PEPSICO INCPEP

PEPSICO INC Leases Disclosure

10-KFiled Feb 3, 20263 min read
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:
202520242023
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 property tax.
(c)Not recorded on our balance sheet.
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:
202520242023
Operating cash flow information:
Cash paid for amounts included in the measurement of lease liabilities
$866 $775 $655 
Non-cash activity:
Right-of-use assets obtained in exchange for lease obligations
$1,046 $1,218 $1,088 
Supplemental balance sheet information related to our operating leases is as follows:
Balance Sheet Classification20252024
Right-of-use assets
Other assets$3,745 $3,383 
Current lease liabilities
Accounts payable and other current liabilities$719 $642 
Noncurrent lease liabilitiesOther liabilities$3,127 $2,803 
Weighted-average remaining lease term and discount rate for our operating leases are as follows:
202520242023
Weighted-average remaining lease term7 years7 years7 years
Weighted-average discount rate5 %4 %4 %
Maturities of lease liabilities by year for our operating leases are as follows:
2026$858 
2027750 
2028631 
2029512 
2030434 
2031 and beyond1,342 
Total lease payments4,527 
Less: Imputed interest681 
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.
Lessor
We have various arrangements for certain foodservice and vending equipment under which we are the lessor. These leases meet the criteria for operating lease classification. Lease income associated with these leases is not material.

Historical Timeline

Fiscal YearFiled
2025Feb 3, 2026Showing above
2024Feb 4, 2025
2023Feb 9, 2024
2022Feb 9, 2023
2021Feb 10, 2022
2020Feb 11, 2021

About Leases Disclosures

Lease disclosures under ASC 842 provide a comprehensive view of a company's leased asset portfolio, including the split between operating and finance leases, discount rates used to present-value future payments, and the maturity schedule of lease obligations. This section reveals a significant source of off-balance-sheet commitments that were largely hidden before the current standard.

Key signals: the weighted-average discount rate affects the size of recorded lease liabilities — a higher rate reduces the reported obligation, so compare the chosen rate against the company's incremental borrowing rate. The operating versus finance lease mix affects both EBITDA and operating income presentation. Watch the maturity table for concentration risk: large payment cliffs in specific years may create cash flow pressure. Variable lease payments excluded from the liability measurement represent real obligations that do not appear on the balance sheet. Compare total lease costs against prior-year operating lease expense to assess the true economic burden.

Other Available Disclosures

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