What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2024-12-17 compared with 2023-12-15 · 434 added, 322 removed, 1323 unchanged (36% of the section changed)

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We believe that our audits provide a reasonable basis for our opinions.

As described in Management’s Report on Internal Control over Financial Reporting, management has excluded ESI Group SA.

("ESI Group"), Riscure Holding B.V ("Riscure") and AnaPico AG ("AnaPico") from its assessment of internal control over financial reporting as of October 31, 2024, because they were acquired by the Company in purchase business combinations during 2024.

We have also excluded ESI Group, Riscure and AnaPico from our audit of internal control over financial reporting.

ESI Group is a wholly-owned subsidiary whose total assets and total revenues excluded from management’s assessment and our audit of internal control over financial reporting represent approximately 1% and 3%, respectively, while Riscure and AnaPico, wholly-owned subsidiaries, each constituted less than 1% of total assets and total revenues of the related consolidated financial statement amounts as of and for the year ended October 31, 2024.

Definition and Limitations of Internal Control over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;

A company’s internal control over financial reporting includes those policies and procedures that

(i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;

(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;

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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.

Defined Benefit Plan Obligations

As described in Notes 1 and 12 to the consolidated financial statements, the Company has defined benefit plan obligations of $634 million for its U.S.

plans as of October 31, 2023.

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.

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.

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 rate used in determining the present value of the defined benefit plan obligations;

Acquisition of ESI Group SA - Valuation of Developed Technology and Customer Relationships

As described in Note 2 to the consolidated financial statements, on November 3, 2023, the Company acquired 50.6% of the share capital of ESI Group for $477 million, net of cash acquired, using existing cash.

During January 2024, the Company completed the acquisition of the remaining share capital of ESI Group for $458 million, using existing cash.

Of the acquired other intangible assets, $270 million of developed technology and $160 million of customer relationships were recorded.

The intangible assets were valued by management using different income approach methods, which included the multi-period excess earnings and with and without valuation methods for developed technology and customer relationships, respectively.

The significant assumptions used to estimate the fair value of the acquired intangible assets included revenue growth rates, earnings before interest and taxes, customer attrition rate, discount rate, obsolescence rate and total operating expenses.

The principal considerations for our determination that performing procedures relating to the valuation of developed technology and customer relationships acquired in the acquisition of ESI Group is a critical audit matter are (i) the significant judgment by management when developing the fair value estimate of the developed technology and customer relationships acquired;

(ii) a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating management’s significant assumption related to earnings before interest and taxes;

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

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements.

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 the U.S.

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.

These procedures included testing the effectiveness of controls relating to the acquisition accounting, including controls over management’s valuation of the developed technology and customer relationships acquired.

These procedures also included, among others (i) reading the purchase agreement;

(ii) testing management’s process for developing the fair value estimate of the developed technology and customer relationships acquired;

(iii) evaluating the appropriateness of the multi-period excess earnings and with and without valuation methods used by management;

(iv) testing the completeness and accuracy of the underlying data used in the multi-period excess earnings and with and without valuation methods;

and (v) evaluating the reasonableness of the significant assumption used by management related to earnings before interest and taxes.

Evaluating management's assumption related to earnings before interest and taxes involved considering (i) the current and past performance of ESI Group;

(ii) the consistency with external market and industry data;

and (iii) whether the assumption was consistent with evidence obtained in other areas of the audit.

Professionals with specialized skill and knowledge were used to assist in evaluating the appropriateness of the multi-period excess earnings and with and without valuation methods.

/s/ PricewaterhouseCoopers LLP

San Francisco, California

San Jose, California

December 17, 2024

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Income before taxes 865 1,357 1,285

Provision for income taxes 300 161 116

Provision for income tax 251 300 161

Net income $ 614 $ 1,057 $ 1,124

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Gains (losses) on derivative instruments, net of tax benefit (expense) of $( 2 ), $ 4 and $( 19 )

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

Amounts reclassified into earnings related to derivative instruments, net of tax benefit (expense) of $ 4 , $ 1 and zero

( 7 ) ( 6 ) ( 3 )

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Net defined benefit pension cost and post-retirement plan costs:

Change in net actuarial gain (loss), net of tax benefit (expense) of $ 10 , zero and $( 55 )

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

Change in net actuarial loss, net of tax benefit (expense) of $( 14 ), $ 10 and zero

Change in net prior service cost, net of tax benefit of zero , zero and zero

Other comprehensive income (loss) 102 ( 12 ) ( 12 )

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1 billion shares authorized;

issued and outstanding shares:

200 million and 199 million, respectively

201 million and 200 million shares issued, respectively

Treasury stock, at cost;

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Excess and obsolete inventory-related charges 35 27 27

Loss on settlement of pension plan — — 16

Unrealized loss (gain) on investments in equity securities ( 5 ) 31 —

Other non-cash expenses (income), net ( 1 ) ( 1 ) 42

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Income taxes payable 30 ( 40 ) ( 14 )

Retirement and post-retirement benefits ( 8 ) ( 19 ) 7

Interest rate swap agreement termination proceeds — 107 —

Prepaid assets 14 7 ( 124 )

Tax receivables ( 202 ) ( 4 ) ( 30 )

Other assets and liabilities ( 113 ) 89 ( 25 )

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Investments in property, plant and equipment ( 154 ) ( 197 ) ( 185 )

Proceeds from government incentives 7 1 —

Acquisitions of businesses and intangible assets, net of cash acquired ( 681 ) ( 85 ) ( 33 )

Purchase of investments ( 11 ) ( 7 ) ( 33 )

Other investing activities 20 — —

Net cash used in investing activities ( 819 ) ( 288 ) ( 251 )

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( 31 ) ( 49 ) ( 74 )

Treasury stock repurchases ( 702 ) ( 849 ) ( 673 )

Acquisition of non-controlling interests

Treasury stock repurchases, including excise tax payments ( 443 ) ( 702 ) ( 849 )

Proceeds from issuance of long-term debt 599 — —

Repayment of debt ( 624 ) — —

Debt issuance costs ( 12 ) — —

Other financing activities ( 10 ) ( 3 ) ( 1 )

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Common Stock Treasury Stock

Number of Shares Par Value Additional Paid-in Capital Number of Shares Treasury Stock at Cost Retained Earnings Accumulated Other Comprehensive Loss Total Stockholders' Equity

Number of Shares Par Value Additional Paid-in Capital Number of Shares Treasury Stock at Cost Retained Earnings Accumulated Other Comprehensive Loss Non-controlling Interests Total Stockholders' Equity

Balance as of October 31, 2021 197,248 $ 2 $ 2,219 ( 15,094 ) $ ( 1,425 ) $ 3,430 $ ( 442 ) $ — $ 3,784

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Share-based compensation — — 136 — — — — — 136

Repurchase of common stock — — — ( 5,442 ) ( 849 ) — — ( 849 )

Repurchase of common stock, including excise tax — — — ( 4,913 ) ( 706 ) — — — ( 706 )

Balance as of October 31, 2023 199,771 2 2,487 ( 25,449 ) ( 2,980 ) 5,611 ( 466 ) — 4,654

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Other comprehensive income (loss), net of tax — — — — — — 102 — 102

ESI Group acquisition — — — — — — — 458 458

Issuance of common stock 1,237 — 66 — — — — — 66

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Share-based compensation — — 138 — — — — — 138

Repurchase of common stock — — — ( 4,913 ) ( 706 ) — — ( 706 )

Repurchase of common stock, including excise tax — — — ( 2,975 ) ( 442 ) — — — ( 442 )

Acquisition of non-controlling interests — — 4 — — — — ( 462 ) ( 458 )

Balance as of October 31, 2024 201,008 $ 2 $ 2,664 ( 28,424 ) $ ( 3,422 ) $ 6,225 $ ( 364 ) $ — $ 5,105

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Our mission, “ accelerating innovation to connect and secure the world,” speaks to the value we provide our customers in a world of ever-increasing technological complexity.

We deliver this value through a broad range of design and test solutions that address the critical challenges our customers face in bringing their innovations to market faster.

We deliver this value through a broad range of design and test solutions that address the critical challenges our customers face in bringing their innovations to market on ever-shorter schedules.

Basis of Presentation.

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Management is responsible for the fair presentation of the accompanying consolidated financial statements, prepared in accordance with GAAP, and has full responsibility for their integrity and accuracy.

In the opinion of management, the accompanying consolidated financial statements contain all normal and recurring adjustments necessary to present fairly our consolidated balance sheet and our consolidated statement of operations, statement of comprehensive income, statement of cash flows and statement of equity.

In the opinion of management, the accompanying consolidated financial statements contain all normal and recurring adjustments necessary to present fairly our consolidated balance sheet, consolidated statement of operations, consolidated statement of comprehensive income, consolidated statement of cash flows and consolidated statement of equity.

Principles of consolidation.

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All significant inter-company transactions have been eliminated.

The consolidated financial statements also reflect the impact of non-controlling interests.

Non-controlling interests do not have a significant impact on the consolidated results of operations;

therefore, net income attributable to non-controlling interests for the year ended October 31, 2024 of $ 4 million is not presented separately and is included in “other income (expense), net” in the consolidated statements of operations.

Use of Estimates.

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Our critical accounting policies are those that affect our financial statements materially and involve difficult, subjective or complex judgments by management.

Those policies are revenue recognition, inventory valuation, share-based compensation, retirement and post-retirement plan assumptions, valuation of goodwill and other intangible assets, warranty, loss contingencies, restructuring and accounting for income taxes.

Reclassifications.

Beginning in fiscal year 2023, to align the presentation of revenue with the manner in which management reviews such information, the presentation of "products" and "services and other" revenue and "costs and expenses" in the consolidated statement of operations were reclassified to move revenue and costs and expenses primarily related to bundled licenses and technical support services from "products" to "services and other." This resulted in reclassification of $ 88 million and $ 57 million, respectively, from "products" revenue to "services and other" revenue for the fiscal year ended October 31, 2022 and 2021, and $ 10 million and $ 11 million, respectively, from "cost of products" to "cost of services and other" for the fiscal year ended October 31, 2022 and 2021 to conform to the current presentation.

This change had no impact on reported total revenue, income from operations and net income in our consolidated statement of operations.

Those policies are revenue recognition, inventory valuation, share-based compensation, retirement and post-retirement plan assumptions, business combinations, valuation of goodwill and other intangible assets, warranty, loss contingencies, restructuring and accounting for income taxes.

Revenue recognition.

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These are considered stand-ready performance obligations where customers benefit from the services evenly throughout the license or service period.

These performance obligations provide the customer access evenly over the contract period.

Our professional services may be sold on a time and material basis (e.g., consulting) or on a fixed-fee basis (e.g., non-recurring engineering).

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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.

Many of our contracts include multiple performance obligations with a combination of distinct products and services, maintenance and support, professional services and/or training.

For contracts with multiple performance obligations, we allocate the total transaction value to each distinct performance obligation based on relative 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.

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Returns, credits, and discounts are estimated at contract inception and updated at the end of each reporting period as additional information becomes available to the extent that it is probable a significant reversal of the cumulative amount of revenue recognized will not occur once the variability is subsequently resolved.

See Note 3, “Revenue,” for additional information.

Shipping and handling costs.

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Accounts receivable, net.

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

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.

Trade accounts receivable is recorded at the invoiced amount and does not bear interest.

Such accounts receivable has 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 credit losses was approximately $ 9 million and $ 5 million, respectively, as of October 31, 2024 and 2023.

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

Share-based compensation.

We account for share-based awards made to our employees and directors, including restricted stock units ("RSUs"), employee stock purchases made under Keysight's employee stock purchase plan under Section 423(b) of the Internal Revenue Code ("ESPP"), employee stock option awards, and performance share awards under Keysight Technologies, Inc.

Long-Term Performance ("the LTP") Program, using the estimated grant date fair value method of accounting.

We account for share-based awards made to our employees and directors, including restricted stock units (“RSUs”), employee stock purchases made under our employee stock purchase plan (“ESPP”), employee stock option awards, and performance share awards under our Long-Term Performance (“the LTP”) Program, using the estimated grant date fair value on a straight-line basis over the requisite service period of the award.

Forfeitures are recognized as they occur and are reductions from share-based compensation expense.

We recorded compensation expense for all share-based awards of $ 136 million in 2023, $ 126 million in 2022 and $ 104 million in 2021.

Inventory is valued at standard cost, which approximates actual cost computed on a first-in, first-out basis, not in excess of market value.

We assess the valuation of our inventory on a periodic basis and make adjustments to the value for estimated excess and obsolete inventory based on estimates about future demand and actual usage.

The excess balance determined by this analysis becomes the basis for our excess inventory charge.

Our excess inventory review process includes analysis of sales unit forecasts, managing product rollovers and working with manufacturing to maximize recovery of excess inventory.

See Note 4, “Share-Based Compensation,” for additional information.

Inventory is valued at standard cost, which approximates actual cost computed on a first-in, first-out basis, not exceeding net realizable value.

We assess the valuation of our inventory periodically and adjust the value for estimated excess and obsolete inventory based on future demand and actual usage.

See Note 13, “Supplemental Financial Information,” for additional information.

Keysight warranties on products sold through direct sales channels are primarily for one year.

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Estimated warranty charges are recorded within “cost of products” at the time related product revenue is recognized.

See Note 13, "Supplemental Financial Information."

See Note 13, “Supplemental Financial Information,” for additional information.

We also sell extended warranties that provide warranty coverage beyond the standard warranty term.

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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.

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.

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.

See Note 5, “Income Taxes,” for additional information.

Business Combinations.

We include the results of operations of the businesses that we acquire as of the acquisition date.

We allocate the purchase price of the acquisitions to the assets acquired and liabilities assumed based on their estimated fair values, except for revenue contracts acquired, which are recognized in accordance with our revenue recognition policy.

The excess of the purchase price over the estimated fair values of identifiable assets and liabilities is recorded as “goodwill.” Acquisition-related expenses are recognized separately from the business combination and are expensed as incurred.

See Note 2, “Acquisitions,” for additional information.

Goodwill and other intangible assets.

Goodwill is assessed for impairment on a reporting unit basis at least annually in the fourth quarter, as of September 30, or more frequently when events and circumstances occur indicating that the recorded goodwill may be impaired.

Goodwill is assessed for impairment on a reporting unit basis at least annually in the fourth quarter, as of September 30, after the annual update to our long-term financial forecasts, or more frequently when events and circumstances occur indicating that the recorded goodwill may be impaired.

The impairment test compares the fair value of a reporting unit with its carrying amount, with an impairment charge recorded for the amount by which the carrying amount exceeds the reporting unit’s fair value up to a maximum amount of the goodwill balance for the reporting unit.

We determine fair values for each of the reporting units using the market approach, when available and appropriate, or the income approach, or a combination of both.

If multiple valuation methodologies are used, the results are weighted appropriately.

Valuations using the market approach are derived from metrics of publicly traded comparable companies.

The selections of comparable businesses are based on the markets in which our reporting units operate, giving consideration to risk profiles, size, geography and diversity of products and services.

Under the income approach, fair value is determined based on the present value of estimated future cash flows, discounted at an appropriate risk-adjusted rate.

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.

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 2023, 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, 2023, 2022 and 2021.

See Note 2, “Acquisitions,” and Note 7, “Goodwill and Other Intangible Assets,” for additional information about our goodwill and other intangible assets.

Other intangible assets consist primarily of developed technologies, proprietary know-how, trademarks, customer relationships, non-compete agreements, and acquired backlog and are amortized using the straight-line method over estimated useful lives ranging from 6 months to 12 years.

Other intangible assets with finite lives consist primarily of developed technologies, trademarks, customer relationships, non-compete agreements, and acquired backlog and are amortized using the straight-line method over estimated useful lives ranging from 1 to 12 years.

We review other intangible 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.

No impairments of purchased intangible assets were recorded during the years ended October 31, 2023, 2022 and 2021.

Other intangible assets with indefinite-lives are generally in-process research and development (“IPR&D”) intangible assets.

The authoritative accounting guidance allows a qualitative approach for testing indefinite-lived intangible assets for impairment, similar to the impairment testing guidance for goodwill.

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An organization may choose to bypass the qualitative assessment for any indefinite-lived intangible asset in any period and proceed directly to calculating its fair value.

Our indefinite-lived intangible assets are generally in-process research and development ("IPR&D") intangible assets.

No material impairments of indefinite-lived intangible assets were recorded in 2021.

We had no IPR&D intangible assets as of October 31, 2023 and 2022.

See Note 2, “Acquisitions,” and Note 7, “Goodwill and Other Intangible Assets,” for additional information about our goodwill and other intangible assets.

Impairment of long-lived assets.

We continually monitor events and changes in circumstances that could indicate carrying amounts of long-lived assets may not be recoverable.

When such events or changes in circumstances occur, we assess the recoverability of long-lived assets by determining whether the carrying value of such assets will be recovered through undiscounted expected future cash flows.

If the total of the undiscounted future cash flows is less than the carrying amount of those assets, we recognize an impairment loss based on the excess of the carrying amount over the fair value of the assets.

Advertising costs are expensed as incurred and were $ 18 million in 2024, $ 24 million in 2023 and $ 27 million in 2022.

Research and development.

Costs related to the research, design and development of our products are charged to research and development expense as they are incurred.

Costs related to the research, design and development of our products are charged to research and development (“R&D”) expense as they are incurred.

Government assistance.

Keysight receives various forms of government assistance, primarily through grants related to the development of new products.

We record proceeds from government grants when there is reasonable assurance that we will comply with the relevant conditions of the grant agreement and we are confident the grant funds will be received.

Keysight receives various forms of government assistance, primarily through grants related to the development of new products and tax credits related to capital expenditures.

We record proceeds from government grants when there is reasonable assurance that we will comply with the relevant conditions of the grant agreement and the grant funds will be received.

Grants in recognition of specific expenses are recognized in the same period as an offset to those related expenses.

Grants received from new or existing arrangements during fiscal year 2023 were $ 4 million and recorded as an offset to expenses in “research and development” in the consolidated statement of operations.

Grant proceeds receivable as of October

31, 2023 were $ 5 million and recorded in “accounts receivable, net” in the consolidated balance sheet.

Grant proceeds received prior to Keysight meeting the conditions of the grant are recorded in "other accrued liabilities" in the consolidated balance sheet, and grant income is recorded in “other income (expense), net” in the consolidated statement of operations.

These amounts were not material for fiscal year 2023.

Grants in form of tax credits related to capital expenditures are recognized as a reduction to property, plant and equipment with a corresponding reduction to depreciation expense over the expected useful life of the related asset.

Grants received from new or existing arrangements in 2024 and 2023 were $ 8 million and $ 4 million, respectively, and are recorded as an offset to “research and development” in the consolidated statement of operations.

Grant proceeds receivable as of October 31, 2024 and 2023 were $ 6 million and $ 5 million, respectively, and are recorded in “other current assets” in the consolidated balance sheet.

Grant proceeds received prior to Keysight meeting the conditions of the grant are recorded in “other accrued liabilities” and “other long-term liabilities” in the consolidated balance sheet and were $ 4 million as of October 31, 2024 and not material as of October 31, 2023.

Grant income recorded in “other income (expense), net” in the consolidated statement of operations was not material for fiscal year 2024 and 2023.

Tax credits related to capital expenditures reduced property, plant and equipment by $ 7 million and $ 1 million in 2024 and 2023, respectively.

Investments with readily determinable fair values and trading securities are reported at fair value.

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The company assesses investments for impairment whenever events or changes in circumstances indicate that the carrying value of an investment may not be recoverable.

There was no impairment recognized in 2023, 2022 and 2021.

Fair value of financial instruments.

The carrying values of certain of our financial instruments, including cash and cash equivalents, accounts receivable, accounts payable and other accrued liabilities, approximate fair value because of their short maturities.

The fair value of long-term equity investments is determined using quoted market prices for those securities when available.

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

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

These inputs, for example, interest rate yield curves, foreign exchange rates, and forward and spot prices for currencies, are observable in the market or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

See Note 8, “Fair Value Measurements,” for additional information.

Net income per share.

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Diluted net income per share gives effect to all potentially dilutive common stock equivalents outstanding during the period.

The dilutive effect of share-based awards is reflected in diluted net income per share by application of the treasury stock method, which includes consideration of unamortized share-based compensation expense, and the dilutive effect of in-the-money options and non-vested RSUs.

Under the treasury stock method, the amount the employee must pay for exercising stock options and unamortized share-based compensation expense are assumed proceeds to be used to repurchase hypothetical shares.

Potentially dilutive shares whose effect would have been antidilutive are excluded from the computation of diluted net income per share.

See Note 6, “Net Income Per Share,” for additional information.

Cash, cash equivalents and short-term investments.

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Cash equivalents are stated at cost, which approximates fair value.

As of October 31, 2023, approximately $ 2.1 billion of our cash, cash equivalents and restricted cash was held outside of the U.S.

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 three months or less.

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We classify investments as short-term investments if their original maturities are greater than three months and their remaining maturities are one year or less.

Fair value of financial instruments.

The fair value of long-term equity investments is determined using quoted market prices for those securities when available.

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

The fair value of our debt, calculated from quoted prices that are Level 1 inputs under the accounting guidance fair value hierarchy, is approximately $ 1,679 million as of October 31, 2023 and 2022.

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

See also Note 8, "Fair Value Measurements," for additional information on the fair value of financial instruments.

Concentration of credit risk.

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, short-term investments and long-term investments.

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

Financial instruments that potentially subject us to concentration of credit risk principally includes cash and cash equivalents, short-term and long-term investments, derivative financial instruments and accounts receivables.

Cash and cash equivalents primarily consists of money market fund investments, time deposits and demand deposit balances.

We invest in a variety of financial instruments and limit the amount of credit exposure with any one financial institution.

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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).

For cash flow hedges, contracts are designed at inception as hedges of the related foreign currency exposures.

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

For cash flow hedges, contracts are designated at inception as hedges of the related foreign currency exposures.

We formally document all relationships between hedging instruments and hedged items, as well as our risk-management objective and strategy for undertaking various hedge transactions at the inception of the hedge.

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All derivatives are recognized on the balance sheet at their fair values.

For derivative instruments that are designated and qualify as cash flow hedges, changes in the value of the effective portion of the derivative instruments are recognized in accumulated comprehensive income, a component of stockholders' equity.

For derivative instruments that are designated and qualify as cash flow hedges, changes in the value of the effective portion of the derivative instruments are recognized in accumulated other comprehensive income (loss), a component of stockholders' equity.

Amounts associated with cash flow hedges are reclassified and recognized in income when either the forecast transaction occurs or it becomes probable the forecast transaction will not occur.

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 with the respective counterparties to allow for net settlement under certain conditions.

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.

See Note 9, “Derivatives,” for additional information.

Property, plant and equipment.

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

See Note 13, “Supplemental Financial Information,” for additional information.

We determine whether an arrangement is a lease at inception.

Operating leases are included in “operating lease right-of-use (“ROU”) assets” and “operating lease liabilities” (current and non-current) on our consolidated balance sheet.

Finance leases are included in property, plant and equipment, other accrued liabilities, and other long-term liabilities in our consolidated balance sheet.

Our finance lease and lessor arrangements are immaterial.

Finance leases are included in “property, plant and equipment, net,” “other accrued liabilities,” and “other long-term liabilities” in our consolidated balance sheet.

Our finance lease and lessor arrangements were immaterial in 2024, 2023 and 2022.

ROU assets and lease obligations are recognized based on their present value of the future minimum lease payments over the lease term at commencement date.

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See Note 10, “Leases,” for additional information.

Impairment of long-lived assets.

We continually monitor events and changes in circumstances that could indicate carrying amounts of long-lived assets may not be recoverable.

Restructuring costs.

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We translate and remeasure balance sheet and statement of operations items into U.S.

For those subsidiaries that operate in a local currency functional environment, all assets and liabilities are translated into

For those subsidiaries that operate in a local currency functional environment, all assets and liabilities are translated into U.S.

dollars using current exchange rates at the balance sheet date;

revenue and expenses are translated using monthly exchange rates that approximate average exchange rates in effect during each period.

Resulting translation adjustments are reported as a separate component of accumulated other comprehensive income (loss) in stockholders' equity.

revenue and expenses are translated using monthly exchange rates that approximate average exchange rates.

Resulting translation adjustments are reported as a separate component of accumulated other comprehensive income (loss) in stockholders' equity in our consolidated balance sheet.

For those subsidiaries that operate in a U.S.

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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.

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

Net gains or losses resulting from foreign currency asset and liability remeasurement transactions are reported in other income (expense) and were a $ 49 million loss in 2023, a $ 1 million loss in 2022 and a $ 3 million gain in 2021.

Net foreign currency losses of $49 million in 2023 include unrealized losses of $45 million on outstanding forward exchange contracts associated with the acquisition of ESI Group S.A.

See Note 9, "Derivatives."

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

Gains or losses from foreign currency re-measurement are included in “net income.” Net gains or losses resulting from foreign currency asset and liability remeasurement transactions are reported in other income (expense), net and were a $ 19 million gain in 2024, a $ 49 million loss in 2023 and a $ 1 million loss in 2022.

See Note 9, “Derivatives” for additional information.

Retirement plans and post-retirement benefit plan assumptions.

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We evaluate these assumptions at least annually.

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

See Note 12, “Retirement Plans and Post-Retirement Benefit Plans,” for additional information.

New Accounting Pronouncements

ASU 2021-10, Government Assistance (Topic 832):

Disclosure by Business Entities about Government Assistance .

In November 2021, the Financial Accounting Standards Board issued guidance that requires annual disclosures of transactions with a government that are accounted for by applying a grant or contributions accounting model by analogy.

The standard is effective for fiscal years beginning after December 15, 2021.

We adopted this guidance effective November 1, 2022.

Accounting Standards Update (“ASU”) 2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures.

In November 2023, the Financial Accounting Standards Board (“FASB”) issued guidance which will require us to disclose significant segment expenses and other segment items used by the Chief Operating Decision Maker ("CODM") on an annual and interim basis as well as provide in interim periods all disclosures about a reportable segment’s profit or loss and assets that are currently required annually.

Additionally, we will be required to disclose the title and position of the CODM.

The new standard is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted.

This ASU will have no impact on our results of operations, cash flows or financial condition.

We will apply the amendments in this ASU retrospectively to all prior period disclosures presented in the financial statements upon adoption.

ASU 2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures.

In December 2023, the FASB issued guidance which requires disclosure of disaggregated income taxes paid, prescribes standard categories for the components of the effective tax rate reconciliation, and modifies other income tax related disclosures.

This standard is effective for fiscal years beginning after December 15, 2024.

We are currently evaluating the impact of adopting this ASU on our consolidated financial statements and disclosures.

ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40):

Disaggregation of Income Statement Expenses.

In November 2024, the FASB issued guidance which requires disclosure of additional expense information on an annual and interim basis, including the amounts of inventory purchases, employee compensation, depreciation and intangible asset amortization included within each income statement expense caption.

This standard is effective for fiscal years beginning after December 15, 2026.

We are currently evaluating the impact of adopting this ASU on our consolidated financial statements and disclosures.

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.

2024 Acquisitions

Acquisition of ESI Group SA

On November 3, 2023 , we acquired 50.6 % of the share capital of ESI Group SA (“ESI Group”) for $ 477 million, net of cash acquired, using existing cash.

During January 2024, we completed the acquisition of the remaining share capital of ESI Group for $ 458 million, using existing cash.

The company entered into put/call agreements valued at $ 7 million for certain ESI Group equity awards, subject to a holding period that may extend beyond the explicit vesting period, for the right to receive a cash payment equal to the public tender offer consideration of 155 euros per share, which was substantially paid in the third quarter of fiscal year 2024.

For the year ended October 31, 2024, ESI Group's net revenue was $ 141 million and net loss attributable to Keysight shareholders was $ 68 million.

The ESI Group acquisition was accounted for in accordance with the authoritative accounting guidance.

The acquired assets and assumed liabilities were recorded at their estimated fair values.

We determined the estimated fair values with the assistance of valuations performed by third party specialists, discounted cash flow analysis, and estimates made by management.

The acquisition of ESI Group expands our application layer portfolio with simulation capabilities that are critical to accelerate innovation in multiple end markets.

These factors, among others, contributed to a purchase price in excess of the estimated fair value of ESI Group's net identifiable assets acquired (see summary of net assets below), and, as a result, we have recorded goodwill in connection with this transaction.

Goodwill was assigned to the Communications Solutions Group (“CSG”) and the Electronic Industrial Solutions Group (“EISG”) reportable segments, based on the expected benefits and synergies that are likely to be realized from the ESI Group acquisition.

We do not expect the goodwill recognized or any potential impairment charges in the future to be deductible for income tax purposes.

A portion of the overall purchase price was allocated to acquired intangible assets.

Amortization expense associated with acquired intangible assets is not deductible for tax purposes.

Therefore, a deferred tax liability of $ 98 million was established primarily for the future amortization of these intangibles and is included in “other long-term liabilities” in the table below.

The following table summarizes the allocation of the purchase price to the estimated fair values of the assets acquired and liabilities assumed on the closing date:

November 3, 2023

(in millions)

Cash and cash equivalents $ 35

Short-term investments 12

Accounts receivable 28

Other current assets 18

Property, plant and equipment 4

Operating lease right-of-use assets 8

Other intangible assets 494

Other assets 3

Total assets acquired 1,205

Accounts payable ( 8 )

Employee compensation and benefits ( 23 )

Deferred revenue ( 14 )

Income and other taxes payable ( 11 )

Operating lease liabilities ( 3 )

Other accrued liabilities ( 18 )

Retirement and post-retirement benefits ( 7 )

Long-term operating lease liabilities ( 5 )

Other long-term liabilities ( 115 )

Net assets acquired $ 977

The fair values of cash and cash equivalents, short-term investments, accounts receivable, other current assets, accounts payable, employee compensation and benefits, and deferred revenue were generally determined using historical carrying values given the short-term nature of these assets and liabilities.

The fair value for intangible assets was determined with the input from third-party valuation specialists.

The fair values of property, plant and equipment and certain other liabilities were determined internally using historical carrying values and estimates made by management.

During the second quarter of fiscal year 2024, the company decreased the deferred tax liability and goodwill by $ 8 million primarily for a timing difference in the recognition of research and development expenses.

During the third quarter of fiscal year 2024, the company increased income and other taxes payable and other long-term liabilities by $ 3 million and $ 5 million, respectively, offset against goodwill, primarily for tax liabilities and uncertain tax positions.

Valuation of Intangible Assets Acquired

The components of intangible assets acquired in connection with the ESI Group acquisition were as follows:

Estimated Fair Value Estimated useful life Valuation Method

(in millions) (in years)

Developed technology $ 270 6 Multi-period excess earnings

Customer relationships 160 6 With and without

Backlog 15 3 Multi-period excess earnings

Trademarks/Tradename 2 2 Relief from royalty

Total amortizable intangible assets 447

In-process research and development 47 Multi-period excess earnings

Total intangible assets $ 494

As noted above, the intangible assets were valued using different income approach methods.

The in-process research and development was valued by discounting forecasted cash flows directly related to the products expecting to result from the projects, net of returns on contributory assets.

A discount rate of 12 % was used to value the research and development projects to reflect the additional risks inherent in the acquired projects.

The primary in-process projects acquired relate to next generation products which will be released in the near future.

Total costs to complete for all ESI Group in-process research and development were estimated at approximately $ 7 million as of the close date.

Acquisition and integration costs directly related to the ESI Group acquisition were recorded in research and development, selling, general and administrative, other operating expense (income), net and other income (expense), net and were $ 39 million for the year ended October 31, 2024.

For the year ended October 31, 2024, we incurred $ 10 million of acquisition-related compensation expense to redeem certain of ESI Group's outstanding unvested stock awards as of the date of the acquisition that were determined to relate to post-merger service periods.

Acquisition of Riscure Holding B.V.

On February 21, 2024 , we acquired all the outstanding share capital of Riscure Holding B.V.

(“Riscure”) for $ 78 million, net of cash acquired, expanding our automated security assessment capabilities and solutions for semiconductors, embedded systems, and connected devices.

We recognized goodwill and other intangible assets of $ 52 million and $ 35 million, respectively, based on the preliminary allocation of the purchase price to the estimated fair values of the assets acquired and liabilities assumed.

Goodwill was assigned to the CSG reportable segment, based on the expected benefits and synergies that are likely to be realized from the Riscure acquisition.

We do not expect the goodwill recognized or any potential impairment charges in the future to be deductible for income tax purposes.

Acquisition of AnaPico AG

On June 12, 2024 , we acquired all the outstanding share capital of AnaPico AG (“AnaPico”) for $ 117 million, net of cash acquired, accelerating our strategy to expand our customer base in commercial communications, automotive, aerospace, defense, and government markets.

We recognized goodwill and other intangible assets of $ 60 million and $ 53 million, respectively, based on the preliminary 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 $ 28 million, customer relationships of $ 12 million, backlog of $ 1 million and in-process research and development of $ 12 million.

The estimated useful lives of developed technology is 9 years, customer relationships is 9 years and backlog is 1 year.

Goodwill was assigned to the CSG and the EISG reportable segments, based on the expected benefits and synergies that are likely to be realized from the AnaPico acquisition.

We do not expect the goodwill recognized or any potential impairment charges in the future to be deductible for income tax purposes.

2023 Acquisitions

During the year ended October 31, 2023, we acquired Cliosoft, Inc.

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The estimated useful lives of developed technology range between 6 to 7 years, customer relationships is 6 years, and backlog is 3 years.

Goodwill for the acquisition was assigned to the Communications Solutions Group ("CSG") and Electronic Industrial Solutions Group ("EISG") operating segments using the relative fair value allocation approach.

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 CSG and $ 11 million was assigned to EISG.

Goodwill for the acquisition was assigned to the CSG and EISG operating segments using the relative fair value allocation approach.

Supplemental Pro Forma Information (Unaudited)

Pro forma results of operations for 2023 and 2022 acquisitions have not been presented because the effects of the acquisitions were not material to the company’s financial results.

The following represents pro forma operating results as if ESI Group had been included in the company's consolidated statements of operations as of the beginning of fiscal 2023:

Year Ended October 31,

(in millions, except per-share amounts)

Net revenue $ 4,979 $ 5,609

Net income $ 649 $ 987

Net income per share - Basic $ 3.73 $ 5.56

Net income per share - Diluted $ 3.71 $ 5.53

The unaudited pro forma financial information for the years ended October 31, 2024 and 2023 combines the historical results of Keysight and ESI Group for the years ended October 31, 2024 and 2023, assuming that the companies were combined as of November 1, 2022 and includes business combination accounting effects from the acquisition including amortization charges from acquired intangible assets and tax-related effects.

Losses resulting from our foreign exchange contracts to hedge the ESI Group acquisition price of $18 million and $45 million were included in 2024 and 2023, respectively.

The pro forma information as presented above is for informational purposes only and is not indicative of the results of operations that would have been achieved if the acquisition had taken place at the beginning of fiscal 2023.

Pro forma results of operations for other acquisitions in 2024 and 2023 have not been presented because the effects of the acquisitions were not material to the company’s financial results.

Disaggregation of Revenue

We disaggregate our revenue from contracts with customers by geographic region, end market, and timing of revenue recognition, as we believe these categories best depict how the nature, amount, timing and uncertainty of our revenue and cash flows are affected by economic factors.

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

Disaggregated revenue is presented for each of our reportable segments, CSG and EISG.

Year Ended October 31,

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The following table provides a roll-forward of our contract liabilities, current and non-current:

Year Ended October 31,

October 31, 2024

(in millions)

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Incentive compensation plans.

The 2014 Equity and Incentive Compensation Plan (the "2014 Stock Plan") was originally adopted by our board of directors on July 16, 2014, with an effective date of November 1, 2014.

It was subsequently amended and restated by our board of directors on September 29, 2014 and again on January 22, 2015.

Our board of directors initially reserved 25 million shares of company common stock that may be issued under the 2014 Stock Plan, plus any shares forfeited or cancelled under the 2014 Stock Plan and subsequently reduced the number to 17 million shares.

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, 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 .

As of October 31, 2023, approximately 4 million shares were available for future awards under the 2014 Stock Plan.

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 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.

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 2014 Equity and Incentive Compensation Plan ("2014 Stock Plan") was adopted on July 16, 2014, and became effective on November 1, 2014.

It was subsequently amended and restated by our board of directors on September 29, 2014, January 22, 2015, November 16, 2017 and November 16, 2023, with the most recent amendments taking effect on March 21, 2024, following stockholders approval.

The maximum number of shares of common stock that may be issued under the plan is 28 million.

The plan provides for the grants of awards in the form of stock options, stock appreciation rights, restricted stock, RSUs, performance-based shares and units, and cash awards.

As of October 31, 2024, approximately 9 million shares were available for future awards.

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

The estimated fair value of the restricted stock unit awards granted under the 2014 Stock Plan is determined based on the market price of Keysight common

stock on the date of grant.

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.

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

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

These metrics may include total shareholder return (“TSR”), financial metrics like operating margin (“OM”), earnings per share (“EPS”), and others.

For TSR-based awards the peer group comparisons are set at the beginning of the performance period, while OM targets are set each year in the first quarter of the respective year.

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

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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.

The estimated fair value of the restricted stock unit awards granted under the 2014 Stock Plan is determined based on the market price of Keysight common stock on the date of grant.

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.

The Employee Stock Purchase Plan (“ESPP”) was adopted on July 16, 2014, and became effective on November 1, 2014.

It was amended and restated effective March 21, 2024.

The maximum number of shares of common stock that may be issued under the plan is 25 million.

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.

Shares authorized for issuance in connection with the ESPP are subject to an automatic annual increase of the lesser of one percent of the outstanding shares of Keysight common stock on November 1 or an amount determined by the Compensation and Human Capital Committee of our board of directors.

Under the terms of the ESPP, in no event shall the number of shares issued under the ESPP exceed 75 million shares.

Under our ESPP, employees purchased 562,455 shares for $ 64 million in 2024, 477,760 shares for $ 64 million in 2023 and 462,279 shares for $ 62 million in 2022.

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Income tax benefit realized from exercised stock options and similar awards $ 3 $ 6 $ 15

For the year ended October 31, 2024, the total share-based compensation expense includes $ 10 million of ESI Group acquisition-related compensation to redeem certain outstanding unvested stock awards as of the date of the acquisition that were determined to relate to post-merger service periods.

Valuation Assumptions

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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 compensation cost for financial metrics-based performance awards reflects 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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Volatility of index 18 % 25 % 23 %

Price-wise correlation with selected peers 75 % 67 % 67 %

Price-wise correlation with index 69 % 75 % 67 %

Share-based Payment Award Activity

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

As of October 31, 2023 and 2022, the options outstanding were approximately 0.1 million and 0.2 million, respectively, with a weighted average exercise price of $ 31 and $ 30 , respectively.

During 2023, 0.1 million options with an intrinsic value of $ 15 million were exercised at the weighted average exercise price of $ 30 .

The intrinsic value of the options exercised during 2022 and 2021 was $ 11 million and $ 14 million, respectively, at a weighted average exercise price of $ 25 and $ 26 , respectively.

The options outstanding as of October 31, 2023 have a weighted average contractual remaining life of 1 year and an intrinsic value of $ 7 million, based on Keysight's closing stock price of $ 122.05 at October 31, 2023.

In 2024, 0.1 million options were exercised with an intrinsic value of $ 8 million at an average exercise price per share of $ 31 .

In 2023 and 2022, options exercised had an intrinsic value of $ 15 million and $ 11 million, with an average exercise price per share of $ 30 and $ 25 , respectively.

As of October 31, 2024, options outstanding were not material.

Non-vested Awards

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Total income before taxes $ 865 $ 1,357 $ 1,285

The provision for income taxes was comprised of:

The provision for income taxes consisted of:

Year Ended October 31,

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Total deferred tax assets, net of deferred tax liabilities $ 214 $ 619

The increase in deferred tax assets in 2023 compared to 2022 primarily relates to the capitalization of research and experimental expenditures for the U.S.

tax filing group due to a U.S.

tax law change that became effective for Keysight on November 1, 2022.

This is partially offset by a decrease in intangible assets in Singapore due to amortization and a decrease from U.K.

net operating losses utilized and surrendered.

The total deferred tax liabilities in 2023 and 2022 remained the same, with other increases and decreases that are not individually significant.

The decrease in deferred tax assets in 2024 as compared to 2023 primarily relates to a decrease in the tax rate applied to intangible assets in Singapore based on the new incentive tax rate, partially offset by an increase in deferred tax assets due to the capitalization of research and experimental expenditures for the U.S.

tax filing group.

The increase in deferred tax liabilities in 2024 as compared to 2023 primarily relates to intangible assets for acquired entities recognized in purchase accounting which are not deductible for tax purposes when amortized.

As of October 31, 2024, there was a deferred tax liability of $ 18 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 $ 218 million and $ 224 million valuation allowances as of October 31, 2023 and 2022, respectively, were mainly related to net operating losses in Luxembourg, capital losses and net operating losses in the U.K., and California research credits from acquired entities that are subject to change in ownership limitations.

At October 31, 2023, there were U.S.

The $ 218 million valuation allowances as of October 31, 2024 and 2023 were mainly related to net operating losses in Luxembourg, capital losses and net operating losses in the U.K., and California research credits from acquired entities that are subject to change in ownership limitations.

As of October 31, 2024, there were U.S.

federal net operating loss carryforwards of $ 3 million and U.S.

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Of the total U.S.

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

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

state net operating loss carryforwards will begin to expire in 2025, which will result in an immaterial tax impact if not utilized.

At October 31, 2023, there were U.S.

As of October 31, 2024, there were U.S.

federal foreign tax credit carryforwards of $ 3 million.

federal foreign tax credits will begin to expire in 2032 .

Due to certain limitations, $ 1 million of U.S.

federal foreign tax credits were subject to valuation allowance.

There were U.S.

state research credit carryforwards of approximately $ 30 million.

Of the total U.S.

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

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

At October 31, 2023, there were foreign net operating loss carryforwards of $ 941 million.

Of the total foreign loss, $ 5 million will expire in years beginning 2024 through 2027.

The remaining loss was comprised of $ 673 million that will expire in years beginning 2032 through 2040 if not utilized and $ 263 million that can be carried forward indefinitely.

state research credit carryforwards, $ 21 million are California research credits that can be carried forward indefinitely, but due to change of ownership limitations, the California research credits were subject to valuation allowance.

As of October 31, 2024, there were foreign net operating loss carryforwards of $ 978 million.

Of the total foreign loss, $ 1 million will expire in 2025.

The remaining loss consisted of $684 million that will expire in years beginning 2031 through 2044 if not utilized and $ 293 million that can be carried forward indefinitely.

Of the $ 978 million of foreign net operating loss carryforward, $691 million were subject to a valuation allowance.

At October 31, 2023, there were foreign capital loss carryforwards of $ 84 million that can be carried forward indefinitely and $ 2 million of tax credits in foreign jurisdictions that can be carried forward indefinitely.

The foreign capital loss carryforwards were subject to valuation allowance as we do not expect to generate income of the type required in order to utilize these losses.

As of October 31, 2024, there were foreign capital loss carryforwards of $ 90 million that can be carried forward indefinitely and $ 2 million of tax credits in foreign jurisdictions that can be carried forward indefinitely.

The foreign capital loss carryforwards were subject to valuation allowance as we do not expect to generate income of the type required to utilize these losses.

As of October 31, 2024, there were $ 63 million of interest deduction carryforwards that can be carried forward indefinitely.

The differences between the U.S.

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Foreign earnings taxed at different rates ( 73 ) ( 113 ) ( 115 )

Singapore incentive deferred tax rate impact 315 — —

Deferred taxes on foreign earnings not considered indefinitely reinvested — 6 ( 9 )

Reduction in tax reserves due to Malaysia refund ( 61 ) — —

Prior year change in potential U.S.

benefit from non-U.S.

tax reserves 35 — —

Change in unrecognized tax benefits 12 3 ( 26 )

Acquired entity integration — — ( 15 )

Release of foreign valuation allowance — — ( 17 )

prior year return adjustment ( 15 ) 6 3

prior year GILTI tax deduction refund claim ( 165 ) — —

Other, net 13 4 16

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The effective tax rate was 29 percent, 22 percent, and 13 percent for 2024, 2023 and 2022, respectively.

The tax rate in 2023 is higher than the U.S.

The tax rate in 2024 was higher than the U.S.

statutory rate primarily due to a one-time income tax charge of $ 315 million required to adjust Singapore deferred tax asset values to an incentive tax rate.

Keysight entered into a new Singapore tax incentive agreement effective August 1, 2024.

The Singapore tax incentive provides lower rates of taxation on certain classes of income and requires thresholds of investments and employment.

The 2024 income tax charge was partially offset by a one-time income tax benefit of $ 165 million related to Global Intangible Low Taxed Income (“GILTI”) tax deductions for intangible asset amortization.

Keysight concluded that U.S.

Department of the Treasury exceeded its regulatory authority in issuing tax regulations disallowing these deductions under IRC

The company amended its U.S.

federal income tax returns for the open tax years to claim GILTI tax deductions.

The tax receivable resulting from the amended returns is reflected in “other assets” and “other current assets” in the consolidated balance sheet.

The annual tax impact of the amortization of the intangible assets will continue to be recognized until 2033.

The company believes the position meets the more likely than not recognition threshold and intends to vigorously defend its position.

The outcome cannot be predicted with certainty.

If we are ultimately unsuccessful in defending our position, we may be required to reverse the benefit previously recorded.

The 2024 income tax charge was also partially offset by a one-time income tax benefit of $61 million for the release of tax reserves related to the successful appeal of a Malaysia income tax assessment.

In the fourth quarter of 2017, Keysight was assessed and paid income tax and penalties in Malaysia on gains related to the transfer of intellectual property rights and recorded a tax reserve on the assessed amount.

The Court of Appeal in Malaysia ruled in Keysight’s favor on May 24, 2024, and the company received a refund of the income tax and penalties.

The 7 percentage point increase in the effective tax rate from 2023 to 2024 was primarily due to these one-time income tax items in 2024.

The tax rate in 2023 was higher than the U.S.

statutory rate primarily due to the impact of U.S.

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tax imposed on those non-U.S.

The tax rate in 2022 and 2021 was lower than the U.S.

The tax rate in 2022 was lower than the U.S.

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

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jurisdictions.

There was an increase in the effective tax rate from 2022 to 2023 of 9 percent, primarily due to a 5 percent increase from the impact of the U.S.

tax capitalization of research and experimental expenditures.

A provision enacted in the Tax Cuts and Jobs Act of 2017 (the "TCJA") became effective for Keysight on November 1, 2022, requiring that research and experimental expenditures be capitalized for U.S.

tax purposes.

The capitalized expenses are amortized over five years for research activities conducted in the U.S.

and over fifteen years for research activities conducted outside the U.S.

The capitalization of research and experimental expenditures increases the U.S.

tax on non-U.S.

earnings as part of the global intangible low-taxed income (“GILTI”) tax.

There was an additional 2 percent increase in the effective tax rate from 2022 to 2023 due to a decrease in 2022 taxes resulting from changes in tax reserves.

The other changes in the effective tax rate from 2022 to 2023 were not individually significant.

There was an increase in the effective tax rate from 2021 to 2022 of 2 percent, primarily due to a 3 percent decrease in the 2021 effective tax rate from nonrecurring tax benefits, partially offset by a 3 percent decrease in 2022 effective tax rate from changes in tax reserves.

The remaining 2 percent increase was comprised of various components that were not individually significant.

The 2022 benefit from the change in tax reserves is primarily due to an audit settlement and an out-of-period adjustment.

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 compared to the estimate at acquisition based on the finalization of the integration plan.

The other changes in the effective tax rate from 2021 to 2022 were not individually significant.

Keysight benefits from tax incentives in several jurisdictions, most significantly in Singapore and Malaysia, that will expire 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 expires July 31, 2024, and the Malaysia tax incentive expires October 31, 2025.

We are continuing to evaluate the impact of potential options on our effective tax rate.

The impact of the tax incentives decreased income taxes by $ 95 million, $ 81 million and $ 70 million in 2023, 2022 and 2021, respectively.

The benefit of the tax incentives on net income per share (diluted) was approximately $ 0.53 , $ 0.45 and $ 0.38 in 2023, 2022 and 2021, respectively.

The increase in tax benefit from 2022 to 2023 was primarily due to a change in the jurisdictional mix of non-U.S.

earnings, which increased the earnings taxed at incentive tax rates in 2023.

The increase in the effective tax rate of 9 percent from 2022 to 2023 was primarily due to a 5 percent increase from U.S.

tax capitalization of research and experimental expenditures in 2023.

Keysight benefits from tax incentives in several jurisdictions, most significantly in Singapore and Malaysia.

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

The Malaysia tax incentive expires October 31, 2025.

The Singapore tax incentive expires July 31, 2029.

The breakdown between current and long-term income tax assets and liabilities, excluding deferred tax assets and liabilities, was as follows for the years 2024 and 2023:

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and other tax jurisdictions, we recognize potential liabilities for anticipated tax audit issues based on our estimate of whether, and the extent to which, additional taxes and interest will be due.

We include interest and penalties related to unrecognized tax benefits within the provision for income taxes in the consolidated statements of operations.

We include interest and penalties related to unrecognized tax positions within the provision for income taxes in the consolidated statements of operations.

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

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Gross Balance, beginning of year $ 266 $ 234 $ 249

Additions due to acquisition 2 — —

Additions for tax positions related to the current year 24 37 32

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Gross Balance, end of year $ 222 $ 266 $ 234

As of October 31, 2023, the total amount of gross unrecognized tax benefits, excluding interest and penalties, was $ 266 million, of which, if recognized, $ 176 million would impact our effective tax rate.

However, approximately $ 1 million of the unrecognized tax benefits was related to acquisitions, which, if recognized within certain agreed upon time periods, would result in the recognition of an offsetting indemnification asset.

Cumulatively, interest and penalties accrued as of October 31, 2023, 2022 and 2021 were $ 41 million, $ 36 million and $ 37 million, respectively.

We recognized tax expense of $ 5 million, $ 3 million and $ 4 million for interest and penalties related to unrecognized tax benefits in 2023, 2022 and 2021, respectively.

As of October 31, 2024, the total amount of gross unrecognized tax benefits, excluding interest and penalties, was $ 222 million.

Of this amount, $ 150 million would impact our effective tax rate.

Approximately $ 1 million of the unrecognized tax benefits was related to acquisitions, which if recognized within certain agreed upon time periods, would result in the recognition of an offsetting indemnification asset.

Cumulatively, interest and penalties accrued as of 2024, 2023 and 2022 were $ 38 million, $ 41 million and $ 36 million, respectively.

We recognized a tax benefit for interest and penalties related to unrecognized tax benefits in 2024 of $ 6 million, which included a tax benefit of $ 16 million for penalties released due to settlements, offset by tax expense of $ 10 million for interest and penalties accrued in the current year.

We recorded an additional $ 3 million of interest and penalties related to unrecognized tax benefits in 2024 through purchase accounting related to acquisitions.

We recognized tax expense of $ 5 million and $ 3 million for interest and penalties related to unrecognized tax benefits in 2023 and 2022, respectively.

The open tax years for the U.S.

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entities, the open tax years are from November 1, 2019 through the current tax year.

For certain non-U.S.

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

The company is being audited in Malaysia for fiscal year 2008.

This tax year predates our separation from Agilent.

However, pursuant to the agreement between Agilent and Keysight pertaining to tax matters, as finalized at the time of separation, for certain entities, including Malaysia, any historical tax liability is the responsibility of Keysight.

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

The company believes there are strong technical 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 available recourses 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.

The final hearing with the Court of Appeal took place on October 23, 2023.

The decision is expected to be rendered on February 29, 2024.

There are limited further legal options available after the conclusion is returned from the Court of Appeal.

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.

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Net income per share - diluted $ 3.51 $ 5.91 $ 6.18

The dilutive effect of share-based awards is reflected in diluted net income per share by application of the treasury stock method, which includes consideration of unamortized share-based compensation expense and the dilutive effect of in-the-money options and non-vested RSUs.

Under the treasury stock method, the amount the employee must pay to exercise stock options and unamortized share-based compensation expense are collectively assumed to be used to repurchase hypothetical shares.

We exclude stock options with exercise prices greater than the average market price of our common stock from the calculation of diluted earnings per share because their effect would be anti-dilutive.

For the years ended 2023, 2022 and 2021, 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 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 2023, 2022 and 2021.

Potentially dilutive shares whose effect would have been antidilutive are excluded from the computation of diluted net income per share.

The number of shares excluded was not material for 2024, 2023 and 2022.

GOODWILL AND OTHER INTANGIBLE ASSETS

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There were no impairments of goodwill during the years ended October 31, 2024, 2023 and 2022.

As of October 31, 2023, 2022 and 2021, accumulated impairment losses on goodwill were $ 709 million.

As of October 31, 2024, 2023 and 2022, accumulated impairment losses on goodwill were $ 709 million as recorded within the CSG reportable segment.

Other intangible assets as of October 31, 2024 and 2023 consisted of the following:

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Customer relationships 587 398 189 406 340 66

Total amortizable intangible assets 2,039 1,477 562 1,494 1,339 155

In-Process R&D 45 — 45 — — —

Total $ 2,084 $ 1,477 $ 607 $ 1,494 $ 1,339 $ 155

In 2023, we recorded additions to goodwill and other intangible assets of $ 56 million and $ 56 million, respectively, related to our acquisition of Cliosoft.

For additional information, see Note 2, "Acquisitions."

In 2024, we recognized additions to goodwill and other intangible assets of $ 738 million and $ 582 million, respectively, based on the preliminary allocation of the purchase price to the estimated fair values of the assets acquired and liabilities assumed from the acquisition of ESI Group and other acquisition activity.

See Note 2, “Acquisitions,” for additional information.

During the year ended October 31, 2024, we transferred $ 15 million from in-process R&D to developed technology as projects were successfully completed.

During the year ended October 31, 2024, foreign exchange translation had a favorable impact of $ 8 million on other intangible assets.

Amortization of other intangible assets was $ 138 million in 2024, $ 90 million in 2023 and $ 103 million in 2022.

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Thereafter $ 38

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

Goodwill is assessed for impairment on a reporting unit basis, which is an operating segment or one level below an operating segment.

We determine fair values for each of the reporting units using the market approach, when available and appropriate, or the income approach, or a combination of both.

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

Other intangible assets with finite lives are assessed 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.

No impairments of amortizable intangible assets were recorded during the years ended October 31, 2024, 2023 and 2022.

The authoritative accounting guidance allows a qualitative approach for testing indefinite-lived intangible assets for impairment, similar to the impairment testing guidance for goodwill.

It allows the option to first assess qualitative factors (events and circumstances) that could have affected the significant inputs used in determining the fair value of the indefinite-lived intangible asset.

The qualitative factors assist in determining whether it is more likely than not that the indefinite-lived intangible asset is impaired.

An organization may choose to bypass the qualitative assessment for any indefinite-lived intangible asset in any period and proceed directly to calculating its fair value.

Our indefinite-lived intangible assets are generally in-process research and development (“IPR&D”) intangible assets.

No impairments of indefinite-lived intangible assets were recorded in 2024.

We had no IPR&D intangible assets as of October 31, 2023 and 2022.

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.

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Derivative instruments (foreign exchange contracts) 38 — 38 — — 18 — 18 — —

Derivative instruments (interest rate swaps) — — — — — 133 — 133 — —

Equity investments 80 80 — — — 56 56 — — —

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Total liabilities measured at fair value $ 40 $ — $ 40 $ — $ — $ 81 $ — $ 81 $ — $ —

In 2023, we terminated forward-starting interest rate swap agreements, resulting in a deferred gain of $ 107 million recognized in accumulated other comprehensive income (loss) that will be amortized to interest expense over the term of the anticipated debt.

See Note 9, "Derivatives," for additional information.

In 2023, we made a cost method investment of $ 7 million classified as "investments - other" in the table above.

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

In 2024, we purchased an equity investment for $ 10 million.

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.

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Our derivative financial instruments are classified within Level 2 as there is not an active market for each hedge contract, but the inputs used to calculate the value of the instruments are tied to active markets.

Equity investments, including securities that are earmarked to pay the deferred compensation liability, and the deferred compensation liability are reported at fair value, with gains or losses resulting from changes in fair value recognized in earnings.

Equity investments, including securities that are earmarked to pay the deferred compensation liability, are reported at fair value, with gains or losses resulting from changes in fair value recognized in earnings.

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

Certain derivative instruments are reported at fair value, with unrealized gains and losses, net of tax, included in “accumulated other comprehensive income (loss).”

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

Net unrealized gain (loss) on our equity and other investments was a gain of $ 7 million in 2023, a loss of $ 36 million in 2022, and a gain of $ 4 million in 2021.

There were no realized gains or losses from the sale of investments in 2024, 2023 and 2022.

Net unrealized gain (loss) on our equity and other investments was as follows:

Year Ended October 31,

2024 2023 2022

(in millions)

Net unrealized gain (loss) on equity and other investments still held $ 15 $ 7 $ ( 36 )

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

Assets measured at fair value on a non-recurring basis consisted of goodwill and intangible assets.

See Note 7, "Goodwill and Other Intangible Assets," for more information.

See Note 7, “Goodwill and Other Intangible Assets,” for additional information.

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

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Intangible Assets

Fair value of intangible assets are considered Level 3 measurements due to the significance of unobservable inputs developed using company-specific information.

Fair value of intangible assets is considered Level 3 measurements due to the significance of unobservable inputs developed using company-specific information.

In the event of performing a quantitative impairment test, we utilize an income approach for estimating the fair value of intangible assets.

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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.

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 fiscal year 2024.

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

These derivative instruments are designated and qualify as cash flow hedges under the criteria prescribed in the authoritative guidance.

The changes in fair value of these derivative instruments have been recognized in accumulated other comprehensive income (loss).

In 2023, we terminated the interest rate swap agreements, resulting in a deferred gain of $ 107 million recognized in accumulated other comprehensive income (loss) to be amortized to interest expense over the term of the anticipated debt.

In 2020, we entered into forward-starting interest rate swaps with an aggregate notional amount of $ 600 million in connection with future interest payments on the issuance of $600 million in unsecured senior notes (“2034 Senior Notes”).

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

These derivative instruments were designated and qualified as cash flow hedges under the criteria prescribed in the authoritative guidance.

The changes in fair value of these derivative instruments were recognized in “accumulated other comprehensive income (loss).” In 2023, we terminated the interest rate swap agreements, resulting in a deferred gain of $ 107 million recognized in “accumulated other comprehensive income (loss)” that is being amortized to interest expense over the term of the 2034 Senior Notes.

The remaining gain to be amortized related to the interest rate swap agreements was $ 106 million as of October 31, 2024.

Additionally, we enter into foreign exchange contracts to hedge monetary assets and liabilities that are denominated in currencies other than the functional currency of our subsidiaries.

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Changes in value of the derivative are recognized in “other income (expense), net”, in the consolidated statement of operations in the current period along with the offsetting foreign currency gain or loss on the underlying assets or liabilities.

In connection with the acquisition of ESI Group SA (see Note 17, "Subsequent Event"), we entered into foreign exchange forward contracts to mitigate the currency exchange risk associated with the payment of the purchase price in Euro.

In connection with the acquisition of the ESI Group, we entered into foreign exchange forward contracts to mitigate the currency exchange risk associated with the payment of the purchase price in euros.

The aggregate notional amount of the currencies hedged was 930 million euros as of October 31, 2023.

These foreign exchange contracts did not qualify for hedge accounting treatment and were not designated as hedging instruments.

The resulting unrealized loss on outstanding contracts was $ 45 million and was recorded in "other income (expense), net" and "other accrued liabilities" in the consolidated statement of operations and the consolidated balance sheet, respectively, for the year ended October 31, 2023.

During the year ended October 31, 2024, these foreign exchange forward contracts were settled using existing cash of $ 63 million, resulting in a loss of $ 18 million recorded in “other income (expense), net” in the consolidated statement of operations.

During the third quarter of fiscal year 2024, we entered into foreign exchange forward contracts with an aggregate notional amount of 1.2 billion pounds sterling to mitigate the currency exchange risk associated with a planned acquisition.

These foreign exchange contracts do not qualify for hedge accounting treatment and are not designated as hedging instruments.

The resulting net unrealized gain on outstanding contracts was $ 23 million and was recorded in “other income (expense), net” in the consolidated statement of operations and in “other current assets” on the consolidated balance sheet for the year ended October 31, 2024.

Our use of derivative instruments exposes us to credit risk to the extent that the counterparties may be unable to meet the terms of the agreement.

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Other current assets $ 8 $ 16 Other accrued liabilities $ 2 $ 7

Interest rate swap contracts:

Other assets — 133

Derivatives not designated as hedging instruments:

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Selling, general and administrative — $ ( 1 ) $ ( 10 )

( 1 ) ( 10 ) 2

Interest expense 1 $ — $ —

Gain excluded from effectiveness testing recognized in earnings based on amortization approach:

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(in millions)

Operating lease cost $ 52 $ 51 $ 51

Operating lease cost, including short-term lease cost $ 59 $ 52 $ 51

Variable lease cost $ 22 $ 22 $ 17

Short-term lease costs, sublease income and finance lease costs were immaterial for the year ended October 31, 2023, 2022 and 2021.

Sublease income and finance lease costs were immaterial for the years ended October 31, 2024, 2023 and 2022.

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

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As of October 31, 2024, we did not have material leases that have not yet commenced.

Rental income from the lease of excess facilities was $ 10 million, $ 11 million and $ 11 million for the year ended October 31, 2023, 2022 and 2021, respectively, and is included in other operating expense (income), net.

Other lessor arrangements were immaterial.

Rental income from the lease of excess facilities was $ 10 million, $ 10 million and $ 11 million for the years ended October 31, 2024, 2023 and 2022, respectively, and is included in “other operating expense (income), net.” Other lessor arrangements were immaterial.

The following table summarizes the components of our debt:

(in millions)

2024 Senior Notes at 4.55 % ($ 600 face amount less unamortized costs of $ 1 and $ 1 )

2024 Senior Notes at 4.55 % ($ 600 face amount less unamortized costs of zero and $ 1 )

2027 Senior Notes at 4.60 % ($ 700 face amount less unamortized costs of $ 2 and $ 2 )

2029 Senior Notes at 3.00 % ($ 500 face amount less unamortized costs of $ 2 and $ 3 )

2034 Senior Notes at 4.95 % ($ 600 face amount less unamortized costs of $ 6 )

Total Debt 1,790 1,794

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Long-Term Debt $ 1,790 $ 1,195

Short-Term Debt

Revolving Credit Facility

On July 30, 2021 , we entered into an amended and restated credit agreement (the “Revolving Credit Facility”) which provides for a $ 750 million five-year unsecured revolving credit facility that expires on July 30, 2026 with an annual interest rate of LIBOR + 1 percent along with a facility fee of 0.125 percent per annum.

On February 17, 2023, we entered into the first amendment to the Revolving Credit Facility to change the annual interest rate from LIBOR + 1 percent to SOFR + 1.1 percent.

In addition, the Revolving Credit Facility 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 Revolving Credit Facility for general corporate purposes.

As of October 31, 2023 and 2022, we had no borrowings outstanding under the Revolving Credit Facility.

We were in compliance with the covenants of the Revolving Credit Facility during the year ended October 31, 2023.

2024 Senior Notes

In October 2014, the company issued an aggregate principal amount of $ 600 million in unsecured senior notes (“2024 Senior Notes”).

The 2024 Senior Notes were issued at 99.966 percent of their principal amount.

The notes will mature on October 30, 2024 , and bear interest at a fixed rate of 4.55 percent per annum.

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, along with the debt discount, are being amortized to interest expense over the term of the senior notes.

Long-Term Debt

These notes matured on October 30, 2024 and were fully repaid.

2027 Senior Notes

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The notes will mature on April 6, 2027 and bear interest at a fixed rate of 4.60 percent per annum.

The interest is payable semi-annually on April 6 and October 6 of each year, commencing on October 6, 2017.

The interest is payable semi-annually on April 6 and October 6, commencing on October 6, 2017.

We incurred issuance costs of $ 6 million in connection with the 2027 Senior Notes that, along with the debt discount, are being amortized to interest expense over the term of the senior notes.

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The notes will mature on October 30, 2029 and bear interest at a fixed rate of 3.00 percent per annum.

The interest is payable semi-annually on April 30 and October 30 of each year, commencing on April 30, 2020.

The interest is payable semi-annually on April 30 and October 30, commencing on April 30, 2020.

We incurred issuance costs of $ 4 million in connection with the 2029 Senior Notes that, along with the debt discount, are being amortized to interest expense over the term of the senior notes.

2034 Senior Notes

In October 2024, the company issued an aggregate principal amount of $ 600 million in unsecured senior notes (“2034 Senior Notes”).

The 2034 Senior Notes were issued at 99.897 percent of their principal amount.

The notes will mature on October 15, 2034 and bear interest at a fixed rate of 4.95 percent per annum.

The interest is payable semi-annually on April 15 and October 15, commencing on April 15, 2025.

We incurred issuance costs of $ 6 million in connection with the 2034 Senior Notes that, along with the debt discount, are being amortized to interest expense over the term of the senior notes.

In 2020, we entered into forward-starting interest rate swaps with an aggregate notional amount of $ 600 million, in connection with future interest payments on our 2034 Senior Notes issued in October 2024.

In 2023, we terminated the interest rate swap agreements, resulting in a deferred gain of $ 107 million recognized in “accumulated other comprehensive income (loss),” which is being amortized to interest expense over the term of the 2034 Senior Notes.

See Note 9, “Derivatives,” for additional information.

The above senior notes are unsecured and rank equally in right of payment with all of our other senior unsecured indebtedness.

We were in compliance with the covenants of our senior notes during the year ended October 31, 2024.

The fair value of our debt, calculated from quoted prices that are Level 1 inputs under the accounting guidance fair value hierarchy, is approximately $ 1,739 million and $ 1,679 million as of October 31, 2024 and 2023, respectively.

Revolving Credit Facility

On July 30, 2021 , we entered into an amended and restated credit agreement (the “Revolving Credit Facility”) which provides a $ 750 million five-year unsecured revolving credit facility that expires on July 30, 2026 with an annual interest rate of LIBOR + 1 percent along with a facility fee of 0.125 percent per annum.

On February 17, 2023, we entered into the first amendment to the Revolving Credit Facility to change the annual interest rate from LIBOR + 1 percent to SOFR + 1.1 percent.

We may use amounts borrowed under the Revolving Credit Facility for general corporate purposes.

As of October 31, 2024 and 2023, we had no borrowings outstanding under the Revolving Credit Facility.

We were in compliance with the covenants of the Revolving Credit Facility during the year ended October 31, 2024.

Bridge Facility

On March 28, 2024 , we entered into a bridge credit agreement (the “Bridge Facility”) pursuant to which certain lenders agreed to provide a senior unsecured 364 -day bridge credit facility of up to 1,350 million pounds sterling for the purpose of providing the financing to support a planned acquisition.

On July 25, 2024, the Bridge Facility was decreased to 1,232 million pounds sterling.

We incurred costs in connection with the Bridge Facility of $ 7 million that are included in “other current assets” in the consolidated balance sheet and are being amortized to “interest expense” over the term of the Bridge Facility.

Letters of Credit

As of October 31, 2024 and 2023, we had $ 43 million and $ 41 million, respectively, of outstanding letters of credit and surety bonds that were issued by various lenders.

ESI Group debt and credit facility assumed

As part of the ESI Group acquisition, we assumed debt of $ 24 million, of which $ 10 million was payable within one year.

The debt included a syndicated loan of $ 11 million payable through yearly installments until April 2025 with an annual interest rate of EURIBOR + 2 to 2.5 percent .

We also assumed various fixed interest rate state-guaranteed loans and other bank borrowings of $ 13 million.

During the year ended October 31, 2024, we repaid the debt assumed as part of the acquisition.

As part of the ESI Group acquisition, we assumed a revolving credit facility of 10 million euros that was subsequently terminated in April 2024.

RETIREMENT PLANS AND POST-RETIREMENT BENEFIT PLANS

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Retirement Plan (“RP”), defined benefits that are based on an employee’s base or target pay during the years of employment and length of service.

For eligible employees' service through October 31, 1993, the benefit payable under the RP is reduced by any amounts due to the eligible employees' service under our defined contribution Deferred Profit-Sharing Plan ("DPSP"), which was closed to new participants as of November 1993.

For eligible employees’ service through October 31, 1993, the defined benefit payable under the RP is reduced by any amounts due to the eligible employees’ service under our defined contribution Deferred Profit-Sharing Plan (“DPSP”), which was closed to new participants as of November 1993.

The obligations under the DPSP equal the fair value of the DPSP assets, which was $ 161 million as of October 31, 2024.

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employees who meet eligibility requirements as of their termination date may participate in the U.S.

Post-Retirement Benefit Plans.

Post-Retirement Benefit Plan.

Components of net periodic benefit cost.

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defined benefit plan, respectively, as the lump-sum payments in the respective plans were more than the sum of the service cost and interest cost components of net periodic benefit cost (“the threshold amount”).

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

For the years ended October 31, 2023, 2022 and 2021, components of net periodic benefit cost (benefit) and other amounts recognized in other comprehensive income were comprised of:

For the years ended October 31, 2024, 2023 and 2022, components of net periodic benefit cost (benefit) and other amounts recognized in other comprehensive income consisted of:

Defined Benefit Plans U.S.

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Service cost — benefits earned during the period $ 14 $ 16 $ 25 $ 8 $ 10 $ 13 $ 1 $ 1 $ 1

Interest cost on benefit obligation 36 23 22 31 15 15 8 5 4

Interest cost on benefit obligations 40 36 23 36 31 15 8 8 5

Expected return on plan assets ( 47 ) ( 49 ) ( 61 ) ( 53 ) ( 53 ) ( 58 ) ( 12 ) ( 12 ) ( 14 )

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Net periodic benefit cost (benefit) 16 12 ( 2 ) — ( 3 ) ( 6 ) ( 4 ) ( 2 ) ( 8 )

Curtailments and settlements — — — ( 1 ) 9 16 — — —

Settlements — — — — ( 1 ) 9 — — —

Total periodic benefit cost (benefit) $ 16 $ 12 $ ( 2 ) $ — $ ( 4 ) $ 3 $ ( 4 ) $ ( 2 ) $ ( 8 )

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Net actuarial loss (gain) $ ( 23 ) $ 14 $ ( 9 ) $ ( 43 ) $ 32 $ ( 38 ) $ ( 3 ) $ ( 5 ) $ 17

Net prior service cost/(credit) 2 — — — — — — — —

Amortization:

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Prior service credit — — — — — — — 1 1

Curtailments and settlements — — — 1 ( 9 ) ( 16 ) — — —

Settlements — — — — 1 ( 9 ) — — —

Foreign currency — — — 1 ( 2 ) ( 6 ) — — —

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Settlements — ( 1 ) — ( 3 ) — —

Curtailments — — — — — —

Actuarial loss (gain) 84 ( 10 ) 52 ( 44 ) 18 ( 5 )

Benefits paid ( 56 ) ( 43 ) ( 46 ) ( 41 ) ( 15 ) ( 14 )

Plan amendment 2 — — — — —

Currency impact — — 36 38 — —

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Amounts recognized in the consolidated balance sheet consist of:

$ — $ 11 $ 205 $ 211 $ 17 $ 9

Other assets $ 10 $ — $ 283 $ 205 $ 23 $ 17

Employee compensation and benefits ( 1 ) ( 1 ) — — — —

( 1 ) ( 1 ) — — — —

Retirement and post-retirement benefits ( 5 ) ( 11 ) ( 43 ) ( 30 ) — —

( 11 ) ( 6 ) ( 30 ) ( 27 ) — —

Net asset (liability) $ 4 $ ( 12 ) $ 240 $ 175 $ 23 $ 17

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The change in benefit obligations for the U.S.

defined benefit plans for 2023 was driven by changes in discount rates, partially offset by changes in demographic assumptions.

The change in benefit obligations for the U.S.

defined benefit plans for 2022 was driven by the changes in actuarial assumptions, primarily discount rates and lump sum conversion rates.

defined benefit plans for 2024 was primarily driven by changes in discount rates, and for 2023 was primarily driven by changes in discount rates, partially offset by changes in demographic assumptions.

The change in benefit obligations for the U.S.

post-retirement benefit plan for 2023 and 2022 was primarily driven by changes in discount rates.

post-retirement benefit plan for 2024 was primarily driven by changes in discount and retiree mortality rates and for 2023 was primarily driven by changes in discount rates.

Investment policies and strategies as of October 31, 2024 .

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

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.

In the U.S., our RP Plan target asset allocations are approximately 60 percent growth funds, primarily equities, and approximately 40 percent fixed income investments and in the U.S.

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

Our DPSP target asset allocation is approximately 60 percent growth funds, primarily equities, and approximately 40 percent fixed income investments.

The general investment objective for all our plan assets is to obtain the optimum rate of investment return on the total investment portfolio consistent with the assumed level of risk.

Specific investment objectives for the plans' portfolios are to:

maintain and enhance the purchasing power of the plans' assets;

Specific investment objectives for the plans’ portfolios are to maintain and enhance the purchasing power of the plans’ assets;

achieve investment returns consistent with the level of risk being taken;

and earn performance rates of return in accordance with the benchmarks adopted for each asset class.

Outside of the U.S., our target asset allocation is from 21 to 70 percent to equities, from 28 to 54 percent to fixed income investments, and from zero to 51 percent to insurance contracts and cash.

Outside of the U.S., our target asset allocation is from 11 to 70 percent equities, from 30 to 54 percent fixed income investments, and from zero to 47 percent insurance contracts and cash.

All plans’ assets are broadly diversified.

Due to fluctuations in capital markets, our actual allocations of plan assets as of October 31, 2023 may differ from the target allocation.

Due to fluctuations in capital markets, our actual allocation of plan assets as of October 31, 2024 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.” In December 2021, we completed the second phase of the same contract.

defined benefit plan and classified it as “other investments.” In December 2021, we completed the second phase of the same contract.

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.

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Some fixed income securities that are not actively traded and are valued basis inputs, such as quoted price of similar securities, or other inputs that can be derived principally from or corroborated by observable market data are classified as Level 2 investments.

Other Investment - Other investment represents the U.K.

Other Investments - Other investments represents the U.K.

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

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Total assets measured at fair value $ 722 $ 58 $ 10 $ — $ 654

(a) Certain instruments that are measured at fair value using the NAV per share practical expedient have not been categorized in the fair value hierarchy.

The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the total value of plan assets.

Fair Value Measurement

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Total assets measured at fair value $ 171 $ 5 $ 31 $ — $ 135

(a) Certain instruments that are measured at fair value using the NAV per share practical expedient have not been categorized in the fair value hierarchy.

The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the total value of plan assets.

Fair Value Measurement as of

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Fixed income 467 — — — 467

Other investment 233 — — 233 —

Other investments 247 — — 247 —

Total assets measured at fair value $ 1,136 $ — $ — $ 247 $ 889

(a) Certain instruments that are measured at fair value using the NAV per share practical expedient have not been categorized in the fair value hierarchy.

The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the total value of plan assets.

Fair Value Measurement as of

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For 2025, we do not expect to contribute to our U.S.

Defined Benefit Plan or U.S.

Defined Benefit Plans or U.S.

Post-Retirement Benefit Plan, and we expect to contribute $ 13 million to our Non-U.S.

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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.

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

The expected long-term return on assets below represents an estimate of long-term returns on investment portfolios, consisting of a mixture of equities, fixed income and other investments, in proportion to the asset allocations of each of our plans.

We consider long-term rates of return, which are weighted based on the asset classes (both historical and forecasted) in which we expect our pension and post-retirement funds to be invested.

We consider long-term rates of return, which are weighted based on the asset classes (both historical and forecasted) in which we expect our pension and post-retirement

funds to be invested.

Discount rates reflect the current rate at which pension and post-retirement obligations could be settled based on the measurement dates of the plans, which is October 31.

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Total inventory $ 1,022 $ 985

The increase in inventory in 2023 was primarily driven by incremental stock build-up to secure supply to support order fulfillment along with an increase in demo inventory.

Gross inventory-related excess and obsolescence charges recorded in cost of products were $ 27 million in 2023, 2022 and 2021.

Inventory-related excess and obsolescence charges recorded in “cost of products” were $ 35 million in 2024 and $ 27 million in 2023 and 2022.

We record excess and obsolete inventory charges for inventory at our sites and at our contract manufacturers and suppliers, where we have non-cancellable purchase commitments.

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Property, plant and equipment, net $ 774 $ 761

The increase in property, plant and equipment, net, in 2023 is primarily driven by increased capital spending for capacity expansion and technology investments.

Asset impairments were zero in 2023, $ 1 million in 2022 and zero in 2021.

Asset impairments were zero in 2024, zero in 2023 and $ 1 million in 2022.

Depreciation expense was $ 126 million in 2024, $ 120 million in 2023 and $ 117 million in 2022.

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(in millions)

Prepaid expenses $ 284 $ 280

Prepaid assets $ 287 $ 284

Tax receivables 138 44

Other current assets 157 124

Total other current assets $ 582 $ 452

Prepaid expenses include deposits paid in advance to contract manufacturers of $ 210 million and $ 199 million as of October 31, 2023 and 2022, respectively.

Prepaid assets include deposits paid in advance to contract manufacturers of $ 200 million and $ 210 million as of October 31, 2024 and 2023, respectively.

The increase in tax receivables in 2024 as compared to 2023 was primarily due to a one-time discrete tax benefit.

See Note 5, “Income Taxes,” for additional information.

(in millions)

Pension assets $ 324 $ 231

Tax receivables 111 —

Other assets 86 109

Total other assets $ 521 $ 340

The increase in tax receivables in 2024 as compared to 2023 was primarily due to a one-time discrete tax benefit.

See Note 5, “Income Taxes,” for additional information.

COMMITMENTS AND CONTINGENCIES

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Litigation and contingencies.

On August 3, 2021, we entered into a Consent Agreement with the Directorate of Defense Trade Controls, Bureau of Political-Military Affairs, Department of State to resolve alleged violations of the Arms Export Control Act and the International Traffic in Arms Regulations ("ITAR").

Pursuant to the Consent Agreement, we were assessed a penalty of $ 6.6 million to be paid over three years, $ 2.5 million of which was suspended and designated for remediation activities over three years, including employment of a special compliance officer.

To date, we have paid $ 3.1 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.

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 violated Section 337 of the Tariff Act (“Section 337”) and should be enjoined from importing certain products that are manufactured outside of the U.S.

and which are alleged to infringe Centripetal patents.

On December 5, 2023, the ITC issued its Notice of Determination that Keysight did not unfairly import products in violation of Section 337 and the investigation was terminated.

Centripetal has appealed this determination.

On August 21, 2024, Keysight was served in Germany with a complaint filed in the Unified Patent Court alleging that certain Keysight products sold in Germany, France, Italy and the Netherlands infringe a European Centripetal patent.

We deny the allegations and are aggressively defending each case.

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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.

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 future periods.

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

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Stock Repurchase Program

On March 6, 2023, our board of directors approved a new stock repurchase program authorizing the purchase of up to $ 1,500 million of the company’s common stock, replacing the previously approved November 2021 program authorizing the purchase of up to $ 1,200 million of the company’s common stock, of which $ 225 million remained.

On March 6, 2023, our board of directors approved a stock repurchase program authorizing the purchase of up to $ 1,500 million of the company’s common stock, of which $ 485 million remained as of October 31, 2024.

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.

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Additionally, we accrued $ 3 million related to excise tax levied on share repurchases, net of issuances.

In 2022 we repurchased 5,442,280 shares of common stock for $ 849 million.

In 2023, we repurchased 4,913,548 shares of common stock for $ 702 million and accrued $ 4 million related to excise tax levied on share repurchases, net of issuances.

In 2022, we repurchased 5,442,280 shares of common stock for $ 849 million.

30 unchanged sentences

— ( 1 ) Selling, general and administrative

1 — Interest expense

( 4 ) ( 1 ) Benefit (provision) for income taxes

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The group’s solutions consist of electronic design and test software, instrumentation, systems, and related services.

These solutions are used in the simulation, design, validation, manufacturing, installation, and optimization of communication systems in wireless, wireline, enterprise, and aerospace, defense and government end markets.

In addition, the group provides automated software test solutions that include AI-ML to automatically identify, build, and execute tests critical to digital business success and a strong customer experience.

These solutions are used in the simulation, design, validation, manufacturing,

installation, and optimization of communication systems in wireless, wireline, enterprise, and aerospace, defense, and government end markets.

In addition, the group provides automated software test solutions to automatically identify, build, and execute tests critical to digital business success and a strong customer experience.

The Electronic Industrial Solutions Group (“EISG”) serves customers across a diverse set of end markets focused on automotive and energy, semiconductor solutions, and general electronics.

The group's solutions consist of electronic design and test software, instrumentation, systems, and related services.

The group’s solutions consist of electronic design, test and simulation software, instrumentation, systems, and related services.

These solutions are used in the simulation, design, validation, manufacturing, installation, and optimization of electronic equipment.

In addition, the group provides automated software test solutions to automatically identify, build, and execute tests critical to digital business success and a strong customer experience.

Our recent acquisition of ESI Group expands our application layer portfolio with simulation capabilities in automotive and general electronics sectors.

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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Income before taxes, as reported $ 865 $ 1,357 $ 1,285

“Restructuring and other” includes legal expenses of $ 17 million and $ 23 million in 2024 and 2023, respectively.

Major customers.

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Segment assets $ 4,721 $ 2,952 $ 7,673 $ 4,410 $ 1,920 $ 6,330

Capital expenditures $ 112 $ 84 $ 196 $ 126 $ 59 $ 185

Capital expenditures, net of government incentives $ 87 $ 60 $ 147 $ 112 $ 84 $ 196

The following table reconciles segment assets to our total assets:

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Cash and cash equivalents 1,796 2,472

Long-term investments 81 62

Long-term deferred tax assets 378 671

Tax receivables 249 44

Long-term investments 110 81

Accumulated amortization of other intangibles ( 1,477 ) ( 1,339 )

1 unchanged sentence

Total assets $ 9,269 $ 8,683

The increase in segment assets for the year ended October 31, 2024 was primarily due to additions in assets acquired as part of the ESI Group acquisition and an increase in tax receivables due to a one-time discrete tax benefit, partially offset by a one-time income tax charge to decrease the deferred tax assets values from the Singapore statutory tax rate to an incentive tax rate.

See Note 2, “Acquisitions,” and Note 5, “Income Taxes,” for additional information.

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

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October 31, 2023 $ 690 $ 233 $ 387 $ 1,310

SUBSEQUENT EVENT

On November 3, 2023 , we acquired 50.6% of the share capital of ESI Group SA ("ESI Group") for approximately $ 512 million, using existing cash.

On November 7, 2023 , we filed a tender offer to acquire the remaining outstanding shares of ESI Group at a price per share of 155 euros, to be primarily funded by approximately $ 457 million placed in an escrow account.

Should the tender offer result in ESI Group's remaining minority shareholders holding no more than 10 percent of ESI Group's share capital and voting rights, then Keysight intends to proceed with a mandatory squeeze-out of all remaining ESI Group shares at the end of the tender offer period and to delist ESI Group from Euronext Paris.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

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