Keysight Technologies (KEYS) 10-K risk factor changes: FY2016 vs FY2015

In addition, we outsource significant portions of our information technology ("IT") and other administrative [added: functions.]

Prior commitments of this type have resulted in an excess of parts when demand for [removed: communications and electronics] [added: electronic] products has decreased.

Violations of these laws and regulations could result in fines and penalties, criminal sanctions, restrictions on our [added: business conduct and on our ability to offer our products in one or more countries, and could also materially affect our brand, ability to attract and retain employees, international operations, business and operating results.]

Although we [removed: plan to implement] [added: actively maintain] policies and procedures designed to ensure [added: ongoing] compliance with these laws and regulations, there can be no assurance that our employees, contractors or agents will not violate these policies and procedures.

[removed: Significant key] [added: Key] customers or large orders may expose us to additional business and legal risks that could have a material adverse impact on our operating results and financial condition.

Certain [removed: significant] key customers have substantial purchasing power and leverage in negotiating contractual arrangements with us.

Some of our properties are undergoing remediation by [removed: Hewlett-Packard Company] [added: HP Inc.] ("HP") for subsurface contaminations that were known at the time of Agilent's separation from HP in 1999.

[removed: Although our policy is to apply strict standards for environmental protection at our sites inside] and outside the United States, even if the sites outside the United States are not subject to regulations imposed by foreign governments, we may not be aware of all conditions that could subject us to liability.

We regularly assess the likelihood of adverse outcomes resulting from ongoing tax examinations to determine the [removed: adequacy of our provision for income taxes.]

The calculation of our tax liabilities involves uncertainties in the application of complex tax laws and [added: regulations in multiple jurisdictions.]

Several jurisdictions have granted [removed: or are anticipated to grant] us tax incentives that require renewal at various times in the future, the most significant being Singapore.

The outcome of existing proceedings, lawsuits and claims may [added: differ from our expectations because the outcomes of litigation are often difficult to reliably predict.]

Because it is unknown what the investment return on [added: and the fair value of our] pension assets will be in future years or what interest rates [added: and discount rates] may be at any point in time, no assurances can be given that applicable law will not require us to make future material plan contributions.

| • | our historical financial information [added: prior to the Separation,] does not reflect the debt or the associated interest expense that we have incurred as part of the separation and distribution. |

[added: For additional information about the past financial performance of our business] and the basis of presentation of the historical combined and consolidated financial statements, see "Management's Discussion and Analysis of Financial Condition and Results of Operations" and the financial statements and accompanying notes included elsewhere in this Form 10-K.

For example, if the distribution failed to qualify for tax-free treatment, Agilent would for U.S. federal income tax purposes be treated as if it had sold the Keysight common stock in a taxable sale for its fair market value, and Agilent's shareholders, who are subject to U.S. federal income tax, would be treated as receiving a taxable distribution in an amount equal to the fair market value of the Keysight common stock [removed: received in the distribution.]

In addition, if the separation and distribution failed to qualify for tax-free treatment under federal, [added: state and local tax law and/or foreign tax law, Agilent (and, under the tax matters agreement described below, Keysight) could incur significant tax liabilities under U.S. federal, state, local and/or foreign tax law.]

Section 203 provides that, subject to limited exceptions, persons that acquire, or are affiliated with a person that acquires, more than 15% of the outstanding voting stock of a Delaware corporation (an "interested stockholder") shall not engage in any business combination with that corporation, including by merger, consolidation or acquisitions of additional shares, for a three-year period following the date on which the person became an interested stockholder, unless (i) prior to such time, the board of directors of such corporation approved either the business combination or the transaction that resulted in the stockholder becoming an interested stockholder; (ii) upon consummation of the transaction that resulted in the stockholder becoming an interested stockholder, the interested stockholder owned at least 85% of the voting stock of such corporation at the time the transaction commenced (excluding for purposes of [added: determining the voting stock outstanding (but not the outstanding voting stock owned by the interested stockholder) the voting stock owned by directors who are also officers or held in employee benefit plans in which the employees do not have a confidential right to tender or vote stock held by the plan); or (iii) on or subsequent to such time the business combination is approved by the board of directors of such corporation and authorized at a meeting of shareholders by the affirmative vote of at least two-thirds of the outstanding voting stock of such corporation not owned by the interested stockholder.]

In addition, macroeconomic developments, such as the recent downturn in Europe, the economic slowdown in Asia and the results of the recent U.S. and other national elections, economic uncertainties caused by the result of the United Kingdom's referendum advising for its exit from the European Union could negatively affect our ability to conduct business in those geographies.

Financial difficulties experienced by our suppliers and customers, including distributors, could result in product delays and inventory issues.

Risks to accounts receivable could result in delays in collection and greater bad debt expense.

Industry consolidation and consolidation among our customer base may lead to increased competition and may harm our operating results.

There is potential for industry consolidation in our markets.

As companies attempt to strengthen or hold their market positions in an evolving industry, companies could be acquired or may be unable to continue operations.

Companies that are strategic alliance partners in some areas of our business may acquire or form alliances with our competitors, thereby reducing their business with us.

We believe that industry consolidation may result in stronger competitors and could lead to more variability in our operating results and could have a material adverse effect on our business, operating results, and financial condition.

Furthermore, particularly in the communications market, rapid consolidation would lead to fewer customers, with the effect that loss of a major customer could have a material impact on results not anticipated in a customer marketplace composed of more numerous participants.

Additionally, if there is consolidation among our customer base, our customers may be able to command increased leverage in negotiating prices and other terms of sale, which could adversely affect our profitability.

In addition, if, as a result of increased leverage, customer pressures require us to reduce our pricing such that our gross margins are diminished, we could decide not to sell our products under such less favorable terms, which would decrease our revenue.

Consolidation among our customer base may also lead to reduced demand for our products, replacement of our products by the combined entity with those of our competitors and cancellations of orders, each of which could harm our operating results.

However, there can be no assurances that our international sales will continue at existing levels or grow in accordance with our effort to increase foreign market penetration.

Any inability to complete acquisitions on acceptable terms could negatively impact our growth rate and financial performance.

Our ability to grow revenues, earnings and cash flow depends in part upon our ability to identify and successfully acquire and integrate businesses at appropriate prices and realize anticipated synergies and business performance.

Appropriate targets for acquisition are difficult to identify and complete for a variety of reasons, including but not limited to, limited due diligence, high valuations, business and intellectual property evaluations, other interested parties, negotiations of the definitive documentation, satisfaction of closing conditions, the need to obtain antitrust or other regulatory approvals on acceptable terms, and availability of funding.

The inability to close appropriate acquisitions on acceptable terms could adversely impact our growth rate, revenue, and financial performance.

Although our policy is to apply strict standards for environmental protection at our sites inside

adequacy of our provision for income taxes.

The Singapore tax incentive is due for renewal in fiscal 2024.

Man-made problems such as cybersecurity attacks, computer viruses or terrorism may disrupt our operations and harm our business, reputation and operating results

Despite our implementation of network security measures, our network may be vulnerable to cybersecurity attacks, computer viruses, break-ins and similar disruptions.

Cybersecurity attacks, in particular, are evolving and include, but are not limited to, malicious software, attempts to gain unauthorized access to data, and other electronic security breaches that could lead to disruptions in systems, unauthorized release of confidential or otherwise protected information and corruption of data.

Any such event could have a material adverse effect on our business, operating results and financial condition.

Our daily business operations require us to retain sensitive data such as intellectual property, proprietary business information and data related to customers, suppliers and business partners within our networking infrastructure.

The ongoing maintenance and security of this information is pertinent to the success of our business operations and our strategic goals, and organizations like Keysight are susceptible to multiple variations of attacks on our networks on a daily basis.

Our networking infrastructure and related assets may be subject to unauthorized access by hackers, employee errors, or other unforeseen activities.

Such issues could result in the disruption of business processes, network degradation and system downtime, along with the potential that a third party will exploit our critical assets such as intellectual property, proprietary business information and data related to our customers, suppliers and business partners.

To the extent that such disruptions occur, they may cause delays in the manufacture or shipment of our products and the cancellation of customer orders and, as a result, our business operating results and financial condition could be materially and adversely affected resulting in a possible loss of business or brand reputation.

In addition, the effects of war or acts of terrorism could have a material adverse effect on our business, operating results and financial condition.

The continued threat of terrorism and heightened security and military action in response to this threat, or any future acts of terrorism, may cause further disruption to the economy and create further uncertainties in the economy.

Energy shortages, such as gas or electricity shortages, could have similar negative impacts.

To the extent that such disruptions or uncertainties result in delays or cancellations of customer orders or the manufacture or shipment of our products, our business, operating results and financial condition could be materially and adversely affected.

If we finance acquisitions by issuing additional convertible debt or equity securities, our existing stockholders may experience share dilution, which could affect the market price of our stock.

received in the distribution.

functions.

business conduct and on our ability to offer our products in one or more countries, and could also materially affect our brand, ability to attract and retain employees, international operations, business and operating results.

regulations in multiple jurisdictions.

differ from our expectations because the outcomes of litigation are often difficult to reliably predict.

Our historical financial information prior to fiscal year 2015 included in this Form 10-K is derived from the consolidated financial statements and accounting records of Agilent.

For additional information about the past financial performance of our business

state and local tax law and/or foreign tax law, Agilent (and, under the tax matters agreement described below, Keysight) could incur significant tax liabilities under U.S. federal, state, local and/or foreign tax law.

We may not be able to engage in certain corporate transactions for a two-year period after the separation.

To preserve the tax-free treatment for U.S. federal income tax purposes to Agilent of the separation and distribution, under the tax matters agreement that we have entered into with Agilent, we are restricted from taking any action that prevents the separation and distribution from being tax-free for U.S. federal income tax purposes.

Under the tax matters agreement, for the two-year period following the distribution, we are prohibited, except in certain circumstances, from entering into acquisition, merger, liquidation, sale and stock redemption transactions with respect to our stock if such transactions, taken as a whole, would result in one or more persons acquiring forty percent (40%) or more of the outstanding Keysight stock.

These restrictions may limit our ability to pursue certain strategic transactions or other transactions that we may believe to be in the best interests of our shareholders or that might increase the value of our business.

In addition, under the tax matters agreement, we may be required to indemnify Agilent against any such tax liabilities as a result of the acquisition of Keysight's stock or assets, even if we did not participate in or otherwise facilitate the acquisition.

Certain of our executive officers and directors may have actual or potential conflicts of interest because of their equity interest in Agilent.

The ownership by our executive officers and some of our directors of common shares of Agilent may create, or may create the appearance of, conflicts of interest.

Because of their current or former positions with Agilent, certain of our executive officers and directors own Agilent common shares.

The individual holdings of common shares may be significant for some of these persons compared to these persons' total assets.

Even though our board of directors consist of a majority of directors who are independent, and our executive officers ceased to be employees of Agilent upon the separation, continuing ownership of Agilent common shares by our executive officers and some of our directors could create, or appear to create, potential conflicts of interest if Keysight and Agilent pursue the same corporate opportunities or face decisions that could have different implications for Keysight and Agilent.

The one-time and ongoing costs of the spin-off may be greater than we expected.

We have and will continue to incur costs in connection with our transition to being a stand-alone public company that relate primarily to accounting, tax, legal and other professional costs; financing costs in connection with obtaining our financing as a stand-alone company; compensation, such as modifications to certain incentive awards as a result of spin-off; recruiting and relocation costs associated with hiring our senior management personnel; and costs to separate assets and information systems.

These costs, whether incurred before or after the spin-off, may be greater than anticipated and could have a material adverse effect on our business, financial condition, results of operations and cash flows.

determining the voting stock outstanding (but not the outstanding voting stock owned by the interested stockholder) the voting stock owned by directors who are also officers or held in employee benefit plans in which the employees do not have a confidential right to tender or vote stock held by the plan); or (iii) on or subsequent to such time the business combination is approved by the board of directors of such corporation and authorized at a meeting of shareholders by the affirmative vote of at least two-thirds of the outstanding voting stock of such corporation not owned by the interested stockholder.

Keysight Technologies, Inc. ("we," "us," "Keysight" or the "company"), incorporated in Delaware on December 6, 2013, is a measurement company providing [removed: core] electronic design and test solutions to communications and electronics industries.

On November 1, 2014, [removed: Keysight Technologies, Inc. (“we,” "our," “Keysight” or "the company”)] [added: we] became an independent publicly-traded company through the distribution by Agilent Technologies, Inc. ("Agilent") of 100 percent of the outstanding common stock of Keysight to Agilent's shareholders (the "Separation").

[removed: In addition,] [added: We recognized costs related to this program of $24 million] for the [removed: years] [added: year] ended October 31, [removed: 2015 and 2014, we recognized non-recurring separation] [added: 2016] and [removed: related costs of] $20 million [removed: and $78 million, respectively.][added: for the year ended October 31, 2015.]

We expect to recognize additional [removed: non-recurring separation and related costs, which are currently] [added: costs] estimated to range from [removed: $12] [added: $25] million to [removed: $17] [added: $35] million through fiscal [removed: 2016.][added: 2018.]

We provide electronic [removed: measurement] [added: design and test] instruments and systems and related software, software design tools, and related services that are used in the design, development, manufacture, installation, deployment and operation of electronics equipment.

We [removed: plan to] invest in product development to address the changing needs of the market and facilitate growth.

The [removed: customer support and services segment] [added: Services Solutions Group] provides [removed: repair and] [added: repair,] calibration [removed: of the hardware measurement solutions] and [removed: the resale of] [added: consulting services, and remarkets] used [removed: instrument] [added: Keysight] equipment.

Years ended October 31, [removed: 2015, 2014] [added: 2016, 2015] and [removed: 2013][added: 2014]

Foreign currency movements had an unfavorable impact of 4 percentage points on the [removed: year‑over‑year] [added: year-over-year] comparison.

Foreign currency movements had an unfavorable impact of 4 percentage points on the [removed: year over year] [added: year-over-year] comparison.

Foreign currency movements had an unfavorable impact of 1 [removed: percentage point] [added: percent] on the [removed: year over year] [added: year-over-year] comparison.

Net income was [removed: $513] [added: $335] million in [removed: 2015] [added: 2016] compared to net income of [removed: $392] [added: $513] million [removed: in 2014] and [removed: $457] [added: $392] million in [removed: 2013.][added: 2015 and 2014.]

In [removed: 2015, 2014] [added: 2016, 2015] and [removed: 2013,] [added: 2014,] we generated operating cash flows of [removed: $376] [added: $416] million, [removed: $563] [added: $376] million and [removed: $566 million, respectively.][added: $563 million.]

Looking forward, we believe the long-term growth rate of our markets is 2 to 3 percent, although [removed: current] [added: near-term] macroeconomic indicators remain mixed.

Our focus is on delivering value through innovative electronic design and test solutions as well as [added: continuously] improving our operational [removed: efficiency as an independent company.][added: efficiency.]

This acquisition [removed: expands] [added: expanded] our solutions offering in wireless communications design and test, specifically into the software layer for design and validation and [removed: provides] [added: provided] an adjacent market opportunity in [added: the] Network [removed: Test.][added: Test business.]

In [removed: June] [added: fiscal] 2015, we [removed: purchased] [added: invested] $7 million [removed: of] [added: in] preferred stock of a privately held radio frequency microstructure [removed: company.][added: company, accounted for using the cost method.]

Our hedging program is designed to hedge currency movements on a relatively short-term basis of up to a rolling [removed: twelve- month] [added: twelve-month] period.

Results from Operations-Years ended October 31, [removed: 2015, 2014] [added: 2016, 2015] and [removed: 2013][added: 2014]

| | [removed: Years] [added: Year] Ended October 31, | | | | | | | | | | | | [removed: 2015] [added: 2016] over [removed: 2014] [added: 2015] % Change | | [removed: 2014] [added: 2015] over [removed: 2013] [added: 2014] % Change |

| | [removed: 2015] [added: 2016] | | | | [removed: 2014] [added: 2015] | | | | [removed: 2013] [added: 2014] | | | | | | |

| Orders | $ | [removed: 2,853] [added: 2,953] | | | $ | [removed: 2,963] [added: 2,853] | | | $ | [removed: 2,866] [added: 2,963] | | | [removed: (4)%] [added: 3%] | | [removed: 3%] [added: (4)%] |

| Products | $ | [removed: 2,408] [added: 2,440] | | | $ | [removed: 2,479] [added: 2,408] | | | $ | [removed: 2,434] [added: 2,479] | | | [removed: (3)%] [added: 1%] | | [removed: 2%] [added: (3)%] |

| Services and other | [removed: 448] [added: 478] | | | | [removed: 454] [added: 448] | | | | 454 | | | | [removed: (1)%] [added: 7%] | | [removed: —%] [added: (1)%] |

| Total net revenue | $ | [removed: 2,856] [added: 2,918] | | | $ | [removed: 2,933] [added: 2,856] | | | $ | [removed: 2,888] [added: 2,933] | | | [removed: (3)%] [added: 2%] | | [removed: 2%] [added: (3)%] |

| | [removed: Years] [added: Year] Ended October 31, | | | | | | | | | [removed: 2015] [added: 2016] over [removed: 2014 Ppts] [added: 2015 %] Change | | [removed: 2014] [added: 2015] over [removed: 2013 Ppts] [added: 2014 %] Change |

| | [removed: 2015] [added: 2016] | | | [removed: 2014] [added: 2015] | | | [removed: 2013] [added: 2014] | | | | | |

| Products | 84 | % | | [removed: 85] [added: 84] | % | | [removed: 84] [added: 85] | % | | [removed: (1) ppt] [added: —] | | [removed: 1] [added: (1)] ppt |

| Services and other | 16 | % | | [removed: 15] [added: 16] | % | | [removed: 16] [added: 15] | % | | [removed: 1 ppt] [added: —] | | [removed: (1)] [added: 1] ppt |

The following table provides the percent change in [removed: orders] [added: revenue] for the years ended October 31, [removed: 2015] [added: 2016] and [removed: 2014] [added: 2015] by geographic region, including and excluding the impact of currency changes, as compared to the respective prior year.

| | [removed: 2015] [added: 2016] over [removed: 2014] [added: 2015] | | | | | | [removed: 2014] [added: 2015] over [removed: 2013] [added: 2014] | | | | |

| Americas | — | % | | 1 | % | | 3 | % | | [removed: 3] [added: 4] | % |

| Europe | [removed: (9] [added: 3] | [removed: )%] [added: %] | | [removed: (3] [added: 5] | [removed: )%] [added: %] | | [removed: 6] [added: (8] | [removed: %] [added: )%] | | [removed: 5] [added: —] | % |

| Japan | [removed: (2] [added: 5] | [removed: )%] [added: %] | | [removed: 10] [added: (1] | [removed: %] [added: )%] | | [removed: (16] [added: (6] | )% | | [removed: (9] [added: 6] | [removed: )%] [added: %] |

| Asia Pacific ex-Japan | [removed: (6] [added: 3] | [removed: )%] [added: %] | | [removed: (4] [added: 4] | [removed: )%] [added: %] | | [removed: 11] [added: (5] | [removed: %] [added: )%] | | [removed: 11] [added: (4] | [removed: %] [added: )%] |

[removed: Total orders decreased 4 percent] [added: Net revenue of $2,856 million] in 2015 [added: decreased 3 percent when] compared to 2014.

Foreign currency movements had [removed: an unfavorable] [added: no] impact [removed: of 1 percentage point] on the year-over-year [removed: compare.][added: comparison.]

| Total revenue | [removed: (3] [added: 2] | [removed: )%] [added: %] | | [removed: 1] [added: 2] | % | | [removed: 2] [added: (3] | [removed: %] [added: )%] | | [removed: 3] [added: 1] | % |

[removed: Europe] [added: Communication Solutions Group] revenue [removed: declined 8] [added: in 2015 decreased 4] percent [added: compared to 2014,] with declines in [removed: aerospace and defense and] [added: the commercial] communications [removed: markets,] [added: market,] partially offset by growth in the [removed: industrial, computer] [added: aerospace, defense] and [removed: semiconductor markets.][added: government market.]

[removed: Net] [added: Keysight’s net] revenue of [removed: $2,933] [added: $2,918] million [removed: for 2014] [added: in 2016] increased 2 percent [removed: as] [added: when] compared to [removed: 2013.][added: 2015.]

In fiscal 2015, we initiated a phased program associated with our separation from Agilent to resize and optimize our infrastructure from the one that had been established to serve a diversified technology company.

The focus of the first phase of the program was on the IT infrastructure to support finance, field and human resources.

The second phase of the program, which was initiated in the third quarter of fiscal 2016, primarily addresses the optimization of the IT infrastructure to support the services business.

In fiscal year 2016, we completed an organizational change to align our organization with the industries we serve.

As a result of this organizational realignment, we have three reportable operating segments: Communications Solutions Group, Electronic Industrial Solutions Group and Services Solutions Group.

The Communications Solutions Group serves customers spanning the worldwide commercial communications end market, which includes internet infrastructure, and the aerospace, defense and

government end market.

The Electronic Industrial Solutions Group provides test and measurement solutions across a broad set of electronic industrial end markets.

In addition, our global team of experts provides startup assistance, consulting, optimization and application support across all of our end markets.

Keysight’s total orders in 2016 were $2,953 million, an increase of 3 percent when compared to 2015.

Orders associated with acquisitions accounted for 5 percentage points of order growth for the year ended October 31, 2016 when compared to 2015.

Excluding acquisitions, revenue declined year-over-year as weakness in the smartphone supply chain and restructuring and consolidation activities in the industry offset strength in 5G technologies and data center expansion.

respectively.

Total orders for the year ended October 31, 2016 were $2,953 million, an increase of 3 percent when compared to 2015.

Orders associated with acquisitions accounted for 5 percentage points of order growth for the year ended October 31, 2016 when compared to 2015.

Orders grew across all operating segments with growth in all regions.

Total orders decreased 4 percent in 2015 compared to 2014, with declines in the Communication Solutions Group and the Electronic Industrial Solutions Group, partially offset by growth in the Services Solutions Group.

Net revenue of $2,918 million for the year ended October 31, 2016 increased 2 percent when compared to 2015.

Foreign currency movements had a negligible impact on the year-over-year comparison.

Revenue associated with acquisitions accounted for 5 percentage points of revenue growth for the year ended October 31, 2016 when compared to 2015.

Revenue from the Communications Solutions Group represented approximately 60 percent of total revenue for the year ended October 31, 2016 and increased 3 percent when compared to 2015.

The Communications Solutions Group contributed 1 percentage point to the total revenue growth in 2016, with growth in Europe, Japan and Asia pacific excluding Japan, while the Americas revenue was flat when compared to 2015.

Excluding revenue from Anite, the Communications Solutions Group revenue declined year-over-year as weakness in the smartphone supply chain and restructuring and consolidation activities in the industry offset strength in 5G technologies and data center expansion.

For 2015, the Communications Solutions Group represented approximately 59 percent of total revenue and declined 4 percent when compared to 2014, with declines in Europe, Asia Pacific excluding Japan and Japan, partially offset by growth in the Americas.

The Communication Solutions Group contributed 2 percentage points to the total Keysight revenue decrease in 2015.

Revenue from the Electronic Industrial Solutions Group represented approximately 26 percent of total revenue for 2016 and grew 2 percent year-over-year when compared to the same period last year.

The Electronic Industrial Solutions Group contributed 1 percentage point to total revenue growth in 2016, with growth in Asia Pacific excluding Japan and Japan, partially offset by declines in Europe and the Americas.

The Electronic Industrial Solutions Group’s contribution to the total revenue decline for 2015 was negligible, with declines in Asia Pacific excluding Japan and Japan, partially offset by growth in the Americas and Europe.

Revenue from the Services Solutions Group represented approximately 14 percent of total revenue for both 2016 and 2015, and was flat when compared year-over-year.

The Services Solutions Group contribution to the total revenue growth was negligible in 2016, with growth in the Americas and Japan, partially offset by decline in Asia Pacific excluding Japan, while Europe was flat.

For 2015, the Services Solutions Group had no impact on the overall decline.

Growth in the Americas, Europe and Japan was partially offset by decline in Asia Pacific excluding Japan.

For the Electronic Industrial Solutions Group, our backlog was approximately $218 million at October 31, 2016 as compared to approximately $211 million at October 31, 2015.

| Other operating expense (income), net | $ | (25 | ) | | $ | (18 | ) | | $ | — | | | 37% | | —% |

Gross margin remained flat in 2016 compared to 2015 as the favorable impacts from a higher percentage of revenue from software and R&D solutions, lower inventory and warranty charges were offset by unfavorable impacts from acquisition-related intangible amortization.

Research and development expense increased 10 percent in 2016 compared to 2015 due to increased expenses associated with acquired companies and our continued investment in research and development programs.

As a percentage of total revenue, research and development expenses increased 1 percentage point to 15 percent in 2016 from 14 percent in 2015.

The increase in other operating income for 2016 was largely driven by a gain on the sale of land.

Operating margin decreased 1 percentage point in 2016 when compared to 2015, primarily driven by the impacts of acquisition-related intangible amortization, higher integration costs and the addition of the Anite cost structure, partially offset by favorable impacts from foreign currency movements and lower share-based compensation expense.

As of October 31, 2016, our headcount was approximately10,300 compared to 10,250 in 2015.

Following the Capitalization, the consolidated financial statements include the accounts of the company and our subsidiaries.

For the first half of fiscal year 2015, Agilent provided some services on a transitional basis for a fee, which were partially offset by other operating income from Keysight services provided to Agilent.

These services were received or provided under a transition services agreement.

The net costs associated with the transition services agreement were not materially different than the historical costs that were allocated to us related to these same services.

We are incurring other incremental costs as an independent, publicly traded company as compared to the costs historically allocated to us by Agilent.

These incremental costs are estimated to be approximately $15 million on an annual pre-tax basis.

These costs are expected to include primarily costs related to infrastructure resizing and optimization.

We have two reportable operating segments, measurement solutions and customer support and services.

The measurement solutions segment is primarily the hardware and associated software businesses serving the electronic measurement market.

Order declines in aerospace and defense and communications markets were partially offset by a slight increase in industrial, computer, and semiconductor market.

Orders of $2,963 million in 2014 increased 3 percent when compared to 2013 with growth in all markets.

Net revenue of $2,856 million in 2015 decreased 3 percent when compared to 2014, with communications market contributing 2 percentage points of the decrease and industrial, computer and semiconductor market contributing 1 percentage point of the decrease, while aerospace and defense market revenue was flat.

Net revenue of $2,933 million in 2014 increased 2 percent when compared to 2013, with industrial, computer and semiconductor market contributing 2 percentage points of the increase, and communications market contributing 1 percentage point of the increase, partially offset by a decline in aerospace and defense market revenue.

We intend to leverage our unique formula of hardware plus software plus people to create value for our customers and shareholders.

Restructuring Activities

We initiated a targeted workforce reduction program in July 2015 that is expected to reduce Keysight's total headcount by approximately 104 employees, representing approximately 1 percent of our global workforce.

The timing and scope of workforce reductions will vary based on local legal requirements.

This is a targeted workforce management program designed to restructure our operations and cost structure for optimization of resources and cost savings.

In the current year, we recognized $8 million of expense associated with the headcount reduction under this workforce reduction program.

As of October 31, 2015, approximately 70 employees have left and $5 million was paid in severance under the above actions.

We also announced a Pre-retirement notification program for retirement-eligible employees to provide early notice of their planned retirement in return for severance benefits.

The program is entirely voluntary and can be initiated only by an employee.

Approximately 160 employees of our total workforce opted for early retirement under this program as of October 31, 2015.

In the current year, we recognized $8 million of expense associated with the headcount reductions and paid $6 million in severance under the Pre-Retirement Notification program.

When completed, these programs are expected to result in operational efficiency and net annual savings of approximately $18 million, while maintaining our focus on growing the business.

As of October 31, 2015, we have a remaining accrual of $6 million under these plans.

We expect to complete a majority of these actions by the end of first quarter of fiscal year 2016.

Acquisitions

Acquisition of Anite.

On August 13, 2015, we acquired all share capital of Anite for a cash purchase price of $558 million, net of $43 million cash acquired.

Anite is a U.K.-based global company and a leading supplier of wireless test solutions with strong software expertise.

This acquisition strengthens our wireless software design and test portfolio and its Network Test business expands our served addressable market.

Coupled with Keysight's expertise in helping customers design and test hardware, we can now provide customers with more comprehensive wireless hardware and software solutions.

Anite’s Network Test business will also enable us to provide innovative solutions that help customers deliver an outstanding experience for mobile users in the network.

Anite results are included in Keysight's consolidated financial statements from the date of acquisition and are reported in the measurement solutions segment.

We financed the acquisition with available cash.

For additional detail related to the acquisition of Anite, see Note 3, "Acquisitions."

Acquisition of Electroservices.

On August 28, 2015, we acquired all share capital of Electroservices Enterprises Limited for a cash purchase price of $16 million, net of $1 million cash acquired.

Electroservices is a U.K.-based company, specializing in test equipment service and solutions.

Our operations generate non-functional currency cash flows such as [removed: revenues,] [added: revenue,] third-party vendor payments and inter-company payments.

Approximately [removed: 75] [added: 71] percent of our revenues in [removed: 2015, 74] [added: 2016, 75] percent of our revenues in [removed: 2014] [added: 2015] and [removed: 75] [added: 74] percent of our revenues in [removed: 2013] [added: 2014] were generated in U.S. dollars.

As of October 31, [removed: 2015] [added: 2016] and [removed: 2014,] [added: 2015,] the analysis indicated that these hypothetical market movements would not have a material effect on our combined and consolidated financial position, results of operations or cash flows.

As of October 31, [removed: 2015,] [added: 2016,] we had $1,100 million in principal amount of fixed-rate senior notes outstanding.

The carrying amount of the senior notes was [removed: $1,099] [added: $1,100] million, and the related fair value based on quoted prices was [removed: $1,091] [added: $1,130] million.

As of October 31, [removed: 2015,] [added: 2016,] a hypothetical 10 percent increase in interest rates would have decreased the fair value of the company’s fixed-rate long-term debt by approximately [removed: $26] [added: $20] million.

Keysight Technologies, Inc. ("we," "us," "Keysight" or the "company”), incorporated in Delaware on December 6, 2013, is a measurement company providing [removed: core] electronic design and test solutions to communications and electronics industries.

We provide electronic [removed: measurement] [added: design and test] instruments and systems and related software, software design tools, and related services that are used in the design, development, manufacture, installation, deployment and operation of electronics equipment.

Keysight's common stock began trading [added: the] "regular-way" under the ticker symbol "KEYS" on the New York Stock Exchange on November 3, 2014.

On August 13, 2015, we acquired all [added: of the] share capital of [removed: Anite,] [added: Anite plc ("Anite"),] for a cash purchase price of $558 million, net of $43 million cash acquired.

Anite [removed: is] [added: was] a [removed: U.K.-based] [added: United Kingdom ("U.K.")-based] global company with strong software expertise and a leading supplier of wireless test solutions.

This acquisition [removed: strengthens] [added: strengthened] our wireless software design and test portfolio and its Network Test business [removed: expands] [added: expanded] our served addressable market.

We generated $2.9 billion of net revenue in fiscal year [removed: 2015, 2014] [added: 2016, 2015] and [removed: 2013.][added: 2014.]

Of our total net revenue of $2.9 billion for the fiscal year ended October 31, [removed: 2015,] [added: 2016,] we generated 35 percent in the United States and 65 percent outside the United States.

Our primary research and development and manufacturing sites are in California and Colorado in the United States and outside of the United States in [added: Belgium,] China, [added: Finland,] Germany, [removed: Great Britain,] [added: U.K.,] India, Japan, Malaysia, [removed: Singapore] [added: Singapore, Spain] and [removed: Spain.][added: Switzerland.]

Net revenue, income from operations and assets by business segment as of and for the fiscal years ended October 31, [removed: 2015, 2014] [added: 2016, 2015] and [removed: 2013] [added: 2014] are shown in Note 21, "Segment Information," to our combined and consolidated financial statements, which we incorporate by reference herein.

We had approximately 15,500 direct customers for our products and services in fiscal year [removed: 2015] [added: 2016] and [removed: greater than] [added: approximately] 30,000 customers including indirect channels.

No single customer represented [removed: a material amount] [added: 10 percent or more] of our net revenue.

Many of our customers acquire products and services across [removed: both of our] [added: multiple] segments.

[removed: With a singular focus on electronic design and test, we] [added: We] help [removed: our] customers bring breakthrough electronic products to market faster and at a lower cost.

Our research and development [removed: investments focus] [added: focuses] on our customers' design and test challenges, from [added: design] simulation to [removed: design] [added: prototype] validation to manufacturing [removed: and optimization.][added: test, to optimization in the network.]

Market and customer opportunities are driven by [added: evolving technology standards, as well as] the need for faster data rates and new form factors, [removed: and by evolving technology standards.][added: from feature-rich solutions to modular solutions to handheld instruments.]

| • | [removed: Invest in new] [added: New] wireless communication measurement solutions. We are investing in the development of new wireless communications test solutions to satisfy the [added: commercial communications end] market which is being driven by [removed: the explosive] growth in mobile data and evolving wireless [removed: standards.] [added: standards, particularly 5G.] The acquisition of Anite [removed: strengthens] [added: in the fourth quarter of fiscal 2015 strengthened] our wireless software design and test portfolio and its Network Test business [removed: expands] [added: expanded] our served addressable market. [added: Our early 5G solutions have also been gaining tangible traction. With our technical breadth and expertise and strategic engagement with customers and partners around the world, we have leading-edge solutions for 5G applications available when needed, even as development schedules accelerate.] |

| • | [removed: Enhance] [added: Enhanced] and [removed: expand] [added: expanded] software solutions. An increasing percentage of measurement science and functionality is delivered through software solutions. Our portfolio of software solutions and software productivity tools is extensive and represents a significant corporate asset. We [removed: will] continue to invest in software development to capitalize on its growth [removed: potential.] [added: potential and provide industry-leading measurement applications, electronic design automation ("EDA") software and software protocol design and test solutions.] |

Technology Leadership as a Competitive Differentiator: Proprietary software and hardware technologies unavailable on the commercial market and developed by our thirteen R&D centers around the [removed: world,] [added: world] enable many Keysight products to deliver the best design and measurement solution capability available for our customers’ engineering requirements.

Built on an intellectual property foundation developed over a [removed: 30 year] [added: 30-year] period, Keysight’s [removed: Electronic Design Automation] [added: EDA] computer aided design software for radio and microwave frequency designs is the premiere tool used by over two-thirds of the world’s engineers doing design work in this field.

Some of Keysight’s hardware technologies are designed and manufactured in our own in-house integrated circuit fabrication [removed: facilities] [added: facilities,] which were purpose-built and optimized to deliver unmatched capabilities across the broad portfolio of Keysight instruments.

Broad Portfolio of Solutions to Address Customer Needs: We believe we have the broadest portfolio of electronic [removed: measurement products] [added: design and test solutions] in the industry.

In addition, we have a broad portfolio of software products including [removed: Electronic Design Automation] [added: EDA] software for RF and high-speed digital design, hundreds of measurement application solutions to help customers make specific measurements quickly and consistently, and software tools for programming.

This installed base enables a strong and growing [removed: Customer Support and] Services [removed: organization] [added: Solutions Group] that provides a wide range of calibration and repair services, on both a per incident and contract basis, and provides a significant source of loyal customers for future sales.

Approximately [removed: 76] [added: 79] percent of our business comes from customer interactions with our direct sales organization.

To ensure broad geographic coverage and [removed: wide availability of our general purpose products,] [added: further drive growth,] we maintain a network of over 600 channel partners to complement our direct sales force.

This business generated revenue of [removed: $2.5] [added: $1.8] billion in fiscal [removed: 2015, 2014] [added: 2016, $1.7 billion in fiscal 2015] and [removed: 2013.][added: $1.8 billion in fiscal 2014.]

[removed: Measurement] [added: Communications] Solutions [added: Group] Markets

Our [removed: electronic design and test solutions] [added: Communications Solutions Group] serve the following [removed: three] [added: two] markets:

[added: Commercial] Communications Market

NEMs manufacture and sell products to [removed: facilitate] [added: enable] the transmission of voice, data and video traffic.

To meet their customers’ demands, NEMs require test and measurement instruments, systems and solutions for the development, production and installation of each [added: optical, electrical and wireless] network technology.

Wireless device manufacturers require design and test solutions for the design, development, manufacture and repair of [added: a variety of] mobile devices.

The device manufacturers’ [removed: primary] customers are large and small service [removed: providers] [added: providers, enterprises] and consumers who purchase devices directly from retailers.

Wireless device manufacturers require design and test solutions that enable technology development in conformance with the latest [removed: communications] standards.

Communications service providers require reliable [added: data center and] network equipment that enables new service offerings and allows their networks to operate [removed: at] [added: with] ever‑increasing capacities.

To achieve this, communications service providers require a range of sophisticated [added: test instruments and systems to ensure conformance to communication standards and network requirements and to evaluate network performance.]

Component manufacturers design, develop and manufacture electronic [added: and optical] components and modules used in network equipment and [removed: wireless] [added: mobile] devices.

The component manufacturers require test and measurement products to verify that the performance of their components and modules meets the specifications of their [removed: NEM and device] customers.

[removed: Aerospace and] [added: Aerospace,] Defense [added: and Government] Market

As of October 31, 2016, we had approximately 10,300 employees worldwide.

With a singular focus on electronic design and test, we deliver market-leading solutions across a wide range of industries, including commercial communications, aerospace, defense and government, automotive, energy, semiconductor and electronic industrial.

Our strategic focus is to deliver market-leading solutions and growth by investing in the following areas:

| • | Industry-focused solutions across form factors. With our focus on industry solutions, we provide customers with solutions that utilize our leading-edge technology across form factors, from feature-rich solutions to modular solutions to handheld instruments. We have the broadest portfolio of software, hardware and service solutions in the industry and continue to leverage our strength in feature-rich instrumentation into a portfolio of modular and handheld measurement solutions to address our customers’ complex design and measurement needs. |

| • | New services solutions. Our services business represents a meaningful growth opportunity as we invest in expanding our services solutions portfolio. Our focus on growing services through multi-vendor calibration and asset management builds upon a strong foundation of repair and calibration services. We are also expanding our service solutions into new areas such as technology refresh and professional services. |

We deploy a direct sales organization focused on selling higher performance products and industry solutions to global and geographic accounts.

Operating Segments

In fiscal year 2016, we completed an organizational change to align our organization with the industries we serve.

As a result of this organizational realignment, we have three reportable operating segments, Communications Solutions Group (“CSG”), Electronic Industrial Solutions Group (“EISG”), and Services Solutions Group (“SSG”).

CSG and EISG are from our previous Measurement Solutions segment, while SSG was formerly reported as the company's Customer Support and Services segment.

The new organizational structure continues to include centralized enterprise functions that provide support across the groups.

Prior period amounts were revised to conform to the current presentation.

Communications Solutions Group

The Communications Solutions Group serves customers spanning the worldwide commercial communications end market, which includes internet infrastructure, and the aerospace, defense and government end market.

The group provides electronic design and test software, instruments, and systems used in the simulation, design, validation, manufacturing, installation and optimization of electronic equipment.

Our customers include commercial companies and government agencies around the world.

We have customers across the lifecycle that design, develop, manufacture, install and monitor a variety of commercial and government communications networks.

Commercial customers include original equipment and contract manufacturers of electronic components, semiconductors, wireless devices and network equipment, as well as network service providers that implement, maintain and manage communication networks and services.

Other commercial customers include defense contractors and sub-contractors.

Government customers include departments or ministries of defense, government agencies and related research institutes.

No single customer represented 10 percent or more of the group's net revenue.

In general, the orders and revenues from many of the Communications Solutions Group markets and product categories are seasonal, traditionally marked by lower business levels in the first and third quarters of the fiscal year and higher volumes in the second and fourth quarters of the fiscal year.

We concentrate our Communications Solutions Group manufacturing efforts primarily on final assembly and test of our products.

Electronic Industrial Solutions Group

The Electronic Industrial Solutions Group provides test and measurement solutions across a broad set of electronic industrial end markets, focusing on high-growth applications in the automotive and energy industry and measurement solutions for semiconductor design and manufacturing, consumer electronics, education and general electronics manufacturing.

The group provides electronic design and test software, instruments, and systems used in the simulation, design, validation, manufacturing, installation and optimization of electronic equipment.

This business generated revenue of $776 million in fiscal 2016, $758 million in fiscal 2015 and $766 million in fiscal 2014.

Electronic Industrial Solutions Group Markets

Electronic Industrial Solutions Group Products

Our electronic industrial products include design and design verification tools, a broad range of electronic test and measurement instruments, comprehensive manufacturing systems, material analysis and university education solutions to train the next generation of engineers and scientists.

Design tools include design-for-test (“DFT”) for printed circuit assemblies and automotive radar, and EDA software for wireless and wired communication links in industrial, automotive and power semiconductor devices.

Design verification solutions include physical signal characterization and protocol compliance, notably for those links used in industrial, energy and automotive devices and products.

Major industry forces are electrifying transportation and changing how electrical energy is generated, stored and controlled.

Examples of verification solutions include those that help design engineers qualify and characterize power semiconductor devices, photo-voltaic/electrical vehicle/storage inverters, AC power analysis, DC battery cells/modules and automotive body/safety/engine electronic modules.

High-precision and higher-bandwidth power analysis products address the increased power efficiency required with the proliferation of battery-powered and energy-efficient devices.

General purpose test and measurement products include hand-held (portable), bench instrument and modular forms.

Capability includes Digital Multi-Meters, Function Generators, Waveform Synthesizers, Counters, Data Acquisition (“DAQ”), Audio Analyzers, LCR Meters, Thermal imaging, low-cost USB modular, precision SMU (Source Measurement Units), ultra-high precision device current analyzers, test executive software platforms and a wide variety of power supplies ranging from bench to highly scalable AC/DC modular supplies and electronically programmable loads.

These products are increasingly integrated with solution-specific software that enable our customers to dramatically accelerate and improve the effectiveness of their product design, design validation, manufacturing and support activities.

Our products also support fundamental measurement science for voltage, current, frequency, signal pulse width, sub-nano-meter distance and complex electronic measurements.

This enables

After separation, we reorganized our business into two operating segments, the measurement solutions segment and customer support and services segment.

The measurement solutions segment consists of businesses that sell hardware and software products including Radio Frequency ("RF"), microwave, digital and other design and test technology solutions.

The customer support and services segment consists of businesses that provide repair and calibration services for our customers' installed base of instruments and facilitates the resale of refurbished used equipment.

As of October 31, 2015, we employed approximately 10,250 people worldwide.

| • | Invest in modular solutions. The market for modular solutions is expected to grow faster than the overall electronic measurement market. We are investing to leverage our strength in feature-rich instrumentation into a portfolio of modular measurement solutions. |

| • | Grow the services business. Services is a new growth initiative with significant potential. Our focus on growing services through multi-vendor calibration and asset management builds upon a strong foundation of repair and calibration services and refurbished used equipment sales. |

We were recognized in December 2014 with the 2014 Global Frost & Sullivan Award for Market Leadership in Instrumentation Software for capturing the highest market share within the industry.

We were recognized in September 2015 with the Global Frost & Sullivan Global Electronics Test Systems in Automotive Price/Performance Value Leadership 2015.

We were also recognized with the 2015 Global Frost & Sullivan Award for Growth Excellence Leadership in the digital oscilloscope market in December 2015.

We deploy a direct sales organization for medium and large targeted accounts, and focus our direct sales efforts on higher performance products that require configuration and application-specific information.

Measurement Solutions Business

Our measurement solutions business provides electronic measurement instruments and systems and related software and software design tools that are used in the design, development, manufacture, installation, deployment and operation of electronics equipment.

We provide start‑up assistance, consulting, optimization and application support throughout the customer’s product lifecycle.

We employed approximately 9,050 people as of October 31, 2015 in our measurement solutions business.

test instruments and systems to ensure conformance to communication standards and network requirements and to evaluate network performance.

Industrial, Computer and Semiconductor Market

Our general purpose instruments and related software are used across all of our markets by engineers in research and development laboratories, in manufacturing, for calibration and service; for measuring voltage, current, frequency, signal pulse width, modulation and other complex electronics measurements.

Our general purpose products include voltmeters, multimeters, frequency counters, bench and system power supplies, function generators and waveform synthesizers.

Our semiconductor and board test solutions enable customers to develop and test state-of-the-art semiconductors, test printed circuit boards and measure position and distance information to the sub‑nanometer level.

We supply parametric test instruments and systems used primarily to examine semiconductor wafers during the manufacturing process.

Our in‑circuit test systems help identify quality defects, such as faulty or incorrect parts, that affect electrical performance.

Our laser interferometer measurement systems are based on precision optical technology and provide precise position or distance information for dimensional measurements.

Our surveillance systems and subsystems are used by defense and government engineers and technicians to detect, locate and analyze signals of interest.

The products offered include probes for detecting signals and software that enables the identification and analysis of these signals.

Our microscopy products are high‑resolution imaging devices that can resolve features as small as an atomic lattice.

Our atomic force microscopes and scanning electron microscopes allow researchers to observe and manipulate molecular and atomic level features.

Our portfolio provides customers with reliable, easy‑to‑use tools for a wide range of nanotechnology applications, including semiconductor, data storage, polymers, materials science and life science studies.

Other customers are service providers who implement, maintain and manage communication networks and services, and companies who design, develop, and manufacture semiconductors and semiconductor lithography systems.

We had approximately 6,600 direct customers for the measurement solutions business in fiscal year 2015.

Our direct sales force consists

Customer Support and Services Business

The customer support and services business provides accredited repair and calibration services for our installed base instrument customers and facilitates the resale of used equipment.

Our customer support and services business enables our customers to maximize the value from their electronic measurement equipment through system uptime support, customer site resident professionals, on-site calibrations and localized service centers.

Providing these services assures a high level of instrument performance and availability while minimizing the cost of ownership and equipment downtime.

We employed approximately 1,200 people as of October 31, 2015 in our customer support and services business.

Customer Support and Services Markets

Customer Support and Services Products

Our customer support and services business provides accredited repair and calibration services for our electronic measurement instruments.

We also manage instrument trade‑in programs and refurbish and sell used instruments.

Repair: We provide repair services to our customers.

| | | For the fiscal year ended October 31, [removed: 2015] [added: 2016] |

Yes [removed: T] [added: x] No [removed: ¨][added: o]

Yes [removed: ¨] [added: o] No [removed: T][added: x]

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [added: o]

| Large accelerated filer [removed: T] [added: x] | | Accelerated filer [removed: ¨] [added: o] | | Non-accelerated filer [removed: ¨] [added: o] | | Smaller reporting company [removed: ¨] [added: o] |

The aggregate market value of common equity held by non-affiliates as of April 30, [removed: 2015] [added: 2016] was approximately [removed: $4] [added: $3] billion, based upon the closing price of the Registrant's common stock as quoted on New York Stock Exchange on such date.

As of December [removed: 14, 2015,] [added: 15, 2016,] there were [removed: 170,850,543] [added: 171,445,423] shares of our common stock outstanding.

| Portions of the Proxy Statement for the Annual Meeting of Stockholders (the "Proxy Statement") to be held on March [removed: 17, 2016] [added: 16, 2017] and to be filed pursuant to Regulation 14A within 120 days after registrant's fiscal year ended October 31, [removed: 2015] [added: 2016] are incorporated by reference into Part III of this Report. | | III |

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| [Item [removed: 12](#sC00715E41A535D7DA04B5D129D2976EC)] [added: 12](#sEDD5DEADE96551B9A98969D5EC6CC4ED)] | [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder [removed: Matters](#sC00715E41A535D7DA04B5D129D2976EC)] [added: Matters](#sEDD5DEADE96551B9A98969D5EC6CC4ED)] | [removed: [93](#sC00715E41A535D7DA04B5D129D2976EC)] [added: [97](#sEDD5DEADE96551B9A98969D5EC6CC4ED)] |

| [Item [removed: 13](#sF51A3A143A1156F18EA092DE3F5EC633)] [added: 13](#sB65611FD66A65C75BF9BA1E4C977D125)] | [Certain Relationships and Related Transactions, and Director [removed: Independence](#sF51A3A143A1156F18EA092DE3F5EC633)] [added: Independence](#sB65611FD66A65C75BF9BA1E4C977D125)] | [removed: [94](#sF51A3A143A1156F18EA092DE3F5EC633)] [added: [98](#sB65611FD66A65C75BF9BA1E4C977D125)] |

| [Item [removed: 14](#s0A54D4BF9C1E5D7E9F57DE0777C49301)] [added: 14](#sFE335397A2A15B3C89E1DE7606A1AE5A)] | [Principal Accounting Fees and [removed: Services](#s0A54D4BF9C1E5D7E9F57DE0777C49301)] [added: Services](#sFE335397A2A15B3C89E1DE7606A1AE5A)] | [removed: [94](#s0A54D4BF9C1E5D7E9F57DE0777C49301)] [added: [98](#sFE335397A2A15B3C89E1DE7606A1AE5A)] |

| [Item [removed: 15](#s6C6CD9DFD0DE5DF282333DEC12B89A47)] [added: 15](#s9C9B729AC1005E6B833D1C737B4C7D3D)] | [Exhibits, Financial Statement [removed: Schedules](#s6C6CD9DFD0DE5DF282333DEC12B89A47)] [added: Schedules](#s9C9B729AC1005E6B833D1C737B4C7D3D)] | [removed: [94](#s6C6CD9DFD0DE5DF282333DEC12B89A47)] [added: [98](#s9C9B729AC1005E6B833D1C737B4C7D3D)] |

10-K 1 keys-10312016x10k.htm 10-K

Yes x No o

Yes x No o

Yes o No x

| [PART I](#s46C69CCE1CC550848878BA21B7D20433) | | |

| [Item 1](#s46C69CCE1CC550848878BA21B7D20433) | [Business](#sC0FE3C397D1B58CE99B9A61C575D8D19) | [3](#sC0FE3C397D1B58CE99B9A61C575D8D19) |

| [PART II](#s5B63B46B93AC52B6B78C8E0005A43977) | | |

| [PART IV](#s635432D8C0F15460B9AE3D6653D3E2F2) | | |

10-K 1 keys-10312015x10k.htm 10-K

| [PART I](#s003BD42FFC85512C8BAB0444A50D289A) | | |

| [Item 1](#s003BD42FFC85512C8BAB0444A50D289A) | [Business](#s024950C4528D57CEBEF705099F47896C) | [3](#s024950C4528D57CEBEF705099F47896C) |

| [PART II](#s5E9024A5DD9E53DB92557CFC42AC04FB) | | |

| [PART IV](#s7E7C2DAC80185BCEA1643DF1F83BE339) | | |

We own or lease a total of approximately [removed: 145] [added: 139] operating facilities located throughout the world that handle manufacturing production, assembly, sales, quality, assurance testing, distribution and packaging of our products.

These facilities are located in the following countries: Australia, Austria, Belgium, Brazil, Canada, China, Denmark, Finland, France, Germany, [removed: Great Britain,] [added: U.K.,] Hong Kong, India, Israel, Italy, Japan, Malaysia, Mexico, Netherlands, Russia, Singapore, Spain, South Korea, Sweden, Switzerland, Taiwan, the United Arab [removed: Emirates and] [added: Emirates,] the United [removed: States.][added: States and Vietnam.]

As of October 31, [removed: 2015,] [added: 2016,] we own or lease a total of approximately [removed: 5.8] [added: 5.9] million square feet of space worldwide, of which we own approximately [removed: 4.1] [added: 4.2] million square feet and lease 1.7 million square feet.

Our manufacturing plants, R&D facilities and warehouse and administrative facilities occupy approximately [removed: 5.3] [added: 5.4] million square feet.

[added: Our common stock is listed on the New York Stock Exchange ("NYSE") with the ticker symbol "KEYS.’’] The following table sets forth the high and low sale prices per quarter for the fiscal [removed: year] [added: year, 2016 and] 2015 as reported in the consolidated transaction reporting system for the New York Stock Exchange:

There were [removed: 25,139] [added: 24,427] shareholders of record of Keysight common stock as of December [removed: 14, 2015.][added: 15, 2016.]

We [added: have not paid any dividends, and we] do not anticipate paying any cash dividends [removed: or repurchase stock] in the foreseeable future.

The information required by this item with respect to equity compensation plans is included under the caption Equity Compensation Plans in our proxy statement for the [removed: 2016] [added: 2017] annual meeting of stockholders, to be filed with the Securities and Exchange Commission pursuant to Regulation 14A, and is incorporated herein by reference.

| Fiscal 2016 | High | | | Low | | | Dividends |

| First Quarter (ended January 31, 2016) | $ | 33.48 | | $ | 22.15 | | — |

| Second Quarter (ended April 30, 2016) | $ | 28.39 | | $ | 21.07 | | — |

| Third Quarter (ended July 31, 2016) | $ | 31.87 | | $ | 25.49 | | — |

| Fourth Quarter (ended October 31, 2016) | $ | 33.14 | | $ | 26.87 | | — |

| | | | | | | | |

ISSUER PURCHASES OF EQUITY SECURITIES

The table below summarizes information about the company’s purchases, based on trade date; of its equity securities registered pursuant to Section 12 of the Exchange Act during the quarterly period ended October 31, 2016.

The total number of shares of common stock purchased by the Company during the fiscal year ended October 31, 2016 is 2,288,516 shares.

| | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | | | | | | | | | | | |

| Period | | Total Number of Shares of Common Stock Purchased (1) | | | Weighted Average Price Paid per Share of Common Stock (2) | | Total Number of Shares of Common Stock Purchased as Part of Publicly Announced Plans or Programs (1) | | | Maximum Approximate Dollar Value of Shares of Common Stock that May Yet Be Purchased Under the Program (1) | | |

| | | | | | | | | | | | | |

| August 1, 2016 through August 31, 2016 | | — | | | N/A | | — | | | $ | 138,515,618 | |

| September 1, 2016 through September 30, 2016 | | — | | | N/A | | — | | | $ | 138,515,618 | |

| October 1, 2016 through October 31, 2016 | | — | | | N/A | | — | | | $ | 138,515,618 | |

| Total | | — | | | N/A | | — | | | | | |

| | |

| --- | --- |

| | |

| (1) | On February 18, 2016, the Board of Directors approved a stock repurchase program authorizing the purchase of up to $200 million of the company’s common stock. Under the program, shares may be purchased from time to time, subject to general business and market conditions and other investment opportunities, through open market purchases, privately negotiated transactions or other means. The stock repurchase program may be commenced, suspended or discontinued at any time at the company’s discretion and does not have an expiration date. All such shares and related costs are held as treasury stock and accounted for using the cost method. |

| (2) | The weighted average price paid per share of common stock does not include the cost of commissions. |

Our common stock is listed on the New York Stock Exchange ("NYSE") with the ticker symbol "KEYS.’’ High and low sales prices per share of our common stock as reported by the NYSE for each full quarterly period of fiscal years 2014 are not provided as Keysight common shares did not begin "regular way" trading on the NYSE until November 3, 2014.

We have not paid any dividends or repurchased any stock to date, and we currently intend to retain any future income to fund the development and growth of our business.

We derived the selected financial data as of October 31, [removed: 2015] [added: 2016] and for each of the fiscal years in the three-year period ended October 31, [removed: 2015] [added: 2016] from our audited combined and consolidated financial statements included elsewhere in this Form 10-K.

We derived the selected financial data as of October 31, [removed: 2012] [added: 2013] and for the fiscal year ended October 31, [removed: 2011] [added: 2012] from audited combined financial statements that are not included in this Form 10-K.

Our historical combined and consolidated financial statements [added: before November 1, 2015] include certain expenses of Agilent that were allocated to us for certain functions, including general corporate expenses related to information technology, research and development, finance, legal, insurance, compliance and human resources activities.

These costs may not be representative of the future costs we [added: have incurred or] will incur as an independent public company.

| | [removed: 2015] [added: 2016] | | | | [removed: 2014] [added: 2015] | | | | [removed: 2013] [added: 2014] | | | | [removed: 2012] [added: 2013] | | | | [removed: 2011] [added: 2012] | | |

| Net revenue | $ | [removed: 2,856] [added: 2,918] | | | $ | [removed: 2,933] [added: 2,856] | | | $ | [removed: 2,888] [added: 2,933] | | | $ | [removed: 3,315] [added: 2,888] | | | $ | [removed: 3,316] [added: 3,315] | |

| Income before taxes | $ | [removed: 388] [added: 366] | | | $ | [removed: 475] [added: 388] | | | $ | [removed: 501] [added: 475] | | | $ | [removed: 746] [added: 501] | | | $ | [removed: 749] [added: 746] | |

| Net income | $ | [removed: 513] [added: 335] | | | $ | [removed: 392] [added: 513] | | | $ | [removed: 457] [added: 392] | | | $ | [removed: 841] [added: 457] | | | $ | [removed: 787] [added: 841] | |

| Basic | $ | [removed: 3.04] [added: 1.97] | | | $ | [removed: 2.35] [added: 3.04] | | | $ | [removed: 2.74] [added: 2.35] | | | $ | [removed: 5.04] [added: 2.74] | | | $ | [removed: 4.71] [added: 5.04] | |

| Diluted | $ | [removed: 3.00] [added: 1.95] | | | $ | [removed: 2.35] [added: 3.00] | | | $ | [removed: 2.74] [added: 2.35] | | | $ | [removed: 5.04] [added: 2.74] | | | $ | [removed: 4.71] [added: 5.04] | |

| Basic | [removed: 169] [added: 170] | | | | [removed: 167] [added: 169] | | | | 167 | | | | 167 | | | | 167 | | |

| Diluted | [removed: 171] [added: 172] | | | | [removed: 167] [added: 171] | | | | 167 | | | | 167 | | | | 167 | | |

| Cash and cash equivalents and short-term investments | $ | [removed: 483] [added: 783] | | | $ | [removed: 810] [added: 483] | | | $ | [removed: —] [added: 810] | | | $ | — | | | $ | — | |

| Working capital | $ | [removed: 893] [added: 1,210] | | | $ | [removed: 1,081] [added: 893] | | | $ | [removed: 412] [added: 1,081] | | | $ | [removed: 398] [added: 412] | | | $ | [removed: 272] [added: 398] | |

| Total assets | $ | [removed: 3,508] [added: 3,803] | | | $ | [removed: 3,050] [added: 3,508] | | | $ | [removed: 2,028] [added: 3,050] | | | $ | [removed: 2,133] [added: 2,028] | | | $ | [removed: 1,908] [added: 2,133] | |

| Long-term debt | $ | [removed: 1,099] [added: 1,100] | | | $ | 1,099 | | | $ | [removed: —] [added: 1,099] | | | $ | — | | | $ | — | |

| Stockholders'/Invested equity | $ | [removed: 1,302] [added: 1,513] | | | $ | [removed: 769] [added: 1,302] | | | $ | [removed: 1,245] [added: 769] | | | $ | [removed: 1,305] [added: 1,245] | | | $ | [removed: 996] [added: 1,305] | |

| | 2016 | | | | 2015 | | | | 2014 | | | | 2013 | | | | 2012 | | |

| [Report of Independent Registered Public Accounting [removed: Firm](#sA79AAC85812F5E23ABB0E1D0D066D2CE)] [added: Firm](#sB93FCC18F72854C8A996BCD9CDF2D254)] | | [removed: [43](#sA79AAC85812F5E23ABB0E1D0D066D2CE)] [added: [49](#sB93FCC18F72854C8A996BCD9CDF2D254)] |

| [Combined and Consolidated Statement of Operations for each of the three years in the period ended October 31, [removed: 2015](#sAF912C8AE21E5A568EFC9E6FEA13F723)] [added: 2016](#s29D5E82A73705AC1B484D8C7FC645177)] | | [removed: [44](#sAF912C8AE21E5A568EFC9E6FEA13F723)] [added: [50](#s29D5E82A73705AC1B484D8C7FC645177)] |

| [Combined and Consolidated Statement of Comprehensive Income for each of the three years in the period ended October 31, [removed: 2015](#s0F58D037FEC1501C82F7DA7F0C1F4C2A)] [added: 2016](#s2A4EFD1ABCF85517B998B45B9577F1E8)] | | [removed: [45](#s0F58D037FEC1501C82F7DA7F0C1F4C2A)] [added: [51](#s2A4EFD1ABCF85517B998B45B9577F1E8)] |

| [Consolidated Balance Sheet at October 31, [removed: 2015] [added: 2016] and [removed: 2014](#sFE913C77953F59D78AA8C11B84A7B4FA)] [added: 2015](#sE765355DDFC15D6EBCC8FC0C22A9F09E)] | | [removed: [46](#sFE913C77953F59D78AA8C11B84A7B4FA)] [added: [52](#sE765355DDFC15D6EBCC8FC0C22A9F09E)] |

| [Combined and Consolidated Statement of Cash Flows for each of the three years in the period ended October 31, [removed: 2015](#s1DDB0B452451583D9DC449BC8312D307)] [added: 2016](#s8A02912673B251C4AAF86D456DEBDE7D)] | | [removed: [47](#s1DDB0B452451583D9DC449BC8312D307)] [added: [53](#s8A02912673B251C4AAF86D456DEBDE7D)] |

| [Combined and Consolidated Statement of Equity for each of the three years in the period ended October 31, [removed: 2015](#s54352B6729F054C28B77495FA5BE8C3F)] [added: 2016](#sB77FC1D0794C56149D1A31707BF0AB1C)] | | [removed: [48](#s54352B6729F054C28B77495FA5BE8C3F)] [added: [54](#sB77FC1D0794C56149D1A31707BF0AB1C)] |

| [Notes to Combined and Consolidated Financial [removed: Statements](#sC5FADAB862005FB6B61501E765BB3C20)] [added: Statements](#sE996F3AE1D4E5D1588F12FD2EBADB98B)] | | [removed: [49](#sC5FADAB862005FB6B61501E765BB3C20)] [added: [55](#sE996F3AE1D4E5D1588F12FD2EBADB98B)] |

| [Quarterly Summary [removed: (unaudited)](#s672DB46564EB5B8FBDF83FA253FEB7C3)] [added: (unaudited)](#s7ECFF67852255E30B718B209C7FE0CB1)] | | [removed: [91](#s672DB46564EB5B8FBDF83FA253FEB7C3)] [added: [95](#s7ECFF67852255E30B718B209C7FE0CB1)] |

In our opinion, the accompanying [added: consolidated] balance sheets and the related [added: combined and consolidated] statements of operations, of comprehensive income, of equity and of cash flows present fairly, in all material respects, the financial position of Keysight Technologies, Inc. and its subsidiaries at October 31, [removed: 2015] [added: 2016] and October 31, [removed: 2014,] [added: 2015,] and the results of their operations and their cash flows for each of the three years in the period ended October 31, [removed: 2015] [added: 2016] in conformity with accounting principles generally accepted in the United States of America.

In addition, in our opinion, the financial statement schedule listed in the index appearing under Item 15(a)(2) presents fairly, in all material respects, the information set forth therein when read in conjunction with the related [added: combined and consolidated] financial statements.

Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of October 31, [removed: 2015,] [added: 2016,] based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

Our responsibility is to express opinions on these financial statements, on the financial statement schedule, and on the Company's internal control over financial reporting based on our audits (which [removed: was an] [added: were] integrated [removed: audit] [added: audits] in [added: 2016 and] 2015).

| | [removed: 2015] [added: 2016] | | | | [removed: 2014] [added: 2015] | | | | [removed: 2013] [added: 2014] | | |

| Products | $ | [removed: 2,408] [added: 2,440] | | | $ | [removed: 2,479] [added: 2,408] | | | $ | [removed: 2,434] [added: 2,479] | |

| Services and other | [removed: 448] [added: 478] | | | | [removed: 454] [added: 448] | | | | 454 | | |

| Total net revenue | [removed: 2,856] [added: 2,918] | | | | [removed: 2,933] [added: 2,856] | | | | [removed: 2,888] [added: 2,933] | | |

| Cost of products | [removed: 1,025] [added: 1,042] | | | | [removed: 1,083] [added: 1,025] | | | | [removed: 1,044] [added: 1,083] | | |

| Cost of services and other | [removed: 244] [added: 252] | | | | [removed: 230] [added: 244] | | | | [removed: 221] [added: 230] | | |

| Total costs | [removed: 1,269] [added: 1,294] | | | | [removed: 1,313] [added: 1,269] | | | | [removed: 1,265] [added: 1,313] | | |

| Research and development | [removed: 387] [added: 425] | | | | [removed: 361] [added: 387] | | | | [removed: 375] [added: 361] | | |

| Selling, general and administrative | [removed: 787] [added: 818] | | | | [removed: 790] [added: 787] | | | | [removed: 752] [added: 790] | | |

| Other operating expense (income), net | [removed: (18] [added: (25] | | ) | | [removed: —] [added: (18] | | [added: )] | | — | | |

| Total costs and expenses | [removed: 2,425] [added: 2,512] | | | | [removed: 2,464] [added: 2,425] | | | | [removed: 2,392] [added: 2,464] | | |

| Income from operations | [removed: 431] [added: 406] | | | | [removed: 469] [added: 431] | | | | [removed: 496] [added: 469] | | |

| Interest income | [removed: 1] [added: 3] | | | | [removed: —] [added: 1] | | | | — | | |

| Interest expense | [removed: (46] [added: (47] | | ) | | [removed: (3] [added: (46] | | ) | | [removed: —] [added: (3] | | [added: )] |

| Other income (expense), net | [removed: 2] [added: 4] | | | | [removed: 9] [added: 2] | | | | [removed: 5] [added: 9] | | |

| Income before taxes | [removed: 388] [added: 366] | | | | [removed: 475] [added: 388] | | | | [removed: 501] [added: 475] | | |

| Provision (benefit) for income taxes | [removed: (125] [added: 31] | | [removed: )] | | [removed: 83] [added: (125] | | [added: )] | | [removed: 44] [added: 83] | | |

| Net income | $ | [removed: 513] [added: 335] | | | $ | [removed: 392] [added: 513] | | | $ | [removed: 457] [added: 392] | |

| Basic | $ | [removed: 3.04] [added: 1.97] | | | $ | [removed: 2.35] [added: 3.04] | | | $ | [removed: 2.74] [added: 2.35] | |

| Diluted | $ | [removed: 3.00] [added: 1.95] | | | $ | [removed: 2.35] [added: 3.00] | | | $ | [removed: 2.74] [added: 2.35] | |

| Basic | [removed: 169] [added: 170] | | | | [removed: 167] [added: 169] | | | | 167 | | |

| Diluted | [removed: 171] [added: 172] | | | | [removed: 167] [added: 171] | | | | 167 | | |

Basic and diluted net income per share for [removed: all periods through] [added: the year ended] October 31, 2014 is calculated using the shares distributed on November 1, 2014.

| | [removed: Years] [added: Year] Ended October 31, | | | | | [removed: | | | | | |]

| Unrealized gain [added: (loss)] on investments, net of tax [removed: expense] [added: benefit (expense)] of $2, [removed: $4] [added: $(2)] and [removed: $3] [added: $(4)] | [removed: 5] [added: (11] | | [added: )] | | [removed: 8] [added: 5] | | | | [removed: 5] [added: 8] | | |

| Unrealized gain (loss) on derivative instruments, net of tax benefit (expense) of [removed: $5, $(2)] [added: $2, $5] and [removed: zero] [added: $(2)] | [removed: (10] [added: (5] | | ) | | [removed: 3] [added: (10] | | [added: )] | | [removed: —] [added: 3] | | |

| Amounts reclassified into earnings related to derivative instruments, net of tax benefit (expense) of [added: $(4),] zero [added: and zero] | [removed: 1] [added: 8] | | | | [removed: —] [added: 1] | | | | — | | |

| Foreign currency translation, net of tax benefit (expense) of zero, [removed: $1] [added: zero] and [removed: $(6)] [added: $1] | [removed: (54] [added: 19] | | [removed: )] | | [removed: (72] [added: (54] | | ) | | [removed: (75] [added: (72] | | ) |

As discussed in Note 2 to the combined and consolidated financial statements, the Company changed the manner in which it classifies deferred tax assets and liabilities in 2016 due to the adoption of Accounting Standards Update 2015-17, Balance Sheet Classification of Deferred Taxes.

| | 2016 | | | | 2015 | | |

| Treasury stock at cost; 2.3 million shares at October 31, 2016 and zero shares at October 31, 2015 | (62 | | ) | | — | | |

| Net income | $ | 335 | | | $ | 513 | | | $ | 392 | |

| Gain on sale of land | (10 | | ) | | — | | | | — | | |

| Other investing activities | 1 | | | | 1 | | | | (1 | | ) |

| Treasury stock repurchases | (62 | | ) | | — | | | | — | | |

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| Issuance of common stock | 2,108 | | | — | | | | 18 | | | | — | | | — | | | | — | | | | — | | | | — | | | | 18 | | |

| Issuance of common stock | 2,696 | | | — | | | | 34 | | | | — | | | — | | | | — | | | | — | | | | — | | | | 34 | | |

| Repurchase of common stock | — | | | — | | | | — | | | | (2,289 | ) | | (62 | | ) | | — | | | | — | | | | — | | | | (62 | | ) |

| Balance as of October 31, 2016 | 172,287 | | | $ | 2 | | | $ | 1,242 | | | (2,289 | ) | | $ | (62 | ) | | $ | 949 | | | $ | (618 | ) | | $ | — | | | $ | 1,513 | |

Land Sale.

OnApril 30, 2014 we entered into a binding sales contract with real estate developers to sell land in the U.K. The contract calls for proportionate transfers and payments of three separate land tracts totaling approximately$34 million in May 2014, November 2015 and November 2016.

In 2016, we recognized a $10 million gain on the sale of the second of three land tracts in other operating expense (income), net.

The

We classify the liability for unrecognized tax benefits as current to the extent

In 2016, we implemented changes in our organizational structure designed to align our organization with the industries we serve which resulted in the formation of three reportable operating segments, which are also our reporting units.

In 2016, we assessed goodwill impairment by performing a quantitative test for our three reporting units.

Based on the results of our testing, the fair values of these reporting units were significantly in excess of the carrying values.

In 2016, cost method investments with a carrying amount of $2 million were written down to their fair value of zero, resulting in an impairment charge of $2 million, which is included in other income (expense).

Under

Restricted Cash.

As of October 31, 2016, restricted cash of $2 million consisted of approximately $1 million of deposits held as collateral against bank guarantees and approximately $1 million of deposits held as collateral against foreign currency hedging contracts and is classified within other assets and other current assets, respectively, on the consolidated balance sheet.

As of October 31, 2015, restricted cash of $1 million consisted of deposits held as collateral against bank guarantees and is classified within other assets on the consolidated balance sheet.

significant cost of doing business.

In addition, during March, April and May 2016, the FASB issued guidance that clarified the reporting of revenue as a principal versus agent, identifying performance obligations, accounting for intellectual property licenses, narrow-scope improvements, and practical expedients.

Additionally, the new guidance may be applied either prospectively to all deferred tax liabilities and assets or retrospectively to all periods presented.

Accordingly, the consolidated balance sheet as of October 31, 2016 reflects the new classification but the prior period amounts were not adjusted to conform to the new guidance.

As a result of the adoption of this guidance, $75 million of current deferred tax assets and $2 million of deferred tax liabilities were reclassed to non-current.

In January 2016, the FASB issued guidance that amends various aspects of the recognition, measurement, presentation, and disclosure for financial instruments.

The standard generally requires companies to measure investments in other entities, except those accounted for under the equity method, at fair value and recognize any changes in fair value in earnings.

Early adoption is permitted for various provisions of the standard.

In February 2016, the FASB issued guidance that will require organizations that lease assets to recognize assets and liabilities for leases with lease terms of more than 12 months.

Consistent with current GAAP, the recognition, measurement, and presentation of expenses and cash flows arising from a lease by a lessee primarily will depend on its classification as a finance or operating lease.

However, unlike current GAAP, which requires only capital leases to be recognized on the balance sheet, the new guidance will require both types of leases to be recognized on the balance sheet.

In March 2016, the FASB issued guidance that simplifies the accounting for taxes related to share-based compensation, including adjustments to how excess tax benefits and a company's payments for tax withholdings should be classified.

The standard is effective for annual and interim periods beginning after December 31, 2016.

As described in Management’s Report on Internal Control over Financial Reporting, management has excluded Anite plc from its assessment of internal control over financial reporting as of October 31, 2015 because it was acquired by the Company in a purchase business combination during 2015.

We have also excluded Anite plc from our audit of internal control over financial reporting.

Anite plc is a wholly-owned subsidiary whose total assets and total revenues represent 4% and 1%, respectively, of the related financial statement amounts as of and for the year ended October 31, 2015.

December 21, 2015

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| | October 31, | | | | | | |

| Deferred taxes | (163 | | ) | | 23 | | | | 14 | | |

| Asset impairment charges | — | | | | — | | | | 1 | | |

| Proceeds from the sale of investments | 1 | | | | — | | | | — | | |

| Net transfers from/(to) Agilent | — | | | | 217 | | | | (481 | | ) |

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| Balance as of October 31, 2012 | — | | | $ | — | | | $ | — | | | $ | — | | | $ | 101 | | | $ | 1,204 | | | $ | 1,305 | |

| Net transfers to Agilent (pre-capitalization) | — | | | — | | | | — | | | | — | | | | — | | | | (267 | | ) | | (267 | | ) |

| Reduction in cash payable to Agilent | — | | | — | | | | 25 | | | | — | | | | — | | | | — | | | | 25 | | |

Separation from Agilent.

Approximately 167 million shares of Keysight common stock were distributed on November 1, 2014 to Agilent shareholders.

Acquisition of Anite.

On August 13, 2015, we acquired all share capital of Anite plc ("Anite") for a cash price of approximately $558 million, net of $43 million of cash acquired.

This acquisition expands our solutions offering in wireless research and development design and test.

Coupled with Keysight's expertise in helping customers design and test hardware, we can now provide customers with comprehensive wireless solutions.

Anite also has a Network Test business that brings innovative solutions that help deliver an outstanding experience for mobile users in the network.

Anite results are included in Keysight's consolidated financial statements from the date of acquisition and are reported in the measurement solutions segment.

For additional details related to the acquisition of Anite, see Note 3, "Acquisitions."

Those policies are

differs substantially from that of competitors, it is difficult to obtain the reliable standalone competitive pricing necessary to establish TPE.

In fiscal year 2015, we assessed goodwill impairment by performing a qualitative test for our two reporting units, which consisted of our two segments, Measurement Solutions and Customer Support and Services.

Based on the results of our testing, it was determined that it is more-likely-than-not that the fair value of the reporting units are greater than their carrying amounts.

Due to cancellation of a specific IPR&D project, we recorded an impairment of $1 million in 2013.

In order to manage foreign currency exposures in a few limited jurisdictions we may enter into foreign exchange contracts that do not qualify for hedge accounting.

In such circumstances, the local foreign currency exposure is offset by contracts owned by the parent company.

In June 2014, the FASB issued an amendment to the accounting guidance relating to share-based compensation to resolve what it saw as diverse accounting treatment of certain awards.

With this amendment, the FASB has given explicit guidance to treat a performance target that could be achieved after the requisite service period as a performance condition that affects vesting rather than as a non-vesting condition that affects the grant-date fair value of an award.

Earlier adoption is permitted.

In August 2014, the FASB issued guidance related to the disclosures around going concern.

The standard provided guidance around management's responsibility to evaluate whether there is substantial doubt about an entity's ability to continue as a going concern and to provide related footnote disclosures.

In February 2015, the FASB issued guidance with respect to the analysis that a reporting entity must perform to determine whether it should consolidate certain types of legal entities.

Our management has evaluated, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, the effectiveness of our disclosure controls and procedures as of October 31, [removed: 2015,] [added: 2016,] pursuant to and as required by Rule 13a-15(b) under the Securities Exchange Act of 1934 (“Exchange Act”).

Based on that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of October 31, [removed: 2015,] [added: 2016,] the company's disclosure controls and procedures, as defined by Rule 13a-15(e) under the Exchange Act, were effective and designed to ensure that(i) information required to be disclosed in the company's reports filed under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms, and (ii) information is accumulated and communicated to management, including the Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosures.

Based on the results of this evaluation, our management concluded that our internal control over financial reporting was effective as of October 31, [removed: 2015.][added: 2016.]

The effectiveness of our internal control over financial reporting as of October 31, [removed: 2015] [added: 2016] has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report which appears in Item 8 of this Annual Report on Form 10-K.

[removed: The acquisition of Anite resulted in a change] [added: There were no changes] in our internal control over financial reporting that occurred during our last fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

The Company completed the acquisition of Anite plc on August 13, 2015.

Management excluded Anite from its assessment of the effectiveness of the Company’s internal control over financial reporting as of October 31, 2015.

Anite constituted approximately 1% and 4% of the Company’s total revenue and assets for the year ended October 31, 2015.

In order for a stockholder proposal to be considered for inclusion in Keysight’s proxy statement for the [removed: 2016] [added: 2017] annual meeting of stockholders, the written proposal must be received by Keysight no later than December [removed: 21, 2015] [added: 18, 2016] and should contain such information as is required under Keysight’s Bylaws.

The following table summarizes information about our equity compensation plans as of October 31, [removed: 2015.][added: 2016.]

| Equity compensation plans approved by security holders (1)(2)(3) | [removed: 7,146,587] [added: 6,331,746] | | | $ | [removed: 24] [added: 25] | | | [removed: 32,472,436] [added: 30,306,620] | |

| (1) | The number of securities remaining available for future issuance in column (c) includes [removed: 24,506,711] [added: 23,272,600] shares of common stock authorized and available for issuance under the Keysight Technologies, Inc. Employee Stock Purchase Plan ("423(b) Plan"). The number of shares authorized for issuance under the 423(b) Plan is subject to an automatic annual increase of the lesser of one percent of the outstanding common stock of Keysight or an amount determined by the Compensation Committee of our Board of Directors. Under the terms of the 423(b) Plan, in no event shall the aggregate number of shares issued under the Plan exceed 75 million shares. The number of securities remaining available for future issuance in column (c) is before the issuance of shares of common stock to participants in consideration of the aggregate participant contribution under 423(b) plan totaling [removed: $15] [added: $16] million as of October 31, [removed: 2015.] [added: 2016.] |

| Total | 6,331,746 | | | $ | 25 | | | 30,306,620 | |

| Total | 7,146,587 | | | $ | 24 | | | 32,472,436 | |

| Tax valuation allowance | | $ | [removed: 41] [added: 46] | | | $ | [removed: —] [added: 4] | | | $ | [removed: —] [added: (12] | [added: )] | | $ | [removed: 41] [added: 38] | |

| 10.27 | | | Keysight Technologies, Inc. 401(k) Plan (Effective as of August 1, 2014)* | | [added: 10-K] | | [added: 12/21/2015] | | [added: 10.27] | | [removed: X] |

| 10.28 | | | Keysight Technologies, Inc. Deferred Profit-Sharing Plan (Effective as of August 1, 2014)* | | [added: 10-K] | | [added: 12/21/2015] | | [added: 10.28] | | [removed: X] |

| 10.29 | | | Keysight Technologies, Inc. Retirement Plan (Effective as of August 1, 2014)* | | [added: 10-K] | | [added: 12/21/2015] | | [added: 10.29] | | [removed: X] |

| 10.30 | | | First Amendment to the Keysight Technologies, Inc. 401(k) Plan (Effective as of August 1, 2015)* | | [added: 10-K] | | [added: 12/21/2015] | | [added: 10.30] | | [removed: X] |

| 10.31 | | | First Amendment to the Keysight Technologies, Inc. Retirement Plan (Effective as of August 1, 2015)* | | [added: 10-K] | | [added: 12/21/2015] | | [added: 10.31] | | [removed: X] |

Date: December [removed: 21, 2015][added: 19, 2016]

| /s/ RONALD S. NERSESIAN | | Director, President and Chief Executive Officer | | December [removed: 21, 2015] [added: 19, 2016] |

| /s/ NEIL DOUGHERTY | | Senior Vice President and Chief Financial Officer | | December [removed: 21, 2015] [added: 19, 2016] |

| /s/ JOHN C. SKINNER | | Vice President and Corporate Controller | | December [removed: 21, 2015] [added: 19, 2016] |

| /s/ PAUL N. CLARK | | Chairman of the Board | | December [removed: 21, 2015] [added: 19, 2016] |

| /s/ JAMES G. CULLEN | | Director | | December [removed: 21, 2015] [added: 19, 2016] |

| /s/ CHARLES J. DOCKENDORFF | | Director | | December [removed: 21, 2015] [added: 19, 2016] |

| /s/ JEAN M. HALLORAN | | Director | | December [removed: 21, 2015] [added: 19, 2016] |

| /s/ RICHARD HAMADA | | Director | | December [removed: 21, 2015] [added: 19, 2016] |

| /s/ ROBERT A. RANGO | | Director | | December [removed: 17, 2015] [added: 19, 2016] |

| /s/ MARK B. TEMPLETON | | Director | | December [removed: 21, 2015] [added: 19, 2016] |

| 2016 | | | | | | | | | | | | | | | | |

| 10.32 | | | Form of Keysight Technologies, Inc. Global Stock Award Agreement as Amended on November 15, 2016* | | | | | | | | X |

| 101.INS | | | XBRL Instance Document | | | | | | | | X |

| 101.SCH | | | XBRL Schema Document | | | | | | | | X |

| 101.CAL | | | XBRL Calculation Linkbase Document | | | | | | | | X |

| 101.LAB | | | XBRL Labels Linkbase Document | | | | | | | | X |

| 101.PRE | | | XBRL Presentation Linkbase Document | | | | | | | | X |

| 101.DEF | | | XBRL Definition Linkbase Document | | | | | | | | X |

| 2013 | | | | | | | | | | | | | | | | |