Restructuring, Impairment and Integration Charges

12 Months Ended

Dec. 28, 2019

Restructuring and Related Activities [Abstract]

Restructuring, Impairment, and Other Activities Disclosure [Text Block]

Restructuring and Impairment Charges

A summary of our restructuring and impairment charges and other productivity initiatives is as follows:

	2019		2018		2017
2019 Productivity Plan	$	370	$	138	$	—
2014 Productivity Plan	—		170		295
Total restructuring and impairment charges	370		308		295
Other productivity initiatives	3		8		16
Total restructuring and impairment charges and other productivity initiatives	$	373	$	316	$	311

2019 Multi-Year Productivity Plan

The 2019 Productivity Plan, publicly announced on February 15, 2019, 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:

	2019		2018
Cost of sales	$	115	$	3
Selling, general and administrative expenses	253		100
Other pension and retiree medical benefits expense	2		35
Total restructuring and impairment charges	$	370	$	138
After-tax amount	$	303	$	109
Net income attributable to PepsiCo per common share	$	0.21	$	0.08

	2019		2018		Plan to Date through 12/28/2019
FLNA	$	22	$	31	$	53
QFNA	2		5		7
PBNA	51		40		91
LatAm	62		9		71
Europe	99		6		105
AMESA	38		3		41
APAC	47		2		49
Corporate	47		7		54
	368		103		471
Other pension and retiree medical benefits expense	2		35		37
Total	$	370	$	138	$	508

	Plan to Date through 12/28/2019
Severance and other employee costs	$	286
Asset impairments	92
Other costs (a)	130
Total	$	508

(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 is as follows:

	Severance and Other Employee Costs			Asset Impairments			Other Costs			Total
2018 restructuring charges	$	137		$	—		$	1		$	138
Non-cash charges and translation	(32		)	—			—			(32		)
Liability as of December 29, 2018	105			—			1			106
2019 restructuring charges	149			92			129			370
Cash payments (a)	(138		)	—			(119		)	(257		)
Non-cash charges and translation	12			(92		)	10			(70		)
Liability as of December 28, 2019	$	128		$	—		$	21		$	149

(a) Excludes cash expenditures of $4 million reported in the cash flow statement in pension and retiree medical contributions.

Substantially all of the restructuring accrual at December 28, 2019 is expected to be paid by the end of 2020.

2014 Multi-Year Productivity Plan

The 2014 Productivity Plan, publicly announced on February 13, 2014, included the next generation of productivity initiatives that we believed would strengthen our beverage, food and snack businesses by: accelerating our investment in manufacturing automation; further optimizing our global manufacturing footprint, including closing certain manufacturing facilities; re-engineering our go-to-market systems in developed markets; expanding shared services; and implementing simplified organization structures to drive efficiency. To build on the 2014 Productivity Plan, in the fourth quarter of 2017, we expanded and extended the plan through the end of 2019 to take advantage of additional opportunities within the initiatives described above that further strengthened our beverage, food and snack businesses.

The 2014 Productivity Plan was completed in 2019. In 2019, there were no material pre-tax charges related to this plan and all cash payments were paid at year end. The total plan pre-tax charges and cash expenditures approximated the previously disclosed plan estimates of $1.3 billion and $960 million, respectively. These total plan pre-tax charges consisted of 59% of severance and other employee costs, 15% of asset impairments and 26% of other costs, including costs associated with the implementation of our initiatives, including certain consulting and other contract termination costs. These total plan pre-tax charges were incurred by division as follows: FLNA 14%, QFNA 3%, PBNA 29%, LatAm 15%, Europe 23%, AMESA 3%, APAC 3% and Corporate 10%.

A summary of our 2014 Productivity Plan charges is as follows:

	2018		2017
Selling, general and administrative expenses	$	169	$	229
Other pension and retiree medical benefits expense	1		66
Total restructuring and impairment charges	$	170	$	295
After-tax amount	$	143	$	224
Net income attributable to PepsiCo per common share	$	0.10	$	0.16

	2018			2017
FLNA	$	8		$	67
QFNA	2			11
PBNA	51			54
LatAm	30			63
Europe	53			53
AMESA	15			2
APAC (a)	12			(5		)
Corporate (b)	(1		)	50
Total	$	170		$	295

(a) Income amount primarily reflects a gain on the sale of property, plant and equipment.

(b) Income amount primarily relates to other pension and retiree medical benefits.

A summary of our 2014 Productivity Plan activity is as follows:

	Severance and Other Employee Costs			Asset Impairments			Other Costs				Total
Liability as of December 31, 2016	$	88		$	—		$	8			$	96
2017 restructuring charges	280			21			(6		)	(a)	295
Cash payments	(91		)	—			(22		)		(113		)
Non-cash charges and translation	(65		)	(21		)	34				(52		)
Liability as of December 30, 2017	212			—			14				226
2018 restructuring charges	86			28			56				170
Cash payments (b)	(203		)	—			(52		)		(255		)
Non-cash charges and translation	(4		)	(28		)	5				(27		)
Liability as of December 29, 2018	91			—			23				114
Cash payments	(77		)	—			(16		)		(93		)
Non-cash charges and translation	(14		)	—			(7		)		(21		)
Liability as of December 28, 2019	$	—		$	—		$	—			$	—

(a) Income amount represents adjustments for changes in estimates and a gain on the sale of property, plant, and equipment.

(b) Excludes cash expenditures of $11 million reported in the cash flow statement in pension and retiree medical plan contributions.

Other Productivity Initiatives

There were no material charges related to other productivity and efficiency initiatives outside the scope of the 2019 and 2014 Productivity Plans.

We regularly evaluate different productivity initiatives beyond the productivity plans and other initiatives described above.