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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 Carolina 13-1584302
(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 class Trading Symbols Name of each exchange on which registered
Common Stock, par value 1-2/3 cents per share PEP The Nasdaq Stock Market LLC
1.750% Senior Notes Due 2021 PEP21a The Nasdaq Stock Market LLC
2.500% Senior Notes Due 2022 PEP22a The Nasdaq Stock Market LLC
0.250% Senior Notes Due 2024 PEP24 The Nasdaq Stock Market LLC
2.625% Senior Notes Due 2026 PEP26 The Nasdaq Stock Market LLC
0.750% Senior Notes Due 2027 PEP27 The Nasdaq Stock Market LLC
0.875% Senior Notes Due 2028 PEP28 The Nasdaq Stock Market LLC
0.500% Senior Notes Due 2028 PEP28a The Nasdaq Stock Market LLC
1.125% Senior Notes Due 2031 PEP31 The Nasdaq Stock Market LLC
0.875% Senior Notes Due 2039 PEP39 The 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
3
3
4
5
7
8
9
Item 2.
28
Report of Independent Registered Public Accounting Firm
53
Item 3.
54
Item 4.
54
Part II Other Information
Item 1.
55
Item 1A.
55
Item 2.
58
Item 6.
58

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 36 Weeks Ended
  9/5/2020 9/7/2019 9/5/2020 9/7/2019
Net Revenue $ 18,091  $ 17,188  $ 47,917  $ 46,521 
Cost of sales 8,156  7,694  21,371  20,786 
Gross profit 9,935  9,494  26,546  25,735 
Selling, general and administrative expenses 6,924  6,639  19,292  18,143 
Operating Profit 3,011  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 taxes 2,833  2,669  6,712  7,104 
Provision for income taxes 526  559  1,396  1,529 
Net income 2,307  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
Basic 1,384  1,397  1,387  1,401 
Diluted 1,390  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 Ended 36 Weeks Ended
9/5/2020 9/7/2019 9/5/2020 9/7/2019
Net income $ 2,307  $ 2,110  $ 5,316  $ 5,575 
Other comprehensive income/(loss), net of taxes:
Net currency translation adjustment 414  (159) (1,136) (51)
Net change on cash flow hedges 11  (38) (37) (71)
Net pension and retiree medical adjustments (1) 56  119  115 
Other (3) (1) (3)  
421  (142) (1,057) (7)
Comprehensive income 2,728  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
  9/5/2020 9/7/2019
Operating Activities
Net income $ 5,316  $ 5,575 
Depreciation and amortization 1,731  1,634 
Share-based compensation expense 186  169 
Restructuring and impairment charges 124  282 
Cash payments for restructuring charges (166) (248)
Inventory fair value adjustments and merger and integration charges 286  46 
Cash payments for merger and integration charges (97) (4)
Pension and retiree medical plan expenses 121  165 
Pension and retiree medical plan contributions (501) (391)
Deferred income taxes and other tax charges and credits 96  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 liabilities 289  80 
Income taxes payable 583  347 
Other, net 414  188 
Net Cash Provided by Operating Activities 6,123  5,063 
Investing Activities
Capital spending (2,074) (1,959)
Sales of property, plant and equipment 26  63 
Acquisitions, net of cash acquired, and investments in noncontrolled affiliates (6,373) (2,628)
Divestitures 4  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, net 33  (38)
Net Cash Used for Investing Activities (8,761) (4,285)
Financing Activities
Proceeds from issuances of long-term debt 10,564  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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Table of Contents    

Proceeds from exercises of stock options 145  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 Activities 6,411  (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 Cash 3,589  (5,062)
Cash and Cash Equivalents and Restricted Cash, Beginning of Year 5,570  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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Table of Contents    

Condensed Consolidated Balance Sheet
PepsiCo, Inc. and Subsidiaries
(in millions except per share amounts)
(Unaudited)
9/5/2020 12/28/2019
ASSETS
Current Assets
Cash and cash equivalents $ 9,094  $ 5,509 
Short-term investments 611  229 
Accounts and notes receivable, less allowance: 9/20 - $220 and 12/19 - $105 9,295  7,822 
Inventories:
Raw materials and packaging 1,798  1,395 
Work-in-process 275  200 
Finished goods 2,062  1,743 
4,135  3,338 
Prepaid expenses and other current assets 925  747 
Total Current Assets 24,060  17,645 
Property, plant and equipment 44,116  43,003 
Accumulated depreciation (24,390) (23,698)
Property, Plant and Equipment, net 19,726  19,305 
Amortizable Intangible Assets, net 1,515  1,433 
Goodwill 18,603  15,501 
Other indefinite-lived intangible assets 17,671  14,610 
Indefinite-Lived Intangible Assets 36,274  30,111 
Investments in Noncontrolled Affiliates 2,752  2,683 
Deferred Income Taxes 4,357  4,359 
Other Assets 3,357  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 Obligations 37,879  29,148 
Deferred Income Taxes 4,217  4,091 
Other Liabilities 10,341  9,979 
Total Liabilities 78,446  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’ Equity 13,483  14,786 
Noncontrolling interests 112  82 
Total Equity 13,595  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 Ended 36 Weeks Ended
9/5/2020 9/7/2019 9/5/2020 9/7/2019
Shares Amount Shares Amount Shares Amount Shares Amount
Common Stock
Balance, beginning of period 1,385  $ 23  1,399  $ 23  1,391  $ 23  1,409  $ 23 
Change in repurchased common stock (2)   (3)   (8)   (13)  
Balance, end of period 1,383  23  1,396  23  1,383  23  1,396  23 
Capital in Excess of Par Value
Balance, beginning of period 3,772  3,796  3,886  3,953 
Share-based compensation expense 85  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 period 3,848  3,842  3,848  3,842 
Retained Earnings
Balance, beginning of period 62,145  60,752  61,946  59,947 
Cumulative effect of accounting changes     (34) 8 
Net income attributable to PepsiCo 2,291  2,100  5,275  5,548 
Cash dividends declared – common (a)
(1,423) (1,338) (4,174) (3,989)
Balance, end of period 63,013  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 PepsiCo 421  (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’ Equity 13,483  14,129  13,483  14,129 
Noncontrolling Interests
Balance, beginning of period 96  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 period 112  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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Table of Contents    

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.
9


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 Ended 36 Weeks Ended
9/5/2020 9/7/2019 9/5/2020 9/7/2019
FLNA $ 4,399  $ 4,105  $ 12,746  $ 11,930 
QFNA 608  576  1,906  1,710 
PBNA 5,958  5,643  15,766  15,475 
LatAm 1,654  1,904  4,531  5,031 
Europe 3,323  3,222  7,887  7,842 
AMESA (a)
1,252  957  2,866  2,533 
APAC 897  781  2,215  2,000 
Total $ 18,091  $ 17,188  $ 47,917  $ 46,521 
(a)The increase in net revenue primarily reflects our acquisition of Pioneer Food Group Ltd. (Pioneer Foods). See Note 12 for further information.
10


Our primary performance obligation is the distribution and sales of beverage, 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
9/5/2020 9/7/2019
Beverage(a)
Food/Snack
Beverage(a)
Food/Snack
LatAm 10  % 90  % 10  % 90  %
Europe 55  % 45  % 55  % 45  %
AMESA (b)
30  % 70  % 45  % 55  %
APAC 25  % 75  % 30  % 70  %
PepsiCo 45  % 55  % 50  % 50  %
36 Weeks Ended
9/5/2020 9/7/2019
Beverage(a)
Food/Snack
Beverage(a)
Food/Snack
LatAm 10  % 90  % 10  % 90  %
Europe 55  % 45  % 55  % 45  %
AMESA (b)
35  % 65  % 45  % 55  %
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. 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.
(b)The increase in the approximate percentage of net revenue generated by the food/snack business primarily reflects our acquisition of Pioneer Foods. See Note 12 for further information.
Operating profit of each division is as follows:
12 Weeks Ended 36 Weeks Ended
9/5/2020 9/7/2019 9/5/2020 9/7/2019
FLNA $ 1,353  $ 1,286  $ 3,833  $ 3,694 
QFNA 145  126  491  391 
PBNA 697  640  1,391  1,719 
LatAm 250  277  700  785 
Europe 480  455  977  909 
AMESA 193  210  386  551 
APAC 163  166  494  388 
Total division $ 3,281  $ 3,160  $ 8,272  $ 8,437 
Corporate unallocated expenses (270) (305) (1,018) (845)
Total $ 3,011  $ 2,855  $ 7,254  $ 7,592 
11


Operating profit in the 12 and 36 weeks ended September 5, 2020 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 9/5/2020
Allowances for Expected Credit Losses(a)
Upfront Payments to Customers(b)
Inventory Write-Downs and Product Returns(c)
Employee Compensation Expense(d)
Employee Protection Costs(e)
Other(f)
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 (g)
    2  (5) 1  1  (1)
Total $ 4  $ 1  $ 10  $ 62  $ 44  $ 26  $ 147 
36 Weeks Ended 9/5/2020
Allowances for Expected Credit Losses(a)
Upfront Payments to Customers(b)
Inventory Write-Downs and Product Returns(c)
Employee Compensation Expense(d)
Employee Protection Costs(e)
Other(f)
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 (g)
    3  (3) 2  2  4 
Total $ 76  $ 48  $ 64  $ 286  $ 130  $ 64  $ 668 
(a)Allowances reflect the expected impact of the global economic uncertainty caused by COVID-19, leveraging estimates of credit worthiness, default and recovery rates for certain of our customers, including foodservice and vending businesses.
(b)Upfront payments relate to promotional spending for which benefit is not expected to be received.
(c)Includes a reserve for product returns of $3 million and $19 million in the 12 and 36 weeks ended September 5, 2020, respectively.
(d)Includes incremental frontline incentive pay, crisis child care and other leave benefits and labor costs.
(e)Includes costs associated with personal protective equipment, temperature scans, cleaning and other sanitization services.
(f)Includes write-downs of property, plant and equipment, donations of cash and product, and other costs.
(g)Income amounts include a social welfare relief credit of $7 million in the 12 and 36 weeks ended September 5, 2020.
Note 2 - Recently Issued Accounting Pronouncements
Adopted
In 2016, the Financial Accounting Standards Board (FASB) issued guidance that changes the impairment model used to measure credit losses for most financial assets. For our trade receivables, certain other receivables and certain other financial instruments, we are required to use a new forward-looking expected credit loss model that replaced the existing incurred credit loss model. The new model generally results in earlier recognition of allowances for credit losses. We adopted this guidance in the first quarter of 2020 and the adoption did not have a material impact on our condensed consolidated financial statements or disclosures. On initial recognition, we recorded an after-tax cumulative effect decrease to retained earnings of $34 million ($44 million pre-tax) as of the beginning of 2020.
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Not Yet Adopted
In 2019, the FASB 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. The guidance is effective in the first quarter of 2021 with early adoption permitted. We will adopt the guidance when it becomes effective in the first quarter of 2021. The guidance is not expected to have a material impact on our 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 and cash expenditures of approximately $1.6 billion. These pre-tax charges are expected to consist of approximately 70% of severance and other employee-related costs, 15% for asset impairments (all non-cash) resulting from plant closures and related actions, and 15% 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:
FLNA QFNA PBNA LatAm Europe AMESA APAC Corporate
Expected pre-tax charges 11  % 2  % 30  % 10  % 25  % 8  % 5  % 9  %
A summary of our 2019 Productivity Plan charges is as follows:
12 Weeks Ended 36 Weeks Ended
9/5/2020 9/7/2019 9/5/2020 9/7/2019
Cost of sales $ 1  $ 10  $ 4  $ 100 
Selling, general and administrative expenses 59  83  112  182 
Other pension and retiree medical benefits expense 1  5  8   
Total restructuring and impairment charges $ 61  $ 98  $ 124  $ 282 
After-tax amount $ 48  $ 82  $ 101  $ 225 
Net income attributable to PepsiCo per common share $ 0.03  $ 0.06  $ 0.07  $ 0.16 
13


12 Weeks Ended 36 Weeks Ended Plan to Date
9/5/2020 9/7/2019 9/5/2020 9/7/2019
through 9/5/2020
FLNA $ 2  $ 16  $ 9  $ 22  $ 62 
QFNA   2  1  2  8 
PBNA 29  26  32  42  123 
LatAm 5  22  14  43  85 
Europe 13  15  29  74  134 
AMESA 2  5  9  21  50 
APAC 1  4  4  41  53 
Corporate 8  3  18  37  72 
60  93  116  282  587 
Other pension and retiree medical benefits expense
1  5  8    45 
Total $ 61  $ 98  $ 124  $ 282  $ 632 
12 Weeks Ended 36 Weeks Ended Plan to Date
9/5/2020 9/7/2019 9/5/2020 9/7/2019
through 9/5/2020
Severance and other employee costs $ 23  $ 65  $ 47  $ 105  $ 333 
Asset impairments 15  3  20  87  112 
Other costs (a)
23  30  57  90  187 
Total $ 61  $ 98  $ 124  $ 282  $ 632 
(a)Includes other 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 36 weeks ended September 5, 2020 is as follows:
Severance and Other Employee Costs Asset
Impairments
Other Costs Total
Liability as of December 28, 2019 $ 128  $   $ 21  $ 149 
2020 restructuring charges 47  20  57  124 
Cash payments (a)
(92)   (74) (166)
Non-cash charges and translation (10) (20) 4  (26)
Liability as of September 5, 2020 $ 73  $   $ 8  $ 81 
(a)Excludes cash expenditures of $1 million reported in the cash flow statement in pension and retiree medical contributions.
Substantially all of the restructuring accrual at September 5, 2020 is expected to be paid by the end of 2020.
Other Productivity Initiatives
There were no material 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.
14


Note 4 - Intangible Assets    
A summary of our amortizable intangible assets is as follows:
9/5/2020 12/28/2019
Gross Accumulated Amortization Net Gross Accumulated Amortization Net
Acquired franchise rights $ 845  $ (167) $ 678  $ 846  $ (158) $ 688 
Reacquired franchise rights 106  (106)   106  (105) 1 
Brands 1,317  (1,082) 235  1,326  (1,066) 260 
Other identifiable intangibles (a)
941  (339) 602  810  (326) 484 
Total $ 3,209  $ (1,694) $ 1,515  $ 3,088  $ (1,655) $ 1,433 
(a)The change in other identifiable intangibles primarily reflects our acquisitions of Pioneer Foods and Hangzhou Haomusi Food Co., Ltd. (Be & Cheery).


15


The change in the book value of indefinite-lived intangible assets is as follows:
Balance
12/28/2019
Acquisitions Translation
and Other
Balance
9/5/2020
FLNA (a)
Goodwill $ 299  $ 163  $   $ 462 
Brands 162  179  (1) 340 
Total 461  342  (1) 802 
QFNA
Goodwill 189      189 
Brands 11      11 
Total 200      200 
PBNA (b)
Goodwill 9,898  2,241    12,139 
Reacquired franchise rights 7,089      7,089 
Acquired franchise rights 1,517  142    1,659 
Brands (c)
763  2,400  (41) 3,122 
Total 19,267  4,783  (41) 24,009 
LatAm
Goodwill 501    (57) 444 
Brands 125    (21) 104 
Total 626