Agilent Technologies Reports Q3 EPS of 33 Cents; Orders up 44 Percent; Net Revenue up 28 Percent
PALO ALTO, Calif.--(BUSINESS WIRE)--Aug. 17, 2000--Agilent
Technologies Inc. (NYSE:A) today reported that orders increased 44
percent, and net revenue increased 28 percent in fiscal 2000's third
quarter, which ended July 31. Net earnings, which reflect the costs of
branding and operating independently, grew 15 percent, and earnings
per share were 33 cents(1).
"This quarter Agilent achieved record orders and revenue," said
Ned Barnholt, president and chief executive officer of Agilent. "We
continue to work closely with our customers to build next-generation
wireless, optical and data networks. Eighty percent of Agilent's
orders and revenue this quarter came from our communications and
electronics businesses, where orders grew 62 percent, and revenue
increased 44 percent. These growth rates have accelerated despite this
quarter's tougher compare. Our biggest challenge is to ramp capacity
to meet this unprecedented demand."
In the third quarter, total orders were $3.2 billion, an increase
of 44 percent over the same period last year. Orders from the United
States totaled $1.5 billion, an increase of 45 percent over last
year's third quarter, while orders from outside the United States were
$1.7 billion, up 42 percent over the same period a year ago.
Net revenue rose to $2.7 billion, up 28 percent over the third
quarter last year. Compared to the second quarter of fiscal 2000, net
revenue rose by $185 million or 7 percent.
Net earnings for the third quarter rose 15 percent to $155
million, compared with $135 million in the same period last year. This
quarter's net earnings were 5.8 percent of revenue. For the third
quarter of fiscal 2000, Agilent's earnings from operations were $210
million, 7.9 percent of net revenue, up 8 percent compared with
earnings from operations of $195 million or 9.3 percent of net revenue
in the third quarter of fiscal 1999.
Business Summary
Test and Measurement
Orders in test and measurement increased to $1.9 billion in the
third quarter of fiscal 2000, up 63 percent over the comparable period
in fiscal 1999. Net revenue rose 51 percent to $1.5 billion. Earnings
from operations in test and measurement increased to $162 million,
compared with earnings from operations of $122 million in the same
period a year ago.
Orders in semiconductor test increased 83 percent this quarter and
reached an all-time high for the third consecutive quarter, while
revenue from the semiconductor test business rose 125 percent. Revenue
from system-on-a-chip, flash memory test, and services and support all
achieved triple-digit increases over the same period last year.
Orders in test-and-measurement's communications business, which
addresses the fast-growing optical, wireless and data-networking
markets, increased 69 percent this quarter, and revenue increased 65
percent year over year. In the general-purpose area of test and
measurement, orders increased by 39 percent year-over-year, and
revenue grew 8 percent year over year. Electronics-manufacturing test
did extremely well this quarter as contract manufacturers added
capacity to meet demand.
Semiconductor Products
The semiconductor products business achieved outstanding results
with record orders, net revenue and earnings from operations. Orders
increased to $730 million, a growth rate of 60 percent over the third
quarter of fiscal 1999. Net revenue grew to $591 million, an increase
of 41 percent when adjusted for the transfer of products to a joint
venture and Agilent's exit from the microprocessor business. Earnings
from operations were $99 million, a 48 percent increase over last
year's third quarter adjusted for a one-time charge.
In communication components, orders increased 152 percent over the
third quarter of 1999, and revenue increased 86 percent. Orders nearly
doubled over the third quarter of last year in fiber-optic
transceivers and high-speed ICs, driven by strong growth in the
metro-access and gigabit markets. Orders more than doubled in wireless
components, where Agilent's CDMAdvantage RF chipset for wireless
applications is winning very strong market acceptance. Imaging
products include image sensors for digital cameras and optical
computer mice, and these products achieved explosive growth this
quarter.
The core business in semiconductor products had order growth of 19
percent and revenue growth of 17 percent this quarter. Core
optoelectronic components achieved particularly strong growth, while
non-networking ASICs had modest growth.
This quarter, the company announced plans to quadruple worldwide
manufacturing capacity for fiber-optic components over a two-year
period with an investment of more than $175 million. Agilent also
recently announced that it is building a dedicated 6-inch wafer
fabrication line in its Newark, Calif. facility for its innovative
film bulk acoustic resonator (FBAR) filter products. Agilent is
ramping FBAR assembly capabilities in its Penang, Malaysia facility as
well. FBAR semiconductor technology enables miniature high-performance
filtering products for applications such as mobile phones, so
manufacturers can produce smaller phones with high performance.
Chemical Analysis
Third quarter orders in chemical analysis were $269 million, an
increase of 8 percent compared with the third quarter of fiscal 1999.
Order growth was helped by recently introduced bioscience products and
liquid phase instruments. Net revenue declined 4 percent compared with
the third quarter of 1999 and totaled $246 million, as demand was weak
in the chemical, environmental and petrochemical markets. Operating
losses were $8 million, compared with profit from operations of $36
million in the year-ago quarter. Operating losses reflected planned
investments in life sciences and costs of branding and operating
independently.
"The chemical-analysis business continues its transformation to
focus on the higher-growth bioscience and pharmaceutical markets,"
said Barnholt. "We're pleased with the acceptance of our new products
for these areas. We're also working to improve our cost structures in
our core businesses."
Healthcare Solutions
Orders in healthcare solutions during the quarter were $318
million, down 13 percent when compared with the third quarter of
fiscal 1999. Net revenue in the third quarter was $319 million, down
14 percent compared to a strong third quarter last year. Operating
losses were $40 million this quarter, compared with profit from
operations of $41 million in the third quarter of 1999.
Continued weakness in the U.S. hospital market resulted in a
decline in orders in patient monitoring, which is the largest business
in healthcare solutions. Two factors have slowed capital spending by
hospitals: purchases pulled into 1999 by the customers to avoid
potential Y2K issues and continuing financial pressure on U.S.
hospitals from the balanced-budget amendment.
Order growth was strong for automatic-external-defibrillator
products and point-of-care diagnostics compared to the third quarter
of 1999. Several new products and enhancements strengthened Agilent's
portfolio and attracted strong customer interest in the areas of
ultrasound imaging; Web-enabled, wireless patient monitoring; and
resuscitation in and outside the hospital.
"We're taking actions to return our healthcare solutions business
to profitability as quickly as possible," said Barnholt. "We don't
intend to wait for market conditions to improve before implementing
our plans. We're firmly committed to strengthening this business and
are confident that our actions will help get this business back on
track."
Earlier this week, Agilent announced that its healthcare-solutions
business is implementing a global restructuring program that, along
with other programs, will result in annual savings in excess of $80
million dollars starting in fiscal 2001.
Costs and Expenses
The company's gross margin for the quarter was 48.7 percent of net
revenue, down slightly from the second quarter as the company brought
capacity online and addressed parts shortages. Operating expenses were
40.9 percent of net revenue for the quarter, with selling, general and
administrative expenses at 29.0 percent of revenue, and research and
development at 11.9 percent.
Business Outlook
"Given our excellent position in the communications and
electronics markets and our strong backlog levels, we continue to feel
comfortable with fourth quarter earnings per share of 39 cents, before
restructuring," said Barnholt. "For fiscal 2001, we are raising our
guidance from 15 percent to at least 20 percent growth in net revenue,
and net earnings approaching 8 percent of net revenue."
About Agilent Technologies
Agilent Technologies, Inc. (NYSE:A) is a diversified technology
company, resulting from Hewlett-Packard Company's plan to
strategically realign itself into two fully independent companies.
With approximately 46,000 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. In fiscal year 1999, the businesses comprising
Agilent, then a subsidiary of HP, had net revenue of more than $8.3
billion.
Information about Agilent Technologies can be found on the Web at
www.agilent.com.
More financial information about this quarter's earnings is
available at investor.agilent.com.
This news release contains forward-looking statements (including,
without limitation, information regarding projected net revenue,
operating income and losses, net margin, net earnings, net earnings
per share, anticipated costs, expenses and charges, and the
information in the section captioned "Business Outlook") that involve
risks and uncertainties that could cause the results of Agilent
Technologies to differ materially from management's current
expectations. These risks include the ability of Agilent to
successfully operate as an independent company, including the ability
to control expenses, and to retain and motivate key employees in a
very competitive technology labor market.
In addition, other risks that Agilent faces in running its
operations include: shortages of critical parts; the timely ability to
ramp manufacturing capacity to meet order demand; the ability to
quickly adapt cost structures to changing conditions; the successful
implementation of the restructuring of its Healthcare Solutions Group;
the economic, political and other risks associated with international
sales and operations; the current use of information systems and
transitional services provided to Agilent by HP, which Agilent must
develop and procure on its own in the near term, potentially at
increased costs; and other risks detailed in Agilent's Annual Report
on Form 10-K for the year ended October 31, 1999, and its Quarterly
Report on Form 10-Q for the quarter ended April 30, 2000, as filed
with the Securities and Exchange Commission.
(1) Pro forma basic and diluted earnings per share were 34 cents
and 33 cents respectively. Pro forma basic earnings per share were
calculated using weighted average shares outstanding for the quarter.
Pro forma diluted earnings per share included the dilutive impact of
outstanding stock options and also assumed that HP stock and options
converted to Agilent stock and options were outstanding for the entire
quarter.
AGILENT TECHNOLOGIES,INC.
CONDENSED CONSOLIDATED STATEMENT OF EARNINGS
(Unaudited)
Three months ended
(In millions, except July 31, Percent
per share amounts) 2000 1999 increase
Net revenue 2,670 2,087 28
Costs and expenses:
Cost of products
and services 1,369 1,103
Research and development 318 242
Selling, general and
administrative 773 547
Total costs & expenses 2,460 1,892 30
Earnings from operations 210 195 8
Other income (expense), net 28 12
Earnings before taxes 238 207
Provision for taxes 83 72
Net earnings $ 155 $ 135 15
Basic net earnings per share $ .34 $ .36
Diluted net earnings per share $ .34 $ .36
Average shares used in
computing net earnings
per share:
Basic 453 380
Diluted 461 380
Unaudited pro forma net
earnings per share:
Basic $.34
Diluted $.33
Average shares used in
computing unaudited pro forma
net earnings per share:
Basic(1) 453
Diluted(2) 464
(1) Unaudited pro forma basic earnings per share were calculated
using weighted average shares outstanding for the quarter.
(2) Unaudited pro forma diluted earnings per share were calculated
using weighted average shares outstanding for the quarter and included
the dilutive impact of outstanding stock options and also assumed that
HP stock and options converted to Agilent stock and options were
outstanding for the entire quarter.
AGILENT TECHNOLOGIES,INC.
CONDENSED CONSOLIDATED STATEMENT OF EARNINGS
(Unaudited)
Nine months ended
(In millions, except July 31, Percent
per share amounts) 2000 1999 increase
Net revenue 7,401 5,883 26
Costs and expenses:
Cost of products
and services 3,790 3,096
Research and development 904 705
Selling, general and
administrative 2,112 1,546
Total costs & expenses 6,806 5,347 27
Earnings from operations 595 536 11
Other income (expense), net 101 27
Earnings before taxes 696 563
Provision for taxes 244 197
Net earnings $ 452 $ 366 23
Basic net earnings per share $ 1.01 $ .96
Diluted net earnings per share $ 1.00 $ .96
Average shares used in
computing net earnings
per share:
Basic 448 380
Diluted 452 380
Unaudited pro forma net
earnings per share:
Basic $1.00
Diluted $.97
Average shares used in
computing unaudited pro forma
net earnings per share:
Basic(1) 452
Diluted(2) 464
(1) Unaudited pro forma basic earnings per share were calculated
using weighted average shares outstanding for the nine-month period
including the 72,000,000 shares issued in Agilent Technologies'
initial public offering and assuming they were outstanding for the
entire period.
(2) Unaudited pro forma diluted earnings per share were calculated
using weighted average shares outstanding for the nine-month period
including the 72,000,000 shares issued in Agilent Technologies'
initial public offering and assuming they were outstanding for the
entire period. In addition, the calculation included the dilutive
impact of outstanding stock options and also assumed that HP stock and
options converted to Agilent stock and options were outstanding for
the entire nine-month period.
AGILENT TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEET
(Unaudited)
(In millions, except par value and share amounts)
ASSETS July 31 October 31
2000 1999
Current assets:
Cash and cash equivalents $ 703 $ --
Accounts receivable 2,167 1,635
Inventory 1,762 1,499
Other current assets 712 404
Total current assets 5,344 3,538
Property, plant and equipment, net 1,581 1,387
Other assets 902 519
Total assets $7,827 $5,444
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts and notes payable $ 912 $ 510
Employee compensation and benefits 600 550
Deferred revenue 361 241
Accrued income taxes and other accrued
liabilities 637 380
Total current liabilities 2,510 1,681
Other liabilities 415 381
Commitments and contingencies
Stockholders' equity:
Preferred stock; $.01 par value; 125,000,000
shares authorized; none issued
and outstanding -- --
Common stock; $.01 par value; 2,000,000,000
shares authorized; 452,981,000 and
380,000,000 shares issued and outstanding
at July 31, 2000 and October 31, 1999 5 4
Additional paid-in capital 4,451 3,378
Retained earnings 452 --
Accumulated comprehensive earnings (loss) (6) --
------- -------
Total stockholders' equity 4,902 3,382
Total liabilities and stockholders' equity $7,827 $5,444
AGILENT TECHNOLOGIES, INC.
ORDERS, NET REVENUE AND EARNINGS (LOSS) FROM
OPERATIONS BY BUSINESS SEGMENT
(Unaudited)
(In millions)
For the three months ended July 31 2000 1999
ORDERS
Test and measurement $ 1,851 $ 1,137
Semiconductor products 730 457
Healthcare solutions 318 364
Chemical analysis 269 249
Total $ 3,168 $ 2,207
NET REVENUE
Test and measurement $ 1,514 $ 1,003
Semiconductor products 591 457
Healthcare solutions 319 372
Chemical analysis 246 255
Total $ 2,670 $ 2,087
EARNINGS (LOSS) FROM OPERATIONS
Test and measurement $ 162 $ 122
Semiconductor products 99 16
Healthcare solutions (40) 41
Chemical analysis (8) 36
Corporate and other (3) (20)
------- -------
Total $ 210 $ 195
In general, recorded orders represent firm purchase commitments
from our customers with established terms and conditions for products
and services that will be delivered within six months.
AGILENT TECHNOLOGIES, INC.
ORDERS, NET REVENUE AND EARNINGS (LOSS) FROM
OPERATIONS BY BUSINESS SEGMENT
(Unaudited)
(In millions)
For the nine months ended July 31 2000 1999
ORDERS
Test and measurement $ 5,132 $ 3,158
Semiconductor products 1,918 1,353
Healthcare solutions 1,020 1,102
Chemical analysis 770 724
Total $ 8,840 $ 6,337
NET REVENUE
Test and measurement $ 4,060 $ 2,856
Semiconductor products 1,535 1,230
Healthcare solutions 1,057 1,043
Chemical analysis 749 754
Total $ 7,401 $ 5,883
EARNINGS (LOSS) FROM OPERATIONS
Test and measurement $ 479 $ 273
Semiconductor products 188 81
Healthcare solutions (53) 86
Chemical analysis 6 99
Corporate and other (25) (3)
------- -------
Total $ 595 $ 536
In general, recorded orders represent firm purchase commitments
from our customers with established terms and conditions for products
and services that will be delivered within six months.
AGILENT TECHNOLOGIES, INC.
ORDERS AND NET REVENUE FROM OPERATIONS BY GEOGRAPHY
(Unaudited)
Local
USD Currency
For the three months ended July 31 2000 1999 Growth Growth
(in millions) (percent)
ORDERS
United States $ 1,454 $ 1,000 45 45
Europe 561 488 15 23
Asia Pacific 964 591 63 53
Latin America 85 61 39 39
Canada 104 67 55 52
Total $ 3,168 $ 2,207
NET REVENUE
United States $ 1,166 $ 980 19
Europe 513 457 12
Asia Pacific 799 542 47
Latin America 114 55 107
Canada 78 53 47
Total $ 2,670 $ 2,087
In general, recorded orders represent firm purchase commitments
from our customers with established terms and conditions for products
and services that will be delivered within six months.
--30--as/sf*
CONTACT: Agilent Technologies Inc.
Steve Beitler, 650/752-5246
steve-beitler@agilent.com
or
Mary Lou Simmermacher, 650/752-5283
marylou-simmermacher@agilent.com
or
CONTACT:
Hilliard Terry, 650/752-5329
hilliard-terry@agilent.com |
