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Agilent Technologies Separating Into Two Industry-Leading Public - - PowerPoint PPT Presentation

Agilent Technologies Separating Into Two Industry-Leading Public Companies to Increase Strategic Flexibility and Enhance Shareholder Value September 19, 2013 Page 1 Safe Harbor This presentation contains forward-looking statements


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Agilent Technologies

Separating Into Two Industry-Leading Public Companies to Increase Strategic Flexibility and Enhance Shareholder Value

September 19, 2013

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Safe Harbor

This presentation contains forward-looking statements (including, without limitation, information and future guidance on the company’s goals, priorities, the planned separation of our Electronic Management Group, revenues, demand, growth opportunities, customer service and innovation plans, new product introductions, financial condition, earnings, the company’s ability to pay dividends, ability to access capital markets, the continued strengths and expected growth of the markets the company sells into, operations, operating earnings, and tax rates) that involve risks and uncertainties that could cause results of Agilent to differ materially from management’s current expectations. The words “anticipate,” “plan,” “estimate,” “expect,” “intend,” “will,” “should” “forecast” “project” and similar expressions, as they relate to the company, are intended to identify forward- looking statements. In addition, other risks that the company faces in running its operations include the ability to execute successfully through business cycles; the ability to successfully adapt its cost structures to continuing changes in business conditions; ongoing competitive, pricing and gross margin pressures; the risk that our cost-cutting initiatives will impair our ability to develop products and remain competitive and to operate effectively; the impact

  • f geopolitical uncertainties on our markets and our ability to conduct business; the ability to improve asset

performance to adapt to changes in demand; the ability to successfully introduce new products at the right time, price and mix, and other risks detailed in the company's filings with the Securities and Exchange Commission, including our quarterly report on Form 10-Q for the quarter ended July 31, 2013. The company assumes no obligation to update the information in these presentations. These presentations and the Q&A that follows include non-GAAP measures. Non-GAAP measures exclude primarily the impacts of acquisition and integration costs, future restructuring costs, asset impairment charges, and non-cash intangibles

  • amortization. Also excluded are tax benefits that are not directly related to ongoing operations and which are

either isolated or cannot be expected to occur again with any regularity or predictability. Most of these excluded amounts pertain to events that have not yet occurred and are not currently possible to estimate with a reasonable degree of accuracy. Accordingly, no reconciliation to GAAP amounts has been provided.

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The World’s Premier Measurement Company

Agilent Labs Order Fulfillment

Life Sciences Group

FY13 Revenue $1.6B Operating Margin 16%

Chemical Analysis Group

FY13 Revenue $1.6B Operating Margin 22%

Electronic Measurement Group

FY13 Revenue $2.9B Operating Margin 19%

Diagnostics & Genomics Group

FY13 Revenue $0.7B Operating Margin 15%

Finance, HR, Legal, IT, Workplace Services

FY13 Revenue $6.8B, Core Growth(2) -3%, Operating Margin 18.5%, ROIC 16%, Free Cash Flow $900M, Debt/EBITDA 1.9x

EM Markets LDA Markets FY13(1) Revenue $3.9B, Operating Margin 18%

(1) FY13 numbers are estimates based on the midpoint of Company guidance provided on August 14, 2013. They are not a confirmation of guidance. (2) Core growth is reported growth adjusted for the effects of M&A and FX.

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Agilent to Split into Two Companies

Strategic Rationale for Separation

  • Capitalizing on EMG, Agilent has grown LDA to be a sizeable and

highly competitive business

  • Spin-off to create two companies with greater strategic and

management focus, each well positioned for growth in its sector

  • Distinct industries and drivers
  • Greater strategic focus
  • Both businesses have the scope to stand on their own
  • Two unique and compelling investment profiles
  • Positioned to attract a more focused shareholder base
  • Better aligned with research analyst coverage universe and peer

comparisons Move Designed to Increase Strategic Flexibility and Enhance Shareholder Value

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Two Independent Publicly Traded Companies

LDA-Focused Company (New Agilent) EM-Focused Company (To Be Named)

Revenue Mix Financial Metrics(1) Key Platforms

  • Revenue: $3.9B
  • Operating Margin: 18%
  • ROIC: 11%
  • Revenue: $2.9B
  • Operating Margin: 19%
  • ROIC: 31%
  • Liquid & Gas Chromatography
  • Mass Spectrometry
  • Spectroscopy
  • Nuclear Magnetic Resonance
  • Genomics & Diagnostics (Dako)
  • Consumables, Services, Software
  • Source & Signal Analyzers
  • Network Analyzers
  • One-box Testers
  • Oscilloscopes
  • Modular & Handheld
  • Services & Software

(1) FY13 numbers are estimates based on the midpoint of Company guidance provided on August 14, 2013. They are not a confirmation of guidance.

Genomics & Diagnostics 17% Life Sciences 42% Chemical Analysis 41% Electronic Measurement 100%

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Management Teams

New Agilent EM Company

Bill Sullivan, President and CEO Ron Nersesian, President and CEO designate Didier Hirsch, Chief Financial Officer Neil Dougherty, Chief Financial Officer designate (formerly VP and Treasurer

  • f Agilent Technologies)

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New Agilent: Life Sciences, Diagnostics, and Applied Markets

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32% 34% 34%

New Agilent Overview

  • Global leader in Life Sciences, Diagnostics, and

Applied markets

  • Attractive recurring revenue base
  • Balanced geographic revenue profile
  • Growth opportunities in emerging markets, molecular

diagnostics and clinical

  • Significant margin expansion opportunities
  • Revenues: $3.9B, +9% y/y (+5% core(2))
  • Operating Margin: 18% of revenue
  • ROIC: 11%

FY13(1) Financial Metrics

(1) FY13 numbers are estimates based on the midpoint of Company guidance provided on August 14, 2013. They are not a confirmation of guidance. (2) Core growth is reported growth adjusted for the effects of M&A and FX.

Revenue Mix Segment Geography Type

Genomics & Diagnostics 17% Life Sciences 42% Chemical Analysis 41% Non- Recurring 59% Recurring 41% Americas Europe Asia Pacific

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New Agilent: Market Profile

End Markets Market Size(1) Long Term Market Growth(1) Market Position(1) Growth Drivers Pharma & Biotech $11B 4-6% #3

  • Shift to new biological

entities

  • Emerging markets

Academia & Government $10B 3-5% #4

  • Global investments in

Life Science research Diagnostics & Clinical $7B 8-10% #2 & emerging

  • Increasing patient

population

  • Companion

diagnostics Food $4B 5-7% #1

  • Global food supply
  • Government

regulations Environmental & Forensics $5B 2-4% #1 & #2

  • New environmental

contaminants

  • Designer drugs

Chemical & Energy $4B 4-6% #1

  • Rising energy

demands

  • Alternative energy

Market Size(1): $41B Long Term Market Growth(1): 4-6%

Pharma & Biotech 26% Academia & Government 12% Diagnostics & Clinical 11% Environmental & Forensics 16% Food 11% Chemical & Energy 24%

Revenue Mix(2)

by End Market

(1) Market size, growth, and position per Company estimates (2) Percentage of LDA revenue based on Q4’12-Q3’13

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Growth through technology leadership, customer intimacy, workflow solutions Higher recurring revenue mix (from 29% to 41%(1)) Continued strategic push from lab to the

  • clinic. Ensuring the success of Dako

Focused on similar markets with higher growth rates and lower cyclicality Leadership in Life Sciences, Diagnostics, and Applied markets Pure play Life Sciences, Diagnostics, and Analytical Company

Same Different

Margin improvement through reduced manufacturing, logistics costs, and sales channel leverage Allows management to focus exclusively

  • n running LDA business

Business model better aligned with shareholder base and peer group

What’s Different for New Agilent?

Scale and financial strength to stand on its

  • wn

Attracting and retaining top talent in the industry Continuing to build on strong foundation in emerging markets

(1) Percentage of recurring revenue based on Q4’12-Q3’13

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New Agilent: Strategy to Win

Creating Shareholder Value

  • Increase organic growth rate

 Leverage large and growing installed base to expand recurring revenues and core instrument sales  Take advantage of greenfield opportunities in developed markets (clinical instrumentation, integrated biology, sample preparation)  Leverage presence in emerging markets  Ensure success of Dako and Varian acquisitions

  • Grow earnings faster than revenues

 Continued improvement in gross margins  Drive operating margin expansion and increase ROIC

  • Deliver complete workflow solutions for our customers

 Core data system platform to easily enable application development in the lab and correlate data from research to the clinic, allowing for deeper insight  Bolt-on acquisitions that help complete the workflow. Focused on sequencing and related technologies, molecular diagnostics, and consumables

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Electronic Measurement Focused Company

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  • Leading position in major markets
  • Global electronic measurement technology

and market leader

  • Growth opportunity in emerging markets
  • Strong cash flow generation and ROIC
  • Industry leading gross and operating

margins

  • $450M of recurring services & support
  • revenue. $300M of software sales

17% 46% 37%

(1) FY13 numbers are estimates based on the midpoint of Company guidance provided on August 14, 2013. They are not a confirmation of guidance. (2) Core growth is reported growth adjusted for the effects of M&A and FX.

Q3’13 Revenue Mix

by Geography Asia Pacific Americas Europe

  • Revenue: $2.9B, -13% y/y (-12% core(2))
  • Operating Margin: 19%
  • ROIC: 31%

FY13(1) Financial Metrics

Communications #1 Industrial, Computers, Semiconductors #1 Aerospace Defense #1

EM Company Overview

The World’s Premier Electronic Measurement Company

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EM Company: Market Profile

Industrial 30% Aerospace Defense 23%

(1) Market size, growth, and position per Company estimates (2) Percentage of EM revenue based on Q4’12-Q3’13 (3) Excludes network assurance

Communications 34% Aerospace Defense 23% Industrial 30% Computer / Semi- conductors 13%

End Markets Market Size(1) Long Term Market Growth(1) Growth Drivers Market Position Communications(3) $4B 4-6%

  • Mobile data traffic growth
  • Complex components and

chipsets

  • Subscriber growth in

China, India, Brazil #1 Aerospace & Defense $3B Flat

  • Satellites and radar

modernization outside U.S.

  • Intelligence, surveillance,

reconnaissance (ISR) #1 Industrial, Computer & Semiconductor $6B 3-5%

  • Electronic content

proliferation

  • Mobile computing
  • High performance cloud

infrastructure

  • Education and research in

emerging markets #1 Communications 34% Industrial, Computer & Semiconductor 43% Aerospace & Defense 23%

Market Size(1): $13B Long Term Market Growth(1): 3-4%

Revenue Mix(2)

by End Market

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Electronic measurement top opportunities are company’s top opportunities Same customers and global footprint New name Top talent Strong position in emerging markets Organic growth, tuck-in acquisitions Whole company 100% focused on EM and customer success Focus: profit and cash generation #1 in key markets Business model completely aligned with shareholders and analysts

Same Different

Corporate headquarters in Santa Rosa

What’s Different for EM Company?

Technology leadership Alignment between incentive compensation and EM value creation

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EM Company Strategy to Win

  • World’s premier electronic test and measurement provider in Communications,

Aerospace/Defense, and Industrial markets

  • First to market with leading edge customer-valued technology solutions

 Take share in core platforms  Top opportunities in electronic measurement industry are now the company’s top opportunities  Transform the measurement experience

  • World’s best customer satisfaction with lowest cost of ownership
  • Manage market volatility by continuing to generate strong cash flow, ROIC, and

solid earnings throughout the cycle

  • Management team with deep EM experience and track record of delivering on

tough financial commitments

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Goal Actions taken since 2009 downturn

EM Company Strong Profitability Throughout the Cycle

Restructured Operations to Maintain Strong Profitability During Periods of Market Volatility

Lower Costs Shift Fixed Costs to Variable Focus on Core

 Reduced headcount by 2700 people  Focused on continuous GM improvement – value engineering  Increased use of Contract Manufacturing  Increased indirect channel for variable selling cost  Increased use of external resources  Maintained R&D investment for technology leadership and application solutions  Leveraged technology investment throughout product portfolio  Owns critical enabling technology in ASICS, microcircuits, and gallium arsenide

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Transaction Details

Transaction Structure Timing Financial Details

 Agilent shareholders will receive a pro rata distribution of shares in EM Company via a tax-free spin-off  Expected to be completed by end of calendar year 2014, subject to the satisfaction of customary closing conditions, including: — Final approval by the Agilent Board of Directors — Receipt of favorable rulings from the IRS — Effectiveness of a Form 10 filing with the SEC — Receipt of regulatory approvals in all major jurisdictions  Both companies to be well capitalized, have strong balance sheets and expected investment grade profiles with target debt to EBITDA ratios below 2.0x  LDA-focused company will pay an annual dividend of approximately $130 million per year, expected to imply a yield at least equal to the current yield  Not anticipated to impact Agilent’s guidance for fiscal year 2013. Plan to provide fiscal year 2014 guidance at next earnings announcement in mid November  Expected to incur one-time charges related to the transaction during the periods preceding the separation, to be quantified at a later date  Expect to retire a portion of current Agilent long-term debt outstanding, utilizing EM Company capital  During the transition Agilent expects to continue its dividend and repurchase shares to at least maintain current share count

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  • Leverage prior experience

 Agilent has completed four major spin-offs/divestitures since 2005

  • Dis-synergies of ~ $100M cumulative over three year period

Little real estate overlap outside of sales offices  Clean ERP separation  Most dis-synergies in shared infrastructure organization

  • Replicate current Colorado Springs Data Center to provide IT infrastructure

for both companies

  • New Agilent to provide infrastructure services, such as payroll, IT, financial

services until EM Company can operate independently (~1 year after spin)  Both companies to develop specific action plans to minimize dis-synergies over time

Spin-off Execution Plan

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Appendix

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New Agilent Historical Consolidated Income Statement(1)

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$M FY 2010 FY 2011 FY 2012 Revenue 2,679 3,310 3,543 % YoY 30% 24% 7% COGS 1,245 1,603 1,685 Gross Margin % 54% 52% 52% Operating Expenses 936 1,157 1,225 % Revenue 35% 35% 35% Operating Profit 498 550 633 % Revenue 19% 17% 18%

(1) Presented on a non-GAAP basis; reconciliations to closest GAAP equivalent provided

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EM Company Historical Consolidated Income Statement(1)

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$M FY 2010 FY 2011 FY 2012 Revenue 2,784 3,316 3,315 % YoY 15% 19% 0% COGS 1,158 1,378 1,428 Gross Margin % 58% 58% 57% Operating Expenses 1,188 1,178 1,136 % Revenue 43% 36% 34% Operating Profit 438 760 751 % Revenue 16% 23% 23%

(1) Represents management’s view of EM segment as reported in the company’s periodic SEC filings

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Broadest range of solutions across ecosystem, including

  • Components and chipsets – Simulation tools, network analyzers

Market Reach, Customer Trust

  • Global footprint with R&D in US, Europe and Asia
  • Recognized leader in electronic test and measurement
  • Leadership in standards bodies
  • Handsets – One-box testers for R&D and manufacturing
  • Base Stations – Signal analyzers, sources
  • Wireline / Optical – Optical modulation analyzers

Key Drivers How We Win

Key New Products

  • Combination of bench-top and modular to deliver best solutions
  • Highly differentiated platforms for mobile device R&D and manufacturing to launch

in H1’14

  • Mobile data traffic grows at double-digit rates each year
  • Components and chipsets increase in complexity
  • Subscriber growth in China, India, Brazil

EM Company in Communications

Market Size(1): $4B Long Term Market Growth(1): 4-6% Market Position(1): #1

Page 23

(1) Market size, growth, and position per Company estimates

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EM Company in Aerospace & Defense

Market Size(1): $3B Long Term Market Growth(1): Flat Market Position(1): #1 Key Drivers How We Win

  • Growth comes from outside US (Russia, China, India, Middle East) driven by new

satellites and radar technologies

  • Growth of intelligence, surveillance, and reconnaissance

Leading Technology, Application Solutions, including

  • Direct wideband radar – 90000 X-Series oscilloscopes
  • Wideband radar simulation -- Arbitrary waveform generator
  • Lowest phase noise for radar – Performance signal generators
  • Best amplifier characterization for satellite communications – PNA-X
  • Mission-critical network surveillance – unique contribution

Market Reach, Customer Trust

  • Largest installed base
  • World-class, long-term service and support
  • Network of system integrators and in-house capabilities

Key New Products

  • Leading high-performance oscilloscopes with proprietary technology
  • RF and microwave modular products with lab-quality measurements
  • Industry’s highest performing handhelds

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(1) Market size, growth, and position per Company estimates

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EM Company in Industrial, Computer & Semiconductors

Market Size(1): $6B Long Term Market Growth(1): 3-5% Market Position(1): #1 Key Drivers How We Win

  • Electronic content in industrial segment continues to proliferate
  • Mobile computing driven by smartphones, tablets, and notebook PCs
  • Cloud computing requires high-performance infrastructure
  • Semiconductor R&D-driven innovation
  • Strategic investments in education and research in emerging countries

Leading Technology, Application Solutions, including

  • Industry-leading PCI-Express Gen3 – Oscilloscopes, bit error rate testers (BERTs),

protocol analyzers

  • Premier battery drain characterization – Source measure units (SMUs)
  • First THz materials research solution – Performance network analyzers

Market Reach, Customer Trust

  • Award-winning products plus expanded indirect channel
  • Leadership in high-speed digital standards: PCI Express, USB, HDMI

Key New Products

  • Differentiated oscilloscope offering with ongoing ease-of-use innovation and value

integration

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(1) Market size, growth, and position per Company estimates

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Applications Market Position (1) Markets Competitors Electronic Design Automation (Software) Designs, simulates, & optimizes electronic circuit performance prior to building the prototype

#1

Communications, Aerospace/Defense, Industrial/Computer/S emi (ICS)

  • Cadence
  • National Instruments

Mobile Radio Test For wireless devices— measures performance at chip, module or device level prior to deploying in network

#3

Communications

  • Anritsu
  • Rohde & Schwarz
  • Teradyne (LitePoint)

Network Analyzer Characterizes responses of devices & components in an electrical network

#1

Communications, Aerospace/Defense, ICS

  • Anritsu
  • Rohde & Schwarz

Oscilloscope Measures changing electrical signals at different points in a circuit or system

#2

Communications, Aerospace/Defense, ICS

  • Danaher (Tektronix)
  • LeCroy (Teledyne)

Signal Analyzer Measures magnitude or power

  • f signal versus frequency

#1

Communications, Aerospace/Defense

  • Anritsu
  • Rohde & Schwarz

Signal Source Applies signals to circuits under development in order to predict device behavior

#1

Communications, Aerospace/Defense

  • Rohde & Schwarz
  • Aeroflex

HP/Agilent Introduced 1983 1967 1956 1964 1939 1985

EM Company: Key Product Platforms

Key platforms account for >50% of revenue

Page 26

(1) Source: Prime Data

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New Agilent: Life Sciences Overview

Pharma & Biotech Academia & Government Research

Markets & Market Position

#3 #4

Market Size(1): $21B Long Term Market Growth(1): 4-5%

#1 in Liquid Chromatography (LC) #3 in Mass Spectrometry (MS) #2 in Nuclear Magnetic Resonance (NMR)

Q3’13 Revenue Mix

by Geography Asia Pacific Americas Europe LSG also sells into the applied markets

  • Revenues: $1.6B, +3% y/y (+4% core(3))
  • Operating Margin: 16% of revenue

FY13(2) Financial Metrics

(1) Market size, growth, and position per Company estimates (2) FY13 numbers are estimates based on the midpoint of Company guidance provided on August 14, 2013. They are not a confirmation of guidance. (3) Core growth is reported growth adjusted for the effects of M&A and FX

  • Pharma shift from new chemical entities (NCEs) to new

biological entities (NBEs) and biosimilars

  • Significant potential for our platforms in emerging markets
  • Relocation, decentralization of pharma infrastructure
  • Investments in world-class academic base

Global Trends

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New Agilent: Diagnostics and Genomics Overview

Anatomic Pathology Molecular Diagnostics

Market Size(1): $7B Long Term Market Growth(1): 8-10%

Markets & Market Position

#2 Emerging

Q3’13 Revenue Mix

by Geography Asia Pacific Americas Europe

DGG also sells into the pharmaceutical and research markets

  • Revenues: $0.7B, +65% y/y (+9% core(3))
  • Operating Margin: 14.5% of revenue
  • Increasing patient population (aging, lifestyle impacts)
  • Increasing understanding of cancer markers and pathways
  • Greater access to healthcare in emerging markets
  • Companion diagnostics bring diagnostic and treatment

solutions together to enable personalized medicine

  • Improved molecular diagnostic approaches

Global Trends

FY13(2) Financial Metrics

Page 28

(1) Market size, growth, and position per Company estimates (2) FY13 numbers are estimates based on the midpoint of Company guidance provided on August 14, 2013. They are not a confirmation of guidance. (3) Core growth is reported growth adjusted for the effects of M&A and FX

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New Agilent: Chemical Analysis Group Overview

Market Size(1): $13B Long Term Market Growth(1): 4-5%

Q3’13 Revenue Mix

by Geography Asia Pacific Americas Europe

Food #1 Environmental and Forensics #1 and #2 Chemical and Energy #1

Markets and Market Position

New Global Trends

  • Global food supply
  • New environmental contaminants
  • Designer drugs
  • Rising energy demands
  • Revenues: $1.6B, +2% y/y (+4% core(3))
  • Operating Margin: 22% of revenue

FY13(2) Financial Metrics

Page 29

(1) Market size, growth, and position per Company estimates (2) FY13 numbers are estimates based on the midpoint of Company guidance provided on August 14, 2013. They are not a confirmation of guidance. (3) Core growth is reported growth adjusted for the effects of M&A and FX

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New Agilent: Key Product Platforms

Key platforms account for >50% of revenue

Platform Applications Markets Market Position(1) Competitors

LC

Pharma R&D and QC Molecular biology, cancer research Education & Research / Routine testing Pharma & Biotech Academia & Government

#1

Waters, Shimadzu, Thermo

LC-MS

Discovery and Development Differential Expression and Pathway Analysis Protein ID, Protein Quantitation Pharma & Biotech Applied Markets

#3

Waters, Danaher Thermo, Bruker, Shimadzu

GC

Separate a liquid or gas sample into its individual components Chemical & Energy Forensics

#1

Shimadzu, PerkinElmer, Thermo, Bruker

GC-MS

Identify known and unknown components or contaminants Environmental/Forensics Food Safety Chemical & Energy

#1

Thermo, Shimadzu, Bruker, Perkin Elmer

Spectroscopy

ATOMIC: Identify and measure the concentrations

  • f elements in a solid or liquid sample

MOLECULAR: Measure the amount, presence or distribution of molecular material in a sample Environmental Chemical & Energy Pharma & Biotech

#3

Thermo, PerkinElmer, Thermo, Bruker, Shimadzu

Genomics

Sample prep for next-gen sequencing Microarrays for research and cytogenetic testing FISH for research and clinical applications Academia & Government Pharma & Biotech Diagnostics & Clinical

#2 in Target Enrichment and Microarray

Thermo (Life), Illumina, Affymetrix

NMR

Structure elucidation, molecular dynamics and in vivo imaging for broad range of small molecules, nucleic acids, proteins Academia & Government Pharma & Biotech

#2

Bruker, JEOL

Dako

Cancer diagnostics within anatomic pathology Diagnostics & Clinical

#2

Roche (Ventana) Danaher (Leica) Page 30

(1) Market position per Company estimates

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Reconciliations

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AGILENT TECHNOLOGIES, INC RECONCILIATION FROM GAAP TO NON-GAAP YEAR ENDED October 31, 2010 (Unaudited) Acceleration Varian Varian

  • f Share-Based

Restructuring Acquisition Acquisition Compensation and Other

and

Related Expense Related Tax Agilent Related Costs Asset Intangible Transformational Litigation Business Integration Fair Value Workforce Sharing Adjustment Agilent (In millions) GAAP FY 2009 Plan Impairments Amortization Restructuring Settlement Divestitures Costs Adjustments Reduction Settlement Other for Taxes Non-GAAP Net revenue Change Year Over Year 21% 5,444 $

  • $
  • $
  • $
  • $
  • $
  • $
  • $

19 $

  • $
  • $
  • $
  • $

5,463 $ 22% Change Year Over Year Costs and expenses: Cost of products and services Gross Margin 53.8% 2,514 (8) (5) (49) (15)

  • (1)

(32)

  • (1)

2,403 56.0% Gross Margin Research and development As a % of Revenue 11.2% 612 (3)

  • (7)
  • (1)

601 11.0% As a % of Revenue Selling, general and administrative As a % of Revenue 32.2% 1,752 (53) (14) (28) (17)

  • (13)

(101)

  • (1)
  • (2)

1,523 27.9% As a % of Revenue Total costs and expenses 4,878 (64) (19) (77) (39)

  • (13)

(102) (32) (1)

  • (4)
  • 4,527

Income from operations Operating Margin 10.4% 566 64 19 77 39

  • 13

102 51 1

  • 4
  • 936

17.1% Operating Margin Other income (expense), net 126

  • (8)

(129)

  • (54)

1

  • (64)

Income before taxes 692 64 19 77 39 (8) (116) 102 51 1 (54) 5

  • 872

Provision for taxes Tax rate (incl. Valuation Allowance) 1% 8

  • 158

166 19% Tax rate (incl. Valuation Allowance) Net income Net Margin 12.6% 684 $ 64 $ 19 $ 77 $ 39 $ (8) $ (116) $ 102 $ 51 $ 1 $ (54) $ 5 $ (158) $ 706 $ 12.9% Net Margin The preliminary reconciliation from GAAP to Non-GAAP net income is estimated based on our current information. Non-GAAP Adjustments

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AGILENT TECHNOLOGIES, INC RECONCILIATION FROM AGILENT NON-GAAP TO NEW AGILENT NON-GAAP YEAR ENDED October 31, 2010 (Unaudited) Adjustment New New Agilent Electronic Agilent Electronic Agilent (In millions) Non-GAAP Measurement Non-GAAP Measurement Non-GAAP Net revenue Change Year Over Year 22% 5,463 $ 2,784 $ 2,679 $ 15% 30% Change Year Over Year Costs and expenses: Cost of products and services Gross Margin 56.0% 2,403 1,158 1,245 58% 54% Gross Margin Research and development As a % of Revenue 11.0% 601 391 210 14% 8% As a % of Revenue Selling, general and administrative As a % of Revenue 27.9% 1,523 797 726 29% 27% As a % of Revenue Total costs and expenses 4,527 2,346 2,181 84% 81% Income from operations Operating Margin 17.1% 936 438 498 16% 18.6% Operating Margin Other income (expense), net (64) Income before taxes 872 Provision for taxes Tax rate (incl. Valuation Allowance) 19% 166 Net income Net Margin 12.9% 706 $ The preliminary reconciliation from GAAP to Non-GAAP net income is estimated based on our current information.

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AGILENT TECHNOLOGIES, INC RECONCILIATION FROM GAAP TO NON-GAAP YEAR ENDED October 31, 2011 (Unaudited) Varian Acquisition Acquisition Restructuring

and

Related Fair Agilent Agilent and Other Asset Intangible Transformational Integration Value Tax Sharing Foundation Adjustment Agilent (In millions) GAAP Related Costs Impairments Amortization Initiatives Costs Adjustments Settlement Donation Other for Taxes Non-GAAP Net revenue Change Year Over Year 22% 6,615 $

  • $
  • $
  • $
  • $
  • $

11 $

  • $
  • $
  • $
  • $

6,626 $ 21% Change Year Over Year Costs and expenses: Cost of products and services Gross Margin 53.3% 3,086 (4) (71) (25) (9) 2 2 2,981 55.0% Gross Margin Research and development As a % of Revenue 9.8% 649 (2) (2) 645 9.7% As a % of Revenue Selling, general and administrative As a % of Revenue 27.3% 1,809 (2) (5) (42) (24) (43) (6) 3 1,690 25.5% As a % of Revenue Total costs and expenses 5,544 (2) (9) (113) (51) (54) 2

  • (6)

5

  • 5,316

Income from operations Operating Margin 16.2% 1,071 2 9 113 51 54 9

  • 6

(5)

  • 1,310

19.8% Operating Margin Other income (expense), net (39) 1 (10) (3) (51) Income before taxes 1,032 2 9 113 51 55 9 (10) 6 (8)

  • 1,259

Provision for taxes Tax rate (incl. Valuation Allowance) 2% 20 194 214 17% Tax rate (incl. Valuation Allowance) Net income Net Margin 15.3% 1,012 $ 2 $ 9 $ 113 $ 51 $ 55 $ 9 $ (10) $ 6 $ (8) $ (194) $ 1,045 $ 15.8% Net Margin The preliminary reconciliation from GAAP to Non-GAAP net income is estimated based on our current information. Non-GAAP Adjustments

slide-35
SLIDE 35

AGILENT TECHNOLOGIES, INC RECONCILIATION FROM AGILENT NON-GAAP TO NEW AGILENT NON-GAAP YEAR ENDED October 31, 2011 (Unaudited) Adjustment New New Agilent Electronic Agilent Electronic Agilent (In millions) Non-GAAP Measurement Non-GAAP Measurement Non-GAAP Net revenue Change Year Over Year 21% 6,626 $ 3,316 $ 3,310 $ 19% 24% Change Year Over Year Costs and expenses: Cost of products and services Gross Margin 55.0% 2,981 1,378 1,603 58% 52% Gross Margin Research and development As a % of Revenue 9.7% 645 379 266 12% 8% As a % of Revenue Selling, general and administrative As a % of Revenue 25.5% 1,690 799 891 24% 27% As a % of Revenue Total costs and expenses 5,316 2,556 2,760 77% 83% Income from operations Operating Margin 19.8% 1,310 760 550 23% 16.6% Operating Margin Other income (expense), net (51) Income before taxes 1,259 Provision for taxes Tax rate (incl. Valuation Allowance) 17% 214 Net income Net Margin 15.8% 1,045 $ The preliminary reconciliation from GAAP to Non-GAAP net income is estimated based on our current information.

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SLIDE 36

AGILENT TECHNOLOGIES, INC RECONCILIATION FROM GAAP TO NON-GAAP YEAR ENDED October 31, 2012 (Unaudited) Acquisition & Agilent Adjustment Agilent Asset Intangible Transformation Integration Foundation for Agilent (In millions) GAAP Impairments Amortization Initiatives Costs Donation Other Taxes Non-GAAP Net revenue Change Year Over Year 4% 6,858 $

  • $
  • $
  • $
  • $
  • $
  • $
  • $

6,858 $ 4% Change Year Over Year Costs and expenses: Cost of products and services Gross Margin 52.6% 3,254

  • (88)

(14) (37)

  • (2)
  • 3,113

54.6% Gross Margin Research and development As a % of Revenue 9.7% 668 (1)

  • (1)

(2)

  • (1)
  • 663

9.7% As a % of Revenue Selling, general and administrative As a % of Revenue 26.5% 1,817 (15) (49) (10) (35) (10)

  • 1,698

24.8% As a % of Revenue Total costs and expenses 5,739 (16) (137) (25) (74) (10) (3)

  • 5,474

Income from operations Operating Margin 16.3% 1,119 16 137 25 74 10 3

  • 1,384

20.2% Operating Margin Other income (expense), net (76)

  • 14
  • (12)
  • (74)

Income before taxes 1,043 16 137 25 88 10 (9)

  • 1,310

Provision (benefit) for taxes Tax rate (incl. Valuation Allowance)

  • 11%

(110)

  • 320

210 16% Tax rate (incl. Valuation Allowance) Net income Net Margin 16.8% 1,153 $ 16 $ 137 $ 25 $ 88 $ 10 $ (9) $ (320) $ 1,100 $ 16.0% Net Margin The preliminary reconciliation from GAAP to Non-GAAP net income is estimated based on our current information. Non GAAP Adjustments

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SLIDE 37

AGILENT TECHNOLOGIES, INC RECONCILIATION FROM AGILENT NON-GAAP TO NEW AGILENT NON-GAAP YEAR ENDED October 31, 2012 (Unaudited) Adjustment New New Agilent Electronic Agilent Electronic Agilent (In millions) Non-GAAP Measurement Non-GAAP Measurement Non-GAAP Net revenue Change Year Over Year 4% 6,858 $ 3,315 $ 3,543 $ 0% 7% Change Year Over Year Costs and expenses: Cost of products and services Gross Margin 54.6% 3,113 1,428 1,685 57% 52% Gross Margin Research and development As a % of Revenue 9.7% 663 375 288 11% 8% As a % of Revenue Selling, general and administrative As a % of Revenue 24.8% 1,698 761 937 23% 27% As a % of Revenue Total costs and expenses 5,474 2,564 2,910 77% 82% Income from operations Operating Margin 20.2% 1,384 751 633 23% 17.9% Operating Margin Other income (expense), net (74) Income before taxes 1,310 Provision for taxes Tax rate (incl. Valuation Allowance) 16% 210 Net income Net Margin 16.0% 1,100 $ The preliminary reconciliation from GAAP to Non-GAAP net income is estimated based on our current information.