Segment Reporting

3 Months Ended

Mar. 31, 2019

Note 17. 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 across our key markets. Our regional management teams have responsibility for the business, product categories and financial results in the regions.

Our operations and management structure are organized into four operating segments:

• Latin America

• AMEA

• Europe

• North America

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,
	2019			2018
	(in millions)
Net revenues:
Latin America	$	800		$	891
AMEA	1,541			1,542
Europe	2,551			2,706
North America	1,646			1,626
Net revenues	$	6,538		$	6,765
Earnings before income taxes:
Operating income:
Latin America	$	98		$	126
AMEA	256			228
Europe	500			497
North America	319			275
Unrealized gains on hedging activities (mark-to-market impacts)	16			206
General corporate expenses	(109		)	(64		)
Amortization of intangibles	(44		)	(44		)
Operating income	1,036			1,224
Benefit plan non-service income	17			13
Interest and other expense, net	(80		)	(80		)
Earnings before income taxes	$	973		$	1,157

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 6, Goodwill and Intangible Assets, Note 8, Restructuring Program, and Note 13, Commitments and Contingencies. Also see Note 9, Debt and Borrowing Arrangements, and Note 10, 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, 2019
	Latin America		AMEA		Europe		North America		Total
	(in millions)
Biscuits	$	170	$	461	$	734	$	1,372	$	2,737
Chocolate	230		557		1,360		59		2,206
Gum & Candy	200		225		173		215		813
Beverages	123		172		26		—		321
Cheese & Grocery	77		126		258		—		461
Total net revenues	$	800	$	1,541	$	2,551	$	1,646	$	6,538

	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