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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 March 20, 2021 (12 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-20210320_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
0.400% Senior Notes Due 2032PEP32The Nasdaq Stock Market LLC
0.875% Senior Notes Due 2039PEP39The Nasdaq Stock Market LLC
1.050% Senior Notes Due 2050PEP50The 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 April 8, 2021 was 1,381,631,264.


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 Ended
 3/20/20213/21/2020
Net Revenue$14,820 $13,881 
Cost of sales6,671 6,127 
Gross profit8,149 7,754 
Selling, general and administrative expenses5,837 5,830 
Operating Profit2,312 1,924 
Other pension and retiree medical benefits income120 77 
Net interest expense and other(258)(290)
Income before income taxes2,174 1,711 
Provision for income taxes451 360 
Net income1,723 1,351 
Less: Net income attributable to noncontrolling interests
9 13 
Net Income Attributable to PepsiCo$1,714 $1,338 
Net Income Attributable to PepsiCo per Common Share
Basic$1.24 $0.96 
Diluted$1.24 $0.96 
Weighted-average common shares outstanding
Basic1,380 1,390 
Diluted1,387 1,396 
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 Ended
3/20/20213/21/2020
Net income$1,723 $1,351 
Other comprehensive income/(loss), net of taxes:
Net currency translation adjustment131 (754)
Net change on cash flow hedges72 (61)
Net pension and retiree medical adjustments27 57 
Other 1 
230 (757)
Comprehensive income1,953 594 
Less: Comprehensive income attributable to
noncontrolling interests
9 13 
Comprehensive Income Attributable to PepsiCo$1,944 $581 
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)
 12 Weeks Ended
 3/20/20213/21/2020
Operating Activities
Net income$1,723 $1,351 
Depreciation and amortization560 533 
Share-based compensation expense79 61 
Restructuring and impairment charges 43 38 
Cash payments for restructuring charges(49)(60)
Merger and integration (credits)/charges(10)25 
Cash payments for merger and integration charges(7)(38)
Pension and retiree medical plan expenses21 40 
Pension and retiree medical plan contributions(413)(234)
Deferred income taxes and other tax charges and credits108 25 
Change in assets and liabilities:
Accounts and notes receivable(455)(784)
Inventories(397)(312)
Prepaid expenses and other current assets(210)(263)
Accounts payable and other current liabilities(1,906)(1,419)
Income taxes payable227 204 
Other, net(33)84 
Net Cash Used for Operating Activities(719)(749)
Investing Activities
Capital spending(471)(484)
Sales of property, plant and equipment5 5 
Acquisitions, net of cash acquired, and investments in noncontrolled affiliates(13)(454)
Divestitures35  
Short-term investments, by original maturity:
More than three months - maturities535  
Three months or less, net
3 7 
Other investing, net 1 
Net Cash Provided by/(Used for) Investing Activities94 (925)
(Continued on following page)
5

Table of Contents    

Condensed Consolidated Statement of Cash Flows (continued)
PepsiCo, Inc. and Subsidiaries
(in millions, unaudited)
12 Weeks Ended
3/20/20213/21/2020
Financing Activities
Proceeds from issuances of long-term debt 6,429 
Payments of long-term debt(1)(1)
Short-term borrowings, by original maturity:
More than three months - proceeds
 164 
More than three months - payments
(396)(2)
Three months or less, net
53 2,794 
Cash dividends paid(1,429)(1,349)
Share repurchases - common(106)(573)
Proceeds from exercises of stock options62 78 
Withholding tax payments on restricted stock units (RSUs) and performance stock units (PSUs) converted(71)(76)
Other financing (2)
Net Cash (Used for)/Provided by Financing Activities(1,888)7,462 
Effect of exchange rate changes on cash and cash equivalents and restricted cash(10)(66)
Net (Decrease)/Increase in Cash and Cash Equivalents and Restricted Cash(2,523)5,722 
Cash and Cash Equivalents and Restricted Cash, Beginning of Year8,254 5,570 
Cash and Cash Equivalents and Restricted Cash, End of Period$5,731 $11,292 
Supplemental Non-Cash Activity
Right-of-use assets obtained in exchange for lease obligations$167 $148 
See accompanying notes to the condensed consolidated financial statements.
6

Table of Contents    

Condensed Consolidated Balance Sheet
PepsiCo, Inc. and Subsidiaries
(in millions except per share amounts)
(Unaudited)
3/20/202112/26/2020
ASSETS
Current Assets
Cash and cash equivalents$5,661 $8,185 
Short-term investments964 1,366 
Accounts and notes receivable, less allowance: 3/21 - $192 and 12/20 - $201
8,885 8,404 
Inventories:
Raw materials and packaging1,827 1,720 
Work-in-process308 205 
Finished goods2,421 2,247 
4,556 4,172 
Prepaid expenses and other current assets1,130 874 
Total Current Assets21,196 23,001 
Property, plant and equipment46,544 46,340 
Accumulated depreciation(25,295)(24,971)
Property, Plant and Equipment, net21,249 21,369 
Amortizable Intangible Assets, net1,690 1,703 
Goodwill18,779 18,757 
Other Indefinite-Lived Intangible Assets17,641 17,612 
Investments in Noncontrolled Affiliates2,777 2,792 
Deferred Income Taxes4,370 4,372 
Other Assets3,522 3,312 
Total Assets$91,224 $92,918 
LIABILITIES AND EQUITY
Current Liabilities
Short-term debt obligations$4,674 $3,780 
Accounts payable and other current liabilities18,019 19,592 
Total Current Liabilities22,693 23,372 
Long-Term Debt Obligations38,991 40,370 
Deferred Income Taxes4,491 4,284 
Other Liabilities10,996 11,340 
Total Liabilities77,171 79,366 
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: 1,382 and 1,380 shares, respectively)
23 23 
Capital in excess of par value3,800 3,910 
Retained earnings63,740 63,443 
Accumulated other comprehensive loss(15,246)(15,476)
Repurchased common stock, in excess of par value (485 and 487 shares, respectively)
(38,370)(38,446)
Total PepsiCo Common Shareholders’ Equity13,947 13,454 
Noncontrolling interests106 98 
Total Equity14,053 13,552 
Total Liabilities and Equity$91,224 $92,918 
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
3/20/20213/21/2020
SharesAmountSharesAmount
Common Stock
Balance, beginning of period1,380 $23 1,391 $23 
Change in repurchased common stock2  (2) 
Balance, end of period1,382 23 1,389 23 
Capital in Excess of Par Value
Balance, beginning of period3,910 3,886 
Share-based compensation expense80 62 
Stock option exercises, RSUs and PSUs converted(119)(131)
Withholding tax on RSUs and PSUs converted(71)(76)
Balance, end of period3,800 3,741 
Retained Earnings
Balance, beginning of period63,443 61,946 
Cumulative effect of accounting changes (34)
Net income attributable to PepsiCo1,714 1,338 
Cash dividends declared – common (a)
(1,417)(1,330)
Balance, end of period63,740 61,920 
Accumulated Other Comprehensive Loss
Balance, beginning of period(15,476)(14,300)
Other comprehensive income/(loss) attributable to PepsiCo230 (757)
Balance, end of period(15,246)(15,057)
Repurchased Common Stock
Balance, beginning of period(487)(38,446)(476)(36,769)
Share repurchases(1)(106)(4)(602)
Stock option exercises, RSUs and PSUs converted3 182 2 209 
Balance, end of period(485)(38,370)(478)(37,162)
Total PepsiCo Common Shareholders’ Equity13,947 13,465 
Noncontrolling Interests
Balance, beginning of period98 82 
Net income attributable to noncontrolling interest9 13 
Other, net(1)(1)
Balance, end of period106 94 
Total Equity$14,053 $13,559 
(a)Cash dividends declared per common share were $1.0225 and $0.955 for the 12 weeks ended March 20, 2021 and March 21, 2020, 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 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 weeks ended March 20, 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 January and February are reflected in our results for the 12 weeks ended March 20, 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. Certain reclassifications were made to the prior year’s financial statements to conform to the current year presentation.
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;
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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
3/20/20213/21/2020
FLNA$4,236 $4,074 
QFNA646 634 
PBNA5,074 4,838 
LatAm1,242 1,310 
Europe1,795 1,839 
AMESA (a)
883 631 
APAC (b)
944 555 
Total$14,820 $13,881 
(a)The increase primarily reflects our acquisition of Pioneer Food Group Ltd. (Pioneer Foods). See Note 12 for further information.
(b)The increase 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
3/20/20213/21/2020
Beverage(a)
Food/Snack
Beverage(a)
Food/Snack
LatAm10 %90 %10 %90 %
Europe50 %50 %55 %45 %
AMESA30 %70 %35 %65 %
APAC15 %85 %20 %80 %
PepsiCo45 %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 both the 12 weeks ended March 20, 2021 and March 21, 2020. 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.
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Operating profit of each division is as follows:
12 Weeks Ended
3/20/20213/21/2020
FLNA$1,240 $1,202 
QFNA150 150 
PBNA366 297 
LatAm218 231 
Europe131 146 
AMESA138 134 
APAC208 142 
Total divisions$2,451 $2,302 
Corporate unallocated expenses (a)
(139)(378)
Total$2,312 $1,924 
(a)During the 12 weeks ended March 20, 2021, we recorded a pre-tax unrealized gain of $108 million ($82 million after-tax or $0.06 per share) on our short-term investment in a publicly traded company, based on the quoted active market price as of market close on March 19, 2021, the last trading day of our first quarter of 2021. The gain was recorded in selling, general and administrative expenses within corporate unallocated expenses. See Note 9 for further information. We subsequently sold all of these shares during the second quarter of 2021. We will record a related pre-tax loss of $39 million ($30 million after-tax), net of discounts, on the sale in our 12 weeks ending June 12, 2021 in selling, general and administrative expenses within corporate unallocated expenses.
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 3/20/2021
Allowances for Expected Credit Losses(a)
Upfront Payments to Customers(b)
Inventory Write-Downs and Product Returns
Employee Compensation Expense(c)
Employee Protection Costs(d)
Other(e)
Total
FLNA (f)
$(4)$ $ $18 $9 $1 $24 
QFNA   1 1  2 
PBNA (f)
(4)1  12 5 (1)13 
LatAm   12 2 1 15 
Europe   3 3  6 
AMESA (f)
  (2)  1 (1)
APAC     2 2 
Total$(8)$1 $(2)$46 $20 $4 $61 
12 Weeks Ended 3/21/2020
Allowances for Expected Credit Losses(a)
Upfront Payments to Customers(b)
Inventory Write-Downs and Product Returns(g)
Other(e)
Total
FLNA$21 $ $3 $3 $27 
QFNA2    2 
PBNA41 44 22 1 108 
Europe4    4 
APAC  1 1 2 
Total$68 $44 $26 $5 $143 
(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.
(b)Relates to promotional spending for which benefit is not expected to be received.
(c)Includes incremental frontline incentive pay, crisis child care and other leave benefits and labor costs.
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(d)Includes costs associated with personal protective equipment, temperature scans, cleaning and other sanitization services.
(e)Includes reserves for property, plant and equipment, donations of cash and product and other costs.
(f)Income amounts represent adjustments for changes in estimates of previously recorded amounts.
(g)Includes a reserve for product returns of $7 million.
Note 2 - Recently Issued Accounting Pronouncements
Adopted
In 2019, the Financial Accounting Standards Board issued guidance to simplify the accounting for income taxes. The guidance primarily addresses how to (1) recognize a deferred tax liability after we transition to or from the equity method of accounting, (2) evaluate if a step-up in the tax basis of goodwill is related to a business combination or is a separate transaction, (3) recognize all of the effects of a change in tax law in the period of enactment, including adjusting the estimated annual tax rate, and (4) include the amount of tax based on income in the income tax provision and any incremental amount as a tax not based on income for hybrid tax regimes. We adopted the guidance in the first quarter of 2021. The adoption did not have a material impact on our condensed consolidated financial statements or related disclosures.
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. In connection with this plan, we expect to incur pre-tax charges of approximately $2.5 billion, including cash expenditures of approximately $1.6 billion. These pre-tax charges are expected to consist of approximately 65% of severance and other employee-related costs, 15% for asset impairments (all non-cash) resulting from plant closures and related actions, and 20% for other costs associated with the implementation of our initiatives. We expect to complete this plan by 2023.
The total expected plan pre-tax charges are expected to be incurred by division approximately as follows:
FLNAQFNAPBNALatAmEuropeAMESAAPACCorporate
Expected pre-tax charges15 %1 %30 %10 %25 %5 %3 %11 %
A summary of our 2019 Productivity Plan charges is as follows:
12 Weeks Ended
3/20/20213/21/2020
Cost of sales$2 $2 
Selling, general and administrative expenses 35 30 
Other pension and retiree medical benefits expense6 6 
Total restructuring and impairment charges$43 $38 
After-tax amount$35 $32 
Net income attributable to PepsiCo per common share$(0.03)$(0.02)
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12 Weeks EndedPlan to Date
3/20/20213/21/2020
through 3/20/2021
FLNA $15 $5 $151 
QFNA 1 12 
PBNA4 3 142 
LatAm2 5 104 
Europe11 8 164 
AMESA 1 2 56 
APAC  54 
Corporate4 8 94 
37 32 777 
Other pension and retiree medical benefits expense6 6 63 
Total$43 $38 $840 
12 Weeks EndedPlan to Date
3/20/20213/21/2020
through 3/20/2021
Severance and other employee costs$34 $22 $478 
Asset impairments 1 125 
Other costs9 15 237 
Total$43 $38 $840 
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 12 weeks ended March 20, 2021 is as follows:
Severance and Other Employee CostsOther CostsTotal
Liability as of December 26, 2020$122 $5 $127 
2021 restructuring charges34 9 43 
Cash payments(37)(12)(49)
Non-cash charges and translation(6)1 (5)
Liability as of March 20, 2021$113 $3 $116 
Substantially all of the restructuring accrual at March 20, 2021 is expected to be paid by the end of 2021.
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.
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Note 4 - Intangible Assets    
A summary of our amortizable intangible assets is as follows:
3/20/202112/26/2020
GrossAccumulated AmortizationNetGrossAccumulated AmortizationNet
Acquired franchise rights$982 $(177)$805 $976 $(173)$803 
Customer relationships641 (209)432 642 (204)438 
Brands1,348 (1,104)244 1,348 (1,099)249 
Other identifiable intangibles473 (264)209 474 (261)213 
Total$3,444 $(1,754)$1,690 $3,440 $(1,737)$1,703 

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The change in the book value of indefinite-lived intangible assets is as follows:
Balance
12/26/2020
AcquisitionsTranslation
and Other
Balance
3/20/2021
FLNA (a)
Goodwill$465 $(8)$4 $461 
Brands340  1 341 
Total805 (8)5 802 
QFNA
Goodwill189