What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2022-12-15 compared with 2021-12-17 · 248 added, 245 removed, 1403 unchanged (26% of the section changed)

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Consolidated Financial Statements:

Report of Independent Registered Public Accounting Firm

Report of Independent Registered Public Accounting Firm (PCAOB ID:

Consolidated Statement of Operations for each of the three years in the period ended October 31, 2022

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Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of October 31, 2022, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO.

Changes in Accounting Principles

As discussed in Note 1 to the consolidated financial statements, the Company changed the manner in which it accounts for leases on November 1, 2019 and the manner in which it accounts for revenues from contracts with customers on November 1, 2018.

Change in Accounting Principles

As discussed in Note 1 to the consolidated financial statements, the Company changed the manner in which it accounts for leases on November 1, 2019.

Basis for Opinions

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(ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company;

and (iii) provide

reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Critical Audit Matter

Critical Audit Matters

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

and Certain Non-U.S.

Defined Benefit Plan Obligations

As described in Notes 1 and 12 to the consolidated financial statements, the Company has defined benefit plan obligations of $881 million and $1,465 million for its U.S.

plans and non-U.S.

plans, respectively, as of October 31, 2021.

As described in Notes 1 and 12 to the consolidated financial statements, the Company has defined benefit plan obligations of $636 million for its U.S.

plans as of October 31, 2022.

Management remeasures the defined benefit plan obligations at least annually based on the present value of future benefit payments to reflect the future benefit costs over the employees' average expected future service to Keysight based on the terms of the plans.

Management estimates the present value of the future payments using actuarial concepts and assumptions.

Two critical assumptions used by management to estimate the defined benefit plan obligations are the discount rate and the expected long-term return on plan assets.

The critical assumption used by management to estimate the defined benefit plan obligations is the discount rate.

The principal considerations for our determination that performing procedures relating to the Company’s U.S.

and certain non-U.S.

defined benefit plan obligations is a critical audit matter are (i) the significant judgment by management in determining the present value of the defined benefit plan obligations;

(ii) a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating the significant assumption related to the discount rates used in determining the present value of the defined benefit plan obligations;

(ii) a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating the significant assumption related to the discount rate used in determining the present value of the defined benefit plan obligations;

and (iii) the audit effort involved the use of professionals with specialized skill and knowledge.

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These procedures included testing the effectiveness of controls relating to the determination of the present value of the defined benefit plan obligations, including controls over the Company’s methods, significant assumptions, and data.

These procedures also included, among others, testing the completeness and accuracy of the underlying data used in the estimate and the involvement of professionals with specialized skill and knowledge to assist in (i) evaluating the appropriateness of the actuarial concepts used to estimate the present value of the defined benefit plan obligations, (ii) developing an independent range of discount rates and (iii) comparing management's selected discount rates to the independently developed ranges to evaluate the reasonableness of management’s discount rate assumption.

Developing the independent estimate involved developing a range of independent discount rates for each benefit plan based on publicly available market data for high quality corporate bonds.

discount rate and (iii) comparing management's selected discount rate to the independently developed ranges to evaluate the reasonableness of management’s discount rate assumption.

Developing the independent estimate involved developing a range of independent discount rates for each U.S.

benefit plan based on publicly available market data for high quality corporate bonds.

/s/ PricewaterhouseCoopers LLP

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Unrealized gain (loss) on derivative instruments, net of tax benefit (expense) of $( 19 ), $( 6 ) and $( 4 )

Amounts reclassified into earnings related to derivative instruments, net of tax benefit (expense) of zero , $( 1 ) and zero

Amounts reclassified into earnings related to derivative instruments, net of tax benefit (expense) of zero , zero and $( 1 )

( 3 ) ( 2 ) 3

Foreign currency translation, net of tax benefit (expense) of zero

( 165 ) ( 10 ) 33

Net defined benefit pension cost and post retirement plan costs:

Change in actuarial net gain (loss), net of tax benefit (expense) of $( 55 ), $ 23 and $ 28

Change in actuarial net gain (loss), net of tax benefit (expense) of zero , $( 55 ) and $ 23

83 144 ( 64 )

Change in net prior service credit, net of tax benefit of zero , $ 3 and $ 4

Change in net prior service credit, net of tax benefit of zero , zero and $ 3

— ( 1 ) ( 9 )

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Gain on insurance proceeds received for damage to property, plant and equipment — — ( 32 )

Unrealized loss (gain) on investments in equity securities 31 — ( 11 )

Other non-cash expenses (income), net 11 6 1

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Retirement and post-retirement benefits ( 19 ) 7 ( 108 )

Prepaid expenses ( 124 ) ( 43 ) 2

Other assets and liabilities ( 36 ) 4 32

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Insurance proceeds received for damage to property, plant and equipment — — 32

Proceeds from sale of investments — — 7

Other investing activities ( 1 ) — 5

Purchase of investments ( 33 ) ( 1 ) —

Net cash used in investing activities ( 251 ) ( 353 ) ( 442 )

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Treasury stock repurchases ( 849 ) ( 673 ) ( 411 )

Proceeds from issuance of long-term debt — — 500

Repayment of debt — ( 7 ) ( 500 )

Payment of acquisition-related contingent consideration ( 2 ) — —

Other financing activities ( 1 ) ( 4 ) ( 7 )

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Effect of exchange rate movements ( 43 ) 3 6

Net increase in cash, cash equivalents, and restricted cash 301 167 683

Net increase (decrease) in cash, cash equivalents, and restricted cash ( 11 ) 301 167

Cash, cash equivalents, and restricted cash at beginning of year 2,068 1,767 1,600

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Balance as of October 31, 2019 193,769 $ 2 $ 2,013 ( 6,458 ) $ ( 342 ) $ 1,909 $ ( 578 ) $ 3,004

Adjustment due to adoption of new accounting standards — — — — — 76 — 76

Net income — — — — — 627 — 627

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Net income — — — — — 894 — 894

Other comprehensive loss, net of tax — — — — — — ( 21 ) ( 21 )

Other comprehensive income, net of tax — — — — — — 157 157

Issuance of common stock 1,587 — 59 — — — — 59

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Net income — — — — — 1,124 — 1,124

Other comprehensive income, net of tax — — — — — — 157 157

Other comprehensive loss, net of tax — — — — — — ( 12 ) ( 12 )

Issuance of common stock 1,321 — 63 — — — — 63

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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.

Due to the COVID-19 pandemic, there has been uncertainty and disruption in the global economy and our markets.

We are not aware of any specific event or circumstance that would require an update to our estimates or judgments or a revision of the carrying value of our assets or liabilities as of October 31, 2022.

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We primarily generate revenue from the sale of products (hardware and/or software), services, or a combination thereof.

We enter into contracts that may involve multiple performance obligations, and we allocate the transaction price between each performance obligation on the basis of relative standalone selling price.

We enter into contracts that may involve multiple performance obligations, and we allocate the transaction price between each performance obligation on the basis of relative standalone selling price ("SSP").

Revenue is recognized net of allowances for returns and any taxes collected from customers, which are subsequently remitted to governmental authorities.

Nature of Goods and Services

Product revenues are generated predominantly from the sale of various types of design and test software and hardware.

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Our hardware products generally do not have any substantive acceptance terms that would otherwise preclude the transfer of control.

Performance obligations related to our software licenses, including the license portion of our software subscriptions, grant the customer the right to use our software via electronic delivery.

Performance obligations related to our software licenses, including the license portion of our software subscriptions, grant the customer the right to use our software primarily via electronic delivery.

Service revenues consist of repair and calibration services, extended warranties, technical support for hardware and software, when-and-if available software updates and upgrades, and professional services, including installation and implementation, consulting, and training.

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Our contracts typically contain various forms of variable consideration, including trade discounts, trade-in credits, rebates, and rights of return.

The transaction price is allocated to the separate performance obligations on a relative standalone selling price basis.

Standalone selling prices ("SSPs") for a majority of our products and services are estimated based on our established pricing practices and maximize the use of observable inputs.

The transaction price is allocated to the separate performance obligations based on relative SSP.

SSPs for a majority of our products and services are estimated based on our established pricing practices and maximize the use of observable inputs.

An observable input is the price of the good or service when it is sold as a separate item in a similar circumstance and to a similar customer as in the contract for which SSPs are being determined.

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Hardware When customer obtains control of the product, typically at delivery (point in time) Within 30-90 days of shipment Estimated based on established pricing practices or observable based on standalone sales for certain hardware products

Software licenses Upon electronic delivery of the software, and the applicable license period has begun (point in time) Within 30-90 days of the beginning of license period Estimated based on established pricing practices or observable based on standalone sales for certain software products

Threat intelligence solutions

Software licenses Primarily upon electronic delivery of the software, and the applicable license period has begun (point in time) Within 30-90 days of the beginning of license period Estimated based on established pricing practices or observable based on standalone sales for certain software products

Software subscriptions

Ratably over the subscription period (over time) Within 30-90 days of the beginning of subscription period Estimated based on established pricing practices

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Custom Solutions

Custom solutions (milestone-based) As milestones are achieved based on transfer of control to customer (over time) Within 30-90 days of milestone achievement Transaction price, as pricing is custom and can vary significantly from contract to contract

Custom solutions (milestone-based;

percentage-of-completion) As milestones are achieved based on transfer of control to customer (over time) Within 30-90 days of milestone achievement Transaction price, as pricing is custom and can vary significantly from contract to contract

Custom solutions (point in time) When customer obtains control of the solution, typically at delivery or customer acceptance, as defined by the contract (point in time) Within 30-90 days of delivery of solution Transaction price, as pricing is custom and can vary significantly from contract to contract

Significant Judgments

Judgment is required to determine the standalone selling price for each distinct performance obligation.

As most of our products and services are not sold on a standalone basis, we typically estimate the standalone selling price.

Significant judgment is required to determine the SSP for each distinct performance obligation.

As most of our products and services are not sold on a standalone basis, we typically estimate the SSP.

In doing so, we consider our internal price list for each product and service, which reflects our desired profitability, based on an expected level of sales, and adjust for factors such as competition, customer relationship, discount provided in the contract, geographic location, and the products and services purchased in the arrangement.

We use a range based on actual historical sales to determine whether the calculated standalone selling price for a product or service is a fair representation of the standalone selling price.

We use a range based on actual historical sales to determine whether the calculated SSP for a product or service is a fair representation of the SSP.

For capitalized contract costs, we use judgment in determining the capitalized amount and amortization period.

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Trade accounts receivable are recorded at the invoiced amount and do not bear interest.

Such accounts receivable have been reduced by an allowance for doubtful accounts, which is our best estimate of the amount of probable credit losses in our existing accounts receivable.

Such accounts receivable have been reduced by an allowance for credit losses, which is our best estimate of the amount of probable credit losses in our existing accounts receivable.

We determine the allowance based on customer specific experience and the aging of such receivables, among other factors.

The allowance for doubtful accounts was approximately $ 4 million and $ 3 million as of October 31, 2021 and 2020, respectively.

The allowance for credit losses was approximately $ 4 million as of both October 31, 2022 and 2021.

We do not have any off-balance-sheet credit exposure related to our customers.

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Income tax expense is based on income or loss before taxes.

Deferred income taxes reflect the effect of temporary differences between asset and liability amounts that are recognized for financial reporting purposes and the amounts that are r ecognized for income tax purposes.

These deferred taxes are measured by applying currently enacted tax laws.

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We classify the liability for unrecognized tax benefits as current to the extent that the company anticipates payment (or receipt) of cash within one year.

Interest and penalties related to uncertain tax

positions are recognized in the provision for income taxes.

Interest and penalties related to uncertain tax positions are recognized in the provision for income taxes.

Given the number of years and numerous matters that remain subject to examination in various tax jurisdictions, we are unable to estimate the range of possible changes to the balance of our unrecognized tax benefits.

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As defined in the authoritative guidance, a reporting unit is an operating segment or one level below an operating segment.

During the fourth quarter of 2021, we performed our annual impairment test for all our reporting units.

Based on the results of our testing, the fair value of each of our reporting units exceeded the carrying value.

During the fourth quarter of 2022, we performed our annual impairment test of goodwill for all our reporting units using a qualitative approach.

Based on the results of our qualitative testing, we believe that it is more-likely-than-not that the fair value of each reporting unit is greater than its respective carrying value.

There were no impairments of goodwill during the years ended October 31, 2022, 2021 and 2020.

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in our foreign subsidiaries.

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 in which we invest our funds.

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For those long-term equity investments accounted for under the equity method or measurement alternative, the carrying value approximates estimated fair value.

The fair value of our long-term debt, calculated from quoted prices that are primarily Level 1 inputs under the accounting guidance fair value hierarchy, exceeded the carrying value less debt issuance costs by approximately $ 178 million and $ 236 million as of October 31, 2021 and 2020, respectively.

The fair value of our long-term debt, calculated from quoted prices that are primarily Level 1 inputs under the accounting guidance fair value hierarchy, is approximately $ 1,679 million and $ 1,977 million as of October 31, 2022 and 2021, respectively.

The fair value of foreign currency contracts used for hedging purposes is estimated internally by using inputs tied to active markets.

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Financial instruments that potentially subject us to significant concentration of credit risk include money market fund investments, time deposits and demand deposit balances.

These investments are categorized as cash and cash equivalents and long-term investments.

These investments are categorized as cash and cash equivalents, short-term investments and long-term investments.

In addition, we have credit risk from derivative financial instruments used in hedging activities and accounts receivable.

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Credit risk is mitigated through collateral, such as letters of credit, bank guarantees or payment terms like cash in advance.

No single customer accounted for more than 10 percent of accounts receivable as of October 31, 2021 or 2020.

N o single customer accounted for more than 10 percent of accounts receivabl e as of October 31, 2022 or 2021.

Derivative instruments.

We are exposed to global foreign currency exchange rate risk in the normal course of business.

We enter into foreign exchange hedging contracts, primarily forward contracts to manage financial exposures resulting from changes in foreign currency exchange rates.

We are exposed to global foreign currency exchange rate fluctuations in the normal course of business.

We enter into foreign exchange hedging contracts, and primarily use forward contracts to manage financial exposures resulting from changes in foreign currency exchange rates.

Foreign currency exposures include committed and anticipated revenue and expense transactions (cash flow exposure) and assets and liabilities that are denominated in currencies other than the functional currency of the subsidiary (balance sheet exposure).

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We also formally assess, both at the hedge’s inception and on an ongoing basis, whether the hedging instruments are highly effective in offsetting changes in cash flows of hedged items.

Our foreign exchange hedging contracts have maturities based on a rolling period of up to twelve months.

Our foreign exchange cash flow hedging contracts have

maturities based on a rolling period of up to twelve months.

We do not use derivative financial instruments for speculative trading purposes.

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Derivatives not designated as hedging instruments are recorded on the balance sheet at fair value, and changes in fair value are recorded in earnings in the current period.

Derivative instruments are subject to master netting arrangements and

qualify for net presentation in the balance sheet.

Derivative instruments are subject to master netting arrangements and qualify for net presentation in the balance sheet.

Cash flows from derivative instruments are classified in the statement of cash flows in the same category as the cash flows from the hedged or economically hedged item, primarily in operating activities.

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When assets are retired or disposed of, the assets and related accumulated depreciation are removed from our general ledger, and the resulting gain or loss is reflected in the consolidated statement of operations.

Buildings and improvements are depreciated over the lesser of their useful lives or the remaining term of the lease and machinery and equipment, which is generally over three years to ten years .

We use the straight-line method to depreciate assets.

Buildings and improvements are depreciated over the lesser of their useful lives, which is generally over five years to forty years , or the remaining term of the lease;

and machinery and equipment is generally depreciated over three years to ten years .

We adopted Accounting Standards Codification (“ASC”) Topic 842, Leases (“ASC 842”), on November 1, 2019 using the modified retrospective transition approach provided by Accounting Standards Update ("ASU") 2018-11, Leases:

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dollars at current exchange rates except for non-monetary assets and capital accounts, which are remeasured at historical exchange rates.

Revenue and expenses are generally remeasured at monthly exchange rates that approximate average exchange rates in effect during each period.

Revenue and expenses are generally remeasured at monthly exchange rates that approximate

average exchange rates in effect during each period.

Gains or losses from foreign currency re-measurement are included in net income.

Net gains or losses resulting from foreign currency transactions are reported in other income (expense) and were a $ 3 million gain in 2021, a $ 3 million gain in 2020 and a $ 2 million gain in 2019.

Net gains or losses resulting from foreign currency asset and liability remeasurement transactions are reported in other income (expense) and were a $ 1 million loss in 2022, a $ 3 million gain in 2021 and a $ 3 million gain in 2020.

Retirement plans and post-retirement benefit plan assumptions.

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Two critical assumptions are the discount rate and the expected long-term return on plan assets.

Other important assumptions include expected future salary increases, expected future increases to benefit payments, expected retirement dates, employee turnover,

retiree mortality rates and investment portfolio composition.

Other important assumptions include expected future salary increases, expected future increases to benefit payments, expected retirement dates, employee turnover, retiree mortality rates and investment portfolio composition.

We evaluate these assumptions at least annually.

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Early adoption is permitted.

We will early adopt this guidance effective November 1, 2021.

We do not expect the adoption of this guidance to have a material impact on our consolidated financial statements.

We adopted this guidance effective November 1, 2021.

The adoption of this guidance did not have a material impact on our consolidated financial statements.

Other amendments to GAAP that do not require adoption until a future date are not expected to have a material impact on our consolidated financial statements upon adoption.

2022 Acquisitions

During the year ended October 31, 2022, we used $ 33 million, net of cash acquired, for acquisition activity and recognized goodwill and other intangible assets of $ 20 million and $ 23 million, respectively, based on the allocation of the purchase price to the estimated fair values of the assets acquired and liabilities assumed.

Of the $20 million goodwill, $ 9 million was assigned to the Communications Solutions Group and $ 11 million was assigned to the Electronic Industrial Solutions Group.

2021 Acquisitions

Acquisition of Sanjole

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Goodwill for the acquisitions was assigned to the Communications Solutions Group.

2020 Acquisitions

Acquisition of Eggplant

During the third quarter of fiscal 2020, we acquired Eggplant Topco Limited ("Eggplant") for $ 319 million, net of $ 11 million cash acquired, and recognized additions to goodwill and other intangible assets of $ 280 million and $ 88 million, respectively, based on the allocation of the purchase price to the estimated fair values of the assets acquired and liabilities assumed.

The identified intangible assets primarily consist of developed technology of $ 38 million and customer relationships of $ 46 million with estimated useful lives of 3 years and 6 years, respectively.

Eggplant is a software test automation platform provider that uses artificial intelligence and analytics to automate test creation and test execution.

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.

Additionally, we acquired two other businesses for $ 38 million, net of cash acquired, and recognized goodwill of $ 34 million based on the allocation of the purchase price to the estimated fair values of the assets acquired and liabilities assumed.

Goodwill for the acquisitions was assigned to the Communications Solutions Group.

Supplemental Pro Forma Information (Unaudited)

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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").

Disaggregated revenue is presented for each of our reportable segments, Communications Solutions Group ("CSG") and Electronic Industrial Solutions Group ("EISG").

Year Ended October 31,

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We classify deferred revenue as current or non-current based on the timing of when we expect to recognize revenue.

Year Ended October 31, 2021

Balance at October 31, 2021 $ 665

Deferral of revenue billed in current period, net of recognition 546

Deferred revenue arising out of acquisitions 3

Revenue recognized that was deferred as of the beginning of the period ( 482 )

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Remaining Performance Obligations

Revenue expected to be recognized in any future period related to remaining performance obligations, excluding revenue pertaining to contracts that have an original expected duration of one year or less, was approximately $ 382 million as of October 31, 2021, and represents the company’s obligation to deliver products and services and obtain customer acceptance on delivered products.

Since we typically invoice customers at contract inception, this amount is included in our current and long-term deferred revenue balances.

Our expected remaining performance obligations, excluding contracts that have an original expected duration of one year or less, was approximately $ 433 million as of October 31, 2022, and represents the company’s obligation to deliver products and services and obtain customer acceptance on delivered products.

As of October 31, 2022, we expect to recognize approximately 47 percent of the revenue related to these unsatisfied performance obligations during 2023 , 33 percent in 2024 and 20 percent thereafter.

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 RSUs, ESPP, employee stock option awards, and performance share awards granted to selected members of our senior management under the LTP Program, based on estimated fair values.

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 RSUs, employee stock purchases made under our employee stock purchase plan ("ESPP"), employee stock option awards, and performance share awards granted to selected members of our senior management under the LTP Program, based on estimated fair values.

Description of Keysight’s Share-Based Plans

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The 2014 Stock Plan was further amended and restated by our board of directors on November 16, 2017 to increase the maximum aggregate number of shares that may be issued under the 2014 Stock Plan to 21.8 million shares.

The 2014 Stock Plan provides for the grant of awards in the form of stock options, SARs, restricted stock, RSUs, performance shares and performance units with performance-based conditions on vesting or exercisability, and cash awards.

The 2014 Stock Plan provides for the grant of awards in the form of stock options, stock appreciation rights, restricted stock, RSUs, performance shares and performance units with performance-based conditions on vesting or exercisability, and cash awards.

The 2014 Stock Plan has a term of ten years .

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Stock options granted under the 2014 Stock Plan may be either "incentive stock options," as defined in Section 422 of the Internal Revenue Code, or non-statutory.

Options were granted prior to November 1, 2015 and generally vest at a rate of 25 percent per year over a period of four years from the date of grant with a maximum contractual term of ten years .

Options generally vest at a rate of 25 percent per year over a period of four years from the date of grant with a maximum contractual term of ten years .

The exercise price for stock options is generally not less than 100 percent of the fair market value of our common stock on the date the stock award is granted.

Effective November 1, 2014, the Compensation and Human Capital Committee of our board of directors approved the performance awards, part of the LTP Program administered under the 2014 Stock Plan, for the company's executive officers and other key employees.

Participants in this program are entitled to receive unrestricted shares of the company's stock after the end of the contractual period if specified performance targets are met.

The maximum contractual period for awards under the performance awards program is three years .

These awards can be based on a variety of targets, such as total shareholder return ("TSR") or financial metrics, such as operating margin, cost synergies and others.

The final award may vary from zero to 200 percent of the target award based on the actual performance.

For TSR-based performance awards, the peer group comparisons are set at the beginning of the performance period.

The performance targets for operating margin-based performance grants are set each year in the first quarter for that respective year.

We consider the dilutive impact of this program in our diluted net income per share calculation only to the extent that the performance conditions are met.

Performance share awards granted under the LTP Program are administered under the 2014 Stock Plan for the company's executive officers and other key employees.

Participants in this program are entitled to receive unrestricted shares of the company's stock after the end of a three-year performance period, contingent upon the achievement of metrics and targets established by the Compensation and Human Capital Committee at the beginning of the performance period.

The metrics for

achievement of these awards can vary and may include total shareholder return ("TSR") or financial metrics, such as operating margin (“OM”), cost synergies and others.

For TSR-based awards, the peer group comparisons are set at the beginning of the performance period.

For OM-based awards, the performance targets are set each year in the first quarter of the respective year.

The final pay-out under the LTP Program may range from zero to 200 percent of the target award based on actual performance

During fiscal year 2022, the Compensation and Human Capital Committee approved performance retention awards with a target earnings per share (“EPS”) goal over a three-year performance period to select members of our leadership team.

The performance targets are set each half year.

The payout range of the award is zero or 100 percent, with no additional payout for performance above target.

RSUs under our share-based plans are granted to directors, executives and employees.

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RSUs generally vest, with some exceptions, at a rate of 25 percent per year over a period of four years from the date of grant.

Effective November 1, 2014, the company adopted the ESPP.

The ESPP allows eligible employees to contribute up to 10 percent of their base compensation to purchase shares of Keysight common stock at 85 percent of the closing market price at the purchase date.

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Valuation Assumptions

The TSR-based performance awards were valued using a Monte Carlo simulation model, which requires the use of highly subjective and complex assumptions, including the price volatility of the underlying stock.

The estimated fair value of restricted stock awards and the financial metrics-based performance awards (both OM and EPS) is determined based on the market price of Keysight’s common stock on the grant date.

The compensation cost for financial metrics-based performance awards reflect the cost of awards that are probable to vest at the end of the performance period.

The following assumptions were used to estimate the fair value of TSR-based performance awards.

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Price-wise correlation with selected peers 67 % 67 % 61 %

The estimated fair value of restricted stock awards and the financial metrics-based performance awards is determined based on the market price of Keysight’s

common stock on the grant date.

The compensation cost for financial metrics-based performance awards reflect the cost of awards that are probable to vest at the end of the performance period.

Share-based Payment Award Activity

Employee Stock Options

We have no t granted any stock options post fiscal year 2015.

We have no t granted any stock options since fiscal 2015.

As of October 31, 2022 and 2021, the options outstanding were approximately 0.2 million and 0.3 million, respectively, having a weighted average exercise price of $ 30 and $ 29 , respectively.

During the year, 0.1 million options, with an intrinsic value of $ 11 million were exercised at the weighted average exercise price of $ 25 .

The intrinsic value of the options exercised during 2020 and 2019 was $ 14 million and $ 39 million, respectively, at the weighted average exercise price of $ 27 .

The intrinsic value of the options exercised during 2021 and 2020 was $ 14 million, respectively, at the weighted average exercise price of $ 26 and $ 27 , respectively.

The options outstanding as of October 31, 2022 have a weighted average contractual remaining life of 1.6 years and an intrinsic value of $ 27 million, based on Keysight's closing stock price of $ 174.15 at October 31, 2022.

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The following table summarizes non-vested award activity in 2022 for our LTP Program and restricted stock unit awards:

Shares Weighted

Grant Date Fair Value

Shares Weighted average grant date fair value per share

(in thousands)

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As of October 31, 2022, the unrecognized share-based compensation cost for non-vested stock awards was approximately $ 107 million, which is expected to be amortized over a weighted average period of 2.7 years.

Unrecognized share-based compensation cost does not include expense for operating margin based performance awards for which the target have not yet been set.

Unrecognized share-based compensation cost does not include expense for financial metrics-based performance awards for which the targets have not yet been set.

The total fair value of stock awards vested was $ 223 million for 2022, $ 165 million for 2021 and $ 167 million for 2020.

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The following table presents the components of the deferred tax assets and liabilities:

2022 2021 (1)

(in millions)

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Lease obligations 52 53

Hedging and currency costs 1 —

Total deferred tax assets 1,054 1,124

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Deferred Tax Liabilities

Inventory ( 1 ) —

Intangibles ( 28 ) ( 41 )

Property, plant and equipment ( 26 ) ( 26 )

Warranty reserves — ( 1 )

Pension benefits ( 70 ) ( 84 )

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ROU lease assets ( 50 ) ( 51 )

Hedging and currency costs ( 30 ) ( 11 )

Others ( 7 ) ( 11 )

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Total deferred tax assets, net of deferred tax liabilities $ 608 $ 643

The decrease in deferred tax assets in 2021 as compared to 2020 primarily relates to a decrease in net pension liabilities in the U.S.

and Germany and a decrease in intangible assets in Singapore due to amortization, partially offset by an increase in the value of the net operating loss carryforwards in the U.K.

due to a tax rate change.

(1) The prior year amounts presented in the table above have been reclassified to conform with the current year presentation.

The decrease in deferred tax assets in 2022 as compared to 2021 primarily relates to a decrease in intangible assets in Singapore due to amortization, a decrease in U.K.

net operating loss assets due to currency fluctuations, and a decrease in net pension liabilities in Germany due to remeasurement.

The decrease in deferred tax liabilities in 2022 as compared to 2021 primarily relates to a decrease in Japan pension deferred tax liabilities related to currency fluctuations, a decrease in intangibles basis difference in the U.S.

due to amortization, and a decrease in taxes on unremitted earnings of foreign subsidiaries due to currency fluctuations, partially offset by an increase in deferred tax liabilities related to derivative instruments.

As of October 31, 2022, there was a deferred tax liability of $ 8 million for the tax liability expected to be imposed upon the repatriation of unremitted foreign earnings that are not considered indefinitely reinvested.

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Such assessment is required on a jurisdiction-by-jurisdiction basis.

The $ 231 million and $ 238 million valuation allowances as of October 31, 2021 and 2020, respectively, are mainly related to net operating losses in Luxembourg and the U.K., capital losses in the U.K., and California research credits.

The decrease in valuation allowance from October 31, 2020 to October 31, 2021 is primarily due to a release of valuation allowance on Netherlands net operating losses, partially offset by an increase in valuation allowance on U.K.

capital and net operating losses.

The release of the Netherlands valuation allowance was due to a tax law change allowing net operating losses to be carried forward indefinitely.

The increase in the valuation allowance on U.K.

capital and net operating losses is primarily due to a tax rate change that increased the after-tax value of the losses subject to valuation allowance.

The $ 224 million and $ 231 million valuation allowances as of October 31, 2022 and 2021, respectively, are mainly related to net operating losses in Luxembourg and the U.K., capital losses in the U.K., and California research credits from acquired entities that are subject to change in ownership limitations.

The decrease in valuation allowance is primarily due to currency fluctuations on U.K.

net operating loss assets that are subject to valuation allowance.

We will maintain a valuation allowance until sufficient positive evidence exists to support a reversal.

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Of the total U.S.

state net operating loss carryforwards, $ 48 million are subject to change of ownership limitations under various state tax provisions and are subject to valuation allowance.

state net operating loss carryforwards will begin to expire in 2029 , if not utilized.

state net operating loss carryforwards, $ 48 million is subject to change of ownership limitations under various state tax provisions and are subject to valuation allowance.

state net operating loss carryforwards will begin to expire in 2023, which would result in an immaterial tax impact if not utilized.

At October 31, 2022, we had U.S.

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Of the total U.S.

state research credit carryforwards, $21 million are California research credits that can be carried forward indefinitely.

Due to change of ownership limitations, however, $ 17 million of California research credits are subject to valuation allowance.

state research credit carryforwards, $ 25 million is California research credits that can be carried forward indefinitely.

Due to change of ownership limitations, however, $ 21 million of California research credits is subject to valuation allowance.

At October 31, 2022, we also had foreign net operating loss carryforwards of approximately $ 957 million.

11 unchanged sentences

State income taxes, net of federal benefit 8 ( 6 ) 4

research credits ( 14 ) ( 15 ) ( 14 )

share-based compensation ( 16 ) ( 11 ) ( 12 )

officers’ compensation limitation 8 6 5

tax on foreign earnings 53 58 39

Deferred taxes on foreign earnings not considered indefinitely reinvested 1 8 2

benefit on foreign sales ( 17 ) ( 16 ) ( 8 )

research credits ( 15 ) ( 14 ) ( 12 )

income taxed at different rates ( 105 ) ( 64 ) ( 70 )

Foreign earnings taxed at different rates ( 115 ) ( 100 ) ( 59 )

Deferred taxes on foreign earnings not considered indefinitely reinvested ( 9 ) 1 8

Change in unrecognized tax benefits ( 26 ) 17 8

Share-based compensation ( 6 ) ( 7 ) ( 5 )

Officers’ compensation 6 5 4

Acquired entity integration — ( 15 ) —

Release of non-US valuation allowance ( 17 ) — —

Release of foreign valuation allowance — ( 17 ) —

Other, net 19 2 3

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Effective tax rate 13 % 11 % 18 %

(1) The prior year amounts presented in the table above have been reclassified to conform with the current year presentation.

The effective tax rate was 13 percent, 11 percent, and 18 percent for 2022, 2021 and 2020, respectively.

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statutory rate primarily due to the proportion of worldwide earnings that are taxed at lower statutory tax rates in non-U.S.

jurisdictions, partially offset by U.S.

tax imposed on earnings in non-U.S.

jurisdictions.

The decrease in the effective tax rate from 2020 to 2021 is due to a change in the jurisdictional mix of non-U.S.

The increase in the effective tax rate from 2021 to 2022 was due to nonrecurring tax benefits recorded in 2021, partially offset by a decrease in 2022 taxes from changes in tax reserves primarily due to audit settlement and from a relative decrease in U.S.

tax due on non-U.S.

The 2022 tax expense also includes a decrease in tax expense resulting from 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 2022 decrease in tax expense was partially offset by an increase to tax expense resulting from an out-of-period adjustment related to corrections to the tax rate applied to non-US pension deferred tax balances.

Neither of these out-of-period adjustments were material individually or in the aggregate.

The 2021 significant nonrecurring tax benefits include the release of valuation allowance on Netherlands net operating losses in 2021 and a decrease due to the 2021 actual tax impact of acquired entity integration as compared to the estimate at acquisition based on the finalization of the integration plan.

The decrease in the effective tax rate from 2020 to 2021 was due to a change in the jurisdictional mix of non-U.S.

earnings offset by an increase in U.S.

taxes on non-U.S.

earnings, a decrease due to the release of valuation allowance on Netherlands net operating losses in 2021, and a decrease due to the 2021 actual tax impact of acquired entity integration as compared to the estimate at acquisition based on the finalization of the integration plan.

The increase in the effective tax rate from 2019 to 2020 is primarily due to the 2019 benefit from a release of tax reserves.

Keysight benefits from tax incentives in several jurisdictions, most significantly in Singapore and Malaysia, that have granted us tax incentives that 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.

earnings and the 2021 nonrecurring tax benefits described above.

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.

These tax incentives provide lower rates of taxation on certain classes of income and require thresholds of investments and employment in those jurisdictions.

The Singapore tax incentive is due for renewal in 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.

The impact of the tax incentives decreased income taxes by $ 81 million, $ 70 million and $ 53 million in 2022, 2021 and 2020, respectively.

The benefit of the tax incentives on net income per share (diluted) was approximately $ 0.45 , $ 0.38 and $ 0.28 in 2022, 2021 and 2020, respectively.

The increase in the tax benefit from 2020 to 2021 is primarily due to change in the jurisdictional mix of non-U.S.

The increase in tax benefit from 2021 to 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.

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Current income tax liabilities (included within income and other taxes payable) ( 58 ) ( 44 )

Long-term income tax assets (included within other assets) 26 —

Long-term income tax liabilities (included within other long-term liabilities) ( 190 ) ( 219 )

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Accrued interest and penalties are included on the related tax liability line in the consolidated balance sheet.

At this time, management does not believe that the outcome of any future or currently ongoing examination will have a material impact on our consolidated financial statements.

We believe that we have an adequate provision for any adjustments that may result from tax examinations.

However, the outcome of tax examinations cannot be predicted with certainty.

If the resolution of any tax issues that arise in any future or currently ongoing examinations are inconsistent with management’s expectations, we may be required to adjust our tax provision for income taxes in the period in which such resolution occurs.

The aggregate changes in the balances of our unrecognized tax benefits including all federal, state and foreign tax jurisdictions are as follows:

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Gross Balance, beginning of year $ 249 $ 237 $ 226

Additions due to acquisition — — 9

Additions for tax positions related to the current year 32 19 13

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Reductions for tax positions from prior years ( 25 ) ( 2 ) ( 2 )

Settlements with taxing authorities ( 3 ) — —

Statute of limitations expirations ( 4 ) ( 4 ) ( 3 )

Impact from currency fluctuations ( 20 ) ( 1 ) 1

Gross Balance, end of year $ 234 $ 249 $ 237

(1) The prior year amounts presented in the table above have been reclassified to conform with the current year presentation.

As of October 31, 2022, the total amount of gross unrecognized tax benefits, excluding interest and penalties, was $ 234 million, of which, if recognized, $ 178 million would impact our effective tax rate.

However, approximately $2 million of the unrecognized tax benefits were related to acquisitions, which if recognized within certain agreed upon time periods, would result in the recognition of an offsetting indemnification asset.

As of October 31, 2020, the total amount of gross unrecognized tax benefits, excluding interest and penalties, was $ 237 million, of which, if recognized, $ 221 million would impact our effective tax rate.

As of October 31, 2019, the total amount of gross unrecognized tax benefits was $ 226 million, of which, if recognized, $ 216 million would impact our effective tax rate.

Cumulatively, interest and penalties accrued as of the end of October 31, 2022, 2021 and 2020 were $ 36 million, $ 37 million and $ 33 million, respectively.

We recognized tax expense of $ 3 million, $ 4 million, and $ 5 million for interest and penalties related to unrecognized tax benefits in 2022, 2021 and 2020, respectively.

We recorded an additional $ 4 million of interest and penalties related to unrecognized tax benefits in 2019 through purchase accounting related to acquisitions.

There was $ 4 million of decrease in interest and penalties related to unrecognized tax benefits in 2022 related to currency fluctuations.

The open tax years for the U.S.

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For certain foreign entities, the tax years remain open, at most, back to the year 2008.

Keysight’s fiscal year 2018 U.S.

federal income tax return is currently under examination by the Internal Revenue Service.

federal income tax return was under examination by the Internal Revenue Service.

The Tax Cuts and Jobs Act was enacted in December 2017 and imposed a one-time U.S.

tax on foreign earnings not previously repatriated to the U.S., known as the Transition Tax, which was reported in Keysight’s 2018 U.S.

tax on foreign earnings not previously repatriated to the U.S., known as the Transition Tax, which was reported in Keysight’s fiscal year 2018 U.S.

federal income tax return.

As of June 2022, the fiscal year 2018 U.S.

federal income tax 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.

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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.

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.

The company believes there are numerous defenses to the current assessment;

the statute of limitations for the 2008 tax year in Malaysia was closed, and the income in question is exempt from tax in Malaysia.

In the fourth quarter of 2017, Keysight paid income taxes and penalties of $ 68 million on gains related to intellectual property rights.

company believes there are numerous defenses to the current assessment;

the statute of limitations for the fiscal year 2008 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 2023.

At this time, management does not believe that the outcome of any future or currently ongoing examination will have a material impact on our consolidated financial statements.

We believe that we have an adequate provision for any adjustments that may result from tax examinations.

However, the outcome of 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 that were to occur, it could have an impact on our effective tax rate in the period in which such examinations are resolved.

NET INCOME PER SHARE

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Basic weighted-average shares 180 185 187

Potential common shares — stock options and other employee stock plans 2 2 3

Potential common shares — RSUs and other employee stock plans 2 2 2

Diluted weighted-average shares 182 187 189

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For the years ended 2022, 2021 and 2020, we excluded zero shares from the calculation of diluted earnings per share.

In addition, we also exclude from the calculation of diluted earnings per share, stock options, ESPP, LTP Program and restricted stock awards, whose combined exercise price and

unamortized fair value collectively were greater than the average market price of our common stock because their effect would also be anti-dilutive.

In addition, we also exclude from the calculation of diluted earnings per share, stock options, ESPP, LTP program awards and restricted stock awards, whose combined exercise price and unamortized fair value collectively were greater than the average market price of our common stock because their effect would also be anti-dilutive.

The number of shares excluded was immaterial in 2022, 2021 and 2020.

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Total $ 1,438 $ 1,249 $ 189 $ 1,418 $ 1,146 $ 272

In 2022, we recorded additions to goodwill and other intangible assets of $ 20 million and $ 23 million, respectively, due to acquisition activity.

In 2021, we recorded additions to goodwill and other intangible assets of $ 100 million and $ 83 million, respectively, due to the acquisition of Sanjole and two other acquisitions.

In 2020, we recorded additions to goodwill and other intangible assets of $ 314 million and $ 88 million, respectively, due to the acquisition of Eggplant and two other acquisitions.

For additional information on the acquisitions, see Note 2, "Acquisitions."

The impact of foreign exchange translation on other intangible assets in 2021 and 2020 was $ 3 million and $ 2 million, respectively.

For additional information on the acquisitions, see Note 2, "Acquisitions." During the year ended October 31, 2022, we transferred $ 7 million from in-process R&D to developed technology as projects were successfully completed.

For the year ended October 31, 2022, other intangible assets decreased $ 3 million due to impact of foreign currency translation.

Amortization of other intangible assets was $ 103 million in 2022, $ 174 million in 2021 and $ 220 million in 2020.

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We use our internal forecasts to estimate future cash flows and include an estimate of long-term future growth rates based on our most recent views of the long-term outlook for each business.

During the fourth quarter of 2021, we performed our annual impairment test of goodwill for all our reporting units using a qualitative approach, except for our Eggplant reporting unit, which is included in our EISG reportable segment, for which the test was performed using a quantitative approach.

During the fourth quarter of 2022, we performed our annual impairment test of goodwill for all our reporting units using a qualitative approach.

Based on the results of our qualitative testing, we believe that it is more-likely-than-not that the fair value of each reporting unit is greater than its respective carrying value.

As of October 31, 2022, we determined that no goodwill impairment exists and that the remaining goodwill is recoverable for all of our reporting units;

however, there can be no assurance that goodwill will not be impaired in future periods.

Estimating the fair value of reporting units requires the use of estimates and significant judgments that are based on a number of

factors including actual operating results.

It is possible that the judgments and estimates described above could change in future periods.

In 2021, we performed our annual impairment test of goodwill for all our reporting units using a qualitative approach, except for our previous Eggplant reporting unit, which is included in our EISG reportable segment, for which the test was performed using a quantitative approach.

The income and market approaches were used to determine the fair value of the Eggplant reporting unit.

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Based on the results of our annual impairment tests, the fair value of each of our reporting units exceeded the carrying value.

As of October 31, 2021, we determined that no goodwill impairment exists and that the remaining goodwill is recoverable for all of our reporting units;

however, there can be no assurance that goodwill will not be impaired in future periods.

Estimating the fair value of reporting units requires the use of estimates and significant judgments that are based on a number of factors including actual operating results.

It is possible that the judgments and estimates described above could change in future periods.

In 2020, we performed our annual impairment test of goodwill for all our reporting units using a qualitative approach.

Based on the results of our annual impairment tests, the fair value of each of our reporting units exceeded the carrying value.

In 2019, we performed our annual impairment test of goodwill for all our reporting units using a qualitative approach, except for our previous Ixia Solutions Group ("ISG") reporting unit, which was the only reporting unit in our previous ISG reportable segment, for which the test was performed using a quantitative approach.

The income and market approaches were used to determine the fair value of the ISG reporting unit.

With respect to the income approach, the discounted cash flow method was used, which included an eight-year future cash flow projection and an estimated terminal value.

The market approach used revenue and EBITDA multiples to develop an estimate of fair value.

A weighting of 60 percent and 40 percent was applied to the income and market approaches, respectively, to determine the fair value of the ISG reporting unit.

The income approach was given a larger weighting based on the underlying detailed financial projections prepared during the strategic planning cycle that reflect the financial and operational facts and circumstances specific to ISG as of the valuation date.

Based on the results of our annual impairment tests, the fair value of each of our reporting units exceeded the carrying value.

We review long-lived assets for impairment whenever events or changes in business circumstances indicate that the carrying amount of the assets may not be fully recoverable or that the useful lives of these assets are no longer appropriate.

We performed an impairment test of Eggplant and ISG's long-lived assets in 2021 and 2019, respectively, which preceded the quantitative test of goodwill in accordance with the guidance, and concluded that no impairment charge was required.

We performed an impairment test of Eggplant long-lived assets in 2021 that preceded the quantitative test of goodwill in accordance with the guidance, and concluded that no impairment charge was required.

FAIR VALUE MEASUREMENTS

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Equity investments 50 50 — — — 60 60 — — —

Equity investments - other 10 — — — 10 9 — — — 9

Investments - other 12 — — — 12 10 — — — 10

Total assets measured at fair value $ 1,554 $ 1,388 $ 154 $ — $ 12 $ 1,420 $ 1,356 $ 54 $ — $ 10

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Total liabilities measured at fair value $ 34 $ — $ 34 $ — $ — $ 28 $ — $ 28 $ — $ —

During the year ended October 31, 2022, we made investments of $ 33 million, including an equity investment of $ 30 million.

The changes in fair value of the equity investment are recorded within "other income (expense), net" in the consolidated statement of operations.

Our money market funds and equity investments with readily determinable fair values are measured at fair value using quoted market prices and, therefore, are classified within Level 1 of the fair value hierarchy.

Equity investments without readily determinable fair values that are measured at cost adjusted for observable changes in price or impairments are not categorized in the fair value hierarchy and are presented as "Equity investments - other" in the tables above.

Equity or fixed income investments without readily determinable fair values that are measured at cost adjusted for observable changes in price or impairments and convertible notes are not categorized in the fair value hierarchy and are presented as "Investments - other" in the tables above.

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.

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All of our investments are subject to periodic impairment review.

The impairment analysis requires significant judgment to identify events or circumstances that would likely have a significant adverse effect on the future value of the investment.

The impairment analysis requires judgment to identify events or circumstances that would likely have a significant adverse effect on the future value of the investment.

There was no impairment recognized in 2022, 2021 and 2020.

Realized gains and losses from the sale of investments are recorded in earnings.

Net recognized gains on equity investments were as follows:

Year Ended October 31,

2021 2020 2019

(in millions)

Net realized gains on investments sold $ — $ — $ 1

Net unrealized gains on investments still held $ 4 $ 11 $ 6

Net unrealized gain (loss) on investments still held was a loss of $ 36 million in 2022 as compared to gains of $ 4 million and $ 11 million in 2021 and 2020, respectively.

There were no realized gains or losses from the sale of investments in 2022, 2021 and 2020.

Financial Assets and Liabilities Measured at Fair Value on a Non-Recurring Basis

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Fair value assessments of the reporting unit and the reporting unit's net assets, which are performed for goodwill impairments tests, are considered Level 3 measurements due to the significance of unobservable inputs developed using company-specific information.

We considered a market approach as well as an income approach using the discounted cash flow model to determine the fair value of the reporting unit.

In the event of performing a quantitative impairment test, we consider a market approach as well as an income approach using the discounted cash flow model to determine the fair value of the reporting unit.

Intangible Assets

2 unchanged sentences

Accordingly, the fair value assessment of the long-lived assets is considered a Level 3 fair value measurement.

Long Lived Assets

For the year ended 2022, our held and used long-lived assets in Russia with a carrying amount of $ 3 million were written down to a fair value of zero, resulting from an impairment of assets that were expected to generate zero cash flows in the future, and was recorded within “other operating expense (income), net” in the consolidated statement of operations.

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 to hedge economic and/or accounting exposures resulting from changes in foreign currency exchange rates.

As part of our risk management strategy, we use derivative instruments, which are primarily forward contracts, to hedge economic and/or accounting exposures resulting from changes in foreign currency exchange rates.

Cash Flow Hedges

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The changes in the value of the derivative instrument included in the assessment of effectiveness are recognized in accumulated other comprehensive income and reclassified into earnings when the forecasted transaction occurs in the same financial statement line item in the consolidated statement of operations where the earnings effect of the hedged item is presented.

If it becomes probable that the forecasted transaction will not occur, the hedge relationship will be de-designated and amounts accumulated in other comprehensive income will be reclassified into earnings in the current period.

the current period.

Gains and losses on the derivative instrument representing hedge components excluded from the assessment of effectiveness are amortized to earnings on a straight-line basis over the tenor of the hedge and are presented in the same financial statement line of the consolidated statement of operations where the earnings effect of the hedged item is presented.

For hedges executed prior to February 1, 2020, these gains and losses were recognized immediately in earnings.

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.

In 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 2024.

The contract term allows us to lock-in a treasury rate on anticipated debt issuances.

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The aggregated notional amounts by currency and designation as of October 31, 2022 were as follows:

Derivatives in

Hedging Relationships Derivatives Not Designated as Hedging Instruments

Contracts Forward

Derivatives in Cash Flow Hedging Relationships Derivatives Not Designated as Hedging Instruments

Forward Contracts Forward Contracts

Currency Buy/(Sell) Buy/(Sell)

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Total $ 12 $ ( 56 )

Derivative instruments are subject to master netting arrangements and are disclosed gross in the consolidated balance sheet.

Derivative instruments are subject to master netting arrangements and are disclosed at their gross fair value in the consolidated balance sheet.

The gross fair values and balance sheet presentation of derivative instruments held as of October 31, 2022 and 2021 were as follows:

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Interest rate swap contracts:

Gain (loss) recognized in accumulated other comprehensive income (loss) $ 26 $ 23 $ —

Gain recognized in accumulated other comprehensive income (loss) $ 85 $ 26 $ 23

Foreign exchange contracts:

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Cost of products

— ( 3 ) ( 1 )

Selling, general and administrative

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Gain (loss) recognized in other income (expense), net

The estimated amount at October 31, 2021 expected to be reclassified from accumulated other comprehensive income (loss) to earnings within the next twelve months is a gain of $ 3 million.

We have operating leases for items including office space, order fulfillment, sales and service centers, R&D and certain equipment, primarily automobiles.

Our leases have remaining terms of up to 13 years, some of which may include options to extend the leases, primarily for 3 to 5 years.

We consider options to renew in our lease terms and measurement of ROU assets and lease liabilities if we determine they are reasonably certain to be exercised.

The weighted average lease term of our operating leases was 8.2 years and 7.3 years as of October 31, 2021 and 2020, respectively.

The weighted average discount rate of our operating leases was 3 percent as of both October 31, 2021 and 2020.

$ 22 $ ( 3 ) $ 4

The estimated amount at October 31, 2022 expected to be reclassified from accumulated other comprehensive income (loss) to earnings within the next twelve months is a loss of $ 7 million.

We have operating leases for items including office space, manufacturing and production locations, sales and service centers, research and development facilities and certain equipment, primarily automobiles.

Our leases have remaining terms of up to 15 years, which represent the non-cancellable periods of the leases and include extension options that we determined are reasonably certain to be exercised.

The weighted average lease term of our operating leases was 7.7 years, 8.2 years and 7.3 years as of October 31, 2022, 2021 and 2020, respectively.

The weighted average discount rate of our operating leases was 3 percent as of October 31, 2022, 2021 and 2020.

The following table summarizes the components of our lease cost:

Year ended October 31,

2022 2021 2020

(in millions)

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Short-term lease costs, sublease income and finance lease costs were immaterial for the year ended October 31, 2022, 2021 and 2020.

Right-of-use (“ROU”) asset impairments were $2 million in 2022 related to the discontinuance of our Russia operations.

Supplemental cash flow information related to our operating leases was as follows:

Year ended October 31,

2022 2021 2020

(in millions)

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ROU assets obtained in exchange for operating lease obligations $ 51 $ 78 $ 67

The decrease in ROU assets obtained in exchange for operating lease obligations was primarily driven by reassessment of a lease term in the prior year triggered by significant leasehold improvements.

The maturities of our operating leases as of October 31, 2022 with initial terms exceeding one year were as follows:

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Total discounted lease liability $ 225

As of October 31, 2021, we did not have material leases that had not yet commenced.

Rental income from leasing out excess facilities was $ 11 million for both the year ended October 31, 2021 and 2020 and is included in other operating expense (income), net.

As of October 31, 2022, we have additional operating leases, primarily for real estate, that have not yet commenced of $ 20 million.

These operating leases will commence in 2023 with lease terms of up to 15 years.

Rental income from the lease of excess facilities was $ 11 million for the year ended October 31, 2022, 2021 and 2020 and is included in other operating expense (income), net.

Other lessor arrangements were immaterial.

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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.

I n 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.

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We were in compliance with the covenants of the Revolving Credit Facility during the year ended October 31, 2022.

During the year ended October 31, 2020, we repaid $ 7 million of debt assumed with the acquisition of Eggplant.

Long-Term Debt

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The interest is payable semi-annually on April 30 and October 30 of each year.

We incurred issuance costs of $ 5 million in connection with the 2024 Senior Notes that are being amortized to interest expense over the term of the senior notes.

We incurred issuance costs of $ 5 million in connection with the 2024 Senior Notes that, along with the debt discount, are being amortized to interest expense over the term of the senior notes.

2027 Senior Notes

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Letter of Credit

As of both October 31, 2021 and 2020, we had $ 40 million of outstanding letters of credit and surety bonds unrelated to the credit facility that were issued by various lenders.

As of October 31, 2022 and October 31, 2021, we had $ 38 million and $ 40 million, respectively, of outstanding letters of credit and surety bonds unrelated to the credit facility that were issued by various lenders.

RETIREMENT PLANS AND POST-RETIREMENT BENEFIT PLANS

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Components of net periodic benefit cost.

We record the service cost component of net periodic benefit cost (benefit) in the same line item as other employee compensation costs.

We record 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, within "other income (expense), net" in the consolidated statement of operations.

The company uses alternate methods of amortization, as allowed by the authoritative guidance, which amortizes the actuarial gains and losses on a consistent basis for the years presented.

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Post-Retirement Benefit Plan, gains and losses are amortized using a separate layer for each year's gains and losses.

In March 2021, we substantially transferred all the assets and obligations of our Netherlands defined benefit 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 consolidated statement of operations during the year ended October 31, 2021.

We received a net refund of $3 million due to the partial settlement of the Netherlands defined benefit plan.

During the year ended October 31, 2020, the lump sum payments in our U.K.

defined benefit plan were more than the sum of the service cost and interest cost components of net

periodic benefit cost (“the threshold amount”), resulting in recognition of a settlement loss of $ 5 million.

We also recognized a curtailment gain of $ 1 million in our Netherlands defined benefit plan for the year 2020.

These are included in other income (expense) in the consolidated statement of operations.

During the years ended October 31, 2022 and 2020, the lump-sum payments in our U.K.

defined benefit plan were more than the sum of the service cost and interest cost components of net periodic benefit cost (“the threshold amount”), resulting in the recognition of settlement losses of $9 million and $ 5 million, respectively.

In March 2021, we transferred substantially all the assets and obligations of our Netherlands defined benefit plan to an insurance company.

This partial settlement resulted in a a net refund of $3 million and a loss of $16 million for the year 2021, which is included in "other income (expense), net" in the consolidated statement of operations.

We recognized a curtailment gain of $ 1 million in our Netherlands defined benefit plan for the year 2020, also included in "other income (expense), net" in the consolidated statement of operations.

For the years ended October 31, 2022, 2021 and 2020, components of net periodic benefit cost (benefit) and other amounts recognized in other comprehensive income were comprised of:

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Total recognized in the periodic benefit cost (benefit) and other comprehensive (income) loss $ ( 22 ) $ ( 106 ) $ 67 $ ( 74 ) $ ( 20 ) $ 29 $ 9 $ ( 45 ) $ 3

We record the service cost component of net periodic benefit cost (benefit) in the same line item as other employee compensation costs.

We record 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, within other income (expense) in the consolidated statement of operations.

Funded status.

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Amounts recognized in accumulated other comprehensive (income) loss:

Actuarial losses

$ 101 $ 225 $ 457 $ 487 $ ( 21 ) $ 28

Prior service credits

— — 1 1 ( 1 ) ( 2 )

Actuarial losses (gains) $ 81 $ 101 $ 380 $ 457 $ ( 4 ) $ ( 21 )

Prior service cost (credits) — — 1 1 ( 1 ) ( 1 )

Total $ 81 $ 101 $ 381 $ 458 $ ( 5 ) $ ( 22 )

The change in the benefit obligations for the U.S.

defined benefit plans was primarily driven by the changes in actuarial assumptions, including the lump sum conversion rate and demographic experience.

The changes in the non-U.S.

plans were primarily driven by an insurance buy-in contract we executed for a portion of benefit obligations under the U.K.

defined benefit plan and partial settlement of benefit obligations under the Netherlands DB plan.

defined benefit plans was driven by the changes in actuarial assumptions, primarily the discount rate and lump sum conversion rate.

The change in the benefit obligations for the U.S.

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In the U.S., our RP and U.S.

Post-Retirement Benefit Plan target asset allocations are approximately 70 percent to equities and approximately 30 percent to fixed income investments.

Post-Retirement Benefit Plan target asset allocations are approximately 70 percent to equities, including growth-seeking, and approximately 30 percent to fixed income investments.

Our DPSP target asset allocation is approximately 60 percent to equities and approximately 40 percent to fixed income investments.

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All plans' assets are broadly diversified.

Due to fluctuations in capital markets, our actual allocations of plan assets as of October 31, 2021, differ from the target allocation.

Due to fluctuations in capital markets, our actual allocations of plan assets as of October 31, 2022 may differ from the target allocation.

Our policy is to periodically bring the actual allocation in line with the target allocation.

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In March 2021, we entered into an insurance buy-in contract for a portion of benefit obligations under the U.K.

defined benefit plan and classified it as “Other Investment.” The insurance buy-in contract is similar to an annuity contract, which matches cash flows with future benefit payments for a specific group of pensioners with the obligation remaining with the plan.

defined benefit plan.

In December 2021, we completed the second phase of the same contract and classified it as “Other Investment.” The insurance buy-in contract is similar to an annuity contract, which matches cash flows with future benefit payments for a specific group of pensioners with the obligation remaining with the plan.

This contract is issued by a third-party insurance company with no affiliation to us.

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Commingled funds that have quoted prices in active markets are classified as Level 1 investments.

Equity also includes some growth-seeking real estate commingled funds that are measured at NAV.

Fixed Income - Some of the fixed income securities are held in commingled funds that have daily NAVs derived from the underlying securities;

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Commingled funds that have quoted prices in active markets are classified as Level 1 investments.

Other Investment - Other investment includes a U.K.

insurance buy-in contract executed during the year and classified as a Level 3 investment.

Other Investment - Other investment represents the U.K.

insurance buy-in contract and is classified as a Level 3 investment.

Insurance contracts are generally classified as Level 3 investments.

T he following tables present the fair value of U.S.

The following tables present the fair value of U.S.

Defined Benefit Plans assets classified under the appropriate level of the fair value hierarchy as of October 31, 2022 and 2021:

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Fixed income 718 — 235 — 483

Other investments 364 — — 364 —

Total assets measured at fair value $ 1,608 $ 189 $ 237 $ 364 $ 818

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Transfers in (out) 77 354

Currency impact $ ( 66 ) —

Balance, end of year $ 254 $ 364

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Total $ 813 $ 1,003 $ 1,451 $ 1,608

Cont ributions and estimated future benefit payments .

Contributions and estimated future benefit payments .

For 2023, we do not expect to contribute to our U.S.

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2028 - 2032 $ 298 $ 233 $ 72

Assu mptions .

Assumptions .

The assumptions used to determine the benefit obligations and net periodic benefit cost for our defined benefit and post-retirement benefit plans are presented in the tables below.

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Cash and cash equivalents $ 2,042 $ 2,052

Restricted cash included in other current assets — 9

Restricted cash included in other assets 15 16

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Property, plant and equipment, net $ 690 $ 650

The increase in property, plant and equipment, net, for the year ended October 31, 2021, is primarily driven by capital investments to increase the resiliency of our supply chains.

Asset impairments were zero in 2021, 2020 and 2019.

The increase in property, plant and equipment, net, for the year ended October 31, 2022, is primarily driven by increased capital spending for capacity expansion and technology investments.

Asset impairments were $ 1 million, zero and zero in 2022, 2021 and 2020, respectively.

Depreciation expense was $ 117 million in 2022, $ 117 million in 2021 and $ 104 million in 2020.

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Ending balance $ 32 $ 34

Other current assets

(in millions)

Prepaid expenses $ 280 $ 168

Other current asset 149 102

Total other current asset $ 429 $ 270

Prepaid expenses include deposits paid in advance to contract manufacturers of $ 199 million and $ 105 million as of October 31, 2022 and 2021, respectively.

COMMITMENTS AND CONTINGENCIES

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The reported open purchase orders represent a commitment to our suppliers.

Our agreements with suppliers for common materials provide us the option to cancel, reschedule, and adjust our requirements based on business needs.

Our agreements with suppliers for common materials provide us with the option to cancel, reschedule, and adjust our requirements based on business needs.

We expect to fulfill most of our purchase commitments for inventory within one year or based on mutually agreed terms.

As of October 31, 2022 and 2021, our non-cancellable purchase commitments were approximately $ 553 million and $ 444 million, respectively, of which the majority is for less than one year.

The increase in the non-cancellable purchase commitments for the year ended October 31, 2021 was driven by higher revenue and advance purchase orders to secure capacity for critical parts due to global supply disruptions.

The increase in non-cancellable purchase commitments for the year ended October 31, 2022, was driven by higher revenue and advance purchase orders to secure capacity for critical parts due to global supply chain constraints.

Other purchase commitments.

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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 the Consent Agreement, we will pay a penalty of $ 6.6 million, $ 2.5 million of which is suspended, over three years and will employ a special compliance officer for three years.

We are also involved in lawsuits, claims, investigations and proceedings, including but not limited to patent, commercial and environmental matters that arise in the ordinary course of business.

Although 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, the outcome of litigation is inherently uncertain and the outcome is difficult to predict.

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 was suspended and designated for remediation activities over three years, including employment of a special compliance officer.

To date, we have paid $2.1 million of the penalty.

The suspended portion of the penalty has been satisfied by amounts we have spent on qualifying compliance activities to date.

On January 1, 2022, Centripetal Networks filed a lawsuit in Federal District Court in Virginia, alleging that certain 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 which are alleged to infringe Centripetal patents.

We deny the allegations and intend to aggressively defend each case.

Although there are no matters pending that we currently believe are probable and reasonably possible of having a material impact to our business, consolidated financial position, or results of operations or cash flows, the outcome of litigation is inherently uncertain and is difficult to predict.

An adverse outcome in any outstanding lawsuit or proceeding could result in significant monetary damages or injunctive relief.

If adverse results are above management’s expectations or are unforeseen, management may not have accrued for the liability, which could impact our results in a financial period.

We are also involved in lawsuits, claims, investigations and other proceedings, including, but not limited to, patent, commercial and environmental matters, which arise in the ordinary course of business.

Indemnification Obligations Related to Transactions

In connection with acquisitions, divestitures, mergers, spin-offs and other transactions, we have agreed to indemnify certain parties for damages, losses, expenses and liabilities arising in the future but that were incurred prior to or are related to such transactions.

In connection with acquisitions, divestitures, mergers, spin-offs and other transactions, we have agreed to indemnify certain parties for future damages, losses, expenses and liabilities that were incurred prior to or are related to such transactions.

The liabilities covered by these indemnifications, include but are not limited to tax, employment, benefits, intellectual property, environmental, and other liabilities.

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In addition, we have entered into separate indemnification agreements with each director and each board-appointed officer of Keysight that provide for indemnification under similar and additional circumstances.

The indemnification obligations are more fully described in the by-laws and the indemnification agreements, which are available on our website.

The indemnification obligations are more fully described in our corporate by-laws and the indemnification agreements, which are available on our website.

We purchase standard insurance to cover claims or a portion of the claims made against our directors and officers.

Since a maximum obligation is not explicitly stated in our by-laws or in our indemnification agreements and will depend on the facts and circumstances that arise out of any future claims, the overall maximum amount of the obligations cannot be reasonably estimated.

Historically, we have not made payments related to these obligations, and do not believe that our indemnification obligations related to such claims were material as of October 31, 2021.

Since a maximum obligation is not explicitly stated in our by-laws or in our

indemnification agreements and will depend on the facts and circumstances that arise out of any future claims, the overall maximum amount of the obligations cannot be reasonably estimated.

We have not historically made payments related to these obligations, and do not believe that our indemnification obligations related to such claims were material as of October 31, 2022.

Other Indemnifications

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and other jurisdictions, many of our standard contracts provide remedies to our customers and others with whom we enter into contracts, such as defense, settlement, or payment of judgment for intellectual property claims related to the use of our products.

From time to time, we indemnify customers, as well as our suppliers, contractors, lessors, lessees, companies that purchase our businesses or assets and others with whom we enter into contracts, against combinations of loss, expense, or liability arising from various triggering events

related to the sale and the use of our products and services, the use of their goods and services, the use of facilities and state of our owned facilities, the state of the assets and businesses that we sell and other matters covered by such contracts, usually up to a specified maximum amount.

From time to time we indemnify customers, as well as our suppliers, contractors, lessors, lessees, companies that purchase our businesses or assets and others with whom we enter into contracts, against combinations of loss, expense, or liability arising from various triggering events related to the sale and the use of our products and services, the use of their goods and services, the use of facilities and state of our owned facilities, the state of the assets and businesses that we sell and other matters covered by such contracts, usually up to a specified maximum amount.

In addition, from time to time we also provide protection to these parties against claims related to undiscovered liabilities, additional product liability or environmental obligations.

In our experience, claims made under such indemnifications are rare and do not believe that our indemnification obligations related to such claims were material as of October 31, 2021.

In our experience, claims made under such indemnifications are rare and we do not believe that our indemnification obligations related to such claims were material as of October 31, 2022.

STOCKHOLDERS' EQUITY

Stock Repurchase Program

On November 18, 2020, our board of directors approved a stock repurchase program authorizing the purchase of up to $ 750 million of the company’s common stock.

On November 18, 2021, our board of directors approved a new stock repurchase program authorizing the purchase of up to $ 1,200 million of the company’s common stock, replacing the previously approved November 2020 program, under which $ 77 million remained.

On November 18, 2021, our board of directors approved a stock repurchase program authorizing the purchase of up to $ 1,200 million of the company’s common stock, replacing the previously approved November 2020 program, under which $77 million remained.

Under our 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.

All such shares and related costs are held as treasury stock and accounted for at the 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.

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In 2020 we repurchased 4,274,366 shares of common stock for $ 410 million.

All such shares and related costs are held as treasury stock and accounted for at trade date using the cost method.

All such shares and related costs are held as treasury stock and accounted for at the trade date using the cost method.

Accumulated other comprehensive loss

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An amount in parentheses indicates a reduction to income and an increase to the accumulated other comprehensive loss.

Reclassifications of prior service credits and net actuarial losses in respect of retirement plans and post retirement pension plans are included in the computation of net periodic cost.

See Note 12, "Retirement Plans and Post Retirement Pension Plans."

Reclassifications of prior service credits and net actuarial losses in respect of retirement plans and post-retirement benefit plans are included in the computation of net periodic cost.

See Note 12, "Retirement Plans and Post-Retirement Benefit Plans."

SEGMENT INFORMATION

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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-value applications in the automotive and energy industries and measurement solutions for consumer electronics, education, general electronics design and manufacturing, and semiconductor design and manufacturing.

The group provides electronic measurement instruments, design and test software and systems and related services used in the simulation, design, validation, manufacturing, installation and optimization of electronic equipment, and automated test software that uses artificial intelligence and machine learning to automate test creation and test execution.

The group provides electronic measurement instruments, design and test software and systems, and related services used in the simulation, design, validation, manufacturing, installation and optimization of electronic equipment, as well as automated test software that uses artificial intelligence and machine learning to automate test creation and test execution.

A significant portion of the segments' expenses arise from allocated corporate charges, as well as expenses related to our centralized sales force, and service, marketing and technology functions that we have historically provided to the segments in order to realize economies of scale and to efficiently use resources.

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Segment allocations are 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.

Newly acquired businesses are not allocated these charges until integrated into our shared services and infrastructure.

Newly acquired businesses are not allocated these charges until integrated into our shared services and corporate infrastructure.

The following tables reflect the results of our reportable segments under our management reporting system.

These results are not necessarily in conformity with GAAP.

These results are not necessarily in conformity with U.S.

The performance of each segment is measured based on several metrics, including income from operations.

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Year ended October 31, 2020:

Total revenue $ 3,168 $ 1,135 $ 4,303

Amortization of acquisition-related balances 9 — 9

Total segment revenue $ 3,177 $ 1,135 $ 4,312

Total and segment revenue $ 3,132 $ 1,089 $ 4,221

Segment income from operations $ 773 $ 296 $ 1,069

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Total assets $ 8,098 $ 7,781

The following tables present summarized information for revenue and long-lived assets by geographic region.

The following tables present summarized information for revenue and long-lived assets by country.

Revenues from external customers are generally attributed to countries based upon the customer's location.

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Year ended October 31, 2020 $ 1,523 $ 863 $ 1,835 $ 4,221

States Japan U.K.

States Japan United Kingdom Rest of the

(in millions)

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data