Segment Information and Geographic Data

6 Months Ended

Mar. 28, 2020

The Company reports segment information based on the “management” approach. The management approach designates the internal reporting used by management for making decisions and assessing performance as the source of the Company’s reportable segments.

The Company manages its business primarily on a geographic basis. The Company’s reportable segments consist of the Americas, Europe, Greater China, Japan and Rest of Asia Pacific. Americas includes both North and South America. Europe includes European countries, as well as India, the Middle East and Africa. Greater China includes China, Hong Kong and Taiwan. Rest of Asia Pacific includes Australia and those Asian countries not included in the Company’s other reportable segments. Although the reportable segments provide similar hardware and software products and similar services, each one is managed separately to better align with the location of the Company’s customers and distribution partners and the unique market dynamics of each geographic region. The accounting policies of the various segments are the same as those described in Note 1, “Summary of Significant Accounting Policies” of the Notes to Consolidated Financial Statements in Part II, Item 8 of the 2019 Form 10-K.

The Company evaluates the performance of its reportable segments based on net sales and operating income. Net sales for geographic segments are generally based on the location of customers and sales through the Company’s retail stores located in those geographic locations. Operating income for each segment includes net sales to third parties, related cost of sales and operating expenses directly attributable to the segment. Advertising expenses are generally included in the geographic segment in which the expenditures are incurred. Operating income for each segment excludes other income and expense and certain expenses managed outside the reportable segments. Costs excluded from segment operating income include various corporate expenses such as research and development, corporate marketing expenses, certain share-based compensation expenses, income taxes, various nonrecurring charges and other separately managed general and administrative costs. The Company does not include intercompany transfers between segments for management reporting purposes.

The following table shows information by reportable segment for the three- and six-month periods ended March 28, 2020 and March 30, 2019 (in millions):



	Three Months Ended				Six Months Ended
	March 28, 2020		March 30, 2019		March 28, 2020		March 30, 2019
Americas:
Net sales	$	25,473	$	25,596	$	66,840	$	62,536
Operating income	$	7,261	$	7,687	$	20,353	$	18,887

Europe:
Net sales	$	14,294	$	13,054	$	37,567	$	33,417
Operating income	$	4,528	$	4,026	$	12,247	$	10,684

Greater China:
Net sales	$	9,455	$	10,218	$	23,033	$	23,387
Operating income	$	3,758	$	3,607	$	9,121	$	8,921

Japan:
Net sales	$	5,206	$	5,532	$	11,429	$	12,442
Operating income	$	2,236	$	2,390	$	5,014	$	5,404

Rest of Asia Pacific:
Net sales	$	3,885	$	3,615	$	11,263	$	10,543
Operating income	$	1,290	$	1,096	$	4,021	$	3,656

A reconciliation of the Company’s segment operating income to the Condensed Consolidated Statements of Operations for the three- and six-month periods ended March 28, 2020 and March 30, 2019 is as follows (in millions):



	Three Months Ended						Six Months Ended
	March 28, 2020			March 30, 2019			March 28, 2020			March 30, 2019
Segment operating income	$	19,073		$	18,806		$	50,756		$	47,552
Research and development expense	(4,565		)	(3,948		)	(9,016		)	(7,850		)
Other corporate expenses, net	(1,655		)	(1,443		)	(3,318		)	(2,941		)
Total operating income	$	12,853		$	13,415		$	38,422		$	36,761