SEGMENT INFORMATION

12 Months Ended

Oct. 31, 2019

Description of Segments. We are a global leader in life sciences, diagnostics and applied chemical markets, providing application focused solutions that include instruments, software, services and consumables for the entire laboratory workflow.

Agilent has three business segments comprised of the life sciences and applied markets business, diagnostics and genomics business and the Agilent CrossLab business each of which comprises a reportable segment. The three operating segments were determined based primarily on how the chief operating decision maker views and evaluates our operations. Operating results are regularly reviewed by the chief operating decision maker to make decisions about resources to be allocated to the segment and to assess its performance. Other factors, including market separation and customer specific applications, go-to-market channels, products and services and manufacturing are considered in determining the formation of these operating segments.

In 2019, we adopted new guidance related to the presentation of the net periodic pension and postretirement benefit cost. See Note 2, "New Accounting Pronouncements" for more information. As a result, we have recast our historical segment results to conform to this new presentation required under this guidance.

A description of our three reportable segments is as follows:

Our life sciences and applied markets business provides application-focused solutions that include instruments and software that enable customers to identify, quantify and analyze the physical and biological properties of substances and products, as well as enable customers in the clinical and life sciences research areas to interrogate samples at the molecular and cellular level. Key product categories include: liquid chromatography ("LC") systems and components; liquid chromatography mass spectrometry ("LCMS") systems; gas chromatography ("GC") systems and components; gas chromatography mass spectrometry ("GCMS") systems; inductively coupled plasma mass spectrometry ("ICP-MS") instruments; atomic absorption ("AA") instruments;

microwave plasma-atomic emission spectrometry ("MP-AES") instruments; inductively coupled plasma optical emission spectrometry ("ICP-OES") instruments; raman spectroscopy; cell analysis plate based assays; flow cytometer; real-time cell analyzer; cell imaging systems; microplate reader; laboratory software for sample tracking; information management and analytics; laboratory automation and robotic systems; dissolution testing; vacuum pumps and measurement technologies.

Our diagnostics and genomics business is comprised of six areas of activity providing active pharmaceutical ingredients ("APIs") for oligo-based therapeutics as well as solutions that include reagents, instruments, software and consumables, which enable customers in the clinical and life sciences research areas to interrogate samples at the cellular and molecular level. First, our genomics business includes arrays for DNA mutation detection, genotyping, gene copy number determination, identification of gene rearrangements, DNA methylation profiling, gene expression profiling, as well as next generation sequencing ("NGS") target enrichment and genetic data management and interpretation support software. This business also includes solutions that enable clinical labs to identify DNA variants associated with genetic disease and help direct cancer therapy. Second, our nucleic acid solutions business provides equipment and expertise focused on production of synthesized oligonucleotides under pharmaceutical good manufacturing practices ("GMP") conditions for use as API in an emerging class of drugs that utilize nucleic acid molecules for disease therapy. Third, our pathology solutions business is focused on product offerings for cancer diagnostics and anatomic pathology workflows. The broad portfolio of offerings includes immunohistochemistry ("IHC"), in situ hybridization ("ISH"), hematoxylin and eosin ("H&E") staining and special staining. Fourth, we also collaborate with a number of major pharmaceutical companies to develop new potential pharmacodiagnostics, also known as companion diagnostics, which may be used to identify patients most likely to benefit from a specific targeted therapy. Fifth, the reagent partnership business is a provider of reagents used for turbidimetry and flow cytometry. Finally, our biomolecular analysis business provides complete workflow solutions, including instruments, consumables and software, for quality control analysis of nucleic acid samples. Samples are analyzed using quantitative and qualitative techniques to ensure accuracy in further genomics analysis techniques utilized in clinical and life science research applications.

The Agilent CrossLab business spans the entire lab with its extensive consumables and services portfolio, which is designed to improve customer outcomes. Most of the portfolio is vendor neutral, meaning Agilent can serve and supply customers regardless of their instrument purchase choices. Solutions range from chemistries and supplies to services and software helping to connect the entire lab. Key product categories in consumables include GC and LC columns, sample preparation products, custom chemistries, and a large selection of laboratory instrument supplies. Services include startup, operational, training and compliance support, software as a service, as well as asset management and consultative services that help increase customer productivity. Custom service and consumable bundles are tailored to meet the specific application needs of various industries and to keep instruments fully operational and compliant with the respective industry requirements.

A significant portion of the segments' expenses arise from shared services and infrastructure that we have historically provided to the segments in order to realize economies of scale and to efficiently use resources. These expenses, collectively called corporate charges, include legal, accounting, tax, real estate, insurance services, information technology services, treasury, order administration, other corporate infrastructure expenses and costs of centralized research and development. Charges are allocated to the segments, and the allocations have been determined on a basis that we consider to be a reasonable reflection of the utilization of services provided to or benefits received by the segments. In addition, we do not allocate amortization and impairment of acquisition-related intangible assets, pension curtailment or settlement gains, restructuring and transformational initiatives expenses, acquisition and integration costs, business exit and divestiture costs, special compliance costs, some nucleic acid solutions division ("NASD") site costs and certain other charges to the operating margin for each segment because management does not include this information in its measurement of the performance of the operating segments.Transformational initiatives include expenses associated with targeted cost reduction activities such as manufacturing transfers, site consolidations, legal entity and other business reorganizations, in-sourcing or outsourcing of activities.

The following tables reflect the results of our reportable segments under our management reporting system. The performance of each segment is measured based on several metrics, including segment income from operations. These results are used, in part, by the chief operating decision maker in evaluating the performance of, and in allocating resources to, each of the segments.

The profitability of each of the segments is measured after excluding restructuring and asset impairment charges, transformational initiatives, investment gains and losses, interest income, interest expense, acquisition and integration costs, non-cash amortization and other items as noted in the reconciliations below.



	Life Sciences and Applied Markets		Diagnostics and Genomics		Agilent CrossLab		Total Segments
	(in millions)
Year Ended October 31, 2019:
Total net revenue	$	2,302	$	1,021	$	1,840	$	5,163
Income from operations	$	542	$	185	$	475	$	1,202
Depreciation expense	$	41	$	35	$	35	$	111
Share-based compensation expense	$	33	$	14	$	25	$	72
Year Ended October 31, 2018:
Total net revenue	$	2,270	$	943	$	1,701	$	4,914
Income from operations	$	543	$	173	$	388	$	1,104
Depreciation expense	$	38	$	33	$	31	$	102
Share-based compensation expense	$	33	$	14	$	24	$	71
Year Ended October 31, 2017:
Total net revenue	$	2,081	$	860	$	1,531	$	4,472
Income from operations	$	470	$	167	$	336	$	973
Depreciation expense	$	35	$	30	$	29	$	94
Share-based compensation expense	$	30	$	10	$	21	$	61

The following table reconciles reportable segments' income from operations to Agilent's total enterprise income before taxes:



	Years Ended October 31,
	2019			2018			2017
	(in millions)
Total reportable segments' income from operations	$	1,202		$	1,104		$	973
Amortization of intangible assets related to business combinations	(125		)	(105		)	(117		)
Acquisition and integration costs	(48		)	(23		)	(30		)
Transformational initiatives	(44		)	(25		)	(12		)
Asset impairments	—			(21		)	—
Business exit and divestiture costs (primarily our NMR business)	—			(9		)	—
NASD site costs	(12		)	(8		)	—
Special compliance costs	(2		)	(4		)	—
Other ⁽¹⁾	(30		)	(5		)	(7		)
Interest Income	36			38			22
Interest Expense	(74		)	(75		)	(79		)
Other income (expense), net	16			79			53
Income before taxes, as reported	$	919		$	946		$	803

(1) The other category primarily includes legal costs related to our pursuing our claim against a third party in addition to other miscellaneous adjustments and settlements.

Major Customers. No customer represented 10 percent or more of our total net revenue in 2019, 2018 or 2017.

The following table reflects segment assets and capital expenditures under our management reporting system. Segment assets include allocations of corporate assets, goodwill, net other intangibles and other assets. Unallocated assets primarily consist of cash, cash equivalents, the valuation allowance relating to deferred tax assets and other assets.



	Life Sciences and Applied Markets		Diagnostics and Genomics		Agilent CrossLab		Total Segments
	(in millions)
As of and for the Year Ended October 31, 2019:
Assets	$	3,202	$	2,620	$	1,331	$	7,153
Capital expenditures	$	59	$	48	$	48	$	155
As of and for the Year Ended October 31, 2018:
Assets	$	1,744	$	2,679	$	1,267	$	5,690
Capital expenditures	$	47	$	92	$	38	$	177

The following table reconciles segment assets to Agilent's total assets:



	October 31,
	2019		2018
	(in millions)
Total reportable segments' assets	$	7,153	$	5,690
Cash, cash equivalents	1,382		2,247
Prepaid expenses	94		80
Investments	102		68
Long-term and other receivables	100		102
Other	621		354
Total assets	$	9,452	$	8,541

The other category primarily includes deferred tax assets and overfunded pension assets which are not allocated to the segments.

The following table presents summarized information for net revenue by geographic region. Revenues from external customers are generally attributed to countries based upon the customer's location.



	United States		China⁽¹⁾		Rest of the World		Total
	(in millions)
Net revenue:
Year Ended October 31, 2019	$	1,619	$	1,019	$	2,525	$	5,163
Year Ended October 31, 2018	$	1,414	$	1,015	$	2,485	$	4,914
Year Ended October 31, 2017	$	1,314	$	900	$	2,258	$	4,472


1.	China also includes Hong Kong net revenue.

The following table presents summarized information for long-lived assets by geographic region. Long lived assets consist of property, plant, and equipment, long-term receivables and other long-term assets excluding intangible assets. The rest of the world primarily consists of Asia and the rest of Europe.



	United States		Germany		Rest of the World		Total
	(in millions)
Long-lived assets:
October 31, 2019	$	621	$	122	$	404	$	1,147
October 31, 2018	$	565	$	117	$	362	$	1,044