“The last two years have not diminished our belief in Agilent’s potential or in the opportunities we are addressing. We have the people, the products and the customer relationships that success demands, and we are committed to building on these strengths during 2003.” Ned Barnholt Chairman, President and Chief Executive Officer

The persistent downturn in the telecommunications and electronics markets was the major factor in Agilent's 2002 results. We are obviously not pleased to report a decline in orders and revenue and a loss for the year. However, we did make substantial progress in returning the company to profitability as we moved through 2002, achieving breakeven on an earnings-before-goodwill (EBG) basis in the fourth quarter.*

This year we also strengthened Agilent for long-term success in two ways. We made investments in research and development (R&D) that are driving product and technology breakthroughs, and we became much more competitive by transforming many aspects of our operations. None of these achievements would have been possible without Agilent's people, who made superb contributions in 2002 under extremely trying conditions. In this letter I'll describe what we are doing to return to sustained profitability, the actions we're taking to build the company for the long term, and the outlook for fiscal 2003.

* Agilent's EBG amounts exclude from earnings amortization of goodwill and other intangibles, acquisition and divestiture related items, and other one-time and non-recurring items such as restructuring.