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Segment reporting

How 10-Ks split results into segments, how segments are chosen, and Apple's five regions with their sales and operating income.

How segments are chosen

US accounting rules use a "management approach": segments follow the way the company is actually run. The starting point is the chief operating decision maker, usually the CEO, and the units whose results that person reviews to allocate resources. A unit becomes a reportable segment once it's big enough, broadly 10% or more of revenue, profit or assets, and companies can combine similar units.

That's why segments look so different from company to company. Apple's 10-K says its CEO "is its chief operating decision maker" and that its reportable segments "consist of the Americas, Europe, Greater China, Japan and Rest of Asia Pacific". Microsoft reports three product segments: Productivity and Business Processes, Intelligent Cloud, and More Personal Computing. Amazon has North America, International and AWS.

Apple's segments in fiscal 2026

From Note 14 of Apple's 10-K for fiscal 2026, which reports the figures in millions. Segment margin is segment operating income divided by net sales.

The segment figures add up to more than Apple's total operating income of $158.1B. The difference, $54.4B, is research and development and general and administrative costs that Apple keeps at the corporate level instead of charging to the regions. Apple's segment operating income covers "net sales to third parties, related cost of sales, and operating expenses directly attributable to the segment". So the segment margins are higher than the company's overall operating margin, and they say more about the regions compared with each other than about any region on its own.

What the segment note contains

• Revenue for each reportable segment, and the profit measure the decision maker uses, often operating income.
• Since fiscal 2024, the significant expenses the decision maker reviews for each segment, such as Apple's cost of sales and selling and marketing by region.
• A reconciliation of the segment totals to the company's consolidated revenue and profit, including corporate costs and eliminations.
• Revenue and long-lived assets by country, for countries that are material.

The segment discussion in MD&A explains why each segment's results changed. How to read a 10-K shows where the note sits.

Things to watch

• Segments change. When a company reorganizes, it re-draws its segments and restates prior years, so check that the years being compared use the same definitions.
• Allocations differ. Amazon allocates most of its infrastructure costs to AWS based on usage; Apple keeps R&D at the corporate level. Segment profit is defined by each company.
• Not a full set of statements. Segments rarely come with their own balance sheet or cash flow. Apple's note says the information given to its decision maker excludes asset information.

More in Learn and Tools · Methodology & Disclosures explains where every number comes from.