Agilent Technologies Announces Temporary 10-Percent Pay Cut for Employees as Latest in Series of Aggressive Expense Reduction Measures.

Business Editors/High-Tech Writers

PALO ALTO, Calif.--(BUSINESS WIRE)--April 5, 2001

Company Addresses Worsening Economic Slowdown 

Agilent Technologies Inc. (NYSE: A) today announced its latest and most aggressive expense reduction measure to date in response to recent dramatic slowing in customer demand. The company will temporarily reduce employee pay by 10 percent.

Agilent began slowing hiring and reducing discretionary spending several months ago. As the demand from Agilent's major customers has dropped dramatically in the last four to six weeks, the company has taken progressively more aggressive expense control actions.

"We're trying to avoid across-the-board layoffs in response to cyclical market conditions," said Ned Barnholt, Agilent president and chief executive officer. "We view the economic slowdown as a business cycle -- even though it's deepening and broadening. At the present time, we believe this pay reduction is the most appropriate action for us. We value our workforce and need to be ready to meet demand as business conditions improve."

The global measures now in place -- in addition to the temporary pay cut -- include:

-- no external hiring or replacement of attrition;

-- significant reduction in the use of temporary workers and consultants;

-- dramatically reduced discretionary spending, including new office equipment;
and,

-- travel limited to customer-related activities.

Temporary pay reductions began April 1 for Agilent's 200 senior managers, and will go into effect May 1 for the rest of the workforce. Implementation will vary by country and is subject to local laws. The temporary pay reductions will save about $70 million per quarter. They will last through the third quarter, which ends July 31. Depending upon business conditions, the pay reductions could be extended into the fourth quarter.

In addition, Agilent is reducing production schedules consistent with incoming orders. This may result in short-term manufacturing closures and time-off programs -- specific to geographic location or Agilent business.

"While we knew that our second quarter would be especially challenging, the downturn is more severe than we had anticipated," said Barnholt. "Business conditions have deteriorated substantially in recent weeks. We're seeing a significant decline in our customers' spending plans across the entire communications and semiconductor markets."

"Given the uncertainty about the duration and severity of the economic slowdown and its impact on our customers, we are no longer able to provide meaningful guidance for the year," Barnholt added. "The dramatic change in orders will obviously have a negative impact on our second-quarter results. Based on orders so far this quarter, we now expect second-quarter revenue to be less than $2.9 billion."

Agilent's second quarter ends April 30, with financial results scheduled for release on May 17.

"This is a very challenging economic environment," he added. "We know we can successfully manage through it by focusing on our customers, engaging our employees, continuing to invest in R&D and introducing exciting new products. We're building a company for the long term, and we will be ready as business conditions improve."

About Agilent Technologies

Agilent Technologies Inc. (NYSE: A) is a global technology leader in communications, electronics, life sciences and healthcare. With 48,000 employees serving customers in more than 120 countries, Agilent had net revenue of $10.8 billion in fiscal year 2000. Information about Agilent can be found on the Web at www.agilent.com.

This news release contains forward-looking statements including, without limitation, information regarding various expense reduction measures, projected net revenues and overall financial results that involve risks and uncertainties that could cause the 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 identify and execute successfully through industry business cycles; the impact of potential shortages of electricity and power in California on Agilent, its customers and suppliers; the timely ability to adapt manufacturing capacity to changing order demand; the ability to quickly adapt cost structures to changing conditions, including absorption of the fixed costs allocated to the healthcare solutions business; the successful completion of the sale and transition of its healthcare solutions business to Royal Philips Electronics; the economic, political and other risks associated with international sales and operations; the successful redesign and implementation of the company's business process and systems; and other risks detailed in Agilent's Annual Report on Form 10-Q for the quarter ended Jan. 31, 2001, as filed with the Securities and Exchange Commission.