PEPSICO INC [PEP] Filings

10-Q 1 pep-20230617.htm FORM 10-Q pep-20230617

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 17, 2023 (24 weeks)


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 1-1183


PepsiCo, Inc.

(Exact Name of Registrant as Specified in its Charter)



North Carolina						13-1584302
(State or Other Jurisdiction of Incorporation or Organization)						(I.R.S. Employer Identification No.)

700 Anderson Hill Road, Purchase, New York 10577


(Address of principal executive offices and Zip Code)

(914) 253-2000


Registrant's telephone number, including area code

N/A


(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)

Securities registered pursuant to Section 12(b) of the Securities Exchange Act of 1934:

Title of each class

Trading Symbols

Name of each exchange on which registered

Common Stock, par value 1-2/3 cents per share

PEP

The Nasdaq Stock Market LLC

0.250% Senior Notes Due 2024

PEP24

The Nasdaq Stock Market LLC

2.625% Senior Notes Due 2026

PEP26

The Nasdaq Stock Market LLC

0.750% Senior Notes Due 2027

PEP27

The Nasdaq Stock Market LLC

0.875% Senior Notes Due 2028

PEP28

The Nasdaq Stock Market LLC

0.500% Senior Notes Due 2028

PEP28a

The Nasdaq Stock Market LLC

3.200% Senior Notes Due 2029

PEP29

The Nasdaq Stock Market LLC

1.125% Senior Notes Due 2031

PEP31

The Nasdaq Stock Market LLC

0.400% Senior Notes Due 2032

PEP32

The Nasdaq Stock Market LLC

0.750% Senior Notes Due 2033

PEP33

The Nasdaq Stock Market LLC

3.550% Senior Notes Due 2034

PEP34

The Nasdaq Stock Market LLC

0.875% Senior Notes Due 2039

PEP39

The Nasdaq Stock Market LLC

1.050% Senior Notes Due 2050

PEP50

The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ¨

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Number of shares of Common Stock outstanding as of July 6, 2023 was 1,376,580,611.

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PepsiCo, Inc. and Subsidiaries

Table of Contents


		Page No.
Part I Financial Information
Item 1.	Condensed Consolidated Financial Statements	2
	Condensed Consolidated Statement of Income – 12 and 2 4 Weeks Ended June 17 , 2023 and June 11 , 2022	2
	Condensed Consolidated Statement of Comprehensive Income – 12 and 24 Weeks Ended June 17 , 2023 and June 1 1 , 2022	3
	Condensed Consolidated Statement of Cash Flows – 24 Weeks Ended June 17 , 2023 and June 1 1 , 2022	4
	Condensed Consolidated Balance Sheet – June 17 , 2023 and December 31, 2022	6
	Condensed Consolidated Statement of Equity – 12 Weeks and 24 Weeks Ended June 17 , 2023 and June 1 1 , 2022	7
	Notes to the Condensed Consolidated Financial Statements	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	26
Report of Independent Registered Public Accounting Firm		49
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	50
Item 4.	Controls and Procedures	50
Part II Other Information
Item 1.	Legal Proceedings	51
Item 1A.	Risk Factors	51
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	51
Item 6.	Exhibits	51

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PART I FINANCIAL INFORMATION

ITEM 1. Condensed Consolidated Financial Statements.

Condensed Consolidated Statement of Income

PepsiCo, Inc. and Subsidiaries

(in millions except per share amounts, unaudited)


	12 Weeks Ended				24 Weeks Ended
	6/17/2023		6/11/2022		6/17/2023		6/11/2022
Net Revenue	$	22,322	$	20,225	$	40,168	$	36,425
Cost of sales	10,121		9,415		18,109		16,848
Gross profit	12,201		10,810		22,059		19,577
Selling, general and administrative expenses	8,542		7,387		15,771		13,967
Gain associated with the Juice Transaction (a)	—		(13)		—		(3,335)
Impairment of intangible assets (see Notes 1 and 4)	—		1,359		—		1,601
Operating Profit	3,659		2,077		6,288		7,344
Other pension and retiree medical benefits income/(expense)	60		(2)		121		132
Net interest expense and other	(201)		(236)		(401)		(476)
Income before income taxes	3,518		1,839		6,008		7,000
Provision for income taxes	747		393		1,293		1,281
Net income	2,771		1,446		4,715		5,719
Less: Net income attributable to noncontrolling interests	23		17		35		29
Net Income Attributable to PepsiCo	$	2,748	$	1,429	$	4,680	$	5,690
Net Income Attributable to PepsiCo per Common Share
Basic	$	1.99	$	1.03	$	3.40	$	4.11
Diluted	$	1.99	$	1.03	$	3.38	$	4.09
Weighted-average common shares outstanding
Basic	1,378		1,382		1,378		1,383
Diluted	1,384		1,389		1,384		1,390

(a)In the 24 weeks ended June 11, 2022, we sold our Tropicana, Naked and other select juice brands to PAI Partners for $3.5 billion in cash and a 39% noncontrolling interest in a joint venture, Tropicana Brands Group (TBG), operating across North America and Europe (Juice Transaction). See Note 12 for further information.

See accompanying notes to the condensed consolidated financial statements.

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Condensed Consolidated Statement of Comprehensive Income

PepsiCo, Inc. and Subsidiaries

(in millions, unaudited)


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

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

See accompanying notes to the condensed consolidated financial statements.

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Condensed Consolidated Statement of Cash Flows

PepsiCo, Inc. and Subsidiaries

(in millions, unaudited)


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

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

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

(Continued on following page)

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Condensed Consolidated Statement of Cash Flows (continued)

PepsiCo, Inc. and Subsidiaries

(in millions, unaudited)


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

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

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

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

See accompanying notes to the condensed consolidated financial statements.

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Condensed Consolidated Balance Sheet

PepsiCo, Inc. and Subsidiaries

(in millions except per share amounts)


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

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

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

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

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

Total Current Liabilities	29,618		26,785
Long-Term Debt Obligations	36,008		35,657
Deferred Income Taxes	4,113		4,133
Other Liabilities	8,342		8,339
Total Liabilities	78,081		74,914
Commitments and contingencies
PepsiCo Common Shareholders’ Equity
Common stock, par value 12/3¢ per share (authorized 3,600 shares; issued, net of repurchased common stock at par value: 1,377 shares)	23		23
Capital in excess of par value	4,082		4,134
Retained earnings	69,135		67,800
Accumulated other comprehensive loss	(15,780)		(15,302)
Repurchased common stock, in excess of par value (490 shares)	(39,775)		(39,506)
Total PepsiCo Common Shareholders’ Equity	17,685		17,149
Noncontrolling interests	140		124
Total Equity	17,825		17,273
Total Liabilities and Equity	$	95,906	$	92,187

See accompanying notes to the condensed consolidated financial statements.

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Condensed Consolidated Statement of Equity

PepsiCo, Inc. and Subsidiaries

(in millions, except per share amounts, unaudited)


	12 Weeks Ended						24 Weeks Ended
	6/17/2023			6/11/2022			6/17/2023			6/11/2022
	Shares	Amount		Shares	Amount		Shares	Amount		Shares	Amount










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

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

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

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

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


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

(a)Cash dividends declared per common share were $1.265 and $1.15 for the 12 weeks ended June 17, 2023 and June 11, 2022, respectively and $2.415 and $2.225 for the 24 weeks ended June 17, 2023 and June 11, 2022, respectively.

See accompanying notes to the condensed consolidated financial statements.

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Notes to the Condensed Consolidated Financial Statements

Note 1 - Basis of Presentation and Our Divisions

Basis of Presentation

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

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. Generally Accepted Accounting Principles (GAAP) for interim financial information and with the rules and regulations for reporting the Quarterly Report on Form 10-Q (Form 10-Q). Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. The condensed consolidated balance sheet at December 31, 2022 has been derived from the audited consolidated financial statements at that date, but does not include all of the information and footnotes required by GAAP for complete financial statements. These financial statements have been prepared on a basis that is substantially consistent with the accounting principles applied in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022 (2022 Form 10-K). This report should be read in conjunction with our 2022 Form 10-K. In our opinion, these financial statements include all normal and recurring adjustments necessary for a fair presentation. The results for the 12 and 24 weeks ended June 17, 2023 are not necessarily indicative of the results expected for any future period or the full year.

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

While our financial results in the United States and Canada (North America) are reported on a 12-week basis, all of our international operations are reported on a monthly calendar basis for which the months of March, April and May are reflected in our results for the 12 weeks ended June 17, 2023 and June 11, 2022, and the months of January through May are reflected in our results for the 24 weeks ended June 17, 2023 and June 11, 2022.

The preparation of our condensed consolidated financial statements requires management to make estimates and assumptions that affect the amounts reported in our condensed consolidated financial statements and related disclosures. Additionally, the business and economic uncertainty resulting from the Russia-Ukraine conflict and the high interest rate and inflationary cost environment has made such estimates and assumptions more difficult to calculate. Accordingly, actual results and outcomes could differ from those estimates.

Our significant interim accounting policies include the recognition of a pro rata share of certain estimated annual sales incentives and certain advertising and marketing costs in proportion to revenue or volume, as applicable, and the recognition of income taxes using an estimated annual effective tax rate.

Unless otherwise noted, tabular dollars are in millions, except per share amounts. All per share amounts reflect common per share amounts, assume dilution unless otherwise noted, and are based on unrounded amounts. Certain reclassifications were made to the prior year’s financial statements to conform to the current year presentation.

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Our Divisions

We are organized into seven reportable segments (also referred to as divisions), as follows:

1)Frito-Lay North America (FLNA), which includes our branded convenient food businesses in the United States and Canada;

2)Quaker Foods North America (QFNA), which includes our branded convenient food businesses, such as cereal, rice, pasta and other branded food, in the United States and Canada;

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

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

5)Europe, which includes all of our beverage and convenient food businesses in Europe;

6)Africa, Middle East and South Asia (AMESA), which includes all of our beverage and convenient food businesses in Africa, the Middle East and South Asia; and

7)Asia Pacific, Australia and New Zealand and China region (APAC), which includes all of our beverage and convenient food businesses in Asia Pacific, Australia and New Zealand, and China region.

Net revenue of each division is as follows:


	12 Weeks Ended				24 Weeks Ended
	6/17/2023		6/11/2022		6/17/2023		6/11/2022
FLNA	$	5,904	$	5,181	$	11,487	$	10,020
QFNA	684		675		1,461		1,388
PBNA	6,755		6,120		12,553		11,473
LatAm	2,856		2,415		4,633		3,889
Europe	3,428		3,023		5,314		4,820
AMESA	1,568		1,696		2,587		2,700
APAC	1,127		1,115		2,133		2,135
Total	$	22,322	$	20,225	$	40,168	$	36,425

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Our primary performance obligation is the distribution and sales of beverage and convenient food products to our customers. The following tables reflect the approximate percentage of net revenue generated between our beverage business and our convenient food business for each of our international divisions, as well as our consolidated net revenue:


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


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

(a)Beverage revenue from company-owned bottlers, which primarily includes our consolidated bottling operations in our PBNA and Europe divisions, is approximately 35% of our consolidated net revenue in the 12 and 24 weeks ended June 17, 2023, and over 35% of our consolidated net revenue in the 12 and 24 weeks ended June 11, 2022. Generally, our finished goods beverage operations produce higher net revenue but lower operating margin as compared to concentrate sold to authorized bottling partners for the manufacture of finished goods beverages.

Operating profit of each division is as follows:


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

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

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

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

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

(e)In the 12 weeks ended June 11, 2022, we recognized net pre-tax charges of $1,165 million ($927 million after-tax or $0.67 per share) as a result of the Russia-Ukraine conflict, with $1,197 million recorded in impairment of intangible assets, partially offset by $7 million and $25 million of income recorded in cost of sales and selling, general and administrative expenses, respectively. The income amounts recorded in cost of sales and selling, general and administrative expenses represent changes in estimates of previously recorded amounts for allowance for expected credit losses of $11 million, allowance for inventory write-downs of $8 million and other costs of $13 million. In the 24 weeks ended June 11, 2022, we recognized pre-tax charges of $1,406 million ($1,168 million after-tax or $0.84 per share) as a result of the Russia-Ukraine conflict, with $133 million recorded in cost of sales, $75 million recorded in selling, general and administrative expenses and $1,198 million recorded in impairment of intangible assets. The amounts recorded in cost of sales and selling, general and administrative expenses include impairment charges related to property, plant and equipment of $123 million, allowance for expected credit losses of $26 million, allowance for inventory write-downs of $25 million and other costs of $34 million. See Note 4 for further information. For information on indefinite-lived intangible assets, see Notes 2 and 4 to our consolidated financial statements in our 2022 Form 10-K.

(f)In the 24 weeks ended June 11, 2022, we recognized pre-tax brand portfolio impairment charges of $241 million ($193 million after-tax or $0.14 per share) in impairment of intangible assets, related to the repositioning or discontinuation of certain juice and dairy brands in Russia. See Note 4 for further information. For information on indefinite-lived intangible assets, see Notes 2 and 4 to our consolidated financial statements in our 2022 Form 10-K.

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

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

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


	6/11/2022
	12 Weeks Ended		24 Weeks Ended

Russia-Ukraine conflict impairment charges	$	1,197	$	1,198
Brand portfolio impairment charges	162		403
Total	$	1,359	$	1,601

Note 2 - Recently Issued Accounting Pronouncements

Adopted

In September 2022, the Financial Accounting Standards Board issued guidance to enhance the transparency of supplier finance programs to allow financial statement users to understand the effect on working capital, liquidity and cash flows. The new guidance requires disclosure of key terms of the program, including a description of the payment terms, payment timing and assets pledged as security or other forms of guarantees provided to the finance provider or intermediary. Other requirements include the disclosure of the amount that remains unpaid as of the end of the reporting period, a description of where these obligations are presented in the balance sheet and a rollforward of the obligation during the annual period. We adopted the guidance in the first quarter of 2023, except for the rollforward, which is effective in fiscal year 2024 with early adoption permitted. We currently plan to adopt the rollforward guidance when effective. See Note 13 for disclosures currently required under this guidance.

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Note 3 - Restructuring and Impairment Charges

2019 Multi-Year Productivity Plan

We publicly announced a multi-year productivity plan on February 15, 2019 (2019 Productivity Plan) that will leverage new technology and business models to further simplify, harmonize and automate processes; re-engineer our go-to-market and information systems, including deploying the right automation for each market; and simplify our organization and optimize our manufacturing and supply chain footprint. To build on the successful implementation of the 2019 Productivity Plan, in 2022, we expanded and extended the plan through the end of 2028 to take advantage of additional opportunities within the initiatives described above. As a result, we expect to incur pre-tax charges of approximately $3.65 billion, including cash expenditures of approximately $2.9 billion. These pre-tax charges are expected to consist of approximately 55% of severance and other employee-related costs, 10% for asset impairments (all non-cash) resulting from plant closures and related actions, and 35% for other costs associated with the implementation of our initiatives.

The total plan pre-tax charges are expected to be incurred by division approximately as follows:


	FLNA		QFNA		PBNA		LatAm		Europe		AMESA		APAC		Corporate
Expected pre-tax charges	15	%	1	%	25	%	10	%	25	%	5	%	4	%	15	%

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


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


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

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

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

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

A summary of our 2019 Productivity Plan activity for the 24 weeks ended June 17, 2023 is as follows:


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

The majority of the restructuring accrual at June 17, 2023 is expected to be paid by the end of 2023.

Other Productivity Initiatives

There were no charges related to other productivity and efficiency initiatives outside the scope of the 2019 Productivity Plan.

We regularly evaluate different productivity initiatives beyond the productivity plan and other initiatives described above.

See Notes 1, 4 and 9 for impairment and other charges/credits taken related to the Russia-Ukraine conflict, brand portfolio impairment charges and other impairment charges.

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Note 4 - Intangible Assets

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

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

During the 24 weeks ended June 11, 2022, we repositioned or discontinued certain juice and dairy brands in Russia in our Europe division. As a result, we recognized pre-tax impairment charges (included in brand portfolio impairment charges) of $241 million ($193 million after-tax or $0.14 per share) in impairment of intangible assets, primarily related to indefinite-lived intangible assets. See Note 1 for further information.

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

A summary of our amortizable intangible assets is as follows:


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

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


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

FLNA
Goodwill	$	451	$	—	$	3	$	454
Brands	251		—		—		251
Total	702		—		3		705
QFNA
Goodwill	189		—		—		189
Total	189		—		—		189
PBNA
Goodwill	11,947		3		10		11,960
Reacquired franchise rights	7,061		62		20		7,143
Acquired franchise rights (a)	1,758		—		(34)		1,724
Brands	2,508		—		—		2,508
Total	23,274		65		(4)		23,335
LatAm
Goodwill	436		—