Financial Analysis

Debt Obligations The following table summarizes our debt obligations: 2025 (a) 2024 (a) Short-term debt obligations (b) Current maturities of long-term debt $ 4,030 $ 4,004 Commercial paper (3.8% and 4.5%) 2,641 2,818 Other borrowings 190 260 $ 6,861 $ 7,082 Long-term debt obligations (b) Notes due 2025 (3.2%) $ $ 3,999 Notes due 2026 (3.6% and 3.7%) 4,003 3,941 Notes due 2027 (3.2% and 3.1%) 3,933 3,370 Notes due 2028 (2.4% and 2.1%) 4,203 3,240 Notes due 2029 (4.3% and 4.6%) 4,043 3,239 Notes due 2030 (3.2% and 2.6%) 4,171 2,472 Notes due 2031-2060 (3.4% and 3.2%) 25,956 20,928 Other, due 2025-2042 42 39 46,351 41,228 Less: current maturities of long-term debt obligations 4,030 4,004 Total $ 42,321 $ 37,224 (a) Amounts are shown net of unamortized net discounts of $224 million and $267 million for 2025 and 2024, respectively. (b) The interest rates presented reflect weighted-average effective interest rates at year-end. Certain of our fixed rate indebtedness have been swapped to floating rates through the use of interest rate derivative instruments. See Note 9 for further information regarding our interest rate swap contracts. As of December 27, 2025 and December 28, 2024, our international debt of $272 million and $325 million, respectively, was related to borrowings from external parties, including various lines of credit. These lines of credit are subject to normal banking terms and conditions and are fully committed at least to the extent of our borrowings. In 2025, we …

DebtDisclosureTextBlock · excerpt; the full note is in the filing

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: 2025 2024 2023 Beverages (a) Convenient Foods Beverages (a) Convenient Foods Beverages (a) Convenient Foods 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 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.

DisaggregationOfRevenueTableTextBlock

Share-Based Compensation 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. Long-Term Incentive Plan (LTIP). Executives who are awarded long-term incentives based on their performance may generally elect to receive their grant in the form of stock options or RSUs, or a combination thereof. Executives who elect stock options receive four stock options for every one RSU that would have otherwise been granted. Certain executive officers and other senior executives do not have a choice and are granted 66% PSUs and 34% long-term cash, each of which are subject to pre-established performance targets. The Company may use authorized and unissued shares to meet share requirements resulting from the exercise of stock options and the vesting of RSUs and PSUs. As of December 27, 2025, 89 million shares were available for future share-based compensation grants under the LTIP. The following table summarizes our total share-based compensation expense, which is primarily recorded in selling, general and administrative expenses, and excess tax benefits recognized: 2025 2024 2023 Share-based compensation expense - equity awards $ 288 $ 362 $ 380 Share-based compensation expense - liability awards 13 7 19 Restructuring charges (8) (5) (1) Total $ 293 $ 364 $ …

DisclosureOfCompensationRelatedCostsShareBasedPaymentsTextBlock · excerpt; the full note is in the filing

Income Taxes The components of income before income taxes are as follows: 2025 2024 2023 United States $ 806 $ 2,590 $ 4,120 Foreign 9,438 9,356 7,297 $ 10,244 $ 11,946 $ 11,417 The provision for income taxes consisted of the following: 2025 2024 2023 Current: U.S. Federal $ 299 $ 1,033 $ 1,133 Foreign 1,583 1,406 1,201 State 42 255 309 1,924 2,694 2,643 Deferred: U.S. Federal 116 (306) (109) Foreign (116) (10) (212) State 25 (58) (60) 25 (374) (381) $ 1,949 $ 2,320 $ 2,262 A reconciliation of the U.S. Federal statutory tax rate to our 2025 annual tax rate is as follows: Amount Tax Rate U.S. Federal statutory tax $ 2,151 21.0 % State income tax, net of U.S. Federal tax benefit (a) 25 0.2 Changes in valuation allowances 12 0.1 Foreign tax effects Ireland Statutory income tax rate differential (119) (1.2) Other 24 0.2 Singapore Tax incentive (113) (1.1) Other (26) (0.3) Switzerland Changes in valuation allowances (149) (1.5) Other 32 0.3 Bermuda 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 th …

IncomeTaxDisclosureTextBlock · excerpt; the full note is in the filing

Legal Contingencies 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 is not expected to have a material adverse effect on our financial condition, results of operations or cash flows.

LegalMattersAndContingenciesTextBlock

Leases Lessee We determine whether an arrangement is a lease at inception. We have operating leases for plants, warehouses, distribution centers, storage facilities, offices and other facilities, as well as machinery and equipment, including fleet. Our leases generally have remaining lease terms of up to 20 years, some of which include options to extend the lease term for up to five years and some of which include options to terminate the lease within one year. We consider these options in determining the lease term used to establish our right-of-use assets and lease liabilities. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants. As most of our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. We have lease agreements that contain both lease and non-lease components. For real estate leases, we account for lease components together with non-lease components (e.g., common-area maintenance). Components of lease cost are as follows: 2025 2024 2023 Operating lease cost (a) $ 880 $ 788 $ 666 Variable lease cost (b) $ 185 $ 165 $ 146 Short-term lease cost (c) $ 570 $ 566 $ 582 (a) Includes right-of-use asset amortization of $727 million, $655 million, and $570 million in 2025, 2024, and 2023, respectively. (b) Primarily related to adjustments for inflation, common-area maintenance and proper …

LesseeOperatingLeasesTextBlock · excerpt; the full note is in the filing

Recently Issued Accounting Pronouncements Adopted 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 …

NewAccountingPronouncementsPolicyPolicyTextBlock · excerpt; the full note is in the filing

Pension, Retiree Medical and Savings Plans 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 av …

PensionAndOtherPostretirementBenefitsDisclosureTextBlock · excerpt; the full note is in the filing

Our Significant Accounting Policies Revenue Recognition We recognize revenue when our performance obligation is satisfied. 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. In addition, we exclude from net revenue all sales, use, value-added and certain excise taxes assessed by government authorities on revenue producing transactions. 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 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. As a result, we record reserves, based on estimates, for product recall, anticipated damaged and out-of-date prod …

SignificantAccountingPoliciesTextBlock · excerpt; the full note is in the filing

Debt Obligations In the 24 weeks ended June 13, 2026, we issued the following notes: Interest Rate Maturity Date Principal Amount (a) (b) Floating Rate February 2028 500 3.300 % February 2034 650 3.700 % February 2038 850 4.150 % February 2047 500 (a) Excludes debt issuance costs, discounts and premiums. (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. In the 24 weeks ended June 13, 2026 , $1.6 billion of U.S. dollar-denominated senior notes and 0.5 billion of euro-denominated senior notes matured and were paid. As of June 13, 2026 , we had $6.1 billion of commercial paper outstanding, excluding discounts. In the 12 and 24 weeks ended June 13, 2026, we entered into a new five-year unsecured revolving credit agreement (2026 Five-Year Credit Agreement), which expires on May 22, 2031. The 2026 Five-Year Credit Agreement enables us and our borrowing subsidiaries to borrow up to $5.0 billion in U.S. dollars and/or euros, including a $1.2 billion swing line subfacility for euro-denominated borrowings permitted to be borrowed on a same-day basis, subject to customary terms and conditions. We may request that commitments under this agreement be increased up to $5.75 billion (or the equivalent amount in euros). …

DebtDisclosureTextBlock · excerpt; the full note is in the filing

Disaggregation of Net Revenue Our primary performance obligation is the distribution and sales of beverage and convenient food products to our customers. The following tables reflect the percentage of net revenue generated between our beverage business and our convenient food business: 12 Weeks Ended 6/13/2026 6/14/2025 Beverages (a) Convenient Foods Beverages (a) Convenient Foods North America 53 % 47 % 51 % 49 % International (b) 32 % 68 % 33 % 67 % PepsiCo 44 % 56 % 43 % 57 % 24 Weeks Ended 6/13/2026 6/14/2025 Beverages (a) Convenient Foods Beverages (a) Convenient Foods North America 52 % 48 % 50 % 50 % International (b) 30 % 70 % 31 % 69 % PepsiCo 43 % 57 % 43 % 57 % (a) Beverage revenue from company-owned bottlers, which includes our consolidated bottling operations in our PBNA and EMEA segments, was 36% of our consolidated net revenue in each of the 12 and 24 weeks ended June 13, 2026 and June 14, 2025. 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 foods revenue generated from our EMEA segment was 37% and 63% of EMEA net revenue, respectively, in the 12 weeks ended June 13, 2026, 38% and 62% of EMEA net revenue, respectively, in the 12 weeks ended June 14, 2025 and 36% and 64% of EMEA net revenue, respectively, in each of the 24 weeks ended June 13, 2026 and June 14, 2025.

DisaggregationOfRevenueTableTextBlock

Share-Based Compensation Starting with awards granted in 2026, RSUs and stock options will primarily vest ratably over three years and amortized to expense on a straight-line basis. Additionally, certain executive officers and other senior executives who were previously granted 66% PSUs and 34% long-term cash were granted 60% PSUs and 40% RSUs in 2026. For PSUs granted in 2026, the final payout will be determined over a three-year period based on achievement of specified pre-established financial performance metrics, with PepsiCos total shareholder return relative to a specific set of peer companies acting as a multiplier. The Monte Carlo valuation model is used to determine the grant date fair value of the award, reflective of the total shareholder return market condition. Share-based compensation expense is adjusted for changes in the expected achievement of pre-established financial performance metrics throughout the three-year performance period. The following table summarizes our total share-based compensation expense, which is primarily recorded in selling, general and administrative expenses: 12 Weeks Ended 24 Weeks Ended 6/13/2026 6/14/2025 6/13/2026 6/14/2025 Share-based compensation expense equity awards $ 69 $ 54 $ 162 $ 131 Share-based compensation expense liability awards 3 (7) 5 (3) Restructuring charges (1) (1) (2) Total $ 71 $ 46 $ 167 $ 126 The following table summarizes share-based awards granted under the terms of the PepsiCo, Inc. Long-Term Incentive Plan: …

DisclosureOfCompensationRelatedCostsShareBasedPaymentsTextBlock · excerpt; the full note is in the filing

Legal Contingencies 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 is not expected to have a material adverse effect on our financial condition, results of operations or cash flows.

LegalMattersAndContingenciesTextBlock

Recently Issued Accounting Pronouncements Adopted In July 2025, the Financial Accounting Standards Board (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. We adopted the guidance in the first quarter of 2026, on a prospective basis. The adoption did not have a material impact on our condensed consolidated financial statements. 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 …

NewAccountingPronouncementsPolicyPolicyTextBlock · excerpt; the full note is in the filing

Pension and Retiree Medical Benefits The components of net periodic benefit cost/(income) for pension and retiree medical plans are as follows: 12 Weeks Ended Pension Retiree Medical U.S. International 6/13/2026 6/14/2025 6/13/2026 6/14/2025 6/13/2026 6/14/2025 Service cost $ 54 $ 73 $ 13 $ 11 $ 9 $ 7 Other pension and retiree medical benefits (income)/expense: Interest cost 120 135 37 36 6 7 Expected return on plan assets (191) (186) (51) (47) (2) (3) Amortization of prior service cost/(credits) 2 (1) (1) Amortization of net losses/(gains) 17 20 8 6 (4) (6) Settlement/curtailment gains (1) Special termination benefits (2) Total other pension and retiree medical benefits income (52) (33) (6) (6) (1) (3) Total $ 2 $ 40 $ 7 $ 5 $ 8 $ 4 24 Weeks Ended Pension Retiree Medical U.S. International 6/13/2026 6/14/2025 6/13/2026 6/14/2025 6/13/2026 6/14/2025 Service cost $ 108 $ 145 $ 23 $ 19 $ 17 $ 14 Other pension and retiree medical benefits (income)/expense: Interest cost 240 270 65 62 12 14 Expected return on plan assets (382) (372) (90) (83) (4) (5) Amortization of prior service cost/(credits) 4 1 (2) (2) Amortization of net losses/(gains) 34 39 14 10 (9) (12) Settlement/curtailment gains (1) Special termination benefits 1 14 Total other pension and retiree medical benefits income (103) (48) (11) (12) (3) (5) Total $ 5 $ 97 $ 12 $ 7 $ 14 $ 9 We regularly evaluate opportunities to reduce risk and volatility associated with our pension and retiree medical plans. In addition, lump …

PensionAndOtherPostretirementBenefitsDisclosureTextBlock · excerpt; the full note is in the filing