Q4 Results. Should be a good Friday for 'A'.
Chris
Thursday December 16, 4:01 pm Eastern Time
Company Press Release
Agilent Technologies Ends IPO Quiet Period and Provides Additional Information On Fourth-quarter, Full-Year Results
PALO ALTO, Calif.--(BUSINESS WIRE)--Dec. 16, 1999--Agilent Technologies, Inc. (NYSE: A - news) today provided further information on its results for the 1999 fiscal year's fourth quarter, which ended Oct. 31, 1999, as well as for the full fiscal year. The company, a subsidiary of Hewlett-Packard Company (NYSE: HWP - news), completed a $2.2 billion initial public offering (IPO) of stock -- the largest in Silicon Valley history -- on Nov. 18, 1999. The legally mandated ``quiet period' for Agilent ended on Dec. 13, 1999.
As the company reported in its Form S-1 filing on Nov. 15, 1999, net revenue for the fourth quarter was $2.4 billion, an increase of 23 percent over the same period last year. For the full year, Agilent's net revenue totaled $8.3 billion, up 5 percent over fiscal year 1998.
``Our revenue goal for fiscal 2000 is about $9.4 billion, which is consistent with the plan we've had in place for some time,' said Bob Walker, chief financial officer of Agilent.
For the fourth quarter, Agilent's earnings from operations were $205 million, or 8.4 percent of the quarter's net revenue. For the full year, earnings from operations were $741 million, or 8.9 percent of revenue.
Net earnings for the fourth quarter were $146 million, compared with a net loss of $51 million in the same period last year. (The net loss for the fourth quarter of last year included pre-tax restructuring charges of $145 million.) This quarter's net earnings were 6 percent of revenue.
Net earnings for fiscal 1999 were $512 million, an increase of 99 percent over the $257 million reported in fiscal 1998. (Net earnings for the full-year 1998 included pre-tax restructuring charges of $163 million.) Agilent's fiscal 1999 net earnings were 6.1 percent of net revenue, and fiscal 1998 net earnings were 3.2 percent of net revenue.
Earnings per share for the fourth quarter were 32 cents, and for fiscal 1999 were $1.11, based on approximately 460 million shares outstanding. The share total includes shares held by Hewlett-Packard Company, shares issued in Agilent's IPO and the estimated dilutive impact of options converted from HP.
``This quarter's growth in earnings and revenue gives Agilent a great start as we begin life as a separate company and work to build shareholder value,' said Edward W. (Ned) Barnholt, president and chief executive officer of Agilent. ``We achieved these results while separating from HP and preparing for our very successful IPO. Our 42,000 employees around the world and our HP colleagues deserve the credit for the resounding success of Agilent's launch, which has energized our entire company.'
In the fourth quarter, total orders were $2.5 billion, an increase of 31 percent compared with the same period last year. Orders from the United States totaled $1.1 billion, an increase of 13 percent over last year's fourth quarter, while orders from outside the United States were $1.4 billion, up 49 percent over the same period a year ago. When compared with the fourth quarter of fiscal 1998, orders from Europe increased 16 percent to $490 million in 1999, while fourth quarter orders from Asia Pacific jumped 82 percent to $736 million. Orders from Latin America in the fourth quarter totaled $71 million, a 37 percent increase over the comparable quarter last year.
For the full year, Agilent's orders increased 12 percent and were $8.9 billion. In the United States, orders increased 10 percent to $4 billion, while orders from outside the United States rose 14 percent and totaled $4.9 billion. When compared with fiscal 1998, orders from Europe increased 7 percent to $2 billion in 1999, while fiscal 1999 orders from Asia Pacific rose 22 percent to $2.4 billion. Orders from Latin America in fiscal 1999 totaled $213 million, a 5 percent increase over last year.
Business Summary
Test and measurement
Net revenue in test and measurement rose 22 percent in the fourth quarter of 1999 over the comparable period in 1998, while orders increased 57 percent. Earnings from operations in test and measurement were $100 million, compared with earnings from operations of $16 million in the same period a year ago. Demand was excellent for products and systems for the wireless-communications market as well as for testing the high-bandwidth optical network infrastructure and network-access technologies such as Digital Subscriber Line (DSL). The automated test segment, which serves the semiconductor and electronics markets, achieved strong revenue and order growth, but revenue from the systems portion of the communications solutions segment fell short of Agilent's goals. There was particularly strong demand for systems used to test flash memory, radio frequency/integrated circuits and system-on-a-chip products.
Semiconductor products
Net revenue for semiconductor products increased 30 percent over the same period a year ago and totaled $492 million, the highest quarterly revenue total ever achieved by this segment. Orders for the quarter rose 21 percent and were $442 million. Earnings from operations in semiconductor products was $52 million for the quarter compared with a loss from operations of $122 million in the same period last year. There was excellent growth across the segment's product lines, driven by robust demand in the networking and mobile-communications markets. Semiconductor products for wireless and fiber-optic communications, as well as high-speed networking, achieved outstanding revenue and order increases this quarter.
Healthcare Solutions
The healthcare solutions segment posted a 30 percent increase in net revenue over the comparable period a year ago, resulting in net revenue of $458 million, the highest-ever quarterly revenue for this segment. The patient-monitoring and cardiology product lines posted outstanding revenue increases compared with the same quarter a year ago. Orders during the quarter were $391 million, down 3 percent compared with a very strong year-ago quarter. Earnings from operations totaled $39 million for the quarter, compared with $8 million in the fourth quarter of fiscal 1998.
Chemical Analysis
Net revenue in the chemical analysis segment rose 7 percent over the year-ago period and totaled $272 million. For the year, net revenue in the chemical analysis segment exceeded $1 billion for the first time ever. Orders in the fourth quarter increased 4 percent to $286 million over the same period a year ago. This quarter's revenue increase was driven by solid growth in the liquid chromatography line, which sells heavily into the pharmaceutical market. There was also a healthy increase in the support and consumables lines. Operating earnings were $13 million for the quarter, compared with $18 million in the year-ago quarter. The chemical analysis segment recently introduced the Bioanalyzer 2100 system, which incorporates ``lab-on-a-chip' technology developed in collaboration with Caliper Technologies.
Costs and Expenses
The company's gross margin for the quarter was 47.2 percent of net revenue, while gross margin for the fiscal year was 47.3 percent of revenue. The full-year figure compares with a gross margin of 43.3 percent in the prior year. Excluding the effect of restructuring charges taken in fiscal 1998, gross margin for that year would have been 45 percent of revenue.
Operating expenses were 38.8 percent of net revenue for the quarter, with selling, general and administrative expenses at 26.9 percent of revenue and research and development at 11.9 percent. For the full year, operating expenses were 38.4 percent of net revenue. Selling, general and administrative expenses in fiscal 1999 were 26.4 percent of revenue, while research and development was 12 percent of revenue.
Expenses associated with launching Agilent contributed to the fourth quarter increase in the company's operating-expense as a percent of net revenue. These expenses rose in the fourth quarter compared with the third quarter, due primarily to planned branding-related costs and the initial costs of operating as a stand-alone company.
``We're planning to spend about $140 million on branding in fiscal 2000,' said Walker. ``In addition, we will have significant ongoing costs associated with setting up systems, processes and programs on our own that we previously shared with HP. We began experiencing the impact of these costs in the fourth quarter, and we expect them to total between $250 and $300 million next year.
``Shortly after the realignment of HP was announced in March, we decided that our primary goal was to accomplish the separation on a very aggressive schedule. Now that we're operating independently, we're going to pursue opportunities to tailor our systems and processes to Agilent's needs. We expect to achieve improvements in our cost and expense structures as a result of this work, with these improvements having greater impact beginning in fiscal 2001.'
Asset Management
Return on assets for Agilent was 9.4 percent for the quarter. As a percent of revenue, accounts receivable was 19.6 percent of revenue; inventory was 18 percent; and net property, plant and equipment was 16.7 percent. Strong revenue growth during the quarter, especially in October, drove the increase in the accounts receivable ratio. The company is also implementing a number of programs to improve inventory ratios in its businesses.
Business Outlook
``We're encouraged by the improvement in our results in the fourth quarter and the second half of the year,' said Barnholt. ``It's clear that the macroeconomic environment in Asia is much better than it was earlier this year. In addition, demand in the semiconductor business has clearly improved.
``Our major businesses are entering the first quarter of the new fiscal year with good order momentum and strong new products,' said Barnholt. ``In addition, we are continuing to identify and implement ways to improve our cost structures. However, as we've said, we will have additional costs related to our operating as a separate company.
``I'm very pleased with the progress we've made in the eight months since we began the creation of Agilent. We're starting our first full year as an independent company with many strengths -- our technology capability, our customer and partner relationships, and 42,000 talented and committed people around the world. We're going to emphasize speed, focus and accountability in everything we do, and we're going to pursue many exciting opportunities primarily in communications and life sciences.'
About Agilent Technologies
Agilent Technologies, Inc. is a diversified technology company, resulting from Hewlett-Packard Company's plan to strategically realign itself into two fully independent companies. With 42,000 employees serving customers in more than 120 countries, Agilent Technologies is a global leader in designing and manufacturing test, measurement and monitoring instruments, systems and solutions, and semiconductor and optical components. The company serves markets that include communications, electronics, life sciences and healthcare. The businesses comprising Agilent, a subsidiary of HP, had net revenues of more than $8.3 billion in fiscal year 1999.
Information about Agilent Technologies can be found on the Web at www.agilent.com. |
