Note 2: Segment Information

HP is a leading global provider of products, technologies, software, solutions and services to individual consumers, small- and medium-sized businesses ("SMBs") and large enterprises, including customers in the government, health and education sectors. HP's offerings span personal computing and other access devices; imaging- and printing-related products and services; enterprise information technology ("IT") infrastructure, including enterprise server and storage technology, networking products and solutions, and technology support and maintenance; multi-vendor customer services, including technology consulting, outsourcing and support services across infrastructure, applications and business process domains; and IT management software, application testing and delivery software, information management solutions, big data analytics, security intelligence and risk management solutions.

HP's operations are organized into seven segments for financial reporting purposes: Personal Systems, Printing, the EG, ES, Software, HP Financial Services ("HPFS") and Corporate Investments. HP's organizational structure is based on a number of factors that management 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 management to evaluate segment results.

The Personal Systems segment and the Printing segment are structured beneath a broader Printing and Personal Systems Group ("PPS"). While PPS is not a reportable segment, HP may provide financial data aggregating the Personal Systems and the Printing segments in order to provide a supplementary view of its business.

A summary description of each segment follows.

The Printing and Personal Systems Group's mission is to leverage the respective strengths of the Personal Systems business and the Printing business by creating a unified organization that is customer-focused and poised to capitalize on rapidly shifting industry trends. Each of the segments within PPS is described below.

Personal Systems provides commercial Personal Computers ("PCs"), consumer PCs, workstations, thin clients, tablets, retail point-of-sale systems, calculators and other related accessories, software, support and services for the commercial and consumer markets. HP groups commercial notebooks, commercial desktops, commercial tablets, workstations and thin clients into commercial clients and consumer notebooks, consumer desktops and consumer tablets 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 SMB customers, and for connectivity, reliability and manageability in networked environments.
•	Consumer PCs include the HP Spectre, HP ENVY, HP Pavilion, HP Chromebook, HP Split and HP Slate series of multi-media consumer notebooks, consumer tablets, hybrids and desktops.

Printing provides consumer and commercial printer hardware, supplies, media, software and services, as well as scanning devices. Printing is also focused on imaging solutions in the commercial markets. HP groups LaserJet, large format printers and commercial inkjet printers into commercial hardware and consumer inkjet printers into consumer hardware when describing performance in these markets. Described below are HP's global business capabilities within Printing.

•	LaserJet and Enterprise Solutions deliver HP's LaserJet and enterprise products, services and solutions to the SMB and enterprise segments. Managed Print Services provides printing equipment, supplies, support, workflow optimization and security services for SMB and enterprise customers around the world, utilizing proprietary HP tools and fleet management solutions as well as third-party software.
•	Inkjet and Printing Solutions deliver HP's consumer and SMB inkjet solutions (hardware, supplies, media, and web-connected hardware and services). Ongoing initiatives and programs such as Ink in the Office and Ink Advantage and newer initiatives such as Instant Ink provide innovative printing solutions to consumers and SMBs.
•	Graphics Solutions delivers large format printers (Designjet, Large Format Production, and Scitex Industrial), specialty printing, digital press solutions (Indigo and Inkjet Webpress), supplies and services to print service providers and design & rendering customers.
•	Software and Web Services delivers a suite of offerings, including photo-storage and printing offerings (such as Snapfish), document storage, entertainment services, web-connected printing, and PC back-up and related services.

The Enterprise Group provides servers, storage, networking and technology services that, when combined with HP's Cloud solutions, enable customers to manage applications across public cloud, virtual private cloud, private cloud and traditional IT environments. Described below are HP's business units and capabilities within EG.

•	Industry Standard Servers offers a range of products from entry-level servers through premium ProLiant servers, which run primarily Windows, Linux and virtualization platforms from software providers such as Microsoft and VMware and open sourced software from other major vendors while leveraging x86 processors from Intel and AMD.
•	Business Critical Systems offers HP Integrity servers based on the Intel® Itanium® processor, HP Integrity NonStop solutions and mission-critical x86 ProLiant servers.
•	Storage offers traditional storage and Converged Storage solutions. Traditional storage includes tape, storage networking and legacy external disk products such as EVA and XP. Converged Storage solutions include 3PAR StoreServ, StoreOnce and StoreVirtual products.
•	Networking offers switches, routers, wireless local area network and network management products that span the data center, campus and branch environments and deliver software-defined networking and unified communications capabilities.

•	Technology Services provides support services and technology consulting optimizing EG's hardware platforms, and focuses on cloud, mobility and big data. These services are available in the form of service contracts, pre-packaged offerings or on a customized basis.

Enterprise Services provides technology consulting, outsourcing and support services across infrastructure, applications and business process domains. ES is comprised of Infrastructure Technology Outsourcing, Application and Business Services.

•	Infrastructure Technology Outsourcing delivers comprehensive services that encompass the management of data centers, IT security, cloud computing, workplace technology, networks, unified communications and enterprise service management.
•	Application and Business Services helps clients develop, revitalize and manage their applications and information assets.

Software provides IT management, application testing and delivery, information management, big data analytics, security intelligence and risk management solutions for businesses and enterprises of all sizes. Our software offerings include licenses, support, professional services and SaaS.

HP Financial Services provides flexible investment solutions, such as leasing, financing, utility programs and asset management services, for customers to enable the creation of unique technology deployment models and acquire complete IT solutions, including hardware, software and services from HP and others. Providing flexible services and capabilities that support the entire IT lifecycle, HPFS partners with customers globally to help build investment strategies that enhance their business agility and support their business transformation. HPFS offers a wide selection of investment solution capabilities for large enterprise customers and channel partners, along with an array of financial options to SMBs and educational and governmental entities.

Corporate Investments includes HP Labs and certain cloud-related business incubation projects among others.

Segment Policy

HP derives the results of the business segments directly from its internal management reporting system. The accounting policies HP uses to derive segment results are substantially the same as those the consolidated company uses. Management measures the performance of each segment based on several metrics, including earnings from operations. Management uses these results, in part, to evaluate the performance of, and to allocate resources to, each of the segments.

Segment revenue includes revenues from sales to external customers and intersegment revenues that reflect transactions between the segments on an arm's-length basis. Intersegment revenues primarily consist of sales of hardware and software that are sourced internally and, in the majority of the cases, are financed as operating leases by HPFS. HP's consolidated net revenue is derived and reported after the elimination of intersegment revenues from such arrangements.

HP periodically engages in intercompany licensing arrangements that may result in advance payments between subsidiaries. Revenues from intercompany licensing arrangements are deferred and recognized ratably over the term of the arrangement by the legal entities involved in such transactions; however, these payments are eliminated from revenues as reported by HP and its business segments. As disclosed in Note 6, during fiscal 2014, HP executed a multi-year intercompany licensing arrangement on which advanced royalty payments of $10.4 billion were received in the U.S. from a foreign consolidated affiliate. Deferred intercompany royalty revenues of $9.9 billion will be recognized over the life of the arrangement through 2029 in the respective legal entities, but eliminated from both HP consolidated and segment revenues.

Financing interest in the Consolidated Statements of Earnings reflects interest expense on debt attributable to HPFS. Debt attributable to HPFS consists of intercompany equity that is treated as debt for segment reporting purposes, intercompany debt, and borrowing- and funding-related activity associated with HPFS and its subsidiaries.

HP does not allocate to its segments certain operating expenses, which it manages at the corporate level. These unallocated costs include certain corporate governance costs, stock-based compensation expense, amortization of intangible assets, impairment of goodwill and intangible assets, restructuring charges and acquisition-related charges.

Segment Realignment

Effective at the beginning of its first quarter of fiscal 2014, HP implemented certain organizational changes to align its segment financial reporting more closely with its current business structure. These organizational changes include:

•	transferring the HP Exstream business from the Commercial Hardware business unit within the Printing segment to the Software segment;
•	transferring the Personal Systems trade and warranty support business from the TS business unit within the EG segment to the Other business unit within the Personal Systems segment;
•	transferring the spare and replacement parts business supporting the Personal Systems and Printing segments from the TS business unit within the EG segment to the Other business unit within the Personal Systems segment and the Commercial Hardware business unit within the Printing segment, respectively;
•	transferring certain cloud-related incubation activities previously reported in Corporate and unallocated costs and eliminations and in the EG segment to the Corporate Investments segment.

In addition, HP transferred certain intrasegment eliminations from the ES segment and the EG segment to corporate intersegment revenue eliminations.

HP has reflected these changes to its segment information retrospectively to the earliest period presented, which has resulted in the transfer of revenue among the Printing, Personal Systems, EG, ES and Software segments and the transfer of operating profit among the Printing, Personal Systems, EG, Software and Corporate Investments segments. These changes had no impact on the previously reported financial results for the HPFS segment. In addition, none of these changes impacted HP's previously reported consolidated net revenue, earnings from operations, net earnings or net EPS.

Segment Operating Results

	Printing and Personal Systems
	Personal Systems		Printing		Enterprise Group		Enterprise Services		Software		HP Financial Services		Corporate Investments			Total
	In millions
2014
Net revenue	$	33,304	$	22,719	$	26,809	$	21,297	$	3,607	$	3,416	$	302		$	111,454
Intersegment net revenue and other		999		260		1,005		1,101		326		82		—			3,773

Total segment net revenue	$	34,303	$	22,979	$	27,814	$	22,398	$	3,933	$	3,498	$	302		$	115,227


Earnings (loss) from operations	$	1,270	$	4,185	$	4,008	$	803	$	872	$	389	$	(199	)	$	11,328


2013
Net revenue	$	31,232	$	23,685	$	27,045	$	23,041	$	3,701	$	3,570	$	24		$	112,298
Intersegment net revenue and other		947		211		1,036		1,020		320		59		—			3,593

Total segment net revenue	$	32,179	$	23,896	$	28,081	$	24,061	$	4,021	$	3,629	$	24		$	115,891


Earnings (loss) from operations	$	980	$	3,933	$	4,259	$	679	$	868	$	399	$	(316	)	$	10,802


2012
Net revenue	$	34,892	$	24,317	$	28,349	$	25,090	$	3,868	$	3,784	$	57		$	120,357
Intersegment net revenue and other		951		221		1,294		903		303		35		1			3,708

Total segment net revenue	$	35,843	$	24,538	$	29,643	$	25,993	$	4,171	$	3,819	$	58		$	124,065


Earnings (loss) from operations	$	1,724	$	3,612	$	5,123	$	1,045	$	836	$	388	$	(233	)	$	12,495

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

	For the fiscal years ended October 31
	2014			2013			2012
	In millions
Net Revenue:
Total segments	$	115,227		$	115,891		$	124,065
Elimination of intersegment net revenue and other		(3,773	)		(3,593	)		(3,708	)

Total HP consolidated net revenue	$	111,454		$	112,298		$	120,357


Earnings before taxes:
Total segment earnings from operations	$	11,328		$	10,802		$	12,495
Corporate and unallocated costs and eliminations		(953	)		(786	)		(787	)
Stock-based compensation expense		(560	)		(500	)		(635	)
Amortization of intangible assets		(1,000	)		(1,373	)		(1,784	)
Impairment of goodwill and intangible assets		—			—			(18,035	)
Restructuring charges		(1,619	)		(990	)		(2,266	)
Acquisition-related charges		(11	)		(22	)		(45	)
Interest and other, net		(628	)		(621	)		(876	)

Total HP consolidated earnings (loss) before taxes	$	6,557		$	6,510		$	(11,933	)

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
	2014		2013(1)
	In millions
Personal Systems	$	12,104	$	11,690
Printing		10,063		11,088

Printing and Personal Systems Group		22,167		22,778

Enterprise Group		27,236		29,759
Enterprise Services		13,472		16,217
Software		11,575		11,940
HP Financial Services		13,529		12,746
Corporate Investments		34		105
Corporate and unallocated assets		15,193		12,131

Total HP consolidated assets	$	103,206	$	105,676

(1)	HP has revised the presentation for the fiscal year ended October 31, 2013 in order to present comparable information with the current year period.

Major Customers

No single customer represented 10% or more of HP's total 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 2014, 2013 and 2012, other than the U.S., 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
	2014		2013		2012
	In millions
U.S.	$	38,805	$	40,284	$	42,140
Other countries		72,649		72,014		78,217

Total net revenue	$	111,454	$	112,298	$	120,357

As of October 31, 2014, the U.S., Netherlands and Ireland each represented more than 10% of net assets. As of October 31, 2013, the U.S., the Cayman Islands and Ireland each represented 10% or more of net assets.

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

	As of October 31
	2014		2013
	In millions
U.S.	$	5,668	$	5,546
The United Kingdom.		1,053		1,090
Other countries		4,619		4,827

Total net property, plant and equipment	$	11,340	$	11,463

Net revenue by segment and business unit was as follows:

	For the fiscal years ended October 31
	2014			2013			2012
	In millions
Notebooks	$	17,540		$	16,029		$	18,830
Desktops		13,197			12,844			13,888
Workstations		2,218			2,147			2,148
Other		1,348			1,159			977

Personal Systems		34,303			32,179			35,843

Supplies		14,917			15,716			16,151
Commercial Hardware		5,717			5,744			5,946
Consumer Hardware		2,345			2,436			2,441

Printing		22,979			23,896			24,538

Total Printing and Personal Systems Group		57,282			56,075			60,381

Industry Standard Servers		12,474			12,102			12,582
Technology Services		8,466			8,788			9,152
Storage		3,316			3,475			3,815
Networking		2,629			2,526			2,482
Business Critical Systems		929			1,190			1,612

Enterprise Group		27,814			28,081			29,643

Infrastructure Technology Outsourcing		14,038			15,223			16,176
Application and Business Services		8,360			8,838			9,817

Enterprise Services		22,398			24,061			25,993

Software		3,933			4,021			4,171
HP Financial Services		3,498			3,629			3,819
Corporate Investments		302			24			58

Total segment net revenue		115,227			115,891			124,065

Eliminations of intersegment net revenue and other		(3,773	)		(3,593	)		(3,708	)

Total net revenue	$	111,454		$	112,298		$	120,357