Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Jan. 31, 2017 | Feb. 28, 2017 | |
Document and Entity Information [Abstract] | ||
Entity Registrant Name | AGILENT TECHNOLOGIES INC. | |
Entity Central Index Key | 1,090,872 | |
Current Fiscal Year End Date | --10-31 | |
Entity Well-known Seasoned Issuer | Yes | |
Entity Voluntary Filers | No | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 322,300,905 | |
Document Fiscal Year Focus | 2,017 | |
Document Fiscal Period Focus | Q1 | |
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Jan. 31, 2017 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (Unaudited) - USD ($) shares in Millions, $ in Millions | 3 Months Ended | |
Jan. 31, 2017 | Jan. 31, 2016 | |
Net revenue: | ||
Products | $ 818 | $ 795 |
Services and other | 249 | 233 |
Total net revenue | 1,067 | 1,028 |
Costs and expenses: | ||
Cost of products | 349 | 365 |
Cost of services and other | 144 | 126 |
Total costs | 493 | 491 |
Research and development | 79 | 78 |
Selling, general and administrative | 289 | 304 |
Total costs and expenses | 861 | 873 |
Income from operations | 206 | 155 |
Interest income | 4 | 2 |
Interest expense | (20) | (18) |
Other income (expense), net | 3 | 3 |
Income before taxes | 193 | 142 |
Provision for income taxes | 25 | 21 |
Net income | $ 168 | $ 121 |
Net income per share | ||
Basic | $ 0.52 | $ 0.37 |
Diluted | $ 0.52 | $ 0.36 |
Weighted average shares used in computing net income per share: | ||
Basic (in shares) | 322 | 329 |
Diluted (in shares) | 326 | 332 |
Cash dividends declared per common share | $ 0.132 | $ 0.115 |
CONDENSED CONSOLIDATED STATEME3
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (LOSS) (Unaudited) - USD ($) $ in Millions | 3 Months Ended | |
Jan. 31, 2017 | Jan. 31, 2016 | |
Net income | $ 168 | $ 121 |
Other comprehensive income (loss): | ||
Unrealized gain on derivative instruments, net of tax expense of $1 and $1 | 1 | 3 |
Amounts reclassified into earnings related to derivative instruments, net of tax expense (benefit) of $(1) and $0 | 0 | (1) |
Foreign currency translation, net of tax benefit of $(1) and $(1) | (3) | (56) |
Net defined benefit pension cost and post retirement plan costs: | ||
Change in actuarial net loss, net of tax expense of $8 and $4 | 17 | 15 |
Change in net prior service benefit, net of tax benefit of $(1) and $(5) | (1) | (8) |
Other comprehensive income (loss) | 14 | (47) |
Total comprehensive income | $ 182 | $ 74 |
CONDENSED CONSOLIDATED STATEME4
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (LOSS) (Unaudited) (Parenthetical) - USD ($) $ in Millions | 3 Months Ended | |
Jan. 31, 2017 | Jan. 31, 2016 | |
Other comprehensive income (loss), tax, parenthetical disclosures | ||
Unrealized gain on derivative instruments, tax | $ 1 | $ 1 |
Amounts reclassified into earnings related to derivative instruments, tax | (1) | 0 |
Foreign currency translation, tax | (1) | (1) |
Net defined benefit pension cost and post retirement plan costs, tax | ||
Change in actuarial net loss, tax | 8 | 4 |
Change in net prior service benefit, tax | $ (1) | $ (5) |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEET (Unaudited) - USD ($) $ in Millions | Jan. 31, 2017 | Oct. 31, 2016 |
Current assets: | ||
Cash and cash equivalents | $ 2,241 | $ 2,289 |
Accounts receivable, net | 653 | 631 |
Inventory | 551 | 533 |
Other current assets | 190 | 182 |
Total current assets | 3,635 | 3,635 |
Property, plant and equipment, net | 653 | 639 |
Goodwill | 2,563 | 2,517 |
Other intangible assets, net | 411 | 408 |
Long-term investments | 133 | 135 |
Other assets | 477 | 460 |
Total assets | 7,872 | 7,794 |
Current liabilities: | ||
Accounts payable | 268 | 257 |
Employee compensation and benefits | 189 | 235 |
Deferred revenue | 299 | 269 |
Short-term debt | 190 | 0 |
Other accrued liabilities | 143 | 184 |
Total current liabilities | 1,089 | 945 |
Long-term debt | 1,802 | 1,904 |
Retirement and post-retirement benefits | 350 | 360 |
Other long-term liabilities | 331 | 339 |
Total liabilities | 3,572 | 3,548 |
Commitments and Contingencies (Note 11) | ||
Stockholders' equity: | ||
Preferred stock; $0.01 par value; 125 million shares authorized; none issued and outstanding | 0 | 0 |
Common stock; $0.01 par value; 2 billion shares authorized; 322 million shares at January 31, 2017 and 614 million shares at October 31, 2016, issued | 3 | 6 |
Treasury stock at cost; zero shares at January 31, 2017 and 290 million shares at October 31, 2016 | 0 | (10,508) |
Additional paid-in-capital | 5,236 | 9,159 |
(Accumulated deficit) retained earnings | (453) | 6,089 |
Accumulated other comprehensive loss | (489) | (503) |
Total stockholder's equity | 4,297 | 4,243 |
Non-controlling interest | 3 | 3 |
Total equity | 4,300 | 4,246 |
Total liabilities and equity | $ 7,872 | $ 7,794 |
CONDENSED CONSOLIDATED BALANCE6
CONDENSED CONSOLIDATED BALANCE SHEET (Unaudited) (Parenthetical) - $ / shares | Jan. 31, 2017 | Oct. 31, 2016 |
Stockholders' equity: | ||
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized (in shares) | 125,000,000 | 125,000,000 |
Preferred stock, issued and outstanding (in shares) | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (in shares) | 2,000,000,000 | 2,000,000,000 |
Common stock, issued and outstanding (in shares) | 322,000,000 | 614,000,000 |
Treasury stock at cost, shares (in shares) | 0 | 290,000,000 |
CONDENSED CONSOLIDATED STATEME7
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited) - USD ($) $ in Millions | 3 Months Ended | |
Jan. 31, 2017 | Jan. 31, 2016 | |
Cash flows from operating activities: | ||
Net income | $ 168 | $ 121 |
Adjustments to reconcile net income to net cash provided by (used in) operating activities: | ||
Depreciation and amortization | 55 | 66 |
Share-based compensation | 20 | 23 |
Deferred taxes | 16 | 4 |
Excess and obsolete inventory related charges | 7 | 4 |
Other non-cash expense, net | 2 | 2 |
Changes in assets and liabilities: | ||
Accounts receivable | (31) | (15) |
Inventory | (26) | (13) |
Accounts payable | 9 | (18) |
Employee compensation and benefits | (43) | (47) |
Other assets and liabilities | (61) | (16) |
Net cash provided by operating activities | 116 | 111 |
Cash flows from investing activities: | ||
Investments in property, plant and equipment | (32) | (38) |
Payment in exchange for convertible note | 0 | (1) |
Change in restricted cash and cash equivalents, net | 0 | 245 |
Proceeds from sale of investment securities | 0 | 1 |
Proceeds from divestitures | 1 | 0 |
Acquisitions of businesses and intangible assets, net of cash acquired | (70) | (235) |
Net cash used in investing activities | (101) | (28) |
Cash flows from financing activities: | ||
Issuance of common stock under employee stock plans | 18 | 24 |
Payment of taxes related to net share settlement of equity awards | (12) | (5) |
Payment of dividends | (42) | (38) |
Proceeds from revolving credit facility | 131 | 100 |
Repayment of revolving credit facility | (42) | (20) |
Treasury stock repurchases | (111) | (200) |
Net cash used in financing activities | (58) | (139) |
Effect of exchange rate movements | (5) | (16) |
Net decrease in cash and cash equivalents | (48) | (72) |
Cash and cash equivalents at end of period | 2,241 | 1,931 |
Supplemental cash flow information: | ||
Income tax paid, net | 27 | 37 |
Interest payments | $ 29 | $ 29 |
OVERVIEW, BASIS OF PRESENTATION
OVERVIEW, BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Notes) | 3 Months Ended |
Jan. 31, 2017 | |
Accounting Policies [Abstract] | |
OVERVIEW AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 1. OVERVIEW, BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Overview. Agilent Technologies, Inc. ("we", "Agilent" or the "company"), incorporated in Delaware in May 1999, is a global leader in life sciences, diagnostics and applied chemical markets, providing application focused solutions that include instruments, software, services and consumables for the entire laboratory workflow. Our fiscal year-end is October 31, and our fiscal quarters end on January 31, April 30 and July 31. Unless otherwise stated, these dates refer to our fiscal year and fiscal quarters. Basis of Presentation . We have prepared the accompanying financial data for the three months ended January 31, 2017 and 2016 pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles (“GAAP”) in the U.S. have been condensed or omitted pursuant to such rules and regulations. The October 31, 2016 condensed balance sheet data was derived from audited financial statements but does not include all the disclosures required in audited financial statements by U.S. GAAP. The accompanying financial data and information should be read in conjunction with our Annual Report on Form 10-K for the fiscal year ended October 31, 2016 . In the opinion of management, the accompanying condensed consolidated financial statements contain all normal and recurring adjustments necessary for a fair statement of our condensed consolidated balance sheet as of January 31, 2017 and October 31, 2016 , condensed consolidated statement of comprehensive income (loss) for the three months ended January 31, 2017 and 2016 , condensed consolidated statement of operations for the three months ended January 31, 2017 and 2016 , and condensed consolidated statement of cash flows for the three months ended January 31, 2017 and 2016 . Use of Estimates. The preparation of condensed consolidated financial statements in accordance with GAAP in the U.S. requires management to make estimates and assumptions that affect the amounts reported in our condensed consolidated financial statements and accompanying notes. Management bases its estimates on historical experience and various other assumptions believed to be reasonable. Although these estimates are based on management’s best knowledge of current events and actions that may impact the company in the future, actual results may be different from the estimates. Our critical accounting policies are those that affect our financial statements materially and involve difficult, subjective or complex judgments by management. Those policies are revenue recognition, inventory valuation, share-based compensation, retirement and post-retirement benefit plan assumptions, goodwill and purchased intangible assets and accounting for income taxes. Retirement of Treasury Shares. Upon the formal retirement of treasury shares, we deduct the par value of the retired treasury shares from common stock and allocate the excess of cost over par as a deduction between additional paid-in capital and retained earnings. All retired treasury shares revert to the status of authorized but unissued shares. Variable Interest Entities. We make a determination upon entering into an arrangement whether an entity in which we have made an investment is considered a Variable Interest Entity (“VIE”). The company evaluates its investments in privately held companies on an ongoing basis. We have determined that as of January 31, 2017 there were no VIE’s required to be consolidated in the company’s consolidated financial statements because we do not have a controlling financial interest in any of the VIE’s that we have invested in nor are we the primary beneficiary. We account for these investments under either the equity or cost method, depending on the circumstances. We periodically reassess whether we are the primary beneficiary of a VIE. The reassessment process considers whether we have acquired the power to direct the most significant activities of the VIE through changes in governing documents or other circumstances. We also reconsider whether entities previously determined not to be VIEs have become VIEs, based on changes in facts and circumstances including changes in contractual arrangements and capital structure. As of January 31, 2017 , the carrying value of our investment in a VIE was $80 million with a maximum exposure of $80 million . The investments are included on the long term investments line of the condensed consolidated balance sheet. Fair Value of Financial Instruments. The carrying values of certain of our financial instruments including cash and cash equivalents, accounts receivable, accounts payable, accrued compensation and other accrued liabilities approximate fair value because of their short maturities. The fair value of long-term equity investments is determined using quoted market prices for those securities when available. For those long-term equity investments accounted for under the cost or equity method, their carrying value approximates their estimated fair value. Equity method investments are reported at the amount of the company’s initial investment and adjusted each period for the company’s share of the investee’s income or loss and dividend paid. There are no equity method investments as of January 31, 2017. The fair value of our long-term debt, calculated from quoted prices which are primarily Level 1 inputs under the accounting guidance fair value hierarchy, exceeds the carrying value by approximately $154 million and $104 million as of January 31, 2017 and October 31, 2016 , respectively. The change in the excess of fair value over carrying value in the three months ended January 31, 2017 is due to fluctuations in market interest rates. The carrying value as of October 31, 2016 reflects the new accounting guidance related to the presentation of debt issuance costs which we adopted on November 1, 2016. The fair value of foreign currency contracts used for hedging purposes is estimated internally by using inputs tied to active markets. These inputs, for example, interest rate yield curves, foreign exchange rates, and forward and spot prices for currencies are observable in the market or can be corroborated by observable market data for substantially the full term of the assets or liabilities. See also Note 8, "Fair Value Measurements" for additional information on the fair value of financial instruments. Goodwill and Purchased Intangible Assets. Under the authoritative guidance we have the option to perform a qualitative assessment to determine whether further impairment testing is necessary. The accounting standard gives an entity the option to first assess qualitative factors to determine whether performing the two-step test is necessary. If an entity believes, as a result of its qualitative assessment, that it is more-likely-than-not (i.e. greater than 50% chance) that the fair value of a reporting unit is less than its carrying amount, the quantitative impairment test will be required. Otherwise, no further testing will be required. The guidance includes examples of events and circumstances that might indicate that a reporting unit's fair value is less than its carrying amount. These include macro-economic conditions such as deterioration in the entity's operating environment or industry or market considerations; entity-specific events such as increasing costs, declining financial performance, or loss of key personnel; or other events such as an expectation that a reporting unit will be sold or a sustained decrease in the stock price on either an absolute basis or relative to peers. If it is determined, as a result of the qualitative assessment, that it is more-likely-than-not that the fair value of a reporting unit is less than its carrying amount, the provisions of authoritative guidance require that we perform a two-step impairment test on goodwill. In the first step, we compare the fair value of each reporting unit to its carrying value. The second step (if necessary) measures the amount of impairment by applying fair-value-based tests to the individual assets and liabilities within each reporting unit. As defined in the authoritative guidance, a reporting unit is an operating segment, or one level below an operating segment. We aggregate components of an operating segment that have similar economic characteristics into our reporting units. In fiscal year 2016, we assessed goodwill impairment for our three reporting units which consisted of three segments: life sciences and applied markets, diagnostics and genomics and Agilent CrossLab. We performed a qualitative test for goodwill impairment of the three reporting units, as of September 30, 2016. Based on the results of our qualitative testing, we believe that it is more-likely-than-not- that the fair value of these reporting units are greater than their respective carrying values. Each quarter we review the events and circumstances to determine if goodwill impairment is indicated. There was no impairment of goodwill during the three months ended January 31, 2017 and 2016 . Purchased intangible assets consist primarily of acquired developed technologies, proprietary know-how, trademarks, and customer relationships and are amortized using the best estimate of the asset's useful life that reflect the pattern in which the economic benefits are consumed or used up or a straight-line method ranging from 6 months to 15 years . In-process research and development ("IPR&D") is initially capitalized at fair value as an intangible asset with an indefinite life and assessed for impairment thereafter. When the IPR&D project is complete, it is reclassified as an amortizable purchased intangible asset and is amortized over its estimated useful life. If an IPR&D project is abandoned, Agilent will record a charge for the value of the related intangible asset to Agilent's condensed consolidated statement of operations in the period it is abandoned. Agilent's indefinite-lived intangible assets are IPR&D intangible assets. The accounting guidance allows a qualitative approach for testing indefinite-lived intangible assets for impairment, similar to the issued impairment testing guidance for goodwill and allows the option to first assess qualitative factors (events and circumstances) that could have affected the significant inputs used in determining the fair value of the indefinite-lived intangible asset to determine whether it is more-likely-than-not (i.e. greater than 50% chance) that the indefinite-lived intangible asset is impaired. An organization may choose to bypass the qualitative assessment for any indefinite-lived intangible asset in any period and proceed directly to calculating its fair value. We performed a qualitative test for impairment of indefinite-lived intangible assets as of September 30, 2016. Based on the results of our qualitative testing, we believe that it is more-likely-than-not that the fair value of these indefinite-lived intangible assets is greater than their respective carrying values. Each quarter we review the events and circumstances to determine if impairment of indefinite-lived intangible assets is indicated. There were no indicators of impairment of indefinite-lived intangible assets during the three months ended January 31, 2017 and 2016 . |
NEW ACCOUNTING PRONOUNCEMENTS (
NEW ACCOUNTING PRONOUNCEMENTS (Notes) | 3 Months Ended |
Jan. 31, 2017 | |
New Accounting Pronouncements and Changes in Accounting Principles [Abstract] | |
NEW ACCOUNTING PRONOUNCEMENTS | 2. NEW ACCOUNTING PRONOUNCEMENTS There were no changes to the new accounting pronouncements not yet adopted as described in our Annual Report on Form 10-K for the fiscal year ended October 31, 2016 except for the following: In April 2015, the FASB issued amendments to simplify the presentation of debt issuance costs. The amendments require that debt issuance costs related to a recognized debt liability to be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The recognition and measurement guidance for debt issuance costs remain unchanged. The amendments were effective for us beginning November 1, 2016. The impact of adoption to our condensed consolidated balance sheet was a decrease of $8 million in other assets and long-term debt. The October 31, 2016 consolidated balance sheet has been revised to reflect the new disclosure requirement. In January 2017, the FASB issued guidance intended to clarify the definition of a business in connection with business combinations with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. This guidance is effective for us beginning November 1, 2018, and for interim periods within that year. Adjustments will be recorded in the period that they are determined rather than applied retrospectively via revision to the period of acquisition and each period thereafter. We do not expect this guidance to have a material impact on our consolidated financial statements and disclosures. In January 2017, the FASB issued an amendment to modify the concept of impairment from the condition that exists when the carrying amount of goodwill exceeds its implied fair value to the condition that exists when the carrying amount of a reporting unit exceeds its fair value. The amendment also simplifies the subsequent measurement of goodwill by eliminating Step 2 from the goodwill impairment test. The amendments are effective for us beginning November 1, 2020. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. We do not expect this guidance to have a material impact on our consolidated financial statements and disclosures. Other amendments to GAAP in the U.S. that have been issued by the FASB or other standards-setting bodies that do not require adoption until a future date are not expected to have a material impact on our consolidated financial statements upon adoption. |
SHARE-BASED COMPENSATION (Notes
SHARE-BASED COMPENSATION (Notes) | 3 Months Ended |
Jan. 31, 2017 | |
Share-based Compensation [Abstract] | |
SHARE-BASED COMPENSATION | 3. SHARE-BASED COMPENSATION Agilent accounts for share-based awards in accordance with the provisions of the authoritative accounting guidance which requires the measurement and recognition of compensation expense for all share-based payment awards made to our employees and directors including employee stock option awards, restricted stock units, employee stock purchases made under our employee stock purchase plan (“ESPP”) and performance share awards granted to selected members of our senior management under the long-term performance plan (“LTPP”) based on estimated fair values. Participants in the LTPP are entitled to receive unrestricted shares of the company's stock after the end of a three-year period, if specified performance targets are met. Certain LTPP awards are generally designed to meet the criteria of a performance award with the performance metrics and peer group comparison based on the Total Stockholders’ Return (“TSR”) set at the beginning of the performance period. Effective November 1, 2015, the Compensation Committee of the Board of Directors approved another type of performance stock award, for the company's executive officers and other key employees. Participants in this program are also entitled to receive unrestricted shares of the company's stock after the end of a three-year period, if specified performance targets over the three-year period are met. The performance target for grants made in 2016 and 2017 were based on Operating Margin (“OM”) and Earnings Per Share ("EPS"), respectively. The performance targets for the LTPP-EPS grants for year 2 and year 3 of the performance period will be set in the first quarter of year 2 and year 3, respectively. All LTPP awards granted after November 1, 2015, are subject to a one-year post-vest holding period. Based on the performance metrics the final LTPP award may vary from zero to 200 percent of the target award. The maximum award value cannot exceed 300 percent of the grant date target value. We consider the dilutive impact of these programs in our diluted net income per share calculation only to the extent that the performance conditions are expected to be met. Restricted stock units generally vest, with some exceptions, at a rate of 25 percent per year over a period of four years from the date of grant. The impact on our results for share-based compensation was as follows: Three Months Ended January 31, 2017 2016 (in millions) Cost of products and services $ 6 $ 6 Research and development 2 2 Selling, general and administrative 13 15 Total share-based compensation expense $ 21 $ 23 At January 31, 2017 and October 31, 2016 , there was no share-based compensation capitalized within inventory. The following assumptions were used to estimate the fair value of the LTPP grants. Three Months Ended January 31, 2017 2016 LTPP: Volatility of Agilent shares 23% 24% Volatility of selected peer-company shares 15%-63% 14%-50% Price-wise correlation with selected peers 36% 35% Shares granted under the LTPP (TSR) were valued using a Monte Carlo simulations model. The Monte Carlo simulation fair value model requires the use of highly subjective and complex assumptions, including the price volatility of the underlying stock. For the volatility of our 2015 and 2016 LTPP (TSR) grants, we used the 3 year average historical stock price volatility of a group of our peer companies. We believed our historical volatility prior to the separation of Keysight in 2015 was no longer relevant to use. For the volatility of our 2017 LTPP (TSR) grants, we used our own historical stock price volatility. The ESPP allows eligible employees to purchase shares of our common stock at 85 percent of the price at purchase and uses the purchase date to establish the fair market value. The estimated fair value of restricted stock units, LTPP (OM) and LTPP (EPS) awards is determined based on the market price of Agilent’s common stock on the date of grant adjusted for expected dividend yield. The compensation cost for LTPP (OM) and LTPP (EPS) reflects the cost of awards that are probable to vest at the end of the performance period. All awards granted in 2017 and 2016 to our senior management employees have a one-year post-vest holding restriction. The estimated discount associated with post-vest holding restrictions is calculated using the Finnerty model. The model calculates the potential lost value if the employee were able to sell the shares during the lack of marketability period, instead of being required to hold the shares. The model used the same historical stock price volatility and dividend yield assumption used for the Monte Carlo simulations model and an expected dividend yield to compute the discount. The grants made during 2017 have a discount of 5.3 percent while computing the fair value. The grants made during 2016 have a discount of 5.5 percent while computing the fair value. |
INCOME TAXES (Notes)
INCOME TAXES (Notes) | 3 Months Ended |
Jan. 31, 2017 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | 4. INCOME TAXES The company’s effective tax rate was 13.0 percent and 14.8 percent for the three months ended January 31, 2017 and 2016 , respectively. The income tax expense was $25 million and $21 million for the three months ended January 31, 2017 and 2016 , respectively. The income tax provision for the three months ended January 31, 2017 included net discrete tax benefits of $2 million . The net discrete tax benefit for the three months ended January 31, 2017 , included $7 million of tax benefit for the settlement of an audit in Italy, $11 million of tax expense related to the employee pension settlement gain and $6 million of other discrete tax benefit items. The income tax provision for the three months ended January 31, 2016 included net discrete tax benefit of $6 million . The net discrete tax benefit for the three months ended January 31, 2016 included $5 million of tax benefit for the extension, which occurred in the first quarter of 2016, of the U.S. research and development tax credit attributable to the company's 2015 fiscal year, and $6 million of tax expense related to the curtailment gain recognized with respect to the U.S. retirement plan and Supplemental Benefits Plan. The net discrete tax benefit for the three months ended January 31, 2016 also included $9 million of tax benefit related primarily to return to provision adjustments and $2 million of other discrete tax expense items. In the U.S., tax years remain open back to the year 2012 for federal income tax purposes and the year 2000 for significant states. There were no substantial changes from our 2016 Annual Report on Form 10-K to the status of these open tax years in the first three months of fiscal 2017. In other major jurisdictions where the company conducts business, the tax years generally remain open back to the year 2001. During the first quarter of 2017, the company settled its ongoing tax audit in Italy for the years 2011-2013 resulting in a net tax expense of $7 million . The settlement resulted in the recognition of previously unrecognized tax benefits of approximately $14 million . With these jurisdictions and the U.S., it is reasonably possible that there could be significant changes to our unrecognized tax benefits in the next twelve months due to either the expiration of a statute of limitation or a tax audit settlement which will be partially offset by an anticipated tax liability related to unremitted foreign earnings, where applicable. Given the number of years and numerous matters that remain subject to examination in various tax jurisdictions, management is unable to estimate the range of possible changes to the balance of our unrecognized tax benefits. On July 27, 2015, the U.S. Tax Court issued an opinion in Altera Corp. v. Commissioner related to the treatment of stock-based compensation expense in an intercompany cost-sharing arrangement. A final decision was entered by the U.S. Tax Court on December 1, 2015. The IRS is appealing the decision and filed its arguments opposing the Tax Court decision in June 2016. Due to the uncertainty surrounding the status of the current regulations, questions related to the scope of potential benefits or obligations, and the risk of the Tax Court’s decision being overturned upon appeal, we concluded that no adjustment to our condensed consolidated financial statements is appropriate at this time. |
NET INCOME PER SHARE (Notes)
NET INCOME PER SHARE (Notes) | 3 Months Ended |
Jan. 31, 2017 | |
Earnings Per Share [Abstract] | |
NET INCOME PER SHARE | 5. NET INCOME PER SHARE The following is a reconciliation of the numerator and denominator of the basic and diluted net income per share computations for the periods presented below: Three Months Ended January 31, 2017 2016 (in millions) Numerator: Net income $ 168 $ 121 Denominator: Basic weighted-average shares 322 329 Potential common shares— stock options and other employee stock plans 4 3 Diluted weighted-average shares 326 332 The dilutive effect of share-based awards is reflected in diluted net income per share by application of the treasury stock method, which includes consideration of unamortized share-based compensation expense and the dilutive effect of in-the-money options and non-vested restricted stock units. Under the treasury stock method, the amount the employee must pay for exercising stock options and unamortized share-based compensation expense collectively are assumed proceeds to be used to repurchase hypothetical shares. An increase in the fair market value of the company's common stock can result in a greater dilutive effect from potentially dilutive awards. We exclude stock options with exercise prices greater than the average market price of our common stock from the calculation of diluted earnings per share because their effect would be anti-dilutive. For the three months ended January 31, 2017 and 2016 , zero and 1.2 million options to purchase shares were excluded from the calculation of diluted earnings per share, respectively. In addition, we exclude from the calculation of diluted earnings per share stock options, ESPP, LTPP and restricted stock awards whose combined exercise price and unamortized fair value were greater than the average market price of our common stock because their effect would also be anti-dilutive. For the three months ended January 31, 2017 and 2016 , zero and 4,300 additional shares were excluded from the calculation of diluted earnings per share, respectively. |
INVENTORY (Notes)
INVENTORY (Notes) | 3 Months Ended |
Jan. 31, 2017 | |
Inventory, Net [Abstract] | |
INVENTORY | 6. INVENTORY January 31, October 31, (in millions) Finished goods $ 354 $ 339 Purchased parts and fabricated assemblies 197 194 Inventory $ 551 $ 533 |
GOODWILL AND OTHER INTANGIBLE A
GOODWILL AND OTHER INTANGIBLE ASSETS (Notes) | 3 Months Ended |
Jan. 31, 2017 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
GOODWILL AND OTHER INTANGIBLE ASSETS | 7. GOODWILL AND OTHER INTANGIBLE ASSETS The following table presents goodwill balances and the movements for each of our reportable segments during the three months ended January 31, 2017 : Life Sciences and Applied Markets Diagnostics and Genomics Agilent CrossLab Total (in millions) Goodwill as of October 31, 2016 $ 790 $ 1,223 $ 504 $ 2,517 Foreign currency translation impact — — — — Goodwill arising from acquisitions — 46 — 46 Goodwill as of January 31, 2017 $ 790 $ 1,269 $ 504 $ 2,563 The components of other intangibles as of January 31, 2017 and October 31, 2016 are shown in the table below: Purchased Other Intangible Assets Gross Carrying Amount Accumulated Amortization Net Book Value (in millions) As of October 31, 2016 Purchased technology $ 823 $ 572 $ 251 Backlog 1 1 — Trademark/Tradename 149 61 88 Customer relationships 263 211 52 Total amortizable intangible assets 1,236 845 391 In-Process R&D 17 — 17 Total $ 1,253 $ 845 $ 408 As of January 31, 2017 Purchased technology $ 845 $ 588 $ 257 Trademark/Tradename 149 64 85 Customer relationships 145 93 52 Total amortizable intangible assets 1,139 745 394 In-Process R&D 17 — 17 Total $ 1,156 $ 745 $ 411 On January 20, 2017, we acquired Multiplicom NV (“Multiplicom”), a leading European diagnostics company with state-of-the-art genetic testing technology and products, for approximately $72 million in cash. Due to the timing of the close, the valuation of the tangible and intangible assets of this acquisition is preliminary and will be finalized in the second quarter. As a result, we recorded additions to goodwill of $46 million and additions to other intangible assets of $34 million during the three months ended January 31, 2017 . During the three months ended January 31, 2017 , we also wrote-off the gross carrying amount of $131 million and the related accumulated amortization of fully amortized intangible assets. Amortization expense of intangible assets was $31 million and $43 million for the three months ended January 31, 2017 and 2016 , respectively. Future amortization expense related to existing finite-lived purchased intangible assets for the remainder of fiscal year 2017 and for each of the five succeeding fiscal years and thereafter is estimated below: Estimated future amortization expense: (in millions) Remainder of 2017 $ 87 2018 $ 91 2019 $ 64 2020 $ 53 2021 $ 41 2022 $ 25 Thereafter $ 33 |
FAIR VALUE MEASUREMENTS (Notes)
FAIR VALUE MEASUREMENTS (Notes) | 3 Months Ended |
Jan. 31, 2017 | |
Fair Value Disclosures [Abstract] | |
FAIR VALUE MEASUREMENTS | 8. FAIR VALUE MEASUREMENTS The authoritative guidance defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required or permitted to be recorded at fair value, we consider the principal or most advantageous market and assumptions that market participants would use when pricing the asset or liability. Fair Value Hierarchy The guidance establishes a fair value hierarchy that prioritizes the use of inputs used in valuation techniques into three levels. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. There are three levels of inputs that may be used to measure fair value: Level 1 - applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities. Level 2 - applies to assets or liabilities for which there are inputs other than quoted prices included within level 1 that are observable, either directly or indirectly, for the asset or liability such as: quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in less active markets; or other inputs that can be derived principally from, or corroborated by, observable market data. Level 3 - applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities. Financial Assets and Liabilities Measured at Fair Value on a Recurring Basis Financial assets and liabilities measured at fair value on a recurring basis as of January 31, 2017 were as follows: Fair Value Measurement at January 31, 2017 Using January 31, Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) (in millions) Assets: Short-term Cash equivalents (money market funds) $ 1,256 $ 1,256 $ — $ — Derivative instruments (foreign exchange contracts) 8 — 8 — Long-term Trading securities 29 29 — — Total assets measured at fair value $ 1,293 $ 1,285 $ 8 $ — Liabilities: Short-term Derivative instruments (foreign exchange contracts) $ 3 $ — $ 3 $ — Long-term Deferred compensation liability 29 — 29 — Total liabilities measured at fair value $ 32 $ — $ 32 $ — Financial assets and liabilities measured at fair value on a recurring basis as of October 31, 2016 were as follows: Fair Value Measurement at October 31, 2016 Using October 31, Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) (in millions) Assets: Short-term Cash equivalents (money market funds) $ 1,482 $ 1,482 $ — $ — Derivative instruments (foreign exchange contracts) 9 — 9 — Long-term Trading securities 31 31 — — Total assets measured at fair value $ 1,522 $ 1,513 $ 9 $ — Liabilities: Short-term Derivative instruments (foreign exchange contracts) $ 8 $ — $ 8 $ — Long-term Deferred compensation liability 31 — 31 — Total liabilities measured at fair value $ 39 $ — $ 39 $ — Our money market funds and trading securities investments are generally valued using quoted market prices and therefore are classified within level 1 of the fair value hierarchy. Our derivative financial instruments are classified within level 2, as there is not an active market for each hedge contract, but the inputs used to calculate the value of the instruments are tied to active markets. Our deferred compensation liability is classified as level 2 because, although the values are not directly based on quoted market prices, the inputs used in the calculations are observable. Trading securities, which is comprised of mutual funds, bonds and other similar instruments, and deferred compensation liability are reported at fair value, with gains or losses resulting from changes in fair value recognized currently in net income. Certain derivative instruments are reported at fair value, with unrealized gains and losses, net of tax, included in accumulated other comprehensive loss within stockholders' equity. Realized gains and losses from the sale of these instruments are recorded in net income. Impairment of Investments. There were no impairments of investments for the three months ended January 31, 2017 and 2016 . Assets and Liabilities Measured at Fair Value on a Non-Recurring Basis For the three months ended January 31, 2017 and 2016 , there were no impairments of long-lived assets held and used. For the three months ended January 31, 2017 and 2016 , there were no impairments of long-lived assets held for sale. |
DERIVATIVES (Notes)
DERIVATIVES (Notes) | 3 Months Ended |
Jan. 31, 2017 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
DERIVATIVES | 9. DERIVATIVES We are exposed to foreign currency exchange rate fluctuations and interest rate changes in the normal course of our business. As part of our risk management strategy, we use derivative instruments, primarily forward contracts, purchased options to hedge economic and/or accounting exposures resulting from changes in foreign currency exchange rates. Fair Value Hedges We are exposed to interest rate risk due to the mismatch between the interest expense we pay on our loans at fixed rates and the variable rates of interest we receive from cash, cash equivalents and other short-term investments. We have issued long-term debt in U.S. dollars at fixed interest rates based on the market conditions at the time of financing. The fair value of our fixed rate debt changes when the underlying market rates of interest change, and, in the past, we have used interest rate swaps to change our fixed interest rate payments to U.S. dollar LIBOR-based variable interest expense to match the floating interest income from our cash, cash equivalents and other short term investments. As of January 31, 2017 , all interest rate swap contracts had either been terminated or had expired. On November 25, 2008, we terminated two interest rate swap contracts associated with our 2017 senior notes that represented the notional amount of $400 million . On October 20, 2014 we prepaid $500 million out of $600 million principal of our 2017 senior notes and fully amortized the associated proportionate deferred gain to other income (expense). The remaining gain to be amortized related to the $100 million of 2017 senior notes at January 31, 2017 was $1 million . On August 9, 2011, we terminated five interest rate swap contracts related to our 2020 senior notes that represented the notional amount of $500 million . The remaining gain to be amortized at January 31, 2017 was $14 million . All deferred gains from terminated interest rate swaps are being amortized over the remaining life of the respective senior notes. Cash Flow Hedges We enter into foreign exchange contracts to hedge our forecasted operational cash flow exposures resulting from changes in foreign currency exchange rates. These foreign exchange contracts, carried at fair value, have maturities between one and twelve months. These derivative instruments are designated and qualify as cash flow hedges under the criteria prescribed in the authoritative guidance and are assessed for effectiveness against the underlying exposure every reporting period. Changes in the time value of the foreign exchange contract are excluded from the assessment of hedge effectiveness and are recognized in other income (expense) each period. The changes in fair value of the effective portion of the derivative instrument are recognized in accumulated other comprehensive income (loss). Amounts associated with cash flow hedges are reclassified to cost of sales in the condensed consolidated statement of operations when the forecasted transaction occurs. If it becomes probable that the forecasted transaction will not occur, the hedge relationship will be de-designated and amounts accumulated in other comprehensive income (loss) will be reclassified to other income (expense) in the current period. Changes in the fair value of the ineffective portion of derivative instruments are recognized in other income (expense) in the condensed consolidated statement of operations in the current period. We record the premium paid (time value) of an option on the date of purchase as an asset. For options designated as cash flow hedges, changes in the time value are excluded from the assessment of hedge effectiveness and are recognized in other income (expense) over the life of the option contract. Ineffectiveness in the three months ended January 31, 2017 and 2016 was not significant. For the three months ended January 31, 2017 and 2016 gains and losses recognized in other income (expense) due to de-designation of cash flow hedge contracts were not significant. In July 2012, Agilent executed treasury lock agreements for $400 million in connection with future interest payments to be made on our 2022 senior notes issued on September 10, 2012. We designated the treasury lock as a cash flow hedge. The treasury lock contracts were terminated on September 10, 2012 and we recognized a deferred gain in accumulated other comprehensive income which is being amortized to interest expense over the life of the 2022 senior notes. The remaining gain to be amortized related to the treasury lock agreements at January 31, 2017 was $2 million . In February 2016, Agilent executed three forward-starting pay fixed/receive variable interest rate swaps for the notional amount of $300 million in connection with future interest payments to be made on our 2026 senior notes issued on September 15, 2016. These derivative instruments were designated and qualified as cash flow hedges under the criteria prescribed in the authoritative guidance. The swap arrangements were terminated on September 15, 2016 with a payment of $10 million and we recognized this as a deferred loss in accumulated other comprehensive income which is being amortized to interest expense over the life of the 2026 senior notes. The remaining loss to be amortized related to the interest rate swap agreements at January 31, 2017 was $9 million . Other Hedges Additionally, we enter into foreign exchange contracts to hedge monetary assets and liabilities that are denominated in currencies other than the functional currency of our subsidiaries. These foreign exchange contracts are carried at fair value and do not qualify for hedge accounting treatment and are not designated as hedging instruments. Changes in value of the derivative are recognized in other income (expense) in the condensed consolidated statement of operations, in the current period, along with the offsetting foreign currency gain or loss on the underlying assets or liabilities. Our use of derivative instruments exposes us to credit risk to the extent that the counterparties may be unable to meet the terms of the agreement. We do, however, seek to mitigate such risks by limiting our counterparties to major financial institutions which are selected based on their credit ratings and other factors. We have established policies and procedures for mitigating credit risk that include establishing counterparty credit limits, monitoring credit exposures, and continually assessing the creditworthiness of counterparties. A number of our derivative agreements contain threshold limits to the net liability position with counterparties and are dependent on our corporate credit rating determined by the major credit rating agencies. The counterparties to the derivative instruments may request collateralization, in accordance with derivative agreements, on derivative instruments in net liability positions. The aggregate fair value of all derivative instruments with credit-risk-related contingent features that were in a net liability position as of January 31, 2017 , was zero . The credit-risk-related contingent features underlying these agreements had not been triggered as of January 31, 2017 . There were 39 foreign exchange forward contracts open as of January 31, 2017 and designated as cash flow hedges. There were 138 foreign exchange forward contracts open as of January 31, 2017 not designated as hedging instruments. The aggregated notional amounts by currency and designation as of January 31, 2017 were as follows: Derivatives Designated as Cash Flow Hedges Derivatives Not Designated as Hedging Instruments Forward Contracts USD Forward Contracts USD Currency Buy/(Sell) Buy/(Sell) (in millions) Euro $ (9 ) $ 78 British Pound (30 ) (17 ) Canadian Dollar (20 ) (3 ) Australian Dollar 3 15 Malaysian Ringgit — (3 ) Japanese Yen (44 ) (7 ) Other 3 (12 ) Totals $ (97 ) $ 51 Derivative instruments are subject to master netting arrangements and are disclosed gross in the balance sheet in accordance with the authoritative guidance. The gross fair values and balance sheet location of derivative instruments held in the consolidated balance sheet as of January 31, 2017 and October 31, 2016 were as follows: Fair Values of Derivative Instruments Asset Derivatives Liability Derivatives Fair Value Fair Value Balance Sheet Location January 31, October 31, Balance Sheet Location January 31, October 31, (in millions) Derivatives designated as hedging instruments: Cash flow hedges Foreign exchange contracts Other current assets $ 3 $ 5 Other accrued liabilities $ — $ 3 Derivatives not designated as hedging instruments: Foreign exchange contracts Other current assets $ 5 $ 4 Other accrued liabilities $ 3 $ 5 Total derivatives $ 8 $ 9 $ 3 $ 8 The effect of derivative instruments for foreign exchange contracts designated as hedging instruments and not designated as hedging instruments in our consolidated statement of operations were as follows: Three Months Ended January 31, 2017 2016 (in millions) Derivatives designated as hedging instruments: Cash Flow Hedges Foreign exchange contracts: Gain recognized in accumulated other comprehensive income (loss) $ 2 $ 4 Gain reclassified from accumulated other comprehensive income (loss) into cost of sales $ 1 $ 1 Derivatives not designated as hedging instruments: Loss recognized in other income (expense) $ (3 ) $ (2 ) The estimated amount of existing net gain at January 31, 2017 that is expected to be reclassified from other comprehensive income (loss) to cost of sales within the next twelve months is $4 million . |
RETIREMENT PLANS AND POST RETIR
RETIREMENT PLANS AND POST RETIREMENT PENSION PLANS (Notes) | 3 Months Ended |
Jan. 31, 2017 | |
Defined Benefit Pension Plans and Defined Benefit Postretirement Plans Disclosure [Abstract] | |
RETIREMENT PLANS AND POST RETIREMENT PENSION PLANS | 10. RETIREMENT PLANS AND POST RETIREMENT PENSION PLANS Components of net periodic costs. For the three months ended January 31, 2017 and 2016 , our net pension and post retirement benefit costs were comprised of the following: Pensions U.S. Plans Non-U.S. Plans U.S. Post Retirement Benefit Plans Three Months Ended January 31, 2017 2016 2017 2016 2017 2016 (in millions) Service cost—benefits earned during the period $ — $ 6 $ 4 $ 4 $ — $ — Interest cost on benefit obligation 3 3 3 4 1 1 Expected return on plan assets (6 ) (6 ) (10 ) (11 ) (2 ) (2 ) Amortization: Actuarial losses 1 2 9 7 3 3 Prior service cost — (1 ) — — (2 ) (2 ) Total net plan costs $ (2 ) $ 4 $ 6 $ 4 $ — $ — Curtailments and settlements gains $ (16 ) $ (32 ) We made no contributions to our U.S. defined benefit plans during the three months ended January 31, 2017 . We contributed $3 million to our non-U.S. defined benefit plans during the three months ended January 31, 2017 . We made no contributions to our U.S. defined benefit plans during the three months ended January 31, 2016 . We contributed $4 million to our non-U.S. defined benefit plans during the three months ended January 31, 2016 . We expect to contribute $25 million to our U.S. defined benefit plans during the remainder of 2017 and we expect to contribute $17 million to our non-U.S. defined benefit plans during the remainder of 2017 . In Japan, Agilent has defined benefit pension plans established under the Japanese Welfare Pension Insurance Law (JWPIL). The plans are composed of (a) a substitutional portion based on the pay-related part of the old-age pension benefits prescribed by JWPIL (similar to social security benefits in the United States) and (b) a corporate portion based on a contributory defined benefit pension arrangement established at the discretion of the company. During the three months ended January 31, 2017, Agilent received government approval and returned the substitutional portion of Japan's pension plan to the Japanese government, as allowed by the JWPIL. The transfer resulted in a net gain of $32 million recorded within cost of sales and operating expenses in the condensed consolidated statement of operations. The net gain consisted of two parts - a gain of $41 million , representing the difference between the fair values of the Accumulated Benefit Obligation (ABO) settled of $65 million and the assets transferred from the pension trust to the government of Japan of $24 million , offset by a settlement loss of $9 million related to the recognition of previously unrecognized actuarial losses included in accumulated other comprehensive income. Plan Amendments. During the three months ended January 31, 2016, we made changes to our U.S. Retirement Plan and Supplemental Benefits Retirement Plan ("U.S. Plans"). Effective April 30, 2016, benefit accruals under the U.S. Plans were frozen. Any pension benefit earned in the U.S. Plans through April 30, 2016 remained fully vested, and there were no additional benefit accruals after April 30, 2016. In addition, active employees who have not met the eligibility requirement for the Retiree Medical Account (RMA) under the U.S. Post Retirement Benefit Plan - 55 years old with at least 15 years of Agilent service - as of April 30, 2016 - will only be eligible for 50 percent of the current RMA reimbursement amount upon retirement. Due to these plan amendments, we recorded a curtailment gain of $15 million in the U.S. Plans during the three months ended January 31, 2016 . In addition, we recognized a settlement gain of $1 million related to the U.S. Supplemental Benefits Retirement Plan during the three months ended January 31, 2016 . |
WARRANTIES AND CONTINGENCIES (N
WARRANTIES AND CONTINGENCIES (Notes) | 3 Months Ended |
Jan. 31, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
WARRANTIES AND CONTINGENCIES | 11. WARRANTIES AND CONTINGENCIES Warranties We accrue for standard warranty costs based on historical trends in warranty charges as a percentage of net product shipments. The accrual is reviewed regularly and periodically adjusted to reflect changes in warranty cost estimates. Estimated warranty charges are recorded within cost of products at the time products are sold. The standard warranty accrual balances are held in other accrued and other long-term liabilities on our condensed consolidated balance sheet. Our standard warranty terms typically extend to one year from the date of delivery, depending on the product. A summary of the standard warranty accrual activity is shown in the table below: January 31, 2017 2016 (in millions) Beginning balance as of November 1 $ 35 $ 31 Accruals for warranties including change in estimate 13 21 Settlements made during the period (13 ) (14 ) Ending balance as of January 31, $ 35 $ 38 Accruals for warranties due within one year $ 34 $ 36 Accruals for warranties due after one year 1 2 Ending balance as of January 31, $ 35 $ 38 Contingencies We are involved in lawsuits, claims, investigations and proceedings, including, but not limited to, intellectual property, commercial and employment matters, which arise in the ordinary course of business. There are no matters pending that we currently believe are probable and reasonably possible of having a material impact to our business, consolidated financial condition, results of operations or cash flows. |
SHORT-TERM DEBT (Notes)
SHORT-TERM DEBT (Notes) | 3 Months Ended |
Jan. 31, 2017 | |
Short-term Debt [Abstract] | |
SHORT-TERM DEBT | 12. SHORT-TERM DEBT Credit Facilities On September 15, 2014 , Agilent entered into a credit agreement with a group of financial institutions which provides for a $400 million five -year unsecured credit facility that will expire on September 15, 2019 . On June 9, 2015, the commitments under the existing credit facility were increased by $300 million so that the aggregate commitments under the facility now total $700 million . As of January 31, 2017 , the company had borrowings of $89 million outstanding under the credit facility. We were in compliance with the covenants for the credit facility during the three months ended January 31, 2017 . 2017 Senior Notes In October 2007 , the company issued an aggregate principal amount of $600 million in senior notes ("2017 senior notes"). On October 20, 2014, we settled the redemption of $500 million of the $600 million outstanding aggregate principal amount of our 2017 senior notes. The remaining $100 million in senior notes will mature on November 1, 2017. All interest rate swap contracts associated with the 2017 senior notes have been terminated and the amounts to be amortized over the remaining life of the senior notes as of January 31, 2017 was $1 million . All outstanding notes issued are unsecured and rank equally in right of payment with all of Agilent’s other senior unsecured indebtedness. There have been no changes to the principal, maturity, interest rates and interest payment terms of the 2017 senior notes in the three months ended January 31, 2017 as compared to the senior notes described in our Annual Report on Form 10-K for the fiscal year ended October 31, 2016 . |
LONG-TERM DEBT (Notes)
LONG-TERM DEBT (Notes) | 3 Months Ended |
Jan. 31, 2017 | |
Debt Disclosure [Abstract] | |
LONG-TERM DEBT | 13. LONG-TERM DEBT Senior Notes The following table summarizes the company’s long-term senior notes and the related interest rate swaps: January 31, 2017 October 31, 2016 Amortized Principal Swap Total Amortized Principal Swap Total (in millions) 2017 Senior Notes — — — 100 1 101 2020 Senior Notes 498 14 512 498 15 513 2022 Senior Notes 398 — 398 398 — 398 2023 Senior Notes 595 — 595 595 — 595 2026 Senior Notes 297 — 297 297 — 297 Total $ 1,788 $ 14 $ 1,802 $ 1,888 $ 16 $ 1,904 The 2017 senior notes are repayable within one year and have been reclassified to short-term debt, see Note 12, "Short-Term Debt". On November 1, 2016, we adopted new guidance related to the presentation of debt issuance costs in the balance sheet. As a result, the amortized principal of long-term debt decreased by $8 million . The table above for October 31, 2016 reflects the new disclosure requirement. Please refer to Note 2, "New Accounting Pronouncements" for additional information. All outstanding notes listed above are unsecured and rank equally in right of payment with all of Agilent’s other senior unsecured indebtedness. Other than described above, there have been no changes to the principal, maturity, interest rates and interest payment terms of the Agilent senior notes, detailed in the table above, in the three months ended January 31, 2017 as compared to the senior notes described in our Annual Report on Form 10-K for the fiscal year ended October 31, 2016 . All interest rate swap contracts have been terminated and amounts to be amortized over the remaining life of the senior notes as of January 31, 2017 and October 31, 2016 are detailed above. |
STOCKHOLDERS' EQUITY (Notes)
STOCKHOLDERS' EQUITY (Notes) | 3 Months Ended |
Jan. 31, 2017 | |
Stockholders' Equity Note [Abstract] | |
STOCKHOLDERS EQUITY | 14. STOCKHOLDERS' EQUITY Stock Repurchase Program On November 22, 2013 we announced that our board of directors had authorized a share repurchase program effective in the first quarter of fiscal year 2014, upon the conclusion of the company's previous $1 billion repurchase program. The program was designed to reduce or eliminate dilution resulting from issuance of stock under the company's employee equity incentive programs to target maintaining a weighted average share count of approximately 335 million diluted shares. During the three months ended January 31, 2016 , we repurchased approximately 2.4 million shares for $98 million , which completed the purchases under this authorization. On May 28, 2015 we announced that our board of directors had approved a new share repurchase program (the "2015 repurchase program"). The 2015 repurchase program authorizes the purchase of up to $1.14 billion of our common stock through and including November 1, 2018. The 2015 repurchase program does not require the company to acquire a specific number of shares and may be suspended or discontinued at any time. During the three months ended January 31, 2017 , we repurchased approximately 2.5 million shares for $111 million under this authorization. During the three months ended January 31, 2016, we repurchased approximately 2.5 million shares for $102 million under this authorization. As of January 31, 2017 , we had remaining authorization to repurchase up to $693 million of our common stock under this program. In the first quarter of 2017, we retired 292.5 million treasury shares at an aggregate cost of $10.6 billion , which represents all our previously repurchased shares over the past 11 years and our repurchases made in the first quarter of fiscal year 2017. The retirement of our treasury shares resulted in a decrease of $6.7 billion to retained earnings and a decrease of $3.9 billion to additional paid-in-capital. Cash Dividends on Shares of Common Stock During the three months ended January 31, 2017 , we paid cash dividends of $0.132 per common share or $42 million on the company's common stock. During the three months ended January 31, 2016 , we paid cash dividends of $0.115 per common share or $38 million on the company's common stock. The timing and amounts of any future dividends are subject to determination and approval by our board of directors. Accumulated Other Comprehensive Income (Loss) Changes in accumulated other comprehensive income (loss) by component and related tax effects were as follows (in millions): Net defined benefit pension cost and post retirement plan costs Three Months Ended January 31, 2017 Foreign currency translation Prior service credits Actuarial Losses Unrealized gains (losses) on derivatives Total (in millions) As of October 31, 2016 $ (197 ) $ 146 $ (451 ) $ (1 ) $ (503 ) Other comprehensive income (loss) before reclassifications (4 ) — 3 2 1 Amounts reclassified out of accumulated other comprehensive income (loss) — (2 ) 22 (1 ) 19 Tax (expense) benefit 1 1 (8 ) — (6 ) Other comprehensive income (loss) (3 ) (1 ) 17 1 14 As of January 31, 2017 $ (200 ) $ 145 $ (434 ) $ — $ (489 ) Reclassifications out of accumulated other comprehensive income (loss) for the three months ended January 31, 2017 and 2016 were as follows (in millions): Details about accumulated other comprehensive income (loss) components Amounts Reclassified from other comprehensive income (loss) Affected line item in statement of operations Three Months Ended January 31, 2017 2016 Unrealized gains on derivatives $ 1 $ 1 Cost of products 1 1 Total before income tax (1 ) — (Provision) benefit for income tax — 1 Total net of income tax Net defined benefit pension cost and post retirement plan costs: Actuarial net loss (22 ) (13 ) Prior service benefit 2 19 (20 ) 6 Total before income tax 6 (4 ) (Provision) benefit for income tax (14 ) 2 Total net of income tax Total reclassifications for the period $ (14 ) $ 3 Amounts in parentheses indicate reductions to income and increases to other comprehensive income (loss). Reclassifications out of accumulated other comprehensive income (loss) of prior service benefit and actuarial net loss in respect of retirement plans and post retirement pension plans are included in the computation of net periodic cost together with curtailments and settlements (see Note 10 "Retirement Plans and Post Retirement Pension Plans"). |
SEGMENT INFORMATION (Notes)
SEGMENT INFORMATION (Notes) | 3 Months Ended |
Jan. 31, 2017 | |
Segment Reporting [Abstract] | |
SEGMENT INFORMATION | 15. SEGMENT INFORMATION Description of segments. We are a global leader in life sciences, diagnostics and applied chemical markets, providing application focused solutions that include instruments, software, services and consumables for the entire laboratory workflow. Agilent has three business segments comprised of the life sciences and applied markets business, diagnostics and genomics business and the Agilent CrossLab business each of which comprises a reportable segment. The three operating segments were determined based primarily on how the chief operating decision maker views and evaluates our operations. Operating results are regularly reviewed by the chief operating decision maker to make decisions about resources to be allocated to the segment and to assess its performance. Other factors, including market separation and customer specific applications, go-to-market channels, products and services and manufacturing are considered in determining the formation of these operating segments. A description of our three reportable segments is as follows: Our life sciences and applied markets business provides application-focused solutions that include instruments and software that enable customers to identify, quantify and analyze the physical and biological properties of substances and products, as well as enable customers in the clinical and life sciences research areas to interrogate samples at the molecular level. Key product categories include: liquid chromatography ("LC") systems and components; liquid chromatography mass spectrometry ("LCMS") systems; gas chromatography ("GC") systems and components; gas chromatography mass spectrometry ("GCMS") systems; inductively coupled plasma mass spectrometry ("ICP-MS") instruments; atomic absorption ("AA") instruments; microwave plasma-atomic emission spectrometry (“MP-AES”) instruments; inductively coupled plasma optical emission spectrometry ("ICP-OES") instruments; cell analysis plate based assays; laboratory software and informatics systems; laboratory automation and robotic systems; dissolution testing; vacuum pumps and measurement technologies. Our diagnostics and genomics business is comprised of five areas of activity providing solutions that include reagents, instruments, software and consumables, which enable customers in the clinical and life sciences research areas to interrogate samples at the cellular and molecular level. First, our genomics business includes arrays for DNA mutation detection, genotyping, gene copy number determination, identification of gene rearrangements, DNA methylation profiling, gene expression profiling, as well as next generation sequencing ("NGS") target enrichment and genetic data management and interpretation support software. Second, our nucleic acid solutions business provides equipment and expertise focused on production of synthesized oligonucleotides under pharmaceutical good manufacturing practices ("GMP") conditions for use as active pharmaceutical ingredients ("API") in an emerging class of drugs that utilize nucleic acid molecules for disease therapy. Next, our pathology solutions business is focused on product offerings to cancer diagnostics and anatomic pathology workflows. The broad portfolio of offerings includes immunohistochemistry (“IHC”), in situ hybridization (“ISH”), hematoxylin and eosin (“H&E”) staining and special staining. We also collaborate with a number of major pharmaceutical companies to develop new potential pharmacodiagnostics, also known as companion diagnostics, which may be used to identify patients most likely to benefit from a specific targeted therapy. Finally, the reagent partnership business is a provider of reagents used for turbidimetry and flow cytometry. The Agilent CrossLab business spans the entire lab with its extensive consumables and services portfolio, which is designed to improve customer outcomes. The majority of the portfolio is vendor neutral, meaning Agilent can serve and supply customers regardless of their instrument purchase choices. Solutions range from chemistries and supplies to services and software helping to connect the entire lab. Key product categories in consumables include GC and LC columns, sample preparation products, custom chemistries, and a large selection of laboratory instrument supplies. Services include startup, operational, training and compliance support, software as a service, as well as asset management and consultative services that help increase customer productivity. Custom service and consumable bundles are tailored to meet the specific application needs of various industries and to keep instruments fully operational and compliant with the respective industry requirements. A significant portion of the segments' expenses arise from shared services and infrastructure that we have historically provided to the segments in order to realize economies of scale and to efficiently use resources. These expenses, collectively called corporate charges, include legal, accounting, tax, real estate, insurance services, information technology services, treasury, other corporate infrastructure expenses and costs of centralized research and development. Charges are allocated to the segments, and the allocations have been determined on a basis that we consider to be a reasonable reflection of the utilization of services provided to or benefits received by the segments. In addition, we do not allocate amortization and impairment of acquisition-related intangible assets, pension curtailment or settlement gains, restructuring and transformational expenses, acquisition and integration costs and certain other charges to the operating margin for each segment because management does not include this information in its measurement of the performance of the operating segments. The following tables reflect the results of our reportable segments under our management reporting system. The performance of each segment is measured based on several metrics, including segment income from operations. These results are used, in part, by the chief operating decision maker in evaluating the performance of, and in allocating resources to, each of the segments. The profitability of each of the segments is measured after excluding restructuring and asset impairment charges, investment gains and losses, interest income, interest expense, acquisition and integration costs, non-cash amortization and other items as noted in the reconciliations below. Life Sciences and Applied Markets Diagnostics and Genomics Agilent CrossLab Total (in millions) Three months ended January 31, 2017: Total net revenue $ 540 $ 164 $ 363 $ 1,067 Segment income from operations $ 126 $ 23 $ 74 $ 223 Three months ended January 31, 2016: Total net revenue $ 526 $ 158 $ 344 $ 1,028 Segment income from operations $ 114 $ 15 $ 76 $ 205 The following table reconciles reportable segments’ income from operations to Agilent’s total enterprise income before taxes: Three Months Ended January 31, 2017 2016 (in millions) Total reportable segments’ income from operations $ 223 $ 205 Transformational initiatives (2 ) (11 ) Amortization of intangibles (31 ) (43 ) Acquisition and integration costs (14 ) (5 ) Business exit and divestiture costs (primarily our NMR business) — (5 ) Pension settlement gain 32 1 Pension curtailment gain — 15 Other (2 ) (2 ) Interest income 4 2 Interest expense (20 ) (18 ) Other income (expense), net 3 3 Income before taxes, as reported $ 193 $ 142 The following table reflects segment assets under our management reporting system. Segment assets include allocations of corporate assets, including deferred tax assets, goodwill, net other intangibles and other assets. Unallocated assets primarily consist of cash, cash equivalents, the valuation allowance relating to deferred tax assets and other assets. Life Sciences and Applied Markets Diagnostics and Genomics Agilent CrossLab Total (in millions) Assets: As of January 31, 2017 $ 1,677 $ 2,052 $ 1,102 $ 4,831 As of October 31, 2016 $ 1,687 $ 1,960 $ 1,082 $ 4,729 |
OVERVIEW, BASIS OF PRESENTATI23
OVERVIEW, BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 3 Months Ended |
Jan. 31, 2017 | |
Accounting Policies [Abstract] | |
Overview, Segment Structure and Basis of Presentation | Overview. Agilent Technologies, Inc. ("we", "Agilent" or the "company"), incorporated in Delaware in May 1999, is a global leader in life sciences, diagnostics and applied chemical markets, providing application focused solutions that include instruments, software, services and consumables for the entire laboratory workflow. Our fiscal year-end is October 31, and our fiscal quarters end on January 31, April 30 and July 31. Unless otherwise stated, these dates refer to our fiscal year and fiscal quarters. Basis of Presentation . We have prepared the accompanying financial data for the three months ended January 31, 2017 and 2016 pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles (“GAAP”) in the U.S. have been condensed or omitted pursuant to such rules and regulations. The October 31, 2016 condensed balance sheet data was derived from audited financial statements but does not include all the disclosures required in audited financial statements by U.S. GAAP. The accompanying financial data and information should be read in conjunction with our Annual Report on Form 10-K for the fiscal year ended October 31, 2016 . In the opinion of management, the accompanying condensed consolidated financial statements contain all normal and recurring adjustments necessary for a fair statement of our condensed consolidated balance sheet as of January 31, 2017 and October 31, 2016 , condensed consolidated statement of comprehensive income (loss) for the three months ended January 31, 2017 and 2016 , condensed consolidated statement of operations for the three months ended January 31, 2017 and 2016 , and condensed consolidated statement of cash flows for the three months ended January 31, 2017 and 2016 . |
Use of Estimates | Use of Estimates. The preparation of condensed consolidated financial statements in accordance with GAAP in the U.S. requires management to make estimates and assumptions that affect the amounts reported in our condensed consolidated financial statements and accompanying notes. Management bases its estimates on historical experience and various other assumptions believed to be reasonable. Although these estimates are based on management’s best knowledge of current events and actions that may impact the company in the future, actual results may be different from the estimates. Our critical accounting policies are those that affect our financial statements materially and involve difficult, subjective or complex judgments by management. Those policies are revenue recognition, inventory valuation, share-based compensation, retirement and post-retirement benefit plan assumptions, goodwill and purchased intangible assets and accounting for income taxes. Retirement of Treasury Shares. Upon the formal retirement of treasury shares, we deduct the par value of the retired treasury shares from common stock and allocate the excess of cost over par as a deduction between additional paid-in capital and retained earnings. All retired treasury shares revert to the status of authorized but unissued shares. |
Retirement of Treasury Shares accounting policy | Retirement of Treasury Shares. Upon the formal retirement of treasury shares, we deduct the par value of the retired treasury shares from common stock and allocate the excess of cost over par as a deduction between additional paid-in capital and retained earnings. All retired treasury shares revert to the status of authorized but unissued shares. |
Variable Interest Entity Disclosure | Variable Interest Entities. We make a determination upon entering into an arrangement whether an entity in which we have made an investment is considered a Variable Interest Entity (“VIE”). The company evaluates its investments in privately held companies on an ongoing basis. We have determined that as of January 31, 2017 there were no VIE’s required to be consolidated in the company’s consolidated financial statements because we do not have a controlling financial interest in any of the VIE’s that we have invested in nor are we the primary beneficiary. We account for these investments under either the equity or cost method, depending on the circumstances. We periodically reassess whether we are the primary beneficiary of a VIE. The reassessment process considers whether we have acquired the power to direct the most significant activities of the VIE through changes in governing documents or other circumstances. We also reconsider whether entities previously determined not to be VIEs have become VIEs, based on changes in facts and circumstances including changes in contractual arrangements and capital structure. As of January 31, 2017 , the carrying value of our investment in a VIE was $80 million with a maximum exposure of $80 million . The investments are included on the long term investments line of the condensed consolidated balance sheet. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments. The carrying values of certain of our financial instruments including cash and cash equivalents, accounts receivable, accounts payable, accrued compensation and other accrued liabilities approximate fair value because of their short maturities. The fair value of long-term equity investments is determined using quoted market prices for those securities when available. For those long-term equity investments accounted for under the cost or equity method, their carrying value approximates their estimated fair value. Equity method investments are reported at the amount of the company’s initial investment and adjusted each period for the company’s share of the investee’s income or loss and dividend paid. There are no equity method investments as of January 31, 2017. The fair value of our long-term debt, calculated from quoted prices which are primarily Level 1 inputs under the accounting guidance fair value hierarchy, exceeds the carrying value by approximately $154 million and $104 million as of January 31, 2017 and October 31, 2016 , respectively. The change in the excess of fair value over carrying value in the three months ended January 31, 2017 is due to fluctuations in market interest rates. The carrying value as of October 31, 2016 reflects the new accounting guidance related to the presentation of debt issuance costs which we adopted on November 1, 2016. The fair value of foreign currency contracts used for hedging purposes is estimated internally by using inputs tied to active markets. These inputs, for example, interest rate yield curves, foreign exchange rates, and forward and spot prices for currencies are observable in the market or can be corroborated by observable market data for substantially the full term of the assets or liabilities. See also Note 8, "Fair Value Measurements" for additional information on the fair value of financial instruments. |
Goodwill and Purchased Intangible Assets | Goodwill and Purchased Intangible Assets. Under the authoritative guidance we have the option to perform a qualitative assessment to determine whether further impairment testing is necessary. The accounting standard gives an entity the option to first assess qualitative factors to determine whether performing the two-step test is necessary. If an entity believes, as a result of its qualitative assessment, that it is more-likely-than-not (i.e. greater than 50% chance) that the fair value of a reporting unit is less than its carrying amount, the quantitative impairment test will be required. Otherwise, no further testing will be required. The guidance includes examples of events and circumstances that might indicate that a reporting unit's fair value is less than its carrying amount. These include macro-economic conditions such as deterioration in the entity's operating environment or industry or market considerations; entity-specific events such as increasing costs, declining financial performance, or loss of key personnel; or other events such as an expectation that a reporting unit will be sold or a sustained decrease in the stock price on either an absolute basis or relative to peers. If it is determined, as a result of the qualitative assessment, that it is more-likely-than-not that the fair value of a reporting unit is less than its carrying amount, the provisions of authoritative guidance require that we perform a two-step impairment test on goodwill. In the first step, we compare the fair value of each reporting unit to its carrying value. The second step (if necessary) measures the amount of impairment by applying fair-value-based tests to the individual assets and liabilities within each reporting unit. As defined in the authoritative guidance, a reporting unit is an operating segment, or one level below an operating segment. We aggregate components of an operating segment that have similar economic characteristics into our reporting units. In fiscal year 2016, we assessed goodwill impairment for our three reporting units which consisted of three segments: life sciences and applied markets, diagnostics and genomics and Agilent CrossLab. We performed a qualitative test for goodwill impairment of the three reporting units, as of September 30, 2016. Based on the results of our qualitative testing, we believe that it is more-likely-than-not- that the fair value of these reporting units are greater than their respective carrying values. Each quarter we review the events and circumstances to determine if goodwill impairment is indicated. There was no impairment of goodwill during the three months ended January 31, 2017 and 2016 . Purchased intangible assets consist primarily of acquired developed technologies, proprietary know-how, trademarks, and customer relationships and are amortized using the best estimate of the asset's useful life that reflect the pattern in which the economic benefits are consumed or used up or a straight-line method ranging from 6 months to 15 years . In-process research and development ("IPR&D") is initially capitalized at fair value as an intangible asset with an indefinite life and assessed for impairment thereafter. When the IPR&D project is complete, it is reclassified as an amortizable purchased intangible asset and is amortized over its estimated useful life. If an IPR&D project is abandoned, Agilent will record a charge for the value of the related intangible asset to Agilent's condensed consolidated statement of operations in the period it is abandoned. Agilent's indefinite-lived intangible assets are IPR&D intangible assets. The accounting guidance allows a qualitative approach for testing indefinite-lived intangible assets for impairment, similar to the issued impairment testing guidance for goodwill and allows the option to first assess qualitative factors (events and circumstances) that could have affected the significant inputs used in determining the fair value of the indefinite-lived intangible asset to determine whether it is more-likely-than-not (i.e. greater than 50% chance) that the indefinite-lived intangible asset is impaired. An organization may choose to bypass the qualitative assessment for any indefinite-lived intangible asset in any period and proceed directly to calculating its fair value. We performed a qualitative test for impairment of indefinite-lived intangible assets as of September 30, 2016. Based on the results of our qualitative testing, we believe that it is more-likely-than-not that the fair value of these indefinite-lived intangible assets is greater than their respective carrying values. Each quarter we review the events and circumstances to determine if impairment of indefinite-lived intangible assets is indicated. There were no indicators of impairment of indefinite-lived intangible assets during the three months ended January 31, 2017 and 2016 . |
SHARE-BASED COMPENSATION (Table
SHARE-BASED COMPENSATION (Tables) | 3 Months Ended |
Jan. 31, 2017 | |
Share-based Compensation [Abstract] | |
Allocated Share-based compensation expense disclosure | The impact on our results for share-based compensation was as follows: Three Months Ended January 31, 2017 2016 (in millions) Cost of products and services $ 6 $ 6 Research and development 2 2 Selling, general and administrative 13 15 Total share-based compensation expense $ 21 $ 23 |
Assumptions used to estimate fair value for LTPP | The following assumptions were used to estimate the fair value of the LTPP grants. Three Months Ended January 31, 2017 2016 LTPP: Volatility of Agilent shares 23% 24% Volatility of selected peer-company shares 15%-63% 14%-50% Price-wise correlation with selected peers 36% 35% |
NET INCOME PER SHARE (Tables)
NET INCOME PER SHARE (Tables) | 3 Months Ended |
Jan. 31, 2017 | |
Earnings Per Share [Abstract] | |
Reconciliation of the numerators and denominators of the basic and diluted net income per share | The following is a reconciliation of the numerator and denominator of the basic and diluted net income per share computations for the periods presented below: Three Months Ended January 31, 2017 2016 (in millions) Numerator: Net income $ 168 $ 121 Denominator: Basic weighted-average shares 322 329 Potential common shares— stock options and other employee stock plans 4 3 Diluted weighted-average shares 326 332 |
INVENTORY (Tables)
INVENTORY (Tables) | 3 Months Ended |
Jan. 31, 2017 | |
Inventory, Net [Abstract] | |
INVENTORY | 6. INVENTORY January 31, October 31, (in millions) Finished goods $ 354 $ 339 Purchased parts and fabricated assemblies 197 194 Inventory $ 551 $ 533 |
GOODWILL AND OTHER INTANGIBLE27
GOODWILL AND OTHER INTANGIBLE ASSETS (Tables) | 3 Months Ended |
Jan. 31, 2017 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill balances and movements for each reportable segments during the period | The following table presents goodwill balances and the movements for each of our reportable segments during the three months ended January 31, 2017 : Life Sciences and Applied Markets Diagnostics and Genomics Agilent CrossLab Total (in millions) Goodwill as of October 31, 2016 $ 790 $ 1,223 $ 504 $ 2,517 Foreign currency translation impact — — — — Goodwill arising from acquisitions — 46 — 46 Goodwill as of January 31, 2017 $ 790 $ 1,269 $ 504 $ 2,563 |
Components of other intangibles during the period | The components of other intangibles as of January 31, 2017 and October 31, 2016 are shown in the table below: Purchased Other Intangible Assets Gross Carrying Amount Accumulated Amortization Net Book Value (in millions) As of October 31, 2016 Purchased technology $ 823 $ 572 $ 251 Backlog 1 1 — Trademark/Tradename 149 61 88 Customer relationships 263 211 52 Total amortizable intangible assets 1,236 845 391 In-Process R&D 17 — 17 Total $ 1,253 $ 845 $ 408 As of January 31, 2017 Purchased technology $ 845 $ 588 $ 257 Trademark/Tradename 149 64 85 Customer relationships 145 93 52 Total amortizable intangible assets 1,139 745 394 In-Process R&D 17 — 17 Total $ 1,156 $ 745 $ 411 |
Schedule of estimated future amortization expense of finite-lived intangible assets | Future amortization expense related to existing finite-lived purchased intangible assets for the remainder of fiscal year 2017 and for each of the five succeeding fiscal years and thereafter is estimated below: Estimated future amortization expense: (in millions) Remainder of 2017 $ 87 2018 $ 91 2019 $ 64 2020 $ 53 2021 $ 41 2022 $ 25 Thereafter $ 33 |
FAIR VALUE MEASUREMENTS (Tables
FAIR VALUE MEASUREMENTS (Tables) | 3 Months Ended |
Jan. 31, 2017 | |
Fair Value Disclosures [Abstract] | |
Fair Value Assets And Liabilities Measured On Recurring Basis | Financial assets and liabilities measured at fair value on a recurring basis as of January 31, 2017 were as follows: Fair Value Measurement at January 31, 2017 Using January 31, Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) (in millions) Assets: Short-term Cash equivalents (money market funds) $ 1,256 $ 1,256 $ — $ — Derivative instruments (foreign exchange contracts) 8 — 8 — Long-term Trading securities 29 29 — — Total assets measured at fair value $ 1,293 $ 1,285 $ 8 $ — Liabilities: Short-term Derivative instruments (foreign exchange contracts) $ 3 $ — $ 3 $ — Long-term Deferred compensation liability 29 — 29 — Total liabilities measured at fair value $ 32 $ — $ 32 $ — Financial assets and liabilities measured at fair value on a recurring basis as of October 31, 2016 were as follows: Fair Value Measurement at October 31, 2016 Using October 31, Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) (in millions) Assets: Short-term Cash equivalents (money market funds) $ 1,482 $ 1,482 $ — $ — Derivative instruments (foreign exchange contracts) 9 — 9 — Long-term Trading securities 31 31 — — Total assets measured at fair value $ 1,522 $ 1,513 $ 9 $ — Liabilities: Short-term Derivative instruments (foreign exchange contracts) $ 8 $ — $ 8 $ — Long-term Deferred compensation liability 31 — 31 — Total liabilities measured at fair value $ 39 $ — $ 39 $ — |
DERIVATIVES (Tables)
DERIVATIVES (Tables) | 3 Months Ended |
Jan. 31, 2017 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Aggregated notional amounts by currency and designation | The aggregated notional amounts by currency and designation as of January 31, 2017 were as follows: Derivatives Designated as Cash Flow Hedges Derivatives Not Designated as Hedging Instruments Forward Contracts USD Forward Contracts USD Currency Buy/(Sell) Buy/(Sell) (in millions) Euro $ (9 ) $ 78 British Pound (30 ) (17 ) Canadian Dollar (20 ) (3 ) Australian Dollar 3 15 Malaysian Ringgit — (3 ) Japanese Yen (44 ) (7 ) Other 3 (12 ) Totals $ (97 ) $ 51 |
Gross fair values and balance sheet location of derivative instruments held in the consolidated balance sheet | Derivative instruments are subject to master netting arrangements and are disclosed gross in the balance sheet in accordance with the authoritative guidance. The gross fair values and balance sheet location of derivative instruments held in the consolidated balance sheet as of January 31, 2017 and October 31, 2016 were as follows: Fair Values of Derivative Instruments Asset Derivatives Liability Derivatives Fair Value Fair Value Balance Sheet Location January 31, October 31, Balance Sheet Location January 31, October 31, (in millions) Derivatives designated as hedging instruments: Cash flow hedges Foreign exchange contracts Other current assets $ 3 $ 5 Other accrued liabilities $ — $ 3 Derivatives not designated as hedging instruments: Foreign exchange contracts Other current assets $ 5 $ 4 Other accrued liabilities $ 3 $ 5 Total derivatives $ 8 $ 9 $ 3 $ 8 |
Effect of derivative instruments for foreign exchange contracts in the consolidated statement of operations | The effect of derivative instruments for foreign exchange contracts designated as hedging instruments and not designated as hedging instruments in our consolidated statement of operations were as follows: Three Months Ended January 31, 2017 2016 (in millions) Derivatives designated as hedging instruments: Cash Flow Hedges Foreign exchange contracts: Gain recognized in accumulated other comprehensive income (loss) $ 2 $ 4 Gain reclassified from accumulated other comprehensive income (loss) into cost of sales $ 1 $ 1 Derivatives not designated as hedging instruments: Loss recognized in other income (expense) $ (3 ) $ (2 ) |
RETIREMENT PLANS AND POST RET30
RETIREMENT PLANS AND POST RETIREMENT PENSION PLANS (Tables) | 3 Months Ended |
Jan. 31, 2017 | |
Defined Benefit Pension Plans and Defined Benefit Postretirement Plans Disclosure [Abstract] | |
Schedule of net pension and post-retirement benefit costs | Components of net periodic costs. For the three months ended January 31, 2017 and 2016 , our net pension and post retirement benefit costs were comprised of the following: Pensions U.S. Plans Non-U.S. Plans U.S. Post Retirement Benefit Plans Three Months Ended January 31, 2017 2016 2017 2016 2017 2016 (in millions) Service cost—benefits earned during the period $ — $ 6 $ 4 $ 4 $ — $ — Interest cost on benefit obligation 3 3 3 4 1 1 Expected return on plan assets (6 ) (6 ) (10 ) (11 ) (2 ) (2 ) Amortization: Actuarial losses 1 2 9 7 3 3 Prior service cost — (1 ) — — (2 ) (2 ) Total net plan costs $ (2 ) $ 4 $ 6 $ 4 $ — $ — Curtailments and settlements gains $ (16 ) $ (32 ) |
WARRANTIES AND CONTINGENCIES (T
WARRANTIES AND CONTINGENCIES (Tables) | 3 Months Ended |
Jan. 31, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
Standard warranty | A summary of the standard warranty accrual activity is shown in the table below: January 31, 2017 2016 (in millions) Beginning balance as of November 1 $ 35 $ 31 Accruals for warranties including change in estimate 13 21 Settlements made during the period (13 ) (14 ) Ending balance as of January 31, $ 35 $ 38 Accruals for warranties due within one year $ 34 $ 36 Accruals for warranties due after one year 1 2 Ending balance as of January 31, $ 35 $ 38 |
LONG-TERM DEBT (Tables)
LONG-TERM DEBT (Tables) | 3 Months Ended |
Jan. 31, 2017 | |
Debt Disclosure [Abstract] | |
Schedule of Senior Notes and Related Interest Rate Swaps | The following table summarizes the company’s long-term senior notes and the related interest rate swaps: January 31, 2017 October 31, 2016 Amortized Principal Swap Total Amortized Principal Swap Total (in millions) 2017 Senior Notes — — — 100 1 101 2020 Senior Notes 498 14 512 498 15 513 2022 Senior Notes 398 — 398 398 — 398 2023 Senior Notes 595 — 595 595 — 595 2026 Senior Notes 297 — 297 297 — 297 Total $ 1,788 $ 14 $ 1,802 $ 1,888 $ 16 $ 1,904 |
STOCKHOLDERS' EQUITY (Tables)
STOCKHOLDERS' EQUITY (Tables) | 3 Months Ended |
Jan. 31, 2017 | |
Schedule of Accumulated Other Comprehensive Income (Loss) | Changes in accumulated other comprehensive income (loss) by component and related tax effects were as follows (in millions): Net defined benefit pension cost and post retirement plan costs Three Months Ended January 31, 2017 Foreign currency translation Prior service credits Actuarial Losses Unrealized gains (losses) on derivatives Total (in millions) As of October 31, 2016 $ (197 ) $ 146 $ (451 ) $ (1 ) $ (503 ) Other comprehensive income (loss) before reclassifications (4 ) — 3 2 1 Amounts reclassified out of accumulated other comprehensive income (loss) — (2 ) 22 (1 ) 19 Tax (expense) benefit 1 1 (8 ) — (6 ) Other comprehensive income (loss) (3 ) (1 ) 17 1 14 As of January 31, 2017 $ (200 ) $ 145 $ (434 ) $ — $ (489 ) |
Reclassification out of Accumulated Other Comprehensive Income | Reclassifications out of accumulated other comprehensive income (loss) for the three months ended January 31, 2017 and 2016 were as follows (in millions): Details about accumulated other comprehensive income (loss) components Amounts Reclassified from other comprehensive income (loss) Affected line item in statement of operations Three Months Ended January 31, 2017 2016 Unrealized gains on derivatives $ 1 $ 1 Cost of products 1 1 Total before income tax (1 ) — (Provision) benefit for income tax — 1 Total net of income tax Net defined benefit pension cost and post retirement plan costs: Actuarial net loss (22 ) (13 ) Prior service benefit 2 19 (20 ) 6 Total before income tax 6 (4 ) (Provision) benefit for income tax (14 ) 2 Total net of income tax Total reclassifications for the period $ (14 ) $ 3 |
SEGMENT INFORMATION (Tables)
SEGMENT INFORMATION (Tables) | 3 Months Ended |
Jan. 31, 2017 | |
Segment Reporting [Abstract] | |
Segment Profitability and Segment Assets | Life Sciences and Applied Markets Diagnostics and Genomics Agilent CrossLab Total (in millions) Three months ended January 31, 2017: Total net revenue $ 540 $ 164 $ 363 $ 1,067 Segment income from operations $ 126 $ 23 $ 74 $ 223 Three months ended January 31, 2016: Total net revenue $ 526 $ 158 $ 344 $ 1,028 Segment income from operations $ 114 $ 15 $ 76 $ 205 The following table reflects segment assets under our management reporting system. Segment assets include allocations of corporate assets, including deferred tax assets, goodwill, net other intangibles and other assets. Unallocated assets primarily consist of cash, cash equivalents, the valuation allowance relating to deferred tax assets and other assets. Life Sciences and Applied Markets Diagnostics and Genomics Agilent CrossLab Total (in millions) Assets: As of January 31, 2017 $ 1,677 $ 2,052 $ 1,102 $ 4,831 As of October 31, 2016 $ 1,687 $ 1,960 $ 1,082 $ 4,729 |
Reconciliation of segment results to total enterprise results | The following table reconciles reportable segments’ income from operations to Agilent’s total enterprise income before taxes: Three Months Ended January 31, 2017 2016 (in millions) Total reportable segments’ income from operations $ 223 $ 205 Transformational initiatives (2 ) (11 ) Amortization of intangibles (31 ) (43 ) Acquisition and integration costs (14 ) (5 ) Business exit and divestiture costs (primarily our NMR business) — (5 ) Pension settlement gain 32 1 Pension curtailment gain — 15 Other (2 ) (2 ) Interest income 4 2 Interest expense (20 ) (18 ) Other income (expense), net 3 3 Income before taxes, as reported $ 193 $ 142 |
OVERVIEW, BASIS OF PRESENTATI35
OVERVIEW, BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - USD ($) $ in Millions | 3 Months Ended | ||
Jan. 31, 2017 | Jan. 31, 2016 | Oct. 31, 2016 | |
Variable Interest Entity Disclosures | |||
Carrying Value of Investments in VIE's | $ 80 | ||
Maximum Exposure of investments in VIE's | 80 | ||
Fair Value of Financial Instruments | |||
Fair value of long term debt in excess of carrying value | 154 | $ 104 | |
Goodwill and Purchased Intangible Assets | |||
Impairment of goodwill | 0 | $ 0 | |
Impairment of IPR&D | $ 0 | $ 0 | |
Minimum | |||
Finite-Lived Intangible Assets | |||
Purchased intangible assets useful life | 6 months | ||
Maximum | |||
Finite-Lived Intangible Assets | |||
Purchased intangible assets useful life | 15 years |
NEW ACCOUNTING PRONOUNCEMENTS N
NEW ACCOUNTING PRONOUNCEMENTS NEW ACCOUNTING PRONOUNCEMENTS - Textuals (Details) - Adjustments for New Accounting Pronouncement $ in Millions | Oct. 31, 2016USD ($) |
Long-term Debt | |
Debt Issuance Costs, Net | $ 8 |
Other Assets | |
Debt Issuance Costs, Net | $ 8 |
SHARE-BASED COMPENSATION Alloca
SHARE-BASED COMPENSATION Allocated Share-based compensation expense (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |
Jan. 31, 2017 | Jan. 31, 2016 | Oct. 31, 2016 | |
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | |||
Share-based compensation expense | $ 21 | $ 23 | |
Inventory | |||
Share-based Compensation, Allocation and Classification in Financial Statements | |||
Capitalized share-based compensation | 0 | $ 0 | |
Cost of Products and Services | |||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | |||
Share-based compensation expense | 6 | 6 | |
Research and Development Expense | |||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | |||
Share-based compensation expense | 2 | 2 | |
Selling, General and Administrative Expenses | |||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | |||
Share-based compensation expense | $ 13 | $ 15 |
SHARE-BASED COMPENSATION Fair V
SHARE-BASED COMPENSATION Fair Value Assumptions (Details) - yr | 3 Months Ended | |
Jan. 31, 2017 | Jan. 31, 2016 | |
Share-based Compensation Arrangement by Share-based Payment Award | ||
ESPP plan purchase price (in hundredths) | 85.00% | 85.00% |
LTPP | ||
Share-based Compensation Arrangement by Share-based Payment Award | ||
Volatility of Agilent shares (in hundredths) | 23.00% | 24.00% |
Volatility of selected peer-company shares minimum (in hundredths) | 15.00% | 14.00% |
Volatility of selected peer-company shares maximum (in hundredths) | 63.00% | 50.00% |
Price-wise correlation with selected peers (in hundredths) | 36.00% | 35.00% |
Number of years of peer groups historical stock price volatility used to determine volatility | 3 | |
Discount for Postvesting Restrictions | 5.30% | 5.50% |
INCOME TAXES (Details)
INCOME TAXES (Details) - USD ($) $ in Millions | 3 Months Ended | |
Jan. 31, 2017 | Jan. 31, 2016 | |
Income Tax Disclosure | ||
Effective income tax rate | 13.00% | 14.80% |
Provision for income taxes | $ 25 | $ 21 |
Net Discrete Tax Expense (Benefit) | (2) | (6) |
Related to Settlement of Audit | ||
Income Tax Disclosure | ||
Discrete Tax Expense (Benefit) | (7) | |
Incremental taxes | 7 | |
Unrecognized Tax Benefits, Decrease Resulting from Prior Period Tax Positions | 14 | |
U.S. Research & Development Tax Credit Extension | ||
Income Tax Disclosure | ||
Discrete Tax Expense (Benefit) | (5) | |
Pension Curtailment and Settlement | ||
Income Tax Disclosure | ||
Discrete Tax Expense (Benefit) | 11 | 6 |
Return To Provision Adjustment | ||
Income Tax Disclosure | ||
Discrete Tax Expense (Benefit) | (9) | |
Other Discrete Items | ||
Income Tax Disclosure | ||
Discrete Tax Expense (Benefit) | $ (6) | $ 2 |
NET INCOME PER SHARE (Details)
NET INCOME PER SHARE (Details) - USD ($) $ in Millions | 3 Months Ended | |
Jan. 31, 2017 | Jan. 31, 2016 | |
Numerator: | ||
Net income | $ 168 | $ 121 |
Denominators: | ||
Basic weighted-average shares (in shares) | 322,000,000 | 329,000,000 |
Potential common shares - stock options and other employee stock plans (in shares) | 4,000,000 | 3,000,000 |
Diluted weighted average shares (in shares) | 326,000,000 | 332,000,000 |
Options with exercise price greater than average market price | ||
Denominators: | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount (in shares) | 0 | 1,200,000 |
Stock Options, LTPP and restricted stock combined exercise price, unamortized fair value, excess tax benefits or shortfalls greater than average market price | ||
Denominators: | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount (in shares) | 0 | 4,300 |
INVENTORY (Details)
INVENTORY (Details) - USD ($) $ in Millions | Jan. 31, 2017 | Oct. 31, 2016 |
Inventory, Net [Abstract] | ||
Finished goods | $ 354 | $ 339 |
Purchased parts and fabricated assemblies | 197 | 194 |
Inventory | $ 551 | $ 533 |
GOODWILL AND OTHER INTANGIBLE42
GOODWILL AND OTHER INTANGIBLE ASSETS Goodwill Roll forward (Details) $ in Millions | 3 Months Ended |
Jan. 31, 2017USD ($) | |
Goodwill Roll Forward | |
Goodwill beginning balance | $ 2,517 |
Foreign currency translation impact | 0 |
Goodwill arising from acquisitions | 46 |
Goodwill ending balance | 2,563 |
Life Sciences and Applied Markets | |
Goodwill Roll Forward | |
Goodwill beginning balance | 790 |
Foreign currency translation impact | 0 |
Goodwill arising from acquisitions | 0 |
Goodwill ending balance | 790 |
Diagnostics and Genomics | |
Goodwill Roll Forward | |
Goodwill beginning balance | 1,223 |
Foreign currency translation impact | 0 |
Goodwill arising from acquisitions | 46 |
Goodwill ending balance | 1,269 |
Agilent CrossLab | |
Goodwill Roll Forward | |
Goodwill beginning balance | 504 |
Foreign currency translation impact | 0 |
Goodwill arising from acquisitions | 0 |
Goodwill ending balance | $ 504 |
GOODWILL AND OTHER INTANGIBLE43
GOODWILL AND OTHER INTANGIBLE ASSETS Disclosures and Components of Purchased Other Intangibles (Details) - USD ($) $ in Millions | Jan. 31, 2017 | Oct. 31, 2016 |
Finite-Lived Intangible Assets, Net | ||
Gross Carrying Amount | $ 1,156 | $ 1,253 |
Accumulated Amortization | 745 | 845 |
Net Book Value | 411 | 408 |
Purchased Technology | ||
Finite-Lived Intangible Assets, Net | ||
Gross Carrying Amount | 845 | 823 |
Accumulated Amortization | 588 | 572 |
Net Book Value | 257 | 251 |
Backlog | ||
Finite-Lived Intangible Assets, Net | ||
Gross Carrying Amount | 1 | |
Accumulated Amortization | 1 | |
Net Book Value | 0 | |
Trademark/Tradenames | ||
Finite-Lived Intangible Assets, Net | ||
Gross Carrying Amount | 149 | 149 |
Accumulated Amortization | 64 | 61 |
Net Book Value | 85 | 88 |
Customer Relationships | ||
Finite-Lived Intangible Assets, Net | ||
Gross Carrying Amount | 145 | 263 |
Accumulated Amortization | 93 | 211 |
Net Book Value | 52 | 52 |
Total amortizable intangible assets | ||
Finite-Lived Intangible Assets, Net | ||
Gross Carrying Amount | 1,139 | 1,236 |
Accumulated Amortization | 745 | 845 |
Net Book Value | 394 | 391 |
In-Process R&D | ||
Indefinite-Lived Intangible Assets (Excluding Goodwill) | ||
In-Process R&D | $ 17 | $ 17 |
GOODWILL AND OTHER INTANGIBLE44
GOODWILL AND OTHER INTANGIBLE ASSETS Textuals (Details) - USD ($) $ in Millions | Jan. 20, 2017 | Jan. 31, 2017 | Jan. 31, 2016 |
Finite-Lived Intangible Assets | |||
Additions to goodwill | $ 46 | ||
Addition to other intangible assets | 34 | ||
Fully amortized intangible assets removed | 131 | ||
Impairment of IPR&D | 0 | $ 0 | |
Amortization of intangible assets during the period | $ 31 | $ 43 | |
Multiplicom | |||
Acquisition | |||
Purchase price of acquisition | $ 72 |
GOODWILL AND OTHER INTANGIBLE45
GOODWILL AND OTHER INTANGIBLE ASSETS GOODWILL AND OTHER INTANGIBLE ASSETS - Estimated Future Amortization (Details) $ in Millions | Jan. 31, 2017USD ($) |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Remainder of 2017 | $ 87 |
2,018 | 91 |
2,019 | 64 |
2,020 | 53 |
2,021 | 41 |
2,022 | 25 |
Thereafter | $ 33 |
FAIR VALUE MEASUREMENTS, Fair v
FAIR VALUE MEASUREMENTS, Fair value of assets and liabilities measured on a recurring basis (Details) - Fair Value, Measurements, Recurring - USD ($) $ in Millions | Jan. 31, 2017 | Oct. 31, 2016 |
Assets Short - term | ||
Cash equivalents (money market funds) | $ 1,256 | $ 1,482 |
Derivative instruments (foreign exchange contracts) | 8 | 9 |
Assets, Long-term | ||
Trading securities | 29 | 31 |
Total assets measured at fair value | 1,293 | 1,522 |
Liabilities, Short-term | ||
Derivative instruments (foreign exchange contracts) | 3 | 8 |
Liabilities Long-term | ||
Deferred compensation liability | 29 | 31 |
Total liabilities measured at fair value | 32 | 39 |
Quoted Prices in Active Markets for Identical Assets (Level 1) | ||
Assets Short - term | ||
Cash equivalents (money market funds) | 1,256 | 1,482 |
Derivative instruments (foreign exchange contracts) | 0 | 0 |
Assets, Long-term | ||
Trading securities | 29 | 31 |
Total assets measured at fair value | 1,285 | 1,513 |
Liabilities, Short-term | ||
Derivative instruments (foreign exchange contracts) | 0 | 0 |
Liabilities Long-term | ||
Deferred compensation liability | 0 | 0 |
Total liabilities measured at fair value | 0 | 0 |
Significant Other Observable Inputs (Level 2) | ||
Assets Short - term | ||
Cash equivalents (money market funds) | 0 | 0 |
Derivative instruments (foreign exchange contracts) | 8 | 9 |
Assets, Long-term | ||
Trading securities | 0 | 0 |
Total assets measured at fair value | 8 | 9 |
Liabilities, Short-term | ||
Derivative instruments (foreign exchange contracts) | 3 | 8 |
Liabilities Long-term | ||
Deferred compensation liability | 29 | 31 |
Total liabilities measured at fair value | 32 | 39 |
Significant Unobservable Inputs (Level 3) | ||
Assets Short - term | ||
Cash equivalents (money market funds) | 0 | 0 |
Derivative instruments (foreign exchange contracts) | 0 | 0 |
Assets, Long-term | ||
Trading securities | 0 | 0 |
Total assets measured at fair value | 0 | 0 |
Liabilities, Short-term | ||
Derivative instruments (foreign exchange contracts) | 0 | 0 |
Liabilities Long-term | ||
Deferred compensation liability | 0 | 0 |
Total liabilities measured at fair value | $ 0 | $ 0 |
FAIR VALUE MEASUREMENTS, Fair47
FAIR VALUE MEASUREMENTS, Fair value measures and impairments (Details) - USD ($) | 3 Months Ended | |
Jan. 31, 2017 | Jan. 31, 2016 | |
Long-Lived Assets | ||
Impairment of Long-Lived Assets Held-for-use | $ 0 | $ 0 |
Impairment of long-lived assets held for sale | 0 | 0 |
Investments | ||
Impairment of Investments | $ 0 | $ 0 |
DERIVATIVES- Terminated Interes
DERIVATIVES- Terminated Interest Rate Swaps (Details) $ in Millions | Sep. 15, 2016USD ($) | Oct. 20, 2014USD ($) | Jan. 31, 2017USD ($) | Oct. 31, 2016USD ($) | Feb. 01, 2016USD ($)contracts | Jul. 01, 2012USD ($) | Aug. 09, 2011USD ($)contracts | Nov. 25, 2008USD ($)contracts | Oct. 24, 2007USD ($) |
Derivative Instruments and Hedging Activities Disclosure | |||||||||
Aggregate fair value of all derivative instruments with credit-risk-related contingent features that were in a net liability position | $ 0 | ||||||||
Terminated Derivative Contracts | |||||||||
Remaining deferred gain (loss) to be amortized on derivative | 14 | $ 16 | |||||||
Senior Notes 2017 | |||||||||
Derivative Instruments and Hedging Activities Disclosure | |||||||||
Aggregate face amount | $ 600 | 100 | $ 600 | ||||||
Amount of extinguishment of debt | $ 500 | ||||||||
Terminated Derivative Contracts | |||||||||
Remaining deferred gain (loss) to be amortized on derivative | 1 | ||||||||
Senior Notes 2017 | Interest Rate Swap | Derivatives Designated as Hedging Instrument | Fair Value Hedging | |||||||||
Terminated Derivative Contracts | |||||||||
Number of interest rate swap contracts terminated | contracts | 2 | ||||||||
Notional amount of contract | $ 400 | ||||||||
Senior Notes 2020 | |||||||||
Terminated Derivative Contracts | |||||||||
Remaining deferred gain (loss) to be amortized on derivative | 14 | 15 | |||||||
Senior Notes 2020 | Interest Rate Swap | Derivatives Designated as Hedging Instrument | Fair Value Hedging | |||||||||
Terminated Derivative Contracts | |||||||||
Number of interest rate swap contracts terminated | contracts | 5 | ||||||||
Notional amount of contract | $ 500 | ||||||||
Remaining deferred gain (loss) to be amortized on derivative | 14 | ||||||||
Senior Notes 2022 | |||||||||
Terminated Derivative Contracts | |||||||||
Remaining deferred gain (loss) to be amortized on derivative | 0 | 0 | |||||||
Senior Notes 2022 | Treasury Lock | Derivatives Designated as Hedging Instrument | Cash Flow Hedging | |||||||||
Terminated Derivative Contracts | |||||||||
Notional amount of contract | $ 400 | ||||||||
Remaining gain (loss) to be amortized on derivative | 2 | ||||||||
Senior Notes 2026 | |||||||||
Terminated Derivative Contracts | |||||||||
Remaining deferred gain (loss) to be amortized on derivative | 0 | $ 0 | |||||||
Senior Notes 2026 | Interest Rate Swap | Derivatives Designated as Hedging Instrument | Cash Flow Hedging | |||||||||
Terminated Derivative Contracts | |||||||||
Number of interest rate swap contracts terminated | contracts | 3 | ||||||||
Notional amount of contract | $ 300 | ||||||||
Interest rate swap payments | $ 10 | ||||||||
Remaining gain (loss) to be amortized on derivative | $ 9 |
DERIVATIVES- Foreign Exchange F
DERIVATIVES- Foreign Exchange Forward Contracts(Details) $ in Millions | Jan. 31, 2017USD ($)contracts |
Foreign Exchange Forward | Derivatives Designated as Hedging Instrument | Cash Flow Hedging | |
Derivative | |
Number of foreign exchange forward contracts (in units) | contracts | 39 |
Foreign Exchange Forward | Derivatives Not Designated as Hedging Instruments | |
Derivative | |
Number of foreign exchange forward contracts (in units) | contracts | 138 |
Sell | Forward Contracts USD | Cash Flow Hedging | |
Derivative | |
Total notional amount | $ 97 |
Sell | Forward Contracts USD | Cash Flow Hedging | Euro | |
Derivative | |
Total notional amount | 9 |
Sell | Forward Contracts USD | Cash Flow Hedging | British Pound | |
Derivative | |
Total notional amount | 30 |
Sell | Forward Contracts USD | Cash Flow Hedging | Canadian Dollar | |
Derivative | |
Total notional amount | 20 |
Sell | Forward Contracts USD | Cash Flow Hedging | Japanese Yen | |
Derivative | |
Total notional amount | 44 |
Sell | Forward Contracts USD | Derivatives Not Designated as Hedging Instruments | British Pound | |
Derivative | |
Total notional amount | 17 |
Sell | Forward Contracts USD | Derivatives Not Designated as Hedging Instruments | Canadian Dollar | |
Derivative | |
Total notional amount | 3 |
Sell | Forward Contracts USD | Derivatives Not Designated as Hedging Instruments | Malaysian Ringgit | |
Derivative | |
Total notional amount | 3 |
Sell | Forward Contracts USD | Derivatives Not Designated as Hedging Instruments | Japanese Yen | |
Derivative | |
Total notional amount | 7 |
Sell | Forward Contracts USD | Derivatives Not Designated as Hedging Instruments | Other | |
Derivative | |
Total notional amount | 12 |
Buy | Forward Contracts USD | Cash Flow Hedging | Australian Dollars | |
Derivative | |
Total notional amount | 3 |
Buy | Forward Contracts USD | Cash Flow Hedging | Other | |
Derivative | |
Total notional amount | 3 |
Buy | Forward Contracts USD | Derivatives Not Designated as Hedging Instruments | |
Derivative | |
Total notional amount | 51 |
Buy | Forward Contracts USD | Derivatives Not Designated as Hedging Instruments | Euro | |
Derivative | |
Total notional amount | 78 |
Buy | Forward Contracts USD | Derivatives Not Designated as Hedging Instruments | Australian Dollars | |
Derivative | |
Total notional amount | $ 15 |
DERIVATIVES, Fair value of deri
DERIVATIVES, Fair value of derivative instruments and Consolidated Balance Sheet location (Details) - USD ($) $ in Millions | Jan. 31, 2017 | Oct. 31, 2016 |
Derivative Fair Value by Balance Sheet Location | ||
Total derivatives Asset | $ 8 | $ 9 |
Total derivatives Liabilities | 3 | 8 |
Derivatives Designated as Hedging Instruments | Cash Flow Hedging | Foreign Exchange Contracts | Other Current Assets | ||
Derivative Fair Value by Balance Sheet Location | ||
Total derivatives Asset | 3 | 5 |
Derivatives Designated as Hedging Instruments | Cash Flow Hedging | Foreign Exchange Contracts | Other Accrued Liabilities | ||
Derivative Fair Value by Balance Sheet Location | ||
Total derivatives Liabilities | 0 | 3 |
Derivatives Not Designated as Hedging Instruments | Foreign Exchange Contracts | Other Current Assets | ||
Derivative Fair Value by Balance Sheet Location | ||
Total derivatives Asset | 5 | 4 |
Derivatives Not Designated as Hedging Instruments | Foreign Exchange Contracts | Other Accrued Liabilities | ||
Derivative Fair Value by Balance Sheet Location | ||
Total derivatives Liabilities | $ 3 | $ 5 |
DERIVATIVES, Effect of derivati
DERIVATIVES, Effect of derivative instruments on Consolidated Statement of Operations (Details) - USD ($) $ in Millions | 3 Months Ended | |
Jan. 31, 2017 | Jan. 31, 2016 | |
Derivative | ||
Gain recognized in accumulated other comprehensive income (loss) | $ 2 | |
Cash Flow Hedging | Cost of Sales | ||
Derivative | ||
Cash Flow Hedge Net Gain to be Reclassified within Twelve Months | 4 | |
Derivatives Designated as Hedging Instrument | Cash Flow Hedging | Foreign Exchange Contracts | Accumulated Other Comprehensive Income (Loss) | ||
Derivative | ||
Gain recognized in accumulated other comprehensive income (loss) | 2 | $ 4 |
Derivatives Designated as Hedging Instrument | Cash Flow Hedging | Foreign Exchange Contracts | Cost of Sales | ||
Derivative | ||
Gain reclassified from accumulated other comprehensive income (loss) into cost of sales | 1 | 1 |
Derivatives Not Designated as Hedging Instruments | Other income (expense) | ||
Derivative | ||
Loss recognized in other income (expense) | $ (3) | $ (2) |
RETIREMENT PLANS AND POST RET52
RETIREMENT PLANS AND POST RETIREMENT PENSION PLANS- Components of net periodic costs (Details) - USD ($) $ in Millions | 3 Months Ended | |
Jan. 31, 2017 | Jan. 31, 2016 | |
Curtailments and Settlements | ||
Settlement gain (loss) | $ 32 | $ 1 |
Curtailment gain | 0 | 15 |
Pensions (U.S. Plans) | ||
Defined Benefit Plan, Net Periodic Benefit Cost | ||
Service cost - benefits earned during the period | 0 | 6 |
Interest cost on benefit obligation | 3 | 3 |
Expected return on plan assets | (6) | (6) |
Amortization: | ||
Actuarial losses | 1 | 2 |
Prior service cost | 0 | (1) |
Total net plan costs | (2) | 4 |
Curtailments and Settlements | ||
Curtailments and settlements | 16 | |
Settlement gain (loss) | 1 | |
Curtailment gain | 15 | |
Pensions (Non-U.S. Plans) | ||
Defined Benefit Plan, Net Periodic Benefit Cost | ||
Service cost - benefits earned during the period | 4 | 4 |
Interest cost on benefit obligation | 3 | 4 |
Expected return on plan assets | (10) | (11) |
Amortization: | ||
Actuarial losses | 9 | 7 |
Prior service cost | 0 | 0 |
Total net plan costs | 6 | 4 |
Curtailments and Settlements | ||
Settlement gain (loss) | 32 | |
United States Post-retirement Benefit Plan | ||
Defined Benefit Plan, Net Periodic Benefit Cost | ||
Service cost - benefits earned during the period | 0 | 0 |
Interest cost on benefit obligation | 1 | 1 |
Expected return on plan assets | (2) | (2) |
Amortization: | ||
Actuarial losses | 3 | 3 |
Prior service cost | (2) | (2) |
Total net plan costs | $ 0 | $ 0 |
RETIREMENT PLANS AND POST RET53
RETIREMENT PLANS AND POST RETIREMENT PENSION PLANS (Details) (Textual) - USD ($) $ in Millions | 3 Months Ended | |
Jan. 31, 2017 | Jan. 31, 2016 | |
Pensions (U.S. Plans) | ||
Defined Benefit Plans Contributions | ||
Contributions to defined benefit plans | $ 0 | $ 0 |
Estimated future employer contributions in remainder of current fiscal year | 25 | |
Pensions (Non-U.S. Plans) | ||
Defined Benefit Plans Contributions | ||
Contributions to defined benefit plans | 3 | $ 4 |
Estimated future employer contributions in remainder of current fiscal year | $ 17 |
RETIREMENT PLANS AND POST RET54
RETIREMENT PLANS AND POST RETIREMENT PENSION PLANS - JWPIL (Details) - USD ($) $ in Millions | 3 Months Ended | |
Jan. 31, 2017 | Jan. 31, 2016 | |
Defined Benefit Plan Disclosure | ||
Settlement gain (loss) | $ 32 | $ 1 |
Pensions (Non-U.S. Plans) | ||
Defined Benefit Plan Disclosure | ||
Settlement gain (loss) | 32 | |
Benefit Obligation | 65 | |
Fair Value of Plan Assets Transferred | 24 | |
Pensions (Non-U.S. Plans) | Difference Between Fair Values of the Obligation Settled and Assets Transferred | ||
Defined Benefit Plan Disclosure | ||
Settlement gain (loss) | 41 | |
Accumulated Other Comprehensive Income | Pensions (Non-U.S. Plans) | ||
Defined Benefit Plan Disclosure | ||
Settlement gain (loss) | $ (9) |
WARRANTIES AND CONTINGENCIES (D
WARRANTIES AND CONTINGENCIES (Details) - USD ($) $ in Millions | 3 Months Ended | |
Jan. 31, 2017 | Jan. 31, 2016 | |
Movement in Standard Product Warranty Accrual | ||
Beginning balance at beginning of period | $ 35 | $ 31 |
Accruals for warranties including change in estimate | 13 | 21 |
Settlements made during the period | (13) | (14) |
Ending balance at end of period | 35 | 38 |
Standard Product Warranty Disclosure | ||
Accruals for warranties due within one year | 34 | 36 |
Accruals for warranties due after one year | 1 | 2 |
Ending balance at end of period | $ 35 | $ 38 |
SHORT-TERM DEBT Credit Facility
SHORT-TERM DEBT Credit Facility (Details) - USD ($) $ in Millions | Sep. 15, 2014 | Jan. 31, 2017 | Jun. 09, 2015 |
Line of Credit Facility | |||
Initiation date of credit facility | Sep. 15, 2014 | ||
Expiration date of credit facility | Sep. 15, 2019 | ||
Initial maximum borrowing capacity of credit facility | $ 400 | ||
Credit faciity terms (in years) | five | ||
Credit facility limit increase | $ 300 | ||
New maximum borrowing capacity of credit facility | $ 700 | ||
Amount outstanding on credit facility | $ 89 |
SHORT-TERM DEBT Senior Notes (D
SHORT-TERM DEBT Senior Notes (Details) - USD ($) $ in Millions | Oct. 20, 2014 | Oct. 24, 2007 | Jan. 31, 2017 | Oct. 31, 2016 |
Short-term Debt | ||||
Interest rate swap | $ 14 | $ 16 | ||
Senior Notes 2017 | ||||
Short-term Debt | ||||
Debt issuance date | Oct. 24, 2007 | |||
Aggregate face amount | $ 600 | $ 600 | 100 | |
Amount of extinguishment of debt | $ 500 | |||
Interest rate swap | $ 1 | |||
Short-term Debt | Senior Notes 2017 | ||||
Short-term Debt | ||||
Interest rate swap | $ 1 |
LONG-TERM DEBT (Details)
LONG-TERM DEBT (Details) - USD ($) $ in Millions | Jan. 31, 2017 | Oct. 31, 2016 |
Debt Instrument | ||
Long-term debt | $ 1,788 | $ 1,888 |
Interest rate swap | 14 | 16 |
Long-term Debt, Excluding Current Maturities | 1,802 | 1,904 |
Senior Notes 2017 | ||
Debt Instrument | ||
Long-term debt | 100 | |
Interest rate swap | 1 | |
Long-term Debt, Excluding Current Maturities | 101 | |
Senior Notes 2020 | ||
Debt Instrument | ||
Long-term debt | 498 | 498 |
Interest rate swap | 14 | 15 |
Long-term Debt, Excluding Current Maturities | 512 | 513 |
Senior Notes 2022 | ||
Debt Instrument | ||
Long-term debt | 398 | 398 |
Interest rate swap | 0 | 0 |
Long-term Debt, Excluding Current Maturities | 398 | 398 |
Senior Notes 2023 | ||
Debt Instrument | ||
Long-term debt | 595 | 595 |
Interest rate swap | 0 | 0 |
Long-term Debt, Excluding Current Maturities | 595 | 595 |
Senior Notes 2026 | ||
Debt Instrument | ||
Long-term debt | 297 | 297 |
Interest rate swap | 0 | 0 |
Long-term Debt, Excluding Current Maturities | $ 297 | 297 |
Long-term Debt | Adjustments for New Accounting Pronouncement | ||
Debt Instrument | ||
Debt Issuance Costs, Net | $ 8 |
STOCKHOLDERS' EQUITY - Stock Re
STOCKHOLDERS' EQUITY - Stock Repurchase Program (Details) - USD ($) shares in Millions, $ in Millions | Nov. 22, 2013 | Jan. 31, 2017 | Jan. 31, 2016 | May 28, 2015 |
Share repurchase program | ||||
Cost to repurchases shares of common stock under share repurchase program | $ 111 | $ 200 | ||
2014 Share Repurchase Program | ||||
Share repurchase program | ||||
Share repurchase program authorized amount | $ 1,000 | |||
Maintain weighted average diluted shares count (in shares) | 335 | |||
Cost to repurchases shares of common stock under share repurchase program | $ 98 | |||
Number of shares repurchased (in shares) | 2.4 | |||
2015 Repurchase Program | ||||
Share repurchase program | ||||
Share repurchase program authorized amount | $ 1,140 | |||
Cost to repurchases shares of common stock under share repurchase program | $ 111 | $ 102 | ||
Number of shares repurchased (in shares) | 2.5 | 2.5 | ||
Remaining authorized repurchase amount under share repurchase program | $ 693 | |||
Treasury Stock | ||||
Treasury Stock Retired | ||||
Number of treasury shares retired | 292.5 | |||
Aggregate cost of treasury shares retired | $ 10,600 | |||
Retained Earnings | ||||
Treasury Stock Retired | ||||
Aggregate cost of treasury shares retired | 6,700 | |||
Additional Paid-in Capital | ||||
Treasury Stock Retired | ||||
Aggregate cost of treasury shares retired | $ 3,900 |
STOCKHOLDER"S EQUITY - Dividend
STOCKHOLDER"S EQUITY - Dividends (Details) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | |
Jan. 31, 2017 | Jan. 31, 2016 | |
Dividends Paid | ||
Aggregate amount of cash dividends paid | $ 42 | $ 38 |
Cash dividends paid per common share | $ 0.132 | $ 0.115 |
STOCKHOLDER'S EQUITY - Accumula
STOCKHOLDER'S EQUITY - Accumulated Other Comprehensive Income (Details) - USD ($) $ in Millions | 3 Months Ended | |
Jan. 31, 2017 | Jan. 31, 2016 | |
Beginning Balance | $ (503) | |
Other comprehensive income (loss), before reclassifications | 1 | |
Amounts reclassified out of accumulated other comprehensive income (loss) | 19 | |
Tax (expense) benefit | (6) | |
Other comprehensive income (loss) | 14 | $ (47) |
Ending Balance | (489) | |
Foreign currency translation | ||
Beginning balance | (197) | |
Other comprehensive income (loss) before reclassifications | (4) | |
Amounts reclassified out of accumulated other comprehensive income (loss) | 0 | |
Tax (expense) benefit | 1 | 1 |
Other Comprehensive Income (Loss), Foreign Currency Transaction and Translation Gain (Loss) Arising During Period, Net of Tax | (3) | (56) |
Ending balance | (200) | |
Prior service credits | ||
Beginning balance | 146 | |
Other comprehensive income (loss) before reclassifications | 0 | |
Amounts reclassified out of accumulated other comprehensive income (loss) | (2) | (19) |
Tax (expense) benefit | 1 | |
Other comprehensive income (loss) | (1) | (8) |
Ending balance | 145 | |
Defined Benefit Plan, Amounts Recognized in Other Comprehensive Income (Loss), Net Actuarial Gain (Loss), before Tax | ||
Beginning balance | (451) | |
Other comprehensive income (loss) before reclassifications | 3 | |
Amounts reclassified out of accumulated other comprehensive income (loss) | 22 | 13 |
Tax (expense) benefit | (8) | |
Other comprehensive income (loss) | 17 | $ 15 |
Ending balance | (434) | |
Unrealized gains (losses) on derivatives | ||
Beginning balance | (1) | |
Other comprehensive income (loss) before reclassifications | 2 | |
Amounts reclassified out of accumulated other comprehensive income (loss) | (1) | |
Tax (expense) benefit | 0 | |
Other comprehensive income (loss) | 1 | |
Ending balance | $ 0 |
STOCKHOLDERS' EQUITY - Reclassi
STOCKHOLDERS' EQUITY - Reclassifications out of accumulated comprehensive income (Details) - USD ($) $ in Millions | 3 Months Ended | |
Jan. 31, 2017 | Jan. 31, 2016 | |
Reclassification Adjustment out of Accumulated Other Comprehensive Income on Derivatives | ||
Unrealized gains on derivatives reclassified to cost of products | $ 1 | $ 1 |
Unrealized gains and (losses) on derivatives reclassified to cost of products, before tax | 1 | 1 |
Reclassification of (gains) and losses into earnings related to derivative instruments, tax | (1) | 0 |
Unrealized gains and (losses) on derivatives reclassified to cost of products, net of tax | 0 | 1 |
Actuarial net loss | (22) | (13) |
Prior service benefit | 2 | 19 |
Actuarial net loss and prior service benefit reclassified, before tax | (20) | 6 |
Tax on actuarial net loss and prior service benefit reclassified | 6 | (4) |
Actuarial net loss and prior service benefit reclassified, net of tax | (14) | 2 |
Reclassification from Accumulated Other Comprehensive Income, Current Period, Net of Tax | $ (14) | $ 3 |
SEGMENT INFORMATION - Profitabi
SEGMENT INFORMATION - Profitability (Details) $ in Millions | 3 Months Ended | |
Jan. 31, 2017USD ($) | Jan. 31, 2016USD ($) | |
Segment Reporting Information | ||
Number of operating segments | 3 | |
Segment Reporting Information | ||
Total net revenue | $ 1,067 | $ 1,028 |
Income from operations | 206 | 155 |
Life Sciences and Applied Markets | ||
Segment Reporting Information | ||
Total net revenue | 540 | 526 |
Income from operations | 126 | 114 |
Diagnostics and Genomics | ||
Segment Reporting Information | ||
Total net revenue | 164 | 158 |
Income from operations | 23 | 15 |
Agilent CrossLab | ||
Segment Reporting Information | ||
Total net revenue | 363 | 344 |
Income from operations | 74 | 76 |
Segment Total | ||
Segment Reporting Information | ||
Total net revenue | 1,067 | 1,028 |
Income from operations | $ 223 | $ 205 |
SEGMENT INFORMATION - Reconcili
SEGMENT INFORMATION - Reconciliation of Reportable Results (Details) - USD ($) $ in Millions | 3 Months Ended | |
Jan. 31, 2017 | Jan. 31, 2016 | |
Reconciliation of Operating Profit (Loss) from Segments to Consolidated | ||
Total reportable segments’ income from operations | $ 223 | $ 205 |
Transformational initiatives | (2) | (11) |
Amortization of intangibles | (31) | (43) |
Acquisition and integration costs | (14) | (5) |
Business exit and divestiture costs (primarily our NMR business) | 0 | (5) |
Pension settlement gain | 32 | 1 |
Pension curtailment gain | 0 | 15 |
Other | (2) | (2) |
Interest income | 4 | 2 |
Interest expense | (20) | (18) |
Other income (expense), net | 3 | 3 |
Income before taxes | $ 193 | $ 142 |
SEGMENT INFORMATION - Segment A
SEGMENT INFORMATION - Segment Assets (Details) - USD ($) $ in Millions | Jan. 31, 2017 | Oct. 31, 2016 |
Segment Reporting Information | ||
Assets | $ 7,872 | $ 7,794 |
Life Sciences and Applied Markets | ||
Segment Reporting Information | ||
Assets | 1,677 | 1,687 |
Diagnostics and Genomics | ||
Segment Reporting Information | ||
Assets | 2,052 | 1,960 |
Agilent CrossLab | ||
Segment Reporting Information | ||
Assets | 1,102 | 1,082 |
Segment Total | ||
Segment Reporting Information | ||
Assets | $ 4,831 | $ 4,729 |