Segment Reporting

9 Months Ended

Sep. 30, 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), amortization of intangibles, gains and losses on divestitures 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 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 September 30,						For the Nine Months Ended September 30,
	2019			2018			2019			2018
	(in millions)
Net revenues:
Latin America	$	736		$	774		$	2,273		$	2,439
AMEA	1,419			1,398			4,312			4,300
Europe	2,377			2,361			7,175			7,370
North America	1,823			1,755			5,195			5,056
Net revenues	$	6,355		$	6,288		$	18,955		$	19,165
Earnings before income taxes:
Operating income:
Latin America	$	84		$	100		$	250		$	318
AMEA	188			153			635			558
Europe	331			381			1,239			1,245
North America	370			334			1,096			514
Unrealized gains/(losses) on hedging activities (mark-to-market impacts)	20			(112		)	69			181
General corporate expenses	(76		)	(74		)	(264		)	(228		)
Amortization of intangibles	(43		)	(44		)	(130		)	(132		)
Net gain on divestiture	3			—			44			—
Acquisition-related costs	(1		)	(1		)	(2		)	(14		)
Operating income	876			737			2,937			2,442
Benefit plan non-service income	13			19			42			47
Interest and other expense, net	(205		)	(86		)	(386		)	(414		)
Earnings before income taxes	$	684		$	670		$	2,593		$	2,075

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, and Note 8, Restructuring Program. 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 September 30, 2019
	Latin America		AMEA		Europe		North America		Total
	(in millions)
Biscuits	$	186	$	495	$	752	$	1,514	$	2,947
Chocolate	164		526		1,177		61		1,928
Gum & Candy	212		213		165		248		838
Beverages	93		103		21		—		217
Cheese & Grocery	81		82		262		—		425
Total net revenues	$	736	$	1,419	$	2,377	$	1,823	$	6,355

	For the Three Months Ended September 30, 2018
	Latin America		AMEA		Europe		North America		Total
	(in millions)
Biscuits	$	185	$	455	$	769	$	1,422	$	2,831
Chocolate	169		524		1,142		66		1,901
Gum & Candy	220		207		167		267		861
Beverages	117		103		19		—		239
Cheese & Grocery	83		109		264		—		456
Total net revenues	$	774	$	1,398	$	2,361	$	1,755	$	6,288



	For the Nine Months Ended September 30, 2019
	Latin America		AMEA		Europe		North America		Total
	(in millions)
Biscuits	$	542	$	1,361	$	2,253	$	4,337	$	8,493
Chocolate	551		1,521		3,543		162		5,777
Gum & Candy	621		662		519		696		2,498
Beverages	324		444		67		—		835
Cheese & Grocery	235		324		793		—		1,352
Total net revenues	$	2,273	$	4,312	$	7,175	$	5,195	$	18,955

	For the Nine Months Ended September 30, 2018
	Latin America		AMEA		Europe		North America		Total
	(in millions)
Biscuits	$	560	$	1,284	$	2,374	$	4,158	$	8,376
Chocolate	573		1,537		3,568		169		5,847
Gum & Candy	668		678		553		729		2,628
Beverages	394		448		66		—		908
Cheese & Grocery	244		353		809		—		1,406
Total net revenues	$	2,439	$	4,300	$	7,370	$	5,056	$	19,165