Segment Data

12 Months Ended

Oct. 31, 2019



3	Segment Data

The company's businesses are organized, managed, and internally grouped into segments based on similarities in products and services. Segment selection is based on the manner in which management organizes segments for making operating and investment decisions and assessing performance. The company has identified ten operating segments and has aggregated certain of those segments into two reportable segments: Professional and Residential. The aggregation of the company's segments is based on the segments having the following similarities: economic characteristics, types of products and services, types of production processes, type or class of customers, and method of distribution. The company's remaining activities are presented as "Other" due to their insignificance.

The Professional business segment consists of turf and landscape equipment; rental, specialty, and underground construction equipment; snow and ice management equipment; and irrigation products. Turf and landscape equipment products include sports fields and grounds maintenance equipment, golf course mowing and maintenance equipment, landscape contractor mowing equipment, landscape creation and renovation equipment, and other maintenance equipment. Rental, specialty, and underground construction equipment products include horizontal directional drills, walk and ride trenchers, compact utility loaders/skid steers, vacuum excavators, stump grinders, turf renovation products, asset locators, pipe rehabilitation solutions, materials handling equipment, and other after-market tools. Snow and ice management equipment products include snowplows, salt and sand spreaders, and related parts and accessories for light and medium duty trucks, utility task vehicles, skid steers, and front-end loaders. Irrigation products consist of sprinkler heads, electric and hydraulic valves, controllers, computer irrigation central control systems, coupling systems, and ag-irrigation drip tape and hose products, as well as professionally installed lighting products offered through distributors and landscape contractors that also purchase irrigation products. Professional business segment products are sold mainly through a network of distributors and dealers to professional users engaged in maintaining golf courses, sports fields, municipal properties, agricultural fields, residential and commercial landscapes, and removing snow and ice, as well as directly to government customers, rental companies, and large retailers.

The Residential business segment consists of walk power mowers, riding mowers, snow throwers, replacement parts, and home solutions products, including trimmers, blowers, blower-vacuums, and underground, hose, and hose-end retail irrigation products sold in Australia and New Zealand. Residential business segment products are sold to homeowners through a network of distributors and dealers, and through a broad array of home centers, hardware retailers, and mass retailers, as well as online.

The company's Other activities consist of the company's wholly-owned domestic distribution companies, the company's

corporate activities, and the elimination of intersegment revenues and expenses. Corporate activities include general corporate expenditures (finance, human resources, legal, information services, public relations, business development, and similar activities) and other unallocated corporate assets and liabilities, such as corporate facilities and deferred tax assets and liabilities.

The accounting policies of the segments are the same as those described in the summary of significant accounting policies in Note 1, Summary of Significant Accounting Policies and Related Data. The company evaluates the performance of its Professional and Residential business segment results based on earnings from operations plus other income, net. The business segment's operating profits or losses include direct costs incurred at the segment's operating level plus allocated expenses, such as profit sharing and manufacturing expenses. The allocated expenses represent costs that these operations would have incurred otherwise, but do not include general corporate expenses, interest expense, and income taxes. Operating loss for the company's Other activities includes earnings (loss) from the company's domestic wholly-owned distribution companies, corporate activities, other income, and interest expense. The company accounts for intersegment gross sales at current market prices.

The following tables present summarized financial information concerning the company's reportable segments and Other activities (in thousands):



Fiscal Year Ended October 31, 2019	Professional		Residential		Other			Total
Net sales	$	2,443,448	$	661,274	$	33,362		$	3,138,084
Intersegment gross sales (eliminations)	59,453		310		(59,763		)	—
Earnings (loss) before income taxes	380,914		65,151		(123,932		)	322,133
Total assets	1,592,065		430,495		307,987			2,330,547
Capital expenditures	57,246		16,970		18,665			92,881
Depreciation and amortization	$	63,885	$	11,897	$	11,916		$	87,698



Fiscal Year Ended October 31, 2018	Professional		Residential		Other			Total
Net sales	$	1,946,999	$	654,413	$	17,238		$	2,618,650
Intersegment gross sales (eliminations)	29,798		312		(30,110		)	—
Earnings (loss) before income taxes	399,806		64,807		(92,216		)	372,397
Total assets	916,106		199,273		455,605			1,570,984
Capital expenditures	58,109		16,014		16,001			90,124
Depreciation and amortization	$	38,585	$	9,999	$	12,693		$	61,277



Fiscal Year Ended October 31, 2017	Professional		Residential		Other			Total
Net sales	$	1,811,705	$	673,247	$	20,224		$	2,505,176
Intersegment gross sales (eliminations)	27,893		332		(28,225		)	—
Earnings (loss) before income taxes	379,496		74,704		(101,016		)	353,184
Total assets	836,600		189,578		467,609			1,493,787
Capital expenditures	29,786		10,605		17,885			58,276
Depreciation and amortization	$	41,313	$	10,308	$	13,365		$	64,986

During fiscal 2019 and fiscal 2018 , no customer accounted for 10 percent or more of total consolidated gross sales. Sales to one customer in the Residential segment accounted for 10.0 percent of total consolidated gross sales in fiscal 2017.

The following table presents the details of operating loss before income taxes for the company's Other activities (in thousands):



Fiscal Years Ended October 31	2019			2018			2017
Corporate expenses	$	(124,422	)	$	(92,541	)	$	(100,928	)
Interest expense	(28,835		)	(19,096		)	(19,113		)
Other income	29,325			19,421			19,025
Total operating loss	$	(123,932	)	$	(92,216	)	$	(101,016	)

The following table presents net sales for groups of similar products and services (in thousands):



Fiscal Years Ended October 31	2019		2018		2017
Equipment	$	2,747,935	$	2,210,047	$	2,060,354
Irrigation and lighting	390,149		408,603		444,822
Total net sales	$	3,138,084	$	2,618,650	$	2,505,176

The following geographic area data includes net sales based on product shipment destination and long-lived assets, which consist of net property, plant, and equipment, and is based on physical location in addition to allocated capital tooling from U.S. plant facilities (in thousands):



Fiscal Years Ended October 31	United States		Foreign Countries		Total
2019
Net sales	$	2,413,153	$	724,931	$	3,138,084
Long-lived assets	$	395,937	$	41,380	$	437,317
2018
Net sales	$	1,975,562	$	643,088	$	2,618,650
Long-lived assets	$	230,246	$	41,213	$	271,459
2017
Net sales	$	1,893,249	$	611,927	$	2,505,176
Long-lived assets	$	194,338	$	40,892	$	235,230