(State or other jurisdiction | (Commission | (IRS Employer | ||
of incorporation) | File Number) | Identification No.) |
(Address of principal executive offices) | (Zip Code) |
Title of each class | Trading symbol | Name on each exchange on which registered |
Exhibit No. | Description | ||
101 | Cover Page Interactive Data File - the cover page XBRL tags are embedded within the Inline XBRL document. | ||
104 | The cover page from this Current Report on Form 8-K, formatted as Inline XBRL. |
KEYSIGHT TECHNOLOGIES, INC. | ||
By: | /s/ Jeffrey K. Li | |
Name: | Jeffrey K. Li | |
Title: | Senior Vice President, General Counsel and Secretary | |
Date: August 21, 2019 |
Exhibit No. | Description | ||
101 | Cover Page Interactive Data File - the cover page XBRL tags are embedded within the Inline XBRL document. | ||
104 | The cover page from this Current Report on Form 8-K, formatted as Inline XBRL. |
• | GAAP revenue grew 8 percent to reach $1,087 million, when compared with $1,004 million last year. |
• | Non-GAAP revenue grew 8 percent to reach $1,088 million. Non-GAAP core revenue, which also excludes the impact of foreign currency changes and revenue associated with businesses acquired or divested within the last twelve months, increased 9 percent. |
• | GAAP net income was $159 million, or $0.83 per share, compared with GAAP net income of $121 million, or $0.63 per share, in the third quarter of 2018. This represents 32 percent year-over-year growth in GAAP earnings per diluted share. |
• | Non-GAAP net income was $239 million, or $1.25 per share, compared with $170 million, or $0.89 per share in the third quarter of 2018. This represents 41 percent year-over-year growth in non-GAAP earnings per diluted share. |
• | As of July 31, 2019, cash and cash equivalents totaled $1,394 million. |
• | Communications Solutions Group (CSG) |
• | Electronic Industrial Solutions Group (EISG) |
• | Ixia Solutions Group (ISG) |
• | Non-GAAP Revenue |
• | Non-GAAP Core Revenue |
• | Non-GAAP Net Income |
• | Non-GAAP Net Income per share |
KEYSIGHT TECHNOLOGIES, INC. | |||||||||
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS | |||||||||
(In millions, except per share amounts) | |||||||||
(Unaudited) | |||||||||
PRELIMINARY | |||||||||
Three months ended | |||||||||
July 31, | Percent | ||||||||
2019 | 2018(a) | Inc/(Dec) | |||||||
Orders | $ | 1,110 | $ | 1,007 | 10% | ||||
Net revenue | $ | 1,087 | $ | 1,004 | 8% | ||||
Costs and expenses: | |||||||||
Cost of products and services | 444 | 442 | — | ||||||
Research and development | 168 | 154 | 9% | ||||||
Selling, general and administrative | 281 | 294 | (4)% | ||||||
Other operating expense (income), net | (3 | ) | (3 | ) | — | ||||
Total costs and expenses | 890 | 887 | — | ||||||
Income from operations | 197 | 117 | 69% | ||||||
Interest income | 7 | 3 | 115% | ||||||
Interest expense | (20 | ) | (20 | ) | 1% | ||||
Other income (expense), net | 15 | 13 | 23% | ||||||
Income before taxes | 199 | 113 | 77% | ||||||
Provision (benefit) for income taxes | 40 | (8 | ) | — | |||||
Net income | $ | 159 | $ | 121 | 32% | ||||
Net income per share: | |||||||||
Basic | $ | 0.85 | $ | 0.64 | |||||
Diluted | $ | 0.83 | $ | 0.63 | |||||
Weighted average shares used in computing net income per share: | |||||||||
Basic | 188 | 188 | |||||||
Diluted | 191 | 191 |
KEYSIGHT TECHNOLOGIES, INC. | |||||||||
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS | |||||||||
(In millions, except per share amounts) | |||||||||
(Unaudited) | |||||||||
PRELIMINARY | |||||||||
Nine months ended | |||||||||
July 31, | Percent | ||||||||
2019 | 2018(a) | Inc/(Dec) | |||||||
Orders | $ | 3,247 | $ | 2,958 | 10% | ||||
Net revenue | $ | 3,183 | $ | 2,831 | 12% | ||||
Costs and expenses: | |||||||||
Cost of products and services | 1,314 | 1,305 | 1% | ||||||
Research and development | 512 | 464 | 10% | ||||||
Selling, general and administrative | 869 | 894 | (3)% | ||||||
Other operating expense (income), net | (15 | ) | (18 | ) | (13)% | ||||
Total costs and expenses | 2,680 | 2,645 | 1% | ||||||
Income from operations | 503 | 186 | 170% | ||||||
Interest income | 17 | 8 | 100% | ||||||
Interest expense | (60 | ) | (63 | ) | (4)% | ||||
Other income (expense), net | 52 | 42 | 27% | ||||||
Income before taxes | 512 | 173 | 196% | ||||||
Provision (benefit) for income taxes | 86 | (106 | ) | — | |||||
Net income | $ | 426 | $ | 279 | 53% | ||||
Net income per share: | |||||||||
Basic | $ | 2.27 | $ | 1.49 | |||||
Diluted | $ | 2.23 | $ | 1.46 | |||||
Weighted average shares used in computing net income per share: | |||||||||
Basic | 188 | 187 | |||||||
Diluted | 191 | 191 | |||||||
KEYSIGHT TECHNOLOGIES, INC. | |||||||
CONDENSED CONSOLIDATED BALANCE SHEET | |||||||
(In millions, except par value and share amounts) | |||||||
PRELIMINARY | |||||||
July 31, | October 31, | ||||||
2019 | 2018 | ||||||
(unaudited) | |||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 1,394 | $ | 913 | |||
Accounts receivable, net | 618 | 624 | |||||
Inventory | 696 | 619 | |||||
Other current assets | 227 | 222 | |||||
Total current assets | 2,935 | 2,378 | |||||
Property, plant and equipment, net | 568 | 555 | |||||
Goodwill | 1,209 | 1,171 | |||||
Other intangible assets, net | 546 | 645 | |||||
Long-term investments | 46 | 46 | |||||
Long-term deferred tax assets | 703 | 750 | |||||
Other assets | 341 | 279 | |||||
Total assets | $ | 6,348 | $ | 5,824 | |||
LIABILITIES AND EQUITY | |||||||
Current liabilities: | |||||||
Short-term debt | $ | 500 | $ | 499 | |||
Accounts payable | 247 | 242 | |||||
Employee compensation and benefits | 223 | 276 | |||||
Deferred revenue | 324 | 334 | |||||
Income and other taxes payable | 48 | 42 | |||||
Other accrued liabilities | 90 | 69 | |||||
Total current liabilities | 1,432 | 1,462 | |||||
Long-term debt | 1,292 | 1,291 | |||||
Retirement and post-retirement benefits | 212 | 224 | |||||
Long-term deferred revenue | 177 | 127 | |||||
Other long-term liabilities | 297 | 287 | |||||
Total liabilities | 3,410 | 3,391 | |||||
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; 194 million shares at July 31, 2019, | |||||||
and 191 million shares at October 31, 2018, issued | 2 | 2 | |||||
Treasury stock at cost; 6.2 million shares at July 31, 2019 and | |||||||
4.4 million shares at October 31, 2018 | (312 | ) | (182 | ) | |||
Additional paid-in-capital | 1,994 | 1,889 | |||||
Retained earnings | 1,714 | 1,212 | |||||
Accumulated other comprehensive loss | (460 | ) | (488 | ) | |||
Total stockholders' equity | 2,938 | 2,433 | |||||
Total liabilities and equity | $ | 6,348 | $ | 5,824 |
KEYSIGHT TECHNOLOGIES, INC. | |||||||
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS | |||||||
(In millions) | |||||||
(unaudited) | |||||||
PRELIMINARY | |||||||
Nine months ended | |||||||
July 31, | |||||||
2019 | 2018 | ||||||
Cash flows from operating activities: | |||||||
Net income | $ | 426 | $ | 279 | |||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Depreciation | 72 | 78 | |||||
Amortization | 157 | 155 | |||||
Share-based compensation | 66 | 48 | |||||
Deferred tax expense (benefit) | 14 | (227 | ) | ||||
Excess and obsolete inventory-related charges | 20 | 20 | |||||
Gain on divestiture | (1 | ) | (8 | ) | |||
Other non-cash expenses (income), net | (4 | ) | 9 | ||||
Changes in assets and liabilities: | |||||||
Accounts receivable | 25 | (55 | ) | ||||
Inventory | (78 | ) | (43 | ) | |||
Accounts payable | 10 | 13 | |||||
Employee compensation and benefits | (55 | ) | (2 | ) | |||
Deferred revenue | 103 | 65 | |||||
Income taxes payable | (11 | ) | 96 | ||||
Retirement and post-retirement benefits | (33 | ) | (116 | ) | |||
Other assets and liabilities | 24 | 8 | |||||
Net cash provided by operating activities(a) | 735 | 320 | |||||
Cash flows from investing activities: | |||||||
Investments in property, plant and equipment | (90 | ) | (98 | ) | |||
Acquisition of businesses and intangible assets, net of cash acquired | (90 | ) | (5 | ) | |||
Proceeds from divestiture | 2 | 12 | |||||
Proceeds from the sale of investments | 7 | — | |||||
Other investing activities | 2 | — | |||||
Net cash used in investing activities | (169 | ) | (91 | ) | |||
Cash flows from financing activities: | |||||||
Proceeds from issuance of common stock under employee stock plans | 65 | 62 | |||||
Payment of taxes related to net share settlement of equity awards | (26 | ) | (18 | ) | |||
Payment of acquisition-related contingent consideration | — | (6 | ) | ||||
Proceeds from credit facility | — | 40 | |||||
Repayment of debt and credit facility | — | (300 | ) | ||||
Treasury stock repurchases | (130 | ) | (80 | ) | |||
Net cash used in financing activities | (91 | ) | (302 | ) | |||
Effect of exchange rate movements | 4 | (3 | ) | ||||
Net increase (decrease) in cash, cash equivalents and restricted cash | 479 | (76 | ) | ||||
Cash, cash equivalents and restricted cash at beginning of period | 917 | 820 | |||||
Cash, cash equivalents and restricted cash at end of period | $ | 1,396 | $ | 744 | |||
(a) Cash payments included in operating activities: | |||||||
Income tax payments, net | $ | (78 | ) | $ | (22 | ) | |
Interest payment on debt | $ | (38 | ) | $ | (41 | ) |
KEYSIGHT TECHNOLOGIES, INC. | |||||||||||||||||
RECONCILIATION OF REVENUE GUIDANCE AND NON GAAP CORE REVENUE | |||||||||||||||||
(In millions) | |||||||||||||||||
(Unaudited) | |||||||||||||||||
PRELIMINARY | |||||||||||||||||
Q4'19 Guidance | Year-over-Year compare | ||||||||||||||||
Low end | High end | Q3'19 | Q3'18 | Percent Inc/(Dec) | |||||||||||||
GAAP Revenue | $ | 1,078 | $ | 1,098 | $ | 1,087 | $ | 1,004 | 8% | ||||||||
Amortization of acquisition-related balances | 2 | 2 | 1 | 4 | |||||||||||||
Non-GAAP Revenue | $ | 1,080 | $ | 1,100 | $ | 1,088 | $ | 1,008 | 8% | ||||||||
Less: Revenue from acquisitions or divestitures included in segment results | (8 | ) | (6 | ) | |||||||||||||
Currency impacts | 8 | — | |||||||||||||||
Non-GAAP Core Revenue | $ | 1,088 | $ | 1,002 | 9% |
KEYSIGHT TECHNOLOGIES, INC. | |||||||||
SEGMENT RESULTS INFORMATION | |||||||||
(In millions, except where noted) | |||||||||
(Unaudited) | |||||||||
PRELIMINARY | |||||||||
Communications Solutions Group | YoY | ||||||||
Q3'19 | Q3'18 | % Chg | |||||||
Revenue | $ | 683 | $ | 604 | 13% | ||||
Gross Margin, % | 62.8 | % | 58.1 | % | |||||
Income from Operations | $ | 190 | $ | 120 | |||||
Operating Margin, % | 28 | % | 20 | % | |||||
Electronic Industrial Solutions Group | YoY | ||||||||
Q3'19 | Q3'18 | % Chg | |||||||
Revenue | $ | 295 | $ | 285 | 3% | ||||
Gross Margin, % | 61.5 | % | 60.9 | % | |||||
Income from Operations | $ | 83 | $ | 75 | |||||
Operating Margin, % | 28 | % | 26 | % | |||||
Ixia Solutions Group | YoY | ||||||||
Q3'19 | Q3'18 | % Chg | |||||||
Revenue | $ | 110 | $ | 119 | (7)% | ||||
Gross Margin, % | 72.3 | % | 75.5 | % | |||||
Income from Operations | $ | 2 | $ | 9 | |||||
Operating Margin, % | 1 | % | 7 | % |
KEYSIGHT TECHNOLOGIES, INC. | |||||||||||||||||||||||||||
NON-GAAP NET INCOME AND DILUTED EPS RECONCILIATIONS | |||||||||||||||||||||||||||
(In millions, except per share amounts) | |||||||||||||||||||||||||||
(Unaudited) | |||||||||||||||||||||||||||
PRELIMINARY | |||||||||||||||||||||||||||
Three months ended | Nine months ended | ||||||||||||||||||||||||||
July 31, | July 31, | ||||||||||||||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||||||||||||||
Net Income | Diluted EPS | Net Income | Diluted EPS | Net Income | Diluted EPS | Net Income | Diluted EPS | ||||||||||||||||||||
GAAP Net income | $ | 159 | $ | 0.83 | $ | 121 | $ | 0.63 | $ | 426 | $ | 2.23 | $ | 279 | $ | 1.46 | |||||||||||
Non-GAAP adjustments: | |||||||||||||||||||||||||||
Amortization of acquisition-related balances | 56 | 0.30 | 56 | 0.30 | 164 | 0.86 | 210 | 1.10 | |||||||||||||||||||
Share-based compensation | 16 | 0.08 | 14 | 0.07 | 66 | 0.35 | 48 | 0.25 | |||||||||||||||||||
Acquisition and integration costs | 3 | 0.02 | 6 | 0.03 | 6 | 0.03 | 42 | 0.22 | |||||||||||||||||||
Northern California wildfire-related costs | — | — | — | — | — | — | 7 | 0.04 | |||||||||||||||||||
Restructuring and related costs | 1 | 0.01 | 3 | 0.02 | 7 | 0.03 | 16 | 0.09 | |||||||||||||||||||
Other | (3 | ) | (0.03 | ) | 8 | 0.04 | (18 | ) | (0.09 | ) | 4 | 0.02 | |||||||||||||||
Adjustment for taxes (a) | 7 | 0.04 | (38 | ) | (0.20 | ) | (3 | ) | (0.01 | ) | (181 | ) | (0.95 | ) | |||||||||||||
Non-GAAP Net income | $ | 239 | $ | 1.25 | $ | 170 | $ | 0.89 | $ | 648 | $ | 3.40 | $ | 425 | $ | 2.23 | |||||||||||
Weighted average shares outstanding - diluted | 191 | 191 | 191 | 191 |
• | Acquisition-related Items: We exclude the impact of certain items recorded in connection with business combinations from our non-GAAP financial measures that are either non-cash or not normal, recurring operating expenses due to their nature, variability of amounts and lack of predictability as to occurrence or timing. These amounts may include non-cash items such as the amortization of acquired intangible assets and amortization of items associated with fair value purchase accounting adjustments, including recognition of acquired deferred revenue (see Non-GAAP Revenue above). We also exclude other acquisition and integration costs associated with business acquisitions that are not normal recurring operating expenses, including amortization of amounts paid to redeem acquires’ unvested stock-based compensation awards, and legal, accounting and due diligence costs. We exclude these charges to facilitate a more meaningful evaluation of our current operating performance and comparisons to our past operating performance. |
• | Share-based Compensation Expense: We exclude share-based compensation expense from our non-GAAP financial measures because share-based compensation expense can vary significantly from period to period based on the company’s share price, as well as the timing, size and nature of equity awards granted. Management believes the exclusion of this expense facilitates the ability of investors to compare the company’s operating results with those of other companies, many of which also exclude share-based compensation expense in determining their non-GAAP financial measures. |
• | Restructuring and Related Costs: We exclude incremental expenses associated with restructuring initiatives, usually aimed at material changes in the business or cost structure. Such costs may include employee separation costs, asset impairments, facility-related costs, contract termination fees, and costs to move operations from one location to another. These activities can vary significantly from period to period based on the timing, size and nature of restructuring plans; therefore, we do not consider such costs to be normal, recurring operating expenses. We believe that these costs do not reflect expected future operating expenses and do not contribute to a meaningful evaluation of the company’s current operating performance or comparisons to our operating performance in other periods. |
• | Northern California wildfire-related costs and Other Items: We exclude certain other significant income or expense items that may occur occasionally and are not normal, recurring, cash operating, from our non-GAAP financial measures. Such items are evaluated on an individual basis based on both quantitative and qualitative factors and generally represent items that we would not anticipate occurring as part of our normal business on a regular basis. While not all-inclusive, examples of certain other significant items excluded from non-GAAP financial measures would include net unrealized gains on equity investments still held, and significant non recurring events like goodwill impairment charges, realized gains or losses associated with our employee benefit plans, costs related to unusual disaster like Northern California wildfires, gain on sale of assets and small divestitures, separation and related costs, etc. |
• | Estimated Tax Rate: We utilize a consistent methodology for long-term projected non-GAAP tax rate. When projecting this long-term rate, we exclude any tax benefits or expenses that are not directly related to ongoing operations and which are either isolated or cannot be expected to occur again with any regularity or predictability. Additionally, we evaluate our current long-term projections, current tax structure and other factors, such as existing tax positions in various jurisdictions and key tax holidays in major jurisdictions where Keysight operates. This tax rate could change in the future for a variety of reasons, including but not limited to significant changes in geographic earnings mix including acquisition activity, or fundamental tax law changes in major jurisdictions where Keysight operates. The above reasons also limit our ability to reasonably estimate the future GAAP tax rate and provide a reconciliation of the expected non-GAAP earnings per share for the fourth fiscal quarter of 2019 to the GAAP equivalent. |
Document and Entity Information Statement |
Aug. 21, 2019 |
---|---|
Document and Entity Information [Abstract] | |
Document Type | 8-K |
Document Period End Date | Aug. 21, 2019 |
Entity Registrant Name | KEYSIGHT TECHNOLOGIES, INC. |
Entity Incorporation, State or Country Code | DE |
Entity Central Index Key | 0001601046 |
Amendment Flag | false |
Entity File Number | 001-36334 |
Entity Tax Identification Number | 46-4254555 |
Entity Address, Address Line One | 1400 Fountaingrove Parkway |
Entity Address, City or Town | Santa Rosa |
Entity Address, State or Province | CA |
Entity Address, Postal Zip Code | 95403 |
City Area Code | (800) |
Local Phone Number | 829-4444 |
Title of 12(b) Security | Common Stock, par value $0.01 per share |
Trading Symbol | KEYS |
Security Exchange Name | NYSE |
Written Communications | false |
Soliciting Material | false |
Pre-commencement Tender Offer | false |
Pre-commencement Issuer Tender Offer | false |
Entity Emerging Growth Company | false |
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