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Segment Reporting | 12 Months Ended
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Dec. 31, 2016
Segment Reporting | Note 16. Segment Reporting We manufacture and market primarily snack food products, including biscuits (cookies, crackers and salted snacks), chocolate, gum & candy and various cheese & grocery products, as well as powdered beverage products. We manage our global business and report operating results through geographic units. Our operations and management structure are organized into four reportable operating segments:
| • |  | Latin America
| • |  | AMEA
| • |  | Europe
| • |  | North America
On October 1, 2016, we integrated our EEMEA operating segment into our Europe and Asia Pacific operating segments to further leverage and optimize the operating scale built within the Europe and Asia Pacific regions. Russia, Ukraine, Turkey, Belarus, Georgia and Kazakhstan were combined within our Europe operating segment, while the remaining Middle East and African countries were combined within our Asia Pacific region to form the AMEA regional operating segment. We have reflected the segment change as if it had occurred in all periods presented. 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. Our regional management teams have responsibility for the business, product categories and financial results in the regions. Historically, we have recorded income from equity method investments within our operating income as these investments were part of our base business. Beginning in the third quarter of 2015, to align with the accounting for our new coffee equity method investment in JDE, we began to record the earnings from our equity method investments in equity method investment earnings outside of segment operating income. For the six months ended December 31, 2015, after-tax equity method investment net earnings were less than $1 million on a combined basis. Earnings from equity method investments through July 2, 2015 recorded within segment operating income were $52 million in AMEA and $4 million in North America. For the year ended December 31, 2014, these earnings were $104 million in AMEA and $9 million in North America. See Note 1, Summary of Significant Accounting Policies – Principles of Consolidation, and Note 2, Divestitures and Acquisitions, for additional information. In 2015, we also began to report stock-based compensation for our corporate employees within general corporate expenses that were reported within our North America region. We reclassified $32 million of corporate stock-based compensation expense in 2015 from the North America segment to general corporate expenses. 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, gain on the JDE coffee business transactions, loss on deconsolidation of Venezuela 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, revised to reflect our new segment structure, were:
|  | For the Years Ended December 31, |
|  | 2016 |  |  | 2015 |  |  | 2014 |
|  | (in millions) |
Net revenues: |  |  |  |  |  |  |  |  |  |  |  |
Latin America (1) |  | $ | 3,392 |  |  | $ | 4,988 |  |  | $ | 5,153 |
AMEA (2) |  |  | 5,816 |  |  |  | 6,002 |  |  |  | 6,367 |
Europe (2) |  |  | 9,755 |  |  |  | 11,672 |  |  |  | 15,788 |
North America |  |  | 6,960 |  |  |  | 6,974 |  |  |  | 6,936 |
Net revenues |  | $ | 25,923 |  |  | $ | 29,636 |  |  | $ | 34,244 |
| (1) | Net revenues of $1,217 million for 2015 and $760 million for 2014 from our Venezuelan subsidiaries are included in our consolidated financial statements. Beginning in 2016, we account for our Venezuelan subsidiaries using the cost method of accounting and no longer include net revenues of our Venezuelan subsidiaries within our consolidated financial statements. Refer to Note 1, Summary of Significant Accounting Policies – Currency Translation and Highly Inflationary Accounting: Venezuela, for more information.
| (2) | On July 2, 2015, we contributed our global coffee businesses primarily from our Europe and AMEA segments. Net revenues of our global coffee business were $1,561 million in Europe and $66 million in AMEA for the year ended December 31, 2015. Refer to Note 2, Divestitures and Acquisitions – JDE Coffee Business Transactions, for more information.
|  | For the Years Ended December 31, |
|  | 2016 |  |  | 2015 |  |  | 2014 |
|  | (in millions) |
Earnings before income taxes: |  |  |  |  |  |  |  |  |  |  |  |
Operating income: |  |  |  |  |  |  |  |  |  |  |  |
Latin America |  | $ | 271 |  |  | $ | 485 |  |  | $ | 475 |
AMEA |  |  | 506 |  |  |  | 389 |  |  |  | 530 |
Europe |  |  | 1,267 |  |  |  | 1,350 |  |  |  | 1,952 |
North America |  |  | 1,078 |  |  |  | 1,105 |  |  |  | 922 |
Unrealized (losses) / gains on hedging activities (mark-to-market impacts) |  |  | (94 | ) |  |  | 96 |  |  |  | (112 | )
General corporate expenses |  |  | (291 | ) |  |  | (383 | ) |  |  | (317 | )
Amortization of intangibles |  |  | (176 | ) |  |  | (181 | ) |  |  | (206 | )
Gains on divestitures and JDE coffee business transactions |  |  | 9 |  |  |  | 6,822 |  |  |  | – |
Loss on deconsolidation of Venezuela |  |  | – |  |  |  | (778 | ) |  |  | – |
Acquisition-related costs |  |  | (1 | ) |  |  | (8 | ) |  |  | (2 | )
Operating income |  |  | 2,569 |  |  |  | 8,897 |  |  |  | 3,242 |
Interest and other expense, net |  |  | (1,115 | ) |  |  | (1,013 | ) |  |  | (688 | )
Earnings before income taxes |  | $ | 1,454 |  |  | $ | 7,884 |  |  | $ | 2,554 |
No single customer accounted for 10% or more of our net revenues from continuing operations in 2016. Our five largest customers accounted for 16.6% and our ten largest customers accounted for 22.9% of net revenues from continuing operations in 2016. Items impacting our segment operating results are discussed in Note 1, Summary of Significant Accounting Policies, including the Venezuela deconsolidation and currency devaluation, Note 2, Divestitures and Acquisitions, Note 5, Goodwill and Intangible Assets, and Note 6, Restructuring Programs. Also see Note 7, Debt and Borrowing Arrangements, and Note 8, Financial Instruments, for more information on our interest and other expense, net for each period. Total assets, depreciation expense and capital expenditures by segment, revised to reflect our new segment structure, were:
|  | For the Years Ended December 31, |
|  | 2016 |  |  | 2015 |  |  | 2014 |
|  | (in millions) |
Total assets: |  |  |  |  |  |  |  |  |  |  |  |
Latin America |  | $ | 5,156 |  |  | $ | 4,673 |  |  | $ | 6,470 |
AMEA |  |  | 10,031 |  |  |  | 10,460 |  |  |  | 10,549 |
Europe |  |  | 19,934 |  |  |  | 21,026 |  |  |  | 27,240 |
North America |  |  | 20,694 |  |  |  | 21,175 |  |  |  | 21,287 |
Equity method investments |  |  | 5,585 |  |  |  | 5,387 |  |  |  | 662 |
Unallocated assets (1) |  |  | 138 |  |  |  | 122 |  |  |  | 563 |
Total assets |  | $ | 61,538 |  |  | $ | 62,843 |  |  | $ | 66,771 |
| (1) | Unallocated assets consist primarily of cash and cash equivalents, deferred income taxes, centrally held property, plant and equipment, prepaid pension assets and derivative financial instrument balances. We had debt issuance costs related to recognized debt liabilities of $40 million as of December 31, 2016, $46 million as of December 31, 2015 and $44 million as of December 31, 2014.
|  | For the Years Ended December 31, |
|  | 2016 |  |  | 2015 |  |  | 2014 |
|  | (in millions) |
Depreciation expense: |  |  |  |  |  |  |  |  |  |  |  |
Latin America |  | $ | 92 |  |  | $ | 94 |  |  | $ | 118 |
AMEA |  |  | 161 |  |  |  | 155 |  |  |  | 154 |
Europe |  |  | 253 |  |  |  | 299 |  |  |  | 407 |
North America |  |  | 141 |  |  |  | 165 |  |  |  | 174 |
Total depreciation expense |  | $ | 647 |  |  | $ | 713 |  |  | $ | 853 |
|  | For the Years Ended December 31, |
|  | 2016 |  |  | 2015 |  |  | 2014 |
|  | (in millions) |
Capital Expenditures: |  |  |  |  |  |  |  |  |  |  |  |
Latin America |  | $ | 321 |  |  | $ | 354 |  |  | $ | 460 |
AMEA |  |  | 349 |  |  |  | 381 |  |  |  | 451 |
Europe |  |  | 294 |  |  |  | 517 |  |  |  | 553 |
North America |  |  | 260 |  |  |  | 262 |  |  |  | 178 |
Total capital expenditures |  | $ | 1,224 |  |  | $ | 1,514 |  |  | $ | 1,642 |
Geographic data for net revenues (recognized in the countries where products are sold) and long-lived assets, excluding deferred tax, goodwill, intangible assets and equity method investments, were:
|  | For the Years Ended December 31, |
|  | 2016 |  |  | 2015 |  |  | 2014 |
|  | (in millions) |
Net revenues: |  |  |  |  |  |  |  |  |  |  |  |
United States |  | $ | 6,329 |  |  | $ | 6,302 |  |  | $ | 6,143 |
Other |  |  | 19,594 |  |  |  | 23,334 |  |  |  | 28,101 |
Total net revenues |  | $ | 25,923 |  |  | $ | 29,636 |  |  | $ | 34,244 |
|  | As of December 31, |
|  | 2016 |  |  | 2015 |  |  | 2014 |
|  | (in millions) |
Long-lived assets: |  |  |  |  |  |  |  |  |  |  |  |
United States |  | $ | 1,508 |  |  | $ | 1,551 |  |  | $ | 1,564 |
Other |  |  | 7,229 |  |  |  | 7,238 |  |  |  | 8,801 |
Total long-lived assets |  | $ | 8,737 |  |  | $ | 8,789 |  |  | $ | 10,365 |
No individual country within Other exceeded 10% of our net revenues or long-lived assets for all periods presented. Net revenues by product category, revised to reflect our new segment structure, were:
|  | For the Year Ended December 31, 2016 |
|  | Latin |  |  |  |  |  |  |  |  | North |  |  |  |
|  | America (1) |  |  | AMEA |  |  | Europe |  |  | America |  |  | Total (1) |
|  | (in millions) |
Biscuits |  | $ | 734 |  |  | $ | 1,588 |  |  | $ | 2,703 |  |  | $ | 5,565 |  |  | $ | 10,590 |
Chocolate |  |  | 743 |  |  |  | 1,901 |  |  |  | 4,840 |  |  |  | 255 |  |  |  | 7,739 |
Gum & Candy |  |  | 938 |  |  |  | 953 |  |  |  | 916 |  |  |  | 1,140 |  |  |  | 3,947 |
Beverages |  |  | 657 |  |  |  | 611 |  |  |  | 177 |  |  |  | – |  |  |  | 1,445 |
Cheese & Grocery |  |  | 320 |  |  |  | 763 |  |  |  | 1,119 |  |  |  | – |  |  |  | 2,202 |
Total net revenues |  | $ | 3,392 |  |  | $ | 5,816 |  |  | $ | 9,755 |  |  | $ | 6,960 |  |  | $ | 25,923 |
|  | For the Year Ended December 31, 2015 |
|  | Latin |  |  |  |  |  |  |  |  | North |  |  |  |
|  | America (1) |  |  | AMEA |  |  | Europe (3) |  |  | America |  |  | Total (1) |
|  | (in millions) |
Biscuits |  | $ | 1,605 |  |  | $ | 1,539 |  |  | $ | 2,680 |  |  | $ | 5,569 |  |  | $ | 11,393 |
Chocolate |  |  | 840 |  |  |  | 1,928 |  |  |  | 5,050 |  |  |  | 256 |  |  |  | 8,074 |
Gum & Candy |  |  | 1,091 |  |  |  | 1,003 |  |  |  | 1,015 |  |  |  | 1,149 |  |  |  | 4,258 |
Beverages (2) |  |  | 767 |  |  |  | 730 |  |  |  | 1,763 |  |  |  | – |  |  |  | 3,260 |
Cheese & Grocery |  |  | 685 |  |  |  | 802 |  |  |  | 1,164 |  |  |  | – |  |  |  | 2,651 |
Total net revenues |  | $ | 4,988 |  |  | $ | 6,002 |  |  | $ | 11,672 |  |  | $ | 6,974 |  |  | $ | 29,636 |
|  | For the Year Ended December 31, 2014 |
|  | Latin |  |  |  |  |  |  |  |  | North |  |  |  |
|  | America (1) |  |  | AMEA |  |  | Europe (3) |  |  | America |  |  | Total (1) |
|  | (in millions) |
Biscuits |  | $ | 1,322 |  |  | $ | 1,442 |  |  | $ | 3,259 |  |  | $ | 5,486 |  |  | $ | 11,509 |
Chocolate |  |  | 1,054 |  |  |  | 2,073 |  |  |  | 5,997 |  |  |  | 296 |  |  |  | 9,420 |
Gum & Candy |  |  | 1,176 |  |  |  | 1,098 |  |  |  | 1,232 |  |  |  | 1,154 |  |  |  | 4,660 |
Beverages (2) |  |  | 940 |  |  |  | 836 |  |  |  | 3,902 |  |  |  | – |  |  |  | 5,678 |
Cheese & Grocery |  |  | 661 |  |  |  | 918 |  |  |  | 1,398 |  |  |  | – |  |  |  | 2,977 |
Total net revenues |  | $ | 5,153 |  |  | $ | 6,367 |  |  | $ | 15,788 |  |  | $ | 6,936 |  |  | $ | 34,244 |
| (1) | In 2015 and 2014, our consolidated net revenues included Venezuela net revenues of $763 million in biscuits, $340 million in cheese & grocery, $66 million in gum & candy and $48 million in beverages and 2014 Venezuela net revenues of $422 million in biscuits, $216 million in cheese & grocery, $91 million in beverages and $30 million in gum & candy. Following the deconsolidation of our Venezuela operations at the end of 2015, in 2016 our consolidated net revenues no longer include the net revenues of our Venezuelan subsidiaries. Refer to Note 1, Summary of Significant Accounting Policies – Currency Translation and Highly Inflationary Accounting: Venezuela, for more information.
| (2) | On July 2, 2015, we contributed our global coffee businesses primarily from our Europe and AMEA segment beverage categories. Net revenues of our global coffee business were $1,561 million in Europe and $66 million in AMEA for the year ended December 31, 2015. Refer to Note 2, Divestitures and Acquisitions – JDE Coffee Business Transactions, for more information.
| (3) | During 2016, we realigned some of our products across product categories primarily within our Europe segment and as such, we reclassified the product category net revenues on a basis consistent with the 2016 presentation.

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- Definition The entire disclosure for reporting segments including data and tables. Reportable segments include those that meet any of the following quantitative thresholds a) it's reported revenue, including sales to external customers and intersegment sales or transfers is 10 percent or more of the combined revenue, internal and external, of all operating segments b) the absolute amount of its reported profit or loss is 10 percent or more of the greater, in absolute amount of 1) the combined reported profit of all operating segments that did not report a loss or 2) the combined reported loss of all operating segments that did report a loss c) its assets are 10 percent or more of the combined assets of all operating segments. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 34 -URI http://asc.fasb.org/extlink&oid=68060357&loc=d3e8981-108599 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 41 -URI http://asc.fasb.org/extlink&oid=68060357&loc=d3e9038-108599 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 33 -URI http://asc.fasb.org/extlink&oid=68060357&loc=d3e8971-108599 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 12 -URI http://asc.fasb.org/extlink&oid=68060357&loc=d3e8595-108599 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=68060357&loc=d3e8380-108599 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 32 -URI http://asc.fasb.org/extlink&oid=68060357&loc=d3e8933-108599 Reference 7: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 26 -URI http://asc.fasb.org/extlink&oid=68060357&loc=d3e8844-108599 Reference 8: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 35 -URI http://asc.fasb.org/extlink&oid=68060357&loc=d3e8984-108599 Reference 9: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 40 -URI http://asc.fasb.org/extlink&oid=68060357&loc=d3e9031-108599 Reference 10: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 42 -URI http://asc.fasb.org/extlink&oid=68060357&loc=d3e9054-108599 Reference 11: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 10 -URI http://asc.fasb.org/extlink&oid=68060357&loc=d3e8538-108599 Reference 12: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 29 -URI http://asc.fasb.org/extlink&oid=68060357&loc=d3e8864-108599 Reference 13: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 31 -URI http://asc.fasb.org/extlink&oid=68060357&loc=d3e8924-108599 Reference 14: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 30 -URI http://asc.fasb.org/extlink&oid=68060357&loc=d3e8906-108599 + Details
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