Highlights:
- GAAP income from continuing operations
of $105 million, or $0.31 per share
- Non-GAAP income from continuing
operations of $147 million, or $0.44 per share(1)
- Orders of $953 million and revenue of
$1.01 billion
- Fourth-quarter fiscal year 2015 revenue
guidance of $1.03 billion to $1.05 billion, and non-GAAP earnings
guidance of $0.45 to $0.49 per share(2)
- Fiscal year 2015 revenue guidance of
$4.03 billion to $4.05 billion, and non-GAAP earnings guidance of
$1.68 to $1.72 per share(2)
Agilent Technologies Inc. (NYSE: A) today reported orders
of $953 million, down 6 percent (up 3 percent on a core basis(3))
over one year ago for the third fiscal quarter ended July 31, 2015.
Third-quarter revenue was $1.01 billion, up 1 percent (up 9 percent
on a core basis(3)) compared with one year ago.
Third-quarter GAAP income from continuing operations was $105
million, or $0.31 per share. Last year’s third-quarter GAAP income
from continuing operations was $63 million, or $0.19 per share.
During the third quarter, Agilent had intangible amortization of
$38 million, transformation costs of $12 million, acquisition and
integration costs of $4 million, and a tax benefit of $14 million.
Excluding these items, and $2 million of other costs, Agilent
reported third-quarter adjusted income from continuing operations
of $147 million, or $0.44 per share(1).
“Agilent delivered excellent results for our shareholders in the
third quarter,” said Mike McMullen, Agilent president and CEO.
“Revenue was at the high end of our guidance, and earnings per
share were above our guidance range.”
“Our operating model is driving above-market revenue growth and
margin expansion,” he added. “In Q3, we delivered an adjusted
operating margin of 19.9 percent(4), up 110 basis points from last
year.”
Third-quarter revenue of $511 million from Agilent’s Life
Sciences and Applied Markets Group (LSAG) grew 1 percent year over
year (up 9 percent on a core basis(3)), driven by strong
performance in pharma, environmental and forensics markets. LSAG’s
Q3 operating margin was 18.7 percent.
Third-quarter revenue of $336 million from the Agilent CrossLab
Group (ACG) was flat year over year (up 8 percent on a core
basis(3)), led by continued strong acceptance of the company’s
CrossLab services and consumables offerings. ACG’s operating margin
was 22.6 percent in the quarter.
Third-quarter revenue of $167 million from Agilent’s Diagnostics
and Genomics Group (DGG) was flat year over year (up 10 percent on
a core basis(3)), with continued strong growth across all its
businesses. DGG’s operating margin for the quarter was 16.8
percent.
Agilent expects fourth-quarter 2015 revenue in the range of
$1.03 billion to $1.05 billion. Fourth-quarter non-GAAP earnings
are expected to be in the range of $0.45 to $0.49 per share(2).
For fiscal year 2015, Agilent expects revenue of $4.03 billion
to $4.05 billion and non-GAAP earnings of $1.68 to $1.72 per
share(2). The guidance is based on July 31, 2015, exchange
rates.
About Agilent Technologies
Agilent Technologies Inc. (NYSE: A), a global leader in
life sciences, diagnostics and applied chemical markets, is the
premier laboratory partner for a better world. Agilent works with
customers in more than 100 countries, providing instruments,
software, services and consumables for the entire laboratory
workflow. Agilent generated revenue of $4.0 billion in fiscal 2014.
The company employs about 12,000 people worldwide. Agilent marks
its 50th anniversary in analytical instrumentation this year.
Information about Agilent is available at www.agilent.com.
Agilent’s management will present more details about its
third-quarter FY2015 financial results on a conference call with
investors today at 1:30 p.m. PT. This event will be webcast live in
listen-only mode. Listeners may log on at www.investor.agilent.com
and select “Q3 2015 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 5:30 p.m. PT today through Aug. 25 by dialing +1 855
859 2056 (or +1 404 537 3406 from outside the United States) and
entering passcode 87671650.
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 revenue, earnings and profitability; planned new
products; market trends; 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 2015. 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; unforeseen changes in the currency markets; 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; the ability of Agilent to
successfully comply with certain complex regulations; 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, 2015. 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 income from continuing
operations and non-GAAP income from continuing operations per share
exclude primarily the impacts of acquisition and integration costs,
pre-separation costs, transformation initiatives and restructuring
costs, business exit and divestiture 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 Q4
FY15 and full fiscal year 2015 excludes primarily the impact of
acquisition and integration costs, future restructuring costs,
asset impairment charges, business exit and divestiture 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. 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
$40 million per quarter. (3)
Core orders and revenue exclude the impact
of currency, the NMR business and acquisitions and divestitures
within the past 12 months. Core revenue is a non-GAAP measure. A
reconciliation between GAAP revenue and core revenue is set forth
on page 8 of the attached tables along with additional information
regarding the use of this non-GAAP measure.
(4) Adjusted operating margin is a non-GAAP measure and
excludes primarily the impacts of acquisition and integration
costs, transformation initiatives and restructuring costs, business
exit and divestiture costs, and non-cash intangibles amortization
in addition to the costs related to services Agilent is providing
to Keysight post separation. A reconciliation is set forth on page
9 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 2015 2014 Inc/(Dec)
Orders $ 953 $ 1,017 (6%) Net revenue $ 1,014 $ 1,009
1% Costs and expenses: Cost of products and services 501 507
(1%) Research and development 79 86 (8%) Selling, general and
administrative 290 285 2% Total costs
and expenses 870 878 (1%) Income
from operations 144 131 10% Interest income 2 3 (33%)
Interest expense (17 ) (28 ) (39%) Other income (expense), net
(1 ) (21 ) (95%) Income from continuing
operations before taxes 128 85 51% Provision for income
taxes 23 22 5% Income from
continuing operations 105 63 67% Income (loss) from
discontinued operations, net of tax (2 ) 84
Net income $ 103 $ 147 (30%)
Net income per share - Basic: Income from continuing
operations $ 0.32 $ 0.19 Income (loss) from discontinued operations
$
(0.01 ) $ 0.25 Net income per share - Basic $ 0.31 $
0.44 Net income per share - Diluted: Income
from continuing operations $ 0.31 $ 0.19 Income from discontinued
operations
$
— $ 0.24 Net income per share - Diluted $ 0.31
$ 0.43 Weighted average shares used in
computing net income per share: Basic 332 334 Diluted 334 338
Cash dividends declared per common share $ 0.100 $ 0.132
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 2015 2014 Inc/(Dec)
Orders $ 2,987 $ 3,027 (1%) Net revenue $ 3,003 $
3,005 — Costs and expenses: Cost of products and services
1,497 1,508 (1%) Research and development 248 261 (5%) Selling,
general and administrative 892 887 1%
Total costs and expenses 2,637 2,656
(1%) Income from operations 366 349 5% Interest
income 6 7 (14%) Interest expense (50 ) (87 ) (43%) Other income
(expense), net 15 (18 ) — Income from
continuing operations before taxes 337 251 34% Provision for
income taxes 42 27 56% Income
from continuing operations 295 224 32% Income (loss) from
discontinued operations, net of tax (37 ) 257
Net income $ 258 $ 481 (46%)
Net income per share - Basic: Income from continuing
operations $ 0.88 $ 0.67 Income (loss) from discontinued operations
$ (0.11 ) $ 0.77 Net income per share - Basic $ 0.77
$ 1.44 Net income per share - Diluted: Income
from continuing operations $ 0.88 $ 0.66 Income (loss) from
discontinued operations $ (0.11 ) $ 0.76 Net income per
share - Diluted $ 0.77 $ 1.42 Weighted
average shares used in computing net income per share: Basic 334
333 Diluted 336 338 Cash dividends declared per common share
$ 0.300 $ 0.396 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, 2015
2014 2015 2014 Net income $ 103 $ 147 $
258 $ 481 Other comprehensive income (loss), net of tax:
Unrealized gain on investments — 8 — 8 Amounts reclassified
into earnings related to investments — (1 ) — (1 ) Unrealized gain
on derivative instruments 1 2 7 1 Amounts reclassified into
earnings related to derivative instruments (1 ) 1 (9 ) 1 Foreign
currency translation (66 ) (92 ) (337 ) (59 ) Net defined benefit
pension cost and post retirement plan costs: Change in actuarial
net loss 7 11 17 36 Change in net prior service benefit (3 )
(8 ) (8 ) (24 ) Other comprehensive loss
(62 ) (79 ) (330 ) (38 ) Total
comprehensive income (loss) $ 41 $ 68 $ (72 ) $ 443
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,
2015 2014 ASSETS Current assets: Cash and cash
equivalents $ 2,075 $ 2,218 Accounts receivable, net 584 626
Inventory 545 574 Other current assets 274 261 Current assets of
discontinued operations — 1,821 Total
current assets 3,478 5,500 Property, plant and equipment,
net 587 631 Goodwill 2,366 2,507 Other intangible assets, net 484
649 Long-term investments 88 96 Other assets 248 283 Non-current
assets of discontinued operations — 1,165
Total assets $ 7,251 $ 10,831
LIABILITIES AND EQUITY Current liabilities: Accounts payable
$ 248 $ 302 Employee compensation and benefits 186 228 Deferred
revenue 265 260 Other accrued liabilities 154 289 Current
liabilities of discontinued operations — 623
Total current liabilities 853 1,702 Long-term debt
1,655 1,663 Retirement and post-retirement benefits 168 209 Other
long-term liabilities 469 522 Long-term liabilities of discontinued
operations — 1,434 Total liabilities
3,145 5,530 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; 611 million shares at July 31, 2015 and 608
million shares at October 31, 2014, issued
6 6
Treasury stock at cost; 279 million shares
at July 31, 2015 and 273 million shares at October 31, 2014
(10,074 ) (9,807 ) Additional paid-in-capital 9,029 8,967 Retained
earnings 5,474 6,466 Accumulated other comprehensive loss
(332 ) (334 ) Total stockholders' equity 4,103 5,298
Non-controlling interest 3 3 Total
equity 4,106 5,301 Total liabilities
and equity $ 7,251 $ 10,831 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, 2015 2015 Cash
flows from operating activities: Net income $ 103 $ 258
Adjustments to reconcile net income to net cash provided by (used
in) operating activities: Depreciation and amortization 62 193
Share-based compensation 10 43 Excess tax benefit from share-based
plans (5 ) (5 ) Excess and obsolete inventory related charges 7 20
Other non-cash expenses, net 8 13 Changes in assets and
liabilities: Accounts receivable (15 ) 1 Inventory — (18 ) Accounts
payable (12 ) (47 ) Employee compensation and benefits (20 ) (27 )
Other assets and liabilities (47 ) (177 ) Net cash
provided by operating activities (a) 91 254 Cash flows from
investing activities: Investments in property, plant and equipment
(19 ) (71 ) Proceeds from sale of property, plant and equipment —
11 Proceeds from divestiture — 3 Payment to acquire equity method
investment — (1 ) Change in restricted cash and cash equivalents,
net — 1 Payment in exchange for convertible note (2 ) (2 )
Acquisition of businesses and intangible assets, net of cash
acquired (66 ) (66 ) Net cash used in investing
activities (87 ) (125 ) Cash flows from financing
activities: Issuance of common stock under employee stock plans 17
57 Treasury stock repurchases (99 ) (267 ) Payment of dividends (33
) (100 ) Net transfer to Keysight — (734 ) Excess tax benefit from
share-based plans 5 5 Net cash used in
financing activities (110 ) (1,039 ) Effect of exchange rate
movements (16 ) (43 ) Net decrease in cash and cash
equivalents (122 ) (953 ) Change in cash and cash
equivalents within current assets of discontinued operations — 810
Cash and cash equivalents at beginning of period
2,197 2,218 Cash and cash equivalents
at end of period $ 2,075 $ 2,075 (a) Cash
payments included in operating activities: Severance payments 7 30
Income tax payments, net 42 121 The preliminary cash
flow is estimated based on our current information.
Page 5
AGILENT TECHNOLOGIES, INC. NON-GAAP INCOME FROM
CONTINUING OPERATIONS AND DILUTED EPS RECONCILIATIONS (In
millions, except per share amounts) (Unaudited)
PRELIMINARY Three Months Ended Nine Months
Ended July 31, July 31, 2015
DilutedEPS
2014
DilutedEPS
2015
DilutedEPS
2014
DilutedEPS
GAAP Income from continuing operations $ 105 $ 0.31 $ 63 $
0.19 $ 295 $ 0.88 $ 224 $ 0.66 Non-GAAP adjustments: Restructuring
and other related costs — — — — — — (2 ) (0.01 ) Acceleration of
share-based compensation related to workforce reduction — — — — 2
0.01 — — Intangible amortization 38 0.11 46 0.14 119 0.35 144 0.43
Business exit and divestiture costs — — — — 13 0.04 — —
Transformational initiatives 12 0.04 7 0.02 41 0.12 18 0.05
Acquisition and integration costs 4 0.01 2 0.01 6 0.02 10 0.03
Pre-separation costs — — 4 0.01 — — 8 0.02 Net loss on
extinguishment of debt — — 21 0.06 — — 21 0.06 Unallocated
corporate costs — — 12 0.03 — — 32 0.09 Other 2 0.01 (13 ) (0.04 )
1 — (10 ) (0.03 ) Adjustment for taxes (a) (14 )
(0.04 ) (5 ) (0.01 ) (62 )
(0.18 ) (49 ) (0.13 ) Non-GAAP
Income from continuing operations $ 147 $ 0.44
$ 137 $ 0.41 $ 415 $ 1.24
$ 396 $ 1.17 (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,
2015 and 2014 , management uses a non-GAAP effective tax rate of
20% and 16%, respectively, that we believe to be indicative of
on-going operations. Historical amounts are reclassified to
conform with current presentation.
We provide non-GAAP income from continuing
operations and non-GAAP income from continuing operations 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, transformational initiatives, acquisition
and integration costs, business exit and divestiture and
pre-separation costs.
Restructuring costs include
incremental expenses 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.
Business exit and divestiture costs include costs associated
with the exit of the NMR business and the divestiture of the XRD
business.
Transformational initiatives
include expenses 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. Included in this
category are also expenses associated with the post-separation
resizing of the IT infrastructure and streamlining of
IT systems as well as the expenses incurred to effect the
Agile Agilent reengineering.
Acquisition and Integration costs
include all incremental expenses incurred to effect a business
combination. 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 Agilent-specific incremental
expenses incurred in order to effect the separation, through
November 1, 2014 distribution date.
Net loss on extinguishment
of debt relates to the early redemption of some of our 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 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 Applied Markets Group Q3'15 Q3'14
Q2'15 Orders $ 471 $ 527 $ 506 Revenue $ 511 $ 507 $ 473
Gross Margin, % 55.6 % 55.2 % 56.1 % Income from Operations $ 95 $
84 $ 75 Operating margin, % 18.7 % 16.5 % 15.8 %
Diagnostics and Genomics Group Q3'15 Q3'14
Q2'15 Orders $ 168 $ 169 $ 168 Revenue $ 167 $ 166 $ 169
Gross Margin, % 57.0 % 55.7 % 54.8 % Income from Operations $ 28 $
22 $ 25 Operating margin, % 16.8 % 13.5 % 15.0 %
Agilent CrossLab™ Group Q3'15 Q3'14
Q2'15 Orders $ 314 $ 321 $ 365 Revenue $ 336 $ 336 $ 321
Gross Margin, % 48.5 % 49.1 % 49.6 % Income from Operations $ 76 $
84 $ 69 Operating margin, % 22.6 % 24.9 % 21.5 %
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, transformational initiatives, acquisition
and integration costs, business exit and divestiture and
pre-separation 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. 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.
RECONCILIATIONS OF REVENUE BY SEGMENT
EXCLUDING THE NMR BUSINESS,
ACQUISITIONS, DIVESTITURES AND THE IMPACT OF CURRENCY
ADJUSTMENTS (CORE) (in millions) (Unaudited)
PRELIMINARY Year-over-Year GAAP
Year-over-Year
GAAP Revenue by
Segment
Q3'15 Q3'14 %
Change Life Sciences and Applied Markets Group $ 511 $
507 1% Diagnostics and Genomics Group 167 166 0%
Agilent CrossLab™ Group 336 336 0%
Agilent $ 1,014 $ 1,009 1%
Non
-GAAP
CurrencyAdjustments
(a)
Currency-Adjusted
Year-over-Year
Year-over-Year
Non GAAP Revenue
by Segment
Q3'15 Q3'14 %
Change Q3'15 Q3'15 Q3'14
% Change Life Sciences and Applied
Markets Group excluding NMR $ 503 $ 485 4% $ (28) $ 531 $ 485 9%
Diagnostics and Genomics Group excluding acquisition 166 166
0% (16) 182 166 10% Agilent CrossLab™ Group 336 336 0% (27)
363 336 8%
Agilent Revenue (Core) $ 1,005 $ 987 2% $ (71)
$ 1,076 $ 987 9%
(a) We compare the year-over-year change
in revenue excluding the effect of the NMR business, recent
acquisitions and divestitures and foreign currency rate
fluctuations to assess the performance of our underlying business.
To determine the impact of currency fluctuations, current period
results for entities reporting in currencies other than United
States dollars are converted into United States dollars at the
actual exchange rate in effect during the respective prior
periods.
The preliminary reconciliation of GAAP
revenue adjusted for the NMR business, recent acquisitions and
divestitures and impact of currency is estimated based on our
current information.
Page 8
AGILENT TECHNOLOGIES, INC.
RECONCILIATION OF ADJUSTED NON-GAAP INCOME FROM OPERATIONS AND
OPERATING MARGINS (In millions, except margin data)
(Unaudited) PRELIMINARY Operating Q3
2015 Margin % Revenue: $ 1,014
Income from operations: GAAP Income from
operations $ 144 14.2 % Add: Amortization of
intangible assets 38 Transformational initiatives 12 Acquisition
and integration costs 4 Other 1
Non-GAAP income from
operations $ 199 19.7 % Reimbursement from
Keysight for services (a) 4
Adjusted non-GAAP income from
operations $ 203 19.9 %
(a) Post separation, Agilent is providing
Keysight Technologies, Inc. certain IT and site services. These IT
and site services are included in our operating expenses. The
amounts billed to Keysight for these services are recorded in other
income.
We provide non-GAAP income from operations
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, transformational initiatives,
acquisition and integration costs and business exit and divestiture
costs.
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 reconciliation of income from operations and operating
margins is estimated based on our current information.
Page 9
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Agilent Technologies Inc.EDITORIAL CONTACT:Michele Drake, +1
408-345-8396michele_drake@agilent.comorINVESTOR CONTACT:Alicia
Rodriguez, +1 408-345-8948alicia_rodriguez@agilent.com
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