Accounts payable and other current liabilities	(1,847)		(2,671)
Income taxes payable	131		223
Other, net	(157)		(246)
Net Cash Provided by/(Used for) Operating Activities	41		(973)

Investing Activities
Capital spending	(447)		(603)
Sales of property, plant and equipment	13		132
Acquisitions, net of cash acquired, investments in noncontrolled affiliates and purchases of intangible and other assets	(67)		(1,200)

Short-term investments, by original maturity:

More than three months - maturities	—		425
More than three months - sales	14		—
Three months or less, net	(9)		16
Other investing, net	19		(2)
Net Cash Used for Investing Activities	(477)		(1,232)

(Continued on following page)

Condensed Consolidated Statement of Cash Flows (continued)

PepsiCo, Inc. and Subsidiaries

(in millions, unaudited)


	12 Weeks Ended
	3/21/2026		3/22/2025
Financing Activities
Proceeds from issuances of long-term debt	$	2,964	$	3,505
Payments of long-term debt	(1,629)		(1,541)

Short-term borrowings, by original maturity:
More than three months - proceeds	1,937		3,656
More than three months - payments	(676)		(2,119)
Three months or less, net	1,198		373
Cash dividends paid	(1,966)		(1,882)
Share repurchases	(182)		(183)
Proceeds from exercises of stock options	93		50
Withholding tax payments on restricted stock units (RSUs) and performance stock units (PSUs) converted	(76)		(89)
Other financing	(1)		(2)
Net Cash Provided by Financing Activities	1,662		1,768
Effect of exchange rate changes on cash and cash equivalents and restricted cash	121		203
Net Increase/(Decrease) in Cash and Cash Equivalents and Restricted Cash	1,347		(234)
Cash and Cash Equivalents and Restricted Cash, Beginning of Year	9,204		8,553
Cash and Cash Equivalents and Restricted Cash, End of Period	$	10,551	$	8,319

Supplemental Non-Cash Activity
Right-of-use assets obtained in exchange for lease obligations	$	114	$	166

See accompanying notes to the condensed consolidated financial statements.

Condensed Consolidated Balance Sheet

PepsiCo, Inc. and Subsidiaries

(in millions, except per share amounts)


	(Unaudited)
	3/21/2026		12/27/2025
ASSETS
Current Assets
Cash and cash equivalents	$	10,475	$	9,159
Short-term investments	353		371
Accounts and notes receivable, less allowance ($225 and $230, respectively)	12,171		11,506
Inventories:
Raw materials and packaging	2,714		2,581
Work-in-process	133		143
Finished goods	3,364		3,121
	6,211		5,845
Prepaid expenses and other current assets	1,706		1,068
Total Current Assets	30,916		27,949
Property, plant and equipment	61,477		60,909
Accumulated depreciation	(31,670)		(31,004)
Property, Plant and Equipment, net	29,807		29,905
Amortizable Intangible Assets, net	1,209		1,219
Goodwill	19,021		18,916
Other Indefinite-Lived Intangible Assets	13,934		13,847

Investments in Noncontrolled Affiliates	2,135		2,038
Deferred Income Taxes	4,560		4,541
Other Assets	9,064		8,984
Total Assets	$	110,646	$	107,399

LIABILITIES AND EQUITY
Current Liabilities
Short-term debt obligations	$	10,151	$	6,861
Accounts payable and other current liabilities	24,326		25,903
Total Current Liabilities	34,477		32,764
Long-Term Debt Obligations	42,577		42,321
Deferred Income Taxes	4,048		3,802
Other Liabilities	8,008		7,965
Total Liabilities	89,110		86,852
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: 1,368 and 1,367 shares, respectively)	23		23
Capital in excess of par value	4,401		4,451
Retained earnings	73,165		72,788
Accumulated other comprehensive loss	(14,342)		(15,024)
Repurchased common stock, in excess of par value (499 and 500 shares, respectively)	(41,864)		(41,832)
Total PepsiCo Common Shareholders’ Equity	21,383		20,406
Noncontrolling interests	153		141
Total Equity	21,536		20,547
Total Liabilities and Equity	$	110,646	$	107,399

See accompanying notes to the condensed consolidated financial statements.

Condensed Consolidated Statement of Equity

PepsiCo, Inc. and Subsidiaries

(in millions, except per share amounts, unaudited)


	12 Weeks Ended
		3/21/2026	3/22/2025
			Shares	Amount		Shares	Amount










Common Stock
Balance, beginning of period			1,367	$	23	1,372	$	23
Change in repurchased common stock			1	—		1	—
Balance, end of period			1,368	23		1,373	23
Capital in Excess of Par Value
Balance, beginning of period				4,451			4,385
Share-based compensation expense				94			76

Stock option exercises, RSUs and PSUs converted				(68)			(98)
Withholding tax on RSUs and PSUs converted				(76)			(89)

Balance, end of period				4,401			4,274
Retained Earnings
Balance, beginning of period				72,788			72,266
Net income attributable to PepsiCo				2,327			1,834
Cash dividends declared (a)				(1,950)			(1,862)
Balance, end of period				73,165			72,238
Accumulated Other Comprehensive Loss
Balance, beginning of period				(15,024)			(17,612)
Other comprehensive income attributable to PepsiCo				682			534
Balance, end of period				(14,342)			(17,078)
Repurchased Common Stock
Balance, beginning of period			(500)	(41,832)		(495)	(41,021)
Share repurchases			(1)	(193)		(1)	(195)
Stock option exercises, RSUs and PSUs converted			2	161		2	148

Balance, end of period			(499)	(41,864)		(494)	(41,068)
Total PepsiCo Common Shareholders’ Equity				21,383			18,389
Noncontrolling Interests
Balance, beginning of period				141			130
Net income attributable to noncontrolling interests				11			9
Distributions to noncontrolling interests				(1)			(1)


Other, net				2			2
Balance, end of period				153			140
Total Equity				$	21,536		$	18,529

(a)Cash dividends declared per common share were $1.4225 and $1.3550 for the 12 weeks ended March 21, 2026 and March 22, 2025, respectively.

See accompanying notes to the condensed consolidated financial statements.

Notes to the Condensed Consolidated Financial Statements

Note 1 - Basis of Presentation and Our Segments

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. We have subsidiaries operating in highly inflationary economies, such as Argentina, Egypt and Turkey, and accordingly apply highly inflationary accounting for these subsidiaries. The condensed consolidated balance sheet at December 27, 2025 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 27, 2025 (2025 Form 10-K). This report should be read in conjunction with our 2025 Form 10-K. In our opinion, these financial statements include all normal and recurring adjustments necessary for a fair presentation. The results for the 12 weeks ended March 21, 2026 are not necessarily indicative of the results expected for any future period or the full year.

Raw materials, direct labor and plant overhead, as well as purchasing and receiving costs, costs directly related to production planning, inspection costs and raw materials handling facilities, are included in cost of sales. The costs of moving, storing and delivering finished product, including merchandising activities, are included in selling, general and administrative expenses.

While our financial results in the United States and Canada (North America) are reported on a 12-week basis, all of our international operations are reported on a monthly calendar basis for which the months of January and February are reflected in our results for the 12 weeks ended March 21, 2026 and March 22, 2025.

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 volatile geopolitical conditions, an increasingly complex global tax environment, including changes in how existing laws are interpreted or enforced, expanded or retaliatory tariffs and changes in the interest rate and inflationary cost environment have 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 Segments

We are organized into six reportable segments, as follows:

1)PepsiCo Foods North America (PFNA), which includes all of our convenient food businesses in the United States and Canada;

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

3)International Beverages Franchise (IB Franchise), which includes our international franchise beverage businesses, as well as our SodaStream business;

4)Europe, Middle East and Africa (EMEA), which includes our convenient food businesses and our beverage businesses with company-owned bottlers in Europe, the Middle East and Africa;

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

6)Asia Pacific Foods, which consists of our convenient food businesses in Asia Pacific, including China, Australia and New Zealand, as well as India.

Net Revenue, Significant Expenses and Operating Profit by Segment


	12 Weeks Ended 3/21/2026
	PFNA		PBNA		IB Franchise		EMEA		LatAm Foods		Asia Pacific Foods		Total
Net revenue	$	6,332	$	6,391	$	824	$	2,823	$	1,934	$	1,139	$	19,443
Segment cost of sales (a)	2,392		2,992		234		1,673		780		657
Segment selling, general and administrative expenses (a)	2,435		2,760		262		849		723		264
Restructuring and impairment charges (b)	75		17		7		23		3		1
Acquisition and divestiture-related charges/credits (c)	1		(114)		—		—		—		—



Segment operating profit	$	1,429	$	736	$	321	$	278	$	428	$	217	$	3,409
Corporate unallocated expenses													(196)
Operating profit													3,213
Other pension and retiree medical benefits income													58
Net interest expense and other													(301)
Income before income taxes													$	2,970


	12 Weeks Ended 3/22/2025
	PFNA		PBNA		IB Franchise		EMEA		LatAm Foods		Asia Pacific Foods		Total
Net revenue	$	6,213	$	5,876	$	759	$	2,388	$	1,661	$	1,022	$	17,919
Segment cost of sales (a)	2,348		2,659		212		1,407		698		612
Segment selling, general and administrative expenses (a)	2,290		2,622		268		748		612		249
Restructuring and impairment charges (b)	24		125		2		13		7		1
Acquisition and divestiture-related charges/credits (c)	15		10		—		—		—		—



Segment operating profit	$	1,536	$	460	$	277	$	220	$	344	$	160	$	2,997
Corporate unallocated expenses													(414)
Operating profit													2,583
Other pension and retiree medical benefits income													23
Net interest expense and other													(264)
Income before income taxes													$	2,342

(a)Does not include items recorded in the cost of sales or selling, general and administrative expenses lines on our income statement that are presented in the restructuring and impairment charges and acquisition and divestiture-related charges/credits lines of these tables.

(b)See Note 3 for further information related to restructuring and impairment charges.

(c)See Note 11 for further information related to acquisition and divestiture-related charges/credits.

Disaggregation of Net Revenue

Our primary performance obligation is the distribution and sales of beverage and convenient food products to our customers. The following table reflects the percentage of net revenue generated between our beverage business and our convenient food business:


	12 Weeks Ended
	3/21/2026				3/22/2025
	Beverages(a)		Convenient Foods		Beverages(a)		Convenient Foods




North America	50	%	50	%	49	%	51	%
International (b)	27	%	73	%	27	%	73	%
PepsiCo	42	%	58	%	42	%	58	%

(a)Beverage revenue from company-owned bottlers, which includes our consolidated bottling operations in our PBNA and EMEA segments, was 36% of our consolidated net revenue in each of the 12 weeks ended March 21, 2026 and March 22, 2025. Generally, our finished goods beverage operations produce higher net revenue but lower operating margins as compared to concentrate sold to authorized bottling partners for the manufacture of finished goods beverages.

(b)Beverage and convenient foods revenue generated from our EMEA segment was 34% and 66% of EMEA net revenue, respectively, in each of the 12 weeks ended March 21, 2026 and March 22, 2025.

Other Segment Information

Capital spending and depreciation and amortization of each segment are as follows:


	12 Weeks Ended
	Capital Spending(a)				Depreciation and Amortization
	3/21/2026		3/22/2025		3/21/2026		3/22/2025
PFNA	$	110	$	195	$	227	$	210
PBNA	183		248		252		253
IB Franchise	9		16		18		19
EMEA	66		50		101		81
LatAm Foods	41		46		80		62
Asia Pacific Foods	16		24		28		23
Total segment	425		579		706		648
Corporate	22		24		36		36
Total	$	447	$	603	$	742	$	684

(a) Asset and other balance sheet information for segments is not provided to our chief operating decision maker.

Note 2 - Recently Issued Accounting Pronouncements

Adopted

In July 2025, the Financial Accounting Standards Board (FASB) issued guidance to provide for a practical expedient that an entity may assume that conditions as of the balance sheet date remain unchanged over the remaining life of the asset when estimating expected credit losses for current accounts receivable and current contract assets arising from revenue transactions from contracts with customers. We adopted the guidance in the first quarter of 2026, on a prospective basis. The adoption did not have a material impact on our condensed consolidated financial statements.

Not Yet Adopted

In September 2025, the FASB issued guidance to improve the accounting for costs related to internal-use software. The new guidance eliminates project stages and requires capitalizing software costs to begin when (1) management has authorized and committed to funding the software project and (2) it is probable that the project will be completed and the software will be used to perform the function intended. When evaluating if a project is probable to be completed, significant development uncertainty must be assessed. Additionally, disclosures for property, plant and equipment will be required for all capitalized software costs. The guidance is effective in the first quarter of 2028 with early adoption permitted as of the beginning of an annual reporting period. Upon adoption, the guidance may be applied prospectively, retrospectively or using a modified transition approach. We are evaluating the impact of this guidance on our consolidated financial statements.

In November 2024, the FASB issued guidance to improve the disclosure of expenses in commonly presented expense captions. The new guidance requires a public entity to provide tabular disclosure, on an annual and interim basis, of amounts for the following expense categories: (1) purchases of inventory, (2) employee compensation, (3) depreciation and (4) intangible asset amortization, as included in each relevant expense caption. A relevant expense caption is an expense caption presented on the face of the income statement that contains any of the expense categories noted. Additionally, on an annual and interim basis, a qualitative description is required for amounts remaining in relevant expense captions that are not separately disaggregated quantitatively. The guidance also requires certain amounts that are currently required to be disclosed to be included in the same tabular disclosure as these disaggregation requirements. Furthermore, on an annual and interim basis, a public entity is required to separately disclose selling expenses and annually, disclose a description of the selling expenses. The guidance is

effective for 2027 annual reporting, and in the first quarter of 2028 for interim reporting, with early adoption permitted, to be applied on a prospective basis, with retrospective application permitted. We will adopt the guidance when it becomes effective, in our 2027 annual reporting and each quarter thereafter, on a prospective basis.

Note 3 - Restructuring and Impairment Charges

2019 Multi-Year Productivity Plan (2019 Productivity Plan)

The 2019 Productivity Plan leverages new technology and business models to further simplify, harmonize and automate processes; re-engineers our go-to-market and information systems, including deploying the right automation for each market; and simplifies our organization and optimizes our manufacturing and supply chain footprint. To build on the successful implementation of the 2019 Productivity Plan, in 2024, we further expanded and extended the plan through the end of 2030 to take advantage of additional opportunities within the initiatives described above. As a result, we expect to incur pre-tax charges of approximately $6.15 billion, including cash expenditures of approximately $5.1 billion. These pre-tax charges are expected to consist of approximately 50% of severance and other employee-related costs, 15% 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 segment approximately as follows:


			PFNA						PBNA						IB Franchise						EMEA						LatAm Foods						Asia Pacific Foods						Corporate
Expected pre-tax charges			20		%				25		%				2		%				25		%				10		%				3		%				15		%

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


	12 Weeks Ended
		3/21/2026		3/22/2025
Cost of sales		$	19	$	1
Selling, general and administrative expenses		113		196

Other pension and retiree medical benefits expense		1		16
Total restructuring and impairment charges		$	133	$	213
After-tax amount		$	102	$	191
Impact on net income attributable to PepsiCo per common share		$	(0.07)	$	(0.14)


	12 Weeks Ended			Plan-to-Date
		3/21/2026		3/22/2025		through 3/21/2026
PFNA		$	75	$	24	$	851
PBNA		17		125		803
IB Franchise		7		2		72
EMEA		23		13		979
LatAm Foods		3		7		302
Asia Pacific Foods		1		1		100
Corporate		6		25		490
		132		197		3,597
Other pension and retiree medical benefits expense		1		16		146
Total		$	133	$	213	$	3,743


	12 Weeks Ended			Plan-to-Date
		3/21/2026		3/22/2025		through 3/21/2026
Severance and other employee costs		$	36	$	58	$	1,825
Asset impairments		59		2		605
Other costs		38		153		1,313
Total		$	133	$	213	$	3,743

Severance and other employee costs primarily include severance and other termination benefits. Other costs primarily include costs associated with the implementation of our initiatives, including contract termination costs, consulting and other professional fees.

A summary of our 2019 Productivity Plan activity for the 12 weeks ended March 21, 2026 is as follows:


	Severance and Other Employee Costs		Asset Impairments		Other Costs		Total
Liability as of December 27, 2025	$	308	$	—	$	18	$	326
Restructuring charges	36		59		38		133
Cash payments	(97)		—		(48)		(145)
Non-cash charges and translation	(1)		(59)		—		(60)
Liability as of March 21, 2026	$	246	$	—	$	8	$	254

The majority of the restructuring accrual at March 21, 2026 is expected to be paid within a year.

Other Productivity Initiatives

There were no material 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.

Note 4 - Intangible Assets

A summary of our amortizable intangible assets is as follows:


	3/21/2026						12/27/2025
	Gross		Accumulated Amortization		Net		Gross		Accumulated Amortization		Net
Acquired franchise rights	$	835	$	(248)	$	587	$	835	$	(244)	$	591
Customer relationships	780		(359)		421		773		(347)		426
Brands	1,089		(1,027)		62		1,084		(1,021)		63
Other identifiable intangibles	436		(297)		139		433		(294)		139
Total	$	3,140	$	(1,931)	$	1,209	$	3,125	$	(1,906)	$	1,219

The components of indefinite-lived intangible assets are as follows:


	3/21/2026		12/27/2025
Goodwill (a)	$	19,021	$	18,916
Other indefinite-lived intangible assets
Reacquired franchise rights	7,544		7,542
Acquired franchise rights	2,164		2,099
Brands	4,226		4,206
Total indefinite-lived intangible assets	$	32,955	$	32,763

(a) Increase is primarily related to currency translation adjustments.

Note 5 - Share-Based Compensation

Starting with awards granted in 2026, RSUs and stock options will primarily vest ratably over three years and amortized to expense on a straight-line basis. Additionally, certain executive officers and other senior executives who were previously granted 66% PSUs and 34% long-term cash were granted 60% PSUs and 40% RSUs in 2026. For PSUs granted in 2026, the final payout will be determined over a three-year period based on achievement of specified pre-established financial performance metrics, with PepsiCo’s total shareholder return relative to a specific set of peer companies acting as a multiplier. The Monte Carlo valuation model is used to determine the grant date fair value of the award, reflective of the total shareholder return market condition. Share-based compensation expense is adjusted for changes in the expected achievement of pre-established financial performance metrics throughout the three-year performance period.

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


	12 Weeks Ended
		3/21/2026		3/22/2025
Share-based compensation expense – equity awards		$	93	$	77
Share-based compensation expense – liability awards		2		4

Restructuring charges		1		(1)
Total		$	96	$	80

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


	12 Weeks Ended
	3/21/2026			3/22/2025
	Granted(a)	Weighted-Average Grant Price		Granted(a)	Weighted-Average Grant Price
Stock options	0.9	$	169.25	1.4	$	153.75
RSUs and PSUs	2.4	$	169.25	2.1	$	153.71

(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 $22 million during the 12 weeks ended March 22, 2025.

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


	12 Weeks Ended
	3/21/2026		3/22/2025
Expected life	7 years		7 years
Risk-free interest rate	3.7	%	4.1	%
Expected volatility	16	%	16	%
Expected dividend yield	3.5	%	3.4	%

Note 6 - Pension and Retiree Medical Benefits

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


	12 Weeks Ended
	Pension								Retiree Medical
	U.S.				International
	3/21/2026		3/22/2025		3/21/2026		3/22/2025		3/21/2026		3/22/2025
Service cost	$	54	$	72	$	10	$	8	$	8	$	7
Other pension and retiree medical benefits (income)/expense:
Interest cost	120		135		28		26		6		7
Expected return on plan assets	(191)		(186)		(39)		(36)		(2)		(2)
Amortization of prior service cost/(credits)	2		1		—		—		(1)		(1)
Amortization of net losses/(gains)	17		19		6		4		(5)		(6)

Special termination benefits	1		16		—		—		—		—
Total other pension and retiree medical benefits income	(51)		(15)		(5)		(6)		(2)		(2)
Total	$	3	$	57	$	5	$	2	$	6	$	5

We regularly evaluate opportunities to reduce risk and volatility associated with our pension and retiree medical plans. In addition, lump sum payments may result in settlement charges in future periods.

In the 12 weeks ended March 21, 2026 and March 22, 2025, we made discretionary contributions of $200 million and $250 million, respectively, to our U.S. qualified defined benefit plans, and $52 million and $29 million, respectively, to our international defined benefit plans.

Note 7 - Debt Obligations

In the 12 weeks ended March 21, 2026, we issued the following notes:


Interest Rate		Maturity Date	Principal Amount(a) (b)
Floating Rate		February 2028	€500
3.300	%	February 2034	€650
3.700	%	February 2038	€850
4.150	%	February 2047	€500

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

(b)These notes, issued in euros, were designated as net investment hedges to partially offset the effects of foreign currency on our investments in certain of our foreign subsidiaries.

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

In the 12 weeks ended March 21, 2026, $1.6 billion of U.S. dollar-denominated senior notes matured and were paid.

As of March 21, 2026, we had $5.0 billion of commercial paper outstanding, excluding discounts.

Note 8 - Financial Instruments

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

commodity prices, affecting the cost of our raw materials and energy;
foreign exchange rates and currency restrictions; and
interest rates.

There have been no material changes during the 12 weeks ended March 21, 2026 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 2025 Form 10-K.

Certain of our agreements with our counterparties require us to post full collateral on derivative instruments in a net liability position if our credit rating is at A2 (Moody’s Investors Service, Inc.) or A (S&P Global Ratings) and we have been placed on credit watch for possible downgrade or if our credit rating falls below either of these levels. The fair value of all derivative instruments with credit-risk-related contingent features that were in a net liability position as of March 21, 2026 was $97 million. We have posted no collateral under these contracts and no credit-risk-related contingent features were triggered as of March 21, 2026.

The notional amounts of our financial instruments used to hedge the above risks are as follows:


	Notional Amounts(a)
	3/21/2026		12/27/2025
Commodity contracts	$	1.4	$	1.5
Interest rate swap contracts	$	2.0	$	2.0
Foreign exchange contracts (b)	$	2.9	$	3.1
Cross-currency contracts	$	1.7	$	1.7
Non-derivative debt instruments (b)	$	11.6	$	4.4

(a)In billions.

(b)During the 12 weeks ended March 21, 2026, we designated $4.5 billion of existing euro denominated debt and $2.9 billion of euro denominated debt issued in February 2026 as net investment hedges to partially offset the effects of foreign currency on our investments in certain of our foreign subsidiaries. As of March 21, 2026, there are no foreign exchange contracts designated as net investment hedges.

As of March 21, 2026, approximately 16% of total debt was subject to variable rates, after the impact of the related interest rate swap contracts, compared to approximately 11% as of December 27, 2025.

Debt Securities

Available-for-Sale

The activity related to our Level 3 (significant unobservable inputs) investments in certain available-for-sale debt securities is as follows:



	12 Weeks Ended

		3/21/2026		3/22/2025
Celsius Holdings, Inc. (Celsius):
Balance, beginning of period		$	1,852	$	785

Net unrealized (loss)/gain		(82)		110
Cash dividends received		(14)		(7)
Balance, end of period		1,756		888
Other:
Balance, beginning of period		275		256
Net unrealized loss		(33)		(14)
Balance, end of period		242		242
Total Level 3 available-for-sale balance, end of period		$	1,998	$	1,130

There were no impairment charges related to our investments in available-for-sale debt securities in both the 12 weeks ended March 21, 2026 and March 22, 2025. There were net unrealized gains of $745 million

and $430 million as of March 21, 2026 and March 22, 2025, respectively, associated with our available-for-sale debt securities.

Recurring Fair Value Measurements

The fair values of our financial assets and liabilities are categorized as follows:


	Fair Value Hierarchy Levels(a)		3/21/2026						12/27/2025
		Assets(a)			Liabilities(a)			Assets(a)			Liabilities(a)

Available-for-sale debt securities (b)	3		$	1,998		$	—		$	2,127		$	—
Index funds (c)	1		336			—			341			—

Deferred compensation (d)	2		—			469			—			495
Contingent consideration (e)	3		—			162			—			278
Derivatives designated as fair value hedging instruments:
Interest rate swap contracts (f)	2		5			10			19			3

Derivatives designated as cash flow hedging instruments:
Foreign exchange contracts (g)	2		7			32			6			28
Cross-currency contracts (g)	2		—			113			—			102
Commodity contracts (h)	2		138			2			116			5
			145			147			122			135
Derivatives designated as net investment hedging instruments:
Foreign exchange contracts (g)	2		—			—			—			1
Cross-currency contracts (g)	2		—			71			—			34
			—			71			—			35
Derivatives not designated as hedging instruments:
Foreign exchange contracts (g)	2		4			8			6			32
Commodity contracts (h)	2		31			1			4			9
			35			9			10			41
Total derivatives at fair value (i)			185			237			151			214
Total			$	2,519		$	868		$	2,619		$	987

(a)Fair value hierarchy levels are categorized consistently by Level 1 (quoted prices in active markets for identical assets), Level 2 (significant other observable inputs) and Level 3 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)Classified as other assets. The fair value of our investment in Celsius is estimated using probability-weighted discounted future cash flows based on a Monte Carlo simulation using significant unobservable inputs, such as an 80% probability that a certain market-based condition will be met and an average estimated discount rate of 8.5%. The fair value of the other investment is estimated using a lattice model primarily based on the underlying stock price, volatility and certain significant unobservable inputs, such as a discount rate of 8.3% based on an estimated synthetic credit rating. An increase in the probability that certain market-based conditions will be met or a decrease in the discount rate would result in a higher fair value measurement, while a decrease in the probability that certain market-based conditions will be met or an increase in the discount rate would result in a lower fair value measurement.

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

(e)In connection with our acquisition of VNGR Beverage, LLC (poppi), we recorded a liability at fair value for the contingent consideration of $300 million payable upon achievement of certain performance milestones by the third quarter of 2027. If these performance milestones are not met, no payment will be made. The fair value of the liability is estimated using discounted future cash flows based on a Monte Carlo simulation using significant unobservable inputs such as forecasts of net revenue and margin. An increase in the net revenue and margin forecasts would result in a higher fair value measurement, while a decrease in the net revenue and margin forecasts would result in a lower fair value measurement. As of March 21, 2026, the fair value of the contingent consideration was $162 million, comprised of the $278 million liability as of December 27, 2025 and a fair value decrease of $116 million in the 12 weeks ended March 21, 2026 recorded in selling, general and administrative expenses.

(f)Based on Secured Overnight Financing Rate forward rates. As of March 21, 2026, the carrying amount of hedged fixed-rate debt was $2.0 billion, which was classified on the balance sheet within long-term debt obligations.

(g)Based on recently reported market transactions of spot and/or forward rates.

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

(i)Derivative assets and liabilities are presented on a gross basis on our balance sheet. Amounts subject to enforceable master netting arrangements or similar agreements which are not offset on our balance sheet as of March 21, 2026 and December 27, 2025 were not material. Collateral received or posted against our asset or liability positions was not material. Exchange-traded commodity futures are cash-settled on a daily basis and, therefore, not included in the table.

The carrying amounts of our cash and cash equivalents and short-term investments recorded at amortized cost approximate fair value (classified as Level 2 in the fair value hierarchy) due to their short-term maturity. The fair value of our debt obligations as of March 21, 2026 and December 27, 2025 was $49 billion and $46 billion, respectively, based upon prices of identical or similar instruments in the marketplace, which are considered Level 2 inputs.

Losses/(gains) on our fair value hedges recognized in the income statement are as follows:



	12 Weeks Ended

		3/21/2026		3/22/2025
Interest rate swap contracts (a)		$	21	$	(36)

(a)Interest rate derivative losses/(gains) are included in net interest expense and other. These losses/(gains) are substantially offset by decreases/increases in the value of the underlying debt, which are also included in net interest expense and other.

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


		12 Weeks Ended
	Recognized in Accumulated Other Comprehensive Loss			Reclassified from Accumulated Other Comprehensive Loss into Income Statement(a)
		3/21/2026		3/22/2025		3/21/2026		3/22/2025
Foreign exchange contracts		$	17	$	16	$	14	$	(16)
Cross-currency contracts		11		(19)		10		(21)
Commodity contracts		(136)		(55)		(61)		6
Total		$	(108)	$	(58)	$	(37)	$	(31)

(a)Foreign exchange derivative losses/(gains) are included in net revenue and cost of sales. Cross-currency interest rate swap 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 10 for further information.

As of March 21, 2026, we expect to reclassify net gains of $171 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) on our net investment hedges are categorized as follows:


		12 Weeks Ended
	Recognized in Accumulated Other Comprehensive Loss			Recognized in Income Statement(a)
		3/21/2026		3/22/2025		3/21/2026		3/22/2025
Non-derivative debt instruments		$	(182)	$	110	$	—	$	—
Cross-currency contracts		38		(3)		(4)		(2)
Foreign exchange contracts		(11)		—		(2)		—
Total		$	(155)	$	107	$	(6)	$	(2)

(a)Amount excluded from the assessment of effectiveness recognized in earnings associated with cross-currency interest rate swaps and forward contracts.

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


	12 Weeks Ended
	3/21/2026						3/22/2025
	Cost of sales		Selling, general and administrative expenses		Total		Cost of sales		Selling, general and administrative expenses		Total
Foreign exchange contracts	$	—	$	(3)	$	(3)	$	—	$	11	$	11
Commodity contracts	(31)		(159)		(190)		(9)		(2)		(11)
Total	$	(31)	$	(162)	$	(193)	$	(9)	$	9	$	—

Note 9 - Net Income Attributable to PepsiCo per Common Share

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


	12 Weeks Ended
	3/21/2026			3/22/2025
	Income		Shares(a)	Income		Shares(a)





Basic net income attributable to PepsiCo per common share	$	1.70		$	1.34
Net income available for PepsiCo common shareholders	$	2,327	1,367	$	1,834	1,372
Dilutive securities:
Stock options, RSUs, PSUs and other (b)	—		4	—		4
Diluted	$	2,327	1,371	$	1,834	1,376
Diluted net income attributable to PepsiCo per common share	$	1.70		$	1.33

(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 7 million for both the 12 weeks ended March 21, 2026 and March 22, 2025.

Note 10 - Accumulated Other Comprehensive Loss Attributable to PepsiCo

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


	Currency Translation Adjustment		Cash Flow Hedges		Pension and Retiree Medical		Available-for-Sale Debt Securities and Other(a)		Accumulated Other Comprehensive Loss Attributable to PepsiCo
Balance as of December 27, 2025 (b)	$	(13,494)	$	126	$	(2,262)	$	606	$	(15,024)
Other comprehensive income/(loss) before reclassifications (c)	757		108		(10)		(129)		726
Amounts reclassified from accumulated other comprehensive loss	—		(37)		19		—		(18)
Net other comprehensive income/(loss)	757		71		9		(129)		708
Tax amounts	(38)		(16)		(3)		31		(26)
Balance as of March 21, 2026 (b)	$	(12,775)	$	181	$	(2,256)	$	508	$	(14,342)

(a)The movements primarily represent fair value changes in available-for-sale debt securities, including our investment in Celsius convertible preferred stock. See Note 8 for further information.

(b)Pension and retiree medical amounts are net of taxes of $1,138 million as of December 27, 2025 and $1,135 million as of March 21, 2026.

(c)Currency translation adjustment primarily reflects appreciation of the euro, Mexican peso and Russian ruble.


	Currency Translation Adjustment		Cash Flow Hedges		Pension and Retiree Medical		Available-for-Sale Debt Securities and Other(a)		Accumulated Other Comprehensive Loss Attributable to PepsiCo
Balance as of December 28, 2024 (b)	$	(15,217)	$	82	$	(2,714)	$	237	$	(17,612)
Other comprehensive income/(loss) before reclassifications (c)	410		58		(4)		87		551
Amounts reclassified from accumulated other comprehensive loss	—		(31)		17		—		(14)
Net other comprehensive income	410		27		13		87		537
Tax amounts	26		(5)		(3)		(21)		(3)
Balance as of March 22, 2025 (b)	$	(14,781)	$	104	$	(2,704)	$	303	$	(17,078)

(a)The movements primarily represent fair value changes in available-for-sale debt securities, including our investment in Celsius convertible preferred stock. See Note 8 for further information.

(b)Pension and retiree medical amounts are net of taxes of $1,282 million as of December 28, 2024 and $1,279 million as of March 22, 2025.

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

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


	12 Weeks Ended
		3/21/2026		3/22/2025		Affected Line Item in the Income Statement






Cash flow hedges:

Foreign exchange contracts		$	14	$	(16)	Cost of sales
Cross-currency contracts		10		(21)		Selling, general and administrative expenses
Commodity contracts		(59)		5		Cost of sales
Commodity contracts		(2)		1		Selling, general and administrative expenses
Net gains before tax		(37)		(31)
Tax amounts		8		9
Net gains after tax		(29)		(22)

Pension and retiree medical items:
Amortization of net prior service cost		1		—		Other pension and retiree medical benefits income
Amortization of net losses		18		17		Other pension and retiree medical benefits income

Net losses before tax		19		17
Tax amounts		(4)		(4)
Net losses after tax		15		13






Total net gains reclassified, net of tax		$	(14)	$	(9)

Note 11 - Acquisitions and Divestitures

Acquisition of poppi

On May 19, 2025, we acquired all of the outstanding equity interest in poppi, a prebiotic soda business, for cash consideration of $1.95 billion and contingent consideration with an acquisition date fair value of $0.2 billion. See Note 8 for further information on the contingent consideration. In connection with this acquisition, other payments may be incurred, subject to the achievement of certain conditions.

We accounted for the transaction as a business combination in the second quarter of 2025 in our PBNA segment. We recognized and measured the identifiable assets acquired and liabilities assumed at their estimated fair values on the date of acquisition. The preliminary estimates of the fair value of the identifiable assets acquired and liabilities assumed in this transaction as of the acquisition date primarily include goodwill and other intangible assets of approximately $2.0 billion. These preliminary estimates include management’s assumptions and are subject to revision as additional information is obtained about the facts and circumstances that existed as of the acquisition date, primarily related to intangible assets, which may result in adjustments to the preliminary values discussed above as valuations are finalized. We will finalize these amounts in the second quarter of 2026.

Acquisition of Garza Food Ventures LLC (Siete)

On January 17, 2025, we acquired all of the outstanding equity interest in Siete, a Mexican-American foods business, for total consideration of $1.2 billion in cash.

We accounted for the transaction as a business combination in the first quarter of 2025 in our PFNA segment. We recognized and measured the identifiable assets acquired and liabilities assumed at their estimated fair values on the date of acquisition. The purchase price allocation was finalized in the first quarter of 2026.

The fair value of identifiable assets acquired and liabilities assumed in the acquisition of Siete and the resulting goodwill as of the acquisition date is summarized as follows:


Inventories	$	28
Property, plant and equipment	7
Amortizable intangible asset	65
Other indefinite-lived intangible asset (brand)	470
Other assets and liabilities	46
Total identifiable net assets	616
Goodwill	630
Total purchase price	$	1,246

Goodwill is calculated as the excess of the aggregate fair value of the consideration transferred over the fair value of the net assets recognized. The goodwill recorded as part of the acquisition of Siete primarily reflects our expectation of future economic benefits arising from growth opportunities, expanded consumer reach and the strengthening of our overall product offerings. All of the goodwill is recorded in our PFNA segment and deductible for tax purposes.

Acquisition and Divestiture-Related Charges/Credits

Acquisition and divestiture-related charges/credits include merger and integration charges, transaction expenses, such as consulting, advisory and other professional fees, as well as fair value adjustments to contingent consideration. Merger and integration charges include employee-related costs, closing costs and other integration costs.

A summary of charges/credits is as follows:


	12 Weeks Ended
		3/21/2026		3/22/2025
PFNA		$	1	$	15
PBNA (a)		(114)		10





Total (b)		$	(113)	$	25
After-tax amount		$	(86)	$	19
Impact on net income attributable to PepsiCo per common share		$	0.06	$	(0.01)

(a)Income amount primarily relates to the change in the fair value of contingent consideration associated with our acquisition of poppi. See Note 8 for further information.

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

Note 12 - Supply Chain Financing Arrangements

We 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. As of March 21, 2026 and December 27, 2025, $1.6 billion and $1.7 billion, respectively, of our accounts payable are to suppliers participating in these financing arrangements. For further information on the key terms of these supply chain financing programs, see Note 14 to our consolidated financial statements in our 2025 Form 10-K.

Note 13 - Legal Contingencies

The Company is party to a variety of litigation, claims, legal or regulatory proceedings, inquiries and investigations. While the results of such litigation, claims, legal or regulatory proceedings, inquiries and investigations cannot be predicted with certainty, management believes that the final outcome of the foregoing is not expected to have a material adverse effect on our financial condition, results of operations or cash flows.

Previous: Cover and table of contents · Next: Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.