Basis of Presentation and Our Divisions Basis of Presentation and Our Divisions (Notes)

8 Months Ended

Sep. 07, 2019

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Organization, Consolidation and Presentation of Financial Statements Disclosure [Text Block]

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.

Our Condensed Consolidated Balance Sheet as of September 7, 2019, Condensed Consolidated Statements of Income, Comprehensive Income and Equity for the 12 and 36 weeks ended September 7, 2019 and September 8, 2018 and the Condensed Consolidated Statement of Cash Flows for the 36 weeks ended September 7, 2019 and September 8, 2018 have not been audited. These 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 29, 2018 (2018 Form 10-K), as modified to reflect the adoption of those recently issued accounting pronouncements disclosed in Note 2 in this Form 10-Q. This report should be read in conjunction with our 2018 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 7, 2019 are not necessarily indicative of the results expected for any future period or the full year.

While our financial results in the United States and Canada (North America) are reported on a 12-week basis, substantially all of our international operations report 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 7, 2019, and the months of January through August are reflected in our results for the 36 weeks ended September 7, 2019.

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. 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.

The following information is unaudited. 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 six reportable segments (also referred to as divisions), as follows:


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


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


3)	PepsiCo Beverages North America (PBNA), which includes our beverage businesses in the United States and Canada. PBNA was formerly named North America Beverages; this change did not impact the results of PBNA or our other reportable segments;


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


5)	Europe Sub-Saharan Africa (ESSA), which includes all of our beverage, food and snack businesses in Europe and Sub-Saharan Africa; and


6)	Asia, Middle East and North Africa (AMENA), which includes all of our beverage, food and snack businesses in Asia, the Middle East and North Africa.

Net revenue and operating profit of each division are as follows:



	12 Weeks Ended				36 Weeks Ended
Net Revenue ^(a)	9/7/2019		9/8/2018		9/7/2019		9/8/2018
FLNA	$	4,105	$	3,891	$	11,930	$	11,345
QFNA	576		567		1,710		1,695
PBNA	5,643		5,456		15,475		15,064
LatAm	1,904		1,868		5,031		4,935
ESSA	3,347		3,161		8,173		7,945
AMENA	1,613		1,542		4,202		4,153
Total	$	17,188	$	16,485	$	46,521	$	45,137

(a)

Our primary performance obligation is the distribution and sales of beverage products and food and snack products to our customers, each comprising approximately 50% of our consolidated net revenue. Internationally, our LatAm segment is predominantly a food and snack business, ESSA’s beverage business and food and snack business are each approximately 50% of the segment’s net revenue and AMENA’s beverage business and food and snack business are approximately 35% and 65%, respectively, of the segment’s net revenue. Beverage revenue from company-owned bottlers, which primarily includes our consolidated bottling operations in our PBNA and ESSA segments, is approximately 40% of our consolidated net revenue. 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.



	12 Weeks Ended						36 Weeks Ended
Operating Profit	9/7/2019			9/8/2018			9/7/2019			9/8/2018
FLNA	$	1,286		$	1,241		$	3,694		$	3,491
QFNA	126			143			391			443
PBNA	640			703			1,719			1,838
LatAm	277			284			785			742
ESSA	474			439			965			995
AMENA ^(a)	357			311			883			994
Total division	$	3,160		$	3,121		$	8,437		$	8,503
Corporate unallocated expenses	(305		)	(277		)	(845		)	(824		)
Total	$	2,855		$	2,844		$	7,592		$	7,679

(a)

Operating profit for AMENA for the 36 weeks ended September 8, 2018 includes a gain of $144 million associated with refranchising a portion of our beverage business in Thailand.