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Segment Reporting
 6 Months Ended
Jun. 30, 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), amortization of intangibles and loss on divestiture 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      For the Six Months Ended  
     June 30,      June 30,  
     2017      2016      2017      2016  
     (in millions)  

Net revenues:

            

Latin America

    $ 848      $ 843      $ 1,758      $ 1,660  

AMEA

      1,394        1,446        2,885        2,961  

Europe

      2,171        2,293        4,536        4,741  

North America

      1,573        1,720        3,221        3,395  
  

 

 

     

 

 

     

 

 

     

 

 

  

Net revenues

    $ 5,986      $ 6,302      $ 12,400      $ 12,757  
  

 

 

     

 

 

     

 

 

     

 

 

  

Earnings before income taxes:

            

Operating income:

            

Latin America

    $ 103      $ 32      $ 214      $ 99  

AMEA

      162        149        343        339  

Europe

      339        256        748        608  

North America

      214        295        506        566  

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

      (46 )       17        (97 )       (37 ) 

General corporate expenses

      (84 )       (67 )       (142 )       (127 ) 

Amortization of intangibles

      (44 )       (44 )       (88 )       (88 ) 

Loss on divestiture

      (3 )       –        (3 )       –  
  

 

 

     

 

 

     

 

 

     

 

 

  

Operating income

      641        638        1,481        1,360  

Interest and other expense, net

      (124 )       (151 )       (243 )       (395 ) 
  

 

 

     

 

 

     

 

 

     

 

 

  

Earnings before income taxes

    $ 517      $ 487      $ 1,238      $ 965  
  

 

 

     

 

 

     

 

 

     

 

 

  

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 June 30, 2017  
     Latin
America		      AMEA      Europe      North
America		      Total  
     (in millions)  

Biscuits

    $ 200      $ 355      $ 718      $ 1,301      $ 2,574  

Chocolate

      194        425        946        50        1,615  

Gum & Candy

      241        238        204        222        905  

Beverages

      129        189        24        –        342  

Cheese & Grocery

      84        187        279        –        550  
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Total net revenues

    $ 848      $ 1,394      $ 2,171      $ 1,573      $ 5,986  
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
     For the Three Months Ended June 30, 2016  
     Latin
America		      AMEA      Europe      North
America		      Total  
     (in millions)  

Biscuits

    $ 196      $ 356      $ 719      $ 1,398      $ 2,669  

Chocolate

      179        392        981        43        1,595  

Gum & Candy

      250        250        254        279        1,033  

Beverages

      138        229        39        –        406  

Cheese & Grocery

      80        219        300        –        599  
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Total net revenues

    $ 843      $ 1,446      $ 2,293      $ 1,720      $ 6,302  
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

 

     For the Six Months Ended June 30, 2017  
     Latin
America		      AMEA      Europe      North
America		      Total  
     (in millions)  

Biscuits

    $ 370      $ 754      $ 1,369      $ 2,634      $ 5,127  

Chocolate

      453        940        2,169        120        3,682  

Gum & Candy

      454        467        397        467        1,785  

Beverages

      322        362        65        –        749  

Cheese & Grocery

      159        362        536        –        1,057  
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Total net revenues

    $ 1,758      $ 2,885      $ 4,536      $ 3,221      $ 12,400  
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
     For the Six Months Ended June 30, 2016  
     Latin
America		      AMEA      Europe      North
America		      Total  
     (in millions)  

Biscuits

    $ 360      $ 763      $ 1,362      $ 2,759      $ 5,244  

Chocolate

      377        885        2,244        88        3,594  

Gum & Candy

      466        506        470        548        1,990  

Beverages

      302        406        87        –        795  

Cheese & Grocery

      155        401        578        –        1,134  
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Total net revenues

    $ 1,660      $ 2,961      $ 4,741      $ 3,395      $ 12,757