Highlights:
-
GAAP net income of $70 million, or $0.41 per share
-
Non-GAAP net income of $96 million, or $0.56 per share(1)
-
Revenues of $701 million, up 4 percent year-over-year
-
GAAP operating margin of 12 percent; non-GAAP operating margin of 17
percent(1)
-
Second-quarter fiscal year 2015 revenue guidance of $720 million to
$760 million; non-GAAP earnings guidance of $0.56 to $0.70 per share(2)
SANTA ROSA, Calif.--(BUSINESS WIRE)--
Keysight Technologies, Inc. (NYSE:KEYS) today reported revenues of $701
million for the first fiscal quarter ended Jan. 31, 2015, up 4 percent
compared with one year ago. First-quarter GAAP net income was $70
million, or $0.41 per share. First-quarter GAAP operating margin was 12
percent.
During the first quarter, Keysight had share-based compensation of $29
million, separation costs of $7 million, intangible amortization of $2
million, and a tax benefit of $11 million. Excluding these items and $1
million of other net benefits, Keysight reported first-quarter non-GAAP
net income of $96 million, or 0.56 per share.(1)
First-quarter non-GAAP operating margin was 17 percent.(1)
“I was very pleased with our performance in our first quarter as an
independent company,” said Ron Nersesian, Keysight president and CEO.
“Our team did an exceptional job in executing the separation with no
significant issues. In parallel, we delivered revenue and profit above
the midpoint of our guidance.
“Looking ahead, our solid stabilization and strong operating performance
allows us to focus even more intently on accelerating growth while
maintaining our business model,” Nersesian added.
Keysight generated $92 million in cash from operations in the quarter.
First-quarter ROIC was 30 percent.(3)
Keysight’s second-quarter 2015 revenues are expected to be in the range
of $720 million to $760 million. Second-quarter non-GAAP earnings are
expected to be in the range of $0.56 to $0.70 per share.(2)
About Keysight Technologies
Keysight Technologies (NYSE:KEYS) is a global electronic measurement
technology and market leader helping to transform its customers’
measurement experience through innovations in wireless, modular, and
software solutions. Keysight’s electronic measurement instruments,
systems, software and services are used in the design, development,
manufacture, installation, deployment and operation of electronic
equipment. The business had revenues of $2.9 billion in fiscal year
2014. Information about Keysight is available at www.keysight.com.
Keysight’s management will present more details about its first-quarter
FY2015 financial results on a conference call with investors today at
1:30 p.m. PT. This event will be webcast in listen-only mode. Listeners
may log on and select Q1
2015 Keysight Technologies, Inc. Results Conference Call in the Investor
News & Events – Upcoming Events section at www.investor.keysight.com.
The webcast will remain on the company site for 90 days.
A telephone replay of the conference call will be available at
approximately 4:15 p.m. PT, Feb. 19 through March 3 by dialing +1 855
859 2056 (or +1 404 537 3406 from outside the United States) and
entering pass code 56366702.
Forward-Looking Statements
This news release contains forward-looking statements as defined in the
Securities Exchange Act of 1934 and is subject to the safe harbors
created therein. The forward-looking statements contained herein
include, but are not limited to, information regarding Keysight’s future
revenues, earnings and profitability; the future demand for the
company’s products and services; and customer expectations. These
forward-looking statements involve risks and uncertainties that could
cause Keysight’s results to differ materially from management’s current
expectations. Such risks and uncertainties include, but are not limited
to, unforeseen changes in the strength of our customers’ businesses;
unforeseen changes in the demand for current and new products,
technologies, and services; customer purchasing decisions and timing,
and the risk that we are not able to realize the savings expected from
integration and restructuring activities.
In addition, other risks that Keysight faces include those detailed in
Keysight’s filings with the Securities and Exchange Commission,
including our Form 10-K for the fiscal year ended Oct. 31, 2014.
Forward-looking statements are based on the beliefs and assumptions of
Keysight’s management and on currently available information. Keysight
undertakes no responsibility to publicly update or revise any
forward-looking statement.
Non-GAAP Measures
Keysight uses a number of different financial measures, both GAAP and
non-GAAP, in analyzing and assessing the overall performance of the
business, for making operating decisions and for forecasting and
planning for future periods. The definition of these non-GAAP financial
measures may differ from similarly titled measures used by others, and
such non-GAAP measures should be considered supplemental to and not a
substitute for financial information prepared in accordance with GAAP.
Keysight generally uses non-GAAP financial measures to facilitate
management’s comparisons to historic operating results, to competitors’
operating results and to guidance provided to investors. In addition,
Keysight believes that the use of these non-GAAP financial measures
provides greater transparency to investors of information used by
management in its financial and operational decision-making.
(1) Non-GAAP net income, non-GAAP operating margin and
non-GAAP net income per share exclude primarily the impacts of
share-based compensation, separation costs and non-cash intangible
amortization. Non–GAAP net income and non-GAAP net income per share,
also excludes any tax benefits that are not directly related to ongoing
operations and which are either isolated or cannot be expected to occur
again with any regularity or predictability. Earnings per share is based
on diluted shares. Reconciliation between non-GAAP net income and GAAP
net income is set forth on page 4 of the attached tables along with
additional information regarding the use of this non-GAAP measure.
(2) Non-GAAP earnings per share as projected for Q2FY15
excludes primarily the impacts of share-based compensation, separation
costs and non-cash intangible amortization. We also exclude any tax
benefits that are not directly related to ongoing operations and which
are either isolated or cannot be expected to occur again with any
regularity or predictability. Most of these excluded amounts pertain to
events that have not yet occurred and are not currently possible to
estimate with a reasonable degree of accuracy. Therefore, no
reconciliation to GAAP amounts has been provided.
(3) Return on invested capital (ROIC) is a non-GAAP measure
and is defined as income from operations less other (income) expense and
taxes, annualized, divided by the average of the two most recent
quarter-end balances of assets less net current liabilities. The
reconciliation of ROIC can be found on page 6 of the attached tables,
along with additional information regarding the use of this non-GAAP
measure.
NOTE TO EDITORS: Further technology, corporate citizenship and executive
news is available at www.keysight.com/go/news.
Source: IR-KEYS
|
KEYSIGHT TECHNOLOGIES, INC.
|
CONDENSED COMBINED AND CONSOLIDATED STATEMENT OF OPERATIONS
|
(In millions, except per share amounts)
|
(Unaudited)
|
PRELIMINARY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
|
|
|
January 31,
|
|
|
Percent
|
|
|
|
2015
|
|
|
2014
|
|
|
Inc/(Dec)
|
|
|
|
|
|
|
|
|
|
|
Orders
|
|
|
$
|
691
|
|
|
|
$
|
699
|
|
|
(1
|
%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net revenue
|
|
|
$
|
701
|
|
|
|
$
|
671
|
|
|
4
|
%
|
|
|
|
|
|
|
|
|
|
|
Costs and expenses:
|
|
|
|
|
|
|
|
|
|
Cost of products and services
|
|
|
|
318
|
|
|
|
|
299
|
|
|
6
|
%
|
Research and development
|
|
|
|
96
|
|
|
|
|
90
|
|
|
7
|
%
|
Selling, general and administrative
|
|
|
|
206
|
|
|
|
|
191
|
|
|
8
|
%
|
Total costs and expenses
|
|
|
|
620
|
|
|
|
|
580
|
|
|
7
|
%
|
|
|
|
|
|
|
|
|
|
|
Income from operations
|
|
|
|
81
|
|
|
|
|
91
|
|
|
(11
|
%)
|
|
|
|
|
|
|
|
|
|
|
Interest expense
|
|
|
|
(12
|
)
|
|
|
|
-
|
|
|
-
|
Other income (expense), net
|
|
|
|
9
|
|
|
|
|
1
|
|
|
800
|
%
|
|
|
|
|
|
|
|
|
|
|
Income before taxes
|
|
|
|
78
|
|
|
|
|
92
|
|
|
(15
|
%)
|
|
|
|
|
|
|
|
|
|
|
Provision for income taxes
|
|
|
|
8
|
|
|
|
|
18
|
|
|
(56
|
%)
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
$
|
70
|
|
|
|
$
|
74
|
|
|
(5
|
%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income per share:
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
$
|
0.42
|
|
|
|
$
|
0.44
|
|
|
|
Diluted
|
|
|
$
|
0.41
|
|
|
|
$
|
0.44
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares used in computing net income per share:(a)
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
|
168
|
|
|
|
|
167
|
|
|
|
Diluted
|
|
|
|
170
|
|
|
|
|
167
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) On November 1, 2014, Agilent Technologies, Inc. distributed 167
million shares of Keysight common stock to existing holders of Agilent
common stock. Basic and diluted net income per share for all periods
through January 31, 2014 is calculated using the shares distributed on
November 1, 2014.
The preliminary income statement is estimated based on our current
information.
Page 1
|
|
|
KEYSIGHT TECHNOLOGIES, INC.
|
|
CONDENSED CONSOLIDATED BALANCE SHEET
|
|
(In millions, except par value and share amounts)
|
|
(Unaudited)
|
|
PRELIMINARY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
January 31,
|
|
|
October 31,
|
|
|
|
|
|
|
|
2015
|
|
|
2014
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
$
|
887
|
|
|
|
$
|
810
|
|
Accounts receivable, net
|
|
|
|
309
|
|
|
|
|
357
|
|
Receivable from Agilent
|
|
|
|
1
|
|
|
|
|
23
|
|
Inventory
|
|
|
|
491
|
|
|
|
|
498
|
|
Deferred tax assets
|
|
|
|
82
|
|
|
|
|
83
|
|
Other current assets
|
|
|
|
108
|
|
|
|
|
79
|
|
Total current assets
|
|
|
|
1,878
|
|
|
|
|
1,850
|
|
|
|
|
|
|
|
|
Property, plant and equipment, net
|
|
|
|
455
|
|
|
|
|
470
|
|
Goodwill
|
|
|
|
381
|
|
|
|
|
392
|
|
Other intangible assets, net
|
|
|
|
16
|
|
|
|
|
18
|
|
Long-term investments
|
|
|
|
59
|
|
|
|
|
63
|
|
Long-term deferred tax assets
|
|
|
|
135
|
|
|
|
|
163
|
|
Other assets
|
|
|
|
91
|
|
|
|
|
94
|
|
Total assets
|
|
|
$
|
3,015
|
|
|
|
$
|
3,050
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
Accounts payable
|
|
|
$
|
158
|
|
|
|
$
|
173
|
|
Payable to Agilent
|
|
|
|
64
|
|
|
|
|
125
|
|
Employee compensation and benefits
|
|
|
|
146
|
|
|
|
|
167
|
|
Deferred revenue
|
|
|
|
176
|
|
|
|
|
175
|
|
Income and other taxes payable
|
|
|
|
60
|
|
|
|
|
72
|
|
Other accrued liabilities
|
|
|
|
82
|
|
|
|
|
57
|
|
Total current liabilities
|
|
|
|
686
|
|
|
|
|
769
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term debt
|
|
|
|
1,099
|
|
|
|
|
1,099
|
|
Retirement and post-retirement benefits
|
|
|
|
187
|
|
|
|
|
213
|
|
Long-term deferred revenue
|
|
|
|
66
|
|
|
|
|
69
|
|
Other long-term liabilities
|
|
|
|
59
|
|
|
|
|
131
|
|
Total liabilities
|
|
|
|
2,097
|
|
|
|
|
2,281
|
|
|
|
|
|
|
|
|
|
|
|
|
Total 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; 168
million shares at January 31, 2015 and 167 million shares at
October 31, 2014, issued and outstanding
|
|
|
|
2
|
|
|
|
|
2
|
|
Additional paid-in-capital
|
|
|
|
1,111
|
|
|
|
|
1,002
|
|
Retained earnings
|
|
|
|
171
|
|
|
|
|
101
|
|
Accumulated other comprehensive loss
|
|
|
|
(366
|
)
|
|
|
|
(336
|
)
|
Total stockholders' equity
|
|
|
|
918
|
|
|
|
|
769
|
|
Total liabilities and equity
|
|
|
$
|
3,015
|
|
|
|
$
|
3,050
|
|
|
|
|
|
|
|
|
|
|
|
|
The preliminary balance sheet is estimated based on our current
information.
|
|
|
|
|
|
|
Page 2
|
KEYSIGHT TECHNOLOGIES, INC.
|
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
|
(In millions)
|
(Unaudited)
|
PRELIMINARY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
|
|
|
|
|
|
|
Ended
|
|
|
|
|
|
|
January 31,
|
|
|
|
|
|
|
2015
|
Cash flows from operating activities:
|
|
|
|
Net income
|
|
|
$
|
70
|
|
|
|
|
|
|
|
|
Adjustments to reconcile net income to net cash provided by (used
in) operating activities:
|
|
|
|
Depreciation and amortization
|
|
|
|
23
|
|
Share-based compensation
|
|
|
|
29
|
|
Excess tax benefit from share-based plans
|
|
|
|
(3
|
)
|
Deferred taxes
|
|
|
|
(1
|
)
|
Excess and obsolete inventory and inventory related charges
|
|
|
|
10
|
|
Other non-cash expenses, net
|
|
|
|
(1
|
)
|
Changes in assets and liabilities:
|
|
|
|
Accounts receivable
|
|
|
|
36
|
|
Inventory
|
|
|
|
(5
|
)
|
Accounts payable
|
|
|
|
(13
|
)
|
Payment to Agilent, net
|
|
|
|
(14
|
)
|
Employee compensation and benefits
|
|
|
|
(22
|
)
|
Other assets and liabilities
|
|
|
|
(17
|
)
|
Net cash provided by operating activities (a)
|
|
|
|
92
|
|
|
|
|
|
|
|
|
Cash flows from investing activities:
|
|
|
|
Investments in property, plant and equipment
|
|
|
|
(15
|
)
|
Proceeds from sale of investment securities
|
|
|
|
1
|
|
Net cash used in investing activities
|
|
|
|
(14
|
)
|
|
|
|
|
|
|
|
Cash flows from financing activities:
|
|
|
|
Issuance of common stock under employee stock plans
|
|
|
|
4
|
|
Excess tax benefit from share-based plans
|
|
|
|
3
|
|
Net cash provided by financing activities
|
|
|
|
7
|
|
|
|
|
|
|
|
|
Effect of exchange rate movements
|
|
|
|
(8
|
)
|
|
|
|
|
|
|
|
Net increase in cash and cash equivalents
|
|
|
|
77
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at beginning of period
|
|
|
|
810
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at end of period
|
|
|
$
|
887
|
|
|
|
|
|
|
|
|
(a) Cash payments included in operating activities:
|
|
|
|
Restructuring payments
|
|
|
|
1
|
|
Income tax payments, net
|
|
|
|
14
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The preliminary cash flow is estimated based on our current
information.
|
|
|
|
|
|
|
|
|
|
|
Page 3
|
KEYSIGHT TECHNOLOGIES, INC.
|
NON-GAAP NET INCOME AND DILUTED EPS RECONCILIATIONS
|
(In millions, except per share amounts)
|
(Unaudited)
|
PRELIMINARY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
January 31,
|
|
|
|
2015
|
|
|
|
2014
|
|
|
|
|
Net Income
|
|
Diluted EPS
|
|
|
Net Income
|
|
Diluted EPS
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP Net income
|
|
|
$
|
70
|
|
|
$
|
0.41
|
|
|
|
$
|
74
|
|
|
|
$
|
0.44
|
|
Non-GAAP adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
Restructuring and other related costs
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
(3
|
)
|
|
|
|
(0.02
|
)
|
Intangible amortization
|
|
|
|
2
|
|
|
|
0.01
|
|
|
|
|
2
|
|
|
|
|
0.01
|
|
Transformational initiatives
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
1
|
|
|
|
|
0.01
|
|
Acquisition and integration costs
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
1
|
|
|
|
|
0.01
|
|
Separation costs
|
|
|
|
7
|
|
|
|
0.04
|
|
|
|
|
8
|
|
|
|
|
0.05
|
|
Share Based Compensation
|
|
|
|
29
|
|
|
|
0.17
|
|
|
|
|
17
|
|
|
|
|
0.10
|
|
Other
|
|
|
|
(1
|
)
|
|
|
(0.01
|
)
|
|
|
|
-
|
|
|
|
|
-
|
|
Adjustment for taxes (a)
|
|
|
|
(11
|
)
|
|
|
(0.06
|
)
|
|
|
|
(1
|
)
|
|
|
|
(0.01
|
)
|
Non-GAAP Net income
|
|
|
$
|
96
|
|
|
$
|
0.56
|
|
|
|
$
|
99
|
|
|
|
$
|
0.59
|
|
(a) The adjustment for taxes excludes tax benefits that
management believes are not directly related to ongoing operations and
which are either isolated or cannot be expected to occur again with any
regularity or predictability. For the three months ended January 31,
2015 and 2014, management uses a non-GAAP effective tax rate of 17% and
16% respectively that we believe to be indicative of on-going operations.
Historical amounts are reclassified to conform with current presentation.
We provide non-GAAP net income and non-GAAP net income per share amounts
in order to provide meaningful supplemental information regarding our
operational performance and our prospects for the future. These
supplemental measures exclude, among other things, charges related to
the amortization of intangibles, the impact of restructuring charges,
acquisition and integration costs, transformational initiatives, share
based compensation and separation costs. Some of the exclusions, such as
impairments, may be beyond the control of management. Further, some may
be less predictable than revenue derived from our core businesses (the
day to day business of selling our products and services). These reasons
provide the basis for management's belief that the measures are useful.
Restructuring costs include incremental expenses incurred in the
period associated with publicly announced major restructuring programs,
usually aimed at material changes in business and/or cost structure.
Such costs may include one-time termination benefits, asset impairments,
facility-related costs and contract termination fees.
Intangible amortization include non-cash intangible amortization
recognized in connection with acquisitions.
Asset impairments and write-downs include assets that have been
written-down to their fair value.
Transformational initiatives include expenses incurred in the
period associated with targeted cost reduction activities such as
manufacturing transfers, small site consolidations, reorganizations,
insourcing or outsourcing of activities. Such costs may include move and
relocation costs, one-time termination benefits and other one-time
reorganization costs.
Acquisition and Integration costs include all incremental
expenses incurred to effect a business combination which have been
expensed during the period. Such acquisition costs may include advisory,
legal, accounting, valuation, and other professional or consulting fees.
Such integration costs may include expenses directly related to
integration of business and facility operations, information technology
systems and infrastructure and other employee-related costs.
Separation costs include all incremental expenses incurred in
order to effect the separation of Keysight from Agilent, including the
cost of new hires specifically required to operate two separate
companies. The intent is to only include in non-GAAP expenses what would
not have been incurred if we had no plan to spin-off.
Share-based compensation includes expense for all share-based
payment awards made to our employees and directors including employee
stock option awards, restricted stock units, employee stock purchases
made under our employee stock purchase plan (“ESPP”) and performance
share awards granted to selected members of our senior management under
the long-term performance plan (“LTPP”) based on estimated fair values.
Our management uses non-GAAP measures to evaluate the performance of our
core businesses, to estimate future core performance and to compensate
employees. Since management finds this measure to be useful, we believe
that our investors benefit from seeing our results “through the eyes” of
management in addition to seeing our GAAP results. This information
facilitates our management’s internal comparisons to our historical
operating results as well as to the operating results of our competitors.
Our management recognizes that items such as amortization of
intangibles, restructuring charges can have a material impact on our
cash flows and/or our net income. Our GAAP financial statements
including our statement of cash flows portray those effects. Although we
believe it is useful for investors to see core performance free of
special items, investors should understand that the excluded items are
actual expenses that may impact the cash available to us for other uses.
To gain a complete picture of all effects on the company’s profit and
loss from any and all events, management does (and investors should)
rely upon the GAAP income statement. The non-GAAP numbers focus instead
upon the core business of the company, which is only a subset, albeit a
critical one, of the company’s performance.
Readers are reminded that non-GAAP numbers are merely a supplement to,
and not a replacement for, GAAP financial measures. They should be read
in conjunction with the GAAP financial measures. It should be noted as
well that our non-GAAP information may be different from the non-GAAP
information provided by other companies.
The preliminary non-GAAP net income and diluted EPS reconciliation is
estimated based on our current information.
Page 4
KEYSIGHT TECHNOLOGIES, INC.
|
SEGMENT INFORMATION
|
(In millions, except where noted)
|
(Unaudited)
|
PRELIMINARY
|
|
|
|
|
|
|
|
|
|
|
Measurement Solutions
|
|
|
|
|
|
|
|
|
|
|
|
|
Q1'15
|
|
|
Q1'14
|
|
|
Q4'14
|
Orders
|
|
|
$
|
607
|
|
|
|
$
|
607
|
|
|
|
$
|
678
|
|
Revenue
|
|
|
$
|
606
|
|
|
|
$
|
574
|
|
|
|
$
|
663
|
|
Gross Margin, %
|
|
|
|
57.6
|
%
|
|
|
|
57.8
|
%
|
|
|
|
57.6
|
%
|
Income from Operations
|
|
|
$
|
107
|
|
|
|
$
|
99
|
|
|
|
$
|
144
|
|
|
|
|
|
|
|
|
|
|
|
Customer Support and Services
|
|
|
|
|
|
|
|
|
|
|
|
|
Q1'15
|
|
|
Q1'14
|
|
|
Q4'14
|
Orders
|
|
|
$
|
84
|
|
|
|
$
|
92
|
|
|
|
$
|
82
|
|
Revenue
|
|
|
$
|
95
|
|
|
|
$
|
97
|
|
|
|
$
|
99
|
|
Gross Margin, %
|
|
|
|
42.0
|
%
|
|
|
|
46.3
|
%
|
|
|
|
45.7
|
%
|
Income from Operations
|
|
|
$
|
13
|
|
|
|
$
|
19
|
|
|
|
$
|
24
|
|
Income from operations reflect the results of our reportable segments
under Keysight's management reporting system which are not necessarily
in conformity with GAAP financial measures. Income from operations of
our reporting segments exclude, among other things, charges related to
the amortization of intangibles, the impact of restructuring charges,
transformational initiatives, acquisition and integration costs and
separation costs.
In general, recorded orders represent firm purchase commitments from our
customers with established terms and conditions for products and
services that will be delivered within six months.
Readers are reminded that non-GAAP numbers are merely a supplement to,
and not a replacement for, GAAP financial measures. They should be read
in conjunction with the GAAP financial measures. It should be noted as
well that our non-GAAP information may be different from the non-GAAP
information provided by other companies.
The preliminary segment information is estimated based on our current
information.
Page 5
|
|
|
|
|
|
|
|
KEYSIGHT TECHNOLOGIES, INC.
|
RECONCILIATION OF ROIC
|
(In millions)
|
(Unaudited)
|
PRELIMINARY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
KEYSIGHT
|
|
KEYSIGHT
|
|
KEYSIGHT
|
Numerator:
|
|
|
Q1'15
|
|
Q1'14
|
|
Q4'14
|
Non-GAAP income from operations
|
|
|
$
|
120
|
|
|
$
|
118
|
|
|
$
|
168
|
|
Less:
|
|
|
|
|
|
|
|
Taxes and Other (income)/expense
|
|
|
|
15
|
|
|
|
19
|
|
|
|
23
|
|
|
|
|
|
|
|
|
|
Quarterly return (a)
|
|
|
|
105
|
|
|
|
99
|
|
|
|
145
|
|
|
|
|
|
|
|
|
|
Quarter return annualized
|
|
|
$
|
420
|
|
|
$
|
396
|
|
|
$
|
580
|
|
|
|
|
|
|
|
|
|
Denominator:
|
|
|
|
|
|
|
|
Segment assets (b)
|
|
|
$
|
1,805
|
|
|
$
|
1,929
|
|
|
$
|
1,976
|
|
Less:
|
|
|
|
|
|
|
|
Net current liabilities (c)
|
|
|
|
462
|
|
|
|
508
|
|
|
|
498
|
|
Invested capital
|
|
|
$
|
1,343
|
|
|
$
|
1,421
|
|
|
$
|
1,478
|
|
|
|
|
|
|
|
|
|
Average invested capital
|
|
|
$
|
1,411
|
|
|
$
|
1,441
|
|
|
$
|
1,469
|
|
|
|
|
|
|
|
|
|
ROIC
|
|
|
|
30
|
%
|
|
|
28
|
%
|
|
|
39
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ROIC calculation:(annualized current quarter segment return)/(average of
the two most recent quarter-end balances of Segment Invested Capital)
(a) Quarterly return is equal to non-GAAP net income of $96 million plus
net interest expense after tax of $9 million for Q1'15, net income of
$99 million plus net interest expense after tax of zero for Q1'14 and
$143 million plus net interest expense after tax of $2 million for
Q4'14. Please see "Non-GAAP Net Income and Diluted EPS Reconciliations"
for a reconciliation of non-GAAP net income to GAAP net income.
(b) Segment assets consist of inventory, accounts receivable, property
plant and equipment, gross goodwill and other intangibles, deferred
taxes and allocated corporate assets.
(c) Includes accounts payable, employee compensation and benefits,
deferred revenue, certain other accrued liabilities and allocated
corporate liabilities.
Return on Invested Capital (ROIC) is a non-GAAP measure that management
believes provides useful supplemental information for management and the
investor. ROIC is a tool by which we track how much value we are
creating for our shareholders. Management uses ROIC as a performance
measure for our businesses, and our senior managers' compensation is
linked to ROIC improvements as well as other performance criteria. We
believe that ROIC provides our management with a means to analyze and
improve their business, measuring segment profitability in relation to
net asset investments. We acknowledge that ROIC may not be calculated
the same way by every company. When we complete a major acquisition, we
may adjust invested capital for the relevant segment in the quarter when
the acquisition occurred. We compensate for this limitation by
monitoring and providing to the reader a full GAAP income statement and
balance sheet.
Readers are reminded that non-GAAP numbers are merely a supplement to,
and not a replacement for, GAAP financial measures. They should be read
in conjunction with the GAAP financial measures. It should be noted as
well that our non-GAAP information may be different from the non-GAAP
information provided by other companies.
The preliminary reconciliation of ROIC is based on our current
information.
Page 6
Source: Keysight Technologies, Inc.