Keysight Technologies Inc
For the period ended Jan 31, 2025. Filed Mar 6, 2025.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jan 31, 2025 · Filed Mar 6, 2025
KEYS$272.13+4.4%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-07-31; filed 2024-08-29.
0001601046-24-000061
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2025-01-31; filed 2025-03-06.
0001601046-25-000009
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 119 previous paragraphs and 107 current paragraphs.
49 unchanged; 40 reworded; 17 added; 30 removed; 0 previous and 1 current paragraphs rearranged.
Tables are not compared: 10 previous and 10 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (17)
Current report
Net income for the three months ended January 31, 2025 was $169 million, compared to $172 million for the same period last year. The decrease in net income for the three months ended January 31, 2025 was primarily driven by losses on derivative instruments, unfavorable mix, and higher R&D expense, partially offset by higher revenue, lower provision for income taxes andnet gains on our equity investments.
Current report
R&D expense for the three months ended January 31, 2025 increased 7 percent compared to the same period last year, primarily driven by continued investments in key growth opportunities in our end markets and leading-edge technologies and incremental costs from acquired businesses.
Current report
Selling, general and administrative expense for the three months ended January 31, 2025 was flat compared to the same period last year as lower amortization of acquisition-related balances and lower people-related costs resulting from the flexibility of our operating model and cost efficiency actions were offset by higher acquisition and integration costs and incremental costs from acquired businesses.
Current report
Operating margin for the three months ended January 31, 2025 decreased 1 percentage point compared to the same period last year, primarily driven by gross margin declines, partially offset by a decrease in operating expenses as a percentage of revenue.
Current report
The effective tax rate for the three months ended January 31, 2025 was lower than the statutory federal income tax rate primarily due to a lower effective tax rate on foreign earnings, partially offset by U.S. taxes on foreign earnings and the impact of Pillar Two minimum taxes.
Current report
The Organization for Economic Cooperation and Development (“OECD”) reached agreement among certain member countries to implement a minimum 15 percent tax rate on certain multinational enterprises, commonly referred to as Pillar Two. Assorted countries have enacted legislation to adopt Pillar Two model rules. A subset of rules are effective for Keysight in the current year, with the remaining rules effective as of November 1, 2025. While Keysight expects to qualify for transitional safe harbor relief in most jurisdictions in which Pillar Two rules are in effect, there are a limited number of jurisdictions where Keysight expects Pillar Two minimum taxes to potentially apply. The income tax provision for the three months ended January 31, 2025 includes the effects of Pillar Two minimum taxes based on currently enacted legislation and administrative guidance. Keysight continues to closely monitor Pillar Two developments, including the release of additional administrative guidance and the U.S. response to Pillar Two minimum taxes.
Current report
The tax expense for the three months ended January 31, 2025 was lower compared to the same period last year, primarily due to decreases in Global Intangible Low Taxed Income (“GILTI”) tax and income before taxes.
Current report
Gross margin for the three months ended January 31, 2025 was flat compared to same period last year as unfavorable mix was offset by higher revenue volume.
Current report
Selling, general and administrative expense for the three months ended January 31, 2025 increased 1 percent compared to the same period last year, primarily driven by incremental costs from acquired businesses.
Current report
Other operating expense (income), net for the three months ended January 31, 2025 was income of $6 million compared to income of $2 million for the same period last year.
Current report
Operating margin for the three months ended January 31, 2025 was flat compared to the same period last year as lower operating expenses as a percentage of revenue were offset by a slight decrease in gross margin.
Current report
EISG revenue for the three months ended January 31, 2025 decreased 1 percent compared to the same period last year. Foreign currency movements had an unfavorable impact of 1 percentage point, and acquisitions had an immaterial impact, on the year-over-year revenue change. Revenue declined in Asia Pacific, partially offset by growth in the Americas, and Europe was flat. The revenue decline reflects mixed demand across the electronic industrial markets with declines in automotive and energy, partially offset by increases in semiconductor measurements. Despite delays in near-term spending, driven by macroeconomic challenges, including inflationary pressures and trade restrictions, customer engagement remains high as they continued to progress in key long-term strategic initiatives, such as R&D for software-defined vehicles and autonomous driving, industrial IoT, digital health, fab capacity, and AI-driven demand for advanced semiconductor technologies.
Current report
R&D expense for the three months ended January 31, 2025 increased 1 percent compared to the same period last year, primarily driven by continued investments in key growth opportunities in our end markets and leading-edge technologies.
Current report
Selling, general and administrative expense for the three months ended January 31, 2025 decreased 4 percent compared to the same period last year, primarily driven by lower infrastructure costs resulting from the flexibility of our operating model and cost efficiency measures.
Current report
Other operating expense (income), net for the three months ended January 31, 2025 was income of $2 million compared to zero for the same period last year.
Current report
Operating margin for the three months ended January 31, 2025 decreased 3 percentage points compared to the same period last year, primarily driven by gross margin declines, partially offset by lower operating expenses as a percentage of revenue.
Current report
On September 19, 2024, Keysight announced that it had entered into a definitive agreement with Synopsys, Inc. (“Synopsys”) to acquire Synopsys’ Optical Solutions Group, a leading developer of optical design and analysis software tools. The transaction is subject to customary closing conditions, including review by regulatory authorities and the successful closing of Synopsys’ proposed acquisition of Ansys, which is pending regulatory approvals and is expected to close in the first half of 2025.
Removed paragraphs (30)
Previous report
Acquisition of ESI Group SA
Previous report
In the first quarter of fiscal 2024, we acquired all of the outstanding common stock of ESI Group SA (“ESI Group”) for $935 million, net of cash acquired, using existing cash. For the three and nine months ended July 31, 2024, our acquisition of ESI Group resulted in incremental revenue of $25 million and $119 million, respectively. In our discussion of changes in our results of operations, we have qualitatively disclosed the impact of the ESI Group acquisition. See Note 2, “Acquisitions,” for additional information.
Previous report
Macroeconomic environment
Previous report
Our global operations continued to be affected by a challenging macro environment, including high interest rates, currency movements, inflationary pressures, geopolitical tensions and trade restrictions. These factors resulted in lower demand, as our customers are also exercising caution in light of the same environment. Against this backdrop, we remained operationally disciplined by exercising our financial playbook and the structural flexibility in our operating model, while investing to expand our differentiated solutions portfolio and deepening our customer relationships. Consistent with the Keysight Leadership Model, our differentiated first-to-market solutions portfolio, technology leadership, customer relationships, and durable and resilient business model give us confidence in the long-term trajectory of the business and our ability to outperform in a variety of market conditions and deliver consistent long-term value to our customers.
Previous report
For discussion of risks related to potential impacts of macroeconomic headwinds and geopolitical challenges on our operations, business results and financial condition, see Part II Item 1A "Risk Factors.”
Previous report
Three and nine months ended July 31, 2024 and 2023
Previous report
Net income for the three and nine months ended July 31, 2024 was $389 million and $687 million, respectively, compared to $288 million and $831 million for the same periods last year. The increase in net income for the three months ended July 31, 2024 was primarily driven by an income tax benefit due to one-time discrete tax items, partially offset by lower revenue, higher acquisition and integration costs and amortization of acquisition-related balances. The decrease in net income for the nine months ended July 31, 2024 was primarily driven by lower revenue, higher acquisition and integration costs, restructuring costs and amortization of acquisition-related balances, partially offset by lower provision for income taxes due to one-time discrete tax items, favorable gross margin impact from the ESI Group acquisition and lower people-related costs.
Previous report
Gross margin for the three months ended July 31, 2024 decreased 3 percentage points compared to the same period last year, primarily driven by lower revenue volume, higher amortization of acquisition-related balances and unfavorable mix, partially offset by lower material andvariable people-related costs. Gross margin for the nine months ended July 31, 2024 decreased 2 percentage points compared to the same period last year, primarily driven by lower revenue volume, higher amortization of acquisition-related balances, higher restructuring costs and unfavorable mix, partially offset by lower material costs, favorable gross margin impact from the ESI Group acquisition and lower variable people-related costs.
Previous report
R&D expense for the three and nine months ended July 31, 2024 increased 5 percent and 3 percent compared to the same periods last year, primarily driven by incremental costs from acquired businesses, partially offset by lower variable people-related costs. We continue to prudently prioritize investment in key growth opportunities in our end markets and leading-edge technologies.
Previous report
Selling, general and administrative expense for the three months ended July 31, 2024 increased 3 percent compared to the same period last year, primarily driven by higher acquisition and integration costs, incremental costs from acquired businesses, partially offset by lower people-related costs and infrastructure costs, reflecting the impact of our cost flexibility, and efficiency measures. Selling, general and administrative expense for the nine months ended July 31, 2024 increased 6 percent compared to the same period last year, primarily driven by higher acquisition and integration costs, incremental costs from acquired businesses, higher amortization of acquisition-related balances and higher restructuring costs, partially offset by lower people-related andinfrastructure costs, reflecting the impact of our cost flexibility, and efficiency measures.
Previous report
Other operating expense (income), net for the three and nine months ended July 31, 2024 was income of $5 million and $10 million, respectively, compared to income of $3 million and $11 million for the same periods last year.
Previous report
Operating margin for the three and nine months ended July 31, 2024 decreased 10 percentage points and 9 percentage points, respectively, compared to the same periods last year, primarily driven by higher selling, general and administrative and R&D expenses on a lower revenue, coupled with gross margin declines.
Previous report
There was a tax benefit for the three and nine months ended July 31, 2024, as compared to the overall tax expense for the same periods last year, primarily due to one-time discrete tax benefits, as explained below, and a decrease in income before taxes in the current year.
Previous report
The company believes the position meets the more likely than not recognition threshold. The company 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.
Previous report
The discrete tax benefit for the three and nine months ended July 31, 2024 also includes a $61 million benefit for the settlement of a Malaysia uncertain tax position. In the fourth quarter of fiscal year 2017, Keysight was assessed and paid income tax and penalties in Malaysia on gains related to the transfer of intellectual property rights. The company disputed this assessment and filed an appeal with the Court of Appeal in Malaysia. The Court of Appeal’s decision was rendered in Keysight’s favor on May 24, 2024, and the company received a refund of the income tax and penalties. At the time of the original assessment, the company had recorded a tax reserve for the assessed amount; the tax reserve was released as a result of the Court of Appeal decision.
Previous report
Additionally, the income tax benefit for the three and nine months ended July 31, 2024 is offset by a discrete expense of $35 million due to a change in the potential U.S. benefit associated with the future resolution of non-U.S. tax reserves.
Previous report
In addition, the Organization for Economic Cooperation and Development reached agreement among various countries to implement a minimum fifteen percent tax rate on certain multinational enterprises, commonly referred to as Pillar Two. Many countries continue to announce changes in their tax laws and regulations based on the Pillar Two proposals. We are continuing to evaluate the impact of these proposed and enacted legislative changes as new guidance becomes available. Some of these legislative changes could result in double taxation of our non-U.S. earnings, a reduction in the tax benefit received from our tax incentives, or other impacts to our effective tax rate and tax liabilities. Given the numerous proposed tax law changes and the uncertainty regarding such legislative changes, the impact of Pillar Two cannot be determined at this time.
Previous report
R&D expense for the three months ended July 31, 2024 increased 2 percent compared to the same period last year, primarily driven by incremental costs of acquired businesses, partially offset by lower variable people-related costs. R&D expense for the nine months ended July 31, 2024 decreased 1 percent compared to the same period last year, primarily driven by lower variable people-related costs, partially offset by incremental costs of acquired businesses. We continue to prudently prioritize investment in key growth opportunities in our end markets and leading-edge technologies.
Previous report
Selling, general and administrative expense for the three and nine months ended July 31, 2024 decreased 1 percent and 6 percent, respectively, compared to the same periods last year, primarily driven by lower people-related and infrastructure costs, partially offset by incremental costs of acquired businesses, reflecting the impact of our cost flexibility, and efficiency measures.
Previous report
The EISG revenue for the three and nine months ended July 31, 2024 decreased 20 percent and 14 percent, respectively, compared to the same periods last year. Revenues associated with acquisitions had a favorable impact of 5 percentage points and 8 percentage points, respectively, on the year-over-year revenue change for the three and nine months ended July 31, 2024. Foreign currency movements had an unfavorable impact of 1 percentage point on the year-over-year revenue change for the three and nine months ended July 31, 2024. For the three months ended July 31, 2024, revenue declined across all regions. For the nine months ended July 31, 2024, revenue declined in Asia Pacific and the Americas, partially offset by an increase in Europe. For the three and nine months ended July 31, 2024, revenue declined across all markets.
Previous report
The decline in revenue reflects the normalization in demand as macroeconomic challenges, such as inflation and high interest rates, continued to slow some investments, primarily in the manufacturing sector. Despite delays in near-term spending, customer engagement remains high as they continued to invest in key long-term strategic initiatives, such as next-generation EV and AV, industrial IoT, digital health, and advanced semiconductor technologies.
Previous report
Gross margin for the three and nine months ended July 31, 2024 decreased 5 percentage points and 2 percentage points, respectively, as compared to the same periods last year, primarily driven bylower revenue volume and unfavorable mix, partially offset by favorable gross margin impact from the ESI Group acquisition and lower variable people-related costs.
Previous report
Selling, general and administrative expense for the three and nine months ended July 31, 2024 increased 2 percent and 8 percent, respectively, compared to the same periods last year, primarily driven byincremental costs from acquired businesses, partially offset by lower people-related and infrastructure costs, reflecting the impact of our cost flexibility, and efficiency measures.
Previous report
Other operating expense (income), net for the three months ended July 31, 2024 and 2023 was income of $3 million and $1 million, respectively. Other operating expense (income), net for the nine months ended July 31, 2024 and 2023 was income of $3 million.
Previous report
Operating margin for the three and nine months ended July 31, 2024 decreased 14 percentage points and 10 percentage points, respectively, compared to the same period last year, primarily driven by higher selling, general and administrative expense and R&D expense on a lower revenue, coupled with gross margin declines.
Previous report
•For the nine months ended July 31, 2024, we recorded a discrete tax benefit of $165 million related to the U.S. intangible asset amortization deduction for purposes of determining income or loss under IRC § 951A(c) and amended our U.S. federal income tax returns for the open tax years to claim the deduction and recognized a long-term tax receivable in the condensed consolidated balance sheet. See Note 5, “Income Taxes,” for additional information.
Previous report
•For the nine months ended July 31, 2023, we terminated forward-starting interest rate swap agreements resulting in proceeds of $107 million. See Note 9, “Derivatives,” for additional information.
Previous report
ESI Group debt and credit facility assumed
Previous report
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 nine months ended July 31, 2024, we repaid the debt assumed as part of the acquisition.
Previous report
As part of the ESI Group acquisition, we assumed a revolving credit facility of 10 million euros that was subsequently terminated in April 2024.
Reworded paragraphs (40)
Previous wording
The following discussion should be read in conjunction with the condensed consolidated financial statements and notes thereto included elsewhere in this Form 10-Q and our Annual Report on Form 10-K. This report contains forward-looking statements which include but are not limited to predictions, future guidance, projections, beliefs, and expectations about the company’s trends, seasonality, cyclicality and growth in, and drivers of, the markets we sell into, our strategic direction, earnings from our foreign subsidiaries, remediation activities, new solution and service introductions, the ability of our solutions to meet market needs, changes to our manufacturing processes, the use of contract manufacturers, the impact of government regulations on our ability to conduct operations, our liquidity position, our ability to generate cash from operations, growth in our businesses, our investments, the potential impact of adopting new accounting pronouncements, our financial results, our purchase commitments, our contributions to our pension plans, the selection of discount rates and recognition of any gains or losses for our benefit plans, our cost-control activities, savings and headcount reduction recognized from our restructuring programs and other cost saving initiatives, and other regulatory approvals, the integration of our completed acquisitions and other transactions, and our transition to lower-cost regions. The forward-looking statements involve risks and uncertainties that could cause Keysight’s results to differ materially from management’s current expectations. Such risks and uncertainties include, but are not limited to, the impact of global economic conditions such as inflation or potential recession, slowing demand for products or services, volatility in financial markets, reduced access to credit, increased interest rates, the existence of political or economic instability, uncertainty relating to national elections and election results in the U.S. and U.K., impacts of geopolitical tension and conflict in regions outside of the U.S., the impacts of increased trade tension and tightening of export control regulations, the impact of new and ongoing litigation, impacts related to endemic and pandemic conditions, impacts related to net zero emissions commitments, and the impact of volatile weather caused by environmental conditions such as climate change. Our actual results could differ materially from the results contemplated by these forward-looking statements due to various factors, including but not limited to those risks and uncertainties discussed in Part II Item 1A and elsewhere in this Form 10-Q.
Current wording
The following discussion should be read in conjunction with the condensed consolidated financial statements and notes thereto included elsewhere in this Form 10-Q and our Annual Report on Form 10-K. This report contains forward-looking statements which include but are not limited to predictions, future guidance, projections, beliefs, and expectations about the company’s trends, seasonality, cyclicality and growth in, and drivers of, the markets we sell into, our strategic direction, earnings from our foreign subsidiaries, remediation activities, new solution and service introductions, the ability of our solutions to meet market needs, changes to our manufacturing processes, the use of contract manufacturers, the impact of government regulations on our ability to conduct operations, our liquidity position, our ability to generate cash from operations, growth in our businesses, our investments, the potential impact of adopting new accounting pronouncements, our financial results, our purchase commitments, our contributions to our pension plans, the selection of discount rates and recognition of any gains or losses for our benefit plans, our cost-control activities, savings and headcount reduction recognized from our restructuring programs and other cost saving initiatives, and other regulatory approvals, the integration of our completed acquisitions and other transactions, and our transition to lower-cost regions. The forward-looking statements involve risks and uncertainties that could cause Keysight’s results to differ materially from management’s current expectations. Such risks and uncertainties include, but are not limited to, the impact of global economic conditions such as inflation or potential recession, slowing demand for products or services, volatility in financial markets, reduced access to credit, changes in interest rates, the existence of political or economic instability, uncertainty related to the impact of national elections results in the U.S., U.K., and Europe, impacts of geopolitical tension and conflict in regions outside of the U.S., the impacts of increased trade tensions such as an imposition of or increase in tariffs and tightening of export control regulations, the impact of new and ongoing litigation, impacts related to net zero emissions commitments, and the impact of volatile weather caused by environmental conditions such as climate change. Our actual results could differ materially from the results contemplated by these forward-looking statements due to various factors, including but not limited to those risks and uncertainties discussed in Part II Item 1A and elsewhere in this Form 10-Q.
Previous wording
Keysight Technologies, Inc. (“we,” “us,” “Keysight” or the “company”), incorporated in Delaware on December 6, 2013, is a global innovator in the computing, communications and electronics market, committed to advancing our customers’ business success by helping them solve critical challenges in the development and commercialization of their products and services. 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.
Current wording
Keysight Technologies, Inc. (“we,” “us,” “our,” “Keysight” or “the company”), incorporated in Delaware on December 6, 2013, is a global innovator in the computing, communications and electronics market, committed to advancing our customers’ business success by helping them solve critical challenges in the development and commercialization of their products and services. 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 on ever-shorter schedules.
Previous wording
We invest in research and development (“R&D”) to align our business with available markets and position the company for growth. Our R&D efforts focus on the development of new software and hardware products, as well as improvements to existing products, and customer solutions aligned to the industries that we serve. We anticipate that we will continue to have significant R&D expenditures in order to maintain our competitive position with a continuous flow of innovative, high-quality software, customer solutions, products and services. We remain committed to investment in R&D and have focused our development efforts on strategic opportunities to capture future growth.
Current wording
We invest in research and development (“R&D”) to align our business with available markets and position the company for growth. Our R&D efforts focus on the development of new software and hardware products, as well as improvements to existing products, and solutions aligned to the industries that we serve. We anticipate that we will continue to have significant R&D expenditures in order to maintain our competitive position with a continuous flow of innovative, high-quality software, solutions, products and services. We remain committed to investment in R&D and have focused our development efforts on strategic opportunities to capture future growth.
Previous wording
Total orders for the three and nine months ended July 31, 2024 were $1,249 million and $3,688 million, respectively, which were flat and decreased 5 percent, compared to the same periods last year. Acquisitions had a favorable impact of 3 percentage points and 4 percentage points, respectively, on the year-over-year order change for the three and nine months ended July 31, 2024. Foreign currency movements had an unfavorable impact of 1 percentage point on the year-over-year order change for the three and nine months ended July 31, 2024. For the three months ended July 31, 2024, orders increased in Asia Pacific offset by declines in the Americas and Europe. For the nine months ended July 31, 2024, orders declined across all regions.
Current wording
Total orders for the three months ended January 31, 2025 were $1,263 million, an increase of 4 percent compared to the same period last year. Foreign currency movements had an unfavorable impact of 1 percentage point, and acquisitions had a favorable impact of 1 percentage point, on the year-over-year order change. For the three months ended January 31, 2025, orders increased in Asia Pacific and Europe, partially offset by a decline in the Americas.
Previous wording
Revenue for the three and nine months ended July 31, 2024 was $1,217 million and $3,692 million, respectively, a decrease of 12 percent and 11 percent, compared to the same periods last year. Revenue associated with acquisitions had a favorable impact of 2 percentage points and 3 percentage points, respectively, on the year-over-year revenue change for the three and nine months ended July 31, 2024. Foreign currency movements had an unfavorable impact of 1 percentage point on the year-over-year revenue change for the three and nine months ended July 31, 2024. For the three and nine months ended July 31, 2024, revenue for both the Communications Solutions Group (“CSG”) and Electronic Industrial Solutions Group (“EISG”) declined year-over-year. Revenue from CSG and EISG represented 70 percent and 30 percent, respectively, of total revenue for the three months ended July 31, 2024. Revenue from CSG and EISG represented 68 percent and 32 percent, respectively, of total revenue for the nine months ended July 31, 2024.
Current wording
Revenue for the three months ended January 31, 2025 was $1,298 million, an increase of 3 percent compared to the same period last year. Foreign currency movements had an unfavorable impact of 1 percentage point, and acquisitions had an immaterial impact, on the year-over-year revenue change. A revenue increase in the Communications Solutions Group (“CSG”) was partially offset by a slight decline in the Electronic Industrial Solutions Group (“EISG”). Revenue from CSG and EISG represented 68 percent and 32 percent, respectively, of total revenue for the three months ended January 31, 2025.
Previous wording
Our first-to-market solutions strategy enables customers to develop new technologies and accelerate innovation and provides a platform for Keysight's long-term growth. Our customers are expected to continue to make R&D investments in certain next-generation technologies and applications, including evolution of 5G, early 6G, high-speed data center networks and infrastructure, satellite networks, Artificial Intelligence (“AI”), next generation electric vehicles (“EV”) and autonomous vehicles (“AV”), industrial internet of things (“IoT”), and defense modernization. We continue to engage actively with our customers, and closely monitor the current macroeconomic environment, including trade, tariffs, monetary and fiscal policies and geopolitical tensions. Despite the near-term situation, we remain confident in the long-term secular growth trends of our markets and our ability to outperform in a variety of market conditions.
Current wording
Our first-to-market solutions strategy enables customers to develop new technologies and accelerate innovation and provides a platform for Keysight's long-term growth. Our customers are expected to continue to make R&D investments in certain next-generation technologies and applications, including evolution of 5G, early 6G, high-speed data center networks and infrastructure, satellite networks, Artificial Intelligence (“AI”), industrial internet of things (“IoT”), defense modernization, and next generation electric vehicles (“EV”) and autonomous vehicles (“AV”). We continue to engage actively with our customers and closely monitor the current macroeconomic environment, including trade restrictions, tariffs and tightening of export control regulations, monetary and fiscal policies, and geopolitical tensions. We remain confident in the long-term secular growth trends of our markets and our ability to outperform in a variety of market conditions.
Previous wording
There were no material changes during the three and nine months ended July 31, 2024 to the critical accounting estimates described in “Management's Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the fiscal year ended October 31, 2023.
Current wording
There were no material changes during the three months ended January 31, 2025 to the critical accounting estimates described in “Management's Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the fiscal year ended October 31, 2024.
Previous wording
Our revenues, costs and expenses, and monetary assets and liabilities are exposed to changes in foreign currency exchange rates as a result of our global operating and financing activities. We hedge revenues, expenses and balance sheet exposures that are not denominated in the functional currencies of our subsidiaries on a short-term and anticipated basis. The result of the hedging has been included in the condensed consolidated balance sheet and statement of operations. We experience some fluctuations within individual lines of the condensed consolidated balance sheet and condensed consolidated statement of operations because our hedging program is not designed to offset the currency movements in each category of revenues, expenses, monetary assets and liabilities. Our hedging program is designed to hedge short-term currency movements based on a rolling period of up to twelve months. Therefore, we are exposed to currency fluctuations over the longer term. To the extent that we are required to pay for all, or portions, of an acquisition price in foreign currencies, we may enter into foreign exchange contracts to reduce the risk that currency movements will impact the U.S. dollar cost of the transaction.
Current wording
Our revenues, costs and expenses, and monetary assets and liabilities are exposed to changes in foreign currency exchange rates as a result of our global operating, investing and financing activities. We hedge revenues, expenses, and balance sheet exposures that are not denominated in the functional currencies of our subsidiaries on a short-term and anticipated basis. The result of the hedging has been included in the condensed consolidated balance sheet and condensed consolidated statement of operations. We experience some fluctuations within individual lines of the condensed consolidated balance sheet and condensed consolidated statement of operations because our hedging program is not designed to offset the currency movements in each category of revenues, expenses, monetary assets and liabilities. Our cash flow hedging program is designed to hedge short-term currency movements based on a rolling period of up to twelve months. Therefore, we are exposed to currency fluctuations over the longer term. To the extent that we are required to pay for all, or portions, of an acquisition price in foreign currencies, we may enter into foreign exchange contracts to reduce the risk that currency movements will impact the U.S. dollar cost of the transaction.
Previous wording
Results from Operations - Three and nine months ended July 31, 2024 and 2023
Current wording
Results from Operations - Three months ended January 31, 2025 and 2024
Previous wording
The following table provides the percent change in revenue for the three and nine months ended July 31, 2024 by geographic region and the impact of foreign currency movements as compared to the same periods last year.
Current wording
The following table provides the percent change in revenue for the three months ended January 31, 2025 by geographic region and the impact of foreign currency movements as compared to the same period last year.
Previous wording
Gross margin for the three months ended July 31, 2024 decreased 1 percentage point compared to same period last year, primarily driven by lower revenue volume and unfavorable mix, partially offset by lower material andvariable people-related costs. Gross margin for nine months ended July 31, 2024 was flat as compared to the same period last year as lower material andvariable people-related costs were offset by lower revenue volume and unfavorable mix.
Current wording
Gross margin for the three months ended January 31, 2025 decreased 1 percentage point compared to the same period last year, primarily driven by unfavorable mix, partially offset by lower restructuring costs.
Previous wording
Other operating expense (income), net for the three months ended July 31, 2024 and 2023 was income of $3 million and $2 million, respectively. Other operating expense (income), net for the nine months ended July 31, 2024 and 2023 was income of $8 million.
Current wording
Other operating expense (income), net for the three months ended January 31, 2025 was income of $8 million compared to income of $2 million for the same period last year.
Previous wording
Interest income for the three and nine months ended July 31, 2024 was $19 million and $60 million, respectively, compared to $29 million and $70 million for the same periods last year and primarily relates to interest earned on our cash balances. Interest expense for the three and nine months ended July 31, 2024 was $21 million and $61 million, respectively, compared to $19 million and $58 million for the same periods last year and primarily relates to interest on our senior notes.
Current wording
Interest income for the three months ended January 31, 2025 was $19 million compared to $23 million for the same period last year and primarily relates to interest earned on our cash balances. Interest expense for both the three months ended January 31, 2025 and 2024 was $20 million and primarily relates to interest on our senior notes.
Previous wording
Other income (expense), net for the three and nine months ended July 31, 2024 was income of $10 million and $15 million, respectively, compared to income of $14 million and $28 million for the same periods last year andprimarily includes income related to our defined benefit and post-retirement benefit plans, the change in fair value of our equity and other investments, currency impacts, and income attributable to non-controlling interests. The decrease in other income (expense), net for the three months ended July 31, 2024 is primarily driven by decreased net gains on our equity investments, partially offset by net currency gains. The decrease in other income (expense), net for the nine months ended July 31, 2024 is primarily driven by decreased net gains on our equity investments and higher pension costs driven by higher interest cost on benefit obligation, partially offset by net currency gains.
Current wording
Other income (expense), net for the three months ended January 31, 2025 was expense of $18 million compared to income of $5 million for the same period last year and primarily includes income related to our defined benefit and post-retirement benefit plans, gains (losses) due to currency and derivative instruments, the change in fair value of our equity and other investments, and income attributable to non-controlling interests. The decrease in other income (expense), net for the three months ended January 31, 2025 is primarily driven by losses on derivative instruments (see Note 9, “Derivatives,” for additional information), partially offset by net gains on our equity investments.
Previous wording
As of July 31, 2024, our headcount was approximately 15,400 compared to approximately 14,800 at July 31, 2023. The increase was primarily driven by acquisitions, partially offset by reductions from our cost efficiency measures.
Current wording
As of January 31, 2025, our headcount was approximately 15,400 compared to approximately 15,500 at January 31, 2024.
Previous wording
The discrete tax benefit for the three and nine months ended July 31, 2024 includes a $165 million benefit related to the deduction in the U.S. of intangible assets for purposes of determining income or loss under IRC § 951A(c). On June 14, 2019, the U.S. Department of the Treasury (“Treasury”) issued final regulations relating to Global Intangible Low Taxed Income (“GILTI”) under IRC § 951A (the “tax regulations”). The tax regulations contained language which disallowed GILTI tax deductions for intangible asset amortization resulting from the Singapore restructuring completed in 2018. During the quarter, the company concluded, in response to recent U.S. Supreme Court decisions on a number of relevant cases, the evolving global tax landscape and other changes in circumstances, that Treasury exceeded its regulatory authority and the intangible asset amortization should be deductible. The company amended its U.S. federal income tax returns for the open tax years to claim the deduction and recognized the discrete benefit in the condensed consolidated financial statements. The tax receivable resulting from the amended returns is reflected as “other assets” in the condensed consolidated balance sheet. The GILTI tax benefit for the fiscal year 2024 amortization is included in the annual effective tax rate, and the Singapore intangible assets will continue to be amortized for GILTI tax purposes until 2033.
Current wording
On June 14, 2019, the U.S. Department of the Treasury (“Treasury”) issued final regulations relating to GILTI under IRC § 951A (the “tax regulations”). The tax regulations contained language that disallowed GILTI tax deductions for intangible asset amortization resulting from the Singapore restructuring completed in 2018. In the third quarter of 2024, we concluded that Treasury exceeded its regulatory authority, and the intangible asset amortization should be deductible. We amended our U.S. federal income tax returns for the open tax years to claim the deduction and filed a lawsuit seeking a tax refund. See Note 13, “Commitments and Contingencies,” for additional information. The GILTI tax benefit resulting from the current year intangible amortization is considered in the tax expense for the three months ended January 31, 2025, but not in the comparable period. The Singapore intangible assets will continue to be amortized for GILTI tax purposes until 2033. If we are ultimately unsuccessful in defending our refund claim, we will be required to reverse the benefit previously recorded, which would most likely result in a material increase in the effective tax rate and income tax liability.
Previous wording
The income tax benefit for the three and nine months ended July 31, 2024 included a net discrete benefit of $179 million and $178 million, respectively. The income tax expense for the three and nine months ended July 31, 2023 included a net discrete expense of $19 million and $21 million, respectively.
Current wording
The income tax expense for the three months ended January 31, 2025 included a net discrete benefit of $1 million. The income tax expense for the three months ended January 31, 2024 included a net discrete expense of $2 million.
Previous wording
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 expired July 31, 2024. The expiration of the Singapore tax incentive in the current year has been reflected in the annual tax forecast. The impact of the tax incentives decreased the income tax provision by $35 million and $73 million for the nine months ended July 31, 2024 and 2023, respectively. The decrease in the tax benefit for the nine months ended July 31, 2024 is primarily due to a decrease in earnings taxed at incentive rates and the impact of the expiration of the Singapore tax incentive. The company is pursuing options to renew the Singapore tax incentive with retroactive effect to August 1, 2024.
Current wording
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 impact of the tax incentives decreased income taxes by $12 million for the three months ended January 31, 2025.
Previous wording
We are subject to income taxes in the U.S. and various other countries globally. Changes in tax law, tax rates, or in the composition of earnings in countries with differing tax rates may affect deferred tax assets and liabilities recorded and our future effective tax rate. On August 16, 2022, the U.S. government enacted the Inflation Reduction Act of 2022 that included changes to the U.S. corporate income tax system, including a fifteen percent minimum tax based on “adjusted financial statement income,” which is effective for Keysight in the current year. Based on the current year forecast, the company does not expect to incur any additional U.S. tax liability from the application of the new minimum tax rules.
Current wording
We are subject to income taxes in the U.S. and several countries globally. Changes in tax law, tax rates, or in the amount of earnings in countries with differing tax rates may affect certain deferred tax assets and liabilities recorded and our effective tax rate.
Previous wording
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 are provided to the segments in order to realize economies of scale and to efficiently use resources. Corporate charges include legal, accounting, real estate, insurance services, information technology services, treasury and other corporate infrastructure expenses. Segment allocations are determined on a basis that we consider to be a reasonable reflection of the utilization of services provided to, or benefits received by, the segments. Newly acquired businesses are not allocated these charges until integrated into our shared services and corporate infrastructure.
Current wording
A significant portion of the segments' expenses arise from allocated corporate charges, expenses related to our centralized sales force, and service, marketing and technology functions that are provided to the segments in order to realize economies of scale and to efficiently use resources. Corporate charges include legal, accounting, real estate, insurance services, information technology services, treasury and other corporate infrastructure expenses. Segment allocations are determined on a basis that we consider to be a reasonable reflection of the utilization of services provided to, or benefits received by, the segments. Newly acquired businesses are not allocated these charges until integrated into our shared services and corporate infrastructure.
Previous wording
The CSG serves customers spanning the global commercial communications and aerospace, defense, and government end markets. 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 to automatically identify, build, and execute tests critical to digital business success and a strong customer experience.
Current wording
CSG serves customers spanning the global commercial communications and aerospace, defense, and government end markets. 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 to automatically identify, build, and execute tests critical to digital business success and a strong customer experience.
Previous wording
The CSG revenue for the three and nine months ended July 31, 2024 decreased 8 percent and 10 percent, respectively, compared to the same periods last year. Revenues associated with acquisitions had a favorable impact of 1 percentage point on the year-over-year revenue change for the three and nine months ended July 31, 2024. Foreign currency movements had an unfavorable impact of 1 percentage point on the year-over-year revenue change for the three and nine months ended July 31, 2024. Revenue declined across all regions and in both the commercial communications and the aerospace, defense, and government end markets for the three and nine months ended July 31, 2024. The decline was driven primarily by overall lower investments and a strong compare to last year, which benefited from robust backlog conversion. Our customers continued to make R&D investments in next-generation technologies and applications, including AI-driven data center expansion, ongoing 5G standards development and deployment, 400G/800G/terabit Ethernet, development of new communications technologies (e.g., 6G, Open Radio Access Networks, commercial non-terrestrial networks, quantum), high-speed networking and major defense and government programs worldwide.
Current wording
CSG revenue for the three months ended January 31, 2025 increased 5 percent compared to the same period last year. Foreign currency movements had an unfavorable impact of 1 percentage point, and acquisitions had a favorable impact of 1 percentage point, on the year-over-year revenue change. Revenue grew across all regions and in both the commercial communications and the aerospace, defense, and government end markets. The increase was primarily driven by higher investments in high-speed networks to support increasing demand for AI capabilities coupled with higher investment in aerospace and defense solutions. Our customers continued to make R&D investments in next-generation technologies and applications, including AI-driven data center expansion, ongoing 5G standards development and deployment, 400G/800G/Ethernet, development of new communications technologies (e.g., 6G, Open Radio Access Networks, commercial non-terrestrial networks, quantum), high-speed networking and major defense and government programs worldwide.
Previous wording
The commercial communications end market revenue for the three and nine months ended July 31, 2024 decreased 6 percent and 10 percent, respectively, year-over-year and represented 68 percent and 66 percent of total Communications Solutions Group revenue. For the three months ended July 31, 2024, revenue declined in Europe and the Americas, partially offset by an increase in Asia Pacific. For the nine months ended July 31, 2024, revenue declined across all regions. For the three and nine months ended July 31, 2024, the revenue decline was primarily driven by continued weakness in the wireless communications ecosystem, particularly smartphones, partially offset by higher investments in AI Workload Emulation tools and infrastructure solutions. We continued to see investments in high-speed networks due to increasing need for AI capabilities in the data center infrastructure ecosystem, which is driving demand for our 400G/800G/terabit Ethernet solutions, both in R&D and manufacturing.
Current wording
Our commercial communications end market revenue for the three months ended January 31, 2025 increased 5 percent year-over-year and represented 65 percent of total CSG revenue. Revenue grew across all regions. The year-over-year increase in revenue was primarily driven by R&D investments in terabit solutions and expanding 400G/800G transceiver manufacturing capacity to meet rising demand for AI capabilities. We continued to see investments in high-speed networks due to increasing need for AI capabilities in the data center infrastructure ecosystem, which is driving demand for our 400G/800G/Ethernet solutions, both in R&D and manufacturing.
Previous wording
The aerospace, defense, and government end market revenue for the three and nine months ended July 31, 2024, decreased 10 percent and 9 percent, respectively, year-over-year and represented 32 percent and 34 percent of total Communications Solutions Group revenue. For the three and nine months ended July 31, 2024, revenue declined in Asia Pacific and the Americas, partially offset by an increase in Europe. We continue to see investments in radar and spectrum operations, space and satellite solutions and signal monitoring.
Current wording
Our aerospace, defense, and government end market revenue for the three months ended January 31, 2025 increased 5 percent year-over-year and represented 35 percent of total CSG revenue. Revenue growth in the Americas and Asia Pacific was partially offset by a decline in Europe. The year-over-year increase in revenue was primarily driven by strong growth in space and satellite solutions coupled with continued investments in radar and spectrum operations. We continue to see investments in radar and spectrum operations, space and satellite solutions and signal monitoring.
Previous wording
R&D expense for the three and nine months ended July 31, 2024 increased 10 percent and 11 percent, respectively, compared to the same periods last year, primarily driven by incremental costs from acquired businesses, partially offset by lower variable people-related costs. We continue to prudently prioritize investment in key growth opportunities in our end markets and leading-edge technologies.
Current wording
R&D expense for the three months ended January 31, 2025 increased 10 percent compared to the same period last year, primarily driven by continued investments in key growth opportunities in our end markets and leading-edge technologies and incremental costs from acquired businesses.
Previous wording
The 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, 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.
Current wording
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, 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. The group also provides automated software test solutions to automatically identify, build, and execute tests critical to digital business success and a strong customer experience. In addition, the group provides software with integrated simulation capabilities and automated software test solutions to automatically identify, build, and execute tests critical to digital business success and a strong customer experience.
Previous wording
Operating margin for the three months ended July 31, 2024 decreased 4 percentage points compared to the same period last year, primarily driven by higher R&D and selling, general and administrative expenses on a lower revenue, coupled with gross margin declines. Operating margin for the nine months ended July 31, 2024 decreased 2 percentage points compared to the same period last year, primarily driven by higher R&D and selling, general and administrative expenses as a percentage of sales.
Current wording
Gross margin for the three months ended January 31, 2025 decreased 4 percentage points compared to the same period last year, primarily driven byunfavorable mix.
Previous wording
Net cash provided by operating activities decreased $337 million during the nine months ended July 31, 2024 compared to the same period last year.
Current wording
Net cash provided by operating activities increased $50 million during the three months ended January 31, 2025 compared to the same period last year.
Previous wording
•Net income for the nine months ended July 31, 2024 decreased $144 million compared to the same period last year. Non-cash adjustments to net income were $25 million higher, primarily due to a $40 million increase in amortization and depreciation, a $9 million decrease in unrealized gains on equity and other investments, and a $7 million increase in excess and obsolete inventory-related charges, partially offset by a $31 million increase in deferred tax benefit. Net income for the nine months ended July 31, 2024 includes a $61 million benefit for the settlement of a Malaysia uncertain tax position. See Note 5, “Income Taxes,” for additional information.
Current wording
•Net income for the three months ended January 31, 2025 decreased $3 million compared to the same period last year. Non-cash adjustments to net income were $35 million lower, primarily due to a $33 million increase in unrealized gains on equity and other investments and a $16 million increase in deferred tax benefit, partially offset by a $14 million increase in share-based compensation expense.
Previous wording
•The aggregate of accounts receivable, inventory and accounts payable provided net cash of $75 million during the first nine months of fiscal 2024 compared to net cash used of $148 million in the same period last year, primarily due to timing of collections relative to revenue, a lower increase in inventory and lower payments. The amount of cash flow generated from or used by the aggregate of accounts receivable, inventory and accounts payable depends upon the cash conversion cycle, which represents the number of days that elapse from the day we pay for the purchase of raw materials and components to the collection of cash from our customers and can be significantly impacted by the timing of shipments and purchases, as well as collections and payments in a period.
Current wording
•The aggregate change in accounts receivable, inventory and accounts payable provided net cash of $11 million during the first three months of fiscal 2025 compared to net cash provided of $83 million in the same period last year. The amount of cash flow generated from or used by the aggregate of accounts receivable, inventory and accounts payable depends upon the cash conversion cycle, which represents the number of days that elapse from the day we pay for the purchase of raw materials and components to the collection of cash from our customers and can be significantly impacted by the timing of shipments and purchases, as well as collections and payments in a period.
Previous wording
•Other movements in assets and liabilities used net cash of $217 million during the first nine months of fiscal 2024 compared to net cash used of $48 million in the same period last year, primarily driven by lower cash from deferred revenue, payments on settlement of foreign exchange forward contracts associated with the ESI Group acquisition, lower income and other tax accruals, net of payments, and changes in other assets and liabilities.
Current wording
•Movements in other assets and liabilities provided net cash of $107 million during the first three months of fiscal 2025 compared to net cash used of $53 million in the same period last year, primarily driven by changes in derivative assets and liabilities (see Note 9, “Derivatives,” for additional information), lower variable compensation and other payroll-related payments and an increase in deferred revenue, partially offset by lower income and other tax accruals, net of payments.
Previous wording
Net cash used in investing activities increased $531 million during the nine months ended July 31, 2024 compared to the same period last year. For the nine months ended July 31, 2024, we used $673 million, net of cash acquired for payments towards acquisitions, including $477 million, net of $35 million cash acquired, for the acquisition of the controlling block of ESI Group shares. See Note 2, “Acquisitions,” for additional information. For the nine months ended July 31, 2023, we used $85 million, net of cash acquired, to acquire Cliosoft. Excluding payments for acquisitions, net cash used for investing activities decreased $57 million, driven by $42 million lower investments in property, plant and equipment, and $15 million from other net investing activities.
Current wording
Net cash used in investing activities decreased $478 million during the three months ended January 31, 2025 compared to the same period last year, primarily driven by $477 million, net of cash acquired, used in the prior year for the acquisition of the controlling block of ESI Group SA (“ESI Group”) shares, $15 million decrease in cash used for purchases of property, plant and equipment, partially offset by $14 million decline in cash proceeds from other net investing activities.
Previous wording
Net cash used in financing activities increased $494 million during the nine months ended July 31, 2024 compared to the same period last year, primarily due to $458 million used for the acquisition of the non-controlling interest in ESI Group, $24 million used for repayment of debt assumed as part of the ESI Group acquisition, $13 million higher treasury stock repurchases, $7 million used for payment of bridge loan facility fees, and $10 million used for other financing activities, partially offset by $18 million lower tax payments related to net share settlement of equity awards.
Current wording
Net cash used in financing activities decreased $474 million during the three months ended January 31, 2025 compared to the same period last year, primarily driven by $458 million used in the prior year for the acquisition of the non-controlling interest in ESI Group and $18 million lower treasury stock repurchases.
Previous wording
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 $635 million remained as of July 31, 2024. The stock repurchase program may be commenced, suspended or discontinued at any time at the company’s discretion and does not have an expiration date. See “Issuer Purchases of Equity Securities” under Part II Item 2 for additional information.
Current wording
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 $410 million remained as of January 31, 2025. The stock repurchase program may be commenced, suspended or discontinued at any time at the company’s discretion and does not have an expiration date. See “Issuer Purchases of Equity Securities” under Part II Item 2 for additional information.
Previous wording
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. 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 July 31, 2024 and October 31, 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 nine months ended July 31, 2024.
Current wording
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. Borrowings under the facility bear an annual interest rate of SOFR + 1.1 percent along with a facility fee of 0.125 percent per annum. 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 January 31, 2025 and October 31, 2024, we had no borrowings outstanding under the Revolving Credit Facility. We were in compliance with the covenants of the Revolving Credit Facility during the three months ended January 31, 2025.
Previous wording
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 condensed consolidated balance sheet and are being amortized to interest expense over the term of the Bridge Facility.
Current wording
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 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 condensed consolidated balance sheet and are being amortized to interest expense over the term of the Bridge Facility.
Previous wording
We have cash requirements to support working capital needs, capital expenditures, business acquisitions, contractual obligations, commitments, principal and interest payments on debt, and other liquidity requirements associated with our operations. We generally intend to use available cash and funds generated from our operations to meet these cash requirements. In the event that additional liquidity is required, we may also borrow under our revolving credit facility.
Current wording
We have cash requirements to support working capital needs, capital expenditures, business acquisitions, contractual obligations, commitments, principal and interest payments on debt, and other liquidity requirements associated with our operations. We generally intend to use available cash and funds generated from our operations to meet these cash requirements. In the event that additional liquidity is required, we may also borrow under the Revolving Credit Facility or Bridge Facility and/or issue new debt.
Previous wording
On March 28, 2024, we announced our intention to acquire the entire share capital of Spirent Communications PLC (“Spirent”) for cash consideration of 199 pence per Spirent share, which reflects a valuation of $1,463 million on a fully diluted basis. Spirent shareholders will also be entitled to receive a special dividend of 2.5 pence per Spirent share, in lieu of any final dividend for the year ended December 31, 2023 (together with the cash consideration of 199 pence per share). The acquisition is expected to be completed during the first half of fiscal year 2025, pending regulatory clearances.
Current wording
On March 28, 2024, we announced our intention to acquire the entire share capital of Spirent Communications PLC (“Spirent”) for cash consideration of 199 pence per Spirent share, which reflects a valuation of $1,463 million on a fully diluted basis. Spirent shareholders will also be entitled to receive a special dividend of 2.5 pence per Spirent share, in lieu of any final dividend for the year ended December 31, 2023 (together with the cash consideration of 199 pence per share). The acquisition is expected to be completed during the first half of fiscal year 2025, subject to regulatory clearances.
Previous wording
Cash requirements related to tax liabilities include uncertain tax positions, which increased by $29 million from our Annual Report on Form 10-K for the fiscal year ended October 31, 2023 due to current year increases in reserves. Additionally, with regard to the U.S. transition tax liability, $18 million moved from amounts due later than one year to amounts due within one year. We believe that we have an adequate provision for any adjustments that may result from tax examinations. However, the outcome of tax examinations cannot be predicted with certainty. Given the numerous tax years and matters that remain subject to examination in various tax jurisdictions, the ultimate resolution of current and future tax examinations could be inconsistent with management’s current expectations.
Current wording
During the three months ended January 31, 2025, there were no material changes to our uncertain tax positions from our Annual Report on Form 10-K for the fiscal year ended October 31, 2024. We believe that we have an adequate provision for any adjustments that may result from tax examinations. However, the outcome of tax examinations cannot be predicted with certainty. Given the numerous tax years and matters that remain subject to examination in various tax jurisdictions, the ultimate resolution of current and future tax examinations could be inconsistent with management’s current expectations.
Previous wording
For the remainder of fiscal 2024, we do not expect to contribute to our U.S. defined benefit plan and U.S. post-retirement benefit plan, and expect to contribute $2 million to our non-U.S. defined benefit plans. The amounts we contribute depend upon, among other things, legal requirements, underlying asset returns, the plan’s funded status, the anticipated tax deductibility of the contribution, local practices, market conditions, interest rates and other factors. See Note 11, “Retirement Plans and Post-Retirement Benefit Plans,” for additional information.
Current wording
For the remainder of fiscal 2025, we do not expect to contribute to our U.S. defined benefit plan and U.S. post-retirement benefit plan, and expect to contribute $7 million to our non-U.S. defined benefit plans. The amounts we contribute depend upon, among other things, legal requirements, underlying asset returns, the plan’s funded status, the anticipated tax deductibility of the contribution, local practices, market conditions, interest rates and other factors. See Note 11, “Retirement Plans and Post-Retirement Benefit Plans,” for additional information.
Rearranged current paragraphs (1)
Current report — wording carried from elsewhere
Three months ended January 31, 2025 and 2024