19. SEGMENT INFORMATION

Description of segments. We are a global leader in life sciences, diagnostics and applied chemical markets, providing application focused solutions that include instruments, software, services and consumables for the entire laboratory workflow. In the first fiscal quarter of 2015, we completed the separation of our electronic measurement business. See Note 3, "Discontinued Operations" for further information.

Agilent has three business segments comprised of the life sciences and applied markets business, diagnostics and genomics business and the Agilent CrossLab business each of which comprises a reportable segment. The three operating segments were determined based primarily on how the chief operating decision maker views and evaluates our operations. Operating results are regularly reviewed by the chief operating decision maker to make decisions about resources to be allocated to the segment and to assess its performance. Other factors, including market separation and customer specific applications, go-to-market channels, products and services and manufacturing are considered in determining the formation of these operating segments.

A description of our three reportable segments is as follows:

Our life sciences and applied markets business provides application-focused solutions that include instruments and software that enable customers to identify, quantify and analyze the physical and biological properties of substances and products, as well as enable customers in the clinical and life sciences research areas to interrogate samples at the molecular level. Key product categories include: liquid chromatography ("LC") systems and components; liquid chromatography mass spectrometry ("LCMS") systems; gas chromatography ("GC") systems and components; gas chromatography mass spectrometry ("GCMS") systems; inductively coupled plasma mass spectrometry ("ICP-MS") instruments; atomic absorption ("AA") instruments; microwave plasma-atomic emission spectrometry (“MP-AES”) instruments; inductively coupled plasma optical emission spectrometry ("ICP-OES") instruments; cell analysis plate based assays; laboratory software and informatics systems; laboratory automation; dissolution testing; vacuum pumps and measurement technologies.

Our diagnostics and genomics business is comprised of five areas of activity providing solutions that include reagents, instruments, software and consumables, which enable customers in the clinical and life sciences research areas to interrogate samples at the cellular and molecular level. First, our genomics business includes arrays for DNA mutation detection, genotyping, gene copy number determination, identification of gene rearrangements, DNA methylation profiling, gene expression profiling, as well as next generation sequencing ("NGS") target enrichment and genetic data management and interpretation support software. Second, our nucleic acid solutions business provides equipment and expertise focused on production of synthesized oligonucleotides under pharmaceutical good manufacturing practices ("GMP") conditions for use as active pharmaceutical ingredients ("API") in an emerging class of drugs that utilize nucleic acid molecules for disease therapy. Next, our pathology solutions business is focused on product offerings to cancer diagnostics and anatomic pathology workflows. The broad portfolio of offerings includes immunohistochemistry (“IHC”), in situ hybridization (“ISH”), hematoxylin and eosin (“H&E”) staining and special staining. We also collaborate with a number of major pharmaceutical companies to develop new potential pharmacodiagnostics, also known as companion diagnostics, which may be used to identify patients most likely to benefit from a specific targeted therapy. Finally, the reagent partnership business is a provider of reagents used for turbidimetry and flow cytometry.

The Agilent CrossLab business spans the entire lab with its extensive consumables and services portfolio, which is designed to improve customer outcomes. The majority of the portfolio is vendor neutral, meaning Agilent can serve and supply customers regardless of their instrument purchase choices. Solutions range from chemistries and supplies to services and software helping to connect the entire lab. Key product categories in consumables include GC and LC columns, sample preparation products, custom chemistries, and a large selection of laboratory instrument supplies. Services include startup, operational, training and compliance support, as well as asset management and consultative services that help increase customer productivity. Custom service and consumable bundles are tailored to meet the specific application needs of various industries and to keep instruments fully operational and compliant with the respective industry requirements.

A significant portion of the segments' expenses arise from shared services and infrastructure that we have historically provided to the segments in order to realize economies of scale and to efficiently use resources. These expenses, collectively called corporate charges, include legal, accounting, real estate, insurance services, information technology services, treasury, other corporate infrastructure expenses and costs of centralized research and development. Charges are allocated to the segments, and the allocations have been determined on a basis that we consider to be a reasonable reflection of the utilization of services provided to or benefits received by the segments. Corporate charges previously allocated to our electronic measurement business, but not classified within discontinued operations, were not reallocated to our other segments. These charges are presented below as a component of the reconciliation between segments' income from operations and Agilent's income from continuing operations and are classified as unallocated corporate charges. In addition, we do not allocate amortization and impairment of acquisition-related intangible assets, restructuring and transformational expenses, acquisition and integration costs and certain other charges to the operating margin for each segment because management does not include this information in its measurement of the performance of the operating segments.

The following tables reflect the results of our reportable segments under our management reporting system. The performance of each segment is measured based on several metrics, including segment income from operations. These results are used, in part, by the chief operating decision maker in evaluating the performance of, and in allocating resources to, each of the segments.

The profitability of each of the segments is measured after excluding restructuring and asset impairment charges, investment gains and losses, interest income, interest expense, acquisition and integration costs, non-cash amortization and other items as noted in the reconciliations below.



	Life Sciences and Applied Markets		Diagnostics and Genomics		Agilent CrossLab		Total Segments
	(in millions)
Year ended October 31, 2016:
Total net revenue	$	2,073	$	709	$	1,420	$	4,202
Income from operations	$	429	$	114	$	316	$	859
Depreciation expense	$	36	$	31	$	28	$	95
Share-based compensation expense	$	29	$	10	$	21	$	60
Year ended October 31, 2015:
Total net revenue	$	2,046	$	662	$	1,330	$	4,038
Income from operations	$	380	$	88	$	299	$	767
Depreciation expense	$	27	$	37	$	34	$	98
Share-based compensation expense	$	27	$	9	$	18	$	54
Year ended October 31, 2014:
Total net revenue	$	2,078	$	663	$	1,307	$	4,048
Income from operations	$	369	$	93	$	301	$	763
Depreciation expense	$	29	$	43	$	33	$	105
Share-based compensation expense	$	29	$	9	$	18	$	56

For the year ended October 31, 2014, depreciation expense and share-based compensation expense excludes unallocated corporate charges.

The following table reconciles reportable segments' income from operations to Agilent's total enterprise income before taxes:



	Years Ended October 31,
	2016			2015			2014
	(in millions)
Total reportable segments' income from operations	$	859		$	767		$	763
Restructuring and business exit related costs	(11		)	(12		)	(66		)
Asset Impairments	(4		)	(3		)	(4		)
Transformational programs	(38		)	(56		)	(29		)
Amortization of intangibles	(152		)	(156		)	(189		)
Acquisition and integration costs	(41		)	(13		)	(11		)
Acceleration of share-based compensation expense related to workforce reduction	—			(2		)	(1		)
One-time and pre-separation costs	—			—			(14		)
Pension curtailment gain	16			—			—
Impairment of loans	(7		)	—			—
Other	(7		)	(3		)	10
Interest Income	11			7			9
Interest Expense	(72		)	(66		)	(110		)
Other income (expense), net	(10		)	17			(89		)
Unallocated corporate charges	—			—			(40		)
Income before taxes, as reported	$	544		$	480		$	229

Major customers. No customer represented 10 percent or more of our total net revenue in 2016, 2015 or 2014.

The following table presents assets and capital expenditures directly managed by each segment. Unallocated assets primarily consist of cash, cash equivalents, accumulated amortization of other intangibles and other assets.



	Life Sciences and Applied Markets		Diagnostics and Genomics		Agilent CrossLab		Total Segments
	(in millions)
As of October 31, 2016:
Assets	$	1,687	$	1,960	$	1,082	$	4,729
Capital expenditures	$	53	$	41	$	45	$	139
As of October 31, 2015:
Assets	$	1,539	$	2,027	$	1,008	$	4,574
Capital expenditures	$	28	$	33	$	37	$	98

The following table reconciles segment assets to Agilent's total assets:



	October 31,
	2016		2015
	(in millions)
Total reportable segments' assets	$	4,729	$	4,574
Cash, cash equivalents and short-term investments	2,289		2,003
Short-term restricted cash and cash equivalents	—		242
Prepaid expenses	92		105
Investments	135		86
Long-term and other receivables	92		104
Other	465		365
Total assets	$	7,802	$	7,479

The other category primarily includes deferred tax assets and long-term investments which are not allocated to the segments.

The following table represents total revenue by product category:



	Years Ended October 31,
	2016		2015		2014
	(in millions)
Instrumentation	$	1,871	$	1,827	$	1,839
Analytical lab services	910		843		831
Analytical lab consumables	510		489		476
Diagnostics and genomics solutions	709		662		663
Informatics and other	202		217		239
Total	$	4,202	$	4,038	$	4,048

The following table presents summarized information for net revenue and long-lived assets by geographic region. Revenues from external customers are generally attributed to countries based upon the customer's location. Long lived assets consist of property, plant, and equipment, long-term receivables and other long-term assets excluding intangible assets. The rest of the world primarily consists of rest of Asia and Europe.



	United States		China		Rest of the World		Total
	(in millions)
Net revenue:
Year ended October 31, 2016	$	1,251	$	821	$	2,130	$	4,202
Year ended October 31, 2015	$	1,206	$	633	$	2,199	$	4,038
Year ended October 31, 2014	$	1,019	$	543	$	2,486	$	4,048



	United States		Germany		Rest of the World		Total
	(in millions)
Long-lived assets:
October 31, 2016	$	449	$	89	$	266	$	804
October 31, 2015	$	391	$	64	$	315	$	770