8-K

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934

Date of Report (date of earliest event reported): August 20, 2001

AGILENT TECHNOLOGIES, INC.

(Exact Name of Registrant as Specified in Charter)

Delaware

(State or Other Jurisdiction of Incorporation)

001-15405

(Commission File Number)

77-0518772

(IRS Employer Identification No.)

395 Page Mill Road
Palo Alto, CA 94306

(Address of Principal Executive Offices) (Zip Code)

(650) 752-5000

(Registrants’ Telephone Number, Including Area Code)

TABLE OF CONTENTS

	Item 5. Other Events.
	Item 7. Financial Statements and Exhibits
SIGNATURES
EXHIBIT INDEX
EXHIBIT 99.1

Item 5. Other Events.

     On August 20, 2001, Agilent Technologies, Inc. reported its third quarter results for the period ended July 31, 2001. A copy of the press release is filed herewith as Exhibit 99.1 and is incorporated herein by reference.

Item 7. Financial Statements and Exhibits

(a) Exhibits

Exhibit No.	Description
99.1	Press Release, dated August 20, 2001, announcing its third quarter results for the period ended July 31, 2001.

SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

AGILENT TECHNOLOGIES, INC.
By:	/s/ Marie Oh Huber
	Name:   Marie Oh Huber
	Title:     Vice President, Assistant Secretary and Assistant               General Counsel

Date: August 20, 2001

EXHIBIT INDEX

Exhibit No.	Description
99.1	Press Release, dated August 20, 2001, announcing its third quarter results for the period ended July 31, 2001.

EX-99.1

Exhibit 99.1

EDITORIAL CONTACTS: PRGP42SN135

Michele Drake
+1 650 752 5296
michele_drake@agilent.com

Amy Flores
+1 650 752 5303
amy_flores@agilent.com

INVESTOR CONTACT:

Hilliard Terry
+1 650 752-5329
hilliard_terry@agilent.com

Agilent Technologies Reports Smaller-than-expected
Third-quarter Loss

Company Announces Workforce Reductions as Latest Action in Response
to Prolonged Downturn in Key Industries

     PALO ALTO, Calif., Aug. 20, 2001 — Agilent Technologies Inc. (NYSE: A) today reported orders of $1.3 billion and revenue of $1.8 billion for the quarter ended July 31. On an earnings before goodwill basis, the company lost 24 cents per share versus the consensus estimate of a 35-cent-per-share loss. These results represent continuing operations, excluding Agilent’s recently sold healthcare business. The company said that third-quarter orders for its communications and semiconductor products continued to be very weak, reflecting the severe slowdown that has plagued these industries in recent months.

     In addition to expense reduction actions that Agilent has already taken, the company announced that it will reduce its workforce by approximately 4,000 people, or about 9 percent, by the middle of next year in order to restore the company to profitability as soon as possible.

     “Based on our outlook earlier in the year, we implemented a variety of aggressive cost-control measures — including a temporary 10-percent pay cut — to try to avoid layoffs,” said Ned Barnholt, Agilent president and CEO. “The measures to date have had a positive impact, but the business environment in our key industries continued to deteriorate this quarter. And the outlook going forward is for a slow and gradual recovery. We are now taking additional actions to bring the size of our workforce more in line with anticipated business levels.”

     “This decision is one we don’t make lightly,” Barnholt said. “This is by far the worst industry downturn I’ve seen in my 34 years with the company. Extraordinary business conditions, unfortunately, require unusual actions. Despite today’s announcement, we remain deeply committed to our culture of valuing our people and the contributions they make to Agilent.”

     Workforce reductions will occur in many geographies and business organizations. Agilent expects to incur restructuring expenses of approximately $200 million to reflect the impact of severance packages and related costs associated with the workforce reductions. The workforce reductions will result in about $500 million in annualized savings.

Third-Quarter Financial Review

     Weak customer demand coupled with excess capacity and inventory in key industries Agilent serves drove net orders down 54 percent — to $1.3 billion — from a very strong third quarter a year ago. Net orders declined 5 percent from last quarter. Cancellations were about $240 million, down from Q2 but higher than expected. Third-quarter revenue was $1.8 billion, a 23-percent decrease year over year. Revenue declined 24 percent from last quarter.

     The company’s loss of 24 cents per share on an earnings before goodwill basis excludes a $74 million one-time (non-cash) charge to reflect a change in strategy for providing information systems for customer support, and a $39 million net (non-cash) investment gain.

     Earnings before goodwill were favorably impacted by 5 cents per share for the effects of changes related to the Adaptec agreement, and negatively impacted by 10 cents per share for an above-normal increase in inventory reserves based on lower order expectations.

     “Our third-quarter revenue and earnings were somewhat stronger than expected, driven by management actions consistent with our commitment to reduce Agilent’s cost structure,” Barnholt said. “Our employees aggressively shipped backlog and worked to reduce expenses. All of these efforts combined to lower our selling, general and administrative expenses by 23 percent year over year and 15 percent compared with Q2.”

     Barnholt noted that given the difficult business environment, Agilent is pleased with its

asset management this quarter. “We were able to generate positive operating cash flow despite a loss,” he said. “We have received $1.6 billion from the sale of our healthcare business, and by the end of August, we’ll have almost no debt.”

     Looking forward, the company said it expects a slight increase in total Q4 orders over this quarter’s $1.3 billion. Because backlog is at very low levels across the company’s test and measurement and semiconductor businesses, revenue will be dependent to a large extent upon new orders. Revenue is expected to be between $1.3 and $1.5 billion, which would lead to an expected loss of between 50 and 70 cents per share on an earnings before goodwill basis, excluding restructuring charges.

     “We’re balancing the need for aggressive, immediate action to meet extraordinary market conditions with our goal of building a company for the long term,” Barnholt said. “We’re very optimistic about the potential of the businesses we’re in, but we clearly need to return Agilent to profitability as soon as possible. Reducing our workforce in areas where we have excess capacity will help us become a stronger company while enabling us to preserve our investments in core R&D and new product programs.”

About Agilent Technologies

     Agilent Technologies Inc. (NYSE: A) is a global technology leader in communications, electronics and life sciences. The company’s 43,000 employees serve customers in more than 120 countries. Agilent had net revenue of $9.4 billion in fiscal year 2000, as restated to reflect the sale of its healthcare business. Information about Agilent is available on the Web at www.agilent.com.

     More financial information about this quarter’s earnings is available at www.investor.agilent.com.

     Agilent management will host a live webcast of its quarterly conference call with the investment community in listen-only mode today at 1:45 p.m. (PT). Listeners may log on at www.investor.agilent.com and select “conference calls.” The webcast will remain on the company site for seven days.

     A telephone replay of the conference call will be available on Aug. 20 starting at 4:45 p.m. (PT) through Aug. 27 at 4:45 p.m. (PT) by dialing +1 719 457 0820 and entering pass code 618933.

     This news release contains forward-looking statements (including, without limitation, information regarding projected orders, revenue, earnings, workforce reductions, restructuring expenses and savings from cost-reduction measures, and overall financial results) that involve risks and uncertainties that could cause results of Agilent Technologies to differ materially from

management’s current expectations.

     In addition, other risks that Agilent faces in running its operations include: the ability to execute successfully through industry business cycles; the ability to manage inventory levels to adapt to the current economic slowdown and setbacks in our customers’ businesses; the timely ability to adapt manufacturing capacity to weak industry orders; the ability to quickly adapt cost structures to align with decreased levels of business, including implementing workforce reductions; the successful redesign and implementation of the company’s business processes and systems; and other risks detailed in the company’s filings with the Securities and Exchange Commission, including: its Annual Report on Form 10-K for the year ended Oct. 31, 2000, Quarterly Report on Form 10-Q for the quarter ended April 30, 2001, and Current Reports on Form 8-K filed June 29, 2001 and Aug. 15, 2001. The company assumes no obligation to update the information in the press release.

# # #

AGILENT TECHNOLOGIES, INC.

PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF EARNINGS
Excluding Amortization of Goodwill and Other Intangibles,
Acquisition Related Items, Discontinued Operations and
Other One-Time and Non-Operational Items
(Unaudited)

(In millions, except per share amounts)

					Three Months Ended
					July 31,
											Percent
					2001			2000			Inc/(Dec)
Orders					$	1,324		$	2,850			(54	%)
Net revenue					$	1,806		$	2,351			(23	%)
Costs and expenses:
	Cost of products and services					1,139			1,189			(4	%)
	Research and development					312			288			8	%
	Selling, general and administrative					514			665			(23	%)
				Total costs & expenses		1,965			2,142			(8	%)
(Loss)/earnings from continuing operations						(159	)		209			(176	%)
Other income (expense), net						(3	)		27			(111	%)
(Loss)/earnings from continuing operations before taxes						(162	)		236			(169	%)
(Tax benefit)/provision for taxes						(53	)		78			(168	%)
Pro forma net (loss)/earnings from continuing operations					$	(109	)	$	158			(169	%)
Pro forma net (loss)/earnings per share — Basic					$	(0.24	)	$	0.35
Pro forma net (loss)/earnings per share — Diluted					$	(0.24	)	$	0.34
Average shares used in computing pro forma net earnings per share:
				Basic		459			453
				Diluted		459			464
The above pro forma condensed consolidated statement of earnings has been adjusted to exclude the following one-time and non-operational items and reconcile to GAAP net earnings:
	Net (loss)/earnings per GAAP				$	(219	)	$	155
		Pro forma adjustments:
			Goodwill			91			20
			Other intangibles (includes In-process R&D charge)			18			—
			Capitalized software write-off			74			—
			Net non-cash investment gains			(39	)
			Discontinued operations (pre-tax)			1			(22	)
			Adjustment for income taxes			(35	)		5
	Pro forma net (loss)/earnings from continuing operations				$	(109	)	$	158

AGILENT TECHNOLOGIES, INC.
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF EARNINGS
Excluding Amortization of Goodwill and Other Intangibles,
Acquisition Related Items, Discontinued Operations and
Other One-Time and Non-Operational Items
(Unaudited)

(In millions, except per share amounts)

					Nine Months Ended
					July 31,
											Percent
					2001			2000			Inc/(Dec)
Orders					$	5,193		$	7,820			(34	%)
Net revenue					$	6,736		$	6,344			6	%
Costs and expenses:
	Cost of products and services					3,818			3,213			19	%
	Research and development					1,001			810			24	%
	Selling, general and administrative					1,725			1,806			(4	%)
				Total costs & expenses		6,544			5,829			12	%
Earnings from continuing operations						192			515			(63	%)
Other income (expense), net						(1	)		72			(101	%)
Earnings from continuing operations before taxes						191			587			(67	%)
Provision for taxes						63			194			(68	%)
Pro forma net earnings from continuing operations					$	128		$	393			(67	%)
Pro forma net earnings per share — Basic					$	0.28		$	0.87
Pro forma net earnings per share — Diluted					$	0.28		$	0.85
Average shares used in computing pro forma net earnings per share:
				Basic		457			452
				Diluted		463			464
The above pro forma condensed consolidated statement of earnings has been adjusted to exclude the following one-time and non-operational items and reconcile to GAAP net earnings:
	Net earnings per GAAP				$	31		$	452
		Pro forma adjustments:
			Goodwill			210			38
			Other intangibles (including In-process R&D charge)			28			—
			Capitalized software write-off			74			—
			Net non-cash investment gains			(45	)		(13	)
			FAS 133 adoption			41			—
			Gain on land sale			(269	)		—
			Discontinued operations (pre-tax)			(21	)		(134	)
			Adjustment for income taxes			79			50
	Pro forma net earnings from continuing operations				$	128		$	393

AGILENT TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENT OF EARNINGS
(Unaudited)

(In millions, except per share amounts)

				Three Months Ended
				July 31,
									Percent
				2001			2000		Inc/(Dec)
Orders				$	1,324		$	2,850		(54	%)
Net revenue				$	1,806		$	2,351		(23	%)
Costs and expenses:
	Cost of products and services				1,146			1,189		(4	%)
	Research and development				319			288		11	%
	Selling, general and administrative				683			685		(	%)
			Total costs and expenses		2,148			2,162		(1	%)
(Loss)/earnings from continuing operations					(342	)		189		(281	%)
Other income (expense), net					35			27		30	%
(Loss)/earnings from continuing operations before taxes					(307	)		216		(242	%)
(Tax benefit)/provision for taxes					(93	)		73		(227	%)
Net (loss)/earnings from continuing operations					(214	)		143		(250	%)
Net (loss)/earnings from discontinued operations (net of taxes $4 million and $10 million for the three months ended July 31, 2001 and 2000)					(5	)		12		(142	%)
Net (loss)/earnings				$	(219	)	$	155		(241	%)
Net earnings per share — Basic:
		Continuing operations		$	(0.47	)	$	0.32
		Discontinued operations		$	(0.01	)	$	0.02
		Net earnings per share		$	(0.48	)	$	0.34
Net earnings per share — Diluted:
		Continuing operations		$	(0.47	)	$	0.31
		Discontinued operations		$	(0.01	)	$	0.03
		Net earnings per share		$	(0.48	)	$	0.34
Average shares used in computing net earnings per share:
		Basic			459			453
		Diluted			459			461

AGILENT TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENT OF EARNINGS
(Unaudited)

(In millions, except per share amounts)

			Nine Months Ended
			July 31,
								Percent
			2001			2000		Inc/(Dec)
Orders			$	5,193		$	7,820		(34	%)
Net revenue			$	6,736		$	6,344		6	%
Costs and expenses:
	Cost of products and services			3,829			3,213		19	%
	Research and development			1,010			810		25	%
	Selling, general and administrative			2,017			1,844		9	%
		Total costs and expenses		6,856			5,867		17	%
(Loss)/earnings from continuing operations				(120	)		477		(125	%)
Other income (expense), net				312			85		267	%
Earnings from continuing operations before taxes and cumulative effect of a change in accounting principle				192			562		(66	%)
Provision for taxes				142			191		(26	%)
Net earnings from continuing operations before cumulative effect of a change in accounting principle				50			371		(87	%)
Cumulative effect of adopting SFAS 133 (net of tax benefit of $16 million)				(25	)		—
Net earnings from discontinued operations (net of taxes $15 million and $53 million for the nine months ended July 31, 2001 and 2000)				6			81		(93	%)
Net earnings			$	31		$	452		(93	%)
Net earnings per share — Basic:
	Continuing operations		$	0.11		$	0.83
	Cumulative effect of adopting SFAS No. 133		$	(0.05	)	$	—
	Discontinued operations		$	0.01		$	0.18
	Net earnings per share		$	0.07		$	1.01
Net earnings per share — Diluted:
	Continuing operations		$	0.11		$	0.82
	Cumulative effect of adopting SFAS No. 133		$	(0.05	)	$	—
	Discontinued operations		$	0.01		$	0.18
	Net earnings per share		$	0.07		$	1.00
Average shares used in computing net earnings per share:
	Basic			457			448
	Diluted			463			452

AGILENT TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEET
(Unaudited)

(In millions, except par value and share amounts)

				July 31,			October 31,
				2001			2000
ASSETS
Current assets:
	Cash and cash equivalents			$	999		$	996
	Accounts receivable, net				1,169			1,938
	Inventory				1,704			1,610
	Other current assets				784			595
		Total current assets			4,656			5,139
Property, plant and equipment, net					1,807			1,685
Goodwill and other intangible assets, net					1,203			467
Other assets					315			442
Net investment in discontinued operations					641			597
		Total assets		$	8,622		$	8,330
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
	Accounts payable			$	544		$	857
	Notes payable and short-term borrowings				794			110
	Employee compensation and benefits				602			679
	Deferred revenue				386			322
	Accrued taxes and other accrued liabilities				492			695
		Total current liabilities			2,818			2,663
Other liabilities					331			402
Commitments and contingencies
Stockholders’ equity:
	Preferred stock; $0.01 par value; 125,000,000 shares authorized; none issued and outstanding
	Common stock; $0.01 par value; 2,000,000,000 shares authorized; 460,637,000 shares at July 31, 2001 and 453,976,000 shares at October 31, 2000 issued and outstanding				5			5
	Additional paid-in capital				4,705			4,508
	Retained earnings				788			757
	Other comprehensive loss				(25	)		(5	)
		Total stockholders’ equity			5,473			5,265
			Total liabilities and stockholders’ equity	$	8,622		$	8,330

AGILENT TECHNOLOGIES, INC.
PRO FORMA EARNINGS (LOSS) FROM CONTINUING OPERATIONS
BY BUSINESS SEGMENT
(Unaudited)

(In Millions)

						Yr vs.Yr			Sequential
For the three months ended July 31	2001			2000		%change			%change
PRO FORMA EARNINGS (LOSS) FROM CONTINUING OPERATIONS
Test and measurement	$	(151	)	$	122		(224	%)		(270	%)
Semiconductor products		(36	)		85		(142	%)		61	%
Chemical analysis		28			2		1300	%		(3	%)
Total	$	(159	)	$	209		(176	%)		(712	%)

							Yr vs.Yr
For the nine months ended July 31		2001			2000		%change
PRO FORMA EARNINGS (LOSS) FROM CONTINUING OPERATIONS
Test and measurement		$	188		$	335		(44	%)
Semiconductor products			(71	)		164		(143	%)
Chemical analysis			75			16		369	%
	Total	$	192		$	515		(63	%)

AGILENT TECHNOLOGIES, INC.
ORDERS AND NET REVENUE
FROM CONTINUING OPERATIONS
BY BUSINESS SEGMENT
(Unaudited)

(In Millions)

						Yr vs.Yr			Sequential
For the three months ended July 31		2001		2000		%change			%change
ORDERS
Test and measurement		$	793	$	1,851		(57	%)		(15	%)
Semiconductor products			277		730		(62	%)		39	%
Chemical analysis			254		269		(6	%)		(4	%)
	Total	$	1,324	$	2,850		(54	%)		(5	%)
NET REVENUE
Test and measurement		$	1,115	$	1,514		(26	%)		(32	%)
Semiconductor products			425		591		(28	%)		(4	%)
Chemical analysis			266		246		8	%		(9	%)
	Total	$	1,806	$	2,351		(23	%)		(24	%)

In general, recorded orders represent firm purchase commitments from our customers with established terms and conditions for products and services that will be delivered within six months.

AGILENT TECHNOLOGIES, INC.
ORDERS AND NET REVENUE
FROM CONTINUING OPERATIONS
BY BUSINESS SEGMENT
(Unaudited)

(In Millions)

						Yr vs.Yr
For the nine months ended July 31		2001		2000		%change
ORDERS
Test and measurement		$	3,345	$	5,132		(35	%)
Semiconductor products			1,030		1,918		(46	%)
Chemical analysis			818		770		6	%
	Total	$	5,193	$	7,820		(34	%)
NET REVENUE
Test and measurement		$	4,448	$	4,060		10	%
Semiconductor products			1,463		1,535		(5	%)
Chemical analysis			825		749		10	%
	Total	$	6,736	$	6,344		6	%

In general, recorded orders represent firm purchase commitments from our customers with established terms and conditions for products and services that will be delivered within six months.

AGILENT TECHNOLOGIES, INC.
PERCENT CHANGE IN Q3 ORDERS AND NET REVENUE BY MARKET SEGMENT
YEAR VERSUS YEAR COMPARISON
Q3 FY01 versus Q3 FY00
(Unaudited)

(In Millions)

		Orders								Net Revenue
		Q3 FY01		% Change			% of			Q3 FY01		% Change			% of
		$ Amount		Y/Y			Segment			$ Amount		Y/Y			Segment
Test and measurement
	Communications test	$	501		(54	%)		63	%	$	747		(16	%)		67	%
	Semiconductor test		81		(74	%)		10	%		108		(55	%)		10	%
	General purpose test		211		(52	%)		27	%		260		(33	%)		23	%
		$	793		(57	%)		100	%	$	1,115		(26	%)		100	%
Semiconductor products
	Networking and computing	$	97		(69	%)		35	%	$	211		(4	%)		50	%
	Wireless		17		(85	%)		6	%		40		(62	%)		9	%
	Imaging		103		(46	%)		37	%		109		(31	%)		26	%
	Core opto business		60		(46	%)		22	%		65		(38	%)		15	%
		$	277		(62	%)		100	%	$	425		(28	%)		100	%

AGILENT TECHNOLOGIES, INC.
PERCENT CHANGE IN Q3 ORDERS AND NET REVENUE BY MARKET SEGMENT
SEQUENTIAL COMPARISON
Q3 FY01 versus Q2 FY01
(Unaudited)

(In Millions)

		Orders								Net Revenue
		Q3 FY01					% of			Q3 FY01					% of
		$ Amount		% Change			Segment			$ Amount		% Change			Segment
Test and measurement
	Communications test	$	501		(26	%)		63	%	$	747		(32	%)		67	%
	Semiconductor test		81		189	%		10	%		108		(42	%)		10	%
	General purpose test		211		(8	%)		27	%		260		(28	%)		23	%
		$	793		(15	%)		100	%	$	1,115		(32	%)		100	%
Semiconductor products
	Networking and computing	$	97		385	%		35	%	$	211		1	%		50	%
	Wireless		17		31	%		6	%		40		(26	%)		9	%
	Imaging		103		(2	%)		37	%		109		(3	%)		26	%
	Core opto business		60		(3	%)		22	%		65		(6	%)		15	%
		$	277		39	%		100	%	$	425		(4	%)		100	%

AGILENT TECHNOLOGIES, INC.
ORDERS AND NET REVENUE FROM CONTINUING OPERATIONS
BY GEOGRAPHY
For The Three Months Ended July 31
(Unaudited)

						(Percent)
		(In millions)
						USD			Local Currency
		2001		2000		Growth			Growth
ORDERS
United States		$	482	$	1,279		(62	%)		(62	%)
Europe			295		494		(40	%)		(37	%)
Asia Pacific			491		910		(46	%)		(41	%)
Latin America			33		73		(55	%)		(55	%)
Canada			23		94		(76	%)		(74	%)
	Total	$	1,324	$	2,850		(54	%)		(52	%)
NET REVENUE
United States		$	712	$	990		(28	%)
Europe			366		441		(17	%)
Asia Pacific			635		747		(15	%)
Latin America			47		105		(55	%)
Canada			46		68		(32	%)
	Total	$	1,806	$	2,351		(23	%)

In general, recorded orders represent firm purchase commitments from our customers with established terms and conditions for products and services that will be delivered within six months.

AGILENT TECHNOLOGIES, INC.
ORDERS AND NET REVENUE FROM CONTINUING OPERATIONS
BY GEOGRAPHY
For The Nine Months Ended July 31
(Unaudited)

						(Percent)
		(In millions)
						USD			Local Currency
		2001		2000		Growth			Growth
ORDERS
United States		$	1,963	$	3,307		(41	%)		(41	%)
Europe			1,164		1,586		(27	%)		(20	%)
Asia Pacific			1,819		2,459		(26	%)		(24	%)
Latin America			112		188		(40	%)		(40	%)
Canada			135		280		(52	%)		(50	%)
	Total	$	5,193	$	7,820		(34	%)		(32	%)
NET REVENUE
United States		$	2,729	$	2,602		5	%
Europe			1,404		1,325		6	%
Asia Pacific			2,149		1,997		8	%
Latin America			177		227		(22	%)
Canada			277		193		44	%
	Total	$	6,736	$	6,344		6	%

In general, recorded orders represent firm purchase commitments from our customers with established terms and conditions for products and services that will be delivered within six months.

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