Agilent Technologies, Inc 10-Q for FY2020 Q1

About this 10-Q

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Agilent Technologies, Inc. (A)

10-Q 2020-03-03 For: 2020-01-31

Added on April 09, 2026

Agilent Technologies, Inc filed this 10-Q on March 3, 2020, covering the quarter ended January 31, 2020 (FY2020 Q1).

(State or other jurisdiction of incorporation or organization)

(IRS Employer Identification No.)

Quarter ended January 31, 2020, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $1.36B; up 5.7% from $1.28B a year earlier
Net income: $197M; down 60.9% from net income of $504M a year earlier
Diluted EPS: $0.63; down 59.9% from $1.57 a year earlier

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Title of each Class	Trading Symbol		Name of each Exchange on which registered
Common Stock, $0.01 par value		A		New York Stock Exchange



Large accelerated filer	☒	Accelerated filer	☐	Non-accelerated filer	☐
Smaller reporting company	☐			Emerging growth company	☐



			Page Number
Part I.	Financial Information		3
	Item 1.	Condensed Consolidated Financial Statements (Unaudited)	3
		Condensed Consolidated Statement of Operations	3
		Condensed Consolidated Statement of Comprehensive Income (Loss)	4
		Condensed Consolidated Balance Sheet	5
		Condensed Consolidated Statement of Cash Flows	6
		Condensed Consolidated Statement of Equity	7
		Notes to Condensed Consolidated Financial Statements	8
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	32
	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	43
	Item 4.	Controls and Procedures	43
Part II.	Other Information		44
	Item 1.	Legal Proceedings	44
	Item 1A.	Risk Factors	44
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	55
	Item 6.	Exhibits	56
Signature			57



	Three Months Ended
	January 31,
	2020			2019
Net revenue:
Products	$	1,023		$	980
Services and other	334			304
Total net revenue	1,357			1,284
Costs and expenses:
Cost of products	454			414
Cost of services and other	180			163
Total costs	634			577
Research and development	104			102
Selling, general and administrative	404			355
Total costs and expenses	1,142			1,034
Income from operations	215			250
Interest income	3			10
Interest expense	(20		)	(18		)
Other income (expense), net	21			6
Income before taxes	219			248
Provision (benefit) for income taxes	22			(256		)
Net income	$	197		$	504

Net income per share:
Basic	$	0.64		$	1.58
Diluted	$	0.63		$	1.57

Weighted average shares used in computing net income per share:
Basic	310			318
Diluted	313			322



	January 31, 2020			October 31, 2019
ASSETS
Current assets:
Cash and cash equivalents	$	1,226		$	1,382
Accounts receivable, net	966			930
Inventory	706			679
Other current assets	204			198
Total current assets	3,102			3,189
Property, plant and equipment, net	844			850
Goodwill	3,589			3,593
Other intangible assets, net	1,059			1,107
Long-term investments	118			102
Other assets	789			611
Total assets	$	9,501		$	9,452
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable	$	329		$	354
Employee compensation and benefits	253			334
Deferred revenue	379			336
Short-term debt	675			616
Other accrued liabilities	256			440
Total current liabilities	1,892			2,080
Long-term debt	1,787			1,791
Retirement and post-retirement benefits	354			360
Other long-term liabilities	620			473
Total liabilities	4,653			4,704
Commitments and contingencies (Note 14)
Total equity:
Stockholders’ equity:
Preferred stock; $0.01 par value; 125 million shares authorized; none issued and outstanding	—			—
Common stock; $0.01 par value; 2 billion shares authorized; 310 million shares at January 31, 2020 and 309 million shares at October 31, 2019 issued	3			3
Additional paid-in-capital	5,293			5,277
Retained earnings (accumulated deficit)	73			(18		)
Accumulated other comprehensive loss	(521		)	(514		)
Total stockholders' equity	4,848			4,748
Total liabilities and equity	$	9,501		$	9,452



	Common Stock							Treasury Stock								Accumulated Other Comprehensive Income/(Loss)
Three Months Ended January 31, 2020	Number of Shares		Par Value		Additional Paid-in Capital			Number of Shares		Treasury Stock at Cost			Retained Earnings (Accumulated Deficit)			Accumulated Other Comprehensive Income/(Loss)			Total Stockholders' Equity			Non- Controlling Interest		Total Equity
Balance as of October 31, 2019	309,071		$	3	$	5,277		—		$	—		$	(18	)	$	(514	)	$	4,748		$	—	$	4,748
Components of comprehensive income, net of tax:
Net income	—		—		—			—		—			197			—			197			—		197
Other comprehensive income (loss)	—		—		—			—		—			—			(7		)	(7		)	—		(7		)
Total comprehensive income																			190					190
Cash dividends declared ($0.18 per common share)	—		—		—			—		—			(56		)	—			(56		)	—		(56		)
Share-based awards issued, net of tax of $33	1,703		—		(1		)	—		—			—			—			(1		)	—		(1		)
Repurchase of common stock	—		—		—			(726	)	(60		)	—			—			(60		)	—		(60		)
Retirement of treasury stock	(726	)	—		(10		)	726		60			(50		)	—			—			—		—
Share-based compensation	—		—		27			—		—			—			—			27			—		27
Balance as of January 31, 2020	310,048		$	3	$	5,293		—		$	—		$	73		$	(521	)	$	4,848		$	—	$	4,848


1.	OVERVIEW, BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES



	January 31,		October 31
	2020		2019
	(in millions)
Cash and cash equivalents	$	1,226	$	1,382
Restricted cash included in other assets	6		6
Total cash, cash equivalents and restricted cash	$	1,232	$	1,388



	October 31, 2019		Impact of Adopting		November 1, 2019
	As Reported		Lease Guidance		As Adopted
	(in millions)
Other assets	$	611	$	192	$	803
Other accrued liabilities	$	440	$	48	$	488
Other long-term liabilities	$	473	$	144	$	617



Cash and cash equivalents		$	10
Accounts receivable		28
Inventories		21
Other current assets		2
Property, plant and equipment		8
Intangible assets		641
Goodwill		483
Total assets acquired	1,193
Accounts payable		(4		)
Deferred revenue		(5		)
Employee compensation and benefits		(7		)
Other accrued liabilities		(2		)
Long-term debt		(4		)
Net assets acquired		$	1,171



	Fair Value			Estimated Useful Life
Developed product technology		$	387	5-13 years
Customer relationships		202		3-8 years
Backlog		5		2 months
Tradenames and trademarks		43		10 years
Total intangible assets subject to amortization		637
In-process research and development		4
Total intangible assets		$	641



	Three Months Ended January 31,
	2019
Net revenue	$	1,326
Net income	$	474
Net income per share — basic	$	1.49
Net income per share — diluted	$	1.47



	Contract Liabilities
	(in millions)

Ending balance as of October 31, 2019	$	386
Net revenue deferred in the period	180
Revenue recognized that was included in the contract liability balance at the beginning of the period	(142		)
Change in deferrals from customer cash advances, net of revenue recognized	9
Currency translation and other adjustments	(1		)
Ending balance as of January 31, 2020	$	432



	Operating Leases
	(in millions)
2020	$	52
2021	41
2022	29
2023	21
2024	14
2025 and thereafter	56
Total future minimum lease payments	$	213


PART I	— FINANCIAL INFORMATION



	Three Months Ended January 31,
	2020								2019
	Life Sciences and Applied Markets		Diagnostics and Genomics		Agilent CrossLab		Total		Life Sciences and Applied Markets		Diagnostics and Genomics		Agilent CrossLab		Total
	(in millions)
Revenue by Region
Americas	$	209	$	118	$	167	$	494	$	168	$	109	$	156	$	433
Europe	167		92		133		392		164		91		128		383
Asia Pacific	262		39		170		471		275		35		158		468
Total	$	638	$	249	$	470	$	1,357	$	607	$	235	$	442	$	1,284



	Three Months Ended
	January 31,
	2020		2019
	(in millions)
Revenue by End Markets
Pharmaceutical and Biopharmaceutical	$	423	$	391
Chemical and Energy	312		308
Diagnostics and Clinical	194		187
Food	130		129
Academia and Government	141		116
Environmental and Forensics	157		153
Total	$	1,357	$	1,284

Revenue by Type
Instrumentation	$	593	$	567
Non-instrumentation and other	764		717
Total	$	1,357	$	1,284



	Three Months Ended
	January 31,
	2020	2019
LTPP:
Volatility of Agilent shares	23%	22%
Volatility of selected peer-company shares	15%-44%	15%-66%
Pair-wise correlation with selected peers	29%	30%

Post-vest holding restriction discount for all executive awards	5.3%	5.0%



	Three Months Ended
	January 31, 2020
	(in millions)

Operating lease cost	$	15
Variable lease cost ^(a)	4
Sublease income	(4		)
Total lease cost	$	15



		Three Months Ended
	Financial Statement Line Item	January 31, 2020
		(in millions, except lease term and discount rate)
Assets:
Operating lease:
Right of use asset	Other assets	$	191

Liabilities:
Current
Operating lease liabilities	Other accrued liabilities	$	51
Long-Term
Operating lease liabilities	Other long-term liabilities	$	141

Weighted average remaining lease term in years
Operating leases		8.25 years
Weighted average discount rate
Operating leases		2.1		%



	Purchased Other Intangible Assets
	Gross Carrying Amount		Accumulated Amortization and Impairments		Net Book Value
	(in millions)
As of October 31, 2019
Purchased technology	$	1,413	$	763	$	650
Backlog	5		5		—
Trademark/Tradename	196		102		94
Customer relationships	329		87		242
Third-party technology and licenses	28		22		6
Total amortizable intangible assets	1,971		979		992
In-Process R&D	115		—		115
Total	$	2,086	$	979	$	1,107
As of January 31, 2020
Purchased technology	$	1,412	$	787	$	625
Backlog	5		5		—
Trademark/Tradename	196		106		90
Customer relationships	329		105		224
Third-party technology and licenses	28		23		5
Total amortizable intangible assets	1,970		1,026		944
In-Process R&D	115		—		115
Total	$	2,085	$	1,026	$	1,059



Estimated future amortization expense:
(in millions)
Remainder of 2020	$	138
2021	$	172
2022	$	150
2023	$	107
2024	$	86
2025	$	68
Thereafter	$	223



			Fair Value Measurement at January 31, 2020 Using
	January 31, 2020		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(in millions)
Assets:
Short-term
Cash equivalents (money market funds)	$	602	$	602	$	—	$	—
Derivative instruments (foreign exchange contracts)	6		—		6		—
Long-term
Trading securities	29		29		—		—
Other investments	25		—		25		—
Total assets measured at fair value	$	662	$	631	$	31	$	—
Liabilities:
Short-term
Derivative instruments (foreign exchange contracts)	$	6	$	—	$	6	$	—
Long-term
Deferred compensation liability	29		—		29		—
Total liabilities measured at fair value	$	35	$	—	$	35	$	—



			Fair Value Measurement at October 31, 2019 Using
	October 31, 2019		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(in millions)
Assets:
Short-term
Cash equivalents (money market funds)	$	784	$	784	$	—	$	—
Derivative instruments (foreign exchange contracts)	12		—		12		—
Long-term
Trading securities	30		30		—		—
Other investments	25		—		25		—
Total assets measured at fair value	$	851	$	814	$	37	$	—
Liabilities:
Short-term
Derivative instruments (foreign exchange contracts)	$	6	$	—	$	6	$	—
Long-term
Deferred compensation liability	30		—		30		—
Total liabilities measured at fair value	$	36	$	—	$	36	$	—



	Derivatives Designated as Cash Flow Hedges			Derivatives Designated as Net Investment Hedges			Derivatives Not Designated as Hedging Instruments
	Forward Contracts USD			Forward Contracts USD			Forward Contracts USD
Currency	Buy/(Sell)			Buy/(Sell)			Buy/(Sell)
	(in millions)
Euro	$	(63	)	$	(55	)	$	64
British Pound	(43		)	—			(4		)
Canadian Dollar	(39		)	—			26
Japanese Yen	(83		)	—			(10		)
Korean Won	(62		)	—			(36		)
Singapore Dollar	15			—			26
Chinese Yuan Renminbi	(71		)	—			(40		)
Swedish Krona	—			—			(8		)
Other	4			—			(9		)
Totals	$	(342	)	$	(55	)	$	9



Fair Values of Derivative Instruments
Asset Derivatives					Liability Derivatives
	Fair Value					Fair Value
Balance Sheet Location	January 31, 2020		October 31, 2019		Balance Sheet Location	January 31, 2020		October 31, 2019
(in millions)
Derivatives designated as hedging instruments:
Cash flow hedges
Foreign exchange contracts
Other current assets	$	3	$	3	Other accrued liabilities	$	2	$	2


Derivatives not designated as hedging instruments:
Foreign exchange contracts
Other current assets	$	3	$	9	Other accrued liabilities	$	4	$	4
Total derivatives	$	6	$	12		$	6	$	6



	Three Months Ended January 31,
	U.S. Pension Plans						Non-U.S. Pension Plans						U.S. Post Retirement Benefit Plans
	2020			2019			2020			2019			2020			2019
	(in millions)
Service cost—benefits earned during the period	$	—		$	—		$	7		$	6		$	—		$	—
Interest cost on benefit obligation	4			5			2			3			1			—
Expected return on plan assets	(8		)	(7		)	(12		)	(11		)	(1		)	(1		)
Amortization:
Actuarial losses	1			—			12			9			1			1
Prior service credits	—			—			—			—			(2		)	(2		)
Total net plan costs	$	(3	)	$	(2	)	$	9		$	7		$	(1	)	$	(2	)



	January 31, 2020		October 31, 2019
	Amortized Principal		Amortized Principal

2022 Senior Notes	$	399	$	399
2023 Senior Notes	597		597
2026 Senior Notes	298		298
2029 Senior Notes	493		492
Total	$	1,787	$	1,786



				Net defined benefit pension cost and post retirement plan costs
Three Months Ended January 31, 2020	Foreign currency translation			Prior service credits			Actuarial Losses			Unrealized gains (losses) on derivatives			Total
	(in millions)
As of October 31, 2019	$	(204	)	$	131		$	(437	)	$	(4	)	$	(514	)

Other comprehensive income (loss) before reclassifications	(11		)	—			(5		)	1			(15		)

Amounts reclassified out of accumulated other comprehensive income (loss)	—			(2		)	14			—			12

Tax expense	—			(1		)	(3		)	—			(4		)

Other comprehensive income (loss)	(11		)	(3		)	6			1			(7		)

As of January 31, 2020	$	(215	)	$	128		$	(431	)	$	(3	)	$	(521	)



Details about accumulated other comprehensive income (loss) components	Amounts Reclassified from other comprehensive income (loss)						Affected line item in statement of operations


	Three Months Ended
	January 31,
	2020			2019

Unrealized gain (loss) on derivatives	$	—		$	5		Cost of products
	—			5			Total before income tax
	—			(1		)	Provision for income tax
	—			4			Total net of income tax
Net defined benefit pension cost and post retirement plan costs:

Actuarial net loss	(14		)	(10		)
Prior service benefit	2			2
	(12		)	(8		)	Total before income tax
	6			4			Benefit for income tax
	(6		)	(4		)	Total net of income tax

Total reclassifications for the period	$	(6	)	$	—



	Three Months Ended				Year over Year Change
	January 31,				Three
	2020		2019		Months
	(in millions)
Net revenue:
Products	$	1,023	$	980	4%
Services and other	334		304		10%
Total net revenue	$	1,357	$	1,284	6%


•	properly identify customer needs and predict future needs;


•	innovate and develop new technologies, services and applications;


•	appropriately allocate our research and development spending to products and services with higher growth prospects;


•	successfully commercialize new technologies in a timely manner;


•	manufacture and deliver new products in sufficient volumes and on time;


•	differentiate our offerings from our competitors' offerings;


•	anticipate our competitors' development of new products, services or technological innovations; and