Segment Information

HP is a leading global provider of personal computing and other access devices, imaging and printing products, and related technologies, solutions and services. HP sells to individual consumers, small- and medium-sized businesses (“SMBs”) and large enterprises, including customers in the government, health and education sectors.

HP’s operations are organized into three segments for financial reporting purposes: Personal Systems, Printing and Corporate Investments. HP’s organizational structure is based on a number of factors that the chief operating decision maker uses to evaluate, view and run its business operations, which include, but are not limited to, customer base and homogeneity of products and technology. The segments are based on this organizational structure and information reviewed by HP’s chief operating decision maker to evaluate segment results. The chief operating decision maker uses several metrics to evaluate the performance of the overall business, including earnings from operations, and uses these results to allocate resources to each of the segments.

A summary description of each segment is as follows:

Personal Systems provides Commercial and Consumer personal computers (“PCs”), Workstations, thin clients, Commercial tablets and mobility devices, retail point-of-sale systems, displays and other related accessories, software, support and services for the commercial and consumer markets. HP groups Commercial notebooks, Commercial desktops, Commercial services, Commercial tablets and mobility devices, Commercial detachables, Workstations, retail point-of-sale systems and thin clients into Commercial clients and Consumer notebooks, Consumer desktops, Consumer services and Consumer detachables into Consumer clients when describing performance in these markets. Described below are HP’s global business capabilities within Personal Systems:


•	Commercial PCs are optimized for use by customers, including enterprise and SMBs, with a focus on robust designs, security, serviceability, connectivity, reliability and manageability in networked environments. Additionally, HP offers a range of services and solutions to enterprise and SMBs to help them manage the lifecycle of their PC and mobility installed base.


•	Consumer PCs are Notebooks, Desktops, and hybrids that are optimized for consumer usage, focusing on multi-media consumption, online browsing, gaming and light productivity.

Personal Systems groups its global business capabilities into Notebooks, Desktops, Workstations and Other when reporting business performance.

Printing provides Consumer and Commercial printer hardware, Supplies, solutions and services, as well as scanning devices. Printing is also focused on imaging solutions in the commercial markets. Described below are HP’s global business capabilities within Printing.

•

Office Printing Solutions delivers HP’s office printers, supplies, services and solutions to SMBs and large enterprises. HP goes to market through its extensive channel network and directly with HP sales. Ongoing key initiatives include design and deployment of A3 products and solutions for the copier and multifunction printer market, printer security solutions, PageWide solutions and award-winning JetIntelligence Laserjet products.

•

Home Printing Solutions delivers innovative printing products and solutions for the home and home business or small office customers utilizing both HP’s Ink and Laser technologies. Initiatives such as Instant Ink and Continuous Ink Supply System provide business model innovation to benefit and expand HP’s existing customer base, while new innovations like Sprocket drive print relevance for a mobile generation.


•	Graphics Solutions offers large-format, commercial and industrial solutions to print service providers and packaging converters through the largest portfolio of printers and presses (HP DesignJet, HP Latex, HP Scitex, HP Indigo and HP PageWide Web Presses).


•	3D Printing delivers HP’s Multi-Jet Fusion 3D Printing Solution designed for prototyping and production of functional parts and functioning on an open platform facilitating the development of new 3D printing materials.

Printing groups its global business capabilities into the following business units when reporting business performance:


•	Commercial Hardware consists of Office Printing Solutions, Graphics Solutions and 3D Printing, excluding supplies;


•	Consumer Hardware includes Home Printing Solutions, excluding supplies; and


•	Supplies comprises a set of highly innovative consumable products, ranging from Ink and Laser print cartridges; and media to graphics supplies and 3D printing supplies, for recurring use in Consumer and Commercial Hardware.

Corporate Investments includes HP Labs and certain business incubation projects.

The accounting policies HP uses to derive segment results are substantially the same as those used by HP in preparing these financial statements. HP derives the results of the business segments directly from its internal management reporting system. Segment net revenue includes revenues from sales to external customers and certain revenues related to Managed Print Services arrangements, which are eliminated for the purposes of reporting HP’s consolidated net revenue.

HP does not allocate certain operating expenses, which it manages at the corporate level, to its segments. These unallocated amounts include certain corporate governance costs and market-related retirement credits, stock-based compensation expense, restructuring and other charges, acquisition-related charges, amortization of intangible assets, defined benefit plan settlement charges and net revenue eliminations, primarily related to Managed Print Services.

Business Unit Realignment

Effective at the beginning of its first quarter of fiscal year 2017, HP implemented an organizational change to align its business unit financial reporting more closely with its current business structure. This organizational change resulted in the transfer of a portion of LaserJet printers from Commercial to Consumer within the Printing segment. HP reflected this change to its business unit information in prior reporting periods on an as-is basis that resulted in the reclassification of revenues between the Commercial and Consumer business units of Printing. The reporting change had no impact to previously reported segment net revenue, consolidated net revenue, earnings from continuing operations, net earnings or net earnings per share.

Segment Operating Results from Continuing Operations



	Personal Systems		Printing		Corporate Investments			Total Segments		Eliminations and Other				Total
	In millions
2017
Net revenue	$	33,374	$	18,801	$	8		$	52,183	$	(127	)		$	52,056
Earnings (loss) from continuing operations	$	1,213	$	3,161	$	(87	)	$	4,287
2016
Net revenue	$	29,987	$	18,260	$	7		$	48,254	$	(16	)	⁽¹⁾	$	48,238
Earnings (loss) from continuing operations	$	1,150	$	3,128	$	(98	)	$	4,180
2015
Net revenue	$	31,520	$	21,232	$	20		$	52,772	$	(1,309	)		$	51,463
Earnings (loss) from continuing operations	$	1,022	$	3,765	$	(43	)	$	4,744

⁽¹⁾ For the fiscal year 2016, the amount includes the recognition of revenue previously deferred in relation to sales to the

pre-Separation finance entity.

The reconciliation of segment operating results to HP consolidated results was as follows:



	For the fiscal years ended October 31
	2017			2016			2015
				In millions
Net revenue:
Total segments	$	52,183		$	48,254		$	52,772
Net revenue eliminations and other	(127		)	(16		)	(1,309		)
Total net revenue	$	52,056		$	48,238		$	51,463
Earnings from continuing operations before taxes:
Total segment earnings from operations	$	4,287		$	4,180		$	4,744
Corporate and unallocated costs and eliminations	(51		)	(42		)	(503		)
Stock-based compensation expense	(224		)	(182		)	(212		)
Restructuring and other charges	(362		)	(205		)	(63		)
Acquisition-related charges	(125		)	(7		)	(1		)
Amortization of intangible assets	(1		)	(16		)	(102		)
Defined benefit plan settlement (charges) credits	(5		)	(179		)	57
Interest and other, net	(243		)	212			(388		)
Total earnings from continuing operations before taxes	$	3,276		$	3,761		$	3,532

Segment Assets

HP allocates assets to its business segments based on the segments primarily benefiting from the assets. Total assets by segment and the reconciliation of segment assets to HP consolidated assets were as follows:



	As of October 31
	2017		2016
	In millions
Personal Systems	$	12,156	$	10,686
Printing	10,548		9,959
Corporate Investments	3		1
Corporate and unallocated assets	10,206		8,341
Total assets	$	32,913	$	28,987

Major Customers

No single customer represented 10% or more of HP’s net revenue in any fiscal year presented.

Geographic Information

Net revenue by country is based upon the sales location that predominately represents the customer location. For each of the fiscal years of 2017, 2016 and 2015, other than the United States, no country represented more than 10% of HP net revenue.

Net revenue by country in which HP operates was as follows:



	For the fiscal years ended October 31
	2017		2016		2015
			In millions
United States	$	19,321	$	18,042	$	17,746
Other countries	32,735		30,196		33,717
Total net revenue	$	52,056	$	48,238	$	51,463

Net property, plant and equipment by country in which HP operates was as follows



	As of October 31
	2017		2016
	In millions
United States	$	866	$	737
Singapore	372		314
Other countries	640		685
Total net property, plant and equipment	$	1,878	$	1,736

No single country other than those represented above exceeds 10% or more of HP’s total net property, plant and equipment in any fiscal year presented.

Net revenue by segment and business unit was as follows:



	For the fiscal years ended October 31
	2017			2016			2015
				In millions
Notebooks	$	19,782		$	16,982		$	17,271
Desktops	10,298			9,956			10,941
Workstations	2,042			1,870			2,018
Other	1,252			1,179			1,290
Personal Systems	33,374			29,987			31,520
Supplies	12,416			11,875			13,979
Commercial Hardware	3,973			4,035			4,350
Consumer Hardware	2,412			2,350			2,903
Printing	18,801			18,260			21,232
Corporate Investments	8			7			20
Total segment net revenue	52,183			48,254			52,772
Net revenue eliminations and other	(127		)	(16		)	(1,309		)
Total net revenue	$	52,056		$	48,238		$	51,463