Segment Reporting

3 Months Ended

Mar. 31, 2020

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 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 March 31,
	2020			2019
	(in millions)
Net revenues:
Latin America	$	726		$	800
AMEA	1,502			1,541
Europe	2,584			2,551
North America	1,895			1,646
Net revenues	$	6,707		$	6,538
Earnings before income taxes:
Operating income:
Latin America	$	78		$	98
AMEA	234			256
Europe	472			500
North America	381			319
Unrealized (losses)/gains on hedging activities (mark-to-market impacts)	(185		)	16
General corporate expenses	(76		)	(109		)
Amortization of intangibles	(43		)	(44		)
Acquisition-related costs	(5		)	—
Operating income	856			1,036
Benefit plan non-service income	33			17
Interest and other expense, net	(190		)	(80		)
Earnings before income taxes	$	699		$	973

Items impacting our segment operating results are discussed in Note 1, Basis of Presentation, Note 2, Acquisitions and Divestitures, Note 4, Property, Plant and Equipment, Note 5, Goodwill and Intangible Assets, and Note 7, Restructuring Program. 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, 2020
	Latin America		AMEA		Europe		North America		Total
	(in millions)
Biscuits	$	174	$	508	$	746	$	1,598	$	3,026
Chocolate	194		543		1,363		56		2,156
Gum & Candy	182		185		173		241		781
Beverages	102		171		25		—		298
Cheese & Grocery	74		95		277		—		446
Total net revenues	$	726	$	1,502	$	2,584	$	1,895	$	6,707

	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