3. TRANSACTIONS WITH AGILENT

Prior to the Separation, we were the Electronic Measurement segment of Agilent, and thus, our transactions with Agilent were considered intercompany. After the Capitalization and prior to November 1, 2014, our transactions with Agilent were considered related party transactions since Agilent owned 100% of our outstanding common stock until October 31, 2014.

For the three months ended January 31, 2015 and 2014, the amount of materials and services sold by us to other Agilent businesses was immaterial, and we did not purchase any materials from the other Agilent businesses.

Allocated Costs

The condensed combined and consolidated statement of operations for the three months ended January 31, 2014 included our direct expenses for cost of products and services sold, research and development, sales and marketing, distribution, and administration as well as allocations of expenses arising from shared services and infrastructure provided by Agilent to us. These allocated expenses include costs of information technology, accounting and legal services, real estate and facilities, corporate advertising, insurance services, treasury and other corporate and infrastructure services and costs for central research and development efforts. In addition, other costs allocated to us included restructuring costs, share-based compensation expense and retirement plan expenses related to Agilent’s corporate and shared services employees and are included in the table below. These expenses were allocated to us using estimates that we consider to be a reasonable reflection of the utilization of services provided to or benefits received by us. These costs were allocated to us on the basis of direct usage when identifiable, with the remainder allocated on a pro-rata basis of revenue, square footage, headcount or other measures.

Allocated costs included in the accompanying condensed combined and consolidated statement of operations are as follows:



	Three Months Ended January 31,
	2015		2014
	(in millions)
Cost of products and services	$	—	$	25
Research and development	—		11
Selling, general and administrative	—		66
Other (income) expense, net	—		(1		)
Total allocated costs	$	—	$	101

Receivable from and Payable to Agilent



	January 31, 2015		October 31, 2014
	(in millions)
Receivable from Agilent	$	1	$	23
Payable to Agilent	$	64	$	125

Payable to Agilent at January 31, 2015 includes an accrual for return of excess cash to Agilent of approximately $49 million, which has declined $25 million as compared to $74 million accrued at October 31, 2014 as a result of finalization of discussions with Agilent as provided in the separation and distribution agreement. The $25 million reduction in the accrual was reflected as an increase to additional paid-in-capital in the condensed consolidated balance sheet. Substantially all of the balance payable to Agilent as of January 31, 2015 was paid subsequent to quarter end.