Segment reporting (ASU 2023-07): disclosure examples

Improvements to Reportable Segment Disclosures . In November 2023, the FASB issued an accounting standard update to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses (Topic 280). The standard requires interim and annual disclosure of significant segment expenses that are regularly provided to the chief operating decision-maker (CODM) and included within the reported measure of a segment’s profit or loss, requires interim disclosures about a reportable segment’s profit or loss and assets that are currently required annually, requires disclosure of the position and title of the CODM, clarifies circumstances in which an entity can disclose multiple segment measures of profit or loss and contains other disclosure requirements. We adopted this authoritative guidance in the fourth quarter of fiscal 2025 and expanded the disclosures in our notes to the consolidated financial statements. See Note 15, Industry Segment Operations, of the Notes to the Consolidated Financial Statements for further information.

APPLIED MATERIALS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Note 2 Earnings Per Share

Basic earnings per share is determined using the weighted average number of common shares outstanding during the period. Diluted earnings per share is determined using the weighted average number of common shares and potential common shares (representing the dilutive effect of restricted stock units and employees’ stock purchase plan shares) outstanding during the period. Our net income has not been adjusted for any period presented for purposes of computing basic or diluted earnings per share due to our non-complex capital structure.

Supplemental information about significant segment expenses	2025	2024	2023
Entertainment
Programming and production costs	22,273	22,385	23,912
Other segment operating expenses (1)	5,400	5,347	5,804
Selling, general, administrative and other	9,733	9,326	9,404
Depreciation and amortization	825	734	756
Total Entertainment costs and expenses	38,231	37,792	39,876
Sports
Programming and production costs	12,492	12,983	12,373
Other segment operating expenses (2)	986	951	941
Selling, general, administrative and other	1,331	1,298	1,314
Depreciation and amortization	48	39	73
Total Sports costs and expenses	14,857	15,271	14,701
Experiences
Operating labor	8,948	8,392	7,550
Infrastructure costs	3,511	3,363	3,127
Costs of goods sold and distribution costs	3,253	3,319	3,357
Other segment operating expenses (3)	3,512	3,282	3,095
Selling, general, administrative and other	4,114	3,944	3,675
Depreciation and amortization	2,823	2,579	2,789
Total Experiences costs and expenses	26,161	24,879	23,593
Eliminations (4)	( 1,869 )	( 1,595 )	( 1,397 )
Corporate and unallocated shared expenses	1,646	1,435	1,147
TFCF and Hulu acquisition amortization (5)	1,567	1,665	1,986
Total costs and expenses	80,593	79,447	79,906

(1) Other operating expenses of Entertainment include technology support costs, distribution costs and costs of goods sold.

(2) Other operating expenses of Sports include technology support costs and distribution costs.

(3) Other operating expenses of Experiences include costs for supplies, commissions and entertainment offerings.

(4) Reflects fees paid by (a) Hulu to ESPN and the Entertainment linear networks business for the right to air their networks on Hulu Live TV and (b) ABC Network and Disney+ to ESPN to program certain sports content on ABC Network and Disney+. The offset is included in Entertainment programming and production costs.

(5) Excludes amortization of TFCF intangible assets related to equity investees.

A reconciliation of segment operating income to income before income taxes is as follows:

Year Ended December 31, 2025	Millions of Dollars
Alaska	L48	Canada	EMENA	AP	Segments Total	Corporate	Consolidated Total
Segment sales and other operating revenues
Sales and other operating revenues	5,638	41,404	5,600	6,485	1,770	60,897	63	60,960
Intersegment eliminations	—	( 9 )	( 1,975 )	( 1 )	—	( 1,985 )	( 31 )	( 2,016 )
Consolidated sales and other operating revenues # *	5,638	41,395	3,625	6,484	1,770	58,912	32	58,944
Significant segment expenses
Production and operating expenses	2,158	5,856	833	962	367	10,176	155	10,331
DD&A	1,399	8,121	556	912	460	11,448	52	11,500
Income tax provision (benefit)	271	1,380	236	2,820	238	4,945	( 277 )	4,668
Total	3,828	15,357	1,625	4,694	1,065	26,569	( 70 )	26,499
Other segment items
Equity in earnings of affiliates	( 1 )	( 11 )	—	( 558 )	( 762 )	( 1,332 )	( 3 )	( 1,335 )
Interest income	—	—	—	—	( 8 )	( 8 )	( 303 )	( 311 )
Interest and debt expense	—	—	—	—	—	—	855	855
Other**	1,081	20,785	1,259	1,124	308	24,557	691	25,248
Total	1,080	20,774	1,259	566	( 462 )	23,217	1,240	24,457
Net income (loss)	730	5,264	741	1,224	1,167	9,126	( 1,138 )	7,988
# Includes revenue from physical contracts meeting the definition of a derivative that are outside the scope of ASC Topic 606 for the L48, Canada and EMENA segments of $ 5.7 billion, $ 0.7 billion and $ 0.8 billion, respectively.
*In 2025, sales by our L48 segment to a certain pipeline company accounted for approximately $ 5.3 billion or approximately 10 percent of our total consolidated sales and other operating revenues.
**Other segment items not required to be separately disclosed for each reportable segment include:
Gain (loss) on disposition: L48, EMENA and Corporate
Other income: L48, Canada, EMENA, AP and Corporate
Purchased commodities: Alaska, L48, Canada, EMENA and AP
Selling, general and administrative expenses, Exploration expenses, Taxes other than income taxes and Accretion on discounted liabilities: Alaska, L48, Canada, EMENA, AP and Corporate

Other segment disclosures

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures , which requires an enhanced disclosure of significant segment expenses on an annual and interim basis. The ASU also requires entities with a single reportable segment to provide all disclosures required by the ASU as well as existing segment disclosures. The ASU does not change how operating segments are identified or, when applicable, aggregated. The ASU is effective for annual periods beginning after December 15, 2023, and for interim periods beginning after December 15, 2024, with early adoption permitted. The Company adopted this standard effective December 31, 2024, and such adoption did not have a material impact on its consolidated financial statements.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures , which requires an entity, on an annual basis, to disclose additional income tax information, primarily related to the rate reconciliation and income taxes paid. The amendment in the ASU is intended to enhance the transparency and decision usefulness of income tax disclosures. The ASU is effective for annual periods beginning after December 15, 2024. The Company adopted this standard on a prospective basis effective December 31, 2025.

Reclassification of Prior Year Presentation

Certain prior year amounts have been reclassified for consistency with the current year presentation. Specifically, accrued compensation is now presented as a separate line item on the consolidated statements of cash flows and was previously included within Accrued expense and other current liabilities.

Note 3. Revenue

Disaggregation of Revenue

Subscription and support revenue is recognized over time and accounted for substantially all of the Company’s revenue for the years ended December 31, 2025, 2024, and 2023.

The CODM regularly reviews operating income as the measure of each operating segment’s profit or loss, as well as significant segment expenses of our Retail Home Improvement segment to evaluate operating performance, generate future operating plans and make strategic decisions regarding the allocation of capital. Corporate expenses are allocated to the individual operating segments. The CODM also uses these measures in monitoring plan versus actual results. The CODM does not review segment assets at a different asset level or category than those disclosed in the consolidated balance sheets.

The following table presents the Company’s operating income results for its Retail Home Improvement reportable segment, including significant segment expenses:

Years Ended
January 30, 2026	January 31, 2025	February 2, 2024
(In millions, except percentage data)	Amount	% Sales	Amount	% Sales	Amount	% Sales
Net Sales	84,078	100.00	83,674	100.00	86,377	100.00
Less:
Cost of sales	55,615	66.15	55,797	66.68	57,533	66.61
Expenses:
Employee compensation and benefits	11,147	13.26	10,830	12.94	10,801	12.50
Occupancy and facility costs	1,932	2.30	1,897	2.27	1,836	2.13
Advertising	973	1.16	921	1.10	831	0.96
Other segment items 1	2,380	2.82	2,034	2.43	2,102	2.43
Selling, general and administrative:	16,432	19.54	15,682	18.74	15,570	18.02
Depreciation and amortization	1,808	2.15	1,729	2.07	1,717	1.99
Operating income	10,223	12.16	10,466	12.51	11,557	13.38

1 Other segment items primarily include financial services costs, technology service costs, insurance costs, impairment costs, and store environment initiative and display costs.

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (ASU 2023-07), which requires entities to disclose significant segment expenses, other segment items, the title and position of the CODM, and information related to how the CODM assesses segment performance and allocates resources, among certain other required disclosures. Additionally, previous annual disclosures are required in interim periods. The Registrants adopted ASU 2023-07 and applied the guidance retrospectively effective for the fiscal year beginning January 1, 2024. ASU 2023-07 was applied retrospectively for the interim periods beginning January 1, 2025. See Note 16 for additional information and related disclosures.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (ASU 2023-09), which requires entities to enhance consistency in income tax disclosures by improving transparency and comparability for stakeholders. Among other changes, ASU 2023-09 requires additional information in the effective tax rate reconciliation, including disaggregation of certain categories, and greater detail about income taxes paid, including disaggregation by jurisdiction. The Registrants adopted ASU 2023-09 and applied the guidance retrospectively effective for the fiscal year beginning January 1, 2025. See Note 10 under "Effective Tax Rate" and "Cash Paid for Income Taxes" for additional information and related disclosures.

II-115

COMBINED NOTES TO FINANCIAL STATEMENTS

In July 2025, the FASB issued ASU 2025-05, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets (ASU 2025-05), which allows an entity to elect a practical expedient for measuring expected credit losses on current accounts receivable and current contract assets arising from transactions accounted for as revenues from contracts customers. This expedient allows an entity to assume that current economic conditions as of the balance sheet date do not change for the remaining life of the asset. ASU 2025-05 is effective for fiscal years beginning after December 15, 2025 and interim periods within fiscal years beginning after December 15, 2026. As permitted, the Registrants have elected to early adopt the practical expedient as of December 31, 2025 and applied its provisions prospectively to the provision for uncollectable accounts. The adoption of ASU 2025‑05 did not have a material impact on the consolidated results of operations, cash flows or financial condition of the Registrants. See "Provision for Uncollectible Accounts" herein for additional information and disclosures impacted by ASU 2025-05.

In the fourth quarter of 2025, the Company adopted ASU No. 2023-07 (Topic 280), Improvements to Reportable Segment Disclosures , which requires disclosure of significant segment expenses on an annual and interim basis. The new standard also requires disclosure of the Company's chief operating decision maker and interim disclosure of each reportable segment's total assets. This standard has no impact on the accounting for reportable segments. See Note 20.

In 2024, the Company adopted ASU No. 2022-04 (Subtopic 405-50), Liabilities - Supplier Finance Programs, which requires disclosures about the use of supplier finance programs. This standard has no impact on the accounting for supplier finance programs and did not materially impact the Company's disclosures.

In 2023, the Company adopted ASU No. 2021-10 (Topic 832), Government Assistance, which requires annual disclosures about certain types of government assistance received. This standard has no impact on the accounting for government assistance and did not materially impact the Company's disclosures.

In December 2023, the FASB issued ASU No. 2023-09 (Topic 740), Improvements to Income Tax Disclosures , which expands the disclosures required with respect to the income tax rate reconciliation and income taxes paid both in U.S. and foreign jurisdictions. The updates, which are effective in fiscal 2026, change disclosures only and will not impact the Company’s results of operations.

In November 2024, the FASB issued ASU No. 2024-03 (Subtopic 220-40), Disaggregation of Income Statement Expenses , which requires expanded disclosures of specific expense categories in the notes to financial statements. The updates, which are effective for annual periods in fiscal 2028 and interim periods in fiscal 2029, change disclosures only and will not impact the Company’s results of operations.

FISCAL 2026 OUTLOOK

For fiscal year 2026, consolidated net sales from continuing operations are expected to be up approximately 5.5 percent, with underlying sales up approximately 4 percent, excluding a 1.5 percent favorable impact from foreign currency translation. Earnings per share are expected to be $4.73 to $4.93, while adjusted earnings per share are expected to be $6.35 to $6.55 (see the following reconciliation).

Year Ended December 31, 2025
Americas	Asia Pacific	Europe, Middle East & Africa	Total
Sales	6,423.9	2,274.7	2,382.2	11,080.8
Intersegment sales	37.6	255.5	557.8	850.9
Net Sales	6,386.3	2,019.2	1,824.4	10,229.9
Significant segment expenses
Cost of sales (1)	3,838.7	1,465.1	1,165.2	6,469.0
Marketing, sales and service costs	356.9	128.9	99.6	585.4
Engineering, research and development costs	229.3	112.2	100.2	441.7
Information technology costs	88.7	60.3	37.3	186.3
Restructuring costs	2.2	0.9	1.3	4.4
Other segment items (2)	156.2	29.7	43.4	229.3
Operating profit (loss)	1,714.3	222.1	377.4	2,313.8
Foreign currency gain (loss)	( 12.0 )
Corporate and other	( 271.7 )
Total corporate, other and eliminations	( 283.7 )
Amortization of intangibles	( 200.4 )
Operating profit (loss)	1,829.7

(1) Cost of sales exclusive of engineering, research and development costs.

(2) Other segment expenses mostly consists of general and administrative expenses such as Finance, HR, Treasury and Legal costs.

For the Year Ended December 31, 2025
NGL Pipelines & Services	Crude Oil Pipelines & Services	Natural Gas Pipelines & Services	Petrochemical & Refined Products Services	Segment Total
Segment revenues:
Revenues from third parties	17,308	20,735	4,149	10,352	52,544
Revenues from related parties	8	26	18	–	52
Intersegment and intrasegment revenues	67,059	42,375	960	21,146	131,540
Total segment revenues	84,375	63,136	5,127	31,498	184,136
Significant segment expenses:
Cost of sales	76,347	61,380	2,746	28,496	168,969
Variable operating costs and expenses (1)	844	140	77	453	1,514
Fixed operating costs and expenses (2)	1,750	408	758	1,129	4,045
Total significant segment expenses	78,941	61,928	3,581	30,078	174,528
Other segment income:
Equity in income of unconsolidated affiliates	83	271	5	2	361
Other segment items (3)	42	22	7	14	85
Total other segment income	125	293	12	16	446
Total segment gross operating margin	5,559	1,501	1,558	1,436	10,054
Other financial information:
Capital expenditures	3,326	112	1,628	554	5,620

(1) Variable operating costs and expenses represent the cost of operating our plants, pipelines and other fixed assets that generally fluctuate based on utilization.

(2) Fixed operating costs and expenses represent the cost of operating our plants, pipelines and other fixed assets that generally remain constant independent of utilization.

(3) Other segment items for each segment primarily represent the following:

• NGL Pipelines & Services – Non-refundable payments received from shippers attributable to make-up rights, subsequent recognition of revenues attributable to make-up rights, and other miscellaneous segment items.

• Crude Oil Pipelines & Services – Other miscellaneous segment items.

• Natural Gas Pipelines & Services – Other miscellaneous segment items.

• Petrochemical & Refined Products Services – Other miscellaneous segment items.

F-43

ENTERPRISE PRODUCTS PARTNERS L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(1) Other segment items represent the difference between segment adjusted revenues less significant segment expenses and pre-tax adjusted income (loss) from operations, and they do not represent significant segment items relative to the CODM's review and oversight.

(2) Includes Net investment gains/losses as presented in our Consolidated Statements of Income, as well as the Company's share of certain investment results of its joint ventures reported in the Cigna Healthcare segment using the equity method of accounting, which are presented within Fees and other revenues in our Consolidated Statements of Income.

(In millions)	Evernorth Health Services	Cigna Healthcare	Other Operations	Corporate and Eliminations	Total
2024
Revenues from external customers	198,177	47,528	440	3	246,148
Intersegment revenues	3,775	4,972	79	( 8,826 )
Net investment income	21	618	309	25	973
Total revenues	201,973	53,118	828	( 8,798 )	247,121
Net investment results from certain equity method investments	—	( 204 )	—	—	( 204 )
Special item related to impairment of dividend receivable	182	—	—	—	182
Adjusted revenues	202,155	52,914	828	( 8,798 )	247,099
Pharmacy and other service costs	190,968	—
Medical costs	—	37,887
Selling, general and administrative expenses	3,779	10,805
Other segment items (1)
Interest (expense) and other	( 2 )	7
Less: Income attributable to noncontrolling interests	405	—
Pre-tax adjusted income (loss) from operations	7,001	4,229	( 9 )	( 1,688 )	9,533
Income (loss) before income taxes	3,929	3,315	( 12 )	( 1,963 )	5,269
Pre-tax adjustments to reconcile to adjusted income from operations
(Income) attributable to noncontrolling interests	( 405 )	—	—	—	( 405 )
Net investment losses (2)	2,129	401	3	—	2,533
Amortization of acquired intangible assets	1,662	41	—	—	1,703
Special items
Integration and transaction-related costs	—	—	—	275	275
Impairment of dividend receivable	182	—	—	—	182
Net (gain) loss on sale of businesses	( 496 )	472	—	—	( 24 )

(1) Other segment items represent the difference between segment adjusted revenues less significant segment expenses and pre-tax adjusted income (loss) from operations, and they do not represent significant segment items relative to the CODM's review and oversight.

The following tables include a summary of significant revenue and expense line items for each segment. Items within “Significant segment expenses” align with the significant segment-level information that is regularly provided to the CODM as required by the adoption of ASU 2023-07 in the fourth quarter of 2024. Intersegment expenses are included within the amounts shown.

106	OXY 2025 FORM 10-K

table of contents

FINANCIAL STATEMENTS FOOTNOTES

OIL AND GAS SEGMENT

Other segment expenses include asset impairments and other charges, selling, general and administrative expense and exploration expense:

Years Ended December 31,
millions	2025	2024	2023
Revenues and other income
Net sales	20,902	21,705	21,284
Gains (losses) on sale of assets and other income	( 70 )	( 551 )	192
Total	20,832	21,154	21,476
Significant segment expenses
Oil and gas lease operating expense	4,681	4,738	4,677
Transportation and gathering expense	1,629	1,583	1,427
Other operating and non-operating expense	1,161	997	889
Taxes other than on income	1,009	1,026	1,076
Depreciation, depletion and amortization	7,115	6,565	6,112
Other segment expenses	633	993	1,031
Total	16,228	15,902	15,212
Segment income before other items	4,604	5,252	6,264
Losses from equity investments and other	( 18 )	( 38 )	( 24 )
Segment income from continuing operations before taxes	4,586	5,214	6,240

MIDSTREAM AND MARKETING SEGMENT

Other segment expenses include asset impairments and other charges, transportation expense, taxes other than on income, and selling, general and administrative expense:

In November 2023, the FASB issued ASU No. 2023-07, “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures” (“ASU 2023-07”), which are intended to improve reportable segment disclosure requirements. ASU 2023-07 expands public entities’ segment disclosures by requiring disclosure of significant segment expenses that are regularly provided to the chief operating decision maker and included within each reported measure of segment profit or loss, an amount and description of its composition for other segment items, and interim disclosures of a reportable segment’s profit or loss and assets. All disclosure requirements of ASU 2023-07 are required for entities with a single reportable segment. Autodesk adopted the annual disclosures of ASU 2023-07 for our fiscal year ended January 31, 2025 and adopted for interim periods beginning February 1, 2025.

Recently issued accounting standards not yet adopted

In September 2025, the FASB issued ASU No. 2025-06, “Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40)” (“ASU 2025-06”), which amends certain aspects of the accounting for and disclosure of software costs under Subtopic 350-40. ASU 2025-06 eliminates accounting consideration of software development “stages”. Cost capitalization will now begin solely when (1) management has authorized and committed to funding the software project, and (2) it is probable the project will be completed and the software used to perform its intended function (the probable-to-complete threshold). In evaluating the probable-to-complete recognition threshold, an entity is required to consider whether there is significant uncertainty associated with the development activities of the software. ASU 2025-06 specifies that the disclosures in Subtopic 360-10, Property, Plant, and Equipment—Overall, are required for all capitalized internal-use software costs, regardless of how those costs are presented in the financial statements. The amendments in ASU 2205-06 supersede the website development costs guidance and incorporate the recognition requirements for website-specific development costs from Subtopic 350-50 into Subtopic 350-40. ASU 2025-06 is effective for Autodesk’s fiscal year beginning February 1, 2028, and interim periods within that fiscal year. Early adoption is permitted. Autodesk is currently evaluating the effect of adopting ASU 2025-06 on its consolidated financial statements.