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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 | ||||||||
|
2020 |
|
|
2019 |
|
Inc/(Dec) | |||
| Orders | $ |
1,231 |
|
$ |
1,194 |
|
3% |
||
|
|||||||||
|
|||||||||
| Net revenue | $ |
1,220 |
|
$ |
1,120 |
|
9% |
||
|
|||||||||
| Costs and expenses: |
|
||||||||
| Cost of products and services |
|
464 |
|
|
455 |
|
2% |
||
| Research and development |
|
193 |
|
|
176 |
|
9% |
||
| Selling, general and administrative |
|
287 |
|
|
286 |
|
- |
||
| Other operating expense (income), net |
|
(2 |
) |
|
(5 |
) |
(70)% |
||
| Total costs and expenses |
|
942 |
|
|
912 |
|
3% |
||
|
|
|||||||||
| Income from operations |
|
278 |
|
|
208 |
|
34% |
||
|
|
|||||||||
| Interest income |
|
- |
|
|
6 |
|
- |
||
| Interest expense |
|
(19 |
) |
|
(20 |
) |
(3)% |
||
| Other income (expense), net |
|
7 |
|
|
9 |
|
(27)% |
||
|
|
|||||||||
| Income before taxes |
|
266 |
|
|
203 |
|
31% |
||
|
|
|||||||||
| Provision for income taxes |
|
49 |
|
|
8 |
|
486% |
||
|
|
|||||||||
| Net Income | $ |
217 |
|
$ |
195 |
|
11% |
||
| Net income per share: | |||||||||
| Basic | $ |
1.17 |
|
$ |
1.04 |
|
|||
| Diluted | $ |
1.15 |
|
$ |
1.02 |
|
|||
| Weighted average shares used in computing net income per share: | |||||||||
| Basic |
|
186 |
|
|
187 |
|
|||
| Diluted |
|
188 |
|
|
191 |
|
|||
| Page 1 | |||||||||
| KEYSIGHT TECHNOLOGIES, INC. | |||||||||
| CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS | |||||||||
| (In millions, except per share amounts) | |||||||||
| (Unaudited) | |||||||||
| PRELIMINARY | |||||||||
| Year ended | |||||||||
| October 31, | Percent | ||||||||
|
|
2020 |
|
|
2019 |
|
Inc/(Dec) | |||
| Orders | $ |
4,528 |
|
$ |
4,441 |
|
2% |
||
|
|
|||||||||
|
|
|||||||||
| Net revenue | $ |
4,221 |
|
$ |
4,303 |
|
(2)% |
||
|
|
|||||||||
| Costs and expenses: |
|
||||||||
| Cost of products and services |
|
1,688 |
|
|
1,769 |
|
(5)% |
||
| Research and development |
|
715 |
|
|
688 |
|
4% |
||
| Selling, general and administrative |
|
1,097 |
|
|
1,155 |
|
(5)% |
||
| Other operating expense (income), net |
|
(44 |
) |
|
(20 |
) |
118% |
||
| Total costs and expenses |
|
3,456 |
|
|
3,592 |
|
(4)% |
||
|
|
|||||||||
| Income from operations |
|
765 |
|
|
711 |
|
8% |
||
|
|
|||||||||
| Interest income |
|
11 |
|
|
23 |
|
(51)% |
||
| Interest expense |
|
(78 |
) |
|
(80 |
) |
(3)% |
||
| Other income (expense), net |
|
63 |
|
|
61 |
|
2% |
||
|
|
|||||||||
| Income before taxes |
|
761 |
|
|
715 |
|
6% |
||
|
|
|||||||||
| Provision for income taxes |
|
134 |
|
|
94 |
|
42% |
||
|
|
|||||||||
| Net Income | $ |
627 |
|
$ |
621 |
|
1% |
||
| Net income per share: | |||||||||
| Basic | $ |
3.35 |
|
$ |
3.31 |
|
|||
| Diluted | $ |
3.31 |
|
$ |
3.25 |
|
|||
| Weighted average shares used in computing net income per share: | |||||||||
| Basic |
|
187 |
|
|
188 |
|
|||
| Diluted |
|
189 |
|
|
191 |
|
|||
| Page 2 | |||||||||
| KEYSIGHT TECHNOLOGIES, INC. | |||||||
| CONDENSED CONSOLIDATED BALANCE SHEET | |||||||
| (In millions, except par value and share amounts) | |||||||
| (Unaudited) | |||||||
| PRELIMINARY | |||||||
| October 31, | October 31, | ||||||
|
|
2020 |
|
|
2019 |
|
||
| ASSETS | |||||||
| Current assets: | |||||||
| Cash and cash equivalents | $ |
1,756 |
|
$ |
1,598 |
|
|
| Accounts receivable, net |
|
606 |
|
|
668 |
|
|
| Inventory |
|
757 |
|
|
705 |
|
|
| Other current assets |
|
255 |
|
|
244 |
|
|
| Total current assets |
|
3,374 |
|
|
3,215 |
|
|
| Property, plant and equipment, net |
|
595 |
|
|
576 |
|
|
| Operating lease right-of-use assets |
|
182 |
|
|
- |
|
|
| Goodwill |
|
1,537 |
|
|
1,209 |
|
|
| Other intangible assets, net |
|
361 |
|
|
490 |
|
|
| Long-term investments |
|
61 |
|
|
46 |
|
|
| Long-term deferred tax assets |
|
740 |
|
|
755 |
|
|
| Other assets |
|
368 |
|
|
332 |
|
|
| Total assets | $ |
7,218 |
|
$ |
6,623 |
|
|
| LIABILITIES AND EQUITY | |||||||
| Current liabilities: | |||||||
| Accounts payable | $ |
224 |
|
$ |
253 |
|
|
| Employee compensation and benefits |
|
289 |
|
|
278 |
|
|
| Deferred revenue |
|
391 |
|
|
334 |
|
|
| Income and other taxes payable |
|
64 |
|
|
55 |
|
|
| Operating lease liabilities |
|
43 |
|
|
- |
|
|
| Other accrued liabilities |
|
70 |
|
|
83 |
|
|
| Total current liabilities |
|
1,081 |
|
|
1,003 |
|
|
| Long-term debt |
|
1,789 |
|
|
1,788 |
|
|
| Retirement and post-retirement benefits |
|
362 |
|
|
357 |
|
|
| Long-term deferred revenue |
|
175 |
|
|
176 |
|
|
| Long-term operating lease liabilities |
|
149 |
|
|
- |
|
|
| Other long-term liabilities |
|
365 |
|
|
295 |
|
|
| Total liabilities |
|
3,921 |
|
|
3,619 |
|
|
| 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; 196 million shares at October 31, 2020, and 194 million shares at October 31, 2019, issued |
|
2 |
|
|
2 |
|
|
| Treasury stock at cost; 10.7 million shares at October 31, 2020 and 6.5 million shares at October 31, 2019 |
|
(752 |
) |
|
(342 |
) |
|
| Additional paid-in-capital |
|
2,110 |
|
|
2,013 |
|
|
| Retained earnings |
|
2,536 |
|
|
1,909 |
|
|
| Accumulated other comprehensive loss |
|
(599 |
) |
|
(578 |
) |
|
| Total stockholders' equity |
|
3,297 |
|
|
3,004 |
|
|
| Total liabilities and equity | $ |
7,218 |
|
$ |
6,623 |
|
|
| Page 3 |
|||||||
| KEYSIGHT TECHNOLOGIES, INC. | |||||||
| CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS | |||||||
| (In millions) | |||||||
| (Unaudited) | |||||||
| PRELIMINARY | |||||||
| Year ended | |||||||
| October 31, | |||||||
|
|
2020 |
|
|
2019 |
|
||
| Cash flows from operating activities: | |||||||
| Net income | $ |
627 |
|
$ |
621 |
|
|
| Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
| Depreciation |
|
104 |
|
|
96 |
|
|
| Amortization |
|
222 |
|
|
212 |
|
|
| Share-based compensation |
|
92 |
|
|
82 |
|
|
| Deferred tax expense (benefit) |
|
41 |
|
|
(2 |
) |
|
| Excess and obsolete inventory-related charges |
|
29 |
|
|
27 |
|
|
| Gain on insurance proceeds received for damage to property, plant and equipment |
|
(32 |
) |
|
- |
|
|
| Other non-cash expense (income), net |
|
(10 |
) |
|
(3 |
) |
|
| Changes in assets and liabilities: | |||||||
| Accounts receivable |
|
75 |
|
|
(26 |
) |
|
| Inventory |
|
(73 |
) |
|
(92 |
) |
|
| Accounts payable |
|
(33 |
) |
|
13 |
|
|
| Employee compensation and benefits |
|
2 |
|
|
- |
|
|
| Deferred revenue |
|
41 |
|
|
112 |
|
|
| Income taxes payable |
|
5 |
|
|
(16 |
) |
|
| Retirement and post-retirement benefits |
|
(108 |
) |
|
(37 |
) |
|
| Other assets and liabilities |
|
34 |
|
|
11 |
|
|
| Net cash provided by operating activities (a) |
|
1,016 |
|
|
998 |
|
|
| Cash flows from investing activities: | |||||||
| Investments in property, plant and equipment |
|
(117 |
) |
|
(120 |
) |
|
| Acquisition of businesses and intangible assets, net of cash acquired |
|
(357 |
) |
|
(88 |
) |
|
| Insurance proceeds received for damage to property, plant and equipment |
|
32 |
|
|
- |
|
|
| Proceeds from sale of investments |
|
- |
|
|
7 |
|
|
| Other investing activities |
|
- |
|
|
5 |
|
|
| Net cash used in investing activities |
|
(442 |
) |
|
(196 |
) |
|
| Cash flows from financing activities: | |||||||
| Proceeds from issuance of common stock under employee stock plans |
|
58 |
|
|
67 |
|
|
| Payment of taxes related to net share settlement of equity awards |
|
(53 |
) |
|
(26 |
) |
|
| Treasury stock repurchases |
|
(411 |
) |
|
(159 |
) |
|
| Proceeds from issuance of long-term debt |
|
- |
|
|
500 |
|
|
| Debt issuance costs |
|
- |
|
|
(4 |
) |
|
| Repayment of debt |
|
(7 |
) |
|
(500 |
) |
|
| Net cash used in financing activities |
|
(413 |
) |
|
(122 |
) |
|
| Effect of exchange rate movements |
|
6 |
|
|
3 |
|
|
| Net increase in cash, cash equivalents and restricted cash |
|
167 |
|
|
683 |
|
|
| Cash, cash equivalents and restricted cash at beginning of year |
|
1,600 |
|
|
917 |
|
|
| Cash, cash equivalents and restricted cash at end of year | $ |
1,767 |
|
$ |
1,600 |
|
|
| (a) Cash payments included in operating activities: | |||||||
| Income tax payments, net | $ |
(84 |
) |
$ |
(103 |
) |
|
| Interest payment on senior notes | $ |
(75 |
) |
$ |
(76 |
) |
|
| Page 4 | |||||||
| KEYSIGHT TECHNOLOGIES, INC. | |||||||||||||||||||
| RECONCILIATION OF NON-GAAP CORE REVENUE | |||||||||||||||||||
| (In millions) | |||||||||||||||||||
| (Unaudited) | |||||||||||||||||||
| PRELIMINARY | |||||||||||||||||||
| Year-over-year compare | Year-over-year compare | ||||||||||||||||||
| Q4'20 | Q4'19 | Percent
Inc/(Dec) |
FY20 | FY19 | Percent
Inc/(Dec) |
||||||||||||||
| Revenue | $ |
1,220 |
|
$ |
1,120 |
9 |
% |
$ |
4,221 |
|
$ |
4,303 |
(2 |
)% |
|||||
| Amortization of acquisition-related balances |
|
- |
|
|
2 |
|
- |
|
|
9 |
|||||||||
| Non-GAAP Revenue | $ |
1,220 |
|
$ |
1,122 |
9 |
% |
$ |
4,221 |
|
$ |
4,312 |
(2 |
)% |
|||||
| Adjustments: | |||||||||||||||||||
| Revenue from acquisitions or divestitures included in segment results |
|
(10 |
) |
|
- |
|
(29 |
) |
|
- |
|||||||||
| Currency impacts |
|
(10 |
) |
|
- |
|
(5 |
) |
|
- |
|||||||||
| Non-GAAP Core Revenue | $ |
1,200 |
|
$ |
1,122 |
7 |
% |
$ |
4,187 |
|
$ |
4,312 |
(3 |
)% |
|||||
| Non-GAAP core revenue excludes impact of currency and revenue from acquisitions or divestitures closed within the last twelve months. | |||||||||||||||||||
| Please refer last page for details on the use of non-GAAP financial measures. | |||||||||||||||||||
| Page 5 | |||||||||||||||||||
| KEYSIGHT TECHNOLOGIES, INC. | ||||||||||
| SEGMENT RESULTS INFORMATION | ||||||||||
| (In millions, except where noted) | ||||||||||
| (Unaudited) | ||||||||||
| PRELIMINARY | ||||||||||
| Communications Solutions Group (a) |
|
|
|
|
YoY |
|||||
| Q4'20 |
|
Q4'19 |
|
% Chg |
||||||
| Revenue | $ |
901 |
|
$ |
838 |
|
8 |
% |
||
| Gross margin, % |
|
66.3 |
% |
|
64.3 |
% |
||||
| Income from operations | $ |
261 |
|
$ |
211 |
|
||||
| Operating margin, % |
|
29 |
% |
|
25 |
% |
||||
| Electronic Industrial Solutions Group | YoY |
|||||||||
| Q4'20 |
|
Q4'19 |
|
% Chg |
||||||
| Revenue | $ |
319 |
|
$ |
284 |
|
12 |
% |
||
| Gross margin, % |
|
64.7 |
% |
|
62.4 |
% |
||||
| Income from operations | $ |
97 |
|
$ |
79 |
|
||||
| Operating margin, % |
|
30 |
% |
|
28 |
% |
||||
| (a) Restated for the organizational change to manage our Ixia Solutions Group within our Communications Solutions Group effective Q1'20. | ||||||||||
| Net revenue for Communications Solutions Group excludes the impact of amortization of acquisition-related balances of $2 million for Q4'19. Segment revenue and income from operations are consistent with the respective non-GAAP measures as discussed on last page. | ||||||||||
| 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, | ||||||||||||||||||||||||
| 2020 |
2019 |
2020 |
2019 |
||||||||||||||||||||||
| Net
Income |
Diluted
EPS |
Net
Income |
Diluted
EPS |
Net
Income |
Diluted
EPS |
Net
Income |
Diluted
EPS |
||||||||||||||||||
| GAAP Net income | $ |
217 |
$ |
1.15 |
$ |
195 |
|
$ |
1.02 |
|
$ |
627 |
|
$ |
3.31 |
|
$ |
621 |
|
$ |
3.25 |
|
|||
| Non-GAAP adjustments: | |||||||||||||||||||||||||
| Amortization of acquisition-related balances |
|
57 |
|
0.30 |
|
60 |
|
|
0.31 |
|
|
224 |
|
|
1.18 |
|
|
224 |
|
|
1.17 |
|
|||
| Share-based compensation |
|
20 |
|
0.10 |
|
16 |
|
|
0.08 |
|
|
93 |
|
|
0.49 |
|
|
82 |
|
|
0.43 |
|
|||
| Acquisition and integration costs |
|
1 |
|
0.01 |
|
5 |
|
|
0.03 |
|
|
12 |
|
|
0.07 |
|
|
11 |
|
|
0.06 |
|
|||
| Northern California wildfire-related impacts |
|
- |
|
- |
|
- |
|
|
- |
|
|
(32 |
) |
|
(0.17 |
) |
|
- |
|
|
- |
|
|||
| Restructuring and related costs |
|
1 |
|
0.01 |
|
2 |
|
|
0.01 |
|
|
5 |
|
|
0.03 |
|
|
9 |
|
|
0.05 |
|
|||
| Others |
|
1 |
|
0.01 |
|
2 |
|
|
0.01 |
|
|
(19 |
) |
|
(0.11 |
) |
|
(16 |
) |
|
(0.09 |
) |
|||
| Adjustment for taxes (a) |
|
8 |
|
0.04 |
|
(26 |
) |
|
(0.13 |
) |
|
9 |
|
|
0.05 |
|
|
(29 |
) |
|
(0.15 |
) |
|||
| Non-GAAP Net income | $ |
305 |
$ |
1.62 |
$ |
254 |
|
$ |
1.33 |
|
$ |
919 |
|
$ |
4.85 |
|
$ |
902 |
|
$ |
4.72 |
|
|||
| Weighted average shares outstanding - diluted |
|
188 |
|
191 |
|
|
189 |
|
|
191 |
|
||||||||||||||
| (a) For both the three and twelve months ended October 31, 2020 and 2019, management uses a non-GAAP effective tax rate 12%. | |||||||||||||||||||||||||
| Historical amounts are reclassified to conform with current presentation. | |||||||||||||||||||||||||
| Please refer last page for details on the use of non-GAAP financial measures. | |||||||||||||||||||||||||
| Page 7 | |||||||||||||||||||||||||
| KEYSIGHT TECHNOLOGIES, INC. | |||||||
| FREE CASH FLOW | |||||||
| (In millions) | |||||||
| (Unaudited) | |||||||
| PRELIMINARY | |||||||
| Q4'20 | FY20 | ||||||
| Net cash provided by operating activities | $ |
338 |
|
$ |
1,016 |
|
|
| Less: Investments in property, plant and equipment |
|
(30 |
) |
|
(117 |
) |
|
| Free cash flow | $ |
308 |
|
$ |
899 |
|
|
| Free cash flow includes net cash provided by operating activities adjusted for investments in property, plant & equipment. | |||||||
| Please refer last page for details on the use of non-GAAP financial measures. | |||||||
| Page 8 | |||||||
