Table of Contents

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
 
(MARK ONE)
x☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.
FOR THE QUARTERLY PERIOD ENDED JANUARYJULY 31, 20182022
OR
¨☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.
FOR THE TRANSITION PERIOD FROM              TO        
COMMISSION FILE NUMBER: 001-36334
KEYSIGHT TECHNOLOGIES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
Delaware46-4254555
(State or other jurisdiction of(IRS employer
incorporation or organization)Identification no.)
DELAWARE1400 Fountaingrove Parkway46-4254555
(State or other jurisdiction ofSanta RosaCalifornia(IRS employer95403
incorporation or organization)Identification no.)
1400 FOUNTAINGROVE PARKWAY
SANTA ROSA, CALIFORNIA95403
(Address of principal executive offices)(Zip Code)
Registrant’s telephone number, including area code: (800) 829-4444
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading SymbolName of each exchange on which registered
Common Stock, par value $0.01 per shareKEYSNew York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes x☒  No ¨☐
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes x☒  No ¨☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the exchange act.
Exchange Act.
Large accelerated filer☒Accelerated filer☐
Large accelerated filer x
Accelerated filer ¨
Non-accelerated filer¨
☐
Smaller reporting company¨
☐
(do not check if a smaller reporting company)
Emerging growth company¨
☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section13(a)of the Exchange Act. ¨☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes ¨ ☐No x☒
The number of shares of common stock outstanding at March 6, 2018August 26, 2022 was 187,542,645. 178,796,275.



Table of Contents
KEYSIGHT TECHNOLOGIES, INC.
TABLE OF CONTENTS
 
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PART I— FINANCIAL INFORMATION


ITEM 1. CONDENSED CONSOLIDATED2
Table of Contents
PART I. FINANCIAL STATEMENTS (UNAUDITED)INFORMATION
 
Item 1. Condensed Consolidated Financial Statements (Unaudited)
KEYSIGHT TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(in millions, except per share data)
(Unaudited)
 
Three Months EndedNine Months Ended
 July 31,July 31,
 2022202120222021
Revenue:  
Products$1,140 $1,021 $3,282 $2,987 
Services and other236 225 695 660 
Total revenue1,376 1,246 3,977 3,647 
Costs and expenses:
Cost of products410 370 1,175 1,151 
Cost of services and other89 88 262 264 
Total costs499 458 1,437 1,415 
Research and development206 207 626 615 
Selling, general and administrative317 302 962 900 
Other operating expense (income), net(3)(5)(3)(14)
Total costs and expenses1,019 962 3,022 2,916 
Income from operations357 284 955 731 
Interest income4 1 6 2 
Interest expense(20)(20)(59)(59)
Other income (expense), net5 5 15 (1)
Income before taxes346 270 917 673 
Provision for income taxes8 16 92 61 
Net income$338 $254 $825 $612 
Net income per share:  
Basic$1.89 $1.38 $4.56 $3.31 
Diluted$1.87 $1.36 $4.52 $3.27 
Weighted average shares used in computing net income per share:
Basic179 184 181 185 
Diluted181 186 182 187 
 Three Months Ended
 January 31,
 2018 2017
Net revenue: 
  
Products$684
 $606
Services and other153
 120
Total net revenue837
 726
Costs and expenses:   
Cost of products337
 255
Cost of services and other73
 67
Total costs410
 322
Research and development146
 108
Selling, general and administrative289
 213
Other operating expense (income), net(3) (79)
Total costs and expenses842
 564
Income (loss) from operations(5) 162
Interest income3
 1
Interest expense(22) (12)
Other income (expense), net1
 1
Income (loss) before taxes(23) 152
Provision (benefit) for income taxes(117) 43
Net income$94
 $109
    
Net income per share: 
  
Basic$0.50
 $0.64
Diluted$0.50
 $0.63
    
Weighted average shares used in computing net income per share:  
Basic187
 171
Diluted189
 173


The accompanying notes are an integral part of these condensed consolidated financial statements.




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KEYSIGHT TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
(in millions)
(Unaudited)
Three Months EndedNine Months Ended
 July 31,July 31,
 2022202120222021
Net income$338 $254 $825 $612 
Other comprehensive income (loss):
Unrealized gain (loss) on derivative instruments, net of tax benefit (expense) of $3, $7, $(7) and $(4)(11)(22)29 18 
Amounts reclassified into earnings related to derivative instruments, net of tax benefit (expense) of zero(1)(1)(3)(1)
Foreign currency translation, net of tax benefit (expense) of zero(20)(7)(106)10 
Net defined benefit pension cost and post retirement plan costs:
Change in net actuarial loss, net of tax expense of $3, $6, $7 and $166 13 22 44 
Other comprehensive income (loss)(26)(17)(58)71 
Total comprehensive income$312 $237 $767 $683 
 Three Months Ended
 January 31,
 2018 2017
Net income$94
 $109
Other comprehensive income (loss):   
Unrealized gain (loss) on investments, net of tax benefit (expense) of zero and ($1)(2) 4
Unrealized gain (loss) on derivative instruments, net of tax benefit (expense) of zero and $12
 2
Amounts reclassified into earnings related to derivative instruments, net of tax benefit (expense) of zero(2) 1
Foreign currency translation, net of tax benefit (expense) of zero41
 (24)
Net defined benefit pension cost and post retirement plan costs:   
Change in actuarial net loss, net of tax expense of $3 and $1310
 28
Change in net prior service credit, net of tax benefit of $1 and $2(4) (4)
Other comprehensive income45
 7
Total comprehensive income$139
 $116

The accompanying notes are an integral part of these condensed consolidated financial statements.




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KEYSIGHT TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEET
(in millions, except par value and share data)

(Unaudited)

January 31,
2018		 October 31,
2017
(unaudited)   July 31, 2022October 31, 2021
ASSETS 
  
ASSETS  
Current assets: 
  
Current assets:  
Cash and cash equivalents$980
 $818
Cash and cash equivalents$1,847 $2,052 
Accounts receivable, net454
 547
Accounts receivable, net882 735 
Inventory609
 588
Inventory837 777 
Other current assets232
 224
Other current assets395 270 
Total current assets2,275
 2,177
Total current assets3,961 3,834 
Property, plant and equipment, net539
 530
Property, plant and equipment, net668 650 
Operating lease right-of-use assetsOperating lease right-of-use assets225 227 
Goodwill1,894
 1,882
Goodwill1,606 1,628 
Other intangible assets, net807
 855
Other intangible assets, net216 272 
Long-term investments61
 63
Long-term investments73 70 
Long-term deferred tax assets204
 186
Long-term deferred tax assets661 711 
Other assets270
 240
Other assets442 389 
Total assets$6,050
 $5,933
Total assets$7,852 $7,781 
LIABILITIES AND EQUITY   LIABILITIES AND EQUITY
Current liabilities: 
  
Current liabilities:  
Current portion of long-term debt$20
 $10
Accounts payable229
 211
Accounts payable$328 $287 
Employee compensation and benefits170
 217
Employee compensation and benefits275 355 
Deferred revenue354
 291
Deferred revenue496 478 
Income and other taxes payable35
 28
Income and other taxes payable63 74 
Operating lease liabilitiesOperating lease liabilities40 41 
Other accrued liabilities78
 62
Other accrued liabilities110 74 
Total current liabilities886
 819
Total current liabilities1,312 1,309 
Long-term debt2,028
 2,038
Long-term debt1,792 1,791 
Retirement and post-retirement benefits315
 309
Retirement and post-retirement benefits131 167 
Long-term deferred revenue105
 101
Long-term deferred revenue200 187 
Long-term operating lease liabilitiesLong-term operating lease liabilities192 191 
Other long-term liabilities232
 356
Other long-term liabilities305 352 
Total liabilities3,566
 3,623
Total liabilities3,932 3,997 
Commitments and contingencies (Note 13)

 

Commitments and contingencies (Note 12)Commitments and contingencies (Note 12)00
Stockholders’ equity: 
  
Stockholders’ equity:  
Preferred stock; $0.01 par value; 100 million shares authorized; none issued and outstanding—
 —
Preferred stock; $0.01 par value; 100 million shares authorized; none issued and outstanding— — 
Common stock; $0.01 par value; 1 billion shares authorized; 190 million shares at January 31, 2018 and 188 million shares at October 31, 2017 issued2
 2
Treasury stock at cost; 2.3 million shares at January 31, 2018 and at October 31, 2017(62) (62)
Common stock; $0.01 par value; 1 billion shares authorized; 199 million shares at July 31, 2022 and 197 million shares at October 31, 2021 issuedCommon stock; $0.01 par value; 1 billion shares authorized; 199 million shares at July 31, 2022 and 197 million shares at October 31, 2021 issued2 2 
Treasury stock at cost; 19.7 million shares at July 31, 2022 and 15.1 million shares at October 31, 2021Treasury stock at cost; 19.7 million shares at July 31, 2022 and 15.1 million shares at October 31, 2021(2,148)(1,425)
Additional paid-in-capital1,815
 1,786
Additional paid-in-capital2,311 2,219 
Retained earnings1,141
 1,041
Retained earnings4,255 3,430 
Accumulated other comprehensive loss(412) (457)Accumulated other comprehensive loss(500)(442)
Total stockholders' equity2,484
 2,310
Total stockholders' equity3,920 3,784 
Total liabilities and equity$6,050
 $5,933
Total liabilities and equity$7,852 $7,781 
 
The accompanying notes are an integral part of these condensed consolidated financial statements.


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KEYSIGHT TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(in millions)
(Unaudited)
Three Months EndedNine Months Ended
January 31, July 31,
2018 2017 20222021
Cash flows from operating activities: 
  
Cash flows from operating activities:  
Net income$94
 $109
Net income$825 $612 
Adjustments to reconcile net income to net cash provided by operating activities: 
  
Adjustments to reconcile net income to net cash provided by operating activities:  
Depreciation and amortization78
 32
DepreciationDepreciation88 87 
AmortizationAmortization80 149 
Share-based compensation19
 18
Share-based compensation102 83 
Deferred tax expense (benefit)(235) 40
Deferred tax expense (benefit)19 (49)
Excess and obsolete inventory-related charges6
 3
Excess and obsolete inventory-related charges18 20 
Gain on sale of land—
 (8)
Pension curtailment and settlement gains—
 (68)
Other non-cash expenses, net2
 —
Loss on settlement of pension planLoss on settlement of pension plan— 16 
Other non-cash expense (income), netOther non-cash expense (income), net30 7 
Changes in assets and liabilities: 
  
Changes in assets and liabilities:  
Accounts receivable99
 40
Accounts receivable(166)(64)
Inventory(20) (10)Inventory(88)(30)
Accounts payable14
 (12)Accounts payable41 10 
Employee compensation and benefits(50) (36)Employee compensation and benefits(81)(12)
Retirement and post-retirement benefits(12) (3)
Deferred revenue61
 15
Deferred revenue69 86 
Income taxes payable115
 (15)Income taxes payable(59)8 
Retirement and post-retirement benefitsRetirement and post-retirement benefits(21)5 
Other assets and liabilities—
 10
Other assets and liabilities(111)26 
Net cash provided by operating activities171
 115
Net cash provided by operating activities746 954 
   
Cash flows from investing activities: 
  
Cash flows from investing activities:  
Investments in property, plant and equipment(24) (16)Investments in property, plant and equipment(127)(101)
Proceeds from sale of land—
 8
Acquisition of businesses and intangible assets, net of cash acquired(3) —
Acquisition of businesses and intangible assets, net of cash acquired(33)(136)
Purchase of investmentsPurchase of investments(30)— 
Other investing activitiesOther investing activities— (1)
Net cash used in investing activities(27) (8)Net cash used in investing activities(190)(238)
   
Cash flows from financing activities: 
  
Cash flows from financing activities:  
Proceeds from issuance of common stock under employee stock plans24
 19
Proceeds from issuance of common stock under employee stock plans63 59 
Payment of taxes related to net share settlement of equity awards(15) (11)Payment of taxes related to net share settlement of equity awards(74)(53)
Proceeds from revolving credit facility40
 —
Repayment of revolving credit facility(40) —
Net cash provided by financing activities9
 8
Treasury stock repurchasesTreasury stock repurchases(723)(320)
Payment of acquisition-related contingent considerationPayment of acquisition-related contingent consideration— (2)
Other financing activitiesOther financing activities— (1)
Net cash used in financing activitiesNet cash used in financing activities(734)(317)
   
Effect of exchange rate movements9
 (2)Effect of exchange rate movements(27)4 
   
Net increase in cash and cash equivalents162
 113
Cash and cash equivalents at beginning of period818
 783
Cash and cash equivalents at end of period$980
 $896
Net increase (decrease) in cash, cash equivalents, and restricted cashNet increase (decrease) in cash, cash equivalents, and restricted cash(205)403 
Cash, cash equivalents, and restricted cash at beginning of periodCash, cash equivalents, and restricted cash at beginning of period2,068 1,767 
Cash, cash equivalents, and restricted cash at end of periodCash, cash equivalents, and restricted cash at end of period$1,863 $2,170 
Supplemental cash flow information:Supplemental cash flow information:
Interest paymentsInterest payments$37 $37 
Income tax paid, netIncome tax paid, net$157 $100 
Investments in property, plant and equipment included in accounts payableInvestments in property, plant and equipment included in accounts payable$23 $27 
The accompanying notes are an integral part of these condensed consolidated financial statements.


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KEYSIGHT TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENT OF EQUITY
(in millions, except number of shares in thousands)
(Unaudited)
 Common StockTreasury Stock  
 Number of SharesPar ValueAdditional Paid-in CapitalNumber of SharesTreasury Stock at CostRetained EarningsAccumulated Other Comprehensive LossTotal Stockholders' Equity
Balance as of April 30, 2022198,229 $2 $2,254 (18,101)$(1,920)$3,917 $(474)$3,779 
Net income— — — — — 338 — 338 
Other comprehensive income (loss), net of tax— — — — — — (26)(26)
Issuance of common stock287 — 32 — — — — 32 
Taxes related to net share settlement of equity awards— — — — — — — — 
Share-based compensation— — 25 — — — — 25 
Repurchase of common stock— — — (1,639)(228)— — (228)
Balance as of July 31, 2022198,516 $2 $2,311 (19,740)$(2,148)$4,255 $(500)$3,920 
Balance as of October 31, 2021197,248 $2 $2,219 (15,094)$(1,425)$3,430 $(442)$3,784 
Net income— — — — — 825 — 825 
Other comprehensive income (loss), net of tax— — — — — — (58)(58)
Issuance of common stock1,268 — 63 — — — — 63 
Taxes related to net share settlement of equity awards— — (73)— — — — (73)
Share-based compensation— — 102 — — — — 102 
Repurchase of common stock— — — (4,646)(723)— — (723)
Balance as of July 31, 2022198,516 $2 $2,311 (19,740)$(2,148)$4,255 $(500)$3,920 
Balance as of April 30, 2021196,901 $2 $2,152 (12,461)$(992)$2,894 $(511)$3,545 
Net income— — — — — 254 — 254 
Other comprehensive income (loss), net of tax— — — — — — (17)(17)
Issuance of common stock318 — 30 — — — — 30 
Taxes related to net share settlement of equity awards— — (1)— — — — (1)
Share-based compensation— — 19 — — — — 19 
Repurchase of common stock— — — (569)(80)— — (80)
Balance as of July 31, 2021197,219 $2 $2,200 (13,030)$(1,072)$3,148 $(528)$3,750 
Balance as of October 31, 2020195,661 $2 $2,110 (10,732)$(752)$2,536 $(599)$3,297 
Net income— — — — — 612 — 612 
Other comprehensive income (loss), net of tax— — — — — — 71 71 
Issuance of common stock1,558 — 59 — — — — 59 
Taxes related to net share settlement of equity awards— — (52)— — — — (52)
Share-based compensation— — 83 — — — — 83 
Repurchase of common stock— — — (2,298)(320)— — (320)
Balance as of July 31, 2021197,219 $2 $2,200 (13,030)$(1,072)$3,148 $(528)$3,750 

The accompanying notes are an integral part of these condensed consolidated financial statements.

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KEYSIGHT TECHNOLOGIES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)(Unaudited)


1.OVERVIEW, BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
1.    OVERVIEW AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Overview.Keysight Technologies, Inc. ("we", "us",we," "us," "Keysight" or the "company"), incorporated in Delaware on December 6, 2013, is a measurementtechnology company that helps enterprises, service providers and governments accelerate innovation to connect and secure the world by providing electronic design and test solutions tothat are used in the simulation, design, validation, manufacture, installation, optimization and secure operation of electronics systems in the communications, networking and electronics industries. FollowingWe also offer customization, consulting and optimization services throughout the acquisition of Ixia on April 18, 2017, the company also provides testing, visibility,customer's product development lifecycle, including start-up assistance, asset management, up-time services, application services and security solutions, strengthening applications across physicalinstrument calibration and virtual networks for enterprises, service providers, and network equipment manufacturers.repair.
Our fiscal year-end is October 31, and our fiscal quarters end on January 31, April 30 and July 31. Unless otherwise stated, these dates refer to our fiscal year and fiscal quarters.
Basis of Presentation. Presentation.We have prepared the accompanying financial statements pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC"). Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles in the U.S. ("GAAP") have been condensed or omitted pursuant to such rules and regulations. The accompanying financial statements and information should be read in conjunction with our Annual Report on Form 10-K.
In the opinion of management, the accompanying condensed consolidated financial statements contain all normal and recurring adjustments necessary to state fairly our condensed consolidated balance sheetfinancial position as of JanuaryJuly 31, 20182022 and October 31, 2017, condensed consolidated statement of comprehensive income for the three months ended January 31, 2018 and 2017, condensed consolidated statement2021, results of operations for the three and nine months ended JanuaryJuly 31, 20182022 and 2017,2021, and condensed consolidated statement of cash flows for the threenine months ended JanuaryJuly 31, 20182022 and 2017.2021.
Use of Estimates.The preparation of condensed consolidated financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the amounts reported in our condensed consolidated financial statements and accompanying notes. Management bases its estimates on historical experience and various other assumptions believed to be reasonable. Although these estimates are based on management’s knowledge of current events and actions that may impact the company in the future, actual results may be different from the estimates. Our critical accounting policies are those that affect our financial statements materially and involve difficult, subjective or complex judgments by management. Those policies are revenue recognition, inventory valuation, share-based compensation, retirement and post-retirement plan assumptions, valuation of goodwill and other intangible assets, warranty, restructuring, and accounting for income taxes.
Land Sale. On April 30, 2014 we entered into a binding contract to sell land in the United Kingdom ("U.K.") that resulted in the transfer of three separate land tracts in May 2014, November 2015 and November 2016 for £21 million. In the three months ended January 31, 2017, we recognized a gain of $8 million on the sale of the land tracts in other operating expense (income).
Restricted Cash. As of January 31, 2018, restricted cash of approximately $2 million consisted of deposits held as collateral against bank guarantees and is classified within other assets in the condensed consolidated balance sheet. As of October 31, 2017, restricted cash of approximately $2 million consisted of deposits held as collateral against bank guarantees and is classified within other assets in the condensed consolidated balance sheet.
Update to Significant Accounting Policies.ThereExcept as set forth in the "new accounting pronouncements" section below, there have been no material changes to our significant accounting policies as compared to the significant accounting policies described in our Annual Report on Form 10-K for the fiscal year ended October 31, 2017.2021.
New Accounting Pronouncements.
2. NEW ACCOUNTING PRONOUNCEMENTS
ASU 2021-08, Business Combinations (Topic 805):Accounting for Contract Assets and Contract Liabilities from Contracts with Customers. In May 2014,October 2021, the Financial Accounting Standards Board ("FASB"(“FASB”) issued guidance which will replace numerous requirements in GAAP, including industry-specific requirements, and provide companies with a single revenue recognition model for recognizing revenue from contracts with customers. The core principle of the new standard is that a company should recognize revenuerequires entities to show the transfer of promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. In July 2015, the FASB deferred the effective date by one year to December 15, 2017 for annual reporting periods beginning after that date. The FASB also permitted early adoption of the standard, but not before the original effective date of December 15, 2016. During 2016, the FASB issued several amendments to the standard, including clarification to the guidance on reporting revenues as a principal versus an agent, identifying performance obligations, accounting for intellectual property licenses, assessing collectability, presentation of sales taxes, impairment testing for contract costs and disclosure of performance obligations.

The two permitted transition methods under the new standard are (1) the full retrospective method, in which case the standard would be applied to each prior reporting period presented, and the cumulative effect of applying the standard would be recognized at the earliest period shown, or (2) the modified retrospective method, in which case the cumulative effect of applying the standard would be recognized at the date of initial application. We currently anticipate adopting the standard on November 1, 2018 under the modified retrospective transition method. Based on the progress to date, we have not identified any material impacts of the new standard on the amount and timing of revenue recognition to our consolidated statement of operations; however, we have not completed our assessment, including the impact of our recent acquisitions of Ixia and ScienLab. We expect recognition of revenue for a majority of customer contracts to remain substantially unchanged. While we are continuing to assess all potential impacts of the standard, we currently believe the most significant impact relates to our accounting for software license revenue, as under the new standard we expectapply Accounting Standards Codification Topic 606 to recognize software license revenue at the time of billing rather than over the contractual term since control of the software license is transferred, and our performance obligation is satisfied at that point in time. The new standard will also require the deferral of commissions that were previously expensed as incurred and may qualify for capitalization under the new standard.
In February 2016, the FASB issued guidance that will require organizations that lease assets to recognizemeasure contract assets and contract liabilities for leases with lease terms of more than 12 months. Consistent with current GAAP, the recognition, measurement, and presentation of expenses and cash flows arising fromin a lease by a lessee primarily will depend on its classification as a finance or operating lease. However, unlike current GAAP, which requires only capital leases to be recognized on the balance sheet, the new guidance will require both types of leases to be recognized on the balance sheet.business combination. The standard is effective for fiscal years beginning after December 15, 2018, and2022, including interim periods within those fiscal years. Early adoption is permitted. We are evaluating the impact of adopting this guidance on our consolidated financial statements.
In March 2016, the FASB issued Accounting Standards Update 2016-09, Improvements to Employee Share-Based Payment Accounting, that amends the accounting for stock-based compensation and requires excess tax benefits and deficiencies to be recognized as a component of income tax expense rather than equity. The inclusion of excess tax benefits and deficiencies as a component of income tax expense will increase volatility within our provision for income taxes as the amount of excess tax benefits or deficiencies from stock-based compensation awards depends on our stock price at the date the awards vest. This guidance also requires excess tax benefits and deficiencies to be presented as operating activity in the statement of cash flows and allows an entity to make an accounting policy election to either estimate expected forfeitures or to account for them as they occur. We adopted this guidance during the first quarter of 2018 and elected to recognize forfeitures as they occur. As a result, a $6 million cumulative-effect adjustment was recorded directly to retained earnings as ofeffective November 1, 2017, the beginning2021. The adoption of the annual period of adoption, withthis guidance did not have a corresponding reduction to deferred tax liabilities. Additionally, we reported an income tax benefit of $1 million for the first quarter of 2018 due to recognition of excess tax benefits from share-based compensation.
We elected to apply the presentation requirements for cash flows related to excess tax benefits and employee taxes paid for withheld shares retrospectively to all periods presented, which resulted in the following changematerial impact to our previously reported condensed consolidated statement of cash flows for the three months ended January 31, 2017:
 
Three Months Ended
January 31, 2017
 
As Originally
Reported
 
As
Adjusted
 Change
 (in millions)
Net cash provided by operating activities$102
 $115
 $13
Net cash provided by financing activities$21
 $8
 $(13)
In March 2017, the FASB issued guidance that requires the service cost component of net periodic pension cost and net periodic post-retirement benefit cost to be included in operating expenses (together with other employee compensation costs) and the other components of the cost to be included in non-operating expenses. The standard is effective for annual and interim periods beginning after December 31, 2017. Early adoption is permitted. We are evaluating the impact of adopting this guidance on our consolidated financial statements.
In May 2017, the FASB issued guidance that clarifies when changes to the terms or conditions of a share-based payment award must be accounted for as modifications. Specifically, an entity would not apply modification accounting if the fair value, vesting conditions, and classification of the awards are the same immediately before and after the modification. The standard is effective for fiscal years beginning after December 31, 2017, and interim periods within those fiscal years. Early adoption is permitted. We are evaluating the impact of adopting this guidance on our consolidated financial statements.

In August 2017, the FASB issued guidance to enable entities to better portray the economics of their risk management activities in the financial statements and enhance transparency and understandability of hedge results. The standard is effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Early adoption is permitted. We are evaluating the impact of adopting this guidance on our consolidated financial statements.
In February 2018, the FASB issued guidance that allows a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the Tax Cuts and Jobs Act enacted in December 2017. The standard is effective for fiscal years beginning after December 15, 2018. Early adoption is permitted. We are evaluating the impact of adopting this guidance on our consolidated financial statements.
Other amendments to GAAP that have been issued by the FASB or other standards-setting bodies that do not require adoption until a future date are not expected to have a material impact on our condensed consolidated financial statements upon adoption.
3. ACQUISITIONS2.    REVENUE
AcquisitionsDisaggregation of Revenue
We disaggregate our revenue from contracts with customers by geographic region, end market, and timing of revenue recognition, as we believe these categories best depict how the nature, amount, timing and uncertainty of our revenue and cash flows are affected by economic factors. Disaggregated revenue is presented for each of our reportable segments, Communications Solutions Group ("CSG") and Electronics Industrial Solutions Group ("EISG").

8
Table of Contents
Three Months Ended
July 31,
20222021
CSGEISGTotalCSGEISGTotal
 (in millions)
Region
Americas$468 $94 $562 $418 $81 $499 
Europe121 86 207 122 79 201 
Asia Pacific381 226 607 335 211 546 
Total revenue$970 $406 $1,376 $875 $371 $1,246 
End Market
Aerospace, Defense & Government$275 $— $275 $280 $— $280 
Commercial Communications695 — 695 595 — 595 
Electronic Industrial— 406 406 — 371 371 
Total revenue$970 $406 $1,376 $875 $371 $1,246 
Timing of Revenue Recognition
Revenue recognized at a point in time$807 $349 $1,156 $729 $322 $1,051 
Revenue recognized over time163 57 220 146 49 195 
Total revenue$970 $406 $1,376 $875 $371 $1,246 
Nine Months Ended
July 31,
20222021
CSGEISGTotalCSGEISGTotal
 (in millions)
Region
Americas$1,340 $268 $1,608 $1,228 $223 $1,451 
Europe395 256 651 380 222 602 
Asia Pacific1,076 642 1,718 996 598 1,594 
Total revenue$2,811 $1,166 $3,977 $2,604 $1,043 $3,647 
End Market
Aerospace, Defense & Government$860 $— $860 $845 $— $845 
Commercial Communications1,951 — 1,951 1,759 — 1,759 
Electronic Industrial— 1,166 1,166 — 1,043 1,043 
Total revenue$2,811 $1,166 $3,977 $2,604 $1,043 $3,647 
Timing of Revenue Recognition
Revenue recognized at a point in time$2,342 $1,006 $3,348 $2,172 $907 $3,079 
Revenue recognized over time469 160 629 432 136 568 
Total revenue$2,811 $1,166 $3,977 $2,604 $1,043 $3,647 
Our point-in-time revenues are generated predominantly from the sale of various types of design and test software and hardware, and per-incident repair and calibration services. Perpetual software and the portion of term software subscription revenue in 2017this category represents revenue recognized up front upon transfer of control at the time of electronic delivery. Revenue on per-incident repair and calibration services is recognized when services are performed. Over-time revenues are generated predominantly from the repair and calibration contracts, extended warranties, technical support for hardware and software, certain software subscription and Software as a Service ("SaaS") product offerings, and professional services. Technical support for software and when-and-if available software updates and upgrades are sold either together with our software licenses and software subscriptions, including SaaS, or separately as part of our customer support programs.

AcquisitionAdditionally, we provide custom solutions that include combinations of Ixia

On April 18, 2017, pursuant tohardware, software, software subscriptions, installation, professional services, and other support services, and revenue may be recognized either up front on delivery or over time depending upon the terms of an Agreement and Planthe contract.

9
Table of Merger dated January 30, 2017, between Keysight and Ixia (the "Merger Agreement"), we acquired allContents
Contract Balances
Contract assets
Contract assets consist of the outstanding common stock of Ixia for $1,622 million, net of $72 million of cash acquired, pursuant to an exchange offer for $19.65 per share (the "Merger Consideration"). Pursuant to the Merger Agreement, any outstanding and unexercised Ixia stock options with an exercise price below the Merger Consideration and any outstanding Ixia restricted stock awards were cancelled and converted into the right to receive a cash payment equal to the merger consideration of $19.65 per share (minus the exercise price for the Ixia stock options). The vested portion of the awards associated with prior service of Ixia employees represented approximately $47 million of the total consideration. We funded the acquisition with a combination of cash and proceeds from debt and equity financings. As a result of the acquisition, Ixia has become a wholly-owned subsidiary of Keysight. Accordingly, the results of Ixia are included in Keysight's consolidated financial statements from the date of the acquisitionunbilled receivables and are reportedrecorded when revenue is recognized in the Ixia Solutions Group operating segment.
The Ixia acquisition was accounted for in accordance with the authoritative accounting guidance. The acquired assetsadvance of scheduled billings to our customers. These amounts are primarily related to solutions and assumed liabilities were recorded by Keysight at their estimated fair values. Keysight determined the estimated fair values with the assistancesupport arrangements when transfer of appraisals or valuations performed by third party specialists, discounted cash flow analysis, and estimates made by management. We expect to leverage and expand the existing sales channels and product development resources, and utilize the assembled workforce. The company also anticipates opportunities for growth through expanded geographic and customer segment diversity and the ability to leverage additional products and capabilities. These factors, among others, contributed to a purchase price in excess of the estimated fair value of Ixia's net identifiable assets acquired (see summary of net assets below), and, as a result,control has occurred but we have recorded goodwill in connection with this transaction.
All goodwillnot yet invoiced. The contract assets balance was assigned to the Ixia Solutions Group. We do not expect the goodwill recognized or any potential impairment charges in the future to be deductible for income tax purposes.
A portion$59 million and $84 million as of the overall purchase price was allocated to acquired intangible assets. Amortization expense associated with acquired intangible assets is not deductible for tax purposes. Therefore, a deferred tax liability of approximately $186 million was established primarily for the future amortization of these intangiblesJuly 31, 2022 and October 31, 2021, respectively, and is included in "accounts receivables, net" and "other long-term liabilities"assets" in our condensed consolidated balance sheet.
Contract costs
We capitalize direct and incremental costs incurred to acquire contracts for which the associated revenue is expected to be recognized in future periods. We have determined that certain employee and third-party representative commission programs meet the requirements to be capitalized. These costs are initially deferred and typically amortized over the term of the customer contract which corresponds to the period of benefit. Capitalized contract costs were $37 million and $39 million as of July 31, 2022 and October 31, 2021, respectively, and are included in “other current assets” and “other assets” in the table below.condensed consolidated balance sheet. The amortization expense associated with these costs was $19 million and $64 million for the three and nine months ended July 31, 2022, respectively, and $20 million and $58 million for the corresponding periods last year.

Contract liabilities
Our contract liabilities consist of deferred revenue that arises when we receive consideration in advance of providing the goods or services promised in the contract. Contract liabilities are primarily generated from customer deposits received in advance of shipments for products or rendering of services and are recognized as revenue when services are provided to the customer. We classify deferred revenue as current or non-current based on the timing of when we expect to recognize revenue.
The following table summarizesprovides a roll-forward of our contract liabilities, current and non-current:
Nine Months Ended
July 31,
2022
(in millions)
Balance at October 31$665 
Deferral of revenue billed in current period, net of recognition479 
Revenue recognized that was deferred as of the beginning of the period(425)
Foreign currency translation impact(23)
Balance at July 31$696 
Of the preliminary allocation$425 million of the purchase price to the estimated fair values of the assets acquired and liabilities assumed on the closing date of April 18, 2017 (in millions):
Cash and cash equivalents$72
Short-term investments44
Accounts receivable91
Inventory107
Other current assets34
Property, plant and equipment50
Goodwill1,117
Other intangible assets744
Other assets4
Total assets acquired2,263
Accounts payable(10)
Employee compensation and benefits(32)
Deferred revenue(35)
Income and other taxes payable(1)
Other accrued liabilities(32)
Other long-term liabilities(459)
Net assets acquired$1,694
The fair values of cash and cash equivalents, short-term investments, accounts receivable, short-term investments, other current assets, accounts payable, employee compensation and benefits, and other accrued liabilities were generally determined using historical carrying values given the short-term nature of these assets and liabilities. The fair values for acquired inventory, property, plant and equipment, intangible assets, and deferred revenue were determined with the input from third-party valuation specialists. The fair values of certain other assets and certain other liabilities were determined internally using historical carrying values and estimates made by management. If additional information becomes available, we may revise the preliminary purchase price allocation during the remainder of the measurement period (which will not exceed 12 months from the acquisition date). Any such revisions or changes may be material.
Valuation of Intangible Assets Acquired
The components of other intangible assets acquired in connection with the Ixia acquisition were as follows (in millions):
 Estimated Fair Value Estimated useful life
Developed product technology$423
 4 years
Customer relationships234
 7 years
Tradenames and trademarks12
 3 years
Backlog8
 90 days
Total intangible assets subject to amortization677
  
In-process research and development67
  
Total intangible assets$744
  
As noted above, the intangible assets were valued with input from valuation specialists using the income approach, which includes the discounted cash flow, cost-savings, and relief from royalty methods. The in-process research and development was valued using the multi-period excess earnings method under the income approach by discounting forecasted cash flows directly related to the products expecting to result from the projects, net of returns on contributory assets. A discount rate of 14% was used to value the research and development projects, adjusted to reflect additional risks inherentrecognized in the acquired projects. The primary in-process projects acquired relate to next generation products which will be released in the near future. Total costs to complete for all Ixia in-process research and development were estimated at approximately $12 million as of the close date.

Acquisition and integration costs directly related to the Ixia acquisition were recorded in the condensed consolidated statement of operations as follows:
 Three Months Ended
 January 31,
 2018 2017
 (in millions)
Cost of products and services$2
 $—
Research and development1
 —
Selling, general and administrative15
 2
Total acquisition and integration costs$18
 $2

Such costs are expensed in accordance with the authoritative accounting guidance.
Acquisition of ScienLab
On August 31, 2017, we acquired all of the outstanding common stock of ScienLab for $60 million, net of $2 million of cash acquired. ScienLab is a Germany-based company that provides test solutions to automotive original equipment manufacturers and Tier 1 suppliers in the automotive and energy markets. This acquisition complements our portfolio, allowing end-to-end solutions for hybrid electric vehicles, electric vehicles, and battery test solutions that address e-mobility market dynamics. We funded the acquisition using existing cash. As a result of the acquisition, ScienLab has become a wholly-owned subsidiary of Keysight. Accordingly, the results of ScienLab are included in Keysight's consolidated financial statements from the date of the acquisition and are reported in the Electronic Industrial Solutions Group operating segment.
The ScienLab acquisition was accounted for in accordance with the authoritative accounting guidance. The acquired assets and assumed liabilities were recorded by Keysight at their estimated fair values. Keysight determined the estimated fair values with the assistance of appraisals or valuations performed by third party specialists, discounted cash flow analysis, and estimates made by management. We expect to leverage and expand the existing sales channels and product development resources, and utilize the assembled workforce. The company also anticipates opportunities for growth through expanded geographic and customer segment diversity and the ability to leverage additional products and capabilities. These factors, among others, contributed to a purchase price in excess of the estimated fair value of ScienLab's net identifiable assets acquired (see summary of net assets below), and, as a result, we have recorded goodwill in connection with this transaction.
All goodwill was assigned to the Electronic Industrial Solutions Group. We do not expect the goodwill recognized or any potential impairment charges in the future to be deductible for income tax purposes.
A portion of the overall purchase price was allocated to acquired intangible assets. Amortization expense associated with acquired intangible assets is not deductible for tax purposes. Therefore, a deferred tax liability of approximately $13 million was established primarily for the future amortization of these intangibles and is included in "other long-term liabilities" in the table below.
The following table summarizes the preliminary allocation of the purchase price to the estimated fair values of the assets acquired and liabilities assumed on the closing date of August 31, 2017 (in millions):
Cash and cash equivalents$2
Accounts receivable3
Inventory16
Other current assets1
Goodwill23
Other intangible assets40
Total assets acquired85
Accounts payable(1)
Deferred revenue(3)
Income and other taxes payable(2)
Current portion of long-term debt(1)
Other long-term liabilities(16)
Net assets acquired$62

The fair values of cash and cash equivalents, accounts receivable, other current assets, accounts payable, deferred revenue, and current portion of long-term debt were generally determined using historical carrying values given the short-term nature of these assets and liabilities. The fair values for acquired inventory and intangible assets were determined with the input from third-party valuation specialists. The fair values of certain other liabilities were determined internally using historical carrying values and estimates made by management. As additional information becomes available, we may revise the preliminary purchase price allocation during the remainder of the measurement period (which will not exceed 12 months from the acquisition date). Any such revisions or changes may be material.
Valuation of Intangible Assets Acquired
The components of intangible assets acquired in connection with the ScienLab acquisition were as follows (in millions):
 Estimated Fair Value Estimated useful life
Developed product technology$33
 6 years
Customer relationships4
 5 years
Non-compete agreements1
 3 years
Tradenames and trademarks1
 3 years
Backlog1
 6 months
Total intangible assets$40
  
As noted above, the intangible assets were valued with input from valuation specialists using the income approach, which includes the discounted cash flow, cost-savings, and relief from royalty methods.
Acquisition and integration costs directly related to the ScienLab acquisition totaled $1 million for the threenine months ended JanuaryJuly 31, 2018 which were recorded in selling, general and administrative expenses.
Supplemental Pro Forma Information (Unaudited)
The following represents pro forma operating results as if Ixia had been included in the company's condensed consolidated statements of operations2022 that was deferred as of the beginning of fiscal 2017. Pro forma results of operations for ScienLab have not been presented because the effects of the acquisition were not material to the company’s financial results.
  Three Months Ended
in millions, except per share amounts January 31, 2017
Net revenue $846
Net income $39
Net income per share - Basic $0.21
Net income per share - Diluted $0.21
The unaudited pro forma financial information forperiod, approximately $88 million was recognized in the three months ended JanuaryJuly 31, 2017 combines the historical results2022.
Remaining Performance Obligations
Our remaining performance obligations, excluding contracts that have an original expected duration of Keysight and Ixia for the three months ended January 31, 2017, assuming that the companies were combinedone year or less, was approximately $399 million as of November 1, 2016July 31, 2022, and include business combination accounting effects fromrepresents the acquisition including amortizationcompany’s obligation to deliver products and depreciation charges from acquired intangible assets, property plantservices and equipment, interest expenseobtain customer acceptance on delivered products. As of July 31, 2022, we expect to fulfill 16 percent of these unsatisfied performance obligations during the financing transactions used to fund the acquisitionremainder of 2022, 43 percent during 2023, and acquisition-related transaction costs and tax-related effects. The pro forma information as presented above is for informational purposes only and is not indicative41 percent thereafter.

10
Table of the results of operations that would have been achieved if the acquisition had taken place at the beginning of fiscal 2017.Contents
4.3.    SHARE-BASED COMPENSATION
Keysight accounts for share-based awards in accordance with the provisions of the authoritative accounting guidance, which requires the measurement and recognition of compensation expense for all share-based payment awards made to our employees and directors, including employee stock option awards, restricted stock units ("RSUs"), 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 (“LTP”) Program, based on estimated fair values. 

The impact of share-based compensation expense on our resultscondensed consolidated statement of operations was as follows:
Three Months EndedNine Months Ended
July 31,July 31,
 2022202120222021
 (in millions)
Cost of products and services$5 $3 $19 $16 
Research and development6 4 22 17 
Selling, general and administrative15 12 62 51 
Total share-based compensation expense$26 $19 $103 $84 
4.    INCOME TAXES

Three Months Ended

January 31,
 2018 2017
 (in millions)
Cost of products and services$3
 $3
Research and development4
 4
Selling, general and administrative12
 11
Total share-based compensation expense$19
 $18
 At both January 31, 2018 and 2017, share-based compensation capitalized within inventory was $1 million.
The following assumptions were used to estimate the fair valuetable provides details of LTP Program grants:
income taxes:
 Three Months Ended
 January 31,
 2018 2017
LTP Program:   
Volatility of Keysight shares25% 27%
Volatility of selected index14% 15%
Price-wise correlation with selected peers57% 57%
 Three Months EndedNine Months Ended
July 31,July 31,
 2022202120222021
in millions, except percentages
Income before taxes$346$270$917$673
Provision for income taxes$8$16$92$61
Effective tax rate2.3 %5.9 %10.0 %9.0 %
Awards granted under the LTP Program are based on a variety of targets, such as total shareholder return (TSR) or financial metrics such as operating margin, cost synergies and others. The awards based on TSR were valued using a Monte Carlo simulation model and those based on financial metrics were valued based on the market price of Keysight’s common stock on the date of grant. We did not grant any option awardstax expense for the three months ended JanuaryJuly 31, 2018 and 2017, respectively. Monte Carlo simulation fair value models require2022 was lower compared to the use of highly subjective and complex assumptions, includingsame period last year, primarily due to a decrease in tax expense due to discrete tax differences, partially offset by an increase in income before taxes. The income tax expense for the option’s expected life andnine months ended July 31, 2022 was higher compared to the price volatility of the underlying stock. The estimated fair value of restricted stock awards is determined based on the market price of Keysight’s common stock on the date of grant.
5.     INCOME TAXESsame period last year, primarily due to an increase in income before taxes.
The company’s effectiveincome tax rate was a benefit of 515.8 percentexpense for the three and nine months ended JanuaryJuly 31, 2018 and expense of 28.3 percent for the three months ended January 31, 2017. The income tax benefit was $117 million for the three months ended January 31, 2018, and income tax expense was $43 million for the three months ended January 31, 2017. The increase in the total income tax benefit and discrete benefit for the three months ended January 31, 2018 is primarily due to changes in U.S. tax law. The income tax benefit for the three months ended January 31, 20182022 included a net discrete benefit of $115$38 million primarily due to $117and $47 million, of benefit resulting from changes in U.S. tax law.respectively. The income tax provisionexpense for the three and nine months ended JanuaryJuly 31, 20172021 included a net discrete expensebenefit of $23$26 million primarilyand $46 million, respectively. The discrete tax benefit for the three and nine months ended July 31, 2022 includes changes in tax reserves from audit settlements as well as an out-of-period adjustment to tax reserves for fiscal years 2019 through 2021 related to $22 millionthe potential U.S. benefit associated with the future resolution of non-U.S. tax reserves. The adjustment was immaterial to current and prior-period financial statements. The discrete tax benefit for the three and nine months ended July 31, 2021 includes the release of valuation allowance on Netherlands tax assets. The discrete tax benefit for the nine months ended July 31, 2021 also includes the impact of integration activities for acquired entities resulting fromin a decrease in U.S. taxes expected to be imposed upon the transferrepatriation of a portion of the Japanese Employees’ Pension Fund (see Note 12).unremitted foreign earnings.
Keysight benefits from tax incentives in several jurisdictions, most significantly in Singapore and several jurisdictions have granted us tax incentivesMalaysia, that will expire or require renewal at various times in the future. The tax incentives provide lower rates of taxation on certain classes of income and require thresholds of investments and employment or specific types of income in those jurisdictions. The Singapore tax incentive is due for renewal in fiscal 2024.
2024, and the Malaysia incentive is due for renewal in 2025. We are continuing to evaluate renewal options and the impact of potential outcomes on our effective tax rate. For the majoritynine months ended July 31, 2022 and 2021, respectively, the impact of our entities, the tax incentives decreased the income tax provision by $63 million and $41 million. The increase in tax benefit for the nine months ended July 31, 2022 is primarily due to a change in the jurisdictional mix of non-U.S. earnings, which increased the earnings taxed at incentive tax rates in 2022.
The open tax years for the IRS, stateU.S. federal income tax return and most foreign audit authoritiesstate income tax returns are from AugustNovember 1, 20142017 through the current tax year. For certain acquired U.S.the majority of our foreign entities, the open tax years generally remain open back to year 2009.are from November 1, 2016 through the current tax year. For certain foreign entities, the tax years remain open, at most, back to the year 2007. Given2008.
Keysight’s fiscal year 2018 U.S. federal income tax return has been under examination by the number of yearsInternal Revenue Service. The Tax Cuts and numerous matters that remain subject to examinationJobs Act was enacted in variousDecember 2017 and imposed a one-time U.S. tax jurisdictions, we are unable to estimate the range of possible changeson foreign earnings not previously repatriated to the balanceU.S., known as the Transition Tax, which was reported in Keysight’s fiscal year 2018 U.S. federal income tax

11
Table of our unrecognizedContents
return. As of June 2022, the fiscal year 2018 U.S. federal income tax benefits.audit was effectively settled with no material assessments and no additional cash taxes paid.
The company is being audited in Malaysia for the 2008 tax year. Although thisfiscal year 2008. This tax year pre-dates our spin-offseparation from Agilent,Agilent. However, pursuant to the agreement between Agilent and Keysight pertaining to tax matters, as finalized at the time of separation, for certain entities, including Malaysia, any historical tax liability is the responsibility of Keysight. In the fourth quarter of fiscal year 2017, Keysight paid income taxes and penalties of $68 million on gains related to intellectual property rights, although we are currently in the process of appealing to the Special Commissioners of Income Tax (“SCIT”) in Malaysia.rights. The company believes there are numerous defenses to the current assessment; the statute of limitations for the fiscal year 2008 tax year in Malaysia was closed, and the income in question

is exempt from tax in Malaysia. The company is disputing this assessment and pursuing all avenues to resolve this issue favorably for the company. Our appeals to both the Special Commissioners of Income Tax and the High Court in Malaysia have been unsuccessful. We have filed a Notice of Appeal with the Court of Appeal, and a hearing is currently scheduled for February 2023.
On December 22, 2017, the U.S. government enacted comprehensive Federal tax legislation commonly known as the Tax Cuts and Jobs Act (the “Tax Act”).  The Tax Act includes significant changes to the U.S.outcome of corporate income tax system, including but not limited to: a federal corporate incomeexaminations cannot be predicted with certainty. Given the numerous tax rate reduction from 35 percent to 21 percent; limitations on the deductibility of interest expenseyears and executive compensation; creation of new minimum taxes such as the base erosion anti-abuse tax (“BEAT”) and Global Intangible Low Taxed Income (“GILTI”) tax; and the transition of U.S. international taxation from a worldwide tax system to a modified territorial tax system, which will result in a one time U.S. tax liability on those earnings which have not previously been repatriated to the U.S. (the “Transition Tax”).
The corporate tax rate reduction is effective as of January 1, 2018. Since the company has a fiscal year rather than a calendar year, it ismatters that remain subject to rules relatingexamination in various tax jurisdictions, the ultimate resolution of current and future tax examinations could be inconsistent with management’s current expectations. If this were to transitional tax rates. As a result, the company’s fiscal year 2018 federal statutory rate will be a blended rate of 23.3 percent.
Due to the complexities involved in accounting for the enactment of the Tax Act, the SEC staff has issued Staff Accounting Bulletin 118 (“SAB 118”) directing companies to consider the impact of the Tax Act as “provisional” when they do notoccur, it could have the necessary information available, prepared or analyzed (including computations) in reasonable detail to complete the accounting for the change in tax law. For the amounts which the company was able to reasonably estimate, the company has recognized a provisional discrete income tax benefit of approximately $117 million. This is made up of a one-time reduction in net deferred tax liabilities and corresponding income tax benefit of approximately $304 million due to the re-measurement of U.S. income taxes recorded on the undistributed earnings of foreign subsidiaries that were not considered permanently reinvested. This was offset by approximately $176 million of income tax expense and corresponding long-term income tax payable due to the one-time toll charge. The company also estimated a one-time reduction in net deferred tax assets and corresponding income tax expense of approximately $11 million due to the re-measurement of the U.S. deferred tax assets at the lower 21 percent U.S. federal corporate income tax rate. We have not completed our accounting for the income tax effects of certain elements of the Tax Act, including the new GILTI tax. Due to the complexity of these new tax rules, we are continuing to evaluate these provisions of the Tax Act and whether such taxes are recorded as a current-period expense when incurred or whether such amounts should be factored into a company’s measurement of its deferred taxes. As a result, we have not included an estimate of the tax expense/benefit related to these items for the period ended January 31, 2018.
We are continuing to evaluate the Tax Act and its requirements, as well as its application to our business and its impact on our effective tax rate. In accordance with SAB 118, the estimated discrete income tax benefit of $117 million represents our best estimate based on interpretation of the Tax Act. We are able to make reasonable estimates of the impact of the deemed repatriation transition tax, remeasurement of the deferred tax liability recorded on the undistributed earnings of foreign subsidiaries that were not considered reinvested and reductionrate in the U.S. corporate income tax rate. The final impact of the Tax Act may differ from these estimates, due to, among other things, changes in our interpretations and assumptions, additional guidance that may be issued by the U.S. Treasury, additional analysis of foreign earnings inherited from acquisitions, and changes to U.S. state conformance to the U.S. federal tax law change. In accordance with SAB 118, the estimated discrete income tax benefit of $117 million is considered provisional and any subsequent adjustment to these amounts will be recorded to tax expense in the quarterperiod in which the analysis is complete, but no later than December 22, 2018.such examinations are resolved.
6.5.    NET INCOME PER SHARE
The following is a reconciliationtable presents the calculation of the numerator and denominator of the basic and diluted net income per share computations forshare:
Three Months EndedNine Months Ended
July 31,July 31,
 2022202120222021
in millions, except per-share amounts
Net income$338 $254 $825 $612 
Basic weighted-average shares179 184 181 185 
Potential common shares— stock options and other employee stock plans2 2 1 2 
Diluted weighted-average shares181 186 182 187 
Net income per share - basic$1.89 $1.38 $4.56 $3.31 
Net income per share - diluted$1.87 $1.36 $4.52 $3.27 
Diluted shares outstanding include the periods presented below:
 Three Months Ended
 January 31,
 2018 2017
 (in millions)
Numerator: 
  
Net income$94
 $109
Denominator:   
Basic weighted-average shares187
 171
Potential common shares— stock options and other employee stock plans2
 2
Diluted weighted-average shares189
 173

The dilutive effect of share-basedin-the-money options and non-vested RSUs. The diluted effect of such awards is reflected in diluted net income percalculated based on the average share by applicationprice of each period using the treasury stock method. We exclude stock options with exercise prices greater thanmethod, except where the average market priceinclusion of our common stock fromsuch awards would have an anti-dilutive impact.
6.    GOODWILL AND OTHER INTANGIBLE ASSETS
The goodwill balance as of July 31, 2022 and October 31, 2021 and the calculation of diluted earnings per share becauseactivity for the effect would be anti-dilutive. For the threenine months ended JanuaryJuly 31, 2018 and 2017, we excluded no options from the calculation of diluted earnings per share. In addition, we exclude stock options, ESPP shares, LTP Program and restricted stock awards, of which the combined exercise price and unamortized fair value collectively was greater than the average market price of our common stock because the effect would be anti-dilutive. For the three months ended January 31, 2018 and 2017, we excluded approximately 668,100 shares and 424,400 shares, respectively.
7. SUPPLEMENTAL CASH FLOW INFORMATION
Net cash paid for income taxes was $1 million and $17 million for the three months ended January 31, 2018 and 2017, respectively. Cash paid for interest was $2 million and zero for the three months ended January 31, 2018 and 2017, respectively. The following table summarizes our non-cash investing activities that are not reflected in the condensed consolidated statement of cash flows:
 Three Months Ended
 January 31,
 2018 2017
 (in millions)
Capital expenditures in accounts payable$(3) $(5)
 $(3) $(5)
8. INVENTORY
 January 31,
2018		 October 31,
2017
 (in millions)
Finished goods$296
 $286
Purchased parts and fabricated assemblies313
 302
Total inventory$609
 $588
9.GOODWILL AND OTHER INTANGIBLE ASSETS
Goodwill balances and the movements2022 for each of our reportable operating segments as of and for the three months ended January 31, 2018 were as follows:
 CSGEISGTotal
 (in millions)
Goodwill at October 31, 2021$1,069 $559 $1,628 
Foreign currency translation impact(35)(7)(42)
Goodwill arising from acquisitions9 11 20 
Goodwill at July 31, 2022$1,043 $563 $1,606 
As of July 31, 2022 and October 31, 2021, accumulated impairment losses on goodwill was $709 million.

12
 Communications Solutions Group Electronic Industrial Solutions Group Ixia Solutions Group Services Solutions Group Total
 (in millions)
Goodwill as of October 31, 2017$441
 $240
 $1,117
 $84
 $1,882
Foreign currency translation impact8
 3
 —
 1
 12
Goodwill as of January 31, 2018$449
 $243
 $1,117
 $85
 $1,894
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Other intangible assets as of JanuaryJuly 31, 20182022 and October 31, 20172021 consisted of the following:
 July 31, 2022October 31, 2021
 Gross
Carrying
Amount		Accumulated
Amortization		Net Book
Value		Gross
Carrying
Amount		Accumulated
Amortization		Net Book
Value
 (in millions)
Developed technology$993 $903 $90 $969 $866 $103 
Backlog17 17 — 17 17 — 
Trademark/Tradename36 30 6 36 28 8 
Customer relationships394 274 120 389 235 154 
Total amortizable intangible assets1,440 1,224 216 1,411 1,146 265 
In-Process R&D— — — 7 — 7 
Total$1,440 $1,224 $216 $1,418 $1,146 $272 
 Other Intangible Assets as of January 31, 2018 Other Intangible Assets as of October 31, 2017
 
Gross
Carrying
Amount
 
Accumulated
Amortization
and
Impairments
 
Net Book
Value
 
Gross
Carrying
Amount
 
Accumulated
Amortization
and
Impairments
 
Net Book
Value
 (in millions)
Developed technology$821
 $291
 $530
 $808
 $252
 $556
Backlog13
 13
 —
 13
 12
 1
Trademark/Tradename33
 10
 23
 33
 8
 25
Customer relationships304
 70
 234
 304
 61
 243
Non-compete agreements1
 —
 1
 1
 —
 1
Total amortizable intangible assets1,172
 384

788
 1,159
 333
 826
In-Process R&D19
 —
 19
 29
 —
 29
Total$1,191
 $384
 $807
 $1,188
 $333
 $855
During the threenine months ended JanuaryJuly 31, 2018,2022, we used $33 million, net of cash acquired, for acquisition activity and recognized no additions to goodwill and other intangible assets.assets of $20 million and $23 million, respectively, based on the preliminary allocation of the purchase price to the estimated fair values of the assets acquired and liabilities assumed. During the threenine months ended JanuaryJuly 31, 2018, there was a $3 million foreign exchange translation impact to other intangible assets. During the three months ended January 31, 2018,2022, we transferred $10$7 million from in-process R&D to developed technology as projects were successfully completed.
Goodwill is assessed for impairment on a reporting unit basis at least annually in the fourth quarter of each year, or more frequently when events and circumstances occur indicating that the recorded goodwill may be impaired. The company has not identified any triggering events that indicate an impairment of goodwill for the nine months ended July 31, 2022.
During the nine months ended July 31, 2022, other intangible assets decreased $1 million due to the impact of foreign exchange translation. Amortization of other intangible assets was $51$26 million and $11$78 million for the three and nine months ended JanuaryJuly 31, 2018 and 2017,2022, respectively. Future amortization expense related to existing finite-lived purchasedAmortization of other intangible assets is estimated to be $152was $33 million and $147 million for the remainderthree and nine months ended July 31, 2021, respectively.
Estimated intangible assets amortization expense for each of 2018, $202 million for 2019, $194 million for 2020, $127 million for 2021, $50 million for 2022 and $63 million thereafter.the five succeeding fiscal years is as follows:
Amortization expense
(in millions)
2022 (remainder)$25 
2023$83 
2024$43 
2025$26 
2026$16 
Thereafter$23 
10.
7.    FAIR VALUE MEASUREMENTS
The authoritative guidance defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required or permitted to be recorded at fair value, we consider the principal or most advantageous market and assumptions that market participants would use when pricing the asset or liability.
Fair Value Hierarchy
The guidance establishes a fair value hierarchy that prioritizes inputs used in valuation techniques into three levels. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. There are three levels of inputs that may be used to measure fair value:
Level 1- applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities.
Level 2- applies to assets or liabilities for which there are inputs other than quoted prices included within Level 1 that are observable, either directly or indirectly, for the asset or liability such as: quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in less active markets; or other inputs that can be derived principally from, or corroborated by, observable market data.

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Level 3- applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities.

Financial Assets and Liabilities Measured at Fair Value on a Recurring Basis
Financial assets and liabilities measured at fair value on a recurring basis as of JanuaryJuly 31, 20182022 and October 31, 20172021 were as follows:
Fair Value Measurements at
 July 31, 2022October 31, 2021
 TotalLevel 1Level 2Level 3OtherTotalLevel 1Level 2Level 3Other
 (in millions)
Assets:        
Short-term        
Cash equivalents
Money market funds$1,151 $1,151 $— $— $— $1,296 $1,296 $— $— $— 
Derivative instruments (foreign exchange contracts)12 — 12 — — 6 — 6 — — 
Long-term
Derivative instruments (interest rate swaps)85 — 85 — — 48 — 48 — — 
Equity investments63 63 — — — 60 60 — — — 
Equity investments - other9 — — — 9 10 — — — 10 
Total assets measured at fair value$1,320 $1,214 $97 $— $9 $1,420 $1,356 $54 $— $10 
Liabilities:        
Short-term
Derivative instruments (foreign exchange contracts)$13 $— $13 $— $— $4 $— $4 $— $— 
Long-term
Deferred compensation liability23 — 23 — — 24 — 24 — — 
Total liabilities measured at fair value$36 $— $36 $— $— $28 $— $28 $— $— 
 Fair Value Measurements at January 31, 2018 
 Fair Value Measurements at October 31, 2017
 Total Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3
 (in millions)
Assets: 
  
  
  
  
  
  
  
Short-term 
  
  
  
  
  
  
  
Cash equivalents               
Money market funds$451
 $451
 $—
 $—
 $403
 $403
 $—
 $—
Derivative instruments (foreign exchange contracts)9
 —
 9
 —
 6
 —
 6
 —
Long-term               
Trading securities13
 13
 —
 —
 13
 13
 —
 —
Available-for-sale investments31
 31
 —
 —
 34
 34
 —
 —
Total assets measured at fair value$504
 $495
 $9
 $—
 $456
 $450
 $6
 $—
Liabilities: 
  
  
  
  
  
  
  
Short-term               
Derivative instruments (foreign exchange contracts)$4
 $—
 $4
 $—
 $1
 $—
 $1
 $—
Long-term               
Deferred compensation liability13
 —
 13
 —
 13
 —
 13
 —
Total liabilities measured at fair value$17
 $—
 $17
 $—
 $14
 $—
 $14
 $—

Our money market funds, trading securities, and available-for-sale investments are generally valued using quoted market prices and therefore are classified within Level 1During the nine months ended July 31, 2022, we made an equity investment of the fair value hierarchy. Our deferred compensation liability is classified as Level 2 because the inputs used in the calculations are observable, although the values are not directly based on quoted market prices. Our derivative financial instruments are classified within Level 2 as there is not an active market for each hedge contract, but the inputs used to calculate the value of the instruments are tied to active markets.
Trading securities (which are earmarked to pay the deferred compensation liability) and deferred compensation liability are reported at fair value, with gains or losses resulting from$30 million. The changes in fair value recognized currentlyof the equity investment are recorded within "other income (expense), net" in earnings. Investments designated as available-for-salethe condensed consolidated statement of operations.
Net realized gains (losses) on sale of our equity investments were 0 for both the three and certain derivative instruments are reportednine months ended July 31, 2022 and 2021. Net unrealized losses on our equity investments were $8 million and $24 million for the three and nine months ended July 31, 2022, respectively. Net unrealized gains on our equity investments were $1 million and $2 million for the three and nine months ended July 31, 2021, respectively.
Assets and Liabilities Measured at Fair Value on a Non-Recurring Basis
For the nine months ended July 31, 2022, our held and used long-lived assets in Russia with a carrying amount of $3 million were written down to a fair value with unrealized gains and losses, net of tax, includedzero, resulting in accumulated other comprehensive income (loss). Realized gains and losses froman impairment on assets that are expected to generate zero cash flows in the salefuture of these instruments are$3 million, which was recorded within “other operating expense (income), net” in earnings.the condensed consolidated statement of operations.
11.DERIVATIVES
8.    DERIVATIVES
We are exposed to foreign currency exchange rate fluctuations and interest rate changes in the normal course of our business. As part of our risk management strategy, we use derivative instruments, primarily forward contracts, and purchased options, to hedge economic and/or accounting exposures resulting from changes in foreign currency exchange rates.
Cash Flow Hedges
We enter into foreign exchange contracts to hedge our forecasted operational cash flow exposures resulting from changes in foreign currency exchange rates. These foreign exchange contracts, carried at fair value, have maturities between one andbased on a rolling period of up to twelve months. These derivative instruments are designated and qualify as cash flow hedges under the criteria prescribed in the authoritative guidance. Ineffectiveness
In fiscal 2020, we entered into forward starting interest rate swaps with an aggregate notional amount of $600 million associated with future interest payments on anticipated debt issuances through fiscal year 2024. The contract terms allow us to

14
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lock-in a treasury rate on anticipated debt issuances. These derivative instruments are designated and qualify as cash flow hedges under the criteria prescribed in the three months ended January 31, 2018 and 2017 was not significant.authoritative guidance.
OtherNon-designated Hedges
Additionally, we enter into foreign exchange contracts to hedge monetary assets and liabilities that are denominated in currencies other than the functional currency of our subsidiaries. These foreign exchange contracts are carried at fair value and do not qualify for hedge accounting treatment and are not designated as hedging instruments.
Our use of derivative instruments exposes us to credit risk to the extent that the counterparties may be unable to meet the terms of the agreement. We do, however, seek to mitigate such risks by limiting our counterparties to major financial institutions that are selected based on their credit ratings and other factors. We have established policies and procedures for mitigating credit

risk that include establishing counterparty credit limits, monitoring credit exposures, and continually assessing the creditworthiness of counterparties.
AThe number of our derivative agreements contain threshold limits to the net liability position with counterparties and are dependent on our corporate credit rating determined by the major credit rating agencies. The counterparties to the derivative instruments may request collateralization, in accordance with derivative agreements, on derivative instruments in net liability positions.
The aggregate fair value of all derivative instruments with credit-risk-related contingent features that were in a net liability position as of January 31, 2018 was $2 million. The credit-risk-related contingent features underlying these agreements had not been triggered as of January 31, 2018.
There were 121open foreign exchange forward contracts open as of January 31, 2018 that were designated as cash"cash flow hedges. There were 63 foreign exchange forward contracts as of January 31, 2018 that were nothedges" and "not designated as hedging instruments.instruments" was 213 and 69, respectively, as of July 31, 2022. The aggregated notional amounts by currency and designation as of JanuaryJuly 31, 20182022 were as follows:
 
Derivatives in Cash Flow
Hedging Relationships
 Derivatives Not Designated as Hedging Instruments Derivatives in Cash Flow
Hedging Relationships		Derivatives Not Designated as Hedging Instruments
 
Forward
Contracts
 
Forward
Contracts
 Forward
Contracts		Forward
Contracts
Currency Buy/(Sell) Buy/(Sell)CurrencyBuy/(Sell)Buy/(Sell)
 (in millions) (in millions)
Euro $—
 $45
Euro$21 $38 
British Pound —
 (6)British Pound24 (78)
Singapore Dollar 11
 1
Singapore Dollar32 34 
Malaysian Ringgit 77
 (5)Malaysian Ringgit106 10 
Japanese Yen (96) (34)Japanese Yen(161)(12)
Other currencies (15) (10)Other currencies13 (20)
Total $(23) $(9)Total$35 $(28)
Derivative instruments are subject to master netting arrangements and are disclosed gross in the condensed consolidated balance sheet in accordance with the authoritative guidance.sheet. The gross fair values and balance sheet locationpresentation of derivative instruments held in the condensed consolidated balance sheet as of JanuaryJuly 31, 20182022 and October 31, 20172021 were as follows:
Fair Values of Derivative Instruments
Assets DerivativesLiabilities Derivatives
Fair Value Fair Value
Balance Sheet LocationJuly 31, 2022October 31, 2021Balance Sheet LocationJuly 31, 2022October 31, 2021
(in millions)
Derivatives designated as hedging instruments:     
Cash flow hedges
Foreign exchange contracts     
Other current assets$11 $5 Other accrued liabilities$10 $1 
Interest rate swap contracts:
Other assets85 48 
Derivatives not designated as hedging instruments:     
Foreign exchange contracts     
Other current assets1 1 Other accrued liabilities3 3 
Total derivatives$97 $54  $13 $4 

15
Fair Values of Derivative Instruments
Asset Derivatives Liability Derivatives
  Fair Value   Fair Value
Balance Sheet Location January 31,
2018		 October 31,
2017		 Balance Sheet Location January 31,
2018		 October 31,
2017
(in millions)
Derivatives designated as hedging instruments:  
  
    
  
Cash flow hedges          
Foreign exchange contracts          
Other current assets $7
 $5
 Other accrued liabilities $2
 $—
Derivatives not designated as hedging instruments:  
  
    
  
Foreign exchange contracts  
  
    
  
Other current assets 2
 1
 Other accrued liabilities 2
 1
Total derivatives $9
 $6
   $4
 $1
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The effect of derivative instruments for foreign exchange contracts designated as hedging instruments and for those not designated as hedging instruments in our condensed consolidated statement of operations was as follows:
Three Months EndedThree Months EndedNine Months Ended
January 31,July 31,July 31,
2018 20172022202120222021
(in millions) (in millions)
Derivatives designated as hedging instruments: 
  
Derivatives designated as hedging instruments:  
Cash Flow Hedges   Cash Flow Hedges
Interest rate swap contracts:Interest rate swap contracts:
Gain (loss) recognized in accumulated other comprehensive income (loss)Gain (loss) recognized in accumulated other comprehensive income (loss)$(11)$(29)$37 $19 
Foreign exchange contracts:   Foreign exchange contracts:
Gain (loss) recognized in accumulated other comprehensive income$2
 $3
Gain (loss) reclassified from accumulated other comprehensive income into cost of sales$2
 $(1)
Gain (loss) recognized in accumulated other comprehensive income (loss)Gain (loss) recognized in accumulated other comprehensive income (loss)$(3)$— $(1)$3 
Gain (loss) reclassified from accumulated other comprehensive income (loss) into earnings:Gain (loss) reclassified from accumulated other comprehensive income (loss) into earnings:
Cost of productsCost of products$5 $1 $9 $(1)
Selling, general and administrativeSelling, general and administrative$(4)$— $(6)$2 
Amount excluded from effectiveness testing recognized in earnings based on amortization approach:Amount excluded from effectiveness testing recognized in earnings based on amortization approach:
Selling, general and administrativeSelling, general and administrative$— $1 $1 $1 
Derivatives not designated as hedging instruments:   Derivatives not designated as hedging instruments:
Gain (loss) recognized in other income (expense), net$1
 $2
Gain (loss) recognized in:Gain (loss) recognized in:
Cost of productsCost of products$— $— $— $1 
Other income (expense), netOther income (expense), net$— $(2)$13 $(5)
The estimated amount of existing net gain at JanuaryJuly 31, 20182022 expected to be reclassified from accumulated other comprehensive income (loss) to cost of salesearnings within the next twelve months is $4a loss of $1 million.
12.9.    DEBT
The following table summarizes the components of our long-term debt:
July 31, 2022October 31, 2021
(in millions)
2024 Senior Notes at 4.55% ($600 face amount less unamortized costs of $1 and $1)$599 $599 
2027 Senior Notes at 4.60% ($700 face amount less unamortized costs of $3 and $4)697 696 
2029 Senior Notes at 3.00% ($500 face amount less unamortized costs of $4 and $4)496 496 
Total debt$1,792 $1,791 
Short-Term Debt
Revolving Credit Facility
On July 30, 2021, we entered into a new credit agreement that amended and restated our existing credit agreement dated February 15, 2017 in its entirety, and provides for a $750 million five-year unsecured revolving credit facility (the “Revolving Credit Facility”) that will expire on July 30, 2026 and bears interest at an annual rate of LIBOR + 1 percent along with a facility fee of 0.125 percent per annum. In addition, the new credit agreement permits the company, subject to certain customary conditions, on one or more occasions to request to increase the total commitments under the Revolving Credit Facility by up to $250 million in the aggregate. We may use amounts borrowed under the facility for general corporate purposes. As of July 31, 2022 and October 31, 2021, we had no borrowings outstanding under the Revolving Credit Facility. We were in compliance with the covenants of the Revolving Credit Facility during the nine months ended July 31, 2022.
Long-Term Debt
There have been no changes to the principal, maturity, interest rates and interest payment terms of the senior notes during the nine months ended July 31, 2022 as compared to the senior notes described in our Annual Report on Form 10-K for the fiscal year ended October 31, 2021. We were in compliance with the covenants of our senior notes during the nine months ended July 31, 2022.

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As of July 31, 2022 and October 31, 2021, we had $39 million and $40 million, respectively, of outstanding letters of credit and surety bonds unrelated to the credit facility that were issued by various lenders.
The fair value of our long-term debt, which is calculated from quoted prices that are primarily Level 1 inputs under the accounting guidance fair value hierarchy is approximately $1,784 million and $1,977 million as of July 31, 2022 and October 31, 2021, respectively.
10.    RETIREMENT PLANS AND POST-RETIREMENT BENEFIT PLANS
For the three and nine months ended JanuaryJuly 31, 20182022 and 2017,2021, our net pension and post-retirement benefit cost (benefit) werewas comprised of the following:
 Pensions 
 U.S. Defined Benefit PlansNon-U.S. Defined Benefit
Plans		U.S. Post-Retirement
Benefit Plan
 Three Months Ended
July 31,
 202220212022202120222021
(in millions)
Service cost—benefits earned during the period$7 $6 $3 $4 $1 $1 
Interest cost on benefit obligation6 6 4 3 1 1 
Expected return on plan assets(16)(13)(15)(19)(4)(3)
Amortization of net actuarial loss3 6 6 10 — 3 
Net periodic benefit cost (benefit)$— $5 $(2)$(2)$(2)$2 
Pensions 
Pensions   U.S. Defined Benefit PlansNon-U.S. Defined Benefit
Plans		U.S. Post-Retirement
Benefit Plan
U.S. Defined Benefit Plans 
Non-U.S. Defined Benefit
Plans
 
U.S. Post-Retirement
Benefit Plan
 Nine Months Ended
Three Months Ended January 31,July 31,
2018 2017 2018 2017 2018 2017 202220212022202120222021
(in millions)(in millions)
Service cost—benefits earned during the period$6
 $5
 $3
 $4
 $—
 $—
Service cost—benefits earned during the period$19 $18 $10 $11 $1 $1 
Interest cost on benefit obligation6
 5
 6
 6
 2
 2
Interest cost on benefit obligation18 17 12 11 3 3 
Expected return on plan assets(9) (8) (21) (19) (4) (3)Expected return on plan assets(46)(39)(45)(58)(11)(9)
Amortization:           
Net actuarial loss3
 4
 6
 9
 4
 5
Prior service credit(2) (2) —
 —
 (3) (4)
Settlement gain—
 —
 —
 (68) —
 —
Amortization of net actuarial lossAmortization of net actuarial loss8 18 18 31 1 8 
Settlement lossSettlement loss— — — 16 — — 
Net periodic benefit cost (benefit)$4
 $4
 $(6) $(68) $(1) $—
Net periodic benefit cost (benefit)$(1)$14 $(5)$11 $(6)$3 
We record the service cost component of net periodic benefit cost (benefit) in the same line item as other employee compensation costs. The non-service components of net periodic benefit cost (benefit), such as interest cost, expected return on assets, amortization of prior service cost, and actuarial gains or losses, are recorded within "other income (expense), net" in the condensed consolidated statement of operations.
In March 2021, we substantially transferred the assets and obligations of our Netherlands defined benefit plan (“The Netherlands DB plan”) to an insurance company. The partial settlement resulted in a loss of $16 million which is included in "other income (expense), net" in the condensed consolidated statement of operations. We received a net refund of $3 million due to the partial settlement of the Netherlands DB plan.
We did not contribute to our U.S. Defined Benefit Plans anddefined benefit plans or U.S. Post-Retirement Benefit Planpost-retirement benefit plan during the three and nine months ended JanuaryJuly 31, 20182022 and 2017.2021. We contributed $9$2 million and $7$6 million to our Non-U.S. Defined Benefit Plansnon-U.S. defined benefit plans during the three and nine months ended JanuaryJuly 31, 20182022. We contributed $1 million and 2017,$6 million to our non-U.S. defined benefit plans during the three and nine months ended July 31, 2021, respectively.
DuringFor the remainder of 2018,2022, we do not expect to contribute to our U.S. Defined Benefit Plans,defined benefit plan and U.S. post-retirement benefit plan, and we expect to contribute $29$2 million to our Non-U.S. Defined Benefit Plans.
On December 15, 2016,non-U.S. defined benefit plans. The amounts we transferred a portioncontribute depend upon, among other things, legal requirements, underlying asset returns, the plan’s funded status, the anticipated tax deductibility of the assetscontribution, local practices, market conditions, interest rates and obligationsother factors.

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11.    SUPPLEMENTAL FINANCIAL INFORMATION
The following tables provide details of selected balance sheet items:
Cash, cash equivalents, and restricted cash
July 31, 2022October 31, 2021
(in millions)
Cash and cash equivalents$1,847 $2,052 
Restricted cash included in other assets16 16 
Total cash, cash equivalents, and restricted cash shown in the statement of cash flows$1,863 $2,068 
Restricted cash primarily relates to deficit reduction contributions to an escrow account for one of our Japanese Employees’ Pension Fund ("EPF") to the Japanese government. The remaining portion of the EPF was transferred to a new Keysight Japan corporatenon-U.S. defined benefit pension plan. plans and deposits held as collateral against bank guarantees.
Inventory
 July 31, 2022October 31, 2021
 (in millions)
Finished goods$303 $329 
Purchased parts and fabricated assemblies534 448 
Total inventory$837 $777 
The difference betweenincrease in inventory for the obligations settled withnine months ended July 31, 2022, was primarily driven by higher material costs and incremental stock build-up to secure supply in the government of $142current supply-constrained environment.
Property, plant and equipment
 July 31, 2022October 31, 2021
 (in millions)
Land$53 $61 
Buildings and leasehold improvements798 785 
Machinery and equipment1,372 1,328 
Total property, plant and equipment2,223 2,174 
Accumulated depreciation of property, plant and equipment(1,555)(1,524)
Property, plant and equipment, net$668 $650 
The increase in property, plant and equipment, net, for the nine months ended July 31, 2022, was primarily driven by increased capital spending for capacity and technology investments. Depreciation expense was $88 million and $87 million for the nine months ended July 31, 2022 and 2021, respectively.
Leases
The following table summarizes the components of our lease cost:
Three Months EndedNine Months Ended
July 31,July 31,
2022202120222021
(in millions)(in millions)
Operating lease cost$13 $13 $38 $39 
Variable lease cost$4 $4 $12 $11 
Supplemental cash flow information related to our operating leases was as follows:
Nine Months Ended
July 31,
20222021
(in millions)
Cash payment for operating leases$36 $40 
Right-of-use assets obtained in exchange for operating lease obligations$40 $78 

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The decrease in right-of-use assets transferred to the governmentobtained in exchange for operating lease obligations was primarily driven by reassessment of $51 million resulted in an increasea lease term in the funded statusprior year triggered by significant leasehold improvements.
As of the new defined benefit pension planJuly 31, 2022, we have additional operating leases, primarily for real estate, that have not yet commenced of $91$16 million. The settlement resulted in a gain of $68 million which is included in otherThese operating expense (income)leases will commence in the consolidated statementremainder of operations. Previously accrued salary progressionfiscal year 2022 and fiscal year 2023 with lease terms of $4 million was derecognized at the time of settlement.
13. WARRANTY, COMMITMENTS AND CONTINGENCIESup to 15 years.
Standard Warrantywarranty
Effective December 1, 2017, the Keysight warrantyOur warranties on products sold through direct sales channel ischannels are primarily for one year. Warranties for products sold through distribution channels continue to beare primarily for three years. We accrue for standard warranty costs based on historical trends in warranty charges. The accrual is reviewed regularly and periodically adjusted to reflect changes

in warranty cost estimates. Estimated warranty charges are recorded within cost of products at the time related product revenue is recognized.
Activity related to the standard warranty accrual, which is included in other accrued and other long-term liabilities in our condensed consolidated balance sheet, is as follows:
 Nine Months Ended
July 31,
 20222021
 (in millions)
Beginning balance$34 $33 
Accruals for warranties, including change in estimates16 23 
Settlements made during the period(18)(21)
Ending balance$32 $35 
Accruals for warranties due within one year$19 $21 
Accruals for warranties due after one year13 14 
Ending balance$32 $35 
 Three Months Ended
 January 31,
 2018 2017
 (in millions)
Beginning balance$45
 $44
Accruals for warranties including change in estimate10
 7
Settlements made during the period(8) (8)
Ending balance$47

$43
    
Accruals for warranties due within one year$26
 $22
Accruals for warranties due after one year21
 21
Ending balance$47
 $43
12.    COMMITMENTS AND CONTINGENCIES
Commitments
ThereOur non-cancellable commitments to contract manufacturers and suppliers increased to $536 million as of July 31, 2022 from $444 million as of October 31, 2021, driven by higher revenue, advance purchase orders to secure capacity for critical parts due to global supply shortages and higher material costs. During the nine months ended July 31, 2022, there were no other material changes during the three months ended January 31, 2018 to the operating and capital lease commitments reported in the company’s 2017 Annual Report on Form 10-K.
Contingencies
We are involved in lawsuits, claims, investigations and proceedings, including, but not limited to, patent, commercial and environmental matters, which arise in the ordinary course of business. There are no matters pending that we currently believe are reasonably possible of having a material impact to our business, consolidated financial condition, results of operations or cash flows.
14. DEBT
Short-Term Debt
Revolving Credit Facility
On February 15, 2017, we entered into an amended and restated credit agreement (the “Revolving Credit Facility”) that replaced our existing $450 million unsecured credit facility dated September 15, 2014. The Revolving Credit Facility provides for a $450 million, five-year unsecured revolving credit facility that will expire on February 15, 2022 and bears interest at an annual rate of LIBOR + 1.30%. In addition, the Revolving Credit Facility permits us to increase the total commitments under this credit facility by up to $150 million in the aggregate on one or more occasions upon request. We may use amounts borrowed under the facility for general corporate purposes. During the three months ended January 31, 2018, we borrowed and repaid $40 million of borrowings outstanding under the Revolving Credit Facility. As of January 31, 2018, we had no borrowings outstanding under the Revolving Credit Facility. We were in compliance with the covenants of the Revolving Credit Facility during the three months ended January 31, 2018.
Long-Term Debt
The following table summarizes the components of our long-term debt:
 January 31, 2018 October 31, 2017
 (in millions)
2019 Senior Notes at 3.30% ($500 face amount less unamortized costs of $2 and $2)$498
 $498
2024 Senior Notes at 4.55% ($600 face amount less unamortized costs of $4 and $4)596
 596
2027 Senior Notes at 4.60% ($700 face amount less unamortized costs of $6 and $6)694
 694
Term loan ($260 face amount less unamortized costs of zero)260
 260
 2,048
 2,048
Less: Current portion of long-term debt20
 10
Total$2,028
 $2,038

There have been no changes to the principal, maturity, interest rates and interest payment terms of the senior notes during the three months ended January 31, 2018purchase commitments as compared to the senior notes describedreported in our Annual Report on Form 10-K for the fiscal year ended October 31, 2017.2021.
Senior Unsecured Term LoanContingencies
On February 15, 2017,August 3, 2021, we entered into a term credit agreement that provides for a three-year $400 million senior unsecured term loan that bears interest at an annual rateConsent Agreement with the Directorate of LIBOR + 1.50%. The term loan was drawn upon the closingDefense Trade Controls, Bureau of Political-Military Affairs, Department of State to resolve alleged violations of the Ixia acquisition. AsArms Export Control Act and the International Traffic in Arms Regulations ("ITAR"). Pursuant to the Consent Agreement, we were assessed a penalty of January$6.6 million to be paid over three years, $2.5 million of which is suspended and designated for remediation activities, including employment of a special compliance officer for three years. We have paid $1.1 million of the assessed amount as of July 31, 2018, we had borrowings outstanding2022.
In October 2019, Keysight entered into a license agreement with Centripetal Networks in conjunction with the resolution of a patent infringement lawsuit brought by Centripetal against Keysight. Royalties owed under the term loanlicense and the scope of $260 million,the license, which expired on December 31, 2021, were the primary subjects of arbitration, which was repaidfully resolved in Keysight’s favor. On January 1, 2022, Centripetal filed a lawsuit in Federal District Court in Virginia, alleging that additional Keysight products infringe certain of Centripetal’s patents. In addition, in February 2018.
As2022, Centripetal filed complaints in Germany alleging infringement of January 31, 2018certain of Centripetal’s German patents, and October 31, 2017, we had $27 million and $26 million, respectively, of outstanding letters of credit unrelated toin April 2022, Centripetal filed a complaint with the credit facilityInternational Trade Commission (“ITC”) requesting that were issued by various lenders.
The fair value of our long-term debt, calculatedthey investigate whether Keysight should be enjoined from quoted pricesimporting certain products that are primarily Level 1 inputs undermanufactured outside of the accounting guidance fair value hierarchy, was aboveU.S. and are alleged to infringe Centripetal patents. We deny the carrying value by approximately $58 millionallegations and $91 million asintend to aggressively defend each case. Although we do not currently believe that these or other matters are reasonably possible of January 31, 2018having a material impact to our business, consolidated financial position, results of operations or cash flows, the outcome of litigation is inherently uncertain and October 31, 2017, respectively.the outcome is difficult to predict. Management’s expectations, if proved to be incorrect, could impact our results in a financial period. We are also involved in lawsuits, claims, investigations and proceedings, including, but not limited to, patent, employment, commercial and environmental matters, which arise in the ordinary course of business.

15.19
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13.    STOCKHOLDERS' EQUITY
Stock Repurchase Program
On FebruaryNovember 18, 2016, the Board2021, our board of Directorsdirectors approved a new stock repurchase program authorizing the purchase of up to $200$1,200 million of the company’s common stock.stock, replacing the previously approved November 2020 program, under which $77 million remained. Under theour stock repurchase 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. The stock repurchase program may be commenced, suspended or discontinued at any time at the company’s discretion and does not have an expiration date.
For the threenine months ended JanuaryJuly 31, 2018,2022, we did not repurchase anyrepurchased 4,646,427 shares of common stock underfor $723 million. For the nine months ended July 31, 2021, we repurchased 2,297,600 shares of common stock repurchase program.for $320 million.
Accumulated Other Comprehensive Loss
Changes in accumulated other comprehensive loss by component and related tax effects for the three and nine months ended JanuaryJuly 31, 20182022 and 20172021 were as follows:
Foreign currency translationNet defined benefit pension cost and post retirement plan costsUnrealized gains (losses) on derivativesTotal
Actuarial lossesPrior service credits
(in millions)
As of April 30, 2022$(106)$(440)$(6)$78 $(474)
Other comprehensive income (loss) before reclassifications(20)— — (14)(34)
Amounts reclassified out of accumulated other comprehensive gain (loss)— 9 — (1)8 
Tax benefit (expense)— (3)— 3 — 
Other comprehensive income (loss)(20)6 — (12)(26)
As of July 31, 2022$(126)$(434)$(6)$66 $(500)
As of October 31, 2021$(20)$(456)$(6)$40 $(442)
Other comprehensive income (loss) before reclassifications(106)— — 36 (70)
Amounts reclassified out of accumulated other comprehensive gain (loss)— 29 — (3)26 
Tax benefit (expense)— (7)— (7)(14)
Other comprehensive income (loss)(106)22 — 26 (58)
As of July 31, 2022$(126)$(434)$(6)$66 $(500)
As of April 30, 2021$7 $(569)$(5)$56 $(511)
Other comprehensive income (loss) before reclassifications(7)— — (29)(36)
Amounts reclassified out of accumulated other comprehensive gain (loss)— 19 — (1)18 
Tax benefit (expense)— (6)— 7 1 
Other comprehensive income (loss)(7)13 — (23)(17)
As of July 31, 2021$— $(556)$(5)$33 $(528)
As of October 31, 2020$(10)$(600)$(5)$16 $(599)
Other comprehensive income (loss) before reclassifications10 (14)— 22 18 
Amounts reclassified out of accumulated other comprehensive gain (loss)— 74 — (1)73 
Tax benefit (expense)— (16)— (4)(20)
Other comprehensive income (loss)10 44 — 17 71 
As of July 31, 2021$— $(556)$(5)$33 $(528)

20
  Unrealized gain on equity securities 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 October 31, 2017 $14
 $(39) $(468) $35
 $1
 $(457)
Other comprehensive income (loss) before reclassifications (2) 41
 —
 —
 2
 41
Amounts reclassified out of accumulated other comprehensive loss —
 —
 13
 (5) (2) 6
Tax (expense) benefit —
 —
 (3) 1
 —
 (2)
Other comprehensive income (loss) (2) 41
 10
 (4) —
 45
As of January 31, 2018 $12
 $2
 $(458) $31
 $1
 $(412)
             
             
As of October 31, 2016 $10
 $(29) $(646) $50
 $(3) $(618)
Other comprehensive income (loss) before reclassifications 5
 (24) 24
 —
 3
 8
Amounts reclassified out of accumulated other comprehensive loss —
 —
 17
 (6) 1
 12
Tax (expense) benefit (1) —
 (13) 2
 (1) (13)
Other comprehensive income (loss) 4
 (24) 28
 (4) 3
 7
As of January 31, 2017 $14
 $(53) $(618) $46
 $—
 $(611)
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Reclassifications out of accumulated other comprehensive loss for the three and nine months ended JanuaryJuly 31, 20182022 and 20172021 were as follows:
Details about Accumulated Other Comprehensive Loss Components Amounts Reclassified from Accumulated Other Comprehensive LossAffected Line Item in Statement of Operations
Details about accumulated other comprehensive loss componentsDetails about accumulated other comprehensive loss componentsAmounts reclassified from other comprehensive lossAffected line item in statement of operations
 Three Months Ended Three Months EndedNine Months Ended
 January 31, July 31,July 31,
 2018 2017 2022202120222021
 (in millions) (in millions)
Unrealized gain (loss) on derivatives $2
 $(1) Cost of productsUnrealized gain (loss) on derivatives$5 $1 $9 $(1)Cost of products
 —
 —
 Provision for income taxes(4)— (6)2 Selling, general and administrative
 2
 (1) Net of income tax— — — — Benefit (provision) for income tax
     1 1 3 1 Net of income tax
Net defined benefit pension cost and post retirement plan costs:     Net defined benefit pension cost and post retirement plan costs:
Actuarial net loss (13) (17) 
Prior service credits 5
 6
 
Net actuarial lossNet actuarial loss(9)(19)(29)(74)
 (8) (11) Total before income tax
 2
 3
 Provision for income taxes3 5 7 19 Benefit (provision) for income tax
 (6) (8) Net of income tax(6)(14)(22)(55)Net of income tax
     
Total reclassifications for the period $(4) $(9) Total reclassifications for the period$(5)$(13)$(19)$(54)
An amount in parentheses indicates a reduction to income and an increase to the accumulated other comprehensive loss.
Reclassifications of prior service benefit and actuarial net loss in respect ofrelated to retirement plans and post retirement pension plans are included in the computation of net periodic cost (see Note 12,10, "Retirement Plans and Post-Retirement PensionBenefit Plans").
16.14.     SEGMENT INFORMATION
We provide electronic design and test instruments and systems and related software, software design tools, and related services that are usedreport our results in the design, development, manufacture, installation, deployment and operation of electronics equipment. Related services include start-up assistance, instrument productivity and application services and instrument calibration and repair. Additionally, we provide test, security and visibility solutions that validate, secure and optimize networks and applications from engineering concept to live deployment. We also offer customization, consulting and optimization services throughout the customer's product life cycle.
On April 18, 2017, we completed the acquisition of Ixia, which became our fourth2 reportable operating segment, the Ixiasegments: Communications Solutions Group (“ISG”("CSG"). As a result, Keysight now has four segments, Communications Solutions Group, and Electronic Industrial Solutions Group Ixia Solutions Group and Services Solutions Group.
Our operating segments were determined based primarily on how the chief operating decision maker views and evaluates our operations. Segment operating results are regularly reviewed by the chief operating decision maker to make decisions about resources to be allocated to each segment and to assess performance. Other factors, including market separation and customer specific applications, go-to-market channels, products and services and manufacturing are considered in determining the formation of these operating segments.
Descriptions of our four reportable operating segments are as follows:
("EISG"). The Communications Solutions Group serves customers spanning the worldwide commercial communications end market, which includes internet infrastructure, and the aerospace, defense and government end market. The group provides electronic design and test software, instruments, and systems used in the simulation, design, validation, manufacturing, installation and optimization of electronic equipment.
The Electronic Industrial Solutions Group provides test and measurement solutions across a broad set of electronic industrial end markets, focusing on high-growth applications in the automotive and energy industry and measurement solutions for semiconductor design and manufacturing, consumer electronics, education and general electronics manufacturing. The group provides electronic design and test software, instruments, and systems used in the simulation, design, validation, manufacturing, installation and optimization of electronic equipment.

The Ixia Solutions Group helps customers validate the performance and security resilience of their networks and associated applications. The test, visibility and security solutions help organizations and their customers strengthen their physical and virtual networks. Enterprises, service providers, network equipment manufacturers, and governments worldwide rely on the group's solutions to validate new products before shipping and secure ongoing operation of their networks with better visibility and security. The group’s solutions consist of high-performance hardware platforms, software applications, and services, including warranty and maintenance offerings.
The Services Solutions Group provides repair, calibration and consulting services, and remarkets used Keysight equipment. In addition to providing repair and calibration support for Keysight equipment, we also calibrate non-Keysight equipment. The group serves the same markets as Keysight’s Communications Solutions and Electronic Industrial Solutions Groups, providing industry-specific services to deliver complete Keysight solutions and help customers reduce their total cost of ownership for their design and test equipment.
A significant portion of the segments' expenses, other than the Ixia Solutions Group expenses, arise from shared services and infrastructure that we have historically provided to the segments in order to realize economies of scale and to efficiently use resources. These expenses, collectively called corporate charges, include costs of centralized research and development, legal, accounting, real estate, insurance services, information technology services, treasury and other corporate infrastructure expenses. Charges are allocated to the segments, and the allocations have been determined on a basis that we consider to be a reasonable reflection of the utilization of services provided to or benefits received by the segments. The Ixia Solutions Group will not be allocated these charges until integrated into the shared services and infrastructure.
The following tables reflect the results of our reportable operating segments underare based on our management reporting system. These resultssystem and are not necessarily in conformity with GAAP. The performance of each segment is measured based on several metrics, including income from operations. These results are used, in part, by the chief operating decision maker in evaluating the performance of, and in allocating resources to each of the segments.
The profitability of each of the segments is measured after excluding share-based compensation expense, amortization of acquisition-related balances, acquisition and integration costs, restructuring and asset impairment charges, investment gains and losses,costs, interest income, interest expense acquisition and integration costs, separation and related costs, amortization related to acquisition-related balances and other items as noted in the reconciliations below.
Three Months Ended
July 31,
20222021
CSGEISGTotalCSGEISGTotal
 (in millions)
Revenue$970 $406 $1,376 $875 $371 $1,246 
Segment income from operations$288 $127 $415 $224 $115 $339 
Nine Months Ended
July 31,
20222021
CSGEISGTotalCSGEISGTotal
 (in millions)
Revenue$2,811 $1,166 $3,977 $2,604 $1,043 $3,647 
Segment income from operations$796 $359 $1,155 $670 $309 $979 

21
 Communications Solutions Group Electronic Industrial Solutions Group Ixia Solutions Group Services Solutions Group Total Segments
 (in millions)
Three Months Ended January 31, 2018:   
    
  
Total net revenue$420
 $203
 $108
 $106
 $837
Amortization of acquisition-related balances—
 —
 19
 —
 19
Total segment revenue$420
 $203
 $127
 $106
 $856
Segment income from operations$59
 $37
 $18
 $17
 $131
Three Months Ended January 31, 2017:   
    
  
Total net revenue$434
 $192
 $—
 $100
 $726
Amortization of acquisition-related balances—
 —
 —
 —
 —
Total segment revenue$434
 $192
 $—
 $100
 $726
Segment income from operations$72
 $42
 $—
 $14
 $128
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The following table reconciles total reportable operating segments’ income from operations to our total enterprise income before taxes:taxes, as reported:
Three Months EndedNine Months Ended
 July 31,July 31,
 2022202120222021
 (in millions)
Total reportable operating segments' income from operations$415 $339 $1,155 $979 
Share-based compensation(26)(19)(103)(84)
Amortization of acquisition-related balances(26)(33)(78)(147)
Acquisition and integration costs(2)(2)(7)(8)
Restructuring and others(4)(1)(12)(9)
Income from operations, as reported357 284 955 731 
Interest income4 1 6 2 
Interest expense(20)(20)(59)(59)
Other income (expense), net5 5 15 (1)
Income before taxes, as reported$346 $270 $917 $673 
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (Unaudited)
 Three Months Ended
 January 31,
 2018 2017
 (in millions)
Total reportable operating segments' income from operations$131
 $128
Share-based compensation expense(19) (18)
Restructuring and related costs(2) (2)
Amortization of acquisition-related balances(89) (10)
Acquisition and integration costs(19) (6)
Separation and related costs(1) (6)
Japan pension settlement gain—
 68
Northern California wildfire-related costs(7) —
Other1
 8
Income (loss) from operations, as reported(5) 162
Interest income3
 1
Interest expense(22) (12)
Other income (expense), net1
 1
Income (loss) before taxes, as reported$(23) $152
There has been no material change in total assets by segment since October 31, 2017.
17.IMPACT OF NORTHERN CALIFORNIA WILDFIRES
During the week of October 8, 2017, wildfires in northern California adversely impacted the Keysight corporate headquarters site in Santa Rosa, CA. Our headquarters was under mandatory evacuation for more than three weeks, and while direct damage to our core facilities was limited, our buildings did experience some smoke and other fire-related impacts. Cleaning and additional restoration efforts are ongoing in both production and non-production areas of the site. To ensure business continuity, the company leased temporary office space to support Santa Rosa employees who could not immediately reoccupy the site. Keysight is insured for the damage caused by the fire, including business interruption insurance, and though we do not expect the fire to have a significant impact on our business results, the disruption will impact the seasonality of revenue in the first half of fiscal 2018.
For the three months ended January 31, 2018, we recognized costs of $7 million, net of $31 million of estimated insurance recovery. Expenses included primarily cleaning, unabsorbed overhead, and other direct costs related to the impact of this event.
A summary of the net charges in the consolidated statement of operations resulting from the impact of the fire is shown below:
 Three months ended January 31, 2018
 (in millions)
Cost of products and services$5
Research and development1
Selling, general and administrative1
Total$7
As of January 31, 2018, we have received insurance proceeds of $10 million. We have increased our insurance receivable from $1.7 million at October 31, 2017 to $23 million at January 31, 2018 for known losses for which insurance reimbursement is probable. The receivable is included in other current assets in the condensed consolidated balance sheet. In many cases, our insurance coverage exceeds the amount of these covered losses, but no gain contingencies have been recognized as our ability to realize those gains remains uncertain for financial reporting purposes. We currently estimate that insurance recovery will range from $80 million to $110 million, which we believe will cover our expected losses and expenses related to the wildfires. There may be a difference in timing of costs incurred and the related insurance reimbursement.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (UNAUDITED)
The following discussion should be read in conjunction with the condensed consolidated financial statements and notes thereto included elsewhere in this Form 10-Q and our Annual Report on Form 10-K. This report contains forward-looking statements including, without limitation, statements regarding trends, seasonality, cyclicality and growth in, and drivers of, the markets we sell into, our strategic direction, our future effective tax rate and tax valuation allowance, earnings from our foreign subsidiaries, remediation activities, new productsolution and service introductions, the ability of our productssolutions to meet market needs, changes to our manufacturing processes, the use of contract manufacturers, the impact of local government regulations on our ability to pay vendors or conduct operations, our liquidity position, our ability to generate cash from operations, growth in our businesses, our investments, the potential impact of adopting new accounting pronouncements, our financial results, our purchase commitments, our contributions to our pension plans, the selection of discount rates and recognition of any gains or losses for our benefit plans, our cost-control activities, savings and headcount reduction recognized from our restructuring programs and other cost saving initiatives, and other regulatory approvals, the integration of our completed acquisitions and other transactions, our transition to lower-cost regions, the existence of political or economic instability, impacts of geopolitical tension and conflict in regions outside of the U.S., including the war between Russia and Ukraine and the risk of increased tensions between China and Taiwan, the impact of increased trade tension and tightening of export control regulations, the impact of compliance with the August 3, 2021 Consent Agreement with the Directorate of Defense Trade Controls, Bureau of Political-Military Affairs, Department of State, the impact of new and ongoing litigation, impacts of the current supply chain constraints, impacts related to endemic and pandemic conditions, net zero emissions commitments, the impact of volatile weather caused by environmental conditions such as climate change, increases in attrition and our ability to retain key personnel, and the combined group’sour estimated or anticipated future results of operations that involve risks and uncertainties. Our actual results could differ materially from the results contemplated by these forward-looking statements due to various factors, including but not limited to those risks and uncertainties discussed in Part II Item 1A and elsewhere in this Form 10-Q.
Basis of Presentation
The financial information presented in this Form 10-Q is not audited and is not necessarily indicative of our future consolidated financial position, results of operations comprehensive income or cash flows. Our fiscal year-end is October 31, and our fiscal quarters end on January 31, April 30 and July 31. Unless otherwise stated, these dates refer to our fiscal year and fiscal quarter periods.
Overview and Executive Summary
Keysight Technologies, Inc. ("we," "us," "Keysight" or the "company”"company"), incorporated in Delaware on December 6, 2013, is a measurementtechnology company that helps enterprises, service providers and governments accelerate innovation to connect and secure the world by providing electronic design and test solutions to communications and electronics industries. We provide electronic design and test instrumentation systems and related software, software design tools, and services that are used in the simulation, design, development,validation, manufacture, installation, deployment, validation, optimization and secure operation of electronics systems. Related services include start-up assistance, instrument productivity, application servicessystems in the communications, networking and instrument calibration and repair.electronics industries. We also offer customization, consulting and optimization services throughout the customer's product lifecycle.development lifecycle, including start-up assistance, asset management, up-time services, application services and instrument calibration and repair.
We invest in product development to address the changing needs of the market and facilitate growth. We are investing in research and development ("R&D") to design measurementalign our business with available markets and position the company for growth. Our R&D efforts focus on improvements to existing software and hardware products and development to support new software and hardware product introductions and complete customer solutions aligned to the industries we serve. We

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anticipate that we will satisfycontinue to have significant R&D expenditures in order to maintain our competitive position with a continuous flow of innovative, high-quality software, customer solutions, products and services. We remain committed to investment in R&D and have focused our development efforts on strategic opportunities to capture future growth.
Inflation, supply chain disruptions and the changing needschallenging geopolitical and macro-economic environment
Our global operations have been affected by many headwinds, including inflationary pressures, ongoing global supply chain disruptions, increased geopolitical tensions, including the war between Russia and Ukraine, financial market volatility, currency movements, and the pandemic. These headwinds, specifically the supply chain disruptions, have adversely impacted our ability to procure certain components, which in some cases is impacting our ability to manufacture products, causing delays in delivery of our customers.solutions to our customers and higher material procurement costs. We used a number of strategies to effectively navigate supply chain challenges, including product redesign, alternate sourcing, and increased supplier and customer engagement. These, opportunities are being driven by evolving technology standardsalong with the strength of our broad portfolio and global application of the need for faster data ratesKeysight Leadership Model, enables us to deliver consistent value to our customers.
For discussion of risks related to potential impacts of supply chain, geopolitical and new form factors.macro-economic challenges on our operations, business results and financial condition, see “Item 1A. Risk Factors.”
On April 18, 2017, we completedRussia-Ukraine war
In February 2022, the acquisitionU.S. imposed economic sanctions and other restrictions on Russia following its invasion of Ixia, which became our fourth reportable operating segment, the Ixia Solutions Group (“ISG”). The group provides testing, visibility and security solutions, strengthening applications across physical and virtual networks for enterprises, service providers and network equipment manufacturers.Ukraine. As a result, Keysight now has four segments, Communications Solutions Group, Electronic Industrial Solutions Group, Ixia Solutions Groupafter an initial suspension of operations in Russia, we have decided to permanently discontinue our Russian operations and Services Solutions Group. Also, our global teamexit Russia. Our business in Russia accounted for approximately 1 percent of experts provides startup assistance, consulting, optimizationtotal revenue for the fiscal year ended October 31, 2021. For the nine months ended July 31, 2022, we recorded pre-tax expenses of $11 million, including asset impairment charges of $7 million and application support across all of our end markets.other liquidation-related expenses, including employee severance.
Three and nine months ended JanuaryJuly 31, 20182022 and 20172021
Total orders for the three and nine months ended JanuaryJuly 31, 20182022 were $964$1,461 million and $4,414 million, respectively, an increase of 3912 percent whenand 14 percent compared to the same periodperiods last yearyear. For the three months ended July 31, 2022, orders grew across all regions, including double-digit growth in Asia Pacific. For the nine months ended July 31, 2022, orders grew across all regions, including double-digit growth in Asia Pacific and the Americas. Foreign currency movements for the three and nine months ended July 31, 2022 had an increase of 37 percent excluding theunfavorable impact of currency fluctuations.3 percentage points and 2 percentage points, respectively, on year-over-year order growth. Orders associated with acquisitions accountedhad an immaterial impact on the year-over-year order growth for 22both the three and nine months ended July 31, 2022.
Revenue for the three and nine months ended July 31, 2022 was $1,376 million and $3,977 million, respectively, an increase of 10 percent and 9 percent compared to the same periods last year. Foreign currency movements for the three and nine months ended July 31, 2022 had an unfavorable impact of 3 percentage points and 2 percentage points, respectively, on the year-over-year revenue growth. Revenue associated with acquisitions had an immaterial impact on the year-over-year revenue growth for both the three and nine months ended July 31, 2022. For the three and nine months ended July 31, 2022, revenue for both the Communications Solutions Group and the Electronic Industrial Solutions Group increased year-over-year, driven by strength in the commercial communications and electronics industrial end markets. Revenue from the Communications Solutions Group and the Electronic Industrial Solutions Group represented 70 percent and 30 percent, respectively, of order growthtotal revenue for the three months ended JanuaryJuly 31, 2018 when compared to the same period last year.
Net revenue of $837 million for the three months ended January 31, 2018 increased 15 percent when compared to the same period last year and increased 14 percent excluding the impact of currency fluctuations. For the three months ended January 31, 2018, acquisitions added approximately 16 percentage points of revenue growth. The disruption2022. Revenue from the northern California wildfires unfavorably impacted the seasonality of our first quarter revenue. While the recovery is progressing faster than our original projections due to the strong responseCommunications Solutions Group and execution of our teams, full recovery is projected to extend at least into our third fiscal quarter. Across the business groups, strength in revenue from the Electronic Industrial Solutions Group represented 71 percent and Services Solutions Group was partially offset by a decline in29 percent, respectively, of total revenue for the Communications Solutions Group, which was most impacted by the wildfire disruption.

nine months ended July 31, 2022.
Net income for the three and nine months ended JanuaryJuly 31, 20182022 was $94$338 million and $825 million, respectively, compared to $109$254 million and $612 million, respectively, for the corresponding periodsame periods last year. The declineincrease in net income was driven by one-time gains infor the three months ended JanuaryJuly 31, 2017 from a Japan pension settlement and land sale, increases in the current period in2022 was primarily driven by higher revenue volume, lower variable people-related costs, lower amortization of acquisition-related balances, acquisitionfavorable mix and integrationlower income tax expenses, partially offset by higher material costs and increases in selling, general and administrative expenses. The increase in net income for the nine months ended July 31, 2022 was primarily driven by higher revenue volume, lower amortization of acquisition-related balances, lower variable people-related costs and an unfavorable impact from the northern California wildfires,favorable mix, partially offset by favorable impacts from new U.S. tax legislationhigher material costs and higher revenue volume.selling, general and administrative and income tax expenses.
ImpactOutlook
Our first-to-market solutions strategy enables customers to develop new technologies and accelerate innovation and provides a platform for long-term growth. Our customers are expected to continue to make R&D investments in certain next-generation technologies, such as 5G/6G, new mobility technologies, industrial internet of Northern California Wildfires
Duringthings ("IoT") and defense modernization. We continue to closely monitor the week of October 8, 2017, wildfires in northern California adversely impacted the Keysight corporate headquarters site in Santa Rosa, CA. Our headquarters was under mandatory evacuation for more than three weeks, and while direct damage to our core facilities was limited, our buildings did experience some smoke and other fire-related impacts. Cleaning and additional restoration efforts are ongoing in both production and non-production areas of the site. To ensure business continuity, the company leased temporary office space to support Santa Rosa employees who could not immediately reoccupy the site. Keysight is insured for the damage caused by the fire, including business interruption insurance, and though we do not expect the fire to have a significant impact on our business results, the disruption will impact the seasonality of revenue in the first half of fiscal 2018.
 For the three months ended January 31, 2018, we recognized costs of $7 million, net of $31 million of estimated insurance recovery. Expenses included primarily cleaning, unabsorbed overhead, and other direct costscurrent macro environment related to the impact of this event.
As of January 31, 2018, we have received insurance proceeds of $10 million. We have increased our insurance receivable from $1.7 million at October 31, 2017 to $23 million at January 31, 2018 for known losses for which insurance reimbursement is probable. The receivable is included in other current assets in the condensed consolidated balance sheet. In many cases, our insurance coverage exceeds the amount of these covered losses, but no gain contingencies have been recognized as our ability to realize those gains remains uncertain for financial reporting purposes. We currently estimate that insurance recovery will range from $80 million to $110 million, which we believe will cover our expected lossestrade, tariffs, monetary and expenses related to the wildfires. There may be a difference in timing of costs incurredfiscal policies, endemic and pandemic conditions, and the related insurance reimbursement.global supply chain challenges and increasing geopolitical tension
Outlook

Looking forward, we believe23
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in regions outside of the U.S., including the risk of increased tensions between China and Taiwan. We remain confident in our investments in R&D combined with our completed acquisitions, which have expandedlong-term secular market growth trends and the strength of our technology portfolio and the size of our addressable market, position Keysight for growth. We remain focused on delivering value through innovative solutions targeted at faster growing markets where customers are investing in next-generation digital and electronic technologies. Internally, we are continuously working to improve operational efficiency within, and across, all functions. operating model.
Critical Accounting Policies and Estimates
Management's DiscussionEffective November 1, 2021, we adopted ASU 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and AnalysisContract Liabilities from Contracts with Customers that requires entities to apply Accounting Standards Codification Topic 606 to recognize and measure contract assets and contract liabilities in a business combination. The adoption of Financial Condition and Results of Operations is based uponthis guidance did not have a material impact to our condensed consolidated financial statements, which have been prepared in accordance with generally accepted accounting principles instatements. See Note 1, "Overview and Summary of Significant Accounting Policies," to the U.S. GAAP ("GAAP"). The preparation of financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the amounts reported in our condensed consolidated financial statements for further details. There were no other material changes during the three and accompanying notes. Ournine months ended July 31, 2022 to the critical accounting policies are those that affect our financial statements materially and involve difficult, subjective or complex judgments by management. Those policies are revenue recognition, inventory valuation, share-based compensation, retirement and post-retirement plan assumptions, valuation of goodwill and other intangible assets, warranty, restructuring and accounting for income taxes. For a detailed description of our critical accounting policies and estimates see "Item 7. Management'sdescribed in "Management's Discussion and Analysis of Financial Condition and Results of Operations" in Part II of our Annual Report on Form 10-K for the fiscal year ended October 31, 2017. Management bases estimates on historical experience and various other assumptions believed to be reasonable. Although these estimates are based on management's best knowledge of current events and actions that may impact the company in the future, actual results may be different from the estimates.2021.
Adoption of New Accounting Pronouncements
See Note 2, “New1, "Overview and Summary of Significant Accounting Pronouncements,”Policies," to the condensed consolidated financial statements for a description of new accounting pronouncements.

Foreign Currency Exchange Rate Exposure
Our revenues, costs and expenses, and monetary assets and liabilities are exposed to changes in foreign currency exchange rates as a result of our global operating and financing activities. We hedge revenues, expenses and balance sheet exposures that are not denominated in the functional currencies of our subsidiaries on a short-term and anticipated basis. The result of the hedging has been included in our condensed consolidated balance sheet and statement of operations. We experience some fluctuations within individual lines of the condensed consolidated balance sheet and condensed consolidated statement of operations because our hedging program is not designed to offset the currency movements in each category of revenues, expenses, monetary assets and liabilities. Our hedging program is designed to hedge short-term currency movements based on a relatively short-term basisrolling period of up to a rolling twelve-month period.twelve months. Therefore, we are exposed to currency fluctuations over the longer term. To the extent that we are required to pay for all, or portions, of an acquisition price in foreign currencies, we may enter into foreign exchange contracts to reduce the risk that currency movements will impact the U.S. dollar cost of the transaction.
Results from Operations - Three and nine months ended July 31, 2022 and 2021

A summary of our results is as follows:
Orders and Net Revenue
 Three Months EndedNine Months EndedYear over Year Change
 July 31,July 31,ThreeNine
 2022202120222021MonthsMonths
in millions, except margin data
Revenue$1,376 $1,246 $3,977 $3,647 10%9%
Gross margin63.8 %63.2 %63.9 %61.2 %1 ppt3 ppts
Research and development$206 $207 $626 $615 (1)%2%
Percentage of revenue15 %17 %16 %17 %(2) ppts(1) ppt
Selling, general and administrative$317 $302 $962 $900 5%7%
Percentage of revenue23 %24 %24 %25 %(1) ppt(1) ppt
Other operating expense (income), net$(3)$(5)$(3)$(14)(44)%(80)%
Income from operations$357 $284 $955 $731 26%31%
Operating margin25.9 %22.7 %24.0 %20.0 %3 ppts4 ppts
Interest income$4 $1 $6 $2 660%271%
Interest expense$(20)$(20)$(59)$(59)(1)%—
Other income (expense), net$5 $5 $15 $(1)1%—
Income before taxes$346 $270 $917 $673 29%36%
Provision for income taxes$8 $16 $92 $61 (50)%52%
Net income$338 $254 $825 $612 33%35%
In general, recorded orders represent firm purchase commitments from our customers with established terms and conditions for products and services. Consistent with our strategy, we are seeing an increase in solution sales, which have a longer order-to-revenue conversion cycle; however, the majority of recorded orders will be delivered within six months.Revenue
Revenue is recognized upon transfer of control of the promised products or services to customers in an amount that reflects the delivery and acceptance of theconsideration we expect to receive in exchange for those products and services as defined on the customer's terms and conditions. Cancellationsor services. Returns are recorded in the period received from the customer and historically have not been material.

24
 Three Months Ended
Year over Year Change
 January 31,
Three
 2018 2017
Months
 (in millions) 
Orders$964
 $695
 39%
Net revenue:     
Products$684
 $606
 13%
Services and other153
 120
 27%
Total net revenue$837
 $726

15%

Orders
Total orders for the three months ended January 31, 2018 were $964 million, an increaseTable of 39 percent when compared to the same period last year and an increase of 37 percent excluding the impact of currency fluctuations. Orders associated with acquisitions accounted for 22 percentage points of order growth for the three months ended January 31, 2018 when compared to the same period last year. For the three months ended January 31, 2018, orders grew across all geographies.Contents
Net Revenue
The following table provides the percent change in net revenue for the three and nine months ended JanuaryJuly 31, 20182022 by geographic region including and excluding the impact of foreign currency changesmovements as compared to the same period last year.
 Year over Year % Change
 Three Months Ended
 January 31, 2018
Geographic Regionactual currency adjusted
Americas31 % 31 %
Europe18 % 12 %
Japan(10)% (10)%
Asia Pacific ex-Japan6 % 4 %
Total net revenue15 % 14 %
Net revenue of $837 million for the three months ended January 31, 2018 increased 15 percent when compared to the same periods last yearyear.
Year over Year Change
 Three Months EndedNine Months Ended
 July 31, 2022July 31, 2022
Geographic RegionActualCurrency Impact Favorable (Unfavorable)ActualCurrency Impact Favorable (Unfavorable)
Americas13%—11%—
Europe3%(6.9)%8%(3.6)%
Asia Pacific11%(3.5)%8%(2.7)%
Total revenue10%(2.7)%9%(1.8)%
Gross Margin, Operating Margin and increased 14 percent excluding the impact of currency fluctuations. Revenue associated with acquisitionsIncome Before Taxes

accounted for 16 percentage points of revenue growthGross margin for the three months ended JanuaryJuly 31, 2018 when compared to the same period last year.
Revenue from the Communications Solutions Group represented approximately 50 percent of total revenue for the three months ended January 31, 2018 and decreased 3 percent year-over-year. For the three months ended January 31, 2018, the Communications Solutions Group's contribution to the total revenue growth was a decline of 2 percentage points. The revenue decline was primarily driven by the impact of the northern California wildfires. While the recovery is progressing faster than our original projections due to the strong response and execution of our teams, full recovery is projected to extend at least into our third fiscal quarter. Revenue decline in Japan and Europe was partially offset by growth in the Americas, while Asia Pacific excluding Japan was flat.
Revenue from the Electronic Industrial Solutions Group represented approximately 24 percent of total revenue for the three months ended January 31, 2018 and grew 6 percent year-over-year. For the three months ended January 31, 2018, the Electronic Industrial Solutions Group's contribution to the total revenue growth was an increase of2022 increased 1 percentage point with growth in Europe and the Americas, partially offset by declines in Asia Pacific including Japan.
Revenue from the Ixia Solutions Group represented approximately 13 percent of total revenue for the three months ended January 31, 2018. The Ixia Solutions Group contribution to the total revenue growth was 15 percentage points for the three months ended January 31, 2018.
Revenue from the Services Solutions Group represented approximately 13 percent of total revenue for the three months ended January 31, 2018 and grew 6 percent year-over-year. For the three months ended January 31, 2018, the Services Solutions Group's contribution to the total revenue growth was an increase of 1 percentage point, with growth in the Americas and Asia Pacific excluding Japan, partially offset by declines in Japan and Europe.
Costs and Expenses
 Three Months Ended
Year over Year Change
 January 31,
Three
 2018 2017
Months
Total gross margin51.1 % 55.7% (5) ppts
Operating margin(0.6)% 22.4% (23) ppts

     
in millions     
Research and development$146
 $108
 35%
Selling, general and administrative$290
 $213
 36%
Other operating expense (income), net$(3) $(79) (96)%
Gross margin decreased 5 percentage points for the three months ended January 31, 2018 compared to the same period last year. The decline in gross margin was driven by the unfavorable impact from amortization of acquisition-related balances, the northern California wildfire-related expenses, and an increase in warranty expenses and inventory charges, partially offset by favorable revenue mix.
Research and development expense increased 35 percent for the three months ended January 31, 2018 compared to the same period last year, driven by the addition of Ixia to the cost structure along with higher people-related costs. As a percentage of revenue, research and development expense was 17 percent for the three months ended January 31, 2018, as compared to 15 percent for the same period last year. We remain committed to investment in research and development and have focused our development efforts on strategic opportunities in order to capture future growth.
Selling, general and administrative expenses increased 36 percent for the three months ended January 31, 2018 compared to the same period last year, primarily driven by the addition of Ixia to our cost structure, increases inhighly differentiated solutions portfolio, lower amortization of acquisition-related balances, higher revenue volume, lower variable people-related costs acquisition and integration costs, the unfavorable impact of foreign currency movements and the unfavorable impact from the northern California wildfire-related expenses,favorable mix, partially offset by a decline in separation and relatedhigher material costs.
Other operating expense (income), net for the three months ended January 31, 2018 and 2017 was income of $3 million and $79 million, respectively. The other operating income for the three months ended January 31, 2017 was largely driven by $68 million from a Japan pension settlement gain and $8 million of gain on sale of land.
Operating Gross margin for the threenine months ended JanuaryJuly 31, 2018 decreased 232022 increased 3 percentage points when compared to the same period last year, primarily driven by one-time gains in the three months ended January 31, 2017 from a Japan pension settlement

and sale of land and increases in current period inlower amortization of acquisition-related balances, acquisition and integrationour highly differentiated solutions portfolio, favorable mix, lower variable people-related costs and people-related costs,higher revenue volume, partially offset by gains related to revenue volume.higher material costs.

As of January 31, 2018, our headcount was approximately 12,700 as compared to approximately 10,400 at January 31, 2017. The increase was primarily driven by acquisitions.

Interest Expense
InterestR&D expense for the three months ended JanuaryJuly 31, 20182022 decreased 1 percent compared to the same period last year, primarily driven by lower variable people-related costs, partially offset by investments in key growth opportunities in our end markets and leading-edge technologies as well as incremental costs of acquired businesses. R&D expense for the nine months ended July 31, 2022 increased 2 percent compared to the same period last year, primarily driven by greater investments in key growth opportunities in our end markets and leading-edge technologies as well as incremental costs of acquired businesses, partially offset by lower variable people-related costs. As a percentage of revenue, R&D expense was $22 million15 percent and 16 percent, respectively, for the three and nine months ended July 31, 2022, as compared to $12 million17 percent for each of the comparable periodsame periods last year. The increase in interest
Selling, general and administrative expense for the three months ended JanuaryJuly 31, 2018 is2022 increased 5 percent compared to the same period last year, primarily driven by increased investment in sales resources, higher travel-related, infrastructure-related and marketing costs, along with incremental costs of acquired businesses, partially offset by lower variable people-related costs. Selling, general and administrative expense for the nine months ended July 31, 2022 increased 7 percent compared to the same period last year, primarily driven by increased investment in sales resources, higher infrastructure-related, marketing and travel-related costs, along with incremental costs of acquired businesses, partially offset by lower variable people-related costs.
Other operating expense (income), net for both the three and nine months ended July 31, 2022 was income of $3 million, compared to income of $5 million and $14 million for the same periods last year. The decrease in net other operating income for the nine months ended July 31, 2022 was primarily driven by asset impairment charges related to the discontinuance of our Russia operations.
Operating margin for the three and nine months ended July 31, 2022 increased 3 percentage points and 4 percentage points, respectively, compared to the same periods last year, primarily driven by gross margin gains and lower operating expenses as a percentage of sales.
Interest income for the three and nine months ended July 31, 2022 was $4 million and $6 million, respectively, as compared to $1 million and $2 million, respectively, for the comparable periods last year and primarily relates to interest earned on our cash balances. Interest expense for the three and nine months ended July 31, 2022 was $20 million and $59 million, respectively, as compared to $20 million and $59 million, respectively, for the comparable periods last year and primarily relates to interest on our senior notes.
Other income (expense), net for the three and nine months ended July 31, 2022 was income of $5 million and $15 million, respectively, compared to income of $5 million and expense of $1 million for the same periods last year and primarily includes income related to our defined benefit and post-retirement benefit plans and the change in fair value of our equity investments. The increase in net other income for the nine months ended July 31, 2022 compared to the same period last year was primarily due to interest expensea prior-period loss on a partial settlement of a non-U.S. pension plan and lower amortization of debt issuance costsnet actuarial losses, partially offset by a loss on $700 millionour equity investments and currency loss.
As of senior notes issued in April 2017 and interest on borrowings under a senior unsecured term loan.July 31, 2022, our headcount was approximately 14,700 compared to approximately 14,100 at July 31, 2021.

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Income Taxes
The company’s effectivefollowing table provides details of income taxes:
Three Months EndedNine Months Ended
July 31,July 31,
 2022202120222021
in millions, except percentages
Income before taxes$346$270$917$673
Provision for income taxes$8$16$92$61
Effective tax rate2.3 %5.9 %10.0 %9.0 %
The tax rate was a benefit of 515.8 percentexpense for the three months ended JanuaryJuly 31, 2018 and2022 was lower compared to the same period last year, primarily due to a decrease in tax expense due to discrete tax differences, partially offset by an increase in income before taxes. The income tax expense of 28.3 percentfor the nine months ended July 31, 2022 was higher compared to the same period last year, primarily due to an increase in income before taxes.
The income tax expense for the three and nine months ended JanuaryJuly 31, 2017. The income tax benefit was $117 million for the three months ended January 31, 2018, and income tax expense was $43 million for the three months ended January 31, 2017. The increase in the total income tax benefit and discrete benefit for the three months ended January 31, 2018 is primarily due to changes in U.S. tax law. The income tax benefit for the three months ended January 31, 20182022 included a net discrete benefit of $115$38 million primarily due to $117and $47 million, of benefit resulting from changes in U.S. tax law.respectively. The income tax provisionexpense for the three and nine months ended JanuaryJuly 31, 20172021 included a net discrete expensebenefit of $23$26 million primarilyand $46 million, respectively. The discrete tax benefit for the three and nine months ended July 31, 2022 includes changes in tax reserves from audit settlements as well as an out-of-period adjustment to tax reserves for fiscal years 2019 through 2021 related to $22 millionthe potential U.S. benefit associated with the future resolution of non-U.S. tax reserves. The adjustment was immaterial to current and prior-period financial statements. The discrete tax benefit for the three and nine months ended July 31, 2021 includes the release of valuation allowance on Netherlands tax assets. The discrete tax benefit for the nine months ended July 31, 2021 also includes the impact of integration activities for acquired entities resulting fromin a decrease in U.S. taxes expected to be imposed upon the transferrepatriation of a portion of the Japanese Employees’ Pension Fund (see Note 12).unremitted foreign earnings.
Keysight benefits from tax incentives in several jurisdictions, most significantly in Singapore and several jurisdictions have granted us tax incentivesMalaysia, that will expire or require renewal at various times in the future. The tax incentives provide lower rates of taxation on certain classes of income and require thresholds of investments and employment or specific types of income in those jurisdictions. The Singapore tax incentive is due for renewal in fiscal 2024.
2024, and the Malaysia incentive is due for renewal in 2025. We are continuing to evaluate renewal options and the impact of potential outcomes on our effective tax rate. For the majoritynine months ended July 31, 2022 and 2021, respectively, the impact of our entities, the tax incentives decreased the income tax provision by $63 million and $41 million. The increase in tax benefit for the nine months ended July 31, 2022 is primarily due to a change in the jurisdictional mix of non-U.S. earnings, which increased the earnings taxed at incentive tax rates in 2022.
The open tax years for the IRS, stateU.S. federal income tax return and most foreign audit authoritiesstate income tax returns are from AugustNovember 1, 20142017 through the current tax year. For certain acquired U.S.the majority of our foreign entities, the open tax years generally remain open back to year 2009.are from November 1, 2016 through the current tax year. For certain foreign entities, the tax years remain open, at most, back to the year 2007. Given2008.
Keysight’s fiscal year 2018 U.S. federal income tax return has been under examination by the number of yearsInternal Revenue Service. The Tax Cuts and numerous matters that remain subject to examinationJobs Act was enacted in variousDecember 2017 and imposed a one-time U.S. tax jurisdictions, we are unable to estimate the range of possible changeson foreign earnings not previously repatriated to the balanceU.S., known as the Transition Tax, which was reported in Keysight’s fiscal year 2018 U.S. federal income tax return. As of our unrecognizedJune 2022, the fiscal year 2018 U.S. federal income tax benefits.audit was effectively settled with no material assessments and no additional cash taxes paid.
The company is being audited in Malaysia for the 2008 tax year. Although this taxfiscal year 2008. This year pre-dates our spin-offseparation from Agilent,Agilent. However, pursuant to the agreement between Agilent and Keysight pertaining to tax matters, as finalized at the time of separation, for certain entities, including Malaysia, any historical tax liability is the responsibility of Keysight. In the fourth quarter of fiscal year 2017, Keysight paid income taxes and penalties of $68 million on gains related to intellectual property rights, although we are currently in the process of appealing to the Special Commissioners of Income Tax (“SCIT”) in Malaysia.rights. The company believes there are numerous defenses to the current assessment; the statute of limitations for the fiscal year 2008 tax year in Malaysia was closed, and the income in question is exempt from tax in Malaysia. The company is disputing this assessment and pursuing all avenues to resolve this issue favorably for the company. Our appeals to both the Special Commissioners of Income Tax and the High Court in Malaysia have been unsuccessful. We have filed a Notice of Appeal with the Court of Appeal, and a hearing is currently scheduled for February 2023.
At January 31, 2018,The outcome of corporate income tax examinations cannot be predicted with certainty. Given the numerous tax years and matters that remain subject to examination in various tax jurisdictions, the ultimate resolution of current and future tax examinations could be inconsistent with management’s current expectations. If this were to occur, it could have an impact on our estimated annual effective tax rate in the period in which such examinations are resolved.
We do not recognize deferred taxes for temporary differences expected to impact the GILTI tax expense in future years. We recognize the tax expense related to GILTI in each year in which the tax is an expenseincurred.

26
Table of 7.5 percent excluding discrete items. We determineContents
Changes in tax law and rates may affect recorded deferred tax assets and liabilities and our interim tax provision using an estimated annual effective tax rate methodology except in jurisdictions where we anticipate a full year loss or we have a year-to-date ordinary loss for which no tax benefit can be recognized. In these jurisdictions, tax expense is computed separately. Our estimated annual effective tax rate differs fromthe future. On August 16, 2022, the U.S. statutory rate primarily duegovernment enacted the Inflation Reduction Act of 2022 that includes changes to the mixU.S. corporate income tax system, including a fifteen percent minimum tax based on "adjusted financial statement income," which is effective for Keysight beginning November 1, 2023, and a one percent excise tax on repurchases of earnings in non-U.S. jurisdictions taxed at lower rates, reserves for uncertain tax positions,stock after December 31, 2022. We are continuing to evaluate the U.S. federal researchInflation Reduction Act and development tax credit and the impact of permanent differences.its requirements, as well as its application to our business.
Segment Overview
Keysight has fourWe have two reportable operating segments:segments, the Communications Solutions Group and the Electronic Industrial Solutions Group, Ixia Solutions Group and Services Solutions Group. The Communications Solutions Group serves customers spanning the worldwide commercial communications end market, which includes internet infrastructure, and the aerospace, defense and government end market. The Electronic Industrial Solutions Group provides test and measurement solutions across a broad set of electronic industrial end markets. Ixia Solutions Group (“ISG”). The group provides testing, visibility and security solutions, strengthening applications across physical and virtual networks for enterprises, service providers and network equipment manufacturers. The Services Solutions Group provides repair, calibration and consulting services, and remarkets used Keysight

equipment. In addition, our global team of experts provides startup assistance, consulting, optimization and application support across all of our end markets.
The profitability of each segmentof the segments is measured after excluding among other things, charges related to theshare-based compensation expense, amortization of acquisition-related balances, the impact of restructuring and related costs, asset impairments, acquisition and integration costs, share-based compensation, separation and relatedrestructuring costs, interest income, interest expense and interest expense.other items.
Communications Solutions Group
The Communications Solutions Group serves customers spanning the worldwide commercial communications end market and the aerospace, defense, and government end market.markets. The group providesgroup’s solutions consist of electronic design and test software, electronic measurement instruments, systems and systemsrelated services. These solutions are used in the simulation, design, validation, manufacturing, installation, and optimization of electronic equipment.equipment and networks.
Net Revenue

Three Months Ended Year over Year Change

January 31, Three

2018 2017 Months

(in millions) 
Net revenue$420
 $434
 (3)%
Three Months EndedNine Months EndedYear over Year Change
July 31,July 31,ThreeNine
2022202120222021MonthsMonths
in millions
Total revenue$970 $875 $2,811 $2,604 11%8%
The Communications Solutions Group revenue for the three and nine months ended JanuaryJuly 31, 2018 decreased 32022 increased 11 percent and 8 percent, respectively, when compared to the same periodperiods last year primarilyyear. For the three months ended July 31, 2022, revenue growth in Asia Pacific and the Americas was partially offset by a slight decline in Europe. The growth was driven by strength in the impact of the northern California wildfires, leading to acommercial communications market, partially offset by decline in revenue from the aerospace, defense and government market. For the nine months ended July 31, 2022, revenue grew across all regions and commercial communication markets. While the recovery is progressing faster than our original projections due to the strong response and execution of our teams, full recovery is projected to extend at least into our third fiscal quarter.
Revenue fromin both the commercial communications and the aerospace, defense and government markets. Foreign currency movements had an unfavorable impact of 2 percentage points on year-over-year revenue growth for both the three and nine months ended July 31, 2022. Investment continues to be strong to support new communications technologies like 5G, Open Radio Access Networks (O-RAN), 400G, 800G, high-speed digital applications and major defense and government programs worldwide. However, the ongoing supply chain constraints continue to impact shipments and moderated revenue growth in the three months ended July 31, 2022.
The commercial communications end market revenue for the three and nine months ended July 31, 2022 increased 17 percent and 11 percent, respectively, year-over-year, and represented approximately 5872 percent and 69 percent, respectively, of the total Communications Solutions Group revenue. For both the three and nine months ended July 31, 2022, revenue grew across all regions, driven by strong market demand across the communications ecosystem. Wireless 5G development and manufacturing of chipsets, components and devices, O-RAN, and high-speed data solutions to support data centers and the cloud are driving growth.
The aerospace, defense and government end market revenue for the three and nine months ended JanuaryJuly 31, 2018,2022 decreased 2 percent and decreased 4increased 2 percent, year-over-year. For the three months ended Januaryrespectively, year-over-year, and represented 28 percent and 31 2018, revenue declines in Europe and Japan were partially offset by growth in the Americas and Asia Pacific excluding Japan when compared to the same period last year. The commercial communications market revenue decline was primarily driven by impact of the northern California wildfires. Decline in the data center market was partially offset by growth in 5G technologies, while 4G spending has stabilized.
Revenue from the aerospace, defense and government market represented approximately 42 percent, respectively, of the total Communications Solutions Group revenue for the three months ended January 31, 2018 and decreased 3 percent year-over-year.revenue. For the three months ended JanuaryJuly 31, 2018,2022, revenue declinedeclined in Asia Pacific including Japan wasEurope and the Americas, partially offset by growth in EuropeAsia Pacific. For the nine months ended July 31, 2022, revenue growth in Asia Pacific was partially offset by declines in the Americas and the Americas. The aerospace, defenseEurope. We continue to see investments in satellites and government market revenue decline was primarily driven by impactspace, including new applications for non-terrestrial networks and new commercial technologies like 5G and early 6G research applications.

27
Table of the northern California wildfires and weakness in China and the rest of Asia.Contents
Gross Margin and Operating Margin
The following table shows the Communications Solutions Group margins, expenses and income from operations for the three months ended January 31, 2018 versus the three months ended January 31, 2017.
Three Months EndedNine Months EndedYear over Year Change

Three Months Ended Year over Year ChangeJuly 31,July 31,ThreeNine

January 31, Three2022202120222021MonthsMonths

2018 2017 Months
Total gross margin60.9% 60.5% -
Operating margin14.0% 16.7% (3) ppts

    
in millions    
in millions, except margin datain millions, except margin data
Gross marginGross margin66.5 %65.7 %66.7 %65.0 %1 ppt2 ppts
Research and development$80
 $76
 6%Research and development$149$151$452$444(1)%2%
Selling, general and administrative$118
 $117
 1%Selling, general and administrative$211$204$633$5893%7%
Other operating expense (income), net$(2) $(2) (6)%Other operating expense (income), net$(2)$(3)$(7)$(10)(43)%(33)%
Income from operations$59
 $72
 (19)%Income from operations$288$224$796$67029%19%
Operating marginOperating margin29.6 %25.6 %28.3 %25.7 %4 ppts3 ppts
Gross margin for the three and nine months ended JanuaryJuly 31, 20182022 increased slightly when1 percentage point and 2 percentage points, respectively, as compared to the same periodperiods last year. The gross margin growth for the three months ended January 31, 2018 wasyear, primarily driven by our highly differentiated solutions portfolio, higher revenue from software,volume, lower variable people-related costs and favorable mix, partially offset by higher warranty and inventory charges.material costs.
Research and developmentR&D expense for the three months ended JanuaryJuly 31, 2018 increased 6 percent compared to the same period last year, driven by continued investments in R&D programs. We remain committed to investment in research and development and have focused our development efforts on strategic opportunities to capture future growth.
Selling, general and administrative expense for the three months ended January 31, 2018 increased2022 decreased 1 percent compared to the same period last year, primarily driven by an increaselower variable people-related costs, partially offset by greater investments in infrastructure-related costs.key growth opportunities in our end markets and leading-edge technologies as well as incremental costs of acquired businesses. R&D expense for the nine months ended July 31, 2022 increased 2 percent compared to the same period last year, primarily driven by greater investments in key growth opportunities in our end markets and leading-edge technologies as well as incremental costs of acquired businesses, partially offset by lower variable people-related costs.
Other operatingSelling, general and administrative expense (income) for the three months ended JanuaryJuly 31, 20182022 increased 3 percent compared to the same period last year, primarily driven by higher investments in sales resources, travel-related, infrastructure-related and 2017marketing costs along with incremental costs of acquired businesses, partially offset by lower variable people-related costs. Selling, general and administrative expense for the nine months ended July 31, 2022 increased 7 percent compared to the same period last year, primarily driven by increased investment in sales resources, higher infrastructure-related, marketing and travel-related costs, along with incremental costs of acquired businesses, partially offset by lower variable people-related costs.
Other operating expense (income), net for the three and nine months ended July 31, 2022 was income of $2 million.
Income from Operations
Income from operationsmillion and $7 million, respectively, compared to income of $3 million and $10 million, respectively, for the three months ended January 31, 2018 decreased $13 million on a corresponding revenue decline of $14 million when compared to the same periodperiods last year.
Operating margin for the three months ended JanuaryJuly 31, 2018 declined 32022 increased 4 percentage points, when compared to the same period last year, primarily driven by gross margin gains and lower revenue andoperating expenses as a percentage of sales. Operating margin for the nine months ended July 31, 2022 increased investments in R&D and infrastructure related costs.3 percentage points, compared to the same period last year, primarily driven by gross margin gains.
Electronic Industrial Solutions Group
The Electronic Industrial Solutions Group provides test and measurement solutions and related services across a broad set of electronic industrial end markets, focusing on high-growthhigh-value applications in the automotive and energy industryindustries and measurement solutions for semiconductorconsumer electronics, education, general electronics design and manufacturing, consumer electronics, education and general electronicssemiconductor design and manufacturing. The group provides electronic measurement instruments, design and test software instruments, and systems and related services used in the simulation, design, validation, manufacturing, installation and optimization of electronic equipment.equipment, and automated software test solutions that include artificial intelligence and machine learning to automatically identify, build and execute tests critical to digital business success and a strong customer experience.
Net Revenue
 Three Months Ended Year over Year Change
 January 31, Three
 2018 2017 Months
 (in millions)  
Net revenue$203
 $192
 6%
Three Months EndedNine Months EndedYear over Year Change
July 31,July 31,ThreeNine
2022202120222021MonthsMonths
in millions
Total revenue$406 $371 $1,166 $1,043 10%12%
The Electronic Industrial Solutions Group revenue for the three and nine months ended JanuaryJuly 31, 20182022 increased 610 percent whenand 12 percent, respectively, compared to the same periodperiods last yearyear. Foreign currency movements for the three and grew 3 percent excluding thenine months ended July 31, 2022 had an unfavorable impact of acquisitions.3 percentage points and 2 percentage points, respectively, on the year-over-year revenue growth. Revenue growthgrew across all regions and markets. The revenue increase was driven by strong growthcontinued investments in automotive and energy andnext-generation semiconductor measurement markets, partially offset by decline in the general electronics measurement market. Strong revenue growth in Europesolutions, new mobility technologies and the Americas was partially offset by a decline in Japan and Asia Pacific excluding Japan.industrial IoT.

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Gross Margin and Operating Margin
The following table shows the Electronic Industrial Solutions Group margins, expenses and income from operations for the three months ended January 31, 2018 versus the three months ended January 31, 2017.
Three Months EndedNine Months EndedYear over Year Change
Three Months Ended Year over Year ChangeJuly 31,July 31,ThreeNine
January 31, Three2022202120222021MonthsMonths
2018 2017 Months
Total gross margin59.0% 59.9% (1) ppt
Operating margin18.5% 21.7% (3) ppts
    
in millions    
in millions, except margin datain millions, except margin data
Gross marginGross margin61.3 %63.7 %62.0 %63.7 %(2) ppts(2) ppts
Research and development$33
 $28
 19%Research and development$51$52$152$153(1)%(1)%
Selling, general and administrative$50
 $46
 8%Selling, general and administrative$72$71$215$2061%4%
Other operating expense (income), net$(1) $(1) (8)%Other operating expense (income), net$(1)$(2)$(3)$(4)(54)%(36)%
Income from operations$37
 $42
 (10)%Income from operations$127$115$359$30910%16%
Operating marginOperating margin31.3 %31.0 %30.8 %29.6 %—1 ppt
Gross margin for both the three and nine months ended JanuaryJuly 31, 2018 declined 12022 decreased 2 percentage point whenpoints compared to the same periodperiods last year, primarily driven by unfavorablehigher material costs, partially offset by higher revenue mixvolume, our highly differentiated solutions portfolio and an increaselower variable people-related costs.
R&D expense for both the three and nine months ended July 31, 2022 decreased 1 percent compared to the same periods last year, primarily driven by lower variable people-related costs, partially offset by greater investments in warranty expense. key growth opportunities in our end markets and leading-edge technologies.
ResearchSelling, general and developmentadministrative expense for the three months ended JanuaryJuly 31, 20182022 increased 191 percent compared to the same period last year, primarily driven by continued investments in leading-edge technologieshigher travel-related, infrastructure-related and key growth opportunities in our end markets and acquisition-relatedmarketing costs, partially offset by lower variable people-related costs. We remain committed to investment in research and development and have focused our development efforts on strategic opportunities to capture future growth.
Selling, general and administrative expense for the threenine months ended JanuaryJuly 31, 20182022 increased 84 percent compared to the same periodperiods last year, primarily due to an increase indriven by higher infrastructure-related, marketing and travel-related costs, partially offset by lower variable people-related costs, investments in sales resources and acquisition-related costs.
Other operating expense (income), net for the three and nine months ended JanuaryJuly 31, 2018 and 20172022 was income of $1 million.
Income from Operations
Income from operationsmillion and $3 million, respectively. Other operating expense (income), net for the three and nine months ended JanuaryJuly 31, 2018 decreased $52021 was income of $2 million on a corresponding revenue increase of $11and $4 million, when compared to the same period last year.respectively.
Operating margin for the three months ended JanuaryJuly 31, 2018 decreased 3 percentage points when2022 was flat compared to the same period last year, primarily driven by unfavorable mix and increased investments in R&D, sales resources and acquisition-related costs.
Ixia Solutions Group
The Ixia Solutions Group helps customers validate the performance and security resilience of their networks and associated applications. The test,visibility and security solutions help organizations and their customers strengthen their physical and virtual networks. Enterprises, service providers, network equipment manufacturers, and governments worldwide rely on the group's solutions to validate new products before shipping and secure ongoing operation of their networks with better visibility and security. The group’s solutions consist of our high-performance hardware platforms, software applications, and services, including warranty and maintenance offerings.
 Three Months Ended Year over Year Change
 January 31, Three
 2018 2017 Months
Total gross margin75.6% —% n/a
Operating margin14.5% —% n/a
      
in millions     
Net revenue$127
 $—
 n/a
Research and development$25
 $—
 n/a
Selling, general and administrative$52
 $—
 n/a
Other operating expense (income), net$—
 $—
 n/a
Income from operations$18
 $—
 n/a
Revenue from the Ixia Solutions Group contributed 18 percentage points to the total Keysight revenue growth for the three months ended January 31, 2018. Revenue from the Ixia Solutions Group represented 15 percent of the total Keysight revenue for the three months ended January 31, 2018.
Services Solutions Group
The Services Solutions Group provides repair, calibration and consulting services, and remarkets used Keysight equipment. In addition to providing repair and calibration support for Keysight equipment, we also calibrate non-Keysight equipment. The group serves the same markets as Keysight’s Communications Solutions and Electronic Industrial Solutions Groups, providing industry-specific services to deliver complete Keysight solutions and help customers reduce their total cost of ownership for their design and test equipment. This segment was formerly reported as the company’s Customer Support and Services segment.

Net Revenue
 Three Months Ended Year over Year Change
 January 31, Three
 2018 2017 Months
 (in millions)  
Net revenue$106
 $100
 6%
The Services Solutions Group revenue for the three months ended January 31, 2018 increased 6 percent when compared to the same period last year and grew 4 percent excluding the impact of acquisitions. For the three months ended January 31, 2018, the revenue increase was driven by strong growth in sales of used equipment, complimented by steady growth in calibration services. Revenue growth in the Americas and Asia Pacific excluding Japan was partiallygross margin declines, offset by declines in Europe and Japan.
Gross Margin andlower operating expenses as a percentage of sales. Operating Margin
The following table shows the Services Solutions Group margins, expenses and income from operations for the three months ended January 31, 2018 versus the three months ended January 31, 2017.
 Three Months Ended Year over Year Change
 January 31, Three
 2018 2017 Months
Total gross margin40.3% 39.4% 1 ppt
Operating margin15.6% 14.4% 1 ppt
      
in millions     
Research and development$1
 $—
 50%
Selling, general and administrative$26
 $25
 4%
Other operating expense (income), net$(1) $—
 24%
Income from operations$17
 $14
 15%
Gross margin for the threenine months ended JanuaryJuly 31, 20182022 increased 1 percentage point when compared to the same period last year, primarily driven by higher volume and more favorable mixlower operating expenses as a percentage of remarketed products.
Research and development expense for the three months ended January 31, 2018 increased 50 percent compared to the same period last year. The increase is primarily driven by investments in a new software application to enable enhanced service offerings.
Selling, general and administrative expense for the three months ended January 31, 2018 increased 4 percent when compared to the same period last year, primarily due to investments in sales, resources and an increase in acquisition-related people costs.
Other operating expense (income) for the three months ended January 31, 2018 and 2017 was income of $1 million and zero, respectively.
Income from Operations
Income from operations for the three months ended January 31, 2018 increased by $3 million on a corresponding revenue increase of $6 million when compared to the same period last year.
Operating margin for the three months ended January 31, 2018 increased 1 percentage point as compared to the same period last year, driven by higher gross margin partially offset by increased investments in R&D and sales resources from the acquisitions.gross margin declines.
FINANCIAL CONDITIONFinancial Condition
Liquidity and Capital Resources
Our financial position asliquidity is affected by many factors, some of January 31, 2018 consisted of cash and cash equivalents of $980 million as compared to $818 million as of October 31, 2017.
As of January31, 2018, approximately $923 millionwhich are based on normal ongoing operations of our cashbusiness and cash equivalents was held outsidesome of the U.S. in our foreign subsidiaries. Under U.S. tax legislation that was enacted on December 22, 2017, certain earnings currently held outside

of the U.S. are deemedwhich arise from fluctuations related to be repatriated to the U.S., with foreignglobal economics and markets. Our cash balances generally subjectare generated and held in many locations throughout the world. Under certain circumstances, U.S. and local government regulations may limit our ability to an effective U.S. tax rate of 15.5 percent and certain cumulative foreign earnings in excess of foreignmove cash balances subject to an effective U.S. tax ratemeet cash needs.
Overview of 8 percent. Cash Flows
Our key cash and cash equivalents mainly consist of short-term deposits held at major global financial institutions, investments in institutional money market funds, and similar short duration instruments with original maturities of 90 days or less. We continuously monitor the creditworthiness of the financial institutions in which we invest our funds. We utilize a variety of funding strategies in an effort to ensure that our worldwide cash is available in the locations in which it is needed. Most significant international locations have access to internal funding through an offshore cash pool for working capital needs, in addition to temporary local overdraft and short-term working capital lines of credit for a few locations which are unable to access internal funding.flow activities were as follows:
We believe our cash and cash equivalents, cash generated from operations, and ability to access capital markets and credit lines will satisfy, for at least the next twelve months, our liquidity requirements, both globally and domestically, including the following: working capital needs, capital expenditures, business acquisitions, contractual obligations, commitments, principal and interest payments on debt, and other liquidity requirements associated with our operations. 
Nine Months Ended
July 31,
 20222021
 (in millions)
Net cash provided by operating activities$746 $954 
Net cash used in investing activities$(190)$(238)
Net cash used in financing activities$(734)$(317)
Net Cash Provided by Operating Activities
Cash flows from operating activities can fluctuate significantly from period to period as working capital needs, and the timing of payments for income taxes, restructuring activities,variable pay, pension funding variable pay and other items impact reported cash flows.
Net cash provided by operating activities was $171decreased $208 million forduring the threenine months ended JanuaryJuly 31, 20182022 compared to $115 million for the same period in 2017.last year.

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•Net income for the first threenine months of fiscal 2018 decreased $15 million. Changes to non-cash income and expenses included a $275ended July 31, 2022 increased $213 million decrease in deferred tax expense, primarily related to a one-time reduction in net deferred tax liabilities and corresponding income tax benefit of approximately $304 million due to the re-measurement of U.S. income taxes recorded on the undistributed earnings of foreign subsidiaries that were not considered permanently reinvested. It also included a $68 million decline in pension curtailment and settlement gain, a $46 million increase in depreciation and amortization expense, an $8 million decline in gain from sale of land, a $1 million increase in share-based compensation expense, a $3 million increase in excess and obsolete inventory-related charges and a $2 million increase in other miscellaneous non-cash expenses as compared to the same period last year. Additionally for the three months ended January 31, 2018, we recognized costsNon-cash adjustments to net income were higher by $24 million primarily due to a $68 million increase in deferred tax expense, a $23 million increase in other non-cash adjustments, and a $19 million increase in share-based compensation expense, partially offset by a $69 million decrease in amortization expense and a prior-period loss of $7$16 million neton a partial settlement of $31 million of estimated insurance recovery towards northern California wildfire-related expenses.a non-U.S. pension plan.
•The aggregate of accounts receivable, inventory and accounts payable providedused net operating cash of $93$213 million during the first threenine months of fiscal 20182022 compared to net cash providedused of $18$84 million in the comparablesame period last year. The inventory change includes $19 million of amortization related to fair value adjustmentsyear, primarily due to acquisitions for the three months ended January 31, 2018. Our operational cash flows were strengthened by significant timing-related reductionshigher revenue volume, net of collections, and an increase in working capital linkedinventory due to the fire recovery, which we expecthigher material procurement costs and incremental stock build-up to balance out during the remainder of the first half of the year.secure supply. 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•Other movements in assets and liabilities providedused net operating cash of $126$203 million during the first threenine months of fiscal 20182022 compared to net cash usedprovided of $26 million in the comparable period last year. The difference is primarily due to an increase in income tax payable due to the impact of new U.S. tax legislation and an increase in deferred revenue balances as a result of acquisition activity, partially offset by higher variable compensation payments and other differences due to timing of accruals and collections versus payments between the periods. As of January 31, 2018, we have received insurance proceeds of $10 million towards northern California wildfire-related expenses. Additionally, we have increased our insurance receivable from $1.7 million at October 31, 2017 to $23 million at January 31, 2018 for known losses for which insurance reimbursement has been received in the month of February. Also during the quarter ending January 31, 2018, we have received insurance proceeds of $26 million towards Singapore fire-related expenses.
We contributed $9 million to our non-U.S. defined benefit plans during the first three months of fiscal 2018 compared to $7$113 million in the same period last year. We expectyear, primarily due to contribute approximately $29 millionhigher prepaid inventory deposits driven by supply chain constraints, higher income tax payments, net of accruals, higher variable compensation and other payroll-related payments, net of accruals, higher prepaid expenses, greater income related to our non-U.S. defined benefit plans during the remainder of 2018. For the three months ended January 31, 2018 and 2017, we did not contribute to our U.S. definedpost-retirement 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 2018.changes in deferred revenue.

Net Cash Used in Investing Activities
Our investing activities primarily include investments in property, plant and equipment and acquisitions of businesses to support our growth.
Net cash used in investing activities was $27decreased $48 million forduring the threenine months ended JanuaryJuly 31, 2018 as2022 compared to $8 million for the same period last year. InvestmentsFor the nine months ended July 31, 2022, we used $33 million, net of cash acquired, for acquisitions. For the nine months ended July 31, 2021, we used $102 million, net of $11 million cash acquired, for the acquisition of Sanjole Inc. and an additional $34 million, net, for other acquisitions. For the nine months ended July 31, 2022 and 2021, investments in property, plant and equipment were $24$127 million and $101 million, respectively. For the nine months ended July 31, 2022, we used $30 million for the three months ended January 31, 2018 compared to $16 million in the same period last year. The increase in capital expenditures was primarily due to acquisitions and $3 million related to northern California wildfires. We received $8 millionpurchase of proceeds from the sale of land in the three months ended January 31, 2017. We expect that total capital expenditures for the current year will be approximately $130 million, including $20 million to $30 million of capital related to recovery from the northern California wildfires, which is expected to be covered by insurance.an equity investment.
Net Cash Used in Financing Activities
Cash flows related toOur financing activities primarily consist of cash flows associated with theinclude proceeds from the issuance of common stock under employee stock plans, tax payments related to net share settlement of equity awards and treasury stock repurchases.
Net cash used in financing activities increased $417 million during the nine months ended July 31, 2022 compared to the same period last year, primarily due to higher treasury stock repurchases and payment of taxes related to net share settlement of equity awards. For
Treasury Stock Repurchases
On November 18, 2021, our board of directors approved a new stock repurchase program authorizing the three months ended January 31, 2018, net cash provided by financing activities was $9purchase of up to $1,200 million compared to cash provided of $8 millionthe company’s common stock. The stock repurchase program may be commenced, suspended or discontinued at any time at the company’s discretion and does not have an expiration date. See "Issuer Purchases of Equity Securities" under Part II Item 2 for the same period in 2017. During the three months ended January 31, 2018, we issued common stock under employee stock plans of $24 million compared to $19 million for the same period last year. Additionally, we paid taxes related to net share settlement of equity awards of $15 million during first quarter of 2018 as compared to $11 million for the same period last year.additional information.
Short-Term Debt
Revolving Credit Facility
 July 31, 2022October 31, 2021
 (in millions)
Total debt (par value)$1,800 $1,800 
Revolving credit facility$750 $750 
On July 30, 2021, we entered into a new credit agreement that amended and restated our existing credit agreement dated February 15, 2017 we entered into an amendedin its entirety, and restatedprovides for a $750 million five-year unsecured revolving credit agreementfacility (the “Revolving Credit Facility”) that provides for a $450 million, five-year unsecured revolving credit facility that will expire on February 15, 2022.July 30, 2026 and bears interest at an annual rate of LIBOR + 1 percent along with a facility fee of 0.125 percent per annum. In addition, the Revolving Credit Facilitynew credit agreement permits usthe company, subject to certain customary conditions, on one or more occasions to request to increase the total commitments under this credit facilitythe Revolving Credit Facility by up to $150$250 million in the aggregate on one or more occasions upon request.aggregate. We may use amounts borrowed under the facility for general corporate purposes. During the three months ended January 31, 2018, we borrowed and repaid $40 million of under the Revolving Credit Facility. As of JanuaryJuly 31, 2018,2022 and October 31, 2021, we had no borrowings outstanding under the Revolving Credit Facility. We were in compliance

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with the covenants of the Revolving Credit Facility and senior notes during the threenine months ended JanuaryJuly 31, 2018.2022. See note 9, "Debt" for additional information.
Long-Term DebtCash and cash requirements
Cash
 July 31, 2022October 31, 2021
 (in millions)
Cash, cash equivalents and restricted cash$1,863 $2,068 
U.S.$469 $427 
Non U.S.$1,394 $1,641 
Our cash and cash equivalents mainly consist of investments in institutional money market funds, short-term deposits held at major global financial institutions and similar short duration instruments with original maturities of 90 days or less. We continuously monitor the creditworthiness of the financial institutions and money market fund asset managers with whom we invest our funds. We utilize a variety of funding strategies in an effort to ensure that our worldwide cash is available in the locations in which it is needed. Most significant international locations have access to internal funding through an offshore cash pool for working capital needs. In addition, a few locations that are unable to access internal funding have access to temporary local overdraft and short-term working capital lines of credit.
Cash requirements
We have cash requirements to support working capital needs, capital expenditures, business acquisitions, contractual obligations, commitments, principal and interest payments on debt, and other liquidity requirements associated with our operations. We generally intend to use available cash and funds generated from our operations to meet these cash requirements, but in the event that additional liquidity is required, we may also borrow under our revolving credit facility.
Our non-cancellable commitments to contract manufacturers and suppliers increased to $536 million as of July 31, 2022 from $444 million as of October 31, 2021, driven by higher revenue, advance purchase orders to secure capacity for critical parts due to global supply shortages and higher material costs. There have beenwere no other material changes to the principal, maturity, interest rates and interest payment terms of the outstanding senior notes in the three months ended January 31, 2018 as compared to the senior notes as described in our Annual Report on Form 10-K for the fiscal year ended October 31, 2017.
Senior Unsecured Term Loan
On February 15, 2017, we entered into a term credit agreement that provides for a three-year $400 million senior unsecured term loan that bears interest at an annual rate of LIBOR + 1.50%. The term loan was drawn upon the closing of the Ixia acquisition. As of January 31, 2018, we had borrowings outstanding under the term loan of $260 million, which was repaid in February 2018.
Other
There were no material changescash requirements from our Annual Report on Form 10-K for the fiscal year ended October 31, 2017, to our contractual commitments (including non-cancellable operating leases) in the first three months of 2018.2021.
There were nowas a material changesdecrease in our liabilities towardfor uncertain tax positions from our Annual Report on Form 10-K for the fiscal year ended October 31, 2017. We are unable2021. This decrease was due to accurately predict when these willthe release of tax reserve liabilities due to audit settlements as well as an out-of-period adjustment to tax reserves for fiscal years 2019 through 2021 related to the potential U.S. benefit associated with the future resolution of non-U.S. tax reserves. The adjustment was immaterial to current and prior-period financial statements. The change in liabilities for uncertain tax positions had no cash impact. The outcome of corporate income tax examinations cannot be realized or released. However, it is reasonably possiblepredicted with certainty. Given the numerous tax years and matters that thereremain subject to examination in various tax jurisdictions, the ultimate resolution of current and future tax examinations could be significant changesinconsistent with management’s current expectations.
For the remainder of fiscal 2022, we do not expect to contribute to our unrecognizedU.S. defined benefit plan and U.S. post-retirement benefit plan, and we expect to contribute $2 million to our non-U.S. defined benefit plans. The ultimate amounts we will contribute depend upon, among other things, legal requirements, underlying asset returns, the plan’s funded status, the anticipated tax benefits indeductibility of the next 12 monthscontribution, local practices, market conditions, interest rates and other factors. See note 10, "Retirement plans and post-retirement benefit plans."
Additionally, due to eitherprocurement issues related to the expirationglobal supply chain challenges, we expect fiscal 2022 capital spending to be between $170 million and $210 million as compared to $240 million to $260 million estimated earlier.
As of a statute of limitations or a tax audit settlement.July 31, 2022, we believe our cash and cash equivalents, cash generated from operations, and our ability to access capital markets and credit lines will satisfy our cash needs for the foreseeable future both globally and domestically.
ITEMItem 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Quantitative and Qualitative Disclosures about Market Risk
Quantitative and qualitative disclosures about market risk appear in “Item 7A. Quantitative and Qualitative Disclosures About Market Risk” in Part II of our Annual Report on Form 10-K for the fiscal year ended October 31, 2017.2021. There were no material changes during the threenine months ended JanuaryJuly 31, 20182022 to this information reported in the company’s 20172021 Annual Report on Form 10-K.


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ITEMItem 4. CONTROLS AND PROCEDURESControls and Procedures
Evaluation of Disclosure Controls and Procedures
Under the supervision and with the participation of our management, including the Chief Executive Officer and Chief Financial Officer, we have evaluated the effectiveness of our disclosure controls and procedures as required by Exchange Act Rule 13a-15(b) as of the end of the period covered by this report. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that these disclosure controls and procedures are effective.
Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting during the third quarter ended January 31, 2018of fiscal 2022 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
PART II —II. OTHER INFORMATION
ITEMItem 1. LEGAL PROCEEDINGSLegal Proceedings
On August 3, 2021, we entered into a Consent Agreement with the Directorate of Defense Trade Controls, Bureau of Political-Military Affairs, Department of State to resolve alleged violations of the Arms Export Control Act and the International Traffic in Arms Regulations ("ITAR"). Pursuant to the Consent Agreement, we were assessed a penalty of $6.6 million to be paid over three years, $2.5 million of which is suspended and designated for remediation activities, including employment of a special compliance officer for three years. We have paid $1.1 million of the assessed amount as of July 31, 2022.
In October 2019, Keysight entered into a license agreement with Centripetal Networks in conjunction with the resolution of a patent infringement lawsuit brought by Centripetal against Keysight. Royalties owed under the license and the scope of the license, which expired on December 31, 2021, were the primary subjects of arbitration, which was fully resolved in Keysight’s favor. On January 1, 2022, Centripetal filed a lawsuit in Federal District Court in Virginia, alleging that additional Keysight products infringe certain of Centripetal’s patents. In addition, in February 2022, Centripetal filed complaints in Germany alleging infringement of certain of Centripetal’s German patents, and in April 2022, Centripetal filed a complaint with the International Trade Commission (“ITC”) requesting that they investigate whether Keysight should be enjoined from importing certain products that are manufactured outside of the U.S. and are alleged to infringe Centripetal patents. We deny the allegations and intend to aggressively defend each case. Although we do not currently believe that these or other matters are reasonably possible of having a material impact to our business, consolidated financial position, results of operations or cash flows, the outcome of litigation is inherently uncertain and the outcome is difficult to predict. Management’s expectations, if proved to be incorrect, could impact our results in a financial period. We are also involved in lawsuits, claims, investigations and proceedings, including, but not limited to, patent, employment, commercial employment and environmental matters, which arise in the ordinary course of business. There are no matters pending that we currently believe are probable of having a material impact to our business, consolidated financial condition, results of operations or cash flows.
ITEMItem 1A. RISK FACTORSRisk Factors
Risks, Uncertainties and Other Factors That May Affect Future Results
Risks Related to Our Business
DepressedVolatile geopolitical turmoil, including popular uprisings, regional conflicts, terrorism and uncertainwar could result in market instability, which could negatively impact our business results.
We are a global company with international operations, and we sell our products and solutions in countries throughout the world. Recent escalation in regional conflicts, including the Russian invasion of Ukraine, which resulted in economic sanctions, and the risk of increased tensions between China and Taiwan, could limit or prohibit our ability to transfer certain technologies, to sell our products and solutions, and could result in closure of facilities in sanctioned countries, such as our recent decision to discontinue operations in Russia. In addition, international conflict has resulted in increased pressure on the supply chain and could further result in increased energy costs, which could increase the cost of manufacturing, selling and delivering products and solutions; inflation, which could result in increases in the cost of manufacturing products and solutions, reduced customer purchasing power, increased price pressure, and reduced or cancelled orders; increased risk of cybersecurity attacks; and market instability, which could adversely impact our financial results.
Uncertainty in general economic conditions may adversely affect our operating results and financial condition.
Our business is sensitive to negative changes in general economic conditions, both inside and outside the United States. Global and regional economic uncertainty, inflation, recession or depression may impact our business, resulting in:
•increased cost to manufacture products or deliver solutions;

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•reduced customer purchasing power;
•reduced demand for our products,solutions, delays in the shipment of orders or increases in order cancellations;
•increased risk of excess and obsolete inventories;inventory;
•increased price pressure for our productssolutions and services; and
•greater risk of impairment to the value, and a detriment to the liquidity, of our future investment portfolio.
In addition, global and regional macroeconomic developments, such as increased unemployment, decreased income, uncertainty related to future economic activity, reduced access to credit, increased interest rates, volatility in capital markets, decreased liquidity, uncertain or destabilizing national election results in the U.S., Europe, and Asia, and negative changes or volatility in general economic conditions in the U.S., Europe, and Asia could negatively affect our ability to conduct business in those territories. Financial difficulties experienced by our suppliers and customers, including distributors, due to economic volatility or negative changes could result in product delays, reduced purchasing power, delays in payment or inability to pay us, and inventory issues. Economic risks related to accounts receivable could result in delays in collection and greater bad debt expense.
Economic, political, and other risks associated with international sales and operations could adversely affect our results of operations.
Because we operate our businesses and sell our solutions worldwide, our business is subject to risks associated with doing business internationally. We anticipate that revenue from international operations will continue to represent a majority of our total revenue. However, there can be no assurances that our international sales will continue at existing levels or grow in accordance with our effort to increase foreign market penetration. In addition, many of our employees, contract manufacturers, suppliers and manufacturing facilities are located outside the United States. Accordingly, our future results could be harmed by a variety of factors, including but not limited to:
•inability to conduct business in certain countries or regions or with certain customers due to U.S. sanctions or trade restrictions;
•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 impact of a country’s response to, or an imposed reduction in economic activity and other economic and political measures taken to contain the spread of global pandemic conditions;
•negative consequences from changes in tax laws;
•difficulty in protecting intellectual property;
•injunctions or exclusion orders related to intellectual property disputes;
•interruptions 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; and
•potential incidences of corruption and fraudulent business practices.
We centralize most of our accounting processes at two locations: India and Malaysia. If conditions change in those countries, it may adversely affect operations, including impairing our ability to pay our suppliers. Our results of operations, as well as our liquidity, may be adversely affected and possible delays may occur in reporting financial results.
Further, even if we are able to successfully manage the risks of international operations, our business may be adversely affected if our business partners are not able to successfully manage similar risks.

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Economic and political policies favoring national interests could adversely affect our results of operations.
Nationalistic economic policies and political trends in the United States, the United Kingdom, the European Union, Singapore, Malaysia and China among other countries, such as opposition to globalization and free trade, sanctions or trade restrictions, withdrawal from or re-negotiation of global trade agreements, tax policies that favor domestic industries and interests, the distancing or potential exit of other countries from the European Union, and other similar actions may result in increased transaction costs, reduced ability to hire employees, reduced access to supplies and materials, reduced demand or access to customers in international markets, and inability to conduct our operations as they have been conducted historically. Each of these factors may adversely affect our business.
International trade disputes and increased tariffs between the United States and such jurisdictions could substantially change our expectations and ability to operate in such jurisdictions as we have done historically. Many of our suppliers, vendors, customers, partners, and other entities with whom we do business have strong ties to doing business in China. Their ability to supply materials to us, buy products or services from us, or otherwise work with us is affected by their ability to do business in China. If the U.S.’s relationship with China results in additional trade disputes, trade protection measures, retaliatory actions, tariffs and increased barriers, policies that favor domestic industries, or increased import or export licensing requirements or restrictions, then our deployment of resources in jurisdictions affected by such measures could be misaligned and our operations may be adversely affected due to such changes in the economic and political ecosystem in which our suppliers, vendors, customers, partners, and other entities with whom we do business operate.
Global health crises, such as the COVID-19 pandemic, have had an impact on our supply chain and could have a material impact on our global operations, our customers and our vendors, which could adversely impact our business results and financial condition.
In March 2020, the World Health Organization declared COVID-19 a global pandemic.Fluctuation in infection rates have continued, and the appearance of new and more easily transmitted variants of COVID-19 have continued to emerge and require vigilant attention and rapid response.
The continued evolution of COVID-19 and its variants, as well as periodic spikes in infection rates, local outbreaks on our sites or supplier, customer or vendor sites, in spite of safety measures or vaccinations, could cause disruptions to our operations or those of our suppliers, customers or vendors. Outbreaks causing new or renewed government orders could impact the availability of our employees or other workers or could lead to attrition of key employees, which could further impact our ability to manufacture, ship or deliver products and solutions to customers. As new variants of the virus appear, especially variants that are more easily spread, cause more serious outcomes, or are resistant to existing vaccines, new health orders and safety protocols could further impact our on-site operations and our ability to collaborate globally with customers, suppliers, and internal colleagues.
The pandemic has led to global supply chain challenges, which have adversely impacted our ability to procure certain components and could impact our ability to manufacture products and cause delays in delivery of our solutions to our customers. Global shifts in customer demand and raw material supply could result in delayed or canceled orders and our customers’ reduced spending, reduced demand for products and solutions, and their inability to pay for products and solutions.
These factors could materially and negatively impact our business results, operations, revenue, growth and overall financial condition.
Our operating results and financial condition could be harmed if the markets into which we sell our productssolutions decline or do not grow as anticipated.
Visibility into our markets is limited. Our quarterly sales and operating results are highly dependent on the volume and timing of technology-related spending and orders received during the fiscal quarter, which are difficult to forecast and may be cancelled by our customers. In addition, our revenues and earnings forecasts for future fiscal quarters are often based on the expected seasonality or cyclicality of our markets. However, due to the uncertainties and volatile economic environment created by increased geopolitical tensions, including the war between Russia and Ukraine, the impact of inflation, the potential for future recession and the continuing impact of the global pandemic, the markets we serve domay experience increased volatility and may not always experience the seasonality or cyclicality that we expect. Any decline in our customers' markets would likely result in a reduction in demand for our productssolutions and services. The broader semiconductor market is one of the drivers forcurrent global supply chain constraints could impact our business,markets and therefore, a decrease in the semiconductor market could harm our business. Also, ifIf our customers' markets decline, we may not be able to collect on outstanding amounts due to us. Such declines could harm our financial position, results of operations, cash flows and stock price, and could limit our profitability. Also, inIn such an environment, pricing pressures could intensify. Since a significant portion of our operating expenses is relatively fixed in nature due to sales, R&D and manufacturing costs, if we were unable to respond quickly enough, these pricing pressures could further reduce our operating margins.


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A decreased demand for our customers’ products or trade restrictions could adversely affect our results of operations.
Our business depends on our customers’ ability to manufacture, design, and sell their products in the marketplace. International trade disputes affecting our customers could adversely affect our business. Tariffs on imports to or from China could increase the cost of our customers’ components and raw materials, which could make our customers’ products and services more expensive and could reduce demand for our customers’ products. Protectionist and retaliatory trade measures by either China or the United States could limit our customers’ ability to sell their products and services and could reduce demand for our customers’ products. Our customers and other entities in our customer chain could decide to take actions in response to international trade disputes that we could not foresee. A decrease in demand or significant change in operations from our customers due to international trade disputes could adversely affect our operating results and financial condition.
In addition to the above, our customers and suppliers have become subject to U.S. export restrictions and sanctions, such as being added to the U.S. Department of Commerce’s “Lists of Parties of Concern” and having U.S. export privileges denied or suspended. When a customer or supplier of ours becomes subject to such sanctions, we suspend our business with such customer or supplier. Because of the continued tense political and economic relationship between the U.S. and China and between the U.S. and Russia, new sanctions could be imposed with little notice, which could leave us without an adequate alternative solution to compensate for our inability to continue to do business with such customer or supplier. Some of our suppliers and customers in the supply chain are working on unique solutions and products in the market, and it may be difficult if not impossible to replace them, especially with short notice. We cannot predict what impact future sanctions could have on our customers or suppliers, and therefore, our business. Any export restrictions or sanctions and any tariffs or other trade restriction imposed on our customers or suppliers could adversely affect our financial condition and business.
Failure to introduce successful new productssolutions and services in a timely manner to address increased competition, rapid technological changes, and changing industry standards could result in our productssolutions and services will become obsolete, and our operating results will suffer.becoming obsolete.
We generally sell our productssolutions in industries that are characterized by increased competition through frequent new productsolution and service introductions, rapid technological changes and changing industry standards. In addition, many of the markets in which we operate are seasonal and cyclical. Without the timely introduction of new products,solutions, services and enhancements, our productssolutions and services will become technologically obsolete over time, in which case our revenue and operating results would suffer. The success ofOur ability to offer new productssolutions and services willand to deploy them in a timely manner depend on several factors, including but not limited to our ability to:
•properly identify and assess customer needs;
•innovate and develop new technologies, services and applications;
•successfully commercialize new technologies in a timely manner;
•manufacture and deliver our productssolutions in sufficient volumes and on time;
•differentiate our offerings from our competitors' offerings;
•price our productssolutions competitively;
•anticipate our competitors' development of new products,solutions, services or technological innovations; and
•control product quality in our manufacturing process.
Our future operating results may fluctuate significantly if our investments in innovative technologies are not as profitable as we anticipate.
On a regular basis, we review the existing technologies available in the market and identify strategic new technologies to develop and invest in. We are currently devoting significant resources to new technologies in the communications, automotive, battery, Internet of Things, and mobile industries. We are investing in R&D, developing relationships with customers and suppliers, and re-directing our corporate and operational resources to grow within these innovative technologies. Our income could be harmed if we fail to expand our customer base, if demand for our solutions is lower than we expect, or if our income related to the innovative technologies is lower than we anticipate. We provide solutions for the design, development, and manufacturing stages of our customers’ workflow. Our customers who currently use our solutions in one stage of their workflow may not use our solutions in other aspects of their manufacturing process.
Failure to adjust our purchases due to changing market conditions or failure to estimate our customers' demand could adversely affect our income.
Our income could be harmed if we are unable to adjust our purchases to market fluctuations, including those caused by global economic conditions, volatile geopolitical conflict, the impact of pandemic conditions, or the seasonal or cyclical nature of the markets in which we operate. The sale of our solutions and services are dependent, to a large degree, on customers whose

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industries are subject to seasonal or cyclical trends in the demand for their products. For example, the consumer electronics market is particularly volatile, making demand difficult to anticipate. Making such estimations in an economic climate affected by inflation or recession, international conflict, or the global pandemic is particularly difficult as increased volatility may impact seasonal trends making it more difficult to anticipate demand fluctuations. Additionally, the current disruption to the global supply chain has impacted our ability to purchase parts and components to meet increasing product demand, which has increased lead times, delayed shipments and could materially affect our results. We have seen a shortage of parts for some of our products. In addition, some of the parts that require custom design are not readily available from alternate suppliers due to their unique design or the length of time necessary for design work. Should a supplier cease manufacturing such a component, we would be forced to re-engineer our solution. In addition to discontinuing parts, suppliers may also extend lead times, limit supplies or increase prices due to capacity constraints or other factors. In order to secure components for the production of products, we may continue to enter into non-cancellable purchase commitments with vendors, or at times make advance payments to suppliers, which could impact our ability to adjust our inventory to declining market demands. Prior commitments of this type have resulted in an excess of parts when demand for electronic products has decreased. If demand for our solutions is less than we expect, we may experience additional excess and obsolete inventories and be forced to incur additional charges.
Dependence on contract manufacturing and outsourcing other portions of our supply chain may adversely affect our ability to bring productssolutions to market and damage our reputation. Dependence on outsourced information technology and other administrative functions may impair our ability to operate effectively.
As part of our efforts to streamline operations and to cut costs, we outsource aspects of our manufacturing processes and other functions and continue to evaluate additional outsourcing. If our contract manufacturers or other outsourcers fail to perform their obligations in a timely manner or at satisfactory quality levels, our ability to bring productssolutions to market and our reputation could suffer. For example, during a market upturn, our contract manufacturers may be unable to meet our demand requirements, which may preclude us from fulfilling our customers' orders on a timely basis. The ability of these manufacturers to perform is largely outside of our control. Additionally, changing or replacing our contract manufacturers or other outsourceesoutsourced vendors could cause disruptions or delays. In addition, we outsource significant portions of our information technology ("IT") and other administrative functions. Since IT is critical to our operations, any failure of our IT providers to perform could impair our ability to operate effectively. In addition to the risks outlined above, problems with manufacturing or IT outsourcing could result in lower revenues and unrealized efficiencies and could impact our results of operations and stock price. Much of our outsourcing takes place in developing countries and, as a result, may be subject to geopolitical uncertainty.
Failure to adjust our purchases due to changing market conditions or failure to estimate our customers' demand could adversely affect our income.
        Our income could be harmed if we are unable to adjust our purchases to market fluctuations, including those caused by the seasonal or cyclical nature of the markets in which we operate. The sale of our products and services are dependent, to a large degree, on customers whose industries are subject to seasonal or cyclical trends in the demand for their products. For example, the consumer electronics market is particularly volatile, making demand difficult to anticipate. During a market upturn, we may not be able to purchase sufficient supplies or components to meet increasing product demand, which could materially affect our results. In the past, we have seen a shortage of parts for some of our products. In addition, some of the parts that require custom design are not readily available from alternate suppliers due to their unique design or the length of time necessary for design work. Should a supplier cease manufacturing such a component, we would be forced to reengineer our product. In addition to discontinuing parts, suppliers may also extend lead times, limit supplies or increase prices due to capacity constraints or other factors. In order to secure components for the production of products, we may continue to enter into non-cancellable purchase commitments with vendors, or at times make advance payments to suppliers, which could impact our ability to adjust our inventory to declining market demands. Prior commitments of this type have resulted in an excess of parts when demand for electronic products has decreased. If demand for our products is less than we expect, we may experience additional excess and obsolete inventories and be forced to incur additional charges.
Our operating results may suffer if our manufacturing capacity does not match the demand for our products.solutions.
Because we cannot immediately adapt our production capacity and related cost structures to rapidly changing market conditions, when demand does not meetis lower than our expectations, our manufacturing capacity will likely exceed our production requirements. If, duringDuring a general market upturn or an upturn in our business, if we cannot increase our manufacturing capacity to meet product demand, we will not be able to fulfill orders in a timely manner, which could lead to order cancellations, contract breaches or indemnification obligations. This inability could materially and adversely limit our ability to improve our income, margin and

operating results. By contrast, if, during an economic downturn, we had excess manufacturing capacity, then our fixed costs associated with excess manufacturing capacity would adversely affect our income, margins and operating results.
Key customers or large orders may expose us to additional business and legal risks that could have a material adverse impact on our operating results and financial condition.
As a global company, we have key customers all over the world, although no one customer makes up more than 10 percent of our revenue. Sales to those customers could be reduced or eliminated as a result of failure to respond to customer needs, reduced customer demand, increased sales to our competitors, inability to manufacture or ship products and solutions, supply chain constraints, trade restrictions, sanctions and embargoes. We have experienced forced reductions in sales and been prevented from selling large orders to certain key customers due to trade restrictions, which we have been able to mitigate with the addition of new customers and new business. If we have future reductions in sales or lose key customers, there is no guarantee that we will be able to mitigate the impact of such reductions or losses, which could negatively impact our income, operating results and financial condition.
Certain key customers have substantial purchasing power and leverage in negotiating contractual arrangements with us. These customers may demand contract terms that differ considerably from our standard terms and conditions. Large orders may also include severe contractual liabilities if we fail to provide the quantity and quality of product at the required delivery times or fail to meet other obligations. While we attempt to contractually limit our potential liability, we may agree to some or all of these provisions to secure these orders and grow our business. Such actions expose us to significant additional risks, which could result in a material adverse impact on our operating results and financial condition.

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Industry consolidation and consolidation among our customer base may lead to increased competition and may harm our operating results.
There is potential for industry consolidation in our markets. As companies attempt to strengthen or hold their market positions in an evolving industry, companies could be acquired or may be unable to continue operations. Companies that are strategic alliance partners in some areas of our business may acquire or form alliances with our competitors, thereby reducing their business with us. We believe that industry consolidation may result in stronger competitors and could lead to more variability in our operating results and could have a material adverse effect on our business, operating results, and financial condition. Furthermore, particularly in the communications market, rapid consolidation would lead to fewer customers, with the effect that loss of a major customer could have a material impact on results not anticipated in a customer marketplace composed of more numerous participants.
Additionally, if there is consolidation among our customer base, our customers may be able to command increased leverage in negotiating prices and other terms of sale, which could adversely affect our profitability. In addition, if, as a result of increased leverage, customer pressures require us to reduce our pricing such that our gross margins are diminished, we could decide not to sell our productssolutions under such less favorable terms, which would decrease our revenue. Consolidation among our customer base may also lead to reduced demand for our products,solutions, replacement of our products by the combined entity with those of our competitors and cancellations of orders, each of which could harm our operating results.
Economic, politicalOur acquisitions, strategic alliances, joint ventures, internal reorganizations and divestitures may result in financial results that are different than expected.
In the normal course of business, we may engage in discussions with third parties relating to possible acquisitions, strategic alliances, joint ventures and divestitures. Additionally, we occasionally make changes to our internal structure to align business products, services and solutions with market demands and to obtain cost synergies and operational efficiencies. As a result of such transactions, our financial results may differ from our own or the investment community's expectations in a given fiscal quarter, or over the long term. If market conditions or other risks associated with international sales and operations could adversely affectfactors lead us to change our strategic direction, we may not realize the expected value from such transactions or reorganizations. Further, such third-party transactions often have post-closing arrangements, including, but not limited to, post-closing adjustments, transition services, escrows or indemnifications, the financial results of operations.
        Because we sellwhich can be difficult to predict. In addition, acquisitions and strategic alliances may require us to integrate a different company culture, management team, employees and business infrastructure into our existing operations without impacting the business operations of the newly acquired company. We may have difficulty developing, manufacturing and marketing the products worldwide, our business is subject to risks associated with doing business internationally. We anticipateof a newly acquired company in a way that revenue from international operations will continue to represent a majorityenhances performance and expands the markets of the newly acquired company. The acquired company may not enhance the performance of our total revenue. However, there can be no assurancesbusinesses or product lines such that our international sales will continue at existing levels or grow in accordance with our effort to increase foreign market penetration. In addition, manywe do not realize the value from expected synergies. Depending on the size and complexity of our employees, contract manufacturers, suppliers, job functions and manufacturing facilities are located outsidean acquisition, the United States. Accordingly, our future results could be harmed bysuccessful integration of the entity depends on a variety of factors, including but not limited to:
interruption•the achievement of anticipated cost savings, synergies, business opportunities and growth prospects from combining the acquired company;
•the scalability of production, manufacturing and marketing of products of a newly acquired company to transportation flowsbroader adjacent markets;
•the ability to cohesively integrate operations, product definitions, price lists, delivery, and technical support for deliveryproducts and solutions of parts to us and finished goods toa newly acquired company into our customers;existing operations;
changes in foreign currency exchange rates;
changes in a specific country's or region's political, economic or other conditions;
trade protection measures, sanctions, and import or export licensing requirements or restrictions;
negative consequences from changes in tax laws;
difficulty in staffing and managing widespread operations;
differing labor regulations;
differing protection of intellectual property;
unexpected changes in regulatory requirements; and
volatile political environments or geopolitical turmoil, including regional conflicts, terrorism, and war.
        We centralize most•the compatibility of our accounting processes at two locations: Indiainfrastructure, operations, policies and Malaysia. These processes include general accounting, inventory cost accounting, accounts payableorganizations with those of the acquired company;
•the retention of key employees and/or customers;
•the management of facilities and accounts receivables functions. employees in different geographic areas; and
•the management of relationships with our strategic partners, suppliers, and customer base.
If conditions change in those countries, it may adversely affect operations, including impairingwe do not realize the expected benefits or synergies of such transactions, our ability to pay our suppliers. Ourconsolidated financial position, results of operations, cash flows and stock price could be negatively impacted. Additionally, we may record significant goodwill and other assets as well as our liquidity,a result of acquisitions or investments, and we may be adversely affected and possible delays may occur in reporting financial results.
        Additionally, we must comply with complex foreign and U.S. laws and regulations, such as the U.S. Foreign Corrupt Practices Act, the U.K. Bribery Act and other local laws prohibiting corrupt paymentsrequired to governmental officials, and anti-competition regulations. Violations of these laws and regulations could result in fines and penalties, criminal sanctions, restrictions on our business conduct and on our ability to offer our products in one or more countries, and could also materially affect our brand, ability to attract and retain employees, international operations, business and operating results. Although we actively maintain policies and procedures designed to ensure ongoing compliance with these laws and regulations, there can be no assurance that our employees, contractors or agents will not violate these policies and procedures.
        In addition, although a substantial amount of our products are priced and paid for in U.S. Dollars, many of our products are priced in local currencies and a significant amount of certain types of expenses, such as payroll, utilities, tax and marketing expenses, are paid in local currencies. Our hedging programs are designed to reduce, but not entirely eliminate, within any given 12-month period, the impact of currency exchange rate movements, including those caused by currency controls,incur impairment charges, which could impact our business, operating results and financial condition by resulting in lower revenue or increased expenses. However, for expenses beyond a 12-month period, our hedging strategy will not mitigate our exchange rate risk. In addition, our currency hedging programs

involve third-party financial institutions as counterparties. The weakening or failure of these counterparties may adversely affect our hedging programsconsolidated financial position and our financial condition through, among other things, a reduction in the numberresults of available counterparties, increasingly unfavorable terms or the failure of counterparties to perform under hedging contracts.
Key customers or large orders may expose us to additional business and legal risks that could have a material adverse impact on our operating results and financial condition.
        Certain key customers have substantial purchasing power and leverage in negotiating contractual arrangements with us. These customers may demand contract terms that differ considerably from our standard terms and conditions. Large orders may also include severe contractual liabilities for us if we fail to provide the quantity and quality of product at the required delivery times. While we attempt to contractually limit our potential liability under such contracts, we may have to agree to some or all of these types of provisions to secure these orders and to continue to grow our business. Such actions expose us to significant additional risks, which could result in a material adverse impact on our operating results and financial condition.
Our business will suffer if we are not able to retain and hire key personnel.
        Our future success depends partly on the continued service of our key research, engineering, sales, marketing, manufacturing, executive and administrative personnel. If we fail to retain and hire a sufficient number of these personnel, we may not be able to maintain or expand our business. The markets in which we operate are dynamic, and we may need to respond with reorganizations, workforce reductions and site closures from time to time. We believe our pay levels are competitive within the regions that we operate. However, there is also intense competition for certain highly technical specialties in geographic areas in which we operate, and it may become more difficult to retain key employees.operations.
Any inability to complete acquisitions on acceptable terms could negatively impact our growth rate and financial performance.
Our ability to grow revenues, earnings and cash flow depends in part upon our ability to identify and successfully acquire and integrate businesses at appropriate prices and realize anticipated synergies and business performance. Appropriate targets for acquisition are difficult to identify and complete for a variety of reasons, including but not limited to, limited due

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diligence, high valuations, business and intellectual property evaluations, other interested parties, negotiations of the definitive documentation, satisfaction of closing conditions, the need to obtain antitrust or other regulatory approvals on acceptable terms, and availability of funding. The inability to close appropriate acquisitions on acceptable terms could adversely impact our growth rate, revenue, and financial performance.
Our acquisitions, strategic alliances, joint ventures and divestitures may result in financial results that are different than expected.
        In the normal course of business, we may engage in discussions with third parties relating to possible acquisitions, strategic alliances, joint ventures and divestitures. As a result of such transactions, our financial results may differ from our own or the investment community's expectations in a given fiscal quarter, or over the long term. If market conditions or other factors lead us to change our strategic direction, we may not realize the expected value from such transactions. Further, such transactions often have post-closing arrangements, including, but not limited to, post-closing adjustments, transition services, escrows or indemnifications, the financial results of which can be difficult to predict. In addition, acquisitions and strategic alliances may require us to integrate a different company culture, management team and business infrastructure. We may have difficulty developing, manufacturing and marketing the products of a newly acquired company in a way that enhances the performance of our businesses or product lines to realize the value from expected synergies. Depending on the size and complexity of an acquisition, the successful integration of the entity depends on a variety of factors, including but not limited to:
the retention of key employees and/or customers;
the management of facilities and employees in different geographic areas; and
the compatibility of our infrastructure, policies and organizations with those of the acquired company.
If we do not realize the expected benefits or synergies of such transactions, our consolidated financial position, results of operations, cash flows and stock price could be negatively impacted.        
In addition, effective internal controls are necessary for us to provide reliable and accurate financial reports and to effectively prevent fraud. We are devoting significant resources and time to comply with the internal control over financial reporting requirements of the Sarbanes-Oxley Act of 2002. However, we cannot be certain that these measures will ensure that we design, implement and maintain adequate control over our financial processes and reportingneed additional financing in the future especially in the context of acquisitions of other businesses. Any difficulties in the assimilation of acquired businesses into our control system could harm our operating results or cause us to fail to meet our financial reporting obligations. Inferior internal controls could also cause investorscapital needs or to lose confidencemake opportunistic acquisitions, and such financing may not be available on terms favorable to us, if at all, and may be dilutive to existing shareholders.
We may need to seek additional financing for our general corporate purposes. For example, we may need to increase our investment in R&D activities or need funds to make acquisitions. We may be unable to obtain any desired additional financing on terms favorable to us, if at all. If adequate funds are not available on acceptable terms, we may be unable to fund our reported financial information,expansion, successfully develop or enhance solutions or respond to competitive pressures, any of which could have a negative effect onnegatively affect our business. If we finance acquisitions by issuing additional convertible debt or equity securities, our existing stockholders may experience share dilution, which could affect the tradingmarket price of our stockstock. If we raise additional funds through the issuance of equity securities, our shareholders will experience dilution of their ownership interest. If we raise additional funds by issuing debt, we may be subject to further limitations on our operations and our accessability to capital. All of these efforts require varying levels of management resources, which may divert our attention from other business operations.

pay dividends due to restrictive covenants.
We have outstanding debt and may incur other debt in the future, which could adversely affect our financial condition, liquidity and results of operations.
We currently have outstanding debt as well as availability to borrow under a revolving credit facility. We may borrow additional amounts in the future and use the proceeds from any future borrowing for general corporate purposes, future acquisitions, expansion of our business or repurchases of our outstanding shares of common stock.
Our incurrence of this debt, and increases in our aggregate levels of debt, may adversely affect our operating results and financial condition by, among other things:
•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.
Our current revolving credit facility and term loan imposes restrictions on us, including restrictions on our ability to create liens on our assets and the ability of our subsidiaries to incur indebtedness, and requires us to maintain compliance with specified financial ratios. Our ability to comply with these ratios may be affected by events beyond our control. In addition, the indenture governing our senior notes contains covenants that may adversely affect our ability to incur certain liens or engage in certain types of sale and leaseback transactions.liens. If we breach any of the covenants and do not obtain a waiver from the lenders, then, subject to applicable cure periods, our outstanding indebtedness could be declared immediately due and payable.
If currency exchange rates fluctuate substantially in the future, our financial results could be adversely affected.
 A substantial amount of our solutions are priced and paid for in U.S. Dollars, although many of our solutions are priced in local currencies and a significant amount of certain types of expenses, such as payroll, utilities, tax and marketing expenses, are paid in local currencies. Our hedging programs are designed to reduce, but not entirely eliminate, within any given 12-month period, the impact of currency exchange rate movements, including those caused by currency controls, which could impact our business, operating results and financial condition by resulting in lower revenue or increased expenses. However, for expenses beyond a 12-month period, our hedging strategy will not mitigate our exchange rate risk. In addition, our currency hedging programs involve third-party financial institutions as counterparties. The weakening or failure of these counterparties may adversely affect our hedging programs and our financial condition through, among other things, a reduction in the number of available counterparties, increasingly unfavorable terms or the failure of counterparties to perform under hedging contracts.
Volatile changes in weather conditions and effects of climate change could damage or destroy strategic facilities, including our headquarters, which could have a significant negative impact on our operations.
We and our customers and suppliers are vulnerable to the increasing impact of climate change. Volatile changes in weather conditions, including extreme heat or cold, could increase the risk of wildfires, floods, blizzards, hurricanes and other weather-related disasters. Such extreme weather events can cause power outages and network disruptions that may result in disruption to operations and may impact our ability to manufacture and ship product, which may negatively impact revenue. Disasters created by extreme conditions could cause significant damage to or destruction of our facilities resulting in temporary or long-term closures of our facilities and operations and significant expense for repair or replacement of damaged or destroyed

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facilities. This could also result in loss or damage to employee homes, employees relocating to other parts of the country or being unwilling to relocate to the strategic locations, housing shortages and loss of or inability to recruit key employees, This could result in adverse impact to the available workforce, damage to or destruction of inventory, inability to manufacture and deliver solutions, cancellation of orders, and breaches of customer contracts leading to reduced revenue.
If we suffer a loss to our employees, factories, facilities or distribution system due to a catastrophic event, our operations could be significantly harmed.
Our factories, facilities and distribution system are vulnerable to catastrophic loss due to natural or man-made disasters. Several of our facilities could be subject to a catastrophic loss caused by earthquake or other natural disasters due to their locations. For example, our production facilities, headquarters and laboratories in California and our production facilities in Japan are all located in areas with above-average seismic activity. If any of these facilities were to experience a catastrophic loss, it could disrupt our operations, delay production, shipments and revenue and result in large expenses to repair or replace the facility. In addition, since we have consolidated our manufacturing facilities, we are more likely to experience an interruption to our operations in the event of a catastrophe in any one location. Although we carry insurance for property damage and business interruption, we do not carry insurance or financial reserves for interruptions or potential losses arising from earthquakes or terrorism. Also, our third-party insurance coverage will vary from time to time in both type and amount depending on availability, cost and our decisions with respect to risk retention. Economic conditions and uncertainties in global markets may adversely affect the cost and other terms upon which we are able to obtain third-party insurance. If our third-party insurance coverage is adversely affected, or to the extent we have elected to self-insure, we may be at a greater risk that our operations will be harmed by a catastrophic loss.
Our commitment to Net Zero emissions in company operations by Fiscal Year 2040 will be subject to significant costs and regulations which could impact business operations, processes, revenue, and reputation.
In May 2021, the company disclosed its commitment to achieving net zero Scope 1 and Scope 2 emissions by the end of fiscal year 2040. The company plans to meet this commitment by reducing energy consumption through efficiency and conservation measures, investments in renewable energy and selective purchase of certified offsets for residual emissions. The company also committed in September 2021 to developing approved science-based targets in line with limiting global warming to 1.5 degrees Celsius above pre-industrial levels. In addition to Scope 1 and Scope 2 emissions defined by our net zero goal, the company will develop Scope 3 reduction and engagement targets across relevant categories as part of our commitment to science-based targets. The development and implementation of goals and targets may require significant and expensive capital improvements, changes in product development, manufacturing processes and shipping methods. These changes may materially increase the cost to manufacture and ship products and solutions, result in price increases to customers, reduce product or solution performance, and create customer dissatisfaction, potentially adversely impacting our revenue and profitability.
Achieving net zero emissions goals and targets may entail compliance with evolving laws and regulatory requirements, which may cause us to change or reconfigure facilities and operations to meet regulatory standards. If operations are out of compliance, we may be subject to civil or criminal actions, fines and penalties and be required to make significant changes to facilities and operations and temporarily or permanently shut down non-compliant operations, which could result in business disruption and significant unexpected expense, delays in or inability to develop, manufacture and ship products and solutions, customer dissatisfaction, loss of revenue and damage to our reputation.
If we are unable to sufficiently reduce Scope 1 and Scope 2 emissions through energy reduction measures or our investments in renewable energy are not successful, we may fail to achieve our net zero emission commitment by fiscal year 2040. If we are unable to achieve Scope 3 reduction and engagement targets, we may fail to achieve our commitment to science-based targets. Failing to achieve the company’s net zero or science-based targets commitments could result in regulatory non-compliance, criminal or civil actions against us, assessment of fees and penalties, inability to develop, manufacture and ship products, customer dissatisfaction with our products and solutions, reduced revenue and profitability, shareholder lawsuits and damage to our reputation.
Third parties may claim that we are infringing their intellectual property rights, and we could suffer significant litigation or licensing expenses or be prevented from selling solutions or services.
From time to time parties have claimed that one or more of our solutions or services infringe their intellectual property rights. We analyze and take action in response to such claims on a case-by-case basis. In October 2019, Keysight entered into a license agreement with Centripetal Networks in conjunction with the resolution of a patent infringement lawsuit brought by Centripetal against Keysight. Royalties owed under the license and the scope of license, which expired on December 31, 2021, were the primary subject of arbitration which resolved in Keysight’s favor. On January 1, 2022, Centripetal filed a lawsuit in Federal District Court in Virginia, alleging that additional Keysight products infringe certain of Centripetal’s patents. In addition, in February 2022, Centripetal filed complaints in Germany alleging infringement of certain of Centripetal’s German patents, and in April 2022, Centripetal filed a complaint with the International Trade Commission (“ITC”) requesting that they

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investigate whether Keysight should be enjoined from importing certain products that are manufactured outside of the U.S. which are alleged to infringe Centripetal patents. Although we deny the allegations and intend to aggressively defend each case, the outcome of existing proceedings, lawsuits and claims may differ from our expectations because the outcomes of litigation are often difficult to reliably predict.
Disputes and litigation regarding patents or other intellectual property are costly and time-consuming due to the complexity of our technology and the uncertainty of intellectual property litigation and could divert our management and key personnel from business operations. Claims of intellectual property infringement could cause us to enter into a costly or restrictive license agreement (which may not be available under acceptable terms, or at all), require us to redesign certain of our solutions (which would be costly and time-consuming) and/or subject us to significant damages or an injunction against the development and sale of certain solutions or services. In certain of our businesses, we rely on third-party intellectual property licenses, and we cannot ensure that these licenses will be available to us in the future on terms favorable to us or at all.
Third parties may infringe our intellectual property rights, and we may suffer competitive injury or expend significant resources enforcing our intellectual property rights.
Our success depends in part on our proprietary technology, including technology we obtained through acquisitions. We rely on various intellectual property rights, including patents, copyrights, trademarks and trade secrets, as well as confidentiality provisions and licensing arrangements, to establish our proprietary rights. If we do not enforce our intellectual property rights successfully, our competitive position may suffer, which could harm our operating results.
Our pending patent, copyright and trademark registration applications may not be allowed or competitors may challenge the validity or scope of our patents, copyrights or trademarks. In addition, our patents, copyrights, trademarks and other intellectual property rights may not provide us with a significant competitive advantage. In preparation for the separation and distribution, we applied for trademarks related to new global brand name in various jurisdictions worldwide. Any successful opposition to our applications in material jurisdictions could impose material costs on us or make it more difficult to protect our brand. Different jurisdictions vary widely in the level of protection and priority they give to trademark and other intellectual property rights.
We may be required to spend significant resources monitoring our intellectual property rights, and we may or may not be able to detect infringement of such rights by third parties. Our competitive position may be harmed if we cannot detect infringement and enforce our intellectual property rights in a timely manner, or at all. In some circumstances, we may choose to not pursue enforcement due to a variety of reasons. In addition, competitors may avoid infringement by designing around our intellectual property rights or by developing non-infringing competing technologies. Intellectual property rights and our ability to enforce them may be unavailable or limited in some countries, which could make it easier for competitors to infringe our intellectual property rights, capture market share and could result in lost revenues to the company. Furthermore, some of our intellectual property is licensed to others, which allows them to compete with us using that intellectual property.
If we experience a significant cybersecurity attack or disruption in our IT systems, our business, reputation, and operating results could be adversely affected.
We rely on several centralized IT systems to provide solutions and services, maintain financial records, retain sensitive data such as intellectual property, proprietary business information, and data related to customers, suppliers, and business partners, process orders, manage inventory, process shipments to customers and operate other critical functions. The ongoing maintenance and security of this information is pertinent to the success of our business operations and our strategic goals.
Despite our implementation of network security measures, our network may be vulnerable to cybersecurity attacks, computer viruses, break-ins and similar disruptions. Our network security measures include, but are not limited to, the implementation of firewalls, antivirus protection, patches, log monitors, routine backups, offsite storage, network audits, employee training and routine updates and modifications. Despite our efforts to create these security barriers, we may not be able to keep pace as new threats emerge and it is virtually impossible for us to entirely eliminate this risk. Cybersecurity attacks are evolving and include, but are not limited to, malicious software, attempts to gain unauthorized access to data, and other electronic security breaches that could lead to disruptions in systems, unauthorized release of confidential or otherwise protected information and corruption of data. Any such event could have a material adverse effect on our business, reputation, operating results and financial condition, and no assurance can be given that our efforts to reduce the risk of such attacks will be successful.
In addition, our IT systems may be susceptible to damage, disruptions, instability, or shutdowns due to power outages, hardware failures, telecommunication failures, user errors, implementation of new operational systems or software or upgrades to existing systems and software, catastrophes, or other unforeseen events. Such events could result in the disruption of business processes, network degradation and system downtime, along with the potential that a third party will exploit our critical assets such as intellectual property, proprietary business information and data related to our customers, suppliers and business partners. Further, such events could result in loss of revenue, loss of or reduction in purchase orders, inability to report financial

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information, litigation, regulatory fines and penalties, and other damage that could have a material impact on our business operations. To the extent that such disruptions occur, our customers and partners may lose confidence in our solutions and we may lose business or brand reputation, resulting in a material and adverse effect on our business operating results and financial condition.
We are or will be subject to ongoing tax examinations of our tax returns by the IRS and other tax authorities. An adverse outcome of any such audit or examination by the IRS or other tax authority could have a material adverse effect on our results of operations, financial condition and liquidity.
We are or will be subject to ongoing tax examinations of our tax returns by the IRS and other tax authorities in various jurisdictions. We regularly assess the likelihood of adverse outcomes resulting from ongoing tax examinations to determine the adequacy of our provision for income taxes. These assessments can require considerable estimates and judgments. Intercompany transactions associated with the sale of inventory, services, intellectual property and cost sharing arrangements are complex and affect our tax liabilities. The calculation of our tax liabilities involves uncertainties in the application of complex tax laws and regulations in multiple jurisdictions. The outcomes of these tax examinations could have an adverse effect on our operating results and financial condition. Due to the complexity of tax contingencies, the ultimate resolution of any tax matters related to operations may result in payments greater or less than amounts accrued.
Our operations may be adversely impacted by changes in our business mix or changes in the tax legislative landscape.
Our effective tax rate may be adversely impacted by, among other things, changes in the mix of our earnings among countries with differing statutory tax rates, changes in the valuation allowance of deferred tax assets, and changes in tax laws. We cannot give any assurance as to what our effective tax rate will be in the future because, among other things, there is uncertainty regarding the tax policies of the jurisdictions where we operate. Changes in tax laws, such as tax reform in the United States or changes in tax laws resulting from the Organization for Economic Co-operation and Development’s (“OECD”) multi-jurisdictional plan of action to address “base erosion and profit shifting” and the taxation of the “Digital Economy” could impact our effective tax rate.
If tax laws or incentives change or cease to be in effect, our income taxes could increase significantly.
We are subject to federal, state, and local taxes in the United States and numerous foreign jurisdictions. We devote significant resources to evaluating our tax positions and our worldwide provision for taxes. Our financial results and tax treatment are susceptible to changes in tax, accounting, and other laws, regulations, principles, and interpretations in the United States and in other jurisdictions where we do business. With the existence of economic and political policies that favor domestic interests, it is possible that more countries will enact tax laws that either increase the tax rates, or reduce or change the tax incentives available to multinational companies like ours. Upon a change in tax laws in any territory where we do significant business, we may not be able to maintain our current tax rate or qualify for or maintain the benefits of any tax incentives offered, to the extent such incentives are offered.
Keysight benefits from tax incentives in several jurisdictions, most significantly in Singapore and Malaysia, that will expire or require renewal at various times in the future. The tax incentives provide lower rates of taxation on certain classes of income and require thresholds of investments and employment in those jurisdictions. Based on the current tax environment, we believe that we will satisfy such conditions in the future as needed, but cannot guarantee that the tax environment will not change or that such conditions will be satisfied. If we cannot or do not wish to satisfy all or portions of the tax incentives conditions, we may lose the related tax incentives and could be required to refund the benefits that the tax incentives previously provided. The Singapore tax incentive is due for renewal in 2024, and the Malaysia incentive is due for renewal in 2025. Based on the current tax environment, we believe that we will satisfy such conditions in the future as needed, but cannot guarantee that the tax environment will not change or that such conditions will be satisfied. We cannot guarantee that we will qualify or wish to qualify for any future incentive regime that may exist in the future. As a result, our effective tax rate could be higher than it would have been had we maintained the benefits of the tax incentives and could harm our operating results.
Our taxes could increase if the existing Singapore or Malaysia incentives are revoked or are not renewed upon expiration. We cannot guarantee that we will qualify for any new incentive regime that may exist in fiscal years 2024 or 2025, respectively. If we cannot or do not wish to satisfy all or portions of the tax incentives conditions, we may lose the related tax incentives and could be required to refund the benefits that the tax incentives previously provided. As a result, our effective tax rate could be higher than it would have been had we maintained the benefits of the tax incentives and could harm our operating results after tax.
Our business will suffer if we are not able to retain and hire key personnel.
Our future success depends partly on the continued service of our key research, engineering, sales, marketing, manufacturing, executive and administrative personnel, including personnel joining our company through acquisitions. The markets in which we operate are dynamic, and we may need to respond with reorganizations, workforce reductions and site

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closures from time to time. We believe our pay levels are competitive within the regions that we operate. However, global labor shortages and increased global attrition have intensified competition for talent in most fields across the geographic areas in which we operate, and it may become more difficult to retain key employees. If we fail to retain key personnel and are unable to hire highly qualified replacements, we may not be able to meet key objectives, such as launching effective product innovations and meeting financial goals, and maintain or expand our business.
If we fail to maintain satisfactory compliance with certain regulations, we may be subject to substantial negative financial consequences and civil or criminal penalties.
We and our customers are subject to various significant international, federal, state and local regulations, including, but not limited to, health and safety, packaging, data privacy, product content, environmental, labor and import/export regulations. These regulations are complex, change frequently and have tended to become more stringent over time. We have been required to incur significant expenses to comply with these regulations and to remedy violations of certain import/export regulations. Any future failure by us to comply with applicable government regulations could also result in cessation of our operations or portions of our operations, high financial penalties, product recalls or impositions of fines, and restrictions on our ability to carry on or expand our operations. If demand for our solutions is adversely affected or our costs increase, our business would suffer.
Our R&D, manufacturing and distribution operations involve the use of hazardous substances and are regulated under international, federal, state and local laws governing health and safety and the environment. We are also regulated under a number of international, federal, state and local laws regarding recycling, product packaging and product content requirements. We apply strict standards for protection of the environment and occupational health and safety inside and outside the United States, even where not subject to regulation imposed by foreign governments. We believe that our properties and operations at our facilities comply in all material respects with applicable environmental and occupational health and safety laws. In spite of these efforts, no assurance can be given that we will be compliant with all applicable environmental and workplace health and safety laws and regulations and violations could result in civil or criminal sanctions, fines and penalties.
We have developed internal data handling policies and practices to comply with the General Data Protection Regulation (“GDPR”) in the European Union and data privacy regulations similar to GDPR in other jurisdictions. Our existing business strategy does not rely on aggregating or selling personally identifiable information, and as a general matter Keysight does not process personally identifiable information on behalf of our customers. We devote resources to keep up with the changing regulatory environment on data privacy in the jurisdictions where we do business. Despite our efforts, no assurance can be given that we will be compliant with data privacy regulations. New laws, amendments, or interpretations of regulations, industry standards, and contractual obligations relating to data privacy may require us to incur additional costs and restrict our business operations. If we fail to comply with GDPR or other data privacy regulation, we may be subject to significant financial fines and civil or criminal penalties, and may suffer damage to our reputation or brand, which could adversely affect our business and financial results.
In addition, our products and operations are also often subject to the rules of industrial standards bodies, like the International Standards Organization, as well as regulation by other agencies such as the U.S. Federal Communications Commission. We also must comply with work safety rules. If we fail to adequately address any of these regulations, our businesses could be harmed.
Failure to comply with anti-corruption laws could adversely affect our business and result in financial penalties.
Because we have extensive international operations, we must comply with complex foreign and U.S. laws and regulations, such as the U.S. Foreign Corrupt Practices Act, the U.K. Bribery Act and other local laws prohibiting corrupt payments to governmental officials, and anti-competition regulations. Although we actively maintain policies and procedures designed to ensure ongoing compliance with these laws and regulations, there can be no assurance that our employees, contractors or agents will not violate these policies and procedures. Violations of these laws and regulations could result in fines and penalties, criminal sanctions, restrictions on our business conduct and on our ability to offer our solutions in one or more countries, and could also materially affect our brand, ability to attract and retain employees, international operations, business and operating results.
Our business and financial results may be adversely affected by various legal and regulatory proceedings.
We are subject to legal proceedings, lawsuits and other claims in the normal course of business and could become subject to additional claims in the future, some of which could be material. In October 2019, Keysight entered into a license agreement with Centripetal Networks in conjunction with the resolution of a patent infringement lawsuit brought by Centripetal against Keysight. Royalties owed under the license and the scope of license, which expired on December 31, 2021, were the primary subject of arbitration which resolved in Keysight's favor. On January 1, 2022, Centripetal filed a lawsuit in Federal District Court in Virginia, alleging that additional Keysight products infringe certain of Centripetal’s patents. In addition, in February 2022, Centripetal filed complaints in Germany alleging infringement of certain of Centripetal’s German patents, and

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in April 2022, Centripetal filed a complaint with the International Trade Commission (“ITC”) requesting that they investigate whether Keysight should be enjoined from importing certain products that are manufactured outside of the U.S. and alleged to infringe Centripetal patents. Although we deny the allegations and intend to aggressively defend each case, the outcome of existing proceedings, lawsuits and claims may differ from our expectations because the outcomes of litigation are often difficult to reliably predict. Various factors or developments can lead us to change current estimates of liabilities and related insurance receivables where applicable, or permit us to make such estimates for matters previously not susceptible to reasonable estimates, such as a significant judicial ruling or judgment, a significant settlement, significant regulatory developments or changes in applicable law. A future adverse ruling, settlement or unfavorable development could result in charges that could adversely affect our business, operating results or financial condition.
Our internal controls may be determined to be ineffective, which may adversely affect investor confidence in our company, the value of our stock, and our access to capital.
The Sarbanes-Oxley Act of 2002 requires us to furnish a report by management on the effectiveness of our internal control over financial reporting, among other things. We are devoting significant resources and time to comply with such internal control over financial reporting requirements. However, we cannot be certain that these measures will ensure that we design, implement and maintain adequate control over our financial processes and reporting in the future, especially in the context of acquisitions of other businesses. Any difficulties in the assimilation of acquired businesses into our control system could harm our operating results or cause us to fail to meet our financial reporting obligations. Inferior internal controls could also cause investors to lose confidence in our reported financial information, which could have a negative effect on the trading price of our stock or on our access to capital, or cause us to be subject to investigation or sanctions by the SEC.
Adverse conditions in the global banking industry and credit markets may adversely impact the value of our cash investments or impair our liquidity.
Our cash and cash equivalents are invested or held in a mix of money market funds, time deposit accounts and bank demand deposit accounts. Disruptions in the financial markets may, in some cases, result in an inability to access assets such as money market funds that traditionally have been viewed as highly liquid. Any failure of our counterparty financial institutions or funds in which we have invested may adversely impact our cash and cash equivalent positions and, in turn, our results and financial condition.
Future investment returns on pension assets may be lower than expected or interest rates may decline, requiring us to make significant additional cash contributions to our future plans.
We sponsor several defined benefit pension plans that cover many of our salaried and hourly employees. The Federal Pension Protection Act of 2006 requires that certain capitalization levels be maintained in each of the U.S. plans, and there may be similar funding requirements in the plans outside the United States. Because it is unknown what the investment return on and the fair value of our pension assets will be in future years or what interest rates and discount rates may be at any point in time, no assurances can be given that applicable law will not require us to make future material plan contributions. Any such contributions could adversely affect our financial condition.
Environmental contamination from past operations could subject us to unreimbursed costs and could harm on-site operations and the future use and value of the properties involved, and environmental contamination caused by ongoing operations could subject us to substantial liabilities in the future.
Some of our properties are undergoing remediation by HP Inc. ("HP") for subsurface contaminations that were known at the time of Agilent's separation from HP in 1999. In connection with Agilent's separation from HP, HP and Agilent entered into an agreement pursuant to which HP agreed to retain the liability for this subsurface contamination, perform the required remediation and indemnify Agilent with respect to claims arising out of that contamination. Agilent has assigned its rights and obligations under this agreement to Keysight in respect of facilities transferred to us in the separation. As a result, HP will have access to a limited number of our properties to perform remediation. Although HP agreed to minimize interference with on-site operations at such properties, remediation activities and subsurface contamination may require us to incur unreimbursed costs and could harm on-site operations and the future use and value of the properties. In connection with the separation, Agilent will indemnify us directly for any liabilities related thereto. We cannot be sure that HP will continue to fulfill its remediation obligations or that Agilent will continue to fulfill its indemnification obligations.
In connection with the separation from Agilent, Agilent also agreed to indemnify us for any liability associated with contamination from past operations at all properties transferred from Agilent to Keysight. We cannot be sure that Agilent will fulfill its indemnification obligations.
Our current manufacturing processes involve the use of substances regulated under various international, federal, state and local laws governing the environment. As a result, we may become subject to liabilities for environmental contamination, and these liabilities may be substantial. Although our policy is to apply strict standards for environmental protection at our sites

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inside and outside the United States, even if the sites outside the United States are not subject to regulations imposed by foreign governments, we may not be aware of all conditions that could subject us to liability.
We and our customers are subject to various governmental regulations, compliance with which may cause us to incur significant expenses, and if we fail to maintain satisfactory compliance with certain regulations, we may be forced to recall products and cease their manufacture and distribution, and we could be subject to civil or criminal penalties.
        We and our customers are subject to various significant international, federal, state and local regulations, including, but not limited to, health and safety, packaging, product content, labor and import/export regulations. These regulations are complex, change frequently and have tended to become more stringent over time. We may be required to incur significant expenses to comply with these regulations or to remedy violations of these regulations. Any failure by us to comply with applicable government regulations could also result in cessation of our operations or portions of our operations, product recalls or impositions of fines and restrictions on our ability to carry on or expand our operations. If demand for our products is adversely affected or our costs increase, our business would suffer.
        Our products and operations are also often subject to the rules of industrial standards bodies, like the International Standards Organization, as well as regulation by other agencies such as the U.S. Federal Communications Commission. We also must comply with work safety rules. If we fail to adequately address any of these regulations, our businesses could be harmed.

Third parties may claim that we are infringing their intellectual property rights, and we could suffer significant litigation or licensing expenses or be prevented from selling products or services.
        From time to time, third parties may claim that one or more of our products or services infringe their intellectual property rights. We analyze and take action in response to such claims on a case-by-case basis. Any dispute or litigation regarding patents or other intellectual property could be costly and time-consuming due to the complexity of our technology and the uncertainty of intellectual property litigation and could divert our management and key personnel from business operations. A claim of intellectual property infringement could cause us to enter into a costly or restrictive license agreement (which may not be available under acceptable terms, or at all), require us to redesign certain of our products (which would be costly and time-consuming) and/or subject us to significant damages or an injunction against the development and sale of certain products or services. In certain of our businesses, we rely on third-party intellectual property licenses, and we cannot ensure that these licenses will be available to us in the future on terms favorable to us or at all.
Third parties may infringe our intellectual property rights, and we may suffer competitive injury or expend significant resources enforcing our intellectual property rights.
        Our success depends in part on our proprietary technology, including technology we obtained through acquisitions. We rely on various intellectual property rights, including patents, copyrights, trademarks and trade secrets, as well as confidentiality provisions and licensing arrangements, to establish our proprietary rights. If we do not enforce our intellectual property rights successfully, our competitive position may suffer, which could harm our operating results.
        Our pending patent, copyright and trademark registration applications may not be allowed or competitors may challenge the validity or scope of our patents, copyrights or trademarks. In addition, our patents, copyrights, trademarks and other intellectual property rights may not provide us with a significant competitive advantage. In preparation for the separation and distribution, we have applied for trademarks related to our new global brand name in various jurisdictions worldwide. Any successful opposition to our applications in material jurisdictions could impose material costs on us or make it more difficult to protect our brand. Different jurisdictions vary widely in the level of protection and priority they give to trademark and other intellectual property rights.
        We may be required to spend significant resources monitoring our intellectual property rights, and we may or may not be able to detect infringement of such rights by third parties. Our competitive position may be harmed if we cannot detect infringement and enforce our intellectual property rights in a timely manner, or at all. In some circumstances, we may choose to not pursue enforcement due to a variety of reasons. In addition, competitors may avoid infringement by designing around our intellectual property rights or by developing non-infringing competing technologies. Intellectual property rights and our ability to enforce them may be unavailable or limited in some countries, which could make it easier for competitors to capture market share and could result in lost revenues to the company. Furthermore, some of our intellectual property is licensed to others, which allows them to compete with us using that intellectual property.
We are or will be subject to ongoing tax examinations of our tax returns by the IRS and other tax authorities. An adverse outcome of any such audit or examination by the IRS or other tax authority could have a material adverse effect on our results of operations, financial condition and liquidity.
        We are or will be subject to ongoing tax examinations of our tax returns by the IRS and other tax authorities in various jurisdictions. We regularly assess the likelihood of adverse outcomes resulting from ongoing tax examinations to determine the adequacy of our provision for income taxes. These assessments can require considerable estimates and judgments. Intercompany transactions associated with the sale of inventory, services, intellectual property and cost sharing arrangements are complex and affect our tax liabilities. The calculation of our tax liabilities involves uncertainties in the application of complex tax laws and regulations in multiple jurisdictions. The outcomes of any tax examinations could have an adverse effect on our operating results and financial condition. Due to the complexity of tax contingencies, the ultimate resolution of any tax matters related to operations may result in payments greater or less than amounts accrued.
Our operations may be adversely impacted by changes in our business mix or changes in the tax legislative landscape.
        Our effective tax rate may be adversely impacted by, among other things, changes in the mix of our earnings among countries with differing statutory tax rates, changes in the valuation allowance of deferred tax assets, and changes in tax laws. We cannot give any assurance as to what our effective tax rate will be in the future because, among other things, there is uncertainty regarding the tax policies of the jurisdictions where we operate. Changes in tax laws, such as tax reform in the United States or changes in tax laws resulting from the Organization for Economic Co-operation and Development’s (“OECD”) multi-jurisdictional plan of action to address “base erosion and profit shifting” and the taxation of the “Digital Economy” could impact our effective tax rate.

If tax incentives change or cease to be in effect, our income taxes could increase significantly.
        We benefit from tax incentives extended to certain of our foreign subsidiaries to encourage investment or employment. Several jurisdictions have granted us tax incentives that require renewal at various times in the future, the most significant being Singapore. We do not expect incentives granted by other jurisdictions to have a material impact on our financial statements. The Singapore tax incentive requires that specific conditions be satisfied, which include achieving thresholds of employment, ownership of certain assets, as well as specific types of investment activities within Singapore. We believe that we will satisfy such conditions in the future as needed, but cannot guarantee that such conditions will be satisfied. Our Singapore tax incentive is due for renewal in fiscal 2024, but we cannot guarantee that Singapore will not revoke the tax incentive earlier.
Singapore announced potential changes to its IP incentive programs in its 2017 budget. Such potential changes could result in a reduction in tax incentive benefits and an early termination of or changes to our existing Singapore incentive in 2021. No changes have been finalized, and it is unclear to what extent, if at all, changes will be made to the tax incentives or any specific conditions. We cannot guarantee that we will qualify for any new incentive regime or that such conditions will be satisfied.
        Our taxes could increase if the incentives are not renewed upon revocation or expiration. If we cannot or do not wish to satisfy all or portions of the tax incentive conditions, we may lose the related tax incentive and could be required to refund the benefits that the tax incentives previously provided. As a result, our effective tax rate could be higher than it would have been had we maintained the benefits of the tax incentives and could harm our operating results.
If we suffer a loss to our factories, facilities or distribution system due to a catastrophic event, our operations could be significantly harmed.
        Our factories, facilities and distribution system are subject to catastrophic loss due to fire, flood, terrorism or other natural or manmade disasters. In particular, several of our facilities could be subject to a catastrophic loss caused by earthquake or other natural disasters due to their locations. For example, our production facilities, headquarters and laboratories in California and our production facilities in Japan are all located in areas with above-average seismic activity. If any of these facilities were to experience a catastrophic loss, it could disrupt our operations, delay production, shipments and revenue and result in large expenses to repair or replace the facility. If such a disruption were to occur, we could breach our agreements, our reputation could be harmed and our business and operating results could be adversely affected. In addition, since we have consolidated our manufacturing facilities, we are more likely to experience an interruption to our operations in the event of a catastrophe in any one location. Although we carry insurance for property damage and business interruption, we do not carry insurance or financial reserves for interruptions or potential losses arising from earthquakes or terrorism. Also, our third-party insurance coverage will vary from time to time in both type and amount depending on availability, cost and our decision with respect to risk retention. Economic conditions and uncertainties in global markets may adversely affect the cost and other terms upon which we are able to obtain third-party insurance. If our third-party insurance coverage is adversely affected, or to the extent we have elected to self-insure, we may be at a greater risk that our operations will be harmed by a catastrophic loss.
If we experience a significant disruption in, or breach in security of, our information technology systems, our business could be adversely affected.
       We rely on several centralized information technology systems to provide products and services, maintain financial records, process orders, manage inventory, process shipments to customers and operate other critical functions. If we experience a prolonged system disruption in the information technology systems that involve our interactions with customers or suppliers, it could result in the loss of sales and customers and significant incremental costs, which could adversely affect our business. In addition, our information technology systems may be susceptible to damage, disruptions or shutdowns due to power outages, hardware failures, computer viruses, attacks by computer hackers, telecommunication failures, user errors, catastrophes or other unforeseen events. Furthermore, security breaches of our information technology systems could result in the misappropriation or unauthorized disclosure of confidential information belonging to the company or our employees, partners, customers or suppliers, which could result in significant financial or reputational damage to the company.
Man-made problems such as cybersecurity attacks, computer viruses or terrorism may disrupt our operations and harm our business, reputation and operating results
Despite our implementation of network security measures, our network may be vulnerable to cybersecurity attacks, computer viruses, break-ins and similar disruptions. Cybersecurity attacks, in particular, are evolving and include, but are not limited to, malicious software, attempts to gain unauthorized access to data, and other electronic security breaches that could lead to disruptions in systems, unauthorized release of confidential or otherwise protected information and corruption of data. Any such event could have a material adverse effect on our business, operating results and financial condition.
 Our daily business operations require us to retain sensitive data such as intellectual property, proprietary business information and data related to customers, suppliers and business partners within our networking infrastructure. The ongoing maintenance and

security of this information is pertinent to the success of our business operations and our strategic goals, and organizations like Keysight are susceptible to multiple variations of attacks on our networks on a daily basis.
 Our networking infrastructure and related assets may be subject to unauthorized access by hackers, employee errors, or other unforeseen activities. Such issues could result in the disruption of business processes, network degradation and system downtime, along with the potential that a third party will exploit our critical assets such as intellectual property, proprietary business information and data related to our customers, suppliers and business partners. To the extent that such disruptions occur, they may cause delays in the manufacture or shipment of our products and the cancellation of customer orders and, as a result, our business operating results and financial condition could be materially and adversely affected resulting in a possible loss of business or brand reputation.
In addition, the effects of war or acts of terrorism could have a material adverse effect on our business, operating results and financial condition. The continued threat of terrorism and heightened security and military action in response to this threat, or any future acts of terrorism, may cause further disruption to the economy and create further uncertainties in the economy. Energy shortages, such as gas or electricity shortages, could have similar negative impacts. To the extent that such disruptions or uncertainties result in delays or cancellations of customer orders or the manufacture or shipment of our products, our business, operating results and financial condition could be materially and adversely affected.
Our business and financial results may be adversely affected by various legal and regulatory proceedings.
        We are subject to legal proceedings, lawsuits and other claims in the normal course of business and could become subject to additional claims in the future, some of which could be material. The outcome of existing proceedings, lawsuits and claims may differ from our expectations because the outcomes of litigation are often difficult to reliably predict. Various factors or developments can lead us to change current estimates of liabilities and related insurance receivables where applicable, or permit us to make such estimates for matters previously not susceptible to reasonable estimates, such as a significant judicial ruling or judgment, a significant settlement, significant regulatory developments or changes in applicable law. A future adverse ruling, settlement or unfavorable development could result in charges that could adversely affect our business, operating results or financial condition.
We may need additional financing in the future to meet our capital needs or to make opportunistic acquisitions, and such financing may not be available on terms favorable to us, if at all, and may be dilutive to existing shareholders.
        We may need to seek additional financing for our general corporate purposes. For example, we may need to increase our investment in R&D activities or need funds to make acquisitions. We may be unable to obtain any desired additional financing on terms favorable to us, if at all. If adequate funds are not available on acceptable terms, we may be unable to fund our expansion, successfully develop or enhance products or respond to competitive pressures, any of which could negatively affect our business. If we finance acquisitions by issuing additional convertible debt or equity securities, our existing stockholders may experience share dilution, which could affect the market price of our stock. If we raise additional funds through the issuance of equity securities, our shareholders will experience dilution of their ownership interest. If we raise additional funds by issuing debt, we may be subject to further limitations on our operations and ability to pay dividends due to restrictive covenants.
Adverse conditions in the global banking industry and credit markets may adversely impact the value of our cash investments or impair our liquidity.
        Our cash and cash equivalents are invested or held in a mix of money market funds, time deposit accounts and bank demand deposit accounts. Disruptions in the financial markets may, in some cases, result in an inability to access assets such as money market funds that traditionally have been viewed as highly liquid. Any failure of our counterparty financial institutions or funds in which we have invested may adversely impact our cash and cash equivalent positions and, in turn, our results and financial condition.
Future investment returns on pension assets may be lower than expected or interest rates may decline, requiring us to make significant additional cash contributions to our future plans.
        We sponsor several defined benefit pension plans that cover many of our salaried and hourly employees. The Federal Pension Protection Act of 2006 requires that certain capitalization levels be maintained in each of the U.S. plans, and there may be similar funding requirements in the plans outside the United States. Because it is unknown what the investment return on and the fair value of our pension assets will be in future years or what interest rates and discount rates may be at any point in time, no assurances can be given that applicable law will not require us to make future material plan contributions. Any such contributions could adversely affect our financial condition.

Risks Related to Our Common Stock
Our share price may fluctuate significantly.
Our common stock is listed on NYSEthe New York Stock Exchange ("NYSE") under the ticker symbol “KEYS.” The market price of our common stock may fluctuate widely, depending on many factors, some of which may be beyond our control, including but not limited to:
•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;
•the impact of global pandemics, such as COVID-19;
•overall market fluctuations;
•results from any material litigation or government investigations;
•changes in laws or regulations affecting our business; and
general •new or expanded trade restrictions;
•economic conditions such as inflation or recession;
•geopolitical conflicts; and
•other external factors.
Stock markets in general have experienced volatility that has often been unrelated to the operating performance of a particular company. These broad market fluctuations could adversely affect the trading price of our common stock.

In addition, when the market price of a company’s shares drops significantly, shareholders often institute securities class action lawsuits against the company. A lawsuit against us could cause us to incur substantial costs and could divert the time and attention of management and other resources.
We do not currently pay dividends on our common stock.
We do not currently pay dividends on our common stock. The payment of any dividends in the future, and the timing and amount thereof, to our stockholders fall within the discretion of our board of directors. The board's decisions regarding the payment of dividends will depend on many factors, such as our financial condition, earnings, capital requirements, debt service obligations, restrictive covenants in our debt, industry practice, legal requirements, regulatory constraints and other factors that theour board of directors deems relevant. We cannot guarantee that we will pay a dividend in the future or continue to pay any dividends if we commence paying dividends.

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Certain provisions in our amended and restated certificate of incorporation and bylaws, and of Delaware law, may prevent or delay an acquisition of the company, which could decrease the trading price of our common stock.
Our amended and restated certificate of incorporation and amended and restated bylaws contain, and Delaware law contains, provisions that are intended to deter coercive takeover practices and inadequate takeover bids by making such practices or bids unacceptably expensive to the bidder and to encourage prospective acquirers to negotiate with our board of directors rather than to attempt a hostile takeover. These provisions include but are not limited to:
•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 of directors 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%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).
In addition, because we have not chosen to be exempt from Section 203 of the Delaware General Corporation Law (the "DGCL"), this provision could also delay or prevent a change of control that some shareholders may favor. Section 203 provides that, subject to limited exceptions, persons that acquire, or are affiliated with a person that acquires, more than 15%15 percent of the outstanding voting stock of a Delaware corporation (an "interested stockholder") shall not engage in any business combination with that corporation, including by merger, consolidation or acquisitions of additional shares, for a three-year period following the date on which the person became an interested stockholder, unless (i) prior to such time, the board of directors of such corporation approved either the business combination or the transaction that resulted in the stockholder becoming an interested stockholder; (ii) upon consummation of the transaction that resulted in the stockholder becoming an interested stockholder, the interested stockholder owned at least 85%85 percent of the voting stock of such corporation at the time the transaction commenced (excluding for purposes of determining the voting stock outstanding (but not the outstanding voting stock owned by the interested stockholder) the voting stock owned by directors who are also officers or held in employee benefit plans in which the employees do not have a confidential right to tender or vote stock held by the plan); or (iii) on or subsequent to such time the business combination is approved by the board of directors of such corporation and authorized at a meeting of shareholders by the affirmative vote of at least two-thirds of the outstanding voting stock of such corporation not owned by the interested stockholder.
We believe these provisions will protect our shareholders from coercive or otherwise unfair takeover tactics by requiring potential acquirers to negotiate with our board of directors and by providing our board of directors with more time to assess any acquisition proposal. These provisions are not intended to make us immune from takeovers. However, these provisions will apply even if the offer may be considered beneficial by some shareholders and could delay or prevent an acquisition that our board of directors determines is not in the best interests of the company and our shareholders. These provisions may also prevent or discourage attempts to remove and replace incumbent directors.

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Our amended and restated certificate of incorporation designates that the state courts in the State of Delaware or, if no state court located within the State of Delaware has jurisdiction, the federal court for the District of Delaware, as the sole and exclusive forum for certain types of actions and proceedings that may be initiated by our shareholders, which could discourage lawsuits against the company and our directors and officers.
Our amended and restated certificate of incorporation provide that unless the board of directors otherwise determines, the state courts in the State of Delaware or, if no state court located within the State of Delaware has jurisdiction, the federal court for the District of Delaware, will be the sole and exclusive forum for any derivative action or proceeding brought on our behalf, any action asserting a claim of breach of a fiduciary duty owed by any of our directors or officers to the company or our shareholders, any action asserting a claim against us or any of our directors or officers arising pursuant to any provision of the DGCL or Keysight's amended and restated certificate of incorporation or bylaws, or any action asserting a claim against us or any of our directors or officers governed by the internal affairs doctrine. This exclusive forum provision may limit the ability of our shareholders to bring a claim in a judicial forum that such shareholders find favorable for disputes with us or our directors or officers, which may discourage such lawsuits against us and our directors and officers.


Risks Related to the Acquisition46
Table of IxiaContents
We may not realize all of the anticipated benefits of the acquisition of Ixia or those benefits may take longer to realize than expected. We may also encounter significant unexpected difficulties in integrating the two businesses.
Our ability to realize the anticipated benefits of the acquisition of Ixia (the "Merger") will depend, to a large extent, on our ability to integrate our and Ixia’s businesses. The combination of two independent businesses is a complex, costly and time-consuming process. As a result, we will be required to devote significant management attention and resources to integrating Ixia’s business practices and operations with our existing business practices and operations. The integration process may disrupt the businesses and, if implemented ineffectively or if impacted by unforeseen negative economic or market conditions or other factors, we may not realize the full anticipated benefits of the Merger. Our failure to meet the challenges involved in integrating the two businesses to realize the anticipated benefits of the Merger could cause an interruption of, or a loss of momentum in, our activities and could adversely affect our results of operations.

In addition, the overall integration of the businesses may result in material unanticipated problems, expenses, liabilities, competitive responses, loss of customer relationships, and diversion of management's attention. The difficulties of combining the operations of the companies include but are not limited to:
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.
Many of these factors will be outside of our control and any one of them could result in increased costs, decreases in the amount of expected revenues and diversion of management's time and energy, which could materially impact the business, financial condition and our results of operations. In addition, even if the operations of our business and Ixia’s business are integrated successfully, we may not realize the full benefits of the Merger, including the synergies, cost savings or sales or growth opportunities that we expect. These benefits may not be achieved within the anticipated time frame, or at all. Furthermore, additional unanticipated costs may be incurred in the integration of the businesses. All of these factors could decrease or delay the expected accretive effect of the Merger and negatively impact us. As a result, we cannot be certain that the combination of our and Ixia’s businesses will result in the realization of the full benefits anticipated from the Merger.
Uncertainties associated with the Merger may cause a loss of employees and may otherwise materially adversely affect the future business and operations of the combined company.
The combined company’s success after the Merger will depend in part upon the ability of the combined company to retain executive officers and key employees. In some of the fields in which we and Ixia operate, there are only a limited number of people in the job market who possess the requisite skills and it may be increasingly difficult for the combined company to hire personnel over time.
Current and prospective employees of each company may experience uncertainty about their roles with the combined company following the Merger. In addition, key employees may depart because of issues relating to the uncertainty and difficulty of integration or a desire not to remain with the combined company following the Merger. The loss of services of any key personnel or the inability to hire new personnel with the requisite skills could restrict the ability of the combined company to develop new products or enhance existing products in a timely manner, to sell products to customers or to manage the business of the combined company effectively. Also, the business, financial condition and results of operations of the combined company could be materially adversely affected by the loss of any of its key employees, by the failure of any key employee to perform in his or her current position, or by the combined company’s inability to attract and retain skilled employees.
We and Ixia will incur direct and indirect costs as a result of the Merger.
We and Ixia will incur substantial expenses in connection with and as a result of completing the Merger and, over a period of time following the completion of the Merger, we further expect to incur substantial expenses in connection with coordinating our businesses, operations, policies and procedures and Ixia’s. While we have assumed that a certain level of transaction expenses will be incurred, factors beyond our control could affect the total amount or the timing of these expenses. Many of the expenses that will be incurred, by their nature, are difficult to estimate accurately.

Risks Related to the Separation
We will be subject to continuing contingent liabilities of Agilent following the separation.
        After the separation, there are several significant areas where the liabilities of Agilent may become our obligations. For example, under the Internal Revenue Code and the related rules and regulations, each corporation that was a member of the Agilent U.S. consolidated group during a taxable period or portion of a taxable period ending on or before the effective time of the distribution is severally liable for the U.S. federal income tax liability of the entire Agilent U.S. consolidated group for that taxable period. Consequently, if Agilent is unable to pay the consolidated U.S. federal income tax liability for a prior period, we could be required to pay the entire amount of such tax, which could be substantial and in excess of the amount allocated to it as agreed

between us and Agilent at the time of separation. Other provisions of federal law establish similar liability for other matters, including laws governing tax-qualified pension plans, as well as other contingent liabilities.
There could be significant liability if the distribution is determined to be a taxable transaction.
        A condition to the distribution is that Agilent received an opinion of Baker & McKenzie LLP, tax counsel to Agilent, regarding the qualification of the separation and the distribution as a reorganization within the meaning of Sections 355(a) and 368(a)(1)(D) of the Code. The opinion relies on certain facts, assumptions, representations and undertakings from Agilent and Keysight, including those regarding the past and future conduct of the companies' respective businesses and other matters. If any of these facts, assumptions, representations or undertakings are incorrect or not satisfied, Agilent and its shareholders may not be able to rely on the opinion, and could be subject to significant tax liabilities. Notwithstanding the opinion of tax counsel, the IRS could determine on audit that the distribution is taxable if it determines that any of these facts, assumptions, representations or undertakings are not correct or have been violated or if it disagrees with the conclusions in the opinion.
        If the distribution were determined to be taxable for U.S. federal income tax purposes, Agilent and its shareholders that are subject to U.S. federal income tax could incur significant U.S. federal income tax liabilities. For example, if the distribution failed to qualify for tax-free treatment, Agilent would for U.S. federal income tax purposes be treated as if it had sold the Keysight common stock in a taxable sale for its fair market value, and Agilent's shareholders, who are subject to U.S. federal income tax, would be treated as receiving a taxable distribution in an amount equal to the fair market value of the Keysight common stock received in the distribution. In addition, if the separation and distribution failed to qualify for tax-free treatment under federal, state and local tax law and/or foreign tax law, Agilent and Keysight could each incur significant tax liabilities under U.S. federal, state, local and/or foreign tax law.
        Under the agreement between Agilent and Keysight pertaining to tax matters, as finalized at the time of separation, we are generally required to indemnify Agilent against taxes incurred by Agilent that arise as a result of our taking or failing to take, as the case may be, certain actions that result in the distribution failing to meet the requirements of a tax-free distribution under Section 355 of the Code. Under the agreement between Agilent and Keysight, as finalized at the time of separation, we may also be required to indemnify Agilent for other contingent tax liabilities, which could materially adversely affect our financial position.

ITEMItem 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDSUnregistered Sales of Equity Securities and Use of Proceeds
ISSUER PURCHASES OF EQUITY SECURITIES

The table below summarizes information about the company’s purchases, based on trade date; of its equity securities registered pursuant to Section 12 of the Exchange Act during the quarterly period ended JanuaryJuly 31, 2018.2022.
 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)
         
November 1, 2017 through November 30, 2017 —
 N/A —
 $138,515,618
December 1, 2017 through December 31, 2017 —
 N/A —
 $138,515,618
January 1, 2018 through January 31, 2018 —
 N/A —
 $138,515,618
Total —
 N/A —
  
 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)
May 1, 2022 through May 31, 2022614,953$138.13614,953$620,651,196
June 1, 2022 through June 30, 2022607,158$139.89607,158$535,716,469
July 1, 2022 through July 31, 2022417,507$140.74417,507$476,957,554
Total1,639,6181,639,618
(1)On FebruaryNovember 18, 2016, the Board2021, our board of Directorsdirectors approved a new stock repurchase program authorizing the purchase of up to $200$1,200 million of the company’s common stock.stock, replacing the previously approved November 2020 program, under which $77 million remained. Under theour stock repurchase 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. The stock repurchase program may be commenced, suspended or discontinued at any time at the company’s discretion and does not have an expiration date. 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.


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ITEMItem 6. EXHIBITS

Exhibits
Exhibit
NumberDescription
Exhibit
NumberDescription
11.131.1
31.1
Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2
32.1
32.2
101.INSXBRL 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.SCHXBRL Extension Schema Document
101.CALXBRL Extension Calculation Linkbase Document
101.LABXBRL LabelsExtension Label Linkbase Document
101.PREXBRL Extension Presentation Linkbase Document
101.DEFXBRL Extension Definition Linkbase Document
104Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)


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KEYSIGHT TECHNOLOGIES, INC.

SIGNATURE
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
KEYSIGHT TECHNOLOGIES, INC.
Dated:March 8, 2018August 30, 2022By:/s/ Neil Dougherty
Neil Dougherty
SeniorExecutive Vice President and Chief Financial Officer
(Principal Financial Officer)
Dated:March 8, 2018August 30, 2022By:/s/ John C. Skinner
John C. Skinner
Vice President and Corporate Controller
(Principal Accounting Officer)

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