SANTA ROSA, Calif.--(BUSINESS WIRE)--
Keysight Technologies, Inc. (NYSE: KEYS) today reported financial
results for the first fiscal quarter of 2017 ended Jan. 31, 2017.
“The first quarter was another strong quarter with earnings above the
mid-point of our guidance. We continued to see strong demand for our
leading-edge technology solutions and believe we are well positioned
within our markets,” said Ron Nersesian, Keysight president and CEO.
“We continue to make progress on our strategy and are accelerating our
transformation for growth with the proposed acquisition of Ixia. We are
confident this strategic move will expand our growth opportunities in
the communications lifecycle from development through operations,”
Nersesian added.
First Quarter Financial Summary
-
Revenue was $726 million, compared with $721 million on a GAAP basis
and $726 million on a non-GAAP basis in the first quarter of 2016.
-
GAAP operating margin was 22 percent, compared with 14 percent in the
first quarter of 2016. Non-GAAP operating margin was 18 percent,
compared with 18 percent in the first quarter of 2016.
-
GAAP net income was $109 million, or $0.63 per share, compared with
$64 million, or $0.37 per share in the first quarter of 2016. Non-GAAP
net income was $98 million, or $0.57 per share, compared with $95
million, or $0.55 per share in the first quarter of 2016.
-
As of Jan. 31, 2017, cash and cash equivalents totaled $896 million.
Reporting Segments
-
Communications Solutions Group (CSG)
CSG revenue was $434 million
in the first quarter, compared to $440 million in the prior year first
quarter. Growth in commercial communications was offset by decline in
aerospace, defense and government.
-
Electronic Industrial Solutions Group (EISG)
EISG revenue was
$192 million in the first quarter, compared to $191 million in the
first quarter of 2016. Growth in semiconductor measurement was offset
by decline in general electronics measurement solutions.
-
Services Solutions Group (SSG)
SSG revenue in the first quarter
grew 5 percent year-over-year to $100 million when compared with $95
million in the first quarter of 2016. SSG revenue growth was driven by
an increase in calibration services and remarketed solution sales.
Second Fiscal Quarter Outlook
Keysight provides guidance based on current market conditions and
expectations.
Keysight’s second quarter 2017 revenue is expected to be in the range of
$720 million to $760 million. Second quarter non-GAAP earnings per share
are expected to be in the range of $0.54 to $0.68. Non-GAAP earnings per
share as projected for the second quarter of fiscal year 2017 exclude
items that pertain to future events and are not currently estimable with
a reasonable degree of accuracy. Therefore, no reconciliation to GAAP
amounts has been provided. Further information is discussed in the
section titled “Non-GAAP Measures” below.
Webcast
Keysight’s management will present more details about its first quarter
FY2017 financial results and its second quarter FY2017 outlook 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 to the call at www.investor.keysight.com
under the “Upcoming
Events” section and select “Q1
2017 Keysight Technologies Inc. Earnings Conference Call” to
participate. The webcast will remain on the company site for 90 days.
A telephone replay of the conference call will be available at
approximately 4:30 p.m. PT, Feb. 16 through Feb. 23 by dialing +1
855-859-2056 (or +1 404-537-3406 from outside the U.S.) and entering
pass code 38573935.
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;
timing and ability to close the Ixia acquisition, and the risk that we
are not able to realize the savings or benefits 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 October 31, 2016.
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 definitions 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.
Segment data reflect the results of our reportable segments under its
management reporting system, which are not necessarily in conformity
with GAAP financial measures. Segment revenue and income from operations
are consistent with the non-GAAP measure as described below. Segment
data are provided on page 6 of the attached tables, along with
additional information regarding the use of this data.
Non-GAAP revenue for Q1 FY16 excludes the impact of fair value
adjustment to acquisition-related deferred revenue balances. Non-GAAP
operating margin, non-GAAP net income and non-GAAP net income per share
for Q1 FY17, Q1 FY16 and as projected for Q2 FY17 exclude primarily the
impacts of share-based compensation, restructuring and related costs,
separation and related costs, acquisition and integration costs,
acquisition-related fair value adjustments, Japan pension settlement
gain and non-cash intangible amortization. Keysight also excludes any
tax benefits or expenses that are not directly related to ongoing
operations and which are either isolated or cannot be expected to occur
again with any regularity or predictability. Earnings per share is based
on diluted shares.
The reconciliation between revenue and non-GAAP revenue and operating
margin and non-GAAP operating margin for Q1 FY17 and Q1 FY16 is set
forth on page 4, and the reconciliation between non-GAAP net income and
GAAP net income is set forth on page 5 of the attached tables, along
with additional information regarding the use of these non-GAAP measures.
Keysight utilizes a fixed long-term projected non-GAAP tax rate. When
projecting this long-term rate, Keysight excludes any tax benefits or
expenses that are not directly related to ongoing operations and which
are either isolated or cannot be expected to occur again with any
regularity or predictability. Additionally, Keysight evaluates its
current long-term projections, current tax structure and other factors
such as existing tax positions in various jurisdictions and key tax
holidays in major jurisdictions where Keysight operates. This tax rate
could change in the future for a variety of reasons, including but not
limited to significant changes in geographic earnings mix including
acquisition activity, or fundamental tax law changes in major
jurisdictions where Keysight operates. The above reasons also limit our
ability to reasonably estimate the future GAAP tax rate and provide a
reconciliation of the expected Non-GAAP earnings per share for second
quarter 2017 to GAAP amounts.
About Keysight Technologies
Keysight Technologies (NYSE: KEYS) helps customers bring breakthrough
electronic products and systems to market faster and at a lower cost.
Keysight’s solutions go where the electronic signal goes, from design
simulation, to prototype validation, to manufacturing test, to
optimization in the network. Customers span the worldwide communications
ecosystem, internet infrastructure, aerospace & defense, automotive,
semiconductor and general electronics end markets. Keysight generated
revenues of $2.9B in fiscal year 2016. More information is available at www.keysight.com.
Additional information about Keysight Technologies is available in the
newsroom at www.keysight.com/go/news
and on Facebook,
Google+,
LinkedIn,
Twitter
and YouTube.
Source: IR-KEYS
|
|
|
KEYSIGHT TECHNOLOGIES, INC.
|
|
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
|
|
(In millions, except per share amounts)
|
|
(Unaudited)
|
|
PRELIMINARY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
|
|
January 31,
|
|
Percent
|
|
|
|
|
2017
|
|
|
|
2016
|
|
|
Inc/(Dec)
|
|
|
|
|
|
|
|
|
|
Orders
|
|
$
|
695
|
|
|
$
|
679
|
|
|
2
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net revenue
|
|
$
|
726
|
|
|
$
|
721
|
|
|
1
|
%
|
|
|
|
|
|
|
|
|
|
Costs and expenses:
|
|
|
|
|
|
|
|
Cost of products and services
|
|
|
322
|
|
|
|
329
|
|
|
(2
|
%)
|
|
Research and development
|
|
|
108
|
|
|
|
108
|
|
|
(1
|
%)
|
|
Selling, general and administrative
|
|
|
213
|
|
|
|
200
|
|
|
7
|
%
|
|
Other operating expense (income), net
|
|
|
(79
|
)
|
|
|
(14
|
)
|
|
447
|
%
|
|
Total costs and expenses
|
|
|
564
|
|
|
|
623
|
|
|
(10
|
%)
|
|
|
|
|
|
|
|
|
|
Income from operations
|
|
|
162
|
|
|
|
98
|
|
|
66
|
%
|
|
|
|
|
|
|
|
|
|
Interest income
|
|
|
1
|
|
|
|
1
|
|
|
—
|
%
|
|
Interest expense
|
|
|
(12
|
)
|
|
|
(12
|
)
|
|
—
|
%
|
|
Other income (expense), net
|
|
|
1
|
|
|
|
(3
|
)
|
|
(106
|
%)
|
|
|
|
|
|
|
|
|
|
Income before taxes
|
|
|
152
|
|
|
|
84
|
|
|
81
|
%
|
|
|
|
|
|
|
|
|
|
Provision for income taxes
|
|
|
43
|
|
|
|
20
|
|
|
116
|
%
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
109
|
|
|
$
|
64
|
|
|
70
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income per share:
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.64
|
|
|
$
|
0.37
|
|
|
|
|
Diluted
|
|
$
|
0.63
|
|
|
$
|
0.37
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares used in computing net income per share:
|
|
|
|
|
|
|
|
Basic
|
|
|
171
|
|
|
|
171
|
|
|
|
|
Diluted
|
|
|
173
|
|
|
|
172
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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)
|
|
PRELIMINARY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
January 31,
|
|
October 31,
|
|
|
|
|
|
|
|
2017
|
|
|
|
2016
|
|
|
|
|
|
|
|
(unaudited)
|
|
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
896
|
|
|
$
|
783
|
|
|
|
Accounts receivable, net
|
|
|
395
|
|
|
|
437
|
|
|
|
Inventory
|
|
|
479
|
|
|
|
474
|
|
|
|
Other current assets
|
|
|
162
|
|
|
|
160
|
|
|
|
|
Total current assets
|
|
|
1,932
|
|
|
|
1,854
|
|
|
|
|
|
|
|
|
|
|
|
Property, plant and equipment, net
|
|
|
494
|
|
|
|
512
|
|
|
Goodwill
|
|
|
|
|
721
|
|
|
|
736
|
|
|
Other intangible assets, net
|
|
|
197
|
|
|
|
208
|
|
|
Long-term investments
|
|
|
60
|
|
|
|
55
|
|
|
Long-term deferred tax assets
|
|
|
342
|
|
|
|
392
|
|
|
Other assets (a)
|
|
|
123
|
|
|
|
39
|
|
|
|
|
Total assets
|
|
$
|
3,869
|
|
|
$
|
3,796
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
Accounts payable
|
|
$
|
172
|
|
|
$
|
189
|
|
|
|
Employee compensation and benefits
|
|
|
146
|
|
|
|
183
|
|
|
|
Deferred revenue
|
|
|
191
|
|
|
|
180
|
|
|
|
Income and other taxes payable
|
|
|
19
|
|
|
|
41
|
|
|
|
Other accrued liabilities
|
|
|
68
|
|
|
|
51
|
|
|
|
|
Total current liabilities
|
|
|
596
|
|
|
|
644
|
|
|
|
|
|
|
|
|
|
|
|
Long-term debt (a)
|
|
|
1,093
|
|
|
|
1,093
|
|
|
Retirement and post-retirement benefits
|
|
|
384
|
|
|
|
405
|
|
|
Long-term deferred revenue
|
|
|
74
|
|
|
|
72
|
|
|
Other long-term liabilities
|
|
|
74
|
|
|
|
69
|
|
|
|
|
Total liabilities
|
|
|
2,221
|
|
|
|
2,283
|
|
|
|
|
|
|
|
|
|
|
|
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; 174
million shares at January 31, 2017 and 172 million shares at
October 31, 2016, issued
|
|
|
2
|
|
|
|
2
|
|
|
|
Treasury stock at cost; 2.3 million shares at January 31, 2017 and
October 31, 2016 respectively
|
|
|
(62
|
)
|
|
|
(62
|
)
|
|
|
Additional paid-in-capital
|
|
|
1,271
|
|
|
|
1,242
|
|
|
|
Retained earnings
|
|
|
1,048
|
|
|
|
949
|
|
|
|
Accumulated other comprehensive loss
|
|
|
(611
|
)
|
|
|
(618
|
)
|
|
|
|
Total stockholders' equity
|
|
|
1,648
|
|
|
|
1,513
|
|
|
|
|
|
Total liabilities and equity
|
|
$
|
3,869
|
|
|
$
|
3,796
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) Early adoption of ASU 2015-03, Simplifying the
Presentation of Debt Issuance Costs, resulted in the
reclassification of $7 million of unamortized debt issuance costs
related to senior notes from, "Other assets" to
"Long-term debt" as of January 31, 2017 and October 31, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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,
|
|
|
|
|
|
|
2017
|
|
2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from operating activities:
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
109
|
|
|
$
|
64
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustments to reconcile net income to net cash provided by
operating activities:
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
32
|
|
|
|
33
|
|
|
|
Share-based compensation
|
|
|
18
|
|
|
|
16
|
|
|
|
Excess tax benefit from share-based plans
|
|
|
(2
|
)
|
|
|
(1
|
)
|
|
|
Deferred taxes
|
|
|
40
|
|
|
|
4
|
|
|
|
Excess and obsolete inventory related charges
|
|
|
3
|
|
|
|
8
|
|
|
|
Gain on sale of land
|
|
|
(8
|
)
|
|
|
(10
|
)
|
|
|
Other non-cash expenses, net
|
|
|
—
|
|
|
|
2
|
|
|
|
Changes in assets and liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
Accounts receivable
|
|
|
40
|
|
|
|
33
|
|
|
|
|
Inventory
|
|
|
(10
|
)
|
|
|
(4
|
)
|
|
|
|
Accounts payable
|
|
|
(12
|
)
|
|
|
(22
|
)
|
|
|
|
Employee compensation and benefits
|
|
|
(36
|
)
|
|
|
(29
|
)
|
|
|
|
Income taxes payable
|
|
|
(15
|
)
|
|
|
2
|
|
|
|
|
Retirement and post-retirement benefits
|
|
|
(71
|
)
|
|
|
(13
|
)
|
|
|
|
Other assets and liabilities
|
|
|
14
|
|
|
|
9
|
|
|
Net cash provided by operating activities (a)
|
|
|
102
|
|
|
|
92
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
|
|
Investments in property, plant and equipment
|
|
|
(16
|
)
|
|
|
(34
|
)
|
|
|
Proceeds from sale of land
|
|
|
8
|
|
|
|
10
|
|
|
Net cash used in investing activities
|
|
|
(8
|
)
|
|
|
(24
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
|
|
Issuance of common stock under employee stock plans
|
|
|
19
|
|
|
|
24
|
|
|
|
Excess tax benefit from share-based plans
|
|
|
2
|
|
|
|
1
|
|
|
Net cash provided by financing activities
|
|
|
21
|
|
|
|
25
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect of exchange rate movements
|
|
|
(2
|
)
|
|
|
(4
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net increase in cash and cash equivalents
|
|
|
113
|
|
|
|
89
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at beginning of the period
|
|
|
783
|
|
|
|
483
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at end of the period
|
|
$
|
896
|
|
|
$
|
572
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) Cash payments included in operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
Income tax payments, net
|
|
|
17
|
|
|
|
8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The preliminary cash flow is estimated based on our current
information.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Page 3
|
|
|
|
|
|
|
|
|
|
KEYSIGHT TECHNOLOGIES, INC.
|
|
NON-GAAP REVENUE AND OPERATING MARGIN RECONCILIATIONS
|
|
(In millions, except where noted)
|
|
(Unaudited)
|
|
PRELIMINARY
|
|
|
|
|
|
|
|
|
|
Q1'17
|
|
Q1'16
|
|
Revenue
|
|
$
|
726
|
|
|
$
|
721
|
|
|
Acquisition related fair value adjustments
|
|
|
—
|
|
|
|
5
|
|
|
Non-GAAP Revenue
|
|
$
|
726
|
|
|
$
|
726
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Q1'17
|
|
Q1'16
|
|
|
|
|
|
|
|
Income from operations, as reported
|
|
$
|
162
|
|
|
$
|
98
|
|
|
Intangible amortization
|
|
|
10
|
|
|
|
11
|
|
|
Share-based compensation
|
|
|
18
|
|
|
|
16
|
|
|
Acquisition and integration costs
|
|
|
6
|
|
|
|
2
|
|
|
Acquisition-related fair value adjustments
|
|
|
—
|
|
|
|
5
|
|
|
Separation and related costs
|
|
|
6
|
|
|
|
5
|
|
|
Japan pension settlement gain
|
|
|
(68
|
)
|
|
|
—
|
|
|
Restructuring and related costs
|
|
|
2
|
|
|
|
—
|
|
|
Other
|
|
|
(8
|
)
|
|
|
(8
|
)
|
|
Non-GAAP income from operations
|
|
$
|
128
|
|
|
$
|
129
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP Operating Margin
|
|
|
22
|
%
|
|
|
14
|
%
|
|
Non-GAAP Operating Margin
|
|
|
18
|
%
|
|
|
18
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non GAAP revenue for Q1'16 is defined to exclude the fair value
adjustments to the Anite acquisition-related deferred revenue
balances.
|
|
|
|
|
|
|
|
We provide non-GAAP income from operations and non-GAAP operating
margin in order to provide meaningful supplemental information
regarding our operational performance and our prospects for the
future. These supplemental measures exclude primarily the impacts
of share-based compensation, restructuring and related costs,
separation and related costs, acquisition and integration costs,
acquisition-related fair value adjustments, Japan pension
settlement gain and non-cash intangible amortization. Some of the
exclusions 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.
|
|
|
|
|
|
|
|
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 management’s internal
comparisons to our historical operating results as well as to the
operating results of our competitors.
|
|
|
|
|
|
|
|
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 from income from operations to
Non-GAAP income from operations is estimated based on our current
information.
|
|
|
|
|
|
|
|
Page 4
|
|
|
|
|
|
KEYSIGHT TECHNOLOGIES, INC.
|
|
NON-GAAP NET INCOME AND DILUTED EPS RECONCILIATIONS
|
|
(In millions, except per share amounts)
|
|
(Unaudited)
|
|
PRELIMINARY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months ended
|
|
|
|
|
|
|
January 31,
|
|
|
|
|
|
|
2017
|
|
2016
|
|
|
|
|
|
|
Net Income
|
|
Diluted EPS
|
|
Net Income
|
|
Diluted EPS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP Net income
|
|
|
$
|
109
|
|
|
$
|
0.63
|
|
|
$
|
64
|
|
|
$
|
0.37
|
|
|
|
Non-GAAP adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
Intangible amortization
|
|
|
10
|
|
|
|
0.06
|
|
|
|
11
|
|
|
|
0.07
|
|
|
|
|
Share-based compensation
|
|
|
18
|
|
|
|
0.10
|
|
|
|
16
|
|
|
|
0.09
|
|
|
|
|
Acquisition and integration costs
|
|
|
6
|
|
|
|
0.04
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
Acquisition-related fair value adjustments
|
|
|
—
|
|
|
|
—
|
|
|
|
5
|
|
|
|
0.03
|
|
|
|
|
Separation and related costs
|
|
|
6
|
|
|
|
0.04
|
|
|
|
5
|
|
|
|
0.03
|
|
|
|
|
Japan pension settlement gain
|
|
|
(68
|
)
|
|
|
(0.39
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
|
Restructuring and related costs
|
|
|
2
|
|
|
|
0.01
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
Other
|
|
|
|
(8
|
)
|
|
|
(0.05
|
)
|
|
|
(6
|
)
|
|
|
(0.04
|
)
|
|
|
|
Adjustment for taxes (a)
|
|
|
23
|
|
|
|
0.13
|
|
|
|
—
|
|
|
|
—
|
|
|
Non-GAAP Net income
|
|
$
|
98
|
|
|
$
|
0.57
|
|
|
$
|
95
|
|
|
$
|
0.55
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding - diluted
|
|
|
173
|
|
|
|
|
|
172
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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 three months ended
January 31, 2017 and 2016, management uses a non-GAAP effective tax
rate of 17%, which 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 primarily the impacts
of share-based compensation, restructuring and related costs,
separation and related costs, acquisition and integration costs,
acquisition-related fair value adjustments, Japan pension
settlement gain and non-cash intangible amortization. Some of the
exclusions 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.
|
|
|
|
Intangible amortization includes non-cash intangible
amortization recognized in connection with acquisitions.
|
|
|
|
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.
|
|
|
|
Acquisition and Integration costs include all incremental
expenses incurred to effect a business combination that 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.
|
|
|
|
Acquisition-related fair value adjustments includes business
combination accounting effects from the acquisition including
reduction in revenue and increase in cost of sales due to the
respective estimated fair value adjustments to deferred revenue and
inventory.
|
|
|
|
Separation and related 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. These costs include, among other things, branding, legal,
accounting and other advisory fees and other costs to separate and
transition from Agilent.
|
|
|
|
Japan Pension settlement gain represents the gain recognized
related to the dissolution of our Japanese Employees’ Pension Fund
in December 2016 and transfer of the related assets and obligations
to the Japanese government.
|
|
|
|
Restructuring and related 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. and other one time reorganization costs.
|
|
|
|
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 management’s internal
comparisons to our historical operating results as well as to the
operating results of our competitors.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Management recognizes that items such as amortization of
intangibles, restructuring charges etc. 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 reconciliation from GAAP to Non-GAAP net income is
estimated based on our current information.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Page 5
|
|
|
|
KEYSIGHT TECHNOLOGIES, INC.
|
|
SEGMENT RESULTS INFORMATION
|
|
(In millions, except where noted)
|
|
(Unaudited)
|
|
PRELIMINARY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Communications Solutions Group
|
|
|
|
|
|
YoY
|
|
|
|
Q1'17
|
|
Q1'16
|
|
% Chg
|
|
Revenue
|
|
$
|
434
|
|
$
|
440
|
|
-1%
|
|
Gross Margin, %
|
|
|
61%
|
|
|
60%
|
|
|
|
Income from Operations
|
|
$
|
72
|
|
$
|
78
|
|
|
|
Operating Margin, %
|
|
|
17%
|
|
|
18%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Electronic Industrial Solutions Group
|
|
|
|
|
|
YoY
|
|
|
|
Q1'17
|
|
Q1'16
|
|
% Chg
|
|
Revenue
|
|
$
|
192
|
|
$
|
191
|
|
— %
|
|
Gross Margin, %
|
|
|
60%
|
|
|
57%
|
|
|
|
Income from Operations
|
|
$
|
42
|
|
$
|
38
|
|
|
|
Operating Margin, %
|
|
|
22%
|
|
|
20%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Services Solutions Group
|
|
|
|
|
|
YoY
|
|
|
|
Q1'17
|
|
Q1'16
|
|
% Chg
|
|
Revenue
|
|
$
|
100
|
|
$
|
95
|
|
5%
|
|
Gross Margin, %
|
|
|
39%
|
|
|
40%
|
|
|
|
Income from Operations
|
|
$
|
14
|
|
$
|
13
|
|
|
|
Operating Margin, %
|
|
|
14%
|
|
|
14%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment data reflect the results of our reportable segments under
Keysight's management reporting system which are not necessarily
in conformity with GAAP financial measures. Net revenue for
Communications Solutions Group excludes the impact of fair value
adjustments to acquisition related deferred revenue balances for
the Anite acquisition of $0 million for Q1'17 and $5 million for
Q1'16, respectively. Income from operations of our reporting
segments exclude primarily the impacts of share-based
compensation, restructuring and related costs, separation and
related costs, acquisition and integration costs,
acquisition-related fair value adjustments, Japan pension
settlement gain and non-cash intangible amortization.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The preliminary segment information is estimated based on our
current information.
|
|
|
|
|
|
|
|
|
|
Page 6
|
View source version on businesswire.com: http://www.businesswire.com/news/home/20170216006099/en/
Source: Keysight Technologies, Inc.