Agilent Announces Losses, Layoffs

PALO ALTO, Calif. -- Agilent Technologies Inc. (NYSE:A) today reported orders of $1.2 billion and revenue of $1.6 billion for the fourth quarter of the fiscal year ended Oct. 31. On an earnings-before-goodwill (EBG) basis, the company lost 60 cents per share, which included 21 cents per share, or $150 million, of above-normal inventory reserves resulting from lower order expectations. EBG was in line with company guidance. Net orders declined 8 percent from last quarter and 56 percent from a strong Q4 a year ago. Cancellations totaled about $250 million for the quarter, continuing at the same level as in the previous quarter. "The persistent downturn in the key markets we serve kept orders very weak in our test and measurement and semiconductor products businesses," said Ned Barnholt, Agilent president and CEO. "While orders have remained at about the same level for the past five months in these businesses, they were below our expectations for the fourth quarter." Bright spots for the quarter included 21-percent growth in orders over last quarter for Agilent's life sciences products and a slight increase in orders for some of the company's semiconductor products. "Continued weakness in customer demand clearly indicates that the recovery will be delayed and more gradual than we expected," said Barnholt. "As a result, we are taking additional steps to further reduce our cost structure and return the company to profitability." Agilent's actions in light of the latest outlook include consolidating facilities, further reducing information technology costs, and cutting back on project materials and tooling. Agilent is addressing workforce cost issues by eliminating an additional 4,000 jobs. The combination of these actions is expected to save the company approximately $700 million on an annualized basis, with one-time restructuring expenses of about $175 million. Agilent announced its first workforce reduction of 4,000 jobs in August. About 3,000 of these people have already left the company. With the announcement of these additional 4,000 job cuts, Agilent will reduce its workforce by 8,000 people, or 18 percent, by the middle of 2002. In addition, Agilent's senior management teams will be on 10-percent pay reductions starting in Q1. Depending on local laws and regulations, the company will implement the equivalent of a 5-percent pay reduction for the rest of its employees starting in Q2. "These latest cost-cutting actions -- coupled with strong new product introductions and entry into new markets -- are intended to return Agilent to profitability sometime during our third fiscal quarter of 2002, independent of how much improvement we see in the industry and the economy at large," Barnholt said. In a separate release:Agilent Technologies Inc. (NYSE:A) today announced that it intends, subject to market and other conditions, to sell approximately $1 billion principal amount of Senior Convertible Debentures due 2021 through a private offering. Agilent stated that it expects the terms of the offering to include an option for up to an additional $150 million principal amount of debentures. The offering will be made only to qualified institutional buyers. Agilent stated that it intends to use the net proceeds of the offering for working capital and general corporate purposes, including to fund potential acquisitions and restructuring costs. Agilent expects that the debentures will be redeemable at the company's option beginning in December 2004 and that the holders of the debentures will have the ability to require Agilent to repurchase the debentures, in whole or in part, on specified dates in 2006, 2011 and 2016. Agilent expects that the holders of the debentures will have the ability to require Agilent to repurchase the debentures in the event that Agilent undergoes a change in control. Agilent anticipates that the debentures will be convertible into shares of its common stock. Agilent Technologies Inc.