Financial Statements
Financial TablesFinancial Tables (169kb)

  Printer Friendly Version

Highlights:

  • GAAP income from continuing operations of $91 million, or $0.28 per share
  • Non-GAAP income from continuing operations of $145 million, or $0.44 per share(1)
  • Revenue of $1.02 billion; core revenue growth of 8.0 percent(2)
  • Raises fiscal year guidance for core revenue growth(2), adjusted non-GAAP operating margin(3), non-GAAP earnings per share(4) and operating cash flow
  • Fiscal year 2016 revenue guidance of $4.16 billion to $4.18 billion, and non-GAAP earnings guidance of $1.88 to $1.92 per share(4)

Agilent Technologies Inc. (NYSE: A) today reported revenue of $1.02 billion, up 6 percent year over year (up 8 percent on a core basis(2)) for the second fiscal quarter ended April 30, 2016.

Second-quarter GAAP income from continuing operations was $91 million, or $0.28 per share. Last year's second-quarter GAAP income from continuing operations was $92 million, or $0.27 per share.

During the second quarter, Agilent had intangible amortization of $40 million, transformation costs of $10 million, acquisition and integration costs of $12 million, and $2 million of other costs. Excluding those items, and a tax benefit of $10 million, Agilent reported second-quarter adjusted income from continuing operations of $145 million, $0.44 per share(1).

Agilent's adjusted operating margin was 19.4 percent(3) for the second quarter, up 110 basis points over a year ago.

"Agilent delivered another strong quarter," said Mike McMullen, Agilent president and CEO. "Revenue and earnings per share exceeded our guidance range. We saw broad growth across most of our portfolio and end markets."

"We continue to execute on our strategy to drive sustainable growth, expand operating margins and provide long-term value to our shareholders," he added.

Second-quarter revenue of $495 million from Agilent's Life Sciences and Applied Markets Group (LSAG) increased 5 percent year over year (up 8 percent on a core basis(2)), led by strong growth in pharma, food and environmental markets. LSAG's Q2 operating margin was 19.0 percent.

Second-quarter revenue of $346 million from the Agilent CrossLab Group (ACG) grew 8 percent year over year (up 10 percent on a core basis(2)). Both services and consumables continued to see solid growth worldwide. ACG's operating margin was 21.5 percent for the quarter.

Second-quarter revenue of $178 million from Agilent's Diagnostics and Genomics Group (DGG) increased 5 percent against a tough year-over-year compare (also up 5 percent on a core basis(2)), reflecting strength in its diagnostics and genomics businesses. DGG's operating margin for the quarter was 15.0 percent.

Agilent expects third-quarter 2016 revenue in the range of $1.03 billion to $1.05 billion. Third-quarter non-GAAP earnings are expected to be in the range of $0.45 to $0.47 per share(4).

For fiscal year 2016, Agilent expects revenue of $4.16 billion to $4.18 billion and non-GAAP earnings of $1.88 to $1.92 per share(4). The guidance is based on April 29, 2016 exchange rates.

Agilent is also raising its full-year operating cash flow guidance from $650 million to $740 million. There is no change to the capital expenditure guidance of $140 million.


Financial Statements for Second-Quarter Fiscal 2016
               
AGILENT TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(In millions, except per share amounts)
(Unaudited)
PRELIMINARY
 
 
Three Months Ended
April 30, Percent

2016

2015

 

(As Revised) Inc/(Dec)
 
Net revenue $ 1,019 $ 963 6%
 
Costs and expenses:
Cost of products and services 489 483 1%
Research and development 81 81
Selling, general and administrative   318     292   9%

Total costs and expenses

  888     856   4%
 
Income from operations 131 107 22%
 
Interest income 3 2 50%
Interest expense (18 ) (17 ) 6%
Other income (expense), net   1     4   (75%)
 
Income from continuing operations before taxes 117 96 22%
 
Provision for income taxes   26     4  
 
Income from continuing operations 91 92 (1%)
 
Loss from discontinued operations, net of tax   -     (5 )
 
Net income $ 91   $ 87   5%
 
 
Net income per share - Basic:
Income from continuing operations $ 0.28 $ 0.28
Loss from discontinued operations $ -   $ (0.02 )
Net income per share - Basic $ 0.28   $ 0.26  
 
 
Net income per share - Diluted:
Income from continuing operations $ 0.28 $ 0.27
Loss from discontinued operations $ -   $ (0.01 )
Net income per share - Diluted $ 0.28   $ 0.26  
 
 
Weighted average shares used in computing net income per share:
Basic 326 334
Diluted 328 337
 
Cash dividends declared per common share $ 0.115 $ 0.100
 
 
 
 
The preliminary income statement is estimated based on our current information.
 

Page 1

               
AGILENT TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(In millions, except per share amounts)
(Unaudited)
PRELIMINARY
 
 
Six Months Ended
April 30, Percent

2016

2015

 

(As Revised) Inc/(Dec)
 
Net revenue $ 2,047 $ 1,989 3%
 
Costs and expenses:
Cost of products and services 980 996 (2%)
Research and development 159 169 (6%)
Selling, general and administrative   622     602   3%
Total costs and expenses   1,761     1,767  
 
Income from operations 286 222 29%
 
Interest income 5 4 25%
Interest expense (36 ) (33 ) 9%
Other income (expense), net   4     16   (75%)
 
Income from continuing operations before taxes 259 209 24%
 
Provision for income taxes   45     24   88%
 
Income from continuing operations 214 185 16%
 
Loss from discontinued operations, net of tax   -     (35 )
 
Net income $ 214   $ 150   43%
 
 
Net income per share - Basic:
Income from continuing operations $ 0.65 $ 0.55
Loss from discontinued operations $ -   $ (0.10 )
Net income per share - Basic $ 0.65   $ 0.45  
 
 
Net income per share - Diluted:
Income from continuing operations $ 0.65 $ 0.55
Loss from discontinued operations $ -   $ (0.10 )
Net income per share - Diluted $ 0.65   $ 0.45  
 
 
Weighted average shares used in computing net income per share:
Basic 327 335
Diluted 330 337
 
Cash dividends declared per common share $ 0.230 $ 0.200
 
 
 
 
The preliminary income statement is estimated based on our current information.
 

Page 2

 
AGILENT TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
(In millions)
(Unaudited)
PRELIMINARY
               
 
Three Months Ended Six Months Ended
April 30, April 30,

2016

2015

2016

2015

 

(As Revised)

 

(As Revised)
 
Net income $ 91 $ 87 $ 214 $ 150
 
Other comprehensive income (loss), net of tax:
 
Unrealized gain (loss) on derivative instruments (9 ) (1 ) (6 ) 6
Amounts reclassified into earnings related to derivative instruments - (5 ) (1 ) (8 )
Foreign currency translation 145 (6 ) 89 (271 )
Net defined benefit pension cost and post retirement plan costs:
Change in actuarial net loss 6 6 21 10
Change in net prior service benefit   (3 )   (3 )   (11 )   (5 )
Other comprehensive income (loss)   139     (9 )   92     (268 )
 
Total comprehensive income (loss) $ 230   $ 78   $ 306   $ (118 )
 
 
 
 
The preliminary statement of comprehensive income is estimated based on our current information.
 

Page 3

         
AGILENT TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEET
(In millions, except par value and share amounts)
(Unaudited)
PRELIMINARY
 
 
April 30, October 31,
2016 2015
ASSETS
 
Current assets:
Cash and cash equivalents $ 2,139 $ 2,003
Short-term restricted cash and cash equivalents 242
Accounts receivable, net 602 606
Inventory 555 541
Other current assets   192     294  
Total current assets 3,488 3,686
 
Property, plant and equipment, net 610 604
Goodwill 2,556 2,366
Other intangible assets, net 490 445
Long-term investments 157 86
Other assets   339     292  
Total assets $ 7,640   $ 7,479  
 
LIABILITIES AND EQUITY
 
Current liabilities:
Accounts payable $ 220 $ 279
Employee compensation and benefits 211 221
Deferred revenue 279 258
Short-term debt 235
Other accrued liabilities   188     218  

Total current liabilities

1,133 976
 
Long-term debt 1,654 1,655
Retirement and post-retirement benefits 242 264
Other long-term liabilities   446     414  
Total liabilities   3,475     3,309  
 
Total Equity:
Stockholders' equity:

Preferred stock; $0.01 par value; 125 million shares authorized; none issued and outstanding

Common stock; $0.01 par value, 2 billion shares authorized; 612 million shares at April 30, 2016 and 611 million shares at October 31, 2015, issued

6 6

Treasury stock at cost; 287 million shares at April 30, 2016 and 279 million shares at October 31, 2015

(10,368 ) (10,074 )
Additional paid-in-capital 9,103 9,045
Retained earnings 5,720 5,581
Accumulated other comprehensive loss   (299 )   (391 )
Total stockholders' equity 4,162 4,167
Non-controlling interest   3     3  
Total equity   4,165     4,170  

Total liabilities and equity

$ 7,640   $ 7,479  
 
 
 
The preliminary balance sheet is estimated based on our current information.
 

Page 4

         
AGILENT TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(In millions)
(Unaudited)
PRELIMINARY
 
 
Three Months Six Months
Ended Ended
April 30, April 30,
2016 2016
Cash flows from operating activities:
Net income $ 91 $ 214
 
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization 64 130
Share-based compensation 13 36
Excess tax benefit from share-based plans 2
Excess and obsolete inventory related charges 8 12
Other non-cash expenses, net 6 8
Changes in assets and liabilities:
Accounts receivable 34 19
Inventory (13 )
Accounts payable (35 ) (53 )
Employee compensation and benefits 34 (13 )
Other assets and liabilities   39     20  
Net cash provided by operating activities (a) 256 360
 
Cash flows from investing activities:
Investments in property, plant and equipment (25 ) (63 )
Proceeds from sale of investment securities 1
Payment to acquire Lasergen investment (80 ) (80 )
Loan to equity method investment (3 ) (3 )
Change in restricted cash and cash equivalents, net 245
Payment in exchange for convertible loan (1 )
Acquisition of businesses and intangible assets, net of cash acquired       (235 )
Net cash used in investing activities (108 ) (136 )
 
Cash flows from financing activities:
Issuance of common stock under employee stock plans 8 32
Treasury stock repurchases (94 ) (294 )
Payment of dividends (37 ) (75 )
Proceeds from revolving credit facility 155 255
Repayment of revolving credit facility (20 )
Excess tax benefit from share-based plans   (2 )    
Net cash provided by (used in) financing activities 30 (102 )
 
Effect of exchange rate movements 30 14
 
Net increase in cash and cash equivalents 208 136
 
Cash and cash equivalents at beginning of period   1,931     2,003  
 
Cash and cash equivalents at end of period $ 2,139   $ 2,139  
 
(a) Cash payments included in operating activities:
Severance payments 1 3
Income tax payments (refunds), net (16 ) 21
 
 
The preliminary cash flow is estimated based on our current information.
 

Page 5

                   
AGILENT TECHNOLOGIES, INC.
NON-GAAP INCOME FROM CONTINUING OPERATIONS AND DILUTED EPS RECONCILIATIONS
(In millions, except per share amounts)
(Unaudited)
PRELIMINARY
 
 
Three Months Ended Six Months Ended
April 30, April 30,
Diluted Diluted Diluted Diluted
2016   EPS 2015   EPS 2016   EPS 2015   EPS
(As Revised) (As Revised)
GAAP Income from continuing operations $ 91 $ 0.28 $ 92 0.27 $ 214 $ 0.65 $ 185 0.55
Non-GAAP adjustments:
Acceleration of share-based compensation related to workforce reduction 1 - 2 0.01
Intangible amortization 40 0.12 38 0.11 83 0.25 81 0.24
Business exit and divestiture costs 1 10 0.03 5 0.02 13 0.04
Transformational initiatives 10 0.03 17 0.05 21 0.06 29 0.09
Acquisition and integration costs 12 0.04 1 17 0.05 2 0.01
Pension curtailment gain (16 ) (0.05 )
Other 1 (2 ) (0.01 ) 3 0.01 (1 )
Adjustment for taxes (a)   (10 )     (0.03 )   (28 )     (0.07 )   (29 )     (0.09 )   (43 )     (0.14 )
Non-GAAP Income from continuing operations $ 145     $ 0.44   $ 129     $ 0.38   $ 298     $ 0.90   $ 268     $ 0.80  
 
(a) The adjustment for taxes excludes tax benefits that management believes are not directly related to ongoing operations and which are either isolated or cannot be expected to occur again with any regularity or predictability. For the three and six months ended April 30, 2016 and 2015 , management uses a non-GAAP effective tax rate of 20% for both periods, that we believe to be indicative of on-going operations.
 
Historical amounts are reclassified to conform with current presentation.
 
We provide non-GAAP income from continuing operations and non-GAAP income from continuing operations per share amounts in order to provide meaningful supplemental information regarding our operational performance and our prospects for the future. These supplemental measures exclude, among other things, charges related to the amortization of intangibles, pension curtailment, transformational initiatives, acquisition and integration costs and business exit and divestiture costs.
 
Business exit and divestiture costs include costs associated with the exit of the NMR business and the divestiture of the XRD business.
 
Transformational initiatives include expenses associated with targeted cost reduction activities such as manufacturing transfers, small site consolidations, reorganizations, insourcing or outsourcing of activities. Such costs may include move and relocation costs, one-time termination benefits and other one-time reorganization costs. Included in this category are also expenses associated with the post-separation resizing of the IT infrastructure and streamlining of IT systems as well as the expenses incurred primarily in fiscal year 2015 to effect the Agile Agilent reengineering.
 
Acquisition and Integration costs include all incremental expenses incurred to effect a business combination. Such acquisition costs may include advisory, legal, accounting, valuation, and other professional or consulting fees. Such integration costs may include expenses directly related to integration of business and facility operations, information technology systems and infrastructure and other employee-related costs.
 
Pension curtailment gain resulted from certain retirement plans benefit reductions.
 
Other includes certain legal costs and settlements in addition to other miscellaneous adjustments.
 
Our management uses non-GAAP measures to evaluate the performance of our core businesses, to estimate future core performance and to compensate employees. Since management finds this measure to be useful, we believe that our investors benefit from seeing our results "through the eyes" of management in addition to seeing our GAAP results. This information facilitates our management’s internal comparisons to our historical operating results as well as to the operating results of our competitors.
 
Our management recognizes that items such as amortization of intangibles can have a material impact on our cash flows and/or our net income. Our GAAP financial statements including our statement of cash flows portray those effects. Although we believe it is useful for investors to see core performance free of special items, investors should understand that the excluded items are actual expenses that may impact the cash available to us for other uses. To gain a complete picture of all effects on the company’s profit and loss from any and all events, management does (and investors should) rely upon the GAAP income statement. The non-GAAP numbers focus instead upon the core business of the company, which is only a subset, albeit a critical one, of the company’s performance.
 
Readers are reminded that non-GAAP numbers are merely a supplement to, and not a replacement for, GAAP financial measures. They should be read in conjunction with the GAAP financial measures. It should be noted as well that our non-GAAP information may be different from the non-GAAP information provided by other companies.
 
The preliminary non-GAAP net income and diluted EPS reconciliation is estimated based on our current information.
 

Page 6

             
AGILENT TECHNOLOGIES, INC.
SEGMENT INFORMATION
(In millions, except where noted)
(Unaudited)
PRELIMINARY
 
Life Sciences and Applied Markets Group
Q2'16 Q2'15
Revenue $ 495 $ 473
Gross Margin, % 58.5% 56.1%
Income from Operations $ 94 $ 75
Operating margin, % 19.0% 15.8%
 
 
Diagnostics and Genomics Group
Q2'16 Q2'15
Revenue $ 178 $ 169
Gross Margin, % 54.1% 54.8%
Income from Operations $ 27 $ 25
Operating margin, % 15.0% 15.0%
 
 
Agilent CrossLab Group
Q2'16 Q2'15
Revenue $ 346 $ 321
Gross Margin, % 49.3% 49.6%
Income from Operations $ 74 $ 69
Operating margin, % 21.5% 21.5%
 
 
 
Income from operations reflect the results of our reportable segments under Agilent's management reporting system which are not necessarily in conformity with GAAP financial measures. Income from operations of our reporting segments exclude, among other things, charges related to the amortization of intangibles, pension curtailment gain, transformational initiatives, acquisition and integration costs and business exit and divestiture costs.
 
Readers are reminded that non-GAAP numbers are merely a supplement to, and not a replacement for, GAAP financial measures. They should be read in conjunction with the GAAP financial measures. It should be noted as well that our non-GAAP information may be different from the non-GAAP information provided by other companies.
 
The preliminary segment information is estimated based on our current information.
 

Page 7

                 
AGILENT TECHNOLOGIES, INC.
RECONCILIATIONS OF REVENUE BY SEGMENT EXCLUDING THE NMR BUSINESS,
ACQUISITIONS, DIVESTITURES AND THE IMPACT OF CURRENCY ADJUSTMENTS (CORE)
(in millions)
(Unaudited)
PRELIMINARY
 
Year-over-Year
 
GAAP
Year-over-Year

GAAP Revenue by Segment

Q2'16   Q2'15   % Change
 
Life Sciences and Applied Markets Group $ 495 $ 473 5 %
 
Diagnostics and Genomics Group 178 169 5 %
 
Agilent CrossLab Group 346 321 8 %
     
Agilent $ 1,019   $ 963 6 %
 
 
Currency

Non-GAAP

Adjustments Currency-Adjusted ((a))
Year-over-Year Year-over-Year

Non GAAP Revenue by Segment

Q2'16   Q2'15   % Change Q2'16 Q2'16   Q2'15   % Change
 
Life Sciences and Applied Markets Group excluding acquisition and NMR $ 484 $ 453 7 % $ (6 ) $ 490 $ 453 8 %
 
Diagnostics and Genomics Group excluding acquisition 177 169 4 % (1 ) 178 169 5 %
 
Agilent CrossLab Group 346 321 8 % (6 ) 352 321 10 %
             
Agilent Revenue (Core) $ 1,007   $ 943 7 % $ (13 ) $ 1,020   $ 943 8 %
 
 
(a) We compare the year-over-year change in revenue excluding the effect of the NMR business, recent acquisitions and divestitures and foreign currency rate fluctuations to assess the performance of our underlying business. To determine the impact of currency fluctuations, current period results for entities reporting in currencies other than United States dollars are converted into United States dollars at the actual exchange rate in effect during the respective prior periods.
 
The preliminary reconciliation of GAAP revenue adjusted for the NMR business, recent acquisitions and divestitures and impact of currency is estimated based on our current information.
 

Page 8

         
AGILENT TECHNOLOGIES, INC.
RECONCILIATION OF ADJUSTED NON-GAAP INCOME FROM OPERATIONS AND OPERATING MARGINS
(In millions, except margin data)
(Unaudited)
PRELIMINARY
 
Operating
Q2 2016     Margin %
 
Revenue: $ 1,019
 
Income from operations:
GAAP Income from operations $ 131 12.9 %
Add:
Intangible amortization 40
Transformational initiatives 10
Acquisition and integration costs 12
Business exit and divestiture costs 1
Other   1
Non-GAAP income from operations $ 195 19.1 %
Reimbursement from Keysight for services (a)   3
Adjusted non-GAAP income from operations $ 198 19.4 %
(a) Post separation, Agilent is providing Keysight Technologies, Inc. certain site services. These site services are included in our operating expenses. The amounts billed to Keysight for these services are recorded in other income.
 
We provide non-GAAP income from operations in order to provide meaningful supplemental information regarding our operational performance and our prospects for the future. These supplemental measures exclude, among other things, charges related to the amortization of intangibles, transformational initiatives, acquisition and integration costs and business exit and divestiture costs.
 
Our management recognizes that items such as amortization of intangibles can have a material impact on our cash flows and/or our net income. Our GAAP financial statements including our statement of cash flows portray those effects. Although we believe it is useful for investors to see core performance free of special items, investors should understand that the excluded items are actual expenses that may impact the cash available to us for other uses. To gain a complete picture of all effects on the company’s profit and loss from any and all events, management does (and investors should) rely upon the GAAP income statement. The non-GAAP numbers focus instead upon the core business of the company, which is only a subset, albeit a critical one, of the company’s performance.
 
Readers are reminded that non-GAAP numbers are merely a supplement to, and not a replacement for, GAAP financial measures. They should be read in conjunction with the GAAP financial measures. It should be noted as well that our non-GAAP information may be different from the non-GAAP information provided by other companies.
 
The preliminary reconciliation of income from operations and operating margins is estimated based on our current information.
 

Page 9

Download Financial Statements for Second-Quarter Fiscal 2016

Download Financial StatementsFinancial Tables (169KB)