Restructuring and Impairment Charges

3 Months Ended

Mar. 25, 2023

Restructuring and Related Activities [Abstract]

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. To build on the successful implementation of the 2019 Productivity Plan, in 2022, we expanded and extended the plan through the end of 2028 to take advantage of additional opportunities within the initiatives described above. As a result, we expect to incur pre-tax charges of approximately $3.65 billion, including cash expenditures of approximately $2.9 billion. These pre-tax charges are expected to consist of approximately 55% of severance and other employee-related costs, 10% for asset impairments (all non-cash) resulting from plant closures and related actions, and 35% for other costs associated with the implementation of our initiatives.

The total 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	15	%	1	%	25	%	10	%	25	%	5	%	4	%	15	%

A summary of our 2019 Productivity Plan charges is as follows:


	12 Weeks Ended
		3/25/2023		3/19/2022
Cost of sales		$	3	$	5
Selling, general and administrative expenses		110		22
Other pension and retiree medical benefits income (a)		(1)		—
Total restructuring and impairment charges		$	112	$	27
After-tax amount		$	98	$	21
Impact on net income attributable to PepsiCo per common share		$	(0.07)	$	(0.02)


	12 Weeks Ended			Plan to Date
		3/25/2023		3/19/2022		through 3/25/2023
FLNA		$	7	$	3	$	217
QFNA		—		—		19
PBNA		5		3		231
LatAm		5		6		176
Europe		89		7		432
AMESA		5		2		87
APAC		1		1		78
Corporate		1		5		230
		113		27		1,470
Other pension and retiree medical benefits (income)/expense (a)		(1)		—		97
Total		$	112	$	27	$	1,567

(a)Income amount represents adjustments for changes in estimates of previously recorded amounts.


	12 Weeks Ended			Plan to Date
		3/25/2023		3/19/2022		through 3/25/2023
Severance and other employee costs		$	92	$	11	$	899
Asset impairments		—		—		190
Other costs		20		16		478
Total		$	112	$	27	$	1,567

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 25, 2023 is as follows:


	Severance and Other Employee Costs		Other Costs		Total
Liability as of December 31, 2022	$	188	$	8	$	196
2023 restructuring charges	92		20		112
Cash payments	(44)		(20)		(64)
Non-cash charges and translation	(4)		—		(4)
Liability as of March 25, 2023	$	232	$	8	$	240

Substantially all of the restructuring accrual at March 25, 2023 is expected to be paid by the end of 2023.

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.

See Notes 1 and 4 for impairment and other charges/credits taken related to the Russia-Ukraine conflict and brand portfolio impairment charges.