10-QPeriod: Q3 FY2008

AGILENT TECHNOLOGIES, INC. Quarterly Report for Q3 Ended Jul 31, 2008

Filed September 5, 2008For Securities:A

Summary

Agilent Technologies, Inc. reported solid revenue growth for the third quarter and first nine months of fiscal year 2008, driven by its Bio-analytical Measurement segment, which saw strong double-digit increases in both orders and revenue. While the Electronic Measurement segment experienced modest revenue growth, it faced some headwinds in general purpose test markets. Overall net revenue for the quarter was $1.44 billion, up 5% year-over-year, and $4.29 billion for the nine-month period, up 8%. Net income for the quarter was $169 million ($0.45 per diluted share), a slight decrease from $185 million ($0.45 per diluted share) in the prior year quarter. The company generated $498 million in operating cash flow for the first nine months of fiscal 2008. A significant item to note is the reclassification of $1.5 billion in debt related to World Trade financing to short-term, with a repurchase obligation due in November 2008. Agilent continues to focus on profitable growth through market share expansion, new product introductions, and strategic acquisitions.

Financial Highlights

28 data points
Beta

Revenue

$1.44B

55.6% Gross Margin

Net Income

$169.00M

11.7% Net Margin

EPS (Diluted)

$0.45

Cash & Equivalents

$1.64B

Free Cash Flow

$388.00M

Financial Statements
Beta
Revenue$1.44B
Cost of Revenue$641.00M
Gross Profit$803.00M
R&D Expenses$170.00M
SG&A Expenses$415.00M
Operating Income$218.00M
Net Income$169.00M
EPS (Basic)$0.47
EPS (Diluted)$0.45
Shares Outstanding (Basic)362.00M
Shares Outstanding (Diluted)372.00M

Key Highlights

  • 1Total net revenue increased by 5% to $1.44 billion for the third quarter and 8% to $4.29 billion for the nine months ended July 31, 2008, compared to the prior year periods.
  • 2The Bio-analytical Measurement segment showed robust performance with 13% and 16% revenue growth for the third quarter and nine months, respectively.
  • 3Net income for the third quarter was $169 million, a decrease from $185 million in the prior year quarter, though earnings per diluted share remained stable at $0.45.
  • 4Operating cash flow for the first nine months of fiscal 2008 was $498 million, a decrease from $571 million in the prior year, impacted by higher tax payments and lower interest income.
  • 5The company repurchased approximately $750 million of its common stock in the first nine months of 2008 under a new $2 billion repurchase program.
  • 6A significant portion of debt ($1.5 billion) has been reclassified to short-term due to a repurchase obligation due in November 2008.
  • 7Agilent reported strong operating margins, with overall operating margin increasing by 3 percentage points to 15.1% in the third quarter and to 12.6% for the nine-month period.

Frequently Asked Questions

Agilent Technologies reported a 5% increase in total net revenue for the third quarter ended July 31, 2008, reaching $1.44 billion, up from $1.37 billion in the same period last year. This growth was primarily driven by the Bio-analytical Measurement segment.

Net income for the third quarter was $169 million, a decrease from $185 million in the prior year's third quarter. However, net income per diluted share remained flat at $0.45 due to a reduction in weighted average diluted shares outstanding.

A significant financial consideration is the $1.5 billion repurchase obligation under the World Trade financing arrangement, which is due in November 2008 and has been classified as short-term debt. The company also notes potential impacts from the IRS audit for fiscal years 2000-2002, although it believes the ultimate resolution will not have a material adverse effect.

Agilent generated $498 million in operating cash flow for the first nine months of fiscal 2008. While this is lower than the previous year, the company expects to generate sufficient cash from operations to fund its needs. The company also has approximately $1.6 billion in unrestricted cash and $1.6 billion in restricted cash as of July 31, 2008, though much of this is held overseas and repatriation could incur tax liabilities.