What changed in this filing

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Item 7. Management’s Discussion and Analysis

2026-02-03 compared with 2025-02-04 · 631 added, 720 removed, 1851 unchanged (42% of the section changed)

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Results of Operations – Consolidated Review 40

Results of Operations – Division Review 43

Results of Operations – Segment Review 41

IB Franchise 43

LatAm Foods 44

Asia Pacific Foods 44

Non-GAAP Measures 44

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Our Liquidity and Capital Resources 49

Changes in Line Items in Our Consolidated Financial Statements 54

Return on Invested Capital 51

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Note 1 – Basis of Presentation and Our Divisions 67

Note 1 – Basis of Presentation and Our Segments 63

Note 2 – Our Significant Accounting Policies 69

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Discussion in this Form 10-K includes results of operations and financial condition for 2025 and 2024 and year-over-year comparisons between 2025 and 2024.

For discussion on results of operations and financial condition pertaining to 2022 and year-over-year comparisons between 2023 and 2022, please refer to “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 30, 2023.

For discussion on results of operations and financial condition pertaining to 2023 and year-over-year comparisons between 2024 and 2023, please refer to “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of Exhibit 99.2 to our Current Report on Form 8-K dated July 17, 2025.

Executive Overview

PepsiCo is a leading global food and beverage company with a diverse and complementary portfolio of brands such as Lay’s, Doritos, Cheetos, Gatorade, Pepsi-Cola, Mountain Dew, Quaker and SodaStream.

We operate through various channels, including authorized bottlers, contract manufacturers, and other third parties, to produce, market, distribute, and sell a wide array of beverages and convenient foods.

Our reach extends to customers and consumers in more than 200 countries and territories around the world.

PepsiCo is a leading global beverage and convenient food company with a complementary portfolio of brands, including Lay’s, Doritos, Cheetos, Gatorade, Pepsi-Cola, Mountain Dew, Quaker and SodaStream.

Through our operations, authorized bottlers, contract manufacturers, and other third parties, we make, market, distribute, and sell a wide array of beverages and convenient foods, serving customers and consumers in more than 200 countries and territories.

As a global company with strong local connections, we faced many of the same challenges in 2025 as our consumers, customers, and competitors worldwide.

These included ongoing supply chain disruptions, persistent inflationary pressures, evolving consumer preferences and behaviors, an intensely competitive business environment, the continued expansion of e-commerce in a rapidly changing retail landscape, ongoing macroeconomic and political volatility, and an increasingly complex regulatory environment.

These included ongoing supply chain disruptions;

persistent inflationary pressures;

evolving consumer consumption patterns and preferences;

an intensely competitive business environment, including the increased adoption of artificial intelligence technologies;

the continued expansion of e-commerce in a rapidly changing retail landscape, including customers moving away from DSD systems;

the need for further innovation and collaboration as we progress toward our ambitious packaging and other goals;

ongoing macroeconomic and political volatility;

and an increasingly complex regulatory environment.

In response to these challenges, we have continued to adapt and innovate, reinforcing our resilience and continued focus on growth.

We are focused on improving our productivity, optimizing our operations and harnessing our scale and capabilities across our markets, and further elevating the needs, occasions, and channels of consumers in our strategies to lead and shape the future of our categories.

This is underpinned by our pep+ (PepsiCo Positive) transformation, now in its fourth year.

A Strategy for the Future:

pep+ is our strategy to transform our company to create sustainable growth and value – today, tomorrow, and many years into the future.

It is the way we are transforming our supply chain, evolving our portfolio, and making sure we have the right capabilities to support our people and our business throughout the world.

As a food and agricultural leader, we are working to help farmers adapt to climate change through investments in regenerative agriculture, training programs, and innovative technologies.

We are operating net-zero water and energy facilities across many markets, electrifying our transport fleets, and accelerating the use of recycled plastics, so we can try to build a more sustainable business while reducing operational costs.

Our leadership in regenerative agriculture not only supports farmers and the planet, but also strengthens our supply chain, helping us become more resilient while positioning us to deliver long-term value for shareholders.

And thanks to the diversification across our portfolio, our categories, and the geographies in which we operate, we are better equipped to capitalize on opportunities across a wide range of consumer needs.

Our pep+ initiatives and ambitions are geared toward driving growth across every aspect of our operations, so that we can strengthen our business and deliver more value for our stakeholders.

Transforming Our Portfolio:

Our consumer-centric portfolio transformation revolves around three key elements:

our work to evolve our recipes to reduce sodium, saturated fat, and added sugar, while

incorporating more diverse ingredients;

our efforts to find innovative ways to deliver new occasions and engagements for consumers across our existing portfolio;

and the strategic acquisition of brands that help us incorporate new and complementary foods and beverages into our portfolio.

Bringing Our Business Closer to the Consumer:

We are continuously making investments that aim to help us provide consumers with more value, more personalization, and more choices.

We will continue to innovate to create foods, beverages, and experiences that meet consumer needs without compromising the taste or quality they expect.

We are making changes to our organization to help us further increase productivity, sharpen our focus on growth and value, and create opportunities to better harness the expertise and scale of our food and beverage operations across markets.

In the United States, we are reorganizing our U.S.

Foods and Beverages businesses into one unified North America Region to harness scale, unlock synergies, and accelerate growth through category-leading brands and innovative products.

Internationally, we are realigning our international beverages and foods businesses to ensure each category is distinctly managed and has the right resources and capabilities to meet the unique needs of consumers in every market.

North America Business:

As part of the changes to our organizational structure, we’re working to enhance our connection with North American consumers, bringing sales and consumer insights closer together, so we can identify and act efficiently on shifts in demand.

Combining supply chain operations allows us to harness scale, reduce duplication, and create a more cohesive system for managing inventory and logistics, thereby optimizing our go-to-market strategy and helping drive consistent best practices across the business.

At the same time, the company is focused on expanding our better-for-you offerings and product innovations in both foods and drinks to meet evolving consumer preferences.

Through advanced technologies like artificial intelligence, we are optimizing our supply chain, reducing waste, and improving speed to market.

These steps ensure the company operates with more precision while protecting margins in an inflationary environment.

The immediate focus is on meeting consumer needs, operational excellence, competing for market share, and maintaining agility and resilience.

These efforts are foundational to the North America business and driving near-term growth, while setting the stage for long-term success.

Productivity Fuels our Ability to Perform:

In 2024, we delivered record productivity.

Increases in automation in our plants and warehouses have empowered frontline decision-making, improved optimization across our transportation and fleet networks, and allowed greater focus on cost management and waste elimination.

These efforts fuel our ability to reinvest in our brands and capabilities, so that we are well-positioned to support areas in which our business is performing well, while simultaneously allowing us to develop in new ways across our markets and our categories.

Focus on Growth:

We remain focused on delivering growth and fueling innovation by driving positive action for people and the planet.

By improving our productivity and aligning our operations and strategy to meet consumer needs, we aim to be well positioned to navigate the complexities of the global market and deliver sustainable, long-term value to our consumers and stakeholders.

We are focused on improving our productivity, optimizing our operations and harnessing our scale and capabilities across our markets and further elevating the interests, occasions, and channels of consumers in our strategies to lead and shape the future of our categories.

This is underpinned by our pep+ (PepsiCo Positive) transformation, now in its fifth year.

A Bold Ambition:

Against this backdrop, we have a clear set of priorities:

reigniting our North America business by combining operations where it makes the most sense and using the savings to support meaningful investments in our brands;

increasing the size, presence and scale of our International business, with a focus on capturing growth in large and developing markets;

and working to grow our away-from-home business by expanding our availability and extending into new occasions.

Laying the Groundwork:

Since 2018, we have made significant investments in the business to adapt to the changing landscape.

This includes increasing investments to strengthen our brands, from transforming our portfolio through innovation and acquisitions, to foundational investments in technology and artificial intelligence to position ourselves to be fit for the future, building a set of high impact commercial, operational, and digital capabilities;

expanding and updating our manufacturing footprint to enable geographic growth and capture future demand;

right-sizing and modernizing our warehousing and distribution capacity;

and transforming our operating model to become more agile, efficient and responsive to the consumer.

Big Changes to Big Things:

Guided by pep+, we continue to work to reshape our portfolio to fit today’s world.

That includes:

reducing added sugar, sodium and saturated fat in core brands like Lay’s and Gatorade;

advancing efforts to remove artificial colors and flavors in brands like Lay’s, Cheetos, and Doritos;

adding new products with functional benefits, such as Pepsi Prebiotic Cola;

and welcoming popular brands like Siete, Sabra and poppi.

We continued to expand our away-from-home business into new occasions.

The successful Walking Taco platform is thriving in stadiums, arenas, and parks across the United States, while our “Food Deserves Pepsi” campaign and the “Pepsi Zero Sugar Taste Challenge” have driven higher brand awareness and contributed positively to our performance.

We are becoming a more deeply integrated, more productive organization.

This has been one of our biggest priorities over the past year.

Since we shifted our operating model at the start of 2025, we have worked hard to be more agile, simpler and more unified.

From sharing global services, to streamlining processes, to launching our first new corporate brand identity in nearly 25 years, we are making One PepsiCo real.

In North America, we are carefully evaluating an integrated model for our food and beverage supply chains, go-to-market, and commercial capabilities and intend to take a nuanced approach factoring in key components such as return on investment, scale and market share.

Our Global Capability Centers now support multiple functions, enabling us to centralize information, reduce duplicative work, and share best practices across the organization.

We are building smarter systems with technologies like artificial intelligence to better serve our customers and consumers, so we can have the right products, at the right place, at the right price.

Through our collaborations with cutting-edge technology providers, we are using artificial intelligence to reimagine our go-to-market model, enhance customer support, and empower sales teams to focus on strategic growth.

This allows us to unify data, gain real-time inventory visibility, and provide faster, more responsive customer service.

We are becoming more resilient through pep+.

pep+ remains central to our strategy, ensuring that we continue to create value for shareholders, customers and consumers, while doing what is right for communities and the planet.

In 2025, we stepped up our efforts around key pillars like regenerative agriculture and water use efficiency, with the aim to make a positive impact in markets around the world.

Our Operations

Business” for information on our divisions and a description of our distribution network, ingredients and other supplies, brands and intellectual property rights, seasonality, customers, competition, research and development, regulatory matters and human capital.

In addition, see Note 1 to our consolidated financial statements for financial information about our divisions and geographic areas.

Business” for information on our segments and a description of our distribution network, ingredients and other supplies, brands and intellectual property rights, seasonality, customers, competition, research and development, regulatory matters and human capital.

In addition, see Note 1 to our consolidated financial statements for financial information about our segments and geographic areas.

Other Relationships

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Risks Associated with Commodities and Our Supply Chain

During 2024, we continued to experience higher operating costs, including on transportation and labor costs, which may continue in 2025.

Many of the commodities used in the production and transportation of our products are purchased in the open market.

The prices we pay for such items are subject to fluctuation, and we manage this risk through the use of fixed-price contracts and purchase orders, pricing agreements and derivative instruments, including swaps and futures.

A number of external factors, including volatile geopolitical conditions, the inflationary cost environment, adverse weather conditions, supply chain disruptions and labor shortages, have impacted and may continue to impact transportation and labor costs.

The prices we pay for such items are subject to fluctuation, and we manage this risk through

the use of fixed-price contracts and purchase orders, pricing agreements and derivative instruments, including swaps and futures.

A number of external factors, including volatile geopolitical conditions, the inflationary cost environment, import/export restrictions and tariffs, adverse weather conditions and supply chain disruptions, have impacted and may continue to impact commodity, transportation and labor costs.

When prices increase, we may or may not pass on such increases to our customers, which may result in reduced volume, revenue, margins and operating results.

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We are subject to risks in the normal course of business that are inherent to international operations.

During the periods presented in this report, volatile economic, political, social and geopolitical conditions, civil unrest and wars and other military conflicts, acts of terrorism and natural disasters and other catastrophic events in certain markets in which our products are made, manufactured, distributed or sold, including in Argentina, Brazil, China, Mexico, the Middle East, Pakistan, Russia, Turkey and Ukraine, continue to result in challenging operating environments and have resulted in and could continue to result in changes in how we operate in certain of these markets.

Debt and credit issues, currency controls or fluctuations in certain of these international markets (including restrictions on the transfer of funds to and from certain markets), as well as the threat or imposition of new, expanded or retaliatory tariffs (including recent U.S.

tariffs imposed or threatened to be imposed on China, Canada and Mexico and other countries and any retaliatory actions taken by such countries), sanctions or export controls have also continued to impact our operations in certain of these international markets.

We continue to closely monitor the

economic, operating and political environment in the markets in which we operate, including risks of additional impairments or write-offs and currency devaluation, and to identify actions to potentially mitigate any unfavorable impacts on our future results.

Our operations in Russia accounted for 4% of our consolidated net revenue for each of the years ended December 28, 2024 and December 30, 2023.

During the periods presented in this report, volatile economic, political, social and geopolitical conditions, civil unrest and wars and other military conflicts, acts of terrorism and natural disasters and other catastrophic events in certain markets in which our products are made, manufactured, distributed or sold, including in Argentina, Brazil, China, Mexico, the Middle East (including Egypt) , Russia, Turkey and Ukraine, continue to result in challenging operating environments and have resulted in and could continue to result in changes in how we operate in certain of these markets.

Debt and credit issues, currency controls or fluctuations, sanctions and export controls in certain of these international markets (including restrictions on the transfer of funds to and from certain markets) have also continued to impact our operations in certain of these international markets.

We continue to closely monitor the economic, operating and political environment in the markets in which we operate, including risks of additional impairments or write-offs and currency fluctuation, and to identify actions to potentially mitigate any unfavorable impacts on our future results.

Our operations in Russia accounted for 5% and 4% of our consolidated net revenue for the years ended December 27, 2025 and December 28, 2024, respectively.

Russia accounted for 5% and 3% of our consolidated assets, 20% and 10% of our consolidated cash and cash equivalents, and 39% and 41% of our accumulated currency translation adjustment loss as of December 27, 2025 and December 28, 2024 , respectively.

Our operations in Ukraine accounted for less than 1% of our consolidated net revenue for each of the years ended December 28, 2024 and December 30, 2023 and of our consolidated assets as of December 28, 2024 and December 30, 2023.

See Notes 1 and 4 to our consolidated financial statements for a discussion of i mpairment and other charges recognized in the years ended December 27, 2025, December 28, 2024, and December 30, 2023 .

Risks Associated with Tariffs

The imposition of tariffs (including U.S.

tariffs imposed or threatened to be imposed on China, the European Union, Canada and Mexico and other countries and any tariffs imposed by such countries) have impacted and could continue to impact our supply chain resulting in increased input costs, including the

cost of certain raw materials and packaging.

The impact of tariffs will continue to vary, including based on where inputs are sourced from and shipped to.

In addition, any supply chain constraints, inflationary impacts or reduced consumer demand for our products as a result of such tariffs or ongoing macroeconomic uncertainty have impacted and could continue to impact our results.

We will continue to evaluate the nature and extent of the impact of these tariffs on our business and to identify actions to potentially mitigate, where possible, any unfavorable impacts on our future results.

Imposition of Taxes and Regulations on our Products

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We continue to monitor existing and proposed taxes and regulations in the jurisdictions in which our products are made, manufactured, distributed and sold and to consider actions we may take to potentially mitigate the unfavorable impact, if any, of such taxes, regulations or limitations, including advocating alternative measures with respect to the imposition, form and scope of any such taxes, regulations or limitations.

OECD Global Minimum Tax

Numerous countries, including European Union member states, have enacted, or are expected to enact, legislation incorporating the OECD model rules for a global minimum tax rate of 15%.

Widespread implementation is expected by the end of 2025, with certain countries that have not yet enacted potentially applying the legislation as of a retroactive date.

As the legislation becomes effective in countries in which we do business, our taxes could increase and negatively impact our provision for income taxes.

We will continue to monitor pending legislation and implementation by individual countries and evaluate the potential impact on our business in future periods.

OECD Model Global Minimum Tax

Numerous countries, including European Union member states, have enacted or are expected to enact legislation incorporating the OECD model rules for a global minimum tax rate of 15% with widespread implementation expected by the end of 2026.

As the legislation becomes effective in countries in which we do business, our taxes will increase and negatively impact our provision for income taxes.

Retail Landscape

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We continue to monitor changes in the retail landscape and seek to identify actions we may take to build our global e-commerce and digital capabilities, such as expanding our direct-to-consumer business, and distribute our products effectively through all existing and emerging channels of trade and potentially mitigate any unfavorable impacts on our future results.

The retail industry also continues to be impacted by the actions and increasing power of retailers, including as a result consolidation of ownership resulting in large retailers or buying groups with increased purchasing power, particularly in North America, Europe and Latin America.

Changing dynamics at the retail level have also impacted and may continue to impact our ability to grow in certain jurisdictions.

In this changing retail landscape, retailers and buying groups are shifting traditional value propositions, removing our products or otherwise reducing shelf space allocated to our products and focusing on introducing and developing private-label brands.

We have seen and expect to continue to see retailers and buying groups impact our ability to compete in these jurisdictions.

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The Board receives updates through presentations, memos and other written materials, teleconferences and other appropriate means of communication, with numerous opportunities for discussion and feedback, and continuously evaluates its approach in addressing top risks as circumstances evolve.

example, as part of risk updates to the Board and relevant Committees during 2024, the Board or its relevant Committee were provided updates on the impact of disruptive events, including geopolitical events and tensions in certain international markets, such as the Russia-Ukraine conflict.

For example, as part of risk updates to the Board and relevant Committees during 2025, the Board or its relevant Committee were provided updates on the impact of disruptive events, including geopolitical events and tensions in certain international markets.

The Board also receives periodic updates from external experts and advisers on global macroeconomic trends and conditions that may impact the Company’s strategy and financial performance, including geopolitical conflicts, economic instability, labor market trends, changing consumer behavior, retail disruption and digitalization.

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◦ The Nominating and Corporate Governance Committee assists the Board in its oversight of the Company’s governance structure and other corporate governance matters, including succession planning;

◦ The Sustainability, Diversity and Public Policy Committee of the Board assists the Board in its oversight of PepsiCo’s policies, programs and related risks that concern key sustainability (including climate change), diversity, and public policy matters.

◦ The Sustainability and Public Policy Committee of the Board assists the Board in its oversight of PepsiCo’s policies, programs and related risks that concern key sustainability (including climate change), inclusion and public policy matters.

• The PepsiCo Risk Committee (PRC) meets regularly to identify, assess, prioritize and address top strategic, financial, operating, compliance, safety, reputational and other risks.

The PRC is also responsible for reporting progress on our risk mitigation efforts to the Board and designated Committees.

The PRC is comprised of a cross-functional, geographically diverse, senior management group, including PepsiCo’s Chairman of the Board of Directors and Chief Executive Officer, Chief Financial Officer, General Counsel, Sector Chief Executive Officers, and the heads of Enterprise Risk, Corporate Affairs, Human Resources, Research & Development, Information Technology, Sustainability, Strategy, Transformation, International Beverages, Commercial, Global Operations and Marketing;

• Division and key market risk committees, comprised of cross-functional senior management teams, meet regularly to identify, assess, prioritize and address division and country-specific business risks;

• PepsiCo’s Risk Management Office, which manages the overall risk management process, provides ongoing guidance, tools and analytical support to the PRC and the division and key country risk committees, identifies and assesses potential risks and facilitates ongoing communication between the parties, as well as with PepsiCo’s Board, the Audit Committee of the Board and other Committees of the Board;

The PRC is comprised of a cross-functional, geographically diverse, senior management group, including PepsiCo’s Chairman of the Board of Directors and Chief Executive Officer, Chief Financial Officer, General Counsel, Region Chief Executive Officers, and the heads of Enterprise Risk, Corporate Affairs, Human Resources, Research & Development, Information Technology, Sustainability, Strategy, Transformation, International Beverages, Commercial, Global Operations and Marketing;

• Segment and key market risk committees, comprised of cross-functional senior management teams, meet regularly to identify, assess, prioritize and address segment and market-specific business risks;

• PepsiCo’s Risk Management Office, which manages the overall risk management process, provides ongoing guidance, tools and analytical support to the PRC and the segment and key market and function risk committees, identifies and assesses potential risks and facilitates ongoing communication between the parties, as well as with PepsiCo’s Board, the Audit Committee of the Board and other Committees of the Board;

• PepsiCo’s Internal Audit Department evaluates the ongoing effectiveness of our key internal controls through periodic audit and review procedures;

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• PepsiCo’s Disclosure Committee, comprised of the General Counsel, Controller and heads of Internal Audit, Financial Planning & Analysis and Investor Relations, evaluates information from PepsiCo’s integrated risk management framework as part of the Disclosure Committee’s monitoring of the integrity and effectiveness of the Company’s disclosure controls and procedures.

PepsiCo’s risk oversight processes and disclosure controls and procedures are designed to appropriately escalate key risks to the Board as well as to analyze potential risks for disclosure.

PepsiCo’s risk oversight processes and disclosure controls and procedures are

designed to appropriately escalate key risks to the Board as well as to analyze potential risks for disclosure.

We are exposed to market risks arising from adverse changes in:

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Our commodity derivative contracts had a total notional value of $1.5 billion as of December 27, 2025 and $1.4 billion as of December 28, 2024.

At the end of 2024, the potential change in fair value of commodity derivative contracts, assuming a 10% decrease in the underlying commodity price, would have increased our net unrealized losses in 2024 by $140 million, which would generally be offset by a reduction in the cost of the underlying commodity purchases.

At the end of 2025, the potential change in fair value of commodity derivative contracts, assuming a 10% decrease in the underlying commodity price, would have decreased our net unrealized gains in 2025 by $155 million, which would generally be offset by a reduction in the cost of the underlying commodity purchases.

Foreign Exchange

Our operations outside of the United States generated 44% of our consolidated net revenue in 2024, with Mexico, Russia, Canada, China, the United Kingdom, South Africa and Brazil, collectively, comprising approximately 25% of our consolidated net revenue in 2024.

Our operations outside of the United States generated 44% of our consolidated net revenue in 2025, with Mexico, Russia, Canada, China, the United Kingdom, Brazil and South Africa, collectively, comprising 25% of our consolidated net revenue in 2025.

As a result, we are exposed to foreign exchange risks in the international markets in which our products are made, manufactured, distributed or sold.

Additionally, we are exposed to foreign exchange risk from net investments in foreign subsidiaries, foreign currency purchases, foreign currency assets and liabilities created in the normal course of business.

During 2024, unfavorable foreign exchange reduced net revenue performance by 1.5 percentage points,

primarily due to declines in the Egyptian pound, Russian ruble, Mexican peso and Brazilian real.

During 2025, unfavorable foreign exchange had a net nominal impact on net revenue performance primarily due to declines in the Mexican peso and Turkish lira, offset by an appreciation of the Russian ruble.

Currency declines against the U.S.

dollar which are not offset could adversely impact our future financial results.

Our foreign exchange derivative contracts had a total notional value of $3.1 billion as of December 28, 2024 and $3.8 billion as of December 30, 2023.

At the end of 2024, we estimate that an unfavorable 10% change in the underlying exchange rates would have decreased our net unrealized gains in 2024 by $319 million, which would be significantly offset by an inverse change in the fair value of the underlying exposure.

Our foreign exchange derivative contracts had a total notional value of $3.1 billion as of both December 27, 2025 and December 28, 2024.

At the end of 2025, we estimate that an unfavorable 10% change in the underlying exchange rates would have increased our net unrealized losses in 2025 by $308 million, which would be significantly offset by an inverse change in the fair value of the underlying exposure.

Subsequent to December 27, 2025, we executed $1.6 billion of foreign exchange contracts

maturing in February 2026 and designated them as net investment hedges to partially offset the effects of foreign currency on our investments in certain of our foreign subsidiaries.

Our cross-currency swap contracts had a total notional value of $1.7 billion as of December 27, 2025 and $1.2 billion as of December 28, 2024.

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The total notional amount of our debt instruments designated as net investment hedges was $4.4 billion as of December 27, 2025 and $2.9 billion as of December 28, 2024.

Subsequent to December 27, 2025, we designated $4.5 billion of existing euro denominated debt as net investment hedges to partially offset the effects of foreign currency on our investments in certain of our foreign subsidiaries.

Interest Rates

Our interest rate swap contracts had a total notional value of $2.0 billion as of December 28, 2024.

Our interest rate swap contracts had a total notional value of $2.0 billion as of both December 27, 2025 and December 28, 2024.

Assuming year-end 2025 investment levels and variable rate debt, a 1-percentage-point increase in interest rates would have decreased our net interest expense in 2025 by $36 million due to higher cash and cash equivalents and short-term investments levels, as compared with our variable rate debt.

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Unit volume performance adjusts for the impacts of acquisitions and divestitures.

Acquisitions and divestitures, when used in this report, reflect mergers and acquisitions activity, as well as divestitures and other structural changes, including changes in ownership or control in consolidated subsidiaries and nonconsolidated equity investees.

Acquisitions and divestitures, when used in this report, reflect mergers and acquisitions activity, as well as divestitures and other structural changes.

Further, unit volume performance excludes the impact of a 53 rd reporting week, where applicable.

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While our net revenue is not entirely based on BCS volume due to the independent bottlers in our supply chain, we believe that BCS is a better measure of the consumption of our beverage products.

PBNA, LatAm, Europe, AMESA and APAC, either independently or in conjunction with third parties, make, market, distribute and sell ready-to-drink tea products through a joint venture with Unilever (under

the Lipton brand name), and PBNA, either independently or in conjunction with third parties, makes, markets, distributes and sells ready-to-drink coffee products through a joint venture with Starbucks.

PBNA, IB Franchise and EMEA, either independently or in conjunction with third parties, make, market, distribute and sell ready-to-drink tea products through a joint venture with Unilever (under the Lipton brand name), and PBNA, either independently or in conjunction with third parties, makes, markets, distributes and sells ready-to-drink coffee products through a joint venture with Starbucks.

Convenient food volume includes volume sold by us and our noncontrolled affiliates of convenient food products bearing company-owned or licensed trademarks.

Internationally, we measure convenient food product volume in kilograms, while in North America we measure convenient food product volume in pounds.

FLNA makes, markets, distributes and sells Sabra refrigerated dips and spreads through a joint venture with Strauss Group.

In December 2024, we acquired the Strauss Group’s 50% ownership in Sabra and Sabra became a wholly-owned subsidiary.

Internationally, we measure convenient food

product volume in kilograms, while in North America we measure convenient food product volume in pounds.

Consolidated Net Revenue and Operating Profit

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Operating margin 12.2 % 14.0 % (1.8)

See “Results of Operations – Division Review” for a tabular presentation and discussion of key drivers of net revenue.

Operating profit increased 8% and operating margin improved 0.9 percentage points.

Operating profit growth was primarily driven by effective net pricing, productivity savings and an 18-percentage-point impact of prior-year impairment charges related to the SodaStream business.

These impacts were partially offset by certain operating cost increases, a decline in organic volume, an 8-percentage-point impact of higher impairment and other charges associated with our TBG investment and Juice Transaction-related receivables, a 5-percentage-point impact of higher restructuring charges and a 4-percentage-point unfavorable impact of an indirect tax reserve.

Corporate unallocated expenses reflect a 3-percentage-point favorable impact driven primarily by a decrease in corporate expenses and prior-year contributions to The PepsiCo Foundation, Inc.

See “Results of Operations – Segment Review” for a tabular presentation and discussion of key drivers of net revenue.

Operating profit decreased 11%, primarily driven by certain operating cost increases, impairment charges related to the Rockstar brand, a decline in organic volume, a 5-percentage-point impact of higher commodity costs and higher acquisition and divestiture-related charges.

These impacts were partially offset by productivity savings and effective net pricing.

Additionally, a favorable impact of prior-year impairment and other charges associated with our TBG investment and receivables related to the sale of Tropicana, Naked and other select juice brands (Juice Transaction) and lower advertising and marketing expenses contributed to the decline.

Other Consolidated Results

2025 2024 Change

Other pension and retiree medical benefits (expense)/income $ (22) $ 250 $ (272)

Other pension and retiree medical benefits expense $ 133 $ 22 $ 111

Net interest expense and other $ 1,121 $ 919 $ 202

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Net income attributable to PepsiCo per common share – diluted $ 6.00 $ 6.95 (14) %

Other pension and retiree medical benefits expense increased $272 million, primarily reflecting higher settlement charges due to lump sum distributions to retired or terminated employees and the purchase of a group annuity contract whereby a third-party insurance company assumed the obligation to pay and administer future benefit payments for certain retirees.

Net interest expense and other increased $100 million, primar ily due to higher interest rates on debt and higher average debt balances, partially offset by higher average cash balances and higher interest rates on average cash balances.

The reported tax rate decreased 0.4 percentage points, primarily reflecting a reduction in the state tax rate.

Results of Operations — Division Review

Other pension and retiree medical benefits expense increased $111 million, primarily reflecting recognition of fixed income losses on plan assets and the impact of the freeze of benefit accruals to U.S.

salaried participants effective December 31, 2025.

See Note 7 to our consolidated financial statements for further information.

Net interest expense and other increased $202 million, due to higher average debt balances, higher interest rates on average debt balances and lower interest rates on average cash balances, partially offset by higher average cash balances.

The reported tax rate decreased 0.4 percentage points, primarily reflecting the release of federal interest accruals.

Results of Operations — Segment Review

See “Our Business Risks,” “Non-GAAP Measures” and “Items Affecting Comparability” for a discussion of items to consider when evaluating our results and related information regarding measures not in accordance with U.S.

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Organic revenue performance is a non-GAAP financial measure.

For further information on this measure, see “Non-GAAP Measures.”

For a description of and further information regarding this measure, see “Non-GAAP Measures.”

Impact of Impact of

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Effective net pricing

FLNA (1) % — — (0.5) % (2.5) 2

(14) % — — (14) % (14) 0.5

PFNA — % — (2) (2) % (2) 1

PBNA 1.5 % — — 1 % (3.5) 5

LatAm 0.5 % 3 — 4 % (2) 5

Europe 5 % 2 — 7 % 2 6

AMESA 1 % 9 — 10 % 1 9

APAC 1 % 2 — 3 % 4 (1)

IB Franchise 2 % — — 3 % — 2

EMEA 8 % (2.5) — 6 % (3) 9

LatAm Foods — % 5 — 4.5 % — 4

Asia Pacific Foods 2 % 1 (1) 1.5 % 5 (3)

Total 2 % — (1) 2 % (2) 4

(a) Amounts may not sum due to rounding.

(b) Excludes the impact of acquisitions and divestitures.

In certain instances, the impact of organic volume on net revenue performance differs from the unit volume change disclosed in the following divisional discussions due to the impacts of product mix, nonconsolidated joint venture volume, and, for our franchise-owned beverage businesses, temporary timing differences between BCS and CSE.

We report net revenue from our franchise-owned beverage businesses based on CSE.

(b) In certain instances, the impact of organic volume change on net revenue performance differs from the unit volume change disclosed in the following segment discussions due to the impacts of product mix, nonconsolidated joint venture volume, and, for our franchise beverage businesses, temporary timing differences between BCS and CSE.

We report net revenue from our franchise beverage businesses based on CSE.

The volume sold by our nonconsolidated joint ventures has no direct impact on our net revenue.

(c) Net revenue decline was impacted by a previously announced voluntary recall of certain bars and cereals in our QFNA division (Quaker Recall).

Operating Profit, Operating Profit Adjusted for Items Affecting Comparability and Operating Profit Performance Adjusted for Items Affecting Comparability on a Constant Currency Basis

Operating profit adjusted for items affecting comparability and operating profit performance adjusted for items affecting comparability on a constant currency basis are both non-GAAP financial measures.

For further information on these measures, see “Non-GAAP Measures” and “Items Affecting Comparability.”

Operating Profit and Operating Profit Adjusted for Items Affecting Comparability

For a description of and further information regarding these measures, see “Non-GAAP Measures” and “Items Affecting Comparability.”

PFNA PBNA IB Franchise EMEA LatAm Foods Asia Pacific Foods Corporate unallocated expenses Total

Reported, GAAP measure $ 6,173 $ 1,089 $ 1,769 $ 2,106 $ 2,010 $ 369 $ (2,018) $ 11,498

Items Affecting Comparability (a)

Reported, GAAP Measure Mark-to-market net impact Restructuring and impairment charges Acquisition and divestiture-related charges Impairment and other charges Product recall-related impact Indirect tax impact Core,

Non-GAAP Measure

FLNA $ 6,316 $ — $ 150 $ 9 $ — $ — $ — $ 6,475

QFNA 303 — 11 — 9 184 — 507

PBNA 2,302 — 238 8 556 — — 3,104

LatAm 2,245 — 51 — — — 218 2,514

Europe 2,019 — 123 — 145 — — 2,287

AMESA 798 — 14 5 — — — 817

APAC 811 — 10 — 4 — — 825

Corporate unallocated expenses (1,907) (25) 101 — — — — (1,831)

Total $ 12,887 $ (25) $ 698 $ 22 $ 714 $ 184 $ 218 $ 14,698

Mark-to-market net impact — — — — — — (1) (1)

Restructuring and impairment charges 344 281 14 195 52 12 66 964

Acquisition and divestiture-related charges 28 422 — — — 3 — 453

Impairment and other charges — 1,523 73 270 — 80 — 1,946

Indirect tax impact — — — — 82 — — 82

Pension and retiree medical-related impact — (30) — — — — — (30)

Core, non-GAAP measure 6,545 3,285 1,856 2,571 2,144 464 (1,953) 14,912

Impact of foreign exchange translation 7 4 9 (104) 117 3 — 36

Core Constant Currency, non-GAAP measure $ 6,552 $ 3,289 $ 1,865 $ 2,467 $ 2,261 $ 467 $ (1,953) $ 14,948

Reported Operating Profit % Change, GAAP measure (7) % (53) % 21 % 7 % (2) % (2) % 6 % (11) %

Core Operating Profit % Change, non-GAAP measure (6) % 6 % 9 % 15 % 2 % 19 % 7 % 1.5 %

Core Constant Currency Operating Profit % Change, non-GAAP measure (6) % 6 % 9 % 10 % 8 % 20 % 7 % 2 %

PFNA PBNA IB Franchise EMEA LatAm Foods Asia Pacific Foods Corporate unallocated expenses Total

Reported, GAAP measure $ 6,619 $ 2,302 $ 1,462 $ 1,971 $ 2,052 $ 377 $ (1,896) $ 12,887

Items Affecting Comparability (a)

GAAP Measure Mark-to-market net impact Restructuring and impairment charges Acquisition and divestiture-related charges Impairment and other charges/credits Product recall-related impact Core,

Non-GAAP Measure

$ 6,755 $ — $ 42 $ — $ — $ — $ 6,797

492 — — — — 136 628

2,584 — 41 16 321 — 2,962

2,252 — 29 — 2 — 2,283

767 — 223 (2) 855 — 1,843

807 — 15 2 (7) — 817

713 — 8 — 59 — 780

Corporate unallocated expenses (2,384) 36 88 25 — — (2,235)

Total $ 11,986 $ 36 $ 446 $ 41 $ 1,230 $ 136 $ 13,875

(a) See “Items Affecting Comparability.”

Operating Profit Performance and Operating Profit Performance Adjusted for Items Affecting Comparability on a Constant Currency Basis

Impact of Items Affecting Comparability (a)

Reported % Change, GAAP Measure Mark-to-market net impact Restructuring and impairment charges Acquisition and divestiture-related charges Impairment and other charges/credits Product recall-related impact Indirect tax impact Core

% Change, Non-GAAP Measure (b)

Foreign exchange translation Core Constant Currency

% Change, Non-GAAP Measure (b)

FLNA (7) % — 2 — — — — (5) % — (5) %

QFNA (38) % — 3 — 3 14 — (19) % — (19) %

PBNA (11) % — 7 — 9 — — 5 % — 5 %

LatAm — % — 1 — — — 10 10 % 3 13 %

Europe 163 % — (17) — (122) — — 24 % 3 27 %

AMESA (1) % — — 0.5 1 — — — % 8 9 %

APAC 14 % — — — (8) — — 6 % 3 8 %

Corporate unallocated expenses (20) % 2 — 1 — — — (18) % — (18) %

Total 8 % (1) 5 — (10) 1 4 6 % 2 8 %

(a) See “Items Affecting Comparability.”

(b) Amounts may not sum due to rounding.

Net revenue decreased 1%, primarily driven by a decrease in organic volume, partially offset by effective net pricing.

Unit volume declined 2.5%, primarily driven by mid-single-digit declines in trademark Cheetos and trademark Tostitos and low-single-digit declines in trademark Lay’s and variety packs, partially offset by double-digit growth in trademark Chester’s and trademark Miss Vickie’s.

Operating profit decreased 7%, primarily reflecting certain operating cost increases, including strategic initiatives, and the decrease in organic volume.

These impacts were partially offset by productivity savings and the effective net pricing.

Net revenue decreased 14%, primarily driven by a decrease in organic volume, which was negatively impacted by the loss of sales from products included in the Quaker Recall.

Unit volume declined 14%, primarily driven by double-digit declines in bars, oatmeal, pancake syrup and mix and ready-to-eat cereals.

The unit volume decline in bars and ready-to-eat cereals was negatively impacted by the loss of sales from products included in the Quaker Recall.

Operating profit decreased 38%, primarily reflecting the decrease in organic volume, certain operating cost increases and a 14-percentage-point impact of charges associated with the Quaker Recall, partially offset by productivity savings, a 12-percentage-point favorable impact of an insurance recovery related to the Quaker Recall, lower advertising and marketing expenses and effective net pricing.

Mark-to-market net impact — — — — — — (25) (25)

Restructuring and impairment charges 161 238 24 116 49 9 101 698

Acquisition and divestiture-related charges 9 8 — — — 5 — 22

Impairment and other charges 9 556 4 145 — — — 714

Indirect tax impact — — 218 — — — — 218

Product recall-related impact 184 — — — — — — 184

Core, non-GAAP measure $ 6,982 $ 3,104 $ 1,708 $ 2,232 $ 2,101 $ 391 $ (1,820) $ 14,698

(a) See “Items Affecting Comparability” for further information.

Net revenue increased slightly, primarily driven by the favorable impact of acquisitions and effective net pricing, partially offset by a decrease in organic volume.

Unit volume declined 2%, driven by a 3% decrease in savory snacks volume.

Operating profit decreased 7%, primarily reflecting certain operating cost increases, including strategic initiatives, higher restructuring charges and the decrease in organic volume.

These impacts were partially offset by productivity savings and a favorable impact of the prior-year charges associated with a previously announced voluntary recall of certain bars and cereals in our PFNA segment (Quaker Recall).

Net revenue increased 1.5%, primarily driven by effective net pricing, partially offset by an organic volume decline.

Unit volume declined 3%, driven by a 4% decline in non-carbonated beverage (NCB) volume and a 2% decline in CSD volume.

The NCB volume decline primarily reflected a mid-single-digit decline in our overall water portfolio, a low-single-digit decline in Gatorade sports drinks and a high-single-digit decline in our Lipton ready-to-drink tea portfolio.

Operating profit decreased 11%, primarily driven by certain operating cost increases, the decline in organic volume, a 9-percentage-point impact of higher impairment and other charges associated with our TBG investment and Juice Transaction-related receivables, a 7-percentage-point impact of higher restructuring charges and higher advertising and marketing expenses.

These impacts were partially offset by the effective net pricing and productivity savings.

Net revenue increased 0.5%, reflecting effective net pricing, partially offset by a 3-percentage-point impact of unfavorable foreign exchange translation and a net decline in organic volume.

Convenient foods unit volume declined 2%, primarily reflecting double-digit declines in Peru and Argentina, partially offset by low-single-digit growth in Brazil.

Additionally, Mexico experienced a low-single-digit decline.

Beverage unit volume grew slightly, primarily reflecting mid-single-digit growth in Brazil and low-single-digit growth in Mexico, Guatemala and Chile, partially offset by a double-digit decline in Colombia and high-single-digit declines in Argentina and Peru.

Operating profit decreased slightly, primarily reflecting certain operating cost increases, a 10-percentage-point unfavorable impact of an indirect tax reserve, the net organic volume decline, higher advertising and marketing expenses and a 3-percentage-point impact of unfavorable foreign exchange translation, partially offset by the effective net pricing, productivity savings and a 5-percentage-point impact of lower commodity costs.

Net revenue increased 5%, primarily reflecting effective net pricing and organic volume growth, partially offset by a 2-percentage-point impact of unfavorable foreign exchange translation.

Convenient foods unit volume grew 2%, primarily reflecting mid-single-digit growth in Russia and low-single-digit growth in the United Kingdom, partially offset by a high-single-digit decline in France and a mid-single-digit decline in the Netherlands.

Additionally, Turkey experienced low-single-digit growth.

Beverage unit volume grew 2%, primarily reflecting mid-single-digit growth in Russia and low-single-digit growth in Turkey, partially offset by a double-digit decline in France and a slight decline in Germany.

Additionally, the United Kingdom experienced low-single-digit growth.

Operating profit increased 163%, primarily reflecting a 148-percentage-point favorable impact of the prior-year impairment charges related to the SodaStream business, the net revenue growth, productivity savings and a 17-percentage-point favorable impact of lower restructuring charges.

These impacts were partially offset by certain operating cost increases, a 23-percentage-point impact of impairment and other charges associated with our TBG investment and Juice Transaction-related receivables, an 8-percentage-point impact of higher commodity costs and higher advertising and marketing costs.

Net revenue increased 1%, primarily reflecting effective net pricing and organic volume growth, partially offset by a 9-percentage-point impact of unfavorable foreign exchange translation.

Convenient foods unit volume grew 2%, primarily reflecting mid-single-digit growth in South Africa and double-digit growth in India, partially offset by double-digit declines in the Middle East and Pakistan.

Beverage unit volume grew 1%, primarily reflecting double-digit growth in India, partially offset by a low-single-digit decline in the Middle East, a mid-single-digit decline in Pakistan and a high-single-digit decline in Nigeria.

Operating profit decreased 1%, primarily reflecting certain operating cost increases, a 33-percentage-point impact of higher commodity costs, primarily packaging materials, potatoes and other ingredients, largely driven by transaction-related foreign exchange and an 8-percentage-point impact of unfavorable foreign exchange translation.

These impacts were partially offset by the net revenue growth and productivity savings.

Net revenue increased 1%, primarily reflecting organic volume growth, partially offset by a 2-percentage-point impact of unfavorable foreign exchange translation and unfavorable net pricing.

Convenient foods unit volume grew 4%, primarily reflecting double-digit growth in Thailand and mid-single-digit growth in China.

Additionally, Australia experienced mid-single-digit growth.

Beverage unit volume grew 1%, primarily reflecting high-single-digit growth in Vietnam, mid-single-digit growth in Thailand and low-single-digit growth in the Philippines, partially offset by a low-single-digit decline in China.

Operating profit increased 14%, primarily reflecting productivity savings, the organic volume growth, a 9-percentage-point favorable impact of impairment charges related to the Be & Cheery brand in the prior year and a 5-percentage-point impact of lower commodity costs.

These impacts were partially offset by certain operating cost increases and the unfavorable net pricing.

Unit volume declined 3%, driven by a 6% decline in non-carbonated beverage volume and a slight decline in CSD volume.

Operating profit decreased 53%, primarily reflecting impairment charges related to the Rockstar brand.

Operating profit also decreased due to certain operating cost increases, acquisition and divestiture-related charges related to our VNGR Beverage, LLC (poppi) acquisition, the decline in organic volume and a 5-percentage-point impact of higher commodity costs, driven by a 6-percentage-point impact of tariffs.

These impacts were partially offset by a favorable impact of prior-year impairment and other charges associated with our TBG investment and Juice Transaction-related receivables, the effective net pricing, productivity savings, and lower advertising and marketing expenses.

Net revenue increased 2%, primarily reflecting effective net pricing.

Unit volume grew 1.5%, primarily reflecting growth in the Middle East, China and Pakistan.

Operating profit increased 21%, primarily reflecting a favorable impact of a prior-year indirect tax reserve, the net revenue growth and lower advertising and marketing costs, partially offset by an impairment charge related to the Rockstar brand.

Net revenue increased 8%, primarily reflecting effective net pricing and a 2.5-percentage-point impact of favorable foreign exchange translation, partially offset by an organic volume decline.

Convenient food unit volume declined 5%, primarily reflecting a decline in South Africa.

Beverage unit volume grew slightly, primarily reflecting growth in the Middle East, Germany, Poland and Turkey, partially offset by declines in South Africa and Russia.

Operating profit increased 7%, primarily reflecting the effective net pricing, productivity savings, a favorable impact of prior-year impairment and other charges associated with our TBG investment and Juice Transaction-related receivables and a 5-percentage-point impact of favorable foreign exchange translation.

These impacts were partially offset by certain operating cost increases, a 22-percentage-point impact of higher commodity costs, primarily dairy, potatoes and cooking oil, an impairment charge related to the Rockstar brand and higher restructuring charges.

Net revenue decreased slightly, primarily reflecting a 5-percentage-point impact of unfavorable foreign exchange translation, partially offset by effective net pricing.

Unit volume grew 1%, primarily reflecting growth in Brazil, Peru, Colombia and Argentina, partially offset by a decline in Mexico.

Operating profit decreased 2%, primarily reflecting certain operating cost increases, a 6-percentage-point impact each of higher commodity costs and unfavorable foreign exchange translation and an unfavorable impact of an indirect tax audit settlement, partially offset by productivity savings and the effective net pricing.

Asia Pacific Foods

Net revenue increased 2%, primarily reflecting organic volume growth, partially offset by unfavorable net pricing.

Unit volume grew 4%, primarily reflecting growth in India, Thailand and Australia, partially offset by a decline in China.

Operating profit decreased 2%, primarily reflecting certain operating cost increases, an impairment charge related to the Be & Cheery brand and the unfavorable net pricing.

These impacts were partially offset by productivity savings, the organic volume growth, lower advertising and marketing costs and a 5-percentage-point impact of lower commodity costs.

Non-GAAP Measures

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We also believe presenting these measures in this Form 10-K allows investors to view our performance using the same measures that we use in evaluating our financial and business performance and trends.

We consider quantitative and qualitative factors in assessing whether to adjust for the impact of items that may be significant or that could affect an understanding of our ongoing financial and business performance or trends.

performance or trends.

Examples of items for which we may make adjustments include:

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tax benefits related to reorganizations of our operations;

debt redemptions, cash tender or exchange offers;

and remeasurements of net monetary assets.

and debt redemptions, cash tender or exchange offers.

See below and “Items Affecting Comparability” for a description of adjustments to our GAAP financial measures in this Form 10-K.

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The following non-GAAP financial measures contained in this Form 10-K are discussed below:

Cost of sales, gross profit, selling, general and administrative expenses, impairment of intangible assets, other pension and retiree medical benefits expense/income, net interest expense and other, provision for income taxes, net income attributable to noncontrolling interests and net income attributable to PepsiCo, each adjusted for items affecting comparability, operating profit and net income attributable to PepsiCo per common share – diluted, each adjusted for items affecting comparability, and the corresponding constant currency growth rates

These measures exclude the net impact of mark-to-market gains and losses on centrally managed commodity derivatives that do not qualify for hedge accounting, restructuring and impairment charges related to our 2019 Multi-Year Productivity Plan (2019 Productivity Plan), charges associated with our acquisitions and divestitures, impairment and other charges/credits, product recall-related impact, indirect tax expense related to an international audit and the impact of settlement and curtailment gains and losses related to pension and retiree medical plans (see “Items Affecting Comparability” for a detailed description of each of these items).

Organic revenue performance

We define organic revenue performance as a measure that adjusts for the impacts of foreign exchange translation (on a constant currency basis, as defined below), acquisitions and divestitures, and every five or six years, the impact of the 53 rd reporting week.

Beginning in 2025, on a prospective basis, we are also applying the constant currency calculation for our subsidiaries operating in highly inflationary economies.

Adjusting for acquisitions and divestitures reflects mergers and acquisitions activity, as well as divestitures and other structural changes, including changes in ownership or control in consolidated subsidiaries and nonconsolidated equity investees.

We believe organic revenue performance provides useful information in evaluating the results of our business because it adjusts for items that we believe are not indicative of ongoing performance or that we believe impact comparability with the prior year.

See “Net Revenue and Organic Revenue Performance” in “Results of Operations – Segment Review” for further information.

Cost of sales, gross profit, selling, general and administrative expenses, impairment of intangible assets, other pension and retiree medical benefits expense/income, provision for income taxes and net income attributable to PepsiCo, each adjusted for items affecting comparability, operating profit and net income attributable to PepsiCo per common share – diluted, each adjusted for items affecting comparability, and the corresponding constant currency growth rates

These measures exclude the net impact of mark-to-market gains and losses on centrally managed commodity derivatives that do not qualify for hedge accounting, restructuring and impairment charges related to our 2019 Multi-Year Productivity Plan (2019 Productivity Plan), charges associated with our acquisitions and divestitures, impairment and other charges/credits, indirect and income tax impacts, product recall-related impact and the impact of settlement, curtailment and certain other gains and losses related to pension and retiree medical plans (see “Items Affecting Comparability” for a detailed description of each of these items).

We also evaluate performance on operating profit and net income attributable to PepsiCo per common share – diluted, each adjusted for items affecting comparability, on a constant currency basis, which measure our financial results assuming constant foreign currency exchange rates used for translation based on the rates in effect for the comparable prior-year period.

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dollar results by the current-year average foreign exchange rates and then multiply or divide, as appropriate, those amounts by the prior-year average foreign exchange rates.

We believe these measures provide useful information in evaluating the results of our business because they exclude items that we believe are not indicative of our ongoing performance or that we believe impact comparability with the prior year.

Organic revenue performance

We define organic revenue performance as a measure that adjusts for the impacts of foreign exchange translation, acquisitions and divestitures, and every five or six years, the impact of the 53 rd reporting week.

We believe organic revenue performance provides useful information in evaluating the results of our business because it excludes items that we believe are not indicative of ongoing performance or that we believe impact comparability with the prior year.

See “Net Revenue and Organic Revenue Performance” in “Results of Operations – Division Review” for further information.

In addition, beginning in 2025, on a prospective basis, we are also applying the constant currency calculation for our subsidiaries operating in highly inflationary economies.

We believe these measures provide useful information in evaluating the

results of our business because they exclude items that we believe are not indicative of our ongoing performance or that we believe impact comparability with the prior year.

Free cash flow

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Our reported financial results in this Form 10-K are impacted by the following items in each of the following years:

Cost of sales Gross profit Selling, general and administrative expenses Impairment of intangible assets Operating profit Other pension and retiree medical benefits (expense)/income Provision for income taxes (a)

Cost of sales Gross profit Selling, general and administrative expenses Impairment of intangible assets Operating profit Other pension and retiree medical benefits (expense)/income

for income taxes (a)

Net income attributable to PepsiCo

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Impairment and other charges — — (3) (1,943) 1,946 — 455 1,491

Product recall-related impact (176) 176 (8) — 184 3 44 143

Indirect tax impact (218) 218 — — 218 — — 218

Pension and retiree medical-related impact

Indirect and income tax impact (b)

— — (82) — 82 — (29) 111

Pension and retiree medical-related impact — — 30 — (30) 279 53 196

Core, non-GAAP measure $ 42,770 $ 51,155 $ 36,243 $ — $ 14,912 $ 165 $ 2,725 $ 11,176

Cost of sales Gross profit Selling, general and administrative expenses Impairment of intangible assets Operating profit Other pension and retiree medical benefits income Provision for income taxes (a)

Net income attributable to noncontrolling interests Net income attributable to PepsiCo

Net income attributable to PepsiCo

Reported, GAAP measure $ 41,744 $ 50,110 $ 37,190 $ 33 $ 12,887 $ (22) $ 2,320 $ 9,578

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— — (22) — 22 — 4 18

Impairment and other charges/credits 5 (5) (308) (927) 1,230 — 284 — 946

Impairment and other charges — — (695) (19) 714 — 184 530

Indirect and income tax impact (218) 218 — — 218 — — 218

Product recall-related impact (176) 176 (8) — 184 3 44 143

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(a) Provision for income taxes is the expected tax charge/benefit on the underlying item based on the tax laws and income tax rates applicable to the underlying item in its corresponding tax jurisdiction.

(b) Provision for income taxes includes the impact of an income tax audit settlement in our LatAm Foods segment.

2025 2024 Change

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Acquisition and divestiture-related charges

Impairment and other charges/credits 0.38 0.68

Impairment and other charges 1.09 0.38

Indirect and income tax impact 0.08 0.16

Product recall-related impact — 0.10

Indirect tax impact 0.16 —

Pension and retiree medical-related impact

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Growth in core net income attributable to PepsiCo per common share – diluted, on a constant currency basis, non-GAAP measure — %

(a) Does not sum due to rounding.

Mark-to-Market Net Impact

We centrally manage commodity derivatives on behalf of our divisions.

These commodity derivatives include agricultural products, metals, and energy.

We centrally manage commodity derivatives on behalf of our segments.

These commodity derivatives include agricultural products, energy and metals.

Commodity derivatives that do not qualify for hedge accounting treatment are marked to market each period with the resulting gains and losses recorded in corporate unallocated expenses as either cost of sales or selling, general and administrative expenses, depending on the underlying commodity.

These gains and losses are subsequently reflected in division results when the divisions recognize the cost of the underlying commodity in operating profit.

Therefore, the divisions realize the economic effects of the derivative without experiencing any resulting mark-to-market volatility, which remains in corporate unallocated expenses.

These gains and losses are subsequently reflected in segment results when the segments recognize the cost of the underlying commodity in operating profit.

Therefore, the segments realize the economic effects of the derivative without experiencing any resulting mark-to-market volatility, which remains in corporate unallocated expenses.

Restructuring and Impairment Charges

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and simplifies our organization and optimizes our manufacturing and supply chain footprint.

To build on the successful implementation of the 2019 Productivity Plan, in the fourth quarter of 2024, we further expanded and extended the plan through the end of 2030 to take advantage of additional opportunities within the initiatives described above.

As a result, we expect to incur

pre-tax charges of approximately $6.15 billion, including cash expenditures of approximately $5.1 billion, as compared to our previous estimate of pre-tax charges of approximately $3.65 billion, including cash expenditures of approximately $2.9 billion.

To build on the successful implementation of the 2019 Productivity Plan, in 2024, we further expanded and extended the plan through the end of 2030 to take advantage of additional opportunities within the initiatives described above.

As a result, we expect to incur pre-tax charges of approximately $6.15 billion, including cash expenditures of approximately $5.1 billion.

Plan to date through December 27, 2025, we have incurred pre-tax charges of $3.6 billion, including cash expenditures of $2.7 billion.

In our 2025 financial results, we expect to incur pre-tax charges of approximately $900 million, including cash expenditures of approximately $800 million.

In our 2026 financial results, we expect to incur pre-tax charges of approximately $900

million, including cash expenditures of approximately $750 million.

These charges will be funded primarily through cash from operations.

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Acquisition and Divestiture-Related Charges

Acquisition and divestiture-related charges primarily include transaction expenses, such as consulting, advisory and other professional fees, and merger and integration charges.

Merger and integration charges include employee-related costs, contract termination costs, closing costs and other integration costs.

Acquisition and divestiture-related charges include merger and integration charges, transaction expenses, such as consulting, advisory and other professional fees, as well as fair value adjustments to contingent consideration and acquired inventory included in the acquisition-date balance sheets.

Merger and integration charges include distribution agreement termination fees, impairment of certain acquisition-related intangible assets, employee-related costs, closing costs and other integration costs.

See Note 13 to our consolidated financial statements for further information.

Impairment and Other Charges/Credits

We recognized Russia-Ukraine conflict charges, brand portfolio impairment charges and other impairment charges as described below.

Russia-Ukraine Conflict Charges

In connection with the ongoing conflict in Ukraine, we recognized charges related to indefinite-lived intangible assets and property, plant and equipment impairment, allowance for expected credit losses, inventory write-downs and other costs in 2022.

We also recognized adjustments to these charges in 2023.

See Notes 1 and 4 to our consolidated financial statements for further information.

Brand Portfolio Impairment Charges

We recognized intangible asset, investment and property, plant and equipment impairments and other charges as a result of management’s decision to reposition or discontinue the sale/distribution of certain brands and to sell an investment in 2022.

We also recognized adjustments to these charges in 2023.

See Notes 1 and 4 to our consolidated financial statements for further information.

Other Impairment Charges

We recognized impairment charges taken as a result of our quantitative assessments of certain of our indefinite-lived intangible assets and related to our investment in TBG.

We recognized impairment charges taken primarily as a result of our quantitative assessments of certain of our indefinite-lived intangible assets and related to our investment in TBG.

In addition, we recorded allowance for expected credit losses related to outstanding receivables from TBG associated with the Juice Transaction.

See Notes 1, 4 and 9 to our consolidated financial statements for further information.

Indirect and Income Tax Impact

We recognized additional expenses related to an indirect and income tax audit settlement in our LatAm Foods segment and an indirect tax reserve in our IB Franchise segment.

See Note 1 to our consolidated financial statements for further information.

Product Recall-Related Impact

We recognized product returns, inventory write-offs and customer and consumer-related costs in our QFNA division associated with a voluntary recall of certain bars and cereals.

We recognized property, plant and equipment write-offs, employee severance costs and other costs in our PFNA segment associated with a previously announced voluntary recall of certain bars and cereals.

See Note 1 to our consolidated financial statements for further information.

Indirect Tax Impact

We recognized additional expenses related to an indirect tax reserve in our LatAm division.

Pension and Retiree Medical-Related Impact

Pension and retiree medical-related impact includes settlement charges due to lump sum distributions to retired or terminated employees and the purchase of a group annuity contract whereby a third-party insurance company assumed the obligation to pay and administer future benefit payments for certain retirees.

The settlement charge was triggered when the aggregate of the cumulative lump sum distributions and the annuity contract premium exceeded the total annual service and interest costs.

Pension and retiree medical-related impact includes settlement charges due to lump sum distributions to retired or terminated employees and the purchases of group annuity contracts whereby a third-party insurance company assumed the obligation to pay and administer future benefit payments for certain retirees.

The settlement charges were triggered when the aggregate of the cumulative lump sum distributions and the annuity contract premium exceeded the total annual service and interest costs.

Pension and retiree medical-related impact also includes curtailment losses due to restructuring actions as part of our 2019 Productivity Plan.

We also recorded pre-tax income in our PBNA segment associated with pension-related liabilities from previous acquisitions.

See Notes 1 and 7 to our consolidated financial statements for further information.

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Risk Factors,” “Our Business Risks” and Note 8 to our consolidated financial statements for further information.

As of December 28, 2024, cash, cash equivalents and short-term investments in our consolidated subsidiaries subject to currency controls or currency exchange restrictions were not material.

As of December 27, 2025, cash, cash equivalents and short-term investments in our consolidated subsidiaries outside of Russia that are subject to currency controls or currency exchange restrictions were not material.

As of December 27, 2025, Russia accounted for 20% of our consolidated cash and cash equivalents.

Our sources and uses of cash were not materially adversely impacted by the cash and cash equivalents held in Russia and, to date, we have not identified any material impact on our liquidity or capital resources as a result of these amounts.

See “Our Business Risks” for further information on our operations in Russia.

The TCJ Act imposed a one-time mandatory transition tax on undistributed international earnings.

As of December 28, 2024, our mandatory transition tax liability was $1.7 billion, which must be paid through 2026 under the provisions of the TCJ Act;

we currently expect to pay approximately $772 million of this liability in 2025.

Any additional guidance issued by the Internal Revenue Service (IRS) may impact our recorded amounts for this transition tax liability.

As of December 27, 2025, our mandatory transition tax liability was $965 million, which must be paid in 2026 and will represent our final payment under the provisions of the TCJ Act.

See Note 5 to our consolidated financial statements for further discussion of the TCJ Act.

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In 2025, net cash provided by operating activities was $12.1 billion, compared to $12.5 billion in the prior year.

The decrease in operating cash flow primarily reflects unfavorable working capital comparisons.

The decrease in operating cash flow primarily reflects increased cash payments for restructuring charges and cash payments for acquisition and divestiture-related charges.

Investing Activities

In 2024, net cash used for investing activities was $5.5 billion, primarily reflecting net capital spending of $5.0 billion.

In 2025, net cash used for investing activities was $6.9 billion, primarily reflecting net cash paid in connection with our acquisitions of poppi of $1.95 billion and Garza Food Ventures LLC (Siete) of $1.2 billion, as well as net capital spending of $3.9 billion.

In 2024, net cash used for investing activities was $5.5 billion, primarily reflecting net capital spending of $5.0 billion.

See Note 1 to our consolidated financial statements for further discussion of capital spending by division and see Note 13 to our consolidated financial statements for further discussion of our acquisitions.

See Note 1 to our consolidated financial statements for further discussion of capital spending by segment and see Note 13 to our consolidated financial statements for further discussion of our acquisitions.

We regularly review our plans with respect to net capital spending and believe that we have sufficient liquidity to meet our net capital spending needs.

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In 2025, net cash used for financing activities was $5.0 billion, primarily reflecting the return of operating cash flow to our shareholders through dividend payments and share repurchases of $8.6 billion, as well as payments of long-term debt borrowings of $4.1 billion, partially offset by proceeds from the issuances of long-term debt of $8.2 billion.

In 2023, net cash used for financing activities was $3.0 billion, primarily reflecting the return of operating cash flow to our shareholders through dividend payments and share repurchases of $7.7 billion, as well as payments of long-term debt borrowings of $3.0 billion, partially offset by proceeds from issuances of long-term debt of $5.5 billion and net proceeds from short-term borrowings of $2.3 billion.

In 2024, net cash used for financing activities was $7.6 billion, primarily reflecting the return of operating cash flow to our shareholders through dividend payments and share repurchases of $8.2 billion, as well as payments of long-term debt borrowings of $3.9 billion, partially offset by proceeds from the issuances of long-term debt of $4.0 billion.

See Note 8 to our consolidated financial statements for further discussion of debt obligations.

We annually review our capital structure with our Board, including our dividend policy and share repurchase activity.

On February 10, 2022, we announced a share repurchase program providing for the repurchase of up to $10.0 billion of PepsiCo common stock which commenced on February 11, 2022 and will expire on February 28, 2026.

On February 3, 2026, we announced the 2026 Share Repurchase Program.

Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities” for further information.

In addition, on February 3, 2026, we announced a 4% increase in our annualized dividend to $5.92 per share from $5.69 per share, effective with the dividend expected to be paid in June 2026.

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Risk Factors,” “Our Business Risks” and Note 8 to our consolidated financial statements for further information.

Changes in Line Items in Our Consolidated Financial Statements

Changes in line items in the income statement are discussed in “Results of Operations – Consolidated Review,” “Results of Operations – Division Review” and “Items Affecting Comparability.”

Changes in line items in the cash flow statement are discussed in “Our Liquidity and Capital Resources.”

Changes in line items in the balance sheet are discussed below:

As of December 28, 2024, total assets were $99.5 billion, compared to $100.5 billion as of December 30, 2023.

The decrease in total assets is primarily driven by the following line item:

Cash and cash equivalents (b)

(a) In billions.

(b) Refer to the cash flow statement for further information.

Total Liabilities

As of December 28, 2024, total liabilities were $81.3 billion, compared to $81.9 billion as of December 30, 2023.

There were no material line item changes.

See Notes 8 and 13 for further information regarding our liabilities.

See the equity statement and Notes 9 and 11 to our consolidated financial statements.

Return on Invested Capital

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Acquisition and divestiture-related charges (a)

Impairment and other charges/credits (a)

Impairment and other charges (a)

Indirect and income tax impact (a)

Product recall-related impact (a)

Indirect tax impact (a)

Pension and retiree medical-related impact (a)

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The transfer of control of products to our customers is typically based on written sales terms that generally do not allow for a right of return, except in the instance of a product recall or other limited circumstances that may allow for product returns.

Our policy for DSD, including certain chilled products, is to remove and replace damaged and out-of-date products from store shelves to ensure that consumers receive the product quality and freshness they expect.

Our policy for DSD is to remove and replace damaged and out-of-date products from store shelves to ensure that consumers receive the product quality and freshness they expect.

Similarly, our policy for certain warehouse-distributed products is to replace damaged and out-of-date products.

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Sales incentives and discounts are primarily accounted for as a reduction of revenue and include payments to customers for performing activities on our behalf, such as payments for in-store displays, payments to gain distribution of new products, payments for shelf space and discounts to promote lower retail prices.

Sales incentives and discounts also include support provided to our independent bottlers through funding of advertising and other marketing activities.

Sales incentives and discounts also

include support provided to our independent bottlers through funding of advertising and other marketing activities.

A number of our sales incentives, such as bottler funding to independent bottlers and customer volume rebates, are based on annual targets, and accruals are established during the year, as products are delivered, for the expected payout, which may occur after year-end once reconciled and settled.

These accruals are based on contract terms and our historical experience with similar programs and require management judgment with respect to estimating customer and consumer participation and performance levels.

Differences between estimated expense and actual incentive costs are normally insignificant and

are recognized in earnings in the period such differences are determined.

Differences between estimated expense and actual incentive costs are normally insignificant and are recognized in earnings in the period such differences are determined.

In addition, certain advertising and marketing costs are also based on annual targets and recognized during the year as incurred.

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Factors considered include macroeconomic conditions (including those related to volatile geopolitical conditions and a high interest rate and inflationary cost environment), industry and competitive conditions, legal and regulatory environment, historical financial performance and significant changes in the brand or reporting unit.

If the qualitative assessment indicates that it is more likely than not that an impairment exists, then a quantitative assessment is performed.

qualitative assessment indicates that it is more likely than not that an impairment exists, then a quantitative assessment is performed.

In the quantitative assessment for indefinite-lived intangible assets and goodwill, an assessment is performed to determine the fair value of the indefinite-lived intangible asset and the reporting unit, respectively.

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If an evaluation of the undiscounted future cash flows indicates impairment, the asset is written down to its estimated fair value, which is based on its discounted future cash flows.

See Note 2 and Note 4 to our consolidated financial statements for further information.

See Notes 2, 4 and 13 to our consolidated financial statements for further information.

Income Tax Expense and Accruals

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Tax law requires items to be included in our tax returns at different times than the items are reflected in our consolidated financial statements.

As a result, our annual tax rate reflected in our consolidated financial statements is different than that reported in our tax returns (our cash tax rate).

As a result, our annual tax rate reflected in our consolidated

financial statements is different than that reported in our tax returns (our cash tax rate).

Some of these differences are permanent, such as expenses that are not deductible in our tax return, and some differences reverse over time, such as depreciation expense.

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We establish valuation allowances for our deferred tax assets if, based on the available evidence, it is not more likely than not that some portion or all of the deferred tax assets will be realized.

in our tax return but have not yet recognized as expense in our consolidated financial statements.

Deferred tax liabilities generally represent tax expense recognized in our consolidated financial statements for which payment has been deferred, or expense for which we have already taken a deduction in our tax return but have not yet recognized as expense in our consolidated financial statements.

In 2025, our annual tax rate was 19.0% compared to 19.4% in 2024.

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At each measurement date, the discount rates are based on interest rates for high-quality, long-term corporate debt securities with maturities comparable to those of our liabilities.

obligation and pension and retiree medical expense is based on the discount rates determined using the Mercer Above Mean Curve.

obligation and pension and retiree medical expense is based on the discount rates determined using the Mercer Above

This curve includes bonds that closely match the timing and amount of our expected benefit payments and reflects the portfolio of investments we would consider to settle our liabilities.

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defined pension plans.

In addition, we expect the recognition of fixed income losses on plan assets, partially offset by higher discount rates, to increase our pension and retiree medical expense in 2025.

In addition, we expect the impact of the freeze of benefit accruals to U.S.

salaried participants effective December 31, 2025, changes in discount rates and higher expected rate of return on plan assets to decrease our pension and retiree medical expense in 2026.

Sensitivity of Assumptions

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As our retiree medical plans are not subject to regulatory funding requirements, we generally fund these plans on a pay-as-you-go basis, although we periodically review available options to make additional contributions toward these benefits.

We made a discretionary contribution of $250 million to a U.S.

qualified defined benefit plan in January 2025.

We made discretionary contributions of $200 million to a U.S.

qualified defined benefit plan and $52 million to our international pension benefit plans in January 2026.

Our pension and retiree medical plan contributions are subject to change as a result of many factors, such as changes in interest rates, deviations between actual and expected asset returns and changes in tax or other benefit laws.

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Selling, general and administrative expenses 37,368 37,190 36,677

Gain associated with the Juice Transaction (see Note 13) — — ( 3,321 )

Impairment of intangible assets (see Notes 1 and 4) 1,993 33 927

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Net income $ 8,295 $ 9,626 $ 9,155

Other comprehensive loss, net of taxes:

Other comprehensive income/(loss), net of taxes:

Net currency translation adjustment 1,723 ( 1,962 ) ( 307 )

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Net change on available-for-sale debt securities and other 369 ( 234 ) 465

Total other comprehensive loss, net of taxes ( 2,078 ) ( 232 ) ( 408 )

Total other comprehensive income/(loss), net of taxes 2,588 ( 2,078 ) ( 232 )

Comprehensive income 10,883 7,548 8,923

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Depreciation and amortization 3,451 3,160 2,948

Gain associated with the Juice Transaction — — ( 3,321 )

Impairment and other charges 1,946 714 1,230

Indirect tax impact 218 — —

Product recall-related impact — 187 136

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Cash payments for restructuring charges ( 796 ) ( 436 ) ( 434 )

Pension and retiree medical plan expense 414 150 419

Acquisition and divestiture-related charges 453 22 41

Cash payments for acquisition and divestiture-related charges ( 228 ) ( 18 ) ( 41 )

Pension and retiree medical plan expenses 504 414 150

Pension and retiree medical plan contributions ( 472 ) ( 348 ) ( 410 )

Deferred income taxes and other tax charges and credits 71 ( 42 ) ( 271 )

Tax expense related to the TCJ Act — — 86

Tax payments related to the TCJ Act ( 772 ) ( 579 ) ( 309 )

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Acquisitions, net of cash acquired, investments in noncontrolled affiliates and purchases of intangible and other assets ( 3,391 ) ( 256 ) ( 314 )

Proceeds associated with the Juice Transaction — — 3,456

Other divestitures, sales of investments in noncontrolled affiliates and other assets 166 75 49

Divestitures, sales of investments in noncontrolled affiliates and other assets 39 166 75

Short-term investments, by original maturity:

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Payments of long-term debt ( 4,082 ) ( 3,886 ) ( 3,005 )

Debt redemptions — — ( 1,716 )

Short-term borrowings, by original maturity:

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Effect of exchange rate changes on cash and cash equivalents and restricted cash 422 ( 687 ) ( 277 )

Net (Decrease)/Increase in Cash and Cash Equivalents and Restricted Cash ( 1,208 ) 4,661 ( 607 )

Net Increase/(Decrease) in Cash and Cash Equivalents and Restricted Cash 651 ( 1,208 ) 4,661

Cash and Cash Equivalents and Restricted Cash, Beginning of Year 8,553 9,761 5,100

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Balance, beginning of year ( 17,612 ) ( 15,534 ) ( 15,302 )

Other comprehensive loss attributable to PepsiCo ( 2,078 ) ( 232 ) ( 404 )

Other comprehensive income/(loss) attributable to PepsiCo 2,588 ( 2,078 ) ( 232 )

Balance, end of year ( 15,024 ) ( 17,612 ) ( 15,534 )

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Distributions to noncontrolling interests ( 44 ) ( 49 ) ( 68 )

Acquisitions — — 21

Other, net — ( 3 ) ( 3 )

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Notes to the Consolidated Financial Statements

Note 1 — Basis of Presentation and Our Divisions

Note 1 — Basis of Presentation and Our Segments

Basis of Presentation

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Intercompany balances and transactions are eliminated.

As a result of exchange restrictions and other operating restrictions, we do not have control over our Venezuelan subsidiaries.

As a result of exchange restrictions and other operating restrictions, during the periods presented, we did not have control over our Venezuelan subsidiaries.

As such, our Venezuelan subsidiaries are not included within our consolidated financial results for any period presented.

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As future events and their effect cannot be determined with precision, actual results could differ significantly from those estimates.

Our fiscal year ends on the last Saturday of each December, resulting in a 53 rd reporting week every five or six years, including in our 2022 financial results.

Our fiscal year ends on the last Saturday of each December, resulting in a 53 rd reporting week every five or six years.

While our North America financial results are reported on a weekly calendar basis, our international operations are reported on a monthly calendar basis.

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Third Quarter 12 weeks June, July and August

Fourth Quarter 16 weeks (17 weeks for 2022) September, October, November and December

Fourth Quarter 16 weeks September, October, November and December

Unless otherwise noted, tabular dollars are in millions, except per share amounts.

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Certain reclassifications were made to the prior year’s consolidated financial statements to conform to the current year presentation.

Our Divisions

We are organized into seven reportable segments (also referred to as divisions), as follows:

1) Frito-Lay North America (FLNA), which includes our branded convenient food businesses in the United States and Canada;

2) Quaker Foods North America (QFNA), which includes our branded convenient food businesses, such as cereal, rice, pasta and other branded food, 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 and convenient food businesses in Latin America;

5) Europe, which includes all of our beverage and convenient food businesses in Europe;

6) Africa, Middle East and South Asia (AMESA), which includes all of our beverage and convenient food businesses in Africa, the Middle East and South Asia;

7) Asia Pacific, Australia and New Zealand and China region (APAC), which includes all of our beverage and convenient food businesses in Asia Pacific, Australia and New Zealand, and China region.

Changes to Organizational Structure

The division amounts and discussions included in this Form 10-K reflect the reportable segments that existed through the end of 2024.

Effective beginning with our first quarter of 2025, we realigned certain of our reportable segments to be consistent with certain changes to our organizational structure and how the Chief Executive Officer will monitor the performance of these segments.

In North America, the food businesses, FLNA and QFNA, will be reported together as PepsiCo Foods North America.

These changes do not impact our PBNA segment.

Internationally, the foods businesses in LatAm, Europe, AMESA and APAC will be reorganized into three reportable segments:

Latin America Foods, Europe, Middle East and Africa (EMEA), and Other International Foods.

Other International Foods will include the foods businesses in APAC and India, currently part of AMESA.

Our international franchise beverage businesses that were part of our LatAm, Europe, AMESA and APAC segments will be reported as International Beverages Franchise.

The company-owned bottling businesses operating internationally are all located within EMEA and will be reported in the newly created EMEA segment.

Our historical segment reporting will be recast beginning first quarter 2025 to reflect the new organizational structure.

Through our operations, authorized bottlers, contract manufacturers and other third parties, we make, market, distribute and sell a wide variety of beverages and convenient foods, serving customers and consumers in more than 200 countries and territories with our largest operations in the United States, Mexico, Russia, Canada, China, the United Kingdom, South Africa and Brazil.

The accounting policies for the divisions are the same as those described in Note 2, except for the following allocation methodologies:

We are organized into six reportable segments, as follows:

1) PepsiCo Foods North America (PFNA), which includes all of our convenient food businesses in the United States and Canada;

2) PepsiCo Beverages North America (PBNA), which includes all of our beverage businesses in the United States and Canada;

3) International Beverages Franchise (IB Franchise), which includes our international franchise beverage businesses, as well as our SodaStream business;

4) Europe, Middle East and Africa (EMEA), which includes our convenient food businesses and our beverage businesses with company-owned bottlers in Europe, the Middle East and Africa;

5) Latin America Foods (LatAm Foods), which includes all of our convenient food businesses in Latin America;

6) Asia Pacific Foods, which consists of our convenient food businesses in Asia Pacific, including China, Australia and New Zealand, as well as India.

The accounting policies for the segments are the same as those described in Note 2, except for the following allocation methodologies:

• share-based compensation expense;

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Share-Based Compensation Expense

Our divisions are held accountable for share-based compensation expense and, therefore, this expense is allocated to our divisions as an incremental employee compensation cost.

The expense allocated to our divisions excludes any impact of changes in our assumptions during the year which reflect market conditions over which division management has no control.

Our segments are held accountable for share-based compensation expense and, therefore, this expense is allocated to our segments as an incremental employee compensation cost.

The expense allocated to our segments excludes any impact of changes in our assumptions during the year which reflect market conditions over which segment management has no control.

Therefore, any variances between allocated expense and our actual expense are recognized in corporate unallocated expenses.

Pension and Retiree Medical Expense

Pension and retiree medical service costs measured at fixed discount rates are reflected in division results.

The variance between the fixed discount rate used to determine the service cost reflected in division results and the discount rate as disclosed in Note 7 is reflected in corporate unallocated expenses.

We centrally manage commodity derivatives on behalf of our divisions.

These commodity derivatives include agricultural products, metals, and energy.

Pension and retiree medical service costs measured at fixed discount rates are reflected in segment results.

The variance between the fixed discount rate used to determine the service cost reflected in segment results and the discount rate as disclosed in Note 7 is reflected in corporate unallocated expenses.

We centrally manage commodity derivatives on behalf of our segments.

These commodity derivatives include agricultural products, energy and metals.

These gains and losses are subsequently reflected in division results when the divisions recognize the cost of the underlying commodity in operating profit.

Therefore, the divisions realize the economic effects of the derivative without experiencing any resulting mark-to-market volatility, which remains in corporate unallocated expenses.

These gains and losses are subsequently reflected in segment results when the segments recognize the cost of the underlying commodity in operating profit.

Therefore, the segments realize the economic effects of the derivative without experiencing any resulting mark-to-market volatility, which remains in corporate unallocated expenses.

These derivatives hedge underlying commodity price risk and were not entered into for trading or speculative purposes.

Net Revenue, Significant Expenses and Operating Profit/(Loss) by Division

Net Revenue, Significant Expenses and Operating Profit by Segment

Our chief operating decision maker (CODM) is our Chairman and Chief Executive Officer.

Our CODM uses division operating profit/(loss) as the profit measure to evaluate division performance and allocate resources across divisions.

Corporate unallocated expenses, other pension and retiree medical benefits (expense)/income and net interest expense and other are centrally managed costs and are therefore excluded from this profit measure to provide better transparency of our division operating results.

Our CODM uses segment operating profit as the profit measure to evaluate segment performance and allocate resources across segments.

Our CODM considers variances of actual performance to our annual operating plan and periodic forecasts when making decisions.

Significant expenses are expenses which are regularly provided to the CODM and are included in division operating profit/(loss).

Significant expenses are expenses which are regularly provided to the CODM and are included in segment operating profit.

These consist of segment cost of sales, segment selling, general and administrative expenses, and various items affecting comparability.

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Segment selling, general and administrative expenses include the costs to execute sales to customers, distribution costs, including the costs of shipping and handling activities, which include certain merchandising activities, costs related to brand and product marketing to consumers, other ongoing operating costs that are not directly related to manufacturing, distribution, selling, advertising or marketing activities as well as other income or expense items, excluding the impact of items affecting comparability.

Items affecting comparability include restructuring and impairment charges, acquisition and divestiture-related charges, impairment and other charges/credits, product recall-related impact, indirect tax impact and gain associated with the Juice Transaction.

Asset and other balance sheet information for divisions is not provided to the CODM.

Net revenue, significant expenses and operating profit/(loss) of each division are as follows:

FLNA QFNA PBNA LatAm Europe AMESA APAC Total

Items affecting comparability include restructuring and impairment charges, acquisition and divestiture-related charges, impairment and other charges/credits, indirect tax impact, product recall-related impact and pension and retiree medical-related impact.

Asset and other balance sheet information for segments is not provided to the CODM.

Net revenue, significant expenses and operating profit of each segment are as follows:

PFNA PBNA IB Franchise EMEA LatAm Foods Asia Pacific Foods Total

Net revenue $ 27,528 $ 28,197 $ 4,997 $ 18,025 $ 10,549 $ 4,629 $ 93,925

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10,564 12,910 1,529 10,437 4,480 2,850

Segment selling, general and administrative expenses (a)(b)

9,494 710 11,964 4,442 4,368 1,515 1,589

Restructuring and impairment charges (c)

Segment selling, general and administrative expenses (a)

10,419 12,002 1,612 5,017 3,925 1,315

Acquisition and divestiture-related charges (d)

Restructuring and impairment charges (b)

344 281 14 195 52 12

Impairment and other charges (e)

Acquisition and divestiture-related charges (c)

28 422 — — — 3

Product recall-related impact (f)

Impairment and other charges (d)

— 1,523 73 270 — 80

Indirect tax impact (g)

Indirect tax impact (e)

Pension and retiree medical-related impact (f)

— ( 30 ) — — — —

Division operating profit $ 6,316 $ 303 $ 2,302 $ 2,245 $ 2,019 $ 798 $ 811 $ 14,794

Segment operating profit $ 6,173 $ 1,089 $ 1,769 $ 2,106 $ 2,010 $ 369 $ 13,516

Corporate unallocated expenses ( 2,018 )

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Income before income taxes $ 10,244

FLNA QFNA PBNA LatAm Europe AMESA APAC Total

PFNA PBNA IB Franchise EMEA LatAm Foods Asia Pacific Foods Total

Net revenue $ 27,431 $ 27,769 $ 4,879 $ 16,658 $ 10,568 $ 4,549 $ 91,854

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10,245 12,701 1,482 9,639 4,420 2,756

Segment selling, general and administrative expenses (a)

Segment selling, general and administrative expenses (a)(g)

10,204 11,964 1,689 4,787 4,047 1,402

Restructuring and impairment charges (c)

Restructuring and impairment charges (b)

161 238 24 116 49 9

Acquisition and divestiture-related charges (d)

Acquisition and divestiture-related charges (c)

Impairment and other charges (d)

9 556 4 145 — —

Impairment and other charges/credits (e)

Indirect tax impact (e)

— — 218 — — —

Product recall-related impact (f)

Product recall-related impact (h)

184 — — — — —

Division operating profit $ 6,755 $ 492 $ 2,584 $ 2,252 $ 767 $ 807 $ 713 $ 14,370

Segment operating profit $ 6,619 $ 2,302 $ 1,462 $ 1,971 $ 2,052 $ 377 $ 14,783

Corporate unallocated expenses ( 1,896 )

Operating profit 12,887

Other pension and retiree medical benefits income 250

Other pension and retiree medical benefits expense ( 22 )

Net interest expense and other ( 919 )

Income before income taxes $ 11,946

FLNA QFNA PBNA LatAm Europe AMESA APAC Total

PFNA PBNA IB Franchise EMEA LatAm Foods Asia Pacific Foods Total

Net revenue $ 28,015 $ 27,626 $ 4,559 $ 16,210 $ 10,576 $ 4,485 $ 91,471

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10,158 11,808 1,641 4,569 4,056 1,404

Restructuring and impairment charges (c)

Restructuring and impairment charges (b)

42 41 11 227 29 8

Acquisition and divestiture-related charges (d)

Acquisition and divestiture-related charges (c)

— 16 — ( 2 ) — 2

Gain associated with the Juice Transaction (h)

Impairment and other charges/credits (d)

— 321 862 ( 14 ) 2 59

Impairment and other charges (e)

Product recall-related impact (h)

136 — — — — —

Division operating profit/(loss) $ 6,135 $ 604 $ 5,426 $ 1,627 $ ( 1,380 ) $ 666 $ 537 $ 13,615

Segment operating profit $ 7,247 $ 2,584 $ 567 $ 1,764 $ 1,898 $ 301 $ 14,361

Corporate unallocated expenses ( 2,375 )

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Income before income taxes $ 11,417

(a) Does not include items recorded in the cost of sales or selling, general and administrative expenses lines on our income statement that are presented in the restructuring and impairment charges, acquisition and divestiture-related charges, impairment and other charges/credits, product recall-related impact and indirect tax impact lines of these tables.

(b) We recognized a pre-tax gain of $ 122 million ($ 92 million after-tax or $ 0.07 per share) in our FLNA division, recorded in selling, general and administrative expenses, related to the remeasurement of our previously held 50 % equity ownership in Sabra at fair value.

(a) Does not include items recorded in the cost of sales or selling, general and administrative expenses lines on our income statement that are presented in the restructuring and impairment charges, acquisition and divestiture-related charges, impairment and other charges/credits, indirect tax impact, product recall-related impact and pension and retiree medical-related impact lines of these tables.

(b) See Note 3 for further information related to restructuring and impairment charges.

(d) See below and Note 4 for impairment and other charges taken.

In 2023, EMEA included adjustments for changes in estimates of previously recorded amounts.

(e) In 2025, we recorded a pre-tax charge of $ 82 million in selling, general and administrative expenses and income tax expense of $ 29 million in provision for income taxes (collectively, $ 0.08 per share) related to an indirect and income tax audit settlement in our LatAm Foods segment.

In 2024, we recorded a pre-tax charge of $ 218 million ($ 218 million after-tax or $ 0.16 per share) in cost of sales related to an indirect tax reserve in our IB Franchise segment.

(f) We recognized pre-tax income of $ 30 million ($ 22 million after-tax or $ 0.02 per share) in our PBNA segment, recorded in selling, general and administrative expenses, associated with pension-related liabilities from previous acquisitions.

(g) We recognized a pre-tax gain of $ 122 million ($ 92 million after-tax or $ 0.07 per share) in our PFNA segment, recorded in selling, general and administrative expenses, related to the remeasurement of our previously held 50 % equity ownership in Sabra at fair value.

See Note 13 for further information.

(d) See Note 13 for further information related to acquisitions and divestiture-related charges.

(e) See below and Note 4 for impairment and other charges taken related to the Russia-Ukraine conflict, brand portfolio impairment and other impairment.

(f) In 2024, we recorded a pre-tax charge of $ 187 million ($ 143 million after-tax or $ 0.10 per share) associated with the Quaker Recall with $ 176 million recorded in cost of sales related to property, plant and equipment write-offs, employee severance costs and other costs, $ 8 million recorded in selling, general and administrative expenses and $ 3 million recorded in other pension and retiree medical benefits (expense)/income, which is not included in operating profit.

(h) In 2024, we recorded a pre-tax charge of $ 187 million ($ 143 million after-tax or $ 0.10 per share) associated with the Quaker Recall with $ 176 million recorded in cost of sales related to property, plant and equipment write-offs, employee severance costs and other costs,

$ 8 million recorded in selling, general and administrative expenses and $ 3 million recorded in other pension and retiree medical benefits (expense)/income, which is not included in operating profit.

In 2023, we recorded a pre-tax charge of $ 136 million ($ 104 million after-tax or $ 0.07 per share) in cost of sales for product returns, inventory write-offs and customer and consumer-related costs associated with the Quaker Recall.

(g) We recorded a pre-tax charge of $ 218 million ($ 218 million after-tax or $ 0.16 per share) in cost of sales related to an indirect tax reserve in our LatAm division.

(h) We recorded a gain of $ 3,029 million and $ 292 million in our PBNA and Europe divisions, respectively, associated with the Juice Transaction.

The total after-tax amount was $ 2,888 million or $ 2.08 per share.

See Note 13 for further information.

Disaggregation of Net Revenue

Our primary performance obligation is the distribution and sales of beverage and convenient food products to our customers.

The following table reflects the percentage of net revenue generated between our beverage business and our convenient food business for each of our international divisions, as well as our consolidated net revenue:

The following table reflects the percentage of net revenue generated between our beverage business and our convenient food business:

2025 2024 2023

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Convenient Foods

LatAm 10 % 90 % 9 % 91 % 9 % 91 %

Europe 48 % 52 % 48 % 52 % 50 % 50 %

AMESA 30 % 70 % 29 % 71 % 30 % 70 %

APAC 23 % 77 % 23 % 77 % 23 % 77 %

North America 51 % 49 % 50 % 50 % 50 % 50 %

International (b)

31 % 69 % 29 % 71 % 29 % 71 %

PepsiCo 42 % 58 % 42 % 58 % 41 % 59 %

(a) Beverage revenue from company-owned bottlers, which primarily includes our consolidated bottling operations in our PBNA and Europe divisions, is 35 % of our consolidated net revenue in both 2024 and 2023, and 37 % of our consolidated net revenue in 2022.

(a) Beverage revenue from company-owned bottlers, which primarily includes our consolidated bottling operations in our PBNA and EMEA segments, is 36 % of our consolidated net revenue in 2025 and 35 % of our consolidated net revenue in both 2024 and 2023.

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) Beverage and convenient food revenue generated from our EMEA segment is 37 % and 63 % of EMEA net revenue, respectively, in 2025, and 35 % and 65 % of EMEA net revenue, respectively, in both 2024 and 2023.

Impairment and Other Charges

We recognized Russia-Ukraine conflict charges, brand portfolio impairment charges and other impairment charges as described below.

A summary of pre-tax charges taken in 2022 in our Europe division as a result of the Russia-Ukraine conflict is as follows:

Cost of sales Selling, general and administrative expenses Impairment of intangible assets (a)

Impairment charges related to intangible assets $ — $ — $ 1,198 $ 1,198

Impairment charges related to property, plant and equipment 103 22 — 125

Allowance for expected credit losses — 12 — 12

Allowance for inventory write downs 28 1 — 29

Other 9 42 — 51

Total $ 140 $ 77 $ 1,198 $ 1,415

After-tax amount $ 1,124

Impact on net income attributable to PepsiCo per common share $ ( 0.81 )

(a) See Note 4 for further information.

For information on our policies for indefinite-lived intangible assets, see Note 2.

In 2023, a pre-tax credit of $ 7 million ($ 7 million after-tax or $ 0.01 per share) was recorded in our Europe division, primarily in selling, general and administrative expenses, representing adjustments for changes in estimates of previously recorded amounts.

A summary of pre-tax charges taken in 2022 as a result of our decision to reposition or discontinue the sale/distribution of certain brands and to sell an investment is as follows:

Cost of sales Selling, general and administrative expenses Impairment of intangible assets Total

PBNA $ 26 $ 8 $ 126 $ 160 Impairment and other charges associated with distribution rights and inventory due to the termination of Bang energy drinks distribution agreement

LatAm — 35 36 71 Loss on sale and impairment of intangible assets related to the sale of certain non-strategic brands

Europe 1 10 242 253 Primarily impairment of intangible assets related to the discontinuation or repositioning of certain juice and dairy brands in Russia (a)

AMESA 29 121 9 159 Primarily impairment of investment, property, plant and equipment and intangible assets related to the sale or discontinuation of non-strategic investment and brands

APAC 5 — — 5 Impairment of property, plant and equipment related to the discontinuation of a non-strategic brand in China

A summary of impairment and other charges taken, which are primarily as a result of our quantitative assessments, is as follows:

2025 2024 2023 Affected Line Item in the Income Statement

Other $ — $ 9 $ — Impairment of intangible assets

1,539 — — Impairment of intangible assets

( 16 ) 556 321 Selling, general and administrative expenses

73 — — Impairment of intangible assets

SodaStream (a)

— — 862 Impairment of intangible assets

Other — 4 — Selling, general and administrative expenses

251 — — Impairment of intangible assets

19 135 — Selling, general and administrative expenses

— 10 ( 14 ) Impairment of intangible assets, selling, general and administrative expenses and cost of sales

Other — — 2 Selling, general and administrative expenses

Asia Pacific Foods

Be & Cheery 80 — 59 Impairment of intangible assets

Total $ 1,946 $ 714 $ 1,230

After-tax amount $ 522

Impact on net income attributable to PepsiCo per common share $ ( 0.38 )

(a) See Note 4 for further information.

For information on our policies for indefinite-lived intangible assets, see Note 2.

In 2023, a pre-tax credit of $ 13 million ($ 13 million after-tax or $ 0.01 per share) was recorded in our AMESA division, with $ 9 million in selling, general and administrative expenses and $ 4 million in cost of sales.

In addition, a pre-tax charge of $ 2 million ($ 1 million after-tax with a nominal amount per share) was recorded in our LatAm division in selling, general and administrative expenses.

Both of these amounts represent adjustments for changes in estimates of previously recorded amounts.

A summary of pre-tax other impairment charges taken as a result of our quantitative assessments is as follows:

After-tax amount (d)

$ 1,491 $ 584 $ 1,014

FLNA $ — $ — $ 88 Related to a baked fruit convenient food brand (recorded in impairment of intangible assets)

QFNA 9 — — Related to a nutrition bar brand (recorded in impairment of intangible assets)

PBNA 556 321 — 2024 includes other-than-temporary impairment of our remaining investment in TBG and allowance for expected credit losses related to receivables associated with the Juice Transaction (recorded in selling, general and administrative expenses).

2023 includes our proportionate share of TBG’s indefinite-lived intangible assets impairment and other-than-temporary impairment of our investment in TBG (recorded in selling, general and administrative expenses) (a)

Europe 145 862 1,264 2024 primarily includes other-than-temporary impairment of our investment in TBG and allowance for expected credit losses related to certain receivables from TBG (recorded in selling, general and administrative expenses).

2023 and 2022 are related to the SodaStream brand and goodwill (recorded in impairment of intangible assets) (a)(b)

AMESA — 6 31 Related to brands from the Pioneer Food Group Ltd.

acquisition (recorded in impairment of intangible assets)

APAC 4 59 172 Primarily related to the Be & Cheery brand (recorded in impairment of intangible assets)

Total $ 714 $ 1,248 $ 1,555

After-tax amount $ 584 $ 1,033 $ 1,301

Impact on net income attributable to PepsiCo per common share $ ( 0.42 ) $ ( 0.75 ) $ ( 0.94 )

(a) See Note 9 for further information regarding our proportionate share of TBG’s indefinite-lived intangible assets impairment and other-than temporary impairment of our investment in TBG.

In 2024, we recorded an allowance for expected credit losses of $ 193 million, primarily related to outstanding receivables associated with the Juice Transaction.

(b) See Note 4 for further information regarding impairment of intangible assets.

Impact on net income attributable to PepsiCo per common share (d)

$ ( 1.09 ) $ ( 0.42 ) $ ( 0.73 )

(a) See Note 4 for further information regarding impairment of intangible assets.

For information on our policies for indefinite-lived intangible assets, see Note 2.

Other Division Information

Capital spending, amortization of intangible assets, and depreciation and other amortization of each division are as follows:

Capital Spending Amortization of

Intangible Assets Depreciation and

Other Amortization

(b) See Note 9 for further information regarding our proportionate share of TBG’s indefinite-lived intangible assets impairment and other-than-temporary impairment of our investment in TBG.

In 2024, we recorded an allowance for expected credit losses of $ 193 million, primarily related to outstanding receivables associated with the Juice Transaction.

In 2025, we recorded adjustments for changes in estimates of previously recorded amounts.

(d) 2025 includes a tax benefit of $ 39 million ($ 0.03 per share) related to the prior-year impairment of our investment in TBG.

Other Segment Information

Capital spending and depreciation and amortization of each segment are as follows:

Capital Spending Depreciation and Amortization

2025 2024 2023 2025 2024 2023

FLNA $ 1,182 $ 1,341 $ 1,464 $ 10 $ 11 $ 11 $ 806 $ 736 $ 653

QFNA 124 103 93 — — — 46 51 47

PFNA $ 1,051 $ 1,306 $ 1,444 $ 969 $ 862 $ 798

PBNA 1,344 1,541 1,723 1,093 1,069 1,025

LatAm 837 841 581 2 2 3 394 372 306

Europe 568 551 668 29 29 30 377 347 357

AMESA 450 391 307 3 3 4 172 167 179

APAC 294 284 241 8 8 8 116 99 92

Total division 4,996 5,234 5,068 74 75 78 2,958 2,775 2,564

IB Franchise 124 148 110 109 109 99

EMEA 744 880 831 549 477 448

LatAm Foods 672 809 814 417 382 362

Asia Pacific Foods 257 312 312 153 133 118

Total segment 4,192 4,996 5,234 3,290 3,032 2,850

Corporate 223 322 284 161 128 98

Total $ 4,415 $ 5,318 $ 5,518 $ 3,451 $ 3,160 $ 2,948

Net revenue and long-lived assets by country are as follows:

Net Revenue Long-Lived Assets (a)

Net revenue by country is as follows:

2025 2024 2023

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United Kingdom 2,142 2,063 1,946

South Africa 1,859 1,707 1,837 1,302 1,305

Brazil 1,782 1,765 1,779

South Africa 1,767 1,859 1,707

All other countries 17,941 17,023 16,872

Total $ 93,925 $ 91,854 $ 91,471

(a) Long-lived assets represent property, plant and equipment, indefinite-lived intangible assets, amortizable intangible assets, investments in noncontrolled affiliates and other investments included in other assets.

These assets are reported in the country where they are primarily used.

See Notes 2 and 15 for further information on property, plant and equipment.

See Notes 2 and 4 for further information on goodwill and other intangible assets.

See Notes 9 and 15 for further information on other assets.

Property, plant and equipment, net by geography is as follows:

United States $ 16,671 $ 16,550

International (a)

13,234 11,458

Total $ 29,905 $ 28,008

(a) Mexico accounted for 9 % and 8 % of our consolidated property, plant and equipment, net as of December 27, 2025 and December 28, 2024, respectively.

No other individual country exceeded 5 % of our consolidated property, plant and equipment, net.

Corporate Unallocated Expenses

Corporate unallocated expenses include costs of our corporate headquarters, centrally managed initiatives such as commodity derivative gains and losses, foreign exchange transaction gains and losses, our ongoing business transformation initiatives, unallocated research and development costs, unallocated insurance and benefit programs, certain gains and losses on equity investments, as well as certain other items.

Corporate unallocated expenses include costs of our corporate headquarters, centrally managed initiatives such as our ongoing business transformation initiatives, unallocated research and development costs, foreign exchange transaction gains and losses, unallocated insurance and benefit programs, commodity derivative gains and losses, as well as certain other items.

Note 2 — Our Significant Accounting Policies

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Our primary performance obligation (the distribution and sales of beverage and convenient food products) is satisfied upon the shipment or delivery of products to our customers, which is also when control is transferred.

Merchandising activities are performed after a customer obtains control of the product, are accounted for as fulfillment of our performance obligation to ship or deliver product to our customers and are recorded in selling, general and

administrative expenses.

Merchandising activities are immaterial in the context of our contracts.

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Our policy for DSD is to remove and replace damaged and out-of-date products from store shelves to ensure that consumers receive the product quality and freshness they expect.

Similarly, our policy for certain warehouse-distributed products is to replace damaged and out-of-date products.

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Consumer research is excluded from research and development costs and included in other marketing costs.

Research and development costs were $ 813 million, $ 804 million and

$ 771 million in 2024, 2023 and 2022, respectively, and are reported within selling, general and administrative expenses.

Research and development costs were $ 839 million, $ 813 million and $ 804 million in 2025, 2024 and 2023, respectively, and are reported within selling, general and administrative expenses.

Goodwill and Other Intangible Assets

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• Leases – Note 12.

• Acquisitions and Divestitures – Note 13.

• Supply Chain Financing Arrangements – Note 14 .

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Construction in progress is not depreciated until ready for service.

• Translation of Financial Statements of Foreign Subsidiaries – Financial statements of foreign subsidiaries are translated into U.S.

• Translation of Financial Statements of Foreign Subsidiaries – Generally, financial statements of foreign subsidiaries are translated into U.S.

dollars using period-end exchange rates for assets and liabilities and average exchange rates for revenues and expenses.

Adjustments resulting from translating net assets are reported as a separate component of accumulated other comprehensive loss within common shareholders’ equity as currency translation adjustment.

For foreign subsidiaries operating in highly inflationary economies, the reporting currency of the immediate parent becomes the functional currency.

Non-functional currency monetary assets and liabilities are remeasured at period-end exchange rates, with the impact of any changes in exchange rates included in net income.

Non-monetary assets and liabilities are carried forward at historical exchange rates starting from when hyperinflationary accounting is implemented.

Recently Issued Accounting Pronouncements

In November 2023, the Financial Accounting Standards Board (FASB) issued guidance to enhance disclosure of expenses of a public entity’s reportable segments.

The new guidance requires a public entity to disclose on an annual and interim basis:

(1) significant segment expenses that are regularly provided to the CODM and included within each reported measure of segment profit or loss, (2) an amount for other segment items (the difference between segment revenue less the significant expenses disclosed under the significant expense principle and each reported measure of segment profit or loss), including a description of its composition, and (3) information about a reportable segment’s:

(a) profit or loss, and (b) assets, if provided to CODM, and on an annual basis, the title and position of the CODM and an explanation of how the CODM uses the reported measure(s) of segment profit or loss in assessing segment performance and how to allocate resources.

The new guidance also clarifies that if the CODM uses more than one measure of a segment’s profit or loss, one or more of those measures may be reported and requires that a public entity that has a single reportable segment provide all the disclosures required by the amendments in the guidance and all existing segment disclosures.

We adopted the guidance in our 2024 annual reporting, on a retrospective basis.

See Note 1 for further information.

In September 2022, the FASB issued guidance to enhance the transparency of supplier finance programs to allow financial statement users to understand the effect on working capital, liquidity and cash flows.

The new guidance requires disclosure of key terms of the program, including a description of the payment terms, payment timing and assets pledged as security or other forms of guarantees provided to the finance provider or intermediary.

Other requirements include the disclosure of the amount that remains unpaid as of the end of the reporting period, a description of where these obligations are presented in the balance sheet and a rollforward of the obligation during the annual period.

We adopted the guidance in the first quarter of 2023, except for the rollforward, which we adopted in our 2024 annual reporting, on a prospective basis.

In December 2023, the Financial Accounting Standards Board (FASB) issued guidance to enhance transparency of income tax disclosures.

On an annual basis, the new guidance requires a public entity to disclose:

(1) specific categories in the rate reconciliation, (2) additional information for reconciling items that are equal to or greater than 5% of the amount computed by multiplying income (or loss) from continuing operations before income tax expense (or benefit) by the applicable statutory income tax rate, (3) income taxes paid (net of refunds received) disaggregated by federal (national), state, and foreign taxes, with foreign taxes disaggregated by individual jurisdictions in which income taxes paid is equal to or greater than 5% of total income taxes paid, (4) income (or loss) from continuing operations before income tax expense (or benefit) disaggregated between domestic and foreign, and (5) income tax expense (or benefit) from continuing operations disaggregated between federal (national), state and foreign.

We adopted the guidance in our 2025 annual reporting, on a prospective basis.

See Note 5 for further information.

Not Yet Adopted

In September 2025, the FASB issued guidance to improve the accounting for costs related to internal-use software.

The new guidance eliminates project stages and requires capitalizing software costs to begin when (1) management has authorized and committed to funding the software project and (2) it is probable that the project will be completed and the software will be used to perform the function intended.

When evaluating if a project is probable to be completed, significant development uncertainty must be assessed.

Additionally, disclosures for property, plant and equipment will be required for all capitalized software costs.

The guidance is effective in the first quarter of 2028 with early adoption permitted as of the beginning of an annual reporting period.

Upon adoption, the guidance may be applied prospectively, retrospectively or using a modified transition approach.

We are evaluating the impact of this guidance on our consolidated financial statements.

In July 2025, the FASB issued guidance to provide for a practical expedient that an entity may assume that conditions as of the balance sheet date remain unchanged over the remaining life of the asset when estimating expected credit losses for current accounts receivable and current contract assets arising from revenue transactions from contracts with customers.

The guidance is effective in the first quarter of 2026 with early adoption permitted, to be applied on a prospective basis.

We will adopt the guidance when it becomes effective.

The guidance is not expected to have a material impact on our consolidated financial statements.

In November 2024, the FASB issued guidance to improve the disclosure of expenses in commonly presented expense captions.

3 unchanged sentences

Additionally, on an annual and interim basis, a qualitative description is required for amounts remaining in relevant expense captions that are not separately disaggregated quantitatively.

The guidance also requires certain amounts that are

currently required to be disclosed to be included in the same tabular disclosure as these disaggregation requirements.

The guidance also requires certain amounts that are currently required to be disclosed to be included in the same tabular disclosure as these disaggregation requirements.

Furthermore, on an annual and interim basis, a public entity is required to separately disclose selling expenses and annually, disclose a description of the selling expenses.

1 unchanged sentence

We will adopt the guidance when it becomes effective, in our 2027 annual reporting and each quarter thereafter, on a prospective basis.

In December 2023, the FASB issued guidance to enhance transparency of income tax disclosures.

On an annual basis, the new guidance requires a public entity to disclose:

The guidance is effective for fiscal year 2025 annual reporting, with early adoption permitted, to be applied on a prospective basis, with retrospective application permitted.

We will adopt the guidance when it becomes effective, in our 2025 annual reporting, on a prospective basis.

Note 3 — Restructuring and Impairment Charges

3 unchanged sentences

and simplifies our organization and optimizes our manufacturing and supply chain footprint.

As a result, we expect to incur pre-tax charges of approximately $ 6.15 billion, including cash expenditures of approximately $ 5.1 billion, as compared to our previous estimate of pre-tax charges of approximately $ 3.65 billion, including cash expenditures of approximately $ 2.9 billion.

As a result, we expect to incur pre-tax charges of approximately $ 6.15 billion, including cash expenditures of approximately $ 5.1 billion.

These pre-tax charges are expected to consist of approximately 50 % of severance and other employee-related costs, 15 % 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

The total plan pre-tax charges are expected to be incurred by segment approximately as follows:

PFNA PBNA IB Franchise EMEA LatAm Foods Asia Pacific Foods Corporate

Expected pre-tax charges 20 % 25 % 2 % 25 % 10 % 3 % 15 %

10 unchanged sentences

through 12/27/2025

FLNA $ 150 $ 42 $ 46 $ 402

QFNA 11 — 7 30

PFNA $ 344 $ 161 $ 42 $ 776

PBNA 281 238 41 786

LatAm 51 29 32 251

Europe 123 223 109 689

AMESA 14 15 12 111

APAC 10 8 16 95

IB Franchise 14 24 11 65

EMEA 195 116 227 956

LatAm Foods 52 49 29 299

Asia Pacific Foods 12 9 8 99

Corporate 66 101 88 484

15 unchanged sentences

Liability as of December 31, 2022

$ 188 $ — $ 8 $ 196

2023 restructuring charges 243 2 200 445

14 unchanged sentences

$ 308 $ — $ 18 $ 326

(a) Excludes cash expenditures of $ 7 million in 2024 , and $ 1 million each in 2023 and 2022, reported in the cash flow statement in pension and retiree medical plan contributions.

The majority of the restructuring accrual at December 28, 2024 is expected to be paid by the end of 2025.

(a) Excludes cash expenditures of $ 12 million in 2025 , $ 7 million in 2024 and $ 1 million in 2023, reported in the cash flow statement in pension and retiree medical plan contributions.

Substantially all of the restructuring accrual at December 27, 2025 is expected to be paid by the end of 2026.

Other Productivity Initiatives

1 unchanged sentence

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

For information on additional impairment charges, see Notes 1, 4 and 9 for impairment and other charges taken related to the Russia-Ukraine conflict, brand portfolio impairment charges and other impairment charges.

For information on additional impairment charges, see Notes 1, 4 and 9.

Note 4 — Intangible Assets

6 unchanged sentences

$ 835 $ ( 244 ) $ 591 $ 821 $ ( 223 ) $ 598

Customer relationships

Customer relationships (a)

773 ( 347 ) 426 565 ( 279 ) 286

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Amortization expense $ 83 $ 74 $ 75

(a) Increase is primarily related to acquisitions of poppi and Siete.

See Note 13 for further information on acquisitions.

Amortization is recognized on a straight-line basis over an intangible asset’s estimated useful life.

6 unchanged sentences

Indefinite-Lived Intangible Assets

In 2025, business performance in conjunction with lower expectations of future business performance compared to projections, as well as the transaction discussed below, indicated a deterioration of the significant inputs used to determine the fair value of our indefinite-lived intangible assets in certain markets and required us to perform quantitative assessments on certain assets.

The fair value of our indefinite-lived intangible assets was estimated using discounted cash flows under the income approach, which we consider to be a Level 3 (significant unobservable inputs) measurement.

We determined that the carrying value exceeded the fair value, which reflected our most current estimates of future sales and their contributions to operating profit and expected future cash flows (including perpetuity growth assumptions), as well as an increase in the weighted-average cost of capital.

As a result of the quantitative assessments, we recorded pre-tax impairment charges of $ 1.9 billion ($ 1.5 billion after-tax or $ 1.11 per share) in impairment of intangible assets primarily comprised of the Rockstar brand in our PBNA, EMEA, and IB Franchise segments.

On August 28, 2025, we consummated a transaction with Celsius, pursuant to which we acquired convertible preferred shares and transferred cash and certain non-cash assets, primarily the Rockstar brand of $ 0.5 billion in the United States and Canada (Celsius Transaction).

For further information on the convertible preferred shares, see Note 9.

On the same date, we entered into an agreement with Celsius to be the exclusive distributor for the Alani Nu brand in certain channels in the United States and Canada that commenced in the fourth quarter of 2025.

As discussed in Note 2, we perform our annual impairment assessment on indefinite-lived intangible assets during our third quarter.

The annual impairment assessment on indefinite-lived intangible assets performed in the third quarter of 2024, based on best available market information and our internal forecasts and operating plans at the time, did not result in any material impairment charges.

The annual impairment assessment on indefinite-lived intangible assets performed in the third quarter of 2025, based on best available market information and our internal forecasts and operating plans at the time, did not result in any further material impairment charges.

As of December 27, 2025, the estimated fair value of the SodaStream reporting unit narrowly exceeded its carrying value.

1 unchanged sentence

We continue to monitor the performance of the SodaStream reporting unit, as well as all of our indefinite-lived intangible assets.

We did not recognize any impairment charges for goodwill in the year ended December 28, 2024 .

In the fourth quarter of 2023, macroeconomic conditions, including higher interest rates, inflationary costs, and the ongoing conflict in the Middle East, and recent business performance indicated a deterioration of the significant inputs used to determine the fair value of our indefinite-lived intangible assets in various markets, primarily assumptions underlying the weighted-average cost of capital and the impact of economic uncertainty on current and future financial performance, and required us to perform a quantitative assessment on certain assets.

We did not recognize any impairment charges for goodwill in the years ended December 27, 2025 and December 28, 2024.

In 2023, macroeconomic conditions, including higher interest rates, inflationary costs, and the ongoing conflict in the Middle East, and recent business performance indicated a deterioration of the significant inputs used to determine the fair value of our indefinite-lived intangible assets in various markets,

primarily assumptions underlying the weighted-average cost of capital and the impact of economic uncertainty on current and future financial performance, and required us to perform a quantitative assessment on certain assets.

The fair value of our indefinite-lived intangible assets was estimated using discounted cash flows under the income approach, which we consider to be a Level 3 measurement.

We determined that the carrying value exceeded the fair value for certain of our intangible assets, which reflects the increase in the weighted-average cost of capital as well as our most current estimates of future sales and their contributions to operating profit and expected future cash flows (including perpetuity growth assumptions).

As a result of the quantitative assessment, we recorded pre-tax impairment charges of $ 0.6 billion ($ 0.5 billion after-tax or $ 0.35 per share) for brands and $ 0.3 billion ($ 0.3 billion after-tax or $ 0.22 per share) for goodwill, both in impairment of intangible assets, primarily related to the SodaStream brand and reporting unit in our Europe division, in the year ended December 30, 2023.

See Note 1 for further information.

In the first quarter of 2022, we discontinued or repositioned certain juice and dairy brands in Russia in our Europe division.

As a result, we recognized pre-tax impairment charges of $ 241 million ($ 193 million after-tax or $ 0.14 per share) in impairment of intangible assets, primarily related to indefinite-lived intangible assets in the year ended December 31, 2022.

See Note 1 for further information.

In the second quarter of 2022, macroeconomic factors, sanctions and other regulations as a result of the Russia-Ukraine conflict indicated a material deterioration of the significant inputs used to determine the fair value of our indefinite-lived intangible assets in Russia, primarily assumptions underlying the

weighted-average cost of capital.

These factors required us to perform a quantitative assessment, despite the absence of a material adverse impact on these assets’ financial performance (e.g., sales, operating profit, cash flows).

The fair value of our indefinite-lived intangible assets in Russia was estimated using discounted cash flows under the income approach, which we consider to be a Level 3 measurement.

We determined that the carrying value exceeded the fair value, with the decrease in the fair value primarily attributable to a significant increase in the weighted-average cost of capital, which reflected the macroeconomic uncertainty in Russia.

As a result of the quantitative assessment, we recorded pre-tax impairment charges of $ 1.2 billion ($ 958 million after-tax or $ 0.69 per share) in impairment of intangible assets, related to our juice and dairy brands in Russia in our Europe division, in the year ended December 31, 2022.

See Note 1 for further information.

In the fourth quarter of 2022, macroeconomic conditions including a high interest rate and inflationary cost environment, coupled with recent business performance, indicated a deterioration of the significant inputs used to determine the fair value of our indefinite-lived intangible assets in various markets, primarily assumptions underlying the weighted-average cost of capital and the impact of economic uncertainty on current and future financial performance, and required us to perform a quantitative assessment on certain assets.

The fair value of our indefinite-lived intangible assets was estimated using discounted cash flows under the income approach, which we consider to be a Level 3 measurement.

We determined that the carrying value exceeded the fair value, which reflected the increase in the weighted-average cost of capital as well as our most current estimates of future sales and their contributions to operating profit and expected future cash flows (including perpetuity growth assumptions).

As a result of the quantitative assessment, we recognized pre-tax impairment charges of $ 1.6 billion ($ 1.3 billion after-tax or $ 0.94 per share) in impairment of intangible assets, primarily related to the SodaStream brand in our Europe division, in the year ended December 31, 2022.

As a result of the quantitative assessment, we recorded pre-tax impairment charges of $ 0.6 billion ($ 0.5 billion after-tax or $ 0.35 per share) for brands and $ 0.3 billion ($ 0.3 billion after-tax or $ 0.22 per share) for goodwill, both in impairment of intangible assets, primarily related to the SodaStream brand and reporting unit in our IB Franchise segment, in the year ended December 30, 2023.

See Note 1 for further information.

We did not recognize any impairment charges for goodwill in the year ended December 31, 2022.

For further information on our policies for indefinite-lived intangible assets, see Note 2.

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Reacquired franchise rights 7,542 7,437

Acquired franchise rights 1,858 1,891

Acquired franchise rights (a)

Total indefinite-lived intangible assets $ 32,763 $ 31,233

(a) Increase is related to the acquisition of remaining ownership in Sabra.

See Note 13 for further information.

(a) Increase is primarily related to acquired distribution rights for the Alani Nu brand.

(b) Decrease is primarily related to impairments of the Rockstar and Be & Cheery brands as well as the sale of the Rockstar brand in connection with the transaction described above, partially offset by acquisitions of poppi and Siete.

See Note 13 for further information on acquisitions.

The change in the book value of goodwill is as follows:

FLNA QFNA PBNA LatAm Europe (a)

AMESA APAC Total

PFNA PBNA IB Franchise EMEA (a)

LatAm Foods Asia Pacific Foods Total

Balance as of December 30, 2023

$ 642 $ 11,961 $ 1,986 $ 2,382 $ 393 $ 364 $ 17,728

Acquisitions — — 4 — — 34 — 38

Impairment — — — — ( 290 ) — — ( 290 )

Acquisitions (b)

159 — — — — 3 162

Translation and other ( 10 ) ( 36 ) ( 68 ) ( 188 ) ( 39 ) ( 15 ) ( 356 )

6 unchanged sentences

$ 1,422 $ 12,125 $ 1,921 $ 2,688 $ 385 $ 375 $ 18,916

(a) Impairment in 2023 is related to SodaStream.

Translation and other in 2023 primarily reflects the depreciation of the Russian ruble, partially offset by appreciation of the euro and British pound.

Translation and other in 2024 primarily reflects the depreciation of the Russian ruble and euro.

(b) Primarily related to the acquisition of remaining ownership in Sabra.

See Note 13 for further information.

(a) Translation and other in 2024 primarily reflects the depreciation of the Russian ruble and euro.

Translation and other in 2025 primarily reflects appreciation of the Russian ruble, euro and South African rand.

(b) Primarily related to the acquisitions of Sabra in 2024 and Siete in 2025 in our PFNA segment and poppi in our PBNA segment.

See Note 13 for further information on acquisitions.

Note 5 — Income Taxes

17 unchanged sentences

Federal statutory tax rate to our 2025 annual tax rate is as follows:

2024 2023 2022

Amount Tax Rate

Federal statutory tax $ 2,151 21.0 %

State income tax, net of U.S.

Federal tax benefit (a)

Changes in valuation allowances 12 0.1

Foreign tax effects

Statutory income tax rate differential ( 119 ) ( 1.2 )

Tax incentive ( 113 ) ( 1.1 )

Other ( 26 ) ( 0.3 )

Changes in valuation allowances ( 149 ) ( 1.5 )

Statutory income tax rate differential ( 310 ) ( 3.0 )

Other foreign jurisdictions 21 0.2

Effect of cross-border tax laws (b)

Transfer pricing adjustments 128 1.3

Global intangible low-tax income (GILTI) 115 1.1

Other ( 110 ) ( 1.0 )

Tax credits ( 29 ) ( 0.3 )

Changes in unrecognized tax benefits 181 1.8

Nondeductible and nontaxable items, net ( 31 ) ( 0.3 )

Other 147 1.5

Reported tax $ 1,949 19.0 %

(a) State taxes in California, Illinois, New Jersey, Texas, Minnesota, Oregon, Wisconsin, Louisiana, Michigan, and Arizona make up the majority (greater than 50%) of the tax effect in this category.

(b) Includes the impact of any tax credits.

A reconciliation of the U.S.

Federal statutory tax rate to our 2024 and 2023 annual tax rate is as follows:

Federal statutory tax rate 21.0 % 21.0 %

2 unchanged sentences

Lower taxes on foreign results ( 2.5 ) ( 2.5 )

One-time mandatory transition tax - TCJ Act — — 0.8

Juice Transaction — ( 0.1 )

Tax settlements — — ( 3.0 )

Other, net ( 0.4 ) ( 0.4 )

Annual tax rate 19.4 % 19.8 %

A summary of income taxes paid in 2025 is as follows:

Federal $ 1,107

State and Local (a)

Total $ 3,083

(a) No single state or local jurisdiction accounts for more than 5 % of the total income taxes paid.

Tax Cuts and Jobs Act

In 2022, we recorded $ 86 million ($ 0.06 per share) of net tax expense related to the TCJ Act as a result of correlating adjustments related to a partial audit settlement with the IRS for tax years 2014 through 2019 .

As of December 28, 2024, our mandatory transition tax liability was $ 1.7 billion, which must be paid through 2026 under the provisions of the TCJ Act.

We reduced our liability through cash payments and application of tax overpayments by $ 579 million in 2024 , and $ 309 million in each of 2023 and 2022.

We currently expect to pay approximately $ 772 million of this liability in 2025.

The TCJ Act also created a requirement that certain income earned by foreign subsidiaries, known as global intangible low-tax income (GILTI), must be included in the gross income of their U.S.

As of December 27, 2025, our mandatory transition tax liability was $ 965 million, which must be paid in 2026 and will represent our final payment under the provisions of the TCJ Act.

We reduced our liability through cash payments by $ 772 million in 2025 , $ 579 million in 2024 and $ 309 million in 2023.

The TCJ Act also created a requirement that certain income earned by foreign subsidiaries, known as GILTI, must be included in the gross income of their U.S.

The FASB allows an accounting policy election of either recognizing deferred taxes for temporary differences expected to reverse as GILTI in future years or recognizing such taxes as a current-period expense when incurred.

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Other Tax Matters

On October 29, 2021, we filed a formal written protest of a final assessment from the IRS audit for the tax years 2014 through 2016 and requested an appeals conference.

In 2022, we came to an agreement with the IRS to settle one of the issues assessed in the 2014 through 2016 tax audit.

The agreement covers tax years 2014 through 2019.

As a result, we reduced our reserves for uncertain tax positions, including any correlating adjustments impacting the mandatory transition tax liability under the TCJ Act, resulting in a net non-cash tax benefit of $ 233 million ($ 0.17 per share) in 2022.

Tax years 2014 through 2019 remain under audit for other issues.

On July 4, 2025, the One Big Beautiful Bill (OBBB) Act, which includes a broad range of tax reform provisions, was signed into law in the United States.

The OBBB Act did not have a material impact on our annual effective tax rate in 2025 and we do not expect it to have a material impact in 2026.

Numerous countries, including European Union member states, have enacted or are expected to enact legislation incorporating the OECD model rules for a global minimum tax rate of 15 % with widespread implementation expected by the end of 2026.

Legislation enacted as of December 27, 2025 did not have a material impact on our financial statements for 2025.

As the legislation becomes effective in countries in which we do business, our taxes will increase and negatively impact our provision for income taxes.

In 2024 and 2023, tax benefits of $ 54 million ($ 0.04 per share) and $ 68 million ($ 0.05 per share), respectively, were recorded related to the impairment of certain consolidated investments.

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Deferred tax liabilities

Debt guarantee of wholly-owned subsidiary $ 578 $ 578

Property, plant and equipment $ 2,047 $ 1,868

Right-of-use assets 819 772

Debt guarantee of wholly-owned subsidiary 578 578

Recapture of net operating losses 488 488

Pension liabilities 238 112

Right-of-use assets 772 660

Investment in TBG — 93

Other 486 301

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Intangible assets other than nondeductible goodwill 1,996 1,599

Lease liabilities 819 773

Share-based compensation 141 148

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Deductible state tax and interest benefits 181 202

Lease liabilities 773 660

Capitalized research and development 134 256

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(Benefit)/provision ( 284 ) ( 198 ) 1,419

Other (deductions)/additions ( 95 ) 46 ( 107 )

Other additions/(deductions) 219 ( 95 ) 46

Balance, end of year $ 6,120 $ 6,185 $ 6,478

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2014-2024 2014-2020

United Kingdom

2021-2023 None

Canada (Domestic)

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We accrue interest related to reserves for income taxes in our provision for income taxes and any associated penalties are recorded in selling, general and administrative expenses.

The gross amount of interest accrued, reported in other liabilities, was $ 469 million as of December 28, 2024, of which $ 103 million of tax expense was recognized in 2024.

The gross amount of interest accrued, reported in other liabilities, was $ 450 million as of December 27, 2025, of which $ 2 million of tax benefit was recognized in 2025, reflecting the release of federal interest accruals.

The gross amount of interest accrued, reported in other liabilities, was $ 469 million as of December 28, 2024, of which $ 103 million of tax expense was recognized in 2024.

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These operating losses and income tax credits will expire as follows:

$ 0.4 billion in 2025, $ 29.1

billion between 2026 and 2041 and $ 4.5 billion may be carried forward indefinitely.

$ 0.8 billion in 2026, $ 29.9 billion between 2027 and 2044 and $ 4.8 billion may be carried forward indefinitely.

We establish valuation allowances for our deferred tax assets if, based on the available evidence, it is not more likely than not that some portion or all of the deferred tax assets will be realized.

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Our share-based compensation program is designed to attract and retain employees while also aligning employees’ interests with the interests of our shareholders.

PepsiCo has granted stock options, RSUs, PSUs and long-term cash awards to employees under the shareholder-approved PepsiCo, Inc.

PepsiCo has granted stock options, RSUs,

PSUs and long-term cash awards to employees under the shareholder-approved PepsiCo, Inc.

Long-Term Incentive Plan (LTIP).

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Share-based compensation expense - liability awards 13 7 19

Acquisition and divestiture-related charges — — 3

Restructuring charges ( 8 ) ( 5 ) ( 1 )

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The fair value of share-based award grants is amortized to expense over the vesting period, primarily three years .

Awards to employees eligible for retirement prior to the award becoming fully vested are amortized to expense over the period through the date that the employee first becomes eligible to retire and is no

longer required to provide service to earn the award.

In addition, we use historical data to estimate forfeiture rates and record share-based compensation expense only for those awards that are expected to vest.

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Outstanding at December 28, 2024

11,055 $ 143.88

Granted 1,804 $ 150.28

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Outstanding at December 27, 2025

11,321 $ 146.60 6.0 $ 100,992

Exercisable at December 27, 2025

6,279 $ 134.10 4.2 $ 98,385

Expected to vest as of December 27, 2025

4,793 $ 162.45 8.2 $ 2,468

(a) In thousands.

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PSUs are awards pursuant to which a number of shares are delivered to the holder upon vesting at the end of the service period based on PepsiCo’s performance against specified financial performance metrics.

The number of shares may be increased to the maximum or reduced to the minimum threshold based on the results of these performance metrics in accordance with

the terms established at the time of the award.

The number of shares may be increased to the maximum or reduced to the minimum threshold based on the results of these performance metrics in accordance with the terms established at the time of the award.

During the vesting period, RSUs and PSUs accrue dividend equivalents that pay out in cash (without interest) if and when the applicable RSU or PSU vests and becomes payable.

The fair value of RSUs and PSUs are measured at the market price of the Company’s stock on the date of grant.

The fair value of RSUs and PSUs is measured at the market price of the Company’s stock on the date of grant.

A summary of our RSU and PSU activity for the year ended December 27, 2025 is as follows:

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Outstanding at December 28, 2024

5,366 $ 166.09

Granted 2,199 $ 153.22

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Note 7 — Pension, Retiree Medical and Savings Plans

In 2024, we recognized a pre-tax settlement charge of $ 213 million ($ 165 million after-tax or $ 0.12 per share) in a U.S.

qualified defined benefit pension plan due to lump sum distributions to retired or terminated employees and the purchase of a group annuity contract whereby a third-party insurance company assumed the obligation to pay and administer future benefit payments for certain retirees.

The settlement charge was triggered when the aggregate of the cumulative lump sum distributions and the annuity contract premium exceeded the total annual service and interest cost.

Effective December 31, 2022, we merged two U.S.

qualified defined benefit pension plans, PepsiCo Employees Retirement Plan I (Plan I), mostly inactive participants, and PepsiCo Employees Retirement Plan A, mostly active participants, with Plan I remaining.

The accrued benefits offered to the plans’ participants were unchanged.

The merger was made to provide additional flexibility in evaluating opportunities to reduce risk and volatility.

Actuarial gains and losses of the merged plan will be amortized over the average remaining life expectancy of participants.

There was no material impact to pre-tax pension benefits expense from this merger.

In 2022, we transferred pension and retiree medical obligations of $ 145 million and related assets to TBG in connection with the Juice Transaction.

See Note 13 for further information.

In 2020, we adopted an amendment to the U.S.

qualified defined benefit plans to freeze benefit accruals for salaried participants, effective December 31, 2025.

In 2025 and 2024, we recognized pre-tax settlement charges of $ 237 million ($ 183 million after-tax or $ 0.13 per share) and $ 213 million ($ 165 million after-tax or $ 0.12 per share), respectively, in a U.S.

qualified defined benefit pension plan due to lump sum distributions to retired or terminated employees and the purchases of group annuity contracts whereby a third-party insurance company assumed the obligation to pay and administer future benefit payments for certain retirees.

The settlement charges were triggered when the aggregate of the cumulative lump sum distributions and the annuity contract premiums exceeded the total annual service and interest cost.

As of December 31, 2025, benefit accruals for salaried participants in the U.S.

qualified defined benefit plans were frozen.

Gains and losses resulting from actual experience differing from our assumptions, including the difference between the actual and expected return on plan assets, as well as changes in our assumptions, are determined at each measurement date.

These differences are recognized as a component of net gain or loss in accumulated other comprehensive loss within common shareholders’ equity.

If this net accumulated gain or loss exceeds 10 % of the greater of the market-related value of plan assets or plan obligations, a portion of the net gain or loss is included in other pension and retiree medical benefits (expense)/income for the following year based upon the average remaining service life for participants in PepsiCo Employees Retirement Hourly Plan (Plan H) (approximately 11 years) and retiree medical (approximately 11 years), and the remaining life expectancy for participants in Plan I (approximately 26 years).

The cost or benefit of plan changes that increase or decrease benefits for prior employee service (prior service cost/(credit)) is included in other pension and retiree medical benefits (expense)/income on a straight-line basis over the average remaining service life for participants in Plan H, and the remaining life expectancy for participants in Plan I, except that prior service cost/(credit) for salaried participants subject to the benefit accruals freeze effective December 31, 2025 is amortized on a straight-line basis over the period up to the effective date of the freeze.

If this net accumulated gain or loss exceeds 10 % of the greater of the market-related value of plan assets or plan obligations, a portion of the net gain or loss is included in other pension and retiree medical benefits (expense)/income for the following year based upon the average remaining service life for participants in PepsiCo Employees Retirement Hourly Plan (Plan H) (approximately 10 years) and retiree medical (approximately 12 years), and the remaining life expectancy for participants in PepsiCo Employees Retirement Plan I (Plan I) (approximately 26 years).

The cost or benefit of plan changes that increase or decrease benefits for prior employee service (prior service cost/(credit)) is included in other pension and retiree medical benefits (expense)/income on a straight-line basis over the average remaining service life for participants in Plan H, and the remaining life expectancy for participants in Plan I, except that prior service cost/(credit) for salaried participants subject to the benefit accruals freeze effective December 31, 2025 was amortized on a straight-line basis over the period up to the effective date of the freeze.

Selected financial information for our pension and retiree medical plans is as follows:

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Participant contributions — — 2 2 — —

Experience (gain)/loss ( 563 ) 603 ( 55 ) 194 ( 44 ) ( 22 )

Experience loss/(gain) 247 ( 563 ) ( 74 ) ( 55 ) 18 ( 44 )

Benefit payments ( 640 ) ( 617 ) ( 112 ) ( 108 ) ( 74 ) ( 78 )

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Changes recognized in net loss/(gain) included in other comprehensive loss

Net loss/(gain) arising in current year $ 320 $ 333 $ 8 $ 119 $ ( 36 ) $ ( 30 )

Net (gain)/loss arising in current year $ ( 252 ) $ 320 $ ( 21 ) $ 8 $ 14 $ ( 36 )

Amortization and settlement recognition ( 331 ) ( 298 ) ( 59 ) ( 43 ) 25 25

Foreign currency translation (gain)/loss — — ( 39 ) 40 1 —

Foreign currency translation loss/(gain) — — 59 ( 39 ) ( 1 ) 1

Total $ ( 583 ) $ 22 $ ( 21 ) $ ( 74 ) $ 38 $ ( 10 )

Accumulated benefit obligation at end of year $ 11,093 $ 11,069 $ 2,740 $ 2,638

The net loss arising in the current year is primarily attributable to lower actual asset return as compared to expected return on plan assets and actual experience differing from demographic assumptions, partially offset by experience gain primarily due to higher discount rates.

The net gain arising in the current year is primarily attributable to higher actual asset return as compared to expected return on plan assets, partially offset by losses due to changes in discount rates and demographic experience.

The amount we report in operating profit as pension and retiree medical cost is service cost, which is the value of benefits earned by employees for working during the year.

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Expected return on plan assets ( 805 ) ( 871 ) ( 851 ) ( 202 ) ( 205 ) ( 192 ) ( 11 ) ( 13 ) ( 13 )

Amortization of prior service credits ( 24 ) ( 26 ) ( 28 ) ( 2 ) ( 1 ) ( 1 ) ( 5 ) ( 6 ) ( 8 )

Amortization of prior service costs/(credits) 3 ( 24 ) ( 26 ) ( 1 ) ( 2 ) ( 1 ) ( 5 ) ( 5 ) ( 6 )

Amortization of net losses/(gains) 84 77 70 27 21 13 ( 25 ) ( 25 ) ( 27 )

Settlement/curtailment losses/(gains) (a)

Net settlement/curtailment losses (a)

247 254 4 32 22 10 — — —

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Total $ 448 $ 399 $ 116 $ 55 $ 26 $ 14 $ 20 $ 21 $ 19

(a) In 2024, U.S.

includes a settlement charge of $ 213 million ($ 165 million after-tax or $ 0.12 per share) related to the aggregate of lump sum distributions and the purchase of a group annuity contract exceeding the total of annual service and interest cost.

In 2022, U.S.

includes a settlement charge of $ 318 million ($ 246 million after-tax or $ 0.18 per share) related to lump sum distributions exceeding the total of annual service and interest cost.

(a) In 2025 and 2024, U.S.

includes settlement charges of $ 237 million ($ 183 million after-tax or $ 0.13 per share) and $ 213 million ($ 165 million after-tax or $ 0.12 per share), respectively, related to the aggregate of lump sum distributions and the purchases of group annuity contracts exceeding the total of annual service and interest cost.

The following table provides the weighted-average assumptions used to determine net periodic benefit cost and projected benefit obligation for our pension and retiree medical plans:

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Net Periodic Benefit Cost

Service cost discount rate (a)

5.1 % 5.4 % 3.1 % 6.9 % 7.0 % 4.2 % 5.1 % 5.4 % 2.8 %

Interest cost discount rate (a)

5.1 % 5.4 % 3.1 % 5.0 % 5.4 % 2.3 % 5.0 % 5.3 % 2.1 %

Expected return on plan assets (a)

7.4 % 7.4 % 6.7 % 5.8 % 5.7 % 5.3 % 7.1 % 7.1 % 5.7 %

Service cost discount rate 5.8 % 5.1 % 5.4 % 7.8 % 6.9 % 7.0 % 5.6 % 5.1 % 5.4 %

Interest cost discount rate 5.4 % 5.1 % 5.4 % 5.3 % 5.0 % 5.4 % 5.2 % 5.0 % 5.3 %

Expected return on plan assets 7.5 % 7.4 % 7.4 % 5.8 % 5.8 % 5.7 % 7.1 % 7.1 % 7.1 %

Rate of salary increases 3.9 % 3.9 % 3.2 % 4.0 % 4.3 % 4.2 %

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Rate of salary increases 3.1 % 3.9 % 3.9 % 4.5 % 4.0 % 4.3 %

(a) 2022 U.S.

rates reflect remeasurement of a U.S.

qualified defined benefit pension plan in the second quarter of 2022.

The following table provides selected information about plans with accumulated benefit obligation and total projected benefit obligation in excess of plan assets:

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qualified defined benefit plans.

We made a discretionary contribution of $ 250 million to a U.S.

qualified defined benefit plan in January 2025.

We made discretionary contributions of $ 200 million to a U.S.

qualified defined benefit plan and $ 52 million to our international pension benefit plans in January 2026.

In addition, in 2026, we expect to make non-discretionary contributions of approximately $ 80 million to our U.S.

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This has the effect of reducing year-to-year volatility.

Plan assets measured at fair value as of year-end 2024 and 2023 are categorized consistently by Level 1 (quoted prices in active markets for identical assets), Level 2 (significant other observable inputs) and Level 3 (significant unobservable inputs) in both years and are as follows:

Plan assets measured at fair value as of year-end 2025 and 2024 are categorized consistently by Level 1 (quoted prices in active markets for identical assets), Level 2 (significant other observable inputs) and Level 3 in both years and are as follows:

Fair Value Hierarchy Level 2025 2024

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plan assets 10,619 10,569

Real estate and other commingled funds measured at net asset value (h)

Investments measured at net asset value (h)

Securities lending payables, net of dividends and interest receivable (g)

( 332 ) ( 358 )

plan assets $ 11,104 $ 10,772

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Sub-total international plan assets 3,513 3,287

Real estate commingled funds measured at net asset value (h)

Investments measured at net asset value (h)

Dividends and interest receivable 17 31

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retirees and their beneficiaries.

(b) Includes securities loaned to borrowers under the securities lending program with fair value of $ 630 million in 2024.

(b) Includes securities loaned to borrowers under the securities lending program with fair value of $ 649 million and $ 630 million in 2025 and 2024, respectively.

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The common and preferred stock investments are based on quoted prices in active markets.

The commingled funds are based on the published price of the fund and include one large-cap fund that represents 12 % and 13 % of total U.S.

plan assets for 2024 and 2023, respectively.

The commingled funds are based on the published price of the fund and include one large-cap fund that represents 12 % of total U.S.

plan assets for both 2025 and 2024.

(d) These investments are based on quoted bid prices for comparable securities in the marketplace and broker/dealer quotes in active markets.

Corporate bonds of U.S.-based companies represent 31 % of total U.S.

Corporate bonds of U.S.-based companies represents 31 % of total U.S.

plan assets for both 2025 and 2024.

(e) Based on the fair value of the contracts as determined by the insurance companies using inputs that are not observable.

The changes in Level 3 amounts were not significant in the years ended December 28, 2024 and December 30, 2023.

During 2025, our international plans liquidated Level 3 investments, resulting in no Level 3 assets as of year-end.

The changes in U.S.

Level 3 amounts were not significant in the years ended December 27, 2025 and December 28, 2024.

(f) Includes Level 1 assets of $ 446 million and $ 456 million, and Level 2 assets of $ 254 million and $ 276 million for 2025 and 2024, respectively.

(g) Includes $ 447 million of cash collateral under the securities lending program offset by corresponding securities lending payable of the same amount.

(g) Includes $ 430 million and $ 447 million of cash collateral for 2025 and 2024, respectively, under the securities lending program offset by corresponding securities lending payable of the same amount.

The net impact on the fair value of U.S.

plan assets is zero .

(h) Includes investments in limited partnerships and private credit funds.

(h) Includes investments in private credit funds, limited partnerships and mortgage funds.

These funds are based on the net asset value of the investments owned by these funds as determined by independent third parties using inputs that are not observable.

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Retiree Medical Cost Trend Rates

The assumed health care cost trend rates for both 2025 and 2024 are as follows:

The assumed health care cost trend rates are as follows:

Average increase assumed 8 % 5 %

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Commercial paper ( 3.8 % and 4.5 %)

Other borrowings ( 8.6 % and 7.8 %)

Other borrowings 190 260

$ 6,861 $ 7,082

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25,956 20,928

Other, due 2024-2033 ( 5.7 % and 3.6 %)

Other, due 2025-2042 42 39

46,351 41,228

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Interest Rate Maturity Date Principal Amount (a)

Floating rate February 2027 $ 300 (b)

4.650 % February 2027 $ 550 (b)

4.550 % February 2029 $ 450 (b)

4.700 % February 2034 $ 450 (b)

4.400 % February 2027 $ 500

4.450 % February 2028 $ 750

4.600 % February 2030 $ 1,000

5.000 % February 2035 $ 1,250

4.100 % January 2029 $ 750

4.300 % July 2030 $ 650

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5.000 % July 2035 $ 1,250

3.450 % July 2037 € 500 (b)

4.050 % July 2055 € 500 (b)

(a) Excludes debt issuance costs, discounts and premiums.

(b) Issued through our wholly-owned consolidated finance subsidiary, PepsiCo Singapore Financing I Pte.

Ltd., which has no assets, operations, revenues or cash flows other than those related to the issuance, administration and repayment of the notes and any other notes that may be issued in the future.

The notes are fully and unconditionally guaranteed by PepsiCo, Inc.

on a senior unsecured basis and may be assumed at any time by PepsiCo, Inc.

as the primary and sole obligor.

(b) These notes, issued in euros, were designated as net investment hedges to partially offset the effects of foreign currency on our investments in certain of our foreign subsidiaries.

The net proceeds from the issuances of the above notes were used for general corporate purposes, including the repayment of commercial paper.

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government securities with the Bank of New York Mellon, as trustee, in the fourth quarter of 2022.

In 2022, we paid $ 750 million to redeem all $ 750 million outstanding principal amount of our 2.25 % senior notes due May 2022, we paid $ 800 million to redeem all $ 800 million outstanding principal amount

of our 3.10 % senior notes due July 2022 and we paid $ 154 million to redeem all $ 133 million outstanding principal amount of our subsidiary, Pepsi-Cola Metropolitan Bottling Company, Inc.’s 7.00 % senior notes due March 2029 and 5.50 % notes due May 2035.

Note 9 — Financial Instruments

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If it becomes probable that the hedged transaction will not occur, we immediately recognize the related hedging gains or losses in earnings;

there were no such gains or losses reclassified during the year ended December 28, 2024.

such gains or losses reclassified during the year ended December 27, 2025 were not material .

Cash flows from derivatives used to manage commodity price, foreign exchange or interest rate risks are classified as operating activities in the cash flow statement.

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We are subject to commodity price risk because our ability to recover increased costs through higher pricing may be limited in the competitive environment in which we operate.

This risk is managed through the use of fixed-price contracts and purchase orders, pricing agreements and derivative instruments, which primarily include swaps and futures.

This risk is managed through

the use of fixed-price contracts and purchase orders, pricing agreements and derivative instruments, which primarily include swaps and futures.

In addition, risk to our supply of certain raw materials is mitigated through purchases from multiple geographies and suppliers.

We use derivatives, with terms of no more than two years , to hedge price fluctuations related to a portion of our anticipated commodity purchases, primarily for agricultural products, metals, and energy.

Derivatives used to hedge commodity price risk that do not qualify for hedge accounting treatment are marked to market each period with the resulting gains and losses recorded in corporate unallocated expenses as either cost of sales or selling, general and administrative expenses, depending on the underlying commodity.

These gains and losses are subsequently reflected in division results when the divisions recognize the cost of the underlying commodity in operating profit.

These gains and losses are subsequently reflected in segment results when the segments recognize the cost of the underlying commodity in operating profit.

Interest Rates

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We are exposed to foreign exchange risk from net investments in our foreign operations.

We manage this risk for certain of our foreign operations by utilizing derivative and non-derivative instruments, including cross-currency interest rate swaps and foreign currency denominated debt designated as net investment hedges.

In 2024, we entered into cross-currency interest rate swaps with a total notional amount of $ 500 million for Chinese renminbi and maturity dates ranging from November 2025 to November 2029 .

The cross-currency interest rate swaps are designated as net investment hedges to hedge the net assets of certain foreign operations with Chinese renminbi functional currency.

We manage this risk for certain of our foreign operations by utilizing derivative and non-derivative instruments, including cross-currency interest rate swaps, forward contracts and foreign currency denominated debt designated as net investment hedges.

The cross-currency interest rate swaps and forward contracts have terms of no more than ten years and one year , respectively.

We use the spot method to assess hedge effectiveness for our net investment hedges.

Excluded components in the form of interest accruals on cross-currency interest rate swaps are recorded in net interest expense and other.

Excluded components in the form of interest accruals on cross-currency interest rate swaps are recorded in net

interest expense and other.

Excluded components in the form of forward points on forward contracts are recorded in selling, general and administrative expenses.

The notional amounts of our financial instruments used to hedge the above risks as of December 27, 2025 and December 28, 2024 are as follows:

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Interest rate swap contracts $ 2.0 $ 2.0

Foreign exchange contracts $ 3.1 $ 3.8

Foreign exchange contracts (b)

Cross-currency contracts $ 1.7 $ 1.2

Non-derivative debt instruments $ 2.9 $ 3.0

Non-derivative debt instruments (b)

(a) In billions.

(b) Subsequent to December 27, 2025, we designated $ 1.6 billion of foreign exchange contracts maturing in February 2026 and $ 4.5 billion of existing euro denominated debt as net investment hedges to partially offset the effects of foreign currency on our investments in certain of our foreign subsidiaries.

Debt Securities

Held-to-Maturity

Investments in debt securities that we have the positive intent and ability to hold until maturity are classified as held-to-maturity.

Highly liquid debt securities with original maturities of three months or less are recorded as cash equivalents.

Our held-to-maturity debt securities consist of commercial paper.

As of December 28, 2024, we have no investments in held-to-maturity debt securities.

As of December 30, 2023, we had $ 309 million investments in commercial paper recorded in cash and cash equivalents.

Held-to-maturity debt securities are recorded at amortized cost, which approximates fair value, and realized gains or losses are reported in earnings.

As of December 30, 2023, gross unrecognized gains and losses and the allowance for expected credit losses were not material .

Available-for-Sale

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Our assessment of whether a debt security has a credit loss or is impaired could change in the future due to new developments or changes in assumptions related to any particular debt security.

In 2022, we entered into an agreement with Celsius Holdings, Inc.

(Celsius) to distribute Celsius energy drinks in the United States and invested $ 550 million in Series A convertible preferred shares issued by Celsius, which included certain conversion and redemption features.

The preferred shares automatically convert into Celsius common shares after six years if certain market-based conditions are met, or can be redeemed after seven years.

Shares underlying the transaction were priced at $ 75 per share, and the

preferred shares are entitled to a 5 % annual dividend, payable either in cash or in-kind.

Given our redemption right, we classified our investment in the convertible preferred stock as an available-for-sale debt security.

As of December 31, 2022, the fair value of this investment was classified as Level 2, based primarily on the transaction price.

There were no unrealized gains and losses on our investment in the year ended December 31, 2022.

In the year ended December 30, 2023, we transferred $ 558 million from Level 2 to Level 3 as unobservable inputs to the fair value became more significant and subsequently recorded an unrealized gain of $ 612 million in other comprehensive income and a decrease in the investment of $ 14 million due to cash dividends received.

In the year ended December 28, 2024 , we recorded an unrealized loss of $ 350 million in other comprehensive income and a decrease in the investment of $ 21 million due to cash dividends received.

In addition, during the year ended December 28, 2024, we transferred $ 184 million of other available-for-sale debt securities from Level 2 to Level 3, as unobservable inputs to the fair value became more significant, and subsequently recorded an unrealized gain of $ 72 million in other comprehensive income.

In 2022, we entered into an agreement with Celsius to distribute Celsius energy drinks in the United States and invested $ 550 million in Series A convertible preferred shares (Series A shares) issued by Celsius, which included certain conversion and redemption features.

Shares underlying the transaction were priced at $ 75 per share ($ 25 per share after a three-for-one stock split in 2023), and are entitled to a 5 % annual dividend, payable either in cash or in-kind.

On August 28, 2025, as part of the Celsius Transaction described in Note 4, we acquired Series B convertible preferred shares (Series B shares) issued by Celsius, valued at $ 585 million upon acquisition, excluding acquisition-related charges.

Shares underlying the transaction were priced at $ 51.75 per share and are entitled to a 5 % annual dividend, payable either in cash or in-kind.

In addition, as part of this transaction, the conversion and redemption periods of the Series A shares were extended to match the terms of the newly issued Series B shares, which was accounted for as a modification.

Both series of shares include certain conversion and redemption features and convert into Celsius common shares after six years from issuance of the Series B shares if certain market-based conditions are met, or can be redeemed for cash after seven years from issuance of the Series B shares.

Given our redemption rights associated with both series of shares, we classified our investments as Level 3 investments in available-for-sale debt securities.

The activity related to our Level 3 investments in certain available-for-sale debt securities is as follows:

Balance, beginning of year $ 785 $ 1,156

Acquired 590 —

Net unrealized gain/(loss) 507 ( 350 )

Cash dividends received ( 30 ) ( 21 )

Balance, end of year 1,852 785

Balance, beginning of year 256 —

Transfer from Level 2 (a)

Net unrealized gain 19 72

Balance, end of year 275 256

Total Level 3 available-for-sale balance, end of year $ 2,127 $ 1,041

(a) Unobservable inputs to the fair value became more significant.

There were no impairment charges related to our investments in available-for-sale debt securities in the years ended December 27, 2025, December 28, 2024 and December 30, 2023.

There were net unrealized gains of $ 334 million and $ 612 million as of December 28, 2024 and December 30, 2023, respectively, associated with our available-for-sale debt securities.

There were net unrealized pre-tax gains of $ 860 million and $ 334 million as of December 27, 2025 and December 28, 2024, respectively, associated with our available-for-sale debt securities.

TBG Investment

In the first quarter of 2022, we sold our Tropicana, Naked and other select juice brands to PAI Partners, while retaining a 39 % noncontrolling interest in TBG, operating across North America and Europe.

We have significant influence over our investment in TBG and account for our investment under the equity method, recognizing our proportionate share of TBG’s earnings on our income statement (recorded in selling, general and administrative expenses).

See Note 13 for further information.

In 2023, we recorded our proportionate share of TBG’s earnings, which included an impairment of TBG’s indefinite-lived intangible assets, and recorded an other-than-temporary impairment of our investment, both of which resulted in pre-tax impairment charges of $ 321 million ($ 243 million after-tax or $ 0.18 per share), recorded in selling, general and administrative expenses in our PBNA division.

We hold a 39 % noncontrolling interest in TBG, operating across North America and Europe, and we account for our investment under the equity method.

We estimated the fair value of our ownership in TBG using discounted cash flows and an option pricing model related to our liquidation preference in TBG, which we categorized as Level 3 in the fair value hierarchy.

In 2024, after identifying several indicators of impairment such as worsening operating losses and liquidity position, we quantitatively assessed our investment in TBG for impairment and, consequently, recorded an other-than-temporary impairment of our remaining investment, resulting in pre-tax impairment charges of $ 498 million ($ 416 million after-tax or $ 0.30 per share), with $ 409 million in our PBNA division and $ 89 million in our Europe division, recorded in selling, general and administrative expenses.

In 2024, after identifying several indicators of impairment such as worsening operating losses and liquidity position, we quantitatively assessed our investment in TBG for impairment and, consequently, recorded an other-than-temporary impairment of our remaining investment, resulting in pre-tax impairment charges of $ 498 million ($ 416 million after-tax or $ 0.30 per share), with $ 409 million in our PBNA segment and $ 89 million in our EMEA segment, recorded in selling, general and administrative expenses.

We estimated the fair value of our ownership in TBG using discounted cash flows.

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1 341 — 336 —

Prepaid forward contracts (d)

2 $ 15 $ — $ 13 $ —

Deferred compensation (e)

Deferred compensation (d)

2 — 495 — 503

Contingent consideration (e)

Derivatives designated as fair value hedging instruments:

Interest rate swap contracts (f)

2 $ — $ 46 $ — $ —

Derivatives designated as cash flow hedging instruments:

Foreign exchange contracts (g)

2 $ 55 $ 3 $ 3 $ 31

Cross-currency contracts (g)

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Derivatives designated as net investment hedging instruments:

Foreign exchange contracts (g)

Cross-currency contracts (g)

2 $ 1 $ 4 $ — $ —

Derivatives not designated as hedging instruments:

Foreign exchange contracts (g)

2 $ 28 $ 12 $ 33 $ 38

Commodity contracts (h)

$ 31 $ 22 $ 38 $ 51

Total derivatives at fair value (i)

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(b) Classified as other assets.

Includes Level 3 assets of $ 1,041 million as of December 28, 2024, and Level 2 assets of $ 178 million and Level 3 assets of $ 1,156 million as of December 30, 2023.

The fair value of our Level 3 investment in Celsius is estimated using probability-weighted discounted future cash flows based on a Monte Carlo simulation using significant unobservable inputs such as an 80 % probability that a certain market-based condition will be met and an average estimated discount rate of 7.3 % and 8.1 % as of December 28, 2024 and December 30, 2023, respectively, based on Celsius’ estimated synthetic credit rating.

The fair value of the other Level 3 investment is estimated using a lattice model primarily based on the underlying stock price, volatility and certain significant unobservable inputs, such as a discount rate of 8.3 % as of December 28, 2024, based upon an estimated synthetic credit rating.

The fair value of our investment in Celsius is estimated using probability-weighted discounted future cash flows based on a Monte Carlo simulation using significant unobservable inputs such as an 80 % probability that a certain market-based condition will be met and an average estimated discount rate of 8.5 % and 7.3 % as of December 27, 2025 and December 28, 2024, respectively.

The fair value of the other investment is estimated using a lattice model primarily based on the underlying stock price, volatility and certain significant unobservable inputs, such as a discount rate of 8.3 % based on an estimated synthetic credit rating.

An increase in the probability that certain market-based conditions will be met or a decrease in the discount rate would result in a higher fair value measurement, while a decrease in the probability that certain market-based conditions will be met or an increase in the discount rate would result in a lower fair value measurement.

The fair value of our Level 2 investment as of December 30, 2023 approximates the transaction price and any accrued returns, as well as the amortized cost.

These investments are classified as short-term investments and are used to manage a portion of market risk arising from our deferred compensation liability.

(d) Based primarily on the price of our common stock.

(e) Based on the fair value of investments corresponding to employees’ investment elections.

(d) Based on the fair value of investments corresponding to employees’ investment elections.

(e) In connection with our acquisition of poppi, we recorded a liability at fair value for the contingent consideration payable upon achievement of certain performance milestones by the third quarter of 2027, with a maximum payment of $ 300 million.

If these performance milestones are not met, no payment will be made.

The fair value of the liability is estimated using discounted future cash flows based on a Monte Carlo simulation using significant unobservable inputs such as forecasts of net revenue and margin.

An increase in the net revenue and margin forecasts would result in a higher fair value measurement, while a decrease in the net revenue and margin forecasts would result in a lower fair value measurement.

As of December 27, 2025, the fair value of the contingent consideration was $ 278 million, comprised of the acquisition date fair value of $ 180 million and a fair value increase of $ 98 million recorded in selling, general and administrative expenses.

(f) Based on Secured Overnight Financing Rate forward rates.

As of December 27, 2025, the carrying amount of hedged fixed-rate debt was $ 2.0 billion, which was classified on the balance sheet within long-term debt obligations.

(g) Based on recently reported market transactions of spot and forward rates.

(g) Based on recently reported market transactions of spot and/or forward rates.

(h) Primarily based on recently reported market transactions of swap arrangements.

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The fair value of our debt obligations as of December 27, 2025 and December 28, 2024 was $ 46 billion and $ 40 billion, respectively, based upon prices of identical or similar instruments in the marketplace, which are considered Level 2 inputs.

Losses/(gains) on our fair value hedges are categorized as follows:

Losses/(Gains) Recognized in

Income Statement (a)

Interest rate swap contracts $ 46 $ —

Losses/(gains) on our fair value hedges recognized in the income statement are as follows:

Interest rate swap contracts (a)

$ ( 62 ) $ 46

(a) Interest rate derivative losses/(gains) are included in net interest expense and other.

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Cross-currency contracts 33 3 ( 13 ) ( 5 )

Foreign exchange contracts ( 13 ) — — —

Total $ 357 $ ( 130 ) $ ( 13 ) $ ( 5 )

(a) Amount excluded from the assessment of effectiveness recognized in earnings associated with cross-currency interest rate swaps.

(a) Amount excluded from the assessment of effectiveness recognized in earnings associated with cross-currency interest rate swaps and

forward contracts.

Based on current market conditions, we expect to reclassify net gains of $ 100 million related to our cash flow hedges from accumulated other comprehensive loss within common shareholders’ equity into net income during the next 12 months.

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(b) The dilutive effect of these securities is calculated using the treasury stock method.

The weighted-average amount of antidilutive securities excluded from the calculation of diluted earnings per common share was 4 million, 3 million and immaterial for the years ended December 28, 2024, December 30, 2023 and December 31, 2022, respectively.

The weighted-average amount of antidilutive securities excluded from the calculation of diluted earnings per common share was 8 million, 4 million and 3 million for the years ended December 27, 2025, December 28, 2024 and December 30, 2023, respectively.

Note 11 — Accumulated Other Comprehensive Loss Attributable to PepsiCo

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( 13,255 ) ( 31 ) ( 2,719 ) 471 ( 15,534 )

Other comprehensive (loss)/income before reclassifications (d)

Other comprehensive loss before reclassifications (d)

( 1,965 ) ( 6 ) ( 280 ) ( 306 ) ( 2,557 )

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( 15,217 ) 82 ( 2,714 ) 237 ( 17,612 )

Other comprehensive loss before reclassifications (e)

Other comprehensive income before reclassifications (e)

1,633 186 234 482 2,535

Amounts reclassified from accumulated other comprehensive loss — ( 132 ) 362 — 230

Net other comprehensive (loss)/income ( 1,965 ) 152 5 ( 306 ) ( 2,114 )

Net other comprehensive income 1,633 54 596 482 2,765

Tax amounts 90 ( 10 ) ( 144 ) ( 113 ) ( 177 )

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See Note 9 for further information.

(b) Pension and retiree medical amounts are net of taxes of $ 1,283 million as of December 25, 2021, $ 1,184 million as of December 31, 2022 and $ 1,282 million as of both December 30, 2023 and December 28, 2024.

(d) Currency translation adjustment primarily reflects depreciation of the Russian ruble and South African rand, partially offset by appreciation of the Mexican peso.

(e) Currency translation adjustment primarily reflects depreciation of the Mexican peso and Russian ruble.

The following table summarizes the reclassifications from accumulated other comprehensive loss to the income statement:

(b) Pension and retiree medical amounts are net of taxes of $ 1,184 million as of December 31, 2022, $ 1,282 million as of both December 30, 2023 and December 28, 2024 and $ 1,138 million as of December 27, 2025.

(c) Currency translation adjustment primarily reflects depreciation of the Russian ruble and South African rand, partially offset by appreciation of the Mexican peso.

(d) Currency translation adjustment primarily reflects depreciation of the Mexican peso and Russian ruble.

(e) Currency translation adjustment primarily reflects appreciation of the Russian ruble and Mexican peso.

The reclassifications from accumulated other comprehensive loss to the income statement are summarized as follows:

Amount Reclassified from Accumulated Other Comprehensive Loss Affected Line Item in the Income Statement

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Commodity contracts 2 1 ( 1 ) Selling, general and administrative expenses

Net losses/(gains) before tax 158 146 ( 129 )

Net (gains)/losses before tax ( 132 ) 158 146

Tax amounts 32 ( 37 ) ( 39 )

Net losses/(gains) after tax $ 121 $ 107 $ ( 106 )

Net (gains)/losses after tax ( 100 ) 121 107

Pension and retiree medical items:

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In 2024 , 2023 and 2022, we recognized gains of $ 118 million, $ 52 million and $ 175 million, respectively, on sale-leaseback transactions with terms generally under five years.

In 2025 , 2024 and 2023, we recognized gains of $ 291 million, $ 118 million and $ 52 million, respectively, on sale-leaseback transactions with lease terms of ten years or less.

Supplemental cash flow information and non-cash activity related to our operating leases are as follows:

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Accounts payable and other current liabilities $ 719 $ 642

Non-current lease liabilities

Other liabilities $ 2,803 $ 2,400

Noncurrent lease liabilities Other liabilities $ 3,127 $ 2,803

Weighted-average remaining lease term and discount rate for our operating leases are as follows:

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Present value of lease liabilities $ 3,846

Operating lease payments presented in the table above exclude approximately $ 900 million of minimum lease payments related to leases entered into but not yet commenced as of December 27, 2025, with weighted-average lease terms of thirteen years.

Finance leases were not material as of December 27, 2025, December 28, 2024 and December 30, 2023.

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Note 13 — Acquisitions and Divestitures

Acquisition of poppi

On May 19, 2025, we acquired all of the outstanding equity interest in poppi, a prebiotic soda business, for cash consideration of $ 1.95 billion and contingent consideration with an acquisition date fair value of $ 0.2 billion.

See Note 9 for further information on the contingent consideration.

In connection with this acquisition, other payments may be incurred, subject to the achievement of certain conditions.

We accounted for the transaction as a business combination in the second quarter of 2025.

We recognized and measured the identifiable assets acquired and liabilities assumed at their estimated fair values on the date of acquisition, in our PBNA segment.

The preliminary estimates of the fair value of the identifiable assets acquired and liabilities assumed in this transaction as of the acquisition date primarily include goodwill and other intangible assets of approximately $ 2.0 billion.

These preliminary estimates include management’s assumptions and are subject to revision as additional information is obtained about the facts and circumstances that existed as of the acquisition date, primarily related to intangible assets, which may result in adjustments to the preliminary values discussed above as valuations are finalized.

We expect to finalize these amounts as soon as possible, but no later than the second quarter of 2026.

Acquisition of Siete

On January 17, 2025, we acquired all of the outstanding equity interest in Siete, a Mexican-American foods business, for total consideration of $ 1.2 billion in cash.

We accounted for the transaction as a business combination in the first quarter of 2025.

We recognized and measured the identifiable assets acquired and liabilities assumed at their estimated fair values on the date of acquisition, in our PFNA segment.

We will finalize these amounts in the first quarter of 2026.

Acquisition of remaining ownership in Sabra

On December 3, 2024, we acquired the Strauss Group’s 50 % ownership in Sabra for total consideration of $ 241 million in cash, resulting in Sabra becoming a wholly-owned subsidiary.

Upon consolidation, we recognized a pre-tax gain of $ 122 million ($ 92 million after-tax or $ 0.07 per share) in our FLNA division, recorded in selling, general and administrative expenses, related to the remeasurement of our previously held 50 % equity ownership in Sabra at fair value using a combination of the transaction price, net of a control premium, and discounted cash flows.

We accounted for the acquisition as a business combination in the fourth quarter of 2024.

We recognized and measured the identifiable assets acquired and liabilities assumed at their estimated fair values on the date of acquisition, in our FLNA division.

The preliminary estimates of the fair value of identifiable assets acquired and liabilities assumed are subject to revision, which may result in adjustments to the preliminary values discussed above as valuations are finalized.

We expect to finalize these amounts as soon as possible, but no later than the fourth quarter of 2025.

Acquisition of Siete

On January 17, 2025, we acquired all of the outstanding equity interest in Siete, a Mexican-American foods business, in a transaction valued at approximately $ 1.2 billion.

The total consideration transferred was approximately $ 1.2 billion in cash.

The purchase price will be adjusted for net working capital and net debt amounts as of the acquisition date.

We will account for the transaction as a business combination in the first quarter of 2025.

We will recognize and measure the identifiable assets acquired and liabilities assumed at their estimated fair values on the date of acquisition.

The identifiable assets acquired and liabilities assumed in Siete as of the acquisition date, which primarily include goodwill and other intangible assets, will be based on preliminary estimates that are subject to revisions and may result in adjustments to the preliminary values as valuations are finalized.

We expect to finalize these amounts as soon as possible, but no later than the first quarter of 2026.

Juice Transaction

In the first quarter of 2022, we sold our Tropicana, Naked and other select juice brands to PAI Partners for approximately $ 3.5 billion in cash, subject to purchase price adjustments, and a 39 % noncontrolling interest in TBG, operating across North America and Europe.

The North America portion of the transaction was completed on January 24, 2022 and the Europe portion of the transaction was completed on February 1, 2022.

In the United States, PepsiCo acts as the exclusive distributor for TBG’s portfolio of brands for small-format and foodservice customers with chilled DSD.

As a result of this transaction, in the year ended December 31, 2022, we recorded a gain in our PBNA and Europe divisions (see detailed income statement activity below), including $ 520 million related to the remeasurement of our 39 % ownership in TBG at fair value using a combination of the transaction price, discounted cash flo ws and an option pricing model related to our liquidation preference in TBG .

In the fourth quarter of 2022, we reached an agreement on final purchase price adjustments for net working

capital and net debt amounts as of the transaction close date compared to targeted amounts set forth in the purchase agreement.

A summary of income statement activity related to the Juice Transaction for the year ended December 31, 2022 is as follows:

PBNA Europe Corporate Total PepsiCo Provision for income taxes (a)

Net income attributable to PepsiCo Impact on net income attributable to PepsiCo per common share

Gain associated with the Juice Transaction $ ( 3,029 ) $ ( 292 ) $ — $ ( 3,321 ) $ 433 $ ( 2,888 ) $ 2.08

Acquisition and divestiture-related charges 51 14 6 71 ( 13 ) 58 ( 0.04 )

Operating profit $ ( 2,978 ) $ ( 278 ) $ 6 ( 3,250 ) 420 ( 2,830 ) 2.04

Other pension and retiree medical benefits income (b)

( 10 ) 3 ( 7 ) 0.01

Total Juice Transaction $ ( 3,260 ) $ 423 $ ( 2,837 ) $ 2.04 (c)

(a) Includes $ 186 million of deferred tax expense related to the recognition of our investment in TBG.

(b) Includes $ 16 million curtailment gain, partially offset by $ 6 million special termination benefits.

In connection with the sale, we entered into a transition services agreement with PAI Partners, under which we provide certain services to TBG to help facilitate an orderly transition of the business following the sale.

In return for these services, TBG is required to pay certain agreed upon fees to reimburse us for our costs without markup.

The Juice Transaction did not meet the criteria to be classified as discontinued operations.

In the years ended December 28, 2024 and December 30, 2023, we recognized i mpairment and other charges related to our TBG investment.

See Notes 1 and 9 for further information.

Upon consolidation, we recognized a pre-tax gain of $ 122 million ($ 92 million after-tax or $ 0.07 per share) in our PFNA segment, recorded in selling, general and administrative expenses, related to the remeasurement of our previously held 50 % equity ownership in Sabra at fair value using a combination of the transaction price, net of a control premium, and discounted cash flows.

We accounted for the acquisition as a business combination.

We recognized and measured the identifiable assets acquired and liabilities assumed at their estimated fair values on the date of acquisition in our PFNA segment, which primarily included goodwill and other intangible assets of $ 0.3 billion and property, plant and equipment of $ 0.1 billion.

The purchase price allocation was finalized in the fourth quarter of 2025.

Acquisition and Divestiture-Related Charges

Acquisition and divestiture-related charges primarily include transaction expenses, such as consulting, advisory and other professional fees, and merger and integration charges.

Merger and integration charges include employee-related costs, contract termination costs, closing costs and other integration costs.

A summary of our acquisition and divestiture-related charges is as follows:

A summary of charges is as follows:

2025 2024 2023

FLNA $ 9 $ — $ —

Corporate — 25 6

Other pension and retiree medical benefits expense — — 6

Total acquisition and divestiture-related charges $ 22 $ 41 $ 80

Cost of sales $ 57 $ — $ —

Selling, general and administrative expenses 346 22 41

Impairment of intangible assets 50 — —

Total $ 453 $ 22 $ 41

After-tax amount $ 347 $ 18 $ 23

$ 18 $ 23 $ 66

Impact on net income attributable to PepsiCo per common share $ ( 0.25 ) $ ( 0.01 ) $ ( 0.02 )

2025 2024 2023

PFNA $ 28 $ 9 $ —

PBNA 422 8 16

Asia Pacific Foods 3 5 2

Corporate — — 25

Total $ 453 $ 22 $ 41

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

(b) Recorded in selling, general and administrative expenses.

Note 14 — Supply Chain Financing Arrangements

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All outstanding amounts related to suppliers participating in such financing arrangements are recorded within accounts payable and other current liabilities in our consolidated balance sheet.

A summary of our outstanding obligations confirmed as valid under the supplier finance program for the year ended December 28, 2024 is as follows:

A summary of our outstanding obligations confirmed as valid under the supplier finance program is as follows:

Confirmed obligations outstanding at beginning of year $ 1,478 $ 1,655

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( 55 ) ( 36 ) ( 26 )

Translation and other ( 11 ) ( 4 ) ( 6 )

Translation and other (a)

( 132 ) ( 11 ) ( 4 )

Allowance, end of year 230 356 $ 175

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Deferred marketplace spending 205 100

Pension plans (b)

Right-of-use assets (c)

Other investments (d)

Pension plans 1,449 1,190

Right-of-use assets 3,745 3,383

Other investments (b)

Other 923 821

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Accounts payable and other current liabilities

Accounts payable (e)

Accounts payable (c)

$ 11,704 $ 10,997

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Current lease liabilities 719 642

Other current liabilities

Other current liabilities (d)

Total $ 25,903 $ 24,454

(a) Increase primarily reflects an allowance for expected credit losses related to outstanding receivables from TBG associated with the Juice Transaction;

(a) In 2024, we recognized an allowance for expected credit losses related to outstanding receivables from TBG associated with the Juice Transaction.

In 2025, the outstanding receivables and related allowance were reclassified to noncurrent notes and accounts receivable.

See Note 1 for further information.

(b) See Note 7 for further information.

(d) Includes our investment in Celsius convertible preferred stock.

(b) Includes our investment in Celsius convertible preferred stock.

See Note 9 for further information.

(e) Primarily reflects a decrease in capital expenditure payables, currency translation adjustments, as well as timing of payments.

(c) Increase primarily reflects timing of payments and currency translation adjustments, partially offset by a decrease in capital expenditure payables.

(d) Increase primarily reflects acquisition of poppi.

See Note 13 for further information on acquisitions.

Statement of Cash Flows

2025 2024 2023

Interest paid (a)

$ 1,585 $ 1,401 $ 1,043

Income taxes paid, net of refunds (b)

Interest paid $ 1,748 $ 1,585 $ 1,401

Income taxes paid, net of refunds (a)

$ 3,083 $ 3,064 $ 2,532

(a) 2022 excludes the premiums paid in accordance with certain debt transactions.

See Note 8 for further information.

(b) Includes tax payments of $ 579 million in 2024 , and $ 309 million in each of 2023 and 2022, related to the TCJ Act.

(a) Includes tax payments of $ 772 million in 2025 , $ 579 million in 2024 and $ 309 million in 2023 related to the TCJ Act.

Supplemental Non-Cash Activity

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Debt discharged via legal defeasance $ — $ — $ 94

Investment obtained for certain assets (see Notes 4 and 9) $ 554 $ — $ —

The following table provides a reconciliation of cash and cash equivalents and restricted cash as reported within the balance sheet to the same items as reported in the cash flow statement:

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The Company is party to a variety of litigation, claims, legal or regulatory proceedings, inquiries and investigations.

While the results of such litigation, claims, legal or regulatory proceedings, inquiries and investigations cannot be predicted with certainty, management believes that the final outcome of the foregoing will not have a material adverse effect on our financial condition, results of operations or cash flows.

While the results of such litigation, claims, legal or regulatory proceedings, inquiries and investigations cannot be predicted with certainty, management believes that the final outcome of the foregoing is not expected to have a material adverse effect on our financial condition, results of operations or cash flows.

Report of Independent Registered Public Accounting Firm

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dollar results by the current-year average foreign exchange rates and then multiply or divide, as appropriate, those amounts by the prior-year average foreign exchange rates.

Beginning in 2025, on a prospective basis, we are also applying the constant currency calculation for our subsidiaries operating in highly inflationary economies.

people who eat and drink our products.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis