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Agilent Technologies Reports Second-Quarter 2013 Results, Increases Stock Repurchase Program to $1 Billion



  Agilent Technologies Reports Second-Quarter 2013 Results, Increases Stock
  Repurchase Program to $1 Billion

Highlights:

  * GAAP net income of $166 million, or $0.48 per share
  * Non-GAAP net income of $269 million, or $0.77 per share^(1)
  * Orders of $1.69 billion and revenues of $1.73 billion
  * Third-quarter fiscal year 2013 revenue guidance of $1.63 billion to $1.66
    billion and non-GAAP earnings guidance of $0.60 to $0.64 per share^(2)
  * Fiscal year 2013 revenue guidance of $6.75 billion to $6.85 billion.
    Non-GAAP earnings guidance at $2.70 to $2.85 per share^(2)
  * Increased stock repurchase program by $500 million to $1 billion

Business Wire

SANTA CLARA, Calif. -- May 14, 2013

Agilent Technologies Inc. (NYSE: A) today reported orders of $1.69 billion,
down 8 percent compared with one year ago, and revenues of $1.73 billion for
the second fiscal quarter ended April 30, 2013, flat with one year ago.
Second-quarter GAAP net income was $166 million, or $0.48 per share. Last
year’s second-quarter GAAP net income was $255 million, or $0.72 per share.

During the second quarter, Agilent had restructuring costs of $55 million,
intangible amortization of $51 million, and acquisition, integration and
transformation costs of $9 million. The company also recognized a tax benefit
of $18 million. Excluding these items and $6 million of other net charges,
Agilent reported second-quarter adjusted net income of $269 million, or $0.77
per share^(1).

Agilent CEO Bill Sullivan said, “We were pleased to have exceeded EPS guidance
for the quarter, reflecting our focus on cost control and profitability in the
face of the worldwide economic slowdown and the impact of U.S. sequestration.
We expect the macroeconomic environment to remain challenging throughout the
second half of 2013 and are taking additional actions to strengthen our
operating performance.”

Electronic Measurement second-quarter revenues were down 13 percent compared
with the prior year, with particular weakness in wireless manufacturing.
Operating margins were 21 percent.

Chemical Analysis revenues were up 3 percent compared with a year ago, led by
growth in food markets. Operating margins were 22 percent.

Life Sciences revenues were up 2 percent over a year ago, with continued
strength in pharmaceutical markets. Operating margins were 15 percent.

Diagnostics and Genomics revenues grew 124 percent, down 3 percent excluding
the effects of the Dako acquisition. Operating margins were 17 percent.

Agilent generated $315 million of cash from operations in the quarter.
Second-quarter ROIC was 17 percent^(3).

Third-quarter 2013 revenues are expected to be in the range of $1.63 billion
to $1.66 billion. Third-quarter non-GAAP earnings are expected to be in the
range of $0.60 to $0.64 per share^(2).

For the full fiscal year 2013, Agilent now expects revenue of $6.75 billion to
$6.85 billion and non-GAAP earnings of $2.70 to $2.85 per share^(2).

Stock Repurchase Program

Agilent announced today that its board of directors has authorized an increase
of $500 million to its existing stock repurchase program. Under the increased
program, the company is authorized to repurchase up to $1 billion of its
common stock, inclusive of amounts repurchased since Nov. 1, 2012. Agilent
expects the program to be completed by the end of calendar year 2013.

During the first quarter of 2013, Agilent purchased 2 million shares of common
stock, and in the second quarter, 3.3 million shares were purchased. Under the
increased program, approximately $781 million of stock remains to be
repurchased.

Targeted Restructuring Program

Agilent also announced today that it has initiated a targeted restructuring
program that is expected to reduce Agilent’s total headcount by approximately
450 regular employees, representing approximately 2 percent of its global
workforce. The timing and scope of workforce reductions will vary based on
local legal requirements. When completed, the restructuring program is
expected to result in an approximately $50 million reduction in annual
operating expenses.

About Agilent Technologies

Agilent Technologies, Inc. (NYSE: A) is the world’s premier measurement
company and a technology leader in chemical analysis, life sciences,
diagnostics, electronics and communications. The company’s 20,500 employees
serve customers in more than 100 countries. Agilent had revenues of $6.9
billion in fiscal 2012. Information about Agilent is available at
www.agilent.com.

Agilent’s management will present more details about its second-quarter FY2013
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 “Q2 2013 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 3:30 p.m.
(Pacific Time) after the call through May 21. The replay number is: (888)
286-8010, or for international, dial (617) 801-6888; enter passcode 37487808.

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 future revenues, earnings and
profitability; the future demand for the company’s products and services;
customer expectations; Agilent’s plans regarding its stock repurchase program;
and revenue and non-GAAP earnings guidance for the third quarter and full
fiscal year 2013. 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; the risk
that we are not able to realize the savings expected from integration and
restructuring activities; and stock price, economic and market conditions, and
corporate and regulatory requirements, which could cause the actual amount of
shares repurchased to be less than currently anticipated.

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 January 31, 2013. 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, acquisition fair value
adjustments, transformation initiatives and restructuring costs, 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 Q3FY13 and full fiscal year
2013 excludes primarily the impacts of acquisition and integration 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 $54 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
                                             April 30,               Percent
                                             2013        2012        Inc/(Dec)
                                                                      
Orders                                       $ 1,688     $ 1,841     (8    %)
                                                                      
Net revenue                                  $ 1,732     $ 1,733     —
                                                                      
Costs and expenses:
Cost of products and services                  841         815       3     %
Research and development                       181         166       9     %
Selling, general and administrative            497         452       10    %
Total costs and expenses                       1,519       1,433     6     %
                                                                      
Income from operations                         213         300       (29   %)
                                                                      
Interest income                                1           2         (50   %)
Interest expense                               (25   )     (25   )   —
Other income (expense), net                    9           16        (44   %)
                                                                      
Income before taxes                            198         293       (32   %)
                                                                      
Provision for income taxes                     32          38        (16   %)
                                                                      
Net income                                   $ 166       $ 255       (35   %)
                                                                      
                                                                      
                                                                      
Net income per share:
Basic                                        $ 0.48      $ 0.73
Diluted                                      $ 0.48      $ 0.72
                                                                      
Weighted average shares used in computing
net income per share:
Basic                                          345         348
Diluted                                        349         354
                                                                      
Cash dividends declared per common share     $ -         $ -
                                                
                                                                      
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
 
                                                                    
                                             Six Months Ended
                                             April 30,               Percent
                                             2013        2012        Inc/(Dec)
                                                                      
Orders                                       $ 3,398     $ 3,464     (2    %)
                                                                      
Net revenue                                  $ 3,412     $ 3,368     1     %
                                                                      
Costs and expenses:
Cost of products and services                  1,641       1,576     4     %
Research and development                       360         328       10    %
Selling, general and administrative            981         893       10    %
Total costs and expenses                       2,982       2,797     7     %
                                                                      
Income from operations                         430         571       (25   %)
                                                                      
Interest income                                3           5         (40   %)
Interest expense                               (50   )     (51   )   (2    %)
Other income (expense), net                    10          24        (58   %)
                                                                      
Income before taxes                            393         549       (28   %)
                                                                      
Provision for income taxes                     48          64        (25   %)
                                                                      
Net income                                   $ 345       $ 485       (29   %)
                                                                      
                                                                      
                                                                      
Net income per share:
Basic                                        $ 1.00      $ 1.39
Diluted                                      $ 0.98      $ 1.37
                                                                      
Weighted average shares used in computing
net income per share:
Basic                                          346         348
Diluted                                        351         353
                                                                      
Cash dividends declared per common share     $ 0.22      $ 0.10
                                                
                                                                      
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   Six Months Ended
                                        April 30,            April 30,
                                        2013       2012      2013      2012
                                                                        
Net Income                              $ 166      $ 255     $ 345     $ 485
                                                                        
Other comprehensive income (loss),
net of tax:
                                                                        
Change in unrealized gain on              (2   )     —         1         6
investments
Change in unrealized gain on              5          —         11        5
derivative instruments
Amounts reclassified into earnings        (4   )     (3  )     (5  )     (5  )
related to derivative instruments
Foreign currency translation              (111 )     (19 )     (55 )     (58 )
Net defined benefit pension cost and
post retirement plan costs:
Change in actuarial net loss              16         16        30        28
Change in net prior service benefit       (8   )     (13 )     (16 )     (24 )
Other comprehensive loss                  (104 )     (19 )     (34 )     (48 )
                                                                        
Total comprehensive income              $ 62       $ 236     $ 311     $ 437  
                                                                
                                                                        
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
 
                                                                  
                                                      April 30,    October 31,
                                                      2013         2012
ASSETS
                                                                    
Current assets:
Cash and cash equivalents                             $ 2,519      $  2,351
Accounts receivable, net                                916           923
Inventory                                               1,042         1,014
Other current assets                                    341           341     
Total current assets                                    4,818         4,629
                                                                    
Property, plant and equipment, net                      1,147         1,164
Goodwill                                                3,006         3,025
Other intangible assets, net                            995           1,086
Long-term investments                                   120           109
Other assets                                            501           523     
Total assets                                          $ 10,587     $  10,536  
                                                                    
LIABILITIES AND EQUITY
                                                                    
Current liabilities:
Accounts payable                                      $ 448        $  461
Employee compensation and benefits                      384           387
Deferred revenue                                        459           420
Short-term debt                                         250           250
Other accrued liabilities                               367           375     
Total current liabilities                               1,908         1,893
                                                                    
Long-term debt                                          2,106         2,112
Retirement and post-retirement benefits                 478           554
Other long-term liabilities                             787           792     
Total liabilities                                       5,279         5,351   
                                                                    
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; 599  million shares at April 30, 2013       6             6
and 595 million shares at October 31, 2012, issued
Treasury stock at cost; 254 million shares at April     (8,926 )      (8,707 )
30, 2013 and 249 million shares at October 31, 2012
Additional paid-in-capital                              8,596         8,489
Retained earnings                                       5,774         5,505
Accumulated other comprehensive loss                    (145   )      (111   )
Total stockholders' equity                              5,305         5,182
Non-controlling interest                                3             3       
Total equity                                            5,308         5,185   
Total liabilities and equity                          $ 10,587     $  10,536  
                                                                    
                                                                    
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   Six Months
                                                     Ended          Ended
                                                     April 30,      April 30,
                                                     2013           2013
Cash flows from operating activities:
Net income                                           $  166         $  345
                                                                     
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation and amortization                           92             186
Share-based compensation                                18             49
Excess tax benefit from share-based plans               —              (2    )
Excess and obsolete inventory and inventory             12             22
related charges
Other non-cash expenses, net                            3              5
Changes in assets and liabilities:
Accounts receivable                                     (56    )       (3    )
Inventory                                               (19    )       (53   )
Accounts payable                                        —              (7    )
Employee compensation and benefits                      69             (1    )
Other assets and liabilities                            30             19     
Net cash provided by operating activities ^(a)          315            560
                                                                     
Cash flows from investing activities:
Investments in property, plant and equipment            (51    )       (110  )
Proceeds from sale of property, plant and               1              2
equipment
Payment to acquire equity method investment             (21    )       (21   )
Purchase of other investments                           —              (15   )
Proceeds from sale of investment securities             —              11
Acquisition of businesses and intangible assets,        —              (10   )
net of cash acquired
Net cash used in investing activities                   (71    )       (143  )
                                                                     
Cash flows from financing activities:
Issuance of common stock under employee stock           16             68
plans
Payment of dividends                                    (41    )       (76   )
Payments to prior non-controlling interest              —              (3    )
Excess tax benefit from share-based plans               —              2
Treasury stock repurchases                              (140   )       (219  )
Net cash used in financing activities                   (165   )       (228  )
                                                                     
Effect of exchange rate movements                       (10    )       (21   )
                                                                     
Net increase in cash and cash equivalents               69             168
                                                                     
Cash and cash equivalents at beginning of period        2,450          2,351  
                                                                     
Cash and cash equivalents at end of period           $  2,519       $  2,519  
                                                                     
^(a) Cash payments included in operating
activities:
Restructuring payments                                  3              11
Income tax payments, net                                11             54
                                                                     
                                                                     
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                          Six Months Ended
                   April 30,                                   April 30,
                             Diluted               Diluted               Diluted               Diluted
                   2013      EPS         2012      EPS         2013      EPS         2012      EPS
                                                                                                
GAAP Net income    $ 166     $ 0.48      $ 255     $ 0.72      $ 345     $ 0.98      $ 485     $ 1.37
Non-GAAP
adjustments:
Restructuring
and other            55        0.16        —         —           55        0.16        —         —
related costs
Asset                1         —           —         —           2         0.01        —         —
impairments
Intangible           51        0.15        26        0.07        103       0.29        53        0.15
amortization
Transformational     3         0.01        8         0.02        6         0.02        16        0.05
initiatives
Acquisition and
integration          6         0.02        6         0.02        16        0.05        13        0.04
costs
Other                5         0.01        (9  )     (0.02 )     9         0.03        (13 )     (0.04 )
Adjustment for       (18 )     (0.06 )     (11 )     (0.03 )     (45 )     (0.14 )     (35 )     (0.10 )
taxes ^ (a)
Non-GAAP Net       $ 269     $ 0.77      $ 275     $ 0.78      $ 491     $ 1.40      $ 519     $ 1.47   
Income
                                                                                                
                                                                                                
(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 six months ended April 30, 2013, management uses a
non-GAAP effective tax rate of 16%, respectively, that we believe to be indicative of on-going
operations.
                                                                                                
Historical amounts are reclassified to conform with current period 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 and acquisition and integration 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.
                                                                                                
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 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
                       Q2'13               Q2'12               Q1'13
Orders                 $   416             $   410             $   397
Revenues               $   405             $   395             $   401
Gross Margin, %            51      %           49      %           52      %
Income from            $   61              $   44              $   61
Operations
Segment Assets         $   1,402           $   1,449           $   1,392
Return On
Invested Capital           20      %           14      %           18      %
^(a) , %
                                                                
                                                                
Chemical Analysis
                       Q2'13               Q2'12               Q1'13
Orders                 $   408             $   408             $   399
Revenues               $   401             $   388             $   394
Gross Margin, %            51      %           51      %           51      %
Income from            $   89              $   73              $   81
Operations
Segment Assets         $   1,739           $   1,727           $   1,721
Return On
Invested Capital           20      %           17      %           18      %
^(a) , %
                                                                
                                                                
Electronic
Measurement
                       Q2'13               Q2'12               Q1'13
Orders                 $   701             $   957             $   749
Revenues               $   760             $   876             $   722
Gross Margin, %            57      %           57      %           57      %
Income from            $   156             $   205             $   125
Operations
Segment Assets         $   2,019           $   2,149           $   1,962
Return On
Invested Capital           38      %           48      %           28      %
^(a) , %
                                                                
                                                                
Diagnostics and
Genomics
                       Q2'13               Q2'12               Q1'13
Orders                 $   163             $   66              $   165
Revenues               $   166             $   74              $   163
Gross Margin, %            63      %           65      %           60      %
Income from            $   28              $   15              $   21
Operations
Segment Assets         $   2,854           $   377             $   2,841
Return On
Invested Capital           3       %           15      %           3       %
^(a) , %
                                                                
                                                                
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.
                                                                
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.
                                                                
^(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.
                                                                
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 segment information is estimated based on our current
information.
                                                                
                                                                
Page 7
 

 
AGILENT TECHNOLOGIES, INC.
RECONCILIATION OF ROIC
(In millions)
(Unaudited)
PRELIMINARY
                                                                                                                                                                                      
                                                                                                                                                                                        
                   LSG         CAG         EMG         DGG         Agilent          LSG         CAG         EMG         DGG       Agilent          LSG         CAG         EMG         DGG
Numerator:         Q2'13       Q2'13       Q2'13       Q2'13       Q2'13            Q2'12       Q2'12       Q2'12       Q2'12     Q2'12            Q1'13       Q1'13       Q1'13       Q1'13
Non-GAAP income    $ 61        $ 89        $ 156       $ 28        $ 334            $ 44        $ 73        $ 205       $ 15      $ 337            $ 61        $ 81        $ 125       $ 21
from operations
Less:
Taxes and Other      8           13          22          4           47               5           10          26          2         44               9           13          20          4      
(income)/expense
                                                                                                                                                                                        
Segment return       53          76          134         24          287     ^(a)     39          63          179         13        293     ^(a)     52          68          105         17
                                                                                                                                                                                        
Segment return     $ 212       $ 304       $ 536       $ 96        $ 1,148          $ 156       $ 252       $ 716       $ 52      $ 1,172          $ 208       $ 272       $ 420       $ 68     
annualized
                                                                                                                                                                                        
Denominator:
Segment assets     $ 1,402     $ 1,739     $ 2,019     $ 2,854     $ 8,015          $ 1,449     $ 1,727     $ 2,149     $ 377     $ 5,705          $ 1,392     $ 1,721     $ 1,962     $ 2,841
^(b)
Less:
Net current          329         253         572         96          1,250            314         255         623         44        1,236            303         238         550         93     
liabilities ^(c)
Invested capital   $ 1,073     $ 1,486     $ 1,447     $ 2,758     $ 6,765          $ 1,135     $ 1,472     $ 1,526     $ 333     $ 4,469          $ 1,089     $ 1,483     $ 1,412     $ 2,748  
                                                                                                                                                                                        
Average invested   $ 1,081     $ 1,484     $ 1,430     $ 2,753     $ 6,752          $ 1,145     $ 1,481     $ 1,503     $ 337     $ 4,469          $ 1,127     $ 1,502     $ 1,493     $ 2,626
capital
                                                                                                                                                                                        
ROIC                 20    %     20    %     38    %     3     %     17    %          14    %     17    %     48    %     15  %     26    %          18    %     18    %     28    %     3     %
                                                                                                                                                                                        
                                                                                                                                                                                        
ROIC calculation:(annualized current quarter segment return)/(average of the two most recent quarter-end balances of Segment Invested Capital)
                                                                                                                                                                                        
^(a) Agilent return is equal to non-GAAP net income of $269 million plus net interest expense after tax of $18 million for Q2'13, and $275 million plus net interest expense after tax of $18
million for Q2'12. Please see "Non-GAAP Net Income and Diluted EPS Reconciliations" for a reconciliation of non-GAAP net income to GAAP net income.
                                                                                                                                                                                        
^(b) Segment assets consist of inventory, accounts receivable, property plant and equipment, gross goodwill and other intangibles, deferred taxes and allocated corporate assets.
                                                                                                                                                                                        
^(c) Includes accounts payable, employee compensation and benefits, deferred revenue, certain other accrued liabilities and allocated corporate liabilities.
                                                                                                                                                                                        
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 major acquisitions, 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.
                                                                                                                                                                                        
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 reconciliation of ROIC is estimated based on our current information.
                                                                                                                                                                                        
                                                                                                                                                                                        
Page 8

Contact:

Agilent Technologies Inc.
Amy Flores, +1-408-345-8194 (editorial)
amy_flores@agilent.com
Alicia Rodriguez, +1-408-345-8948 (investors)
alicia_rodriguez@agilent.com
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