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Source: IR-KEYS
KEYSIGHT TECHNOLOGIES, INC. |
|||||||||||
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS |
|||||||||||
(In millions, except per share amounts) |
|||||||||||
(Unaudited) |
|||||||||||
PRELIMINARY |
|||||||||||
Three months ended |
|
|
|||||||||
October 31, |
|
Percent |
|||||||||
2019 |
|
2018(a) |
|
Inc/(Dec) |
|||||||
|
|
|
|||||||||
Orders |
$ |
1,194 |
|
$ |
1,124 |
|
6 |
% |
|||
Net revenue |
$ |
1,120 |
|
$ |
1,047 |
|
7 |
% |
|||
Costs and expenses: |
|||||||||||
Cost of products and services |
|
455 |
|
|
462 |
|
(2 |
)% |
|||
Research and development |
|
176 |
|
|
160 |
|
11 |
% |
|||
Selling, general and administrative |
|
286 |
|
|
311 |
|
(8 |
)% |
|||
| Goodwill impairment |
|
- |
|
|
709 |
|
‒ |
|
|||
| Other operating expense (income), net |
|
(5 |
) |
|
(15 |
) |
(72 |
)% |
|||
| Total costs and expenses |
|
912 |
|
|
1,627 |
|
(44 |
)% |
|||
|
|
|
||||||||||
| Income (loss) from operations |
|
208 |
|
|
(580 |
) |
‒ |
|
|||
| Interest income |
|
6 |
|
|
4 |
|
70 |
% |
|||
| Interest expense |
|
(20 |
) |
|
(20 |
) |
1 |
% |
|||
| Other income (expense), net |
|
9 |
|
|
12 |
|
(22 |
)% |
|||
|
|
|
||||||||||
| Income (loss) before taxes |
|
203 |
|
|
(584 |
) |
‒ |
|
|||
| Provision (benefit) for income taxes |
|
8 |
|
|
(470 |
) |
‒ |
|
|||
|
|
|
||||||||||
| Net Income (loss) |
$ |
195 |
|
$ |
(114 |
) |
‒ |
|
|||
|
|
|
||||||||||
| Net income (loss) per share: |
|||||||||||
| Basic |
$ |
1.04 |
|
$ |
(0.61 |
) |
|||||
| Diluted |
$ |
1.02 |
|
$ |
(0.61 |
) |
|||||
| Weighted average shares used in computing net income (loss) per share: |
|||||||||||
| Basic |
|
187 |
|
|
187 |
|
|||||
| Diluted |
|
191 |
|
|
187 |
|
|||||
| (a) Restated to include the impact of adoption of ASU 2017-07, Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost, on November 1, 2018. There is no impact to net income or net income per share. |
|||||||||||
| Page 1 |
|||||||||||
| KEYSIGHT TECHNOLOGIES, INC. |
|||||||||||
| CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS |
|||||||||||
| (In millions, except per share amounts) |
|||||||||||
| (Unaudited) |
|||||||||||
| PRELIMINARY |
|||||||||||
| Year ended |
|
|
|||||||||
| October 31, |
|
Percent |
|||||||||
| 2019 |
|
2018 (a) |
|
Inc/(Dec) |
|||||||
|
|
|
|
|||||||||
| Orders |
$ |
4,441 |
|
$ |
4,082 |
|
9 |
% |
|||
| Net revenue |
$ |
4,303 |
|
$ |
3,878 |
|
11 |
% |
|||
| Costs and expenses: |
|||||||||||
| Cost of products and services |
|
1,769 |
|
|
1,767 |
|
‒ |
|
|||
| Research and development |
|
688 |
|
|
624 |
|
10 |
% |
|||
| Selling, general and administrative |
|
1,155 |
|
|
1,205 |
|
(4 |
)% |
|||
| Goodwill impairment |
|
- |
|
|
709 |
|
‒ |
|
|||
| Other operating expense (income), net |
|
(20 |
) |
|
(33 |
) |
(40 |
)% |
|||
| Total costs and expenses |
|
3,592 |
|
|
4,272 |
|
(16 |
)% |
|||
|
|
|
||||||||||
| Income (loss) from operations |
|
711 |
|
|
(394 |
) |
‒ |
|
|||
| Interest income |
|
23 |
|
|
12 |
|
90 |
% |
|||
| Interest expense |
|
(80 |
) |
|
(83 |
) |
(3 |
)% |
|||
| Other income (expense), net |
|
61 |
|
|
54 |
|
16 |
% |
|||
|
|
|
||||||||||
| Income (loss) before taxes |
|
715 |
|
|
(411 |
) |
‒ |
|
|||
| Provision (benefit) for income taxes |
|
94 |
|
|
(576 |
) |
‒ |
|
|||
|
|
|
||||||||||
| Net Income |
$ |
621 |
|
$ |
165 |
|
277 |
% |
|||
|
|
|
||||||||||
| Net income per share: |
|||||||||||
| Basic |
$ |
3.31 |
|
$ |
0.88 |
|
|||||
| Diluted |
$ |
3.25 |
|
$ |
0.86 |
|
|||||
| Weighted average shares used in computing net income per share: |
|||||||||||
| Basic |
|
188 |
|
|
187 |
|
|||||
| Diluted |
|
191 |
|
|
191 |
|
|||||
| (a) Restated to include the impact of adoption of ASU 2017-07, Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost, on November 1, 2018. There is no impact to net income or net income per share. |
|||||||||||
| Page 2 |
|||||||||||
| KEYSIGHT TECHNOLOGIES, INC. |
||||||||
| CONDENSED CONSOLIDATED BALANCE SHEET |
||||||||
| (In millions, except par value and share amounts) |
||||||||
| PRELIMINARY |
||||||||
| October 31, |
October 31, |
|||||||
| 2019 |
2018 |
|||||||
| (unaudited) |
|
|||||||
| ASSETS |
||||||||
| Current assets: |
||||||||
| Cash and cash equivalents |
$ |
1,598 |
|
$ |
913 |
|
||
| Accounts receivable, net |
|
668 |
|
|
624 |
|
||
| Inventory |
|
705 |
|
|
619 |
|
||
| Other current assets |
|
244 |
|
|
222 |
|
||
| Total current assets |
|
3,215 |
|
|
2,378 |
|
||
| Property, plant and equipment, net |
|
576 |
|
|
555 |
|
||
| Goodwill |
|
1,209 |
|
|
1,171 |
|
||
| Other intangible assets, net |
|
490 |
|
|
645 |
|
||
| Long-term investments |
|
46 |
|
|
46 |
|
||
| Long-term deferred tax assets |
|
755 |
|
|
750 |
|
||
| Other assets |
|
332 |
|
|
279 |
|
||
| Total assets |
$ |
6,623 |
|
$ |
5,824 |
|
||
|
|
|
|||||||
| LIABILITIES AND EQUITY |
||||||||
| Current liabilities: |
||||||||
| Short-term debt |
$ |
- |
|
$ |
499 |
|
||
| Accounts payable |
|
253 |
|
|
242 |
|
||
| Employee compensation and benefits |
|
278 |
|
|
276 |
|
||
| Deferred revenue |
|
334 |
|
|
334 |
|
||
| Income and other taxes payable |
|
55 |
|
|
42 |
|
||
| Other accrued liabilities |
|
83 |
|
|
69 |
|
||
| Total current liabilities |
|
1,003 |
|
|
1,462 |
|
||
| Long-term debt |
|
1,788 |
|
|
1,291 |
|
||
| Retirement and post-retirement benefits |
|
357 |
|
|
224 |
|
||
| Long-term deferred revenue |
|
176 |
|
|
127 |
|
||
| Other long-term liabilities |
|
295 |
|
|
287 |
|
||
| Total liabilities |
|
3,619 |
|
|
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 October 31, 2019, and 191 million shares at October 31, 2018, issued |
|
2 |
|
|
2 |
|
||
| Treasury stock at cost; 6.5 million shares at October 31, 2019 and 4.4 million shares at October 31, 2018 |
|
(342 |
) |
|
(182 |
) |
||
| Additional paid-in-capital |
|
2,013 |
|
|
1,889 |
|
||
| Retained earnings |
|
1,909 |
|
|
1,212 |
|
||
| Accumulated other comprehensive loss |
|
(578 |
) |
|
(488 |
) |
||
| Total stockholders' equity |
|
3,004 |
|
|
2,433 |
|
||
| Total liabilities and equity |
$ |
6,623 |
|
$ |
5,824 |
|
||
|
|
|
|||||||
| Page 3 |
||||||||
| KEYSIGHT TECHNOLOGIES, INC. | ||||||||
| CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS | ||||||||
| (In millions) | ||||||||
| PRELIMINARY | ||||||||
| Year ended |
||||||||
| October 31, |
||||||||
| 2019 |
|
2018 (a) |
||||||
| (unaudited) | ||||||||
| Cash flows from operating activities: | ||||||||
| Net income | $ |
621 |
|
$ |
165 |
|
||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
| Depreciation |
|
96 |
|
|
103 |
|
||
| Amortization |
|
212 |
|
|
207 |
|
||
| Share-based compensation |
|
82 |
|
|
59 |
|
||
| Deferred tax benefit |
|
(2 |
) |
|
(789 |
) |
||
| Excess and obsolete inventory related charges |
|
27 |
|
|
25 |
|
||
| Gain on sale of assets and divestitures |
|
(1 |
) |
|
(20 |
) |
||
| Goodwill impairment |
|
- |
|
|
709 |
|
||
| Pension curtailment and settlement loss |
|
2 |
|
|
1 |
|
||
| Other non-cash expenses (income), net |
|
(4 |
) |
|
15 |
|
||
| Changes in assets and liabilities: | ||||||||
| Accounts receivable |
|
(26 |
) |
|
(89 |
) |
||
| Inventory |
|
(92 |
) |
|
(61 |
) |
||
| Accounts payable |
|
13 |
|
|
22 |
|
||
| Employee compensation and benefits |
|
- |
|
|
63 |
|
||
| Deferred revenue |
|
112 |
|
|
75 |
|
||
| Income taxes payable |
|
(16 |
) |
|
181 |
|
||
| Retirement and post-retirement benefits |
|
(37 |
) |
|
(127 |
) |
||
| Other assets and liabilities |
|
11 |
|
|
16 |
|
||
| Net cash provided by operating activities (b) |
|
998 |
|
|
555 |
|
||
| Cash flows from investing activities: | ||||||||
| Purchases of property, plant and equipment |
|
(120 |
) |
|
(132 |
) |
||
| Proceeds from the sale of assets and divestitures |
|
2 |
|
|
29 |
|
||
| Acquisition of businesses and intangible assets, net of cash acquired |
|
(88 |
) |
|
(5 |
) |
||
| Proceeds from the sale of investments |
|
7 |
|
|
- |
|
||
| Other investing activities |
|
3 |
|
|
- |
|
||
| Net cash used in investing activities |
|
(196 |
) |
|
(108 |
) |
||
| Cash flows from financing activities: | ||||||||
| Issuance of common stock under employee stock plans |
|
67 |
|
|
64 |
|
||
| Payment of taxes related to net share settlement of equity awards |
|
(26 |
) |
|
(18 |
) |
||
| Treasury stock repurchases (c) |
|
(159 |
) |
|
(120 |
) |
||
| Proceeds from issuance of long-term debt |
|
500 |
|
|
- |
|
||
| Debt issuance costs |
|
(4 |
) |
|
- |
|
||
| Proceeds from short term borrowings |
|
- |
|
|
40 |
|
||
| Repayment of debt and credit facility |
|
(500 |
) |
|
(300 |
) |
||
| Payment of acquisition-related contingent consideration |
|
- |
|
|
(6 |
) |
||
| Other financing activities |
|
- |
|
|
(1 |
) |
||
| Net cash used in financing activities |
|
(122 |
) |
|
(341 |
) |
||
| Effect of exchange rate movements |
|
3 |
|
|
(9 |
) |
||
| Net increase in cash and cash equivalents and restricted cash |
|
683 |
|
|
97 |
|
||
| Cash, cash equivalents and restricted cash at beginning of period |
|
917 |
|
|
820 |
|
||
| Cash, cash equivalents and restricted cash at end of period | $ |
1,600 |
|
$ |
917 |
|
||
| (a) Restated to include the impact of adoption of ASU 2016-15, Classification of Certain Cash Receipts and Cash Payments , and ASU 2016-18, Restricted Cash , on November 1, 2018. | ||||||||
| (b) Cash payments included in operating activities: | ||||||||
| Income tax payments, net | $ |
(103 |
) |
$ |
(27 |
) |
||
| Interest payment on debt | $ |
(76 |
) |
$ |
(79 |
) |
||
| (c) For the year ended October 31, 2019, we repurchased 2,093,570 shares of common stock for $160 million, held as treasury stock and accounted for at trade date using the cost method. There were $1 million of stock repurchases pending settlements as of October 31, 2019. For the year ended October 31, 2018, we repurchased 2,075,460 shares of common stock for $120 million, held as treasury stock and accounted for at trade date using the cost method. | ||||||||
| Page 4 | ||||||||
| KEYSIGHT TECHNOLOGIES, INC. |
||||||||||||||||||||||
| RECONCILIATION OF NON-GAAP CORE REVENUE |
||||||||||||||||||||||
| (In millions) |
||||||||||||||||||||||
| (Unaudited) |
||||||||||||||||||||||
| PRELIMINARY |
||||||||||||||||||||||
| Q4'19 |
|
Q4'18 |
|
Percent Inc/(Dec) |
|
FY19 |
|
FY18 |
|
Percent Inc/(Dec) |
||||||||||||
| GAAP Revenue |
$ |
1,120 |
|
$ |
1,047 |
|
7 |
% |
$ |
4,303 |
|
$ |
3,878 |
|
11 |
% |
||||||
| Amortization of acquisition-related balances |
|
2 |
|
|
4 |
|
|
9 |
|
|
36 |
|
||||||||||
| Non-GAAP Revenue |
$ |
1,122 |
|
$ |
1,051 |
|
7 |
% |
$ |
4,312 |
|
$ |
3,914 |
|
10 |
% |
||||||
| Less: Revenue from acquisition or divestitures included in segment results |
|
(10 |
) |
|
(5 |
) |
|
(19 |
) |
|
(22 |
) |
||||||||||
| Currency impacts |
|
4 |
|
|
- |
|
|
37 |
|
|
- |
|
||||||||||
| Non-GAAP Core Revenue |
$ |
1,116 |
|
$ |
1,046 |
|
7 |
% |
$ |
4,330 |
|
$ |
3,892 |
|
11 |
% |
||||||
|
|
|
|
|
|||||||||||||||||||
| Non-GAAP core revenue excludes impact of currency and revenue from acquisitions or divestitures closed within the last twelve months. |
||||||||||||||||||||||
| Please refer page 8 for discussion on our non-GAAP financial measures. |
||||||||||||||||||||||
| Page 5 |
||||||||||||||||||||||
| KEYSIGHT TECHNOLOGIES, INC. | |||||||||||
| SEGMENT RESULTS INFORMATION | |||||||||||
| (In millions, except where noted) | |||||||||||
| (Unaudited) | |||||||||||
| PRELIMINARY | |||||||||||
| Communications Solutions Group | YoY | ||||||||||
| Q4'19 | Q4'18 | % Chg | |||||||||
| Revenue | $ |
706 |
|
$ |
661 |
|
7 |
% |
|||
| Gross margin, % |
|
62.9 |
% |
|
60.1 |
% |
|||||
| Income from operations | $ |
199 |
|
$ |
159 |
|
|||||
| Operating margin, % |
|
28 |
% |
|
24 |
% |
|||||
| Electronic Industrial Solutions Group | YoY | ||||||||||
| Q4'19 | Q4'18 | % Chg | |||||||||
| Revenue | $ |
284 |
|
$ |
275 |
|
3 |
% |
|||
| Gross margin, % |
|
62.4 |
% |
|
58.7 |
% |
|||||
| Income from operations | $ |
79 |
|
$ |
64 |
|
|||||
| Operating margin, % |
|
28 |
% |
|
23 |
% |
|||||
| Ixia Solutions Group | YoY | ||||||||||
| Q4'19 | Q4'18 | % Chg | |||||||||
| Revenue | $ |
132 |
|
$ |
115 |
|
15 |
% |
|||
| Gross margin, % |
|
71.7 |
% |
|
70.3 |
% |
|||||
| Income from operations | $ |
12 |
|
$ |
(1 |
) |
|||||
| Operating margin, % |
|
9 |
% |
|
(1 |
)% |
|||||
| Restated for (1) the organizational change completed in Q1'19 to align our services business with its customers and end markets. With this change, services, which was previously reported as Services Solutions Group (SSG), is now reported as part of the Communications Solutions Group (CSG) and Electronic Industrial Solutions Group (EISG); and (2) the retrospective application of ASU 2017-07, Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost , which the company adopted on November 1, 2018. | |||||||||||
| Net revenue for Ixia Solutions Group excludes the impact of amortization of acquisition-related balances of $2 million and $4 million for Q4'19 and Q4'18, respectively. Segment revenue and income from operations are consistent with the respective non-GAAP measures as discussed on Page 8. | |||||||||||
| Page 6 | |||||||||||
| KEYSIGHT TECHNOLOGIES, INC. |
||||||||||||||||||||||||||||||||
| NON-GAAP NET INCOME AND DILUTED EPS RECONCILIATIONS |
||||||||||||||||||||||||||||||||
| (In millions, except per share amounts) |
||||||||||||||||||||||||||||||||
| (Unaudited) |
||||||||||||||||||||||||||||||||
| PRELIMINARY |
||||||||||||||||||||||||||||||||
| Three months ended |
|
Year ended |
||||||||||||||||||||||||||||||
| October 31, |
|
October 31, |
||||||||||||||||||||||||||||||
| 2019 |
|
2018 |
|
2019 |
|
2018 |
||||||||||||||||||||||||||
| Net Income |
|
Diluted EPS |
|
Net Income |
|
Diluted EPS (a) |
|
Net Income |
|
Diluted EPS |
|
Net Income |
|
Diluted EPS |
||||||||||||||||||
| GAAP Net income (loss) |
$ |
195 |
|
$ |
1.02 |
|
$ |
(114 |
) |
$ |
(0.61 |
) |
$ |
621 |
|
$ |
3.25 |
|
$ |
165 |
|
$ |
0.86 |
|
||||||||
| Non-GAAP adjustments: |
||||||||||||||||||||||||||||||||
| Amortization of acquisition-related balances |
|
60 |
|
|
0.31 |
|
|
55 |
|
|
0.28 |
|
|
224 |
|
|
1.17 |
|
|
265 |
|
|
1.38 |
|
||||||||
| Share-based compensation |
|
16 |
|
|
0.08 |
|
|
11 |
|
|
0.06 |
|
|
82 |
|
|
0.43 |
|
|
59 |
|
|
0.31 |
|
||||||||
| Acquisition and integration costs |
|
5 |
|
|
0.03 |
|
|
7 |
|
|
0.03 |
|
|
11 |
|
|
0.06 |
|
|
49 |
|
|
0.25 |
|
||||||||
| Goodwill impairment |
|
- |
|
|
- |
|
|
709 |
|
|
3.71 |
|
|
- |
|
|
- |
|
|
709 |
|
|
3.72 |
|
||||||||
| Restructuring and related costs |
|
2 |
|
|
0.01 |
|
|
1 |
|
|
0.01 |
|
|
9 |
|
|
0.05 |
|
|
17 |
|
|
0.09 |
|
||||||||
| Northern California wildfire-related costs |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
7 |
|
|
0.04 |
|
||||||||
| Other |
|
2 |
|
|
0.01 |
|
|
20 |
|
|
0.12 |
|
|
(16 |
) |
|
(0.09 |
) |
|
24 |
|
|
0.14 |
|
||||||||
| Adjustment for taxes (b) |
|
(26 |
) |
|
(0.13 |
) |
|
(496 |
) |
|
(2.59 |
) |
|
(29 |
) |
|
(0.15 |
) |
|
(677 |
) |
|
(3.55 |
) |
||||||||
| Non-GAAP Net income |
$ |
254 |
|
$ |
1.33 |
|
$ |
193 |
|
$ |
1.01 |
|
$ |
902 |
|
$ |
4.72 |
|
$ |
618 |
|
$ |
3.24 |
|
||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||
| Weighted average shares outstanding - diluted |
|
191 |
|
|
187 |
|
|
191 |
|
|
187 |
|
||||||||||||||||||||
| (a) EPS impact on non-GAAP adjustments and non-GAAP net income is based on an adjusted shares outstanding of 191 million for three months ended October 31, 2018. |
||||||||||||||||||||||||||||||||
| (b) For both the three and twelve months ended October 31, 2019 management uses a non-GAAP effective tax rate of 12%. For the three and twelve months ended October 31, 2018 management uses a non-GAAP effective tax rate of 12% and 14%, respectively. |
||||||||||||||||||||||||||||||||
| Historical amounts are reclassified to conform with current presentation. |
||||||||||||||||||||||||||||||||
| Please refer page 8 for discussion on our non-GAAP financial measures. |
||||||||||||||||||||||||||||||||
| Page 7 |
||||||||||||||||||||||||||||||||
