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.

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 benefit plan non-service income and 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,
	2018			2017
	(in millions)
Net revenues:
Latin America	$	891		$	910
AMEA	1,542			1,491
Europe	2,706			2,365
North America	1,626			1,648
Net revenues	$	6,765		$	6,414
Earnings before income taxes:
Operating income:
Latin America	$	126		$	111
AMEA	228			181
Europe	497			393
North America	275			292
Unrealized gains/(losses) on hedging activities (mark-to-market impacts)	206			(51		)
General corporate expenses	(64		)	(57		)
Amortization of intangibles	(44		)	(44		)
Operating income	1,224			825
Benefit plan non-service income	13			15
Interest and other expense, net	(80		)	(119		)
Earnings before income taxes	$	1,157		$	721

During the first quarter of 2018, in connection with adopting a new pension cost classification accounting standard (see Note 1, Basis of Presentation, for additional information), we reclassified certain of our benefit plan component costs other than service costs out of operating income into a new line item, benefit plan non-service income, on our condensed consolidated statements of earnings. As such, we have recast our historical operating income and segment operating income to reflect this reclassification, which had no impact to earnings before income taxes or net earnings.

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 7, 2014-2018 Restructuring Program, and Note 12, Commitments and Contingencies. Also see Note 8, Debt and Borrowing Arrangements, and Note 9, 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, 2018
	Latin America		AMEA		Europe		North America		Total
	(in millions)
Biscuits	$	183	$	442	$	795	$	1,333	$	2,753
Chocolate	243		573		1,423		57		2,296
Gum & Candy	224		235		186		236		881
Beverages	161		172		28		—		361
Cheese & Grocery	80		120		274		—		474
Total net revenues	$	891	$	1,542	$	2,706	$	1,626	$	6,765



	For the Three Months Ended March 31, 2017 ⁽¹⁾
	Latin America		AMEA		Europe		North America		Total
	(in millions)
Biscuits	$	170	$	400	$	665	$	1,333	$	2,568
Chocolate	259		514		1,209		70		2,052
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


(1)	During the first quarter of 2018, 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 2018 presentation.