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Segment Reporting
 3 Months Ended
Mar. 31, 2017
Segment Reporting

Note 15.   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 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.

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) and amortization of intangibles 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 Three Months Ended  
     March 31,  
     2017      2016  
     (in millions)  

Net revenues:

      

Latin America

    $ 910      $ 817  

AMEA

      1,491        1,515  

Europe

      2,365        2,448  

North America

      1,648        1,675  
  

 

 

     

 

 

  

Net revenues

    $ 6,414      $ 6,455  
  

 

 

     

 

 

  

Earnings before income taxes:

      

Operating income:

      

Latin America

    $ 111      $ 67  

AMEA

      181        190  

Europe

      409        352  

North America

      292        271  

Unrealized losses on hedging activities (mark-to-market impacts)

      (51 )       (54 ) 

General corporate expenses

      (58 )       (60 ) 

Amortization of intangibles

      (44 )       (44 ) 
  

 

 

     

 

 

  

Operating income

      840        722  

Interest and other expense, net

      (119 )       (244 ) 
  

 

 

     

 

 

  

Earnings before income taxes

    $ 721      $ 478  
  

 

 

     

 

 

  

Items impacting our segment operating results are discussed in Note 1, Basis of Presentation, Note 2, Divestitures and Acquisitions, Note 4, Property, Plant and Equipment, Note 5, Goodwill and Intangible Assets, Note 6, 2014-2018 Restructuring Program and Note 11. Commitments and Contingencies. 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.

 

Net revenues by product category, revised to reflect our new segment structure, were:

 

       For the Three Months Ended March 31, 2017  
       Latin
America		        AMEA        Europe        North
America		        Total  
       (in millions)  

Biscuits

      $ 170        $ 399        $ 651        $ 1,333        $ 2,553  

Chocolate

        259          515          1,223          70          2,067  

Gum & Candy

        213          229          193          245          880  

Beverages

        193          173          41          –          407  

Cheese & Grocery

        75          175          257          –          507  
    

 

 

       

 

 

       

 

 

       

 

 

       

 

 

  

Total net revenues

      $ 910        $ 1,491        $ 2,365        $ 1,648        $ 6,414  
    

 

 

       

 

 

       

 

 

       

 

 

       

 

 

  
       For the Three Months Ended March 31, 2016  
       Latin
America		        AMEA        Europe        North
America		        Total  
       (in millions)  

Biscuits

      $ 164        $ 407        $ 643        $ 1,361        $ 2,575  

Chocolate

        198          493          1,263          45          1,999  

Gum & Candy

        216          256          216          269          957  

Beverages

        164          177          48          –          389  

Cheese & Grocery

        75          182          278          –          535  
    

 

 

       

 

 

       

 

 

       

 

 

       

 

 

  

Total net revenues

      $ 817        $ 1,515        $ 2,448        $ 1,675        $ 6,455