[August 14, 2014] |
|
Agilent Technologies Reports Third-Quarter 2014 Results
SANTA CLARA, Calif. --(Business Wire)--
Agilent Technologies Inc. (NYSE: A) today reported orders of $1.74
billion, up 9 percent over one year ago, for the third fiscal quarter
ended July 31, 2014, and revenues of $1.77 billion, up 7 percent
compared with one year ago. Third-quarter GAAP net income was $147
million, or $0.43 per share. Last year's third-quarter GAAP net income
was $168 million, or $0.49 per share.
During the third quarter, Agilent had pre-separation costs of $62
million, intangible amortization of $50 million, a net loss on
extinguishment of debt of $21 million, and a tax benefit of $14 million.
Excluding these items and $4 million of other net benefits, Agilent
reported third-quarter adjusted net income of $262 million, or $0.78 per
share(1).
"Agilent generated strong revenue and earnings this quarter, exceeding
the high-end of our forecasted guidance," said Agilent President and CEO
Bill Sullivan. "We're seeing continued improvement in our markets and
good order growth across our businesses."
"While delivering these solid results, the Agilent and Keysight teams
have done an outstanding job of executing the company separation to
date," he added. "We are on track for the formal separation in early
November, and both companies are well positioned for the future."
Third-quarter revenues for Electronic Measurement-now Keysight-
increased 8 percent compared with a year ago. Operating margins were 20
percent. Orders increased 7 percent over a year ago. Keysight began
operating as a wholly owned subsidiary of Agilent on Aug. 1. The
subsidiary is expected to formally separate from Agilent in early
November 2014, when its common stock is expected to trade on the New
York Stock Exchange with the ticker symbol KEYS.
In Life Sciences, Diagnostics and Applied Chemical Markets (LDA)-the new
Agilent-revenues grew 6 percent compared with a year ago, led by growth
in environmental, forensics, pharma and clinical/diagnostics. LDA
operating margins were 19 percent. Orders were up 10 percent year over
year.
Agilent generated $28 million of cash from operations in the quarter.
Third-quarter ROIC was 17 percent(3).
Fourth-quarter 2014 revenues are expected to be in the range of $1.81
billion to $1.85 billion. Fourth-quarter non-GAAP earnings are expected
to be in the range of $0.87 to $0.91 per share(2).
For the full fiscal year 2014, Agilent expects revenue of $6.99 billion
to $7.03 billion and non-GAAP earnings of $3.04 to $3.08 per share(2).
About Agilent Technologies
Agilent Technologies Inc. (NYSE: A) is a leader in chemical analysis,
life sciences, diagnostics, electronics and communications. The
company's 20,600 employees serve customers in more than 100 countries.
Agilent had revenues of $6.8 billion in fiscal 2013. Information about
Agilent is available at www.agilent.com.
In September 2013, Agilent announced plans to separate into two publicly
traded companies through a tax-free spinoff of its electronic
measurement business. On Aug. 1, 2014, the company's electronic
measurement business began operating as Keysight Technologies, Inc., a
wholly owned subsidiary. The separation is expected to be completed in
early November 2014.
Agilent's management will present more details about its third-quarter
FY2014 financial results on a conference call with investors today at
1:30 p.m. PDT. This event will be webcast live in listen-only mode.
Listeners may log on at www.investor.agilent.com
and select "Q3 2014 Agilent Technologies Inc. Earnings Conference Call"
in the "News & Events Calendar of Events" section. The webcast will
remain available on the company's website for 90 days.
Additional information regarding financial results can be found at www.investor.agilent.com
by selecting "Financial Results" in the "Financial Information" section.
A telephone replay of the conference call will be available at
approximately 4:30 p.m. PDT today through Aug. 21. The replay number is
(855) 859-2056, or from outside the United States, (404) 537-3406; enter
passcode 65641706.
Forward-Looking Statements
This news release contains forward-looking statements as defined in the
Securities Exchange Act of 1934 and is subject to the safe harbors
created therein. The forward-looking statements contained herein
include, but are not limited to, information regarding Agilent's
separation of the electronic measurement business; future revenues,
earnings and profitability; the future demand for the company's products
and services; customer expectations; and revenue and non-GAAP earnings
guidance for the fourth quarter and full fiscal year 2014. These
forward-looking statements involve risks and uncertainties that could
cause Agilent's results to differ materially from management's current
expectations. Such risks and uncertainties include, but are not limited
to, unforeseen changes in the strength of our customers' businesses;
unforeseen changes in the demand for current and new products,
technologies, and services; customer purchasing decisions and timing,
and the risk that we are not able to realize the savings expected from
integration and restructuring activities.
In addition, other risks that Agilent faces in running its operations
include the ability to execute successfully through business cycles; the
ability to meet and achieve the benefits of its cost-reduction goals and
otherwise successfully adapt its cost structures to continuing changes
in business conditions; ongoing competitive, pricing and gross-margin
pressures; the risk that our cost-cutting initiatives will impair our
ability to develop products and remain competitive and to operate
effectively; the impact of geopolitical uncertainties and global
economic conditions on our operations, our markets and our ability to
conduct business; the ability to improve asset performance to adapt to
changes in demand; the ability of our supply chain to adapt to changes
in demand; the ability to successfully introduce new products at the
right time, price and mix; the ability of Agilent to successfully
integrate recent acquisitions; and other risks detailed in Agilent's
filings with the Securities and Exchange Commission, including our
Quarterly Report on Form 10-Q for the quarter ended April 30, 2014.
Forward-looking statements are based on the beliefs and assumptions of
Agilent's management and on currently available information. Agilent
undertakes no responsibility to publicly update or revise any
forward-looking statement.
(1) Non-GAAP net income and non-GAAP net income per share
exclude primarily the impacts of acquisition and integration costs,
pre-separation costs, transformation initiatives and restructuring
costs, net loss on debt extinguishment, and non-cash intangibles
amortization. We also exclude any tax benefits that are not directly
related to ongoing operations and which are either isolated or cannot be
expected to occur again with any regularity or predictability. A
reconciliation between non-GAAP net income and GAAP net income is set
forth on page 6 of the attached tables along with additional information
regarding the use of this non-GAAP measure.
(2) Non-GAAP earnings per share as projected for Q4FY14 and
full fiscal year 2014 excludes primarily the impacts of acquisition and
integration costs, net loss on debt extinguishment, pre-separation
costs, future restructuring costs, asset impairment charges, and
non-cash intangibles amortization. We also exclude any tax benefits that
are not directly related to ongoing operations and which are either
isolated or cannot be expected to occur again with any regularity or
predictability. Most of these excluded amounts pertain to events that
have not yet occurred and are not currently possible to estimate with a
reasonable degree of accuracy. Therefore, no reconciliation to GAAP
amounts has been provided. Future amortization of intangibles is
expected to be approximately $50 million per quarter.
(3) Return on invested capital (ROIC) is a non-GAAP measure
and is defined as income from operations less other (income) expense and
taxes, annualized, divided by the average of the two most recent
quarter-end balances of assets less net current liabilities. The
reconciliation of ROIC can be found on page 8 of the attached tables,
along with additional information regarding the use of this non-GAAP
measure.
NOTE TO EDITORS: Further technology, corporate citizenship and executive
news is available on the Agilent news site at www.agilent.com/go/news.
|
|
|
|
|
|
|
AGILENT TECHNOLOGIES, INC.
|
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
|
(In millions, except per share amounts)
|
(Unaudited)
|
PRELIMINARY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
|
July 31,
|
|
Percent
|
|
|
2014
|
|
2013
|
|
Inc/(Dec)
|
|
|
|
|
|
|
|
Orders
|
|
$
|
1,739
|
|
|
$
|
1,600
|
|
|
9
|
%
|
|
|
|
|
|
|
|
Net revenue
|
|
$
|
1,766
|
|
|
$
|
1,652
|
|
|
7
|
%
|
|
|
|
|
|
|
|
Costs and expenses:
|
|
|
|
|
|
|
Cost of products and services
|
|
|
852
|
|
|
|
796
|
|
|
7
|
%
|
Research and development
|
|
|
177
|
|
|
|
171
|
|
|
4
|
%
|
Selling, general and administrative
|
|
|
508
|
|
|
|
449
|
|
|
13
|
%
|
Total costs and expenses
|
|
|
1,537
|
|
|
|
1,416
|
|
|
9
|
%
|
|
|
|
|
|
|
|
Income from operations
|
|
|
229
|
|
|
|
236
|
|
|
(3
|
%)
|
|
|
|
|
|
|
|
Interest income
|
|
|
3
|
|
|
|
2
|
|
|
50
|
%
|
Interest expense
|
|
|
(28
|
)
|
|
|
(27
|
)
|
|
4
|
%
|
Other income (expense), net
|
|
|
(20
|
)
|
|
|
1
|
|
|
-
|
|
|
|
|
|
|
|
|
Income before taxes
|
|
|
184
|
|
|
|
212
|
|
|
(13
|
%)
|
|
|
|
|
|
|
|
Provision for income taxes
|
|
|
37
|
|
|
|
44
|
|
|
(16
|
%)
|
|
|
|
|
|
|
|
Net income
|
|
$
|
147
|
|
|
$
|
168
|
|
|
(13
|
%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income per share:
|
|
|
|
|
|
|
Basic
|
|
$
|
0.44
|
|
|
$
|
0.50
|
|
|
|
Diluted
|
|
$
|
0.43
|
|
|
$
|
0.49
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares used in computing net income per share:
|
|
|
|
|
|
|
Basic
|
|
|
334
|
|
|
|
339
|
|
|
|
Diluted
|
|
|
338
|
|
|
|
343
|
|
|
|
|
|
|
|
|
|
|
Cash dividends declared per common share
|
|
$
|
0.132
|
|
|
$
|
0.120
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The preliminary income statement is estimated based on our current
information.
|
|
Page 1
|
|
|
|
|
|
|
|
AGILENT TECHNOLOGIES, INC.
|
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
|
(In millions, except per share amounts)
|
(Unaudited)
|
PRELIMINARY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended
|
|
|
|
|
July 31,
|
|
Percent
|
|
|
2014
|
|
2013
|
|
Inc/(Dec)
|
|
|
|
|
|
|
|
Orders
|
|
$
|
5,229
|
|
|
$
|
4,998
|
|
|
5
|
%
|
|
|
|
|
|
|
|
Net revenue
|
|
$
|
5,176
|
|
|
$
|
5,064
|
|
|
2
|
%
|
|
|
|
|
|
|
|
Costs and expenses:
|
|
|
|
|
|
|
Cost of products and services
|
|
|
2,480
|
|
|
|
2,437
|
|
|
2
|
%
|
Research and development
|
|
|
530
|
|
|
|
531
|
|
|
-
|
|
Selling, general and administrative
|
|
|
1,509
|
|
|
|
1,430
|
|
|
6
|
%
|
Total costs and expenses
|
|
|
4,519
|
|
|
|
4,398
|
|
|
3
|
%
|
|
|
|
|
|
|
|
Income from operations
|
|
|
657
|
|
|
|
666
|
|
|
(1
|
%)
|
|
|
|
|
|
|
|
Interest income
|
|
|
7
|
|
|
|
5
|
|
|
40
|
%
|
Interest expense
|
|
|
(87
|
)
|
|
|
(77
|
)
|
|
13
|
%
|
Other income (expense), net
|
|
|
(16
|
)
|
|
|
11
|
|
|
-
|
|
|
|
|
|
|
|
|
Income before taxes
|
|
|
561
|
|
|
|
605
|
|
|
(7
|
%)
|
|
|
|
|
|
|
|
Provision for income taxes
|
|
|
80
|
|
|
|
92
|
|
|
(13
|
%)
|
|
|
|
|
|
|
|
Net income
|
|
$
|
481
|
|
|
$
|
513
|
|
|
(6
|
%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income per share:
|
|
|
|
|
|
|
Basic
|
|
$
|
1.44
|
|
|
$
|
1.49
|
|
|
|
Diluted
|
|
$
|
1.42
|
|
|
$
|
1.47
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares used in computing net income per share:
|
|
|
|
|
|
|
Basic
|
|
|
333
|
|
|
|
344
|
|
|
|
Diluted
|
|
|
338
|
|
|
|
348
|
|
|
|
|
|
|
|
|
|
|
Cash dividends declared per common share
|
|
$
|
0.396
|
|
|
$
|
0.340
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The preliminary income statement is estimated based on our current
information.
|
|
|
|
|
|
|
|
Page 2
|
|
|
|
|
|
|
|
|
|
AGILENT TECHNOLOGIES, INC.
|
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
|
(In millions)
|
(Unaudited)
|
PRELIMINARY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
|
|
July 31,
|
|
July 31,
|
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
147
|
|
|
$
|
168
|
|
|
$
|
481
|
|
|
$
|
513
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive income (loss), net of tax:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized gain on investments
|
|
|
8
|
|
|
|
4
|
|
|
|
8
|
|
|
|
5
|
|
Amounts reclassified into earnings related to investments
|
|
|
(1
|
)
|
|
|
-
|
|
|
|
(1
|
)
|
|
|
-
|
|
Unrealized gain (loss) on derivative instruments
|
|
|
2
|
|
|
|
(4
|
)
|
|
|
1
|
|
|
|
7
|
|
Amounts reclassified into earnings related to derivative instruments
|
|
|
1
|
|
|
|
(3
|
)
|
|
|
1
|
|
|
|
(8
|
)
|
Foreign currency translation
|
|
|
(92
|
)
|
|
|
(32
|
)
|
|
|
(59
|
)
|
|
|
(87
|
)
|
Net defined benefit pension cost and post retirement plan costs:
|
|
|
|
|
|
|
|
|
Amortization of actuarial net loss
|
|
|
11
|
|
|
|
15
|
|
|
|
36
|
|
|
|
45
|
|
Amortization of net prior service benefit
|
|
|
(8
|
)
|
|
|
(8
|
)
|
|
|
(24
|
)
|
|
|
(24
|
)
|
Other comprehensive loss
|
|
|
(79
|
)
|
|
|
(28
|
)
|
|
|
(38
|
)
|
|
|
(62
|
)
|
|
|
|
|
|
|
|
|
|
Total comprehensive income
|
|
$
|
68
|
|
|
$
|
140
|
|
|
$
|
443
|
|
|
$
|
451
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The preliminary statement of comprehensive income is estimated based
on our current information.
|
|
|
|
|
|
|
|
|
|
Page 3
|
|
|
|
|
|
AGILENT TECHNOLOGIES, INC.
|
CONDENSED CONSOLIDATED BALANCE SHEET
|
(In millions, except par value and share amounts)
|
(Unaudited)
|
PRELIMINARY
|
|
|
|
|
|
|
|
|
|
|
|
|
July 31,
|
|
October 31,
|
|
|
2014
|
|
2013
|
ASSETS
|
|
|
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
2,391
|
|
|
$
|
2,675
|
|
Accounts receivable, net
|
|
|
891
|
|
|
|
899
|
|
Inventory
|
|
|
1,099
|
|
|
|
1,066
|
|
Other current assets
|
|
|
453
|
|
|
|
343
|
|
Total current assets
|
|
|
4,834
|
|
|
|
4,983
|
|
|
|
|
|
|
Property, plant and equipment, net
|
|
|
1,142
|
|
|
|
1,134
|
|
Goodwill
|
|
|
3,012
|
|
|
|
3,047
|
|
Other intangible assets, net
|
|
|
758
|
|
|
|
916
|
|
Long-term investments
|
|
|
164
|
|
|
|
139
|
|
Other assets
|
|
|
470
|
|
|
|
467
|
|
Total assets
|
|
$
|
10,380
|
|
|
$
|
10,686
|
|
|
|
|
|
|
LIABILITIES AND EQUITY
|
|
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
Accounts payable
|
|
$
|
402
|
|
|
$
|
432
|
|
Employee compensation and benefits
|
|
|
365
|
|
|
|
401
|
|
Deferred revenue
|
|
|
447
|
|
|
|
439
|
|
Short-term debt
|
|
|
35
|
|
|
|
-
|
|
Other accrued liabilities
|
|
|
330
|
|
|
|
330
|
|
Total current liabilities
|
|
|
1,579
|
|
|
|
1,602
|
|
|
|
|
|
|
Long-term debt
|
|
|
2,181
|
|
|
|
2,699
|
|
Retirement and post-retirement benefits
|
|
|
235
|
|
|
|
294
|
|
Other long-term liabilities
|
|
|
745
|
|
|
|
802
|
|
Total liabilities
|
|
|
4,740
|
|
|
|
5,397
|
|
|
|
|
|
|
Total Equity:
|
|
|
|
|
Stockholders' equity:
|
|
|
|
|
Preferred stock; $0.01 par value; 125 million shares authorized;
none issued and outstanding
|
|
|
-
|
|
|
|
-
|
|
Common stock; $0.01 par value, 2 billion shares authorized; 606
million shares at July 31, 2014 and 602 million shares at October
31, 2013, issued
|
|
|
6
|
|
|
|
6
|
|
Treasury stock at cost; 273 million shares at July 31, 2014 and
269 million shares at October 31, 2013
|
|
|
(9,807
|
)
|
|
|
(9,607
|
)
|
Additional paid-in-capital
|
|
|
8,898
|
|
|
|
8,723
|
|
Retained earnings
|
|
|
6,487
|
|
|
|
6,073
|
|
Accumulated other comprehensive income
|
|
|
53
|
|
|
|
91
|
|
Total stockholders' equity
|
|
|
5,637
|
|
|
|
5,286
|
|
Non-controlling interest
|
|
|
3
|
|
|
|
3
|
|
Total equity
|
|
|
5,640
|
|
|
|
5,289
|
|
Total liabilities and equity
|
|
$
|
10,380
|
|
|
$
|
10,686
|
|
|
|
|
|
|
|
|
|
|
|
The preliminary balance sheet is estimated based on our current
information.
|
|
|
|
|
|
Page 4
|
|
|
|
|
|
AGILENT TECHNOLOGIES, INC.
|
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
|
(In millions)
|
(Unaudited)
|
PRELIMINARY
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
|
|
Nine Months
|
|
|
Ended
|
|
Ended
|
|
|
July 31,
|
|
July 31,
|
|
|
2014
|
|
2014
|
Cash flows from operating activities:
|
|
|
|
|
Net income
|
|
$
|
147
|
|
|
$
|
481
|
|
|
|
|
|
|
Adjustments to reconcile net income to net cash provided by (used
in) operating activities:
|
|
|
|
|
Depreciation and amortization
|
|
|
98
|
|
|
|
291
|
|
Accelerated amortization of interest rate swap gain (due to early
redemption of debt)
|
|
|
(8
|
)
|
|
|
(8
|
)
|
Share-based compensation
|
|
|
19
|
|
|
|
77
|
|
Excess tax benefit from share-based plans
|
|
|
-
|
|
|
|
(3
|
)
|
Excess and obsolete inventory related charges
|
|
|
16
|
|
|
|
39
|
|
Other non-cash expenses, net
|
|
|
(14
|
)
|
|
|
(6
|
)
|
Changes in assets and liabilities:
|
|
|
|
|
Accounts receivable
|
|
|
3
|
|
|
|
-
|
|
Inventory
|
|
|
(17
|
)
|
|
|
(73
|
)
|
Accounts payable
|
|
|
(73
|
)
|
|
|
(29
|
)
|
Employee compensation and benefits
|
|
|
(36
|
)
|
|
|
(32
|
)
|
Other assets and liabilities
|
|
|
(107
|
)
|
|
|
(190
|
)
|
Net cash provided by operating activities (a)
|
|
|
28
|
|
|
|
547
|
|
|
|
|
|
|
Cash flows from investing activities:
|
|
|
|
|
Investments in property, plant and equipment
|
|
|
(64
|
)
|
|
|
(162
|
)
|
Proceeds from sale of property, plant and equipment
|
|
|
12
|
|
|
|
14
|
|
Payment to acquire equity method investment
|
|
|
(21
|
)
|
|
|
(25
|
)
|
Change in restricted cash and cash equivalents, net
|
|
|
1
|
|
|
|
1
|
|
Proceeds from divestiture
|
|
|
2
|
|
|
|
2
|
|
Proceeds from sale of investment securities
|
|
|
1
|
|
|
|
1
|
|
Acquisition of businesses and intangible assets, net of cash acquired
|
|
|
(1
|
)
|
|
|
(3
|
)
|
Net cash used in investing activities
|
|
|
(70
|
)
|
|
|
(172
|
)
|
|
|
|
|
|
Cash flows from financing activities:
|
|
|
|
|
Issuance of common stock under employee stock plans
|
|
|
41
|
|
|
|
136
|
|
Treasury stock repurchases
|
|
|
(50
|
)
|
|
|
(200
|
)
|
Prepayment of senior notes
|
|
|
(500
|
)
|
|
|
(500
|
)
|
Payment of dividends
|
|
|
(44
|
)
|
|
|
(132
|
)
|
Proceeds from short-term borrowings
|
|
|
35
|
|
|
|
35
|
|
Proceeds from revolving credit facility
|
|
|
50
|
|
|
|
50
|
|
Repayment of revolving credit facility
|
|
|
(50
|
)
|
|
|
(50
|
)
|
Excess tax benefit from share-based plans
|
|
|
-
|
|
|
|
3
|
|
Net cash used in financing activities
|
|
|
(518
|
)
|
|
|
(658
|
)
|
|
|
|
|
|
Effect of exchange rate movements
|
|
|
1
|
|
|
|
(1
|
)
|
|
|
|
|
|
Net decrease in cash and cash equivalents
|
|
|
(559
|
)
|
|
|
(284
|
)
|
|
|
|
|
|
Cash and cash equivalents at beginning of period
|
|
|
2,950
|
|
|
|
2,675
|
|
|
|
|
|
|
Cash and cash equivalents at end of period
|
|
$
|
2,391
|
|
|
$
|
2,391
|
|
|
|
|
|
|
(a) Cash payments included in operating activities:
|
|
|
|
|
Restructuring payments
|
|
|
5
|
|
|
|
23
|
|
Income tax payments, net
|
|
|
37
|
|
|
|
71
|
|
|
|
|
|
|
|
|
|
|
|
The preliminary cash flow is estimated based on our current
information.
|
|
|
|
|
|
Page 5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AGILENT TECHNOLOGIES, INC.
|
NON-GAAP NET INCOME AND DILUTED EPS RECONCILIATIONS
|
(In millions, except per share amounts)
|
(Unaudited)
|
PRELIMINARY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
|
|
July 31,
|
|
July 31,
|
|
|
|
|
Diluted
|
|
|
|
Diluted
|
|
|
|
Diluted
|
|
|
|
Diluted
|
|
|
2014
|
|
EPS
|
|
2013
|
|
EPS
|
|
2014
|
|
EPS
|
|
2013
|
|
EPS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP Net income
|
|
$
|
147
|
|
|
$
|
0.43
|
|
|
|
$
|
168
|
|
|
$
|
0.49
|
|
$
|
481
|
|
|
$
|
1.42
|
|
|
|
$
|
513
|
|
|
$
|
1.47
|
|
Non-GAAP adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restructuring and other related costs
|
|
|
-
|
|
|
|
-
|
|
|
|
|
1
|
|
|
|
-
|
|
|
(4
|
)
|
|
|
(0.01
|
)
|
|
|
|
56
|
|
|
|
0.16
|
|
Asset impairments and write-downs
|
|
|
-
|
|
|
|
-
|
|
|
|
|
1
|
|
|
|
-
|
|
|
-
|
|
|
|
-
|
|
|
|
|
3
|
|
|
|
0.01
|
|
Intangible amortization
|
|
|
50
|
|
|
|
0.15
|
|
|
|
|
48
|
|
|
|
0.14
|
|
|
152
|
|
|
|
0.45
|
|
|
|
|
151
|
|
|
|
0.43
|
|
Transformational initiatives
|
|
|
7
|
|
|
|
0.02
|
|
|
|
|
8
|
|
|
|
0.02
|
|
|
18
|
|
|
|
0.05
|
|
|
|
|
14
|
|
|
|
0.04
|
|
Acquisition and integration costs
|
|
|
2
|
|
|
|
0.01
|
|
|
|
|
6
|
|
|
|
0.02
|
|
|
11
|
|
|
|
0.03
|
|
|
|
|
22
|
|
|
|
0.06
|
|
Pre-separation costs
|
|
|
62
|
|
|
|
0.19
|
|
|
|
|
-
|
|
|
|
-
|
|
|
123
|
|
|
|
0.36
|
|
|
|
|
-
|
|
|
|
-
|
|
Net loss on extinguishment of debt
|
|
|
21
|
|
|
|
0.06
|
|
|
|
|
-
|
|
|
|
-
|
|
|
21
|
|
|
|
0.06
|
|
|
|
|
-
|
|
|
|
-
|
|
Other
|
|
|
(13
|
)
|
|
|
(0.04
|
)
|
|
|
|
2
|
|
|
|
0.01
|
|
|
(10
|
)
|
|
|
(0.02
|
)
|
|
|
|
11
|
|
|
|
0.03
|
|
Adjustment for taxes (a)
|
|
|
(14
|
)
|
|
|
(0.04
|
)
|
|
|
|
(1
|
)
|
|
|
-
|
|
|
(60
|
)
|
|
|
(0.17
|
)
|
|
|
|
(46
|
)
|
|
|
(0.12
|
)
|
Non-GAAP Net income
|
|
$
|
262
|
|
|
$
|
0.78
|
|
|
|
$
|
233
|
|
|
$
|
0.68
|
|
$
|
732
|
|
|
$
|
2.17
|
|
|
|
$
|
724
|
|
|
$
|
2.08
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) The adjustment for taxes excludes tax benefits that
management believes are not directly related to ongoing operations
and which are either isolated or cannot be expected to occur again
with any regularity or predictability. For the three and nine months
ended July 31, 2014, management uses a non-GAAP effective tax rate
of 16% that we believe to be indicative of on-going operations.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Historical amounts are reclassified to conform with current
presentation.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
We provide non-GAAP net income and non-GAAP net income per share
amounts in order to provide meaningful supplemental information
regarding our operational performance and our prospects for the
future. These supplemental measures exclude, among other things,
charges related to the amortization of intangibles, the impact of
restructuring charges, acquisition and integration costs, net loss
on debt extinguishment and pre-separation costs. Some of the
exclusions, such as impairments, may be beyond the control of
management. Further, some may be less predictable than revenue
derived from our core businesses (the day to day business of selling
our products and services). These reasons provide the basis for
management's belief that the measures are useful.
|
|
|
|
|
|
Restructuring costs include incremental expenses incurred in the
period associated with publicly announced major restructuring
programs, usually aimed at material changes in business and/or cost
structure. Such costs may include one-time termination benefits,
asset impairments, facility-related costs and contract termination
fees.
|
|
|
|
|
|
Asset impairments and write-downs include assets that have been
written-down to their fair value.
|
|
|
|
|
|
Transformational initiatives include expenses incurred in the period
associated with targeted cost reduction activities such as
manufacturing transfers, small site consolidations, reorganizations,
insourcing or outsourcing of activities. Such costs may include move
and relocation costs, one-time termination benefits and other
one-time reorganization costs.
|
|
|
|
|
|
Acquisition and Integration costs include all incremental expenses
incurred to effect a business combination which have been expensed
during the period. Such acquisition costs may include advisory,
legal, accounting, valuation, and other professional or consulting
fees. Such integration costs may include expenses directly related
to integration of business and facility operations, information
technology systems and infrastructure and other employee-related
costs.
|
|
|
|
|
|
Pre-separation costs include all incremental expenses incurred by
Agilent in order to effect the separation, through the planned early
November distribution date. They also include the cost of all the
new FY14 hires required to operate two separate companies. The
intent is to only include in non-GAAP expenses what would not have
been incurred if we had no plan to spin-off our Electronic
Measurement Group.
|
|
|
|
|
|
Net loss on extinguishment of debt relates to the early redemption
of our 2015 senior notes.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Our management uses non-GAAP measures to evaluate the performance of
our core businesses, to estimate future core performance and to
compensate employees. Since management finds this measure to be
useful, we believe that our investors benefit from seeing our
results "through the eyes" of management in addition to seeing our
GAAP results. This information facilitates our management's internal
comparisons to our historical operating results as well as to the
operating results of our competitors.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Our management recognizes that items such as amortization of
intangibles, net loss on debt extinguishment and restructuring
charges can have a material impact on our cash flows and/or our
net income. Our GAAP financial statements including our statement
of cash flows portray those effects. Although we believe it is
useful for investors to see core performance free of special
items, investors should understand that the excluded items are
actual expenses that may impact the cash available to us for other
uses. To gain a complete picture of all effects on the company's
profit and loss from any and all events, management does (and
investors should) rely upon the GAAP income statement. The
non-GAAP numbers focus instead upon the core business of the
company, which is only a subset, albeit a critical one, of the
company's performance.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Readers are reminded that non-GAAP numbers are merely a supplement
to, and not a replacement for, GAAP financial measures. They should
be read in conjunction with the GAAP financial measures. It should
be noted as well that our non-GAAP information may be different from
the non-GAAP information provided by other companies.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The preliminary non-GAAP net income and diluted EPS reconciliation
is estimated based on our current information.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Page 6
|
|
|
|
|
|
|
|
AGILENT TECHNOLOGIES, INC.
|
SEGMENT INFORMATION
|
(In millions, except where noted)
|
(Unaudited)
|
PRELIMINARY
|
|
|
|
|
|
|
|
Life Sciences and Diagnostics
|
|
|
|
|
|
|
|
|
Q3'14
|
|
Q3'13
|
|
Q2'14
|
Orders
|
|
$
|
597
|
|
|
$
|
536
|
|
|
$
|
598
|
|
Revenue
|
|
$
|
592
|
|
|
$
|
564
|
|
|
$
|
577
|
|
Gross Margin, %
|
|
|
53.6
|
%
|
|
|
53.6
|
%
|
|
|
53.2
|
%
|
Income from Operations
|
|
$
|
93
|
|
|
$
|
91
|
|
|
$
|
76
|
|
Segment Assets
|
|
$
|
4,305
|
|
|
$
|
4,252
|
|
|
$
|
4,306
|
|
Return On Invested Capital (a), %
|
|
|
8
|
%
|
|
|
8
|
%
|
|
|
7
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Chemical Analysis
|
|
|
|
|
|
|
|
|
Q3'14
|
|
Q3'13
|
|
Q2'14
|
Orders
|
|
$
|
420
|
|
|
$
|
390
|
|
|
$
|
432
|
|
Revenue
|
|
$
|
417
|
|
|
$
|
387
|
|
|
$
|
411
|
|
Gross Margin, %
|
|
|
52.7
|
%
|
|
|
51.0
|
%
|
|
|
52.5
|
%
|
Income from Operations
|
|
$
|
97
|
|
|
$
|
83
|
|
|
$
|
90
|
|
Segment Assets
|
|
$
|
1,791
|
|
|
$
|
1,732
|
|
|
$
|
1,778
|
|
Return On Invested Capital (a), %
|
|
|
21
|
%
|
|
|
19
|
%
|
|
|
20
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Electronic Measurement
|
|
|
|
|
|
|
|
|
Q3'14
|
|
Q3'13
|
|
Q2'14
|
Orders
|
|
$
|
722
|
|
|
$
|
674
|
|
|
$
|
782
|
|
Revenue
|
|
$
|
757
|
|
|
$
|
701
|
|
|
$
|
743
|
|
Gross Margin, %
|
|
|
55.3
|
%
|
|
|
56.6
|
%
|
|
|
56.2
|
%
|
Income from Operations
|
|
$
|
149
|
|
|
$
|
129
|
|
|
$
|
148
|
|
Segment Assets
|
|
$
|
1,963
|
|
|
$
|
2,008
|
|
|
$
|
1,976
|
|
Return On Invested Capital (a), %
|
|
|
35
|
%
|
|
|
30
|
%
|
|
|
35
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from operations reflect the results of our reportable
segments under Agilent's management reporting system which are not
necessarily in conformity with GAAP financial measures. Income from
operations of our reporting segments exclude, among other things,
charges related to the amortization of intangibles, the impact of
restructuring charges, acquisition and integration costs and
pre-separation costs.
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In general, recorded orders represent firm purchase commitments from
our customers with established terms and conditions for products and
services that will be delivered within six months.
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(a) Return On Invested Capital is a non-GAAP measure and
is defined as income from operations less other (income) expense and
taxes, annualized, divided by the average of the two most recent
quarter-end balances of assets less net current liabilities. The
reconciliation of ROIC can be found on page 8 of these tables, along
with additional information regarding the use of this non-GAAP
measure.
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Readers are reminded that non-GAAP numbers are merely a supplement
to, and not a replacement for, GAAP financial measures. They should
be read in conjunction with the GAAP financial measures. It should
be noted as well that our non-GAAP information may be different from
the non-GAAP information provided by other companies.
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The preliminary segment information is estimated based on our
current information.
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Page 7
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AGILENT TECHNOLOGIES, INC.
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RECONCILIATION OF ROIC
|
(In millions)
|
(Unaudited)
|
PRELIMINARY
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LDG
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CAG
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EMG
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AGILENT
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LDG
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CAG
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EMG
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AGILENT
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LDG
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CAG
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EMG
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Numerator:
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Q3'14
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Q3'14
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Q3'14
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Q3'14
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Q3'13
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Q3'13
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Q3'13
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Q3'13
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Q2'14
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Q2'14
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Q2'14
|
Non-GAAP income from operations
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|
$
|
93
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|
|
$
|
97
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|
|
$
|
149
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|
|
$
|
339
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|
|
|
$
|
91
|
|
|
$
|
83
|
|
|
$
|
129
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|
|
$
|
303
|
|
|
|
$
|
76
|
|
|
$
|
90
|
|
|
$
|
148
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|
Less:
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|
|
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|
|
|
|
|
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Taxes and Other (income)/expense
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|
|
15
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|
|
15
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|
|
23
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|
|
54
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|
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16
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|
13
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|
|
20
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|
49
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|
11
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|
|
14
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|
23
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|
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|
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Segment return
|
|
|
78
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|
|
|
82
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|
|
|
126
|
|
|
|
285
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|
(a)
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|
|
75
|
|
|
|
70
|
|
|
|
109
|
|
|
|
254
|
|
(a)
|
|
|
65
|
|
|
|
76
|
|
|
|
125
|
|
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|
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|
|
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Segment return annualized
|
|
$
|
312
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|
$
|
328
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|
$
|
504
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|
$
|
1,140
|
|
|
|
$
|
300
|
|
|
$
|
280
|
|
|
$
|
436
|
|
|
$
|
1,016
|
|
|
|
$
|
260
|
|
|
$
|
304
|
|
|
$
|
500
|
|
|
|
|
|
|
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Denominator:
|
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|
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Segment assets (b)
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|
$
|
4,305
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$
|
1,791
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$
|
1,963
|
|
|
$
|
8,059
|
|
|
|
$
|
4,252
|
|
|
$
|
1,732
|
|
|
$
|
2,008
|
|
|
$
|
7,994
|
|
|
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$
|
4,306
|
|
|
$
|
1,778
|
|
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$
|
1,976
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Less:
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|
|
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Net current liabilities (c)
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|
416
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|
|
249
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|
503
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1,169
|
|
|
|
|
411
|
|
|
|
235
|
|
|
|
522
|
|
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|
1,167
|
|
|
|
|
462
|
|
|
|
281
|
|
|
|
573
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|
Invested capital
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|
$
|
3,889
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$
|
1,542
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$
|
1,460
|
|
|
$
|
6,890
|
|
|
|
$
|
3,841
|
|
|
$
|
1,497
|
|
|
$
|
1,486
|
|
|
$
|
6,827
|
|
|
|
$
|
3,844
|
|
|
$
|
1,497
|
|
|
$
|
1,403
|
|
|
|
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Average invested capital
|
|
$
|
3,866
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|
$
|
1,520
|
|
|
$
|
1,431
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|
|
$
|
6,821
|
|
|
|
$
|
3,836
|
|
|
$
|
1,491
|
|
|
$
|
1,467
|
|
|
$
|
6,796
|
|
|
|
$
|
3,859
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|
|
$
|
1,503
|
|
|
$
|
1,412
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|
ROIC
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|
|
8
|
%
|
|
|
21
|
%
|
|
|
35
|
%
|
|
|
17
|
%
|
|
|
|
8
|
%
|
|
|
19
|
%
|
|
|
30
|
%
|
|
|
15
|
%
|
|
|
|
7
|
%
|
|
|
20
|
%
|
|
|
35
|
%
|
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|
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ROIC calculation:(annualized current quarter segment
return)/(average of the two most recent quarter-end balances of
segment invested capital)
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(a) Agilent return is equal to non-GAAP net income of $262 million
plus net interest expense after tax of $23 million for Q3'14 and
$233 million plus net interest expense after tax of $21 million
for Q3'13. Please see "Non-GAAP Net Income and Diluted EPS
Reconciliations" for a reconciliation of non-GAAP net income to
GAAP net income.
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|
(b) Segment assets consist of inventory, accounts receivable,
property plant and equipment, gross goodwill and other intangibles,
deferred taxes and allocated corporate assets.
|
|
|
|
|
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|
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|
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(c) Includes accounts payable, employee compensation and benefits,
deferred revenue, certain other accrued liabilities and allocated
corporate liabilities.
|
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|
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Return on Invested Capital (ROIC) is a non-GAAP measure that
management believes provides useful supplemental information for
management and the investor. ROIC is a tool by which we track how
much value we are creating for our shareholders. Management uses
ROIC as a performance measure for our businesses, and our senior
managers' compensation is linked to ROIC improvements as well as
other performance criteria. We believe that ROIC provides our
management with a means to analyze and improve their business,
measuring segment profitability in relation to net asset
investments. We acknowledge that ROIC may not be calculated the
same way by every company. When we complete a major acquisition,
we may adjust invested capital for the relevant segment in the
quarter when the acquisition occurred. We compensate for this
limitation by monitoring and providing to the reader a full GAAP
income statement and balance sheet.
|
|
|
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|
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|
|
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|
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|
|
Readers are reminded that non-GAAP numbers are merely a supplement
to, and not a replacement for, GAAP financial measures. They should
be read in conjunction with the GAAP financial measures. It should
be noted as well that our non-GAAP information may be different from
the non-GAAP information provided by other companies.
|
|
|
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|
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The preliminary reconciliation of ROIC is based on our current
information.
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Page 8
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