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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 September 5, 2020 (36 weeks)
OR
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
pep-20200905_g1.jpg 
PepsiCo, Inc.
(Exact Name of Registrant as Specified in its Charter)
North Carolina13-1584302
(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 classTrading SymbolsName of each exchange on which registered
Common Stock, par value 1-2/3 cents per sharePEPThe Nasdaq Stock Market LLC
1.750% Senior Notes Due 2021PEP21aThe Nasdaq Stock Market LLC
2.500% Senior Notes Due 2022PEP22aThe Nasdaq Stock Market LLC
0.250% Senior Notes Due 2024PEP24The Nasdaq Stock Market LLC
2.625% Senior Notes Due 2026PEP26The Nasdaq Stock Market LLC
0.750% Senior Notes Due 2027PEP27The Nasdaq Stock Market LLC
0.875% Senior Notes Due 2028PEP28The Nasdaq Stock Market LLC
0.500% Senior Notes Due 2028PEP28aThe Nasdaq Stock Market LLC
1.125% Senior Notes Due 2031PEP31The Nasdaq Stock Market LLC
0.875% Senior Notes Due 2039PEP39The 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   x    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   x    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
x
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  x
Number of shares of Common Stock outstanding as of September 24, 2020 was 1,381,956,485.



Table of Contents    

PepsiCo, Inc. and Subsidiaries

Table of Contents
Page No.
Part I Financial Information
Item 1.Condensed Consolidated Financial Statements
Item 2.
Report of Independent Registered Public Accounting Firm
Item 3.
Item 4.
Part II Other Information
Item 1.
Item 1A.
Item 2.
Item 6.

2

Table of Contents    

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 Ended36 Weeks Ended
 9/5/20209/7/20199/5/20209/7/2019
Net Revenue$18,091 $17,188 $47,917 $46,521 
Cost of sales8,156 7,694 21,371 20,786 
Gross profit9,935 9,494 26,546 25,735 
Selling, general and administrative expenses6,924 6,639 19,292 18,143 
Operating Profit3,011 2,855 7,254 7,592 
Other pension and retiree medical benefits income
86 38 247 163 
Net interest expense and other(264)(224)(789)(651)
Income before income taxes2,833 2,669 6,712 7,104 
Provision for income taxes526 559 1,396 1,529 
Net income2,307 2,110 5,316 5,575 
Less: Net income attributable to noncontrolling interests
16 10 41 27 
Net Income Attributable to PepsiCo$2,291 $2,100 $5,275 $5,548 
Net Income Attributable to PepsiCo per Common Share
Basic$1.66 $1.50 $3.80 $3.96 
Diluted$1.65 $1.49 $3.79 $3.94 
Weighted-average common shares outstanding
Basic1,384 1,397 1,387 1,401 
Diluted1,390 1,405 1,393 1,409 
See accompanying notes to the condensed consolidated financial statements.
3

Table of Contents    

Condensed Consolidated Statement of Comprehensive Income
PepsiCo, Inc. and Subsidiaries
(in millions, unaudited) 
12 Weeks Ended36 Weeks Ended
9/5/20209/7/20199/5/20209/7/2019
Net income$2,307 $2,110 $5,316 $5,575 
Other comprehensive income/(loss), net of taxes:
Net currency translation adjustment414 (159)(1,136)(51)
Net change on cash flow hedges11 (38)(37)(71)
Net pension and retiree medical adjustments(1)56 119 115 
Other(3)(1)(3) 
421 (142)(1,057)(7)
Comprehensive income2,728 1,968 4,259 5,568 
Comprehensive income attributable to
noncontrolling interests
(16)(10)(41)(27)
Comprehensive Income Attributable to PepsiCo$2,712 $1,958 $4,218 $5,541 
See accompanying notes to the condensed consolidated financial statements.
4

Table of Contents    

Condensed Consolidated Statement of Cash Flows
PepsiCo, Inc. and Subsidiaries
(in millions, unaudited)
 36 Weeks Ended
 9/5/20209/7/2019
Operating Activities
Net income$5,316 $5,575 
Depreciation and amortization1,731 1,634 
Share-based compensation expense186 169 
Restructuring and impairment charges 124 282 
Cash payments for restructuring charges(166)(248)
Inventory fair value adjustments and merger and integration charges286 46 
Cash payments for merger and integration charges(97)(4)
Pension and retiree medical plan expenses121 165 
Pension and retiree medical plan contributions(501)(391)
Deferred income taxes and other tax charges and credits96 195 
Net tax related to the Tax Cuts and Jobs Act (TCJ Act) (29)
Tax payments related to the TCJ Act(78)(393)
Change in assets and liabilities:
Accounts and notes receivable(1,430)(1,716)
Inventories(549)(573)
Prepaid expenses and other current assets(202)(264)
Accounts payable and other current liabilities289 80 
Income taxes payable583 347 
Other, net414 188 
Net Cash Provided by Operating Activities6,123 5,063 
Investing Activities
Capital spending(2,074)(1,959)
Sales of property, plant and equipment26 63 
Acquisitions, net of cash acquired, and investments in noncontrolled affiliates(6,373)(2,628)
Divestitures4 253 
Short-term investments, by original maturity:
More than three months - purchases
(400) 
More than three months - maturities
 8 
More than three months - sales
 3 
Three months or less, net
23 13 
Other investing, net33 (38)
Net Cash Used for Investing Activities(8,761)(4,285)
Financing Activities
Proceeds from issuances of long-term debt10,564 3,098 
Payments of long-term debt(814)(2,954)
Short-term borrowings, by original maturity:
More than three months - proceeds
4,069 6 
More than three months - payments
(1,801) 
Three months or less, net
(11)94 
Cash dividends paid(4,094)(3,971)
Share repurchases - common(1,543)(2,268)
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Proceeds from exercises of stock options145 282 
Withholding tax payments on restricted stock units (RSUs) and performance stock units (PSUs) converted(86)(100)
Other financing(18)(16)
Net Cash Provided by/(Used for) Financing Activities6,411 (5,829)
Effect of exchange rate changes on cash and cash equivalents and restricted cash(184)(11)
Net Increase/(Decrease) in Cash and Cash Equivalents and Restricted Cash3,589 (5,062)
Cash and Cash Equivalents and Restricted Cash, Beginning of Year5,570 10,769 
Cash and Cash Equivalents and Restricted Cash, End of Period$9,159 $5,707 
Supplemental Non-Cash Activity
Right-of-use assets obtained in exchange for lease obligations$431 $304 
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)
9/5/202012/28/2019
ASSETS
Current Assets
Cash and cash equivalents$9,094 $5,509 
Short-term investments611 229 
Accounts and notes receivable, less allowance: 9/20 - $220 and 12/19 - $1059,295 7,822 
Inventories:
Raw materials and packaging1,798 1,395 
Work-in-process275 200 
Finished goods2,062 1,743 
4,135 3,338 
Prepaid expenses and other current assets925 747 
Total Current Assets24,060 17,645 
Property, plant and equipment44,116 43,003 
Accumulated depreciation(24,390)(23,698)
Property, Plant and Equipment, net19,726 19,305 
Amortizable Intangible Assets, net1,515 1,433 
Goodwill18,603 15,501 
Other indefinite-lived intangible assets17,671 14,610 
Indefinite-Lived Intangible Assets36,274 30,111 
Investments in Noncontrolled Affiliates2,752 2,683 
Deferred Income Taxes4,357 4,359 
Other Assets3,357 3,011 
Total Assets$92,041 $78,547 
LIABILITIES AND EQUITY
Current Liabilities
Short-term debt obligations
$6,692 $2,920 
Accounts payable and other current liabilities
19,317 17,541 
Total Current Liabilities
26,009 20,461 
Long-Term Debt Obligations37,879 29,148 
Deferred Income Taxes4,217 4,091 
Other Liabilities10,341 9,979 
Total Liabilities78,446 63,679 
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: 1,383 and 1,391 shares, respectively)
23 23 
Capital in excess of par value
3,848 3,886 
Retained earnings
63,013 61,946 
Accumulated other comprehensive loss
(15,357)(14,300)
Repurchased common stock, in excess of par value (484 and 476 shares, respectively)
(38,044)(36,769)
Total PepsiCo Common Shareholders’ Equity13,483 14,786 
Noncontrolling interests112 82 
Total Equity13,595 14,868 
Total Liabilities and Equity$92,041 $78,547 
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 Ended36 Weeks Ended
9/5/20209/7/20199/5/20209/7/2019
SharesAmountSharesAmountSharesAmountSharesAmount
Common Stock
Balance, beginning of period1,385 $23 1,399 $23 1,391 $23 1,409 $23 
Change in repurchased common stock(2) (3) (8) (13) 
Balance, end of period1,383 23 1,396 23 1,383 23 1,396 23 
Capital in Excess of Par Value
Balance, beginning of period3,772 3,796 3,886 3,953 
Share-based compensation expense85 51 186 170 
Stock option exercises, RSUs and PSUs converted
(2)(5)(138)(181)
Withholding tax on RSUs and PSUs converted
(7) (86)(100)
Balance, end of period3,848 3,842 3,848 3,842 
Retained Earnings
Balance, beginning of period62,145 60,752 61,946 59,947 
Cumulative effect of accounting changes  (34)8 
Net income attributable to PepsiCo2,291 2,100 5,275 5,548 
Cash dividends declared – common (a)
(1,423)(1,338)(4,174)(3,989)
Balance, end of period63,013 61,514 63,013 61,514 
Accumulated Other Comprehensive Loss
Balance, beginning of period(15,778)(14,984)(14,300)(15,119)
Other comprehensive income/(loss) attributable to PepsiCo421 (142)(1,057)(7)
Balance, end of period(15,357)(15,126)(15,357)(15,126)
Repurchased Common Stock
Balance, beginning of period(482)(37,671)(468)(35,635)(476)(36,769)(458)(34,286)
Share repurchases(3)(400)(4)(551)(12)(1,559)(19)(2,301)
Stock option exercises, RSUs and PSUs
converted
1 27 1 62 4 284 6 463 
Balance, end of period(484)(38,044)(471)(36,124)(484)(38,044)(471)(36,124)
Total PepsiCo Common Shareholders’ Equity13,483 14,129 13,483 14,129 
Noncontrolling Interests
Balance, beginning of period96 85 82 84 
Net income attributable to noncontrolling
interest
16 10 41 27 
Distributions to noncontrolling interests  (15)(15)
Acquisitions  5  
Other, net  (1)(1)
Balance, end of period112 95 112 95 
Total Equity$13,595 $14,224 $13,595 $14,224 
(a)Cash dividends declared per common share were $1.0225 and $0.955 for the 12 weeks ended September 5, 2020 and September 7, 2019, respectively, and $3.00 and $2.8375 for the 36 weeks ended September 5, 2020 and September 7, 2019, 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 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 and 36 weeks ended September 5, 2020 are not necessarily indicative of the results expected for any future period or the full year.
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.
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 5, 2020, and the months of January through August are reflected in our results for the 36 weeks ended September 5, 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. Certain reclassifications were made to the prior year’s financial statements to conform to the current year presentation.
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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 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 of each division is as follows:
12 Weeks Ended36 Weeks Ended
9/5/20209/7/20199/5/20209/7/2019
FLNA$4,399 $4,105 $12,746 $11,930 
QFNA608 576 1,906 1,710 
PBNA5,958 5,643 15,766 15,475 
LatAm1,654 1,904 4,531 5,031 
Europe3,323 3,222 7,887