10-K/APeriod: FY2015

Keysight Technologies, Inc. Annual Report (Amendment), Year Ended Oct 31, 2015

Filed May 4, 2016For Securities:KEYS

Summary

This filing represents Keysight Technologies, Inc.'s 2016 Annual Report on Form 10-K, detailing its corporate structure, agreements, and operational framework as of May 4, 2016. The report primarily lists various exhibits that form part of the company's established governance and operational foundation. These include critical agreements related to its separation from Agilent Technologies, Inc., such as the Separation and Distribution Agreement, Services Agreement, and various intellectual property and tax matters agreements. The exhibits also cover the company's capital structure, including its Certificate of Incorporation and Bylaws, as well as debt instruments like the Indenture and Guarantee for its notes. Furthermore, a significant portion of the listed exhibits pertains to executive compensation and employee benefit plans, including stock purchase, equity incentive, and deferred compensation plans, alongside severance agreements. For investors, the key takeaway from this filing is the comprehensive set of foundational legal and operational documents that underpin Keysight's existence and its relationship with its former parent company. The detailed agreements surrounding the spin-off from Agilent highlight the formalization of Keysight's independent operations. Additionally, the extensive list of compensation and benefit plans indicates a structured approach to employee and executive remuneration, which is a crucial aspect for understanding corporate governance and potential future equity dilution. Investors should review these agreements to understand the framework within which Keysight operates and manages its workforce and financial obligations.

Financial Statements
Beta
Revenue$2.86B
Cost of Revenue$1.27B
Gross Profit$1.59B
R&D Expenses$387.00M
SG&A Expenses$787.00M
Operating Expenses$2.42B
Operating Income$431.00M
Interest Expense$46.00M
Net Income$513.00M
EPS (Basic)$3.04
EPS (Diluted)$3.00
Shares Outstanding (Basic)169.00M
Shares Outstanding (Diluted)171.00M

Key Highlights

  • 1The filing details the crucial Separation and Distribution Agreement with Agilent Technologies, Inc., outlining the terms of Keysight's spin-off and operational independence.
  • 2Numerous agreements governing post-spin-off relationships with Agilent are listed, including services, tax, employee, intellectual property, and real estate matters, providing insight into ongoing operational dependencies or transitions.
  • 3The report includes exhibits related to Keysight's corporate structure, such as its Amended and Restated Certificate of Incorporation and Bylaws, establishing the legal framework of the company.
  • 4Debt financing instruments, including an Indenture, Supplemental Indenture, and Guarantee, are filed, providing transparency on the company's debt obligations.
  • 5A comprehensive array of employee and executive compensation plans are listed, including stock purchase plans, equity and incentive compensation plans, and various deferred compensation and retirement plans, important for understanding shareholder value and corporate governance.
  • 6Forms of indemnification and change of control severance agreements are included, offering visibility into protections for directors, officers, and executives.
  • 7The filing references the company's Credit Agreement and a subsequent letter agreement with lenders, indicating its access to and structure of credit facilities.

Frequently Asked Questions

The Separation and Distribution Agreement (Exhibit 2.1) is a foundational document that outlines the terms and conditions under which Keysight Technologies, Inc. was separated from its former parent, Agilent Technologies, Inc. It details the allocation of assets, liabilities, and responsibilities, signifying Keysight's establishment as an independent, publicly traded entity.

These agreements (Exhibits 10.2 through 10.6) delineate how specific areas like taxes, employee matters, intellectual property, and real estate are managed post-separation. For investors, they clarify the ongoing operational or financial relationships and potential residual dependencies or collaborations between Keysight and Agilent, which could impact future performance and strategic decisions.

The extensive list of employee compensation and stock plans (e.g., Exhibits 10.8, 10.9, 10.10 through 10.18, 10.23, 10.26 through 10.28) demonstrates Keysight's structured approach to attracting, retaining, and incentivizing its workforce, including key executives. For investors, this information is crucial for understanding potential equity dilution from stock-based compensation, executive compensation strategies, and the overall governance framework related to employee benefits.

The Credit Agreement (Exhibit 10.21) and subsequent letter agreements (Exhibit 10.25) indicate Keysight's established borrowing facilities. This provides investors with insight into the company's capital structure, its access to debt financing, and the terms associated with that debt, which are important factors in assessing financial risk and flexibility.