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Segment Information and Geographic Data
 12 Months Ended
Sep. 26, 2015
Segment Information and Geographic Data

Note 11 – 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 operating segments.

The Company manages its business primarily on a geographic basis. The Company’s reportable operating segments consist of the Americas, Europe, Greater China, Japan and Rest of Asia Pacific. The Americas segment includes both North and South America. The Europe segment includes European countries, as well as India, the Middle East and Africa. The Greater China segment includes China, Hong Kong and Taiwan. The Rest of Asia Pacific segment includes Australia and those Asian countries not included in the Company’s other reportable operating segments. Although each reportable operating segment provides similar hardware and software products and similar services, they are 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 operating 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 operating segments. Costs excluded from segment operating income include various corporate expenses such as R&D, 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 operating segment for 2015, 2014 and 2013 (in millions):

 

     2015      2014      2013  

Americas:

         

Net sales

    $   93,864       $   80,095       $   77,093   

Operating income

    $ 31,186       $ 26,158       $ 24,829   
        

Europe:

         

Net sales

    $ 50,337       $ 44,285       $ 40,980   

Operating income

    $ 16,527       $ 14,434       $ 12,767   

Greater China:

         

Net sales

    $ 58,715       $ 31,853       $ 27,016   

Operating income

    $ 23,002       $ 11,039       $ 8,499   
        

Japan:

         

Net sales

    $ 15,706       $ 15,314       $ 13,782   

Operating income

    $ 7,617       $ 6,904       $ 6,668   

Rest of Asia Pacific:

         

Net sales

    $ 15,093       $ 11,248       $ 12,039   

Operating income

    $ 5,518       $ 3,674       $ 3,762   

A reconciliation of the Company’s segment operating income to the Consolidated Statements of Operations for 2015, 2014 and 2013 is as follows (in millions):

 

                                                  
     2015      2014      2013  

Segment operating income

    $     83,850       $     62,209       $     56,525   

Research and development expense

      (8,067 )       (6,041 )       (4,475 ) 

Other corporate expenses, net

      (4,553 )       (3,665 )       (3,051 ) 
  

 

 

     

 

 

     

 

 

  

Total operating income

    $ 71,230       $ 52,503       $ 48,999   
  

 

 

     

 

 

     

 

 

  

The U.S. and China were the only countries that accounted for more than 10% of the Company’s net sales in 2015, 2014 and 2013. There was no single customer that accounted for more than 10% of net sales in 2015, 2014 or 2013. Net sales for 2015, 2014 and 2013 and long-lived assets as of September 26, 2015 and September 27, 2014 are as follows (in millions):

 

                                                  
     2015      2014      2013  

Net sales:

         

U.S.

    $ 81,732       $ 68,909       $ 66,197   

China (1)

      56,547         30,638         25,946   

Other countries

      95,436         83,248         78,767   
  

 

 

     

 

 

     

 

 

  

Total net sales

    $   233,715       $   182,795       $   170,910   
  

 

 

     

 

 

     

 

 

  
        
     2015      2014         

Long-lived assets:

         

U.S.

    $ 12,022       $ 9,108      

China (1)

      8,722         9,477      

Other countries

      3,040         2,917      
  

 

 

     

 

 

     

Total long-lived assets

    $ 23,784       $ 21,502      
  

 

 

     

 

 

     

 

  (1)

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

  

 

Net sales by product for 2015, 2014 and 2013 are as follows (in millions):

 

                                                  
     2015      2014      2013  

Net Sales by Product:

         

iPhone (1)

    $ 155,041       $ 101,991       $ 91,279   

iPad (1)

      23,227         30,283         31,980   

Mac (1)

      25,471         24,079         21,483   

Services (2)

      19,909         18,063         16,051   

Other Products (1)(3)

      10,067         8,379         10,117   
  

 

 

     

 

 

     

 

 

  

Total net sales

    $   233,715       $   182,795       $   170,910   
  

 

 

     

 

 

     

 

 

  

 

  (1) 

Includes deferrals and amortization of related software upgrade rights and non-software services.

  

 

  (2) 

Includes revenue from the iTunes Store, App Store, Mac App Store, iBooks Store, Apple Music, AppleCare, Apple Pay, licensing and other services.

  

 

  (3) 

Includes sales of Apple TV, Apple Watch, Beats products, iPod and Apple-branded and third-party accessories.