Highlights:
- GAAP net income of $16 million, or
$0.05 per share
- Non-GAAP net income of $297 million, or
$0.88 per share(1)
- Orders of $1.91 billion and revenues of
$1.81 billion
- Agilent successfully completed the
spinoff of its electronic measurement business, now Keysight
Technologies, on Nov. 1, 2014.
- In FY15, Agilent plans to return
approximately $500 million in capital to shareholders.
- First-quarter fiscal year 2015 revenue
guidance of $1.02 billion to $1.04 billion, and non-GAAP earnings
guidance of $0.39 to $0.43 per share(2)
- Fiscal year 2015 revenue guidance of
$4.12 billion to $4.18 billion, and non-GAAP earnings guidance at
$1.68 to $1.78 per share(2)
Agilent Technologies Inc. (NYSE: A) today reported orders
of $1.91 billion, up 4 percent over one year ago, for the fourth
fiscal quarter ended Oct. 31, 2014, and revenues of $1.81 billion,
up 5 percent compared with one year ago. Fourth-quarter GAAP net
income was $16 million, or $0.05 per share. Last year’s
fourth-quarter GAAP net income was $211 million, or $0.63 per
share.
These results include Keysight Technologies, formerly Agilent’s
electronic measurement business. Agilent completed the spinoff of
Keysight on Nov. 1 by distributing Keysight common stock to Agilent
shareholders. Keysight financial results will be reported by
Keysight as a separate, publicly traded company.
During the fourth quarter, Agilent had pre-separation costs of
$70 million, intangible amortization of $47 million, a net loss on
extinguishment of debt of $68 million, mostly non-cash charges of
$68 million related to exiting the Nuclear Magnetic Resonance
business, and a tax expense of $13 million. Excluding these items
and $15 million of other net costs, Agilent reported fourth-quarter
adjusted net income of $297 million, or $0.88 per share(1).
Agilent’s Life Sciences, Diagnostics and Applied Chemical
Markets (LDA) revenues were $1.04 billion, up 3 percent over last
year, reflecting growth across all key end markets. Orders of $1.15
billion were up 5 percent compared with last year. LDA operating
margin was 20.4 percent.
“Our LDA business finished the year strong, with record revenues
and orders,” said Agilent CEO Bill Sullivan. “During the quarter,
while generating these record numbers, we completed the company
separation flawlessly, without business disruption to either
company.”
“We are excited about Agilent’s future as a company focused one
hundred percent on the life sciences, diagnostics and applied
markets, with innovative new product rollouts planned for this year
and market trends looking positive,” he added.
In FY15, Agilent plans to return approximately $500 million in
capital to shareholders, including approximately $135 million in
dividends and approximately $365 million in stock buybacks. The
repurchases will occur from time to time, in the open market, with
consideration given to Agilent’s stock price.
Agilent’s first-quarter 2015 revenues are expected to be in the
range of $1.02 billion to $1.04 billion. First-quarter non-GAAP
earnings are expected to be in the range of $0.39 to $0.43 per
share(2).
For the full fiscal year 2015, Agilent expects revenue of $4.12
billion to $4.18 billion and non-GAAP earnings of $1.68 to $1.78
per share(2).
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 revenues of $4.0 billion in fiscal
2014. The company employs about 12,000 people worldwide.
Information about Agilent is available at www.agilent.com.
Agilent’s management will present more details about its
fourth-quarter FY2014 financial results on a conference call with
investors today at 2:30 p.m. PT. This event will be webcast live in
listen-only mode. Listeners may log on at www.investor.agilent.com
and select “Q4 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 5:30 p.m. PT today through Nov. 24. The replay number
is +1 855 859-2056, or from outside the United States, +1 404
537-3406; enter passcode 5848337.
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; planned new
products; market trends; the future demand for the company’s
products and services; customer expectations; plans regarding the
company’s dividend program and stock repurchase program; and
revenue and non-GAAP earnings guidance for the first 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; 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
July 31, 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, NMR business exit, 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 Q1 FY15 and
full fiscal year 2015 excludes primarily the impacts of acquisition
and integration costs, post-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 $45
million per quarter.
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 October 31,
Percent 2014 2013
Inc/(Dec) Orders $ 1,905 $ 1,829 4 % Net
revenue $ 1,805 $ 1,718 5 % Costs and expenses: Cost of
products and services 908 810 12 % Research and development 189 173
9 % Selling, general and administrative 534
450 19 % Total costs and expenses 1,631
1,433 14 % Income from operations 174 285 (39 %)
Interest income 2 2 — Interest expense (26 ) (30 ) (13 %)
Other income (expense), net (65 ) (3 ) —
Income before taxes 85 254 (67 %) Provision for income taxes
69 43 60 % Net income $ 16
$ 211 (92 %) Net income per
share: Basic $ 0.05 $ 0.64 Diluted $ 0.05 $ 0.63 Weighted
average shares used in computing net income per share: Basic 334
331 Diluted 338 336 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
Year Ended October 31,
Percent 2014 2013 Inc/(Dec)
Orders $ 7,134 $ 6,827 4 % Net revenue $ 6,981 $ 6,782 3 %
Costs and expenses: Cost of products and services 3,388
3,247 4 % Research and development 719 704 2 % Selling, general and
administrative 2,043 1,880 9 % Total
costs and expenses 6,150 5,831 5 %
Income from operations 831 951 (13 %) Interest income
9 7 29 % Interest expense (113 ) (107 ) 6 % Other income (expense),
net (81 ) 8 — Income before taxes 646
859 (25 %) Provision for income taxes 149
135 10 % Net income $ 497 $ 724
(31 %) Net income per share: Basic $ 1.49 $
2.12 Diluted $ 1.47 $ 2.10 Weighted average shares used in
computing net income per share: Basic 333 341 Diluted 338 345
Cash dividends declared per common share $ 0.528 $ 0.460
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 Year Ended October 31,
October 31, 2014 2013 2014 2013
Net income $ 16 $ 211 $ 497 $ 724 Other comprehensive
income (loss), net of tax: Unrealized gain on investments 3
2 11 7 Amounts reclassified into earnings related to investments —
— (1 ) — Unrealized gain on derivative instruments 7 1 8 8 Amounts
reclassified into earnings related to derivative instruments — (2 )
1 (10 ) Foreign currency translation (216 ) 88 (275 ) 1 Net defined
benefit pension cost and post retirement plan costs: Change in
actuarial net loss (179 ) 183 (143 ) 228 Change in net prior
service benefit (8 ) (8 ) (32 ) (32 )
Other comprehensive income (loss) (393 ) 264
(431 ) 202 Total comprehensive income
(loss) $ (377 ) $ 475 $ 66 $ 926
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
October 31, October 31, 2014
2013 ASSETS Current assets:
Cash and cash equivalents
$ 3,028 $ 2,675
Accounts receivable, net
983 899
Inventory
1,072 1,066
Other current assets
376
343
Total current assets
5,459 4,983 Property, plant and equipment, net 1,101 1,134
Goodwill 2,899 3,047 Other intangible assets, net 667 916 Long-term
investments 159 139 Other assets 475 467
Total assets
$ 10,760 $ 10,686 LIABILITIES AND EQUITY
Current liabilities:
Accounts payable
$ 475 $ 432
Employee compensation and benefits
395 401
Deferred revenue
435 439
Other accrued liabilities
346 330
Total current liabilities
1,651 1,602 Long-term debt 2,762 2,699 Retirement and
post-retirement benefits 422 294 Other long-term liabilities
638 802
Total liabilities
5,473 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; 608 million shares at
October 31, 2014
and 602 million shares at October 31,
2013, issued
6 6
Treasury stock at cost; 273 million shares
at October 31, 2014 and
269 million shares at October 31, 2013
(9,807 ) (9,607 )
Additional paid-in-capital
8,966 8,723
Retained earnings
6,459 6,073
Accumulated other comprehensive income
(loss)
(340 ) 91
Total stockholders' equity
5,284 5,286
Non-controlling interest
3 3
Total equity
5,287 5,289
Total liabilities and equity
$ 10,760 $ 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 Year Ended
Ended October 31, October 31,
2014 2014 Cash flows from
operating activities:
Net income
$ 16 $ 497 Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation and amortization
92 383
Accelerated amortization of interest rate
swap gain (due to early redemption of debt)
(14 ) (22 )
Share-based compensation
19 96
Excess tax benefit from share-based
plans
2 (1 )
Excess and obsolete inventory related
charges
40 79
Other non-cash expenses, net
28 22
Changes in assets and liabilities:
Accounts receivable
(119 ) (119 )
Inventory
(26 ) (99 )
Accounts payable
79 50
Employee compensation and benefits
41 9
Other assets and liabilities
8 (182 ) Net cash provided by operating
activities (a) 166 713 Cash flows from investing activities:
Investments in property, plant and
equipment
(45 ) (207 )
Proceeds from sale of property, plant and
equipment
— 14
Payment to acquire equity method
investment
— (25 )
Change in restricted cash and cash
equivalents, net
(5 ) (4 )
Proceeds from divestiture
— 2
Proceeds from sale of investment
securities
— 1
Acquisition of businesses and intangible
assets, net of cash acquired
(10 ) (13 ) Net cash used in investing activities (60
) (232 ) Cash flows from financing activities:
Issuance of common stock under employee
stock plans
52 188
Treasury stock repurchases
— (200 )
Issuance of senior notes
1,099 1,099
Debt issuance costs
(9 ) (9 )
Prepayment of senior notes
(500 ) (1,000 )
Payment of dividends
(44 ) (176 )
Proceeds from short-term borrowings
2 37
Repayment of short-term borrowings
(37 ) (37 )
Proceeds from revolving credit
facility
— 50
Repayment of revolving credit facility
— (50 )
Excess tax benefit from share-based
plans
(2 ) 1 Net cash provided by (used in)
financing activities 561 (97 ) Effect of exchange rate
movements (30 ) (31 ) Net increase in cash and cash
equivalents 637 353 Cash and cash equivalents at beginning
of period 2,391 2,675 Cash and
cash equivalents at end of period $ 3,028 $ 3,028
(a) Cash payments included in operating
activities:
Restructuring payments
6 29
Income tax payments, net
60 131
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 Year Ended October 31, October 31,
2014 Diluted EPS 2013 Diluted
EPS 2014 Diluted EPS 2013
Diluted EPS GAAP Net income $ 16 $ 0.05 $ 211
$ 0.63 $ 497 $ 1.47 $ 724 $ 2.10
Non-GAAP adjustments:
Restructuring and other related costs
— — (3 ) (0.01 ) (4 ) (0.01 ) 53 0.15
Asset impairments and write-downs
4 0.01 — — 4 0.01 3 0.01
Acceleration of share-based compensation
related to workforce reduction
1 — 3 0.01 1 — 3 0.01
Intangible amortization
47 0.14 48 0.15 197 0.58 199 0.58
Transformational initiatives
11 0.03 5 0.01 29 0.09 19 0.06
Acquisition and integration costs
1 — 7 0.02 12 0.04 29 0.08
Pre-separation costs
70 0.21 5 0.01 192 0.57 5 0.01
Net loss on extinguishment of debt
68 0.20 — — 89 0.26 — —
Nuclear Magnetic Resonance (NMR) business
exit
68 0.20 — — 68 0.20 — —
Other
(2 ) (0.01 ) 4 0.01 (9 ) (0.03 ) 15 0.04
Adjustment for taxes (a)
13 0.05 (9 ) (0.02 )
(47 ) (0.14 ) (55 ) (0.16 ) Non-GAAP
Net income $ 297 $ 0.88 $ 271 $ 0.81 $
1,029 $ 3.04 $ 995 $ 2.88
(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 months and year ended
October 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, NMR business exit, 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 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, 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 Q4'14 Q4'13 Q3'14 Orders $ 665
$ 642 $ 597 Revenue $ 612 $ 601 $ 592 Gross Margin, % 54.2 % 55.1 %
53.6 % Income from Operations $ 107 $ 115 $ 93 Segment Assets $
4,312 $ 4,291 $ 4,305 Return On Invested Capital (a), % 9 % 10 % 8
%
Chemical Analysis Q4'14 Q4'13
Q3'14 Orders $ 480 $ 445 $ 420 Revenue $ 431 $ 412 $ 417
Gross Margin, % 53.2 % 52.9 % 52.7 % Income from Operations $ 106 $
102 $ 97 Segment Assets $ 1,815 $ 1,756 $ 1,791 Return On Invested
Capital (a), % 23 % 23 % 21 %
Electronic
Measurement Q4'14 Q4'13 Q3'14 Orders $ 760
$ 742 $ 722 Revenue $ 762 $ 705 $ 757 Gross Margin, % 55.7 % 56.4 %
55.3 % Income from Operations $ 160 $ 134 $ 149 Segment Assets $
1,976 $ 1,997 $ 1,963 Return On Invested Capital (a), % 37 % 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, NMR business exit 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. (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
LDG CAG
EMG AGILENT LDG CAG EMG
AGILENT LDG CAG EMG Numerator:
Q4'14 Q4'14 Q4'14
Q4'14 Q4'13 Q4'13 Q4'13
Q4'13 Q3'14 Q3'14
Q3'14 Non-GAAP income from operations $ 107 $ 106 $ 160 $
373 $ 115 $ 102 $ 134 $ 351 $ 93 $ 97 $ 149 Less: Taxes and Other
(income)/expense 17 16
24 57 18
17 22 56
15 15 23
Segment return 90 90 136 316 (a) 97 85 112 295 (a) 78 82 126
Segment return annualized $ 360 $ 360
$ 544 $ 1,264 $ 388 $ 340
$ 448 $ 1,180 $ 312
$ 328 $ 504
Denominator:
Segment assets (b) $ 4,312 $ 1,815 $ 1,976 $ 8,098 $ 4,291 $ 1,756
$ 1,997 $ 8,044 $ 4,305 $ 1,791 $ 1,963 Less: Net current
liabilities (c) 477 290
498 1,262 437
258 536
1,237 416 249
503 Invested capital $ 3,835 $ 1,525
$ 1,478 $ 6,836 $ 3,854
$ 1,498 $ 1,461 $ 6,807 $
3,889 $ 1,542 $ 1,460
Average invested capital $ 3,862 $ 1,533 $ 1,469 $ 6,863 $ 3,847 $
1,497 $ 1,473 $ 6,817 $ 3,866 $ 1,520 $ 1,431 ROIC 9 % 23 %
37 % 18 % 10 % 23 % 30 % 17 % 8 % 21 % 35 %
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 $297 million plus net interest expense after
tax of $19 million for Q4'14 and $271 million plus net interest
expense after tax of $24 million for
Q4'13. 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 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. 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 based on our current
information. Page 8
Agilent Technologies Inc.EDITORIAL CONTACT:Michele Drake,
+1-408-345-8396michele_drake@agilent.comINVESTOR CONTACT:Alicia
Rodriguez, +1-408-345-8948alicia_rodriguez@agilent.com
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