Agilent Technologies Reports First Quarter 2007 Results.

SANTA CLARA, Calif. -- Agilent Technologies Inc. (NYSE:A) today reported orders from continuing operations of $1.25 billion for the first fiscal quarter ended Jan. 31, 2007, 6 percent above one year ago. Revenues during the quarter were $1.28 billion, 10 percent above last year. First quarter GAAP income from continuing operations before equity income was $150 million, or $0.36 per diluted share, compared with $73 million, or $0.15 per share, in last year's first quarter.

Included in this quarter's GAAP income from continuing operations is $36 million of share-based compensation expense. Excluding this item and $24 million of tax and other net gains, Agilent reported first quarter adjusted net income from continuing operations of $162 million, or $0.39 per share. On a comparable basis, the company earned $142 million, or $0.29 per share, one year ago.(1)

"Agilent performed well in this year's first quarter," said Bill Sullivan, Agilent president and chief executive officer. "We met expectations for revenues and earnings growth, with notable strength across our Bio-Analytical Measurement portfolio, and despite significant weakness in wireless handset test." In Q1, revenues were up 10 percent, and adjusted net income per share from continuing operations, at $0.39 per share, was 34 percent above last year's results.

Sullivan noted that the company's Bio-Analytical revenue was up 22 percent, outpacing all competitors and setting a record for revenue, profit and growth for this business segment: "The success of our new product introductions is clearly evident in the first quarter performance of this segment." Sullivan also noted that, while Electronic Measurement grew 4 percent, segment revenue growth excluding the impact of a weak handset test market was about 9 percent.

First quarter Return on Invested Capital(2) reached 23 percent, one point better than last year's strong performance, while receivables Days-Sales-Outstanding improved 3 days, and inventory Days-On-Hand improved 5 days. Cash generated from operating activities was $93 million in the seasonally weak first quarter. During the period, the company invested $70 million in acquisitions and repurchased $254 million of its common stock. The company ended the quarter with net cash of $2.1 billion.

Sullivan added, "We expect the relative performance of our business segments to be repeated in the current quarter, and to see improved momentum in Electronic Measurement during the second half of the fiscal year. Overall, we remain comfortable with the range of analyst estimates for the second quarter and for fiscal year 2007."

In the fiscal second quarter of 2007, Agilent expects revenues of $1.30 billion to $1.34 billion, up 5 percent to 8 percent from last year. Adjusted net income is expected to be in the range of $0.41 to $0.45 per share(3), 14 percent to 25 percent above last year's comparable earnings.

Segment Results

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Bio-Analytical Measurement recorded double-digit orders growth for the third consecutive quarter, with a 14 percent year-to-year increase in the first quarter of this year following last year's 15 percent fourth quarter rise. Revenues of $455 million were up 22 percent from last year, the fastest pace on record. During the quarter, the segment's book-to-bill ratio dropped below 1.00 for the first time in three years as it worked off $21 million of its record fourth quarter backlog. Life Sciences revenues of $195 million were up 23 percent, driven by year-end spending in pharmaceutical and biotech spending, and by the continued success of Agilent's new 1200 Series Liquid Chromatograph platform. Chemical Analysis revenues of $260 million were up 21 percent from last year, with particular strength in spending by petrochemical firms, and sustained momentum in Asia in the categories of food safety and the environment.

Segment income from operations of $88 million was $36 million above last year on an $82 million increase in revenues. Gross margins improved by 3 points, while operating margins improved 5 points to 19 percent. Segment Return On Invested Capital(2) improved 8 points to 36 percent.

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First quarter Electronic Measurement orders of $817 million were up 2 percent from last year, with weakness concentrated in wireless manufacturing test and wireless monitoring. Revenues of $825 million were up 4 percent, with Americas up 6 percent and Europe up 12 percent, while demand from Asia was down 1 percent. General Purpose Test revenues were 11 percent ahead of last year while Communications Test, reflecting the weakness in handset test, was off 6 percent from one year ago.

First quarter income from operations of $95 million was up $6 million from last year on a $31 million increase in revenues. Operating margins improved less than a point from last year, while asset management was about on par with last year's performance. Segment ROIC(2) improved 1 point to 19 percent.

About Agilent Technologies

Agilent Technologies Inc. (NYSE:A) is the world's premier measurement company and a technology leader in communications, electronics, life sciences and chemical analysis. The company's 19,000 employees serve customers in more than 110 countries. Agilent had net revenue of $5.0 billion in fiscal 2006. Information about Agilent is available on the Web at www.agilent.com.

Agilent's management will present more details on its first quarter FY2007 financial results on a conference call with investors beginning at 1:30 p.m. (Pacific). This event will be webcast live in listen-only mode. Listeners may log on at www.investor.agilent.com and select "Q1 2007 Agilent Technologies Inc. Earnings Conference Call" in the "News & Events -- Calendar of Events" section. The webcast will remain available on the company's Web site for 90 days.

A telephone replay of the conference call will be available from 3:30 p.m. (Pacific) today through Feb. 22, 2007. The replay number is [phone] or international callers may dial [phone]; enter pass code 23980204.

Forward-Looking Statements 

This news release contains forward-looking statements as defined in the Securities Exchange Act of 1934 and is subject to the safe harbors created therein. The forward-looking statements contained herein include, but are not limited to, information regarding Agilent's future revenues, earnings and profitability; the pace of new product introductions and future demand for the Company's products and services; and guidance for the second quarter and the full fiscal year 2007. These forward-looking statements involve risks and uncertainties that could cause Agilent's results to differ materially from management's current expectations. Such risks and uncertainties include, but are not limited to, unforeseen changes in the strength of our customers' businesses, and unforeseen changes in the demand for current and new products and technologies.

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 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 operations, 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 Annual Report on Form 10-K for the year ended October 31, 2006. Forward-looking statements are based on the beliefs and assumptions of Agilent's management and on currently available information. Agilent undertakes no responsibility to publicly update or revise any forward-looking statement.

(1) Adjusted net income from continuing operations and adjusted net income from continuing operations per share are non-GAAP measures. Each of these measures is defined to exclude primarily the impacts of restructuring and asset impairment charges, business separation costs, non-cash stock-based compensation, donations to the Agilent Foundation, intangible amortization as well as gains and losses from the sale of investments and disposals of businesses net of their tax effects. Adjusted net income from continuing operations excludes the impact of discontinued operations. A reconciliation between adjusted net income from continuing operations, adjusted net income, and GAAP net income from continuing operations is set forth on page 4 of the attached tables along with additional information regarding the use of this non-GAAP measure.

(2)Return On Invested Capital is a non-GAAP measure and is defined as income (loss) from operations less other (income) expense and taxes, annualized, divided by the average of the two most recent quarter-end balances of assets less net current liabilities. The reconciliation of ROIC can be found on page 5 of the attached tables, along with additional information regarding the use of this non-GAAP measure.

(3)Adjusted net income per share as projected for Q207 is a non-GAAP measure which excludes primarily the impacts of future restructuring and asset impairment charges, non-cash stock-based compensation, and intangibles amortization. Most of these excluded amounts pertain to events that have not yet occurred and are not currently possible to estimate with a reasonable degree of accuracy. Therefore, no reconciliation to GAAP amounts has been provided. Future amortization of intangibles is expected to be approximately $10 million per quarter.

(4) Historical segment data have been restated to correspond to current presentation.

NOTE TO EDITORS: Further technology, corporate citizenship and executive news is available on the Agilent news site at www.agilent.com/go/news.

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