Agilent Technologies Inc. Reports Operating Results (10-Q)

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Jun 10, 2009
Agilent Technologies Inc. (A, Financial) filed Quarterly Report for the period ended 2009-04-30.

Agilent Technologies is the world's premier measurement company and a technology leader in communications electronics life sciences and chemical analysis. Agilent has two primary business segments: Bio-Analytical Measurement and Electronic Measurement. Agilent Technologies Inc. has a market cap of $6.81 billion; its shares were traded at around $19.72 with a P/E ratio of 13.4 and P/S ratio of 1.2.

Highlight of Business Operations:

Revisions to Financial Statement Presentation. We have revised our consolidated balance sheet as of October 31, 2008 to correct an error in the classification of deferred tax assets and liabilities. This revision does not impact the consolidated statement of operations or the consolidated statement of cash flows for any period. During the April 30, 2009 quarter-end process, we noted that the October 31, 2008 U.S. deferred tax valuation allowances and certain deferred tax assets/ deferred tax liabilities were misclassified on the balance sheet as a result of improperly applying the jurisdictional netting rules of SFAS No. 109. We have therefore revised our balance sheet as of October 31, 2008 by decreasing other long-term liabilities by $435 million and decreasing other long-term assets by $404 million, decreasing other current assets by $26 million and increasing other accrued liabilities by $5 million.

For the three and six months ended April 30, 2009, total orders were $1,026 million and $2,141 million, respectively, a decrease of 33 percent and 27 percent in comparison to the same periods last year. For the three and six months ended April 30, 2009, bio-analytical orders decreased 16 percent and 9 percent, respectively, electronic measurement orders decreased 39 percent and 34 percent, respectively, and semiconductor and board test orders decreased 75 percent and 71 percent, respectively, when compared to the same periods last year.

Net loss for the three and six months ended April 30, 2009 was $101 million and $37 million, respectively, as compared to net income of $173 million and $293 million for the corresponding periods last year. For the three and six months ended April 30, 2009, net income decreased mainly due to reduced revenue. Tax expense decreased $44 million when compared to the six months ended April 30, 2008 primarily due to net discrete tax benefits associated with lapses of statutes of limitations and tax settlements.

The March 2009 restructuring activities are combined with those actions previously announced in December 2008 and February 2009 under a single restructuring plan and are part of a series of actions being taken by Agilent in response to the current economic situation. In connection with the combined restructuring plan, we expect to record in aggregate approximately $315 million in pre-tax restructuring and other charges related to business and infrastructure cost reduction. We expect that a significant proportion of these charges will result in cash expenditures. When completed, these actions together are expected to result in future annual operating savings of approximately $525 million and workforce reductions of approximately 3,800 regular positions. Total restructuring and other special charges of $134 million have been incurred in the six months ended April 30, 2009 with respect to these actions. Of the expected 3,800 reduction in regular positions, approximately 650 employees have left Agilent as of April 30, 2009.

Total restructuring and other special charges of $134 million have been incurred in the six months ended April 30, 2009 with respect to these actions. Of the $134 million, $17 million related to asset impairments and $23 million related to special charges for excess inventory as a result of exiting the inspection businesses in our semiconductor and board test segment. Of the 3,800 reduction in regular positions under the FY 2009 Plan, approximately 650 employees have left Agilent as of April 30, 2009. We expect to complete the majority of these activities related to the FY 2009 Plan by October 31, 2009 with the remainder expected to be completed by the end of the second quarter of fiscal 2010. We expect our restructuring to cause us to record a curtailment gain related to our U.S. Post Retirement Benefit Plan in the third quarter due to an expected decrease in the plans average future working lifetime.

For the three and six months ended April 30, 2009, we recorded an income tax provision of $43 million and $6 million, respectively, compared to an income tax provision of $23 million and $50 million in the same periods last year. The income tax provisions for the three and six months ended April 30, 2009 include net discrete benefits of zero and $34 million, respectively, and are primarily associated with lapses of statutes of limitations and tax settlements. The tax provisions for the three and six months ended April 30, 2008 both include a benefit of $12 million for effectively settled issues related to foreign audits.

Read the The complete ReportA is in the portfolios of Richard Snow of Snow Capital Management, L.P., NWQ Managers of NWQ Investment Management Co, Robert Olstein of Olstein Financial Alert Fund, Chris Davis of Davis Selected Advisers, Jean-Marie Eveillard of Arnhold & S. Bleichroeder Advisers, LLC, PRIMECAP Management, Dodge & Cox, Ron Baron of Baron Funds.