10-QPeriod: Q3 FY2009

AGILENT TECHNOLOGIES, INC. Quarterly Report for Q3 Ended Jul 31, 2009

Filed September 4, 2009For Securities:A

Summary

Agilent Technologies, Inc. reported a challenging third quarter for fiscal year 2009, marked by a significant decline in net revenue of 27% year-over-year to $1,057 million, and a net loss of $19 million compared to a net income of $169 million in the prior year. This performance reflects the continued weakness across most of its key segments, particularly Electronic Measurement and Semiconductor and Board Test, which experienced substantial revenue drops of 36% and 59% respectively. Despite these headwinds, the company is strategically positioning itself for future growth with the announcement of a pending $1.5 billion acquisition of Varian, Inc., a leading supplier of scientific instrumentation. Management highlighted ongoing restructuring efforts aimed at reducing operating expenses by approximately $525 million annually through workforce reductions and infrastructure optimization. These measures are part of a broader response to the deteriorating economic conditions. While facing significant macroeconomic challenges, Agilent remains focused on innovation and operational efficiency, preparing to report in three segments (Electronic Measurement, Chemical Analysis, and Life Sciences) starting in fiscal year 2010.

Financial Highlights

53 data points
Beta

Revenue

$1.06B

51.0% Gross Margin

Net Income

-$19.00M

-1.8% Net Margin

EPS (Diluted)

$-0.06

Total Assets

$6.57B

Cash & Equivalents

$1.48B

Free Cash Flow

$11.00M

Financial Statements
Beta
Revenue$1.06B
Cost of Revenue$518.00M
Gross Profit$539.00M
R&D Expenses$153.00M
SG&A Expenses$387.00M
Operating Expenses$1.06B
Operating Income-$1.00M
Interest Expense$21.00M
Net Income-$19.00M
EPS (Basic)$-0.06
EPS (Diluted)$-0.06
Shares Outstanding (Basic)345.00M
Shares Outstanding (Diluted)345.00M

Key Highlights

  • 1Net revenue decreased 27% to $1.057 billion in Q3 FY2009, with significant declines across Electronic Measurement (-36%) and Semiconductor and Board Test (-59%) segments.
  • 2The company reported a net loss of $19 million for the quarter, a sharp contrast to a net income of $169 million in the prior year.
  • 3Agilent announced a pending acquisition of Varian, Inc. for an estimated $1.5 billion, signaling a strategic move to strengthen its position in the life sciences and applied markets.
  • 4Significant restructuring efforts are underway, aiming for $525 million in annual operating savings through workforce reductions (targeting 3,800 positions) and infrastructure consolidation.
  • 5Orders decreased 23% year-over-year, reflecting broad-based weakness across all major business segments due to challenging economic conditions.
  • 6Cash flow from operations for the nine months ended July 31, 2009, was $195 million, down from $498 million in the prior year, impacted by reduced revenue and increased restructuring payments.
  • 7The company plans to realign its reporting segments to Electronic Measurement, Chemical Analysis, and Life Sciences in fiscal year 2010.

Frequently Asked Questions

In the third quarter of fiscal year 2009, Agilent Technologies reported a net revenue of $1,057 million, a decrease of 27% compared to the same period last year. The company recorded a net loss of $19 million, a significant change from the net income of $169 million in the prior year's quarter. Orders also declined by 23% year-over-year, reflecting challenging market conditions.

Agilent is actively pursuing several strategic initiatives. Most notably, it announced a pending acquisition of Varian, Inc. for approximately $1.5 billion, which is expected to bolster its offerings in the life sciences and applied markets. Additionally, the company is implementing a significant restructuring program designed to reduce operating expenses by about $525 million annually through workforce reductions and infrastructure consolidation, in response to the ongoing economic downturn.

All major business segments experienced revenue declines. The Electronic Measurement segment saw revenue drop by 36%, and the Semiconductor and Board Test segment experienced a substantial 59% decrease in revenue. The Bio-analytical Measurement segment revenue declined by 8%. This widespread weakness is attributed to prevailing challenging economic conditions across most end markets and geographic regions.

Agilent anticipates continued challenging business conditions due to the depressed global economic environment, though it notes signs that its businesses may have reached the bottom of the downturn. The company remains committed to operational efficiency and innovation. It also plans to realign its reporting segments into three main areas: Electronic Measurement, Chemical Analysis, and Life Sciences, starting in the first quarter of fiscal year 2010.