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Financials Overview
Net Revenue
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Cost and Expenses
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Cost of products sold and services
Selling, general and administrative
Research and development
Net Earnings
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An excellent first year Overall, we had very strong financial results in 2000, with excellent growth, substantial profit improvement and the launch of initiatives to improve our cost structures for the long term.

For the years ended October 31
In millions
20001 19992 Percentage change

Net Revenue $10,773 $8,331 29%
Earnings from Operations 1,053 741 42%
Net Earnings 757 512 48%

Return on Assets 9.0% 9.4%<

1In 2000, Agilent Technologies recognized pre-tax restructuring charges of approximately $21 million. In addition, Agilent Technologies sold its U.S. portfolio of lease assets to The CIT Group, Inc. and recognized $212 million in net revenue and $89 million in cost of products.

2In 1999, Agilent Technologies recognized a pre-tax charge of approximately $51 million related to asset impairment.


Agilent’s people worked with great skill and energy to complete our priorities for the year, including finalizing our separation from Hewlett-Packard, and they successfully addressed a number of challenges that arose during the year. In 2000 we also strengthened our competitive position by completing nine acquisitions. These acquisitions, along with our R&D investments, are designed to ensure that we continue to deliver innovative products and solutions that not only address but anticipate customer needs.

Strong growth and solid profitability We’re focused on high-growth opportunities in communications, electronics and life sciences. This year’s strong revenue growth reflected extraordinary demand in our businesses that provide enabling solutions for the wireless, optical, broadband and Internet communications markets. There was also very good initial response to our DNA microarrays and lab-on-a-chip offerings in the life sciences.

For the full year, orders rose 35 percent over 1999 and totaled $12.0 billion dollars. Net revenue increased 29 percent over a strong 1999 and totaled $10.8 billion dollars. Agilent’s operating profit for the year was 9.8 percent of revenue, and our net profit margin was 7.0 percent. These profit levels compare very well to what we achieved in 1999, when operating profit was 8.9 percent and our net profit margin was 6.1 percent.

Net earnings for the year were $757 million dollars, an increase of 48 percent compared with 1999. This translates into earnings per share of $1.66 on a diluted basis, an increase of 23 percent over last year. Our net revenue and operating profit margin were above the plan with which we started the year and better than the guidance we gave to investors at midyear.

Our test and measurement business provides critical enabling products and solutions to network equipment manufacturers, component manufacturers and service providers who are building and operating the next-generation communications network. This was a great year for new products and platforms in test and measurement, and this business posted revenue growth of 50 per-cent and had operating profit of 14.7 percent of revenue.

Agilent's semiconductor products business provides optical, mixed-signal and digital IC products for networking, wireless, imaging and computing applications. This year we added capacity to keep up with very strong demand and made significant technology advances that position us well in growth
markets. Net revenue in semiconductor products rose 29 percent, and this business achieved operating profit of 12.2 percent of revenue.

This was a transitional year in our chemical analysis business. Growth remained slow in its traditional markets — the chemical, petrochemical and environmental industries. We have been strengthening our focus on opportunities in life sciences, and we’re investing appropriately to establish Agilent as a leading supplier of tools and services that advance understanding of the genetic basis of disease.

Our healthcare solutions business had a difficult year. During 2000 it became clear that a fundamental change in the global healthcare market was affecting this business. Customers in healthcare increasingly want to work with suppliers who offer a broad product line. We had to decide whether to make the investments required to make our healthcare business a broad-based supplier. We decided that the best course of action for our shareholders, customers and employees would be to sell this business to a leading supplier that had a complementary product offering. We found that company in Philips, and on November 17, 2000, we announced an agreement under which Philips would purchase this business. The sale is contingent upon customary approvals and other closing conditions.

This year we launched a number of initiatives whose goal is to tailor our systems and processes to Agilent’s needs. During 2000 we worked to strengthen our customer interface, improve the flexibility of our information technology systems, make e-business a competitive strength and streamline a number of functions, such as human resources and finance. These efforts are designed to make the company easier for customers to work with and even more responsive. We believe this work will yield improvements in our cost structures beginning in late 2001.


Robert R. Walker
Robert R. Walker photo
  Robert Walker signature
  Robert R. Walker
Executive Vice President
Chief Financial Officer

Investing in Innovation This year’s strong financial performance was rooted in the decisions and investments we’ve made over the last several years: to focus on communications and life sciences, and to fund research and development in order to drive innovation. In 2000 we spent $1.3 billion on research and development, or 11.7 percent of net revenue. We will continue to invest approximately 10 to 12 percent of net revenue in research and development in order to maximize innovation in new products and services.

Building on a Great Start We started 2001 in very sound financial condition. We have a strong backlog of orders, our cash position is solid and we have no significant debt. We are in an excellent competitive position in many markets. While there is some uncertainty about market conditions as our fiscal year begins, we believe we have the products, global presence and customer relationships required to succeed even in a slightly less robust environment.

We’ll continue to work hard to remain a high-performance company that achieves consistent growth in revenue and earnings. We have the deep technology portfolio and talented people that success requires in today’s intensely competitive markets. We’re very optimistic about our ability to capitalize on the opportunities we have to achieve profitable growth by making a significant contribution to our customers’ success.

Consolidated Statement of Earnings
Dollars As a percentage of total net revenue

Years ended October 31
In millions
2000 1999 1998 2000 1999 1998
Net Revenue:            
Products $9,420 $7,122 $6,898 87.4% 85.5% 86.7%
Services 1,353 1,209 1,054 12.6 14.5 13.3
Total Net Revenue 10,733 8,331 7,952 100.0 100.0 100.0
Cost and expenses:            
Cost of Products 4,745 3,675 3,888 44.0 44.1 48.9
Cost of Services 777 713 624 7.2 8.6 7.8
Research and development 1,258 997 948 11.7 12.0 11.9
Selling, general and administrative 2,940 2,205 2,050 27.3 26.4 25.8
Total costs and expenses 9,720 7,590 7,510 90.2 91.1 94.4
Earnings from operations 1,053 741 442 9.8 8.9 5.6
Other income (expense), net 111 46 (46) 1.0 0.5 (0.6)
Earnings before taxes 1,164 787 396 10.8 9.4 5.0
Provision for taxes 407 275 139 3.8 3.3 1.8
Net earnings 757 512 257 7.0% 6.1% 3.2%

Consolidated Balance Sheet Data
  October 31
In millions 2000 1999 1998
Working capital $2,897 $1,857 $1,476
Total assets $8,425 $5,444 $4,987
Stockholders’ equity $5,265 $3,382 $3,022