8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities and Exchange Act of 1934

Date of Report (Date of earliest event reported) May 17, 2004

AGILENT TECHNOLOGIES, INC.

(Exact name of registrant as specified in its charter)

Delaware	001-15405	77-0518772
(State or other jurisdiction of incorporation or organization)	(Commission File Number)	(IRS Employer Identification No.)

395 Page Mill Road, Palo Alto, California 94306

(Address of principal executive offices) (Zip Code)

Registrant’s telephone number, including area code (650) 752-5000

(Former name, former address and former fiscal year, if changed since last report)

Item 12. Results of Operations and Financial Condition

The information in this Form 8-K and the Exhibit attached hereto is furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended.

On May 17, 2004, Agilent Technologies, Inc. (the “Company”) issued its press release announcing financial results for the three months ended April 30, 2004. A copy of this press release is attached as Exhibit 99.1.

We provide non-GAAP financial information in order to provide meaningful supplemental information regarding our operational performance and to enhance our investors’ overall understanding of our core current financial performance and our prospects for the future. We believe that our investors benefit from seeing our results “through the eyes” of management in addition to the GAAP presentation. Management measures segment and enterprise performance using measures such as those that are disclosed in this release. This information facilitates management’s internal comparisons to the company’s historical operating results and comparisons to competitors’ operating results. Non-GAAP information allows for greater transparency to supplemental information used by management in its financial and operational decision making. Historically, we have reported similar non-GAAP information to our investors and believe that the inclusion of comparative numbers provides consistency in our financial reporting.

This information is not in accordance with, or an alternative for, generally accepted accounting principles in the United States. It excludes items, such as restructuring and amortization, that may have a material effect on the company’s earnings and earnings per share calculated in accordance with GAAP. Management monitors these items to ensure that expenses are in line with expectations and that our GAAP results are correctly stated but does not use them to measure the ongoing operating performance of the company. The non-GAAP information we provide may be different from the non-GAAP information provided by other companies.

2

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: May 17, 2004

3

EXHIBIT INDEX

Exhibit No.	Description
99.1	Press Release of the Company May 17, 2004 announcing financial results for the three months ended April 30, 2004.

4

EX-99.1

Exhibit 99.1

EDITORIAL CONTACTS: PRGP42SN410

Michele Drake

+1 650 752 5296

michele_drake@agilent.com

Jorgen Tesselaar (Europe and Asia)

+31 20 547 2825

jorgen_tesselaar@agilent.com

INVESTOR CONTACT:

Hilliard Terry

+1 650 752 5329

hilliard_terry@agilent.com

Agilent Technologies Reports Second Quarter 2004 Results

Orders, Revenues at Highest Levels in Three Years

PALO ALTO, Calif., May 17, 2004 — Agilent Technologies Inc. (NYSE: A) today reported orders of $1.89 billion for the second fiscal quarter ended April 30, 2004, 24 percent above one year ago. Revenues during the quarter were $1.83 billion, 25 percent ahead of last year. Second quarter GAAP net earnings were $104 million, or $0.21 per diluted share, compared to a loss of $146 million, or $0.31 per share, in last year’s second quarter.

Excluding $15 million of net restructuring and amortization charges, Agilent reported second quarter operating net income of $119 million, or $0.24 per share, versus a loss on a comparable basis of $72 million, or $0.15 per share, one year ago.

“Agilent’s businesses are clearly picking up, with virtually all of our major markets and all geographies gaining momentum,” said Ned Barnholt, Agilent chairman, president and chief executive officer. “Orders and revenue were at their highest levels since early 2001. Operating earnings per share⁽¹⁾ of 24 cents were near the top end of our guidance range — three cents better than the first quarter and 39 cents above last year.”

For the third consecutive quarter, Agilent generated positive free cash flow from operations⁽²⁾. The company ended the quarter with $1.84 billion of cash and equivalents, up $164 million from the prior quarter. Inventory days-on-hand improved by 21 from one year ago to 94. Receivables days sales outstanding improved by 3 from one year ago to 54. Capital spending of $35 million was $32 million below the level of depreciation.

“Given our strong orders and revenues, our performance on the bottom line could have been even better,” said Barnholt. “With our markets clearly on the upswing, our market shares stable or rising, and our fundamental cost structure firmly in place, Agilent’s remaining challenge is to demonstrate superior performance on the bottom line. We intend to make significant progress against that commitment during the second half of this year.”

For the seasonally soft third quarter, Agilent expects revenues of $1.80 billion to $1.90 billion, roughly in line with second quarter results. Operating earnings should be in the range of $0.25 to $0.30 per share⁽³⁾ compared to the second quarter’s $0.24. During the fourth quarter, the company currently anticipates revenues to be roughly $50 million above the third quarter and operating earnings per share to be up an additional $0.05.

Segment Results

Test and Measurement

(in millions)

	Q2:F04	Q2:F03		Q1:F04
Orders	745	608		642
Revenues	705	652		642
Operating Profit(4)	11	(103	)	4

Second quarter Test and Measurement orders of $745 million were 23 percent above one year ago and up 16 percent from the seasonally soft first quarter. Compared to last year, orders were up in all geographies and all markets except wireline telecommunications. Revenues of $705 million were 8 percent above last year and 10 percent ahead of three months earlier.

Second quarter operating profits of $11 million were improved by $114 million compared to one year ago on a $53 million increase in revenues because of the cumulative benefits of aggressive restructuring. Profits were up $7 million versus the first quarter on a revenue gain of $63 million because of disappointing results in systems and support businesses. Actions now under way to address these performance issues are expected to enable segment operating margins to reach double-digit levels by the fourth quarter of this year.

Automated Test

(in millions)

	Q2:F04	Q2:F03		Q1:F04
Orders	286	219		200
Revenues	266	153		219
Operating Profit(4)	34	(37	)	20

Second quarter Automated Test orders of $286 million were 31 percent above one year ago and at the highest level since 2000, with significant year-to-year growth in all product lines. Sequentially, orders were up 43 percent from the seasonally weak first quarter. Revenues of $266 million were 74 percent above last year and up 21 percent from the first quarter. The segment book-to-bill was 1.08 compared to 1.43 one year ago and 0.91 in the first quarter.

Segment profits of $34 million were up $71 million from one year ago on a $113 million increase in revenues, an attractive 63 percent incremental performance. Return on invested capital (ROIC) during the quarter was about 16 percent⁽⁵⁾.

Semiconductor Products

(in millions)

	Q2:F04	Q2:F03		Q1:F04
Orders	523	420		582
Revenues	527	376		469
Operating Profit(4)	65	(43	)	60

The top line of Semiconductor Products was very strong again in the second quarter. Orders of $523 million were up 25 percent from last year, with Personal Systems orders up 35 percent while Networking Systems orders were about flat with last year’s levels. Second quarter revenues of $527 million were 40 percent above one year ago compared to a 32 percent increase in worldwide semiconductor industry shipments through March.

Segment profits of $65 million were $108 million better than last year on a $151 million increase in sales. Sequentially, profits improved $5 million on a $58 million increase in revenues as the business invested to meet strong demand for new mobile and consumer products and experienced cost pressures in Networking Systems. Nonetheless, the segment generated a very attractive 34 percent ROIC during the quarter⁽⁵⁾.

Life Sciences and Chemical Analysis

(in millions)

	Q2:F04	Q2:F03	Q1:F04
Orders	338	280	307
Revenues	333	286	313
Operating Profit(4)	39	20	49

2

The cyclical rebound in Life Sciences and Chemical Analysis continued to build momentum in the second quarter. Orders reached an all-time high of $338 million, 21 percent above last year, with Life Sciences and Chemical Analysis up 20 and 21 percent respectively. Revenues of $333 million were also at record levels, up 16 percent above last year.

Segment profits reached $39 million in the quarter, up $19 million from one year ago on a $47 million increase in revenues. Profits were off $10 million from the first quarter because of the normal seasonal increase in expenses. During the quarter, the segment achieved an ROIC of 21 percent⁽⁵⁾.

About Agilent Technologies

Agilent Technologies Inc. (NYSE: A) is a global technology leader in communications, electronics, life sciences and chemical analysis. The company’s 28,000 employees serve customers in more than 110 countries. Agilent had net revenue of $6.1 billion in fiscal year 2003. Information about Agilent is available on the Web at www.agilent.com.

Agilent management will host a live webcast of its quarterly conference call with the investment community in listen-only mode today at 1:30 p.m. (PT). Listeners may log on at www.investor.agilent.com and select “Q2 FY04 Conference Call” under “Recent News and Events.” The webcast will remain on the company site for 90 days.

A telephone replay of the conference call will be available from 5:30 p.m. (PT) today through May 24 by dialing + 1 719 457 0820 and entering pass code 148315.

Forward-Looking Statements

This news release contains forward-looking statements (including, without limitation, information regarding expected revenues, margins and earnings; the markets we serve; our ability to take advantage of the recovery; and seasonality) that involve risks and uncertainties that could cause results of Agilent 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 business cycles while it continues to implement workforce and other cost reductions; the ability to meet and achieve the benefits of its cost-reduction goals and otherwise successfully adapt its cost structures to continuing changes in business conditions; ongoing competitive, pricing and gross margin pressures; the risk that our cost-cutting initiatives will impair our ability to develop products and remain competitive and to operate effectively; the impact of geopolitical uncertainties on our markets and our ability to conduct business; the ability to improve asset performance to adapt to changes in demand; the ability to successfully introduce new products at the right time, price and mix, and other risks detailed in Agilent’s filings with the Securities and Exchange Commission, including our Quarterly Report on Form 10-Q for the quarter ended January 31, 2004.

# # #

⁽¹⁾ Before net restructuring and amortization charges in all periods.

⁽²⁾ Free cash flow is defined as Net Cash provided by operating activities less Investments in property, plant and equipment.

⁽³⁾ Agilent’s expected range of EPS for Q304 and Q404 excludes restructuring, which cannot be estimated, and amortization of intangibles, which is expected to be $5 million per quarter. Non-GAAP tax rate is assumed to be 29 percent. Beginning in Q304, Agilent expects to treat its senior convertible debentures as “if converted.” As a result, approximately 36 million shares will be added to the denominator of diluted EPS and $6 million of associated after-tax quarterly interest expense will be added back to the numerator.

⁽⁴⁾ Before restructuring charges in all periods.

⁽⁵⁾ Refer to financial results tables for ROIC.

3

AGILENT TECHNOLOGIES, INC.

CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

(In millions, except per share amounts)

(Unaudited)

	Three Months Ended April 30,					Percent Inc/(Dec)
	2004		2003
Orders	$	1,892	$	1,527		24	%
Net revenue	$	1,831	$	1,467		25	%
Costs and expenses:
Cost of products and services		1,023		958		7	%
Research and development		237		296		(20	)%
Selling, general and administrative		460		548		(16	)%
Total costs and expenses		1,720		1,802		(5	)%
Income (loss) from operations		111		(335	)	133	%
Other income (expense), net		17		11		55	%
Income (loss) before taxes		128		(324	)	140	%
Provision (benefit) for taxes		24		(178	)	(113	)%
Net income (loss)	$	104	$	(146	)	171	%
Net income (loss) per share -
Basic	$	0.22	$	(0.31	)
Diluted	$	0.21	$	(0.31	)
Weighted average shares used in computing net income (loss) per share:
Basic		481		471
Diluted		495		471

Historical amounts were reclassified to conform with current period presentation.

4

AGILENT TECHNOLOGIES, INC.

CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

(In millions, except per share amounts)

(Unaudited)

	Six Months Ended April 30,					Percent Inc/(Dec)
	2004		2003
Orders	$	3,623	$	2,885		26	%
Net revenue	$	3,474	$	2,879		21	%
Costs and expenses:
Cost of products and services		1,927		1,838		5	%
Research and development		466		573		(19	)%
Selling, general and administrative		891		1,059		(16	)%
Total costs and expenses		3,284		3,470		(5	)%
Income (loss) from operations		190		(591	)	132	%
Other income (expense), net		21		15		40	%
Income (loss) before taxes		211		(576	)	137	%
Provision (benefit) for taxes		36		(318	)	(111	)%
Income (loss) before cumulative effect of accounting change		175		(258	)	168	%
Cumulative effect of adopting SFAS No. 142 (net of tax benefit of $11 million)		—		(257	)	100	%
Net income (loss)	$	175	$	(515	)	134	%
Net income (loss) per share -
Basic
Income (loss) before cumulative effect of accounting change	$	0.36	$	(0.55	)
Cumulative effect of adopting SFAS No. 142, net		—		(0.54	)
Net income (loss)	$	0.36	$	(1.09	)
Diluted
Income (loss) before cumulative effect of accounting change	$	0.36	$	(0.55	)
Cumulative effect of adopting SFAS No. 142, net		—		(0.54	)
Net income (loss)	$	0.36	$	(1.09	)
Weighted average shares used in computing net income (loss) per share:
Basic		481		471
Diluted		492		471

Historical amounts were reclassified to conform with current period presentation.

5

AGILENT TECHNOLOGIES, INC.

CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

Excluding Restructuring, Amortization of Intangibles

and Non-Operational Items

(Unaudited)

(In millions, except per share amounts)

	Three Months Ended April 30,						Percent Inc/(Dec)
	2004			2003
Orders	$	1,892		$	1,527		24	%
Net revenue	$	1,831		$	1,467		25	%
Costs and expenses:
Cost of products and services		1,010			892		13	%
Research and development		237			268		(12	)%
Selling, general and administrative		435			489		(11	)%
Total costs and expenses		1,682			1,649		2	%
Income (loss) from operations		149			(182	)	182	%
Other income (expense), net		15			14		7	%
Income (loss) before taxes		164			(168	)	198	%
Provision (benefit) for taxes		45			(96	)	(147	)%
Non-GAAP net income (loss)	$	119		$	(72	)	265	%
Non-GAAP net income (loss) per share:
Basic	$	0.25		$	(0.15	)
Diluted		0.24		$	(0.15	)
Weighted average shares used in computing non-GAAP net income (loss) per share:
Basic		481			471
Diluted		495			471
The above non-GAAP condensed consolidated statement of operations has been adjusted to exclude the following items and reconcile to GAAP net income (loss):
Net income (loss) per GAAP	$	104		$	(146	)
Non-GAAP adjustments:
Other intangibles		7			12
Restructuring and asset impairment		20			134
Other		9			10
Adjustment for income taxes		(21	)		(82	)
Non-GAAP net income (loss)	$	119		$	(72	)

We provide non-GAAP financial information in order to provide meaningful supplemental information regarding our operational performance and to enhance our investors’ overall understanding of our core current financial performance and our prospects for the future. We believe that our investors benefit from seeing our results “through the eyes” of management in addition to the GAAP presentation. Management measures segment and enterprise performance using measures such as are disclosed in this release. This information facilitates management’s internal comparisons to the company’s historical operating results and comparisons to competitors operating results.

Non-GAAP information allows for greater transparency to supplemental information used by management in its financial and operational decision making. Historically, we have reported similar non-GAAP information to our investors and believe that the inclusion of comparative numbers provides consistency in our financial reporting.

This information is not in accordance with, or an alternative for, generally accepted accounting principles in the United States. It excludes items, such as restructuring and amortization, that may have a material effect on the company’s earnings and earnings per share calculated in accordance with GAAP. Management monitors these items to ensure that expenses are in line with expectations and that our GAAP results are correctly stated but does not use them to measure the ongoing operating performance of the company. The non-GAAP information we provide may be different from the non-GAAP information provided by other companies.

Historical amounts were reclassified to conform with current period presentation.

6

AGILENT TECHNOLOGIES, INC.

CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

Excluding Restructuring, Amortization of Intangibles

and Non-Operational Items

(Unaudited)

(In millions, except per share amounts)

	Six Months Ended April 30,						Percent Inc/(Dec)
	2004			2003
Orders	$	3,623		$	2,885		26	%
Net revenue	$	3,474		$	2,879		21	%
Costs and expenses:
Cost of products and services		1,897			1,756		8	%
Research and development		456			541		(16	)%
Selling, general and administrative		835			966		(14	)%
Total costs and expenses		3,188			3,263		(2	)%
Income (loss) from operations		286			(384	)	174	%
Other income (expense), net		27			21		29	%
Income (loss) before taxes		313			(363	)	186	%
Provision (benefit) for taxes		91			(182	)	(150	)%
Non-GAAP income (loss)	$	222		$	(181	)	223	%
Non-GAAP net income (loss) per share:
Basic	$	0.46		$	(0.38	)
Diluted		0.45		$	(0.38	)
Weighted average shares used in computing non-GAAP net income (loss) per share:
Basic		481			471
Diluted		492			471
The above non-GAAP condensed consolidated statement of operations has been adjusted to exclude the following items and reconcile to GAAP net income (loss):
Net income (loss) per GAAP	$	175		$	(515	)
Non-GAAP adjustments:
Other intangibles		18			24
Restructuring and asset impairment		73			181
SFAS No. 142 adoption		—			268
Gain on sale of assets		—			(2	)
Other		11			10
Adjustment for income taxes		(55	)		(147	)
Non-GAAP net income (loss)	$	222		$	(181	)

We provide non-GAAP financial information in order to provide meaningful supplemental information regarding our operational performance and to enhance our investors’ overall understanding of our core current financial performance and our prospects for the future. We believe that our investors benefit from seeing our results “through the eyes” of management in addition to the GAAP presentation. Management measures segment and enterprise performance using measures such as are disclosed in this release. This information facilitates management’s internal comparisons to the company’s historical operating results and comparisons to competitors operating results.

Non-GAAP information allows for greater transparency to supplemental information used by management in its financial and operational decision making. Historically, we have reported similar non-GAAP information to our investors and believe that the inclusion of comparative numbers provides consistency in our financial reporting.

This information is not in accordance with, or an alternative for, generally accepted accounting principles in the United States. It excludes items, such as restructuring and amortization, that may have a material effect on the company’s earnings and earnings per share calculated in accordance with GAAP. Management monitors these items to ensure that expenses are in line with expectations and that our GAAP results are correctly stated but does not use them to measure the ongoing operating performance of the company. The non-GAAP information we provide may be different from the non-GAAP information provided by other companies.

Historical amounts were reclassified to conform with current period presentation.

7

AGILENT TECHNOLOGIES, INC

RECONCILIATION FROM GAAP TO NON-GAAP

NET INCOME

THREE MONTHS ENDED APRIL 30, 2004

(Unaudited)

(In millions, except per share amounts)	GAAP		Non-GAAP Adjustments												Non-GAAP
			Other Intangibles			Restructuring and Asset Impairment			Other			Adjustment for Income Taxes
Orders	$	1,892	$	—		$	—		$	—		$	—		$	1,892
Net revenue	$	1,831	$	—		$	—		$	—		$	—		$	1,831
Costs and expenses:
Cost of products and services		1,023		(6	)		(7	)		—			—			1,010
Research and development		237		—			—			—			—			237
Selling, general and administrative		460		(1	)		(13	)		(11	)		—			435
Total costs and expenses		1,720		(7	)		(20	)		(11	)		—			1,682
Income from operations		111		7			20			11			—			149
Other income (expense), net		17		—			—			(2	)		—			15
Income from operations before taxes		128		7			20			9			—			164
Provision for taxes		24		—			—			—			21			45
Net income	$	104	$	7		$	20		$	9		$	(21	)	$	119
Net income per share - Basic and Diluted:
Basic	$	0.22	$	0.01		$	0.04		$	0.02		$	(0.04	)	$	0.25
Diluted	$	0.21	$	0.01		$	0.04		$	0.02		$	(0.04	)	$	0.24
Weighted average shares used in computing net income per share:
Basic		481		481			481			481			481			481
Diluted		495		495			495			495			495			495

We provide non-GAAP financial information in order to provide meaningful supplemental information regarding our operational performance and to enhance our investors’ overall understanding of our core current financial performance and our prospects for the future. We believe that our investors benefit from seeing our results “through the eyes” of management in addition to the GAAP presentation. Management measures segment and enterprise performance using measures such as those that are disclosed in this release. This information facilitates management’s internal comparisons to the company’s historical operating results and comparisons to competitors’ operating results.

Non-GAAP information allows for greater transparency to supplemental information used by management in its financial and operational decision making. Historically, we have reported similar non-GAAP information to our investors and believe that the inclusion of comparative numbers provides consistency in our financial reporting.

This information is not in accordance with, or an alternative for, generally accepted accounting principles in the United States. It excludes items, such as restructuring and amortization, that may have a material effect on the company’s earnings and earnings per share calculated in accordance with GAAP. Management monitors these items to ensure that expenses are in line with expectations and that our GAAP results are correctly stated but does not use them to measure the ongoing operating performance of the company. The non-GAAP information we provide may be different from the non-GAAP information provided by other companies.

8

AGILENT TECHNOLOGIES, INC

RECONCILIATION FROM GAAP TO NON-GAAP

NET INCOME

SIX MONTHS ENDED APRIL 30, 2004

(Unaudited)

(In millions, except per share amounts)	GAAP		Non-GAAP Adjustments												Non-GAAP
			Other Intangibles			Restructuring and Asset Impairment			Other			Adjustment for Income Taxes
Orders	$	3,623	$	—		$	—		$	—		$	—		$	3,623
Net revenue	$	3,474	$	—		$	—		$	—		$	—		$	3,474
Costs and expenses:
Cost of products and services		1,927		(15	)		(15	)		—			—			1,897
Research and development		466		—			(10	)		—			—			456
Selling, general and administrative		891		(3	)		(40	)		(13	)		—			835
Total costs and expenses		3,284		(18	)		(65	)		(13	)		—			3,188
Income from operations		190		18			65			13			—			286
Other income (expense), net		21		—			8			(2	)		—			27
Income from operations before taxes		211		18			73			11			—			313
Provision for taxes		36		—			—			—			55			91
Net income	$	175	$	18		$	73		$	11		$	(55	)	$	222
Net income per share - Basic and Diluted:
Basic	$	0.36	$	0.04		$	0.15		$	0.02		$	(0.11	)	$	0.46
Diluted	$	0.36	$	0.03		$	0.15		$	0.02		$	(0.11	)	$	0.45
Weighted average shares used in computing net income per share:
Basic		481		481			481			481			481			481
Diluted		492		492			492			492			492			492

We provide non-GAAP financial information in order to provide meaningful supplemental information regarding our operational performance and to enhance our investors’ overall understanding of our core current financial performance and our prospects for the future. We believe that our investors benefit from seeing our results “through the eyes” of management in addition to the GAAP presentation. Management measures segment and enterprise performance using measures such as those that are disclosed in this release. This information facilitates management’s internal comparisons to the company’s historical operating results and comparisons to competitors’ operating results.

Non-GAAP information allows for greater transparency to supplemental information used by management in its financial and operational decision making. Historically, we have reported similar non-GAAP information to our investors and believe that the inclusion of comparative numbers provides consistency in our financial reporting.

This information is not in accordance with, or an alternative for, generally accepted accounting principles in the United States. It excludes items, such as restructuring and amortization, that may have a material effect on the company’s earnings and earnings per share calculated in accordance with GAAP. Management monitors these items to ensure that expenses are in line with expectations and that our GAAP results are correctly stated but does not use them to measure the ongoing operating performance of the company. The non-GAAP information we provide may be different from the non-GAAP information provided by other companies.

9

AGILENT TECHNOLOGIES, INC

RECONCILIATION FROM GAAP TO NON-GAAP

NET LOSS

THREE MONTHS ENDED APRIL 30, 2003

(Unaudited)

				Non-GAAP Adjustments
(In millions, except per share amounts)	GAAP			Other Intangibles			Restructuring and Asset Impairment			Other			Adjustment for Income Taxes			Non-GAAP
Orders	$	1,527		$	—		$	—		$	—		$	—		$	1,527
Net revenue	$	1,467		$	—		$	—		$	—		$	—		$	1,467
Costs and expenses:
Cost of products and services		958			(10	)		(46	)		(10	)		—			892
Research and development		296			—			(28	)		—			—			268
Selling, general and administrative		548			(2	)		(57	)		—			—			489
Total costs and expenses		1,802			(12	)		(131	)		(10	)		—			1,649
Loss from operations		(335	)		12			131			10			—			(182	)
Other income (expense), net		11			—			3			—			—			14
Loss before taxes		(324	)		12			134			10			—			(168	)
Benefit for taxes		(178	)		—			—			—			82			(96	)
Net loss	$	(146	)	$	12		$	134		$	10		$	(82	)	$	(72	)
Net loss per share - Basic and Diluted:
Net loss	$	(0.31	)	$	0.03		$	0.29		$	0.02		$	(0.18	)	$	(0.15	)
Weighted average shares used in computing net loss per share:
Basic and diluted		471			471			471			471			471			471

We provide non-GAAP financial information in order to provide meaningful supplemental information regarding our operational performance and to enhance our investors’ overall understanding of our core current financial performance and our prospects for the future. We believe that our investors benefit from seeing our results “through the eyes” of management in addition to the GAAP presentation. Management measures segment and enterprise performance using measures such as those that are disclosed in this release. This information facilitates management’s internal comparisons to the company’s historical operating results and comparisons to competitors’ operating results.

Non-GAAP information allows for greater transparency to supplemental information used by management in its financial and operational decision making. Historically, we have reported similar non-GAAP information to our investors and believe that the inclusion of comparative numbers provides consistency in our financial reporting.

This information is not in accordance with, or an alternative for, generally accepted accounting principles in the United States. It excludes items, such as restructuring and amortization, that may have a material effect on the company’s earnings and earnings per share calculated in accordance with GAAP. Management monitors these items to ensure that expenses are in line with expectations and that our GAAP results are correctly stated but does not use them to measure the ongoing operating performance of the company. The non-GAAP information we provide may be different from the non-GAAP information provided by other companies.

Historical amounts were reclassified to conform with current period presentation.

10

AGILENT TECHNOLOGIES, INC

RECONCILIATION FROM GAAP TO NON-GAAP

NET LOSS

SIX MONTHS ENDED APRIL 30, 2003

(Unaudited)

				Non-GAAP Adjustments
(In millions, except per share amounts)	GAAP			Other Intangibles			Restructuring and Asset Impairment			Gain on Sale of Assets			SFAS No. 142		Other			Adjustment for Income Taxes			Non-GAAP
Orders	$	2,885		$	—		$	—		$	—		$	—	$	—		$	—		$	2,885
Net revenue	$	2,879		$	—		$	—		$	—		$	—	$	—		$	—		$	2,879
Costs and expenses:
Cost of products and services		1,838			(20	)		(52	)		—			—		(10	)		—			1,756
Research and development		573			—			(32	)		—			—		—			—			541
Selling, general and administrative		1,059			(4	)		(89	)		—			—		—			—			966
Total costs and expenses		3,470			(24	)		(173	)		—			—		(10	)		—			3,263
Loss from operations		(591	)		24			173			—			—		10			—			(384	)
Other income (expense), net		15			—			8			(2	)		—		—			—			21
Loss from continuing operations before taxes		(576	)		24			181			(2	)		—		10			—			(363	)
Benefit for taxes		(318	)		—			—			—			—		—			136			(182	)
Loss before cumulative effect of accounting change		(258	)		24			181			(2	)		—		10			(136	)		(181	)
Cumulative effect of adopting SFAS No. 142 (net of tax benefit of $11 million)		(257	)		—			—			—			268		—			(11	)		—
Net loss	$	(515	)	$	24		$	181		$	(2	)	$	268	$	10		$	(147	)	$	(181	)
Net loss per share - Basic and Diluted:
Loss before cumulative effect of accounting change	$	(0.55	)	$	0.05		$	0.39		$	—		$	—	$	0.02		$	(0.29	)	$	(0.38	)
Cumulative effect of adopting SFAS No. 142, net		(0.54	)		—			—			—			0.56		—			(0.02	)		—
Net loss	$	(1.09	)	$	0.05		$	0.39		$	—		$	0.56	$	0.02		$	(0.31	)	$	(0.38	)
Weighted average shares used in computing net loss per share:
Basic and diluted		471			471			471			471			471		471			471			471

We provide non-GAAP financial information in order to provide meaningful supplemental information regarding our operational performance and to enhance our investors’ overall understanding of our core current financial performance and our prospects for the future. We believe that our investors benefit from seeing our results “through the eyes” of management in addition to the GAAP presentation. Management measures segment and enterprise performance using measures such as those that are disclosed in this release. This information facilitates management’s internal comparisons to the company’s historical operating results and comparisons to competitors’ operating results.

Non-GAAP information allows for greater transparency to supplemental information used by management in its financial and operational decision making. Historically, we have reported similar non-GAAP information to our investors and believe that the inclusion of comparative numbers provides consistency in our financial reporting.

This information is not in accordance with, or an alternative for, generally accepted accounting principles in the United States. It excludes items, such as restructuring and amortization, that may have a material effect on the company’s earnings and earnings per share calculated in accordance with GAAP. Management monitors these items to ensure that expenses are in line with expectations and that our GAAP results are correctly stated but does not use them to measure the ongoing operating performance of the company. The non-GAAP information we provide may be different from the non-GAAP information provided by other companies.

Historical amounts were reclassified to conform with current period presentation.

11

AGILENT TECHNOLOGIES, INC.

CONDENSED CONSOLIDATED BALANCE SHEET

(in millions, except par value and share amounts)

(Unaudited)

	April 30, 2004			October 31, 2003
ASSETS
Current assets:
Cash and cash equivalents	$	1,842		$	1,607
Accounts receivable, net		1,094			1,086
Inventory		1,050			995
Current deferred tax assets		14			10
Other current assets		255			191
Total current assets		4,255			3,889
Property, plant and equipment, net		1,363			1,447
Goodwill and other intangible assets, net		393			402
Long-term deferred tax assets		29			27
Other assets		635			532
Total assets	$	6,675		$	6,297
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	428		$	441
Employee compensation and benefits		565			566
Deferred revenue		307			262
Income and other taxes payable		326			326
Other accrued liabilities		280			311
Total current liabilities		1,906			1,906
Senior convertible debentures		1,150			1,150
Other liabilities		432			417
Total liabilities		3,488			3,473
Commitments and contingencies		—			—
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; 481 million shares at April 30, 2004 and 476 million shares at October 31, 2003 issued and outstanding		5			5
Additional paid-in capital		5,067			4,984
Accumulated deficit		(1,984	)		(2,159	)
Accumulated comprehensive income (loss)		99			(6	)
Total stockholders’ equity		3,187			2,824
Total liabilities and stockholders’ equity	$	6,675		$	6,297

12

AGILENT TECHNOLOGIES, INC.

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

(In millions)

(Unaudited)

	Six months ended April 30, 2004			Three months ended April 30, 2004
Cash flows from operating activities:
Net income	$	175		$	104
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation		136			67
Amortization		20			8
Inventory-related charges		2			1
Deferred taxes		(17	)		(10	)
Asset impairment charges		12			—
Net loss on sale of assets		7			7
Changes in assets and liabilities:
Accounts receivable		27			(24	)
Inventory		(61	)		4
Accounts payable		26			19
Employee compensation and benefits		(1	)		91
Income taxes and other taxes payable		(66	)		(36	)
Other current assets and liabilities		(24	)		(54	)
Other long-term assets and liabilities		(24	)		(5	)
Net cash provided by operating activities *		212			172
Cash flows from investing activities:
Investments in property, plant and equipment		(64	)		(35	)
Dispositions of property, plant and equipment		8			8
Purchased intangibles		(5	)		—
Net cash used in investing activities		(61	)		(27	)
Cash flows from financing activities:
Issuance of common stock under employee stock plans		83			17
Net repayments of notes payable and short-term borrowings		1			2
Net cash provided by financing activities		84			19
Change in cash and cash equivalents		235			164
Cash and cash equivalents at beginning of period		1,607			1,678
Cash and cash equivalents at end of period	$	1,842		$	1,842
*       Cash payments included in operating activities:
Restructuring		73			36
Income tax payments		69			43
Pension trust fund contributions		97			19

13

AGILENT TECHNOLOGIES, INC.

TEST AND MEASUREMENT INFORMATION

(In millions, except percent changes)

(Unaudited)

	Three months ended April 30, 2004		Three months ended April 30, 2003			Yr vs.Yr % change		Three months ended January 31, 2004		Sequential % change
Orders	$	745	$	608		23	%	$	642	16	%
Net Revenue	$	705	$	652		8	%	$	642	10	%
Income (loss) from operations	$	11	$	(103	)	111	%	$	4	175	%

	Six months ended April 30, 2004		Six months ended April 30, 2003			Yr vs.Yr % change
Orders	$	1,387	$	1,202		15	%
Net Revenue	$	1,347	$	1,285		5	%
Income (loss) from operations	$	15	$	(235	)	106	%

Q2 FY04 vs Q1 FY04 BY MARKET SEGMENT

	Orders						Net Revenue
	Q2 FY04 $ Amount		Sequential % change		% of Segment		Q2 FY04 $ Amount		Sequential % change		% of Segment
Communications test	$	527	18	%	71	%	$	493	11	%	70	%
General purpose test		218	11	%	29	%		212	8	%	30	%
	$	745	16	%	100	%	$	705	10	%	100	%

Q2 FY04 vs Q2 FY03 BY MARKET SEGMENT

	Orders				Net Revenue
	Q2 FY04 $ Amount		Yr vs.Yr % change		Q2 FY04 $ Amount		Yr vs.Yr % change
Communications test	$	527	27	%	$	493	7	%
General purpose test		218	12	%		212	10	%
	$	745	23	%	$	705	8	%

Income (loss) from operations reflect the results of our reportable segments under Agilent’s management reporting system which are not necessarily in conformity with accounting principles generally accepted in the United States (GAAP). Income (loss) from operations of our reporting segments excludes restructuring, amortization of intangibles, non-operational charges and some residual corporate charges.

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.

14

AGILENT TECHNOLOGIES, INC.

AUTOMATED TEST INFORMATION

(In millions, except percent changes)

(Unaudited)

	Three months ended April 30, 2004		Three months ended April 30, 2003			Yr vs.Yr % change		Three months ended January 31, 2004		Sequential % change
Orders	$	286	$	219		31	%	$	200	43	%
Net Revenue	$	266	$	153		74	%	$	219	21	%
Income (loss) from operations	$	34	$	(37	)	192	%	$	20	70	%

	Six months ended April 30, 2004		Six months ended April 30, 2003			Yr vs.Yr % change
Orders	$	486	$	334		46	%
Net Revenue	$	485	$	289		68	%
Income (loss) from operations	$	54	$	(85	)	164	%

Q2 FY04 vs Q1 FY04 BY MARKET SEGMENT

	Orders						Net Revenue
	Q2 FY04 $ Amount		Sequential % change		% of Segment		Q2 FY04 $ Amount		Sequential % change		% of Segment
Semiconductor test	$	240	48	%	84	%	$	225	26	%	85	%
Manufacturing test		46	21	%	16	%		41	3	%	15	%
	$	286	43	%	100	%	$	266	21	%	100	%

Q2 FY04 vs Q2 FY03 BY MARKET SEGMENT

	Orders				Net Revenue
	Q2 FY04 $ Amount		Yr vs.Yr % change		Q2 FY04 $ Amount		Yr vs.Yr % change
Semiconductor test	$	240	28	%	$	225	86	%
Manufacturing test		46	44	%		41	28	%
	$	286	31	%	$	266	74	%

Income (loss) from operations reflect the results of our reportable segments under Agilent’s management reporting system which are not necessarily in conformity with accounting principles generally accepted in the United States (GAAP). Income (loss) from operations of our reporting segments excludes restructuring, amortization of intangibles, non-operational charges and some residual corporate charges.

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.

15

AGILENT TECHNOLOGIES, INC.

SEMICONDUCTOR PRODUCTS INFORMATION

(In millions, except percent changes)

(Unaudited)

	Three months ended April 30, 2004		Three months ended April 30, 2003			Yr vs. Yr % change		Three months ended January 31, 2004		Sequential % change
Orders	$	523	$	420		25	%	$	582	(10	)%
Net Revenue	$	527	$	376		40	%	$	469	12	%
Income (loss) from operations	$	65	$	(43	)	251	%	$	60	8	%

	Six months ended April 30, 2004		Six months ended April 30, 2003			Yr vs. Yr % change
Orders	$	1,105	$	801		38	%
Net Revenue	$	996	$	743		34	%
Income (loss) from operations	$	125	$	(91	)	237	%

Q2 FY04 vs Q1 FY04 BY MARKET SEGMENT

	Orders						Net Revenue
	Q2 FY04 $ Amount		Sequential % change		% of Segment		Q2 FY04 $ Amount		Sequential % change		% of Segment
Networking	$	131	(12	)%	25	%	$	175	17	%	33	%
Personal systems		392	(9	)%	75	%		352	10	%	67	%
	$	523	(10	)%	100	%	$	527	12	%	100	%

Q2 FY04 vs Q2 FY03 BY MARKET SEGMENT

	Orders				Net Revenue
	Q2 FY04 $ Amount		Yr vs.Yr % change		Q2 FY04 $ Amount		Yr vs.Yr % change
Networking	$	131	1	%	$	175	51	%
Personal systems		392	35	%		352	35	%
	$	523	25	%	$	527	40	%

Income (loss) from operations reflect the results of our reportable segments under Agilent’s management reporting system which are not necessarily in conformity with accounting principles generally accepted in the United States (GAAP). Income (loss) from operations of our reporting segments excludes restructuring, amortization of intangibles, non-operational charges and some residual corporate charges.

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

16

AGILENT TECHNOLOGIES, INC.

LIFE SCIENCES AND CHEMICAL ANALYSIS INFORMATION

(In millions, except percent changes)

(Unaudited)

	Three months ended April 30, 2004		Three months ended April 30, 2003		Yr vs.Yr % change		Three months ended January 31, 2004		Sequential % change
Orders	$	338	$	280	21	%	$	307	10	%
Net Revenue	$	333	$	286	16	%	$	313	6	%
Income from operations	$	39	$	20	95	%	$	49	(20	)%

	Six months ended April 30, 2004		Six months ended April 30, 2003		Yr vs.Yr % change
Orders	$	645	$	548	18	%
Net Revenue	$	646	$	562	15	%
Income from operations	$	88	$	54	63	%

Income from operations reflect the results of our reportable segments under Agilent’s management reporting system which are not necessarily in conformity with accounting principles generally accepted in the United States (GAAP). Income from operations of our reporting segments excludes restructuring, amortization of intangibles, non-operational charges and some residual corporate charges.

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.

17

AGILENT TECHNOLOGIES, INC.

Segment Income (Loss) from Operations

Reconciliation of Reporting Segments to Agilent Non-GAAP Income (Loss)

(In millions)

(Unaudited)

	Three months ended April 30,					Three months ended January 31, 2004
	2004		2003
Test and Measurement	$	11	$	(103	)	$	4
Semiconductor Products		65		(43	)		60
Automated Test		34		(37	)		20
Life Sciences and Chemical Analysis		39		20			49
Unallocated infrastructure charges		—		(19	)		4
Non-GAAP Income (loss) from operations - Agilent	$	149	$	(182	)	$	137

Income (loss) from operations reflect the results of our reportable segments under Agilent’s management reporting system which are not necessarily in conformity with accounting principles generally accepted in the United States (GAAP). Income (loss) from operations of our reporting segments excludes restructuring, amortization of intangibles, non-operational charges and unallocated infrastructure charges.

18

AGILENT TECHNOLOGIES, INC.

ORDERS AND NET REVENUE FROM OPERATIONS

BY GEOGRAPHY

(In millions, except percent changes)

(Unaudited)

	Three Months Ended April 30,				Percent Inc/(Dec)
	2004		2003
ORDERS
Americas	$	669	$	589	14	%
Europe		353		304	16	%
Asia Pacific		870		634	37	%
Total	$	1,892	$	1,527	24	%
NET REVENUE
Americas	$	588	$	533	10	%
Europe		374		297	26	%
Asia Pacific		869		637	36	%
Total	$	1,831	$	1,467	25	%
	Six Months Ended April 30,				Percent Inc/(Dec)
	2004		2003
ORDERS
Americas	$	1,221	$	1,085	13	%
Europe		725		599	21	%
Asia Pacific		1,677		1,201	40	%
Total	$	3,623	$	2,885	26	%
NET REVENUE
Americas	$	1,161		1,109	5	%
Europe		737		593	24	%
Asia Pacific		1,576		1,177	34	%
Total	$	3,474	$	2,879	21	%

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.

19

AGILENT TECHNOLOGIES, INC.

Reconciliation of Segment ROIC

(In millions)

(Unaudited)

	Q2 FY04 ATG			Q2 FY04 SPG			Q2 FY04 LSCA
Numerator:
Segment income from operations	$	34		$	65		$	39
Less:
Other (income) expense and taxes		13			(9	)		18
Segment return		21			74			21
Segment return annualized	$	84		$	296		$	84
Denominator:
Segment assets (1)	$	651		$	1,180		$	578
Less:
Net current liabilities (2)		109			307			188
Invested capital	$	542		$	873		$	390
Average Invested capital	$	541		$	879		$	407
ROIC		16	%		34	%		21	%

ROIC calculation: (annualized current quarter segment return)/(average of the two most recent quarter-end balances of Segment Invested Capital)

⁽¹⁾ Segment assets consist of inventory, accounts receivable, property plant and equipment and gross goodwill and other intangibles.

⁽²⁾ Includes accounts payable, employee compensation and benefits and other accrued liabilities.

We provide non-GAAP financial information in order to provide meaningful supplemental information regarding our operational performance and to enhance our investors’ overall understanding of our core current financial performance and our prospects for the future. We believe that our investors benefit from seeing our results “through the eyes” of management in addition to the GAAP presentation. Management measures segment and enterprise performance using measures such as those that are disclosed in this release. This information facilitates management’s internal comparisons to the company’s historical operating results and comparisons to competitors’ operating results.

Non-GAAP information allows for greater transparency to supplemental information used by management in its financial and operational decision making. Historically, we have reported similar non-GAAP information to our investors and believe that the inclusion of comparative numbers provides consistency in our financial reporting.

This information is not in accordance with, or an alternative for, generally accepted accounting principles in the United States. It excludes items, such as restructuring and amortization, that may have a material effect On the company’s earnings and earnings per share calculated in accordance with GAAP. Management monitors these items to ensure that expenses are in line with expectations and that our GAAP results are correctly stated but does not use them to measure the ongoing operating performance of the company. The non-GAAP information we provide may be different from the non-GAAP information provided by other companies.

20

AGILENT TECHNOLOGIES, INC

RECONCILIATION OF DAYS ON HAND (DOH)

(In millions)

	Q204	Q203	Yr vs. Yr Change in Days
Non-GAAP
Costs of Products and Services	1,023	958
Amort of Intangibles	6	10
Restructuring	7	46
Inventory Charges	1	5
Other	—	10
Adjusted Costs of Products and Services	1,009	887
Net Inventory	1,050	1,131
Non-GAAP Inventory Days	94	115	(21	)
GAAP
Costs of Products and Services	1,023	958
Net Inventory	1,050	1,131
GAAP Inventory Days	92	106	(14	)

Non-GAAP DOH Formula: (Quarter-end net inventory * 90 Days)/(Current quarter’s COGS—Inventory Charges—Non-GAAP Adjustments)

GAAP DOH Formula: (Quarter end net inventory * 90 Days)/(Current quarter’s COGS)

We provide non-GAAP financial information in order to provide meaningful supplemental information regarding our operational performance and to enhance our investors’ overall understanding of our core current financial performance and our prospects for the future. We believe that our investors benefit from seeing our results “through the eyes” of management in addition to the GAAP presentation. Management measures segment and enterprise performance using measures such as those that are disclosed in this release. This information facilitates management’s internal comparisons to the company’s historical operating results and comparisons to competitors’ operating results.

Non-GAAP information allows for greater transparency to supplemental information used by management in its financial and operational decision making. Historically, we have reported similar non-GAAP information to our investors and believe that the inclusion of comparative numbers provides consistency in our financial reporting.

This information is not in accordance with, or an alternative for, generally accepted accounting principles in the United States. It excludes items, such as restructuring and amortization, that may have a material effect on the company’s earnings and earnings per share calculated in accordance with GAAP. Management monitors these items to ensure that expenses are in line with expectations and that our GAAP results are correctly stated but does not use them to measure the ongoing operating performance of the company. The non-GAAP information we provide may be different from the non-GAAP information provided by other companies.