Segment Reporting (Notes)

3 Months Ended

Mar. 28, 2020

In the first quarter of our fiscal year 2020, our internal reporting and reportable segments changed. We moved our Puerto Rico business from the Latin America zone to the United States zone to consolidate and streamline the management of our product categories and supply chain. We also combined our EMEA, Latin America, and APAC zones to form the International zone as a result of certain previously announced organizational changes.

Therefore, effective in the first quarter of 2020, we manage and report our operating results through three reportable segments defined by geographic region: United States, International, and Canada. We have reflected these changes in all historical periods presented.

Management evaluates segment performance based on several factors, including net sales and Segment Adjusted EBITDA. Segment Adjusted EBITDA is defined as net income/(loss) from continuing operations before interest expense, other expense/(income), provision for/(benefit from) income taxes, and depreciation and amortization (excluding integration and restructuring expenses); in addition to these adjustments, we exclude, when they occur, the impacts of integration and restructuring expenses, deal costs, unrealized gains/(losses) on commodity hedges (the unrealized gains and losses are recorded in general corporate expenses until realized; once realized, the gains and losses are recorded in the applicable segment’s operating results), impairment losses, and equity award compensation expense (excluding integration and restructuring expenses). Segment Adjusted EBITDA is a tool that can assist management and investors in comparing our performance on a consistent basis by

removing the impact of certain items that management believes do not directly reflect our underlying operations. Management uses Segment Adjusted EBITDA to evaluate segment performance and allocate resources.

Management does not use assets by segment to evaluate performance or allocate resources. Therefore, we do not disclose assets by segment.

Net sales by segment were (in millions):


	For the Three Months Ended
	March 28, 2020		March 30, 2019
Net sales:
United States	$	4,495	$	4,224
International	1,301		1,285
Canada	361		450
Total net sales	$	6,157	$	5,959

Segment Adjusted EBITDA was (in millions):


	For the Three Months Ended
	March 28, 2020		March 30, 2019
Segment Adjusted EBITDA:
United States	$	1,209	$	1,139
International	245		238
Canada	55		121
General corporate expenses	(94)		(67)
Depreciation and amortization (excluding integration and restructuring expenses)	(243)		(234)
Integration and restructuring expenses	—		(27)
Deal costs	—		(8)
Unrealized gains/(losses) on commodity hedges	(143)		29
Impairment losses	(226)		(620)
Equity award compensation expense (excluding integration and restructuring expenses)	(33)		(9)
Operating income/(loss)	770		562
Interest expense	310		321
Other expense/(income)	(81)		(380)
Income/(loss) before income taxes	$	541	$	621

Net sales by product category were (in millions):


	For the Three Months Ended
	March 28, 2020		March 30, 2019
Condiments and sauces	$	1,581	$	1,513
Cheese and dairy	1,139		1,194
Ambient foods	716		598
Frozen and chilled foods	648		605
Meats and seafood	590		587
Refreshment beverages	389		357
Coffee	275		308
Infant and nutrition	113		129
Desserts, toppings and baking	204		194
Nuts and salted snacks	250		225
Other	252		249
Total net sales	$	6,157	$	5,959