Segment Information and Geographic Data

12 Months Ended

Sep. 26, 2020

Segment Reporting [Abstract]

Segment Information and Geographic Data

Segment Information and Geographic Data

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 mainland, 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.”

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 2020, 2019 and 2018 (in millions):

	2020		2019		2018
Americas:
Net sales	$	124,556	$	116,914	$	112,093
Operating income	$	37,722	$	35,099	$	34,864
Europe:
Net sales	$	68,640	$	60,288	$	62,420
Operating income	$	22,170	$	19,195	$	19,955
Greater China:
Net sales	$	40,308	$	43,678	$	51,942
Operating income	$	15,261	$	16,232	$	19,742
Japan:
Net sales	$	21,418	$	21,506	$	21,733
Operating income	$	9,279	$	9,369	$	9,500
Rest of Asia Pacific:
Net sales	$	19,593	$	17,788	$	17,407
Operating income	$	6,808	$	6,055	$	6,181

A reconciliation of the Company’s segment operating income to the Consolidated Statements of Operations for 2020, 2019 and 2018 is as follows (in millions):

	2020		2019		2018
Segment operating income	$	91,240	$	85,950	$	90,242
Research and development expense	(18,752)		(16,217)		(14,236)
Other corporate expenses, net	(6,200)		(5,803)		(5,108)
Total operating income	$	66,288	$	63,930	$	70,898

The U.S. and China were the only countries that accounted for more than 10% of the Company’s net sales in 2020, 2019 and 2018. There was no single customer that accounted for more than 10% of net sales in 2020, 2019 and 2018. Net sales for 2020, 2019 and 2018 and long-lived assets as of September 26, 2020 and September 28, 2019 were as follows (in millions):

	2020		2019		2018
Net sales:
U.S.	$	109,197	$	102,266	$	98,061
China (1)	40,308		43,678		51,942
Other countries	125,010		114,230		115,592
Total net sales	$	274,515	$	260,174	$	265,595

	2020		2019
Long-lived assets:
U.S.	$	25,890	$	24,711
China (1)	7,256		9,064
Other countries	3,620		3,603
Total long-lived assets	$	36,766	$	37,378

(1)China includes Hong Kong and Taiwan. Long-lived assets located in China consist primarily of product tooling and manufacturing process equipment and assets related to retail stores and related infrastructure.