Keysight Technologies Announces Change to Segment Reporting

January 16, 2019 4:33 PM

SANTA ROSA, Calif.--(BUSINESS WIRE)-- Keysight Technologies, Inc. (NYSE: KEYS), a leading technology company that helps enterprises, service providers, and governments accelerate innovation to connect and secure the world, today announced that, in the first quarter of fiscal year 2019, it completed an organizational change to align its services business with its customers and end markets.

The alignment of services to the Communications Solutions Group (CSG) and Electronic Industrial Solutions Group (EISG) segments is a logical next step in Keysight’s customer solutions oriented go-to-market strategy, to fully reflect our services delivery within the markets served and further enable services growth. With this change from four reported segments to three, services, which was previously reported as Services Solutions Group (SSG), will now be reported in the segment in which the services are delivered.

Beginning in the first quarter of fiscal year 2019, the company will report segment operating results for: Communications Solutions Group (CSG), Electronic Industrial Solutions Group (EISG) and Ixia Solutions Group (ISG).

Historical Financial Information

Historical financial segment information under the new operating segment structure for the four quarters and full year for fiscal years 2016, 2017 and 2018 is provided below. In addition, the new segment reporting structure also reflects the retrospective application of ASU 2017-07, Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost, which the company adopted on November 1, 2018. Additional segment information is available on the company’s website at investor.keysight.com. Keysight historical results in aggregate remain unchanged.

About Keysight Technologies

Keysight Technologies, Inc. (NYSE: KEYS) is a leading technology company that helps enterprises, service providers, and governments accelerate innovation to connect and secure the world. Keysight's solutions optimize networks and bring electronic products to market faster and at a lower cost with offerings from design simulation, to prototype validation, to manufacturing test, to optimization in networks and cloud environments. Customers span the worldwide communications ecosystem, aerospace and defense, automotive, energy, semiconductor and general electronics end markets. Keysight generated revenues of $3.9B in fiscal year 2018. More information is available at www.keysight.com.

Additional information about Keysight Technologies is available in the newsroom at www.keysight.com/go/news and on Facebook, Google+, LinkedIn, Twitter and YouTube.

Source: IR-KEYS

 
KEYSIGHT TECHNOLOGIES, INC.
COMMUNICATIONS SOLUTIONS GROUP (CSG)
RESTATED FOR ASU 2017-07 AND SERVICES SOLUTIONS GROUP (SSG) REALIGNMENT
(Unaudited)
                                     
2018 Q1 Q2 Q3 Q4 FY18

($ in millions, except margins data)

As
Reported

 

ASU
2017-07

  SSG   Restated

As
Reported

 

ASU
2017-07

  SSG   Restated

As
Reported

 

ASU
2017-07

  SSG Restated

As
Reported

 

ASU
2017-07

 

SSG

  Restated

As
Reported

 

ASU
2017-07

  SSG   Restated
Net revenue $ 420 $ - $ 80 $ 500 $ 536 $ - $ 91 $ 627 $ 515 $ - $ 89 $ 604 $ 566 $ - $ 94 $ 661 $ 2,037 $ - $ 354 $ 2,392
Cost of goods sold 164 2 48 214 206 2 54 262 197 2 54 253 205 2 56 263 772 8 212 992
Gross margin % 60.9 % 57.2 % 61.7 % 58.2 % 61.7 % 58.1 % 63.7 % 60.1 % 62.1 % 58.5 %
Research and development 80 3 - 84 87 3 - 89 81 3 1 85 83 3 1 87 331 11 2 345
Selling, general and administrative 118 4 20 142 120 3 23 146 124 3 22 149 124 3 26 153 486 13 91 590
Other operating expense (income), net (2 ) - - (2 ) (2 ) - (1 ) (3 ) (2 ) - - (2 ) (1 ) - (1 ) (2 ) (7 ) - (2 ) (9 )
Income from operations 59 (8 ) 12 63 126 (9 ) 14 132 114 (7 ) 13 120 155 (8 ) 12 159 454 (33 ) 51 474
Operating margin % 14.0 % 12.6 % 23.5 % 21.0 % 22.2 % 19.8 % 27.4 % 24.1 % 22.3 % 19.8 %
Segment assets $ 1,700 $ 240 $ 1,940 $ 1,801 $ 254 $ 2,055 $ 1,801 $ 258 $ 2,059 $ 1,854 $ 261 $ 2,115 $ 1,854 $ 261 $ 2,115
 
 
2017 Q1 Q2 Q3 Q4 FY17
($ in millions, except margins data)

As
Reported

 

ASU
2017-07

  SSG   Restated

As
Reported

 

ASU
2017-07

  SSG   Restated

As
Reported

 

ASU
2017-07

  SSG Restated

As
Reported

 

ASU
2017-07

  SSG   Restated

As
Reported

 

ASU
2017-07

  SSG   Restated
Net revenue $ 434 $ - $ 76 $ 510 $ 424 $ - $ 78 $ 502 $ 418 $ - $ 86 $ 504 $ 462 $ - $ 86 $ 548 $ 1,738 $ - $ 326 $ 2,064
Cost of goods sold 171 1 46 218 164 1 47 212 163 1 48 212 171 1 50 223 669 3 192 865
Gross margin % 60.5 % 57.2 % 61.3 % 57.7 % 61.2 % 58.1 % 62.9 % 59.4 % 61.5 % 58.1 %
Research and development 76 2 - 78 73 2 - 75 75 1 - 77 78 2 - 80 302 6 1 310
Selling, general and administrative 117 2 19 137 114 2 20 136 116 1 20 138 116 2 23 140 463 6 82 551
Other operating expense (income), net (2 ) - - (2 ) (2 ) - (1 ) (3 ) (1 ) - (1 ) (2 ) (2 ) - - (2 ) (7 ) - (2 ) (9 )
Income from operations 72 (4 ) 11 79 75 (5 ) 11 81 66 (3 ) 17 80 98 (4 ) 13 107 311 (16 ) 53 347
Operating margin % 16.7 % 15.6 % 17.6 % 16.1 % 15.7 % 15.9 % 21.3 % 19.5 % 17.9 % 16.8 %
Segment assets $ 1,661 $ 198 $ 1,859 $ 1,674 $ 207 $ 1,881 $ 1,679 $ 230 $ 1,909 $ 1,739 $ 237 $ 1,976 $ 1,739 $ 237 $ 1,976
 
 
2016

Q1

Q2 Q3 Q4 FY16
($ in millions, except margins data)

As
Reported

 

ASU
2017-07

  SSG   Restated

As
Reported

 

ASU
2017-07

  SSG   Restated

As
Reported

 

ASU
2017-07

  SSG Restated

As
Reported

 

ASU
2017-07

  SSG   Restated

As
Reported

 

ASU
2017-07

  SSG   Restated
Net revenue $ 440 $ - $ 73 $ 513 $ 446 $ - $ 72 $ 519 $ 424 $ - $ 79 $ 503 $ 442 $ - $ 83 $ 525 $ 1,752 $ - $ 309 $ 2,060
Cost of goods sold 175 1 44 221 174 1 44 219 162 1 45 209 176 2 48 225 687 6 182 874
Gross margin % 60.1 % 57.0 % 61.1 % 57.8 % 61.7 % 58.5 % 60.3 % 57.1 % 60.8 % 57.6 %
Research and development 76 2 2 79 76 1 2 79 75 1 - 77 76 2 - 78 303 6 4 313
Selling, general and administrative 113 2 18 133 115 2 19 137 112 3 19 133 117 3 20 141 457 11 76 544
Other operating expense (income), net (3 ) - - (3 ) (2 ) - - (3 ) (2 ) - - (2 ) (2 ) - - (3 ) (9 ) - (2 ) (11 )
Income from operations 78 (5 ) 11 83 84 (5 ) 7 87 77 (5 ) 15 86 75 (7 ) 16 84 314 (23 ) 49 340
Operating margin % 17.7 % 16.2 % 18.9 % 16.7 % 18.1 % 17.2 % 17.1 % 15.9 % 17.9 % 16.5 %
Segment assets $ 1,744 $ 198 $ 1,942 $ 1,798 $ 204 $ 2,002 $ 1,792 $ 210 $ 2,002 $ 1,805 $ 210 $ 2,015 $ 1,805 $ 210 $ 2,015
 
Keysight adopted ASU 2017-07, Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost, retrospectively effective November 1, 2018.
 
Segment data reflect the results of our reportable segments under Keysight's management reporting system which are not necessarily in conformity with GAAP financial measures. Net revenue for Communications Solutions Group excludes the impact of fair value adjustments to acquisition related deferred revenue balances for the Anite acquisition of $5 million for Q1'16, $4 million for Q2'16, $3 million for Q3'16, $1 million for Q2'17 and $1 million for Q2'18, respectively. Income from operations of our reporting segments exclude, among other things, charges related to the amortization of acquisition-related balances, share based compensation, restructuring and related costs, acquisition and integration costs, separation and related costs, Northern California wildfire-related costs and Goodwill impairment.
 
The sum of the quarters may not tie to total due to rounding.
Page 1
 
KEYSIGHT TECHNOLOGIES, INC.
ELECTRONIC INDUSTRIAL SOLUTIONS GROUP (EISG)
RESTATED FOR ASU 2017-07 AND SERVICES SOLUTIONS GROUP (SSG) REALIGNMENT
(Unaudited)
                                       
2018 Q1 Q2 Q3 Q4 FY18
($ in millions, except margins data)

As
Reported

 

ASU
2017-07

  SSG   Restated

As
Reported

 

ASU
2017-07

  SSG   Restated

As
Reported

 

ASU
2017-07

  SSG   Restated

As
Reported

 

ASU
2017-07

  SSG   Restated

As
Reported

 

ASU
2017-07

  SSG   Restated
Net revenue $ 203 $ - $ 26 $ 229 $ 255 $ - $ 26 $ 282 $ 258 $ - $ 27 $ 285 $ 249 $ - $ 27 $ 275 $ 965 $ - $ 106 $ 1,071
Cost of goods sold 83 1 15 99 99 1 16 116 95 1 16 112 98 1 15 114 375 3 62 441
Gross margin % 59.0 % 56.6 % 61.3 % 59.0 % 63.1 % 60.9 % 60.6 % 58.7 % 61.1 % 58.9 %
Research and development 33 1 - 34 36 1 - 37 36 1 - 37 36 1 - 37 141 4 1 145
Selling, general and administrative 50 2 6 58 55 1 7 63 55 1 7 63 54 1 7 61 212 5 27 245
Other operating expense (income), net (1 ) - - (1 ) (1 ) - - (1 ) (1 ) - - (1 ) (1 ) - - (1 ) (4 ) - (1 ) (4 )
Income from operations 37 (3 ) 4 38 67 (3 ) 4 68 74 (3 ) 5 75 63 (3 ) 4 64 241 (12 ) 17 245
Operating margin % 18.5 % 16.9 % 26.0 % 23.9 % 28.5 % 26.5 % 25.5 % 23.3 % 25.0 % 22.9 %
Segment assets $ 774 $ 72 $ 846 $ 813 $ 75 $ 888 $ 828 $ 77 $ 905 $ 812 $ 76 $ 888 $ 812 $ 76 $ 888
 
 
2017 Q1 Q2 Q3 Q4 FY17
($ in millions, except margins data)

As
Reported

 

ASU
2017-07

  SSG   Restated

As
Reported

 

ASU
2017-07

  SSG   Restated

As
Reported

 

ASU
2017-07

  SSG   Restated

As
Reported

 

ASU
2017-07

  SSG   Restated

As
Reported

 

ASU
2017-07

  SSG   Restated
Net revenue $ 192 $ - $ 24 $ 216 $ 220 $ - $ 24 $ 244 $ 218 $ - $ 21 $ 239 $ 206 $ - $ 24 $ 230 $ 836 $ - $ 93 $ 929
Cost of goods sold 77 - 14 91 84 - 13 98 85 - 14 99 80 - 13 93 326 1 54 381
Gross margin % 59.9 % 57.6 % 61.8 % 60.0 % 61.1 % 58.7 % 61.3 % 59.6 % 61.1 % 59.0 %
Research and development 28 - - 28 31 - - 32 30 - - 30 32 1 - 33 121 2 - 123
Selling, general and administrative 46 1 6 53 49 1 6 55 49 - 5 55 50 1 6 56 194 3 23 219
Other operating expense (income), net (1 ) - - (1 ) (1 ) - - (1 ) (1 ) - - (1 ) - - - (1 ) (3 ) - (1 ) (4 )
Income from operations 42 (1 ) 4 44 57 (2 ) 5 61 55 (1 ) 2 56 45 (2 ) 5 48 199 (6 ) 15 209
Operating margin % 21.7 % 20.4 % 26.1 % 24.8 % 25.3 % 23.4 % 21.8 % 21.0 % 23.8 % 22.5 %
Segment assets $ 746 $ 59 $ 805 $ 764 $ 63 $ 827 $ 772 $ 65 $ 837 $ 798 $ 68 $ 866 $ 798 $ 68 $ 866
 
 
2016 Q1 Q2 Q3 Q4 FY16
($ in millions, except margins data)

As
Reported

 

ASU
2017-07

  SSG   Restated

As
Reported

 

ASU
2017-07

  SSG   Restated

As
Reported

 

ASU
2017-07

  SSG   Restated

As
Reported

 

ASU
2017-07

  SSG   Restated

As
Reported

 

ASU
2017-07

  SSG   Restated
Net revenue $ 191 $ - $ 22 $ 213 $ 193 $ - $ 24 $ 216 $ 191 $ - $ 24 $ 215 $ 201 $ - $ 25 $ 226 $ 776 $ - $ 94 $ 870
Cost of goods sold 82 - 13 96 78 1 14 93 75 - 14 89 81 1 15 97 316 2 56 375
Gross margin % 57.2 % 55.0 % 59.4 % 57.0 % 60.7 % 58.3 % 59.6 % 57.2 % 59.2 % 56.9 %
Research and development 27 - - 28 27 - 1 29 27 - - 27 27 1 - 28 108 2 1 112
Selling, general and administrative 46 1 5 52 47 1 6 54 46 1 6 52 47 1 6 54 186 4 23 212
Other operating expense (income), net (1 ) - - (1 ) (1 ) - - (1 ) (1 ) - - (1 ) (1 ) - - (1 ) (4 ) - - (4 )
Income from operations 38 (2 ) 3 38 40 (2 ) 3 42 44 (2 ) 4 47 47 (3 ) 4 48 169 (8 ) 14 175
Operating margin % 19.7 % 18.1 % 20.9 % 19.1 % 23.1 % 21.5 % 23.3 % 21.4 % 21.8 % 20.1 %
Segment assets $ 748 $ 59 $ 807 $ 770 $ 63 $ 833 $ 773 $ 64 $ 837 $ 773 $ 63 $ 836 $ 773 $ 63 $ 836
 
Keysight adopted ASU 2017-07, Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost, retrospectively effective November 1, 2018.
 
Segment data reflect the results of our reportable segments under Keysight's management reporting system which are not necessarily in conformity with GAAP financial measures. Income from operations of our reporting segments exclude, among other things, charges related to the amortization of acquisition-related balances, share based compensation, restructuring and related costs, acquisition and integration costs, separation and related costs, Northern California wildfire-related costs and Goodwill impairment.
 
The sum of the quarters may not tie to total due to rounding.
 
Page 2
 
KEYSIGHT TECHNOLOGIES, INC.
IXIA SOLUTIONS GROUP (ISG)
RESTATED FOR ASU 2017-07 AND SERVICES SOLUTIONS GROUP (SSG) REALIGNMENT
(Unaudited)
                                       
2018 Q1 Q2 Q3 Q4 FY18
($ in millions, except margins data)

As
Reported

 

ASU
2017-07

  SSG   Restated

As
Reported

 

ASU
2017-07

  SSG   Restated

As
Reported

 

ASU
2017-07

  SSG   Restated

As
Reported

 

ASU
2017-07

  SSG   Restated

As
Reported

 

ASU
2017-07

  SSG   Restated
Net revenue $ 127 $ - $ - $ 127 $ 90 $ - $ - $ 90 $ 119 $ - $ - $ 119 $ 115 $ - $ - $ 115 $ 451 $ - $ - $ 451
Cost of goods sold 31 - - 31 22 - - 22 29 - - 29 34 - - 34 116 - - 116
Gross margin % 75.6 % 75.5 % 75.8 % 75.6 % 75.6 % 75.5 % 70.5 % 70.3 % 74.3 % 74.2 %
Research and development 25 - - 26 30 - - 30 31 - - 31 32 - - 32 118 1 - 119
Selling, general and administrative 52 - - 53 46 1 - 47 49 1 - 50 49 1 - 49 196 3 - 199
Other operating expense (income), net - - - - - - - - - - - - - - - - - - - -
Income from operations 18 - - 18 (7 ) (2 ) - (10 ) 10 (1 ) - 9 - (1 ) - (1 ) 21 (4 ) - 16
Operating margin % 14.5 % 14.1 % -8.4 % -10.6 % 8.1 % 7.1 % 0.4 % -0.5 % 4.7 % 3.6 %
Segment assets $ 2,056 $ - $ 2,056 $ 2,018 $ - $ 2,018 $ 2,036 $ - $ 2,036 $ 1,327 $ - $ 1,327 $ 1,327 $ - $ 1,327
 
 
2017 Q1 Q2(a) Q3 Q4 FY17
($ in millions, except margins data)

As
Reported

 

ASU
2017-07

  SSG   Restated

As
Reported

 

ASU
2017-07

  SSG   Restated

As
Reported

 

ASU
2017-07

  SSG   Restated

As
Reported

 

ASU
2017-07

  SSG   Restated

As
Reported

 

ASU
2017-07

  SSG   Restated
Net revenue - - - - $ 12 $ - $ - $ 12 $ 120 $ - $ - $ 120 $ 124 $ - $ - $ 124 $ 256 $ - $ - $ 256
Cost of goods sold - - - - 3 - - 3 27 - - 27 30 - - 30 60 - - 60
Gross margin % - - - - 77.1 % 77.0 % 77.0 % 76.8 % 76.2 % 76.2 % 76.6 % 76.5 %
Research and development - - - - 4 - - 4 21 - - 21 25 - - 26 50 - - 51
Selling, general and administrative - - - - 7 - - 7 47 - - 47 49 - - 49 103 - - 103
Other operating expense (income), net - - - - - - - - - - - - - - - - - - - -
Income from operations - - - - (2 ) - - (2 ) 24 - - 24 20 - - 20 42 - - 42
Operating margin % - - - - -12.9 % -13.1 % 19.9 % 19.6 % 16.4 % 16.2 % 16.6 % 16.3 %
Segment assets - - - - $ 1,959 $ - $ 1,959 $ 2,055 $ - $ 2,055 $ 2,063 $ - $ 2,063 $ 2,063 $ - $ 2,063
 
(a) The Ixia Solutions Group operating results include activity for 13 days during the period, from the date of acquisition, April 18, 2017, through April 30, 2017.
Keysight adopted ASU 2017-07, Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost, retrospectively effective November 1, 2018.
 
Segment data reflect the results of our reportable segments under Keysight's management reporting system which are not necessarily in conformity with GAAP financial measures. Net revenue for Ixia Solutions Group excludes the impact of fair value adjustments to acquisition related deferred revenue balances for the Ixia acquisition of $4 million for Q2'17, $31 million for Q3'17, $24 million for Q4'17, $19 million for Q1'18, $8 million for Q2'18, $4 million for Q3'18 and $4 million for Q4'18, respectively. Income from operations of our reporting segments exclude, among other things, charges related to the amortization of acquisition-related balances, share based compensation, restructuring and related costs, acquisition and integration costs, separation and related costs, Northern California wildfire-related costs and Goodwill impairment.
 
The sum of the quarters may not tie to total due to rounding.
 
Page 3

EDITORIAL CONTACT:

Denise Idone

+1 631-849-3500

denise.idone@keysight.com

INVESTOR CONTACT:

Jason Kary

+1 707-577-6916

jason.kary@keysight.com

Source: Keysight Technologies, Inc.

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