Restructuring and Impairment Charges

8 Months Ended

Sep. 09, 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				36 Weeks Ended
	9/9/2023		9/3/2022		9/9/2023		9/3/2022
Cost of sales	$	4	$	1	$	10	$	6
Selling, general and administrative expenses	79		50		278		117
Other pension and retiree medical benefits (income)/expense (a)	—		—		(1)		3
Total restructuring and impairment charges	$	83	$	51	$	287	$	126
After-tax amount	$	67	$	40	$	228	$	101
Impact on net income attributable to PepsiCo per common share	$	(0.05)	$	(0.03)	$	(0.16)	$	(0.07)


	12 Weeks Ended				36 Weeks Ended				Plan to Date
	9/9/2023		9/3/2022		9/9/2023		9/3/2022		through 9/9/2023
FLNA	$	6	$	4	$	19	$	10	$	229
QFNA	—		1		—		1		19
PBNA	8		4		18		9		244
LatAm	8		3		19		17		190
Europe	44		21		185		40		528
AMESA	5		—		10		5		92
APAC	2		4		7		8		84
Corporate	10		14		30		33		259
	83		51		288		123		1,645
Other pension and retiree medical benefits (income)/expense (a)	—		—		(1)		3		97
Total	$	83	$	51	$	287	$	126	$	1,742

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


	12 Weeks Ended				36 Weeks Ended				Plan to Date
	9/9/2023		9/3/2022		9/9/2023		9/3/2022		through 9/9/2023
Severance and other employee costs	$	39	$	10	$	181	$	41	$	988
Asset impairments	1		7		1		7		191
Other costs	43		34		105		78		563
Total	$	83	$	51	$	287	$	126	$	1,742

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 36 weeks ended September 9, 2023 is as follows:


	Severance and Other Employee Costs		Asset Impairments		Other Costs		Total
Liability as of December 31, 2022	$	188	$	—	$	8	$	196
2023 restructuring charges	181		1		105		287
Cash payments	(174)		—		(109)		(283)
Non-cash charges and translation	(8)		(1)		1		(8)
Liability as of September 9, 2023	$	187	$	—	$	5	$	192

The majority of the restructuring accrual at September 9, 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, 4 and 9 for impairment and other charges/credits taken related to the Russia-Ukraine conflict, brand portfolio impairment charges and other impairment charges.