Exhibit 99.1
On May 19, 2003 Agilent Technologies Inc. (NYSE: A) reported orders of $1.53 billion and revenue of $1.47 billion for the fiscal second quarter ended April 30, 2003. The company reported a GAAP net loss of $146 million, or $0.31 per share, which includes $74 million of net restructuring charges and intangibles amortization.
“Our second quarter results were mixed,” said Ned Barnholt, Agilent chairman, president and chief executive officer. “We’re encouraged by orders and revenue that came in near the top of our expectations, despite world events. Earnings, however, were at the low end of our range because of delays in realizing restructuring savings as well as ongoing pricing pressures in our markets. But, we
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did achieve $35 million in structural cost reductions during the quarter, and we reduced headcount by nearly 2,500.
Overall, Agilent’s second-quarter orders and revenue were in the same range as those of the past six quarters. The company reported a rebound in semiconductor test equipment orders, which reached their highest level in two-and-a-half years. Semiconductor component orders were also seasonally higher, although they remained well below last year’s second-quarter spike. Activity in Agilent’s other business segments was basically flat compared to the prior year.
The company also demonstrated good balance sheet management during the quarter, generating $28 million from working capital despite sequentially higher revenue. Capital spending, at $38 million, was about $50 million below depreciation expense.
“We continue to invest in Agilent’s future by maintaining our significant investment in R&D,” Barnholt said. “This has resulted in our winning market share across many of our businesses in the first half of the year.”
Segment Results
Test and Measurement
(in millions)
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| Q2:F03 | Q1:F03 | Q2:F02 | ||||||||||
| Orders | 608 | 594 | 639 | |||||||||
| Revenues | 652 | 633 | 660 | |||||||||
Operating Profit(1) | (103 | ) | (132 | ) | (172 | ) | ||||||
Second quarter Test and Measurement orders were down 5 percent from one year ago and were up 2 percent from the first quarter. By market segment, communications test orders were down 7 percent from last year because of weakness in the wireline test market, and were down 1 percent compared to the first quarter. General purpose test was flat compared to last year and up 11 percent from a very soft first quarter despite continued weakness in aerospace and defense. Second-quarter revenues of $652 million were off 1 percent from last year and up 3 percent sequentially. Aggressive restructuring helped comparative operating results. The second-quarter operating loss of $103 million was $29 million better than first quarter results on only $19 million higher revenues. The operating loss was reduced by $69 million compared to last year despite $8 million lower revenues.
Automated Test
(in millions)
| Q2:F03 | Q1:F03 | Q2:F02 | ||||||||||
| Orders | 219 | 115 | 197 | |||||||||
| Revenues | 153 | 136 | 154 | |||||||||
Operating Profit(1) | (37 | ) | (48 | ) | (30 | ) | ||||||
As expected, the Automated Test segment rebounded from the first quarter weakness caused by both geopolitical uncertainty and a temporarily weak flash memory test market. Second-quarter segment orders of $219 million were up 11 percent from last year to the highest level since the first quarter of 2001. Sequentially, orders were up 90 percent, with all semiconductor test products up sharply. Revenues of $153 million were flat with last year and up 13 percent from the first quarter. Automated Test’s second quarter book-to-bill ratio of 1.43 was substantially ahead of the industry’s April reading of 1.21. The second quarter operating loss of $37 million was affected by a $5 million inventory charge. Adjusted for that charge, operating results were essentially equal to last year on
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similar volume and $16 million better than the first quarter on $17 million higher volume.
Semiconductor Products
(in millions)
| Q2:F03 | Q1:F03 | Q2:F02 | ||||||||||
| Orders | 420 | 381 | 476 | |||||||||
| Revenues | 376 | 367 | 371 | |||||||||
Operating Profit(1) | (43 | ) | (48 | ) | (37 | ) | ||||||
Semiconductor Products’ orders of $420 million were down 12 percent from last year and were up 10 percent from the first quarter. Excluding hardcopy ASICs, segment orders would have been up 2 percent from last year and up 10 percent sequentially. Revenues of $376 million were up 1 percent from last year despite the lower ASIC business and were up 2 percent sequentially. The segment book-to-bill ratio of 1.12 compares to 1.04 in the first quarter and 1.28 one year ago. The $6 million deterioration in second-quarter operating results compared to last year was caused by costs associated with the continued ramp of FBAR filter and E-pHEMT power module products. At the end of the quarter, the company ended production in the Newark, Calif. fab and closed the facility. Compared to the first quarter, the operating loss was improved by $5 million on additional volume of $9 million.
Life Sciences and Chemical Analysis
(in millions)
| Q2:F03 | Q1:F03 | Q2:F02 | ||||||||||
| Orders | 280 | 268 | 285 | |||||||||
| Revenues | 286 | 276 | 272 | |||||||||
Operating Profit(1) | 20 | 34 | 20 | |||||||||
Life Sciences and Chemical Analysis continued its generally flat business profile, with second-quarter orders of $280 million off 2 percent from last year and up about 4 percent sequentially. Life Sciences orders were down 4 percent from one year ago and up 1 percent sequentially, while orders for chemical analysis were flat year-to-year and up 7 percent from the first quarter. Revenues of $286 million were 5 percent ahead of one year ago and up 4 percent from the first quarter. Because of the seasonality of operating expenses, operating profits were off $14 million sequentially, similar to the quarterly pattern in 2002. Compared to last year, profits were unchanged despite $14 million higher revenues because of increased R&D spending in life sciences and temporarily higher IT expenses associated with the CRM implementation.
(1) Before restructuring charges in all periods.
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AGILENT TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(In millions, except per share amounts)
(Unaudited)
| Three Months Ended | |||||||||||||||
| April 30, | |||||||||||||||
| Percent | |||||||||||||||
| 2003 | 2002 | Inc/(Dec) | |||||||||||||
| Orders | $ | 1,527 | $ | 1,597 | (4 | %) | |||||||||
| Net revenue | $ | 1,467 | $ | 1,457 | 1 | % | |||||||||
| Costs and expenses: | |||||||||||||||
| Cost of products and services | 961 | 894 | 7 | % | |||||||||||
| Research and development | 296 | 307 | (4 | %) | |||||||||||
| Selling, general and administrative | 545 | 605 | (10 | %) | |||||||||||
| Total costs and expenses | 1,802 | 1,806 | — | ||||||||||||
| Loss from operations | (335 | ) | (349 | ) | 4 | % | |||||||||
| Other income (expense), net | 11 | 22 | (50 | %) | |||||||||||
| Loss from continuing operations before taxes | (324 | ) | (327 | ) | 1 | % | |||||||||
| Benefit for taxes | (178 | ) | (80 | ) | 123 | % | |||||||||
| Loss from continuing operations | (146 | ) | (247 | ) | 41 | % | |||||||||
| Loss from sale of discontinued operations (net of taxes) | — | (6 | ) | ||||||||||||
| Net loss | $ | (146 | ) | $ | (253 | ) | 42 | % | |||||||
Net (loss) earnings per share — Basic and diluted: | |||||||||||||||
| Loss from continuing operations | $ | (0.31 | ) | $ | (0.54 | ) | |||||||||
| Loss from sale of discontinued operations, net | — | $ | (0.01 | ) | |||||||||||
| Net loss | $ | (0.31 | ) | $ | (0.55 | ) | |||||||||
| Weighted average shares used in computing loss per share: | |||||||||||||||
| Basic and diluted | 471 | 464 | |||||||||||||
Loss from sale of discontinued operations (net of taxes) relate to the sale of our Healthcare Solutions group.
Historical amounts were reclassified to conform with current period presentation.
AGILENT TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(In millions, except per share amounts)
(Unaudited)
| Six Months Ended | |||||||||||||||
| April 30, | |||||||||||||||
| Percent | |||||||||||||||
| 2003 | 2002 | Inc/(Dec) | |||||||||||||
| Orders | $ | 2,885 | $ | 3,062 | (6 | %) | |||||||||
| Net revenue | $ | 2,879 | $ | 2,883 | — | ||||||||||
| Costs and expenses: | |||||||||||||||
| Cost of products and services | 1,844 | 1,814 | 2 | % | |||||||||||
| Research and development | 573 | 624 | (8 | %) | |||||||||||
| Selling, general and administrative | 1,053 | 1,236 | (15 | %) | |||||||||||
| Total costs and expenses | 3,470 | 3,674 | (6 | %) | |||||||||||
| Loss from operations | (591 | ) | (791 | ) | 25 | % | |||||||||
| Other income (expense), net | 15 | 41 | (63 | %) | |||||||||||
| Loss from continuing operations before taxes | (576 | ) | (750 | ) | 23 | % | |||||||||
| Benefit for taxes | (318 | ) | (186 | ) | 71 | % | |||||||||
| Loss from continuing operations | (258 | ) | (564 | ) | 54 | % | |||||||||
| Loss from sale of discontinued operations (net of taxes) | — | (4 | ) | ||||||||||||
| Loss before cumulative effect of accounting changes | (258 | ) | (568 | ) | 55 | % | |||||||||
| Cumulative effect of adopting SFAS No. 142 (net of tax benefit of $11 million) | (257 | ) | — | ||||||||||||
| Net loss | $ | (515 | ) | $ | (568 | ) | 9 | % | |||||||
Net (loss) earnings per share — Basic and diluted: | |||||||||||||||
| Loss from continuing operations | $ | (0.55 | ) | $ | (1.21 | ) | |||||||||
| Loss from sale of discontinued operations, net | — | $ | (0.01 | ) | |||||||||||
| Cumulative effect of adopting SFAS No. 142, net | (0.54 | ) | — | ||||||||||||
| Net loss | $ | (1.09 | ) | $ | (1.22 | ) | |||||||||
| Weighted average shares used in computing loss per share: | |||||||||||||||
| Basic and diluted | 471 | 464 | |||||||||||||
Loss from sale of discontinued operations (net of taxes) relate to the sale of our Healthcare Solutions group.
Historical amounts were reclassified to conform with current period presentation.
AGILENT TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEET
(In millions, except par value and share amounts)
(Unaudited)
| April 30, | October 31, | ||||||||||
| 2003 | 2002 | ||||||||||
| ASSETS | |||||||||||
| Current assets: | |||||||||||
| Cash and cash equivalents | $ | 1,533 | $ | 1,844 | |||||||
| Accounts receivable, net | 929 | 1,118 | |||||||||
| Inventory | 1,131 | 1,184 | |||||||||
| Current deferred tax assets | 441 | 462 | |||||||||
| Other current assets | 275 | 272 | |||||||||
| Total current assets | 4,309 | 4,880 | |||||||||
| Property, plant and equipment, net | 1,510 | 1,579 | |||||||||
| Goodwill and other intangible assets, net | 414 | 685 | |||||||||
| Long-term deferred tax assets | 966 | 635 | |||||||||
| Other assets | 418 | 424 | |||||||||
| Total assets | $ | 7,617 | $ | 8,203 | |||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||||||
| Current liabilities: | |||||||||||
| Accounts payable | $ | 294 | $ | 305 | |||||||
| Employee compensation and benefits | �� | 677 | 733 | ||||||||
| Deferred revenue | 257 | 244 | |||||||||
| Income and other taxes payable | 335 | 325 | |||||||||
| Other accrued liabilities | 443 | 574 | |||||||||
| Total current liabilities | 2,006 | 2,181 | |||||||||
| Senior convertible debentures | 1,150 | 1,150 | |||||||||
| Other liabilities | 260 | 245 | |||||||||
| Total liabilities | 3,416 | 3,576 | |||||||||
| Commitments and contingencies | — | — | |||||||||
| 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; 467 million shares at October 31, 2002 and 471 million shares at April 30, 2003 issued and outstanding | 5 | 5 | |||||||||
| Additional paid-in capital | 4,923 | 4,872 | |||||||||
| Accumulated deficit | (616 | ) | (101 | ) | |||||||
| Accumulated comprehensive loss | (111 | ) | (149 | ) | |||||||
| Total stockholders’ equity | 4,201 | 4,627 | |||||||||
| Total liabilities and stockholders’ equity | $ | 7,617 | $ | 8,203 | |||||||
AGILENT TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(In millions)
(Unaudited)
| Six months | Three months | |||||||||
| ended | ended | |||||||||
| April 30, | April 30, | |||||||||
| 2003 | 2003 | |||||||||
| Cash flows from operating activities: | ||||||||||
| Net loss | $ | (515 | ) | $ | (146 | ) | ||||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||||
| Depreciation | 156 | 87 | ||||||||
| Amortization | 26 | 13 | ||||||||
| Inventory-related charges | 6 | 5 | ||||||||
| Deferred taxes | (317 | ) | (168 | ) | ||||||
| Asset impairment charges | 27 | 17 | ||||||||
| Net gain on sale of assets | (2 | ) | — | |||||||
| Adoption of SFAS No. 142 | 268 | — | ||||||||
| Changes in assets and liabilities: | ||||||||||
| Accounts receivable | 193 | 7 | ||||||||
| Inventory | 44 | 14 | ||||||||
| Accounts payable | (9 | ) | 7 | |||||||
| Employee compensation and benefits | (56 | ) | 50 | |||||||
| Income taxes | (61 | ) | (94 | ) | ||||||
| Other current assets and liabilities | (44 | ) | 10 | |||||||
| Other long-term assets and liabilities | 2 | 7 | ||||||||
| Net cash used in operating activities: | (282 | ) | (191 | ) | ||||||
| Cash flows from investing activities: | ||||||||||
| Investments in property, plant and equipment | (86 | ) | (38 | ) | ||||||
| Dispositions of property, plant and equipment | 7 | 4 | ||||||||
| Purchase of equity investments | (2 | ) | — | |||||||
| Net cash used in investing activities: | (81 | ) | (34 | ) | ||||||
| Cash flows from financing activities: | ||||||||||
| Issuance of common stock under employee stock plans | 51 | 1 | ||||||||
| Net payments to notes payable and short-term borrowings | 1 | 3 | ||||||||
| Net cash provided by financing activities: | 52 | 4 | ||||||||
| Change in cash and cash equivalents | (311 | ) | (221 | ) | ||||||
| Cash and cash equivalents at beginning of period | 1,844 | 1,754 | ||||||||
| Cash and cash equivalents at end of period | $ | 1,533 | $ | 1,533 | ||||||
AGILENT TECHNOLOGIES, INC.
TEST AND MEASUREMENT INFORMATION
(In millions, except percent changes)
(Unaudited)
| Three months | Three months | Three months | ||||||||||||||||||
| ended | ended | ended | ||||||||||||||||||
| April 30, | April 30, | Yr vs. Yr | January 31, | Sequential | ||||||||||||||||
| 2003 | 2002 | % change | 2003 | % change | ||||||||||||||||
| Orders | $ | 608 | $ | 639 | (5 | %) | $ | 594 | 2 | % | ||||||||||
| Net Revenue | $ | 652 | $ | 660 | (1 | %) | $ | 633 | 3 | % | ||||||||||
| Loss from operations | $ | (103 | ) | $ | (172 | ) | 40 | % | $ | (132 | ) | 22 | % | |||||||
| Six months | Six months | ||||||||||||
| ended | ended | ||||||||||||
| April 30, | April 30, | Yr vs. Yr | |||||||||||
| 2003 | 2002 | % change | |||||||||||
| Orders | $ | 1,202 | $ | 1,286 | (7 | %) | |||||||
| Net Revenue | $ | 1,285 | $ | 1,344 | (4 | %) | |||||||
| Loss from operations | $ | (235 | ) | $ | (343 | ) | 31 | % | |||||
Loss from operations reflect the results of our reportable segments under Agilent’s management reporting system which are not necessarily in conformity with accounting principles generally accepted in the United States (GAAP). Loss from operations of our reporting segments excludes restructuring, amortization of intangibles, non-operational charges and some residual corporate charges.
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.
Historical amounts have been reclassified to conform with current period presentation.
AGILENT TECHNOLOGIES, INC.
AUTOMATED TEST INFORMATION
(In millions, except percent changes)
(Unaudited)
| Three months | Three months | Three months | ||||||||||||||||||
| ended | ended | ended | ||||||||||||||||||
| April 30, | April 30, | Yr vs. Yr | January 31, | Sequential | ||||||||||||||||
| 2003 | 2002 | % change | 2003 | % change | ||||||||||||||||
| Orders | $ | 219 | $ | 197 | 11 | % | $ | 115 | 90 | % | ||||||||||
| Net Revenue | $ | 153 | $ | 154 | (1 | %) | $ | 136 | 13 | % | ||||||||||
| Loss from operations | $ | (37 | ) | $ | (30 | ) | (23 | %) | $ | (48 | ) | 23 | % | |||||||
| Six months | Six months | |||||||||||
| ended | ended | |||||||||||
| April 30, | April 30, | Yr vs. Yr | ||||||||||
| 2003 | 2002 | % change | ||||||||||
| Orders | $ | 334 | $ | 382 | (13 | %) | ||||||
| Net Revenue | $ | 289 | $ | 292 | (1 | %) | ||||||
| Loss from operations | $ | (85 | ) | $ | (74 | ) | (15 | %) | ||||
Loss from operations reflect the results of our reportable segments under Agilent’s management reporting system which are not necessarily in conformity with accounting principles generally accepted in the United States (GAAP). Loss from operations of our reporting segments excludes restructuring, amortization of intangibles, non-operational charges and some residual corporate charges.
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.
Historical amounts have been reclassified to conform with current period presentation.
AGILENT TECHNOLOGIES, INC.
SEMICONDUCTOR PRODUCTS INFORMATION
(In millions, except percent changes)
(Unaudited)
| Three months | Three months | Three months | ||||||||||||||||||
| ended | ended | ended | ||||||||||||||||||
| April 30, | April 30, | Yr vs. Yr | January 31, | Sequential | ||||||||||||||||
| 2003 | 2002 | % change | 2003 | % change | ||||||||||||||||
| Orders | $ | 420 | $ | 476 | (12 | %) | $ | 381 | 10 | % | ||||||||||
| Net Revenue | $ | 376 | $ | 371 | 1 | % | $ | 367 | 2 | % | ||||||||||
| Loss from operations | $ | (43 | ) | $ | (37 | ) | (16 | %) | $ | (48 | ) | 10 | % | |||||||
| Six months | Six months | |||||||||||
| ended | ended | |||||||||||
| April 30, | April 30, | Yr vs. Yr | ||||||||||
| 2003 | 2002 | % change | ||||||||||
| Orders | $ | 801 | $ | 822 | (3 | %) | ||||||
| Net Revenue | $ | 743 | $ | 698 | 6 | % | ||||||
| Loss from operations | $ | (91 | ) | $ | (98 | ) | 7 | % | ||||
Loss from operations reflect the results of our reportable segments under Agilent’s management reporting system which are not necessarily in conformity with accounting principles generally accepted in the United States (GAAP). Loss from operations of our reporting segments excludes restructuring, amortization of intangibles, non-operational charges and some residual corporate charges.
In general, recorded orders represent firm purchase commitments from our customers with established terms and conditions for products that will be delivered within six months.
Historical amounts have been reclassified to conform with current period presentation.
AGILENT TECHNOLOGIES, INC.
LIFE SCIENCES AND CHEMICAL ANALYSIS INFORMATION
(In millions, except percent changes)
(Unaudited)
| Three months | Three months | Three months | ||||||||||||||||||
| ended | ended | ended | ||||||||||||||||||
| April 30, | April 30, | Yr vs. Yr | January 31, | Sequential | ||||||||||||||||
| 2003 | 2002 | % change | 2003 | % change | ||||||||||||||||
| Orders | $ | 280 | $ | 285 | (2 | %) | $ | 268 | 4 | % | ||||||||||
| Net Revenue | $ | 286 | $ | 272 | 5 | % | $ | 276 | 4 | % | ||||||||||
| Earnings from operations | $ | 20 | $ | 20 | 0 | % | $ | 34 | (41 | %) | ||||||||||
| Six months | Six months | |||||||||||
| ended | ended | |||||||||||
| April 30, | April 30, | Yr vs. Yr | ||||||||||
| 2003 | 2002 | % change | ||||||||||
| Orders | $ | 548 | $ | 572 | (4 | %) | ||||||
| Net Revenue | $ | 562 | $ | 549 | 2 | % | ||||||
| Earnings from operations | $ | 54 | $ | 55 | (2 | %) | ||||||
Earnings from operations reflect the results of our reportable segments under Agilent’s management reporting system which are not necessarily in conformity with accounting principles generally accepted in the United States (GAAP). Earnings from operations of our reporting segments excludes restructuring, amortization of intangibles, non-operational charges and some residual corporate charges.
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.
Historical amounts have been reclassified to conform with current period presentation.
AGILENT TECHNOLOGIES, INC.
Income (Loss) from Operations
Reconciliation of Reporting Segments to Agilent
(In millions)
(Unaudited)
| Three months ended | Three months ended | ||||||||||||
| April 30, | January 31, | ||||||||||||
| 2003 | 2002 | 2003 | |||||||||||
| Test and Measurement | $ | (103 | ) | $ | (172 | ) | $ | (132 | ) | ||||
| Semiconductor Products | (43 | ) | (37 | ) | (48 | ) | |||||||
| Automated Test | (37 | ) | (30 | ) | (48 | ) | |||||||
| Life Sciences and Chemical Analysis | 20 | 20 | 34 | ||||||||||
| Residual corporate charges | (19 | ) | — | (8 | ) | ||||||||
| Loss from operations — Agilent | $ | (182 | ) | $ | (219 | ) | $ | (202 | ) | ||||
Earnings from operations reflect the results of our reportable segments under Agilent’s management reporting system which are not necessarily in conformity with accounting principles generally accepted in the United States (GAAP). Earnings from operations of our reporting segments excludes restructuring, amortization of intangibles, non-operational charges and residual corporate charges.
Historical amounts were reclassified to conform with current period presentation.
AGILENT TECHNOLOGIES, INC.
ORDERS AND NET REVENUE FROM OPERATIONS
BY GEOGRAPHY
(In millions, except percent changes)
(Unaudited)
| Three Months Ended | |||||||||||||
| April 30, | |||||||||||||
| Percent | |||||||||||||
| 2003 | 2002 | Inc/(Dec) | |||||||||||
| ORDERS | |||||||||||||
| Americas | $ | 589 | $ | 649 | (9 | %) | |||||||
| Europe | 304 | 314 | (3 | %) | |||||||||
| Asia Pacific | 634 | 634 | — | ||||||||||
| Total | $ | 1,527 | $ | 1,597 | (4 | %) | |||||||
| NET REVENUE | |||||||||||||
| Americas | $ | 533 | $ | 632 | (16 | %) | |||||||
| Europe | 297 | 277 | 7 | % | |||||||||
| Asia Pacific | 637 | 548 | 16 | % | |||||||||
| Total | $ | 1,467 | $ | 1,457 | 1 | % | |||||||
| Six Months Ended | |||||||||||||
| April 30, | |||||||||||||
| Percent | |||||||||||||
| 2003 | 2002 | Inc/(Dec) | |||||||||||
| ORDERS | |||||||||||||
| Americas | $ | 1,085 | $ | 1,287 | (16 | %) | |||||||
| Europe | 599 | 612 | (2 | %) | |||||||||
| Asia Pacific | 1,201 | 1,163 | 3 | % | |||||||||
| Total | $ | 2,885 | $ | 3,062 | (6 | %) | |||||||
| NET REVENUE | |||||||||||||
| Americas | $ | 1,109 | $ | 1,228 | (10 | %) | |||||||
| Europe | 593 | 582 | 2 | % | |||||||||
| Asia Pacific | 1,177 | 1,073 | 10 | % | |||||||||
| Total | $ | 2,879 | $ | 2,883 | — | ||||||||
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.
Historical amounts were reclassified to conform with current period presentation.
