SEGMENT INFORMATION
6 Months Ended
Apr. 30, 2017
Segment Reporting [Abstract]  
SEGMENT INFORMATION
SEGMENT INFORMATION
We provide electronic design and test instruments and systems and related software, software design tools, and related services that are used in the design, development, manufacture, installation, deployment and operation of electronics equipment. Related services include start-up assistance, instrument productivity and application services and instrument calibration and repair. Additionally, we provide test, security and visibility solutions that validate, secure and optimize networks and applications from engineering concept to live deployment. We also offer customization, consulting and optimization services throughout the customer's product life cycle.
In fiscal 2016, we completed an organizational change to align our organization with the industries we serve which resulted in three reportable operating segments, Communications Solutions Group (“CSG”), Electronic Industrial Solutions Group (“EISG”), and Services Solutions Group (“SSG”). CSG and EISG are from our previous Measurement Solutions segment, while SSG was formerly reported as the company's Customer Support and Services segment. On April 18, 2017, we completed the acquisition of Ixia, which became our fourth reportable segment, the Ixia Solutions Group (“ISG”). The new organizational structure continues to include centralized enterprise functions that provide support across the groups. Prior period amounts were revised to conform to the current presentation.
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 four reportable segments are as follows:
The Communications Solutions Group serves customers spanning the worldwide commercial communications end market, which includes internet infrastructure, and the aerospace, defense and government end market. The group provides electronic design and test software, instruments, and systems used in the simulation, design, validation, manufacturing, installation and optimization of electronic equipment.
The Electronic Industrial Solutions Group provides test and measurement solutions across a broad set of electronic industrial end markets, focusing on high-growth applications in the automotive and energy industry and measurement solutions for semiconductor design and manufacturing, consumer electronics, education and general electronics manufacturing. The group provides electronic design and test software, instruments, and systems used in the simulation, design, validation, manufacturing, installation and optimization of electronic equipment.
The Ixia Solutions Group helps customers validate the performance and security resilience of their networks and associated applications. The test, visibility and security products help organizations and their customers strengthen their physical and virtual networks. Enterprises, service providers, network equipment manufacturers, and governments worldwide rely on the group's solutions to validate new products before shipping and secure ongoing operation of their networks with better visibility and security. The group’s product solutions consist of high-performance hardware platforms, software applications, and services, including warranty and maintenance offerings.
The Services Solutions Group provides repair, calibration and consulting services, and remarkets used Keysight equipment. In addition to providing repair and calibration support for Keysight equipment, we also calibrate non-Keysight equipment. The group serves the same markets as Keysight’s Communications Solutions and Electronic Industrial Solutions Groups, providing industry-specific services to deliver complete Keysight solutions and help customers reduce their total cost of ownership for their design and test equipment.
A significant portion of the segments' expenses, other than the Ixia Solutions Group expenses, arise from shared services and infrastructure that we have historically provided to the segments in order to realize economies of scale and to efficiently use resources. These expenses, collectively called corporate charges, include costs of centralized research and development, legal, accounting, real estate, insurance services, information technology services, treasury and other corporate infrastructure expenses. Charges are allocated to the segments, and the allocations have been 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. The Ixia Solutions Group will not be allocated these charges until integrated.
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, restructuring and asset impairment charges, investment gains and losses, interest income, interest expense, acquisition and integration costs, separation and related costs, acquisition-related fair value adjustments, non-cash amortization and other items as noted in the reconciliations below.
 
Communications Solutions Group
 
Electronic Industrial Solutions Group
 
Ixia Solutions Group
 
Services Solutions Group
 
Total Segments
 
(in millions)
Three Months Ended April 30, 2017:
 
 
 

 
 
 
 

 
 

Total segment revenue
$
424

 
$
220

 
$
12

 
$
102

 
$
758

Acquisition-related fair value adjustments
(1
)
 

 
(4
)
 

 
(5
)
Total net revenue
$
423

 
$
220

 
$
8

 
$
102

 
$
753

Segment income (loss) from operations
$
75

 
$
57

 
$
(2
)
 
$
17

 
$
147

Three Months Ended April 30, 2016:
 
 
 

 
 
 
 

 
 

Total segment revenue
$
446

 
$
193

 
$

 
$
96

 
$
735

Acquisition-related fair value adjustments
(4
)
 

 

 

 
(4
)
Total net revenue
$
442

 
$
193

 
$

 
$
96

 
$
731

Segment income (loss) from operations
$
84

 
$
40

 
$

 
$
11

 
$
135


 
Communications Solutions Group
 
Electronic Industrial Solutions Group
 
Ixia Solutions Group
 
Services Solutions Group
 
Total Segments
 
(in millions)
Six Months Ended April 30, 2017:
 
 
 

 
 
 
 

 
 

Total segment revenue
$
858

 
$
412

 
$
12

 
$
202

 
$
1,484

Acquisition-related fair value adjustments
(1
)
 

 
(4
)
 

 
(5
)
Total net revenue
$
857

 
$
412

 
$
8

 
$
202

 
$
1,479

Segment income (loss) from operations
$
147

 
$
99

 
$
(2
)
 
$
31

 
$
275

Six Months Ended April 30, 2016:
 
 
 

 
 
 
 

 
 

Total segment revenue
$
886

 
$
384

 
$

 
$
191

 
$
1,461

Acquisition-related fair value adjustments
(9
)
 

 

 

 
(9
)
Total net revenue
$
877

 
$
384

 
$

 
$
191

 
$
1,452

Segment income (loss) from operations
$
162

 
$
78

 
$

 
$
24

 
$
264


The following table reconciles reportable segments’ income from operations to our total enterprise income before taxes:
 
Three Months Ended
 
Six Months Ended
 
April 30,
 
April 30,
 
2017
 
2016
 
2017
 
2016
 
(in millions)
Total reportable segments' income from operations
$
147

 
$
135

 
$
275

 
$
264

Share-based compensation expense
(13
)
 
(13
)
 
(31
)
 
(29
)
Restructuring and related costs
(1
)
 

 
(3
)
 

Amortization of intangibles
(18
)
 
(11
)
 
(28
)
 
(22
)
Acquisition and integration costs
(21
)
 
(5
)
 
(27
)
 
(7
)
Acquisition-related compensation expense
(28
)
 

 
(28
)
 

Separation and related costs
(8
)
 
(5
)
 
(14
)
 
(10
)
Acquisition-related fair value adjustments
(8
)
 
(4
)
 
(8
)
 
(9
)
Japan pension settlement gain

 

 
68

 

Other
(8
)
 
(2
)
 

 
6

Income from operations, as reported
42

 
95

 
204

 
193

Interest income
2

 

 
3

 
1

Interest expense
(24
)
 
(12
)
 
(36
)
 
(24
)
Other income (expense), net
2

 
4

 
3

 
1

Income before taxes, as reported
$
22

 
$
87

 
$
174

 
$
171



The following table presents assets directly managed by each segment. Unallocated assets primarily consist of cash and cash equivalents, investments and other assets.
 
Communications Solutions Group
 
Electronic Industrial Solutions Group
 
Ixia Solutions Group
 
Services Solutions Group
 
Total Segments
 
(in millions)
Assets:
 
 
 

 
 
 
 

 
 

As of April 30, 2017
$
1,674

 
$
764

 
$
1,953

 
$
270

 
$
4,661

As of October 31, 2016
$
1,805

 
$
773

 
$

 
$
273

 
$
2,851