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)
|
Title of each class
|
Trading Symbol
|
Name of each exchange on which registered
|
Common Stock
par value $0.01 per share
|
KEYS
|
New York Stock Exchange, Inc.
|
Large accelerated filer x
|
|
Accelerated filer ¨
|
|
|
|
Non-accelerated filer ¨
|
|
Smaller reporting company ¨
|
|
|
|
Emerging growth company ¨
|
|
|
|
|
|
Page
Number
|
|
|||
|
|||
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
|||
|
|||
|
|||
|
|||
|
|||
|
|||
|
|||
|
|||
|
|
PART I
|
— FINANCIAL INFORMATION
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
April 30,
|
|
April 30,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Net revenue:
|
|
|
|
|
|
|
|
|
|
||||||
Products
|
$
|
911
|
|
|
$
|
830
|
|
|
$
|
1,748
|
|
|
$
|
1,514
|
|
Services and other
|
179
|
|
|
160
|
|
|
348
|
|
|
313
|
|
||||
Total net revenue
|
1,090
|
|
|
990
|
|
|
2,096
|
|
|
1,827
|
|
||||
Costs and expenses:
|
|
|
|
|
|
|
|
||||||||
Cost of products
|
360
|
|
|
370
|
|
|
707
|
|
|
709
|
|
||||
Cost of services and other
|
82
|
|
|
81
|
|
|
163
|
|
|
154
|
|
||||
Total costs
|
442
|
|
|
451
|
|
|
870
|
|
|
863
|
|
||||
Research and development
|
171
|
|
|
160
|
|
|
344
|
|
|
310
|
|
||||
Selling, general and administrative
|
300
|
|
|
305
|
|
|
588
|
|
|
600
|
|
||||
Other operating expense (income), net
|
(8
|
)
|
|
(12
|
)
|
|
(12
|
)
|
|
(15
|
)
|
||||
Total costs and expenses
|
905
|
|
|
904
|
|
|
1,790
|
|
|
1,758
|
|
||||
Income from operations
|
185
|
|
|
86
|
|
|
306
|
|
|
69
|
|
||||
Interest income
|
6
|
|
|
2
|
|
|
10
|
|
|
5
|
|
||||
Interest expense
|
(20
|
)
|
|
(21
|
)
|
|
(40
|
)
|
|
(43
|
)
|
||||
Other income (expense), net
|
22
|
|
|
16
|
|
|
37
|
|
|
29
|
|
||||
Income before taxes
|
193
|
|
|
83
|
|
|
313
|
|
|
60
|
|
||||
Provision (benefit) for income taxes
|
40
|
|
|
19
|
|
|
46
|
|
|
(98
|
)
|
||||
Net income
|
$
|
153
|
|
|
$
|
64
|
|
|
$
|
267
|
|
|
$
|
158
|
|
|
|
|
|
|
|
|
|
||||||||
Net income per share:
|
|
|
|
|
|
|
|
|
|
||||||
Basic
|
$
|
0.81
|
|
|
$
|
0.34
|
|
|
$
|
1.42
|
|
|
$
|
0.84
|
|
Diluted
|
$
|
0.80
|
|
|
$
|
0.34
|
|
|
$
|
1.40
|
|
|
$
|
0.83
|
|
|
|
|
|
|
|
|
|
||||||||
Weighted average shares used in computing net income per share:
|
|
|
|
|
|
|
|||||||||
Basic
|
188
|
|
|
188
|
|
|
188
|
|
|
187
|
|
||||
Diluted
|
191
|
|
|
190
|
|
|
191
|
|
|
190
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
April 30,
|
|
April 30,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Net income
|
$
|
153
|
|
|
$
|
64
|
|
|
$
|
267
|
|
|
$
|
158
|
|
Other comprehensive income (loss):
|
|
|
|
|
|
|
|
||||||||
Unrealized gain (loss) on investments, net of tax benefit of zero, $1, zero and $1
|
—
|
|
|
—
|
|
|
—
|
|
|
(2
|
)
|
||||
Unrealized gain (loss) on derivative instruments, net of tax benefit (expense) of zero
|
—
|
|
|
—
|
|
|
(2
|
)
|
|
2
|
|
||||
Amounts reclassified into earnings related to derivative instruments, net of tax benefit (expense) of zero
|
—
|
|
|
(1
|
)
|
|
1
|
|
|
(3
|
)
|
||||
Foreign currency translation, net of tax benefit (expense) of zero
|
(16
|
)
|
|
(13
|
)
|
|
14
|
|
|
28
|
|
||||
Net defined benefit pension cost and post retirement plan costs:
|
|
|
|
|
|
|
|
||||||||
Change in actuarial net loss, net of tax expense of $4, $4, $7 and $7
|
8
|
|
|
11
|
|
|
21
|
|
|
21
|
|
||||
Change in net prior service credit, net of tax benefit of $1, $2, $2 and $3
|
(4
|
)
|
|
(4
|
)
|
|
(7
|
)
|
|
(8
|
)
|
||||
Other comprehensive income (loss)
|
(12
|
)
|
|
(7
|
)
|
|
27
|
|
|
38
|
|
||||
Total comprehensive income
|
$
|
141
|
|
|
$
|
57
|
|
|
$
|
294
|
|
|
$
|
196
|
|
|
April 30,
2019 |
|
October 31,
2018 |
||||
|
(unaudited)
|
|
|
||||
ASSETS
|
|
|
|
|
|
||
Current assets:
|
|
|
|
|
|
||
Cash and cash equivalents
|
$
|
1,277
|
|
|
$
|
913
|
|
Accounts receivable, net
|
660
|
|
|
624
|
|
||
Inventory
|
660
|
|
|
619
|
|
||
Other current assets
|
227
|
|
|
222
|
|
||
Total current assets
|
2,824
|
|
|
2,378
|
|
||
Property, plant and equipment, net
|
563
|
|
|
555
|
|
||
Goodwill
|
1,174
|
|
|
1,171
|
|
||
Other intangible assets, net
|
543
|
|
|
645
|
|
||
Long-term investments
|
42
|
|
|
46
|
|
||
Long-term deferred tax assets
|
727
|
|
|
750
|
|
||
Other assets
|
317
|
|
|
279
|
|
||
Total assets
|
$
|
6,190
|
|
|
$
|
5,824
|
|
LIABILITIES AND EQUITY
|
|
|
|
||||
Current liabilities:
|
|
|
|
|
|
||
Short-term debt
|
$
|
500
|
|
|
$
|
499
|
|
Accounts payable
|
236
|
|
|
242
|
|
||
Employee compensation and benefits
|
281
|
|
|
276
|
|
||
Deferred revenue
|
333
|
|
|
334
|
|
||
Income and other taxes payable
|
61
|
|
|
42
|
|
||
Other accrued liabilities
|
74
|
|
|
69
|
|
||
Total current liabilities
|
1,485
|
|
|
1,462
|
|
||
Long-term debt
|
1,292
|
|
|
1,291
|
|
||
Retirement and post-retirement benefits
|
214
|
|
|
224
|
|
||
Long-term deferred revenue
|
150
|
|
|
127
|
|
||
Other long-term liabilities
|
251
|
|
|
287
|
|
||
Total liabilities
|
3,392
|
|
|
3,391
|
|
||
Commitments and contingencies (Note 13)
|
|
|
|
|
|
||
Stockholders’ equity:
|
|
|
|
|
|
||
Preferred stock; $0.01 par value; 100 million shares authorized; none issued and outstanding
|
—
|
|
|
—
|
|
||
Common stock; $0.01 par value; 1 billion shares authorized; 193 million shares at April 30, 2019 and 191 million shares at October 31, 2018 issued
|
2
|
|
|
2
|
|
||
Treasury stock at cost; 5.4 million shares at April 30, 2019 and 4.4 million shares at October 31, 2018
|
(252
|
)
|
|
(182
|
)
|
||
Additional paid-in-capital
|
1,954
|
|
|
1,889
|
|
||
Retained earnings
|
1,555
|
|
|
1,212
|
|
||
Accumulated other comprehensive loss
|
(461
|
)
|
|
(488
|
)
|
||
Total stockholders' equity
|
2,798
|
|
|
2,433
|
|
||
Total liabilities and equity
|
$
|
6,190
|
|
|
$
|
5,824
|
|
|
Six Months Ended
|
||||||
|
April 30,
|
||||||
|
2019
|
|
2018
|
||||
Cash flows from operating activities:
|
|
|
|
|
|
||
Net income
|
$
|
267
|
|
|
$
|
158
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
|
||
Depreciation
|
48
|
|
|
53
|
|
||
Amortization
|
103
|
|
|
104
|
|
||
Share-based compensation
|
50
|
|
|
34
|
|
||
Deferred tax benefit
|
(2
|
)
|
|
(237
|
)
|
||
Excess and obsolete inventory-related charges
|
13
|
|
|
11
|
|
||
Gain on divestiture
|
(1
|
)
|
|
(8
|
)
|
||
Other non-cash expenses, net
|
(2
|
)
|
|
5
|
|
||
Changes in assets and liabilities:
|
|
|
|
|
|
||
Accounts receivable
|
(28
|
)
|
|
(31
|
)
|
||
Inventory
|
(53
|
)
|
|
(18
|
)
|
||
Accounts payable
|
1
|
|
|
20
|
|
||
Employee compensation and benefits
|
5
|
|
|
23
|
|
||
Deferred revenue
|
85
|
|
|
71
|
|
||
Income taxes payable
|
(8
|
)
|
|
125
|
|
||
Retirement and post-retirement benefits
|
(23
|
)
|
|
(22
|
)
|
||
Other assets and liabilities
|
6
|
|
|
(6
|
)
|
||
Net cash provided by operating activities
|
461
|
|
|
282
|
|
||
|
|
|
|
||||
Cash flows from investing activities:
|
|
|
|
|
|
||
Investments in property, plant and equipment
|
(60
|
)
|
|
(58
|
)
|
||
Proceeds from sale of investments
|
7
|
|
|
—
|
|
||
Proceeds from divestiture
|
2
|
|
|
12
|
|
||
Other investing activities
|
2
|
|
|
—
|
|
||
Net cash used in investing activities
|
(49
|
)
|
|
(46
|
)
|
||
|
|
|
|
||||
Cash flows from financing activities:
|
|
|
|
|
|
||
Proceeds from issuance of common stock under employee stock plans
|
39
|
|
|
33
|
|
||
Payment of taxes related to net share settlement of equity awards
|
(24
|
)
|
|
(16
|
)
|
||
Payment of acquisition-related contingent consideration
|
—
|
|
|
(3
|
)
|
||
Proceeds from credit facility
|
—
|
|
|
40
|
|
||
Repayment of debt and credit facility
|
—
|
|
|
(300
|
)
|
||
Treasury stock repurchases
|
(69
|
)
|
|
(28
|
)
|
||
Net cash used by financing activities
|
(54
|
)
|
|
(274
|
)
|
||
|
|
|
|
||||
Effect of exchange rate movements
|
5
|
|
|
4
|
|
||
|
|
|
|
||||
Net increase (decrease) in cash, cash equivalents, and restricted cash
|
363
|
|
|
(34
|
)
|
||
Cash, cash equivalents, and restricted cash at beginning of period
|
917
|
|
|
820
|
|
||
Cash, cash equivalents, and restricted cash at end of period
|
$
|
1,280
|
|
|
$
|
786
|
|
|
Common Stock
|
|
Treasury Stock
|
|
|
|
|
|
|
||||||||||||||||||||
|
Number of Shares
|
|
Par Value
|
|
Additional Paid-in Capital
|
|
Number of Shares
|
|
Treasury Stock at Cost
|
|
Retained Earnings
|
|
Accumulated Other Comprehensive Income/(Loss)
|
|
Total Stockholders' Equity
|
||||||||||||||
Balance as of January 31, 2019
|
192,801
|
|
|
$
|
2
|
|
|
$
|
1,925
|
|
|
(5,050
|
)
|
|
$
|
(222
|
)
|
|
$
|
1,402
|
|
|
$
|
(449
|
)
|
|
$
|
2,658
|
|
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
153
|
|
|
—
|
|
|
153
|
|
||||||
Other comprehensive loss, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(12
|
)
|
|
(12
|
)
|
||||||
Issuance of common stock
|
416
|
|
|
—
|
|
|
7
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
7
|
|
||||||
Share-based compensation
|
—
|
|
|
—
|
|
|
22
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
22
|
|
||||||
Repurchase of common stock
|
—
|
|
|
—
|
|
|
—
|
|
|
(344
|
)
|
|
(30
|
)
|
|
—
|
|
|
—
|
|
|
(30
|
)
|
||||||
Balance as of April 30, 2019
|
193,217
|
|
|
$
|
2
|
|
|
$
|
1,954
|
|
|
(5,394
|
)
|
|
$
|
(252
|
)
|
|
$
|
1,555
|
|
|
$
|
(461
|
)
|
|
$
|
2,798
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Balance as of October 31, 2018
|
191,204
|
|
|
$
|
2
|
|
|
$
|
1,889
|
|
|
(4,364
|
)
|
|
$
|
(182
|
)
|
|
$
|
1,212
|
|
|
$
|
(488
|
)
|
|
$
|
2,433
|
|
Adjustment due to adoption of new accounting standards
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
76
|
|
|
—
|
|
|
76
|
|
||||||
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
267
|
|
|
—
|
|
|
267
|
|
||||||
Other comprehensive income, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
27
|
|
|
27
|
|
||||||
Issuance of common stock
|
2,013
|
|
|
—
|
|
|
15
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
15
|
|
||||||
Share-based compensation
|
—
|
|
|
—
|
|
|
50
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
50
|
|
||||||
Repurchase of common stock
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,030
|
)
|
|
(70
|
)
|
|
—
|
|
|
—
|
|
|
(70
|
)
|
||||||
Balance as of April 30, 2019
|
193,217
|
|
|
$
|
2
|
|
|
$
|
1,954
|
|
|
(5,394
|
)
|
|
$
|
(252
|
)
|
|
$
|
1,555
|
|
|
$
|
(461
|
)
|
|
$
|
2,798
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Balance as of January 31, 2018
|
189,800
|
|
|
$
|
2
|
|
|
$
|
1,815
|
|
|
(2,289
|
)
|
|
$
|
(62
|
)
|
|
$
|
1,141
|
|
|
$
|
(412
|
)
|
|
$
|
2,484
|
|
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
64
|
|
|
—
|
|
|
64
|
|
||||||
Other comprehensive loss, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(7
|
)
|
|
(7
|
)
|
||||||
Issuance of common stock
|
453
|
|
|
—
|
|
|
8
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
8
|
|
||||||
Share-based compensation
|
—
|
|
|
—
|
|
|
14
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
14
|
|
||||||
Repurchase of common stock
|
—
|
|
|
—
|
|
|
—
|
|
|
(773
|
)
|
|
(40
|
)
|
|
—
|
|
|
—
|
|
|
(40
|
)
|
||||||
Balance as of April 30, 2018
|
190,253
|
|
|
$
|
2
|
|
|
$
|
1,837
|
|
|
(3,062
|
)
|
|
$
|
(102
|
)
|
|
$
|
1,205
|
|
|
$
|
(419
|
)
|
|
$
|
2,523
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Balance as of October 31, 2017
|
188,310
|
|
|
$
|
2
|
|
|
$
|
1,786
|
|
|
(2,289
|
)
|
|
$
|
(62
|
)
|
|
$
|
1,041
|
|
|
$
|
(457
|
)
|
|
$
|
2,310
|
|
Adjustment due to adoption of new accounting standards
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
6
|
|
|
—
|
|
|
6
|
|
||||||
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
158
|
|
|
—
|
|
|
158
|
|
||||||
Other comprehensive income, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
38
|
|
|
38
|
|
||||||
Issuance of common stock
|
1,943
|
|
|
—
|
|
|
17
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
17
|
|
||||||
Share-based compensation
|
—
|
|
|
—
|
|
|
34
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
34
|
|
||||||
Repurchase of common stock
|
—
|
|
|
—
|
|
|
—
|
|
|
(773
|
)
|
|
(40
|
)
|
|
—
|
|
|
—
|
|
|
(40
|
)
|
||||||
Balance as of April 30, 2018
|
190,253
|
|
|
$
|
2
|
|
|
$
|
1,837
|
|
|
(3,062
|
)
|
|
$
|
(102
|
)
|
|
$
|
1,205
|
|
|
$
|
(419
|
)
|
|
$
|
2,523
|
|
1.
|
OVERVIEW, BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
|
2.
|
NEW ACCOUNTING PRONOUNCEMENTS
|
|
October 31,
2018 |
|
Adjustments Due to ASC 606
|
|
November 1,
2018 |
||||||
|
(in millions)
|
||||||||||
Assets:
|
|
|
|
|
|
||||||
Accounts receivable, net
|
$
|
624
|
|
|
$
|
7
|
|
|
$
|
631
|
|
Other current assets
|
222
|
|
|
28
|
|
|
250
|
|
|||
Long-term deferred tax assets
|
750
|
|
|
(15
|
)
|
|
735
|
|
|||
Other assets
|
279
|
|
|
3
|
|
|
282
|
|
|||
Liabilities:
|
|
|
|
|
|
||||||
Deferred revenue
|
$
|
334
|
|
|
$
|
(53
|
)
|
|
$
|
281
|
|
Income and other taxes payable
|
42
|
|
|
1
|
|
|
43
|
|
|||
Other accrued liabilities
|
69
|
|
|
7
|
|
|
76
|
|
|||
Long-term deferred revenue
|
127
|
|
|
(11
|
)
|
|
116
|
|
|||
Other long-term liabilities
|
287
|
|
|
3
|
|
|
290
|
|
|||
Stockholders' equity:
|
|
|
|
|
|
||||||
Retained earnings
|
$
|
1,212
|
|
|
$
|
76
|
|
|
$
|
1,288
|
|
|
Three months ended
|
||||||||||
|
April 30, 2019
|
||||||||||
|
As Reported
|
|
Balances Without Adoption of ASC 606
|
|
Effect of Change
Higher/(Lower) |
||||||
|
(in millions)
|
||||||||||
Net revenue:
|
|
|
|
|
|
||||||
Products
|
$
|
911
|
|
|
$
|
903
|
|
|
$
|
8
|
|
Services and other
|
179
|
|
|
184
|
|
|
(5
|
)
|
|||
Total net revenue
|
1,090
|
|
|
1,087
|
|
|
3
|
|
|||
Costs and expenses:
|
|
|
|
|
|
||||||
Cost of products
|
360
|
|
|
360
|
|
|
—
|
|
|||
Cost of services and other
|
82
|
|
|
82
|
|
|
—
|
|
|||
Total costs
|
442
|
|
|
442
|
|
|
—
|
|
|||
Research and development
|
171
|
|
|
171
|
|
|
—
|
|
|||
Selling, general and administrative
|
300
|
|
|
298
|
|
|
2
|
|
|||
Other operating expense (income), net
|
(8
|
)
|
|
(8
|
)
|
|
—
|
|
|||
Total costs and expenses
|
905
|
|
|
903
|
|
|
2
|
|
|||
Income from operations
|
185
|
|
|
184
|
|
|
1
|
|
|||
Interest income
|
6
|
|
|
6
|
|
|
—
|
|
|||
Interest expense
|
(20
|
)
|
|
(20
|
)
|
|
—
|
|
|||
Other income (expense), net
|
22
|
|
|
22
|
|
|
—
|
|
|||
Income before taxes
|
193
|
|
|
192
|
|
|
1
|
|
|||
Provision for income taxes
|
40
|
|
|
40
|
|
|
—
|
|
|||
Net income
|
$
|
153
|
|
|
$
|
152
|
|
|
$
|
1
|
|
|
|
|
|
|
|
||||||
Net income per share:
|
|
|
|
|
|
||||||
Basic
|
$
|
0.81
|
|
|
$
|
0.81
|
|
|
$
|
—
|
|
Diluted
|
$
|
0.80
|
|
|
$
|
0.79
|
|
|
$
|
0.01
|
|
|
Six months ended
|
||||||||||
|
April 30, 2019
|
||||||||||
|
As Reported
|
|
Balances Without Adoption of ASC 606
|
|
Effect of Change
Higher/(Lower) |
||||||
|
(in millions)
|
||||||||||
Net revenue:
|
|
|
|
|
|
||||||
Products
|
$
|
1,748
|
|
|
$
|
1,725
|
|
|
$
|
23
|
|
Services and other
|
348
|
|
|
354
|
|
|
(6
|
)
|
|||
Total net revenue
|
2,096
|
|
|
2,079
|
|
|
17
|
|
|||
Costs and expenses:
|
|
|
|
|
|
||||||
Cost of products
|
707
|
|
|
706
|
|
|
1
|
|
|||
Cost of services and other
|
163
|
|
|
163
|
|
|
—
|
|
|||
Total costs
|
870
|
|
|
869
|
|
|
1
|
|
|||
Research and development
|
344
|
|
|
344
|
|
|
—
|
|
|||
Selling, general and administrative
|
588
|
|
|
585
|
|
|
3
|
|
|||
Other operating expense (income), net
|
(12
|
)
|
|
(12
|
)
|
|
—
|
|
|||
Total costs and expenses
|
1,790
|
|
|
1,786
|
|
|
4
|
|
|||
Income from operations
|
306
|
|
|
293
|
|
|
13
|
|
|||
Interest income
|
10
|
|
|
10
|
|
|
—
|
|
|||
Interest expense
|
(40
|
)
|
|
(40
|
)
|
|
—
|
|
|||
Other income (expense), net
|
37
|
|
|
37
|
|
|
—
|
|
|||
Income before taxes
|
313
|
|
|
300
|
|
|
13
|
|
|||
Provision for income taxes
|
46
|
|
|
44
|
|
|
2
|
|
|||
Net income
|
$
|
267
|
|
|
$
|
256
|
|
|
$
|
11
|
|
|
|
|
|
|
|
||||||
Net income per share:
|
|
|
|
|
|
||||||
Basic
|
$
|
1.42
|
|
|
$
|
1.36
|
|
|
$
|
0.06
|
|
Diluted
|
$
|
1.40
|
|
|
$
|
1.34
|
|
|
$
|
0.06
|
|
|
April 30, 2019
|
||||||||||
|
As Reported
|
|
Balances Without Adoption of ASC 606
|
|
Effect of Change Higher/(Lower)
|
||||||
|
(in millions)
|
||||||||||
Assets:
|
|
|
|
|
|
||||||
Accounts receivable, net
|
$
|
660
|
|
|
$
|
652
|
|
|
$
|
8
|
|
Inventory
|
660
|
|
|
661
|
|
|
(1
|
)
|
|||
Other current assets
|
227
|
|
|
202
|
|
|
25
|
|
|||
Long-term deferred tax assets
|
727
|
|
|
744
|
|
|
(17
|
)
|
|||
Other assets
|
317
|
|
|
314
|
|
|
3
|
|
|||
Liabilities:
|
|
|
|
|
|
||||||
Deferred revenue
|
$
|
333
|
|
|
$
|
397
|
|
|
$
|
(64
|
)
|
Income and other taxes payable
|
61
|
|
|
60
|
|
|
1
|
|
|||
Other accrued liabilities
|
74
|
|
|
67
|
|
|
7
|
|
|||
Long-term deferred revenue
|
150
|
|
|
166
|
|
|
(16
|
)
|
|||
Other long-term liabilities
|
251
|
|
|
248
|
|
|
3
|
|
|||
Stockholders' equity:
|
|
|
|
|
|
||||||
Retained earnings
|
$
|
1,555
|
|
|
$
|
1,468
|
|
|
$
|
87
|
|
|
Six Months Ended
April 30, 2018
|
||||||||||
|
As Originally
Reported
|
|
As
Adjusted
|
|
Change
|
||||||
|
(in millions)
|
||||||||||
Net cash provided by operating activities
|
$
|
282
|
|
|
$
|
282
|
|
|
$
|
—
|
|
Net cash used in investing activities
|
$
|
(49
|
)
|
|
$
|
(46
|
)
|
|
$
|
3
|
|
Net cash used in financing activities
|
$
|
(271
|
)
|
|
$
|
(274
|
)
|
|
$
|
(3
|
)
|
|
Three Months Ended
April 30, 2018 |
|
Six Months Ended
April 30, 2018 |
||||||||||||||||||||
|
As Originally Reported
|
|
As Adjusted
|
|
Effect of Change
Higher/(Lower) |
|
As Originally Reported
|
|
As Adjusted
|
|
Effect of Change
Higher/(Lower) |
||||||||||||
|
(in millions)
|
|
(in millions)
|
|
|
|
|
||||||||||||||||
Cost of products
|
$
|
367
|
|
|
$
|
370
|
|
|
$
|
3
|
|
|
$
|
704
|
|
|
$
|
709
|
|
|
$
|
5
|
|
Cost of services
|
$
|
80
|
|
|
$
|
81
|
|
|
$
|
1
|
|
|
$
|
153
|
|
|
$
|
154
|
|
|
$
|
1
|
|
Research and development
|
$
|
156
|
|
|
$
|
160
|
|
|
$
|
4
|
|
|
$
|
302
|
|
|
$
|
310
|
|
|
$
|
8
|
|
Selling, general and administrative
|
$
|
299
|
|
|
$
|
305
|
|
|
$
|
6
|
|
|
$
|
588
|
|
|
$
|
600
|
|
|
$
|
12
|
|
Other income (expense), net
|
$
|
2
|
|
|
$
|
16
|
|
|
$
|
14
|
|
|
$
|
3
|
|
|
$
|
29
|
|
|
$
|
26
|
|
3.
|
REVENUE
|
Performance Obligation
|
When performance obligation is typically satisfied
|
When payment is typically due
|
How standalone selling price is typically determined
|
Product Revenues
|
|
|
|
Hardware
|
When customer obtains control of the product, typically at delivery (point in time)
|
Within 30-90 days of shipment
|
Estimated based on established pricing practices or observable based on standalone sales for certain hardware products
|
Software licenses
|
Upon electronic delivery of the software, and the applicable license period has begun (point in time)
|
Within 30-90 days of the beginning of license period
|
Estimated based on established pricing practices or observable based on standalone sales for certain software products
|
Threat intelligence solutions
|
Ratably over the subscription period (over time)
|
Within 30-90 days of the beginning of subscription period
|
Estimated based on established pricing practices
|
Service Revenues
|
|
|
|
Calibration contracts
|
Ratably over the service contract period (over time)
|
Within 30-90 days of the beginning of service contract period
|
Estimated based on established pricing practices
|
Repair and calibration (per- incident)
|
As services are performed (point in time)
|
Within 30-90 days of invoicing for services rendered
|
Estimated based on established pricing practices
|
Extended hardware warranty
|
Ratably over the warranty period (over time)
|
Within 30-90 days of the beginning of warranty period
|
Estimated based on established pricing practices or observable based on standalone sales of certain hardware warranty contracts
|
Technical support and when-and-if-available software updates
|
Ratably over the license service contract period (over time)
|
Within 30-90 days of the beginning of license or service contract period
|
Estimated based on established pricing practices or observable based on standalone sales for certain support contracts
|
Professional services
|
As services are performed based on measures of progress (over time) or at a point in time
|
Within 30-90 days invoicing for services rendered
|
Estimated based on established pricing practices
|
Custom Solutions
|
|
|
|
Custom solutions (milestone-based)
|
As milestones are achieved based on transfer of control to customer (over time)
|
Within 30-90 days of milestone achievement
|
Transaction price, as pricing is custom and can vary significantly from contract to contract
|
Custom solutions (point in time)
|
When customer obtains control of the solution, typically at delivery (point in time)
|
Within 30-90 days of delivery of solution
|
Transaction price, as pricing is custom and can vary significantly from contract to contract
|
|
Three Months Ended April 30, 2019
|
||||||||||||||
|
Communications Solutions Group
|
|
Electronic Industrial Solutions Group
|
|
Ixia Solutions Group
|
|
Total
|
||||||||
|
(in millions)
|
||||||||||||||
Region
|
|
|
|
|
|
|
|
||||||||
Americas
|
$
|
294
|
|
|
$
|
66
|
|
|
$
|
65
|
|
|
$
|
425
|
|
Europe
|
90
|
|
|
71
|
|
|
18
|
|
|
179
|
|
||||
Asia Pacific
|
292
|
|
|
162
|
|
|
32
|
|
|
486
|
|
||||
Total net revenue
|
$
|
676
|
|
|
$
|
299
|
|
|
$
|
115
|
|
|
$
|
1,090
|
|
|
|
|
|
|
|
|
|
||||||||
End Market
|
|
|
|
|
|
|
|
||||||||
Aerospace, Defense & Government
|
$
|
245
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
245
|
|
Commercial Communications
|
431
|
|
|
—
|
|
|
—
|
|
|
431
|
|
||||
Electronic Industrial
|
—
|
|
|
299
|
|
|
—
|
|
|
299
|
|
||||
Ixia Solutions
|
—
|
|
|
—
|
|
|
115
|
|
|
115
|
|
||||
Total net revenue
|
$
|
676
|
|
|
$
|
299
|
|
|
$
|
115
|
|
|
$
|
1,090
|
|
|
|
|
|
|
|
|
|
||||||||
Timing of Revenue Recognition
|
|
|
|
|
|
|
|
||||||||
Revenue recognized at a point in time
|
$
|
619
|
|
|
$
|
274
|
|
|
$
|
68
|
|
|
$
|
961
|
|
Revenue recognized over time
|
57
|
|
|
25
|
|
|
47
|
|
|
129
|
|
||||
Total net revenue
|
$
|
676
|
|
|
$
|
299
|
|
|
$
|
115
|
|
|
$
|
1,090
|
|
|
Six Months Ended April 30, 2019
|
||||||||||||||
|
Communications Solutions Group
|
|
Electronic Industrial Solutions Group
|
|
Ixia Solutions Group
|
|
Total
|
||||||||
|
(in millions)
|
||||||||||||||
Region
|
|
|
|
|
|
|
|
||||||||
Americas
|
$
|
566
|
|
|
$
|
123
|
|
|
$
|
139
|
|
|
$
|
828
|
|
Europe
|
186
|
|
|
134
|
|
|
38
|
|
|
358
|
|
||||
Asia Pacific
|
547
|
|
|
299
|
|
|
64
|
|
|
910
|
|
||||
Total net revenue
|
$
|
1,299
|
|
|
$
|
556
|
|
|
$
|
241
|
|
|
$
|
2,096
|
|
|
|
|
|
|
|
|
|
||||||||
End Market
|
|
|
|
|
|
|
|
||||||||
Aerospace, Defense & Government
|
$
|
468
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
468
|
|
Commercial Communications
|
831
|
|
|
—
|
|
|
—
|
|
|
831
|
|
||||
Electronic Industrial
|
—
|
|
|
556
|
|
|
—
|
|
|
556
|
|
||||
Ixia Solutions
|
—
|
|
|
—
|
|
|
241
|
|
|
241
|
|
||||
Total net revenue
|
$
|
1,299
|
|
|
$
|
556
|
|
|
$
|
241
|
|
|
$
|
2,096
|
|
|
|
|
|
|
|
|
|
||||||||
Timing of Revenue Recognition
|
|
|
|
|
|
|
|
||||||||
Revenue recognized at a point in time
|
$
|
1,189
|
|
|
$
|
509
|
|
|
$
|
150
|
|
|
$
|
1,848
|
|
Revenue recognized over time
|
110
|
|
|
47
|
|
|
91
|
|
|
248
|
|
||||
Total net revenue
|
$
|
1,299
|
|
|
$
|
556
|
|
|
$
|
241
|
|
|
$
|
2,096
|
|
|
Six Months Ended
|
||
|
April 30, 2019
|
||
|
(in millions)
|
||
Balance at October 31, 2018
|
$
|
—
|
|
Costs capitalized on November 1, 2018 due to ASC 606 adoption
|
29
|
|
|
Costs capitalized during the period
|
33
|
|
|
Costs amortized during the period
|
(36
|
)
|
|
Balance at April 30, 2019
|
$
|
26
|
|
|
Contract Liabilities
|
||
|
(in millions)
|
||
Balance at October 31, 2018
|
$
|
461
|
|
Impact of adopting new revenue standard
|
(64
|
)
|
|
Balance at November 1, 2018
|
397
|
|
|
Deferral of revenue billed in current period, net of recognition
|
276
|
|
|
Revenue recognized that was deferred as of the beginning of the period
|
(191
|
)
|
|
Foreign currency translation impact
|
1
|
|
|
Balance at April 30, 2019
|
$
|
483
|
|
•
|
We do not disclose the value of remaining performance obligations for contracts with an original expected length of one year or less.
|
•
|
We determine incremental costs of obtaining a contract for a portfolio of contracts with similar characteristics as we reasonably expect that the effects on the financial statements of applying this guidance to the portfolio would not differ materially from applying this guidance to the individual contracts within that portfolio.
|
•
|
We exclude from the transaction price certain taxes (e.g., sales, use, value added, and some excise taxes).
|
•
|
We do not adjust the promised amount of consideration for the effects of a significant financing component if we expect, at contract inception, that the period between when we transfer a promised good or service to a customer and when the customer pays for that good or service will be one year or less.
|
•
|
We treat shipping and handling costs associated with outbound freight after control of a product has transferred to a customer as a fulfillment cost, included in cost of products.
|
•
|
We have applied the guidance only to contracts that have not been completed as of the date of adoption (November 1, 2018).
|
•
|
We did not evaluate individual modifications for those periods prior to the adoption date, but rather evaluated the aggregate effect of all modifications as of the adoption date.
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
April 30,
|
|
April 30,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
|
(in millions)
|
||||||||||||||
Cost of products and services
|
$
|
5
|
|
|
$
|
4
|
|
|
$
|
9
|
|
|
$
|
7
|
|
Research and development
|
3
|
|
|
2
|
|
|
9
|
|
|
6
|
|
||||
Selling, general and administrative
|
15
|
|
|
9
|
|
|
32
|
|
|
21
|
|
||||
Total share-based compensation expense
|
$
|
23
|
|
|
$
|
15
|
|
|
$
|
50
|
|
|
$
|
34
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||
|
April 30,
|
|
April 30,
|
||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||
Volatility of Keysight shares
|
26
|
%
|
|
25
|
%
|
|
25
|
%
|
|
25
|
%
|
Volatility of selected index
|
13
|
%
|
|
14
|
%
|
|
12
|
%
|
|
14
|
%
|
Price-wise correlation with selected peers
|
57
|
%
|
|
57
|
%
|
|
57
|
%
|
|
57
|
%
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
April 30,
|
|
April 30,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
|
(in millions)
|
||||||||||||||
Numerator:
|
|
|
|
|
|
|
|
|
|
||||||
Net income
|
$
|
153
|
|
|
$
|
64
|
|
|
$
|
267
|
|
|
$
|
158
|
|
Denominator:
|
|
|
|
|
|
|
|
||||||||
Basic weighted-average shares
|
188
|
|
|
188
|
|
|
188
|
|
|
187
|
|
||||
Potential common shares— stock options and other employee stock plans
|
3
|
|
|
2
|
|
|
3
|
|
|
3
|
|
||||
Diluted weighted-average shares
|
191
|
|
|
190
|
|
|
191
|
|
|
190
|
|
|
Six months ended
|
||||||
|
April 30,
|
||||||
|
2019
|
|
2018
|
||||
|
(in millions)
|
||||||
Non-cash investing activities
|
|
|
|
||||
Increase (decrease) in unpaid capital expenditures in accounts payable
|
$
|
7
|
|
|
$
|
(9
|
)
|
|
$
|
7
|
|
|
$
|
(9
|
)
|
Non-cash financing activities
|
|
|
|
||||
Treasury stock repurchases pending settlement in other accrued liabilities
|
$
|
(1
|
)
|
|
$
|
(12
|
)
|
|
$
|
(1
|
)
|
|
$
|
(12
|
)
|
|
Six months ended
|
||||||
|
April 30,
|
||||||
|
2019
|
|
2018
|
||||
|
(in millions)
|
||||||
Cash and cash equivalents
|
$
|
1,277
|
|
|
$
|
784
|
|
Restricted cash included in other current assets
|
2
|
|
|
—
|
|
||
Restricted cash included in other assets
|
1
|
|
|
2
|
|
||
Total cash, cash equivalents, and restricted cash shown in the statement of cash flows
|
$
|
1,280
|
|
|
$
|
786
|
|
|
April 30,
2019 |
|
October 31,
2018 |
||||
|
(in millions)
|
||||||
Finished goods
|
$
|
290
|
|
|
$
|
283
|
|
Purchased parts and fabricated assemblies
|
370
|
|
|
336
|
|
||
Total inventory
|
$
|
660
|
|
|
$
|
619
|
|
9.
|
GOODWILL AND OTHER INTANGIBLE ASSETS
|
|
Communications Solutions Group
|
|
Electronic Industrial Solutions Group
|
|
Ixia Solutions Group
|
|
Total
|
||||||||
|
(in millions)
|
||||||||||||||
Balance as of October 31, 2018:
|
|
|
|
|
|
|
|
||||||||
Goodwill
|
$
|
497
|
|
|
$
|
267
|
|
|
$
|
1,116
|
|
|
$
|
1,880
|
|
Accumulated impairment losses
|
—
|
|
|
—
|
|
|
(709
|
)
|
|
(709
|
)
|
||||
Goodwill as reported
|
497
|
|
|
267
|
|
|
407
|
|
|
1,171
|
|
||||
Foreign currency translation impact
|
3
|
|
|
—
|
|
|
—
|
|
|
3
|
|
||||
Balance as of April 30, 2019
|
$
|
500
|
|
|
$
|
267
|
|
|
$
|
407
|
|
|
$
|
1,174
|
|
|
|
|
|
|
|
|
|
||||||||
Components of goodwill as of April 30, 2019:
|
|
|
|
|
|
|
|
||||||||
Goodwill
|
$
|
500
|
|
|
$
|
267
|
|
|
$
|
1,116
|
|
|
$
|
1,883
|
|
Accumulated impairment losses
|
—
|
|
|
—
|
|
|
(709
|
)
|
|
(709
|
)
|
||||
Goodwill as reported
|
$
|
500
|
|
|
$
|
267
|
|
|
$
|
407
|
|
|
$
|
1,174
|
|
|
Other Intangible Assets as of April 30, 2019
|
|
Other Intangible Assets as of October 31, 2018
|
||||||||||||||||||||
|
Gross
Carrying
Amount
|
|
Accumulated
Amortization
and
Impairments
|
|
Net Book
Value
|
|
Gross
Carrying
Amount
|
|
Accumulated
Amortization
and
Impairments
|
|
Net Book
Value
|
||||||||||||
|
(in millions)
|
||||||||||||||||||||||
Developed technology
|
$
|
835
|
|
|
$
|
494
|
|
|
$
|
341
|
|
|
$
|
835
|
|
|
$
|
415
|
|
|
$
|
420
|
|
Backlog
|
13
|
|
|
13
|
|
|
—
|
|
|
13
|
|
|
13
|
|
|
—
|
|
||||||
Trademark/Tradename
|
33
|
|
|
17
|
|
|
16
|
|
|
33
|
|
|
14
|
|
|
19
|
|
||||||
Customer relationships
|
304
|
|
|
120
|
|
|
184
|
|
|
304
|
|
|
100
|
|
|
204
|
|
||||||
Non-compete agreements
|
1
|
|
|
—
|
|
|
1
|
|
|
1
|
|
|
—
|
|
|
1
|
|
||||||
Total amortizable intangible assets
|
1,186
|
|
|
644
|
|
|
542
|
|
|
1,186
|
|
|
542
|
|
|
644
|
|
||||||
In-Process R&D
|
1
|
|
|
—
|
|
|
1
|
|
|
1
|
|
|
—
|
|
|
1
|
|
||||||
Total
|
$
|
1,187
|
|
|
$
|
644
|
|
|
$
|
543
|
|
|
$
|
1,187
|
|
|
$
|
542
|
|
|
$
|
645
|
|
|
Amortization expense
|
||
|
(in millions)
|
||
2019 (remainder)
|
$
|
101
|
|
2020
|
196
|
|
|
2021
|
128
|
|
|
2022
|
52
|
|
|
2023
|
44
|
|
|
Thereafter
|
21
|
|
10.
|
FAIR VALUE MEASUREMENTS
|
|
Fair Value Measurements at
|
||||||||||||||||||||||||||||||||||||||
|
April 30, 2019
|
|
October 31, 2018
|
||||||||||||||||||||||||||||||||||||
|
Total
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Other
|
|
Total
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Other
|
||||||||||||||||||||
|
(in millions)
|
|
|
||||||||||||||||||||||||||||||||||||
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Short-term
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Cash equivalents
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||
Money market funds
|
$
|
754
|
|
|
$
|
754
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
484
|
|
|
$
|
484
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Derivative instruments (foreign exchange contracts)
|
2
|
|
|
—
|
|
|
2
|
|
|
—
|
|
|
—
|
|
|
6
|
|
|
—
|
|
|
6
|
|
|
—
|
|
|
—
|
|
||||||||||
Long-term
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||
Equity investments
|
33
|
|
|
33
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
30
|
|
|
30
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||||
Equity investments - other
|
9
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
9
|
|
|
16
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
16
|
|
||||||||||
Total assets measured at fair value
|
$
|
798
|
|
|
$
|
787
|
|
|
$
|
2
|
|
|
$
|
—
|
|
|
$
|
9
|
|
|
$
|
536
|
|
|
$
|
514
|
|
|
$
|
6
|
|
|
$
|
—
|
|
|
$
|
16
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Short-term
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||
Derivative instruments (foreign exchange contracts)
|
$
|
4
|
|
|
$
|
—
|
|
|
$
|
4
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
6
|
|
|
$
|
—
|
|
|
$
|
6
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Long-term
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||
Deferred compensation liability
|
13
|
|
|
—
|
|
|
13
|
|
|
—
|
|
|
—
|
|
|
13
|
|
|
—
|
|
|
13
|
|
|
—
|
|
|
—
|
|
||||||||||
Total liabilities measured at fair value
|
$
|
17
|
|
|
$
|
—
|
|
|
$
|
17
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
19
|
|
|
$
|
—
|
|
|
$
|
19
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Three Months Ended
|
Six Months Ended
|
|||||
|
April 30, 2019
|
||||||
|
(in millions)
|
||||||
Net realized gains on investments sold
|
$
|
1
|
|
|
$
|
1
|
|
Net unrealized gains (losses) on investments still held
|
(2
|
)
|
|
3
|
|
||
Other-than-temporary impairments of investments
|
—
|
|
|
—
|
|
||
Total
|
$
|
(1
|
)
|
|
$
|
4
|
|
11.
|
DERIVATIVES
|
|
|
Derivatives in Cash Flow
Hedging Relationships
|
|
Derivatives Not Designated as Hedging Instruments
|
||||
|
|
Forward
Contracts
|
|
Forward
Contracts
|
||||
Currency
|
|
Buy/(Sell)
|
|
Buy/(Sell)
|
||||
|
|
(in millions)
|
||||||
Euro
|
|
$
|
14
|
|
|
$
|
153
|
|
British Pound
|
|
—
|
|
|
(55
|
)
|
||
Singapore Dollar
|
|
15
|
|
|
—
|
|
||
Malaysian Ringgit
|
|
84
|
|
|
1
|
|
||
Japanese Yen
|
|
(74
|
)
|
|
(38
|
)
|
||
Other currencies
|
|
(18
|
)
|
|
1
|
|
||
Total
|
|
$
|
21
|
|
|
$
|
62
|
|
Fair Values of Derivative Instruments
|
||||||||||||||||||
Derivative Assets
|
|
Derivative Liabilities
|
||||||||||||||||
|
|
Fair Value
|
|
|
|
Fair Value
|
||||||||||||
Balance Sheet Location
|
|
April 30,
2019 |
|
October 31,
2018 |
|
Balance Sheet Location
|
|
April 30,
2019 |
|
October 31,
2018 |
||||||||
|
|
(in millions)
|
|
|
|
(in millions)
|
||||||||||||
Derivatives designated as hedging instruments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Cash flow hedges
|
|
|
|
|
|
|
|
|
|
|
||||||||
Foreign exchange contracts
|
|
|
|
|
|
|
|
|
|
|
||||||||
Other current assets
|
|
$
|
2
|
|
|
$
|
5
|
|
|
Other accrued liabilities
|
|
$
|
2
|
|
|
$
|
4
|
|
Derivatives not designated as hedging instruments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Foreign exchange contracts
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Other current assets
|
|
—
|
|
|
1
|
|
|
Other accrued liabilities
|
|
2
|
|
|
2
|
|
||||
Total derivatives
|
|
$
|
2
|
|
|
$
|
6
|
|
|
|
|
$
|
4
|
|
|
$
|
6
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
April 30,
|
|
April 30,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
|
(in millions)
|
||||||||||||||
Derivatives designated as hedging instruments:
|
|
|
|
|
|
|
|
|
|
||||||
Cash Flow Hedges
|
|
|
|
|
|
|
|
||||||||
Foreign exchange contracts:
|
|
|
|
|
|
|
|
||||||||
Gain (loss) recognized in accumulated other comprehensive income
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(2
|
)
|
|
$
|
2
|
|
Gain (loss) reclassified from accumulated other comprehensive income into earnings:
|
|
|
|
|
|
|
|
||||||||
Cost of products
|
$
|
—
|
|
|
$
|
1
|
|
|
$
|
—
|
|
|
$
|
3
|
|
Selling, general and administrative
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(1
|
)
|
|
$
|
—
|
|
Amount excluded from effectiveness testing recognized in earnings based on changes in fair value:
|
|
|
|
|
|
|
|
||||||||
Cost of products
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1
|
|
|
$
|
—
|
|
Derivatives not designated as hedging instruments:
|
|
|
|
|
|
|
|
||||||||
Gain (loss) recognized in other income (expense), net
|
$
|
(2
|
)
|
|
$
|
—
|
|
|
$
|
(5
|
)
|
|
$
|
1
|
|
|
Pensions
|
|
|
|
|
||||||||||||||||||
|
U.S. Defined Benefit Plans
|
|
Non-U.S. Defined Benefit
Plans |
|
U.S. Post-Retirement
Benefit Plan |
||||||||||||||||||
|
Three Months Ended April 30,
|
||||||||||||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||||||
|
(in millions)
|
||||||||||||||||||||||
Service cost—benefits earned during the period
|
$
|
5
|
|
|
$
|
6
|
|
|
$
|
4
|
|
|
$
|
4
|
|
|
$
|
—
|
|
|
$
|
1
|
|
Interest cost on benefit obligation
|
7
|
|
|
6
|
|
|
5
|
|
|
6
|
|
|
2
|
|
|
1
|
|
||||||
Expected return on plan assets
|
(10
|
)
|
|
(9
|
)
|
|
(20
|
)
|
|
(23
|
)
|
|
(3
|
)
|
|
(3
|
)
|
||||||
Amortization:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Net actuarial loss
|
2
|
|
|
3
|
|
|
7
|
|
|
7
|
|
|
2
|
|
|
4
|
|
||||||
Prior service credit
|
(1
|
)
|
|
(2
|
)
|
|
—
|
|
|
—
|
|
|
(4
|
)
|
|
(4
|
)
|
||||||
Settlement loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
$
|
—
|
|
|||||
Net periodic benefit cost (benefit)
|
$
|
3
|
|
|
$
|
4
|
|
|
$
|
(4
|
)
|
|
$
|
(6
|
)
|
|
$
|
(3
|
)
|
|
$
|
(1
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Pensions
|
|
|
|
|
||||||||||||||||||
|
U.S. Defined Benefit Plans
|
|
Non-U.S. Defined Benefit
Plans |
|
U.S. Post-Retirement
Benefit Plan |
||||||||||||||||||
|
Six Months Ended April 30,
|
||||||||||||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||||||
|
(in millions)
|
||||||||||||||||||||||
Service cost—benefits earned during the period
|
$
|
10
|
|
|
$
|
12
|
|
|
$
|
7
|
|
|
$
|
7
|
|
|
$
|
—
|
|
|
$
|
1
|
|
Interest cost on benefit obligation
|
14
|
|
|
12
|
|
|
11
|
|
|
12
|
|
|
4
|
|
|
3
|
|
||||||
Expected return on plan assets
|
(21
|
)
|
|
(18
|
)
|
|
(39
|
)
|
|
(44
|
)
|
|
(6
|
)
|
|
(7
|
)
|
||||||
Amortization:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Net actuarial loss
|
5
|
|
|
6
|
|
|
14
|
|
|
13
|
|
|
4
|
|
|
8
|
|
||||||
Prior service credit
|
(2
|
)
|
|
(4
|
)
|
|
—
|
|
|
—
|
|
|
(7
|
)
|
|
(7
|
)
|
||||||
Settlement loss
|
—
|
|
|
—
|
|
|
2
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Net periodic benefit cost (benefit)
|
$
|
6
|
|
|
$
|
8
|
|
|
$
|
(5
|
)
|
|
$
|
(12
|
)
|
|
$
|
(5
|
)
|
|
$
|
(2
|
)
|
13.
|
WARRANTY, COMMITMENTS AND CONTINGENCIES
|
|
Six Months Ended
|
||||||
|
April 30,
|
||||||
|
2019
|
|
2018
|
||||
|
(in millions)
|
||||||
Beginning balance
|
$
|
45
|
|
|
$
|
45
|
|
Accruals for warranties including change in estimate
|
15
|
|
|
18
|
|
||
Settlements made during the period
|
(18
|
)
|
|
(17
|
)
|
||
Ending balance
|
$
|
42
|
|
|
$
|
46
|
|
|
|
|
|
||||
Accruals for warranties due within one year
|
$
|
24
|
|
|
$
|
26
|
|
Accruals for warranties due after one year
|
18
|
|
|
20
|
|
||
Ending balance
|
$
|
42
|
|
|
$
|
46
|
|
|
|
Unrealized gain (loss) on investments
|
|
Foreign currency translation
|
|
Net defined benefit pension cost and post retirement plan costs
|
|
Unrealized gains (losses) on derivatives
|
|
Total
|
||||||||||||||
|
|
|
|
Actuarial losses
|
|
Prior service credits
|
|
|
||||||||||||||||
|
|
(in millions)
|
||||||||||||||||||||||
As of January 31, 2019
|
|
$
|
—
|
|
|
$
|
(30
|
)
|
|
$
|
(432
|
)
|
|
$
|
16
|
|
|
$
|
(3
|
)
|
|
$
|
(449
|
)
|
Other comprehensive income (loss) before reclassifications
|
|
—
|
|
|
(16
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(16
|
)
|
||||||
Amounts reclassified out of accumulated other comprehensive loss
|
|
—
|
|
|
—
|
|
|
12
|
|
|
(5
|
)
|
|
—
|
|
|
7
|
|
||||||
Tax (expense) benefit
|
|
—
|
|
|
—
|
|
|
(4
|
)
|
|
1
|
|
|
—
|
|
|
(3
|
)
|
||||||
Other comprehensive income (loss)
|
|
—
|
|
|
(16
|
)
|
|
8
|
|
|
(4
|
)
|
|
—
|
|
|
(12
|
)
|
||||||
As of April 30, 2019
|
|
$
|
—
|
|
|
$
|
(46
|
)
|
|
$
|
(424
|
)
|
|
$
|
12
|
|
|
$
|
(3
|
)
|
|
$
|
(461
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
As of October 31, 2018
|
|
$
|
—
|
|
|
$
|
(60
|
)
|
|
$
|
(445
|
)
|
|
$
|
19
|
|
|
$
|
(2
|
)
|
|
$
|
(488
|
)
|
Other comprehensive income (loss) before reclassifications
|
|
—
|
|
|
14
|
|
|
2
|
|
|
—
|
|
|
(2
|
)
|
|
14
|
|
||||||
Amounts reclassified out of accumulated other comprehensive loss
|
|
—
|
|
|
—
|
|
|
26
|
|
|
(9
|
)
|
|
1
|
|
|
18
|
|
||||||
Tax (expense) benefit
|
|
—
|
|
|
—
|
|
|
(7
|
)
|
|
2
|
|
|
—
|
|
|
(5
|
)
|
||||||
Other comprehensive income (loss)
|
|
—
|
|
|
14
|
|
|
21
|
|
|
(7
|
)
|
|
(1
|
)
|
|
27
|
|
||||||
As of April 30, 2019
|
|
$
|
—
|
|
|
$
|
(46
|
)
|
|
$
|
(424
|
)
|
|
$
|
12
|
|
|
$
|
(3
|
)
|
|
$
|
(461
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
As of January 31, 2018
|
|
$
|
12
|
|
|
$
|
2
|
|
|
$
|
(458
|
)
|
|
$
|
31
|
|
|
$
|
1
|
|
|
$
|
(412
|
)
|
Other comprehensive income (loss) before reclassifications
|
|
(1
|
)
|
|
(13
|
)
|
|
1
|
|
|
—
|
|
|
—
|
|
|
(13
|
)
|
||||||
Amounts reclassified out of accumulated other comprehensive loss
|
|
—
|
|
|
—
|
|
|
14
|
|
|
(6
|
)
|
|
(1
|
)
|
|
7
|
|
||||||
Tax (expense) benefit
|
|
1
|
|
|
—
|
|
|
(4
|
)
|
|
2
|
|
|
—
|
|
|
(1
|
)
|
||||||
Other comprehensive income (loss)
|
|
—
|
|
|
(13
|
)
|
|
11
|
|
|
(4
|
)
|
|
(1
|
)
|
|
(7
|
)
|
||||||
As of April 30, 2018
|
|
$
|
12
|
|
|
$
|
(11
|
)
|
|
$
|
(447
|
)
|
|
$
|
27
|
|
|
$
|
—
|
|
|
$
|
(419
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
As of October 31, 2017
|
|
$
|
14
|
|
|
$
|
(39
|
)
|
|
$
|
(468
|
)
|
|
$
|
35
|
|
|
$
|
1
|
|
|
$
|
(457
|
)
|
Other comprehensive income (loss) before reclassifications
|
|
(3
|
)
|
|
28
|
|
|
1
|
|
|
—
|
|
|
2
|
|
|
28
|
|
||||||
Amounts reclassified out of accumulated other comprehensive loss
|
|
—
|
|
|
—
|
|
|
27
|
|
|
(11
|
)
|
|
(3
|
)
|
|
13
|
|
||||||
Tax (expense) benefit
|
|
1
|
|
|
—
|
|
|
(7
|
)
|
|
3
|
|
|
—
|
|
|
(3
|
)
|
||||||
Other comprehensive income (loss)
|
|
(2
|
)
|
|
28
|
|
|
21
|
|
|
(8
|
)
|
|
(1
|
)
|
|
38
|
|
||||||
As of April 30, 2018
|
|
$
|
12
|
|
|
$
|
(11
|
)
|
|
$
|
(447
|
)
|
|
$
|
27
|
|
|
$
|
—
|
|
|
$
|
(419
|
)
|
Details about Accumulated Other Comprehensive Loss Components
|
|
|
|
|
|
Affected Line Item in Statement of Operations
|
||||||||||||
|
|
Three Months Ended
|
|
Six Months Ended
|
|
|
||||||||||||
|
|
April 30,
|
|
April 30,
|
|
|
||||||||||||
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
|
||||||||
|
|
|
|
|
|
|
||||||||||||
Unrealized gain (loss) on derivatives
|
|
$
|
—
|
|
|
$
|
1
|
|
|
$
|
—
|
|
|
$
|
3
|
|
|
Cost of products
|
|
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
—
|
|
|
Selling, general and administrative
|
||||
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Provision for income taxes
|
||||
|
|
—
|
|
|
1
|
|
|
(1
|
)
|
|
3
|
|
|
Net of income tax
|
||||
|
|
|
|
|
|
|
|
|
|
|
||||||||
Net defined benefit pension cost and post retirement plan costs:
|
|
|
|
|
|
|
|
|
|
|
||||||||
Actuarial net loss
|
|
(12
|
)
|
|
(14
|
)
|
|
(26
|
)
|
|
(27
|
)
|
|
|
||||
Prior service credits
|
|
5
|
|
|
6
|
|
|
9
|
|
|
11
|
|
|
|
||||
|
|
(7
|
)
|
|
(8
|
)
|
|
(17
|
)
|
|
(16
|
)
|
|
Total before income tax
|
||||
|
|
3
|
|
|
2
|
|
|
4
|
|
|
4
|
|
|
Provision for income taxes
|
||||
|
|
(4
|
)
|
|
(6
|
)
|
|
(13
|
)
|
|
(12
|
)
|
|
Net of income tax
|
||||
|
|
|
|
|
|
|
|
|
|
|
||||||||
Total reclassifications for the period
|
|
$
|
(4
|
)
|
|
$
|
(5
|
)
|
|
$
|
(14
|
)
|
|
$
|
(9
|
)
|
|
|
16.
|
SEGMENT INFORMATION
|
|
Communications Solutions Group
|
|
Electronic Industrial Solutions Group
|
|
Ixia Solutions Group
|
|
Total Segments
|
||||||||
|
(in millions)
|
||||||||||||||
Three months ended April 30, 2019:
|
|
|
|
|
|
|
|
||||||||
Total net revenue
|
$
|
676
|
|
|
$
|
299
|
|
|
$
|
115
|
|
|
$
|
1,090
|
|
Amortization of acquisition-related balances
|
—
|
|
|
—
|
|
|
3
|
|
|
3
|
|
||||
Total segment revenue
|
$
|
676
|
|
|
$
|
299
|
|
|
$
|
118
|
|
|
$
|
1,093
|
|
Segment income from operations
|
$
|
187
|
|
|
$
|
78
|
|
|
$
|
3
|
|
|
$
|
268
|
|
|
|
|
|
|
|
|
|
||||||||
Three months ended April 30, 2018:
|
|
|
|
|
|
|
|
||||||||
Total net revenue
|
$
|
626
|
|
|
$
|
282
|
|
|
$
|
82
|
|
|
$
|
990
|
|
Amortization of acquisition-related balances
|
1
|
|
|
—
|
|
|
8
|
|
|
9
|
|
||||
Total segment revenue
|
$
|
627
|
|
|
$
|
282
|
|
|
$
|
90
|
|
|
$
|
999
|
|
Segment income (loss) from operations
|
$
|
132
|
|
|
$
|
68
|
|
|
$
|
(10
|
)
|
|
$
|
190
|
|
|
Communications Solutions Group
|
|
Electronic Industrial Solutions Group
|
|
Ixia Solutions Group
|
|
Total Segments
|
||||||||
|
(in millions)
|
||||||||||||||
Six months ended April 30, 2019:
|
|
|
|
|
|
|
|
||||||||
Total net revenue
|
$
|
1,299
|
|
|
$
|
556
|
|
|
$
|
241
|
|
|
$
|
2,096
|
|
Amortization of acquisition-related balances
|
—
|
|
|
—
|
|
|
6
|
|
|
6
|
|
||||
Total segment revenue
|
$
|
1,299
|
|
|
$
|
556
|
|
|
$
|
247
|
|
|
$
|
2,102
|
|
Segment income from operations
|
$
|
325
|
|
|
$
|
132
|
|
|
$
|
15
|
|
|
$
|
472
|
|
|
|
|
|
|
|
|
|
||||||||
Six months ended April 30, 2018:
|
|
|
|
|
|
|
|
||||||||
Total net revenue
|
$
|
1,126
|
|
|
$
|
511
|
|
|
$
|
190
|
|
|
$
|
1,827
|
|
Amortization of acquisition-related balances
|
1
|
|
|
—
|
|
|
27
|
|
|
28
|
|
||||
Total segment revenue
|
$
|
1,127
|
|
|
$
|
511
|
|
|
$
|
217
|
|
|
$
|
1,855
|
|
Segment income from operations
|
$
|
195
|
|
|
$
|
106
|
|
|
$
|
8
|
|
|
$
|
309
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
April 30,
|
|
April 30,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
|
(in millions)
|
||||||||||||||
Total reportable operating segments' income from operations
|
$
|
268
|
|
|
$
|
190
|
|
|
$
|
472
|
|
|
$
|
309
|
|
Share-based compensation expense
|
(23
|
)
|
|
(15
|
)
|
|
(50
|
)
|
|
(34
|
)
|
||||
Amortization of acquisition-related balances
|
(54
|
)
|
|
(65
|
)
|
|
(108
|
)
|
|
(154
|
)
|
||||
Acquisition and integration costs
|
—
|
|
|
(17
|
)
|
|
(2
|
)
|
|
(36
|
)
|
||||
Restructuring and related costs
|
(6
|
)
|
|
(11
|
)
|
|
(6
|
)
|
|
(13
|
)
|
||||
Northern California wildfire-related costs
|
—
|
|
|
—
|
|
|
—
|
|
|
(7
|
)
|
||||
Other
|
—
|
|
|
4
|
|
|
—
|
|
|
4
|
|
||||
Income from operations, as reported
|
185
|
|
|
86
|
|
|
306
|
|
|
69
|
|
||||
Interest income
|
6
|
|
|
2
|
|
|
10
|
|
|
5
|
|
||||
Interest expense
|
(20
|
)
|
|
(21
|
)
|
|
(40
|
)
|
|
(43
|
)
|
||||
Other income (expense), net
|
22
|
|
|
16
|
|
|
37
|
|
|
29
|
|
||||
Income before taxes, as reported
|
$
|
193
|
|
|
$
|
83
|
|
|
$
|
313
|
|
|
$
|
60
|
|
|
Communications Solutions Group
|
|
Electronic Industrial Solutions Group
|
|
Ixia Solutions Group
|
|
Total Segments
|
||||||||
|
(in millions)
|
||||||||||||||
Assets:
|
|
|
|
|
|
|
|
|
|
||||||
As of April 30, 2019
|
$
|
2,126
|
|
|
$
|
912
|
|
|
$
|
1,403
|
|
|
$
|
4,441
|
|
As of October 31, 2018
|
$
|
2,115
|
|
|
$
|
888
|
|
|
$
|
1,327
|
|
|
$
|
4,330
|
|
17.
|
IMPACT OF NORTHERN CALIFORNIA WILDFIRES
|
|
Three Months Ended
|
|
Six Months Ended
|
|
Year over Year Change
|
||||||||||||||
|
April 30,
|
|
April 30,
|
|
Three
|
|
Six
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
Months
|
|
Months
|
||||||||
|
|
|
|
|
|
|
|
|
|||||||||||
Orders
|
$
|
1,121
|
|
|
$
|
987
|
|
|
$
|
2,137
|
|
|
$
|
1,951
|
|
|
14%
|
|
10%
|
Net revenue:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Products
|
$
|
911
|
|
|
$
|
830
|
|
|
$
|
1,748
|
|
|
$
|
1,514
|
|
|
10%
|
|
15%
|
Services and other
|
179
|
|
|
160
|
|
|
348
|
|
|
313
|
|
|
12%
|
|
11%
|
||||
Total net revenue
|
$
|
1,090
|
|
|
$
|
990
|
|
|
$
|
2,096
|
|
|
$
|
1,827
|
|
|
10%
|
|
15%
|
|
Year over Year Change
|
||||||||||
|
Three Months Ended
|
|
Six Months Ended
|
||||||||
|
April 30, 2019
|
|
April 30, 2019
|
||||||||
Geographic Region
|
Actual
|
|
Currency Adjusted
|
|
Actual
|
|
Currency Adjusted
|
||||
Americas
|
12
|
%
|
|
12
|
%
|
|
15
|
%
|
|
15
|
%
|
Europe
|
(2
|
)%
|
|
2
|
%
|
|
2
|
%
|
|
5
|
%
|
Asia Pacific
|
13
|
%
|
|
15
|
%
|
|
21
|
%
|
|
22
|
%
|
Total net revenue
|
10
|
%
|
|
12
|
%
|
|
15
|
%
|
|
16
|
%
|
|
Three Months Ended
|
|
Six Months Ended
|
|
Year over Year Change
|
||||||||||||||
|
April 30,
|
|
April 30,
|
|
Three
|
|
Six
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
Months
|
|
Months
|
||||||||
Total gross margin
|
59.5
|
%
|
|
54.5
|
%
|
|
58.5%
|
|
52.8
|
%
|
|
5 ppts
|
|
6 ppts
|
|||||
Operating margin
|
17.0
|
%
|
|
8.7
|
%
|
|
14.6%
|
|
3.8
|
%
|
|
8 ppts
|
|
11 ppts
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
in millions
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Research and development
|
$
|
171
|
|
|
$
|
160
|
|
|
$
|
344
|
|
|
$
|
310
|
|
|
7%
|
|
11%
|
Selling, general and administrative
|
$
|
300
|
|
|
$
|
305
|
|
|
$
|
588
|
|
|
$
|
600
|
|
|
(1)%
|
|
(2)%
|
Other operating expense (income), net
|
$
|
(8
|
)
|
|
$
|
(12
|
)
|
|
$
|
(12
|
)
|
|
$
|
(15
|
)
|
|
(27)%
|
|
(16)%
|
|
Three Months Ended
|
|
Six Months Ended
|
|
Year over Year Change
|
||||||||||||||
|
April 30,
|
|
April 30,
|
|
Three
|
|
Six
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
Months
|
|
Months
|
||||||||
|
(in millions)
|
|
(in millions)
|
|
|
|
|
||||||||||||
Net revenue
|
$
|
676
|
|
|
$
|
627
|
|
|
$
|
1,299
|
|
|
$
|
1,127
|
|
|
8%
|
|
15%
|
|
Three Months Ended
|
|
Six Months Ended
|
|
Year over Year Change
|
||||||||||||||
|
April 30,
|
|
April 30,
|
|
Three
|
|
Six
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
Months
|
|
Months
|
||||||||
Total gross margin
|
63.4
|
%
|
|
58.2
|
%
|
|
62.3
|
%
|
|
57.8
|
%
|
|
5 ppts
|
|
4 ppts
|
||||
Operating margin
|
27.7
|
%
|
|
21.0
|
%
|
|
25.1
|
%
|
|
17.3
|
%
|
|
7 ppts
|
|
8 ppts
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
in millions
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Research and development
|
$
|
93
|
|
|
$
|
89
|
|
|
$
|
189
|
|
|
$
|
173
|
|
|
4%
|
|
9%
|
Selling, general and administrative
|
$
|
150
|
|
|
$
|
146
|
|
|
$
|
298
|
|
|
$
|
288
|
|
|
2%
|
|
3%
|
Other operating expense (income), net
|
$
|
(2
|
)
|
|
$
|
(3
|
)
|
|
$
|
(4
|
)
|
|
$
|
(5
|
)
|
|
(30)%
|
|
(20)%
|
Income from operations
|
$
|
187
|
|
|
$
|
132
|
|
|
$
|
325
|
|
|
$
|
195
|
|
|
42%
|
|
67%
|
|
Three Months Ended
|
|
Six Months Ended
|
|
Year over Year Change
|
||||||||||||||
|
April 30,
|
|
April 30,
|
|
Three
|
|
Six
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
Months
|
|
Months
|
||||||||
|
(in millions)
|
|
(in millions)
|
|
|
|
|
||||||||||||
Net revenue
|
$
|
299
|
|
|
$
|
282
|
|
|
$
|
556
|
|
|
$
|
511
|
|
|
6%
|
|
9%
|
|
Three Months Ended
|
|
Six Months Ended
|
|
Year over Year Change
|
||||||||||||||
|
April 30,
|
|
April 30,
|
|
Three
|
|
Six
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
Months
|
|
Months
|
||||||||
Total gross margin
|
61.3
|
%
|
|
59.0
|
%
|
|
60.2
|
%
|
|
57.9
|
%
|
|
2 ppts
|
|
2 ppts
|
||||
Operating margin
|
26.1
|
%
|
|
23.9
|
%
|
|
23.7
|
%
|
|
20.8
|
%
|
|
2 ppts
|
|
3 ppts
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
in millions
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Research and development
|
$
|
42
|
|
|
$
|
37
|
|
|
$
|
81
|
|
|
$
|
71
|
|
|
12%
|
|
14%
|
Selling, general and administrative
|
$
|
64
|
|
|
$
|
63
|
|
|
$
|
123
|
|
|
$
|
121
|
|
|
1%
|
|
2%
|
Other operating expense (income), net
|
$
|
(1
|
)
|
|
$
|
(1
|
)
|
|
$
|
(2
|
)
|
|
$
|
(2
|
)
|
|
(37)%
|
|
(25)%
|
Income from operations
|
$
|
78
|
|
|
$
|
68
|
|
|
$
|
132
|
|
|
$
|
106
|
|
|
16%
|
|
24%
|
|
Three Months Ended
|
|
Six Months Ended
|
|
Year over Year Change
|
||||||||||||||
|
April 30,
|
|
April 30,
|
|
Three
|
|
Six
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
Months
|
|
Months
|
||||||||
Total gross margin
|
71.5
|
%
|
|
75.6
|
%
|
|
71.4
|
%
|
|
75.6
|
%
|
|
(4) ppts
|
|
(4) ppts
|
||||
Operating margin
|
2.6
|
%
|
|
(10.6
|
)%
|
|
6.0
|
%
|
|
3.9
|
%
|
|
13 ppts
|
|
2 ppts
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
in millions
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Research and development
|
$
|
32
|
|
|
$
|
30
|
|
|
$
|
64
|
|
|
$
|
56
|
|
|
7%
|
|
15%
|
Selling, general and administrative
|
$
|
50
|
|
|
$
|
47
|
|
|
$
|
98
|
|
|
$
|
100
|
|
|
6%
|
|
(2)%
|
Other operating expense (income), net
|
$
|
(1
|
)
|
|
$
|
—
|
|
|
$
|
(1
|
)
|
|
$
|
—
|
|
|
—
|
|
—
|
Income (loss) from operations
|
$
|
3
|
|
|
$
|
(10
|
)
|
|
$
|
15
|
|
|
$
|
8
|
|
|
133%
|
|
77%
|
•
|
Net income for the six months ended April 30, 2019 increased $109 million compared to the same period last year. Non-cash adjustments increased $247 million primarily due to a decrease in deferred tax benefits from the 2018 U.S. tax legislation in the six months ended April 30, 2018.
|
•
|
The aggregate of accounts receivable, inventory and accounts payable used net operating cash of $80 million during the first six months of fiscal 2019 compared to net cash used of $29 million in the comparable period last year. The amount of cash flow generated from or used by the aggregate of accounts receivable, inventory and accounts payable depends upon the cash conversion cycle, which represents the number of days that elapse from the day we pay for the purchase of raw materials and components to the collection of cash from our customers and can be significantly impacted by the timing of shipments and purchases, as well as collections and payments in a period.
|
•
|
The aggregate of employee compensation and benefits, income tax payable, deferred revenue and other assets and liabilities provided net operating cash of $88 million during the first six months of fiscal 2019 compared to net cash provided of $213 million in the comparable period last year. The difference is primarily due to lower cash from income taxes payable due to the establishment of a long-term transition tax liability from the 2018 U.S. tax legislation recognized in the six months ended April 30, 2018, and higher variable compensation payments, partially offset by lower cash outflow for fire-related recovery. For the six months ended April 30, 2019 and 2018, we received insurance proceeds of $22 million and $40 million, respectively, associated with the northern California wildfires. Also, for the six months ended April 30, 2018, we received insurance proceeds of $26 million for Singapore fire-related expenses.
|
•
|
We contributed $15 million to our non-U.S. defined benefit plans during the first six months of fiscal 2019 compared to $16 million in the same period last year. We expect to contribute $15 million to our non-U.S. defined benefit plans during the remainder of 2019. For the six months ended April 30, 2019 and 2018, we did not contribute to our U.S. defined benefit plans or U.S. post-retirement benefit plan, and we do not expect to contribute to our U.S. defined benefit plans during the remainder of 2019.
|
•
|
properly identify customer needs;
|
•
|
innovate and develop new technologies, services and applications;
|
•
|
successfully commercialize new technologies in a timely manner;
|
•
|
manufacture and deliver our solutions in sufficient volumes and on time;
|
•
|
differentiate our offerings from our competitors' offerings;
|
•
|
price our solutions competitively;
|
•
|
anticipate our competitors' development of new solutions, services or technological innovations; and
|
•
|
control product quality in our manufacturing process.
|
•
|
reduced demand for our solutions, delays in the shipment of orders or increases in order cancellations;
|
•
|
increased risk of excess and obsolete inventories;
|
•
|
increased price pressure for our solutions and services; and
|
•
|
greater risk of impairment to the value, and a detriment to the liquidity, of our future investment portfolio.
|
•
|
changes in a specific country's or region's political, economic or other conditions, including but not limited to changes that favor national interests and economic volatility;
|
•
|
negative consequences from changes in tax laws;
|
•
|
difficulty in protecting intellectual property;
|
•
|
interruption to transportation flows for delivery of parts to us and finished goods to our customers;
|
•
|
changes in foreign currency exchange rates;
|
•
|
difficulty in staffing and managing foreign operations;
|
•
|
local competition;
|
•
|
differing labor regulations;
|
•
|
unexpected changes in regulatory requirements;
|
•
|
inadequate local infrastructure;
|
•
|
potential incidences of corruption and fraudulent business practices; and
|
•
|
volatile geopolitical turmoil, including popular uprisings, regional conflicts, terrorism, and war.
|
•
|
the achievement of anticipated cost savings, synergies, business opportunities and growth prospects from combining the acquired company;
|
•
|
the compatibility of our infrastructure, operations, policies and organizations with those of the acquired company;
|
•
|
the retention of key employees and/or customers;
|
•
|
the management of facilities and employees in different geographic areas; and
|
•
|
the management of relationships with our strategic partners, suppliers, and customer base.
|
•
|
requiring a portion of our cash flow from operations to make interest payments on this debt;
|
•
|
increasing our vulnerability to general adverse economic and industry conditions;
|
•
|
reducing the cash flow available to fund capital expenditures and other corporate purposes and to grow our business; and
|
•
|
limiting our flexibility in planning for, or reacting to, changes in our business and the industry.
|
•
|
actual or anticipated fluctuations in our operating results due to factors related to our business;
|
•
|
success or failure of our business strategy;
|
•
|
our quarterly or annual earnings, or those of other companies in our industry;
|
•
|
our ability to obtain third-party financing as needed;
|
•
|
announcements by us or our competitors of significant acquisitions or dispositions;
|
•
|
changes in accounting standards, policies, guidance, interpretations or principles;
|
•
|
the failure of securities analysts to cover our common stock;
|
•
|
changes in earnings estimates by securities analysts or our ability to meet those estimates;
|
•
|
the operating and share price performance of other comparable companies;
|
•
|
investor perception of our company;
|
•
|
natural or other disasters that investors believe may affect us;
|
•
|
overall market fluctuations;
|
•
|
results from any material litigation or government investigations;
|
•
|
changes in laws or regulations affecting our business; and
|
•
|
general economic conditions and other external factors.
|
•
|
the inability of our shareholders to call a special meeting;
|
•
|
the inability of our shareholders to act without a meeting of shareholders;
|
•
|
rules regarding how shareholders may present proposals or nominate directors for election at shareholder meetings;
|
•
|
the right of our board to issue preferred stock without shareholder approval;
|
•
|
the division of our board of directors into three classes of directors, with each class serving a staggered three-year term, and this classified board provision could have the effect of making the replacement of incumbent directors more time consuming and difficult;
|
•
|
a provision that shareholders may only remove directors with cause;
|
•
|
the ability of our directors, and not shareholders, to fill vacancies on our board of directors; and
|
•
|
the requirement that the affirmative vote of shareholders holding at least 80 percent of our voting stock is required to amend certain provisions in our amended and restated certificate of incorporation (relating to the number, term and removal of our directors, the filling of our board vacancies, the advance notice to be given for nominations for elections of directors, the calling of special meetings of shareholders, shareholder action by written consent, the ability of the board of directors to amend the bylaws, elimination of liability of directors to the extent permitted by Delaware law, exclusive forum for certain types of actions and proceedings that may be initiated by our shareholders and amendments of the certificate of incorporation) and certain provisions in our amended and restated bylaws (relating to the calling of special meetings of shareholders, the business that may be conducted or considered at annual or special meetings, the advance notice of shareholder business and nominations, shareholder action by written consent, the number, tenure, qualifications and removal of our directors, the filling of our board vacancies, director and officer indemnification and amendments of the bylaws).
|
•
|
the diversion of management's attention to integration matters;
|
•
|
difficulties in achieving anticipated cost savings, synergies, business opportunities and growth prospects from combining Ixia’s business with our business;
|
•
|
difficulties entering new markets or manufacturing in new geographies where we have no or limited direct prior experience;
|
•
|
difficulties in the integration of operations and systems;
|
•
|
difficulties in the assimilation of employees;
|
•
|
difficulties in managing the expanded operations of a significantly larger and more complex company;
|
•
|
successfully managing relationships with our strategic partners and supplier and customer base; and
|
•
|
challenges in maintaining existing, and establishing new, business relationships.
|
Period
|
|
Total Number of Shares of Common Stock Purchased (1)
|
|
Weighted Average Price Paid per Share of Common Stock (2)
|
|
Total Number of Shares of Common Stock Purchased as Part of Publicly Announced Plans or Programs (1)
|
|
Maximum Approximate Dollar Value of Shares of Common Stock that May Yet Be Purchased Under the Program (1)
|
|
|
|
|
|
|
|
|
|
February 1, 2019 through February 29, 2019
|
|
—
|
|
—
|
|
—
|
|
189,873,335
|
March 1, 2019 through March 31, 2019
|
|
231,193
|
|
85.96
|
|
231,193
|
|
170,000,454
|
April 1, 2019 through April 30, 2019
|
|
112,529
|
|
89.73
|
|
112,529
|
|
159,902,847
|
Total
|
|
343,722
|
|
|
|
343,722
|
|
|
(1)
|
On March 6, 2018, the Board of Directors approved a new stock repurchase program authorizing the purchase of up to $350 million of the company’s common stock, replacing a previously approved 2016 program authorizing the purchase of up to $200 million of the company’s common stock, and of which $139 million remained. Under the new program, shares may be purchased from time to time, subject to general business and market conditions and other investment opportunities, through open market purchases, privately negotiated transactions or other means. All such shares and related costs are held as treasury stock and accounted for at trade date using the cost method.
|
(2)
|
The weighted average price paid per share of common stock does not include the cost of commissions.
|
Exhibit
|
|
|
Number
|
|
Description
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
101.INS
|
|
XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
|
|
|
|
101.SCH
|
|
XBRL Extension Schema Document
|
|
|
|
101.CAL
|
|
XBRL Extension Calculation Linkbase Document
|
|
|
|
101.LAB
|
|
XBRL Extension Label Linkbase Document
|
|
|
|
101.PRE
|
|
XBRL Extension Presentation Linkbase Document
|
|
|
|
101.DEF
|
|
XBRL Extension Definition Linkbase Document
|
Dated:
|
May 30, 2019
|
By:
|
/s/ Neil Dougherty
|
|
|
|
Neil Dougherty
|
|
|
|
Senior Vice President and Chief Financial Officer
|
|
|
|
(Principal Financial Officer)
|
|
|
|
|
|
|
|
|
Dated:
|
May 30, 2019
|
By:
|
/s/ John C. Skinner
|
|
|
|
John C. Skinner
|
|
|
|
Vice President and Corporate Controller
|
|
|
|
(Principal Accounting Officer)
|
1.
|
I have reviewed this Form 10-Q of Keysight Technologies, Inc. ("the Registrant");
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report;
|
4.
|
The Registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the Registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the Registrant's internal control over financial reporting that occurred during the Registrant's most recent fiscal quarter (the Registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant's internal control over financial reporting; and
|
5.
|
The Registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant's auditors and the audit committee of the Registrant's board of directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant's ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant's internal control over financial reporting.
|
Date:
|
May 30, 2019
|
|
|
|
/s/ Ronald S. Nersesian
|
|
|
Ronald S. Nersesian
|
|
|
President and Chief Executive Officer
|
1.
|
I have reviewed this Form 10-Q of Keysight Technologies, Inc. ("the Registrant");
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report;
|
4.
|
The Registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the Registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the Registrant's internal control over financial reporting that occurred during the Registrant's most recent fiscal quarter (the Registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant's internal control over financial reporting; and
|
5.
|
The Registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant's auditors and the audit committee of the Registrant's board of directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant's ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant's internal control over financial reporting.
|
Date:
|
May 30, 2019
|
|
|
|
/s/ Neil Dougherty
|
|
|
Neil Dougherty
|
|
|
Senior Vice President and Chief Financial Officer
|
Date:
|
May 30, 2019
|
/s/ Ronald S. Nersesian
|
|
|
Ronald S. Nersesian
|
|
|
President and Chief Executive Officer
|
Date:
|
May 30, 2019
|
/s/ Neil Dougherty
|
|
|
Neil Dougherty
|
|
|
Senior Vice President and Chief Financial Officer
|