DELAWARE | 46-4254555 | |
(State or other jurisdiction of | (IRS employer | |
incorporation or organization) | Identification no.) | |
1400 FOUNTAINGROVE PARKWAY | ||
SANTA ROSA, CALIFORNIA | 95403 | |
(Address of principal executive offices) | (Zip Code) |
Large accelerated filer x | Accelerated filer ¨ | |
Non-accelerated filer ¨ | Smaller reporting company ¨ | |
Emerging growth company ¨ |
Page Number | |||
PART I | — FINANCIAL INFORMATION |
Three Months Ended | |||||||
January 31, | |||||||
2019 | 2018 | ||||||
Net revenue: | |||||||
Products | $ | 837 | $ | 684 | |||
Services and other | 169 | 153 | |||||
Total net revenue | 1,006 | 837 | |||||
Costs and expenses: | |||||||
Cost of products | 347 | 339 | |||||
Cost of services and other | 81 | 73 | |||||
Total costs | 428 | 412 | |||||
Research and development | 173 | 150 | |||||
Selling, general and administrative | 288 | 295 | |||||
Other operating expense (income), net | (4 | ) | (3 | ) | |||
Total costs and expenses | 885 | 854 | |||||
Income (loss) from operations | 121 | (17 | ) | ||||
Interest income | 4 | 3 | |||||
Interest expense | (20 | ) | (22 | ) | |||
Other income (expense), net | 15 | 13 | |||||
Income (loss) before taxes | 120 | (23 | ) | ||||
Provision (benefit) for income taxes | 6 | (117 | ) | ||||
Net income | $ | 114 | $ | 94 | |||
Net income per share: | |||||||
Basic | $ | 0.61 | $ | 0.50 | |||
Diluted | $ | 0.60 | $ | 0.50 | |||
Weighted average shares used in computing net income per share: | |||||||
Basic | 187 | 187 | |||||
Diluted | 190 | 189 |
Three Months Ended | |||||||
January 31, | |||||||
2019 | 2018 | ||||||
Net income | $ | 114 | $ | 94 | |||
Other comprehensive income (loss): | |||||||
Unrealized gain (loss) on investments, net of tax benefit of zero | — | (2 | ) | ||||
Unrealized gain (loss) on derivative instruments, net of tax benefit (expense) of zero | (2 | ) | 2 | ||||
Amounts reclassified into earnings related to derivative instruments, net of tax benefit (expense) of zero | 1 | (2 | ) | ||||
Foreign currency translation, net of tax benefit (expense) of zero | 30 | 41 | |||||
Net defined benefit pension cost and post retirement plan costs: | |||||||
Change in actuarial net loss, net of tax expense of $3 | 13 | 10 | |||||
Change in net prior service credit, net of tax benefit of $1 | (3 | ) | (4 | ) | |||
Other comprehensive income (loss) | 39 | 45 | |||||
Total comprehensive income | $ | 153 | $ | 139 |
January 31, 2019 | October 31, 2018 | ||||||
(unaudited) | |||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 1,098 | $ | 913 | |||
Accounts receivable, net | 580 | 624 | |||||
Inventory | 641 | 619 | |||||
Other current assets | 225 | 222 | |||||
Total current assets | 2,544 | 2,378 | |||||
Property, plant and equipment, net | 558 | 555 | |||||
Goodwill | 1,181 | 1,171 | |||||
Other intangible assets, net | 594 | 645 | |||||
Long-term investments | 52 | 46 | |||||
Long-term deferred tax assets | 741 | 750 | |||||
Other assets | 308 | 279 | |||||
Total assets | $ | 5,978 | $ | 5,824 | |||
LIABILITIES AND EQUITY | |||||||
Current liabilities: | |||||||
Short-term debt | $ | 499 | $ | 499 | |||
Accounts payable | 222 | 242 | |||||
Employee compensation and benefits | 210 | 276 | |||||
Deferred revenue | 317 | 334 | |||||
Income and other taxes payable | 56 | 42 | |||||
Other accrued liabilities | 96 | 69 | |||||
Total current liabilities | 1,400 | 1,462 | |||||
Long-term debt | 1,291 | 1,291 | |||||
Retirement and post-retirement benefits | 219 | 224 | |||||
Long-term deferred revenue | 126 | 127 | |||||
Other long-term liabilities | 284 | 287 | |||||
Total liabilities | 3,320 | 3,391 | |||||
Commitments and contingencies (Note 13) | |||||||
Stockholders’ equity: | |||||||
Preferred stock; $0.01 par value; 100 million shares authorized; none issued and outstanding | — | — | |||||
Common stock; $0.01 par value; 1 billion shares authorized; 193 million shares at January 31, 2019 and 191 million shares at October 31, 2018 issued | 2 | 2 | |||||
Treasury stock at cost; 5.1 million shares at January 31, 2019 and 4.4 million shares at October 31, 2018 | (222 | ) | (182 | ) | |||
Additional paid-in-capital | 1,925 | 1,889 | |||||
Retained earnings | 1,402 | 1,212 | |||||
Accumulated other comprehensive loss | (449 | ) | (488 | ) | |||
Total stockholders' equity | 2,658 | 2,433 | |||||
Total liabilities and equity | $ | 5,978 | $ | 5,824 |
Three Months Ended | |||||||
January 31, | |||||||
2019 | 2018 | ||||||
Cash flows from operating activities: | |||||||
Net income | $ | 114 | $ | 94 | |||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Depreciation | 24 | 26 | |||||
Amortization | 52 | 52 | |||||
Share-based compensation | 27 | 19 | |||||
Deferred tax benefit | (12 | ) | (235 | ) | |||
Excess and obsolete inventory-related charges | 7 | 6 | |||||
Gain on divestiture | (1 | ) | — | ||||
Pension curtailment and settlement loss | 2 | — | |||||
Net unrealized gains on equity investments | (5 | ) | — | ||||
Other non-cash expenses, net | — | 2 | |||||
Changes in assets and liabilities: | |||||||
Accounts receivable | 56 | 99 | |||||
Inventory | (26 | ) | (20 | ) | |||
Accounts payable | (10 | ) | 14 | ||||
Employee compensation and benefits | (68 | ) | (50 | ) | |||
Deferred revenue | 43 | 61 | |||||
Income taxes payable | 10 | 115 | |||||
Retirement and post-retirement benefits | (12 | ) | (12 | ) | |||
Other assets and liabilities | 39 | — | |||||
Net cash provided by operating activities | 240 | 171 | |||||
Cash flows from investing activities: | |||||||
Investments in property, plant and equipment | (31 | ) | (24 | ) | |||
Proceeds from divestiture | 2 | — | |||||
Net cash used in investing activities | (29 | ) | (24 | ) | |||
Cash flows from financing activities: | |||||||
Proceeds from issuance of common stock under employee stock plans | 30 | 24 | |||||
Payment of taxes related to net share settlement of equity awards | (23 | ) | (15 | ) | |||
Payment of acquisition-related contingent consideration | — | (3 | ) | ||||
Proceeds from revolving credit facility | — | 40 | |||||
Repayment of revolving credit facility | — | (40 | ) | ||||
Treasury stock repurchases | (40 | ) | — | ||||
Net cash provided (used) by financing activities | (33 | ) | 6 | ||||
Effect of exchange rate movements | 7 | 9 | |||||
Net increase in cash, cash equivalents, and restricted cash | 185 | 162 | |||||
Cash, cash equivalents, and restricted cash at beginning of period | 917 | 820 | |||||
Cash, cash equivalents, and restricted cash at end of period | $ | 1,102 | $ | 982 |
Common Stock | Treasury Stock | ||||||||||||||||||||||||||||
Number of Shares | Par Value | Additional Paid-in Capital | Number of Shares | Treasury Stock at Cost | Retained Earnings | Accumulated Other Comprehensive Income/(Loss) | Total Stockholders' Equity | ||||||||||||||||||||||
Balance as of October 31, 2018 | 191,204 | $ | 2 | $ | 1,889 | (4,364 | ) | $ | (182 | ) | $ | 1,212 | $ | (488 | ) | $ | 2,433 | ||||||||||||
Adjustment due to adoption of new accounting standards | — | — | — | — | — | 76 | — | 76 | |||||||||||||||||||||
Net income | — | — | — | — | — | 114 | — | 114 | |||||||||||||||||||||
Other comprehensive income, net of tax | — | — | — | — | — | — | 39 | 39 | |||||||||||||||||||||
Issuance of common stock | 1,597 | — | 8 | — | — | — | — | 8 | |||||||||||||||||||||
Share-based compensation | — | — | 28 | — | — | — | — | 28 | |||||||||||||||||||||
Repurchase of common stock | — | — | — | (686 | ) | (40 | ) | — | — | (40 | ) | ||||||||||||||||||
Balance as of January 31, 2019 | 192,801 | $ | 2 | $ | 1,925 | (5,050 | ) | $ | (222 | ) | $ | 1,402 | $ | (449 | ) | $ | 2,658 | ||||||||||||
Balance as of October 31, 2017 | 188,310 | $ | 2 | $ | 1,786 | (2,289 | ) | $ | (62 | ) | $ | 1,041 | $ | (457 | ) | $ | 2,310 | ||||||||||||
Adjustment due to adoption of new accounting standards | — | — | — | — | — | 6 | — | 6 | |||||||||||||||||||||
Net income | — | — | — | — | — | 94 | — | 94 | |||||||||||||||||||||
Other comprehensive income, net of tax | — | — | — | — | — | — | 45 | 45 | |||||||||||||||||||||
Issuance of common stock | 1,490 | — | 9 | — | — | — | — | 9 | |||||||||||||||||||||
Share-based compensation | — | — | 20 | — | — | — | — | 20 | |||||||||||||||||||||
Repurchase of common stock | — | — | — | — | — | — | — | — | |||||||||||||||||||||
Balance as of January 31, 2018 | 189,800 | $ | 2 | $ | 1,815 | (2,289 | ) | $ | (62 | ) | $ | 1,141 | $ | (412 | ) | $ | 2,484 |
1. | OVERVIEW, BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
2. | NEW ACCOUNTING PRONOUNCEMENTS |
October 31, 2018 | Adjustments Due to ASC 606 | November 1, 2018 | |||||||||
(in millions) | |||||||||||
Assets: | |||||||||||
Accounts receivable, net | $ | 624 | $ | 7 | $ | 631 | |||||
Other current assets | 222 | 28 | 250 | ||||||||
Long-term deferred tax assets | 750 | (15 | ) | 735 | |||||||
Other assets | 279 | 3 | 282 | ||||||||
Liabilities: | |||||||||||
Deferred revenue | $ | 334 | $ | (53 | ) | $ | 281 | ||||
Income and other taxes payable | 42 | 1 | 43 | ||||||||
Other accrued liabilities | 69 | 7 | 76 | ||||||||
Long-term deferred revenue | 127 | (11 | ) | 116 | |||||||
Other long-term liabilities | 287 | 3 | 290 | ||||||||
Stockholders' equity: | |||||||||||
Retained earnings | $ | 1,212 | $ | 76 | $ | 1,288 |
Three months ended | |||||||||||
January 31, 2019 | |||||||||||
As Reported | Balances Without Adoption of ASC 606 | Effect of Change Higher/(Lower) | |||||||||
(in millions) | |||||||||||
Net revenue: | |||||||||||
Products | $ | 837 | $ | 822 | $ | 15 | |||||
Services and other | 169 | 170 | (1 | ) | |||||||
Total net revenue | 1,006 | 992 | 14 | ||||||||
Costs and expenses: | |||||||||||
Cost of products | 347 | 346 | 1 | ||||||||
Cost of services and other | 81 | 81 | — | ||||||||
Total costs | 428 | 427 | 1 | ||||||||
Research and development | 173 | 173 | — | ||||||||
Selling, general and administrative | 288 | 287 | 1 | ||||||||
Other operating expense (income), net | (4 | ) | (4 | ) | — | ||||||
Total costs and expenses | 885 | 883 | 2 | ||||||||
Income from operations | 121 | 109 | 12 | ||||||||
Interest income | 4 | 4 | — | ||||||||
Interest expense | (20 | ) | (20 | ) | — | ||||||
Other income (expense), net | 15 | 15 | — | ||||||||
Income before taxes | 120 | 108 | 12 | ||||||||
Provision for income taxes | 6 | 4 | 2 | ||||||||
Net income | $ | 114 | $ | 104 | $ | 10 | |||||
Net income per share: | |||||||||||
Basic | $ | 0.61 | $ | 0.55 | $ | 0.06 | |||||
Diluted | $ | 0.60 | $ | 0.55 | $ | 0.05 |
January 31, 2019 | |||||||||||
As Reported | Balances Without Adoption of ASC 606 | Effect of Change Higher/(Lower) | |||||||||
(in millions) | |||||||||||
Assets: | |||||||||||
Accounts receivable, net | $ | 580 | $ | 572 | $ | 8 | |||||
Inventory | 641 | 642 | (1 | ) | |||||||
Other current assets | 225 | 198 | 27 | ||||||||
Long-term deferred tax assets | 741 | 758 | (17 | ) | |||||||
Other assets | 308 | 304 | 4 | ||||||||
Liabilities: | |||||||||||
Deferred revenue | $ | 317 | $ | 377 | $ | (60 | ) | ||||
Income and other taxes payable | 56 | 54 | 2 | ||||||||
Other accrued liabilities | 96 | 89 | 7 | ||||||||
Long-term deferred revenue | 126 | 143 | (17 | ) | |||||||
Other long-term liabilities | 284 | 281 | 3 | ||||||||
Stockholders' equity: | |||||||||||
Retained earnings | $ | 1,402 | $ | 1,316 | $ | 86 |
Three Months Ended January 31, 2018 | |||||||||||
As Originally Reported | As Adjusted | Change | |||||||||
(in millions) | |||||||||||
Net cash provided by operating activities | $ | 171 | $ | 171 | $ | — | |||||
Net cash used in investing activities | $ | (27 | ) | $ | (24 | ) | $ | 3 | |||
Net cash provided by financing activities | $ | 9 | $ | 6 | $ | (3 | ) |
Three Months Ended January 31, 2018 | |||||||||||
As Originally Reported | As Adjusted | Effect of Change Higher/(Lower) | |||||||||
(in millions) | |||||||||||
Cost of products | $ | 337 | $ | 339 | $ | 2 | |||||
Research and development | 146 | 150 | 4 | ||||||||
Selling, general and administrative | 289 | 295 | 6 | ||||||||
Other income (expense), net | 1 | 13 | 12 |
3. | REVENUE |
Performance Obligation | When performance obligation is typically satisfied | When payment is typically due | How standalone selling price is typically determined |
Product Revenues | |||
Hardware | When customer obtains control of the product, typically at delivery (point in time) | Within 30-90 days of shipment | Estimated based on established pricing practices or observable based on standalone sales for certain hardware products |
Software licenses | Upon electronic delivery of the software, and the applicable license period has begun (point in time) | Within 30-90 days of the beginning of license period | Estimated based on established pricing practices or observable based on standalone sales for certain software products |
Threat intelligence solutions | Ratably over the subscription period (over time) | Within 30-90 days of the beginning of subscription period | Estimated based on established pricing practices |
Service Revenues | |||
Calibration contracts | Ratably over the service contract period (over time) | Within 30-90 days of the beginning of service contract period | Estimated based on established pricing practices |
Repair and calibration (per- incident) | As services are performed (point in time) | Within 30-90 days of invoicing for services rendered | Estimated based on established pricing practices |
Extended hardware warranty | Ratably over the warranty period (over time) | Within 30-90 days of the beginning of warranty period | Estimated based on established pricing practices or observable based on standalone sales of certain hardware warranty contracts |
Technical support and when-and-if-available software updates | Ratably over the license service contract period (over time) | Within 30-90 days of the beginning of license or service contract period | Estimated based on established pricing practices or observable based on standalone sales for certain support contracts |
Professional services | As services are performed based on measures of progress (over time) or at a point in time | Within 30-90 days invoicing for services rendered | Estimated based on established pricing practices |
Custom Solutions | |||
Custom solutions (milestone-based) | As milestones are achieved based on transfer of control to customer (over time) | Within 30-90 days of milestone achievement | Transaction price, as pricing is custom and can vary significantly from contract to contract |
Custom solutions (point in time) | When customer obtains control of the solution, typically at delivery (point in time) | Within 30-90 days of delivery of solution | Transaction price, as pricing is custom and can vary significantly from contract to contract |
Three Months Ended January 31, 2019 | |||||||||||||||
Communications Solutions Group | Electronic Industrial Solutions Group | Ixia Solutions Group | Total | ||||||||||||
(in millions) | |||||||||||||||
Region | |||||||||||||||
Americas | $ | 272 | $ | 57 | $ | 74 | $ | 403 | |||||||
Europe | 96 | 63 | 19 | 178 | |||||||||||
Asia Pacific | 255 | 137 | 33 | 425 | |||||||||||
Total net revenue | $ | 623 | $ | 257 | $ | 126 | $ | 1,006 | |||||||
End Market | |||||||||||||||
Aerospace, Defense & Government | $ | 223 | $ | — | $ | — | $ | 223 | |||||||
Commercial Communications | 400 | — | — | 400 | |||||||||||
Electronic Industrial | — | 257 | — | 257 | |||||||||||
Ixia Solutions | — | — | 126 | 126 | |||||||||||
Total net revenue | $ | 623 | $ | 257 | $ | 126 | $ | 1,006 | |||||||
Timing of Revenue Recognition | |||||||||||||||
Revenue recognized at a point in time | $ | 570 | $ | 235 | $ | 82 | $ | 887 | |||||||
Revenue recognized over time | 53 | 22 | 44 | 119 | |||||||||||
Total net revenue | $ | 623 | $ | 257 | $ | 126 | $ | 1,006 |
Three months ended | |||
January 31, 2019 | |||
(in millions) | |||
Balance at October 31, 2018 | $ | — | |
Costs capitalized on November 1, 2018 due to ASC 606 adoption | 29 | ||
Costs capitalized during the period | 17 | ||
Costs amortized during the period | (18 | ) | |
Foreign currency translation impact | 1 | ||
Balance at January 31, 2019 | $ | 29 |
Contract Liabilities | |||
(in millions) | |||
Balance at October 31, 2018 | $ | 461 | |
Impact of adopting new revenue standard | (64 | ) | |
Balance at November 1, 2018 | 397 | ||
Deferral of revenue billed in current period, net of recognition | 167 | ||
Revenue recognized that was deferred as of the beginning of the period | (124 | ) | |
Foreign currency translation impact | 3 | ||
Balance at January 31, 2019 | $ | 443 |
• | We do not disclose the value of remaining performance obligations for contracts with an original expected length of one year or less. |
• | We determine incremental costs of obtaining a contract for a portfolio of contracts with similar characteristics as we reasonably expect that the effects on the financial statements of applying this guidance to the portfolio would not differ materially from applying this guidance to the individual contracts within that portfolio. |
• | We exclude from the transaction price certain taxes (e.g., sales, use, value added, and some excise taxes). |
• | We do not adjust the promised amount of consideration for the effects of a significant financing component if we expect, at contract inception, that the period between when we transfer a promised good or service to a customer and when the customer pays for that good or service will be one year or less. |
• | We treat shipping and handling costs associated with outbound freight after control of a product has transferred to a customer as a fulfillment cost, included in cost of products. |
• | We have applied the guidance only to contracts that have not been completed as of the date of adoption (November 1, 2018). |
• | We did not evaluate individual modifications for those periods prior to the adoption date, but rather evaluated the aggregate effect of all modifications as of the adoption date. |
Three Months Ended | |||||||
January 31, | |||||||
2019 | 2018 | ||||||
(in millions) | |||||||
Cost of products and services | $ | 4 | $ | 3 | |||
Research and development | 6 | 4 | |||||
Selling, general and administrative | 17 | 12 | |||||
Total share-based compensation expense | $ | 27 | $ | 19 |
Three Months Ended | |||||
January 31, | |||||
2019 | 2018 | ||||
Volatility of Keysight shares | 25 | % | 25 | % | |
Volatility of selected index | 12 | % | 14 | % | |
Price-wise correlation with selected peers | 57 | % | 57 | % |
Three Months Ended | |||||||
January 31, | |||||||
2019 | 2018 | ||||||
(in millions) | |||||||
Numerator: | |||||||
Net income | $ | 114 | $ | 94 | |||
Denominator: | |||||||
Basic weighted-average shares | 187 | 187 | |||||
Potential common shares— stock options and other employee stock plans | 3 | 2 | |||||
Diluted weighted-average shares | 190 | 189 |
Three months ended | |||||||
January 31, | |||||||
2019 | 2018 | ||||||
(in millions) | |||||||
Increase (decrease) in unpaid capital expenditures in accounts payable | $ | 11 | $ | (3 | ) | ||
$ | 11 | $ | (3 | ) |
Three months ended | |||||||
January 31, | |||||||
2019 | 2018 | ||||||
(in millions) | |||||||
Cash and cash equivalents | $ | 1,098 | $ | 980 | |||
Restricted cash included in other current assets | 2 | — | |||||
Restricted cash included in other assets | 2 | 2 | |||||
Total cash, cash equivalents, and restricted cash shown in the statement of cash flows | $ | 1,102 | $ | 982 |
January 31, 2019 | October 31, 2018 | ||||||
(in millions) | |||||||
Finished goods | $ | 286 | $ | 283 | |||
Purchased parts and fabricated assemblies | 355 | 336 | |||||
Total inventory | $ | 641 | $ | 619 |
9. | GOODWILL AND OTHER INTANGIBLE ASSETS |
Communications Solutions Group | Electronic Industrial Solutions Group | Ixia Solutions Group | Total | ||||||||||||
(in millions) | |||||||||||||||
Balance as of October 31, 2018: | |||||||||||||||
Goodwill | $ | 497 | $ | 267 | $ | 1,116 | $ | 1,880 | |||||||
Accumulated impairment losses | — | — | (709 | ) | (709 | ) | |||||||||
Goodwill as reported | 497 | 267 | 407 | 1,171 | |||||||||||
Foreign currency translation impact | 9 | 1 | — | 10 | |||||||||||
Balance as of January 31, 2019 | $ | 506 | $ | 268 | $ | 407 | $ | 1,181 | |||||||
Components of goodwill as of January 31, 2019: | |||||||||||||||
Goodwill | $ | 506 | $ | 268 | $ | 1,116 | $ | 1,890 | |||||||
Accumulated impairment losses | — | — | (709 | ) | (709 | ) | |||||||||
Goodwill as reported | $ | 506 | $ | 268 | $ | 407 | $ | 1,181 |
Other Intangible Assets as of January 31, 2019 | Other Intangible Assets as of October 31, 2018 | ||||||||||||||||||||||
Gross Carrying Amount | Accumulated Amortization and Impairments | Net Book Value | Gross Carrying Amount | Accumulated Amortization and Impairments | Net Book Value | ||||||||||||||||||
(in millions) | |||||||||||||||||||||||
Developed technology | $ | 835 | $ | 455 | $ | 380 | $ | 835 | $ | 415 | $ | 420 | |||||||||||
Backlog | 13 | 13 | — | 13 | 13 | — | |||||||||||||||||
Trademark/Tradename | 33 | 16 | 17 | 33 | 14 | 19 | |||||||||||||||||
Customer relationships | 304 | 109 | 195 | 304 | 100 | 204 | |||||||||||||||||
Non-compete agreements | 1 | — | 1 | 1 | — | 1 | |||||||||||||||||
Total amortizable intangible assets | 1,186 | 593 | 593 | 1,186 | 542 | 644 | |||||||||||||||||
In-Process R&D | 1 | — | 1 | 1 | — | 1 | |||||||||||||||||
Total | $ | 1,187 | $ | 593 | $ | 594 | $ | 1,187 | $ | 542 | $ | 645 |
Amortization expense | |||
(in millions) | |||
2019 (remainder) | $ | 152 | |
2020 | 196 | ||
2021 | 128 | ||
2022 | 52 | ||
2023 | 44 | ||
Thereafter | 21 |
10. | FAIR VALUE MEASUREMENTS |
Fair Value Measurements at | |||||||||||||||||||||||||||||||||||||||
January 31, 2019 | October 31, 2018 | ||||||||||||||||||||||||||||||||||||||
Total | Level 1 | Level 2 | Level 3 | Other | Total | Level 1 | Level 2 | Level 3 | Other | ||||||||||||||||||||||||||||||
(in millions) | |||||||||||||||||||||||||||||||||||||||
Assets: | |||||||||||||||||||||||||||||||||||||||
Short-term | |||||||||||||||||||||||||||||||||||||||
Cash equivalents | |||||||||||||||||||||||||||||||||||||||
Money market funds | $ | 603 | $ | 603 | $ | — | $ | — | $ | — | $ | 484 | $ | 484 | $ | — | $ | — | $ | — | |||||||||||||||||||
Derivative instruments (foreign exchange contracts) | 3 | — | 3 | — | — | 6 | — | 6 | — | — | |||||||||||||||||||||||||||||
Long-term | |||||||||||||||||||||||||||||||||||||||
Equity investments | 36 | 36 | — | — | — | 30 | 30 | — | — | — | |||||||||||||||||||||||||||||
Equity investments - other | 16 | — | — | — | 16 | 16 | — | — | — | 16 | |||||||||||||||||||||||||||||
Total assets measured at fair value | $ | 658 | $ | 639 | $ | 3 | $ | — | $ | 16 | $ | 536 | $ | 514 | $ | 6 | $ | — | $ | 16 | |||||||||||||||||||
Liabilities: | |||||||||||||||||||||||||||||||||||||||
Short-term | |||||||||||||||||||||||||||||||||||||||
Derivative instruments (foreign exchange contracts) | $ | 5 | $ | — | $ | 5 | $ | — | $ | — | $ | 6 | $ | — | $ | 6 | $ | — | $ | — | |||||||||||||||||||
Long-term | |||||||||||||||||||||||||||||||||||||||
Deferred compensation liability | 13 | — | 13 | — | — | 13 | — | 13 | — | — | |||||||||||||||||||||||||||||
Total liabilities measured at fair value | $ | 18 | $ | — | $ | 18 | $ | — | $ | — | $ | 19 | $ | — | $ | 19 | $ | — | $ | — |
Three Months Ended | |||
January 31, | |||
2019 | |||
(in millions) | |||
Net realized gains on investments sold | $ | — | |
Net unrealized gains on investments still held | 5 | ||
Other-than-temporary impairments of investments | — | ||
Total | $ | 5 |
11. | DERIVATIVES |
Derivatives in Cash Flow Hedging Relationships | Derivatives Not Designated as Hedging Instruments | |||||||
Forward Contracts | Forward Contracts | |||||||
Currency | Buy/(Sell) | Buy/(Sell) | ||||||
(in millions) | ||||||||
Euro | $ | 13 | $ | 48 | ||||
British Pound | — | (39 | ) | |||||
Singapore Dollar | 16 | — | ||||||
Malaysian Ringgit | 87 | (4 | ) | |||||
Japanese Yen | (75 | ) | (38 | ) | ||||
Other currencies | (14 | ) | (5 | ) | ||||
Total | $ | 27 | $ | (38 | ) |
Fair Values of Derivative Instruments | ||||||||||||||||||
Derivative Assets | Derivative Liabilities | |||||||||||||||||
Fair Value | Fair Value | |||||||||||||||||
Balance Sheet Location | January 31, 2019 | October 31, 2018 | Balance Sheet Location | January 31, 2019 | October 31, 2018 | |||||||||||||
(in millions) | (in millions) | |||||||||||||||||
Derivatives designated as hedging instruments: | ||||||||||||||||||
Cash flow hedges | ||||||||||||||||||
Foreign exchange contracts | ||||||||||||||||||
Other current assets | $ | 2 | $ | 5 | Other accrued liabilities | $ | 3 | $ | 4 | |||||||||
Derivatives not designated as hedging instruments: | ||||||||||||||||||
Foreign exchange contracts | ||||||||||||||||||
Other current assets | 1 | 1 | Other accrued liabilities | 2 | 2 | |||||||||||||
Total derivatives | $ | 3 | $ | 6 | $ | 5 | $ | 6 |
Three Months Ended | |||||||
January 31, | |||||||
2019 | 2018 | ||||||
(in millions) | |||||||
Derivatives designated as hedging instruments: | |||||||
Cash Flow Hedges | |||||||
Foreign exchange contracts: | |||||||
Gain (loss) recognized in accumulated other comprehensive income | $ | (2 | ) | $ | 2 | ||
Gain (loss) reclassified from accumulated other comprehensive income into earnings: | |||||||
Cost of products | $ | — | $ | 2 | |||
Selling, general and administrative | $ | (1 | ) | $ | — | ||
Amount excluded from effectiveness testing recognized in earnings based on changes in fair value: | |||||||
Cost of products | $ | 1 | $ | — | |||
Derivatives not designated as hedging instruments: | |||||||
Gain (loss) recognized in other income (expense), net | $ | (3 | ) | $ | 1 |
12. | RETIREMENT PLANS AND POST-RETIREMENT BENEFIT PLANS |
Pensions | |||||||||||||||||||||||
U.S. Defined Benefit Plans | Non-U.S. Defined Benefit Plans | U.S. Post-Retirement Benefit Plan | |||||||||||||||||||||
Three Months Ended January 31, | |||||||||||||||||||||||
2019 | 2018 | 2019 | 2018 | 2019 | 2018 | ||||||||||||||||||
(in millions) | |||||||||||||||||||||||
Service cost—benefits earned during the period | $ | 5 | $ | 6 | $ | 3 | $ | 3 | $ | — | $ | — | |||||||||||
Interest cost on benefit obligation | 7 | 6 | 6 | 6 | 2 | 2 | |||||||||||||||||
Expected return on plan assets | (11 | ) | (9 | ) | (19 | ) | (21 | ) | (3 | ) | (4 | ) | |||||||||||
Amortization: | |||||||||||||||||||||||
Net actuarial loss | 3 | 3 | 7 | 6 | 2 | 4 | |||||||||||||||||
Prior service credit | (1 | ) | (2 | ) | — | — | (3 | ) | (3 | ) | |||||||||||||
Settlement loss | — | — | 2 | — | — | — | |||||||||||||||||
Net periodic benefit cost (benefit) | $ | 3 | $ | 4 | $ | (1 | ) | $ | (6 | ) | $ | (2 | ) | $ | (1 | ) |
13. | WARRANTY, COMMITMENTS AND CONTINGENCIES |
Three Months Ended | |||||||
January 31, | |||||||
2019 | 2018 | ||||||
(in millions) | |||||||
Beginning balance | $ | 45 | $ | 45 | |||
Accruals for warranties including change in estimate | 8 | 10 | |||||
Settlements made during the period | (9 | ) | (8 | ) | |||
Ending balance | $ | 44 | $ | 47 | |||
Accruals for warranties due within one year | $ | 25 | $ | 26 | |||
Accruals for warranties due after one year | 19 | 21 | |||||
Ending balance | $ | 44 | $ | 47 |
January 31, 2019 | October 31, 2018 | ||||||
(in millions) | |||||||
2019 senior unsecured notes at 3.30% (net of unamortized costs of $1 and $1) | $ | 499 | $ | 499 | |||
2024 senior unsecured notes at 4.55% (net of unamortized costs of $3 and $3) | 597 | 597 | |||||
2027 senior unsecured notes at 4.60% (net of unamortized costs of $6 and $6) | 694 | 694 | |||||
Total debt | 1,790 | 1,790 | |||||
Less: short-term debt | 499 | 499 | |||||
Total long-term debt | $ | 1,291 | $ | 1,291 |
Unrealized gain (loss) on investments | Foreign currency translation | Net defined benefit pension cost and post retirement plan costs | Unrealized gains (losses) on derivatives | Total | ||||||||||||||||||||
Actuarial losses | Prior service credits | |||||||||||||||||||||||
(in millions) | ||||||||||||||||||||||||
As of October 31, 2018 | $ | — | $ | (60 | ) | $ | (445 | ) | $ | 19 | $ | (2 | ) | $ | (488 | ) | ||||||||
Other comprehensive income (loss) before reclassifications | — | 30 | 4 | — | (2 | ) | 32 | |||||||||||||||||
Amounts reclassified out of accumulated other comprehensive loss | — | — | 12 | (4 | ) | 1 | 9 | |||||||||||||||||
Tax (expense) benefit | — | — | (3 | ) | 1 | — | (2 | ) | ||||||||||||||||
Other comprehensive income (loss) | — | 30 | 13 | (3 | ) | (1 | ) | 39 | ||||||||||||||||
As of January 31, 2019 | $ | — | $ | (30 | ) | $ | (432 | ) | $ | 16 | $ | (3 | ) | $ | (449 | ) | ||||||||
As of October 31, 2017 | $ | 14 | $ | (39 | ) | $ | (468 | ) | $ | 35 | $ | 1 | $ | (457 | ) | |||||||||
Other comprehensive income (loss) before reclassifications | (2 | ) | 41 | — | — | 2 | 41 | |||||||||||||||||
Amounts reclassified out of accumulated other comprehensive loss | — | — | 13 | (5 | ) | (2 | ) | 6 | ||||||||||||||||
Tax (expense) benefit | — | — | (3 | ) | 1 | — | (2 | ) | ||||||||||||||||
Other comprehensive income (loss) | (2 | ) | 41 | 10 | (4 | ) | — | 45 | ||||||||||||||||
As of January 31, 2018 | $ | 12 | $ | 2 | $ | (458 | ) | $ | 31 | $ | 1 | $ | (412 | ) |
Details about Accumulated Other Comprehensive Loss Components | Affected Line Item in Statement of Operations | |||||||||
Three Months Ended | ||||||||||
January 31, | ||||||||||
2019 | 2018 | |||||||||
Unrealized gain (loss) on derivatives | $ | — | $ | 2 | Cost of products | |||||
(1 | ) | — | Selling, general and administrative | |||||||
— | — | Provision for income taxes | ||||||||
(1 | ) | 2 | Net of income tax | |||||||
Net defined benefit pension cost and post retirement plan costs: | ||||||||||
Actuarial net loss | (12 | ) | (13 | ) | ||||||
Prior service credits | 4 | 5 | ||||||||
(8 | ) | (8 | ) | Total before income tax | ||||||
3 | 2 | Provision for income taxes | ||||||||
(5 | ) | (6 | ) | Net of income tax | ||||||
Total reclassifications for the period | $ | (6 | ) | $ | (4 | ) |
16. | SEGMENT INFORMATION |
Communications Solutions Group | Electronic Industrial Solutions Group | Ixia Solutions Group | Total Segments | ||||||||||||
(in millions) | |||||||||||||||
Three months ended January 31, 2019: | |||||||||||||||
Total net revenue | $ | 623 | $ | 257 | $ | 126 | $ | 1,006 | |||||||
Amortization of acquisition-related balances | — | — | 3 | 3 | |||||||||||
Total segment revenue | $ | 623 | $ | 257 | $ | 129 | $ | 1,009 | |||||||
Segment income from operations | $ | 138 | $ | 54 | $ | 12 | $ | 204 | |||||||
Three months ended January 31, 2018: | |||||||||||||||
Total net revenue | $ | 500 | $ | 229 | $ | 108 | $ | 837 | |||||||
Amortization of acquisition-related balances | — | — | 19 | 19 | |||||||||||
Total segment revenue | $ | 500 | $ | 229 | $ | 127 | $ | 856 | |||||||
Segment income from operations | $ | 63 | $ | 38 | $ | 18 | $ | 119 |
Three Months Ended | |||||||
January 31, | |||||||
2019 | 2018 | ||||||
(in millions) | |||||||
Total reportable operating segments' income from operations | $ | 204 | $ | 119 | |||
Share-based compensation expense | (27 | ) | (19 | ) | |||
Amortization of acquisition-related balances | (54 | ) | (89 | ) | |||
Acquisition and integration costs | (2 | ) | (19 | ) | |||
Northern California wildfire-related costs | — | (7 | ) | ||||
Other | — | (2 | ) | ||||
Income (loss) from operations, as reported | 121 | (17 | ) | ||||
Interest income | 4 | 3 | |||||
Interest expense | (20 | ) | (22 | ) | |||
Other income (expense), net | 15 | 13 | |||||
Income (loss) before taxes, as reported | $ | 120 | $ | (23 | ) |
Communications Solutions Group | Electronic Industrial Solutions Group | Ixia Solutions Group | Total Segments | ||||||||||||
(in millions) | |||||||||||||||
Assets: | |||||||||||||||
As of January 31, 2019 | $ | 2,059 | $ | 875 | $ | 1,407 | $ | 4,341 | |||||||
As of October 31, 2018 | $ | 2,115 | $ | 888 | $ | 1,327 | $ | 4,330 |
17. | IMPACT OF NORTHERN CALIFORNIA WILDFIRES |
Three Months Ended | |||||||
January 31, | |||||||
2019 | 2018 | ||||||
(in millions) | |||||||
Cost of products and services | $ | — | $ | 5 | |||
Research and development | — | 1 | |||||
Selling, general and administrative | — | 1 | |||||
Total | $ | — | $ | 7 |
Three Months Ended | Year over Year Change | ||||||||
January 31, | Three | ||||||||
2019 | 2018 | Months | |||||||
Orders | $ | 1,016 | $ | 964 | 5% | ||||
Net revenue: | |||||||||
Products | $ | 837 | $ | 684 | 22% | ||||
Services and other | 169 | 153 | 11% | ||||||
Total net revenue | $ | 1,006 | $ | 837 | 20% |
Year over Year Change | |||||
Three Months Ended | |||||
January 31, 2019 | |||||
Geographic Region | Actual | Currency adjusted | |||
Americas | 18 | % | 18 | % | |
Europe | 5 | % | 8 | % | |
Asia Pacific | 31 | % | 32 | % | |
Total net revenue | 20 | % | 21 | % |
Three Months Ended | Year over Year Change | ||||||||
January 31, | Three | ||||||||
2019 | 2018 | Months | |||||||
Total gross margin | 57.4% | 50.7% | 7 ppts | ||||||
Operating margin | 12.0% | (2.0)% | 14 ppts | ||||||
in millions | |||||||||
Research and development | $ | 173 | $ | 150 | 16% | ||||
Selling, general and administrative | $ | 288 | $ | 295 | (2)% | ||||
Other operating expense (income), net | $ | (4 | ) | $ | (3 | ) | 27% |
Three Months Ended | Year over Year Change | ||||||||
January 31, | Three | ||||||||
2019 | 2018 | Months | |||||||
(in millions) | |||||||||
Net revenue | $ | 623 | $ | 500 | 25% |
Three Months Ended | Year over Year Change | ||||||||
January 31, | Three | ||||||||
2019 | 2018 | Months | |||||||
Total gross margin | 61.1 | % | 57.2 | % | 4 ppts | ||||
Operating margin | 22.2 | % | 12.6 | % | 10 ppts | ||||
in millions | |||||||||
Research and development | $ | 96 | $ | 84 | 15% | ||||
Selling, general and administrative | $ | 148 | $ | 142 | 5% | ||||
Other operating expense (income), net | $ | (2 | ) | $ | (2 | ) | (8)% | ||
Income from operations | $ | 138 | $ | 63 | 120% |
Three Months Ended | Year over Year Change | ||||||||
January 31, | Three | ||||||||
2019 | 2018 | Months | |||||||
(in millions) | |||||||||
Net revenue | $ | 257 | $ | 229 | 13% |
Three Months Ended | Year over Year Change | ||||||||
January 31, | Three | ||||||||
2019 | 2018 | Months | |||||||
Total gross margin | 58.9 | % | 56.6 | % | 2 ppts | ||||
Operating margin | 20.9 | % | 16.9 | % | 4 ppts | ||||
in millions | |||||||||
Research and development | $ | 39 | $ | 34 | 16% | ||||
Selling, general and administrative | $ | 59 | $ | 58 | 3% | ||||
Other operating expense (income), net | $ | (1 | ) | $ | (1 | ) | (7)% | ||
Income from operations | $ | 54 | $ | 38 | 39% |
Three Months Ended | Year over Year Change | ||||||||
January 31, | Three | ||||||||
2019 | 2018 | Months | |||||||
(in millions) | |||||||||
Net revenue | $ | 129 | $ | 127 | 1% |
Three Months Ended | Year over Year Change | ||||||||
January 31, | Three | ||||||||
2019 | 2018 | Months | |||||||
Total gross margin | 71.3 | % | 75.5 | % | (4) ppts | ||||
Operating margin | 9.2 | % | 14.1 | % | (5) ppts | ||||
in millions | |||||||||
Research and development | $ | 32 | $ | 26 | 26% | ||||
Selling, general and administrative | $ | 48 | $ | 53 | (8)% | ||||
Income from operations | $ | 12 | $ | 18 | (35)% |
• | Net income for the three months ended January 31, 2019 increased by $20 million compared to the same period last year. Non-cash adjustments increased $224 million primarily due to a decrease in deferred tax benefits as benefits from new U.S. tax legislation were recognized in the three months ended January 31, 2018. |
• | The aggregate of accounts receivable, inventory and accounts payable provided net operating cash of $20 million during the first three months of fiscal 2019 compared to net cash provided of $93 million in the comparable period last year. The amount of cash flow generated from or used by the aggregate of accounts receivable, inventory and accounts payable depends upon the cash conversion cycle, which represents the number of days that elapse from the day we pay for the purchase of raw materials and components to the collection of cash from our customers and can be significantly impacted by the timing of shipments and purchases, as well as collections and payments in a period. |
• | The aggregate of employee compensation and benefits, income tax payable, deferred revenue and other assets and liabilities, including the impact of insurance proceeds, provided net operating cash of $24 million during the first three months of fiscal 2019 compared to net cash provided of $126 million in the comparable period last year. The difference is primarily due to less cash from income taxes payable as the income tax payable at January 31, 2018 included the establishment of a long-term transition tax liability associated with new U.S. tax legislation, and higher variable compensation payments, partially offset by lower cash outflow for fire-related recovery. For the three months ended January 31, 2019 and 2018, we received insurance proceeds of $22 million and $10 million, respectively, associated with the northern California wildfires. Also, for the three months ended January 31, 2018, we received insurance proceeds of $26 million for Singapore fire-related expenses. |
• | We contributed $8 million to our non-U.S. defined benefit plans during the first three months of fiscal 2019 compared to $9 million in the same period last year. We expect to contribute approximately $23 million to our non-U.S. defined benefit plans during the remainder of 2019. For the three months ended January 31, 2019 and 2018, we did not contribute to our U.S. defined benefit plans or U.S. post-retirement benefit plan, and we do not expect to contribute to our U.S. defined benefit plans during the remainder of 2019. |
• | properly identify customer needs; |
• | innovate and develop new technologies, services and applications; |
• | successfully commercialize new technologies in a timely manner; |
• | manufacture and deliver our solutions in sufficient volumes and on time; |
• | differentiate our offerings from our competitors' offerings; |
• | price our solutions competitively; |
• | anticipate our competitors' development of new solutions, services or technological innovations; and |
• | control product quality in our manufacturing process. |
• | changes in a specific country's or region's political, economic or other conditions, including but not limited to changes that favor national interests and economic volatility; |
• | negative consequences from changes in tax laws; |
• | difficulty in protecting intellectual property; |
• | interruption to transportation flows for delivery of parts to us and finished goods to our customers; |
• | changes in foreign currency exchange rates; |
• | difficulty in staffing and managing foreign operations; |
• | local competition; |
• | differing labor regulations; |
• | unexpected changes in regulatory requirements; |
• | inadequate local infrastructure; |
• | potential incidences of corruption and fraudulent business practices; and |
• | volatile geopolitical turmoil, including popular uprisings, regional conflicts, terrorism, and war. |
• | reduced demand for our solutions, delays in the shipment of orders or increases in order cancellations; |
• | increased risk of excess and obsolete inventories; |
• | increased price pressure for our solutions and services; and |
• | greater risk of impairment to the value, and a detriment to the liquidity, of our future investment portfolio. |
• | the achievement of anticipated cost savings, synergies, business opportunities and growth prospects from combining the acquired company; |
• | the compatibility of our infrastructure, operations, policies and organizations with those of the acquired company; |
• | the retention of key employees and/or customers; |
• | the management of facilities and employees in different geographic areas; and |
• | the management of relationships with our strategic partners, suppliers, and customer base. |
• | requiring a portion of our cash flow from operations to make interest payments on this debt; |
• | increasing our vulnerability to general adverse economic and industry conditions; |
• | reducing the cash flow available to fund capital expenditures and other corporate purposes and to grow our business; and |
• | limiting our flexibility in planning for, or reacting to, changes in our business and the industry. |
• | actual or anticipated fluctuations in our operating results due to factors related to our business; |
• | success or failure of our business strategy; |
• | our quarterly or annual earnings, or those of other companies in our industry; |
• | our ability to obtain third-party financing as needed; |
• | announcements by us or our competitors of significant acquisitions or dispositions; |
• | changes in accounting standards, policies, guidance, interpretations or principles; |
• | the failure of securities analysts to cover our common stock; |
• | changes in earnings estimates by securities analysts or our ability to meet those estimates; |
• | the operating and share price performance of other comparable companies; |
• | investor perception of our company; |
• | natural or other disasters that investors believe may affect us; |
• | overall market fluctuations; |
• | results from any material litigation or government investigations; |
• | changes in laws or regulations affecting our business; and |
• | general economic conditions and other external factors. |
• | the inability of our shareholders to call a special meeting; |
• | the inability of our shareholders to act without a meeting of shareholders; |
• | rules regarding how shareholders may present proposals or nominate directors for election at shareholder meetings; |
• | the right of our board to issue preferred stock without shareholder approval; |
• | the division of our board of directors into three classes of directors, with each class serving a staggered three-year term, and this classified board provision could have the effect of making the replacement of incumbent directors more time consuming and difficult; |
• | a provision that shareholders may only remove directors with cause; |
• | the ability of our directors, and not shareholders, to fill vacancies on our board of directors; and |
• | the requirement that the affirmative vote of shareholders holding at least 80 percent of our voting stock is required to amend certain provisions in our amended and restated certificate of incorporation (relating to the number, term and removal of our directors, the filling of our board vacancies, the advance notice to be given for nominations for elections of directors, the calling of special meetings of shareholders, shareholder action by written consent, the ability of the board of directors to amend the bylaws, elimination of liability of directors to the extent permitted by Delaware law, exclusive forum for certain types of actions and proceedings that may be initiated by our shareholders and amendments of the certificate of incorporation) and certain provisions in our amended and restated bylaws (relating to the calling of special meetings of shareholders, the business that may be conducted or considered at annual or special meetings, the advance notice of shareholder business and nominations, shareholder action by written consent, the number, tenure, qualifications and removal of our directors, the filling of our board vacancies, director and officer indemnification and amendments of the bylaws). |
• | the diversion of management's attention to integration matters; |
• | difficulties in achieving anticipated cost savings, synergies, business opportunities and growth prospects from combining Ixia’s business with our business; |
• | difficulties entering new markets or manufacturing in new geographies where we have no or limited direct prior experience; |
• | difficulties in the integration of operations and systems; |
• | difficulties in the assimilation of employees; |
• | difficulties in managing the expanded operations of a significantly larger and more complex company; |
• | successfully managing relationships with our strategic partners and supplier and customer base; and |
• | challenges in maintaining existing, and establishing new, business relationships. |
Period | Total Number of Shares of Common Stock Purchased (1) | Weighted Average Price Paid per Share of Common Stock (2) | Total Number of Shares of Common Stock Purchased as Part of Publicly Announced Plans or Programs (1) | Maximum Approximate Dollar Value of Shares of Common Stock that May Yet Be Purchased Under the Program (1) | ||||
November 1, 2018 through November 30, 2018 | 686,398 | $58.26 | 686,398 | 189,873,335 | ||||
December 1, 2018 through December 31, 2018 | — | — | — | 189,873,335 | ||||
January 1, 2019 through January 31, 2019 | — | — | — | 189,873,335 | ||||
Total | 686,398 | 686,398 |
(1) | On March 6, 2018, the Board of Directors approved a new stock repurchase program authorizing the purchase of up to $350 million of the company’s common stock, replacing a previously approved 2016 program authorizing the purchase of up to $200 million of the company’s common stock, and of which $139 million remained. Under the new program, shares may be purchased from time to time, subject to general business and market conditions and other investment opportunities, through open market purchases, privately negotiated transactions or other means. All such shares and related costs are held as treasury stock and accounted for at trade date using the cost method. |
(2) | The weighted average price paid per share of common stock does not include the cost of commissions. |
Exhibit | ||
Number | Description | |
101.INS | XBRL Instance Document | |
101.SCH | XBRL Schema Document | |
101.CAL | XBRL Calculation Linkbase Document | |
101.LAB | XBRL Labels Linkbase Document | |
101.PRE | XBRL Presentation Linkbase Document | |
101.DEF | XBRL Definition Linkbase Document |
Dated: | March 5, 2019 | By: | /s/ Neil Dougherty |
Neil Dougherty | |||
Senior Vice President and Chief Financial Officer | |||
(Principal Financial Officer) | |||
Dated: | March 5, 2019 | By: | /s/ John C. Skinner |
John C. Skinner | |||
Vice President and Corporate Controller | |||
(Principal Accounting Officer) |
1. | I have reviewed this Form 10-Q of Keysight Technologies, Inc. ("the Registrant"); |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report; |
4. | The Registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the Registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the Registrant's internal control over financial reporting that occurred during the Registrant's most recent fiscal quarter (the Registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant's internal control over financial reporting; and |
5. | The Registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant's auditors and the audit committee of the Registrant's board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant's ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant's internal control over financial reporting. |
Date: | March 5, 2019 | |
/s/ Ronald S. Nersesian | ||
Ronald S. Nersesian | ||
President and Chief Executive Officer |
1. | I have reviewed this Form 10-Q of Keysight Technologies, Inc. ("the Registrant"); |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report; |
4. | The Registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the Registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the Registrant's internal control over financial reporting that occurred during the Registrant's most recent fiscal quarter (the Registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant's internal control over financial reporting; and |
5. | The Registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant's auditors and the audit committee of the Registrant's board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant's ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant's internal control over financial reporting. |
Date: | March 5, 2019 | |
/s/ Neil Dougherty | ||
Neil Dougherty | ||
Senior Vice President and Chief Financial Officer |
Date: | March 5, 2019 | /s/ Ronald S. Nersesian |
Ronald S. Nersesian | ||
President and Chief Executive Officer |
Date: | March 5, 2019 | /s/ Neil Dougherty |
Neil Dougherty | ||
Senior Vice President and Chief Financial Officer |
Document and Entity Information - shares |
3 Months Ended | |
---|---|---|
Jan. 31, 2019 |
Mar. 01, 2019 |
|
Document and Entity Information [Abstract] | ||
Entity Registrant Name | Keysight Technologies, Inc. | |
Entity Central Index Key | 0001601046 | |
Current Fiscal Year End Date | --10-31 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 187,988,723 | |
Document Fiscal Year Focus | 2019 | |
Document Fiscal Period Focus | Q1 | |
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Jan. 31, 2019 | |
Trading Symbol | KEYS | |
Entity Emerging Growth Company | false | |
Entity Small Business | false |
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (Unaudited) - USD ($) $ in Millions |
3 Months Ended | |
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Jan. 31, 2019 |
Jan. 31, 2018 |
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Other comprehensive income (loss): | ||
Net income | $ 114 | $ 94 |
Unrealized gain (loss) on investments, net of tax benefit of zero | 0 | (2) |
Unrealized gain (loss) on derivative instruments, net of tax benefit (expense) of zero | (2) | 2 |
Amounts reclassified into earnings related to derivative instruments, net of tax benefit (expense) of zero | 1 | (2) |
Foreign currency translation, net of tax benefit (expense) of zero | 30 | 41 |
Net defined benefit pension cost and post retirement plan costs: | ||
Change in actuarial net loss, net of tax expense of $3 | 13 | 10 |
Change in net prior service credit, net of tax benefit of $1 | (3) | (4) |
Other comprehensive income (loss) | 39 | 45 |
Total comprehensive income | $ 153 | $ 139 |
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (Unaudited) (Parenthetical) - USD ($) $ in Millions |
3 Months Ended | |
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Jan. 31, 2019 |
Jan. 31, 2018 |
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Other comprehensive income (loss), tax, parenthetical disclosures [Abstract] | ||
Unrealized gain (loss) on investments, tax | $ 0 | $ 0 |
Unrealized gain (loss) on derivative instruments, tax | 0 | 0 |
Amounts reclassified into earnings related to derivative instruments, tax | 0 | 0 |
Foreign currency translation, tax | 0 | 0 |
Net defined benefit pension cost and post retirement plan costs, tax [Abstract] | ||
Change in actuarial net loss, tax | 3 | 3 |
Change in net prior service credit, tax | $ 1 | $ 1 |
CONDENSED CONSOLIDATED BALANCE SHEET (Unaudited) (Parenthetical) - $ / shares shares in Millions |
Jan. 31, 2019 |
Oct. 31, 2018 |
---|---|---|
Stockholders' equity: | ||
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized (in shares) | 100.0 | 100.0 |
Preferred stock, issued and outstanding (in shares) | 0.0 | 0.0 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (in shares) | 1,000.0 | 1,000.0 |
Common Stock, Shares, Issued | 193.0 | 191.0 |
Treasury Stock, Shares | 5.1 | 4.4 |
OVERVIEW, BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
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Jan. 31, 2019 | |||||
Accounting Policies [Abstract] | |||||
OVERVIEW, BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
Overview. Keysight Technologies, Inc. ("we," "us," "Keysight" or the "company"), incorporated in Delaware on December 6, 2013, is a technology company providing electronic design and test solutions that are used in the design, development, manufacture, installation, deployment, validation, optimization and secure operation of electronics systems to communications, networking and electronics industries. We also offer customization, consulting and optimization services throughout the customer's product lifecycle, including start-up assistance, instrument productivity, application services and instrument calibration and repair. Our fiscal year-end is October 31, and our fiscal quarters end on January 31, April 30 and July 31. Unless otherwise stated, these dates refer to our fiscal year and fiscal quarters. Basis of Presentation. We have prepared the accompanying financial statements pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC"). Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles in the U.S. ("GAAP") have been condensed or omitted pursuant to such rules and regulations. The accompanying financial statements and information should be read in conjunction with our Annual Report on Form 10-K. In the opinion of management, the accompanying condensed consolidated financial statements contain all normal and recurring adjustments necessary to state fairly our financial position as of January 31, 2019 and October 31, 2018, our results of operations and cash flows for the three months ended January 31, 2019 and 2018. Use of Estimates. The preparation of condensed consolidated financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the amounts reported in our condensed consolidated financial statements and accompanying notes. Management bases its estimates on historical experience and various other assumptions believed to be reasonable. Although these estimates are based on management’s knowledge of current events and actions that may impact the company in the future, actual results may be different from the estimates. Our critical accounting policies are those that affect our financial statements materially and involve difficult, subjective or complex judgments by management. Those policies are revenue recognition, inventory valuation, share-based compensation, retirement and post-retirement plan assumptions, valuation of goodwill and other intangible assets, warranty, loss contingencies, restructuring, and accounting for income taxes. Update to Significant Accounting Policies. Except as set forth in Note 2, "New Accounting Pronouncements," there have been no material changes to our significant accounting policies as described in our Annual Report on Form 10-K for the fiscal year ended October 31, 2018. |
NEW ACCOUNTING PRONOUNCEMENTS |
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New Accounting Pronouncements and Changes in Accounting Principles [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
NEW ACCOUNTING PRONOUNCEMENTS |
Accounting Standards Update ("ASU") 2014-09, Revenue From Contracts With Customers. In May 2014, the Financial Accounting Standards Board (“FASB”) issued ASU 2014-09 and has since modified the standard with several ASUs (collectively, the “new revenue standard” or "ASC 606"). The new revenue standard requires entities to recognize revenue through the application of a five-step model, which includes: identification of the contract, identification of the performance obligations, determination of the transaction price, allocation of the transaction price to the performance obligations, and recognition of revenue as the entity satisfies the performance obligations. We adopted the new revenue standard on November 1, 2018, using the modified retrospective method with the cumulative effect of initially applying the guidance recognized at the date of adoption. Comparative information has not been restated and continues to be reported under the standards in effect for the prior periods presented. We have applied the new revenue standard only to contracts not completed as of the date of adoption, referred to as open contracts. We have elected the practical expedient that permits an entity to reflect the aggregate effect of all modifications (on a contract-by-contract basis) that occurred before the date of adoption in determining the transaction price, identifying the satisfied and unsatisfied performance obligations, and allocating the transaction price to the performance obligations. The most significant impact of the new revenue standard was our accounting for software license revenue. Historically, we have deferred revenue for certain types of license arrangements and recognize the revenue ratably over the license term. Under the new revenue standard, we are no longer required to establish vendor-specific objective evidence to recognize software license revenue separately from the other elements, and we are required to recognize software license revenue once the customer obtains control of the license, which will generally occur at the start of each license term. The new revenue standard further requires certain costs, primarily sales-related commissions on contracts, to be capitalized rather than expensed. We reclassified our allowance for sales returns from accounts receivable, net to other accrued liabilities due to the adoption of the new revenue standard. See Note 3, "Revenue." The cumulative effect of initially applying the new revenue standard to all open contracts as of November 1, 2018 was as follows:
The following tables summarize the impact of ASC 606 on our condensed consolidated financial statements:
ASU 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities. In January 2016, the FASB issued guidance related to certain aspects of recognition, measurement, presentation and disclosure of financial instruments. Most prominent among the changes in the standard is the requirement for changes in the fair value of our equity investments, with certain exceptions, to be recognized in net income rather than other comprehensive income. We adopted the standard effective November 1, 2018 using a modified retrospective approach. We elected to prospectively measure equity investments without readily determinable fair values at cost with adjustments for observable changes in price or impairments. The adoption of this guidance did not have a material impact to our condensed consolidated financial statements. ASU 2016-02, Leases. In February 2016, the FASB issued guidance that will require substantially all leases to be reported on the balance sheet as right-of-use assets and lease obligations. We expect our leases designated as operating leases in Note 16 to the consolidated financial statements in our Annual Report on Form 10-K for fiscal year ended October 31, 2018 will be reported in the consolidated balance sheet upon adoption. Consistent with current GAAP, the recognition, measurement, and presentation of expenses and cash flows arising from a lease by a lessee primarily will depend on its classification as a finance or operating lease. The standard is effective for fiscal years beginning after December 15, 2018 and interim periods within those fiscal years. We expect to adopt the new standard on November 1, 2019 and will elect the transition package of practical expedients, which among other things, allows us to carry forward the historical lease classification. We do not plan to elect the practical expedient to use hindsight in determining the lease term and in assessing impairment of right-of-use assets. The company has selected a leasing software solution and is in the process of identifying changes to our business processes, systems, and controls to support adoption of the new standard. ASU 2016-15, Classification of Certain Cash Receipts and Cash Payments. In August 2016, the FASB issued guidance that adds or clarifies guidance on eight cash flow classification issues that had been creating diversity in practice. We adopted this guidance during the first quarter of 2019 retrospectively to all periods presented, which resulted in the following change to our previously reported condensed consolidated statement of cash flows for the three months ended January 31, 2018 related to the classification of acquisition-related contingent consideration.
ASU 2016-18, Restricted Cash. In November 2016, the FASB issued guidance that requires an entity to include in its cash and cash equivalent balances in the statement of cash flows those amounts that are deemed to be restricted cash and restricted cash equivalents. We adopted this guidance during the first quarter of 2019 retrospectively to all periods presented. See Note 7, "Supplemental Cash Flow Information." ASU 2017-07, Improving the Presentation of Net Periodic Pension Cost and Net Periodic Post-Retirement Benefit Cost. In March 2017, the FASB issued guidance that requires the service cost component of net periodic pension cost and net periodic post-retirement benefit cost to be included in operating expenses (together with other employee compensation costs) and the other components of the cost to be presented in the statement of operations separately from the service cost component and outside of income from operations. We retrospectively adopted this guidance during the first quarter of 2019. The interest cost, expected return on assets, amortization of prior service credits and other costs have been reclassified from cost of products, research and development, selling, general and administrative, and other operating expenses (income) to other income (expense). We elected to apply the practical expedient, which allows us to reclassify amounts disclosed previously in our retirement plans and post-retirement benefit plans note as the basis for applying retrospective presentation for comparative periods as it is impractical to determine the disaggregation of the components for amounts capitalized and reclassified in those periods. On a prospective basis, the service cost component of net periodic pension and post-retirement benefit cost is presented with other current compensation costs in operating income. The remaining components are included in other operating expense (income) and will not be included in amounts capitalized in inventory or property, plant, and equipment. The effect of the retrospective presentation change related to the retirement plans and post-retirement benefit plans to our previously reported condensed consolidated statement of operations for the three months ended January 31, 2018 was as follows:
ASU 2017-12, Targeted Improvements to Accounting for Hedging Activities. In August 2017, the FASB issued guidance to enable entities to better portray the economics of their risk management activities in the financial statements and enhance transparency and understandability of hedge results. We adopted this guidance during the first quarter of 2019 and elected to continue to record changes in the fair value of components excluded from the effectiveness assessment of cash flow hedges in earnings. The adoption of this guidance did not have a material impact to our condensed consolidated financial statements. ASU 2018-02, Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income. In February 2018, the FASB issued guidance that allows a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the Tax Cuts and Jobs Act (the "Tax Act") enacted in December 2017. The standard is effective for fiscal years beginning after December 15, 2018. Early adoption is permitted. We adopted this guidance on November 1, 2018. We elected to retain the income tax effects of the Tax Act as a component of accumulated other comprehensive income. Given this election, the adoption of this guidance did not have a material impact on our condensed consolidated financial statements. ASU 2018-15, Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract. In August 2018, the FASB issued guidance that requires a customer in a cloud computing arrangement (i.e., hosting arrangement) that is a service contract to follow the internal-use software guidance to determine which implementation costs to defer and recognize as an asset and aligns the recognition of implementation costs to those incurred in an arrangement that includes an internal-use software license. Further, new disclosures about implementation costs for both internal-use software and hosting arrangements are required. The standard is effective for fiscal years beginning after December 15, 2019 and interim periods within those fiscal years. Early adoption is permitted. We are evaluating the impact of adopting this guidance on our consolidated financial statements. Other amendments to GAAP that have been issued by the FASB or other standards-setting bodies that do not require adoption until a future date are not expected to have a material impact on our consolidated financial statements upon adoption. |
REVENUE (Notes) |
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Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue from Contract with Customer [Text Block] |
Revenue Recognition Revenue is recognized upon transfer of control of the promised products or services to customers in an amount that reflects the consideration we expect to receive in exchange for those products or services. We primarily generate revenue from the sale of products (hardware and/or software), services, or a combination thereof. We enter into contracts that may involve multiple performance obligations, and we allocate the transaction price between each performance obligation on the basis of relative standalone selling price. Revenue is recognized net of allowances for returns and any taxes collected from customers, which are subsequently remitted to governmental authorities. Nature of Goods and Services Product revenues are generated predominantly from the sales of various types of design and test hardware and associated software. Products consist of hardware, generally installed with basic software and software licenses that consist of perpetual and term-based licenses for optional software. Our hardware products generally do not have any substantive acceptance terms that would otherwise preclude the transfer of control. Performance obligations related to our software licenses, including the license portion of our software subscriptions, grant the customer the right to use our software via electronic delivery. Service revenues consist of repair and calibration services, extended warranties, technical support for hardware and software, when-and-if available software updates and upgrades, and professional services, including installation and implementation, consulting, and training. Repair and calibration services for hardware products are sold both as per-incident customer services and as customer agreements to provide such services over the contractual period. Extended warranties are optional to the customer and provide warranty on hardware products for additional years beyond the standard one-year warranty. Technical support for software and when-and-if available software updates and upgrades are sold either together with our software licenses and software subscriptions, or separately as part of our customer support programs. These are considered stand-ready performance obligations where customers benefit from the services evenly throughout the license or service period. These performance obligations provide the customer access evenly over the contract period. Our professional services may be sold on a time and material basis (e.g., consulting) or on a fixed-fee basis (e.g., non-recurring engineering). We also generate revenues from a combination of products and services ("custom solutions"), including combinations of hardware, software, installation or other start-up services, software subscriptions, and/or software support services. Custom solutions provide the customer with a combination of hardware, software and professional services to meet customers' unique specifications. For our contracts with customers, we account for individual performance obligations separately if they are distinct. Our standard payment terms are net 30 to 90 days, and we generally do not offer extended payment terms beyond one year. Our contracts typically contain various forms of variable consideration, including trade discounts, trade-in credits, rebates, and rights of return. The transaction price is allocated to the separate performance obligations on a relative standalone selling price basis. Standalone selling prices for a majority of our products and services are estimated based on our established pricing practices and maximize the use of observable inputs. We have elected to exclude from the measurement of the transaction price all taxes assessed by a governmental authority that are both imposed on and concurrent with a specific revenue-producing transaction and collected by Keysight from a customer (e.g., sales, use, value added, and some excise taxes). We have also elected to account for shipping and handling activities that occur after control of the related good transfers as fulfillment activities instead of assessing such activities as performance obligations. Our typical performance obligations include the following:
Significant Judgments Judgment is required to determine the standalone selling price for each distinct performance obligation. As most of our products and services are not sold on a standalone basis, we typically estimate the standalone selling price. In doing so, we consider our internal price list for each product and service, which reflects our desired profitability, based on an expected level of sales, and adjust for factors such as competition, customer relationship, discount provided in the contract, geographic location, and the products and services purchased in the arrangement. We use a range based on actual historical sales to determine whether the calculated standalone selling price for a product or service is a fair representation of the standalone selling price. For capitalized contract costs, we use judgment in determining the capitalized amount. Our products are generally sold with a right of return and we may provide other credits, discounts, or incentives, which are accounted for as variable consideration when estimating the amount of revenue to recognize. Returns, credits, and discounts are estimated at contract inception and updated at the end of each reporting period as additional information becomes available to the extent that it is probable a significant reversal of the cumulative amount of revenue recognized will not occur once the variability is subsequently resolved. Disaggregation of Revenue We disaggregate our revenue from contracts with customers by geographic region, end market, and timing of transfer of products and services to customers, as we believe these categories best depict how the nature, amount, timing and uncertainty of our revenue and cash flows are affected by economic factors. Disaggregated revenue is presented for each of our three reportable segments.
Contract Balances The timing of revenue recognition, billings and cash collections results in billed accounts receivable, unbilled receivables (contract assets) and deferred revenue (contract liabilities) on our condensed consolidated balance sheet. In addition, we defer and capitalize certain costs incurred to obtain a contract (contract costs). Contract assets - Contract assets represent unbilled amounts from arrangements for which we have performed by transferring goods or services to the customer in advance of receiving all or partial consideration for such goods and services from the customer. Contract assets arise primarily from service agreements and products delivered pending a formal customer acceptance, which generally occurs within 30 days. The contract assets balance was $19 million at January 31, 2019 and is included in "accounts receivables, net" in our condensed consolidated balance sheet. Contract costs - We recognize an asset for the incremental costs of obtaining a contract with a customer. We have determined that certain employee and third-party representative commissions programs meet the requirements to be capitalized. Employee commissions are based on the achievement of order volume compared to a sales target. Third-party representative commission costs relate directly to a customer contract as the commission is tied to orders contracted through and contracts arranged by our third-party representatives. Without obtaining the contracts, the commissions would not be paid and, as such, are determined to be an incremental cost to obtaining a contract. We only defer these costs when we have determined the commissions are, in fact, incremental and would not have been incurred absent the customer contract. Capitalized incremental costs are allocated to the individual performance obligations in proportion to the transaction price allocated to each performance obligation and amortized based on the pattern of performance for the underlying performance obligation. Contract costs related to initial contracts and renewals are amortized over the same period because the commissions paid on both the initial contract and renewals are commensurate with one another. The following table provides a roll-forward of our capitalized contract costs, current and non-current:
Contract liabilities - Our contract liabilities consist of deferred revenue that arises when we receive consideration in advance of providing the goods or services promised in the contract. Contract liabilities are primarily generated from customer deposits received in advance of shipments for products or rendering of services and are recognized as revenue when services are provided to the customer. We classify deferred revenue as current or non-current based on the timing of when we expect to recognize revenue. Contract liabilities are recognized as revenue when services are provided to the customer. Changes in contract liabilities, current and non-current, during the three months ended January 31, 2019 were as follows:
Remaining Performance Obligations Revenue expected to be recognized in any future period related to remaining performance obligations, excluding revenue pertaining to contracts that have an original expected duration of one year or less, was approximately $260 million as of January 31, 2019, and represents the company’s obligation to deliver products and services and obtain customer acceptance on delivered products. Since we typically invoice customers at contract inception, this amount is included in our current and long-term deferred revenue balances. As of January 31, 2019, we expect to recognize approximately 41 percent of the revenue related to these unsatisfied performance obligations during the remainder of 2019, 32 percent during 2020, and 27 percent thereafter. Practical Expedients As discussed in Note 2, "New Accounting Pronouncements," and previously in this note, we have elected the following practical expedients in accordance with ASC 606:
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SHARE-BASED COMPENSATION |
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SHARE-BASED COMPENSATION | SHARE-BASED COMPENSATION Keysight accounts for share-based awards in accordance with the provisions of the authoritative accounting guidance, which requires the measurement and recognition of compensation expense for all share-based payment awards made to our employees and directors, including employee stock option awards, restricted stock units ("RSUs"), employee stock purchases made under our Employee Stock Purchase Plan (“ESPP”) and performance share awards granted to selected members of our senior management under the Long-Term Performance (“LTP”) Program based on estimated fair values. The impact of share-based compensation on our results was as follows:
Share-based compensation capitalized within inventory was $1 million at both January 31, 2019 and 2018. The following assumptions were used to estimate the fair value of awards granted under the LTP Program that are based on total shareholder return ("TSR"):
The TSR-based performance awards were valued using a Monte Carlo simulation model, which requires the use of highly subjective and complex assumptions, including the price volatility of the underlying stock. The estimated fair value of restricted stock awards and the financial metrics-based performance awards is determined based on the market price of Keysight’s common stock on the grant date. We did not grant any option awards for the three months ended January 31, 2019 and 2018, respectively. |
INCOME TAXES |
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Income Tax Disclosure [Abstract] | |
INCOME TAXES | INCOME TAXES The company’s effective tax rate was 5.2 percent and 515.8 percent for the three months ended January 31, 2019 and 2018, respectively. The income tax expense was $6 million for the three months ended January 31, 2019 and an income tax benefit of $117 million for the three months ended January 31, 2018. The income tax expense for the three months ended January 31, 2019 included a net discrete benefit of $23 million, primarily related to a change in tax reserves resulting from a change in judgment. The income tax benefit for the three months ended January 31, 2018 included a net discrete benefit of $115 million, primarily due to $117 million of benefit resulting from changes in U.S. tax law. Keysight benefits from tax incentives in several jurisdictions, most significantly in Singapore, that have granted us tax incentives that require renewal at various times in the future. The tax incentives provide lower rates of taxation on certain classes of income and require thresholds of investments and employment or specific types of income in those jurisdictions. The Singapore tax incentive is due for renewal in fiscal 2024. The impact of the tax incentives decreased the income tax provision for the three months ended January 31, 2019 by $8 million, resulting in a benefit to net income per share (diluted) of approximately $0.04 for the three months ended January 31, 2019. The open tax years for the IRS and most states are from November 1, 2014 through the current tax year. For the majority of our foreign entities, the open tax years are from August 1, 2014 through the current tax year. For certain foreign entities, the tax years remain open, at most, back to the year 2008. Given the number of years and numerous matters that remain subject to examination in various tax jurisdictions, we are unable to estimate the range of possible changes to the balance of our unrecognized tax benefits. The company is being audited in Malaysia for the 2008 tax year. Although this tax year pre-dates our spin-off from Agilent, pursuant to the agreement between Agilent and Keysight pertaining to tax matters, as finalized at the time of separation, for certain entities, including Malaysia, any historical tax liability is the responsibility of Keysight. In the fourth quarter of fiscal 2017, Keysight paid income taxes and penalties of $68 million on gains related to intellectual property rights, although we are currently in the process of appealing to the Special Commissioners of Income Tax in Malaysia. The company believes there are numerous defenses to the current assessment; the statute of limitations for the 2008 tax year in Malaysia was closed, and the income in question is exempt from tax in Malaysia. The company is disputing this assessment and pursuing all avenues to resolve this issue favorably for the company. The Tax Act, as enacted by the U.S. government on December 22, 2017, includes significant changes to the U.S. corporate income tax system, including but not limited to: the transition of U.S. international taxation from a worldwide tax system to a modified territorial tax system, which resulted in a one-time U.S. tax liability on those earnings which were not previously repatriated to the U.S. (the “Transition Tax”); creation of new minimum taxes such as the Global Intangible Low Taxed Income (“GILTI”) tax and the base erosion anti-abuse tax; creation of the foreign-derived intangible income (“FDII”) deduction; a federal corporate income tax rate reduction from 35 percent to 21 percent; and limitations on the deductibility of interest expense and executive compensation. The company completed its accounting for the income tax effects of the Tax Act during the first quarter of fiscal 2019, in accordance with the U.S. Securities and Exchange Commission Staff Accounting Bulletin No. 118. Finalizing the provisional adjustments related to the Tax Act did not have a material impact on our consolidated financial statements as of January 31, 2019. Legislation and clarifying guidance is expected to continue to be issued by the U.S. Treasury and various states in 2019, which could result in significant changes to currently computed income tax liabilities for past and current tax periods. The FASB Staff Q&A, Topic 740 No. 5, Accounting for Global Intangible Low-Taxed Income, states that an entity can make an accounting policy election to either recognize deferred taxes for temporary differences expected to impact the GILTI tax expense in future years or provide for the tax expense related to GILTI in each year in which the tax is incurred. The company has elected to recognize the tax on GILTI as a period expense in each period in which the tax is incurred. |
NET INCOME PER SHARE |
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NET INCOME PER SHARE | NET INCOME PER SHARE The following is a reconciliation of the numerator and denominator of the basic and diluted net income per share computations for the periods presented below:
The dilutive effect of share-based awards is reflected in diluted net income per share by application of the treasury stock method, which includes consideration of unamortized share-based compensation expense and the dilutive effect of in-the-money options and non-vested restricted stock units. Under the treasury stock method, the amount the employee must pay for exercising stock options and unamortized share-based compensation expense are collectively assumed to be used to repurchase hypothetical shares. We exclude stock options with exercise prices greater than the average market price of our common stock from the calculation of diluted earnings per share because their effect would be anti-dilutive. For each of the three-month periods ended January 31, 2019 and 2018, we excluded zero options from the calculation of diluted earnings per share. In addition, we also exclude from the calculation of diluted earnings per share, stock options, ESPP, LTP Program and restricted stock awards, whose combined exercise price, unamortized fair value and excess tax benefits collectively were greater than the average market price of our common stock because their effect would also be anti-dilutive. For the three months ended January 31, 2019 and 2018, we excluded approximately 417,400 shares and 668,100 shares, respectively. |
SUPPLEMENT CASH FLOW INFORMATION (Notes) |
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Schedule of Cash Flow, Supplemental Disclosures [Table Text Block] | . SUPPLEMENTAL CASH FLOW INFORMATION Net cash paid for income taxes was $1 million for the three months ended January 31, 2019 and 2018. Cash paid for interest was zero and $2 million for the three months ended January 31, 2019 and 2018, respectively. The following table summarizes our non-cash investing activities that are not reflected in the condensed consolidated statement of cash flows:
The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the condensed consolidated balance sheet to the amount shown in the condensed consolidated statement of cash flows:
Restricted cash consisted primarily of deposits held as collateral against bank guarantees. |
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INVENTORY | INVENTORY
Inventory-related excess and obsolescence charges recorded in total cost of products were $7 million and $6 million for the three months ended January 31, 2019 and January 31, 2018, respectively. We record excess and obsolete inventory charges for inventory at our sites as well as inventory at our contract manufacturers and suppliers, where we have non-cancellable purchase commitments. |
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GOODWILL AND OTHER INTANGIBLE ASSETS | GOODWILL AND OTHER INTANGIBLE ASSETS The goodwill balances as of January 31, 2019 and October 31, 2018 and the activity for the three months ended January 31, 2019 for each of our reportable operating segments were as follows. Prior period amounts have been reclassified to conform to our organizational change as described in Note 16, "Segment Information."
The company has not identified any triggering events that indicate an impairment of goodwill in the three months ended January 31, 2019. Other intangible assets as of January 31, 2019 and October 31, 2018 consisted of the following:
During the three months ended January 31, 2019, there was no foreign exchange translation impact to other intangible assets. Amortization of other intangible assets was $51 million for each of the three-month periods ended January 31, 2019 and 2018. Estimated intangible assets amortization expense for each of the five succeeding fiscal years is as follows:
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
FAIR VALUE MEASUREMENTS | FAIR VALUE MEASUREMENTS The authoritative guidance defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required or permitted to be recorded at fair value, we consider the principal or most advantageous market and assumptions that market participants would use when pricing the asset or liability. Fair Value Hierarchy The guidance establishes a fair value hierarchy that prioritizes inputs used in valuation techniques into three levels. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. There are three levels of inputs that may be used to measure fair value: Level 1 - applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities. Level 2 - applies to assets or liabilities for which there are inputs other than quoted prices included within Level 1 that are observable, either directly or indirectly, for the asset or liability such as: quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in less active markets; or other inputs that can be derived principally from, or corroborated by, observable market data. Level 3 - applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities. Financial Assets and Liabilities Measured at Fair Value on a Recurring Basis Financial assets and liabilities measured at fair value on a recurring basis as of January 31, 2019 and October 31, 2018 were as follows:
Net recognized gains (losses) on equity investments were as follows:
Our money market funds and equity investments with readily determinable fair values are measured at fair value using quoted market prices and, therefore, are classified within Level 1 of the fair value hierarchy. Equity investments without readily determinable fair values that are measured at cost adjusted for observable changes in price or impairments are not categorized in the fair value hierarchy and are presented as "other" in the tables above. Our deferred compensation liability is classified as Level 2 because the inputs used in the calculations are observable, although the values are not directly based on quoted market prices. Our derivative financial instruments are classified within Level 2 as there is not an active market for each hedge contract, but the inputs used to calculate the value of the instruments are tied to active markets. Equity investments including securities that are earmarked to pay the deferred compensation liability and the deferred compensation liability are reported at fair value, with gains or losses resulting from changes in fair value recognized in earnings. Certain derivative instruments are reported at fair value, with unrealized gains and losses, net of tax, included in accumulated other comprehensive income (loss). Realized gains and losses from the sale of these instruments are recorded in earnings. |
DERIVATIVES |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
DERIVATIVES | DERIVATIVES We are exposed to foreign currency exchange rate fluctuations and interest rate changes in the normal course of our business. As part of our risk management strategy, we use derivative instruments, primarily forward contracts and purchased options, to hedge economic and/or accounting exposures resulting from changes in foreign currency exchange rates. Cash Flow Hedges We enter into foreign exchange contracts to hedge our forecasted operational cash flow exposures resulting from changes in foreign currency exchange rates. These foreign exchange contracts, carried at fair value, have maturities between one and twelve months. These derivative instruments are designated and qualify as cash flow hedges under the criteria prescribed in the authoritative guidance. The changes in the value of the derivative instrument included in the assessment of effectiveness are recognized in accumulated other comprehensive income and reclassified into earnings when the forecasted transaction occurs in the same financial statement line item in the consolidated statement of operations where the earnings effect of the hedged item is presented. If it becomes probable that the forecasted transaction will not occur, the hedge relationship will be de-designated and amounts accumulated in other comprehensive income will be reclassified into earnings in the current period. Gains and losses on the derivative instrument representing hedge components excluded from the assessment of effectiveness (forward points) are recognized immediately in earnings and are presented in the same financial statement line of the consolidated statement of operations where the earnings effect of the hedged item is presented. We record the premium paid (time value) of an option on the date of purchase as an asset. For options designated as cash flow hedges, changes in the time value are excluded from the assessment of hedge effectiveness and are recognized in earnings over the life of the option contract. Other Hedges Additionally, we enter into foreign exchange contracts to hedge monetary assets and liabilities that are denominated in currencies other than the functional currency of our subsidiaries. These foreign exchange contracts are carried at fair value and do not qualify for hedge accounting treatment and are not designated as hedging instruments. Our use of derivative instruments exposes us to credit risk to the extent that the counterparties may be unable to meet the terms of the agreement. We do, however, seek to mitigate such risks by limiting our counterparties to major financial institutions that are selected based on their credit ratings and other factors. We have established policies and procedures for mitigating credit risk that include establishing counterparty credit limits, monitoring credit exposures, and continually assessing the creditworthiness of counterparties. A number of our derivative agreements contain threshold limits to the net liability position with counterparties and are dependent on our corporate credit rating determined by the major credit rating agencies. The counterparties to the derivative instruments may request collateralization, in accordance with derivative agreements, on derivative instruments in net liability positions. The aggregate fair value of all derivative instruments with credit-risk-related contingent features that were in a net liability position as of January 31, 2019 was $3 million. The credit-risk-related contingent features underlying these agreements had not been triggered as of January 31, 2019. There were 177 foreign exchange forward contracts open as of January 31, 2019 that were designated as cash flow hedges. There were 66 foreign exchange forward contracts as of January 31, 2019 that were not designated as hedging instruments. The aggregated notional amounts by currency and designation as of January 31, 2019 were as follows:
Derivative instruments are subject to master netting arrangements and are disclosed gross in the balance sheet in accordance with the authoritative guidance. The gross fair values and balance sheet location of derivative instruments held in the condensed consolidated balance sheet as of January 31, 2019 and October 31, 2018 were as follows:
The effect of derivative instruments for foreign exchange contracts designated as hedging instruments and for those not designated as hedging instruments in our condensed consolidated statement of operations was as follows:
The estimated amount of existing net loss at January 31, 2019 expected to be reclassified from accumulated other comprehensive income to earnings within the next twelve months is $2 million. |
RETIREMENT PLANS AND POST RETIREMENT PENSION PLANS |
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Defined Benefit Plan [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
RETIREMENT PLANS AND POST RETIREMENT PENSION PLANS | RETIREMENT PLANS AND POST-RETIREMENT BENEFIT PLANS For the three months ended January 31, 2019 and 2018, our net pension and post-retirement benefit cost (benefit) were comprised of the following:
We did not contribute to our U.S. Defined Benefit Plans or U.S. Post-Retirement Benefit Plan during the three months ended January 31, 2019 and 2018. We contributed $8 million and $9 million to our Non-U.S. Defined Benefit Plans during the three months ended January 31, 2019 and 2018, respectively. For the remainder of 2019, we do not expect to contribute to our U.S. Defined Benefit Plans, and we expect to contribute $23 million to our Non-U.S. Defined Benefit Plans. On January 1, 2019, we transferred a portion of the assets and liabilities of our Switzerland defined benefit plan to an insurance company, resulting in the recognition of a settlement loss of $2 million, which is included in other income (expense) in the condensed consolidated statement of operations. |
WARRANTY, COMMITMENTS AND CONTINGENCIES |
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Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
WARRANTY, COMMITMENTS AND CONTINGENCIES | WARRANTY, COMMITMENTS AND CONTINGENCIES Standard Warranty The Keysight warranty on products sold through direct sales channel is primarily one year. Warranties for products sold through distribution channels continue to be primarily three years. We accrue for standard warranty costs based on historical trends in warranty charges. The accrual is reviewed regularly and periodically adjusted to reflect changes in warranty cost estimates. Estimated warranty charges are recorded within cost of products at the time related product revenue is recognized. Activity related to the standard warranty accrual, which is included in other accrued and other long-term liabilities in our condensed consolidated balance sheet, is as follows:
Commitments During the three months ended January 31, 2019, there were no material changes to the operating and capital lease commitments reported in the company’s 2018 Annual Report on Form 10-K. Contingencies We are involved in lawsuits, claims, investigations and proceedings, including, but not limited to, patent, commercial and environmental matters, which arise in the ordinary course of business. There are no matters pending that we currently believe are reasonably possible of having a material impact to our business, consolidated financial condition, results of operations or cash flows. |
DEBT (Notes) |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
DEBT | DEBT The following table summarizes the components of our long-term debt:
Short-Term Debt Revolving Credit Facility On February 15, 2017, we entered into an amended and restated credit agreement (the “Revolving Credit Facility”) that replaced our existing $450 million unsecured credit facility dated September 15, 2014. The Revolving Credit Facility provides for a $450 million, five-year unsecured revolving credit facility that will expire on February 15, 2022 and bears interest at an annual rate of LIBOR + 1.30%. In addition, the Revolving Credit Facility permits us to increase the total commitments under this credit facility by up to $150 million in the aggregate on one or more occasions upon request. We may use amounts borrowed under the facility for general corporate purposes. As of January 31, 2019, we had no borrowings outstanding under the Revolving Credit Facility. We were in compliance with the covenants of the Revolving Credit Facility during the three months ended January 31, 2019. 2019 Senior Notes There have been no changes to the principal, maturity, interest rates and interest payment terms of the senior notes during the three months ended January 31, 2019 as compared to the senior notes described in our Annual Report on Form 10-K for the fiscal year ended October 31, 2018. Long-Term Debt There have been no changes to the principal, maturity, interest rates and interest payment terms of the senior notes during the three months ended January 31, 2019 as compared to the senior notes described in our Annual Report on Form 10-K for the fiscal year ended October 31, 2018. As of January 31, 2019 and October 31, 2018, we had $31 million and $26 million, respectively, of outstanding letters of credit unrelated to the credit facility that were issued by various lenders. The fair value of our long-term debt, calculated from quoted prices that are primarily Level 1 inputs under the accounting guidance fair value hierarchy, was above the carrying value by approximately $25 million and $3 million as of January 31, 2019 and October 31, 2018, respectively. |
STOCKHOLDERS' EQUITY |
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Statement of Comprehensive Income [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
STOCKHOLDERS EQUITY | STOCKHOLDERS' EQUITY Stock Repurchase Program On March 6, 2018, the Board of Directors approved a new stock repurchase program authorizing the purchase of up to $350 million of the company’s common stock, replacing a previously approved 2016 program authorizing the purchase of up to $200 million of the company’s common stock. Under the new program, shares may be purchased from time to time, subject to general business and market conditions and other investment opportunities, through open market purchases, privately negotiated transactions or other means. All such shares and related costs are held as treasury stock and accounted for at trade date using the cost method. The stock repurchase program may be commenced, suspended or discontinued at any time at the company’s discretion and does not have an expiration date. For the three months ended January 31, 2019, we repurchased 686,398 shares of common stock for $40 million. For the three months ended January 31, 2018, we did not repurchase any shares of common stock under the stock repurchase program. Accumulated Other Comprehensive Loss Changes in accumulated other comprehensive loss by component and related tax effects for the three months ended January 31, 2019 and 2018 were as follows:
Reclassifications out of accumulated other comprehensive loss for the three months ended January 31, 2019 and 2018 were as follows:
An amount in parentheses indicates a reduction to income and an increase to the accumulated other comprehensive loss. Reclassifications of prior service benefit and actuarial net loss in respect of retirement plans and post retirement pension plans are included in the computation of net periodic cost (see Note 12, "Retirement Plans and Post-Retirement Pension Plans"). |
SEGMENT INFORMATION |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SEGMENT INFORMATION | SEGMENT INFORMATION We provide electronic design and test solutions that are used in the design, development, manufacture, installation, deployment, validation, optimization and secure operation of electronics systems to communications, networking and electronics industries. We also offer customization, consulting and optimization services throughout the customer's product lifecycle, including start-up assistance, instrument productivity, application services and instrument calibration and repair. In the first quarter of fiscal year 2019, in recognition of Keysight’s customer solutions-oriented go-to-market strategy and to fully reflect our services delivery within the markets served and further enable services growth, we completed an organizational change to align our services business with our customers and end markets. With this change, services that were previously reported as the Services Solutions Group are now reported as part of the Communications Solutions Group and Electronic Industrial Solutions Group. As a result, Keysight now has three segments: Communications Solutions Group, Electronic Industrial Solutions Group and Ixia Solutions Group. The new organizational structure continues to include centralized enterprise functions that provide support across the groups. Our operating segments were determined based primarily on how the chief operating decision maker views and evaluates our operations. Segment operating results are regularly reviewed by the chief operating decision maker to make decisions about resources to be allocated to each segment and to assess 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. Descriptions of our three reportable operating segments are as follows: The Communications Solutions Group serves customers spanning the worldwide commercial communications and aerospace, defense and government end markets. The group provides electronic design and test software, instruments, systems and related services used in the simulation, design, validation, manufacturing, installation and optimization of electronic equipment. The Electronic Industrial Solutions Group provides test and measurement solutions across a broad set of electronic industrial end markets, focusing on high-growth applications in the automotive and energy industry and measurement solutions for semiconductor design and manufacturing, consumer electronics, education and general electronics manufacturing. The group provides electronic design and test software, instruments, systems and related services used in the simulation, design, validation, manufacturing, installation and optimization of electronic equipment. The Ixia Solutions Group helps customers worldwide, including enterprises, service providers, network equipment manufacturers, and governments, to validate new products before shipping and secure ongoing operation of their networks with better visibility and security. The test, visibility and security products help organizations and their customers strengthen their physical and virtual networks. The group’s product solutions consist of high-performance hardware platforms, software applications and services, including warranty and maintenance offerings. 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 optimize resources. These expenses, collectively called corporate charges, include costs of centralized research and development, legal, accounting, real estate, insurance services, information technology services, treasury and other corporate infrastructure expenses. 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. The Ixia Solutions Group was not allocated these shared services and infrastructure charges, with the exception of net periodic benefit costs, until fiscal 2019. The following tables reflect the results of our reportable segments under our management reporting system. These results are not necessarily in conformity with GAAP. The performance of each segment is measured based on several metrics, including 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. Prior period amounts have been revised to conform to the new organizational structure. The profitability of each of the segments is measured after excluding share-based compensation expense, amortization of acquisition-related balances, acquisition and integration costs, northern California wildfire-related costs, interest income, interest expense and other items as noted in the reconciliations below.
The following table reconciles reportable operating segments’ income from operations to our total enterprise income before taxes:
The following table presents assets directly managed by each segment. Unallocated assets primarily consist of cash and cash equivalents, investments and other assets.
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NORTHERN CALIFORNIA WILDFIRES IMPACT (Notes) |
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Unusual or Infrequent Items, or Both [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Unusual or Infrequent Items, or Both, Disclosure [Text Block] | IMPACT OF NORTHERN CALIFORNIA WILDFIRES During the week of October 8, 2017, wildfires in northern California adversely impacted the Keysight corporate headquarters site in Santa Rosa, CA. Our headquarters was under mandatory evacuation for more than three weeks, and while direct damage to our core facilities was limited, our buildings did experience some smoke and other fire-related impacts. Cleaning and restoration efforts are largely complete, and we have fully re-occupied the site. Keysight is insured for the damage caused by the fire. For the three months ended January 31, 2019 and 2018, we recognized costs of zero and $7 million, net of estimated insurance recoveries of zero and $31 million, respectively. Expenses were primarily for cleaning and restoration activities, write-off of damaged fixed assets and other direct costs related to recovery from this event. A summary of the net charges in the consolidated statement of operations resulting from the impact of the fire is shown below:
For the three months ended January 31, 2019 and 2018, we received insurance proceeds of $22 million and $10 million, respectively, for covered expenses incurred. Combined with $68 million received in fiscal 2018, we have received insurance proceeds related to recovery from the northern California wildfires of $90 million to date, which has substantially covered our total fire-related expenses in excess of our $10 million self-insured retention amount. In addition, for the three months ended January 31, 2019 and 2018, we made investments in property, plant and equipment related to fire recovery of $10 million and $3 million, respectively. Combined with capital expenditures of $27 million in fiscal 2018, we have made investments in property, plant and equipment related to fire recovery of $37 million to date that are expected to be covered by insurance. We currently estimate additional insurance proceeds of $30 million to $40 million in fiscal 2019. In certain cases, our insurance coverage exceeds the amount of the covered losses, but no gain contingencies have been recognized as our ability to realize those gains remains uncertain for financial reporting purposes. There may be a difference in timing of costs incurred and the related insurance reimbursement. |
NEW ACCOUNTING PRONOUNCEMENTS NEW ACCOUNTING PRONOUNCEMENTS ASU 2016-15 (Tables) |
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Accounting Changes and Error Corrections [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of New Accounting Pronouncements and Changes in Accounting Principles [Table Text Block] |
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NEW ACCOUNTING PRONOUNCEMENTS NEW REVENUE RECOGNITION (Tables) |
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Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
New Accounting Pronouncement or Change in Accounting Principle, Effect of Adoption, Quantification | The cumulative effect of initially applying the new revenue standard to all open contracts as of November 1, 2018 was as follows:
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Schedule of Prospective Adoption of New Accounting Pronouncements [Table Text Block] | The following tables summarize the impact of ASC 606 on our condensed consolidated financial statements:
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NEW ACCOUNTING PRONOUNCEMENTS NEW ACCOUNTING PRONOUNCEMENTS ASU 2017-07 (Tables) |
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Accounting Changes and Error Corrections [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of New Accounting Pronouncements and Changes in Accounting Principles [Table Text Block] |
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REVENUE DISSAGGREGATION OF REVENUE (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jan. 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue Recognition [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disaggregation of Revenue [Table Text Block] | Disaggregation of Revenue We disaggregate our revenue from contracts with customers by geographic region, end market, and timing of transfer of products and services to customers, as we believe these categories best depict how the nature, amount, timing and uncertainty of our revenue and cash flows are affected by economic factors. Disaggregated revenue is presented for each of our three reportable segments.
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REVENUE CAPITALIZED CONTRACTUAL COST (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||
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Jan. 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||
Capitalized Contract Cost [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||
Capitalized Contract Cost [Abstract] | The following table provides a roll-forward of our capitalized contract costs, current and non-current:
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REVENUE CONTRACT LIABILITIES (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||
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Jan. 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||
Revenue Recognition and Deferred Revenue [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||
Contract with Customer, Asset and Liability [Table Text Block] | Changes in contract liabilities, current and non-current, during the three months ended January 31, 2019 were as follows:
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REVENUE Remaning Performace Obligations (Tables) |
3 Months Ended |
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Jan. 31, 2019 | |
Revenue from Contract with Customer [Abstract] | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Table Text Block] | Revenue expected to be recognized in any future period related to remaining performance obligations, excluding revenue pertaining to contracts that have an original expected duration of one year or less, was approximately $260 million as of January 31, 2019, and represents the company’s obligation to deliver products and services and obtain customer acceptance on delivered products. Since we typically invoice customers at contract inception, this amount is included in our current and long-term deferred revenue balances. As of January 31, 2019, we expect to recognize approximately 41 percent of the revenue related to these unsatisfied performance obligations during the remainder of 2019, 32 percent during 2020, and 27 percent thereafter. |
SHARE-BASED COMPENSATION (Tables) |
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Jan. 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-based Compensation [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Allocated Share-based compensation expense disclosure | The impact of share-based compensation on our results was as follows:
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Share-based compensation arrangement by share-based payment award fair value assumptions and methodology schedule | The following assumptions were used to estimate the fair value of awards granted under the LTP Program that are based on total shareholder return ("TSR"):
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NET INCOME PER SHARE (Tables) |
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Jan. 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reconciliation of the numerators and denominators of the basic and diluted net income per share | The following is a reconciliation of the numerator and denominator of the basic and diluted net income per share computations for the periods presented below:
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SUPPLEMENT CASH FLOW INFORMATION (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jan. 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Significant Noncash Transactions [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cash Flow, Supplemental Disclosures [Text Block] |
The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the condensed consolidated balance sheet to the amount shown in the condensed consolidated statement of cash flows:
Restricted cash consisted primarily of deposits held as collateral against bank guarantees. |
INVENTORY (Tables) |
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Jan. 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventory, Net [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
INVENTORY |
Inventory-related excess and obsolescence charges recorded in total cost of products were $7 million and $6 million for the three months ended January 31, 2019 and January 31, 2018, respectively. We record excess and obsolete inventory charges for inventory at our sites as well as inventory at our contract manufacturers and suppliers, where we have non-cancellable purchase commitments. |
GOODWILL AND OTHER INTANGIBLE ASSETS (Tables) |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill balances and movements for each reportable segments during the period | oodwill balances as of January 31, 2019 and October 31, 2018 and the activity for the three months ended January 31, 2019 for each of our reportable operating segments were as follows. Prior period amounts have been reclassified to conform to our organizational change as described in Note 16, "Segment Information."
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Components of other intangibles during the period | The company has not identified any triggering events that indicate an impairment of goodwill in the three months ended January 31, 2019. Other intangible assets as of January 31, 2019 and October 31, 2018 consisted of the following:
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FAIR VALUE MEASUREMENTS (Tables) |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Assets And Liabilities Measured On Recurring Basis | Financial assets and liabilities measured at fair value on a recurring basis as of January 31, 2019 and October 31, 2018 were as follows:
Net recognized gains (losses) on equity investments were as follows: |
FAIR VALUE MEASUREMENTS FAIR VALUE MEASUREMENTS (Net recognized gains losses on equity securities) (Tables) |
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Jan. 31, 2019 | |||||||||||||||||||||||||||||||||||||||||
Investments, Debt and Equity Securities [Abstract] | |||||||||||||||||||||||||||||||||||||||||
Gain (Loss) on Securities [Table Text Block] | Net recognized gains (losses) on equity investments were as follows:
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DERIVATIVES (Tables) |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Aggregated notional amounts by currency and designation | The aggregated notional amounts by currency and designation as of January 31, 2019 were as follows:
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Gross fair values and balance sheet location of derivative instruments held in the consolidated balance sheet | Derivative instruments are subject to master netting arrangements and are disclosed gross in the balance sheet in accordance with the authoritative guidance. The gross fair values and balance sheet location of derivative instruments held in the condensed consolidated balance sheet as of January 31, 2019 and October 31, 2018 were as follows:
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Effect of derivative instruments for foreign exchange contracts in the consolidated statement of operations | The effect of derivative instruments for foreign exchange contracts designated as hedging instruments and for those not designated as hedging instruments in our condensed consolidated statement of operations was as follows:
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RETIREMENT PLANS AND POST RETIREMENT PENSION PLANS (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jan. 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Defined Benefit Plan [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of net pension and post-retirement benefit costs | For the three months ended January 31, 2019 and 2018, our net pension and post-retirement benefit cost (benefit) were comprised of the following:
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WARRANTY, COMMITMENTS AND CONTINGENCIES (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jan. 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Standard warranty | Activity related to the standard warranty accrual, which is included in other accrued and other long-term liabilities in our condensed consolidated balance sheet, is as follows:
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DEBT (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jan. 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Long-term Debt Instruments | The following table summarizes the components of our long-term debt:
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STOCKHOLDERS' EQUITY (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jan. 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Statement of Comprehensive Income [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Accumulated Other Comprehensive Income (Loss) | Changes in accumulated other comprehensive loss by component and related tax effects for the three months ended January 31, 2019 and 2018 were as follows:
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Reclassification out of Accumulated Other Comprehensive Income | Reclassifications out of accumulated other comprehensive loss for the three months ended January 31, 2019 and 2018 were as follows:
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SEGMENT INFORMATION (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jan. 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting, Description of All Other Segments |
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SEGMENT INFORMATION Segment Profitability (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jan. 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reconciliation of Operating Profit (Loss) from Segments to Consolidated [Table Text Block] | The following table reconciles reportable operating segments’ income from operations to our total enterprise income before taxes:
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NORTHERN CALIFORNIA WILDFIRES IMPACT (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jan. 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Unusual or Infrequent Item, or Both [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Unusual or Infrequent Items, or Both [Table Text Block] | A summary of the net charges in the consolidated statement of operations resulting from the impact of the fire is shown below:
|
NEW ACCOUNTING PRONOUNCEMENTS Effect of ASU 2016-15 adoption - Adjustments in Cash flow (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Jan. 31, 2019 |
Jan. 31, 2018 |
|
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Net cash provided by operating activities | $ 240 | $ 171 |
Net cash used in investing activities | (29) | (24) |
Net cash provided by financing activities | $ (33) | 6 |
As originally reported | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Net cash provided by operating activities | 171 | |
Net cash used in investing activities | (27) | |
Net cash provided by financing activities | 9 | |
Change | Accounting Standards Update 2016-15 [Member] | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Net cash provided by operating activities | 0 | |
Net cash used in investing activities | 3 | |
Net cash provided by financing activities | $ (3) |
REVENUE Capitalized Contractual Cost (Details) - USD ($) |
3 Months Ended | ||
---|---|---|---|
Jan. 31, 2019 |
Jan. 31, 2018 |
Nov. 01, 2018 |
|
Capitalized Contract Cost [Line Items] | |||
Capitalized Contract Cost, Judgment | Capitalized incremental costs are allocated to the individual performance obligations in proportion to the transaction price allocated to each performance obligation and amortized based on the pattern of performance for the underlying performance obligation. Contract costs related to initial contracts and renewals are amortized over the same period because the commissions paid on both the initial contract and renewals are commensurate with one another. | ||
Balance at October 31, 2018 | $ 0 | ||
Cost capitalized on day1 due to ASC 606 adoption | $ 29 | ||
Costs capitalized during the period | 17 | ||
Costs amortized during the period | (18) | ||
Foreign currency translation impact | 1 | ||
Balance at January 31, 2019 | $ 29 |
REVENUE CONTRACT LIABILITIES ROLL FORWARD (Details) - USD ($) |
3 Months Ended | |
---|---|---|
Jan. 31, 2019 |
Nov. 01, 2018 |
|
Contract with Customer, Liability [Abstract] | ||
Balance at October 31, 2018 | $ 461 | |
Impact of adopting new revenue standard | (64) | |
Balance at November 1, 2018 | 461 | $ 397 |
Deferral of revenue billed in current period, net of recognition | 167 | |
Revenue recognized that was deferred as of the beginning of the period | (124) | |
Foreign currency translation impact | 3 | |
Balance at January 31, 2019 | $ 443 |
SHARE-BASED COMPENSATION Allocated Share-based compensation expense (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Jan. 31, 2019 |
Jan. 31, 2018 |
|
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||
Allocated Share-based Compensation Expense | $ 27 | $ 19 |
Share-based Compensation Capitalized within inventory | 1 | 1 |
Cost of products and services | ||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||
Allocated Share-based Compensation Expense | 4 | 3 |
Research and development | ||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||
Allocated Share-based Compensation Expense | 6 | 4 |
Selling, general and administrative | ||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||
Allocated Share-based Compensation Expense | $ 17 | $ 12 |
SHARE-BASED COMPENSATION Fair Value Assumptions (Details) - shares shares in Millions |
3 Months Ended | |
---|---|---|
Jan. 31, 2019 |
Jan. 31, 2018 |
|
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross | 0 | 0 |
LTPP [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Volatility of Keysight shares (in hundredths) | 25.00% | 25.00% |
Volatility of selected index | 12.00% | 14.00% |
Price-wise correlation with selected peers (in hundredths) | 57.00% | 57.00% |
INCOME TAXES (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Jan. 31, 2019 |
Jan. 31, 2018 |
|
Income Tax Examination [Line Items] | ||
Provision for income taxes | $ 6 | $ (117) |
Certain foreign entities [Member] | ||
Income Tax Examination [Line Items] | ||
Open Tax Year | 2008 | |
Malaysia Tax Authority [Member] | ||
Income Tax Examination [Line Items] | ||
Income Tax Examination, Description | The company is being audited in Malaysia for the 2008 tax year. Although this tax year pre-dates our spin-off from Agilent, pursuant to the agreement between Agilent and Keysight pertaining to tax matters, as finalized at the time of separation, for certain entities, including Malaysia, any historical tax liability is the responsibility of Keysight. In the fourth quarter of fiscal 2017, Keysight paid income taxes and penalties of $68 million on gains related to intellectual property rights, although we are currently in the process of appealing to the Special Commissioners of Income Tax in Malaysia. The company believes there are numerous defenses to the current assessment; the statute of limitations for the 2008 tax year in Malaysia was closed, and the income in question is exempt from tax in Malaysia. The company is disputing this assessment and pursuing all avenues to resolve this issue favorably for the company. | |
Internal Revenue Service (IRS) [Member] | ||
Income Tax Examination [Line Items] | ||
Effective Income Tax Rate, Percent | 5.20% | (515.80%) |
Provision for income taxes | $ 6 | $ (117) |
Net Discrete Tax expense (Benefit) | $ (23) | $ (115) |
Open tax year, from date | Nov. 01, 2014 | |
Foreign Tax Authority [Member] | Majority of company's entities [Member] | ||
Income Tax Examination [Line Items] | ||
Open tax year, from date | Aug. 01, 2014 |
INCOME TAXES INCOME TAXES (Tax incentives) (Details) $ / shares in Units, $ in Millions |
3 Months Ended |
---|---|
Jan. 31, 2019
USD ($)
$ / shares
| |
Income Tax Disclosure [Abstract] | |
Income Tax Holiday, Aggregate Dollar Amount | $ | $ 8 |
Income Tax Holiday, Income Tax Benefits Per Share | $ / shares | $ 0.04 |
Income Tax Holiday, Termination Date | The Singapore tax incentive is due for renewal in fiscal 2024. |
Income Tax Holiday, Description | Keysight benefits from tax incentives in several jurisdictions, most significantly in Singapore, that have granted us tax incentives that require renewal at various times in the future. The tax incentives provide lower rates of taxation on certain classes of income and require thresholds of investments and employment or specific types of income in those jurisdictions. The Singapore tax incentive is due for renewal in fiscal 2024. |
NET INCOME PER SHARE NET INCOME PER SHARE - COMPUTATIONS (Details) - USD ($) shares in Millions, $ in Millions |
3 Months Ended | |
---|---|---|
Jan. 31, 2019 |
Jan. 31, 2018 |
|
Numerator: | ||
Net income | $ 114 | $ 94 |
Denominator: | ||
Basic weighted-average shares | 187 | 187 |
Potential common shares— stock options and other employee stock plans | 3 | 2 |
Diluted weighted-average shares | 190 | 189 |
SUPPLEMENT CASH FLOW INFORMATION Income Taxes (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Jan. 31, 2019 |
Jan. 31, 2018 |
|
Income Taxes Paid, Net [Abstract] | ||
Income Taxes Paid, Net | $ 1 | $ 1 |
SUPPLEMENT CASH FLOW INFORMATION (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Jan. 31, 2019 |
Jan. 31, 2018 |
|
Other Significant Noncash Transactions [Line Items] | ||
Increase (decrease) in capital expenditure incurred but not yet paid | $ 11 | $ (3) |
Accounts Payable [Member] | ||
Other Significant Noncash Transactions [Line Items] | ||
Increase (decrease) in capital expenditure incurred but not yet paid | $ 11 | $ (3) |
SUPPLEMENT CASH FLOW INFORMATION Interest paid (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Jan. 31, 2019 |
Jan. 31, 2018 |
|
Supplemental Cash Flow Elements [Abstract] | ||
Cash paid for interest | $ 0 | $ 2 |
SUPPLEMENT CASH FLOW INFORMATION SUPPLEMENTAL CASH FLOW (Cash, cash equivalents an restricted cash reconciliation) (Details) - USD ($) $ in Millions |
Jan. 31, 2019 |
Oct. 31, 2018 |
Jan. 31, 2018 |
Oct. 31, 2017 |
---|---|---|---|---|
Cash and cash equivalents | $ 1,098 | $ 913 | $ 980 | |
Total cash, cash equivalents, and restricted cash shown in the statement of cash flows | 1,102 | $ 917 | 982 | $ 820 |
Other Current Assets [Member] | ||||
Restricted cash included in other current assets | 2 | 0 | ||
Other Assets [Member] | ||||
Restricted cash included in other assets | $ 2 | $ 2 |
INVENTORY (Details) - USD ($) $ in Millions |
3 Months Ended | ||
---|---|---|---|
Jan. 31, 2019 |
Jan. 31, 2018 |
Oct. 31, 2018 |
|
Inventory, Net [Abstract] | |||
Finished goods | $ 286 | $ 283 | |
Purchased parts and fabricated assemblies | 355 | 336 | |
Total inventory | 641 | $ 619 | |
Excess and obsolete inventory-related charges | $ 7 | $ 6 |
GOODWILL AND OTHER INTANGIBLE ASSETS GOODWILL AND OTHER INTANGIBLE ASSETS Textuals (Details) $ in Millions |
3 Months Ended |
---|---|
Jan. 31, 2019
USD ($)
| |
Goodwill [Line Items] | |
Document Period End Date | Jan. 31, 2019 |
Additions to other intangible assets | $ 0 |
Amortization of intangible assets | $ 51 |
GOODWILL AND OTHER INTANGIBLE ASSETS Finite-Lived Assets Future Amortization Expense (Details) |
Jan. 31, 2019
USD ($)
|
---|---|
Finite-Lived Intangible Assets, Net, Amortization Expense, Fiscal Year Maturity [Abstract] | |
Finite-Lived Intangible Assets, Amortization Expense, Remainder of 2019 | $ 152 |
Finite-Lived Intangible Assets, Amortization Expense, 2020 | 196 |
Finite-Lived Intangible Assets, Amortization Expense, 2021 | 128 |
Finite-Lived Intangible Assets, Amortization Expense, 2022 | 52 |
Finite-Lived Intangible Assets, Amortization Expense, 2023 | 44 |
Finite-Lived Intangible Assets, Amortization Expense, thereafter | $ 21 |
FAIR VALUE MEASUREMENTS FAIR VALUE MEASUREMENTS (Net recognized gains losses on equity securities) (Details) $ in Millions |
3 Months Ended |
---|---|
Jan. 31, 2019
USD ($)
| |
Debt and Equity Securities, Gain (Loss) [Abstract] | |
Net realized gains on investments sold | $ 0 |
Net unrealized gains on investments still held | 5 |
Other-than-temporary impairments of investments | 0 |
Total | $ 5 |
RETIREMENT PLANS AND POST RETIREMENT PENSION PLANS (Details) (Textual) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Jan. 31, 2019 |
Jan. 31, 2018 |
|
US | Defined benefit plan | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Contributions by employer | $ 0 | $ 0 |
Estimated future employer contributions in remainder of current fiscal year | 0 | |
US | Post-retirement Benefits Plan | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Contributions by employer | 0 | 0 |
Non-US | Defined benefit plan | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Contributions by employer | 8 | $ 9 |
Estimated future employer contributions in remainder of current fiscal year | $ 23 |
RETIREMENT PLANS AND POST RETIREMENT PENSION PLANS RETIREMENT AND POST RETIREMENT PENSION PLANS (Details) (Switzerland defined benefit plan settlement) - Defined benefit plan - Non-US - USD ($) $ in Millions |
3 Months Ended | ||
---|---|---|---|
Jan. 01, 2019 |
Jan. 31, 2019 |
Jan. 31, 2018 |
|
Defined Benefit Plan Disclosure [Line Items] | |||
Settlement loss | $ 2 | $ 0 | |
Switzerland Defined Benefit Plan | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Date of transfer of defined benefit plan assets | Jan. 01, 2019 | ||
Settlement loss | $ 2 |
WARRANTIES AND CONTINGENCIES (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Jan. 31, 2019 |
Jan. 31, 2018 |
|
Guarantees [Abstract] | ||
Standard Product Warranty Description | The Keysight warranty on products sold through direct sales channel is primarily one year. Warranties for products sold through distribution channels continue to be primarily three years. | |
Movement in Standard Product Warranty Accrual [Roll Forward] | ||
Beginning balance at beginning of period | $ 45 | $ 45 |
Accruals for warranties including change in estimate | 8 | 10 |
Settlements made during the period | (9) | (8) |
Ending balance at end of period | 44 | 47 |
Standard Product Warranty Disclosure [Abstract] | ||
Accruals for warranties due within one year | 25 | 26 |
Accruals for warranties due after one year | 19 | 21 |
Ending balance at end of period | $ 44 | $ 47 |
DEBT Facility (Details) - Revolving Credit Facility [Member] $ in Millions |
3 Months Ended |
---|---|
Jan. 31, 2019
USD ($)
| |
Line of Credit Facility [Line Items] | |
Facility, Description | On February 15, 2017, we entered into an amended and restated credit agreement (the “Revolving Credit Facility”) that replaced our existing $450 million unsecured credit facility dated September 15, 2014. The Revolving Credit Facility provides for a $450 million, five-year unsecured revolving credit facility that will expire on February 15, 2022 and bears interest at an annual rate of LIBOR + 1.30%. In addition, the Revolving Credit Facility permits us to increase the total commitments under this credit facility by up to $150 million in the aggregate on one or more occasions upon request. We may use amounts borrowed under the facility for general corporate purposes. As of January 31, 2019, we had no borrowings outstanding under the Revolving Credit Facility. We were in compliance with the covenants of the Revolving Credit Facility during the three months ended January 31, 2019. |
Debt Instrument, Term | 5 years |
Facility, Initiation Date | Feb. 15, 2017 |
Facility, Maximum Borrowing Capacity | $ 450 |
Facility, Expiration Date | Feb. 15, 2022 |
Debt Instrument, Description of Variable Rate Basis | LIBOR + 1.30% |
Additional drawings on credit facility | $ 150 |
Facility, Outstanding | $ 0 |
London Interbank Offered Rate (LIBOR) [Member] | |
Line of Credit Facility [Line Items] | |
Debt Instrument, Basis Spread on Variable Rate | 1.30% |
DEBT Long Term Debt (Details) - USD ($) $ in Millions |
Jan. 31, 2019 |
Oct. 31, 2018 |
---|---|---|
Debt Instrument [Line Items] | ||
Total debt | $ 1,790 | $ 1,790 |
Short-term debt | 499 | 499 |
Long-term debt | 1,291 | 1,291 |
Senior Notes 2019 | ||
Debt Instrument [Line Items] | ||
Total debt | 499 | 499 |
Debt Instrument, Unamortized Discount (Premium) and Debt Issuance Costs, Net | 1 | 1 |
Senior Notes 2024 | ||
Debt Instrument [Line Items] | ||
Total debt | 597 | 597 |
Debt Instrument, Unamortized Discount (Premium) and Debt Issuance Costs, Net | 3 | 3 |
Senior Notes 2027 | ||
Debt Instrument [Line Items] | ||
Total debt | 694 | 694 |
Debt Instrument, Unamortized Discount (Premium) and Debt Issuance Costs, Net | $ 6 | $ 6 |
DEBT Debt (Textuals) (Details) - USD ($) $ in Millions |
Jan. 31, 2019 |
Oct. 31, 2018 |
---|---|---|
Debt Disclosure [Abstract] | ||
Letters of Credit Outstanding, Amount | $ 31 | $ 26 |
Long Term Debt Fair Value Over Carrying Value | $ 25 | $ 3 |
STOCKHOLDERS' EQUITY STOCKHOLDES' EQUITY - Stock Repurchase (Details) - USD ($) shares in Millions, $ in Millions |
3 Months Ended | |||
---|---|---|---|---|
Jan. 31, 2019 |
Jan. 31, 2018 |
Mar. 16, 2018 |
Oct. 31, 2016 |
|
Treasury Stock Transactions, Excluding Value of Shares Reissued [Abstract] | ||||
Stock Repurchase Program, Authorized Amount | $ 350 | $ 200 | ||
Treasury Stock, Shares, Acquired | 686,398 | 0 | ||
Treasury Stock, Value, Acquired, Cost Method | $ 40 | $ 0 |
SEGMENT INFORMATION Profitability (Details) $ in Millions |
3 Months Ended | |
---|---|---|
Jan. 31, 2019
USD ($)
|
Jan. 31, 2018
USD ($)
|
|
Segment Reporting Information [Line Items] | ||
Number of Reportable Segments | 3 | |
Number of Operating Segments | 3 | |
Segment Reporting, Factors Used to Identify Entity's Reportable Segments | Our operating segments were determined based primarily on how the chief operating decision maker views and evaluates our operations. Segment operating results are regularly reviewed by the chief operating decision maker to make decisions about resources to be allocated to each segment and to assess 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. | |
Segment Reporting, Additional Information about Entity's Reportable Segments | The Communications Solutions Group serves customers spanning the worldwide commercial communications and aerospace, defense and government end markets. The group provides electronic design and test software, instruments, systems and related services used in the simulation, design, validation, manufacturing, installation and optimization of electronic equipment. The Electronic Industrial Solutions Group provides test and measurement solutions across a broad set of electronic industrial end markets, focusing on high-growth applications in the automotive and energy industry and measurement solutions for semiconductor design and manufacturing, consumer electronics, education and general electronics manufacturing. The group provides electronic design and test software, instruments, systems and related services used in the simulation, design, validation, manufacturing, installation and optimization of electronic equipment. The Ixia Solutions Group helps customers validate the performance and security resilience of their networks and associated applications. The test, visibility and security products help organizations and their customers strengthen their physical and virtual networks. Enterprises, service providers, network equipment manufacturers, and governments worldwide rely on the group's solutions to validate new products before shipping and secure ongoing operation of their networks with better visibility and security. The group’s product solutions consist of high-performance hardware platforms, software applications and services, including warranty and maintenance offerings. | |
Amortization of acquisition-related balances | $ 3 | $ 19 |
Total segment revenue | 1,006 | 837 |
Income from operations | 121 | (17) |
Communications Solutions Group | ||
Segment Reporting Information [Line Items] | ||
Amortization of acquisition-related balances | 0 | 0 |
Total segment revenue | 623 | 500 |
Electronic Industrial Solutions Group | ||
Segment Reporting Information [Line Items] | ||
Amortization of acquisition-related balances | 0 | 0 |
Total segment revenue | 257 | 229 |
Ixia Solutions Group | ||
Segment Reporting Information [Line Items] | ||
Amortization of acquisition-related balances | 3 | 19 |
Total segment revenue | 126 | 108 |
Operating Segments [Member] | ||
Segment Reporting Information [Line Items] | ||
Total segment revenue | 1,009 | 856 |
Income from operations | 204 | 119 |
Operating Segments [Member] | Communications Solutions Group | ||
Segment Reporting Information [Line Items] | ||
Total segment revenue | 623 | 500 |
Income from operations | 138 | 63 |
Operating Segments [Member] | Electronic Industrial Solutions Group | ||
Segment Reporting Information [Line Items] | ||
Total segment revenue | 257 | 229 |
Income from operations | 54 | 38 |
Operating Segments [Member] | Ixia Solutions Group | ||
Segment Reporting Information [Line Items] | ||
Total segment revenue | 129 | 127 |
Income from operations | $ 12 | $ 18 |
SEGMENT INFORMATION Reconciliation of Reportable Results (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Jan. 31, 2019 |
Jan. 31, 2018 |
|
Reconciliation of Operating Profit (Loss) from Segments to Consolidated [Abstract] | ||
Total reportable operating segments' income from operations | $ 121 | $ (17) |
Share-based compensation expense | (27) | (19) |
Amortization of acquisition-related balances | (54) | (89) |
Acquisition and integration costs | (2) | (19) |
Northern California wildfire-related costs | 0 | (7) |
Other | 0 | (2) |
Income (loss) from operations | 121 | (17) |
Interest income | 4 | 3 |
Interest expense | (20) | (22) |
Other income (expense), net | 15 | 13 |
Income (loss) before taxes | 120 | (23) |
Operating Segments [Member] | ||
Reconciliation of Operating Profit (Loss) from Segments to Consolidated [Abstract] | ||
Total reportable operating segments' income from operations | 204 | 119 |
Income (loss) from operations | $ 204 | $ 119 |
SEGMENT INFORMATION Segment Assets (Details) - USD ($) $ in Millions |
Jan. 31, 2019 |
Oct. 31, 2018 |
---|---|---|
Segment Reporting Information [Line Items] | ||
Assets | $ 5,978 | $ 5,824 |
Communications Solutions Group | ||
Segment Reporting Information [Line Items] | ||
Assets | 2,059 | 2,115 |
Electronic Industrial Solutions Group | ||
Segment Reporting Information [Line Items] | ||
Assets | 875 | 888 |
Ixia Solutions Group | ||
Segment Reporting Information [Line Items] | ||
Assets | 1,407 | 1,327 |
Operating Segments [Member] | ||
Segment Reporting Information [Line Items] | ||
Assets | $ 4,341 | $ 4,330 |
NORTHERN CALIFORNIA WILDFIRES IMPACT Charges in consolidated statement of operations (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Jan. 31, 2019 |
Jan. 31, 2018 |
|
Unusual or Infrequent Item, or Both [Line Items] | ||
Loss from Catastrophes | $ 0 | $ 7 |
Northern California Wildfires [Member] | ||
Unusual or Infrequent Item, or Both [Line Items] | ||
Loss from Catastrophes | 0 | 7 |
Cost of products and services | Northern California Wildfires [Member] | ||
Unusual or Infrequent Item, or Both [Line Items] | ||
Loss from Catastrophes | 0 | 5 |
Research and development | Northern California Wildfires [Member] | ||
Unusual or Infrequent Item, or Both [Line Items] | ||
Loss from Catastrophes | 0 | 1 |
Selling, general and administrative | Northern California Wildfires [Member] | ||
Unusual or Infrequent Item, or Both [Line Items] | ||
Loss from Catastrophes | $ 0 | $ 1 |
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