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Basis of Presentation and Our Divisions Basis of Presentation and Our Divisions (Notes) | 8 Months Ended
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Sep. 04, 2021
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 26, 2020 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 26, 2020 (2020 Form 10-K). This report should be read in conjunction with our 2020 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 4, 2021 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 4, 2021 and the months of January through August are reflected in our results for the 36 weeks ended September 4, 2021. 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. The business and economic uncertainty resulting from the novel coronavirus (COVID-19) pandemic 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. 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 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 of each division is as follows:
| 12 Weeks Ended |  | 36 Weeks Ended
| 9/4/2021 |  | 9/5/2020 |  | 9/4/2021 |  | 9/5/2020
FLNA | $ | 4,653 |  |  | $ | 4,399 |  |  | $ | 13,441 |  |  | $ | 12,746 |
QFNA | 618 |  |  | 608 |  |  | 1,839 |  |  | 1,906 |
PBNA | 6,402 |  |  | 5,958 |  |  | 17,632 |  |  | 15,766 |
LatAm | 2,100 |  |  | 1,654 |  |  | 5,309 |  |  | 4,531 |
Europe | 3,612 |  |  | 3,323 |  |  | 8,693 |  |  | 7,887 |
AMESA (a) | 1,665 |  |  | 1,252 |  |  | 4,150 |  |  | 2,866 |
APAC (b) | 1,139 |  |  | 897 |  |  | 3,162 |  |  | 2,215 |
Total | $ | 20,189 |  |  | $ | 18,091 |  |  | $ | 54,226 |  |  | $ | 47,917 |
(a)The increase in net revenue for the 36 weeks ended September 4, 2021 primarily reflects our acquisition of Pioneer Food Group Ltd. (Pioneer Foods). See Note 12 for further information. (b)The increase in net revenue for the 36 weeks ended September 4, 2021 primarily reflects our acquisition of Hangzhou Haomusi Food Co., Ltd. (Be & Cheery). See Note 12 for further information. Our primary performance obligation is the distribution and sales of beverage and food and snack products to our customers. The following tables reflect the approximate percentage of net revenue generated between our beverage business and our food and snack business for each of our international divisions, as well as our consolidated net revenue:
| 12 Weeks Ended
| 9/4/2021 |  | 9/5/2020
| Beverage(a) |  | Food/Snack |  | Beverage(a) |  | Food/Snack
LatAm | 10 | % |  | 90 | % |  | 10 | % |  | 90 | %
Europe | 55 | % |  | 45 | % |  | 55 | % |  | 45 | %
AMESA | 35 | % |  | 65 | % |  | 30 | % |  | 70 | %
APAC | 25 | % |  | 75 | % |  | 25 | % |  | 75 | %
PepsiCo | 45 | % |  | 55 | % |  | 45 | % |  | 55 | %
| 36 Weeks Ended
| 9/4/2021 |  | 9/5/2020
| Beverage(a) |  | Food/Snack |  | Beverage(a) |  | Food/Snack
LatAm | 10 | % |  | 90 | % |  | 10 | % |  | 90 | %
Europe | 55 | % |  | 45 | % |  | 55 | % |  | 45 | %
AMESA | 35 | % |  | 65 | % |  | 35 | % |  | 65 | %
APAC | 25 | % |  | 75 | % |  | 25 | % |  | 75 | %
PepsiCo | 45 | % |  | 55 | % |  | 45 | % |  | 55 | %
(a)Beverage revenue from company-owned bottlers, which primarily includes our consolidated bottling operations in our PBNA and Europe segments, is approximately 40% of our consolidated net revenue in each of the 12 and 36 weeks ended September 4, 2021 and September 5, 2020. Generally, our finished goods beverage operations produce higher net revenue but lower operating margin as compared to concentrate sold to authorized bottling partners for the manufacture of finished goods beverages. Operating profit of each division is as follows:
| 12 Weeks Ended |  | 36 Weeks Ended
| 9/4/2021 |  | 9/5/2020 |  | 9/4/2021 |  | 9/5/2020
FLNA | $ | 1,357 |  |  | $ | 1,353 |  |  | $ | 3,979 |  |  | $ | 3,833 |
QFNA | 106 |  |  | 145 |  |  | 384 |  |  | 491 |
PBNA | 773 |  |  | 697 |  |  | 1,948 |  |  | 1,391 |
LatAm | 393 |  |  | 250 |  |  | 967 |  |  | 700 |
Europe | 439 |  |  | 480 |  |  | 975 |  |  | 977 |
AMESA | 312 |  |  | 193 |  |  | 706 |  |  | 386 |
APAC | 201 |  |  | 163 |  |  | 601 |  |  | 494 |
Total divisions | 3,581 |  |  | 3,281 |  |  | 9,560 |  |  | 8,272 |
Corporate unallocated expenses (a) | (422) |  |  | (270) |  |  | (960) |  |  | (1,018) |
Total | $ | 3,159 |  |  | $ | 3,011 |  |  | $ | 8,600 |  |  | $ | 7,254 |
(a)In the 36 weeks ended September 4, 2021, we sold our short-term investment in a publicly traded company and recorded a pre-tax net gain of $69 million ($52 million after-tax or $0.04 per share), net of discounts, in selling, general and administrative expenses associated with this sale. Operating profit includes certain pre-tax charges taken as a result of the COVID-19 pandemic. These pre-tax charges by division are as follows:
| 12 Weeks Ended 9/4/2021
| Allowances for Expected Credit Losses(a) |  | Upfront Payments to Customers(b) |  |  |  | Employee Compensation Expense(c) |  | Employee Protection Costs(d) |  | Other(e) |  | Total
FLNA | $ | (1) |  |  | $ | — |  |  |  |  | $ | 2 |  |  | $ | 4 |  |  | $ | 1 |  |  | $ | 6 |
QFNA | (1) |  |  | — |  |  |  |  | — |  |  | — |  |  | — |  |  | (1) |
PBNA | (2) |  |  | (13) |  |  |  |  | 8 |  |  | 2 |  |  | (7) |  |  | (12) |
LatAm | — |  |  | — |  |  |  |  | 12 |  |  | 4 |  |  | 1 |  |  | 17 |
Europe | (1) |  |  | (1) |  |  |  |  | 2 |  |  | 1 |  |  | 2 |  |  | 3 |
AMESA | (1) |  |  | — |  |  |  |  | 1 |  |  | 2 |  |  | 1 |  |  | 3 |
APAC | — |  |  | — |  |  |  |  | 1 |  |  | — |  |  | 1 |  |  | 2 |
Total | $ | (6) |  |  | $ | (14) |  |  |  |  | $ | 26 |  |  | $ | 13 |  |  | $ | (1) |  |  | $ | 18 |
| 12 Weeks Ended 9/5/2020
| Allowances for Expected Credit Losses(a) |  | Upfront Payments to Customers(b) |  | Inventory Write-Downs and Product Returns(f) |  | Employee Compensation Expense(c) |  | Employee Protection Costs(d) |  | Other(e) |  | Total
FLNA | $ | — |  |  | $ | — |  |  | $ | 1 |  |  | $ | 24 |  |  | $ | 16 |  |  | $ | — |  |  | $ | 41 |
QFNA | — |  |  | — |  |  | — |  |  | 1 |  |  | 1 |  |  | 1 |  |  | 3 |
PBNA | 3 |  |  | — |  |  | 1 |  |  | 14 |  |  | 12 |  |  | 20 |  |  | 50 |
LatAm | — |  |  | — |  |  | 6 |  |  | 19 |  |  | 6 |  |  | 1 |  |  | 32 |
Europe | 1 |  |  | 1 |  |  | — |  |  | 8 |  |  | 6 |  |  | — |  |  | 16 |
AMESA | — |  |  | — |  |  | — |  |  | 1 |  |  | 2 |  |  | 3 |  |  | 6 |
APAC | — |  |  | — |  |  | 2 |  |  | (5) |  |  | 1 |  |  | 1 |  |  | (1) |
Total | $ | 4 |  |  | $ | 1 |  |  | $ | 10 |  |  | $ | 62 |  |  | $ | 44 |  |  | $ | 26 |  |  | $ | 147 |
| 36 Weeks Ended 9/4/2021
| Allowances for Expected Credit Losses(a) |  | Upfront Payments to Customers(b) |  | Inventory Write-Downs and Product Returns(f) |  | Employee Compensation Expense(c) |  | Employee Protection Costs(d) |  | Other(e) |  | Total
FLNA | $ | (9) |  |  | $ | — |  |  | $ | — |  |  | $ | 31 |  |  | $ | 20 |  |  | $ | 2 |  |  | $ | 44 |
QFNA | (1) |  |  | — |  |  | — |  |  | 2 |  |  | 1 |  |  | — |  |  | 2 |
PBNA | (15) |  |  | (18) |  |  | — |  |  | 27 |  |  | 11 |  |  | (15) |  |  | (10) |
LatAm | — |  |  | — |  |  | 1 |  |  | 36 |  |  | 9 |  |  | 3 |  |  | 49 |
Europe | (1) |  |  | (1) |  |  | — |  |  | 10 |  |  | 7 |  |  | 3 |  |  | 18 |
AMESA | (1) |  |  | — |  |  | (2) |  |  | 1 |  |  | 3 |  |  | 4 |  |  | 5 |
APAC | — |  |  | — |  |  | — |  |  | 1 |  |  | 1 |  |  | 4 |  |  | 6 |
Total | $ | (27) |  |  | $ | (19) |  |  | $ | (1) |  |  | $ | 108 |  |  | $ | 52 |  |  | $ | 1 |  |  | $ | 114 |
| 36 Weeks Ended 9/5/2020
| Allowances for Expected Credit Losses(a) |  | Upfront Payments to Customers(b) |  | Inventory Write-Downs and Product Returns(f) |  | Employee Compensation Expense(c) |  | Employee Protection Costs(d) |  | Other(e) |  | Total
FLNA | $ | 19 |  |  | $ | — |  |  | $ | 8 |  |  | $ | 124 |  |  | $ | 49 |  |  | $ | 3 |  |  | $ | 203 |
QFNA | 2 |  |  | — |  |  | — |  |  | 7 |  |  | 2 |  |  | 1 |  |  | 12 |
PBNA | 48 |  |  | 46 |  |  | 30 |  |  | 98 |  |  | 43 |  |  | 30 |  |  | 295 |
LatAm | 1 |  |  | — |  |  | 12 |  |  | 35 |  |  | 14 |  |  | 4 |  |  | 66 |
Europe | 5 |  |  | 2 |  |  | 10 |  |  | 17 |  |  | 14 |  |  | 17 |  |  | 65 |
AMESA | 1 |  |  | — |  |  | 1 |  |  | 8 |  |  | 6 |  |  | 7 |  |  | 23 |
APAC | — |  |  | — |  |  | 3 |  |  | (3) |  |  | 2 |  |  | 2 |  |  | 4 |
Total | $ | 76 |  |  | $ | 48 |  |  | $ | 64 |  |  | $ | 286 |  |  | $ | 130 |  |  | $ | 64 |  |  | $ | 668 |
(a)Reflects the expected impact of the global economic uncertainty caused by COVID-19, leveraging estimates of creditworthiness and projections of default and recovery rates for certain of our customers, including foodservice and vending businesses. Income amounts represent reductions in the previously recorded reserves due to improved projected default rates and lower at-risk receivable balances. (b)Relates to promotional spending for which benefit is not expected to be received. Income amounts represent reductions in previously recorded reserves due to improved projected default rates and lower overall advance balances. (c)Includes incremental frontline incentive pay, crisis child care and other leave benefits and labor costs. Income amounts include a social welfare relief credit of $7 million in the 12 and 36 weeks ended September 5, 2020. (d)Includes costs associated with personal protective equipment, temperature scans, cleaning and other sanitization services. (e)Includes certain reserves for property, plant and equipment, donations of cash and product, and other costs. Income amounts represent adjustments for changes in estimates of previously recorded amounts. (f)Includes a reserve for product returns of $3 million and $19 million in the 12 and 36 weeks ended September 5, 2020, respectively. Income amount represents adjustments for changes in estimates of previously recorded amounts.

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