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Basis of Presentation and Our Divisions Basis of Presentation and Our Divisions (Notes) | 3 Months Ended
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Mar. 21, 2020
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. 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 28, 2019 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 28, 2019 (2019 Form 10-K), as modified to reflect the adoption of the recently issued accounting pronouncement disclosed in Note 2 in this Form 10-Q. This report should be read in conjunction with our 2019 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, 2020 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 January and February are reflected in our results for the 12 weeks ended March 21, 2020. 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. 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. Our Divisions As previously disclosed in our 2019 Form 10-K, during the fourth quarter of 2019, we realigned certain of our reportable segments to be consistent with a recent strategic realignment of our organizational structure and how our Chief Executive Officer assesses the performance of, and allocates resources to, our reportable segments. Our historical segment reporting presented in this report has been retrospectively revised to reflect the new organizational structure. These changes did not impact our consolidated financial results. See Note 1 to our consolidated financial statements in our 2019 Form 10-K for further information. We are organized into seven 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;
4) | Latin America (LatAm), which includes all of our beverage, food and snack businesses in Latin America;
5) | Europe, which includes all of our beverage, food and snack businesses in Europe;
6) | Africa, Middle East and South Asia (AMESA), which includes all of our beverage, food and snack 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, food and snack businesses in Asia Pacific, Australia and New Zealand, and China region.
Net revenue and operating profit of each division are as follows:
| 12 Weeks Ended
Net Revenue (a) | 3/21/2020 |  |  | 3/23/2019 |
FLNA | $ | 4,074 |  |  | $ | 3,815 |
QFNA | 634 |  |  | 594 |
PBNA | 4,838 |  |  | 4,510 |
LatAm | 1,310 |  |  | 1,241 |
Europe | 1,839 |  |  | 1,620 |
AMESA | 631 |  |  | 579 |
APAC | 555 |  |  | 525 |
Total | $ | 13,881 |  |  | $ | 12,884 |
(a) | Our primary performance obligation is the distribution and sales of beverage, food and snack products to our customers. For the 12 weeks ended March 21, 2020 and March 23, 2019, our food and snack business represented approximately 55% of our consolidated net revenue. Internationally, LatAm’s food and snack business represented approximately 90% of the segment’s revenue, Europe’s beverage business and food and snack business represented approximately 55% and 45%, respectively, of the segment’s net revenue, AMESA’s beverage business and food and snack business represented approximately 35% and 65%, respectively, of the segment’s net revenue and APAC’s beverage business and food and snack business represented approximately 20% and 80%, respectively, of the segment’s net revenue. Beverage revenue from company-owned bottlers, which primarily includes our consolidated bottling operations in our PBNA and Europe segments, was 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
Operating Profit | 3/21/2020 |  |  | 3/23/2019 |
FLNA (a) | $ | 1,202 |  |  | $ | 1,159 |
QFNA (a) | 150 |  |  | 138 |
PBNA (a) | 297 |  |  | 389 |
LatAm | 231 |  |  | 230 |
Europe (a) | 146 |  |  | 115 |
AMESA | 134 |  |  | 105 |
APAC (a) | 142 |  |  | 106 |
Total division | $ | 2,302 |  |  | $ | 2,242 |
Corporate unallocated expenses | (378 | ) |  | (234 | )
Total | $ | 1,924 |  |  | $ | 2,008 |
(a) In the 12 weeks ended March 21, 2020, operating profit includes $143 million of certain charges taken as a result of the novel coronavirus (COVID-19) pandemic, including $68 million of incremental allowances for expected credit losses ($21 million in FLNA, $2 million in QFNA, $41 million in PBNA and $4 million in Europe), $44 million of write-downs against upfront payments to customers in PBNA, $26 million of inventory write-downs and product returns ($3 million in FLNA, $22 million in PBNA and $1 million in APAC) and $5 million of certain other charges ($3 million in FLNA, $1 million in PBNA and $1 million in APAC).

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