Restructuring and Impairment Charges Restructuring and Impairment Charges (Notes)

8 Months Ended

Sep. 05, 2020

Restructuring and Related Activities [Abstract]

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

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

	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.