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 ¨ | |
(do not check if a smaller reporting company) |
Page Number | |||
PART I | — FINANCIAL INFORMATION |
Three Months Ended | Six Months Ended | ||||||||||||||
April 30, | April 30, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
Net revenue: | |||||||||||||||
Products | $ | 613 | $ | 630 | $ | 1,219 | $ | 1,226 | |||||||
Services and other | 118 | 110 | 233 | 215 | |||||||||||
Total net revenue | 731 | 740 | 1,452 | 1,441 | |||||||||||
Costs and expenses: | |||||||||||||||
Cost of products | 263 | 264 | 530 | 524 | |||||||||||
Cost of services and other | 62 | 60 | 124 | 118 | |||||||||||
Total costs | 325 | 324 | 654 | 642 | |||||||||||
Research and development | 108 | 96 | 216 | 192 | |||||||||||
Selling, general and administrative | 207 | 192 | 407 | 398 | |||||||||||
Other operating expense (income), net | (4 | ) | (5 | ) | (18 | ) | (11 | ) | |||||||
Total costs and expenses | 636 | 607 | 1,259 | 1,221 | |||||||||||
Income from operations | 95 | 133 | 193 | 220 | |||||||||||
Interest income | — | 1 | 1 | 1 | |||||||||||
Interest expense | (12 | ) | (11 | ) | (24 | ) | (23 | ) | |||||||
Other income (expense), net | 4 | (1 | ) | 1 | 2 | ||||||||||
Income before taxes | 87 | 122 | 171 | 200 | |||||||||||
Provision (benefit) for income taxes | (1 | ) | 26 | 19 | 34 | ||||||||||
Net income | $ | 88 | $ | 96 | $ | 152 | $ | 166 | |||||||
Net income per share: | |||||||||||||||
Basic | $ | 0.52 | $ | 0.57 | $ | 0.89 | $ | 0.99 | |||||||
Diluted | $ | 0.51 | $ | 0.56 | $ | 0.88 | $ | 0.97 | |||||||
Weighted average shares used in computing net income per share: | |||||||||||||||
Basic | 170 | 169 | 171 | 168 | |||||||||||
Diluted | 172 | 171 | 172 | 171 |
Three Months Ended | Six Months Ended | ||||||||||||||
April 30, | April 30, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
Net income | $ | 88 | $ | 96 | $ | 152 | $ | 166 | |||||||
Other comprehensive income (loss): | |||||||||||||||
Unrealized gain (loss) on investments, net of tax benefit (expense) of zero, $(1), $1 and $(1) | (1 | ) | 8 | (7 | ) | 8 | |||||||||
Unrealized gain (loss) on derivative instruments, net of tax benefit (expense) of $1, $(1), zero and $1 | (2 | ) | 2 | (1 | ) | (1 | ) | ||||||||
Amounts reclassified into earnings related to derivative instruments, net of tax benefit (expense) of $(1), zero, $(2) and zero | 2 | (1 | ) | 5 | (2 | ) | |||||||||
Foreign currency translation, net of tax benefit (expense) of zero | 56 | (1 | ) | 31 | (34 | ) | |||||||||
Net defined benefit pension cost and post retirement plan costs: | |||||||||||||||
Change in actuarial net loss, net of tax expense of $4, $3, $10 and $6 | 10 | 8 | 22 | 16 | |||||||||||
Change in net prior service benefit, net of tax benefit of $2, $3, $5 and $6 | (5 | ) | (4 | ) | (8 | ) | (8 | ) | |||||||
Other comprehensive income (loss) | 60 | 12 | 42 | (21 | ) | ||||||||||
Total comprehensive income | $ | 148 | $ | 108 | $ | 194 | $ | 145 |
April 30, 2016 | October 31, 2015 | ||||||
(unaudited) | |||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 620 | $ | 483 | |||
Accounts receivable, net | 408 | 398 | |||||
Inventory | 475 | 487 | |||||
Deferred tax assets | 75 | 74 | |||||
Other current assets | 159 | 137 | |||||
Total current assets | 1,737 | 1,579 | |||||
Property, plant and equipment, net | 531 | 518 | |||||
Goodwill | 731 | 700 | |||||
Other intangible assets, net | 226 | 246 | |||||
Long-term investments | 58 | 70 | |||||
Long-term deferred tax assets | 264 | 295 | |||||
Other assets | 108 | 100 | |||||
Total assets | $ | 3,655 | $ | 3,508 | |||
LIABILITIES AND EQUITY | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 168 | $ | 209 | |||
Employee compensation and benefits | 174 | 168 | |||||
Deferred revenue | 198 | 175 | |||||
Income and other taxes payable | 39 | 50 | |||||
Other accrued liabilities | 73 | 84 | |||||
Total current liabilities | 652 | 686 | |||||
Long-term debt | 1,100 | 1,099 | |||||
Retirement and post-retirement benefits | 250 | 280 | |||||
Long-term deferred revenue | 69 | 61 | |||||
Other long-term liabilities | 84 | 80 | |||||
Total liabilities | 2,155 | 2,206 | |||||
Commitments and contingencies (Note 12) | |||||||
Total equity: | |||||||
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; 171 million shares at April 30, 2016 and 170 million shares at October 31, 2015 issued | 2 | 2 | |||||
Treasury stock at cost; 1.6 million shares at April 30, 2016 and zero shares at October 31, 2015 | (42 | ) | — | ||||
Additional paid-in-capital | 1,211 | 1,165 | |||||
Retained earnings | 766 | 614 | |||||
Accumulated other comprehensive loss | (437 | ) | (479 | ) | |||
Total stockholders' equity | 1,500 | 1,302 | |||||
Total liabilities and equity | $ | 3,655 | $ | 3,508 |
Six Months Ended | |||||||
April 30, | |||||||
2016 | 2015 | ||||||
Cash flows from operating activities: | |||||||
Net income | $ | 152 | $ | 166 | |||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Depreciation and amortization | 67 | 46 | |||||
Share-based compensation | 29 | 42 | |||||
Excess tax benefit from share-based plans | — | (3 | ) | ||||
Deferred taxes | 3 | 13 | |||||
Excess and obsolete inventory related charges | 11 | 17 | |||||
Gain on sale of land | (10 | ) | — | ||||
Other non-cash expenses, net | 2 | 1 | |||||
Changes in assets and liabilities: | |||||||
Accounts receivable | (3 | ) | (5 | ) | |||
Inventory | (11 | ) | (17 | ) | |||
Accounts payable | (27 | ) | 1 | ||||
Payment to Agilent, net | — | (28 | ) | ||||
Employee compensation and benefits | 11 | 7 | |||||
Retirement and post-retirement benefits | (20 | ) | (21 | ) | |||
Income tax payable | 2 | 3 | |||||
Other assets and liabilities | 3 | (62 | ) | ||||
Net cash provided by operating activities | 209 | 160 | |||||
Cash flows from investing activities: | |||||||
Investments in property, plant and equipment | (62 | ) | (31 | ) | |||
Proceeds from sale of investments | — | 1 | |||||
Acquisition of businesses and intangible assets, net of cash acquired | (10 | ) | — | ||||
Proceeds from sale of land | 10 | — | |||||
Net cash used in investing activities | (62 | ) | (30 | ) | |||
Cash flows from financing activities: | |||||||
Issuance of common stock under employee stock plans | 24 | 8 | |||||
Excess tax benefit from share-based plans | — | 3 | |||||
Return of capital to Agilent | — | (49 | ) | ||||
Treasury stock repurchases | (40 | ) | — | ||||
Net cash used in financing activities | (16 | ) | (38 | ) | |||
Effect of exchange rate movements | 6 | (8 | ) | ||||
Net increase in cash and cash equivalents | 137 | 84 | |||||
Cash and cash equivalents at beginning of period | 483 | 810 | |||||
Cash and cash equivalents at end of period | $ | 620 | $ | 894 | |||
Cash paid during the period for: | |||||||
Interest | $ | 22 | $ | 24 | |||
Income taxes, net of refunds | $ | 8 | $ | 22 |
1. | OVERVIEW, BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
Three Months Ended April 30, 2015 | Six Months Ended April 30, 2015 | ||||||
Net revenue | $ | 791 | $ | 1,543 | |||
Net income | $ | 101 | $ | 170 | |||
Net income per share - Basic | $ | 0.60 | $ | 1.01 | |||
Net income per share - Diluted | $ | 0.59 | $ | 0.99 |
Three Months Ended | Six Months Ended | ||||||||||||||
April 30, | April 30, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
(in millions) | |||||||||||||||
Cost of products and services | $ | 4 | $ | 4 | $ | 7 | $ | 8 | |||||||
Research and development | 2 | 2 | 5 | 6 | |||||||||||
Selling, general and administrative | 7 | 7 | 17 | 28 | |||||||||||
Total share-based compensation expense | $ | 13 | $ | 13 | $ | 29 | $ | 42 |
Three Months Ended | Six Months Ended | ||||||||||
April 30, | April 30, | ||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||
Stock Option Plans: | |||||||||||
Weighted average risk-free interest rate | — | — | — | 1.6 | % | ||||||
Dividend yield | — | — | — | — | % | ||||||
Weighted average volatility | — | — | — | 31 | % | ||||||
Expected life | — | — | — | 4.9 years | |||||||
LTP Program: | |||||||||||
Volatility of Keysight shares | 25 | % | 26 | % | 25 | % | 26 | % | |||
Volatility of selected peer-company shares | 14%-54% | 17%-67% | 14%-54% | 17%-67% | |||||||
Price-wise correlation with selected peers | 38 | % | 38 | % | 38 | % | 38 | % |
Three Months Ended | Six Months Ended | ||||||||||||||
April 30, | April 30, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
(in millions) | |||||||||||||||
Numerator: | |||||||||||||||
Net income | $ | 88 | $ | 96 | $ | 152 | $ | 166 | |||||||
Denominator: | |||||||||||||||
Basic weighted-average shares | 170 | 169 | 171 | 168 | |||||||||||
Potential common shares— stock options and other employee stock plans | 2 | 2 | 1 | 3 | |||||||||||
Diluted weighted-average shares | 172 | 171 | 172 | 171 |
April 30, 2016 | October 31, 2015 | ||||||
(in millions) | |||||||
Finished goods | $ | 226 | $ | 235 | |||
Purchased parts and fabricated assemblies | 249 | 252 | |||||
Total Inventory | $ | 475 | $ | 487 |
8. | GOODWILL AND OTHER INTANGIBLE ASSETS |
Measurement Solutions | Customer Support and Services | Total | |||||||||
(in millions) | |||||||||||
Goodwill as of October 31, 2015 | $ | 637 | $ | 63 | $ | 700 | |||||
Foreign currency translation impact | 19 | 2 | 21 | ||||||||
Goodwill arising from acquisitions | 10 | — | 10 | ||||||||
Goodwill as of April 30, 2016 | $ | 666 | $ | 65 | $ | 731 |
Other Intangible Assets | |||||||||||
Gross Carrying Amount | Accumulated Amortization and Impairments | Net Book Value | |||||||||
(in millions) | |||||||||||
As of October 31, 2015: | |||||||||||
Developed technology | $ | 305 | $ | 125 | $ | 180 | |||||
Backlog | 4 | 4 | — | ||||||||
Trademark/Tradename | 20 | 2 | 18 | ||||||||
Customer relationships | 64 | 28 | 36 | ||||||||
Total amortizable intangible assets | 393 | 159 | 234 | ||||||||
In-Process R&D | 12 | — | 12 | ||||||||
Total | $ | 405 | $ | 159 | $ | 246 | |||||
As of April 30, 2016: | |||||||||||
Developed technology | $ | 307 | $ | 142 | $ | 165 | |||||
Backlog | 4 | 4 | — | ||||||||
Trademark/Tradename | 20 | 3 | 17 | ||||||||
Customer relationships | 64 | 32 | 32 | ||||||||
Total amortizable intangible assets | 395 | 181 | 214 | ||||||||
In-Process R&D | 12 | — | 12 | ||||||||
Total | $ | 407 | $ | 181 | $ | 226 |
Fair Value Measurements at April 30, 2016 | Fair Value Measurements at October 31, 2015 | ||||||||||||||||||||||||||||||
Total | Level 1 | Level 2 | Level 3 | Total | Level 1 | Level 2 | Level 3 | ||||||||||||||||||||||||
(in millions) | |||||||||||||||||||||||||||||||
Assets: | |||||||||||||||||||||||||||||||
Short-term | |||||||||||||||||||||||||||||||
Cash equivalents (money market funds) | $ | 373 | $ | 373 | $ | — | $ | — | $ | 295 | $ | 295 | $ | — | $ | — | |||||||||||||||
Derivative instruments (foreign exchange contracts) | 7 | — | 7 | — | 1 | — | 1 | — | |||||||||||||||||||||||
Long-term | |||||||||||||||||||||||||||||||
Trading securities | 11 | 11 | — | — | 12 | 12 | — | — | |||||||||||||||||||||||
Available-for-sale investments | 31 | 31 | — | — | 41 | 41 | — | — | |||||||||||||||||||||||
Total assets measured at fair value | $ | 422 | $ | 415 | $ | 7 | $ | — | $ | 349 | $ | 348 | $ | 1 | $ | — | |||||||||||||||
Liabilities: | |||||||||||||||||||||||||||||||
Short-term | |||||||||||||||||||||||||||||||
Derivative instruments (foreign exchange contracts) | $ | 10 | $ | — | $ | 10 | $ | — | $ | 10 | $ | — | $ | 10 | $ | — | |||||||||||||||
Long-term | |||||||||||||||||||||||||||||||
Deferred compensation liability | 11 | — | 11 | — | 12 | — | 12 | — | |||||||||||||||||||||||
Total liabilities measured at fair value | $ | 21 | $ | — | $ | 21 | $ | — | $ | 22 | $ | — | $ | 22 | $ | — |
10. | DERIVATIVES |
Derivatives in Cash Flow Hedging Relationships | Derivatives Not Designated as Hedging Instruments | |||||||||||||||
Forward Contracts | Option Contracts | Forward Contracts | Option Contracts | |||||||||||||
Currency | Buy/(Sell) | Buy/(Sell) | Buy/(Sell) | Buy/(Sell) | ||||||||||||
(in millions) | ||||||||||||||||
Euro | $ | — | $ | — | $ | 51 | — | |||||||||
British Pound | — | — | (34 | ) | — | |||||||||||
Singapore Dollar | 9 | — | (4 | ) | — | |||||||||||
Malaysian Ringgit | 68 | — | (8 | ) | — | |||||||||||
Japanese Yen | (67 | ) | — | (60 | ) | — | ||||||||||
Other currencies | (9 | ) | — | (14 | ) | — | ||||||||||
Totals | $ | 1 | $ | — | $ | (69 | ) | $ | — |
Fair Values of Derivative Instruments | ||||||||||||||||||
Asset Derivatives | Liability Derivatives | |||||||||||||||||
Fair Value | Fair Value | |||||||||||||||||
Balance Sheet Location | April 30, 2016 | October 31, 2015 | Balance Sheet Location | April 30, 2016 | October 31, 2015 | |||||||||||||
(in millions) | ||||||||||||||||||
Derivatives designated as hedging instruments: | ||||||||||||||||||
Cash flow hedges | ||||||||||||||||||
Foreign exchange contracts | ||||||||||||||||||
Other current assets | $ | 5 | $ | — | Other accrued liabilities | $ | 6 | $ | 8 | |||||||||
Derivatives not designated as hedging instruments: | ||||||||||||||||||
Foreign exchange contracts | ||||||||||||||||||
Other current assets | 2 | 1 | Other accrued liabilities | 4 | 2 | |||||||||||||
Total derivatives | $ | 7 | $ | 1 | $ | 10 | $ | 10 |
Three Months Ended | Six Months Ended | ||||||||||||||
April 30, | April 30, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
(in millions) | |||||||||||||||
Derivatives designated as hedging instruments: | |||||||||||||||
Cash Flow Hedges | |||||||||||||||
Foreign exchange contracts: | |||||||||||||||
Gain (loss) recognized in accumulated other comprehensive income | $ | (3 | ) | $ | 3 | $ | (1 | ) | $ | (2 | ) | ||||
Gain (loss) reclassified from accumulated other comprehensive income into cost of sales | $ | (3 | ) | $ | 1 | $ | (7 | ) | $ | 2 | |||||
Derivatives not designated as hedging instruments: | |||||||||||||||
Gain (loss) recognized in other income (expense), net | $ | — | $ | 2 | $ | (2 | ) | $ | (4 | ) |
Pensions | |||||||||||||||||||||||
U.S. Defined Benefit Plans | Non-U.S. Defined Benefit Plans | U.S. Post-Retirement Benefit Plan | |||||||||||||||||||||
Three Months Ended April 30, | |||||||||||||||||||||||
2016 | 2015 | 2016 | 2015 | 2016 | 2015 | ||||||||||||||||||
(in millions) | |||||||||||||||||||||||
Service cost—benefits earned during the period | $ | 5 | $ | 6 | $ | 4 | $ | 5 | $ | — | $ | 1 | |||||||||||
Interest cost on benefit obligation | 6 | 5 | 8 | 10 | 2 | 2 | |||||||||||||||||
Expected return on plan assets | (9 | ) | (10 | ) | (18 | ) | (18 | ) | (4 | ) | (3 | ) | |||||||||||
Amortization: | |||||||||||||||||||||||
Net actuarial losses | 2 | 1 | 7 | 7 | 5 | 3 | |||||||||||||||||
Prior service credit | (2 | ) | (1 | ) | — | — | (4 | ) | (6 | ) | |||||||||||||
Total periodic benefit cost (benefit) | $ | 2 | $ | 1 | $ | 1 | $ | 4 | $ | (1 | ) | $ | (3 | ) |
Pensions | |||||||||||||||||||||||
U.S. Defined Benefit Plans | Non-U.S. Defined Benefit Plans | U.S. Post-Retirement Benefit Plan | |||||||||||||||||||||
Six Months Ended April 30, | |||||||||||||||||||||||
2016 | 2015 | 2016 | 2015 | 2016 | 2015 | ||||||||||||||||||
(in millions) | |||||||||||||||||||||||
Service cost—benefits earned during the period | $ | 10 | $ | 11 | $ | 8 | $ | 9 | $ | — | $ | 1 | |||||||||||
Interest cost on benefit obligation | 12 | 10 | 16 | 21 | 4 | 4 | |||||||||||||||||
Expected return on plan assets | (18 | ) | (19 | ) | (37 | ) | (37 | ) | (7 | ) | (7 | ) | |||||||||||
Amortization: | |||||||||||||||||||||||
Net actuarial losses | 4 | 2 | 14 | 14 | 10 | 6 | |||||||||||||||||
Prior service credit | (4 | ) | (3 | ) | — | — | (8 | ) | (11 | ) | |||||||||||||
Total periodic benefit cost (benefit) | $ | 4 | $ | 1 | $ | 1 | $ | 7 | $ | (1 | ) | $ | (7 | ) |
Six Months Ended | |||||||
April 30, | |||||||
2016 | 2015 | ||||||
(in millions) | |||||||
Beginning balance | $ | 53 | $ | 51 | |||
Accruals for warranties including change in estimate | 14 | 17 | |||||
Settlements made during the period | (16 | ) | (16 | ) | |||
Ending balance | $ | 51 | $ | 52 | |||
Accruals for warranties due within one year | $ | 33 | $ | 39 | |||
Accruals for warranties due after one year | 18 | 13 | |||||
Ending balance | $ | 51 | $ | 52 |
April 30, 2016 | October 31, 2015 | ||||||
(in millions) | |||||||
3.30% Senior Notes due 2019 | $ | 499 | $ | 499 | |||
4.55% Senior Notes due 2024 | 600 | 600 | |||||
Other | 1 | — | |||||
Total | $ | 1,100 | $ | 1,099 |
Net defined benefit pension cost and post retirement plan costs | ||||||||||||||||||||||||
Unrealized gain on investments | Foreign currency translation | Actuarial losses | Prior service costs | Unrealized gains (losses) on derivatives | Total | |||||||||||||||||||
(in millions) | ||||||||||||||||||||||||
As of January 31, 2016 | $ | 15 | $ | (73 | ) | $ | (499 | ) | $ | 62 | $ | (2 | ) | $ | (497 | ) | ||||||||
Other comprehensive income (loss) before reclassifications | (1 | ) | 56 | — | — | (3 | ) | 52 | ||||||||||||||||
Amounts reclassified out of accumulated other comprehensive loss | — | — | 14 | (7 | ) | 3 | 10 | |||||||||||||||||
Tax (expense) benefit | — | — | (4 | ) | 2 | — | (2 | ) | ||||||||||||||||
Other comprehensive income (loss) | (1 | ) | 56 | 10 | (5 | ) | — | 60 | ||||||||||||||||
As of April 30, 2016 | $ | 14 | $ | (17 | ) | $ | (489 | ) | $ | 57 | $ | (2 | ) | $ | (437 | ) | ||||||||
As of October 31, 2015 | $ | 21 | $ | (48 | ) | $ | (511 | ) | $ | 65 | $ | (6 | ) | $ | (479 | ) | ||||||||
Other comprehensive income (loss) before reclassifications | (8 | ) | 31 | 4 | — | (1 | ) | 26 | ||||||||||||||||
Amounts reclassified out of accumulated other comprehensive loss | — | — | 28 | (13 | ) | 7 | 22 | |||||||||||||||||
Tax (expense) benefit | 1 | — | (10 | ) | 5 | (2 | ) | (6 | ) | |||||||||||||||
Other comprehensive income (loss) | (7 | ) | 31 | 22 | (8 | ) | 4 | 42 | ||||||||||||||||
As of April 30, 2016 | $ | 14 | $ | (17 | ) | $ | (489 | ) | $ | 57 | $ | (2 | ) | $ | (437 | ) |
Net defined benefit pension cost and post retirement plan costs | ||||||||||||||||||||||||
Unrealized gain on investments | Foreign currency translation | Actuarial losses | Prior service costs | Unrealized gains (losses) on derivatives | Total | |||||||||||||||||||
(in millions) | ||||||||||||||||||||||||
As of January 31, 2015 | $ | 16 | $ | (27 | ) | $ | (436 | ) | $ | 79 | $ | (1 | ) | $ | (369 | ) | ||||||||
Other comprehensive income (loss) before reclassifications | 9 | (1 | ) | — | — | 3 | 11 | |||||||||||||||||
Amounts reclassified out of accumulated other comprehensive loss | — | — | 11 | (7 | ) | (1 | ) | 3 | ||||||||||||||||
Tax (expense) benefit | (1 | ) | — | (3 | ) | 3 | (1 | ) | (2 | ) | ||||||||||||||
Other comprehensive income (loss) | 8 | (1 | ) | 8 | (4 | ) | 1 | 12 | ||||||||||||||||
As of April 30, 2015 | $ | 24 | $ | (28 | ) | $ | (428 | ) | $ | 75 | $ | — | $ | (357 | ) | |||||||||
As of October 31, 2014 | $ | 16 | $ | 6 | $ | (444 | ) | $ | 83 | $ | 3 | $ | (336 | ) | ||||||||||
Other comprehensive income (loss) before reclassifications | 9 | (34 | ) | — | — | (2 | ) | (27 | ) | |||||||||||||||
Amounts reclassified out of accumulated other comprehensive loss | — | — | 22 | (14 | ) | (2 | ) | 6 | ||||||||||||||||
Tax (expense) benefit | (1 | ) | — | (6 | ) | 6 | 1 | — | ||||||||||||||||
Other comprehensive income (loss) | 8 | (34 | ) | 16 | (8 | ) | (3 | ) | (21 | ) | ||||||||||||||
As of April 30, 2015 | $ | 24 | $ | (28 | ) | $ | (428 | ) | $ | 75 | $ | — | $ | (357 | ) |
Details about Accumulated Other Comprehensive Loss Components | Amounts Reclassified from Accumulated Other Comprehensive Loss | Affected Line Item in Statement of Operations | ||||||||||||||||
Three Months Ended | Six Months Ended | |||||||||||||||||
April 30, | April 30, | |||||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||||
(in millions) | ||||||||||||||||||
Unrealized gain on derivatives | $ | (3 | ) | $ | 1 | $ | (7 | ) | $ | 2 | Cost of sales | |||||||
1 | — | 2 | — | Provision for income taxes | ||||||||||||||
(2 | ) | 1 | (5 | ) | 2 | Net of income tax | ||||||||||||
Net defined benefit pension cost and post retirement plan costs: | ||||||||||||||||||
Actuarial net loss | (14 | ) | (11 | ) | (28 | ) | (22 | ) | ||||||||||
Prior service benefit | 7 | 7 | 13 | 14 | ||||||||||||||
(7 | ) | (4 | ) | (15 | ) | (8 | ) | Total before income tax | ||||||||||
2 | — | 5 | — | Provision for income taxes | ||||||||||||||
(5 | ) | (4 | ) | (10 | ) | (8 | ) | Net of income tax | ||||||||||
Total reclassifications for the period | $ | (7 | ) | $ | (3 | ) | $ | (15 | ) | $ | (6 | ) |
Measurement Solutions | Customer Support and Services | Total Segments | |||||||||
(in millions) | |||||||||||
Three Months Ended April 30, 2016: | |||||||||||
Total segment revenue | $ | 639 | $ | 96 | $ | 735 | |||||
Acquisition related fair value adjustments | (4 | ) | — | (4 | ) | ||||||
Total net revenue | $ | 635 | $ | 96 | $ | 731 | |||||
Segment income from operations | $ | 124 | $ | 11 | $ | 135 | |||||
Three Months Ended April 30, 2015: | |||||||||||
Total net revenue | $ | 638 | $ | 102 | $ | 740 | |||||
Segment income from operations | $ | 136 | $ | 18 | $ | 154 |
Measurement Solutions | Customer Support and Services | Total Segments | |||||||||
(in millions) | |||||||||||
Six Months Ended April 30, 2016: | |||||||||||
Total segment revenue | $ | 1,270 | $ | 191 | $ | 1,461 | |||||
Acquisition related fair value adjustments | (9 | ) | — | (9 | ) | ||||||
Total net revenue | $ | 1,261 | $ | 191 | $ | 1,452 | |||||
Segment income from operations | $ | 240 | $ | 24 | $ | 264 | |||||
Six Months Ended April 30, 2015: | |||||||||||
Total net revenue | $ | 1,244 | $ | 197 | $ | 1,441 | |||||
Segment income from operations | $ | 246 | $ | 32 | $ | 278 |
Three Months Ended | Six Months Ended | ||||||||||||||
April 30, | April 30, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
(in millions) | |||||||||||||||
Total reportable segments' income from operations | $ | 135 | $ | 154 | $ | 264 | $ | 278 | |||||||
Share-based compensation expense | (13 | ) | (13 | ) | (29 | ) | (42 | ) | |||||||
Asset impairment | — | (2 | ) | — | (2 | ) | |||||||||
Amortization of intangibles | (11 | ) | (2 | ) | (22 | ) | (4 | ) | |||||||
Acquisition and integration costs | (5 | ) | — | (5 | ) | — | |||||||||
Separation and related costs | (5 | ) | (5 | ) | (10 | ) | (12 | ) | |||||||
Acquisition related fair value adjustments | (4 | ) | — | (9 | ) | — | |||||||||
Other | (2 | ) | 1 | 4 | — | ||||||||||
Interest income | — | — | 1 | — | |||||||||||
Interest expense | (12 | ) | (11 | ) | (24 | ) | (23 | ) | |||||||
Other income (expense), net | 4 | — | 1 | 5 | |||||||||||
Income before taxes, as reported | $ | 87 | $ | 122 | $ | 171 | $ | 200 |
Measurement Solutions | Customer Support and Services | Total | |||||||||
(in millions) | |||||||||||
Assets: | |||||||||||
As of April 30, 2016 | $ | 2,568 | $ | 267 | $ | 2,835 | |||||
As of October 31, 2015 | $ | 2,531 | $ | 265 | $ | 2,796 |
Three Months Ended | Six Months Ended | Year over Year Change | |||||||||||||||||
April 30, | April 30, | Three | Six | ||||||||||||||||
2016 | 2015 | 2016 | 2015 | Months | Months | ||||||||||||||
(in millions) | |||||||||||||||||||
Orders | $ | 761 | $ | 697 | $ | 1,440 | $ | 1,388 | 9% | 4% | |||||||||
Net revenue: | |||||||||||||||||||
Products | $ | 613 | $ | 630 | $ | 1,219 | $ | 1,226 | (3)% | (1)% | |||||||||
Services and other | 118 | 110 | 233 | 215 | 8% | 8% | |||||||||||||
Total net revenue | $ | 731 | $ | 740 | $ | 1,452 | $ | 1,441 | (1)% | 1% |
Year over Year % Change | |||||||||||
Three Months Ended | Six Months Ended | ||||||||||
April 30, 2016 | April 30, 2016 | ||||||||||
Geographic Region | actual | currency adjusted | actual | currency adjusted | |||||||
Americas | (1 | )% | (1 | )% | (2 | )% | (2 | )% | |||
Europe | 27 | % | 28 | % | 15 | % | 18 | % | |||
Japan | 6 | % | 3 | % | 5 | % | 5 | % | |||
Asia Pacific ex-Japan | 14 | % | 16 | % | 5 | % | 7 | % | |||
Total orders | 9 | % | 10 | % | 4 | % | 5 | % |
Year over Year % Change | |||||||||||
Three Months Ended | Six Months Ended | ||||||||||
April 30, 2016 | April 30, 2016 | ||||||||||
Geographic Region | actual | currency adjusted | actual | currency adjusted | |||||||
Americas | (9 | )% | (8 | )% | (3 | )% | (3 | )% | |||
Europe | 11 | % | 11 | % | 8 | % | 11 | % | |||
Japan | (7 | )% | (9 | )% | 2 | % | 2 | % | |||
Asia Pacific ex-Japan | 4 | % | 5 | % | 1 | % | 3 | % | |||
Total net revenue | (1 | )% | (1 | )% | 1 | % | 2 | % |
Three Months Ended | Six Months Ended | Year over Year Change | |||||||||||||||||
April 30, | April 30, | Three | Six | ||||||||||||||||
2016 | 2015 | 2016 | 2015 | Months | Months | ||||||||||||||
Total gross margin | 55.5 | % | 56.3 | % | 54.9 | % | 55.5 | % | (1) ppt | (1) ppt | |||||||||
Operating margin | 13.0 | % | 18.0 | % | 13.3 | % | 15.3 | % | (5) ppts | (2) ppts | |||||||||
in millions | |||||||||||||||||||
Research and development | $ | 108 | $ | 96 | $ | 216 | $ | 192 | 12% | 13% | |||||||||
Selling, general and administrative | $ | 207 | $ | 192 | $ | 407 | $ | 398 | 8% | 2% | |||||||||
Other operating expense (income), net | $ | (4 | ) | $ | (5 | ) | $ | (18 | ) | $ | (11 | ) | (28)% | 62% |
Three Months Ended | Six Months Ended | Year over Year Change | ||||||||||||||||||
April 30, | April 30, | Three | Six | |||||||||||||||||
2016 | 2015 | 2016 | 2015 | Months | Months | |||||||||||||||
(in millions) | (in millions) | |||||||||||||||||||
Net revenue | $ | 639 | $ | 638 | $ | 1,270 | $ | 1,244 | —% | 2 | % |
Three Months Ended | Six Months Ended | Year over Year Change | |||||||||||||||||
April 30, | April 30, | Three | Six | ||||||||||||||||
2016 | 2015 | 2016 | 2015 | Months | Months | ||||||||||||||
Total gross margin | 60.6 | % | 59.3 | % | 59.9 | % | 58.5 | % | 1 ppt | 1 ppt | |||||||||
Operating margin | 19.5 | % | 21.3 | % | 18.9 | % | 19.8 | % | (2) ppts | (1) ppt | |||||||||
in millions | |||||||||||||||||||
Research and development | $ | 103 | $ | 91 | $ | 206 | $ | 180 | 13% | 15% | |||||||||
Selling, general and administrative | $ | 162 | $ | 155 | $ | 321 | $ | 308 | 5% | 4% | |||||||||
Other operating expense (income), net | $ | (3 | ) | $ | (4 | ) | $ | (7 | ) | $ | (7 | ) | (22)% | (4)% | |||||
Income from operations | $ | 124 | $ | 136 | $ | 240 | $ | 246 | (9)% | (3)% |
Three Months Ended | Six Months Ended | Year over Year Change | ||||||||||||||||||
April 30, | April 30, | Three | Six | |||||||||||||||||
2016 | 2015 | 2016 | 2015 | Months | Months | |||||||||||||||
(in millions) | (in millions) | |||||||||||||||||||
Net revenue | $ | 96 | $ | 102 | $ | 191 | $ | 197 | (5)% | (3 | )% |
Three Months Ended | Six Months Ended | Year over Year Change | ||||||||||||||||||
April 30, | April 30, | Three | Six | |||||||||||||||||
2016 | 2015 | 2016 | 2015 | Months | Months | |||||||||||||||
Total gross margin | 39.3 | % | 43.8 | % | 39.4 | % | 42.9 | % | (5) ppts | (3 | ) ppts | |||||||||
Operating margin | 11.2 | % | 18.2 | % | 12.6 | % | 16.4 | % | (7) ppts | (4 | ) ppts | |||||||||
in millions | ||||||||||||||||||||
Research and development | $ | 3 | $ | 3 | $ | 5 | $ | 6 | (12)% | (18)% | ||||||||||
Selling, general and administrative | $ | 25 | $ | 24 | $ | 48 | $ | 48 | 5% | —% | ||||||||||
Other operating expense (income), net | $ | — | $ | — | $ | (1 | ) | $ | (1 | ) | —% | (7)% | ||||||||
Income from operations | $ | 11 | $ | 18 | $ | 24 | $ | 32 | (41)% | (25)% |
• | Net income for the first six months of fiscal 2016 decreased $14 million. Changes to non-cash income and expenses included an $18 million increase to amortization expense as compared to the same period last year due to the impact of recently acquired businesses, a $13 million decrease to stock-based compensation expense as the first six months of fiscal 2015 included expense associated with one-time inaugural grants, a $10 million gain from a land sale in the first six months of fiscal 2016, a $6 million decline in excess and obsolete inventory related charges, a $10 million decrease in deferred tax expense and $1 million of higher expense associated with investment losses. |
• | The aggregate of accounts receivable, inventory and accounts payable used net operating cash of $41 million during the first six months of fiscal 2016, compared to $21 million used 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 how effectively we manage 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 collections and payments in a period. |
• | Net cash paid to Agilent under separation and distribution agreement was zero for the six months ended April 30, 2016 as compared to the $28 million during the corresponding period last year. |
• | The aggregate of employee compensation and benefits, income tax payable and other assets and liabilities provided net operating cash of $16 million during the first six months of fiscal 2016, compared to $52 million used in the comparable period last year. The difference is primarily due to an increase in deferred revenue balances in the first six months of fiscal 2016 as compared to a decrease in the same period last year and other differences due to timing of accruals and collections versus payments between the periods. |
• | We contributed $19 million to our non-U.S. defined benefit plans during the first six months of fiscal 2016, compared to $25 million in the same period last year. We expect to contribute approximately $19 million to our non-U.S. defined benefit plans during the remainder of 2016. For the six months ended April 30, 2016 and 2015, 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 2016. |
• | reduced demand for our products, delays in the shipment of orders or increases in order cancellations; |
• | increased risk of excess and obsolete inventories; |
• | increased price pressure for our products and services; and |
• | greater risk of impairment to the value, and a detriment to the liquidity, of our future investment portfolio. |
• | properly identify customer needs; |
• | innovate and develop new technologies, services and applications; |
• | successfully commercialize new technologies in a timely manner; |
• | manufacture and deliver our products in sufficient volumes and on time; |
• | differentiate our offerings from our competitors' offerings; |
• | price our products competitively; |
• | anticipate our competitors' development of new products, services or technological innovations; and control product quality in our manufacturing process. |
• | interruption to transportation flows for delivery of parts to us and finished goods to our customers; |
• | changes in foreign currency exchange rates; |
• | changes in a specific country's or region's political, economic or other conditions; |
• | trade protection measures, sanctions, and import or export licensing requirements or restrictions; |
• | negative consequences from changes in tax laws; |
• | difficulty in staffing and managing widespread operations; |
• | differing labor regulations; |
• | differing protection of intellectual property; |
• | unexpected changes in regulatory requirements; and |
• | volatile political environments or geopolitical turmoil, including regional conflicts, terrorism, and war. |
• | the retention of key employees and/or customers; |
• | the management of facilities and employees in different geographic areas; and |
• | the compatibility of our infrastructure, policies and organizations with those of the acquired company. |
• | 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. |
• | prior to the separation, our business was operated by Agilent as part of its broader corporate organization, rather than as an independent company. Agilent or one of its affiliates performed various corporate functions for us such as legal, treasury, |
• | generally, our working capital requirements and capital for our general corporate purposes, including acquisitions and capital expenditures, have historically been satisfied as part of the corporate-wide cash management policies of Agilent. Following the separation, we may need to obtain additional financing from banks, through public offerings or private placements of debt or equity securities, strategic relationships or other arrangements; and |
• | our historical financial information does not reflect the debt or the associated interest expense that we have incurred as part of the separation and distribution. |
• | 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% 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). |
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) | ||||||||||
Feb. 1, 2016 through Feb. 29, 2016 | 435,600 | $ | 25.60 | 435,600 | $ | 188,850,047 | ||||||||
Mar. 1, 2016 through Mar. 31, 2016 | 1,005,855 | $ | 26.53 | 1,005,855 | $ | 162,165,219 | ||||||||
Apr. 1, 2016 through Apr. 30, 2016 | 139,665 | $ | 26.49 | 139,665 | $ | 158,464,991 | ||||||||
Total | 1,581,120 | $ | 26.27 | 1,581,120 |
(1) | On February 18, 2016, the Board of Directors approved a stock repurchase program authorizing the purchase of up to $200 million of the company’s common stock. Under the 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. 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. All such shares and related costs are held as treasury stock and accounted for using the cost method. |
(2) | The weighted average price paid per share of common stock does not include the cost of commissions. |
A list of exhibits is set forth in the Exhibit Index found on page 48 of this report. |
Dated: | June 3, 2016 | By: | /s/ Neil Dougherty |
Neil Dougherty | |||
Senior Vice President and Chief Financial Officer | |||
(Principal Financial Officer) | |||
Dated: | June 3, 2016 | By: | /s/ John C. Skinner |
John C. Skinner | |||
Vice President and Corporate Controller | |||
(Principal Accounting Officer) |
Exhibit | |||
Number | Description | ||
11.1 | See Note 6, “Net Income Per Share,” to our Condensed Consolidated Financial Statements. | ||
31.1 | Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | ||
31.2 | Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | ||
32.1 | Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | ||
32.2 | Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | ||
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 | ||
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: | June 3, 2016 | |
/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: | June 3, 2016 | |
/s/ Neil Dougherty | ||
Neil Dougherty | ||
Senior Vice President and Chief Financial Officer |
Date: | June 3, 2016 | /s/ Ronald S. Nersesian |
Ronald S. Nersesian | ||
President and Chief Executive Officer |
Date: | June 3, 2016 | /s/ Neil Dougherty |
Neil Dougherty | ||
Senior Vice President and Chief Financial Officer |
Document and Entity Information - shares |
6 Months Ended | |
---|---|---|
Apr. 30, 2016 |
Jun. 01, 2016 |
|
Entity Information [Line Items] | ||
Entity Registrant Name | Keysight Technologies, Inc. | |
Entity Central Index Key | 0001601046 | |
Current Fiscal Year End Date | --10-31 | |
Entity Voluntary Filers | No | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 170,227,893 | |
Document Fiscal Year Focus | 2016 | |
Document Fiscal Period Focus | Q2 | |
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Apr. 30, 2016 | |
Trading Symbol | KEYS |
CONDENSED COMBINED AND CONSOLIDATED STATEMENT OF OPERATIONS (Unaudited) - USD ($) shares in Millions, $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Apr. 30, 2016 |
Apr. 30, 2015 |
Apr. 30, 2016 |
Apr. 30, 2015 |
|
Net revenue [Abstract] | ||||
Products | $ 613 | $ 630 | $ 1,219 | $ 1,226 |
Services and other | 118 | 110 | 233 | 215 |
Total net revenue | 731 | 740 | 1,452 | 1,441 |
Costs and expenses: | ||||
Cost of products | 263 | 264 | 530 | 524 |
Cost of services and other | 62 | 60 | 124 | 118 |
Total costs | 325 | 324 | 654 | 642 |
Research and development | 108 | 96 | 216 | 192 |
Selling, general and administrative | 207 | 192 | 407 | 398 |
Other Operating Expense (Income), Net | (4) | (5) | (18) | (11) |
Total costs and expenses | 636 | 607 | 1,259 | 1,221 |
Income from operations | 95 | 133 | 193 | 220 |
Interest income | 0 | 1 | 1 | 1 |
Interest expense | (12) | (11) | (24) | (23) |
Other income (expense), net | 4 | (1) | 1 | 2 |
Income before taxes, as reported | 87 | 122 | 171 | 200 |
Provision (Benefit) for income taxes | (1) | 26 | 19 | 34 |
Net Income | $ 88 | $ 96 | $ 152 | $ 166 |
Net income per share: | ||||
Basic (in dollars per share) | $ 0.52 | $ 0.57 | $ 0.89 | $ 0.99 |
Diluted (in dollars per share) | $ 0.51 | $ 0.56 | $ 0.88 | $ 0.97 |
Weighted average shares used in computing net income per share: | ||||
Basic (in shares) | 170 | 169 | 171 | 168 |
Diluted (in shares) | 172 | 171 | 172 | 171 |
CONDENSED AND CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (Unaudited) (Parenthetical) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Apr. 30, 2016 |
Apr. 30, 2015 |
Apr. 30, 2016 |
Apr. 30, 2015 |
|
Other comprehensive income (loss), tax, parenthetical disclosures [Abstract] | ||||
Unrealized gain (loss) on investments, tax | $ 0 | $ (1) | $ 1 | $ (1) |
Unrealized gain (loss) on derivative instruments, tax | 1 | (1) | 0 | 1 |
Amounts reclassified into earnings related to derivative instruments, tax | (1) | 0 | (2) | 0 |
Foreign currency translation, tax | 0 | 0 | 0 | 0 |
Net defined benefit pension cost and post retirement plan costs, tax [Abstract] | ||||
Change in actuarial net loss, tax | (4) | (3) | (10) | (6) |
Change in net prior service benefit, tax | $ 2 | $ 3 | $ 5 | $ 6 |
CONDENSED CONSOLIDATED BALANCE SHEET (Unaudited) (Parenthetical) - $ / shares |
Apr. 30, 2016 |
Oct. 31, 2015 |
---|---|---|
Stockholders' Equity Attributable to Parent [Abstract] | ||
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized (in shares) | 100,000,000 | 100,000,000 |
Preferred stock, issued and outstanding (in shares) | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (in shares) | 1,000,000,000 | 1,000,000,000 |
Common Stock, Shares, Issued | 171,000,000 | 170,000,000 |
Treasury Stock, Shares | 1,600,000 | 0 |
OVERVIEW, BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
6 Months Ended | ||||
---|---|---|---|---|---|
Apr. 30, 2016 | |||||
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 measurement company providing electronic design and test solutions to communications and electronics industries. 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. On November 1, 2014, Keysight became an independent publicly-traded company through the distribution by Agilent Technologies, Inc. ("Agilent") of 100 percent of the outstanding common stock of Keysight to Agilent's shareholders (the "Separation"). Each Agilent shareholder of record as of the close of business on October 22, 2014 received one share of Keysight common stock for every two shares of Agilent common stock held on the record date, resulting in the distribution of approximately 167 million shares of Keysight common stock. Keysight's Registration Statement on Form 10 was declared effective by the U.S. Securities and Exchange Commission ("SEC") on October 6, 2014. Keysight's common stock began trading "regular-way" under the ticker symbol "KEYS" on the New York Stock Exchange on November 3, 2014. Basis of Presentation. We have prepared the accompanying financial statements for the three and six months ended April 30, 2016 and 2015 pursuant to the rules and regulations of the SEC. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles (“GAAP”) in the U.S. 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 condensed consolidated balance sheet as of April 30, 2016 and October 31, 2015, condensed consolidated statement of comprehensive income for the three and six months ended April 30, 2016 and 2015, condensed consolidated statement of operations for the three and six months ended April 30, 2016 and 2015, and condensed consolidated statement of cash flows for the six months ended April 30, 2016 and 2015. Use of Estimates. The preparation of condensed consolidated financial statements in accordance with GAAP in the U.S. 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, valuation of goodwill and other intangible assets, share-based compensation, retirement and post-retirement plan assumptions, restructuring, warranty and accounting for income taxes. Land Sale. On April 30, 2014 we entered into a binding sales contract with real estate developers to sell land in the U.K. The contract calls for proportionate transfers and payments of three separate land tracts totaling approximately $34 million in May 2014, November 2015 and November 2016. In the six months ended April 30, 2016 we recognized a $10 million gain on the sale of the second of three land tracts in other operating expense (income), net. Restricted Cash. Restricted cash of $1.5 million primarily consists of deposit held as collateral against bank guarantee and is classified within other assets on the condensed consolidated balance sheet. Reclassifications. Other operating expense (income), net for the three and six months ended April 30, 2015 includes $5 million and $11 million, respectively, of miscellaneous income and expense that was previously classified as other income (expense), net in the condensed consolidated statement of operations, primarily representing rental income, as management believes this is more appropriately classified within our operating results. This change had no effect on reported net income for any period presented. Net revenue for the six months ended April 30, 2016 includes $5 million of product revenue that was previously classified as services and other revenue in the condensed consolidated statement of operations. Cost and expenses for the six months ended April 30, 2016 includes $7 million of costs of products that was previously classified as cost of services and other in the condensed consolidated statement of operations. The changes have no effect on reported net revenue, total costs and expenses and income for any periods presented. Update to Significant Accounting Policies. There have been no material changes to our significant accounting policies, as compared to the significant accounting policies described in our Annual Report on Form 10-K for the fiscal year ended October 31, 2015. |
NEW ACCOUNTING PRONOUNCEMENTS |
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New Accounting Pronouncements and Changes in Accounting Principles [Abstract] | |
NEW ACCOUNTING PRONOUNCEMENTS | 2. NEW ACCOUNTING PRONOUNCEMENTS In May 2014, the Financial Accounting Standards Board ("FASB") issued an amendment to the accounting guidance related to revenue recognition. The amendment was the result of a joint project between the FASB and the International Accounting Standards Board ("IASB") to clarify the principles for recognizing revenue and to develop common revenue standards for U.S. GAAP and International Financial Reporting Standards ("IFRS"). To meet those objectives, the FASB amended the FASB Accounting Standards Codification and created a new Topic 606, Revenue from Contracts with Customers, and the IASB issued IFRS 15, Revenue from Contracts with Customers. On July 9, 2015, the FASB deferred the effective date by one year to December 15, 2017 for annual reporting periods beginning after that date. The FASB also permitted early adoption of the standard, but not before the original effective date of December 15, 2016. In addition, during March, April, and May 2016, the FASB issued guidance that clarified the reporting of revenue as a principal versus agent, identifying performance obligations, accounting for intellectual property licenses, narrow-scope improvements, and practical expedients. We are evaluating the impact of adopting this guidance on our consolidated financial statements. In June 2014, the FASB issued an amendment to the accounting guidance relating to share-based compensation to resolve what it saw as diverse accounting treatment of certain awards. With this amendment, the FASB has given explicit guidance to treat a performance target that could be achieved after the requisite service period as a performance condition that affects vesting rather than as a non-vesting condition that affects the grant-date fair value of an award. The new guidance is effective for annual periods beginning after December 15, 2015 and for the interim periods within those annual periods. Earlier adoption is permitted. We do not expect a material impact to our consolidated financial statements due to the adoption of this guidance. In August 2014, the FASB issued guidance related to the disclosures around going concern. The standard provided guidance around management's responsibility to evaluate whether there is substantial doubt about an entity's ability to continue as a going concern and to provide related footnote disclosures. The standard is effective for fiscal years beginning after December 15, 2016, and interim periods within those fiscal years. Early adoption is permitted. We do not expect a material impact to our consolidated financial statements due to the adoption of this guidance. In February 2015, the FASB issued guidance with respect to the analysis that a reporting entity must perform to determine whether it should consolidate certain types of legal entities. All legal entities are subject to reevaluation under the revised consolidation model. The new guidance affects the following areas: (1) limited partnerships and similar legal entities, (2) evaluating fees paid to a decision maker or a service provider as a variable interest, (3) the effect of fee arrangements on the primary beneficiary determination, (4) the effect of related parties on the primary beneficiary determination, and (5) certain investment funds. The new guidance is effective for annual periods beginning after December 15, 2015, and interim periods within those annual periods. Early adoption is permitted. We do not expect a material impact to our consolidated financial statements due to the adoption of this guidance. In April 2015, the FASB issued guidance to simplify presentation of debt issuance costs. The standard requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The standard is effective for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years. Early adoption is permitted. We do not expect a material impact to our consolidated financial statements due to the adoption of this guidance. In April 2015, the FASB issued guidance that clarifies the circumstances under which a cloud computing customer would account for an arrangement as a license of internal-use software. The standard is effective for annual periods beginning after December 15, 2015, and interim periods within those fiscal years. Early adoption is permitted. We do not expect a material impact to our consolidated financial statements due to the adoption of this guidance. In May 2015, the FASB issued guidance that removes the requirement to categorize within the fair value hierarchy all investments for which fair value is measured using the net asset value per share practical expedient. The standard also removes the requirement to make certain disclosures for all investments that are eligible to be measured at fair value using the net asset value per share practical expedient. Rather, those disclosures are limited to investments for which the entity has elected to measure the fair value using that practical expedient. The standard is effective for fiscal years beginning after December 15, 2015, including interim periods within those fiscal years. Early adoption is permitted. We do not expect a material impact to our consolidated financial statements due to the adoption of this guidance. In July 2015, the FASB issued guidance to simplify the subsequent measurement of inventory. The standard requires most inventory to be measured at the lower of cost and net realizable value, thereby simplifying the current guidance under which inventory must be measured at the lower of cost or market (where market was defined as replacement cost, with a ceiling of net realizable value and floor of net realizable value less a normal profit margin). The standard is effective for fiscal years beginning after December 15, 2016, and interim periods within those fiscal years. Early application is permitted. We do not expect a material impact to our consolidated financial statements due to the adoption of this guidance. In August 2015, the FASB issued guidance to simplify presentation of debt issuance costs associated with line of credit arrangements. The standard clarifies the SEC's position on presenting and measuring debt issuance costs incurred in connection with line of credit arrangements as an asset and subsequently amortizing the deferred debt issuance costs ratably over the term of the line of credit arrangement. The standard is effective for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years. Early adoption is permitted. We do not expect a material impact to our consolidated financial statements due to the adoption of this guidance. In September 2015, the FASB issued guidance that requires that an acquirer recognize adjustments to provisional amounts that are identified during the measurement period in the reporting period in which the adjustment amounts are determined. Under the standard, if the initial accounting for a business combination is incomplete at the end of the reporting period in which the combination occurs, the acquirer would no longer be required to revise its comparative information for changes to the provisional amounts recognized as of the acquisition date during the measurement period. The standard is effective for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years. Early adoption is permitted. We adopted this guidance in the fourth quarter of 2015. We do not expect a material impact to our consolidated financial statements due to the adoption of this guidance. In November 2015, the FASB issued guidance that requires deferred income tax liabilities and assets to be classified as non-current in a classified balance sheet, and eliminates the prior guidance which required an entity to separate deferred tax liabilities and assets into a current amount and a non-current amount in a classified balance sheet. The standard is effective for annual reporting periods beginning after December 15, 2016, and interim periods within those annual periods. Early adoption is permitted. Additionally, the new guidance may be applied either prospectively to all deferred tax liabilities and assets or retrospectively to all periods presented. We have not yet selected an adoption method and are currently evaluating the impact of adopting this guidance on our consolidated financial statements. In January 2016, the FASB issued guidance that amends various aspects of the recognition, measurement, presentation, and disclosure for financial instruments. The standard generally requires companies to measure investments in other entities, except those accounted for under the equity method, at fair value and recognize any changes in fair value in net income. The standard is effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted for various provisions of the standard. We do not expect a material impact to our consolidated financial statements due to the adoption of this guidance. In February 2016, the FASB issued guidance that will require organizations that lease assets to recognize assets and liabilities for leases with lease terms of more than 12 months. 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. However, unlike current GAAP, which requires only capital leases to be recognized on the balance sheet, the new guidance will require both types of leases to be recognized on the balance sheet. The standard is effective for fiscal years beginning after December 15, 2018, 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. In March 2016, the FASB issued guidance that simplifies the accounting for taxes related to share-based compensation, including adjustments to how excess tax benefits and a company's payments for tax withholdings should be classified. The standard is effective for annual and interim periods beginning after December 31, 2016. Early adoption is permitted. We are evaluating the impact of adopting this guidance on our consolidated financial statements. Other amendments to GAAP in the U.S. 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. |
ACQUISITION OF ANITE (Notes) |
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Business Combination Disclosure [Text Block] | 3. ACQUISITION OF ANITE On August 13, 2015, we acquired all share capital of Anite for a cash price of approximately $558 million, net of $43 million of cash acquired. Anite was a U.K.-based global company with strong software expertise and a leading supplier of wireless test solutions. As a result of the acquisition, Anite has become a wholly-owned subsidiary of Keysight. Accordingly, the results of Anite are included in Keysight's consolidated financial statements from the date of the acquisition. There have been no revisions to the preliminary purchase price allocation during the three and six months ended April 30, 2016. As additional information becomes available, we may revise the preliminary purchase price allocation during the remainder of the measurement period (which will not exceed 12 months from the acquisition date). Any such revisions or changes are not expected to be material. In February 2016, we paid approximately $1 million related to the contingent consideration established during the preliminary purchase price allocation in connection with Anite's equity-settled share-based payment arrangements. Acquisition and integration costs directly related to the Anite acquisition totaled $4 million and $7 million for the three and six months ended April 30, 2016, respectively, and were recorded in selling, general and administrative expenses. The following represents pro forma operating results as if Anite had been included in the company's condensed consolidated statements of operations as of the beginning of fiscal 2014 (in millions, except per share amounts):
The unaudited pro forma financial information for the three and six months ended April 30, 2015 combines the historical results of Keysight and Anite for the three and six months ended April 30, 2015, assuming that the companies were combined as of November 1, 2013 and include business combination accounting effects from the acquisition including amortization charges from acquired intangible assets, the impact on cost of sales due to the respective estimated fair value adjustments to inventory, and acquisition-related transaction costs and tax-related effects. The pro forma information as presented above is for informational purposes only and is not indicative of the results of operations that would have been achieved if the acquisition had taken place at the beginning of fiscal 2014. |
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:
At April 30, 2016 and 2015, there was no share-based compensation capitalized within inventory. The expense for the three and six months ended April 30, 2016 includes $2 million and $3 million, respectively, related to special inaugural RSU awards granted during the three months ended January 31, 2015. The expense for the three and six months ended April 30, 2015 includes $1 million and $15 million, respectively, related to these special inaugural RSU grants. These awards will vest over three years from the date of grant. The following assumptions were used to estimate the fair value of employee stock options and LTP Program grants.
The fair value of employee stock option awards was estimated using the Black-Scholes option pricing model. Shares granted under the LTP Program were valued using a Monte Carlo simulation model. Both the Black-Scholes and Monte Carlo simulation fair value models require the use of highly subjective and complex assumptions, including the option’s expected life and the price volatility of the underlying stock. The estimated fair value of restricted stock awards is determined based on the market price of Keysight’s common stock on the date of grant. We did not grant any option awards for the three and six months ended April 30, 2016. For the six months ended April 30, 2015, we used the average historical volatility of eleven peer companies to estimate the volatility for our stock option awards. We considered our ability to find traded options of peer companies in the current market with similar terms and prices to our options. In estimating the expected life of our options, we considered the historical option exercise behavior of our executives, which we believe is representative of future behavior. |
INCOME TAXES |
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Income Tax Disclosure [Abstract] | |
INCOME TAXES | INCOME TAXES As of April 30, 2016, we continue to include a best estimate of the deferred tax liability for foreign unremitted earnings due to the Separation as zero. Excess foreign tax credits associated with unremitted earnings are not recorded as an asset as they do not represent a separate deferred asset until earnings are remitted. However, unremitted foreign taxes reduce deferred tax liabilities associated with outside basis differences related to the investment in a foreign subsidiary to the extent the credit reduces a deferred tax liability of the investment. We continue to have ongoing discussions with Agilent regarding the allocation of certain deferred tax liability balances related to foreign unremitted earnings in accordance with the Separation agreements. The company’s effective tax rate was a benefit of 1.1 percent and an expense of 11.0 percent for the three and six months ended April 30, 2016, respectively. Income tax recognized was a benefit of $1 million and expense of $19 million for the three and six months ended April 30, 2016, respectively. The effective tax rate for the three months ended April 30, 2016 was a benefit due to tax planning implemented during the quarter. The company's effective tax rate was 21.7 percent and 17.2 percent for the three and six months ended April 30, 2015, respectively. Income tax expense was $26 million and $34 million for the three and six months ended April 30, 2015, respectively. The income tax provision for the three and six months ended April 30, 2016 included a net discrete benefit of $3 million and $2 million, respectively. The income tax provision for the three and six months ended April 30, 2015 included a net discrete expense of $3 million and a net discrete benefit of $7 million, respectively. Keysight benefits from tax incentives in several jurisdictions, most significantly in Singapore, and several jurisdictions 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 impact of tax incentives decreased the income tax provision for the three and six months ended April 30, 2016 by $9 million and $17 million, respectively, resulting in a benefit to net income per share (diluted) of approximately $0.05 and $0.10 for the three and six months ended April 30, 2016, respectively. The Singapore tax incentive is due for renewal in fiscal 2024. For the majority of our entities, the open tax years for the IRS, state and most foreign audit authorities are from August 1, 2014, through the current tax year. For certain historical Agilent foreign entities that Keysight retained as part of the separation, the tax years generally remain open back to the year 2006. For certain entities acquired during 2015, the tax years also remain open back to the year 2006. 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. |
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, the tax benefits or shortfalls recorded to additional paid-in capital 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 and tax benefits or shortfalls collectively are assumed proceeds to be used to repurchase hypothetical shares. An increase in the fair market value of the company's common stock can result in a greater dilutive effect from potentially dilutive awards. 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 the effect would be anti-dilutive. For the three and six months ended April 30, 2016, 1.7 million options to purchase shares were excluded from the calculation of diluted earnings per share, respectively. In addition, we excluded stock options, ESPP shares, LTP Program and restricted stock awards, of which the combined exercise price, unamortized fair value and excess tax benefits or shortfalls collectively was greater than the average market price of our common stock because the effect would be anti-dilutive. For the three and six months ended April 30, 2016, we excluded 30,000 and 23,100 shares, respectively. |
INVENTORY |
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INVENTORY | INVENTORY
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GOODWILL AND OTHER INTANGIBLE ASSETS |
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GOODWILL AND OTHER INTANGIBLE ASSETS | GOODWILL AND OTHER INTANGIBLE ASSETS The following table presents goodwill balances and the movements for each of our reportable segments during the six months ended April 30, 2016:
The components of other intangible assets as of April 30, 2016 and October 31, 2015 are shown in the table below:
During the six months ended April 30, 2016, we recognized additions to goodwill and other intangible assets of $10 million and $6 million, respectively, based on our preliminary estimates of acquisition date fair values related to one acquisition. During the six months ended April 30, 2016, we recorded $4 million of foreign exchange translation impact to other intangible assets. Amortization of other intangible assets was $10 million and $22 million for the three and six months ended April 30, 2016, respectively. Amortization of other intangible assets was $2 million and $4 million for the three and six months ended April 30, 2015, respectively. Future amortization expense related to existing finite-lived purchased intangible assets is estimated to be $22 million for the remainder of 2016, $40 million for 2017, $37 million for 2018, $37 million for 2019, $36 million for 2020 and $42 million thereafter. |
FAIR VALUE MEASUREMENTS |
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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 April 30, 2016 and October 31, 2015 were as follows:
Our money market funds, trading securities, and available-for-sale investments are generally valued using quoted market prices and therefore are classified within Level 1 of the fair value hierarchy. 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. Our deferred compensation liability is classified as Level 2 because, although the values are not directly based on quoted market prices, the inputs used in the calculations are observable. Trading securities and deferred compensation liability are reported at fair value, with gains or losses resulting from changes in fair value recognized currently in net income. Investments designated as available-for-sale and 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 net income. |
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. Prior to the Capitalization, there were no derivatives contracts legally held by us and the below disclosures represent the activity pertaining to the contracts entered into by us subsequently. 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 fair value of the effective portion of the derivative instrument are recognized in accumulated other comprehensive income. Amounts associated with cash flow hedges are reclassified to cost of products in the condensed consolidated statement of operations when the forecasted transaction occurs. 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 to other income (expense), net in the current period. Changes in the fair value of the ineffective portion of derivative instruments are recognized in other income (expense), net in the condensed consolidated statement of operations in the current period. 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 other income (expense), net over the life of the option contract. Ineffectiveness in the three and six months ended April 30, 2016 and 2015 was not significant. 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. Changes in value of the derivative are recognized in other income (expense), net in the condensed consolidated statement of operations, in the current period, along with the offsetting foreign currency gain or loss on the underlying assets or liabilities. 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 April 30, 2016 was $9 million. The credit-risk-related contingent features underlying these agreements had not been triggered as of April 30, 2016. There were 123 foreign exchange forward contracts open as of April 30, 2016 that were designated as cash flow hedges. There were 79 foreign exchange forward contracts and zero foreign exchange option contract open as of April 30, 2016 that were not designated as hedging instruments. The aggregated notional amounts by currency and designation as of April 30, 2016 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 April 30, 2016 and October 31, 2015 were as follows:
The effect of derivative instruments for foreign exchange contracts designated as hedging instruments and not designated as hedging instruments in our condensed consolidated statement of operations were as follows:
The estimated amount of existing net loss at April 30, 2016 expected to be reclassified from other comprehensive income to cost of sales within the next twelve months is $2 million. |
RETIREMENT PLANS AND POST RETIREMENT PENSION PLANS |
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Defined Benefit Pension Plans and Defined Benefit Postretirement Plans Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
RETIREMENT PLANS AND POST RETIREMENT PENSION PLANS | RETIREMENT PLANS AND POST-RETIREMENT BENEFIT PLANS For the three and six months ended April 30, 2016 and 2015, our net pension and post-retirement benefit costs were comprised of the following:
We did not contribute to our U.S. Defined Benefit Plans and U.S. Post-Retirement Benefit Plan during the three and six months ended April 30, 2016 and 2015. We contributed $9 million and $19 million to our Non-U.S. Defined Benefit Plans during the three and six months ended April 30, 2016, respectively, and contributed $11 million and $25 million to our Non-U.S. Defined Benefit Plans during the three and six months ended April 30, 2015, respectively. During the remainder of 2016, we do not expect to contribute to our U.S. Defined Benefit Plans, and we expect to contribute $19 million to our Non-U.S. Defined Benefit Plans. Employees hired on or after August 1, 2015 are not eligible to participate in the U.S. Defined Benefit Plans or the U.S. Post-Retirement Benefit Plan. We provide matching contributions to these employees under the Keysight Technologies, Inc. 401(k) Plan up to a maximum of 6 percent of the employee's annual eligible compensation. |
WARRANTY, COMMITMENTS AND CONTINGENCIES |
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Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
WARRANTY, COMMITMENTS AND CONTINGENCIES | WARRANTY, COMMITMENTS AND CONTINGENCIES Standard Warranty Our standard warranty term for most of our products from the date of delivery is typically three years. We accrue for standard warranty costs based on historical trends in warranty charges as a percentage of net product shipments. 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 There were no material changes during the six months ended April 30, 2016 to the operating lease commitments reported in the company’s 2015 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 Short-Term Debt On September 15, 2014, we entered into a five year credit agreement, which provides for a $300 million unsecured credit facility that will expire on November 1, 2019. On July 21, 2015, the total amount available under the credit facility was increased to $450 million. The company may use amounts borrowed under the facility for general corporate purposes. As of April 30, 2016, we had no borrowings outstanding under the credit facility. We were in compliance with the covenants of the credit facility during the six months ended April 30, 2016. As a result of the Anite acquisition, we have an overdraft facility of £25 million that will expire on July 31, 2016. As of April 30, 2016, we had no borrowings outstanding under the facility. We were in compliance with the covenants of the credit facility during the six months ended April 30, 2016. Long-Term Debt The following table summarizes the components of our long-term debt:
The notes issued are unsecured and rank equally in right of payment with all of our other senior unsecured indebtedness. There have been no changes to the principal, maturity, interest rates and interest payment terms of the senior notes, detailed in the table above, during the six months ended April 30, 2016 as compared to the senior notes described in our Annual Report on Form 10-K for fiscal year ended October 31, 2015. In March 2016, we assumed approximately $1 million of long-term debt in connection with an acquisition. In May 2016, this debt was subsequently repaid in full. As of April 30, 2016 and October 31, 2015, we had $16 million and $19 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 $7 million and was below the carrying value by $8 million as of April 30, 2016 and October 31, 2015, respectively. |
STOCKHOLDERS' EQUITY |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Statement of Comprehensive Income [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
STOCKHOLDERS EQUITY | STOCKHOLDERS' EQUITY Stock Repurchase Program On February 18, 2016, the Board of Directors approved a stock repurchase program authorizing the purchase of up to $200 million of the company’s common stock. Under the 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. 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 six months ended April 30, 2016, we repurchased 1.6 million shares of common stock for $42 million. All such shares and related costs are held as treasury stock and accounted for at trade date using the cost method. Accumulated Other Comprehensive Loss Changes in accumulated other comprehensive loss by component and related tax effects for the three and six months ended April 30, 2016 and 2015 were as follows:
Reclassifications out of accumulated other comprehensive loss for the three and six months ended April 30, 2016 and 2015 were as follows:
An amount in parentheses indicates a reduction to income and an increase to the accumulated other comprehensive income. 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 11, "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 to the communications and electronics industries. We have two reportable operating segments, measurement solutions and customer support and services. The measurement solutions segment is primarily the hardware and associated software businesses serving the electronic design and test market. The customer support and services segment provides hardware repair and calibration services and facilitates the resale of used instrument equipment. The two operating segments were determined based primarily on how the chief operating decision maker views and evaluates our operations. Operating results are regularly reviewed by the chief operating decision maker to make decisions about resources to be allocated to the segment and to assess its performance. Other factors, including market separation and customer specific applications, go-to-market channels, products and services and manufacturing are considered in determining the formation of these operating segments. A description of our two reportable segments is as follows: Our measurement solutions business provides electronic design and test instruments and systems with related software and software design tools that are used in the design, development, manufacture, installation, deployment and operation of electronics equipment. We provide startup assistance, consulting, optimization and application support throughout the customer's product lifecycle. Our customer support and services business provides hardware repair and calibration services and facilitates the resale of used equipment. Our customer support and services business enables our customers to maximize the value from their electronic design and test equipment and strengthens customer loyalty. Providing these services assures a high level of instrument performance and availability, while minimizing the cost of ownership and downtime. A significant portion of the segments' expenses arise from shared services and infrastructure that we have historically provided to the segments in order to realize economies of scale and to efficiently use resources. These expenses, collectively called corporate charges, include 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 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. The profitability of each of the segments is measured after excluding, among other things, charges related to the amortization of intangibles, the impact of restructuring and related costs, asset impairments, acquisition and integration costs, share-based compensation, separation and related costs, acquisition related fair value adjustments, interest income and interest expense as noted in the reconciliations below.
The following table reconciles reportable 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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ACQUISITION OF ANITE (Tables) |
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Apr. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Acquisition [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Business Acquisitions, by Acquisition [Table Text Block] | The following represents pro forma operating results as if Anite had been included in the company's condensed consolidated statements of operations as of the beginning of fiscal 2014 (in millions, except per share amounts):
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SHARE-BASED COMPENSATION (Tables) |
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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 employee stock options and LTP Program grants.
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NET INCOME PER SHARE (Tables) |
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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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INVENTORY (Tables) |
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Apr. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventory, Net [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
INVENTORY |
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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 | The following table presents goodwill balances and the movements for each of our reportable segments during the six months ended April 30, 2016:
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Components of other intangibles during the period | The components of other intangible assets as of April 30, 2016 and October 31, 2015 are shown in the table below:
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FAIR VALUE MEASUREMENTS (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Apr. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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 April 30, 2016 and October 31, 2015 were as follows:
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DERIVATIVES (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Apr. 30, 2016 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Aggregated notional amounts by currency and designation | The aggregated notional amounts by currency and designation as of April 30, 2016 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 April 30, 2016 and October 31, 2015 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 not designated as hedging instruments in our condensed consolidated statement of operations were as follows:
|
RETIREMENT PLANS AND POST RETIREMENT PENSION PLANS (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Apr. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Defined Benefit Pension Plans and Defined Benefit Postretirement Plans Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of net pension and post-retirement benefit costs | For the three and six months ended April 30, 2016 and 2015, our net pension and post-retirement benefit costs were comprised of the following:
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WARRANTY, COMMITMENTS AND CONTINGENCIES (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Apr. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Apr. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Apr. 30, 2016 |
Apr. 30, 2015 |
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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 and six months ended April 30, 2016 and 2015 were as follows:
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Reclassification out of Accumulated Other Comprehensive Income | Reclassifications out of accumulated other comprehensive loss for the three and six months ended April 30, 2016 and 2015 were as follows:
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SEGMENT INFORMATION (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Profitability and Segment Assets |
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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Reconciliation of segment results to total enterprise results | The following table reconciles reportable segments’ income from operations to our total enterprise income before taxes:
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OVERVIEW, BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - Common Stock [Member] |
Oct. 22, 2014
shares
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---|---|
Spin off from Agilent [Line Items] | |
Sale of Stock, Number of Shares Issued in Transaction, Per Two Shares Held | 1 |
Stock Issued During Period, Shares, New Issues | 167,000,000 |
OVERVIEW, BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Land Sale (Details) $ in Millions |
6 Months Ended |
---|---|
Apr. 30, 2016
USD ($)
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Retail Land Sales, Installment Method, Gross Profit, Deferred [Abstract] | |
Date of Land Sale Agreeement | Apr. 30, 2014 |
Retail Land Sales, Installment Method, Sales Value | $ 34 |
Retail Land Sales, Installment Method, Gross Profit | $ 10 |
OVERVIEW, BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Other Operating Expense (Income), Net (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended |
---|---|---|
Apr. 30, 2015 |
Apr. 30, 2015 |
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Accounting Policies [Abstract] | ||
Re-class from Other expense (income),net to Other operating expense (income), net | $ 5 | $ 11 |
OVERVIEW, BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Restricted Cash (Details) |
Apr. 30, 2016
USD ($)
|
---|---|
Restricted Cash and Cash Equivalents Items [Line Items] | |
Restricted Cash and Cash Equivalents, Noncurrent | $ 1,500,000.0 |
OVERVIEW, BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Re-classification (Details) $ in Millions |
6 Months Ended |
---|---|
Apr. 30, 2016
USD ($)
| |
Supplemental Income Statement Elements [Abstract] | |
Product Revenue that was previously classified as Services and Other Revenue | $ 5 |
Cost of Products that was previously classified as Cost of Services and Others | $ 7 |
ACQUISITION OF ANITE Pro Forma operating results - if acquisition was connsumated (Details) - USD ($) $ / shares in Units, $ in Millions |
3 Months Ended | 6 Months Ended |
---|---|---|
Apr. 30, 2015 |
Apr. 30, 2015 |
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Business Acquisition [Line Items] | ||
Business Acquisition, Pro Forma Revenue | $ 791 | $ 1,543 |
Business Acquisition, Pro Forma Net Income (Loss) | $ 101 | $ 170 |
Business Acquisition, Pro Forma Earnings Per Share, Basic | $ 0.60 | $ 1.01 |
Business Acquisition, Pro Forma Earnings Per Share, Diluted | $ 0.59 | $ 0.99 |
ACQUISITION OF ANITE (Narrative) (Details) - USD ($) $ in Millions |
1 Months Ended | 3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|---|
Aug. 13, 2015 |
Feb. 29, 2016 |
Apr. 30, 2016 |
Apr. 30, 2016 |
Aug. 31, 2015 |
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Business Acquisition [Line Items] | |||||
Business Acquisition, Percentage of Voting Interests Acquired | 100.00% | ||||
Business Acquisition, Name of Acquired Entity | Anite | ||||
Business Combination, Contingent Consideration Arrangements, Change in Amount of Contingent Consideration, Liability | $ 1 | ||||
Anite [Member] | |||||
Business Acquisition [Line Items] | |||||
Business Acquisition, Effective Date of Acquisition | Aug. 13, 2015 | ||||
Business Acquisition, Description of Acquired Entity | Anite was a U.K.-based global company with strong software expertise and a leading supplier of wireless test solutions. | ||||
Payments to Acquire Business, Net of Cash Acquired | $ 558 | ||||
Cash Acquired from Acquisition | $ 43 | ||||
Anite [Member] | Selling, general and administrative | |||||
Business Acquisition [Line Items] | |||||
Business Combination, Integration Related Costs | $ 4 | $ 7 |
INCOME TAXES (Details) - USD ($) $ / shares in Units, $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Apr. 30, 2016 |
Apr. 30, 2015 |
Apr. 30, 2016 |
Apr. 30, 2015 |
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Income Tax Examination [Line Items] | ||||
Income Tax Holiday, Aggregate Dollar Amount | $ 9 | $ 17 | ||
Income Tax Expense (Benefit) | $ (1) | $ 26 | $ 19 | $ 34 |
Income Tax Holiday, Income Tax Benefits Per Share | $ 0.05 | $ 0.10 | ||
Foreign Tax Authority [Member] | ||||
Income Tax Examination [Line Items] | ||||
Income Tax Holiday, Description | Keysight benefits from tax incentives in several jurisdictions, most significantly in Singapore, and several jurisdictions 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. | |||
Income Tax Holiday, Termination Date | The Singapore tax incentive is due for renewal in fiscal 2024. | |||
Internal Revenue Service (IRS) | ||||
Income Tax Examination [Line Items] | ||||
Effective Income Tax Rate Reconciliation, Percent | (1.10%) | 21.70% | 11.00% | 17.20% |
Net Discrete Tax expense (Benefit) | $ (3) | $ 3 | $ (2) | $ (7) |
Income Tax Expense (Benefit) | $ (1) | $ 26 | $ 19 | $ 34 |
Majority of company's entities [Member] | ||||
Income Tax Examination [Line Items] | ||||
Open Tax Year | 2014 | |||
Entities retained as part of separation [Member] | ||||
Income Tax Examination [Line Items] | ||||
Open Tax Year | 2006 | |||
Entities acquired [Member] | ||||
Income Tax Examination [Line Items] | ||||
Open Tax Year | 2006 |
NET INCOME PER SHARE NET INCOME PER SHARE - COMPUTATIONS (Details) - USD ($) shares in Millions, $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Apr. 30, 2016 |
Apr. 30, 2015 |
Apr. 30, 2016 |
Apr. 30, 2015 |
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Numerator: | ||||
Net Income | $ 88 | $ 96 | $ 152 | $ 166 |
Denominators: | ||||
Basic weighted-average shares (in shares) | 170 | 169 | 171 | 168 |
Potentially dilutive common shares equivalents - stock options and other employee stock plans (in shares) | 2 | 2 | 1 | 3 |
Diluted weighted average shares (in shares) | 172 | 171 | 172 | 171 |
NET INCOME PER SHARE (Details) - shares |
3 Months Ended | 6 Months Ended |
---|---|---|
Apr. 30, 2016 |
Apr. 30, 2016 |
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Stock Options [Member] | ||
Antidilutive Securities Excluded from EPS Computation | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share, Number | 1,700,000 | 1,700,000 |
Stock Options, ESPP, LTPP and restricted stock combined exercise price, unamortized fair value, excess tax benefits or shortfalls greater than average market price [Member] [Member] | ||
Antidilutive Securities Excluded from EPS Computation | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share, Number | 30,000 | 23,100 |
INVENTORY (Details) - USD ($) $ in Millions |
Apr. 30, 2016 |
Oct. 31, 2015 |
---|---|---|
Inventory, Net [Abstract] | ||
Finished goods | $ 226 | $ 235 |
Purchased parts and fabricated assemblies | 249 | 252 |
Inventory | $ 475 | $ 487 |
GOODWILL AND OTHER INTANGIBLE ASSETS Goodwill Roll forward (Details) $ in Millions |
6 Months Ended |
---|---|
Apr. 30, 2016
USD ($)
| |
Goodwill [Roll Forward] | |
Goodwill beginning balance | $ 700 |
Foreign currency translation impact | 21 |
Additions to goodwill | 10 |
Goodwill ending balance | 731 |
Measurement Solutions | |
Goodwill [Roll Forward] | |
Goodwill beginning balance | 637 |
Foreign currency translation impact | 19 |
Additions to goodwill | 10 |
Goodwill ending balance | 666 |
Customer Support and Services | |
Goodwill [Roll Forward] | |
Goodwill beginning balance | 63 |
Foreign currency translation impact | 2 |
Additions to goodwill | 0 |
Goodwill ending balance | $ 65 |
GOODWILL AND OTHER INTANGIBLE ASSETS GOODWILL AND OTHER INTANGIBLE ASSETS Textuals (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Apr. 30, 2016 |
Apr. 30, 2015 |
Apr. 30, 2016 |
Apr. 30, 2015 |
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Goodwill and Intangible Assets Disclosure [Abstract] | ||||
Additions to goodwill | $ 10 | |||
Additions to other intangible assets | 6 | |||
Impact to other intangibles due to Translation | 4 | |||
Amortization of intangible assets | $ 10 | $ 2 | $ 22 | $ 4 |
GOODWILL AND OTHER INTANGIBLE ASSETS Finite-Lived Assets Future Amortization Expense (Details) $ in Millions |
Apr. 30, 2016
USD ($)
|
---|---|
Finite-Lived Intangible Assets, Net, Amortization Expense, Fiscal Year Maturity [Abstract] | |
Remainder of 2016 | $ 22 |
2017 | 40 |
2018 | 37 |
2019 | 37 |
2020 | 36 |
Thereafter | $ 42 |
DERIVATIVES, Effect of derivative instruments on Consolidated Statement of Operations (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Apr. 30, 2016 |
Apr. 30, 2015 |
Apr. 30, 2016 |
Apr. 30, 2015 |
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Cash Flow Hedging | Cost of products and services | ||||
Derivative [Line Items] | ||||
Cash Flow Hedge (Gain) Loss to be Reclassified within Twelve Months | $ 2 | |||
Designated as Hedging Instruments | Cash Flow Hedging | Foreign Exchange Contracts | Accumulated Other Comprehensive Income (Loss) | ||||
Derivative [Line Items] | ||||
Gain (loss) recognized in accumulated other comprehensive income | (3) | $ 3 | $ (1) | $ (2) |
Designated as Hedging Instruments | Cash Flow Hedging | Foreign Exchange Contracts | Cost of products and services | ||||
Derivative [Line Items] | ||||
Gain (loss) reclassified from accumulated other comprehensive income into cost of sales | (3) | 1 | (7) | 2 |
Not Designated as Hedging Instruments | Other (income) expense, net | ||||
Derivative [Line Items] | ||||
Gain (loss) recognized in other income (expense),net | $ 0 | $ 2 | $ (2) | $ (4) |
RETIREMENT PLANS AND POST RETIREMENT PENSION PLANS (Details) (Textual) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Apr. 30, 2016 |
Apr. 30, 2015 |
Apr. 30, 2016 |
Apr. 30, 2015 |
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U.S. Defined Benefit Plans | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Estimated future employer contributions in remainder of current fiscal year | $ 0 | |||
Non-U.S. Defined Benefit Plans | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Contributions by employer | $ 9 | $ 11 | 19 | $ 25 |
Estimated future employer contributions in remainder of current fiscal year | $ 19 |
WARRANTIES AND CONTINGENCIES (Details) - USD ($) $ in Millions |
6 Months Ended | |
---|---|---|
Apr. 30, 2016 |
Apr. 30, 2015 |
|
Movement in Standard Product Warranty Accrual [Roll Forward] | ||
Beginning balance at beginning of period | $ 53 | $ 51 |
Accruals for warranties including change in estimate | 14 | 17 |
Settlements made during the period | (16) | (16) |
Ending balance at end of period | 51 | 52 |
Standard Product Warranty Disclosure [Abstract] | ||
Accruals for warranties due within one year | 33 | 39 |
Accruals for warranties due after one year | 18 | 13 |
Ending balance at end of period | $ 51 | $ 52 |
DEBT Long Term Debt (Details) - USD ($) $ in Millions |
1 Months Ended | 6 Months Ended | 12 Months Ended |
---|---|---|---|
May. 31, 2016 |
Apr. 30, 2016 |
Oct. 31, 2015 |
|
Debt Instrument [Line Items] | |||
Unsecured Long-term Debt, Noncurrent | $ 1,100 | $ 1,099 | |
Long Term Debt Fair Value below Carrying Value | (7) | 8 | |
3.30% Senior Notes due 2019 | |||
Debt Instrument [Line Items] | |||
Unsecured Long-term Debt, Noncurrent | 499 | 499 | |
4.55% Senior Notes due 2024 | |||
Debt Instrument [Line Items] | |||
Unsecured Long-term Debt, Noncurrent | 600 | 600 | |
Other Debt Obligations [Member] | |||
Debt Instrument [Line Items] | |||
Unsecured Long-term Debt, Noncurrent | $ 1 | $ 0 | |
Subsequent Event [Member] | Other Debt Obligations [Member] | |||
Debt Instrument [Line Items] | |||
Other Long-term Debt from acquisition | $ 1 |
STOCKHOLDERS' EQUITY Stock Repurchase (Details) - USD ($) shares in Thousands, $ in Millions |
6 Months Ended | |
---|---|---|
Apr. 30, 2016 |
Feb. 18, 2016 |
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Treasury Stock Transactions, Excluding Value of Shares Reissued [Abstract] | ||
Stock Repurchase Program, Authorized Amount | $ 200 | |
Treasury Stock, Value, Acquired, Cost Method | $ 42 | |
Treasury Stock, Shares, Acquired | 1,600 |
SEGMENT INFORMATION Reconciliation of Reportable Results (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Apr. 30, 2016 |
Apr. 30, 2015 |
Apr. 30, 2016 |
Apr. 30, 2015 |
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Reconciliation of Operating Profit (Loss) from Segments to Consolidated [Abstract] | ||||
Total reportable segments' income from operations | $ 135 | $ 154 | $ 264 | $ 278 |
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost | (13) | (13) | (29) | (42) |
Asset Impairment Charges | 0 | (2) | 0 | (2) |
Business Combination Acquisition Related Fair Value Adjustments | (4) | 0 | (9) | 0 |
Amortization of Intangibles and Other | (11) | (2) | (22) | (4) |
Acquisition and integration costs | (5) | 0 | (5) | 0 |
Separation and related costs | (5) | (5) | (10) | (12) |
Segment Reporting Other reconciling items for operating profit loss segment to consolidated | (2) | 1 | 4 | 0 |
Investment Income, Nonoperating | 0 | 0 | 1 | 0 |
Interest expense | (12) | (11) | (24) | (23) |
Other Nonoperating Gains (Losses) | 4 | 0 | 1 | 5 |
Income before taxes, as reported | $ 87 | $ 122 | $ 171 | $ 200 |
SEGMENT INFORMATION Segment Assets (Details) - USD ($) $ in Millions |
Apr. 30, 2016 |
Oct. 31, 2015 |
---|---|---|
Segment Reporting Information [Line Items] | ||
Assets | $ 3,655 | $ 3,508 |
Measurement Solutions | ||
Segment Reporting Information [Line Items] | ||
Assets | 2,568 | 2,531 |
Customer Support and Services | ||
Segment Reporting Information [Line Items] | ||
Assets | 267 | 265 |
Total | ||
Segment Reporting Information [Line Items] | ||
Assets | $ 2,835 | $ 2,796 |