Keysight Technologies, Inc.KEYS
Keysight Technologies, Inc. Fair Value Disclosure
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.
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, 2025 and 2024 were as follows:
| October 31, | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2025 | 2024 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 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 | $ | 1,349 | $ | 1,349 | $ | — | $ | — | $ | — | $ | 1,141 | $ | 1,141 | $ | — | $ | — | $ | — | |||||||||||||||||||||||||||||||||||||||
| Derivative instruments (foreign exchange contracts) | 14 | — | 14 | — | — | 38 | — | 38 | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||
| Long-term | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Equity investments | 169 | 169 | — | — | — | 80 | 80 | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||
| Investments - other | 42 | — | — | — | 42 | 29 | — | — | — | 29 | |||||||||||||||||||||||||||||||||||||||||||||||||
| Total assets measured at fair value | $ | 1,574 | $ | 1,518 | $ | 14 | $ | — | $ | 42 | $ | 1,288 | $ | 1,221 | $ | 38 | $ | — | $ | 29 | |||||||||||||||||||||||||||||||||||||||
| Liabilities: | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Short-term | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Derivative instruments (foreign exchange contracts) | $ | 8 | $ | — | $ | 8 | $ | — | $ | — | $ | 6 | $ | — | $ | 6 | $ | — | $ | — | |||||||||||||||||||||||||||||||||||||||
| Long-term | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Deferred compensation liability | 40 | — | 40 | — | — | $ | 34 | — | 34 | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||
| Total liabilities measured at fair value | $ | 48 | $ | — | $ | 48 | $ | — | $ | — | $ | 40 | $ | — | $ | 40 | $ | — | $ | — | |||||||||||||||||||||||||||||||||||||||
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, and company-owned life insurance contracts measured at cash surrender value 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 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).”
Realized gains and losses from the sale of investments are recorded in earnings. Net realized and unrealized gain on our equity and other investments was as follows:
| Year Ended October 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| (in millions) | |||||||||||||||||
| Net unrealized gain on equity and other investments still held | $ | 98 | $ | 15 | $ | 7 | |||||||||||
| Realized gain on sale of investments | $ | 21 | $ | — | $ | — | |||||||||||
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.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Dec 17, 2025 | Showing above |
| 2024 | Dec 17, 2024 | |
| 2023 | Dec 15, 2023 | |
| 2022 | Dec 15, 2022 | |
| 2021 | Dec 17, 2021 | |
| 2020 | Dec 17, 2020 | |
| 2018 | Dec 18, 2018 | |
| 2017 | Dec 20, 2017 | |
| 2016 | Dec 19, 2016 | |
| 2015 | Dec 21, 2015 | |
About Fair Value Disclosures
Fair value disclosures classify all assets and liabilities measured at fair value into a three-level hierarchy: Level 1 (quoted market prices), Level 2 (observable inputs like yield curves), and Level 3 (unobservable inputs requiring management estimates). The proportion of Level 3 assets directly reflects how much of the balance sheet depends on internal models rather than market evidence.
Key signals: a growing Level 3 balance relative to total fair-value assets increases valuation uncertainty and earnings volatility risk. Watch for transfers between levels — assets moving from Level 2 to Level 3 often signal deteriorating market liquidity. Unrealized gains and losses on Level 3 positions flow through earnings or other comprehensive income, so large swings deserve scrutiny. For financial institutions, examine the sensitivity disclosures that show how Level 3 valuations change under alternative assumptions. Compare the fair value of debt against its carrying amount to gauge hidden leverage.