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Segment Reporting
 3 Months Ended
Mar. 31, 2015
Segment Reporting

Note 15.  Segment Reporting

We manufacture and market primarily snack food and beverage products, including biscuits (cookies, crackers and salted snacks), chocolate, gum & candy, coffee & powdered beverages and various cheese & grocery products. We manage our global business and report operating results through geographic units.

Our operations and management structure are organized into five reportable operating segments:

  •   Latin America
  •   Asia Pacific
  •   Eastern Europe, Middle East and Africa (“EEMEA”)
  •   Europe
  •   North America

We manage our operations by region to leverage regional operating scale, manage different and changing business environments more effectively and pursue growth opportunities as they arise in our key markets. Beginning in 2015, within each region, we also manage by product category. The change did not affect our operating or reportable segments. In 2014, we managed our operations within Latin America, Asia Pacific and EEMEA by location and within Europe and North America by product category. Also, in 2015, we began to report stock-based compensation for our corporate employees, which was previously reported within our North America region, within general corporate expenses. During the first quarter of 2015, we reclassified $11 million of corporate stock-based compensation expense out of the North America segment.

We use segment operating income to evaluate segment performance and allocate resources. We believe it is appropriate to disclose this measure to help investors analyze segment performance and trends. Segment operating income excludes unrealized gains and losses on hedging activities (which are a component of cost of sales), general corporate expenses (which are a component of selling, general and administrative expenses), amortization of intangibles, gains and losses on divestitures or acquisitions and acquisition-related costs (which are a component of selling, general and administrative expenses) in all periods presented. We exclude these items from segment operating income in order to provide better transparency of our segment operating results. Furthermore, we centrally manage interest and other expense, net. Accordingly, we do not present these items by segment because they are excluded from the segment profitability measure that management reviews.

 

Our segment net revenues and earnings were:

 

                                     
     For the Three Months Ended
March 31,		  
     2015      2014  
     (in millions)  

Net revenues:

      

Latin America

    $ 1,257       $ 1,356   

Asia Pacific

      1,153         1,223   

EEMEA

      695         838   

Europe

      2,975         3,557   

North America

      1,682         1,667   
  

 

 

     

 

 

  

Net revenues

 $ 7,762    $ 8,641   
  

 

 

     

 

 

  

 

                                     
     For the Three Months Ended
March 31,		  
     2015      2014  
     (in millions)  

Earnings before income taxes:

      

Operating income:

      

Latin America

    $ 154       $ 44   

Asia Pacific

      146         188   

EEMEA

      32         64   

Europe

      326         463   

North America

      281         203   

Unrealized gains / (losses) on hedging activities

      (7 )       7   

General corporate expenses

      (74 )       (72 ) 

Amortization of intangibles

      (46 )       (54 ) 

Acquisition-related costs

      (1 )       –   
  

 

 

     

 

 

  

Operating income

   811      843   

Interest and other expense, net

   (386 )    (720 ) 
  

 

 

     

 

 

  

Earnings before income taxes

 $ 425    $ 123   
  

 

 

     

 

 

  

Items impacting our segment operating results are discussed in Note 1, Basis of Presentation, including the Venezuelan currency devaluation, Note 2, Divestitures and Acquisitions and Note 6, Restructuring Programs. Also see Note 7, Debt, and Note 8, Financial Instruments, for more information on our interest and other expense, net for each period.

 

Net revenues by product category were:

 

                                                                                                                 
     For the Three Months Ended March 31, 2015  
     Latin      Asia                    North         
   America      Pacific      EEMEA      Europe      America      Total  
     (in millions)  

Biscuits

    $ 309       $ 316       $ 124       $ 594       $ 1,358       $ 2,701   

Chocolate

      294         402         199         1,228         56         2,179   

Gum & Candy

      295         191         118         183         268         1,055   

Beverages

      214         115         185         674         –         1,188   

Cheese & Grocery

      145         129         69         296         –         639   
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Total net revenues

 $ 1,257    $ 1,153    $ 695    $ 2,975    $ 1,682    $ 7,762   
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

 

                                                                                                                 
     For the Three Months Ended March 31, 2014 (1)  
     Latin      Asia                    North         
   America      Pacific      EEMEA      Europe      America      Total  
     (in millions)  

Biscuits

    $ 327       $ 331       $ 147       $ 722       $ 1,341       $ 2,868   

Chocolate

      324         418         243         1,476         63         2,524   

Gum & Candy

      286         206         147         223         263         1,125   

Beverages

      255         122         228         777         –         1,382   

Cheese & Grocery

      164         146         73         359         –         742   
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Total net revenues

 $ 1,356    $ 1,223    $ 838    $ 3,557    $ 1,667    $ 8,641   
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

 

  (1) During 2014, we realigned some of our products across product categories and as such, we reclassified the product category net revenues on a basis consistent with the 2015 presentation.