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2003 Corporate Report
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CEO letter to our shareholders
building
We have continued to make progress in building for Agilent's long-term success. building

Fiscal 2003 was a year of significant accomplishment for Agilent, as we continued to strike a balance between the need to return to profitability and our ongoing work to build the company for the long term. In the fourth quarter of 2003 we achieved revenue that exceeded our plans, helped by a modest recovery in some of our markets. By the fourth quarter we had also lowered our quarterly operating costs to $1.45 billion1 – almost $200 million2 lower than a year ago. As a result we were profitable in the fourth quarter, and our return to profitability is the start of Agilent’s next phase, in which our near-term goals are to sustain profitability and to grow faster than the markets we are in.

During 2003 we also made substantial progress in creating an exciting future for Agilent. We continued our efforts to transform how the company operates in order to be faster and more efficient. We made appropriate investments in research and development (R&D) in order to maintain our market leadership and to bring compelling new products to market. We refined our strategic focus and strengthened our leadership team. As a result, we began 2004 a more competitive, financially stronger and more efficient company. In this letter I will describe our key accomplishments and will discuss the outlook for 2004.


1 Agilent’s operating breakeven cost structure of $1.45 billion can be reconciled to GAAP breakeven cost structure as follows: total GAAP costs and expenses of $1.6 billion less restructuring of $.06 billion, less cost of sales decrement of $.08 billion (35% x $225 million), less IT projects of $.02 billion.

2 This number can be calculated as follows: total GAAP costs and expenses for the fourth quarter of 2002 of $2.1 billion less $.09 billion of goodwill and intangible amortization and $.3 billion of restructuring, less total GAAP costs and expenses for the fourth quarter of 2003 of $1.6 billion less $.06 billion of restructuring.


 
CEO letter to our shareholders
  Making Agilent more
efficient and competitive
  Investing for growth
  A sharper strategic focus
  Senior management changes
  Business outlook
  Financial overview


  Ned Barnholt, Chairman, President and Chief Executive Officer
  Ned Barnholt
Chairman, President and Chief Executive Officer
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