Summary
PepsiCo, Inc. (PEP) filed this Form 8-K on February 27, 2018, to provide investors with supplemental information regarding the retrospective impact of adopting new Financial Accounting Standards Board (FASB) guidance on the presentation of net periodic benefit cost. This new guidance requires the service cost component of pension and retiree medical plans to be presented within operating profit, while other components are reported below operating profit. The retrospective adoption resulted in a decrease in operating profit of $233 million for the fiscal year ended December 30, 2017, and an increase of $19 million for the fiscal year ended December 31, 2016. These adjustments primarily affected selling, general, and administrative expenses across various segments. Importantly, these changes have no impact on PepsiCo's consolidated net revenue, net income, or earnings per share. The company adopted this guidance starting in the first quarter of 2018, with the effects to be reflected in future filings. The report details the segment-level impact of these adjustments, offering transparency into how the new accounting standard alters the presentation of operating profit.
Key Highlights
- 1PepsiCo is providing supplemental information on the retrospective impact of adopting new FASB guidance on net periodic benefit cost presentation.
- 2The new guidance requires service cost component of pension/retiree medical plans to be presented within operating profit.
- 3Retrospective adoption led to a $233 million decrease in operating profit for FY 2017 and a $19 million increase for FY 2016.
- 4These changes primarily impact selling, general, and administrative expenses across segments.
- 5No impact on PepsiCo's consolidated net revenue, net income, or earnings per share.
- 6The company adopted the guidance effective Q1 2018, with impacts to be reflected in future SEC filings.
- 7The report provides a detailed breakdown of operating profit changes by segment for various quarters in 2017 and full years 2017/2016.