Item 8. Financial Statements and Supplementary Data

Index to Consolidated Financial Statements						Page
Consolidated Financial Statements:
Report of Independent Registered Public Accounting Firm (PCAOB ID: 238)						54
Consolidated Statement of Operations for each of the three years in the period ended October 31, 2024						56
Consolidated Statement of Comprehensive Income for each of the three years in the period ended October 31, 2024						57
Consolidated Balance Sheet at October 31, 2024 and 2023						58
Consolidated Statement of Cash Flows for each of the three years in the period ended October 31, 2024						59
Consolidated Statement of Equity for each of the three years in the period ended October 31, 2024						60
Notes to Consolidated Financial Statements						61

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Report of Independent Registered Public Accounting Firm

To the Board of Directors and Stockholders of Keysight Technologies, Inc.

Opinions on the Financial Statements and Internal Control over Financial Reporting

We have audited the accompanying consolidated balance sheets of Keysight Technologies, Inc. and its subsidiaries (the "Company") as of October 31, 2024 and 2023, and the related consolidated statements of operations, of comprehensive income, of equity and of cash flows for each of the three years in the period ended October 31, 2024, including the related notes and schedule of valuation and qualifying accounts for each of the three years in the period ended October 31, 2024 appearing under Item 15(a)(2) (collectively referred to as the "consolidated financial statements"). We also have audited the Company's internal control over financial reporting as of October 31, 2024, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of October 31, 2024 and 2023, and the results of its operations and its cash flows for each of the three years in the period ended October 31, 2024 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of October 31, 2024, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO.

Basis for Opinions

The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in Management’s Report on Internal Control over Financial Reporting appearing under Item 9A. Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company's internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.

Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

As described in Management’s Report on Internal Control over Financial Reporting, management has excluded ESI Group SA. ("ESI Group"), Riscure Holding B.V ("Riscure") and AnaPico AG ("AnaPico") from its assessment of internal control over financial reporting as of October 31, 2024, because they were acquired by the Company in purchase business combinations during 2024. We have also excluded ESI Group, Riscure and AnaPico from our audit of internal control over financial reporting. ESI Group is a wholly-owned subsidiary whose total assets and total revenues excluded from management’s assessment and our audit of internal control over financial reporting represent approximately 1% and 3%, respectively, while Riscure and AnaPico, wholly-owned subsidiaries, each constituted less than 1% of total assets and total revenues of the related consolidated financial statement amounts as of and for the year ended October 31, 2024.

Definition and Limitations of Internal Control over Financial Reporting

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

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(i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Critical Audit Matters

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

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

As described in Note 2 to the consolidated financial statements, on November 3, 2023, the Company acquired 50.6% of the share capital of ESI Group for $477 million, net of cash acquired, using existing cash. During January 2024, the Company completed the acquisition of the remaining share capital of ESI Group for $458 million, using existing cash. Of the acquired other intangible assets, $270 million of developed technology and $160 million of customer relationships were recorded. The intangible assets were valued by management using different income approach methods, which included the multi-period excess earnings and with and without valuation methods for developed technology and customer relationships, respectively. The significant assumptions used to estimate the fair value of the acquired intangible assets included revenue growth rates, earnings before interest and taxes, customer attrition rate, discount rate, obsolescence rate and total operating expenses.

The principal considerations for our determination that performing procedures relating to the valuation of developed technology and customer relationships acquired in the acquisition of ESI Group is a critical audit matter are (i) the significant judgment by management when developing the fair value estimate of the developed technology and customer relationships acquired; (ii) a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating management’s significant assumption related to earnings before interest and taxes; and (iii) the audit effort involved the use of professionals with specialized skill and knowledge.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to the acquisition accounting, including controls over management’s valuation of the developed technology and customer relationships acquired. These procedures also included, among others (i) reading the purchase agreement; (ii) testing management’s process for developing the fair value estimate of the developed technology and customer relationships acquired; (iii) evaluating the appropriateness of the multi-period excess earnings and with and without valuation methods used by management; (iv) testing the completeness and accuracy of the underlying data used in the multi-period excess earnings and with and without valuation methods; and (v) evaluating the reasonableness of the significant assumption used by management related to earnings before interest and taxes. Evaluating management's assumption related to earnings before interest and taxes involved considering (i) the current and past performance of ESI Group; (ii) the consistency with external market and industry data; and (iii) whether the assumption was consistent with evidence obtained in other areas of the audit. Professionals with specialized skill and knowledge were used to assist in evaluating the appropriateness of the multi-period excess earnings and with and without valuation methods.

/s/ PricewaterhouseCoopers LLP

San Jose, California

December 17, 2024

We have served as the Company’s auditor since 2013.

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KEYSIGHT TECHNOLOGIES, INC.

CONSOLIDATED STATEMENT OF OPERATIONS

(in millions, except per share data)

			Year Ended October 31,
			2024						2023						2022
Revenue:
Products			$	3,717					$	4,336					$	4,386
Services and other			1,262						1,128						1,034
Total revenue			4,979						5,464						5,420
Costs and expenses:
Cost of products			1,452						1,552						1,607
Cost of services and other			394						380						363
Total costs			1,846						1,932						1,970
Research and development			919						882						841
Selling, general and administrative			1,395						1,307						1,283
Other operating expense (income), net			(14)						(15)						(8)
Total costs and expenses			4,146						4,106						4,086
Income from operations			833						1,358						1,334
Interest income			81						102						16
Interest expense			(84)						(78)						(79)
Other income (expense), net			35						(25)						14
Income before taxes			865						1,357						1,285
Provision for income tax			251						300						161
Net income			$	614					$	1,057					$	1,124
Net income per share:
Basic			$	3.53					$	5.95					$	6.23
Diluted			$	3.51					$	5.91					$	6.18
Weighted average shares used in computing net income per share:
Basic			174						178						180
Diluted			175						179						182

The accompanying notes are an integral part of these consolidated financial statements.

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KEYSIGHT TECHNOLOGIES, INC.

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

(in millions)

			Year Ended October 31,
			2024						2023						2022
Net income			$	614					$	1,057					$	1,124
Other comprehensive income (loss):
Gains (losses) on derivative instruments, net of tax benefit (expense) of $(2), $4 and $(19)			7						(15)						73
Amounts reclassified into earnings related to derivative instruments, net of tax benefit (expense) of $4, $1 and zero			(7)						(6)						(3)
Foreign currency translation, net of tax benefit (expense) of zero			31						18						(165)
Net defined benefit pension cost and post-retirement plan costs:
Change in net actuarial loss, net of tax benefit (expense) of $(14), $10 and zero			73						(9)						83
Change in net prior service cost, net of tax benefit of zero, zero and zero			(2)						—						—
Other comprehensive income (loss)			102						(12)						(12)
Total comprehensive income			$	716					$	1,045					$	1,112

The accompanying notes are an integral part of these consolidated financial statements.

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KEYSIGHT TECHNOLOGIES, INC.

CONSOLIDATED BALANCE SHEET

(in millions, except par value and share data)

			October 31,
			2024						2023
ASSETS
Current assets:
Cash and cash equivalents			$	1,796					$	2,472
Accounts receivable, net			857						900
Inventory			1,022						985
Other current assets			582						452
Total current assets			4,257						4,809
Property, plant and equipment, net			774						761
Operating lease right-of-use assets			234						226
Goodwill			2,388						1,640
Other intangible assets, net			607						155
Long-term investments			110						81
Long-term deferred tax assets			378						671
Other assets			521						340
Total assets			$	9,269					$	8,683
LIABILITIES AND EQUITY
Current liabilities:
Current portion of long-term debt			$	—					$	599
Accounts payable			313						286
Employee compensation and benefits			295						304
Deferred revenue			561						541
Income and other taxes payable			90						90
Operating lease liabilities			43						40
Other accrued liabilities			125						189
Total current liabilities			1,427						2,049
Long-term debt			1,790						1,195
Retirement and post-retirement benefits			81						64
Long-term deferred revenue			206						216
Long-term operating lease liabilities			197						192
Other long-term liabilities			463						313
Total liabilities			4,164						4,029
Commitments and contingencies (Note 14)
Stockholders' equity:
Preferred stock; $0.01 par value; 100 million shares authorized; none issued and outstanding			—						—
Common stock; $0.01 par value; 1 billion shares authorized; 201 million and 200 million shares issued, respectively			2						2
Treasury stock, at cost; 28.4 million shares and 25.4 million shares, respectively			(3,422)						(2,980)
Additional paid-in-capital			2,664						2,487
Retained earnings			6,225						5,611
Accumulated other comprehensive loss			(364)						(466)
Total stockholders' equity			5,105						4,654
Total liabilities and equity			$	9,269					$	8,683

The accompanying notes are an integral part of these consolidated financial statements.

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KEYSIGHT TECHNOLOGIES, INC.

CONSOLIDATED STATEMENT OF CASH FLOWS

(in millions)

			Year Ended October 31,
			2024						2023						2022
Cash flows from operating activities:
Net income			$	614					$	1,057					$	1,124
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation			126						120						117
Amortization			144						92						106
Share-based compensation			137						135						125
Deferred tax expense (benefit)			268						(3)						7
Excess and obsolete inventory-related charges			35						27						27
Other non-cash expenses (income), net			(1)						(1)						42
Changes in assets and liabilities, net of effects of businesses acquired:
Accounts receivable			71						14						(204)
Inventory			(49)						(148)						(125)
Accounts payable			26						(62)						56
Employee compensation and benefits			(36)						(43)						(17)
Deferred revenue			(12)						61						79
Income taxes payable			30						(40)						(14)
Interest rate swap agreement termination proceeds			—						107						—
Prepaid assets			14						7						(124)
Tax receivables			(202)						(4)						(30)
Other assets and liabilities			(113)						89						(25)
Net cash provided by operating activities			1,052						1,408						1,144
Cash flows from investing activities:
Investments in property, plant and equipment			(154)						(197)						(185)
Proceeds from government incentives			7						1						—
Acquisitions of businesses and intangible assets, net of cash acquired			(681)						(85)						(33)
Purchase of investments			(11)						(7)						(33)
Other investing activities			20						—						—
Net cash used in investing activities			(819)						(288)						(251)
Cash flows from financing activities:
Proceeds from issuance of common stock under employee stock plans			66						67						63
Payment of taxes related to net share settlement of equity awards			(31)						(49)						(74)
Acquisition of non-controlling interests			(458)						—						—
Treasury stock repurchases, including excise tax payments			(443)						(702)						(849)
Proceeds from issuance of long-term debt			599						—						—
Repayment of debt			(624)						—						—
Debt issuance costs			(12)						—						—
Other financing activities			(10)						(3)						(1)
Net cash used in financing activities			(913)						(687)						(861)
Effect of exchange rate movements			6						(2)						(43)
Net increase (decrease) in cash, cash equivalents, and restricted cash			(674)						431						(11)
Cash, cash equivalents, and restricted cash at beginning of year			2,488						2,057						2,068
Cash, cash equivalents, and restricted cash at end of year			$	1,814					$	2,488					$	2,057
Supplemental cash flow information:
Interest payments			$	75					$	75					$	75
Income tax paid, net			$	146					$	343					$	191
Investments in property, plant and equipment included in accounts payable			$	19					$	30					$	31

The accompanying notes are an integral part of these consolidated financial statements.

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KEYSIGHT TECHNOLOGIES, INC.

CONSOLIDATED STATEMENT OF EQUITY

(in millions, except number of shares in thousands)

			Common Stock																		Treasury Stock
			Number of Shares						Par Value						Additional Paid-in Capital						Number of Shares						Treasury Stock at Cost						Retained Earnings						Accumulated Other Comprehensive Loss						Non-controlling Interests						Total Stockholders' Equity
Balance as of October 31, 2021			197,248						$	2					$	2,219					(15,094)						$	(1,425)					$	3,430					$	(442)					$	—					$	3,784
Net income			—						—						—						—						—						1,124						—						—						1,124
Other comprehensive income (loss), net of tax			—						—						—						—						—						—						(12)						—						(12)
Issuance of common stock			1,321						—						63						—						—						—						—						—						63
Taxes related to net share settlement of equity awards			—						—						(74)						—						—						—						—						—						(74)
Share-based compensation			—						—						125						—						—						—						—						—						125
Repurchase of common stock			—						—						—						(5,442)						(849)						—						—						—						(849)
Balance as of October 31, 2022			198,569						2						2,333						(20,536)						(2,274)						4,554						(454)						—						4,161
Net income			—						—						—						—						—						1,057						—						—						1,057
Other comprehensive income (loss), net of tax			—						—						—						—						—						—						(12)						—						(12)
Issuance of common stock			1,202						—						67						—						—						—						—						—						67
Taxes related to net share settlement of equity awards			—						—						(49)						—						—						—						—						—						(49)
Share-based compensation			—						—						136						—						—						—						—						—						136
Repurchase of common stock, including excise tax			—						—						—						(4,913)						(706)						—						—						—						(706)
Balance as of October 31, 2023			199,771						2						2,487						(25,449)						(2,980)						5,611						(466)						—						4,654
Net income			—						—						—						—						—						614						—						4						618
Other comprehensive income (loss), net of tax			—						—						—						—						—						—						102						—						102
ESI Group acquisition			—						—						—						—						—						—						—						458						458
Issuance of common stock			1,237						—						66						—						—						—						—						—						66
Taxes related to net share settlement of equity awards			—						—						(31)						—						—						—						—						—						(31)
Share-based compensation			—						—						138						—						—						—						—						—						138
Repurchase of common stock, including excise tax			—						—						—						(2,975)						(442)						—						—						—						(442)
Acquisition of non-controlling interests			—						—						4						—						—						—						—						(462)						(458)
Balance as of October 31, 2024			201,008						$	2					$	2,664					(28,424)						$	(3,422)					$	6,225					$	(364)					$	—					$	5,105

The accompanying notes are an integral part of these consolidated financial statements.

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KEYSIGHT TECHNOLOGIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. OVERVIEW, BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Overview. Keysight Technologies, Inc. (“we,” “us,” “Keysight” or the “company”), incorporated in Delaware on December 6, 2013, is a global innovator in the computing, communications and electronics market, committed to advancing our customers’ business success by helping them solve critical challenges in the development and commercialization of their products and services. Our mission, “accelerating innovation to connect and secure the world,” speaks to the value we provide our customers in a world of ever-increasing technological complexity. We deliver this value through a broad range of design and test solutions that address the critical challenges our customers face in bringing their innovations to market on ever-shorter schedules.

Basis of Presentation. We have prepared the accompanying financial statements pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) and in conformity with generally accepted accounting principles in the U.S. (“GAAP”). Our fiscal year end is October 31. Unless otherwise stated, all years and dates refer to our fiscal year.

Management is responsible for the fair presentation of the accompanying consolidated financial statements, prepared in accordance with GAAP, and has full responsibility for their integrity and accuracy. In the opinion of management, the accompanying consolidated financial statements contain all normal and recurring adjustments necessary to present fairly our consolidated balance sheet, consolidated statement of operations, consolidated statement of comprehensive income, consolidated statement of cash flows and consolidated statement of equity.

Principles of consolidation. The consolidated financial statements include the accounts of the company and our wholly- and majority-owned subsidiaries. All significant inter-company transactions have been eliminated. The consolidated financial statements also reflect the impact of non-controlling interests. Non-controlling interests do not have a significant impact on the consolidated results of operations; therefore, net income attributable to non-controlling interests for the year ended October 31, 2024 of $4 million is not presented separately and is included in “other income (expense), net” in the consolidated statements of operations.

Use of Estimates. The preparation of financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the amounts reported in our consolidated financial statements and accompanying notes. Management bases its estimates on historical experience and various other assumptions believed to be reasonable. Although these estimates are based on management's knowledge of current events and actions that may impact the company in the future, actual results may be different from the estimates. We are not aware of any specific event or circumstance that would require an update to our estimates or judgments or a revision of the carrying value of our assets or liabilities as of October 31, 2024. Our critical accounting policies are those that affect our financial statements materially and involve difficult, subjective or complex judgments by management. Those policies are revenue recognition, inventory valuation, share-based compensation, retirement and post-retirement plan assumptions, business combinations, valuation of goodwill and other intangible assets, warranty, loss contingencies, restructuring and accounting for income taxes.

Revenue recognition. Revenue is recognized upon transfer of control of the promised products or services to customers in an amount that reflects the consideration we expect to receive in exchange for those products or services. We primarily generate revenue from the sale of products (hardware and/or software), services, or a combination thereof. We enter into contracts that may involve multiple performance obligations, and we allocate the transaction price between each performance obligation on the basis of relative standalone selling price (“SSP”). Revenue is recognized net of allowances for returns and any taxes collected from customers, which are subsequently remitted to governmental authorities.

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Product revenues are generated predominantly from the sale of various types of design and test software and hardware. Products consist of standalone software and hardware generally installed with software applications that are licensed on a perpetual and term basis. Our hardware products generally do not have any substantive acceptance terms that would otherwise preclude the transfer of control. Performance obligations related to our software licenses, including the license portion of our software subscriptions, grant the customer the right to use our software primarily via electronic delivery.

Service revenues consist of repair and calibration services, extended warranties, technical support for hardware and software, when-and-if available software updates and upgrades, and professional services, including installation and implementation, consulting, and training. Services include both hardware and software services. Repair and calibration services for hardware products are sold both as per-incident customer services and as customer agreements to provide such services over the contractual period. Extended warranties are optional to the customer and provide warranty on hardware products for additional years beyond the standard one-year warranty. Technical support for software and when-and-if available software updates and upgrades are sold either together with our software licenses and software subscriptions, or separately as part of our customer support programs. These are considered stand-ready performance obligations where customers benefit from the services evenly throughout the license or service period. Our professional services may be sold on a time and material basis (e.g., consulting) or on a fixed-fee basis (e.g., non-recurring engineering).

We also generate revenues from a combination of products and services (“custom solutions”), including combinations of hardware, software, software subscriptions, installation, professional services, and other support services. Custom solutions provide the customer with a combination of hardware, software and professional services to meet customers' unique specifications and are accounted for as one performance obligation.

For our contracts with customers, we account for individual performance obligations separately if they are distinct. Our standard payment terms are net 30 to 90 days, and we generally do not offer extended payment terms beyond one year. Our contracts typically contain various forms of variable consideration, including trade discounts, trade-in credits, rebates, and rights of return. The transaction price is allocated to the separate performance obligations based on relative SSP. SSPs for a majority of our products and services are estimated based on our established pricing practices and maximize the use of observable inputs. An observable input is the price of the good or service when it is sold as a separate item in a similar circumstance and to a similar customer as in the contract for which SSPs are being determined. We have elected to exclude from the measurement of the transaction price all taxes assessed by a governmental authority that are both imposed on and concurrent with a specific revenue-producing transaction and collected by Keysight from a customer (e.g., sales, use, value added, and some excise taxes). We have also elected to account for shipping and handling activities that occur after control of the related good transfers as fulfillment activities instead of assessing such activities as performance obligations.

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Our typical performance obligations include the following:

Performance obligation			When performance obligation is typically satisfied			When payment is typically due			How standalone selling price is typically determined
Product Revenues
Hardware			When customer obtains control of the product, typically at delivery (point in time)			Within 30-90 days of shipment			Estimated based on established pricing practices or observable based on standalone sales for certain hardware products
Software licenses			Primarily upon electronic delivery of the software, and the applicable license period has begun (point in time)			Within 30-90 days of the beginning of license period			Estimated based on established pricing practices or observable based on standalone sales for certain software products
Software subscriptions			Ratably over the subscription period (over time)			Within 30-90 days of the beginning of subscription period			Estimated based on established pricing practices
Service Revenues
Calibration contracts			Ratably over the service contract period (over time)			Within 30-90 days of the beginning of service contract period			Estimated based on established pricing practices
Repair and calibration (per- incident)			As services are performed (point in time)			Within 30-90 days of invoicing for services rendered			Estimated based on established pricing practices
Extended hardware warranty			Ratably over the warranty period (over time)			Within 30-90 days of invoicing			Estimated based on established pricing practices or observable based on standalone sales of certain hardware warranty contracts
Technical support and when-and-if-available software updates			Ratably over the license service contract period (over time)			Within 30-90 days of the beginning of license or service contract period			Estimated based on established pricing practices or observable based on standalone sales for certain support contracts
Professional services			As services are performed based on measures of progress (over time) or at a point in time			Within 30-90 days of invoicing for services rendered			Estimated based on established pricing practices
Custom Solutions
Custom solutions (milestone-based; percentage-of-completion)			As milestones are achieved based on transfer of control to customer (over time)			Within 30-90 days of milestone achievement			Transaction price, as pricing is custom and can vary significantly from contract to contract
Custom solutions (point in time)			When customer obtains control of the solution, typically at delivery or customer acceptance, as defined by the contract (point in time)			Within 30-90 days of delivery of solution			Transaction price, as pricing is custom and can vary significantly from contract to contract

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Significant judgment is required to determine the SSP for each distinct performance obligation. Many of our contracts include multiple performance obligations with a combination of distinct products and services, maintenance and support, professional services and/or training. For contracts with multiple performance obligations, we allocate the total transaction value to each distinct performance obligation based on relative SSP. In doing so, we consider our internal price list for each product and service, which reflects our desired profitability, based on an expected level of sales, and adjust for factors such as competition, customer relationship, discount provided in the contract, geographic location, and the products and services purchased in the arrangement. We use a range based on actual historical sales to determine whether the calculated SSP for a product or service is a fair representation of the SSP.

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

Our products are generally sold with a right of return, and we may provide other credits, discounts, or incentives, which are accounted for as variable consideration at the portfolio level and estimated based on historical information. Returns, credits, and discounts are estimated at contract inception and updated at the end of each reporting period as additional information becomes available to the extent that it is probable a significant reversal of the cumulative amount of revenue recognized will not occur once the variability is subsequently resolved. See Note 3, “Revenue,” for additional information.

Shipping and handling costs. Our shipping and handling costs charged to customers are included in “revenue” and the associated expense is recorded in “cost of products” for all periods presented.

Deferred revenue. We recognize contract liabilities in our consolidated balance sheet as deferred revenue, which represents the amount of service and software revenue deferred and recognized over the contractual period or as services are rendered and accepted by the customer. In addition, it includes the amount allocated to undelivered performance obligations.

Accounts receivable, net. Trade accounts receivable is recorded at the invoiced amount and does not bear interest. Such accounts receivable has been reduced by an allowance for credit losses, which is our best estimate of the amount of probable credit losses in our existing accounts receivable. We determine the allowance based on customer specific experience and the aging of such receivables, among other factors. The allowance for credit losses was approximately $9 million and $5 million, respectively, as of October 31, 2024 and 2023.

Share-based compensation. We account for share-based awards made to our employees and directors, including restricted stock units (“RSUs”), employee stock purchases made under our employee stock purchase plan (“ESPP”), employee stock option awards, and performance share awards under our Long-Term Performance (“the LTP”) Program, using the estimated grant date fair value on a straight-line basis over the requisite service period of the award. Forfeitures are recognized as they occur and are reductions from share-based compensation expense. See Note 4, “Share-Based Compensation,” for additional information.

Inventory. Inventory is valued at standard cost, which approximates actual cost computed on a first-in, first-out basis, not exceeding net realizable value. We assess the valuation of our inventory periodically and adjust the value for estimated excess and obsolete inventory based on future demand and actual usage. See Note 13, “Supplemental Financial Information,” for additional information.

Warranty. Keysight warranties on products sold through direct sales channels are primarily for one year. Warranties for products sold through distribution channels are primarily for three years. We accrue for standard warranty costs based on historical trends in warranty charges. The accrual is reviewed regularly and periodically adjusted to reflect changes in warranty cost estimates. Estimated warranty charges are recorded within “cost of products” at the time related product revenue is recognized. See Note 13, “Supplemental Financial Information,” for additional information.

We also sell extended warranties that provide warranty coverage beyond the standard warranty term. Revenue associated with extended warranties is deferred and recognized over the extended coverage period.

Loss contingencies. We accrue for probable losses from contingencies, including legal settlement costs, on an undiscounted basis when such costs are considered probable of being incurred and are reasonably estimable. We periodically evaluate available information, both internal and external, relative to such contingencies and adjust this accrual as necessary.

Taxes on income. Income tax expense is based on income or loss before taxes. Deferred income taxes reflect the effect of temporary differences between asset and liability amounts that are recognized for financial reporting purposes and the amounts that are recognized for income tax purposes. These deferred taxes are measured by applying currently enacted tax laws. Valuation allowances are recognized to reduce deferred tax assets to the amount that is more likely than not to be realized.

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We account for uncertainty in income taxes using a two-step approach to recognize and measure uncertain tax positions. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates that it is more likely than not that the position will be sustained on audit, including resolution of related appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount that is more than 50 percent likely of being realized upon settlement. We make adjustments to these reserves when facts and circumstances change, such as the closing of a tax audit or the refinement of an estimate due to new information. We classify the liability for unrecognized tax benefits as current to the extent that the company anticipates payment (or receipt) of cash within one year. Interest and penalties related to uncertain tax positions are recognized in the “provision for income taxes.” Given the number of years and numerous matters that remain subject to examination in various tax jurisdictions, we are unable to estimate the range of possible changes to the balance of our unrecognized tax benefits. See Note 5, “Income Taxes,” for additional information.

Business Combinations. We include the results of operations of the businesses that we acquire as of the acquisition date. We allocate the purchase price of the acquisitions to the assets acquired and liabilities assumed based on their estimated fair values, except for revenue contracts acquired, which are recognized in accordance with our revenue recognition policy. The excess of the purchase price over the estimated fair values of identifiable assets and liabilities is recorded as “goodwill.” Acquisition-related expenses are recognized separately from the business combination and are expensed as incurred. See Note 2, “Acquisitions,” for additional information.

Goodwill and other intangible assets. Goodwill is assessed for impairment on a reporting unit basis at least annually in the fourth quarter, as of September 30, after the annual update to our long-term financial forecasts, or more frequently when events and circumstances occur indicating that the recorded goodwill may be impaired. The impairment test compares the fair value of a reporting unit with its carrying amount, with an impairment charge recorded for the amount by which the carrying amount exceeds the reporting unit’s fair value up to a maximum amount of the goodwill balance for the reporting unit.

Other intangible assets with finite lives consist primarily of developed technologies, trademarks, customer relationships, non-compete agreements, and acquired backlog and are amortized using the straight-line method over estimated useful lives ranging from 1 to 12 years. We review other intangible assets for impairment whenever events or changes in business circumstances indicate that the carrying amount of the assets may not be fully recoverable or that the useful lives of these assets are no longer appropriate.

Other intangible assets with indefinite-lives are generally in-process research and development (“IPR&D”) intangible assets. The authoritative accounting guidance allows a qualitative approach for testing indefinite-lived intangible assets for impairment, similar to the impairment testing guidance for goodwill. It allows the option to first assess qualitative factors (events and circumstances) that could have affected the significant inputs used in determining the fair value of the indefinite-lived intangible asset. The qualitative factors assist in determining whether it is more likely than not that the indefinite-lived intangible asset is impaired. An organization may choose to bypass the qualitative assessment for any indefinite-lived intangible asset in any period and proceed directly to calculating its fair value.

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

Impairment of long-lived assets. We continually monitor events and changes in circumstances that could indicate carrying amounts of long-lived assets may not be recoverable. When such events or changes in circumstances occur, we assess the recoverability of long-lived assets by determining whether the carrying value of such assets will be recovered through undiscounted expected future cash flows. If the total of the undiscounted future cash flows is less than the carrying amount of those assets, we recognize an impairment loss based on the excess of the carrying amount over the fair value of the assets.

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

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

Government assistance. Keysight receives various forms of government assistance, primarily through grants related to the development of new products and tax credits related to capital expenditures. We record proceeds from government grants when there is reasonable assurance that we will comply with the relevant conditions of the grant agreement and the grant funds will be received. Grants in recognition of specific expenses are recognized in the same period as an offset to those related expenses. Grants in form of tax credits related to capital expenditures are recognized as a reduction to property, plant and equipment with a corresponding reduction to depreciation expense over the expected useful life of the related asset.

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Grants received from new or existing arrangements in 2024 and 2023 were $8 million and $4 million, respectively, and are recorded as an offset to “research and development” in the consolidated statement of operations. Grant proceeds receivable as of October 31, 2024 and 2023 were $6 million and $5 million, respectively, and are recorded in “other current assets” in the consolidated balance sheet. Grant proceeds received prior to Keysight meeting the conditions of the grant are recorded in “other accrued liabilities” and “other long-term liabilities” in the consolidated balance sheet and were $4 million as of October 31, 2024 and not material as of October 31, 2023. Grant income recorded in “other income (expense), net” in the consolidated statement of operations was not material for fiscal year 2024 and 2023.

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

Investments. Investments with readily determinable fair values and trading securities are reported at fair value. Equity investments without readily determinable fair values are measured at cost with adjustments for observable changes in price or impairments. Gains or losses resulting from changes in fair value are recognized currently in earnings. The company assesses investments for impairment whenever events or changes in circumstances indicate that the carrying value of an investment may not be recoverable.

Fair value of financial instruments. The carrying values of certain of our financial instruments, including cash and cash equivalents, accounts receivable, accounts payable and other accrued liabilities, approximate fair value because of their short maturities. The fair value of long-term equity investments is determined using quoted market prices for those securities when available. For those long-term equity investments accounted for under the equity method or a measurement alternative, the carrying value approximates estimated fair value. The fair value of foreign currency contracts used for hedging purposes is estimated internally by using inputs tied to active markets. These inputs, for example, interest rate yield curves, foreign exchange rates, and forward and spot prices for currencies, are observable in the market or can be corroborated by observable market data for substantially the full term of the assets or liabilities. See Note 8, “Fair Value Measurements,” for additional information.

Net income per share. Basic net income per share is computed by dividing net income by the weighted average number of common shares outstanding during the period excluding the dilutive effect of share-based awards. Diluted net income per share gives effect to all potentially dilutive common stock equivalents outstanding during the period. The dilutive effect of share-based awards is reflected in diluted net income per share by application of the treasury stock method, which includes consideration of unamortized share-based compensation expense, and the dilutive effect of in-the-money options, non-vested RSUs, LTP program awards and potential ESPP issuances. Under the treasury stock method, the amount the employee must pay for exercising stock options and unamortized share-based compensation expense are assumed proceeds to be used to repurchase hypothetical shares. Potentially dilutive shares whose effect would have been antidilutive are excluded from the computation of diluted net income per share. See Note 6, “Net Income Per Share,” for additional information.

Cash, cash equivalents and short-term investments. We classify investments as cash equivalents if their original maturity or remaining maturity at the time of purchase is three months or less at the date of purchase. Cash equivalents are stated at cost, which approximates fair value.

Our cash and cash equivalents mainly consist of investments in institutional money market funds, short-term deposits held at major global financial institutions, and similar short duration instruments with original maturities of three months or less. We continuously monitor the creditworthiness of the financial institutions in which we invest our funds. We utilize a variety of funding strategies in an effort to ensure that our worldwide cash is available in the locations in which it is needed. Most significant international locations have access to internal funding through an offshore cash pool for working capital needs. In addition, a few locations that are unable to access internal funding have access to temporary local overdraft and short-term working capital lines of credit.

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

Concentration of credit risk. Financial instruments that potentially subject us to concentration of credit risk principally includes cash and cash equivalents, short-term and long-term investments, derivative financial instruments and accounts receivables. Cash and cash equivalents primarily consists of money market fund investments, time deposits and demand deposit balances. We invest in a variety of financial instruments and limit the amount of credit exposure with any one financial institution. We have a comprehensive credit policy in place and credit exposure is monitored on an ongoing basis.

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Credit risk with respect to our accounts receivable is diversified due to the large number of entities comprising our customer base and their dispersion across many different industries and geographies. Credit evaluations are performed on customers requiring credit over a certain amount.

Credit risk is mitigated through collateral, such as letters of credit, bank guarantees or payment terms like cash in advance. No single customer accounted for more than 10 percent of accounts receivable as of October 31, 2024 or 2023.

Derivative instruments. We are exposed to global foreign currency exchange rate fluctuations in the normal course of business. We enter into foreign exchange hedging contracts and primarily use forward contracts to manage financial exposures resulting from changes in foreign currency exchange rates. Foreign currency exposures include committed and anticipated revenue and expense transactions (cash flow exposure) and monetary assets and liabilities that are denominated in currencies other than the functional currency of the subsidiary (balance sheet exposure). For cash flow hedges, contracts are designated at inception as hedges of the related foreign currency exposures. We formally document all relationships between hedging instruments and hedged items, as well as our risk-management objective and strategy for undertaking various hedge transactions at the inception of the hedge. This process includes linking all derivatives that are designated as cash flow hedges to specific forecasted transactions. We also formally assess, both at the hedge’s inception and on an ongoing basis, whether the hedging instruments are highly effective in offsetting changes in cash flows of hedged items. Our foreign exchange cash flow hedging contracts have maturities based on a rolling period of up to twelve months. We do not use derivative financial instruments for speculative trading purposes.

All derivatives are recognized on the balance sheet at their fair values. For derivative instruments that are designated and qualify as cash flow hedges, changes in the value of the effective portion of the derivative instruments are recognized in accumulated other comprehensive income (loss), a component of stockholders' equity. Amounts associated with cash flow hedges are reclassified and recognized in income when either the forecast transaction occurs or it becomes probable the forecast transaction will not occur. Derivatives not designated as hedging instruments are recorded on the balance sheet at fair value, and changes in fair value are recorded in earnings in the current period. Derivative instruments are subject to master netting arrangements with the respective counterparties to allow for net settlement under certain conditions. Cash flows from derivative instruments are classified in the statement of cash flows in the same category as the cash flows from the hedged or economically hedged item, primarily in operating activities. See Note 9, “Derivatives,” for additional information.

Property, plant and equipment. Property, plant and equipment are stated at cost less accumulated depreciation. Additions, improvements and major renewals are capitalized; maintenance, repairs and minor renewals are expensed as incurred. When assets are retired or disposed of, the assets and related accumulated depreciation are removed from our general ledger, and the resulting gain or loss is reflected in the consolidated statement of operations. We use the straight-line method to depreciate assets. Buildings and improvements are depreciated over the lesser of their useful lives, which is generally over five years to forty years, or the remaining term of the lease; and machinery and equipment is generally depreciated over three years to ten years. See Note 13, “Supplemental Financial Information,” for additional information.

Leases. We determine whether an arrangement is a lease at inception. Operating leases are included in “operating lease right-of-use (“ROU”) assets” and “operating lease liabilities” (current and non-current) on our consolidated balance sheet. Finance leases are included in “property, plant and equipment, net,” “other accrued liabilities,” and “other long-term liabilities” in our consolidated balance sheet. Our finance lease and lessor arrangements were immaterial in 2024, 2023 and 2022.

ROU assets and lease obligations are recognized based on their present value of the future minimum lease payments over the lease term at commencement date. As most of our leases do not provide an implicit rate, we use our incremental borrowing rate based on the lease term and economic environment to discount lease obligations. ROU assets also include any lease payments made and exclude lease incentives and initial direct costs incurred. We initially measure payments based on an index by using the applicable rate at lease commencement. Variable payments that do not depend on an index are not included in the lease liability and are recognized as they are incurred. See Note 10, “Leases,” for additional information.

Restructuring costs. The main component of our existing restructuring plans is related to workforce reductions and site restructuring. Workforce reduction charges are accrued when payment of benefits becomes probable and the amounts can be estimated. If the amounts and timing of cash flows from restructuring activities are significantly different from what we have estimated, the actual amount of restructuring and other related charges could be materially different, either higher or lower, than those we have recorded.

Employee compensation and benefits. Amounts owed to employees, such as accrued salary, bonuses and vacation benefits are reported within employee compensation and benefits in the consolidated balance sheet. The total amount of accrued vacation benefit was $114 million and $113 million as of October 31, 2024 and 2023, respectively.

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Foreign currency translation. We translate and remeasure balance sheet and statement of operations items into U.S. dollars. For those subsidiaries that operate in a local currency functional environment, all assets and liabilities are translated into U.S. dollars using current exchange rates at the balance sheet date; revenue and expenses are translated using monthly exchange rates that approximate average exchange rates. Resulting translation adjustments are reported as a separate component of accumulated other comprehensive income (loss) in stockholders' equity in our consolidated balance sheet.

For those subsidiaries that operate in a U.S. dollar functional environment, foreign currency assets and liabilities are re-measured into U.S. dollars at current exchange rates except for non-monetary assets and capital accounts, which are remeasured at historical exchange rates. Revenue and expenses are generally remeasured at monthly exchange rates that approximate average exchange rates. Gains or losses from foreign currency re-measurement are included in “net income.” Net gains or losses resulting from foreign currency asset and liability remeasurement transactions are reported in other income (expense), net and were a $19 million gain in 2024, a $49 million loss in 2023 and a $1 million loss in 2022. See Note 9, “Derivatives” for additional information.

Retirement plans and post-retirement benefit plan assumptions. Defined benefit plan obligations are remeasured at least annually as of October 31, based on the present value of future benefit payments to reflect future benefit costs over the employees' average expected future service to Keysight based on the terms of the plans. To estimate the present value of these future payments, we are required to make assumptions using actuarial concepts within the framework of GAAP. Two critical assumptions are the discount rate and the expected long-term return on plan assets. Other important assumptions include expected future salary increases, expected future increases to benefit payments, expected retirement dates, employee turnover, retiree mortality rates and investment portfolio composition. We evaluate these assumptions at least annually. See Note 12, “Retirement Plans and Post-Retirement Benefit Plans,” for additional information.

New Accounting Pronouncements

Accounting Standards Update (“ASU”) 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. In November 2023, the Financial Accounting Standards Board (“FASB”) issued guidance which will require us to disclose significant segment expenses and other segment items used by the Chief Operating Decision Maker ("CODM") on an annual and interim basis as well as provide in interim periods all disclosures about a reportable segment’s profit or loss and assets that are currently required annually. Additionally, we will be required to disclose the title and position of the CODM. The new standard is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. This ASU will have no impact on our results of operations, cash flows or financial condition. We will apply the amendments in this ASU retrospectively to all prior period disclosures presented in the financial statements upon adoption.

ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. In December 2023, the FASB issued guidance which requires disclosure of disaggregated income taxes paid, prescribes standard categories for the components of the effective tax rate reconciliation, and modifies other income tax related disclosures. This standard is effective for fiscal years beginning after December 15, 2024. We are currently evaluating the impact of adopting this ASU on our consolidated financial statements and disclosures.

ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses. In November 2024, the FASB issued guidance which requires disclosure of additional expense information on an annual and interim basis, including the amounts of inventory purchases, employee compensation, depreciation and intangible asset amortization included within each income statement expense caption. This standard is effective for fiscal years beginning after December 15, 2026. We are currently evaluating the impact of adopting this ASU on our consolidated financial statements and disclosures.

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

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2. ACQUISITIONS

2024 Acquisitions

Acquisition of ESI Group SA

On November 3, 2023, we acquired 50.6% of the share capital of ESI Group SA (“ESI Group”) for $477 million, net of cash acquired, using existing cash. During January 2024, we completed the acquisition of the remaining share capital of ESI Group for $458 million, using existing cash. The company entered into put/call agreements valued at $7 million for certain ESI Group equity awards, subject to a holding period that may extend beyond the explicit vesting period, for the right to receive a cash payment equal to the public tender offer consideration of 155 euros per share, which was substantially paid in the third quarter of fiscal year 2024. For the year ended October 31, 2024, ESI Group's net revenue was $141 million and net loss attributable to Keysight shareholders was $68 million.

The ESI Group acquisition was accounted for in accordance with the authoritative accounting guidance. The acquired assets and assumed liabilities were recorded at their estimated fair values. We determined the estimated fair values with the assistance of valuations performed by third party specialists, discounted cash flow analysis, and estimates made by management. The acquisition of ESI Group expands our application layer portfolio with simulation capabilities that are critical to accelerate innovation in multiple end markets. These factors, among others, contributed to a purchase price in excess of the estimated fair value of ESI Group's net identifiable assets acquired (see summary of net assets below), and, as a result, we have recorded goodwill in connection with this transaction.

Goodwill was assigned to the Communications Solutions Group (“CSG”) and the Electronic Industrial Solutions Group (“EISG”) reportable segments, based on the expected benefits and synergies that are likely to be realized from the ESI Group acquisition. We do not expect the goodwill recognized or any potential impairment charges in the future to be deductible for income tax purposes.

A portion of the overall purchase price was allocated to acquired intangible assets. Amortization expense associated with acquired intangible assets is not deductible for tax purposes. Therefore, a deferred tax liability of $98 million was established primarily for the future amortization of these intangibles and is included in “other long-term liabilities” in the table below.

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

			November 3, 2023
			(in millions)
Cash and cash equivalents			$	35
Short-term investments			12
Accounts receivable			28
Other current assets			18
Property, plant and equipment			4
Operating lease right-of-use assets			8
Goodwill			603
Other intangible assets			494
Other assets			3
Total assets acquired			1,205
Accounts payable			(8)
Employee compensation and benefits			(23)
Deferred revenue			(14)
Income and other taxes payable			(11)
Operating lease liabilities			(3)
Other accrued liabilities			(18)
Debt			(24)
Retirement and post-retirement benefits			(7)
Long-term operating lease liabilities			(5)
Other long-term liabilities			(115)
Net assets acquired			$	977

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The fair values of cash and cash equivalents, short-term investments, accounts receivable, other current assets, accounts payable, employee compensation and benefits, and deferred revenue were generally determined using historical carrying values given the short-term nature of these assets and liabilities. The fair value for intangible assets was determined with the input from third-party valuation specialists. The fair values of property, plant and equipment and certain other liabilities were determined internally using historical carrying values and estimates made by management. During the second quarter of fiscal year 2024, the company decreased the deferred tax liability and goodwill by $8 million primarily for a timing difference in the recognition of research and development expenses. During the third quarter of fiscal year 2024, the company increased income and other taxes payable and other long-term liabilities by $3 million and $5 million, respectively, offset against goodwill, primarily for tax liabilities and uncertain tax positions.

Valuation of Intangible Assets Acquired

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

			Estimated Fair Value						Estimated useful life						Valuation Method
			(in millions)						(in years)
Developed technology			$	270					6						Multi-period excess earnings
Customer relationships			160						6						With and without
Backlog			15						3						Multi-period excess earnings
Trademarks/Tradename			2						2						Relief from royalty
Total amortizable intangible assets			447
In-process research and development			47												Multi-period excess earnings
Total intangible assets			$	494

As noted above, the intangible assets were valued using different income approach methods. The significant assumptions used to estimate the fair value of the acquired intangible assets included revenue growth rates, earnings before interest and taxes, customer attrition rate, discount rate, obsolescence rate and total operating expenses. The in-process research and development was valued by discounting forecasted cash flows directly related to the products expecting to result from the projects, net of returns on contributory assets. A discount rate of 12% was used to value the research and development projects to reflect the additional risks inherent in the acquired projects. The primary in-process projects acquired relate to next generation products which will be released in the near future. Total costs to complete for all ESI Group in-process research and development were estimated at approximately $7 million as of the close date.

Acquisition and integration costs directly related to the ESI Group acquisition were recorded in research and development, selling, general and administrative, other operating expense (income), net and other income (expense), net and were $39 million for the year ended October 31, 2024. For the year ended October 31, 2024, we incurred $10 million of acquisition-related compensation expense to redeem certain of ESI Group's outstanding unvested stock awards as of the date of the acquisition that were determined to relate to post-merger service periods.

Acquisition of Riscure Holding B.V.

On February 21, 2024, we acquired all the outstanding share capital of Riscure Holding B.V. (“Riscure”) for $78 million, net of cash acquired, expanding our automated security assessment capabilities and solutions for semiconductors, embedded systems, and connected devices. We recognized goodwill and other intangible assets of $52 million and $35 million, respectively, based on the preliminary allocation of the purchase price to the estimated fair values of the assets acquired and liabilities assumed. Goodwill was assigned to the CSG reportable segment, based on the expected benefits and synergies that are likely to be realized from the Riscure acquisition. We do not expect the goodwill recognized or any potential impairment charges in the future to be deductible for income tax purposes.

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Acquisition of AnaPico AG

On June 12, 2024, we acquired all the outstanding share capital of AnaPico AG (“AnaPico”) for $117 million, net of cash acquired, accelerating our strategy to expand our customer base in commercial communications, automotive, aerospace, defense, and government markets. We recognized goodwill and other intangible assets of $60 million and $53 million, respectively, based on the preliminary allocation of the purchase price to the estimated fair values of the assets acquired and liabilities assumed. The identified intangible assets primarily consist of developed technology of $28 million, customer relationships of $12 million, backlog of $1 million and in-process research and development of $12 million. The estimated useful lives of developed technology is 9 years, customer relationships is 9 years and backlog is 1 year. Goodwill was assigned to the CSG and the EISG reportable segments, based on the expected benefits and synergies that are likely to be realized from the AnaPico acquisition. We do not expect the goodwill recognized or any potential impairment charges in the future to be deductible for income tax purposes.

2023 Acquisitions

During the year ended October 31, 2023, we acquired Cliosoft, Inc. (“Cliosoft”) for $85 million, net of $15 million cash acquired. Cliosoft's data and intellectual property management tools enhance our portfolio of electronic design automation solutions. Based on the allocation of the purchase price to the estimated fair values of the assets acquired and liabilities assumed, we recognized additions to goodwill and other intangible assets of $56 million and $56 million, respectively. The identified intangible assets primarily consist of developed technology of $41 million, customer relationships of $13 million and backlog of $2 million. The estimated useful lives of developed technology range between 6 to 7 years, customer relationships is 6 years, and backlog is 3 years. Goodwill for the acquisition was assigned to the CSG and EISG operating segments using the relative fair value allocation approach.

Supplemental Pro Forma Information (Unaudited)

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

			Year Ended October 31,
			2024						2023
			(in millions, except per-share amounts)
Net revenue			$	4,979					$	5,609
Net income			$	649					$	987
Net income per share - Basic			$	3.73					$	5.56
Net income per share - Diluted			$	3.71					$	5.53

The unaudited pro forma financial information for the years ended October 31, 2024 and 2023 combines the historical results of Keysight and ESI Group for the years ended October 31, 2024 and 2023, assuming that the companies were combined as of November 1, 2022 and includes business combination accounting effects from the acquisition including amortization charges from acquired intangible assets and tax-related effects. Losses resulting from our foreign exchange contracts to hedge the ESI Group acquisition price of $18 million and $45 million were included in 2024 and 2023, respectively. The pro forma information as presented above is for informational purposes only and is not indicative of the results of operations that would have been achieved if the acquisition had taken place at the beginning of fiscal 2023.

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

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3. REVENUE

Disaggregation of Revenue

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

			Year Ended October 31,
			2024																		2023																		2022
			CSG						EISG						Total						CSG						EISG						Total						CSG						EISG						Total
			(in millions)
Region
Americas			$	1,657					$	398					$	2,055					$	1,798					$	407					$	2,205					$	1,824					$	379					$	2,203
Europe			518						416						934						536						420						956						523						359						882
Asia Pacific			1,245						745						1,990						1,351						952						2,303						1,456						879						2,335
Total revenue			$	3,420					$	1,559					$	4,979					$	3,685					$	1,779					$	5,464					$	3,803					$	1,617					$	5,420
End Market
Aerospace, Defense & Government			$	1,149					$	—					$	1,149					$	1,250					$	—					$	1,250					$	1,171					$	—					$	1,171
Commercial Communications			2,271						—						2,271						2,435						—						2,435						2,632						—						2,632
Electronic Industrial			—						1,559						1,559						—						1,779						1,779						—						1,617						1,617
Total revenue			$	3,420					$	1,559					$	4,979					$	3,685					$	1,779					$	5,464					$	3,803					$	1,617					$	5,420
Timing of Revenue Recognition
Revenue recognized at a point in time			$	2,683					$	1,273					$	3,956					$	3,012					$	1,515					$	4,527					$	3,166					$	1,393					$	4,559
Revenue recognized over time			737						286						1,023						673						264						937						637						224						861
Total revenue			$	3,420					$	1,559					$	4,979					$	3,685					$	1,779					$	5,464					$	3,803					$	1,617					$	5,420

Our point-in-time revenues are generated predominantly from the sale of various types of design and test software and hardware, and per-incident repair and calibration services. Perpetual software and the portion of term software subscription revenue in this category represents revenue recognized up front upon transfer of control at the time of electronic delivery. Revenue on per-incident repair and calibration services is recognized when services are performed. Over-time revenues are generated predominantly from the repair and calibration contracts, extended warranties, technical support for hardware and software, certain software subscription and Software as a Service (“SaaS”) product offerings, and professional services. Technical support for software and when-and-if available software updates and upgrades are sold either together with our software licenses and software subscriptions, including SaaS, or separately as part of our customer support programs.

Additionally, we provide custom solutions that include combinations of hardware, software, software subscriptions, installation, professional services, and other support services, and revenue may be recognized either up front on delivery or over time depending upon the terms of the contract.

Contract Balances

Contract assets

Contract assets consist of unbilled receivables and are recorded when revenue is recognized in advance of scheduled billings to our customers. These amounts are primarily related to solutions and support arrangements when transfer of control has occurred but we have not yet invoiced. The contract assets balances were $88 million and $58 million as of October 31, 2024 and October 31, 2023, respectively, and are included in “accounts receivables, net” and “other assets” in our consolidated balance sheet.

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Contract costs

We capitalize direct and incremental costs incurred to acquire contracts for which the associated revenue is expected to be recognized in future periods. We have determined that certain employee and third-party representative commission programs meet the requirements to be capitalized. These costs are initially deferred and typically amortized over the term of the customer contract which corresponds to the period of benefit. Capitalized contract costs were $35 million and $43 million as of October 31, 2024 and October 31, 2023, respectively, and are included in “other current assets” and “other assets” in the consolidated balance sheet. The amortization expense associated with these capitalized costs was $57 million, $62 million and $84 million for the years ended October 31, 2024, 2023 and 2022, respectively.

Contract liabilities

Our contract liabilities consist of deferred revenue that arises when we receive consideration in advance of providing the goods or services promised in the contract. Contract liabilities are primarily generated from customer deposits received in advance of shipments for products or rendering of services and are recognized as revenue when products are shipped and services are provided to the customer. We classify deferred revenue as current or non-current based on the timing of when we expect to recognize revenue.

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

			Year Ended
			October 31, 2024
			(in millions)
Beginning balance			$	757
Deferral of revenue billed in current period, net of recognition			529
Deferred revenue arising out of acquisitions			19
Revenue recognized that was deferred as of the beginning of the period			(541)
Foreign currency translation impact			3
Ending balance			$	767

Remaining Performance Obligations

Our expected remaining performance obligations, excluding contracts that have an original expected duration of one year or less, was approximately $576 million as of October 31, 2024, and represents the company’s obligation to deliver products and services and obtain customer acceptance on delivered products. As of October 31, 2024, we expect to fulfill 60 percent of these remaining performance obligations in 2025, 25 percent in 2026 and 15 percent thereafter.

4. SHARE-BASED COMPENSATION

Keysight accounts for share-based awards in accordance with the provisions of the authoritative accounting guidance, which requires the measurement and recognition of compensation expense for all share-based payment awards made to our employees and directors, including RSUs, employee stock purchases made under our ESPP, employee stock option awards, and performance share awards granted to selected members of our senior management under the LTP Program, based on estimated fair values.

Description of Keysight’s Share-Based Plans

Incentive compensation plans.

The 2014 Equity and Incentive Compensation Plan ("2014 Stock Plan") was adopted on July 16, 2014, and became effective on November 1, 2014. It was subsequently amended and restated by our board of directors on September 29, 2014, January 22, 2015, November 16, 2017 and November 16, 2023, with the most recent amendments taking effect on March 21, 2024, following stockholders approval. The maximum number of shares of common stock that may be issued under the plan is 28 million. The plan provides for the grants of awards in the form of stock options, stock appreciation rights, restricted stock, RSUs, performance-based shares and units, and cash awards. As of October 31, 2024, approximately 9 million shares were available for future awards.

RSUs under our share-based plans are granted to directors, executives and employees. The estimated fair value of the restricted stock unit awards granted under the 2014 Stock Plan is determined based on the market price of Keysight common

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

Performance share awards under the LTP Program, administered through the 2014 Stock Plan, are granted to the company's executive officers and key employees. Participants in this program are entitled to receive unrestricted company shares after a three-year performance period, contingent upon the achievement of metrics and targets set by the Compensation and Human Capital Committee at the beginning of the performance period. These metrics may include total shareholder return (“TSR”), financial metrics like operating margin (“OM”), earnings per share (“EPS”), and others. For TSR-based awards the peer group comparisons are set at the beginning of the performance period, while OM targets are set each year in the first quarter of the respective year. The final payout under the LTP Program may range from zero to 200 percent of the target award based on actual performance. During fiscal year 2022, the Compensation and Human Capital Committee approved performance retention awards with a target earnings per share (“EPS”) goal over a three-year performance period to select members of our leadership team. The performance targets are set each half year. The payout range of the award is zero or 100 percent, with no additional payout for performance above target.

The Employee Stock Purchase Plan (“ESPP”) was adopted on July 16, 2014, and became effective on November 1, 2014. It was amended and restated effective March 21, 2024. The maximum number of shares of common stock that may be issued under the plan is 25 million. The ESPP allows eligible employees to contribute up to 10 percent of their base compensation to purchase shares of Keysight common stock at 85 percent of the closing market price at the purchase date.

Under our ESPP, employees purchased 562,455 shares for $64 million in 2024, 477,760 shares for $64 million in 2023 and 462,279 shares for $62 million in 2022. As of October 31, 2024, common stock authorized and available for issuance under our ESPP was 17,820,022 shares, which includes shares issued in November 2024 to participants in consideration of the aggregate contribution of $30 million as of October 31, 2024.

Impact of Share-based Compensation Awards

Share-based compensation expense has been recognized using a straight-line amortization method over the requisite service period. The impact of share-based compensation expense on our consolidated statement of operations was as follows:

			Year Ended October 31,
			2024						2023						2022
			(in millions)
Cost of products and services			$	27					$	25					$	23
Research and development			38						38						28
Selling, general and administrative			80						73						75
Total share-based compensation expense			$	145					$	136					$	126
Income tax benefit realized from exercised stock options and similar awards			$	3					$	6					$	15

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

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Valuation Assumptions

The TSR-based performance awards were valued using a Monte Carlo simulation model, which requires the use of highly subjective and complex assumptions, including the price volatility of the underlying stock. The estimated fair value of restricted stock awards and the financial metrics-based performance awards (both OM and EPS) is determined based on the market price of Keysight’s common stock on the grant date. The compensation cost for financial metrics-based performance awards reflects the cost of awards that are probable to vest at the end of the performance period.

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

			Year Ended October 31,
			2024						2023						2022
Volatility of Keysight shares			29%						35%						36%
Volatility of index			18%						25%						23%
Price-wise correlation with index			69%						75%						67%

Share-based Payment Award Activity

Employee Stock Options

We have not granted any stock options since fiscal 2015. In 2024, 0.1 million options were exercised with an intrinsic value of $8 million at an average exercise price per share of $31. In 2023 and 2022, options exercised had an intrinsic value of $15 million and $11 million, with an average exercise price per share of $30 and $25, respectively. As of October 31, 2024, options outstanding were not material.

Non-vested Awards

The following table summarizes non-vested award activity in 2024 for our LTP Program and restricted stock unit awards:

			Shares						Weighted average grant date fair value per share
			(in thousands)
Non-vested at October 31, 2023			2,149						$	160
Granted			810						137
Vested			(839)						144
Forfeited			(30)						158
LTP Program incremental			33						113
Non-vested at October 31, 2024			2,123						$	157

As of October 31, 2024, the unrecognized share-based compensation cost for non-vested stock awards was approximately $124 million, which is expected to be amortized over a weighted average period of 2.3 years. Unrecognized share-based compensation cost does not include expense for financial metrics-based performance awards for which the targets have not yet been set. The total fair value of stock awards that vested in 2024, 2023 and 2022 was $114 million, $154 million and $223 million, respectively. See Note 5, “Income Taxes,” for the tax impact on share-based award exercises and vesting.

5. INCOME TAXES

The domestic and foreign components of income before taxes are:

			Year Ended October 31,
			2024						2023						2022
			(in millions)
U.S. operations			$	170					$	237					$	235
Non-U.S. operations			695						1,120						1,050
Total income before taxes			$	865					$	1,357					$	1,285

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The provision for income taxes consisted of:

			Year Ended October 31,
			2024						2023						2022
			(in millions)
U.S. federal taxes:
Current			$	(52)					$	185					$	28
Deferred			(47)						(54)						(10)
Non-U.S. taxes:
Current			31						105						113
Deferred			323						54						19
State taxes, net of federal benefit:
Current			4						13						13
Deferred			(8)						(3)						(2)
Total provision for income taxes			$	251					$	300					$	161

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

			October 31,
			2024									2023
			(in millions)
Deferred Tax Assets
Inventory			$	27								$	28
Intangibles			127									482
Property, plant and equipment			29									29
Warranty reserves			8									9
Pension benefits			26									18
Employee benefits, other than retirement			29									33
Net operating loss, capital loss, and credit carryforwards			307									275
Share-based compensation			22									22
Deferred revenue			48									43
Lease obligations			54									48
Hedging and currency costs			1									12
R&D capitalization			91									45
Others			16									15
Total deferred tax assets			785									1,059
Tax valuation allowance			(218)									(218)
Total deferred tax assets less valuation allowance			567									841
Deferred Tax Liabilities
Inventory			$	(3)								$	—
Intangibles			(148)									(31)
Property, plant and equipment			(18)									(23)
Pension benefits			(82)									(67)
Employee benefits, other than retirement			(1)									(1)
Unremitted earnings of foreign subsidiaries			(18)									(11)
Deferred revenue			(1)									(1)
ROU lease assets			(52)									(46)
Hedging and currency costs			(23)									(36)
Others			(7)									(6)
Total deferred tax liabilities			(353)									(222)
Total deferred tax assets, net of deferred tax liabilities			$	214								$	619

The decrease in deferred tax assets in 2024 as compared to 2023 primarily relates to a decrease in the tax rate applied to intangible assets in Singapore based on the new incentive tax rate, partially offset by an increase in deferred tax assets due to the capitalization of research and experimental expenditures for the U.S. tax filing group. The increase in deferred tax liabilities in 2024 as compared to 2023 primarily relates to intangible assets for acquired entities recognized in purchase accounting which are not deductible for tax purposes when amortized.

As of October 31, 2024, there was a deferred tax liability of $18 million for the tax liability expected to be imposed upon the repatriation of unremitted foreign earnings that are not considered indefinitely reinvested. As of October 31, 2024, the cumulative amount of undistributed earnings considered indefinitely reinvested was $105 million. No deferred tax liability has been recognized on the basis difference created by such earnings since it is our intention to indefinitely reinvest those earnings in the company’s foreign operations. The amount of the unrecognized deferred tax liability on the indefinitely reinvested earnings was $4 million.

Valuation allowances require an assessment of both positive and negative evidence when determining whether it is more likely than not that deferred tax assets are recoverable. Such assessment is required on a jurisdiction-by-jurisdiction basis.

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

As of October 31, 2024, there were U.S. federal net operating loss carryforwards of $3 million and U.S. state net operating loss carryforwards, primarily from acquired entities, of $49 million. The U.S. federal net operating losses will expire in years beginning 2027 through 2029 if not utilized. Of the total U.S. state net operating loss carryforwards, $48 million were subject to change of ownership limitations under various state tax provisions and were subject to valuation allowance. The U.S. state net operating loss carryforwards will begin to expire in 2025, which will result in an immaterial tax impact if not utilized. As of October 31, 2024, there were U.S. federal foreign tax credit carryforwards of $3 million. The U.S. federal foreign tax credits will begin to expire in 2032. Due to certain limitations, $1 million of U.S. federal foreign tax credits were subject to valuation allowance. There were U.S. state research credit carryforwards of approximately $30 million. Of the total U.S. state research credit carryforwards, $21 million are California research credits that can be carried forward indefinitely, but due to change of ownership limitations, the California research credits were subject to valuation allowance.

As of October 31, 2024, there were foreign net operating loss carryforwards of $978 million. Of the total foreign loss, $1 million will expire in 2025. The remaining loss consisted of $684 million that will expire in years beginning 2031 through 2044 if not utilized and $293 million that can be carried forward indefinitely. Of the $978 million of foreign net operating loss carryforward, $691 million were subject to a valuation allowance. As of October 31, 2024, there were foreign capital loss carryforwards of $90 million that can be carried forward indefinitely and $2 million of tax credits in foreign jurisdictions that can be carried forward indefinitely. The foreign capital loss carryforwards were subject to valuation allowance as we do not expect to generate income of the type required to utilize these losses. As of October 31, 2024, there were $63 million of interest deduction carryforwards that can be carried forward indefinitely.

The differences between the U.S. federal statutory income tax rate and our effective tax rate are:

			Year Ended October 31,
			2024						2023						2022
			(in millions)
Profit before tax times statutory rate			$	182					$	285					$	270
State income taxes, net of federal benefit			(3)						8						8
U.S. research credits			(21)						(22)						(14)
U.S. share-based compensation			(2)						(5)						(16)
U.S. officers’ compensation limitation			5						6						8
Current U.S. tax on foreign earnings			43						139						53
U.S. benefit on foreign sales			(14)						(17)						(17)
Foreign earnings taxed at different rates			(73)						(113)						(115)
Singapore incentive deferred tax rate impact			315						—						—
Deferred taxes on foreign earnings not considered indefinitely reinvested			—						6						(9)
Reduction in tax reserves due to Malaysia refund			(61)						—						—
Prior year change in potential U.S. benefit from non-U.S. tax reserves			35						—						—
Change in unrecognized tax benefits			12						3						(26)
U.S. prior year return adjustment			(15)						6						3
U.S. prior year GILTI tax deduction refund claim			(165)						—						—
Other, net			13						4						16
Provision for income taxes			$	251					$	300					$	161
Effective tax rate			29		%				22		%				13		%

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

The tax rate in 2024 was higher than the U.S. statutory rate primarily due to a one-time income tax charge of $315 million required to adjust Singapore deferred tax asset values to an incentive tax rate. Keysight entered into a new Singapore tax incentive agreement effective August 1, 2024. The Singapore tax incentive provides lower rates of taxation on certain classes of income and requires thresholds of investments and employment.

The 2024 income tax charge was partially offset by a one-time income tax benefit of $165 million related to Global Intangible Low Taxed Income (“GILTI”) tax deductions for intangible asset amortization. Keysight concluded that U.S. Department of the Treasury exceeded its regulatory authority in issuing tax regulations disallowing these deductions under IRC

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§ 951A. The company amended its U.S. federal income tax returns for the open tax years to claim GILTI tax deductions. The tax receivable resulting from the amended returns is reflected in “other assets” and “other current assets” in the consolidated balance sheet. The annual tax impact of the amortization of the intangible assets will continue to be recognized until 2033. The company believes the position meets the more likely than not recognition threshold and intends to vigorously defend its position. The outcome cannot be predicted with certainty. If we are ultimately unsuccessful in defending our position, we may be required to reverse the benefit previously recorded.

The 2024 income tax charge was also partially offset by a one-time income tax benefit of $61 million for the release of tax reserves related to the successful appeal of a Malaysia income tax assessment. In the fourth quarter of 2017, Keysight was assessed and paid income tax and penalties in Malaysia on gains related to the transfer of intellectual property rights and recorded a tax reserve on the assessed amount. The Court of Appeal in Malaysia ruled in Keysight’s favor on May 24, 2024, and the company received a refund of the income tax and penalties.

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

The tax rate in 2023 was higher than the U.S. statutory rate primarily due to the impact of U.S. tax capitalization of research and experimental expenditures, partially offset by the net impact from the proportion of worldwide earnings taxed at lower statutory tax rates in non-U.S. jurisdictions and the U.S. tax imposed on those non-U.S. earnings. The tax rate in 2022 was lower than the U.S. statutory rate primarily due to the proportion of worldwide earnings that are taxed at lower statutory tax rates in non-U.S. jurisdictions, partially offset by U.S. tax imposed on earnings in non-U.S. jurisdictions. The increase in the effective tax rate of 9 percent from 2022 to 2023 was primarily due to a 5 percent increase from U.S. tax capitalization of research and experimental expenditures in 2023.

Keysight benefits from tax incentives in several jurisdictions, most significantly in Singapore and Malaysia. The tax incentives provide lower rates of taxation on certain classes of income and require thresholds of investments and employment in those jurisdictions. The Malaysia tax incentive expires October 31, 2025. The Singapore tax incentive expires July 31, 2029.

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

			October 31,
			2024						2023
			(in millions)
Current income tax assets (included within other current assets)			$	175					$	78
Current income tax liabilities (included within income and other taxes payable)			(45)						(49)
Long-term income tax assets (included within other assets)			140						53
Long-term income tax liabilities (included within other long-term liabilities)			(219)						(210)
Total			$	51					$	(128)

The calculation of our tax liabilities involves uncertainties in the application of complex tax law and regulations in a multitude of jurisdictions. Although the guidance on the accounting for uncertainty in income taxes prescribes the use of a recognition and measurement model, the determination of whether an uncertain tax position has met those thresholds requires significant judgment by management. In accordance with the guidance on the accounting for uncertainty in income taxes, for all U.S. and other tax jurisdictions, we recognize potential liabilities for anticipated tax audit issues based on our estimate of whether, and the extent to which, additional taxes and interest will be due. We include interest and penalties related to unrecognized tax positions within the provision for income taxes in the consolidated statements of operations. Accrued interest and penalties are included on the related tax liability line in the consolidated balance sheet.

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

			Year Ended October 31,
			2024						2023						2022
			(in millions)
Gross Balance, beginning of year			$	266					$	234					$	249
Additions due to acquisition			2						—						—
Additions for tax positions related to the current year			24						37						32
Additions for tax positions from prior years			—						1						5
Reductions for tax positions from prior years			(22)						—						(25)
Settlements with taxing authorities			(45)						—						(3)
Statute of limitations expirations			(3)						(5)						(4)
Impact from currency fluctuations			—						(1)						(20)
Gross Balance, end of year			$	222					$	266					$	234

As of October 31, 2024, the total amount of gross unrecognized tax benefits, excluding interest and penalties, was $222 million. Of this amount, $150 million would impact our effective tax rate. Approximately $1 million of the unrecognized tax benefits was related to acquisitions, which if recognized within certain agreed upon time periods, would result in the recognition of an offsetting indemnification asset.

Cumulatively, interest and penalties accrued as of 2024, 2023 and 2022 were $38 million, $41 million and $36 million, respectively. We recognized a tax benefit for interest and penalties related to unrecognized tax benefits in 2024 of $6 million, which included a tax benefit of $16 million for penalties released due to settlements, offset by tax expense of $10 million for interest and penalties accrued in the current year. We recorded an additional $3 million of interest and penalties related to unrecognized tax benefits in 2024 through purchase accounting related to acquisitions. We recognized tax expense of $5 million and $3 million for interest and penalties related to unrecognized tax benefits in 2023 and 2022, respectively.

The open tax years for the U.S. federal income tax return and most state income tax returns are from November 1, 2019 through the current tax year. For the majority of our non-U.S. entities, the open tax years are from November 1, 2019 through the current tax year.

At this time, management does not believe that the outcome of any future or currently ongoing examination will have a material impact on our consolidated financial statements. We believe that we have an adequate provision for any adjustments that may result from tax examinations. However, the outcome of tax examinations cannot be predicted with certainty. Given the numerous tax years and matters that remain subject to examination in various tax jurisdictions, the ultimate resolution of current and future tax examinations could be inconsistent with management’s current expectations. If that were to occur, it could have an impact on our effective tax rate in the period in which such examinations are resolved.

6. NET INCOME PER SHARE

The following table presents the calculation of basic and diluted net income per share:

			Year Ended October 31,
			2024						2023						2022
			(in millions, except per-share amounts)
Net income			$	614					$	1,057					$	1,124
Basic weighted-average shares			174						178						180
Potential common shares			1						1						2
Diluted weighted-average shares			175						179						182
Net income per share - basic			$	3.53					$	5.95					$	6.23
Net income per share - diluted			$	3.51					$	5.91					$	6.18

Potentially dilutive shares whose effect would have been antidilutive are excluded from the computation of diluted net income per share. The number of shares excluded was not material for 2024, 2023 and 2022.

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7. GOODWILL AND OTHER INTANGIBLE ASSETS

The goodwill balances as of October 31, 2024, 2023 and 2022 and the movements in 2024 and 2023 for each of our reportable segments were as follows:

			CSG						EISG						Total
			(in millions)
Goodwill at October 31, 2022			$	1,022					$	560					$	1,582
Foreign currency translation impact			(1)						3						2
Goodwill arising from acquisitions			36						20						56
Goodwill at October 31, 2023			1,057						583						1,640
Foreign currency translation impact			2						8						10
Goodwill arising from acquisitions			181						557						738
Goodwill at October 31, 2024			$	1,240					$	1,148					$	2,388

There were no impairments of goodwill during the years ended October 31, 2024, 2023 and 2022. As of October 31, 2024, 2023 and 2022, accumulated impairment losses on goodwill were $709 million as recorded within the CSG reportable segment.

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

			October 31, 2024																		October 31, 2023
			Gross Carrying Amount						Accumulated Amortization						Net Book Value						Gross Carrying Amount						Accumulated Amortization						Net Book Value
			(in millions)
Developed technology			$	1,377					$	1,018					$	359					$	1,033					$	949					$	84
Backlog			37						25						12						19						17						2
Trademark/Tradename			38						36						2						36						33						3
Customer relationships			587						398						189						406						340						66
Total amortizable intangible assets			2,039						1,477						562						1,494						1,339						155
In-Process R&D			45						—						45						—						—						—
Total			$	2,084					$	1,477					$	607					$	1,494					$	1,339					$	155

In 2024, we recognized additions to goodwill and other intangible assets of $738 million and $582 million, respectively, based on the preliminary allocation of the purchase price to the estimated fair values of the assets acquired and liabilities assumed from the acquisition of ESI Group and other acquisition activity. See Note 2, “Acquisitions,” for additional information. During the year ended October 31, 2024, we transferred $15 million from in-process R&D to developed technology as projects were successfully completed.

During the year ended October 31, 2024, foreign exchange translation had a favorable impact of $8 million on other intangible assets. Amortization of other intangible assets was $138 million in 2024, $90 million in 2023 and $103 million in 2022. Estimated future amortization expense for our intangible assets as of October 31, 2024 is as follows:

			Amortization expense
			(in millions)
2025			$	125
2026			$	112
2027			$	101
2028			$	97
2029			$	89
Thereafter			$	38

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Goodwill is assessed for impairment on a reporting unit basis, which is an operating segment or one level below an operating segment. We determine fair values for each of the reporting units using the market approach, when available and appropriate, or the income approach, or a combination of both. If multiple valuation methodologies are used, the results are weighted appropriately. Valuations using the market approach are derived from metrics of publicly traded comparable companies. The selections of comparable businesses are based on the markets in which our reporting units operate, giving consideration to risk profiles, size, geography, and diversity of products and services. Under the income approach, fair value is determined based on the present value of estimated future cash flows, discounted at an appropriate risk-adjusted rate. We use our internal forecasts to estimate future cash flows and include an estimate of long-term future growth rates based on our most recent views of the long-term outlook for each business.

During the fourth quarter of 2024, we performed our annual impairment test of goodwill for all our reporting units using a qualitative approach. Based on the results of our qualitative testing, we believe that it is more likely than not that the fair value of each reporting unit is greater than its respective carrying value.

As of October 31, 2024, we determined that no goodwill impairment exists and that the remaining goodwill is recoverable for all of our reporting units; however, there can be no assurance that goodwill will not be impaired in future periods. Estimating the fair value of reporting units requires the use of estimates and significant judgments that are based on a number of factors including actual operating results. It is possible that the judgments and estimates described above could change in future periods.

Other intangible assets with finite lives are assessed for impairment whenever events or changes in business circumstances indicate that the carrying amount of the assets may not be fully recoverable or that the useful lives of these assets are no longer appropriate. No impairments of amortizable intangible assets were recorded during the years ended October 31, 2024, 2023 and 2022.

The authoritative accounting guidance allows a qualitative approach for testing indefinite-lived intangible assets for impairment, similar to the impairment testing guidance for goodwill. It allows the option to first assess qualitative factors (events and circumstances) that could have affected the significant inputs used in determining the fair value of the indefinite-lived intangible asset. The qualitative factors assist in determining whether it is more likely than not that the indefinite-lived intangible asset is impaired. An organization may choose to bypass the qualitative assessment for any indefinite-lived intangible asset in any period and proceed directly to calculating its fair value. Our indefinite-lived intangible assets are generally in-process research and development (“IPR&D”) intangible assets. No impairments of indefinite-lived intangible assets were recorded in 2024. We had no IPR&D intangible assets as of October 31, 2023 and 2022.

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

8. FAIR VALUE MEASUREMENTS

The authoritative guidance defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required or permitted to be recorded at fair value, we consider the principal or most advantageous market and assumptions that market participants would use when pricing the asset or liability.

Fair Value Hierarchy

The guidance establishes a fair value hierarchy that prioritizes inputs used in valuation techniques into three levels. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. There are three levels of inputs that may be used to measure fair value:

Level 1 — applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities.

Level 2 — applies to assets or liabilities for which there are inputs other than quoted prices included within Level 1 that are observable, either directly or indirectly, for the asset or liability, such as quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in less active markets, or other inputs that can be derived principally from, or corroborated by, observable market data.

Level 3 — applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities.

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

Financial assets and liabilities measured at fair value on a recurring basis as of October 31, 2024 and 2023 were as follows:

			October 31,
			2024																														2023
			Total						Level 1						Level 2						Level 3						Other						Total						Level 1						Level 2						Level 3						Other
			(in millions)
Assets:
Short-term
Cash equivalents
Money market funds			$	1,141					$	1,141					$	—					$	—					$	—					$	1,934					$	1,934					$	—					$	—					$	—
Derivative instruments (foreign exchange contracts)			38						—						38						—						—						18						—						18						—						—
Long-term
Equity investments			80						80						—						—						—						56						56						—						—						—
Investments - other			29						—						—						—						29						25						—						—						—						25
Total assets measured at fair value			$	1,288					$	1,221					$	38					$	—					$	29					$	2,033					$	1,990					$	18					$	—					$	25
Liabilities:																																																									—
Short-term
Derivative instruments (foreign exchange contracts)			$	6					$	—					$	6					$	—					$	—					$	54					$	—					$	54					$	—					$	—
Long-term
Deferred compensation liability			34						—						34						—						—						27						—						27						—						—
Total liabilities measured at fair value			$	40					$	—					$	40					$	—					$	—					$	81					$	—					$	81					$	—					$	—

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

Our money market funds and equity investments with readily determinable fair values are measured at fair value using quoted market prices and, therefore, are classified within Level 1 of the fair value hierarchy. Equity and fixed income investments or convertible notes without readily determinable fair values that are either measured at cost, adjusted for observable changes in price or impairments, or accounted for under a measurement alternative are not categorized in the fair value hierarchy and are presented as “investments - other” in the table above. Our deferred compensation liability is classified as Level 2 because the inputs used in the calculations are observable, although the values are not directly based on quoted market prices. Our derivative financial instruments are classified within Level 2 as there is not an active market for each hedge contract, but the inputs used to calculate the value of the instruments are tied to active markets.

Equity investments, including securities that are earmarked to pay the deferred compensation liability, are reported at fair value, with gains or losses resulting from changes in fair value recognized in earnings. The changes in fair value of equity investments are recorded within “other income (expense), net” in the consolidated statement of operations. Certain derivative instruments are reported at fair value, with unrealized gains and losses, net of tax, included in “accumulated other comprehensive income (loss).”

All of our investments are subject to periodic impairment review. The impairment analysis requires judgment to identify events or circumstances that would likely have a significant adverse effect on the future value of the investment. There were no impairments recognized in 2024, 2023 and 2022.

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Realized gains and losses from the sale of investments are recorded in earnings. There were no realized gains or losses from the sale of investments in 2024, 2023 and 2022. Net unrealized gain (loss) on our equity and other investments was as follows:

			Year Ended October 31,
			2024						2023						2022
			(in millions)
Net unrealized gain (loss) on equity and other investments still held			$	15					$	7					$	(36)

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

Assets measured at fair value on a non-recurring basis consisted of goodwill and intangible assets. See Note 7, “Goodwill and Other Intangible Assets,” for additional information.

Goodwill

Fair value assessments of the reporting unit and the reporting unit’s net assets, which are performed for goodwill impairment tests, are considered Level 3 measurements due to the significance of unobservable inputs developed using company-specific information. In the event of performing a quantitative impairment test, we consider a market approach as well as an income approach using the discounted cash flow model to determine the fair value of the reporting unit.

Intangible Assets

Fair value of intangible assets is considered Level 3 measurements due to the significance of unobservable inputs developed using company-specific information. In the event of performing a quantitative impairment test, we utilize an income approach for estimating the fair value of intangible assets. The future cash flows used in the analysis are based on internal cash flow projections based on our long-range plans and include significant assumptions by management.

Long Lived Assets

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

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9. DERIVATIVES

We are exposed to foreign currency exchange rate fluctuations and interest rate changes in the normal course of our business. As part of our risk management strategy, we use derivative instruments, primarily forward contracts, to hedge economic and/or accounting exposures resulting from changes in foreign currency exchange rates.

Cash Flow Hedges

We enter into foreign exchange contracts to hedge our forecasted operational cash flow exposures resulting from changes in foreign currency exchange rates. These foreign exchange contracts, carried at fair value, have maturities based on a rolling period of up to twelve months. These derivative instruments are designated and qualify as cash flow hedges under the criteria prescribed in the authoritative guidance. The changes in the value of the derivative instrument included in the assessment of effectiveness are recognized in accumulated other comprehensive income and reclassified into earnings, when the forecasted transaction occurs, in the same financial statement line item in the consolidated statement of operations where the earnings effect of the hedged item is presented. If it becomes probable that the forecasted transaction will not occur, the hedge relationship will be de-designated and amounts accumulated in other comprehensive income will be reclassified into earnings in the current period. Gains and losses on the derivative instrument representing hedge components excluded from the assessment of effectiveness are amortized to earnings on a straight-line basis over the tenor of the hedge and are presented in the same financial statement line of the consolidated statement of operations where the earnings effect of the hedged item is presented.

In 2020, we entered into forward-starting interest rate swaps with an aggregate notional amount of $600 million in connection with future interest payments on the issuance of $600 million in unsecured senior notes (“2034 Senior Notes”). The contract term allowed us to lock in a treasury rate on anticipated debt issuances. These derivative instruments were designated and qualified as cash flow hedges under the criteria prescribed in the authoritative guidance. The changes in fair value of these derivative instruments were recognized in “accumulated other comprehensive income (loss).” In 2023, we terminated the interest rate swap agreements, resulting in a deferred gain of $107 million recognized in “accumulated other comprehensive income (loss)” that is being amortized to interest expense over the term of the 2034 Senior Notes. The remaining gain to be amortized related to the interest rate swap agreements was $106 million as of October 31, 2024.

Other Hedges

Additionally, we enter into foreign exchange contracts to hedge monetary assets and liabilities that are denominated in currencies other than the functional currency of our subsidiaries. These foreign exchange contracts are carried at fair value and do not qualify for hedge accounting treatment and are not designated as hedging instruments. Changes in value of the derivative are recognized in “other income (expense), net”, in the consolidated statement of operations in the current period along with the offsetting foreign currency gain or loss on the underlying assets or liabilities.

In connection with the acquisition of the ESI Group, we entered into foreign exchange forward contracts to mitigate the currency exchange risk associated with the payment of the purchase price in euros. The aggregate notional amount of the currencies hedged was 930 million euros as of October 31, 2023. These foreign exchange contracts did not qualify for hedge accounting treatment and were not designated as hedging instruments. During the year ended October 31, 2024, these foreign exchange forward contracts were settled using existing cash of $63 million, resulting in a loss of $18 million recorded in “other income (expense), net” in the consolidated statement of operations.

During the third quarter of fiscal year 2024, we entered into foreign exchange forward contracts with an aggregate notional amount of 1.2 billion pounds sterling to mitigate the currency exchange risk associated with a planned acquisition. These foreign exchange contracts do not qualify for hedge accounting treatment and are not designated as hedging instruments. The resulting net unrealized gain on outstanding contracts was $23 million and was recorded in “other income (expense), net” in the consolidated statement of operations and in “other current assets” on the consolidated balance sheet for the year ended October 31, 2024.

Our use of derivative instruments exposes us to credit risk to the extent that the counterparties may be unable to meet the terms of the agreement. We do, however, seek to mitigate such risks by limiting our counterparties to major financial institutions, which are selected based on their credit ratings and other factors. We have established policies and procedures for mitigating credit risk that include establishing counterparty credit limits, monitoring credit exposures, and continually assessing the creditworthiness of counterparties.

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The number of open foreign exchange forward contracts designated as “cash flow hedges” and “not designated as hedging instruments” was 216 and 78, respectively, as of October 31, 2024. The aggregated notional amounts by currency and designation as of October 31, 2024 were as follows:

						Derivatives in Cash Flow Hedging Relationships						Derivatives Not Designated as Hedging Instruments
						Forward Contracts						Forward Contracts
Currency						Buy/(Sell)						Buy/(Sell)
						(in millions)
Euro						$	19					$	7
British Pound						15						1,565
Singapore Dollar						32						16
Malaysian Ringgit						108						12
Japanese Yen						(130)						(73)
Other currencies						(35)						(26)
Total						$	9					$	1,501

Derivative instruments are subject to master netting arrangements and are disclosed at their gross fair value in the consolidated balance sheet. The gross fair values and balance sheet presentation of derivative instruments held as of October 31, 2024 and 2023 were as follows:

Fair Values of Derivative Instruments
Assets Derivatives																		Liabilities Derivatives
						Fair Value																		Fair Value
Balance Sheet Location						October 31, 2024						October 31, 2023						Balance Sheet Location						October 31, 2024						October 31, 2023
(in millions)
Derivatives designated as hedging instruments:
Cash flow hedges
Foreign exchange contracts
Other current assets						$	8					$	16					Other accrued liabilities						$	2					$	7
Derivatives not designated as hedging instruments:
Foreign exchange contracts
Other current assets						30						2						Other accrued liabilities						4						47
Total derivatives						$	38					$	18											$	6					$	54

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The effect of derivative instruments for foreign exchange contracts designated as hedging instruments and not designated as hedging instruments in our consolidated statement of operations was as follows:

			Year Ended October 31,
			2024						2023						2022
			(in millions)
Derivatives designated as hedging instruments:
Cash flow hedges
Interest rate swap contracts:
Gain (loss) recognized in accumulated other comprehensive income (loss)			$	—					$	(26)					$	85
Foreign exchange contracts:
Gain recognized in accumulated other comprehensive income (loss)			9						$	7					$	7
Gain (loss) reclassified from accumulated other comprehensive income (loss) into earnings:
Cost of products			10						$	8					$	13
Selling, general and administrative			—						$	(1)					$	(10)
Interest expense			1						$	—					$	—
Gain excluded from effectiveness testing recognized in earnings based on amortization approach:
Cost of products			4						$	5					$	2
Selling, general and administrative			(1)						$	—					$	1
Derivatives not designated as hedging instruments:
Gain (loss) recognized in other income (expense), net			$	8					$	(44)					$	22

The estimated amount at October 31, 2024 expected to be reclassified from accumulated other comprehensive income (loss) to earnings within the next twelve months is a gain of $16 million.

10. LEASES

We have operating leases for items including office space, manufacturing and production locations, sales and service centers, research and development facilities and certain equipment, primarily automobiles. Our leases have remaining terms of up to 14 years, which represent the non-cancellable periods of the leases and include extension options that are reasonably certain to be exercised. The weighted average lease term of our operating leases was 7.0 years, 7.8 years and 7.7 years as of October 31, 2024, 2023 and 2022, respectively. The weighted average discount rate of our operating leases was 3 percent as of October 31, 2024, 2023 and 2022.

The following table summarizes the components of our lease cost:

			Year Ended October 31,
			2024						2023						2022
			(in millions)
Operating lease cost, including short-term lease cost			$	59					$	52					$	51
Variable lease cost			$	22					$	22					$	17

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Sublease income and finance lease costs were immaterial for the years ended October 31, 2024, 2023 and 2022. Right-of-use (“ROU”) asset impairments were $2 million in 2022 related to the discontinuance of our Russia operations.

Supplemental information related to our operating leases was as follows:

			Year Ended October 31,
			2024						2023						2022
			(in millions)
Cash payments for operating leases			$	56					$	53					$	51
ROU assets obtained in exchange for operating lease obligations			$	46					$	51					$	51

The maturities of our operating leases as of October 31, 2024 with initial terms exceeding one year were as follows:

			Operating Leases
			(in millions)
2025			$	51
2026			45
2027			38
2028			30
2029			26
Thereafter			80
Total undiscounted lease liability			270
Imputed interest			30
Total discounted lease liability			$	240

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

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

11. DEBT

The following table summarizes the components of our debt:

			October 31,
			2024						2023
			(in millions)
2024 Senior Notes at 4.55% ($600 face amount less unamortized costs of zero and $1)			$	—					$	599
2027 Senior Notes at 4.60% ($700 face amount less unamortized costs of $2 and $2)			698						698
2029 Senior Notes at 3.00% ($500 face amount less unamortized costs of $2 and $3)			498						497
2034 Senior Notes at 4.95% ($600 face amount less unamortized costs of $6)			594						—
Total Debt			1,790						1,794
Less: Current portion of long-term debt			—						599
Long-Term Debt			$	1,790					$	1,195

Senior Notes

2024 Senior Notes

In October 2014, the company issued an aggregate principal amount of $600 million in unsecured senior notes (“2024 Senior Notes”). These notes matured on October 30, 2024 and were fully repaid.

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2027 Senior Notes

In April 2017, the company issued an aggregate principal amount of $700 million in unsecured senior notes (“2027 Senior Notes”). The 2027 Senior Notes were issued at 99.873 percent of their principal amount. The notes will mature on April 6, 2027 and bear interest at a fixed rate of 4.60 percent per annum. The interest is payable semi-annually on April 6 and October 6, commencing on October 6, 2017. We incurred issuance costs of $6 million in connection with the 2027 Senior Notes that, along with the debt discount, are being amortized to interest expense over the term of the senior notes.

2029 Senior Notes

In October 2019, the company issued an aggregate principal amount of $500 million in unsecured senior notes (“2029 Senior Notes”). The 2029 Senior Notes were issued at 99.914 percent of their principal amount. The notes will mature on October 30, 2029 and bear interest at a fixed rate of 3.00 percent per annum. The interest is payable semi-annually on April 30 and October 30, commencing on April 30, 2020. We incurred issuance costs of $4 million in connection with the 2029 Senior Notes that, along with the debt discount, are being amortized to interest expense over the term of the senior notes.

2034 Senior Notes

In October 2024, the company issued an aggregate principal amount of $600 million in unsecured senior notes (“2034 Senior Notes”). The 2034 Senior Notes were issued at 99.897 percent of their principal amount. The notes will mature on October 15, 2034 and bear interest at a fixed rate of 4.95 percent per annum. The interest is payable semi-annually on April 15 and October 15, commencing on April 15, 2025. We incurred issuance costs of $6 million in connection with the 2034 Senior Notes that, along with the debt discount, are being amortized to interest expense over the term of the senior notes.

In 2020, we entered into forward-starting interest rate swaps with an aggregate notional amount of $600 million, in connection with future interest payments on our 2034 Senior Notes issued in October 2024. In 2023, we terminated the interest rate swap agreements, resulting in a deferred gain of $107 million recognized in “accumulated other comprehensive income (loss),” which is being amortized to interest expense over the term of the 2034 Senior Notes. See Note 9, “Derivatives,” for additional information.

The above senior notes are unsecured and rank equally in right of payment with all of our other senior unsecured indebtedness. We were in compliance with the covenants of our senior notes during the year ended October 31, 2024.

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

Revolving Credit Facility

On July 30, 2021, we entered into an amended and restated credit agreement (the “Revolving Credit Facility”) which provides a $750 million five-year unsecured revolving credit facility that expires on July 30, 2026 with an annual interest rate of LIBOR + 1 percent along with a facility fee of 0.125 percent per annum. On February 17, 2023, we entered into the first amendment to the Revolving Credit Facility to change the annual interest rate from LIBOR + 1 percent to SOFR + 1.1 percent. In addition, the Revolving Credit Facility permits the company, subject to certain customary conditions, on one or more occasions to request to increase the total commitments under the Revolving Credit Facility by up to $250 million in the aggregate. We may use amounts borrowed under the Revolving Credit Facility for general corporate purposes. As of October 31, 2024 and 2023, we had no borrowings outstanding under the Revolving Credit Facility. We were in compliance with the covenants of the Revolving Credit Facility during the year ended October 31, 2024.

Bridge Facility

On March 28, 2024, we entered into a bridge credit agreement (the “Bridge Facility”) pursuant to which certain lenders agreed to provide a senior unsecured 364-day bridge credit facility of up to 1,350 million pounds sterling for the purpose of providing the financing to support a planned acquisition. On July 25, 2024, the Bridge Facility was decreased to 1,232 million pounds sterling. We incurred costs in connection with the Bridge Facility of $7 million that are included in “other current assets” in the consolidated balance sheet and are being amortized to “interest expense” over the term of the Bridge Facility.

Letters of Credit

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

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ESI Group debt and credit facility assumed

As part of the ESI Group acquisition, we assumed debt of $24 million, of which $10 million was payable within one year. The debt included a syndicated loan of $11 million payable through yearly installments until April 2025 with an annual interest rate of EURIBOR + 2 to 2.5 percent. We also assumed various fixed interest rate state-guaranteed loans and other bank borrowings of $13 million. During the year ended October 31, 2024, we repaid the debt assumed as part of the acquisition.

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

12. RETIREMENT PLANS AND POST-RETIREMENT BENEFIT PLANS

General**.** The majority of our employees are covered under various defined benefit and/or defined contribution retirement plans. Additionally, we sponsor post-retirement health care benefits for our eligible U.S. employees. We provide U.S. employees who meet eligibility criteria under the Keysight Technologies, Inc. Retirement Plan (“RP”), defined benefits that are based on an employee’s base or target pay during the years of employment and length of service. For eligible employees’ service through October 31, 1993, the defined benefit payable under the RP is reduced by any amounts due to the eligible employees’ service under our defined contribution Deferred Profit-Sharing Plan (“DPSP”), which was closed to new participants as of November 1993. The obligations under the DPSP equal the fair value of the DPSP assets, which was $161 million as of October 31, 2024. Employees hired on or after August 1, 2015 are not eligible to participate in the RP or the Keysight Technologies, Inc. Health Plan for Retirees (“U.S. Post-Retirement Benefit Plan”).

In addition, in the U.S. we maintain the Supplemental Benefits Retirement Plan (“SBRP”), a supplemental unfunded non-qualified defined benefit plan to provide benefits that would be provided under the RP but for limitations imposed by the Internal Revenue Code. The RP and the SBRP comprise the “U.S. Plans.”

Eligible employees outside the U.S. generally receive retirement benefits under various retirement plans (“Non-U.S. Plans”) based on factors such as years of service and/or employee compensation levels. Eligibility is generally determined in accordance with local statutory requirements. Certain of our immaterial Non-U.S. defined benefit plans are not included in these disclosures.

401(k) defined contribution plan. Eligible U.S. employees may participate in the Keysight Technologies, Inc. 401(k) Plan (the “401(k) Plan”). Enrollment in the 401(k) Plan is automatic for employees who meet eligibility requirements unless they decline participation. We provide matching contributions of up to 4 percent of annual eligible compensation for employees hired prior to August 1, 2015 and up to 6 percent for employees hired thereafter. The 401(k) Plan employer expense included in income from operations was $33 million in 2024, $34 million in 2023 and $31 million in 2022.

Post-retirement medical benefit plans. In addition to receiving retirement benefits, U.S. employees who meet eligibility requirements as of their termination date may participate in the U.S. Post-Retirement Benefit Plan.

Components of net periodic benefit cost. We record the service cost component of net periodic benefit cost (benefit) in the same line item as other employee compensation costs. We record the non-service cost components of net periodic benefit cost (benefit), such as interest cost, expected return on assets, amortization of prior service cost, and actuarial gains or losses, within “other income (expense), net” in the consolidated statement of operations. The company uses alternate methods of amortization, as allowed by the authoritative guidance, which amortizes the actuarial gains and losses on a consistent basis for the years presented. For the U.S. Plans, gains and losses are amortized over the average future working lifetime of active plan participants. For most Non-U.S. Plans and the U.S. Post-Retirement Benefit Plan, gains and losses are amortized using a separate layer for each year’s gains and losses.

During the year ended October 31, 2023 and October 31, 2022, we recognized a settlement gain of $1 million in our Japan defined benefit plan and a settlement loss of $9 million in our U.K. defined benefit plan, respectively, as the lump-sum payments in the respective plans were more than the sum of the service cost and interest cost components of net periodic benefit cost (“the threshold amount”).

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

			Defined Benefit Plans																																				U.S. Post-Retirement Benefit Plan
			U.S. Plans																		Non-U.S. Plans
			Year Ended October 31,
			2024						2023						2022						2024						2023						2022						2024						2023						2022
			(in millions)
Net periodic benefit cost (benefit)
Service cost — benefits earned during the period			$	14					$	16					$	25					$	8					$	10					$	13					$	1					$	1					$	1
Interest cost on benefit obligations			40						36						23						36						31						15						8						8						5
Expected return on plan assets			(47)						(49)						(61)						(53)						(53)						(58)						(12)						(12)						(14)
Amortization:
Net actuarial loss			9						9						11						9						9						24						(1)						2						1
Prior service credit			—						—						—						—						—						—						—						(1)						(1)
Net periodic benefit cost (benefit)			16						12						(2)						—						(3)						(6)						(4)						(2)						(8)
Settlements			—						—						—						—						(1)						9						—						—						—
Total periodic benefit cost (benefit)			$	16					$	12					$	(2)					$	—					$	(4)					$	3					$	(4)					$	(2)					$	(8)
Other changes in plan assets and benefit obligations recognized in other comprehensive (income) loss
Net actuarial loss (gain)			$	(23)					$	14					$	(9)					$	(43)					$	32					$	(38)					$	(3)					$	(5)					$	17
Net prior service cost/(credit)			2						—						—						—						—						—						—						—						—
Amortization:
Net actuarial loss			(9)						(9)						(11)						(9)						(9)						(24)						1						(2)						(1)
Prior service credit			—						—						—						—						—						—						—						1						1
Settlements			—						—						—						—						1						(9)						—						—						—
Foreign currency			—						—						—						1						(2)						(6)						—						—						—
Total recognized in other comprehensive (income) loss			$	(30)					$	5					$	(20)					$	(51)					$	22					$	(77)					$	(2)					$	(6)					$	17
Total recognized in the periodic benefit cost (benefit) and other comprehensive (income) loss			$	(14)					$	17					$	(22)					$	(51)					$	18					$	(74)					$	(6)					$	(8)					$	9

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Funded status. As of October 31, 2024 and 2023, the funded status of the defined benefit and post-retirement benefit plans was as follows:

			U.S. Defined Benefit Plans												Non-U.S. Defined Benefit Plans												U.S. Post-Retirement Benefit Plan
			October 31,
			2024						2023						2024						2023						2024						2023
			(in millions)
Change in fair value of plan assets:
Fair value — beginning of year			$	622					$	640					$	985					$	1,003					$	153					$	155
Actual return on plan assets			155						25						149						(23)						33						12
Employer contributions			1						1						13						12						—						—
Settlements			—						(1)						—						(3)						—						—
Benefits paid			(56)						(43)						(46)						(41)						(15)						(14)
Currency impact			—						—						35						37						—						—
Fair value — end of year			$	722					$	622					$	1,136					$	985					$	171					$	153
Change in benefit obligation:
Benefit obligation — beginning of year			$	634					$	636					$	810					$	819					$	136					$	146
Service cost			14						16						8						10						1						1
Interest cost			40						36						36						31						8						8
Settlements			—						(1)						—						(3)						—						—
Actuarial loss (gain)			84						(10)						52						(44)						18						(5)
Benefits paid			(56)						(43)						(46)						(41)						(15)						(14)
Plan amendment			2						—						—						—						—						—
Currency impact			—						—						36						38						—						—
Benefit obligation — end of year			$	718					$	634					$	896					$	810					$	148					$	136
Overfunded (Underfunded) status of PBO			$	4					$	(12)					$	240					$	175					$	23					$	17
Amounts recognized in the consolidated balance sheet consist of:
Other assets			$	10					$	—					$	283					$	205					$	23					$	17
Employee compensation and benefits			(1)						(1)						—						—						—						—
Retirement and post-retirement benefits			(5)						(11)						(43)						(30)						—						—
Net asset (liability)			$	4					$	(12)					$	240					$	175					$	23					$	17
Amounts recognized in accumulated other comprehensive (income) loss:
Actuarial losses (gains)			$	54					$	86					$	352					$	403					$	(13)					$	(11)
Prior service cost (credits)			2						—						—						—						—						—
Total			$	56					$	86					$	352					$	403					$	(13)					$	(11)

The change in benefit obligations for the U.S. and non-U.S. defined benefit plans for 2024 was primarily driven by changes in discount rates, and for 2023 was primarily driven by changes in discount rates, partially offset by changes in demographic assumptions. The change in benefit obligations for the U.S. post-retirement benefit plan for 2024 was primarily driven by changes in discount and retiree mortality rates and for 2023 was primarily driven by changes in discount rates.

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Investment policies and strategies as of October 31, 2024. In the U.S., our RP Plan target asset allocations are approximately 60 percent growth funds, primarily equities, and approximately 40 percent fixed income investments and in the U.S. Post-Retirement Benefit Plan, target asset allocations are approximately 70 percent growth funds, primarily equities, and approximately 30 percent fixed income investments. Our DPSP target asset allocation is approximately 60 percent growth funds, primarily equities, and approximately 40 percent fixed income investments. The general investment objective for all our plan assets is to obtain the optimum rate of investment return on the total investment portfolio consistent with the assumed level of risk. Specific investment objectives for the plans’ portfolios are to maintain and enhance the purchasing power of the plans’ assets; achieve investment returns consistent with the level of risk being taken; and earn performance rates of return in accordance with the benchmarks adopted for each asset class. Outside of the U.S., our target asset allocation is from 11 to 70 percent equities, from 30 to 54 percent fixed income investments, and from zero to 47 percent insurance contracts and cash. All plans’ assets are broadly diversified. Due to fluctuations in capital markets, our actual allocation of plan assets as of October 31, 2024 may differ from the target allocation. Our policy is to periodically bring the actual allocation in line with the target allocation.

Equity securities include exchange-traded common stock and preferred stock of companies from broadly diversified industries. Fixed income securities include a portfolio of corporate bonds of companies from diversified industries, government securities, mortgage-backed securities, asset-backed securities, derivative instruments and other. Portions of the cash and cash equivalent, equity, and fixed income investments are held in commingled funds. Investments in commingled funds are valued using the net asset value (“NAV”) method as a practical expedient. Investments valued using the NAV method are allocated across a broad array of funds and diversify the portfolio. The value of the plan assets directly affects the funded status of our pension and post-retirement benefit plans recorded in the financial statements. In March 2021, we entered into an insurance buy-in contract for a portion of benefit obligations under the U.K. defined benefit plan and classified it as “other investments.” In December 2021, we completed the second phase of the same contract. The insurance buy-in contract is similar to an annuity contract, which matches cash flows with future benefit payments for a specific group of pensioners with the obligation remaining with the plan. This contract is issued by a third-party insurance company with no affiliation to us. The insurance contract is valued on an insurer pricing basis, which reflects the purchase price adjusted for changes in discount rates and other actuarial assumptions, which approximates fair value.

Fair Value. The measurement of the fair value of pension and post-retirement plan assets uses the valuation methodologies and the inputs as described in Note 8, “Fair Value Measurements.”

Cash and Cash Equivalents - Cash and cash equivalents consist of short-term investment funds that are invested in short-term domestic fixed income securities and other securities with debt-like characteristics, emphasizing short-term maturities and quality. Cash and cash equivalents are generally classified as Level 2 investments except when the cash and cash equivalents are held in commingled funds, which have a daily NAV derived from quoted prices for the underlying securities in active markets; these are classified as assets measured at NAV.

Equity - Some equity securities consisting of common and preferred stock are held in commingled funds, which have daily NAVs derived from quoted prices for the underlying securities in active markets; these are classified as assets measured at NAV. Commingled funds that have quoted prices in active markets are classified as Level 1 investments. Equity also includes some growth-seeking real estate commingled funds that are measured at NAV.

Fixed Income - Some fixed income securities are held in commingled funds that have daily NAVs derived from the underlying securities; these are classified as assets measured at NAV. Commingled funds that have quoted prices in active markets are classified as Level 1 investments. Some fixed income securities that are not actively traded and are valued basis inputs, such as quoted price of similar securities, or other inputs that can be derived principally from or corroborated by observable market data are classified as Level 2 investments.

Other Investments - Other investments represents the U.K. insurance buy-in contract and is classified as a Level 3 investment. Insurance contracts are generally classified as Level 3 investments.

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The following tables present the fair value of U.S. Defined Benefit Plans assets classified under the appropriate level of the fair value hierarchy as of October 31, 2024 and 2023:

									Fair Value Measurement as of October 31, 2024 Using
			Total						Quoted Prices in Active Markets for Identical Assets (Level 1)						Significant Other Observable Inputs (Level 2)						Significant Unobservable Inputs (Level 3)						Assets Measured at NAV**(a)**
			(in millions)
Cash and cash equivalents			$	10					$	—					$	10					$	—					$	—
Equity			438						—						—						—						438
Fixed income			274						58						—						—						216
Total assets measured at fair value			$	722					$	58					$	10					$	—					$	654

									Fair Value Measurement as of October 31, 2023 Using
			Total						Quoted Prices in Active Markets for Identical Assets (Level 1)						Significant Other Observable Inputs (Level 2)						Significant Unobservable Inputs (Level 3)						Assets Measured at NAV**(a)**
			(in millions)
Cash and cash equivalents			$	—					$	—					$	—					$	—					$	—
Equity			446						—						—						—						446
Fixed income			176						—						—						—						176
Total assets measured at fair value			$	622					$	—					$	—					$	—					$	622

(a) Certain instruments that are measured at fair value using the NAV per share practical expedient have not been categorized in the fair value hierarchy. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the total value of plan assets.

For U.S. Defined Benefit Plans, there was no activity relating to assets measured at fair value using significant unobservable inputs (Level 3) during 2024 and 2023.

The following tables present the fair value of U.S. Post-Retirement Benefit Plan assets classified under the appropriate level of the fair value hierarchy as of October 31, 2024 and 2023:

									Fair Value Measurement as of October 31, 2024 Using
			Total						Quoted Prices in Active Markets for Identical Assets (Level 1)						Significant Other Observable Inputs (Level 2)						Significant Unobservable Inputs (Level 3)						Assets Measured at NAV**(a)**
			(in millions)
Cash and cash equivalents			$	2					$	—					$	2					$	—					$	—
Equity			121						—						—						—						121
Fixed income			48						5						29						—						14
Total assets measured at fair value			$	171					$	5					$	31					$	—					$	135

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									Fair Value Measurement as of October 31, 2023 Using
			Total						Quoted Prices in Active Markets for Identical Assets (Level 1)						Significant Other Observable Inputs (Level 2)						Significant Unobservable Inputs (Level 3)						Assets Measured at NAV**(a)**
			(in millions)
Cash and cash equivalents			$	1					$	—					$	1					$	—					$	—
Equity			107						—						—						—						107
Fixed income			45						3						26						—						16
Total assets measured at fair value			$	153					$	3					$	27					$	—					$	123

(a) Certain instruments that are measured at fair value using the NAV per share practical expedient have not been categorized in the fair value hierarchy. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the total value of plan assets.

For the U.S. Post-Retirement Benefit Plan, there was no activity relating to assets measured at fair value using significant unobservable inputs (Level 3) during 2024 and 2023.

The following tables present the fair value of Non-U.S. Defined Benefit Plans assets classified under the appropriate level of the fair value hierarchy as of October 31, 2024 and 2023:

									Fair Value Measurement as of October 31, 2024 Using
			Total						Quoted Prices in Active Markets for Identical Assets (Level 1)						Significant Other Observable Inputs (Level 2)						Significant Unobservable Inputs (Level 3)						Assets Measured at NAV**(a)**
			(in millions)
Equity			$	422					$	—					$	—					$	—					$	422
Fixed income			467						—						—						—						467
Other investments			247						—						—						247						—
Total assets measured at fair value			$	1,136					$	—					$	—					$	247					$	889

									Fair Value Measurement as of October 31, 2023 Using
			Total						Quoted Prices in Active Markets for Identical Assets (Level 1)						Significant Other Observable Inputs (Level 2)						Significant Unobservable Inputs (Level 3)						Assets Measured at NAV**(a)**
			(in millions)
Equity			$	410					$	—					$	—					$	—					$	410
Fixed income			342						—						—						—						342
Other investments			233						—						—						233						—
Total assets measured at fair value			$	985					$	—					$	—					$	233					$	752

(a) Certain instruments that are measured at fair value using the NAV per share practical expedient have not been categorized in the fair value hierarchy. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the total value of plan assets.

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For Non-U.S. Defined Benefit Plans assets measured at fair value using significant unobservable inputs (Level 3), the following table summarizes the change in balances during 2024 and 2023:

			Year Ended October 31,
			2024						2023
			(in millions)
Balance, beginning of year			$	233					$	254
Unrealized gains (losses)			15						(19)
Purchases, sales, issuances and settlements			(17)						(15)
Transfers in (out)			—						—
Currency impact			16						13
Balance, end of year			$	247					$	233

The table below presents the combined projected benefit obligation (“PBO”), accumulated benefit obligation (“ABO”) and fair value of plan assets, grouping plans using comparisons of the PBO and ABO relative to the plan assets as of October 31, 2024 and 2023:

			2024												2023
			Benefit Obligation						Fair Value of Plan Assets						Benefit Obligation						Fair Value of Plan Assets
			PBO									PBO
			(in millions)												(in millions)
U.S. defined benefit plans where PBO exceeds the fair value of plan assets			$	6					$	—					$	634					$	622
U.S. defined benefit plans where fair value of plan assets exceeds PBO			712						722						—						—
Total			$	718					$	722					$	634					$	622
Non-U.S. defined benefit plans where PBO exceeds the fair value of plan assets			$	86					$	43					$	64					$	34
Non-U.S. defined benefit plans where fair value of plan assets exceeds PBO			810						1,093						746						951
Total			$	896					$	1,136					$	810					$	985
			ABO												ABO
U.S. defined benefit plans where ABO exceeds the fair value of plan assets			$	4					$	—					$	5					$	—
U.S. defined benefit plans where the fair value of plan assets exceeds ABO			636						722						576						622
Total			$	640					$	722					$	581					$	622
Non-U.S. defined benefit plans where ABO exceeds the fair value of plan assets			$	85					$	43					$	63					$	34
Non-U.S. defined benefit plans where fair value of plan assets exceeds ABO			808						1,093						742						951
Total			$	893					$	1,136					$	805					$	985

Contributions and estimated future benefit payments. For 2025, we do not expect to contribute to our U.S. Defined Benefit Plans or U.S. Post-Retirement Benefit Plan, and we expect to contribute $13 million to our Non-U.S. Defined Benefit Plans. The following table presents expected future benefit payments for the next 10 years.

			U.S. Defined Benefit Plans						Non-U.S. Defined Benefit Plans						U.S. Post-Retirement Benefit Plan
			(in millions)
2025			$	56					$	45					$	16
2026			$	57					$	47					$	16
2027			$	59					$	49					$	17
2028			$	56					$	51					$	17
2029			$	59					$	52					$	17
2030 - 2034			$	286					$	269					$	66

Assumptions. The assumptions used to determine the benefit obligations and net periodic benefit cost (benefit) for our defined benefit and post-retirement benefit plans are presented in the tables below. The expected long-term return on assets below represents an estimate of long-term returns on investment portfolios, consisting of a mixture of equities, fixed income and other investments, in proportion to the asset allocations of each of our plans. We consider long-term rates of return, which are weighted based on the asset classes (both historical and forecasted) in which we expect our pension and post-retirement

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funds to be invested. Discount rates reflect the current rate at which pension and post-retirement obligations could be settled based on the measurement dates of the plans, which is October 31. The U.S. discount rates as of October 31, 2024 and 2023 were determined based on the results of matching expected plan benefit payments with cash flows from a hypothetically constructed bond portfolio. The Non-U.S. discount rates as of October 31, 2024 and 2023 were determined based on a granular approach, which discounts the expected plan benefit payments with rates from a high-quality corporate bond yield curve. In addition, we used this method to calculate two components of the periodic benefit cost: service cost and interest cost. The range of assumptions that were used for the Non-U.S. Defined Benefit Plans reflects the different economic environments within various countries.

Assumptions used to calculate the net periodic benefit cost (benefit) were as follows:

			Year Ended October 31,
			2024						2023
U.S. Defined Benefit Plans:
Discount rate			6.50%						6.00%
Average increase in compensation levels			3.50%						3.50%
Expected long-term return on assets			8.00%						8.00%
Non-U.S. Defined Benefit Plans:
Discount rate			2.50-5.35%						1.87-4.22%
Average increase in compensation levels			2.50-3.00%						2.50-3.00%
Expected long-term return on assets			4.73-7.00%						4.16-7.00%
U.S. Post-Retirement Benefits Plan:
Discount rate			6.50%						6.00%
Expected long-term return on assets			8.00%						8.00%
Current medical cost trend rate			6.50%						7.00%
Ultimate medical cost trend rate			4.75%						4.75%
Medical cost trend rate decreases to ultimate rate in year			2029						2029

Assumptions used to calculate the benefit obligation as of October 31, 2024 and 2023 were as follows:

			Year Ended October 31,
			2024						2023
U.S. Defined Benefit Plans:
Discount rate			5.50%						6.50%
Average increase in compensation levels			3.50%						3.50%
Non-U.S. Defined Benefit Plans:
Discount rate			2.30-5.07%						2.50-5.35%
Average increase in compensation levels			2.50-3.00%						2.50-3.00%
U.S. Post-Retirement Benefits Plan:
Discount rate			5.50%						6.50%
Current medical cost trend rate			6.00%						6.50%
Ultimate medical cost trend rate			4.75%						4.75%
Medical cost trend rate decreases to ultimate rate in year			2029						2029

Health care trend rates did not have a significant effect on the total service and interest cost components or on the post-retirement benefit obligation amounts reported for the U.S. Post-Retirement Benefit Plan for the years ended October 31, 2024 and 2023.

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13. SUPPLEMENTAL FINANCIAL INFORMATION

The following tables provide details of selected balance sheet items:

Cash, cash equivalents, and restricted cash

			October 31,
			2024						2023
			(in millions)
Cash and cash equivalents			$	1,796					$	2,472
Restricted cash included in other assets			18						16
Total cash, cash equivalents, and restricted cash shown in the statement of cash flows			$	1,814					$	2,488

Restricted cash primarily relates to deficit reduction contributions to an escrow account for one of our non-U.S. defined benefit pension plans and deposits held as collateral against bank guarantees.

Inventory

			October 31,
			2024						2023
			(in millions)
Finished goods			$	375					$	376
Purchased parts and fabricated assemblies			647						609
Total inventory			$	1,022					$	985

Inventory-related excess and obsolescence charges recorded in “cost of products” were $35 million in 2024 and $27 million in 2023 and 2022. We record excess and obsolete inventory charges for inventory at our sites and at our contract manufacturers and suppliers, where we have non-cancellable purchase commitments.

Property, plant and equipment

			October 31,
			2024						2023
			(in millions)
Land			$	48					$	48
Buildings and leasehold improvements			851						828
Machinery and equipment			1,581						1,508
Total property, plant and equipment			2,480						2,384
Accumulated depreciation of property, plant and equipment			(1,706)						(1,623)
Property, plant and equipment, net			$	774					$	761

Asset impairments were zero in 2024, zero in 2023 and $1 million in 2022. Depreciation expense was $126 million in 2024, $120 million in 2023 and $117 million in 2022.

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Standard warranty

Activity related to the standard warranty accrual, which is included in “other accrued liabilities” and “other long-term liabilities” in our consolidated balance sheet, is as follows:

			Year Ended October 31,
			2024						2023
			(in millions)
Beginning balance			$	36					$	32
Accruals for warranties, including change in estimates			22						33
Settlements made during the period			(27)						(29)
Ending balance			$	31					$	36

Accruals for warranties due within one year			$	19					$	22
Accruals for warranties due after one year			12						14
Ending balance			$	31					$	36

Other current assets

			October 31,
			2024						2023
			(in millions)
Prepaid assets			$	287					$	284
Tax receivables			138						44
Other current assets			157						124
Total other current assets			$	582					$	452

Prepaid assets include deposits paid in advance to contract manufacturers of $200 million and $210 million as of October 31, 2024 and 2023, respectively. The increase in tax receivables in 2024 as compared to 2023 was primarily due to a one-time discrete tax benefit. See Note 5, “Income Taxes,” for additional information.

Other assets

			October 31,
			2024						2023
			(in millions)
Pension assets			$	324					$	231
Tax receivables			111						—
Other assets			86						109
Total other assets			$	521					$	340

The increase in tax receivables in 2024 as compared to 2023 was primarily due to a one-time discrete tax benefit. See Note 5, “Income Taxes,” for additional information.

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14. COMMITMENTS AND CONTINGENCIES

Commitments to contract manufacturers and suppliers. We purchase components from a variety of suppliers and use several contract manufacturers to provide manufacturing services for our products. During the normal course of business, we enter into agreements with contract manufacturers and suppliers that allow them to procure inventory based on mutually agreed criteria. As of October 31, 2024, our non-cancellable purchase commitments were approximately $423 million. We expect to fulfill most of our purchase commitments for inventory within one year or based on mutually agreed terms.

Other purchase commitments. Other purchase commitments primarily relate to software as a service and other professional services contracts. As of October 31, 2024, our non-cancellable contractual obligations related to these contracts were approximately $96 million.

We also have long-term power purchase agreements to purchase power at predominantly variable prices. These agreements are expected to support our power consumption needs with more favorable pricing and reliability than our previous supply agreements.

Litigation and contingencies. On January 1, 2022, Centripetal Networks filed a lawsuit in Federal District Court in Virginia, alleging that certain Keysight products infringe certain of Centripetal’s patents. In addition, in February 2022 Centripetal filed complaints in Germany alleging infringement of certain of Centripetal’s German patents, and in April 2022 Centripetal filed a complaint with the International Trade Commission (“ITC”) requesting that they investigate whether Keysight violated Section 337 of the Tariff Act (“Section 337”) and should be enjoined from importing certain products that are manufactured outside of the U.S. and which are alleged to infringe Centripetal patents. On December 5, 2023, the ITC issued its Notice of Determination that Keysight did not unfairly import products in violation of Section 337 and the investigation was terminated. Centripetal has appealed this determination. On August 21, 2024, Keysight was served in Germany with a complaint filed in the Unified Patent Court alleging that certain Keysight products sold in Germany, France, Italy and the Netherlands infringe a European Centripetal patent. We deny the allegations and are aggressively defending each case.

Although there are no matters pending that we currently believe are probable and reasonably possible of having a material impact to our business, consolidated financial position, or results of operations or cash flows, the outcome of litigation is inherently uncertain and is difficult to predict. An adverse outcome in any outstanding lawsuit or proceeding could result in significant monetary damages or injunctive relief. If adverse results are above management’s expectations or are unforeseen, management may not have accrued for the liability, which could impact our results in future periods.

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

Indemnification Obligations Related to Transactions

In connection with acquisitions, divestitures, mergers, spin-offs and other transactions, we have agreed to indemnify certain parties for future damages, losses, expenses and liabilities that were incurred prior to or are related to such transactions. The liabilities covered by these indemnifications include, but are not limited to, tax, employment, benefits, intellectual property, environmental, and other liabilities. We do not believe that our indemnification obligations related to such liabilities were material as of October 31, 2024.

Indemnifications to Officers and Directors

Our corporate by-laws require that we indemnify our officers and directors, as well as those who act as directors and officers of other entities at our request, against expenses, judgments, fines, settlements and other amounts actually and reasonably incurred in connection with any proceedings arising out of their services to Keysight and such other entities, including service with respect to employee benefit plans. In addition, we have entered into separate indemnification agreements with each director and each board-appointed officer of Keysight that provide for indemnification under similar and additional circumstances. The indemnification obligations are more fully described in our corporate by-laws and the indemnification agreements, which are available on our website. We purchase standard insurance to cover claims or a portion of the claims made against our directors and officers. Since a maximum obligation is not explicitly stated in our by-laws or in our indemnification agreements and will depend on the facts and circumstances that arise out of any future claims, the overall maximum amount of the obligations cannot be reasonably estimated. We have not historically made payments related to these obligations, and do not believe that our indemnification obligations related to such claims were material as of October 31, 2024.

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Other Indemnifications

As is customary in our industry and as provided for in local law in the U.S. and other jurisdictions, many of our standard contracts provide remedies to our customers and others with whom we enter into contracts, such as defense, settlement, or payment of judgment for intellectual property claims related to the use of our products. From time to time we indemnify customers, as well as our suppliers, contractors, lessors, lessees, companies that purchase our businesses or assets and others with whom we enter into contracts, against combinations of loss, expense, or liability arising from various triggering events related to the sale and the use of our products and services, the use of their goods and services, the use of facilities and state of our owned facilities, the state of the assets and businesses that we sell and other matters covered by such contracts, usually up to a specified maximum amount. In addition, from time to time we also provide protection to these parties against claims related to undiscovered liabilities, additional product liability or environmental obligations. In our experience, claims made under such indemnifications are rare and we do not believe that our indemnification obligations related to such claims were material as of October 31, 2024.

15. STOCKHOLDERS' EQUITY

Stock Repurchase Program

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

Under our stock repurchase program, shares may be purchased from time to time, subject to general business and market conditions and other investment opportunities, through open market purchases, privately negotiated transactions or other means. All such shares and related costs are held as treasury stock and accounted for at the trade date using the cost method. The stock repurchase program may be commenced, suspended or discontinued at any time at the company’s discretion and does not have an expiration date.

In 2024, we repurchased 2,974,967 shares of common stock for $439 million. Additionally, we accrued $3 million related to excise tax levied on share repurchases, net of issuances. In 2023, we repurchased 4,913,548 shares of common stock for $702 million and accrued $4 million related to excise tax levied on share repurchases, net of issuances. In 2022, we repurchased 5,442,280 shares of common stock for $849 million. All such shares and related costs are held as treasury stock and accounted for at the trade date using the cost method.

Accumulated other comprehensive loss

The following table summarizes the components of accumulated other comprehensive loss, net of tax effect:

			October 31,
			2024						2023
			(in millions)
Foreign currency translation, net of tax (expense) of $(63) and $(63)			$	(136)					$	(167)
Unrealized losses on defined benefit plans, net of tax benefit of $80 and $94			(317)						(388)
Gains (losses) on derivative instruments, net of tax (expense) of $(23) and $(25)			89						89
Total accumulated other comprehensive loss			$	(364)					$	(466)

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Changes in accumulated other comprehensive loss by component and related tax effects were as follows:

									Net defined benefit pension cost and post-retirement plan costs:
			Foreign currency translation						Actuarial losses						Prior service credits						Gains (losses) on derivatives						Total
			(in millions)
At October 31, 2022			$	(185)					$	(373)					$	(6)					$	110					$	(454)
Other comprehensive income (loss) before reclassifications			18						(39)						—						(19)						(40)
Amounts reclassified out of accumulated other comprehensive gain (loss)			—						20						—						(7)						13
Tax benefit (expense)			—						10						—						5						15
Other comprehensive income (loss)			18						(9)						—						(21)						(12)
At October 31, 2023			(167)						(382)						(6)						89						(466)
Other comprehensive income (loss) before reclassifications			31						71						(2)						9						109
Amounts reclassified out of accumulated other comprehensive gain (loss)			—						16						—						(11)						5
Tax benefit (expense)			—						(14)						—						2						(12)
Other comprehensive income (loss)			31						73						(2)						—						102
At October 31, 2024			$	(136)					$	(309)					$	(8)					$	89					$	(364)

Reclassifications out of accumulated other comprehensive loss into earnings were as follows:

Details about accumulated other comprehensive loss components						Amounts reclassified from other comprehensive loss												Affected line item in statement of operations
						Year Ended October 31,
						2024						2023
						(in millions)
Gain (loss) on derivatives						$	10					$	8					Cost of products
						—						(1)						Selling, general and administrative
						1						—						Interest expense
						(4)						(1)						Benefit (provision) for income taxes
						7						6						Net of income tax
Net defined benefit pension cost and post-retirement plan costs:
Net actuarial losses						(16)						(20)						Other income (expense), net
						4						4						Benefit (provision) for income taxes
						(12)						(16)						Net of income tax
Total reclassifications for the period						$	(5)					$	(10)					Net of income tax

16. SEGMENT INFORMATION

Our operating segments were determined based primarily on how the chief operating decision maker views and evaluates our operations. Segment operating results are regularly reviewed by the chief operating decision maker to make decisions about resources to be allocated to each segment and to assess performance. Other factors, including market separation and customer specific applications, go-to-market channels, products and services, and manufacturing are considered in determining the formation of these operating segments.

Descriptions of our two reportable segments are as follows:

The Communications Solutions Group (“CSG”) serves customers spanning the global commercial communications and aerospace, defense, and government end markets. The group’s solutions consist of electronic design and test software, instrumentation, systems, and related services. These solutions are used in the simulation, design, validation, manufacturing,

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installation, and optimization of communication systems in wireless, wireline, enterprise, and aerospace, defense, and government end markets. In addition, the group provides automated software test solutions to automatically identify, build, and execute tests critical to digital business success and a strong customer experience.

The Electronic Industrial Solutions Group (“EISG”) serves customers across a diverse set of end markets focused on automotive and energy, semiconductor solutions, and general electronics. The group’s solutions consist of electronic design, test and simulation software, instrumentation, systems, and related services. These solutions are used in the simulation, design, validation, manufacturing, installation, and optimization of electronic equipment. In addition, the group provides automated software test solutions to automatically identify, build, and execute tests critical to digital business success and a strong customer experience. Our recent acquisition of ESI Group expands our application layer portfolio with simulation capabilities in automotive and general electronics sectors.

A significant portion of the segments’ expenses arise from allocated corporate charges, as well as expenses related to our centralized sales force, and service, marketing and technology functions that we have historically provided to the segments in order to realize economies of scale and to efficiently use resources. Corporate charges include legal, accounting, real estate, insurance services, information technology services, treasury and other corporate infrastructure expenses. Segment allocations are determined on a basis that we consider to be a reasonable reflection of the utilization of services provided to, or benefits received by, the segments. Newly acquired businesses are not allocated these charges until integrated into our shared services and corporate infrastructure.

The following tables reflect the results of our reportable segments under our management reporting system. These results are not necessarily in conformity with GAAP. The performance of each segment is measured based on several metrics, including income from operations. These results are used, in part, by the chief operating decision maker in evaluating the performance of, and in allocating resources to, each of the segments.

The profitability of each of the segments is measured after excluding share-based compensation expense, amortization of acquisition-related balances, acquisition and integration costs, restructuring costs, interest income, interest expense and other items as noted in the reconciliations below.

			CSG						EISG						Total
			(in millions)
Year ended October 31, 2024:
Total and segment revenue			$	3,420					$	1,559					$	4,979
Segment income from operations			$	921					$	357					$	1,278
Depreciation expense			$	85					$	41					$	126
Year ended October 31, 2023:
Total and segment revenue			$	3,685					$	1,779					$	5,464
Segment income from operations			$	1,068					$	581					$	1,649
Depreciation expense			$	81					$	39					$	120
Year ended October 31, 2022:
Total and segment revenue			$	3,803					$	1,617					$	5,420
Segment income from operations			$	1,085					$	501					$	1,586
Depreciation expense			$	88					$	29					$	117

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The following table reconciles reportable segments’ income from operations to our total enterprise income before taxes:

			Year Ended October 31,
			2024						2023						2022
			(in millions)
Total reportable segments’ income from operations			$	1,278					$	1,649					$	1,586
Share-based compensation			(145)						(136)						(126)
Amortization of acquisition-related balances			(139)						(90)						(103)
Acquisition and integration costs			(91)						(13)						(9)
Restructuring and other			(70)						(52)						(14)
Income from operations, as reported			833						1,358						1,334
Interest income			81						102						16
Interest expense			(84)						(78)						(79)
Other income (expense), net			35						(25)						14
Income before taxes, as reported			$	865					$	1,357					$	1,285

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

Major customers. No customer represented 10 percent or more of our total revenue in 2024, 2023 or 2022.

The following table presents segment assets and capital expenditures directly managed by each segment.

			Year Ended October 31,
			2024																		2023
			CSG						EISG						Total						CSG						EISG						Total
			(in millions)
Segment assets			$	4,721					$	2,952					$	7,673					$	4,410					$	1,920					$	6,330
Capital expenditures, net of government incentives			$	87					$	60					$	147					$	112					$	84					$	196

The following table reconciles segment assets to our total assets:

			October 31,
			2024						2023
			(in millions)
Total reportable segments’ assets			$	7,673					$	6,330
Cash and cash equivalents			1,796						2,472
Long-term deferred tax assets			378						671
Tax receivables			249						44
Long-term investments			110						81
Accumulated amortization of other intangibles			(1,477)						(1,339)
Pension and other assets			540						424
Total assets			$	9,269					$	8,683

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The increase in segment assets for the year ended October 31, 2024 was primarily due to additions in assets acquired as part of the ESI Group acquisition and an increase in tax receivables due to a one-time discrete tax benefit, partially offset by a one-time income tax charge to decrease the deferred tax assets values from the Singapore statutory tax rate to an incentive tax rate. See Note 2, “Acquisitions,” and Note 5, “Income Taxes,” for additional information.

The following tables present summarized information for revenue and long-lived assets by country. Revenues from external customers are generally attributed to countries based upon the customer's location. Long-lived assets consist of property, plant, and equipment, operating lease right-of-use assets and other long-term assets excluding intangible assets.

			United States						China						Rest of the World						Total
			(in millions)
Revenue:
Year ended October 31, 2024			$	1,769					$	884					$	2,326					$	4,979
Year ended October 31, 2023			$	1,928					$	1,005					$	2,531					$	5,464
Year ended October 31, 2022			$	1,933					$	1,041					$	2,446					$	5,420

			United States						Japan															Rest of the World						Total
			(in millions)
Long-lived assets:
October 31, 2024			$	726					$	261														$	469					$	1,456
October 31, 2023			$	690					$	233														$	387					$	1,310

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