Segment Reporting

6 Months Ended

Jun. 30, 2020

Segment Reporting [Abstract]

Segment Reporting

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 June 30,						For the Six Months Ended June 30,
	2020			2019			2020			2019
	(in millions)
Net revenues:
Latin America	$	511		$	737		$	1,237		$	1,537
AMEA	1,237			1,352			2,739			2,893
Europe	2,138			2,247			4,722			4,798
North America	2,025			1,726			3,920			3,372
Net revenues	$	5,911		$	6,062		$	12,618		$	12,600
Earnings before income taxes:
Operating income:
Latin America	$	(6	)	$	68		$	72		$	166
AMEA	171			191			405			447
Europe	297			408			769			908
North America	424			407			805			726
Unrealized (losses)/gains on hedging activities (mark-to-market impacts)	(2		)	33			(187		)	49
General corporate expenses	(111		)	(79		)	(187		)	(188		)
Amortization of intangibles	(50		)	(43		)	(93		)	(87		)
Net gain on divestiture	—			41			—			41
Acquisition-related costs	(10		)	(1		)	(15		)	(1		)
Operating income	713			1,025			1,569			2,061
Benefit plan non-service income	31			12			64			29
Interest and other expense, net	(85		)	(101		)	(275		)	(181		)
Earnings before income taxes	$	659		$	936		$	1,358		$	1,909

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 June 30, 2020
	Latin America		AMEA		Europe		North America		Total
	(in millions)
Biscuits	$	154	$	458	$	694	$	1,804	$	3,110
Chocolate	119		361		1,001		39		1,520
Gum & Candy	65		153		135		182		535
Beverages	90		157		20		—		267
Cheese & Grocery	83		108		288		—		479
Total net revenues	$	511	$	1,237	$	2,138	$	2,025	$	5,911
	For the Three Months Ended June 30, 2019
	Latin America		AMEA		Europe		North America		Total
	(in millions)
Biscuits	$	186	$	405	$	767	$	1,451	$	2,809
Chocolate	157		438		1,006		42		1,643
Gum & Candy	209		224		181		233		847
Beverages	108		169		20		—		297
Cheese & Grocery	77		116		273		—		466
Total net revenues	$	737	$	1,352	$	2,247	$	1,726	$	6,062
	For the Six Months Ended June 30, 2020
	Latin America		AMEA		Europe		North America		Total
	(in millions)
Biscuits	$	328	$	966	$	1,440	$	3,402	$	6,136
Chocolate	313		904		2,364		95		3,676
Gum & Candy	247		338		308		423		1,316
Beverages	192		328		45		—		565
Cheese & Grocery	157		203		565		—		925
Total net revenues	$	1,237	$	2,739	$	4,722	$	3,920	$	12,618
	For the Six Months Ended June 30, 2019
	Latin America		AMEA		Europe		North America		Total
	(in millions)
Biscuits	$	356	$	866	$	1,501	$	2,823	$	5,546
Chocolate	387		995		2,366		101		3,849
Gum & Candy	409		449		354		448		1,660
Beverages	231		341		46		—		618
Cheese & Grocery	154		242		531		—		927
Total net revenues	$	1,537	$	2,893	$	4,798	$	3,372	$	12,600