Agilent

2018  

Agilent Technologies, Inc.    
Annual Report

 
 
 
 
 
 
 
Our Mission is to deliver trusted 
answers and insights that advance 
the quality of life.

Whether we are helping our customers keep    
food supplies safe, improve the quality of air,    
water and soil, or fight cancer with more precise 
diagnoses and targeted treatments, Agilent 
employees share a passion and commitment   
to helping our customers make a difference in  
the lives of people around the world. 

 
 
To Our Shareholders

2018 was a record year for the Agilent team   
as our efforts in transforming Agilent are 
delivering measurable results. We achieved our 
highest annual core revenue growth rate and 
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2015. We achieved all of this while continuing to make strategic 
investments for future growth, both organically and through M&A.

The Numbers Tell the Story   

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$4.9 billion, representing core growth of 7.1 percent*, 

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total of 520 basis points since 2014. 

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Our sustained focus on improving operating results led
to an adjusted operating margin of 23.1 percent* for the 

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Shareholder Letter    1

 
 
 
 
 
 
 
 
 
We utilized our strong balance sheet to invest in our 
business and return cash directly to shareholders. In

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Moving into 2019, we increased our dividend by  

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$1.75 billion share repurchase plan this year.

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continued focus on delivering superior earnings growth.

The Agilent Transformation  
When I became CEO in 2015, I launched several 

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One Agilent cultural transformation promotes greater
collaboration across the company and has made it easier 
for customers to do business with us. Our Agile Agilent

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products and solutions.  

Sustainable Growth
We serve large, attractive markets where growth is fueled
by investments to improve the human condition. Whether 
helping our customers keep food supplies safe, reduce 

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precise diagnoses and targeted treatments, enabling our
customers to tackle their most challenging issues with 
technology is the essence of Agilent. 

Looking forward, we are focused on four key growth
drivers to continue our momentum: innovation from our 

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and digital innovation to transform the way we work 
inside and outside the company.

~8%
of Revenue Invested 
in R&D Yearly 

R&D Engine

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highly differentiated solutions to help our customers

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include:

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Chemical Imaging System, which brings greater   
clarity and unprecedented speed to pharmaceutical,
biomedical, food, and materials science. The  
Analytical Scientist magazine ranked it among  
2018’s top innovations.

• (cid:43)(cid:80)(cid:3)(cid:81)(cid:87)(cid:84)(cid:3)(cid:71)(cid:72)(cid:72)(cid:81)(cid:84)(cid:86)(cid:85)(cid:3)(cid:86)(cid:81)(cid:3)(cid:85)(cid:87)(cid:82)(cid:82)(cid:81)(cid:84)(cid:86)(cid:3)(cid:86)(cid:74)(cid:71)(cid:3)(cid:402)(cid:73)(cid:74)(cid:86)(cid:3)(cid:67)(cid:73)(cid:67)(cid:75)(cid:80)(cid:85)(cid:86)(cid:3)(cid:69)(cid:67)(cid:80)(cid:69)(cid:71)(cid:84)(cid:3)(cid:67)(cid:80)(cid:70)

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(cid:3)
(cid:35)(cid:73)(cid:75)(cid:78)(cid:71)(cid:80)(cid:86)(cid:358)(cid:85)(cid:3)(cid:72)(cid:78)(cid:67)(cid:73)(cid:85)(cid:74)(cid:75)(cid:82)(cid:3)(cid:38)(cid:67)(cid:77)(cid:81)(cid:3)(cid:49)(cid:79)(cid:80)(cid:75)(cid:85)(cid:3)(cid:75)(cid:80)(cid:85)(cid:86)(cid:84)(cid:87)(cid:79)(cid:71)(cid:80)(cid:86)(cid:14)(cid:3)(cid:89)(cid:74)(cid:75)(cid:69)(cid:74)(cid:3)
allows pathologists to more easily visualize cancer in 

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(cid:70)(cid:75)(cid:67)(cid:73)(cid:80)(cid:81)(cid:85)(cid:86)(cid:75)(cid:69)(cid:85)(cid:3)(cid:82)(cid:84)(cid:81)(cid:70)(cid:87)(cid:69)(cid:86)(cid:3)(cid:67)(cid:78)(cid:85)(cid:81)(cid:3)(cid:84)(cid:71)(cid:69)(cid:71)(cid:75)(cid:88)(cid:71)(cid:70)(cid:3)(cid:71)(cid:90)(cid:82)(cid:67)(cid:80)(cid:70)(cid:71)(cid:70)(cid:3)(cid:55)(cid:16)(cid:53)(cid:16)(cid:3)(cid:40)(cid:38)(cid:35)
approval in cervical cancer.

• (cid:57)(cid:71)(cid:3)(cid:75)(cid:80)(cid:86)(cid:84)(cid:81)(cid:70)(cid:87)(cid:69)(cid:71)(cid:70)(cid:3)(cid:86)(cid:74)(cid:71)(cid:3)(cid:402)(cid:84)(cid:85)(cid:86)(cid:3)(cid:85)(cid:75)(cid:73)(cid:80)(cid:75)(cid:402)(cid:69)(cid:67)(cid:80)(cid:86)(cid:3)(cid:67)(cid:70)(cid:88)(cid:67)(cid:80)(cid:69)(cid:71)(cid:79)(cid:71)(cid:80)(cid:86)(cid:3)(cid:75)(cid:80)

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system, a major breakthrough in both chemical  
imaging and spectral analysis.

• (cid:57)(cid:71)(cid:3)(cid:68)(cid:71)(cid:69)(cid:67)(cid:79)(cid:71)(cid:3)(cid:86)(cid:74)(cid:71)(cid:3)(cid:402)(cid:84)(cid:85)(cid:86)(cid:3)(cid:69)(cid:81)(cid:79)(cid:82)(cid:67)(cid:80)(cid:91)(cid:3)(cid:86)(cid:81)(cid:3)(cid:70)(cid:71)(cid:88)(cid:71)(cid:78)(cid:81)(cid:82)(cid:3)(cid:67)(cid:80)(cid:70)(cid:3)(cid:78)(cid:67)(cid:87)(cid:80)(cid:69)(cid:74)(cid:3)
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standardized data format for the pharmaceutical 
industry. The standard allows labs to transfer and

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collaboration and discovery. 

2    Shareholder Letter 

Agilent Technologies, Inc.

 
 
 
 
 
 
 
w

(cid:49)(cid:87)(cid:84)(cid:3)(cid:75)(cid:80)(cid:80)(cid:81)(cid:88)(cid:67)(cid:86)(cid:75)(cid:81)(cid:80)(cid:3)(cid:67)(cid:78)(cid:85)(cid:81)(cid:3)(cid:71)(cid:90)(cid:86)(cid:71)(cid:80)(cid:70)(cid:85)(cid:3)(cid:86)(cid:81) how we meet our business
goals. We work very hard to make sustainable products,
using less packaging and power and meeting the most 
stringent international standards.  Our commitment
continues to be recognized with citations and awards — 
Agilent was again ranked as an Industry Leader for Life

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(cid:53)(cid:87)(cid:85)(cid:86)(cid:67)(cid:75)(cid:80)(cid:67)(cid:68)(cid:75)(cid:78)(cid:75)(cid:86)(cid:91)(cid:3)(cid:52)(cid:67)(cid:80)(cid:77)(cid:75)(cid:80)(cid:73)(cid:85)(cid:3)(cid:68)(cid:91)(cid:3)(cid:52)(cid:81)(cid:68)(cid:71)(cid:69)(cid:81)(cid:53)(cid:35)(cid:47)(cid:3)(cid:72)(cid:81)(cid:84)(cid:3)(cid:20)(cid:18)(cid:19)(cid:26)(cid:16)

Complementary M&A  
Our M&A strategy is to complement organic growth by
bringing to Agilent new capabilities and unique offerings. 
Our One Agilent approach to integration fully leverages 
our scale to drive revenue and create cost synergies.

Since 2015, we have invested over $1 billion in capital

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acquiring seven companies across our business groups. 

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our portfolio of real time, live cell analysis solutions in 

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measurement of live cells broadly accessible. In 

(cid:3)

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software solutions for laboratory management, 

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the acquisition of the Agilent business from Young In

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Korea, grew our direct sales and service capabilities in 

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Advanced Analytical Technologies, Inc. and Lasergen, Inc. 

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generation sequencing workflows.

Geographic Penetration    
We continue to invest and leverage our leadership to

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important market that now accounts for 21 percent of 
our revenue. In addition, we opened a new logistics hub in
Shanghai that will enable faster delivery of parts, supplies

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to improve our service and the speed at which we
support our customers in this part of the world.

Over $1 Billion
China FY18 Revenue

Digital Innovation  

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the WeChat platform in China are making it easier for
customers to do business with Agilent. At the same time,

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We are also investing in the digital lab of the future.
Informatics is a strategic differentiator for Agilent. We are
bringing to market technologies that help our customers
leverage their data for even more insights and
discoveries.

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Shareholder Letter    3

 
 
 
 
 
 
 
 
 
A Great Place to Work
I am honored to lead a company that together with our 
customers is using science to make a tangible difference 
in the lives of people around the world. Science is at the 
heart of the human endeavor, and the passion and 
commitment of our 14,800 global employees is the
driving force behind Agilent.            

Our employees make Agilent a great place to work with a 

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and respects diversity and inclusion. This year we 

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being a great place to work. And, I am committed to 
making Agilent an even better place to work in 2019 by
continuing to invest in our people and work environment. 

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opportunities we have as a company to continue to grow 

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position, the momentum in our businesses and our 
passionate and highly skilled One Agilent team position
us for sustained success.

Sincerely,

Mike McMullen

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4    Shareholder Letter 

Agilent Technologies, Inc.

Our 14,800 employees serve 
customers in 110 countries   
around the world.

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Consolidated Statement of Operations

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   Costs
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(cid:3)(cid:3)(cid:53)(cid:71)(cid:78)(cid:78)(cid:75)(cid:80)(cid:73)(cid:14)(cid:3)(cid:73)(cid:71)(cid:80)(cid:71)(cid:84)(cid:67)(cid:78)(cid:3)(cid:67)(cid:80)(cid:70)(cid:3)(cid:67)(cid:70)(cid:79)(cid:75)(cid:80)(cid:75)(cid:85)(cid:86)(cid:84)(cid:67)(cid:86)(cid:75)(cid:88)(cid:71)(cid:3)(cid:71)(cid:90)(cid:82)(cid:71)(cid:80)(cid:85)(cid:71)(cid:85)
Income from operations
Interest income
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(cid:49)(cid:86)(cid:74)(cid:71)(cid:84)(cid:3)(cid:75)(cid:80)(cid:69)(cid:81)(cid:79)(cid:71)(cid:3)(cid:10)(cid:71)(cid:90)(cid:82)(cid:71)(cid:80)(cid:85)(cid:71)(cid:11)(cid:14)(cid:3)(cid:80)(cid:71)(cid:86)
(cid:43)(cid:80)(cid:69)(cid:81)(cid:79)(cid:71)(cid:3)(cid:68)(cid:71)(cid:72)(cid:81)(cid:84)(cid:71)(cid:3)(cid:86)(cid:67)(cid:90)(cid:71)(cid:85)
(cid:50)(cid:84)(cid:81)(cid:88)(cid:75)(cid:85)(cid:75)(cid:81)(cid:80)(cid:3)(cid:72)(cid:81)(cid:84)(cid:3)(cid:75)(cid:80)(cid:69)(cid:81)(cid:79)(cid:71)(cid:3)(cid:86)(cid:67)(cid:90)(cid:71)(cid:85)
(cid:48)(cid:71)(cid:86)(cid:3)(cid:75)(cid:80)(cid:69)(cid:81)(cid:79)(cid:71)
(cid:48)(cid:71)(cid:86)(cid:3)(cid:75)(cid:80)(cid:69)(cid:81)(cid:79)(cid:71)(cid:3)(cid:82)(cid:71)(cid:84)(cid:3)(cid:85)(cid:74)(cid:67)(cid:84)(cid:71)(cid:28)
(cid:3)(cid:3)(cid:3)(cid:36)(cid:67)(cid:85)(cid:75)(cid:69)
(cid:3)(cid:3)(cid:3)(cid:38)(cid:75)(cid:78)(cid:87)(cid:86)(cid:71)(cid:70)
Weighted average shares:
(cid:3)(cid:3)(cid:3)(cid:36)(cid:67)(cid:85)(cid:75)(cid:69)
(cid:3)(cid:3)(cid:3)(cid:38)(cid:75)(cid:78)(cid:87)(cid:86)(cid:71)(cid:70)

Reconciliation of Non-GAAP Diluted EPS

(cid:41)(cid:35)(cid:35)(cid:50)(cid:3)(cid:70)(cid:75)(cid:78)(cid:87)(cid:86)(cid:71)(cid:70)(cid:3)(cid:39)(cid:50)(cid:53)
   Asset impairments
  Intangible amortization
(cid:3)(cid:3)(cid:3)(cid:36)(cid:87)(cid:85)(cid:75)(cid:80)(cid:71)(cid:85)(cid:85)(cid:3)(cid:71)(cid:90)(cid:75)(cid:86)(cid:3)(cid:67)(cid:80)(cid:70)(cid:3)(cid:70)(cid:75)(cid:88)(cid:71)(cid:85)(cid:86)(cid:75)(cid:86)(cid:87)(cid:84)(cid:71)(cid:3)(cid:69)(cid:81)(cid:85)(cid:86)(cid:85)
  Transformational initiatives
   Acquisition and integration costs
(cid:3)(cid:3)(cid:50)(cid:71)(cid:80)(cid:85)(cid:75)(cid:81)(cid:80)(cid:3)(cid:85)(cid:71)(cid:86)(cid:86)(cid:78)(cid:71)(cid:79)(cid:71)(cid:80)(cid:86)(cid:3)(cid:73)(cid:67)(cid:75)(cid:80)
(cid:3)(cid:3)(cid:3)(cid:50)(cid:71)(cid:80)(cid:85)(cid:75)(cid:81)(cid:80)(cid:3)(cid:69)(cid:87)(cid:84)(cid:86)(cid:67)(cid:75)(cid:78)(cid:79)(cid:71)(cid:80)(cid:86)(cid:3)(cid:73)(cid:67)(cid:75)(cid:80)
(cid:3)(cid:3)(cid:3)(cid:41)(cid:67)(cid:75)(cid:80)(cid:3)(cid:81)(cid:80)(cid:3)(cid:85)(cid:86)(cid:71)(cid:82)(cid:3)(cid:67)(cid:69)(cid:83)(cid:87)(cid:75)(cid:85)(cid:75)(cid:86)(cid:75)(cid:81)(cid:80)(cid:3)(cid:81)(cid:72)(cid:3)(cid:46)(cid:67)(cid:85)(cid:71)(cid:84)(cid:73)(cid:71)(cid:80)
(cid:3)(cid:3)(cid:3)(cid:48)(cid:35)(cid:53)(cid:38)(cid:3)(cid:85)(cid:75)(cid:86)(cid:71)(cid:3)(cid:69)(cid:81)(cid:85)(cid:86)(cid:85)
   Special compliance costs
   Impairment of investment and loans
(cid:3)(cid:3)(cid:3)(cid:35)(cid:69)(cid:69)(cid:71)(cid:78)(cid:71)(cid:84)(cid:67)(cid:86)(cid:75)(cid:81)(cid:80)(cid:3)(cid:81)(cid:72)(cid:3)(cid:85)(cid:74)(cid:67)(cid:84)(cid:71)(cid:70)(cid:15)(cid:68)(cid:67)(cid:85)(cid:71)(cid:70)(cid:3)(cid:69)(cid:81)(cid:79)(cid:82)(cid:71)(cid:80)(cid:85)(cid:67)(cid:86)(cid:75)(cid:81)(cid:80)(cid:3)(cid:71)(cid:90)(cid:82)(cid:71)(cid:80)(cid:85)(cid:71)
(cid:3)(cid:3)(cid:3)(cid:52)(cid:71)(cid:85)(cid:86)(cid:84)(cid:87)(cid:69)(cid:86)(cid:87)(cid:84)(cid:75)(cid:80)(cid:73)(cid:3)(cid:67)(cid:80)(cid:70)(cid:3)(cid:81)(cid:86)(cid:74)(cid:71)(cid:84)(cid:3)(cid:84)(cid:71)(cid:78)(cid:67)(cid:86)(cid:71)(cid:70)(cid:3)(cid:69)(cid:81)(cid:85)(cid:86)(cid:85)
(cid:3)(cid:3)(cid:3)(cid:50)(cid:84)(cid:71)(cid:15)(cid:85)(cid:71)(cid:82)(cid:67)(cid:84)(cid:67)(cid:86)(cid:75)(cid:81)(cid:80)(cid:3)(cid:69)(cid:81)(cid:85)(cid:86)(cid:85)
(cid:3)(cid:3)(cid:3)(cid:48)(cid:71)(cid:86)(cid:3)(cid:78)(cid:81)(cid:85)(cid:85)(cid:3)(cid:81)(cid:80)(cid:3)(cid:71)(cid:90)(cid:86)(cid:75)(cid:80)(cid:73)(cid:87)(cid:75)(cid:85)(cid:74)(cid:79)(cid:71)(cid:80)(cid:86)(cid:3)(cid:81)(cid:72)(cid:3)(cid:70)(cid:71)(cid:68)(cid:86)
(cid:3)(cid:3)(cid:3)(cid:55)(cid:80)(cid:67)(cid:78)(cid:78)(cid:81)(cid:69)(cid:67)(cid:86)(cid:71)(cid:70)(cid:3)(cid:69)(cid:81)(cid:84)(cid:82)(cid:81)(cid:84)(cid:67)(cid:86)(cid:71)(cid:3)(cid:69)(cid:81)(cid:85)(cid:86)(cid:85)
   Other
(cid:3)(cid:3)(cid:3)(cid:35)(cid:70)(cid:76)(cid:87)(cid:85)(cid:86)(cid:79)(cid:71)(cid:80)(cid:86)(cid:3)(cid:72)(cid:81)(cid:84)(cid:3)(cid:54)(cid:67)(cid:90)(cid:3)(cid:52)(cid:71)(cid:72)(cid:81)(cid:84)(cid:79)
(cid:3)(cid:3)(cid:35)(cid:70)(cid:76)(cid:87)(cid:85)(cid:86)(cid:79)(cid:71)(cid:80)(cid:86)(cid:3)(cid:72)(cid:81)(cid:84)(cid:3)(cid:86)(cid:67)(cid:90)(cid:71)(cid:85)(cid:3)(cid:10)(cid:67)(cid:11)
(cid:48)(cid:81)(cid:80)(cid:15)(cid:41)(cid:35)(cid:35)(cid:50)(cid:3)(cid:70)(cid:75)(cid:78)(cid:87)(cid:86)(cid:71)(cid:70)(cid:3)(cid:39)(cid:50)(cid:53)

FY 2018

FY 2017

FY 2016

FY 2015

FY 2014

$  4,914 

$  4,472 

$  4,202 

$  4,038 

$  4,048 

 2,227 
 385 
 1,374 
 928 
 38
(cid:3)(cid:10)(cid:25)(cid:23)(cid:11)
 55 
(cid:3)(cid:27)(cid:22)(cid:24)(cid:3)
(cid:3)(cid:24)(cid:21)(cid:18)(cid:3)
(cid:3)(cid:21)(cid:19)(cid:24)(cid:3)

$

(cid:3)(cid:20)(cid:14)(cid:18)(cid:24)(cid:21)(cid:3)
 339 
 1,229 
 841
 22 
(cid:3)(cid:10)(cid:25)(cid:27)(cid:11)
 19
 803
 119 
(cid:3)(cid:24)(cid:26)(cid:22)(cid:3)

$

 2,005 
 329 
 1,253 
(cid:3)(cid:24)(cid:19)(cid:23)(cid:3)
 11 
(cid:3)(cid:10)(cid:25)(cid:20)(cid:11)
(cid:3)(cid:10)(cid:19)(cid:18)(cid:11)
 544 
 82
(cid:3)(cid:22)(cid:24)(cid:20)(cid:3)

$

 1,997 
 330 
 1,189 
 522 
 7 
(cid:3)(cid:10)(cid:24)(cid:24)(cid:11)
 17
 480
 42
 438

$

 2,072 
 358 
 1,199
 419 
 9
(cid:3)(cid:10)(cid:19)(cid:19)(cid:18)(cid:11)
(cid:3)(cid:10)(cid:26)(cid:27)(cid:11)
 229 
(cid:3)(cid:10)(cid:21)(cid:11)
 232 

$

$  0.98 
$  0.97 

$  2.12 
$  2.10 

$  1.42 
$  1.40 

$  1.32 
$  1.31 

$  0.70 
$ (cid:3)(cid:18)(cid:16)(cid:24)(cid:27)(cid:3)

 321 
 325 

 322
(cid:3)(cid:21)(cid:20)(cid:24)(cid:3)

(cid:3)(cid:21)(cid:20)(cid:24)(cid:3)
 329 

 333 
 335 

 333 
 338 

$  0.97 
(cid:3)(cid:18)(cid:16)(cid:18)(cid:24)(cid:3)
 0.32 
 0.03 
 0.08 
 0.07 
(cid:3)(cid:10)(cid:18)(cid:16)(cid:18)(cid:20)(cid:11)
(cid:15)
(cid:3)(cid:10)(cid:18)(cid:16)(cid:18)(cid:24)(cid:11)
 0.02 
 0.01 
(cid:3)(cid:15)(cid:3)
(cid:3)(cid:15)(cid:3)
(cid:3)(cid:15)(cid:3)
(cid:3)(cid:15)(cid:3)
(cid:3)(cid:15)(cid:3)
(cid:3)(cid:15)(cid:3)
(cid:3)(cid:10)(cid:18)(cid:16)(cid:18)(cid:21)(cid:11)
 1.70 
(cid:3)(cid:10)(cid:18)(cid:16)(cid:21)(cid:24)(cid:11)
$  2.79 

$  2.10 
(cid:15)
(cid:3)(cid:18)(cid:16)(cid:21)(cid:24)(cid:3)
(cid:3)(cid:15)(cid:3)
 0.04 
 0.10 
(cid:3)(cid:10)(cid:18)(cid:16)(cid:19)(cid:18)(cid:11)
(cid:15)
(cid:3)(cid:15)(cid:3)
(cid:3)(cid:15)(cid:3)
(cid:3)(cid:15)(cid:3)
(cid:3)(cid:15)(cid:3)
(cid:3)(cid:15)(cid:3)
(cid:3)(cid:15)(cid:3)
(cid:3)(cid:15)(cid:3)
(cid:3)(cid:15)(cid:3)
(cid:3)(cid:15)(cid:3)
 0.02 
(cid:3)(cid:15)(cid:3)
(cid:3)(cid:10)(cid:18)(cid:16)(cid:19)(cid:24)(cid:11)
$ (cid:3)(cid:20)(cid:16)(cid:21)(cid:24)(cid:3)

$  1.40 
 0.01 
(cid:3)(cid:18)(cid:16)(cid:22)(cid:24)(cid:3)
 0.03 
 0.12 
 0.12 
(cid:3)(cid:15)(cid:3)
(cid:3)(cid:10)(cid:18)(cid:16)(cid:18)(cid:23)(cid:11)
(cid:3)(cid:15)(cid:3)
(cid:3)(cid:15)(cid:3)
(cid:3)(cid:15)(cid:3)
 0.08 
(cid:3)(cid:15)(cid:3)
(cid:3)(cid:15)(cid:3)
(cid:3)(cid:15)(cid:3)
(cid:3)(cid:15)(cid:3)
(cid:3)(cid:15)(cid:3)
 0.02 
(cid:3)(cid:15)(cid:3)
(cid:3)(cid:10)(cid:18)(cid:16)(cid:20)(cid:19)(cid:11)
$  1.98 

$  1.31 
 0.01 
 0.47 
 0.04 
 0.17 
 0.04 
(cid:3)(cid:15)(cid:3)
(cid:15)
(cid:3)(cid:15)(cid:3)
(cid:3)(cid:15)(cid:3)
(cid:3)(cid:15)(cid:3)
(cid:3)(cid:15)(cid:3)
 0.01 
(cid:3)(cid:15)(cid:3)
(cid:3)(cid:15)(cid:3)
(cid:3)(cid:15)(cid:3)
(cid:3)(cid:15)(cid:3)
 0.01 
(cid:3)(cid:15)(cid:3)
(cid:3)(cid:10)(cid:18)(cid:16)(cid:21)(cid:20)(cid:11)
$  1.74 

$ (cid:3)(cid:18)(cid:16)(cid:24)(cid:27)(cid:3)
 0.01 
(cid:3)(cid:18)(cid:16)(cid:23)(cid:24)(cid:3)
 0.20 
 0.09 
 0.03 
(cid:3)(cid:15)(cid:3)
(cid:15)
(cid:3)(cid:15)(cid:3)
(cid:3)(cid:15)(cid:3)
(cid:3)(cid:15)(cid:3)
(cid:3)(cid:15)(cid:3)
(cid:3)(cid:15)(cid:3)
(cid:3)(cid:10)(cid:18)(cid:16)(cid:18)(cid:19)(cid:11)
 0.05 
(cid:3)(cid:18)(cid:16)(cid:20)(cid:24)(cid:3)
 0.13 
(cid:3)(cid:10)(cid:18)(cid:16)(cid:18)(cid:22)(cid:11)
(cid:3)(cid:15)(cid:3)
(cid:3)(cid:10)(cid:18)(cid:16)(cid:21)(cid:20)(cid:11)
$ (cid:3)(cid:19)(cid:16)(cid:24)(cid:23)(cid:3)

(cid:24)  (cid:3)(cid:3)(cid:41)(cid:35)(cid:35)(cid:50)(cid:3)(cid:86)(cid:81)(cid:3)(cid:48)(cid:81)(cid:80)(cid:15)(cid:41)(cid:35)(cid:35)(cid:50)(cid:3)(cid:52)(cid:71)(cid:69)(cid:81)(cid:80)(cid:69)(cid:75)(cid:78)(cid:75)(cid:67)(cid:86)(cid:75)(cid:81)(cid:80)(cid:85) 

Agilent Technologies, Inc.

(cid:41)(cid:35)(cid:35)(cid:50)(cid:3)(cid:86)(cid:81)(cid:3)(cid:48)(cid:81)(cid:80)(cid:15)(cid:41)(cid:35)(cid:35)(cid:50)(cid:3)(cid:52)(cid:71)(cid:69)(cid:81)(cid:80)(cid:69)(cid:75)(cid:78)(cid:75)(cid:67)(cid:86)(cid:75)(cid:81)(cid:80)(cid:85)

(cid:10)(cid:67)(cid:11)(cid:3)(cid:54)(cid:74)(cid:71)(cid:3)(cid:67)(cid:70)(cid:76)(cid:87)(cid:85)(cid:86)(cid:79)(cid:71)(cid:80)(cid:86)(cid:3)(cid:72)(cid:81)(cid:84)(cid:3)(cid:86)(cid:67)(cid:90)(cid:71)(cid:85)(cid:3)(cid:71)(cid:90)(cid:69)(cid:78)(cid:87)(cid:70)(cid:71)(cid:85)(cid:3)(cid:86)(cid:67)(cid:90)(cid:3)(cid:68)(cid:71)(cid:80)(cid:71)(cid:402)(cid:86)(cid:85)(cid:3)(cid:86)(cid:74)(cid:67)(cid:86)(cid:3)(cid:79)(cid:67)(cid:80)(cid:67)(cid:73)(cid:71)(cid:79)(cid:71)(cid:80)(cid:86)(cid:3)(cid:68)(cid:71)(cid:78)(cid:75)(cid:71)(cid:88)(cid:71)(cid:85)(cid:3)(cid:67)(cid:84)(cid:71)(cid:3)(cid:80)(cid:81)(cid:86)(cid:3)(cid:70)(cid:75)(cid:84)(cid:71)(cid:69)(cid:86)(cid:78)(cid:91)(cid:3)(cid:84)(cid:71)(cid:78)(cid:67)(cid:86)(cid:71)(cid:70)(cid:3)(cid:86)(cid:81)(cid:3)(cid:81)(cid:80)(cid:15)(cid:73)(cid:81)(cid:75)(cid:80)(cid:73)(cid:3)(cid:81)(cid:82)(cid:71)(cid:84)(cid:67)(cid:86)(cid:75)(cid:81)(cid:80)(cid:85)(cid:3)(cid:67)(cid:80)(cid:70)(cid:3)(cid:89)(cid:74)(cid:75)(cid:69)(cid:74)(cid:3)(cid:67)(cid:84)(cid:71)(cid:3)(cid:71)(cid:75)(cid:86)(cid:74)(cid:71)(cid:84)(cid:3)(cid:75)(cid:85)(cid:81)(cid:78)(cid:67)(cid:86)(cid:71)(cid:70)(cid:3)(cid:81)(cid:84)(cid:3)
(cid:69)(cid:67)(cid:80)(cid:80)(cid:81)(cid:86)(cid:3)(cid:68)(cid:71)(cid:3)(cid:71)(cid:90)(cid:82)(cid:71)(cid:69)(cid:86)(cid:71)(cid:70)(cid:3)(cid:86)(cid:81)(cid:3)(cid:81)(cid:69)(cid:69)(cid:87)(cid:84)(cid:3)(cid:67)(cid:73)(cid:67)(cid:75)(cid:80)(cid:3)(cid:89)(cid:75)(cid:86)(cid:74)(cid:3)(cid:67)(cid:80)(cid:91)(cid:3)(cid:84)(cid:71)(cid:73)(cid:87)(cid:78)(cid:67)(cid:84)(cid:75)(cid:86)(cid:91)(cid:3)(cid:81)(cid:84)(cid:3)(cid:82)(cid:84)(cid:71)(cid:70)(cid:75)(cid:69)(cid:86)(cid:67)(cid:68)(cid:75)(cid:78)(cid:75)(cid:86)(cid:91)(cid:16)(cid:3)(cid:40)(cid:81)(cid:84)(cid:3)(cid:86)(cid:74)(cid:71)(cid:3)(cid:91)(cid:71)(cid:67)(cid:84)(cid:85)(cid:3)(cid:71)(cid:80)(cid:70)(cid:71)(cid:70)(cid:3)(cid:49)(cid:69)(cid:86)(cid:81)(cid:68)(cid:71)(cid:84)(cid:3)(cid:21)(cid:19)(cid:14)(cid:3)(cid:20)(cid:18)(cid:19)(cid:26)(cid:14)(cid:3)(cid:49)(cid:69)(cid:86)(cid:81)(cid:68)(cid:71)(cid:84)(cid:3)(cid:21)(cid:19)(cid:14)(cid:3)(cid:20)(cid:18)(cid:19)(cid:25)(cid:14)(cid:3)(cid:49)(cid:69)(cid:86)(cid:81)(cid:68)(cid:71)(cid:84)(cid:3)(cid:21)(cid:19)(cid:14)(cid:3)(cid:20)(cid:18)(cid:19)(cid:24)(cid:14)(cid:3)(cid:49)(cid:69)(cid:86)(cid:81)(cid:68)(cid:71)(cid:84)
(cid:21)(cid:19)(cid:14)(cid:3)(cid:20)(cid:18)(cid:19)(cid:23)(cid:3)(cid:67)(cid:80)(cid:70)(cid:3)(cid:49)(cid:69)(cid:86)(cid:81)(cid:68)(cid:71)(cid:84)(cid:3)(cid:21)(cid:19)(cid:14)(cid:3)(cid:20)(cid:18)(cid:19)(cid:22)(cid:14)(cid:3)(cid:79)(cid:67)(cid:80)(cid:67)(cid:73)(cid:71)(cid:79)(cid:71)(cid:80)(cid:86)(cid:3)(cid:87)(cid:85)(cid:71)(cid:70)(cid:3)(cid:67)(cid:3)(cid:80)(cid:81)(cid:80)(cid:15)(cid:41)(cid:35)(cid:35)(cid:50)(cid:3)(cid:71)(cid:72)(cid:72)(cid:71)(cid:69)(cid:86)(cid:75)(cid:88)(cid:71)(cid:3)(cid:86)(cid:67)(cid:90)(cid:3)(cid:84)(cid:67)(cid:86)(cid:71)(cid:3)(cid:81)(cid:72)(cid:3)(cid:19)(cid:26)(cid:16)(cid:18)(cid:7)(cid:14)(cid:3)(cid:19)(cid:26)(cid:16)(cid:18)(cid:7)(cid:14)(cid:3)(cid:19)(cid:27)(cid:16)(cid:18)(cid:7)(cid:14)(cid:3)(cid:20)(cid:18)(cid:16)(cid:18)(cid:7)(cid:3)(cid:67)(cid:80)(cid:70)(cid:3)(cid:19)(cid:24)(cid:16)(cid:18)(cid:7)(cid:16)(cid:3)

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Asset impairments include assets that have been written down to their fair value.

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manufacturing due to new tariffs and tariff remediation actions, site consolidations, legal entity and other business reorganizations, insourcing or 
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business and facility operations, the transfer of assets and intellectual property, information technology systems and infrastructure and other 
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commencement of commercial manufacturing. 

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Impairment of investment and loans include investments and their related convertible loans that have been written down to their fair value.

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fees.

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Other includes certain legal costs and settlements in addition to other miscellaneous adjustments.

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(cid:3)
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(cid:3)

(cid:3)

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as well as to the operating results of our competitors.

(cid:49)(cid:87)(cid:84)(cid:3)(cid:79)(cid:67)(cid:80)(cid:67)(cid:73)(cid:71)(cid:79)(cid:71)(cid:80)(cid:86)(cid:3)(cid:84)(cid:71)(cid:69)(cid:81)(cid:73)(cid:80)(cid:75)(cid:92)(cid:71)(cid:85)(cid:3)(cid:86)(cid:74)(cid:67)(cid:86)(cid:3)(cid:75)(cid:86)(cid:71)(cid:79)(cid:85)(cid:3)(cid:85)(cid:87)(cid:69)(cid:74)(cid:3)(cid:67)(cid:85)(cid:3)(cid:67)(cid:79)(cid:81)(cid:84)(cid:86)(cid:75)(cid:92)(cid:67)(cid:86)(cid:75)(cid:81)(cid:80)(cid:3)(cid:81)(cid:72)(cid:3)(cid:75)(cid:80)(cid:86)(cid:67)(cid:80)(cid:73)(cid:75)(cid:68)(cid:78)(cid:71)(cid:85)(cid:3)(cid:69)(cid:67)(cid:80)(cid:3)(cid:74)(cid:67)(cid:88)(cid:71)(cid:3)(cid:67)(cid:3)(cid:79)(cid:67)(cid:86)(cid:71)(cid:84)(cid:75)(cid:67)(cid:78)(cid:3)(cid:75)(cid:79)(cid:82)(cid:67)(cid:69)(cid:86)(cid:3)(cid:81)(cid:80)(cid:3)(cid:81)(cid:87)(cid:84)(cid:3)(cid:69)(cid:67)(cid:85)(cid:74)(cid:3)(cid:72)(cid:78)(cid:81)(cid:89)(cid:85)(cid:3)(cid:67)(cid:80)(cid:70)(cid:17)(cid:81)(cid:84)(cid:3)(cid:81)(cid:87)(cid:84)(cid:3)(cid:80)(cid:71)(cid:86)(cid:3)(cid:75)(cid:80)(cid:69)(cid:81)(cid:79)(cid:71)(cid:16)(cid:3)(cid:49)(cid:87)(cid:84)(cid:3)(cid:41)(cid:35)(cid:35)(cid:50)
(cid:402)(cid:80)(cid:67)(cid:80)(cid:69)(cid:75)(cid:67)(cid:78)(cid:3)(cid:85)(cid:86)(cid:67)(cid:86)(cid:71)(cid:79)(cid:71)(cid:80)(cid:86)(cid:85)(cid:3)(cid:75)(cid:80)(cid:69)(cid:78)(cid:87)(cid:70)(cid:75)(cid:80)(cid:73)(cid:3)(cid:81)(cid:87)(cid:84)(cid:3)(cid:85)(cid:86)(cid:67)(cid:86)(cid:71)(cid:79)(cid:71)(cid:80)(cid:86)(cid:3)(cid:81)(cid:72)(cid:3)(cid:69)(cid:67)(cid:85)(cid:74)(cid:3)(cid:72)(cid:78)(cid:81)(cid:89)(cid:85)(cid:3)(cid:82)(cid:81)(cid:84)(cid:86)(cid:84)(cid:67)(cid:91)(cid:3)(cid:86)(cid:74)(cid:81)(cid:85)(cid:71)(cid:3)(cid:71)(cid:72)(cid:72)(cid:71)(cid:69)(cid:86)(cid:85)(cid:16)(cid:3)(cid:35)(cid:78)(cid:86)(cid:74)(cid:81)(cid:87)(cid:73)(cid:74)(cid:3)(cid:89)(cid:71)(cid:3)(cid:68)(cid:71)(cid:78)(cid:75)(cid:71)(cid:88)(cid:71)(cid:3)(cid:75)(cid:86)(cid:3)(cid:75)(cid:85)(cid:3)(cid:87)(cid:85)(cid:71)(cid:72)(cid:87)(cid:78)(cid:3)(cid:72)(cid:81)(cid:84)(cid:3)(cid:75)(cid:80)(cid:88)(cid:71)(cid:85)(cid:86)(cid:81)(cid:84)(cid:85)(cid:3)(cid:86)(cid:81)(cid:3)(cid:85)(cid:71)(cid:71)(cid:3)(cid:69)(cid:81)(cid:84)(cid:71)(cid:3)(cid:82)(cid:71)(cid:84)(cid:72)(cid:81)(cid:84)(cid:79)(cid:67)(cid:80)(cid:69)(cid:71)(cid:3)(cid:72)(cid:84)(cid:71)(cid:71)(cid:3)
(cid:81)(cid:72)(cid:3)(cid:85)(cid:82)(cid:71)(cid:69)(cid:75)(cid:67)(cid:78)(cid:3)(cid:75)(cid:86)(cid:71)(cid:79)(cid:85)(cid:14)(cid:3)(cid:75)(cid:80)(cid:88)(cid:71)(cid:85)(cid:86)(cid:81)(cid:84)(cid:85)(cid:3)(cid:85)(cid:74)(cid:81)(cid:87)(cid:78)(cid:70)(cid:3)(cid:87)(cid:80)(cid:70)(cid:71)(cid:84)(cid:85)(cid:86)(cid:67)(cid:80)(cid:70)(cid:3)(cid:86)(cid:74)(cid:67)(cid:86)(cid:3)(cid:86)(cid:74)(cid:71)(cid:3)(cid:71)(cid:90)(cid:69)(cid:78)(cid:87)(cid:70)(cid:71)(cid:70)(cid:3)(cid:75)(cid:86)(cid:71)(cid:79)(cid:85)(cid:3)(cid:67)(cid:84)(cid:71)(cid:3)(cid:67)(cid:69)(cid:86)(cid:87)(cid:67)(cid:78)(cid:3)(cid:71)(cid:90)(cid:82)(cid:71)(cid:80)(cid:85)(cid:71)(cid:85)(cid:3)(cid:86)(cid:74)(cid:67)(cid:86)(cid:3)(cid:79)(cid:67)(cid:91)(cid:3)(cid:75)(cid:79)(cid:82)(cid:67)(cid:69)(cid:86)(cid:3)(cid:86)(cid:74)(cid:71)(cid:3)(cid:69)(cid:67)(cid:85)(cid:74)(cid:3)(cid:67)(cid:88)(cid:67)(cid:75)(cid:78)(cid:67)(cid:68)(cid:78)(cid:71)(cid:3)(cid:86)(cid:81)(cid:3)(cid:87)(cid:85)(cid:3)(cid:72)(cid:81)(cid:84)(cid:3)(cid:81)(cid:86)(cid:74)(cid:71)(cid:84)(cid:3)(cid:87)(cid:85)(cid:71)(cid:85)(cid:16)(cid:3)(cid:54)(cid:81)(cid:3)(cid:73)(cid:67)(cid:75)(cid:80)(cid:3)(cid:67)(cid:3)
(cid:69)(cid:81)(cid:79)(cid:82)(cid:78)(cid:71)(cid:86)(cid:71)(cid:3)(cid:82)(cid:75)(cid:69)(cid:86)(cid:87)(cid:84)(cid:71)(cid:3)(cid:81)(cid:72)(cid:3)(cid:67)(cid:78)(cid:78)(cid:3)(cid:71)(cid:72)(cid:72)(cid:71)(cid:69)(cid:86)(cid:85)(cid:3)(cid:81)(cid:80)(cid:3)(cid:86)(cid:74)(cid:71)(cid:3)(cid:69)(cid:81)(cid:79)(cid:82)(cid:67)(cid:80)(cid:91)(cid:358)(cid:85)(cid:3)(cid:82)(cid:84)(cid:81)(cid:402)(cid:86)(cid:3)(cid:67)(cid:80)(cid:70)(cid:3)(cid:78)(cid:81)(cid:85)(cid:85)(cid:3)(cid:72)(cid:84)(cid:81)(cid:79)(cid:3)(cid:67)(cid:80)(cid:91)(cid:3)(cid:67)(cid:80)(cid:70)(cid:3)(cid:67)(cid:78)(cid:78)(cid:3)(cid:71)(cid:88)(cid:71)(cid:80)(cid:86)(cid:85)(cid:14)(cid:3)(cid:79)(cid:67)(cid:80)(cid:67)(cid:73)(cid:71)(cid:79)(cid:71)(cid:80)(cid:86)(cid:3)(cid:70)(cid:81)(cid:71)(cid:85)(cid:3)(cid:10)(cid:67)(cid:80)(cid:70)(cid:3)(cid:75)(cid:80)(cid:88)(cid:71)(cid:85)(cid:86)(cid:81)(cid:84)(cid:85)(cid:3)(cid:85)(cid:74)(cid:81)(cid:87)(cid:78)(cid:70)(cid:11)(cid:3)(cid:84)(cid:71)(cid:78)(cid:91)(cid:3)(cid:87)(cid:82)(cid:81)(cid:80)(cid:3)(cid:86)(cid:74)(cid:71)(cid:3)(cid:41)(cid:35)(cid:35)(cid:50)
(cid:75)(cid:80)(cid:69)(cid:81)(cid:79)(cid:71)(cid:3)(cid:85)(cid:86)(cid:67)(cid:86)(cid:71)(cid:79)(cid:71)(cid:80)(cid:86)(cid:16)(cid:3)(cid:54)(cid:74)(cid:71)(cid:3)(cid:80)(cid:81)(cid:80)(cid:15)(cid:41)(cid:35)(cid:35)(cid:50)(cid:3)(cid:80)(cid:87)(cid:79)(cid:68)(cid:71)(cid:84)(cid:85)(cid:3)(cid:72)(cid:81)(cid:69)(cid:87)(cid:85)(cid:3)(cid:75)(cid:80)(cid:85)(cid:86)(cid:71)(cid:67)(cid:70)(cid:3)(cid:87)(cid:82)(cid:81)(cid:80)(cid:3)(cid:86)(cid:74)(cid:71)(cid:3)(cid:69)(cid:81)(cid:84)(cid:71)(cid:3)(cid:68)(cid:87)(cid:85)(cid:75)(cid:80)(cid:71)(cid:85)(cid:85)(cid:3)(cid:81)(cid:72)(cid:3)(cid:86)(cid:74)(cid:71)(cid:3)(cid:69)(cid:81)(cid:79)(cid:82)(cid:67)(cid:80)(cid:91)(cid:14)(cid:3)(cid:89)(cid:74)(cid:75)(cid:69)(cid:74)(cid:3)(cid:75)(cid:85)(cid:3)(cid:81)(cid:80)(cid:78)(cid:91)(cid:3)(cid:67)(cid:3)(cid:85)(cid:87)(cid:68)(cid:85)(cid:71)(cid:86)(cid:14)(cid:3)(cid:67)(cid:78)(cid:68)(cid:71)(cid:75)(cid:86)(cid:3)(cid:67)(cid:3)(cid:69)(cid:84)(cid:75)(cid:86)(cid:75)(cid:69)(cid:67)(cid:78)(cid:3)(cid:81)(cid:80)(cid:71)(cid:14)(cid:3)(cid:81)(cid:72)(cid:3)(cid:86)(cid:74)(cid:71)(cid:3)
company’s performance. 

(cid:52)(cid:71)(cid:67)(cid:70)(cid:71)(cid:84)(cid:85)(cid:3)(cid:67)(cid:84)(cid:71)(cid:3)(cid:84)(cid:71)(cid:79)(cid:75)(cid:80)(cid:70)(cid:71)(cid:70)(cid:3)(cid:86)(cid:74)(cid:67)(cid:86)(cid:3)(cid:80)(cid:81)(cid:80)(cid:15)(cid:41)(cid:35)(cid:35)(cid:50)(cid:3)(cid:80)(cid:87)(cid:79)(cid:68)(cid:71)(cid:84)(cid:85)(cid:3)(cid:67)(cid:84)(cid:71)(cid:3)(cid:79)(cid:71)(cid:84)(cid:71)(cid:78)(cid:91)(cid:3)(cid:67)(cid:3)(cid:85)(cid:87)(cid:82)(cid:82)(cid:78)(cid:71)(cid:79)(cid:71)(cid:80)(cid:86)(cid:3)(cid:86)(cid:81)(cid:14)(cid:3)(cid:67)(cid:80)(cid:70)(cid:3)(cid:80)(cid:81)(cid:86)(cid:3)(cid:67)(cid:3)(cid:84)(cid:71)(cid:82)(cid:78)(cid:67)(cid:69)(cid:71)(cid:79)(cid:71)(cid:80)(cid:86)(cid:3)(cid:72)(cid:81)(cid:84)(cid:14)(cid:3)(cid:41)(cid:35)(cid:35)(cid:50)(cid:3)(cid:402)(cid:80)(cid:67)(cid:80)(cid:69)(cid:75)(cid:67)(cid:78)(cid:3)(cid:79)(cid:71)(cid:67)(cid:85)(cid:87)(cid:84)(cid:71)(cid:85)(cid:16)(cid:3)(cid:54)(cid:74)(cid:71)(cid:91)(cid:3)(cid:85)(cid:74)(cid:81)(cid:87)(cid:78)(cid:70)(cid:3)(cid:68)(cid:71)(cid:3)(cid:84)(cid:71)(cid:67)(cid:70)(cid:3)(cid:75)(cid:80)(cid:3)
(cid:69)(cid:81)(cid:80)(cid:76)(cid:87)(cid:80)(cid:69)(cid:86)(cid:75)(cid:81)(cid:80)(cid:3)(cid:89)(cid:75)(cid:86)(cid:74)(cid:3)(cid:86)(cid:74)(cid:71)(cid:3)(cid:41)(cid:35)(cid:35)(cid:50)(cid:3)(cid:402)(cid:80)(cid:67)(cid:80)(cid:69)(cid:75)(cid:67)(cid:78)(cid:3)(cid:79)(cid:71)(cid:67)(cid:85)(cid:87)(cid:84)(cid:71)(cid:85)(cid:16)(cid:3)(cid:43)(cid:86)(cid:3)(cid:85)(cid:74)(cid:81)(cid:87)(cid:78)(cid:70)(cid:3)(cid:68)(cid:71)(cid:3)(cid:80)(cid:81)(cid:86)(cid:71)(cid:70)(cid:3)(cid:67)(cid:85)(cid:3)(cid:89)(cid:71)(cid:78)(cid:78)(cid:3)(cid:86)(cid:74)(cid:67)(cid:86)(cid:3)(cid:81)(cid:87)(cid:84)(cid:3)(cid:80)(cid:81)(cid:80)(cid:15)(cid:41)(cid:35)(cid:35)(cid:50)(cid:3)(cid:75)(cid:80)(cid:72)(cid:81)(cid:84)(cid:79)(cid:67)(cid:86)(cid:75)(cid:81)(cid:80)(cid:3)(cid:79)(cid:67)(cid:91)(cid:3)(cid:68)(cid:71)(cid:3)(cid:70)(cid:75)(cid:72)(cid:72)(cid:71)(cid:84)(cid:71)(cid:80)(cid:86)(cid:3)(cid:72)(cid:84)(cid:81)(cid:79)(cid:3)(cid:86)(cid:74)(cid:71)(cid:3)(cid:80)(cid:81)(cid:80)(cid:15)(cid:41)(cid:35)(cid:35)(cid:50)(cid:3)(cid:75)(cid:80)(cid:72)(cid:81)(cid:84)(cid:79)(cid:67)(cid:86)(cid:75)(cid:81)(cid:80)
provided by other companies.

(cid:20)(cid:18)(cid:19)(cid:26)(cid:3)(cid:35)(cid:80)(cid:80)(cid:87)(cid:67)(cid:78)(cid:3)(cid:52)(cid:71)(cid:82)(cid:81)(cid:84)(cid:86) 

(cid:41)(cid:35)(cid:35)(cid:50)(cid:3)(cid:86)(cid:81)(cid:3)(cid:48)(cid:81)(cid:80)(cid:15)(cid:41)(cid:35)(cid:35)(cid:50)(cid:3)(cid:52)(cid:71)(cid:69)(cid:81)(cid:80)(cid:69)(cid:75)(cid:78)(cid:75)(cid:67)(cid:86)(cid:75)(cid:81)(cid:80)(cid:85)    7

 
 
 
 
 
 
 
 
 
 
 
(cid:41)(cid:35)(cid:35)(cid:50)(cid:3)(cid:86)(cid:81)(cid:3)(cid:48)(cid:81)(cid:80)(cid:15)(cid:41)(cid:35)(cid:35)(cid:50)(cid:3)(cid:52)(cid:71)(cid:69)(cid:81)(cid:80)(cid:69)(cid:75)(cid:78)(cid:75)(cid:67)(cid:86)(cid:75)(cid:81)(cid:80)(cid:85)

Reconciliation of Adjusted Non-GAAP Income from Operations and Operating Margins

(cid:41)(cid:35)(cid:35)(cid:50)(cid:3)(cid:80)(cid:71)(cid:86)(cid:3)(cid:84)(cid:71)(cid:88)(cid:71)(cid:80)(cid:87)(cid:71)

$  4,914

$  4,472

$  4,202 

$  4,038

$  4,048 

FY 2018

FY 2017

FY 2016

FY 2015

FY 2014

(cid:41)(cid:35)(cid:35)(cid:50)(cid:3)(cid:75)(cid:80)(cid:69)(cid:81)(cid:79)(cid:71)(cid:3)(cid:72)(cid:84)(cid:81)(cid:79)(cid:3)(cid:81)(cid:82)(cid:71)(cid:84)(cid:67)(cid:86)(cid:75)(cid:81)(cid:80)(cid:85)
   Asset impairments
   Intangible amortization
(cid:3)(cid:3)(cid:3)(cid:36)(cid:87)(cid:85)(cid:75)(cid:80)(cid:71)(cid:85)(cid:85)(cid:3)(cid:71)(cid:90)(cid:75)(cid:86)(cid:3)(cid:67)(cid:80)(cid:70)(cid:3)(cid:70)(cid:75)(cid:88)(cid:71)(cid:85)(cid:86)(cid:75)(cid:86)(cid:87)(cid:84)(cid:71)(cid:3)(cid:69)(cid:81)(cid:85)(cid:86)(cid:85)
   Transformational initiatives
   Acquisition and integration costs
(cid:3)(cid:3)(cid:50)(cid:71)(cid:80)(cid:85)(cid:75)(cid:81)(cid:80)(cid:3)(cid:85)(cid:71)(cid:86)(cid:86)(cid:78)(cid:71)(cid:79)(cid:71)(cid:80)(cid:86)(cid:3)(cid:73)(cid:67)(cid:75)(cid:80)
(cid:3)(cid:3)(cid:3)(cid:50)(cid:71)(cid:80)(cid:85)(cid:75)(cid:81)(cid:80)(cid:3)(cid:69)(cid:87)(cid:84)(cid:86)(cid:67)(cid:75)(cid:78)(cid:79)(cid:71)(cid:80)(cid:86)(cid:3)(cid:73)(cid:67)(cid:75)(cid:80)
(cid:3)(cid:3)(cid:3)(cid:48)(cid:35)(cid:53)(cid:38)(cid:3)(cid:85)(cid:75)(cid:86)(cid:71)(cid:3)(cid:69)(cid:81)(cid:85)(cid:86)(cid:85)
   Special compliance costs
   Impairment of investment loans
(cid:3)(cid:3)(cid:3)(cid:35)(cid:69)(cid:69)(cid:71)(cid:78)(cid:71)(cid:84)(cid:67)(cid:86)(cid:75)(cid:81)(cid:80)(cid:3)(cid:81)(cid:72)(cid:3)(cid:85)(cid:74)(cid:67)(cid:84)(cid:71)(cid:70)(cid:15)(cid:68)(cid:67)(cid:85)(cid:71)(cid:70)
(cid:3)(cid:3)(cid:3)(cid:3)(cid:3)(cid:3)(cid:69)(cid:81)(cid:79)(cid:82)(cid:71)(cid:80)(cid:85)(cid:67)(cid:86)(cid:75)(cid:81)(cid:80)(cid:3)(cid:71)(cid:90)(cid:82)(cid:71)(cid:80)(cid:85)(cid:71)
(cid:3)(cid:3)(cid:52)(cid:71)(cid:85)(cid:86)(cid:84)(cid:87)(cid:69)(cid:86)(cid:87)(cid:84)(cid:75)(cid:80)(cid:73)(cid:3)(cid:67)(cid:80)(cid:70)(cid:3)(cid:81)(cid:86)(cid:74)(cid:71)(cid:84)(cid:3)(cid:84)(cid:71)(cid:78)(cid:67)(cid:86)(cid:71)(cid:70)(cid:3)(cid:69)(cid:81)(cid:85)(cid:86)(cid:85)
(cid:3)(cid:3)(cid:3)(cid:50)(cid:84)(cid:71)(cid:15)(cid:85)(cid:71)(cid:82)(cid:67)(cid:84)(cid:67)(cid:86)(cid:75)(cid:81)(cid:80)(cid:3)(cid:69)(cid:81)(cid:85)(cid:86)(cid:85)
(cid:3)(cid:3)(cid:3)(cid:55)(cid:80)(cid:67)(cid:78)(cid:78)(cid:81)(cid:69)(cid:67)(cid:86)(cid:71)(cid:70)(cid:3)(cid:69)(cid:81)(cid:84)(cid:82)(cid:81)(cid:84)(cid:67)(cid:86)(cid:71)(cid:3)(cid:69)(cid:81)(cid:85)(cid:86)(cid:85)
   Other
(cid:48)(cid:81)(cid:80)(cid:15)(cid:41)(cid:35)(cid:35)(cid:50)(cid:3)(cid:75)(cid:80)(cid:69)(cid:81)(cid:79)(cid:71)(cid:3)(cid:72)(cid:84)(cid:81)(cid:79)(cid:3)(cid:81)(cid:82)(cid:71)(cid:84)(cid:67)(cid:86)(cid:75)(cid:81)(cid:80)(cid:85)
(cid:3)(cid:3)(cid:3)(cid:52)(cid:71)(cid:75)(cid:79)(cid:68)(cid:87)(cid:84)(cid:85)(cid:71)(cid:79)(cid:71)(cid:80)(cid:86)(cid:3)(cid:72)(cid:84)(cid:81)(cid:79)(cid:3)(cid:45)(cid:71)(cid:91)(cid:85)(cid:75)(cid:73)(cid:74)(cid:86)(cid:3)
(cid:3)(cid:3)(cid:3)(cid:3)(cid:3)(cid:3)(cid:72)(cid:81)(cid:84)(cid:3)(cid:85)(cid:71)(cid:84)(cid:88)(cid:75)(cid:69)(cid:71)(cid:85)(cid:3)(cid:10)(cid:67)(cid:11)
(cid:3)(cid:3)(cid:3)(cid:45)(cid:71)(cid:91)(cid:85)(cid:75)(cid:73)(cid:74)(cid:86)(cid:3)(cid:85)(cid:82)(cid:75)(cid:80)(cid:15)(cid:81)(cid:72)(cid:72)(cid:3)(cid:69)(cid:81)(cid:85)(cid:86)(cid:3)(cid:70)(cid:75)(cid:85)(cid:15)(cid:85)(cid:91)(cid:80)(cid:71)(cid:84)(cid:73)(cid:75)(cid:71)(cid:85)
(cid:35)(cid:70)(cid:76)(cid:87)(cid:85)(cid:86)(cid:71)(cid:70)(cid:3)(cid:80)(cid:81)(cid:80)(cid:15)(cid:41)(cid:35)(cid:35)(cid:50)(cid:3)(cid:75)(cid:80)(cid:69)(cid:81)(cid:79)(cid:71)(cid:3)(cid:72)(cid:84)(cid:81)(cid:79)(cid:3)
    operations

$  928
 21 
105 
 9 
 25 
 23 
(cid:3)(cid:10)(cid:23)(cid:11)

(cid:3)(cid:15)(cid:3)

(cid:3)(cid:15)(cid:3)
(cid:3)(cid:15)(cid:3)

(cid:3)(cid:15)(cid:3)
(cid:3)(cid:15)(cid:3)
(cid:3)(cid:15)(cid:3)

 8 
 4 

 4 

(cid:19)(cid:26)(cid:16)(cid:27)(cid:7) $  841  (cid:19)(cid:26)(cid:16)(cid:26)(cid:7) $ (cid:3)(cid:24)(cid:19)(cid:23)
4 
 152 
 11 
38 
 41 
(cid:10)(cid:19)(cid:11)
(cid:3)(cid:10)(cid:19)(cid:23)(cid:11)
(cid:3)(cid:15)(cid:3)
(cid:3)(cid:15)(cid:3)

(cid:15)(cid:3)
 117
(cid:15)(cid:3)
 12 
 30 
(cid:3)(cid:10)(cid:21)(cid:20)(cid:11)
(cid:3)(cid:15)(cid:3)
(cid:3)(cid:15)(cid:3)
(cid:3)(cid:15)(cid:3)
(cid:3)(cid:15)(cid:3)
(cid:3)(cid:15)(cid:3)

(cid:3)(cid:15)(cid:3)
(cid:3)(cid:15)(cid:3)
(cid:3)(cid:15)(cid:3)

(cid:3)(cid:24)(cid:3)

(cid:19)(cid:22)(cid:16)(cid:24)(cid:7) $

522
 3 
(cid:3)(cid:19)(cid:23)(cid:24)(cid:3)
12 
(cid:3)(cid:23)(cid:24)(cid:3)
 13 
(cid:3)(cid:15)(cid:3)
(cid:3)(cid:15)(cid:3)
(cid:3)(cid:15)(cid:3)
(cid:3)(cid:15)(cid:3)
(cid:3)(cid:15)(cid:3)

 2 

(cid:3)(cid:15)(cid:3)
(cid:3)(cid:15)(cid:3)
(cid:3)(cid:15)(cid:3)

 3 

(cid:19)(cid:20)(cid:16)(cid:27)(cid:7) $  419  (cid:19)(cid:18)(cid:16)(cid:22)(cid:7)

 4 
 189 
(cid:3)(cid:24)(cid:26)(cid:3)
 29 
 11
(cid:3)(cid:15)(cid:3)
(cid:3)(cid:15)(cid:3)
(cid:3)(cid:15)(cid:3)
(cid:3)(cid:15)(cid:3)
(cid:3)(cid:15)(cid:3)

 1 

(cid:3)(cid:10)(cid:20)(cid:3)(cid:11)
 14 
 40 
(cid:3)(cid:10)(cid:19)(cid:18)(cid:11)

(cid:3)(cid:15)(cid:3)

(cid:3)(cid:15)(cid:3)
(cid:3)(cid:15)(cid:3)
(cid:3)(cid:15)(cid:3)

 7 

 7 

$  1,122  (cid:20)(cid:20)(cid:16)(cid:26)(cid:7) $  974  (cid:20)(cid:19)(cid:16)(cid:26)(cid:7) $  859  (cid:20)(cid:18)(cid:16)(cid:22)(cid:7) $ (cid:3)(cid:25)(cid:24)(cid:25)(cid:3) (cid:19)(cid:27)(cid:16)(cid:18)(cid:7) $ (cid:3)(cid:25)(cid:24)(cid:21)(cid:3) (cid:19)(cid:26)(cid:16)(cid:26)(cid:7)

12

(cid:3)(cid:15)(cid:3)

12

(cid:3)(cid:15)(cid:3)

12

(cid:3)(cid:15)(cid:3)

 25 

(cid:3)(cid:15)(cid:3)

(cid:15)

(cid:3)(cid:10)(cid:22)(cid:18)(cid:11)

$  1,134  (cid:20)(cid:21)(cid:16)(cid:19)(cid:7) $ (cid:3)(cid:27)(cid:26)(cid:24)(cid:3) (cid:20)(cid:20)(cid:16)(cid:18)(cid:7) $  871  (cid:20)(cid:18)(cid:16)(cid:25)(cid:7) $  792  (cid:19)(cid:27)(cid:16)(cid:24)(cid:7) $  723  (cid:19)(cid:25)(cid:16)(cid:27)(cid:7)

(cid:10)(cid:67)(cid:11)(cid:3)(cid:50)(cid:81)(cid:85)(cid:86)(cid:3)(cid:85)(cid:71)(cid:82)(cid:67)(cid:84)(cid:67)(cid:86)(cid:75)(cid:81)(cid:80)(cid:14)(cid:3)(cid:35)(cid:73)(cid:75)(cid:78)(cid:71)(cid:80)(cid:86)(cid:3)(cid:75)(cid:85)(cid:3)(cid:82)(cid:84)(cid:81)(cid:88)(cid:75)(cid:70)(cid:75)(cid:80)(cid:73)(cid:3)(cid:45)(cid:71)(cid:91)(cid:85)(cid:75)(cid:73)(cid:74)(cid:86)(cid:3)(cid:54)(cid:71)(cid:69)(cid:74)(cid:80)(cid:81)(cid:78)(cid:81)(cid:73)(cid:75)(cid:71)(cid:85)(cid:14)(cid:3)(cid:43)(cid:80)(cid:69)(cid:16)(cid:3)(cid:69)(cid:71)(cid:84)(cid:86)(cid:67)(cid:75)(cid:80)(cid:3)(cid:85)(cid:75)(cid:86)(cid:71)(cid:3)(cid:85)(cid:71)(cid:84)(cid:88)(cid:75)(cid:69)(cid:71)(cid:85)(cid:16)(cid:3)(cid:54)(cid:74)(cid:71)(cid:85)(cid:71)(cid:3)(cid:85)(cid:75)(cid:86)(cid:71)(cid:3)(cid:85)(cid:71)(cid:84)(cid:88)(cid:75)(cid:69)(cid:71)(cid:85)(cid:3)(cid:67)(cid:84)(cid:71)(cid:3)(cid:75)(cid:80)(cid:69)(cid:78)(cid:87)(cid:70)(cid:71)(cid:70)(cid:3)(cid:75)(cid:80)(cid:3)(cid:81)(cid:87)(cid:84)(cid:3)(cid:81)(cid:82)(cid:71)(cid:84)(cid:67)(cid:86)(cid:75)(cid:80)(cid:73)(cid:3)(cid:71)(cid:90)(cid:82)(cid:71)(cid:80)(cid:85)(cid:71)(cid:85)(cid:16)(cid:3)(cid:3)(cid:54)(cid:74)(cid:71)
amounts billed to Keysight for these services are recorded in other income.

(cid:57)(cid:71)(cid:3)(cid:82)(cid:84)(cid:81)(cid:88)(cid:75)(cid:70)(cid:71)(cid:3)(cid:80)(cid:81)(cid:80)(cid:15)(cid:41)(cid:35)(cid:35)(cid:50)(cid:3)(cid:75)(cid:80)(cid:69)(cid:81)(cid:79)(cid:71)(cid:3)(cid:72)(cid:84)(cid:81)(cid:79)(cid:3)(cid:81)(cid:82)(cid:71)(cid:84)(cid:67)(cid:86)(cid:75)(cid:81)(cid:80)(cid:85)(cid:3)(cid:67)(cid:80)(cid:70)(cid:3)(cid:80)(cid:81)(cid:80)(cid:15)(cid:41)(cid:35)(cid:35)(cid:50)(cid:3)(cid:81)(cid:82)(cid:71)(cid:84)(cid:67)(cid:86)(cid:75)(cid:80)(cid:73)(cid:3)(cid:79)(cid:67)(cid:84)(cid:73)(cid:75)(cid:80)(cid:85)(cid:3)(cid:67)(cid:79)(cid:81)(cid:87)(cid:80)(cid:86)(cid:85)(cid:3)(cid:75)(cid:80)(cid:3)(cid:81)(cid:84)(cid:70)(cid:71)(cid:84)(cid:3)(cid:86)(cid:81)(cid:3)(cid:82)(cid:84)(cid:81)(cid:88)(cid:75)(cid:70)(cid:71)(cid:3)(cid:79)(cid:71)(cid:67)(cid:80)(cid:75)(cid:80)(cid:73)(cid:72)(cid:87)(cid:78)(cid:3)(cid:85)(cid:87)(cid:82)(cid:82)(cid:78)(cid:71)(cid:79)(cid:71)(cid:80)(cid:86)(cid:67)(cid:78)(cid:3)(cid:75)(cid:80)(cid:72)(cid:81)(cid:84)(cid:79)(cid:67)(cid:86)(cid:75)(cid:81)(cid:80)(cid:3)
(cid:84)(cid:71)(cid:73)(cid:67)(cid:84)(cid:70)(cid:75)(cid:80)(cid:73)(cid:3)(cid:81)(cid:87)(cid:84)(cid:3)(cid:81)(cid:82)(cid:71)(cid:84)(cid:67)(cid:86)(cid:75)(cid:81)(cid:80)(cid:67)(cid:78)(cid:3)(cid:82)(cid:71)(cid:84)(cid:72)(cid:81)(cid:84)(cid:79)(cid:67)(cid:80)(cid:69)(cid:71)(cid:3)(cid:67)(cid:80)(cid:70)(cid:3)(cid:81)(cid:87)(cid:84)(cid:3)(cid:82)(cid:84)(cid:81)(cid:85)(cid:82)(cid:71)(cid:69)(cid:86)(cid:85)(cid:3)(cid:72)(cid:81)(cid:84)(cid:3)(cid:86)(cid:74)(cid:71)(cid:3)(cid:72)(cid:87)(cid:86)(cid:87)(cid:84)(cid:71)(cid:16)(cid:3)(cid:54)(cid:74)(cid:71)(cid:85)(cid:71)(cid:3)(cid:85)(cid:87)(cid:82)(cid:82)(cid:78)(cid:71)(cid:79)(cid:71)(cid:80)(cid:86)(cid:67)(cid:78)(cid:3)(cid:79)(cid:71)(cid:67)(cid:85)(cid:87)(cid:84)(cid:71)(cid:85)(cid:3)(cid:71)(cid:90)(cid:69)(cid:78)(cid:87)(cid:70)(cid:71)(cid:14)(cid:3)(cid:67)(cid:79)(cid:81)(cid:80)(cid:73)(cid:3)(cid:81)(cid:86)(cid:74)(cid:71)(cid:84)(cid:3)(cid:86)(cid:74)(cid:75)(cid:80)(cid:73)(cid:85)(cid:14)(cid:3)(cid:69)(cid:74)(cid:67)(cid:84)(cid:73)(cid:71)(cid:85)(cid:3)(cid:84)(cid:71)(cid:78)(cid:67)(cid:86)(cid:71)(cid:70)(cid:3)(cid:86)(cid:81)(cid:3)
(cid:67)(cid:85)(cid:85)(cid:71)(cid:86)(cid:3)(cid:75)(cid:79)(cid:82)(cid:67)(cid:75)(cid:84)(cid:79)(cid:71)(cid:80)(cid:86)(cid:85)(cid:14)(cid:3)(cid:67)(cid:79)(cid:81)(cid:84)(cid:86)(cid:75)(cid:92)(cid:67)(cid:86)(cid:75)(cid:81)(cid:80)(cid:3)(cid:81)(cid:72)(cid:3)(cid:75)(cid:80)(cid:86)(cid:67)(cid:80)(cid:73)(cid:75)(cid:68)(cid:78)(cid:71)(cid:85)(cid:14)(cid:3)(cid:68)(cid:87)(cid:85)(cid:75)(cid:80)(cid:71)(cid:85)(cid:85)(cid:3)(cid:71)(cid:90)(cid:75)(cid:86)(cid:3)(cid:67)(cid:80)(cid:70)(cid:3)(cid:70)(cid:75)(cid:88)(cid:71)(cid:85)(cid:86)(cid:75)(cid:86)(cid:87)(cid:84)(cid:71)(cid:3)(cid:69)(cid:81)(cid:85)(cid:86)(cid:85)(cid:14)(cid:3)(cid:86)(cid:84)(cid:67)(cid:80)(cid:85)(cid:72)(cid:81)(cid:84)(cid:79)(cid:67)(cid:86)(cid:75)(cid:81)(cid:80)(cid:67)(cid:78)(cid:3)(cid:75)(cid:80)(cid:75)(cid:86)(cid:75)(cid:67)(cid:86)(cid:75)(cid:88)(cid:71)(cid:85)(cid:14)(cid:3)(cid:67)(cid:69)(cid:83)(cid:87)(cid:75)(cid:85)(cid:75)(cid:86)(cid:75)(cid:81)(cid:80)(cid:3)(cid:67)(cid:80)(cid:70)(cid:3)(cid:75)(cid:80)(cid:86)(cid:71)(cid:73)(cid:84)(cid:67)(cid:86)(cid:75)(cid:81)(cid:80)(cid:3)(cid:69)(cid:81)(cid:85)(cid:86)(cid:85)(cid:14)(cid:3)(cid:82)(cid:71)(cid:80)(cid:85)(cid:75)(cid:81)(cid:80)
(cid:85)(cid:71)(cid:86)(cid:86)(cid:78)(cid:71)(cid:79)(cid:71)(cid:80)(cid:86)(cid:3)(cid:73)(cid:67)(cid:75)(cid:80)(cid:14)(cid:3)(cid:82)(cid:71)(cid:80)(cid:85)(cid:75)(cid:81)(cid:80)(cid:3)(cid:69)(cid:87)(cid:84)(cid:86)(cid:67)(cid:75)(cid:78)(cid:79)(cid:71)(cid:80)(cid:86)(cid:3)(cid:73)(cid:67)(cid:75)(cid:80)(cid:14)(cid:3)(cid:48)(cid:35)(cid:53)(cid:38)(cid:3)(cid:85)(cid:75)(cid:86)(cid:71)(cid:3)(cid:69)(cid:81)(cid:85)(cid:86)(cid:85)(cid:14)(cid:3)(cid:85)(cid:82)(cid:71)(cid:69)(cid:75)(cid:67)(cid:78)(cid:3)(cid:69)(cid:81)(cid:79)(cid:82)(cid:78)(cid:75)(cid:67)(cid:80)(cid:69)(cid:71)(cid:3)(cid:69)(cid:81)(cid:85)(cid:86)(cid:85)(cid:14)(cid:3)(cid:75)(cid:79)(cid:82)(cid:67)(cid:75)(cid:84)(cid:79)(cid:71)(cid:80)(cid:86)(cid:3)(cid:81)(cid:72)(cid:3)(cid:75)(cid:80)(cid:88)(cid:71)(cid:85)(cid:86)(cid:79)(cid:71)(cid:80)(cid:86)(cid:3)(cid:78)(cid:81)(cid:67)(cid:80)(cid:85)(cid:14)(cid:3)(cid:67)(cid:69)(cid:69)(cid:71)(cid:78)(cid:71)(cid:84)(cid:67)(cid:86)(cid:75)(cid:81)(cid:80)(cid:3)(cid:81)(cid:72)(cid:3)(cid:85)(cid:74)(cid:67)(cid:84)(cid:71)(cid:70)(cid:15)(cid:68)(cid:67)(cid:85)(cid:71)(cid:70)
(cid:69)(cid:81)(cid:79)(cid:82)(cid:71)(cid:80)(cid:85)(cid:67)(cid:86)(cid:75)(cid:81)(cid:80)(cid:3)(cid:71)(cid:90)(cid:82)(cid:71)(cid:80)(cid:85)(cid:71)(cid:14)(cid:3)(cid:84)(cid:71)(cid:85)(cid:86)(cid:84)(cid:87)(cid:69)(cid:86)(cid:87)(cid:84)(cid:75)(cid:80)(cid:73)(cid:3)(cid:67)(cid:80)(cid:70)(cid:3)(cid:81)(cid:86)(cid:74)(cid:71)(cid:84)(cid:3)(cid:84)(cid:71)(cid:78)(cid:67)(cid:86)(cid:71)(cid:70)(cid:3)(cid:69)(cid:81)(cid:85)(cid:86)(cid:85)(cid:14)(cid:3)(cid:82)(cid:84)(cid:71)(cid:15)(cid:85)(cid:71)(cid:82)(cid:67)(cid:84)(cid:67)(cid:86)(cid:75)(cid:81)(cid:80)(cid:3)(cid:69)(cid:81)(cid:85)(cid:86)(cid:85)(cid:3)(cid:67)(cid:80)(cid:70)(cid:3)(cid:87)(cid:80)(cid:67)(cid:78)(cid:78)(cid:81)(cid:69)(cid:67)(cid:86)(cid:71)(cid:70)(cid:3)(cid:69)(cid:81)(cid:84)(cid:82)(cid:81)(cid:84)(cid:67)(cid:86)(cid:71)(cid:3)(cid:69)(cid:81)(cid:85)(cid:86)(cid:85)(cid:16)

(cid:49)(cid:87)(cid:84)(cid:3)(cid:79)(cid:67)(cid:80)(cid:67)(cid:73)(cid:71)(cid:79)(cid:71)(cid:80)(cid:86)(cid:3)(cid:84)(cid:71)(cid:69)(cid:81)(cid:73)(cid:80)(cid:75)(cid:92)(cid:71)(cid:85)(cid:3)(cid:86)(cid:74)(cid:67)(cid:86)(cid:3)(cid:75)(cid:86)(cid:71)(cid:79)(cid:85)(cid:3)(cid:85)(cid:87)(cid:69)(cid:74)(cid:3)(cid:67)(cid:85)(cid:3)(cid:67)(cid:79)(cid:81)(cid:84)(cid:86)(cid:75)(cid:92)(cid:67)(cid:86)(cid:75)(cid:81)(cid:80)(cid:3)(cid:81)(cid:72)(cid:3)(cid:75)(cid:80)(cid:86)(cid:67)(cid:80)(cid:73)(cid:75)(cid:68)(cid:78)(cid:71)(cid:85)(cid:3)(cid:69)(cid:67)(cid:80)(cid:3)(cid:74)(cid:67)(cid:88)(cid:71)(cid:3)(cid:67)(cid:3)(cid:79)(cid:67)(cid:86)(cid:71)(cid:84)(cid:75)(cid:67)(cid:78)(cid:3)(cid:75)(cid:79)(cid:82)(cid:67)(cid:69)(cid:86)(cid:3)(cid:81)(cid:80)(cid:3)(cid:81)(cid:87)(cid:84)(cid:3)(cid:69)(cid:67)(cid:85)(cid:74)(cid:3)(cid:72)(cid:78)(cid:81)(cid:89)(cid:85)(cid:3)(cid:67)(cid:80)(cid:70)(cid:17)(cid:81)(cid:84)(cid:3)(cid:81)(cid:87)(cid:84)(cid:3)(cid:80)(cid:71)(cid:86)(cid:3)(cid:75)(cid:80)(cid:69)(cid:81)(cid:79)(cid:71)(cid:16)(cid:3)(cid:49)(cid:87)(cid:84)(cid:3)(cid:41)(cid:35)(cid:35)(cid:50)
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(cid:75)(cid:80)(cid:69)(cid:81)(cid:79)(cid:71)(cid:3)(cid:85)(cid:86)(cid:67)(cid:86)(cid:71)(cid:79)(cid:71)(cid:80)(cid:86)(cid:16)(cid:3)(cid:54)(cid:74)(cid:71)(cid:3)(cid:80)(cid:81)(cid:80)(cid:15)(cid:41)(cid:35)(cid:35)(cid:50)(cid:3)(cid:80)(cid:87)(cid:79)(cid:68)(cid:71)(cid:84)(cid:85)(cid:3)(cid:72)(cid:81)(cid:69)(cid:87)(cid:85)(cid:3)(cid:75)(cid:80)(cid:85)(cid:86)(cid:71)(cid:67)(cid:70)(cid:3)(cid:87)(cid:82)(cid:81)(cid:80)(cid:3)(cid:86)(cid:74)(cid:71)(cid:3)(cid:69)(cid:81)(cid:84)(cid:71)(cid:3)(cid:68)(cid:87)(cid:85)(cid:75)(cid:80)(cid:71)(cid:85)(cid:85)(cid:3)(cid:81)(cid:72)(cid:3)(cid:86)(cid:74)(cid:71)(cid:3)(cid:69)(cid:81)(cid:79)(cid:82)(cid:67)(cid:80)(cid:91)(cid:14)(cid:3)(cid:89)(cid:74)(cid:75)(cid:69)(cid:74)(cid:3)(cid:75)(cid:85)(cid:3)(cid:81)(cid:80)(cid:78)(cid:91)(cid:3)(cid:67)(cid:3)(cid:85)(cid:87)(cid:68)(cid:85)(cid:71)(cid:86)(cid:14)(cid:3)(cid:67)(cid:78)(cid:68)(cid:71)(cid:75)(cid:86)(cid:3)(cid:67)(cid:3)(cid:69)(cid:84)(cid:75)(cid:86)(cid:75)(cid:69)(cid:67)(cid:78)(cid:3)(cid:81)(cid:80)(cid:71)(cid:14)(cid:3)(cid:81)(cid:72)(cid:3)(cid:86)(cid:74)(cid:71)(cid:3)
company’s performance.

(cid:52)(cid:71)(cid:67)(cid:70)(cid:71)(cid:84)(cid:85)(cid:3)(cid:67)(cid:84)(cid:71)(cid:3)(cid:84)(cid:71)(cid:79)(cid:75)(cid:80)(cid:70)(cid:71)(cid:70)(cid:3)(cid:86)(cid:74)(cid:67)(cid:86)(cid:3)(cid:80)(cid:81)(cid:80)(cid:15)(cid:41)(cid:35)(cid:35)(cid:50)(cid:3)(cid:80)(cid:87)(cid:79)(cid:68)(cid:71)(cid:84)(cid:85)(cid:3)(cid:67)(cid:84)(cid:71)(cid:3)(cid:79)(cid:71)(cid:84)(cid:71)(cid:78)(cid:91)(cid:3)(cid:67)(cid:3)(cid:85)(cid:87)(cid:82)(cid:82)(cid:78)(cid:71)(cid:79)(cid:71)(cid:80)(cid:86)(cid:3)(cid:86)(cid:81)(cid:14)(cid:3)(cid:67)(cid:80)(cid:70)(cid:3)(cid:80)(cid:81)(cid:86)(cid:3)(cid:67)(cid:3)(cid:84)(cid:71)(cid:82)(cid:78)(cid:67)(cid:69)(cid:71)(cid:79)(cid:71)(cid:80)(cid:86)(cid:3)(cid:72)(cid:81)(cid:84)(cid:14)(cid:3)(cid:41)(cid:35)(cid:35)(cid:50)(cid:3)(cid:402)(cid:80)(cid:67)(cid:80)(cid:69)(cid:75)(cid:67)(cid:78)(cid:3)(cid:79)(cid:71)(cid:67)(cid:85)(cid:87)(cid:84)(cid:71)(cid:85)(cid:16)(cid:3)(cid:3)(cid:54)(cid:74)(cid:71)(cid:91)(cid:3)(cid:85)(cid:74)(cid:81)(cid:87)(cid:78)(cid:70)(cid:3)(cid:68)(cid:71)(cid:3)(cid:84)(cid:71)(cid:67)(cid:70)(cid:3)(cid:75)(cid:80)
(cid:69)(cid:81)(cid:80)(cid:76)(cid:87)(cid:80)(cid:69)(cid:86)(cid:75)(cid:81)(cid:80)(cid:3)(cid:89)(cid:75)(cid:86)(cid:74)(cid:3)(cid:86)(cid:74)(cid:71)(cid:3)(cid:41)(cid:35)(cid:35)(cid:50)(cid:3)(cid:402)(cid:80)(cid:67)(cid:80)(cid:69)(cid:75)(cid:67)(cid:78)(cid:3)(cid:79)(cid:71)(cid:67)(cid:85)(cid:87)(cid:84)(cid:71)(cid:85)(cid:16)(cid:3)(cid:3)(cid:43)(cid:86)(cid:3)(cid:85)(cid:74)(cid:81)(cid:87)(cid:78)(cid:70)(cid:3)(cid:68)(cid:71)(cid:3)(cid:80)(cid:81)(cid:86)(cid:71)(cid:70)(cid:3)(cid:67)(cid:85)(cid:3)(cid:89)(cid:71)(cid:78)(cid:78)(cid:3)(cid:86)(cid:74)(cid:67)(cid:86)(cid:3)(cid:81)(cid:87)(cid:84)(cid:3)(cid:80)(cid:81)(cid:80)(cid:15)(cid:41)(cid:35)(cid:35)(cid:50)(cid:3)(cid:75)(cid:80)(cid:72)(cid:81)(cid:84)(cid:79)(cid:67)(cid:86)(cid:75)(cid:81)(cid:80)(cid:3)(cid:79)(cid:67)(cid:91)(cid:3)(cid:68)(cid:71)(cid:3)(cid:70)(cid:75)(cid:72)(cid:72)(cid:71)(cid:84)(cid:71)(cid:80)(cid:86)(cid:3)(cid:72)(cid:84)(cid:81)(cid:79)(cid:3)(cid:86)(cid:74)(cid:71)(cid:3)(cid:80)(cid:81)(cid:80)(cid:15)(cid:41)(cid:35)(cid:35)(cid:50)(cid:3)(cid:75)(cid:80)(cid:72)(cid:81)(cid:84)(cid:79)(cid:67)(cid:86)(cid:75)(cid:81)(cid:80)
provided by other companies.

8  (cid:3)(cid:3)(cid:41)(cid:35)(cid:35)(cid:50)(cid:3)(cid:86)(cid:81)(cid:3)(cid:48)(cid:81)(cid:80)(cid:15)(cid:41)(cid:35)(cid:35)(cid:50)(cid:3)(cid:52)(cid:71)(cid:69)(cid:81)(cid:80)(cid:69)(cid:75)(cid:78)(cid:75)(cid:67)(cid:86)(cid:75)(cid:81)(cid:80)(cid:85) 

Agilent Technologies, Inc.

(cid:40)(cid:81)(cid:84)(cid:79)(cid:3)(cid:19)(cid:18)(cid:15)(cid:45)

2018  

(cid:35)(cid:80)(cid:80)(cid:87)(cid:67)(cid:78)(cid:3)(cid:52)(cid:71)(cid:82)(cid:81)(cid:84)(cid:86)(cid:3)(cid:81)(cid:80)(cid:3)(cid:40)(cid:81)(cid:84)(cid:79)(cid:3)(cid:19)(cid:18)(cid:15)(cid:45)

(cid:20)(cid:18)(cid:19)(cid:26)(cid:3)(cid:35)(cid:80)(cid:80)(cid:87)(cid:67)(cid:78)(cid:3)(cid:52)(cid:71)(cid:82)(cid:81)(cid:84)(cid:86) 

(cid:40)(cid:81)(cid:84)(cid:79)(cid:3)(cid:19)(cid:18)(cid:15)(cid:45)    9

 
 
 
 
 
 
 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_____________________________________________________________
Form 10-K
_____________________________________________________________

(Mark One)

  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
  For the fiscal year ended October 31, 2018

  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
  For the transition period from                 to

or

Commission File Number: 001-15405
_____________________________________________________________
Agilent Technologies, Inc.
(Exact name of registrant as specified in its charter)

Delaware
State or other jurisdiction of
Incorporation or organization

77-0518772
I.R.S. Employer
Identification No.

Address of principal executive offices: 5301 Stevens Creek Blvd., Santa Clara, California 95051
Registrant's telephone number, including area code: (408) 345-8886
Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Common Stock
par value $0.01 per share

Name of each exchange on which registered
New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act:
None
_____________________________________________________________

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes 
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes 

 No 

 No 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act 
of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to 
such filing requirements for the past 90 days. Yes 

 No 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to 
Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to 
submit such files). Yes 

 No 

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained 
herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in 
Part III of this Form 10-K or any amendment to this Form 10-K. 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting 
company or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer", "smaller reporting company" and 
"emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer 

Accelerated filer 

Smaller reporting company 

Emerging growth company 

      Non-accelerated filer 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying 

with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes 

 No 

The aggregate market value of the registrant's common equity held by non-affiliates as of April 30, 2018, was approximately $16.0 billion. 
Shares of stock held by officers, directors and 5 percent or more stockholders have been excluded in that such persons may be deemed to be affiliates. 
This determination of affiliate status is not necessarily a conclusive determination for other purposes.

As of December 10, 2018, there were 318,533,054 outstanding shares of common stock, par value $0.01 per share.

_____________________________________________________________
DOCUMENTS INCORPORATED BY REFERENCE

Document Description
Portions of the Proxy Statement for the Annual Meeting of Stockholders (the "Proxy Statement") to be held on March 20, 2019, and
to be filed pursuant to Regulation 14A within 120 days after registrant's fiscal year ended October 31, 2018 are incorporated by
reference into Part III of this Report

10-K Part 

III

 
TABLE OF CONTENTS

Forward-Looking Statements

Item 1

Business

Item 1A Risk Factors

Item 1B Unresolved Staff Comments

Item 2

Properties

Item 3

Legal Proceedings

Item 4 Mine Safety Disclosures

PART I

PART II

Item 5 Market for the Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Item 6

Selected Financial Data

Item 7 Management's Discussion and Analysis of Financial Condition and Results of Operations

Item 7A Quantitative and Qualitative Disclosures About Market Risk

Item 8

Financial Statements and Supplementary Data

Item 9

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

Item 9A Controls and Procedures

Item 9B Other Information

Item 10 Directors, Executive Officers and Corporate Governance

Item 11 Executive Compensation

PART III

Item 12 Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

Item 13 Certain Relationships and Related Transactions, and Director Independence

Item 14 Principal Accounting Fees and Services

Item 15 Exhibits, Financial Statement Schedules

PART IV

Page

3

3

15

24

24

25

25

25

28

29

49

50

103

103

103

103

104

104

105

105

105

2

  
Forward-Looking Statements

 This report contains forward-looking statements including, without limitation, statements regarding trends, seasonality and 
growth in, and drivers of, the markets we sell into, our strategic direction, new product and service introductions and future products 
and services, adoption of our products, the ability of our products to meet market and customer needs, improving our customers’ 
experience, future financial results, our operating margin, mix, our investments, including in manufacturing infrastructure and 
research  and  development,  our  ability  to  identify  and  enable  synergies  across  our  businesses,  our  focus  on  balanced  capital 
allocation,  competition,  our  contributions  to  our  pension  and  other  defined  benefit  plans,  impairment  of  goodwill  and  other 
intangible assets, the effect of the U.S. Tax Cuts and Jobs Act of 2017 and U.S. and other tariffs, the impact of foreign currency 
movements, our hedging programs and other actions to offset the effects of tariffs and foreign currency movements, our future 
effective tax rate and tax valuation allowance, earnings from our foreign subsidiaries, repatriation of our earnings from foreign 
jurisdictions, the impact of local government regulations on our ability to pay vendors or conduct operations, our liquidity position, 
our ability to generate cash from operations, the potential impact of adopting new accounting pronouncements, indemnification, 
the use of contract manufacturers, out sourcing and third-party package delivery services, source and supply of materials used in 
our  products,  our  sales,  our  purchase  commitments,  our  capital  expenditures,  the  integration  of  our  acquisitions  and  other 
transactions, write down of investments values or loans and convertible notes, our stock repurchase program, our declared dividends, 
and the existence of economic instability, that involve risks and uncertainties. Our actual results could differ materially from the 
results contemplated by these forward-looking statements due to various factors, including those discussed in Part I Item 1A and 
elsewhere in this Form 10-K.

PART I

Item 1.    Business

 Overview

Agilent Technologies Inc. ("we", "Agilent" or the "company"), incorporated in Delaware in May 1999, is a global leader 
in  life  sciences,  diagnostics  and  applied  chemical  markets,  providing  application  focused  solutions  that  include  instruments, 
software, services and consumables for the entire laboratory workflow.

In 2018, we re-organized our operating segments and moved the microfluidics business from our life sciences and applied 
markets operating segment to our diagnostics and genomics operating segment. Following this re-organization and for the year 
ended October 31, 2018, we continue to have three business segments comprised of the life sciences and applied markets business, 
diagnostics and genomics business and the Agilent CrossLab business. All historical financial segment information for the life 
sciences and applied markets segment and the diagnostics and genomics segment has been recast to reflect this reorganization in 
our financial statements.

Our life sciences and applied markets business provides application-focused solutions that include instruments and software 
that enable customers to identify, quantify and analyze the physical and biological properties of substances and products, as well 
as enable customers in the clinical and life sciences research areas to interrogate samples at the molecular and cellular level. Our 
diagnostics and genomics business is comprised of six areas of activity providing solutions that include reagents, instruments, 
software and consumables which enable customers in the clinical and life sciences research areas to interrogate samples at the 
cellular and molecular level. The Agilent CrossLab business spans the entire lab with its extensive consumables and services 
portfolio, which is designed to improve customer outcomes. In addition, we conduct centralized order fulfillment and supply chain 
operations for our businesses through the order fulfillment and supply chain organization (“OFS”). OFS provides resources for 
manufacturing, engineering and strategic sourcing to our respective businesses. Each of our businesses, together with OFS and 
Agilent Technologies Research Laboratories, is supported by our global infrastructure organization, which provides shared services 
in the areas of finance, information technology, legal, certain procurement services, workplace services and human resources. 

We sell our products primarily through direct sales, but we also utilize distributors, resellers, manufacturer's representatives 
and electronic commerce. As of October 31, 2018, we employed approximately 14,800 people worldwide. Our primary research 
and development and manufacturing sites are in California, Colorado, Delaware, Massachusetts and Texas in the U.S. and in 
Australia, China, Denmark, Germany, Italy, Japan, Malaysia, Singapore and the United Kingdom.

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Life Sciences and Applied Markets Business 

Our life sciences and applied markets business provides application-focused solutions that include instruments and software 
that enable customers to identify, quantify and analyze the physical and biological properties of substances and products, as well 
as enable customers in the clinical and life sciences research areas to interrogate samples at the molecular and cellular level. Key 
product categories include: liquid chromatography ("LC") systems and components; liquid chromatography mass spectrometry 
("LCMS") systems; gas chromatography ("GC") systems and components; gas chromatography mass spectrometry ("GCMS") 
systems;  inductively  coupled  plasma  mass  spectrometry  ("ICP-MS")  instruments;  atomic  absorption  ("AA")  instruments; 
microwave  plasma-atomic  emission  spectrometry  (“MP-AES”)  instruments;  inductively  coupled  plasma  optical  emission 
spectrometry  ("ICP-OES")  instruments;  raman  spectroscopy;  cell  analysis  plate  based  assays;  flow  cytometer;  real-time  cell 
analyzer; laboratory software for sample tracking, information management and analytics; laboratory automation and robotic 
systems; dissolution testing; vacuum pumps and measurement technologies.

We employed approximately 4,500 people as of October 31, 2018 in our life sciences and applied markets business. 

Life Sciences and Applied Markets

Our life sciences and applied markets business focuses primarily on the following five markets:

The Pharmaceutical, Biotechnology, CRO & CMO Market.  This market consists of “for-profit” companies who participate 
across the pharmaceutical value chain in the areas of therapeutic research, discovery & development, clinical trials, manufacturing 
and  quality  assurance  and  quality  control.  One  sub-segment  of  this  market  is  core  and  emerging  pharmaceutical  companies 
(“pharma”). A second sub-segment includes biotechnology companies (“biotech”), contract research organizations (“CROs”) and 
contract manufacturing organizations (“CMOs”). Biotech companies and, to a somewhat lesser extent, CROs and CMOs typically 
participate in specific points in the pharmaceutical industry value chain. Additionally, due to the relatively low drug efficacy within 
oncology, pharma companies are partnering with diagnostic companies to bring validated tests to the market with their new drugs.

The Academic  and  Government  Market.   This  market  consists  primarily  of  “not-for-profit”  organizations  and  includes 
academic institutions, large government institutes and privately funded organizations. The academic and government market plays 
an influential role in technology adoption and therapeutic developments for pharmaceutical and molecular diagnostics companies. 
After  decades  of  investment  in  basic  biomedical  research  by  government  funding  bodies,  the  focus  has  widened  to  include 
translational research - multidisciplinary scientific efforts directed at accelerating therapy development.

The Chemical & Energy Market.    The natural gas and petroleum refining markets use our products to measure and control 
the  quality  of  their  finished  products  and  to  verify  the  environmental  safety  of  their  operations.  Petroleum  refiners  use  our 
measurement solutions to analyze crude oil composition, perform raw material analysis, verify and improve refining processes 
and ensure the overall quality of gasoline, fuels, lubricants and other products. Our solutions are also used in the development, 
manufacturing and quality control of fine chemicals and other industrial applications such as materials analysis.

The Environmental & Forensics Market.    Our instruments, software and workflow solutions are used by the environmental 
market for applications such as laboratory and field analysis of chemical pollutants in air, water, soil and solid waste. Environmental 
industry  customers  include  all  levels  of  government,  the  industrial  and  manufacturing  sectors,  engineering  and  consulting 
companies,  commercial  testing  laboratories  and  colleges  and  universities.  Drug  testing  and  forensics  laboratories  use  our 
instruments, software and workflow solutions for applications such as analyzing evidence associated with crime, screening athletes 
for performance enhancing drugs, analyzing samples for recreational drugs, or detecting and identifying biological and chemical 
warfare agents. Some of our instruments are used in mobile laboratories as well. Customers include local, state, federal, and 
international law enforcement agencies and health laboratories.

The Food Market.    Our instruments, software, and workflow solutions are used throughout the food production chain, 
including incoming inspection, new product development, quality control and assurance, and packaging. For example, our mass 
spectrometer portfolio is used to analyze contaminants and residual pesticides in food. There is also a significant food safety market 
involved in analyzing food for pathogen contamination, accurate verification of species type and evidence of genetically modified 
content.

Life Sciences and Applied Markets Products and Applications

Our  products  fall  into  eight  main  areas  of  work:  liquid  chromatography,  gas  chromatography,  mass  spectrometry, 

spectroscopy, software and informatics, lab automation and robotics, vacuum technology and cell analysis.

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Our key products and applications include the following technologies:

Liquid Chromatography

A liquid chromatograph ("LC") or a high performance liquid chromatograph (“HPLC”) is used to separate molecules of a 
liquid mixture to determine the quantity and identity of the molecules present. The Agilent LC portfolio is modular in construction 
and can be configured as analytical and preparative systems. These systems can be stepwise upgraded to highly sophisticated, 
automated  workflow  solutions  such  as  method  development,  multi method/walk-up,  high-capacity/high-throughput  or 
multi dimensional LC and can be extended to application based analyzers e.g. for bio-molecular separations, chiral analysis or 
size exclusion chromatography. As a leader in liquid chromatography, we continue to expand our application space with new 
HPLC columns, new services and diagnostics offerings and ongoing instrument and software product enhancements.

Gas Chromatography

Agilent is the world's leading provider of gas chromatographs, both laboratory and portable models. GC's are used to separate 
any gas, liquid or solid that can be vaporized and then detect the molecules present to determine their identity and quantity. Agilent 
provides custom or standard analyzers configured for specific chemical analysis applications, such as detailed speciation of a 
complex hydrocarbon stream, calculation of gas calorific values in the field, or analysis of a new bio-fuel formulation. We also 
offer related software, accessories and consumable products for these and other similar instruments.

Mass Spectrometry

A mass spectrometer (“MS”) identifies and quantifies chemicals based on a chemical's molecular mass and characteristic 
patterns of fragment ion masses that result when a molecule is broken apart. Liquid chromatography is commonly used to separate 
compounds and introduce them to the MS system. The combined use of LC and MS is frequently used both to identify and quantify 
chemical compounds. Mass spectrometry is an important tool in analyzing small molecules and can also be used to characterize 
and quantify proteins and other biological entities. Agilent's LCMS portfolio includes instruments built around four main analyzer 
types - single quadrupole, triple quadrupole, time-of-flight (“TOF”) and quadrupole time-of-flight (“QTOF”). We significantly 
expanded our mass spectrometry portfolio in recent years with a focus on improving performance, sensitivity, and ease of use.

Spectroscopy

Spectroscopy is a technique for analyzing the individual chemical components of substances based on the absorption or 
emission of electromagnetic radiation of specific wavelengths of light. Our spectroscopy instruments include AA spectrometers, 
microwave  plasma-atomic  emission  spectrometers  (“MP-AES”),  ICP-OES,  ICP-MS,  fluorescence  spectrophotometers, 
ultraviolet-  visible  ("UV-Vis")  spectrophotometers,  Fourier  Transform  infrared  ("FT-IR")  spectrophotometers,  near-infrared 
("NIR") spectrophotometers, Raman spectrometers and sample automation products. We also offer related software, accessories 
and consumable products for these and other similar instruments.

Software and Informatics

We  provide  software  for  instrument  control,  data  acquisition,  data  analysis,  laboratory  content  and  business  process 
management, and informatics. Our software facilitates the compliant use of instruments in pharmaceutical quality assurance/
quality control environments. With our OpenLab Laboratory Software Suite, Agilent has a scalable, open software platform that 
enables customers to capture, analyze, and share scientific data throughout the lab and across the enterprise.

Lab Automation and Robotics

We offer a comprehensive suite of workflow solutions to our life science customers with the addition of automated liquid 
handling and robotics that range from standalone instrumentation to bench-top automation solutions. These solutions strengthen 
our offering of automated sample preparation solutions across a broad range of applications. 

Vacuum Technology

Our  vacuum  technologies  products  are  used  to  create,  control,  measure  and  test  vacuum  environments  in  life  science, 
industrial and scientific applications where ultra-clean, high-vacuum environments are needed. Vacuum technologies' customers 
are typically OEMs that manufacture equipment for these applications, or government and research organizations that require 
vacuum solutions in their facilities. Products include a wide range of high and ultra-high vacuum pumps (diffusion, turbomolecular 
and  ion  getter),  intermediate  vacuum  pumps  (rotary  vane,  sorption  and  dry  scroll),  vacuum  instrumentation  (vacuum  control 
5

  
instruments, sensor gauges and meters) and vacuum components (valves, flanges and other mechanical hardware). These products 
also  include  helium  mass  spectrometry  and  helium-sensing  leak  detection  instruments  used  to  identify  and  measure  leaks  in 
hermetic or vacuum environments. In addition to product sales, we also offer a wide range of services including an exchange and 
rebuild program, assistance with the design and integration of vacuum systems, applications support and training in basic and 
advanced vacuum technologies.

Cell Analysis

Our cell analysis tools are used to study cell signaling pathways, general cell function and behavior through metabolic 
profile analysis, real-time cellular impedance measurements, and traditional cytometry techniques. Characterizing cellular behavior 
and  function  is  an  increasingly  critical  step  in  understanding  normal  behavior  versus  diseased  states,  advancements  of  those 
diseases, and response to therapies, providing researchers with a more targeted approach for drug discovery and ultimately more 
effective therapeutics.  Cell analysis customers are typically academic institutions and pharma and bio-pharma companies.

Life Sciences and Applied Markets Customers

We had approximately 24,000 customers for our life sciences and applied markets business in fiscal 2018. No single customer 
represented a material amount of the net revenue of the life sciences and applied markets business. A significant number of our 
life sciences and applied markets customers are also customers of our Agilent CrossLab business.

The life sciences and applied markets business is susceptible to seasonality in its orders and revenues primarily related to 
U.S. and foreign government budgets, chemical and energy and environmental customers and large pharmaceutical company 
budgets. Historically, the result is that our first and fourth fiscal quarters tend to deliver the strongest profits for this group. However, 
general economic trends, new product introductions and competition might overshadow this trend in any given year.

Life Sciences and Applied Markets Sales, Marketing and Support

The life sciences and applied markets channels focus on the therapeutics and human disease research customer base (pharma, 
biotech, CRO, CMO and generics), clinical customer base (high complexity clinical testing labs) and on emerging life sciences 
opportunities in life science research institutes. We deploy a multi-channel approach, marketing products to our customers through 
direct sales, electronic commerce, resellers, manufacturers' representatives and distributors. We primarily use direct sales to market 
our solutions to our pharmaceutical, biopharmaceutical and clinical accounts. Sales agents supplement direct sales by providing 
broader geographic coverage and coverage of smaller accounts. Our active reseller program augments our ability to provide more 
complete solutions to our customers. We sell our consumable products through distributors, electronic commerce and direct sales. 

Our products typically come with standard warranties, and extended warranties are available for additional cost. 

Life Sciences and Applied Markets Manufacturing

Our  manufacturing  supports  our  diverse  product  range  and  customer centric  focus.  We  assemble  highly  configurable 
products to individual customer orders and make standard products to stock. We employ advanced manufacturing techniques and 
supply chain management systems to reduce costs and manufacturing cycle times. Our manufacturing process then converts these 
designs into standard as well as custom products for shipment to customers. We selectively use third parties to provide some supply 
chain  processes  for  manufacturing,  warehousing  and  logistics. We  have  manufacturing  facilities  in  California,  Delaware  and 
Massachusetts in the U.S. Outside of the U.S., we have manufacturing facilities in Germany, Malaysia and Singapore.  We have 
FDA registered sites in California, Germany and Singapore. 

Life Sciences and Applied Markets Competition

The markets for analytical instruments in which we compete are characterized by evolving industry standards and intense 
competition. Our principal competitors in the life sciences and applied markets arena include: Danaher Corporation, PerkinElmer 
Inc., Shimadzu Corporation, Thermo Fisher Scientific Inc. and Waters Corporation. Agilent competes on the basis of product 
performance, reliability, support quality, applications expertise, global channel coverage and price.

Diagnostics and Genomics Business

Our  diagnostics  and  genomics  business  includes  the  genomics,  nucleic  acid  contract  manufacturing  and  research  and 

development, pathology, companion diagnostics, reagent partnership and biomolecular analysis businesses.

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Our diagnostics and genomics business is comprised of six areas of activity providing active pharmaceutical ingredients 
("APIs") for oligo-based therapeutics as well as solutions that include reagents, instruments, software and consumables, which 
enable customers in the clinical and life sciences research areas to interrogate samples at the cellular and molecular level. First, 
our genomics business includes arrays for DNA mutation detection, genotyping, gene copy number determination, identification 
of gene rearrangements, DNA methylation profiling, gene expression profiling, as well as next generation sequencing ("NGS") 
target enrichment and genetic data management and interpretation support software. This business also includes solutions that 
enable clinical labs to identify DNA variants associated with genetic disease and help direct cancer therapy. Second, our nucleic 
acid  solutions  business  provides  equipment  and  expertise  focused  on  production  of  synthesized  oligonucleotides  under 
pharmaceutical good manufacturing practices ("GMP") conditions for use as API in an emerging class of drugs that utilize nucleic 
acid molecules for disease therapy. Third, our pathology solutions business is focused on product offerings for cancer diagnostics 
and anatomic pathology workflows. The broad portfolio of offerings includes immunohistochemistry (“IHC”), in situ hybridization 
(“ISH”),  hematoxylin  and  eosin  (“H&E”)  staining  and  special  staining.  Fourth,  we  also  collaborate  with  a  number  of  major 
pharmaceutical companies to develop new potential pharmacodiagnostics, also known as companion diagnostics, which may be 
used to identify patients most likely to benefit from a specific targeted therapy. Fifth, the reagent partnership business is a provider 
of reagents used for turbidimetry and flow cytometry. Finally, our biomolecular analysis business provides complete workflow 
solutions, including instruments, consumables and software, for quality control analysis of nucleic acid samples.  Samples are 
analyzed  using  quantitative  and  qualitative  techniques  to  ensure  accuracy  in  further  genomics  analysis  techniques  utilized  in 
clinical and life science research applications.

We employed approximately 2,500 people as of October 31, 2018 in our diagnostics and genomics business. 

Diagnostics and Genomics Market

Within the diagnostics and genomics business, we focus primarily on the diagnostics and clinical market. A significant part 
of our clinical diagnostic customers are in pathology labs throughout the world.  Our high-quality, automated pathology tissue 
staining platforms and solutions are used most heavily by the large labs located in hospitals, medical centers, and reference labs. 
The market is skewed towards mature economies, with most of the market in North America, Western Europe and Japan.  The 
mix is changing, however, as emerging markets increase spending on human health.

The clinical market for genomics consists of high complexity clinical labs performing patient testing, including “for-profit” 
reference laboratories, hospital labs, and molecular diagnostic companies. While these labs primarily purchase in vitro diagnostics 
(“IVD”) labeled testing kits, they often develop and validate their own molecular based tests. Analyte Specific Reagents (“ASRs”) 
are often used by these labs.

Diagnostics and Genomics Products

Our  products  fall  into  eight  main  areas  of  work:  pathology  products,  specific  proteins  and  flow  reagents,  companion 
diagnostics, target enrichment, cytogenetic research solutions and microarrays, PCR and qPCR instrumentation and molecular 
biology reagents, nucleic acid solutions and automated electrophoresis and microfluidics.

Pathology

This area consists of routine clinical solutions for tissue based cancer diagnostics with solutions that comprise antibodies, 
reagents, instruments and software targeting both primary and advanced cancer diagnostics. Our CoverStainer and Artisan based 
product families target primary cancer diagnostics through hematoxylin and eosin staining as well as special stains for additional 
insights  and  detection  of  potentially  carcinogenic  tissue.  In  the  fourth  quarter  of  2013,  we  launched  our  combined  IHC/ISH 
platform, Dako Omnis. The Dako Omnis and Autostainer based IHC solution and Instant Quality Fluorescence In Situ Hybridization 
("IQFISH") technologies provide advanced tumor typing through investigation of protein and gene expression. These products 
also include companion diagnostic tests that are used to help identify patients most likely to benefit from a specific targeted therapy.

Specific Proteins and Flow Reagents

Our reagent OEM business is a provider of clinical diagnostic products within the areas of specific proteins for turbidimetry 
and reagents for flow cytometry. These are sold to OEM customers as customized reagent solutions supplied to top IVD companies 
or through retail partners.

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Companion Diagnostics

In our companion diagnostics business, we partner with a number of major pharmaceutical companies to develop new 

potential pharmacodiagnostics, which may be used to identify patients most likely to benefit from a specific targeted therapy.

Target Enrichment

Agilent continues to be a strong player in the next generation sequencing market. We provide a target enrichment portfolio 
composed of two main platforms, SureSelect and HaloPlex, both enabling customers to select specific target regions of the genome 
for sequencing. Customers can customize our products for their regions of interest using the SureDesign software, or they can 
choose from a wide range of catalog products, including gene panels for specific applications and Exome designs, which allow 
analysis of the entire coding sequences of the genome. After preparing samples with SureSelect and HaloPlex, products can be 
sequenced in the main next generation sequencing platforms available in the market. The technologies provide an easy sample 
prep workflow that can be automated with the Agilent Bravo platform for scalability. HaloPlex provides less-than-24-hours fast 
workflow, which makes it suitable for labs that require fast turnaround time from sample to results. These products are used for 
mutation detection and genotyping. Results can be easily analyzed using Agilent software solutions GeneSpring or SureCall. Our 
solutions also enable clinical labs to identify DNA variants associated with genetic diseases and help direct cancer therapy.

Cytogenetic Research Solutions and Microarrays

Agilent is a leading provider of microarrays for comparative genomic hybridization (“CGH”), mostly used by customers 
in cytogenetic laboratories.  The arrays allow customers to detect genome-wide copy number alterations, with high levels of 
resolution (from entire chromosomal copy number changes to specific microdeletions or duplications). The arrays are offered in 
many formats allowing the customers to choose from different levels of resolution and number of samples per arrays. Arrays can 
also be customized using the SureDesign software. In addition to the microarrays, Agilent's solution includes reagents for sample 
processing, hardware for reading the microarrays, and software to help users view the data in a meaningful way.  In addition to 
the  CGH  portfolio,  the  cytogenetics  solution  comprises  a  line  of  oligonucleotide  probes  for  fluorescent  in  situ  hybridization 
("FISH") called SureFISH. Over 400 probes are available in our catalog, covering most relevant regions in the genome. Cytogenetic 
labs can use SureFISH probes to detect specific translocations or copy number changes in samples. Additionally, Agilent provides 
a wide range of microarrays to the research market for different types of applications: gene expression, microRNA, methylation, 
splice variants, and chromatin immunoprecipitation applications. Arrays are offered as catalog designs or customizable designs, 
with no minimum order size and short delivery time, which differentiates us from other vendors and enables researchers the 
maximum flexibility in their studies.  Our end-to-end solution includes reagents for sample preparation and microarray processing; 
hardware for sample QC and high-throughput microarray scanning; microarrays on industry-standard 1” × 3” glass slides for key 
applications; custom microarray design services; and GeneSpring and CytoGenomics software products for data analysis.

PCR and qPCR Instrumentation and Molecular Biology Reagents

Polymerase chain ceaction (“PCR”) is a standard laboratory method used to amplify the amount of genetic material of a 
given sample to enable further interrogation.  Quantitative PCR (“qPCR”) or real time PCR is also a standard method used in 
genomic research facilities to measure the amount of a specific nucleic acid sequence within a sample.  There are several applications 
for qPCR, among the most common are identifying the expression level of a specific gene, or calculating the amount of a specific 
pathogen present in a sample. Agilent offers a complete portfolio of PCR & qPCR instruments, as well as specialty enzymes for 
amplifying difficult sample types. In addition to PCR and qPCR enzymes, Agilent offers a wide range of molecular biology reagents 
including tools for cloning and mutagenesis applications.

Nucleic Acid Solutions 

Our  Nucleic Acid  Solutions  division  ("NASD")  is  a  contract  manufacturing  and  development  services  business  with 
equipment and expertise focused on mid to large scale production of synthesized oligonucleotide APIs under pharmaceutical GMP 
conditions for an emerging class of drugs that utilize oligonucleotide molecules for disease therapy.  These drugs have advanced 
from single strand DNA molecules to complex, highly modified molecules including antisense, aptamers, double-stranded RNA, 
and RNA mixtures. These advancements in the technology have greatly improved the efficacy of delivery and stability of the 
oligos in-vivo. NASD offers industry leading experience to efficiently advance our customer’s oligo drug candidates from clinical 
trials to commercial launch with a common goal of patient health and safety.   

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Automated Electrophoresis and Microfluidics

Automated electrophoresis is a separation technique for bio molecules such as proteins, peptides and nucleic acids (RNA 
and DNA) and is used to determine the identity of a molecule by either size or charge. It is widely used as a QC tool to check 
sample integrity prior to subsequent analysis.  Prominent examples are nucleic acid preparation products in front of polymerase 
chain reaction, NGS and microarrays.

Diagnostics and Genomics Customers

We had approximately 11,000 customers for our diagnostics and genomics business in fiscal 2018. No single customer 

represented a material amount of the net revenue of the diagnostics and genomics business. 

Diagnostics and Genomics Sales, Marketing and Support

The diagnostics and genomics channels focus on the therapeutics and human disease research customer base (pharma, 
biotech,  CRO,  CMO  and  generics),  clinical  customer  base  (pathology  labs  and  high  complexity  clinical  testing  labs)  and  on 
emerging life sciences opportunities in life science research institutes. We deploy a multi-channel approach, marketing products 
to our customers through direct sales, electronic commerce, resellers, manufacturers' representatives and distributors. We primarily 
use direct sales to market our solutions to our pharmaceutical, biopharmaceutical and clinical accounts. Sales agents supplement 
direct sales by providing broader geographic coverage and coverage of smaller accounts. Our active reseller program augments 
our ability to provide more complete solutions to our customers. We sell our consumable products through distributors, telesales, 
electronic commerce and direct sales. We utilize telesales for more mature product lines, as well as for reorders of reagent products.

Diagnostics and Genomics Manufacturing

Our  manufacturing  supports  our  diverse  product  range  and  customer-centric  focus.  We  assemble  highly  configurable 
products to individual customer orders and make standard products to stock. We employ advanced manufacturing techniques and 
supply chain management systems to reduce costs and manufacturing cycle times. We selectively use third parties to provide some 
supply chain processes for manufacturing, warehousing and logistics. We have manufacturing facilities in California, Colorado 
and Texas in the U.S. Outside of the U.S., we have manufacturing facilities in Denmark and Malaysia. Our FDA registered sites 
include California, Colorado, Texas and Denmark. We utilize just-in-time manufacturing and so typically do not maintain a high 
level of inventory.

Diagnostics and Genomics Competition

The markets for diagnostics and genomics analytical products in which we compete are characterized by evolving industry 
standards  and  intense  competition.  Our  principal  competitors  in  the  diagnostics  and  genomics  arena  include:  Roche Ventana 
Medical  Systems,  Inc.,  a  member  of  the  Roche  Group,  Leica  Biosystems,  Inc.,  a  division  of  Danaher  Corporation, Abbott 
Laboratories, Ilumina, Inc. and Affymetrix, Inc., a division of Thermo Fisher Scientific Inc. Agilent competes on the basis of 
product performance, reliability, support quality, applications expertise, whole solution offering, global channel coverage and 
price.

Diagnostics and Genomics Government Regulation

Some of the products the diagnostics and genomics business sells are subject to regulatory approval by the FDA and other 
regulatory  bodies  throughout  the  world.   These  regulations  govern  a  wide  variety  of  product  related  activities,  from  quality 
management, design and development to labeling, manufacturing, promotion, sales and distribution.  We continually invest in our 
manufacturing infrastructure to gain and maintain certifications necessary for the level of clearance. 

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Agilent CrossLab Business 

The Agilent CrossLab business spans the entire lab with its extensive consumables and services portfolio, which is designed 
to improve customer outcomes.  The majority of the portfolio is vendor neutral, meaning Agilent can serve and supply customers 
regardless of their instrument purchase choices.  Solutions range from chemistries and supplies to services and software helping 
to connect the entire lab.  Key product categories in consumables include GC and LC columns, sample preparation products, 
custom chemistries, and a large selection of laboratory instrument supplies.  Services include startup, operational, training and 
compliance support, software as a service, as well as asset management and consultative services that help increase customer 
productivity.  Custom service and consumable bundles are tailored to meet the specific application needs of various industries and 
to keep instruments fully operational and compliant with the respective industry requirements.

Our Agilent CrossLab business employed approximately 5,100 people as of October 31, 2018. 

Agilent CrossLab Markets

The Pharmaceutical, Biotechnology, CRO & CMO Market.  Our services and consumable products support customers in 
this market that consists of “for-profit” companies who participate across the pharmaceutical value chain in the areas of therapeutic 
research, discovery and development, clinical trials, manufacturing and quality assurance and quality control.  One sub-segment 
of  this  market  is  core  and  emerging  pharmaceutical  companies  (“pharma”).   A  second  sub-segment  includes  biotechnology 
companies (“biotech”), contract research organizations (“CROs”) and contract manufacturing organizations (“CMOs”).  Biotech 
companies and, to a somewhat lesser extent, CROs and CMOs typically participate in specific points in the pharmaceutical industry 
value chain.  Additionally, due to the relatively low drug efficacy within oncology, pharma companies are partnering with diagnostic 
companies to bring validated tests to the market with their new drugs.

The Academic and Government Market.  Our services and consumable products support customers in this market that 
consists primarily of “not-for-profit” organizations and includes academic institutions, large government institutes and privately 
funded organizations.  The academic and government market plays an influential role in technology adoption and therapeutic 
developments for pharmaceutical and molecular diagnostics companies. After decades of investment in basic biomedical research 
by government funding bodies, the focus has widened to include translational research - multidisciplinary scientific efforts directed 
at accelerating therapy development.

The Chemical & Energy Market.    The natural gas and petroleum refining markets use our services and consumable products 

to support their quality control and environmental safety reviews.

The  Environmental &  Forensics  Market.    Our  services  and  consumable  products  support  the  environmental  industry 
customers that perform laboratory and field analysis of chemical pollutants in air, water, soil and solid waste.  Environmental 
industry  customers  include  all  levels  of  government,  the  industrial  and  manufacturing  sectors,  engineering  and  consulting 
companies, commercial testing laboratories and colleges and universities. Our services and consumable products also support 
drug testing and forensics laboratories that are involved with analyzing evidence associated with crime, screening athletes for 
performance enhancing drugs, analyzing samples for recreational drugs, or detecting and identifying biological and chemical 
warfare  agents.    Customers  include  local,  state,  federal,  and  international  law  enforcement  agencies  and  commercial  testing 
laboratories.

The  Food  Market.    Our  services  and  consumable  products  support  the  food  production  chain,  including  incoming 

inspection, new product development, quality control and assurance, and packaging.

The Diagnostics and Clinical Market.   Our services and consumable products support clinical diagnostic customers in 
pathology labs throughout the world.  The market is skewed towards the mature economies, with most of the market in North 
America, Western Europe and Japan.  The mix is changing, however, as emerging markets increase spending on human health.

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Agilent CrossLab Products and Applications

Chemistries and Supplies

We offer a broad range of consumable products, which support our technology platforms, including sample preparation 
consumables such as solid phase extraction ("SPE") and filtration products, self-manufactured GC and LC columns, chemical 
standards, and instrument replacement parts. Consumable products also include scientific instrument parts and supplies such as 
filters and fittings for GC systems; xenon lamps and cuvettes for UV-Vis-NIR, fluorescence, FT-IR and Raman spectroscopy 
instruments; and graphite furnace tubes, hollow cathode lamps and specialized sample introduction glassware for our AA, ICP-
OES and ICP-MS products.

Services and Support

We offer a wide range of startup, operational, educational and compliance support services for our measurement and data 
handling systems. Our support services include maintenance, troubleshooting, repair and training for all of our chemical and 
bioanalytical instrumentation hardware and software products. Special service bundles have also been designed to meet the specific 
application needs of various industries. As customers continue to outsource laboratory operations and consolidate suppliers, our 
enterprise services consist of a broad portfolio of integrated laboratory management services including instrument services, lab 
supply management, asset management, procurement, informatics and scientific services.

Remarketed Instruments

We  refurbish  and  resell  certified  pre-owned  instruments  to  value-oriented  customers  who  demand Agilent  quality  and 

performance at a budget conscious price.

Agilent CrossLab Customers

We had approximately 51,000 Agilent CrossLab customers in fiscal 2018 and no single customer represented a material 
amount of the net revenue of the Agilent CrossLab business. A significant number of our Agilent CrossLab customers are also 
customers of our life sciences and applied markets business.

The service and consumables business is mostly recurring in nature, and is not as susceptible to market seasonality and 
industry cycles in comparison to our instrument businesses.  The vendor neutral portion of the portfolio allows the business to 
perform relatively independent from our instrument business.

Agilent CrossLab Sales, Marketing and Support

We deploy a multi-channel approach, marketing products and services to our customers through direct sales, electronic 
commerce, resellers, manufacturers' representatives and distributors. We primarily use direct sales to market our solutions to our 
large accounts. Sales agents supplement direct sales by providing broader geographic coverage and coverage of smaller accounts. 
Our active reseller program augments our ability to provide more complete solutions to our customers. We utilize telesales to 
enhance the transactional sales model of our products.  All channels are supported by technical product and application specialists 
to meet our customer’s specific requirements.

We deliver our support services to customers in a variety of ways, including on-site assistance with repair or exchange of 
returned products, telephone support and self-diagnostic services provided over the Internet. We also offer special industry-focused 
service  bundles  that  are  designed  to  meet  the  specific  needs  of  hydrocarbon  processing,  environmental,  pharmaceutical  and 
biopharmaceutical customers to keep instruments fully operational and compliant with the respective industry requirements. Our 
products typically come with standard warranties, and extended warranties are available for additional cost.

Agilent CrossLab Manufacturing

Our  primary  manufacturing  sites  for  the  consumables  business  are  in  California  and  Delaware  in  the  U.S.,  and  in  the 
Netherlands and the United Kingdom outside of the U.S.  Our direct service delivery organization is regionally based operating 
in 30 countries.

11

  
Agilent CrossLab Competition

Our principal competitors in the services and consumable products arena include many of our competitors from the instrument 
business,  such  as:  Danaher  Corporation,  PerkinElmer,  Inc.,  Shimadzu  Corporation, Thermo  Fisher  Scientific Inc.  and Waters 
Corporation, as well as numerous niche consumables and service providers.  Agilent competes on the basis of product performance, 
reliability, support quality, applications expertise, global channel coverage and price.

Agilent Technologies Research Laboratories

Agilent Technologies Research Laboratories ("Research Labs") is our research organization based in Santa Clara, California. 
The Research Labs create competitive advantage through high-impact technology, driving market leadership and growth in Agilent's 
core businesses and expanding Agilent's footprint into adjacent markets. At the cross-roads of the organization, the Research Labs 
are able to identify and enable synergies across Agilent's businesses to create competitive differentiation and compelling customer 
value.

The technical staff have advanced degrees that cover a wide range of scientific and engineering fields, including biology, 
chemistry, distributed measurement, image processing, mathematics, nano/microfabrication, microfluidics, software, physics and 
physiology. 

Global Infrastructure Organization

We provide support to our businesses through our global infrastructure organization. This support includes services in the 
areas of finance, tax, treasury, legal, real estate, insurance services, workplace services, human resources, information technology 
services,  order administration and other corporate infrastructure expenses. Generally, these organizations are managed from Santa 
Clara, California, with operations and services provided worldwide. As of the end of October 2018, our global infrastructure 
organization employed approximately 2,700 people worldwide.

Agilent Order Fulfillment Organizations

Our order fulfillment and supply chain organization (“OFS”) focuses on order fulfillment and supply chain operations in 
our businesses. OFS provides resources for manufacturing, engineering and strategic sourcing to our respective businesses. In 
general, OFS employees are dedicated to specific businesses and the associated costs are directly allocated to those businesses.

        The following discussions of Research and Development, Backlog, Intellectual Property, Materials, Environmental 
and Acquisition and Disposal of Material Assets include information common to each of our businesses.

Research and Development

We anticipate that we will continue to have significant R&D expenditures in order to maintain our competitive position 
with a continuing flow of innovative, high-quality products and services. Our research and development efforts focus on potential 
new products and product improvements covering a wide variety of technologies, none of which is individually significant to our 
operations. Our research seeks to improve on various technical competencies in software, systems and solutions, life sciences and 
diagnostics. In each of these research fields, we conduct research that is focused on specific product development for release in 
the short-term as well as other research that is intended to be the foundation for future products over a longer time-horizon. Most 
of our product development research is designed to improve products already in production, focus on major new product releases, 
and develop new product segments for the future. We remain committed to invest significantly in research and development and 
have focused our development efforts on key strategic opportunities to align our business with available markets and position 
ourselves to capture market share.

Backlog

We believe that backlog is not a meaningful indicator of future business prospects for our business segments since a significant 
portion of our revenue for a given quarter is derived from the current quarter's orders.  Therefore, we believe that backlog information 
is not material to an understanding of our business.

Intellectual Property 

We generate patent and other intellectual property rights covering significant inventions and other innovations in order to 
create a competitive advantage. While we believe that our licenses, patents and other intellectual property rights have value, in 
12

  
general no single license, patent or other intellectual property right is in itself material. In addition, our intellectual property rights 
may be challenged, invalidated or circumvented or may otherwise not provide significant competitive advantage.

Materials 

Our life sciences and applied markets, diagnostics and genomics and Agilent CrossLab businesses all purchase materials 
from thousands of suppliers on a global basis. Some of the parts that require custom design work are not readily available from 
alternate suppliers due to their unique design or the length of time necessary for design work. Our long-term relationships with 
suppliers allow us to proactively manage technology road maps and product discontinuance plans and monitor their financial 
health. To address any potential disruption in our supply chain, we use a number of techniques, including qualifying multiple 
sources of supply and redesign of products for alternative components. In addition, while we generally attempt to keep our inventory 
at minimal levels, we do purchase incremental inventory as circumstances warrant to protect the supply chain.

Environmental

Our R&D, manufacturing and distribution operations involve the use of hazardous substances and are regulated under 
international, federal, state and local laws governing health and safety and the environment. We apply strict standards for protection 
of the environment and occupational health and safety to sites inside and outside the U.S., even if not subject to regulation imposed 
by foreign governments. We believe that our properties and operations at our facilities comply in all material respects with applicable 
environmental laws and occupational health and safety laws. We are also regulated under a number of international, federal, state, 
and  local  laws  regarding  recycling,  product  packaging  and  product  content  requirements. We  believe  we  are  substantially  in 
compliance with such environmental, product content/disposal and recycling laws.

We maintain a comprehensive Environmental Site Liability insurance policy which may cover certain clean-up costs or 

legal claims related to environmental contamination. This policy covers specified active, inactive and divested locations.

Acquisition and Disposal of Material Assets

In 2018, we acquired seven businesses, for a combined purchase price of approximately $536 million. The largest of 

which was Advanced Analytical Technologies, Inc. ("AATI") for approximately $268 million in cash. These acquisitions were 
not material individually or in aggregate.

Executive Officers of the Registrant 

The names of our current executive officers and their ages, titles and biographies appear below:

Henrik Ancher-Jensen, 53, has served as Senior Vice President, Agilent and President, Order Fulfillment since September 
2013.   From  September  2012  to  September  2013,  Mr. Ancher-Jensen  served  as  our  Vice  President,  Global  Product  Supply, 
Diagnostics and Genomics Group.  From September 2010 to September 2012 he served as Corporate Vice President, Global 
Operations of Dako A/S, a Danish diagnostics company, and as Dako’s Vice President, Supply Chain and Chief Information Officer 
from 2006 to September 2010.  Prior to joining Dako, he spent more than 15 years in senior management roles and management 
consulting with Chr. Hansen, Deloitte Consulting and NVE.

Mark Doak, 63, has served as our Senior Vice President, Agilent and President, Agilent CrossLab Group (formerly a group 
within the Life Sciences & Applied Markets Group) since September 2014.    From August 2008 to September 2014, Mr. Doak 
served as our Vice President and General Manager of the Services and Support Division.  Prior to that, he held several senior 
management positions across functions in marketing, quality and services.

Rodney Gonsalves, 53, has served as our Vice President, Corporate Controllership and Chief Accounting Officer since May 
2015.  From September 2009 to May 2015, Mr. Gonsalves served as Vice President and operational CFO for various business 
groups within the Company, most recently for the Life Sciences and Applied Markets Group. Prior to that, Mr. Gonsalves served 
in various capacities for Agilent, including as vice president of Investor Relations, controller, corporate governance and customer 
financing in Agilent’s Global Infrastructure Organization, and controller for the Photonics Systems Business Unit.  Before joining 
Agilent, Mr. Gonsalves held a variety of positions in finance with Hewlett- Packard Co.  

Dominique P. Grau 59, has served as our Senior Vice President, Human Resources since August 2014.  From May 2012 to 
August  2014  Mr.  Grau  served  as  Vice  President,  Worldwide  Human  Resources.    Prior  to  that,  he  served  as  Vice  President, 
Compensation, Benefits and HR Services from May 2006 to May 2012.  Mr. Grau had previously served in various capacities for 
Agilent and Hewlett-Packard Company.

13

  
Robert W. McMahon 50, has served as our Senior Vice President since August 2018 and Chief Financial Officer since 
September 2018. He previously served as the Chief Financial Officer of Hologic, Inc., a medical technology company from May 
2014 to August 2018.  Prior to Hologic, Mr. McMahon spent 20 years with Johnson & Johnson most recently as Worldwide Vice 
President of Finance and Business Development for Ortho Clinical Diagnostics a division of Johnson & Johnson's Medical Device 
and Diagnostics Group.

Michael R. McMullen, 57, has served as Chief Executive Officer since March 2015 and as President since September 2014. 
From September 2014 to March 2015 he also served as Chief Operating Officer.  From September 2009 to September 2014  he 
served as Senior Vice President, Agilent and President, Chemical Analysis Group. Prior to that, he served in various capacities 
for Agilent, including as our Vice President and General Manager of the Chemical Analysis Solutions Unit of the Life Sciences 
and Chemical Analysis Group and Country Manager for Agilent's China, Japan and Korea Life Sciences and Chemical Analysis 
Group. Prior to that, Mr. McMullen served as our Controller for the Hewlett Packard Company and Yokogawa Electric Joint 
Venture from July 1996 to March 1999. Since September 2018, Mr. McMullen has served as a member of the Board of Directors 
of Coherent, Inc. 

Samraat S. Raha, 46, has served as our Senior Vice President, Agilent and President, Diagnostics and Genomics Group 
since April  2018.   From  May  2017  to April  2018,  Mr.  Raha  served  as  our  Senior  Vice  President,  Strategy  and  Corporate 
Development.  From June 2013 to January 2017 he served as Vice President, Global Marketing for Illumina, Inc. and from 2008 
to 2012 he served as Vice President and General Manager, Genomic Assays / NextGen qPCR for Life Technologies, Inc.  

Michael Tang, 44, has served as our Senior Vice President, General Counsel and Secretary since January 2016.  From May 
2015 to January 2016 he served as Vice President, Assistant General Counsel and Secretary and from November 2013 to April 
2015 he served as Vice President, Assistant General Counsel and Assistant Secretary.  From March 2012 to October 2013 he served 
as Business Development Manager in Agilent’s Corporate Development group.  Prior to that, Mr. Tang served in various capacities 
in Agilent's legal department. Before joining Agilent, Mr. Tang worked at Wilson Sonsini Goodrich & Rosati, a California law 
firm and Fenwick & West LLP, a California, law firm.

Jacob Thaysen, 43, has served as Senior Vice President, Agilent and President, Life Sciences and Applied Markets Group, 
since April 2018. From November 2014 to April 2018 he served as Senior Vice President, Agilent and President, Diagnostics and 
Genomics Group.  From October 2013 to November 2014 he served as Vice President and General Manager of the Diagnostics 
and Genomics business. Prior to that he served as Vice President and General Manager of the Genomics Solutions unit from 
January 2013 to October 2013. Before joining Agilent, he served in various capacities at Dako A/S, a Danish diagnostics company, 
including as Corporate Vice President of R&D,  Vice President, System Development, R&D, Vice President, Strategic Marketing 
and Vice President, Global Sales Operations.  Prior to Dako, Mr. Thaysen worked as a management consultant and Chief Technical 
Officer and founder of a high-tech start-up company.

Investor Information

We are subject to the informational requirements of the Securities Exchange Act of 1934 (“Exchange Act”). Therefore, we 
file periodic reports, proxy statements and other information with the Securities and Exchange Commission (“SEC”). The SEC 
maintains an Internet site (http://www.sec.gov) that contains reports, proxy and information statements and other information 
regarding issuers that file electronically.

Our  financial  and  other  information  can  be  accessed  at  our  Investor  Relations  website.  The  address  is 
www.investor.agilent.com. We make available, free of charge, copies of our annual report on Form 10-K, quarterly reports on 
Form 10-Q, current reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) 
of the Exchange Act as soon as reasonably practicable after filing such material electronically or otherwise furnishing it to the 
SEC.

Our Amended and Restated Bylaws,  Corporate Governance Standards, the charters of our Audit and Finance Committee, 
our Compensation Committee, our Executive Committee and our Nominating/Corporate Governance Committee, as well as our 
Standards of Business Conduct (including code of ethics provisions that apply to our principal executive officer, principal financial 
officer, principal accounting officer and senior financial officers) are available on our website at www.investor.agilent.com under 
“Corporate Governance”. These items are also available in print to any stockholder in the United States and Canada who requests 
them by calling (877) 942-4200. This information is also available by writing to the company at the address on the cover of this 
Annual Report on Form 10-K.

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Item 1A.  Risk Factors

Our operating results and financial condition could be harmed if the markets into which we sell our products decline or do 
not grow as anticipated.

Visibility into our markets is limited. Our quarterly sales and operating results are highly dependent on the volume and 
timing of orders received during the fiscal quarter, which are difficult to forecast and may be cancelled by our customers. In 
addition, our revenue and earnings forecasts for future fiscal quarters are often based on the expected seasonality of our markets. 
However, the markets we serve do not always experience the seasonality that we expect as customer spending policies and budget 
allocations, particularly for capital items, may change. Any decline in our customers' markets or in general economic conditions 
would likely result in a reduction in demand for our products and services. Also, if our customers' markets decline, we may not 
be able to collect on outstanding amounts due to us. Such declines could harm our consolidated financial position, results of 
operations, cash flows and stock price, and could limit our profitability. Also, in such an environment, pricing pressures could 
intensify. Since a significant portion of our operating expenses is relatively fixed in nature due to sales, research and development 
and manufacturing costs, if we were unable to respond quickly enough these pricing pressures could further reduce our operating 
margins.

If we do not introduce successful new products and services in a timely manner to address increased competition through 
frequent new product and service introductions, rapid technological changes and changing industry standards, our products 
and services may become obsolete, and our operating results may suffer.

We generally sell our products in industries that are characterized by increased competition through frequent new product 
and service introductions, rapid technological changes and changing industry standards. Without the timely introduction of new 
products, services and enhancements, our products and services may become technologically obsolete over time, in which case 
our revenue and operating results could suffer. The success of our new products and services will depend on several factors, 
including our ability to:

•
•
•

properly identify customer needs and predict future needs;
innovate and develop new technologies, services and applications;
appropriately allocate our research and development spending to products and services with higher growth
prospects;
successfully commercialize new technologies in a timely manner;

•
• manufacture and deliver new products in sufficient volumes and on time;
•
•
•
•

differentiate our offerings from our competitors' offerings;
price our products competitively;
anticipate our competitors' development of new products, services or technological innovations; and
control product quality in our manufacturing process.

In addition, if we fail to accurately predict future customer needs and preferences or fail to produce viable technologies, 
we may invest in research and development of products and services that do not lead to significant revenue, which would adversely 
affect our profitability. Even if we successfully innovate and develop new and enhanced products and services, we may incur 
substantial costs in doing so, and our operating results may suffer. In addition, promising new products may fail to reach the market 
or realize only limited commercial success because of real or perceived concerns of our customers. Furthermore, as we collaborate 
with pharmaceutical customers to develop drugs such as companion diagnostics assays or providing drug components like active 
pharmaceutical ingredients, we face risks that those drug programs may be cancelled upon clinical trial failures. 

General economic conditions may adversely affect our operating results and financial condition.

Our business is sensitive to negative changes in general economic conditions, both inside and outside the United States. 
Slower global economic growth and uncertainty in the markets in which we operate may adversely impact our business resulting 
in:

•
•
•
•

reduced demand for our products, delays in the shipment of orders, or increases in order cancellations;
increased risk of excess and obsolete inventories;
increased price pressure for our products and services; and
greater risk of impairment to the value, and a detriment to the liquidity, of our investment portfolio.

15

  
Failure to adjust our purchases due to changing market conditions or failure to accurately estimate our customers' demand 

could adversely affect our income.

Our income could be harmed if we are unable to adjust our purchases to reflect market fluctuations, including those caused 
by the seasonal nature of the markets in which we operate. The sale of our products and services are dependent, to a large degree, 
on customers whose industries are subject to seasonal trends in the demand for their products. During a market upturn, we may 
not be able to purchase sufficient supplies or components to meet increasing product demand, which could materially affect our 
results. In the past we have experienced a shortage of parts for some of our products. In addition, some of the parts that require 
custom design are not readily available from alternate suppliers due to their unique design or the length of time necessary for 
design work. Should a supplier cease manufacturing such a component, we would be forced to reengineer our product. In addition 
to discontinuing parts, suppliers may also extend lead times, limit supplies or increase prices due to capacity constraints or other 
factors. In order to secure components for the production of products, we may continue to enter into non-cancelable purchase 
commitments with vendors, or at times make advance payments to suppliers, which could impact our ability to adjust our inventory 
to declining market demands. If demand for our products is less than we expect, we may experience additional excess and obsolete 
inventories and be forced to incur additional expenses.

Demand for some of our products and services depends on the capital spending policies of our customers, research and 

development budgets and on government funding policies.

Our customers include pharmaceutical companies, laboratories, universities, healthcare providers, government agencies 
and public and private research institutions.   Many factors, including public policy spending priorities, available resources, mergers 
and consolidations, institutional and governmental budgetary policies and spending priorities, and product and economic cycles, 
have a significant effect on the capital spending policies of these entities. Fluctuations in the research and development budgets 
at these organizations could have a significant effect on the demand for our products and services. Research and development 
budgets  fluctuate  due  to  changes  in  available  resources,  consolidation,  spending  priorities,  general  economic  conditions  and 
institutional and governmental budgetary policies. The timing and amount of revenue from customers that rely on government 
funding  or  research  may  vary  significantly  due  to  factors  that  can  be  difficult  to  forecast,  including  changes  in  spending 
authorizations and budgetary priorities for our products and services. If demand for our products and services is adversely affected, 
our revenue and operating results would suffer.

Economic, political, foreign currency and other risks associated with international sales and operations could adversely 

affect our results of operations.

Because we sell our products worldwide, our business is subject to risks associated with doing business internationally. We 
anticipate that revenue from international operations will continue to represent a majority of our total revenue. International revenue 
and costs are subject to the risk that fluctuations in foreign currency exchange rates could adversely affect our financial results 
when translated into U.S. dollars for financial reporting purposes. The favorable effects of changes in foreign currency exchange 
rates has increased revenues by approximately 2 percentage points in the year ended October 31, 2018. When movements in 
foreign currency exchange rates have a positive impact on revenue it will also have a negative impact on our costs and expenses. 
In addition, many of our employees, contract manufacturers, suppliers, job functions, outsourcing activities and manufacturing 
facilities are located outside the United States. Accordingly, our future results could be harmed by a variety of factors, including:

•
•
•

•

•
•
•
•
•
•

interruption to transportation flows for delivery of parts to us and finished goods to our customers;
changes in a specific country's or region's political, economic or other conditions;
changes in diplomatic and trade relationships, including new tariffs, trade protection measures, import or export
licensing requirements, new or different customs duties trade embargoes and sanctions and other trade barriers;
tariffs imposed by the U.S. on goods from other countries and tariffs imposed by other countries on U.S. goods,
including the tariffs recently enacted and proposed by the U.S. government on various imports from China and by
the Chinese government on certain U.S. goods, the scope and duration of which, if implemented, remains uncertain;
negative consequences from changes in tax laws;
difficulty in staffing and managing widespread operations;
differing labor regulations;
differing protection of intellectual property;
unexpected changes in regulatory requirements; and
geopolitical uncertainty or turmoil, including terrorism and war.

We sell our products into many countries and we also source many components and materials for our products from various 
countries.  Tariffs recently announced and implemented could have negative impact on our business, results of operations and 

16

  
financial condition.  Further, additional tariffs which have been proposed or threatened and the potential escalation of a trade war 
and retaliatory measures could have a material adverse effect on our business, results of operations and financial condition.

We centralized most of our accounting and tax processes to two locations: India and Malaysia. These processes include 
general  accounting,  cost  accounting,  accounts  payable,  accounts  receivables  and  tax  functions.  If  conditions  change  in  those 
countries, it may adversely affect operations, including impairing our ability to pay our suppliers and collect our receivables. Our 
results of operations, as well as our liquidity, may be adversely affected and possible delays may occur in reporting financial 
results.

In addition, although the majority of our products are priced and paid for in U.S. dollars, a significant amount of certain 
types of expenses, such as payroll, utilities, tax, and marketing expenses, are paid in local currencies. Our hedging programs 
reduce,  but  do  not  always  entirely  eliminate,  within  any  given  twelve-month  period,  the  impact  of  currency  exchange  rate 
movements, and therefore fluctuations in exchange rates, including those caused by currency controls, could impact our business, 
operating results and financial condition by resulting in lower revenue or increased expenses. For expenses beyond that twelve-
month period, our hedging strategy does not mitigate our exposure. In addition, our currency hedging programs involve third party 
financial institutions as counterparties. The weakening or failure of financial institution counterparties may adversely affect our 
hedging programs and our financial condition through, among other things, a reduction in available counterparties, increasingly 
unfavorable terms, and the failure of the counterparties to perform under hedging contracts.

Our strategic initiatives to adjust our cost structure could have long-term adverse effects on our business and we may not 

realize the operational or financial benefits from such actions.

We have implemented multiple strategic initiatives across our businesses to adjust our cost structure, and we may engage 
in  similar  activities  in  the  future.    These  strategic  initiatives  and  our  regular  ongoing  cost  reduction  activities  may  distract 
management, could slow improvements in our products and services and limit our ability to increase production quickly if demand 
for our products increases.  In addition, delays in implementing our strategic initiatives, unexpected costs or failure to meet targeted 
improvements may diminish the operational and financial benefits we realize from such actions.  Any of the above circumstances 
could have an adverse effect on our business and operating results and financial condition.

Our business will suffer if we are not able to retain and hire key personnel.

Our future success depends partly on the continued service of our key research, engineering, sales, marketing, manufacturing, 
executive and administrative personnel. If we fail to retain and hire a sufficient number of these personnel, we will not be able to 
maintain or expand our business. The markets in which we operate are very dynamic, and our businesses continue to respond with 
reorganizations, workforce reductions and site closures. We believe our pay levels are very competitive within the regions that we 
operate. However, there is an intense competition for certain highly technical specialties in geographic areas where we continue 
to recruit, and it may become more difficult to hire and retain our key employees.

Our acquisitions, strategic investments and alliances, joint ventures, exiting of businesses and divestitures may result in 

financial results that are different than expected.

In the normal course of business, we frequently engage in discussions with third parties relating to possible acquisitions, 
strategic investments and alliances, joint ventures and divestitures, and generally expect to complete several transactions per year. 
In addition, we may decide to exit a particular business within our product portfolio. As a result of such transactions, our financial 
results may differ from our own or the investment community's expectations in a given fiscal quarter, or over the long term.  We 
may have difficulty developing, manufacturing and marketing the products of a newly acquired company in a way that enhances 
the performance of our combined businesses or product lines. Acquired businesses may also expose us to new risks and new 
markets and we may have difficulty addressing these risks in a cost effective and timely manner. Transactions such as acquisitions 
have resulted, and may in the future result in, unexpected significant costs and expenses. In the future, we may be required to 
record charges to earnings during the period if we determine there is an impairment of goodwill or intangible assets, up to the full 
amount of the value of the assets, or, in the case of strategic investments and alliances, consolidate results, including losses, of 
third parties or write down investment values or loans and convertible notes related to the strategic investment.

Integrating the operations of acquired businesses within Agilent could be a difficult, costly and time-consuming process 
that involves a number of risks.  Acquisitions and strategic investments and alliances may require us to integrate and collaborate 
with  a  different  company  culture,  management  team,  business  models,  business  infrastructure  and  sales  and  distribution 
methodologies and assimilate and retain geographically dispersed, decentralized operations and personnel. Depending on the size 
and complexity of an acquisition, our successful integration of the entity depends on a variety of factors, including introducing 
new products and meeting revenue targets as expected, the retention of key employees and key customers, increased exposure to 
17

  
certain governmental regulations and compliance requirements and increased costs and use of resources. Further, the integration 
of acquired businesses is likely to result in our systems and internal controls becoming increasingly complex and more difficult 
to manage. Any difficulties in the assimilation of acquired businesses into our control system could harm our operating results or 
cause us to fail to meet our financial reporting obligations.

Even if we are able to successfully integrate acquired businesses within Agilent, we may not be able to realize the revenue 
and other synergies and growth that we anticipated from the acquisition in the time frame that we expected, and the costs of 
achieving these benefits may be higher than what we expected. As a result, the acquisition and integration of acquired businesses 
may not contribute to our earnings as expected, we may not achieve our operating margin targets when expected, or at all, and we 
may not achieve the other anticipated strategic and financial benefits of such transactions.

A successful divestiture depends on various factors, including our ability to effectively transfer liabilities, contracts, facilities 
and employees to the purchaser, identify and separate the intellectual property to be divested from the intellectual property that 
we wish to keep and reduce fixed costs previously associated with the divested assets or business.  In addition, if customers of the 
divested business do not receive the same level of service from the new owners, this may adversely affect our other businesses to 
the extent that these customers also purchase other Agilent products. In exiting a business, we may still retain liabilities associated 
with the support and warranty of those businesses and other indemnification obligations. All of these efforts require varying levels 
of management resources, which may divert our attention from other business operations. If we do not realize the expected benefits 
or synergies of such transactions, our consolidated financial position, results of operations, cash flows and stock price could be 
negatively impacted.

If we fail to maintain an effective system of internal controls, we may not be able to accurately report our financial results, 

which could lead to a loss of investor confidence in our financial statements and have an adverse effect on our stock price.

Effective internal controls are necessary for us to provide reliable and accurate financial statements and to effectively prevent 
fraud.  We devote significant resources and time to comply with the internal control over financial reporting requirements of the 
Sarbanes Oxley Act of 2002 and continue to enhance our controls. However, we cannot be certain that we will be able to prevent 
future significant deficiencies or material weaknesses.  Inadequate internal controls could cause investors to lose confidence in 
our reported financial information, which could have a negative effect on investor confidence in our financial statements, the 
trading price of our stock and our access to capital.

Our customers and we are subject to various governmental regulations. Compliance with or changes in such regulations 
may cause us to incur significant expenses, and if we fail to maintain satisfactory compliance with certain regulations, we may 
be forced to recall products and cease their manufacture and distribution, and we could be subject to civil or criminal penalties.

Our customers and we are subject to various significant international, federal, state and local regulations, including but not 
limited to regulations in the areas of health and safety, packaging, product content, employment, labor and immigration, import/
export controls, trade restrictions and anti-competition. In addition, as a global organization, we are subject to data privacy and 
security laws, regulations, and customer-imposed controls in numerous jurisdictions as a result of having access to and processing 
confidential,  personal,  sensitive  and/or  patient  health  data  in  the  course  of  our  business.   The  EU's  General  Data  Protection 
Regulation (GDPR), which became effective in May 2018, applies to all of our activities related to products and services that we 
offer to EU customers and workers. The GDPR established new requirements regarding the handling of personal data and includes 
significant penalties for non-compliance (including possible fines of up to 4 percent of total company revenue). Other governmental 
authorities around the world are considering similar types of legislative and regulatory proposals concerning data protection. Each 
of these privacy, security and data protection laws and regulations could impose significant limitations and increase our cost of 
providing our products and services where we process end user personal data and could harm our results of operations and expose 
us to significant fines, penalties and other damages.

We must also comply with complex foreign and U.S. laws and regulations, such as the U.S. Foreign Corrupt Practices Act, 
the U.K. Bribery Act, and other local laws prohibiting corrupt payments to governmental officials, anti-competition regulations 
and sanctions imposed by the U.S. Office of Foreign Assets Control and other similar laws and regulations. Violations of these 
laws and regulations could result in fines and penalties, criminal sanctions, restrictions on our business conduct and on our ability 
to offer our products in one or more countries, and could also materially affect our brand, our ability to attract and retain employees, 
our  international  operations,  our  business  and  our  operating  results. Although  we  have  implemented  policies  and  procedures 
designed to ensure compliance with these laws and regulations, there can be no assurance that our employees, contractors, or 
agents will not violate our policies. 

These regulations are complex, change frequently and have tended to become more stringent over time. We may be required 
to incur significant expenses to comply with these regulations or to remedy any violations of these regulations. Any failure by us 
18

  
to comply with applicable government regulations could also result in the cessation of our operations or portions of our operations, 
product recalls or impositions of fines and restrictions on our ability to carry on or expand our operations. In addition, because 
many of our products are regulated or sold into regulated industries, we must comply with additional regulations in marketing our 
products. We develop, configure and market our products to meet customer needs created by these regulations. Any significant 
change in these regulations could reduce demand for our products, force us to modify our products to comply with new regulations 
or increase our costs of producing these products. If demand for our products is adversely affected or our costs increase, our 
operating results and business would suffer.

Our products and operations are also often subject to the rules of industrial standards bodies, like the International Standards 
Organization, as well as regulation by other agencies such as the FDA. We also must comply with work safety rules. If we fail to 
adequately address any of these regulations, our businesses could be harmed.

We are subject to extensive regulation by the FDA and certain similar foreign regulatory agencies, and failure to comply 

with such regulations could harm our reputation, business, financial condition and results of operations.

A number of our products are subject to regulation by the FDA and certain similar foreign regulatory agencies. In addition, 
a number of our products may in the future be subject to regulation by the FDA and certain similar foreign regulatory agencies.  
These  regulations  govern  a  wide  variety  of  product-related  activities,  from  quality  management,  design  and  development  to 
labeling, manufacturing, promotion, sales and distribution. If we or any of our suppliers or distributors fail to comply with FDA 
and other applicable regulatory requirements or are perceived to potentially have failed to comply, we may face, among other 
things, warning letters, adverse publicity affecting both us and our customers; investigations or notices of non-compliance, fines, 
injunctions, and civil penalties; import or export restrictions; partial suspensions or total shutdown of production facilities or the 
imposition of operating restrictions; increased difficulty in obtaining required FDA clearances or approvals or foreign equivalents; 
seizures or recalls of our products or those of our customers; or the inability to sell our products. Any such FDA or other regulatory 
agency actions could disrupt our business and operations, lead to significant remedial costs and have a material adverse impact 
on our financial position and results of operations.

Some of our products are subject to particularly complex regulations such as regulations of toxic substances, and failure 

to comply with such regulations could harm our business.

Some of our products and related consumables are used in conjunction with chemicals whose manufacture, processing, 
distribution and notification requirements are regulated by the U.S. Environmental Protection Agency (“EPA”) under the Toxic 
Substances  Control Act,  and  by  regulatory  bodies  in  other  countries  under  similar  laws.  The  Toxic  Substances  Control Act 
regulations govern, among other things, the testing, manufacture, processing and distribution of chemicals, the testing of regulated 
chemicals for their effects on human health and safety and the import and export of chemicals. The Toxic Substances Control Act 
prohibits persons from manufacturing any chemical in the United States that has not been reviewed by EPA for its effect on health 
and safety, and placed on an EPA inventory of chemical substances. We must ensure conformance of the manufacturing, processing, 
distribution of and notification about these chemicals to these laws and adapt to regulatory requirements in all applicable countries 
as these requirements change. If we fail to comply with the notification, record-keeping and other requirements in the manufacture 
or distribution of our products, then we could be subject to civil penalties, criminal prosecution and, in some cases, prohibition 
from distributing or marketing our products until the products or component substances are brought into compliance.

Our business may suffer if we fail to comply with government contracting laws and regulations.

We derive a portion of our revenue from direct and indirect sales to U.S., state, local, and foreign governments and their 
respective agencies. Such contracts are subject to various procurement laws and regulations, and contract provisions relating to 
their formation, administration and performance. Failure to comply with these laws, regulations or provisions in our government 
contracts  could  result  in  the  imposition  of  various  civil  and  criminal  penalties,  termination  of  contracts,  forfeiture  of  profits, 
suspension of payments, or suspension from future government contracting.  If our government contracts are terminated, if we 
are suspended from government work, or if our ability to compete for new contracts is adversely affected, our business could 
suffer.

Our reputation, ability to do business and financial statements may be harmed by improper conduct by any of our 

employees, agents or business partners.

We cannot provide assurance that our internal controls and compliance systems will always protect us from acts committed 
by employees, agents or business partners of ours (or of businesses we acquire or partner with) that would violate U.S. and/or 
non-U.S. laws, including the laws governing payments to government officials, bribery, fraud, kickbacks and false claims, pricing, 
sales and marketing practices, conflicts of interest, competition, export and import compliance, money laundering and data privacy. 
19

  
In particular, the U.S. Foreign Corrupt Practices Act, the U.K. Bribery Act and similar anti-bribery laws in other jurisdictions 
generally prohibit companies and their intermediaries from making improper payments to government officials for the purpose 
of obtaining or retaining business, and we operate in many parts of the world that have experienced governmental corruption to 
some degree. Any such improper actions or allegations of such acts could damage our reputation and subject us to civil or criminal 
investigations in the United States and in other jurisdictions and related shareholder lawsuits, could lead to substantial civil and 
criminal, monetary and non-monetary penalties and could cause us to incur significant legal and investigatory fees. In addition, 
the government may seek to hold us liable as a successor for violations committed by companies in which we invest or that we 
acquire. We also rely on our suppliers to adhere to our supplier standards of conduct, and material violations of such standards of 
conduct could occur that could have a material effect on our business, reputation and financial statements.

Our retirement and post retirement pension plans are subject to financial market risks that could adversely affect our 

future results of operations and cash flows.

We have significant retirement and post retirement pension plan assets and obligations. The performance of the financial 
markets and interest rates impact our plan expenses and funding obligations. Significant decreases in market interest rates, decreases 
in the fair value of plan assets and investment losses on plan assets will increase our funding obligations and adversely impact 
our results of operations and cash flows.

The impact of consolidation and acquisitions of competitors is difficult to predict and may harm our business.

The life sciences industry is intensely competitive and has been subject to increasing consolidation. Consolidation in our 
industries could result in existing competitors increasing their market share through business combinations and result in stronger 
competitors, which could have a material adverse effect on our business, financial condition and results of operations. We may 
not  be  able  to  compete  successfully  in  increasingly  consolidated  industries  and  cannot  predict  with  certainty  how  industry 
consolidation will affect our competitors or us.

If we are unable to successfully manage the consolidation and streamlining of our manufacturing operations, we may 

not achieve desired efficiencies and our ability to deliver products to our customers could be disrupted.

Although  we  utilize  manufacturing  facilities  throughout  the  world,  we  have  been  consolidating,  and  may  continue  to 
consolidate,  our  manufacturing  operations  to  certain  of  our  plants  to  achieve  efficiencies  and  gross  margin  improvements. 
Additionally, we typically consolidate the production of products from our acquisitions into our supply chain and manufacturing 
processes, which are technically complex and require expertise to operate. If we are unable to establish processes to efficiently 
and effectively produce high quality products in the consolidated locations, we may not achieve the anticipated synergies and 
production may be disrupted, which could adversely affect our business and operating results.

Our operating results may suffer if our manufacturing capacity does not match the demand for our products.

Because  we  cannot  immediately  adapt  our  production  capacity  and  related  cost  structures  to  rapidly  changing  market 
conditions, when demand does not meet our expectations, our manufacturing capacity may exceed our production requirements. 
If during an economic downturn we had excess manufacturing capacity, then our fixed costs associated with excess manufacturing 
capacity would adversely affect our gross margins, and operating results. If, during a general market upturn or an upturn in one 
of our segments, we cannot increase our manufacturing capacity to meet product demand, we may not be able to fulfill orders in 
a timely manner which could lead to order cancellations, contract breaches or indemnification obligations. This inability could 
materially and adversely limit our ability to improve our results. 

Dependence on contract manufacturing and outsourcing other portions of our supply chain, including logistics and third-
party  package  delivery  services,  may  adversely  affect  our  ability  to  bring  products  to  market  and  damage  our  reputation. 
Dependence  on  outsourced  information  technology  and  other  administrative  functions  may  impair  our  ability  to  operate 
effectively.

As part of our efforts to streamline operations and to cut costs, we outsource aspects of our manufacturing processes and 
other functions and continue to evaluate additional outsourcing. If our contract manufacturers or other outsourcers fail to perform 
their obligations in a timely manner or at satisfactory quality levels, our ability to bring products to market and our reputation 
could suffer. For example, during a market upturn, our contract manufacturers may be unable to meet our demand requirements, 
which may preclude us from fulfilling our customers' orders on a timely basis. The ability of these manufacturers to perform is 
largely outside of our control. If one or more of the third-party package delivery providers experiences a significant disruption in 
services or institutes a significant price increase, we may have to seek alternative providers, our costs could increase and the 
delivery of our products could be prevented or delayed. Additionally, changing or replacing our contract manufacturers, logistics 
20

  
providers or other outsourcers could cause disruptions or delays. In addition, we outsource significant portions of our information 
technology ("IT") and other administrative functions. Since IT is critical to our operations, any failure to perform on the part of 
our IT providers could impair our ability to operate effectively. In addition to the risks outlined above, problems with manufacturing 
or IT outsourcing could result in lower revenue and unexecuted efficiencies, and impact our results of operations and our stock 
price. 

Environmental contamination from past and ongoing operations could subject us to substantial liabilities.

Certain properties we have previously owned or leased are undergoing remediation for subsurface contaminations.  Although 
we are indemnified for liability relating to the required remediation at some of those properties, we may be subject to liability if 
these indemnification obligations are not fulfilled.  In other cases, we have agreed to indemnify the current owners of certain 
properties for liabilities related to contamination, including companies with which we have previously been affiliated such as HP, 
Inc., Hewlett-Packard Enterprise (formerly Hewlett-Packard Company) and Varian Medical Systems, Inc.  Further, other properties 
we have previously owned or leased at which we have operated in the past, or for which we have otherwise contractually assumed, 
or provided indemnities for, certain actual or contingent environmental liabilities may or do require remediation. While we are 
not  aware  of  any  material  liabilities  associated  with  any  potential  environmental  contamination  at  any  of  those  properties  or 
facilities, we may be exposed to material liability if environmental contamination at material levels is found to exist. In addition, 
in connection with the acquisition of certain companies, we have assumed other costs and potential or contingent liabilities for 
environmental matters.  Any significant costs or liabilities could have an adverse effect on results of operations.

Our current and historical manufacturing processes and operations involve, or have involved, the use of certain substances 
regulated under various foreign, federal, state and local environment protection and health and safety laws and regulations. As a 
result, we may become subject to liabilities for environmental contamination and these liabilities may be substantial. Although 
our policy is to apply strict standards for environmental protection and health and safety at our sites inside and outside the United 
States, we may not be aware of all conditions that could subject us to liability.  Failure to comply with these environmental 
protection and health and safety laws and regulations could result in civil, criminal, regulatory, administrative or contractual 
sanction, including fines, penalties or suspensions.  If we have any violations of, or incur liabilities pursuant to these laws or 
regulations, our financial condition and operating results could be adversely affected.   

Regulations related to “conflict minerals” may cause us to incur additional expenses and could limit the supply and 

increase the cost of certain metals used in manufacturing our products.

We  are  subject  to  the  rules  of  the  Securities  and  Exchange  Commission  (“SEC”)  which  require  disclosures  by  public 
companies of specified minerals, known as conflict minerals, that are necessary to the functionality or production of products 
manufactured or contracted to be manufactured. The rule, which requires an annual disclosure report to be filed with the SEC by 
May 31st of each year, requires companies to perform due diligence, disclose and report whether or not such minerals originate 
from the Democratic Republic of Congo or an adjoining country. There are costs associated with complying with these disclosure 
requirements, including for diligence in regards to the sources of any conflict minerals used in our products, in addition to the cost 
of remediation and other changes to products, processes, or sources of supply as a consequence of such verification activities.  In 
addition, our ongoing implementation of these rules could adversely affect the sourcing, supply, and pricing of materials used in 
our products. The rule could affect sourcing at competitive prices and availability in sufficient quantities of certain minerals used 
in the manufacture of our products, including tin, tantalum, gold and tungsten. The number of suppliers who provide conflict-free 
minerals may be limited. In addition, there may be material costs associated with complying with the disclosure requirements, 
such as costs related to the due diligence process of determining the source of certain minerals used in our products, as well as 
costs of possible changes to products, processes, or sources of supply as a consequence of such verification activities. As our 
supply chain is complex and we use contract manufacturers for some of our products, we may not be able to sufficiently verify 
the origins of the relevant minerals used in our products through the due diligence procedures that we implement, which may harm 
our reputation. We may also encounter challenges to satisfy those customers who require that all of the components of our products 
be certified as conflict-free, which could place us at a competitive disadvantage if we are unable to do so.

Third parties may claim that we are infringing their intellectual property and we could suffer significant litigation or 

licensing expenses or be prevented from selling products or services.

From time to time, third parties may claim that one or more of our products or services infringe their intellectual property 
rights. We analyze and take action in response to such claims on a case by case basis. Any dispute or litigation regarding patents 
or other intellectual property could be costly and time-consuming due to the complexity of our technology and the uncertainty of 
intellectual property litigation and could divert our management and key personnel from our business operations. A claim of 
intellectual property infringement could force us to enter into a costly or restrictive license agreement, which might not be available 
under acceptable terms or at all, could require us to redesign our products, which would be costly and time-consuming, and/or 
21

  
could subject us to significant damages or to an injunction against the development and sale of certain of our products or services. 
Our intellectual property portfolio may not be useful in asserting a counterclaim, or negotiating a license, in response to a claim 
of intellectual property infringement. In certain of our businesses, we rely on third party intellectual property licenses and we 
cannot ensure that these licenses will continue to be available to us in the future or can be expanded to cover new products on 
favorable terms or at all.

Third parties may infringe our intellectual property and we may suffer competitive injury or expend significant resources 

enforcing our rights.

Our success depends in large part on our proprietary technology, including technology we obtained through acquisitions. 
We rely on various intellectual property rights, including patents, copyrights, trademarks and trade secrets, as well as confidentiality 
provisions and licensing arrangements, to establish our proprietary rights. If we do not enforce our intellectual property rights 
successfully our competitive position may suffer which could harm our operating results.

Our pending patent, copyright and trademark registration applications, may not be allowed or competitors may challenge 
the validity or scope of our patents, copyrights or trademarks. In addition, our patents, copyrights, trademarks and other intellectual 
property rights may not provide us with a significant competitive advantage.

We may need to spend significant resources monitoring and enforcing our intellectual property rights and we may not be 
aware of or able to detect or prove infringement by third parties. Our competitive position may be harmed if we cannot detect 
infringement and enforce our intellectual property rights quickly or at all. In some circumstances, we may choose to not pursue 
enforcement because an infringer has a dominant intellectual property position or for other business reasons. In addition, competitors 
might  avoid  infringement  by  designing  around  our  intellectual  property  rights  or  by  developing  non-infringing  competing 
technologies. Intellectual property rights and our ability to enforce them may be unavailable or limited in some countries which 
could make it easier for competitors to capture market share and could result in lost revenues. Furthermore, some of our intellectual 
property is licensed to others which may allow them to compete with us using that intellectual property.

Changes in tax laws, unfavorable resolution of tax examinations, or exposure to additional tax liabilities could have a 

material adverse effect on our results of operations, financial condition and liquidity.

We are subject to taxes in the U.S., Singapore and various foreign jurisdictions. Governments in the jurisdictions in which 
we operate implement changes to tax laws and regulations periodically. Any implementation of tax laws that fundamentally change 
the taxation of corporations in the U.S. or Singapore could materially impact our effective tax rate and could have a significant 
adverse impact on our financial results. 

The 2017 United States Tax Cut and Jobs Act (“Tax Act”) significantly changed the taxation of U.S. based multinational 
corporations.  Our compliance with the Tax Act requires the use of estimates in our financial statements and exercise of significant 
judgment in accounting for its provisions.  The implementation of the Tax Act requires interpretations and implementing regulations 
by the Internal Revenue Service, as well as state tax authorities.  The legislation could be subject to potential amendments and 
technical corrections, any of which could materially lessen or increase certain adverse impacts of the legislation.  As regulations 
and guidance evolve with respect to the Tax Act, and as we gather information and perform more analysis, our results may differ 
from previous estimates and may materially affect our financial position.

We are also subject to examinations of our tax returns by tax authorities in various jurisdictions around the world. We 
regularly assess the likelihood of adverse outcomes resulting from ongoing tax examinations to determine the adequacy of our 
provision for taxes. These assessments can require a high degree of judgment and estimation. Intercompany transactions associated 
with the sale of inventory, services, intellectual property and cost share arrangements are complex and affect our tax liabilities. 
The calculation of our tax liabilities involves dealing with uncertainties in the application of complex tax laws and regulations in 
multiple jurisdictions. There can be no assurance that the outcomes from ongoing tax examinations will not have an adverse effect 
on our operating results and financial condition. A difference in the ultimate resolution of tax uncertainties from what is currently 
estimated could have an adverse effect on our financial results and condition.

If tax incentives change or cease to be in effect, our income taxes could increase significantly.

We  benefit  from  tax  incentives  extended  to  our  foreign  subsidiaries  to  encourage  investment  or  employment.  Several 
jurisdictions have granted us tax incentives which require renewal at various times in the future. The incentives are conditioned 
on achieving various thresholds of investments and employment, or specific types of income. Our taxes could increase if the 
incentives are not renewed upon expiration. If we cannot or do not wish to satisfy all or parts of the tax incentive conditions, we 

22

  
may lose the related tax incentive and could be required to refund tax incentives previously realized. As a result, our effective tax 
rate could be higher than it would have been had we maintained the benefits of the tax incentives.

We have outstanding debt and may incur other debt in the future, which could adversely affect our financial condition, 

liquidity and results of operations.

We currently have outstanding an aggregate principal amount of $1.8 billion in senior unsecured notes. We also are party 
to a five-year unsecured revolving credit facility which expires in September 2019.  On June 9, 2015, we increased the commitments 
under the existing credit facility by $300 million and on July 14, 2017, the commitments under the existing credit facility were 
increased by an additional $300 million so that the aggregate commitments under the facility now total $1 billion.  As of October 31, 
2018, we had no borrowings outstanding under the credit facility. We may borrow additional amounts in the future and use the 
proceeds from any future borrowing for general corporate purposes, future acquisitions, expansion of our business or repurchases 
of our outstanding shares of common stock.

Our incurrence of this debt and increases in our aggregate levels of debt, may adversely affect our operating results and 

financial condition by, among other things:

•

•

•

increasing our vulnerability to downturns in our business, to competitive pressures and to adverse economic and
industry conditions;
requiring  the  dedication  of  an  increased  portion  of  our  expected  cash  flows  from  operations  to  service  our
indebtedness, thereby reducing the amount of expected cash flows available for other purposes, including capital
expenditures, acquisitions, stock repurchases and dividends; and
limiting our flexibility in planning for, or reacting to, changes in our business and our industry.

Our current revolving credit facility imposes restrictions on us, including restrictions on our ability to create liens on our 
assets and the ability of our subsidiaries to incur indebtedness, and requires us to maintain compliance with specified financial 
ratios. Our ability to comply with these ratios may be affected by events beyond our control. In addition, the indenture governing 
our senior notes contains covenants that may adversely affect our ability to incur certain liens or engage in certain types of sale 
and leaseback transactions. If we breach any of the covenants and do not obtain a waiver from the lenders, then, subject to applicable 
cure periods, our outstanding indebtedness could be declared immediately due and payable.

If we suffer a loss to our factories, facilities or distribution system due to catastrophe, our operations could be seriously 

harmed.

Our factories, facilities and distribution system are subject to catastrophic loss due to fire, flood, terrorism or other natural 
or man-made disasters. In particular, several of our facilities could be subject to a catastrophic loss caused by earthquake due to 
their locations. Our production facilities, headquarters, and laboratories in California, and our production facilities in Japan, are 
all located in areas with above-average seismic activity. If any of our facilities were to experience a catastrophic loss, it could 
disrupt our operations, delay production, shipments and revenue and result in large expenses to repair or replace the facility. If 
such a disruption were to occur, we could breach agreements, our reputation could be harmed, and our business and operating 
results could be adversely affected. In addition, because we have consolidated our manufacturing facilities and we may not have 
redundant manufacturing capability readily available, we are more likely to experience an interruption to our operations in the 
event of a catastrophe in any one location. Although we carry insurance for property damage and business interruption, we do not 
carry insurance or financial reserves for interruptions or potential losses arising from earthquakes or terrorism. Also, our third-
party insurance coverage will vary from time to time in both type and amount depending on availability, cost and our decisions 
with respect to risk retention. Economic conditions and uncertainties in global markets may adversely affect the cost and other 
terms upon which we are able to obtain third-party insurance. If our third-party insurance coverage is adversely affected, or to the 
extent we have elected to self-insure, we may be at a greater risk that our operations will be harmed by a catastrophic loss.

If we experience a significant disruption in, or breach in security of, our information technology systems, or if we fail to 

implement new systems and software successfully, our business could be adversely affected.

We rely on several centralized information technology systems throughout our company to provide products and services, 
keep financial records, process orders, manage inventory, process shipments to customers and operate other critical functions. Our 
information technology systems may be susceptible to damage, disruptions or shutdowns due to power outages, hardware failures, 
computer viruses, attacks by computer hackers, telecommunication failures, user errors, catastrophes or other unforeseen events. 
Our  information  technology  systems  also  may  experience  interruptions,  delays  or  cessations  of  service  or  produce  errors  in 
connection with system integration, software upgrades or system migration work that takes place from time to time.  If we were 
to experience a prolonged system disruption in the information technology systems that involve our interactions with customers 
23

  
or suppliers, it could result in the loss of sales and customers and significant incremental costs, which could adversely affect our 
business. In addition, security breaches of our information technology systems could result in the misappropriation or unauthorized 
disclosure of confidential information belonging to us or to our employees, partners, customers or suppliers, which could result 
in our suffering significant financial or reputational damage.

Adverse  conditions  in  the  global  banking  industry  and  credit  markets  may  adversely  impact  the  value  of  our  cash 

investments or impair our liquidity.

As of October 31, 2018, we had cash and cash equivalents of approximately $2,247 million invested or held in a mix of 
money market funds, time deposit accounts and bank demand deposit accounts. Disruptions in the financial markets may, in some 
cases, result in an inability to access assets such as money market funds that traditionally have been viewed as highly liquid. Any 
failure of our counterparty financial institutions or funds in which we have invested may adversely impact our cash and cash 
equivalent positions and, in turn, our operating results and financial condition.

We could incur significant liabilities if the distribution of Keysight common stock to our shareholders is determined to be 

a taxable transaction.

We have received an opinion from outside tax counsel to the effect that the separation and distribution of Keysight qualifies 
as a transaction that is described in Sections 355(a) and 368(a)(1)(D) of the Internal Revenue Code.  The opinion relies on certain 
facts, assumptions, representations and undertakings from Keysight and us regarding the past and future conduct of the companies’ 
respective businesses and other matters.  If any of these facts, assumptions, representations or undertakings are incorrect or not 
satisfied, our shareholders and we may not be able to rely on the opinion of tax counsel and could be subject to significant tax 
liabilities.   Notwithstanding the opinion of tax counsel we have received, the IRS could determine on audit that the separation is 
taxable if it determines that any of these facts, assumptions, representations or undertakings are not correct or have been violated 
or if it disagrees with the conclusions in the opinion. If the separation is determined to be taxable for U.S. federal income tax 
purposes, our shareholders that are subject to U.S. federal income tax and we could incur significant U.S. federal income tax 
liabilities.

We cannot assure that we will continue to pay dividends on our common stock.

Since the first quarter of fiscal year 2012, we have paid a quarterly dividend on our common stock. The timing, declaration, 
amount and payment of any future dividends fall within the discretion of our Board of Directors and will depend on many factors, 
including our available cash, estimated cash needs, earnings, financial condition, operating results, capital requirements, as well 
as  limitations  in  our  contractual  agreements,  applicable  law,  regulatory  constraints,  industry  practice  and  other  business 
considerations that our Board of Directors considers relevant. A change in our dividend program could have an adverse effect on 
the market price of our common stock.

Item 1B.    Unresolved Staff Comments

None.

Item 2.  Properties

As of October 31, 2018, we owned or leased a total of approximately 6.3 million square feet of space worldwide. Of that, 
we owned approximately 4.4 million square feet and leased the remaining 1.9 million square feet. Our sales and support facilities 
occupied  a  total  of  approximately  0.7  million  square  feet.  Our  manufacturing  plants,  R&D  facilities  and  warehouse  and 
administrative facilities occupied approximately 5.6 million square feet. All of our businesses share sales offices throughout the 
world.

Information about each of our businesses appears below:

Life Sciences & Applied Markets Business.  Our life sciences and applied markets business has manufacturing and R&D 

facilities in Australia, China, Germany, Italy, Malaysia, Singapore, United Kingdom and the United States.

Diagnostics and Genomics Business.  Our diagnostics and genomics business has manufacturing and R&D facilities in 

Belgium, Denmark, Malaysia and the United States.

Agilent CrossLab Business. Our Agilent CrossLab business has manufacturing and R&D facilities in Australia, China, 

Germany, Japan, Netherlands, Singapore, United Kingdom and the United States.

24

  
Item 3.  Legal Proceedings

We are involved in lawsuits, claims, investigations and proceedings, including, but not limited to, intellectual property, 
commercial, real estate, environmental and employment matters, which arise in the ordinary course of business. There are no 
matters  pending  that  we  currently  believe  are  probable  and  reasonably  possible  of  having  a  material  impact  to  our  business, 
consolidated financial condition, results of operations or cash flows.

Item 4.  Mine Safety Disclosures

Not applicable.

PART II

Item 5.  Market for the Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Our common stock is listed on the New York Stock Exchange with the ticker symbol “A”.   As of December 1, 2018, there 

were 22,187 common stockholders of record.

 The information required by this item with respect to equity compensation plans is included under the caption "Equity 
Compensation Plans" in our Proxy Statement for the Annual Meeting of Stockholders to be held March 20, 2019, to be filed with 
the Securities and Exchange Commission pursuant to Regulation 14A, and is incorporated herein by reference.

25

  
STOCK PRICE PERFORMANCE GRAPH

The graph below shows the cumulative total stockholder return on our common stock with the cumulative total return of 
the S&P 500 Index and our peer group, consisting of all companies in the Health Care and Materials Indexes of the S&P 500, 
assuming an initial investment of $100 on October 31, 2013 and the reinvestment of all dividends.  The cumulative returns on our 
common stock have also been adjusted to reflect the spin-off of our electronic measurement business into an independent publicly 
traded company called Keysight Technologies, Inc. on November 1, 2014.

Agilent’s stock price performance shown in the following graph is not indicative of future stock price performance. The data 

for this performance graph was compiled for us by Standard and Poor’s.

Comparison of 5 Years (10/31/2013 to 10/31/2018) Cumulative Total Return
Among Agilent Technologies, the S&P 500 Index, 
and the Peer Group Index

$200

$150

$100

$50

$0

Agilent Technologies

S&P 500

Peer Group

Company Name / Index
Agilent Technologies
S&P 500
Peer Group

Base
Period
10/31/2013
100
100
100

        INDEXED RETURNS
            Years Ending

10/31/2014 10/31/2015
104.32
123.37
134.19

109.93
117.27
125.48

10/31/2016
121.65
128.93
130.32

10/31/2017
191.77
159.40
160.31

10/31/2018
184.30
171.11
174.07

26

  
ISSUER PURCHASES OF EQUITY SECURITIES

The table below summarizes information about the Company’s purchases, based on trade date; of its equity securities 
registered pursuant to Section 12 of the Exchange Act during the quarterly period ended October 31, 2018. The total number of 
shares of common stock purchased by the Company during the fiscal year ended October 31, 2018 is 6,435,974 shares.

Period

Aug. 1, 2018 through
Aug. 31, 2018
Sep. 1, 2018 through
Sep. 30, 2018
Oct. 1, 2018 through
Oct. 31, 2018
Total

Total Number of
Shares of Common
Stock Purchased(1)

Weighted Average
Price Paid per Share of
Common Stock(2)

Total
Number of
Shares of Common
Stock Purchased as
Part of Publicly
Announced Plans or
Programs(1)

Maximum
Approximate Dollar
Value of Shares of
Common Stock that
May Yet Be
Purchased Under the
Plans or Programs
(in millions)(1)

241,748

202,400

881,462
1,325,610

$
$

66.07

69.04

63.93
65.10

241,748

202,400

881,462
1,325,610

$

$

$

258

244

188

(1) 

On May 28, 2015, we announced that our board of directors had approved a new share repurchase program (the "2015 
repurchase program"). The 2015 repurchase program authorizes the purchase of up to $1.14 billion of our common stock 
through and including November 1, 2018.  The 2015 repurchase program does not require the company to acquire a 
specific number of shares and may be suspended or discontinued at any time. As of October 31, 2018, all repurchased 
shares have been retired. The remaining authorization of $188 million expired on November 1, 2018.

(2) 

The weighted average price paid per share of common stock does not include the cost of commissions.

27

Item 6.    Selected Financial Data

SELECTED FINANCIAL DATA
(Unaudited)

Consolidated Statement of Operations Data:

Net revenue

Income from continuing operations before taxes

Income from continuing operations

Income (loss) from discontinued operations, net of taxes

Net income

Net income per share — basic:

Income from continuing operations

Income (loss) from discontinued operations, net of taxes
Net income per share - basic

Net income per share — diluted:

Income from continuing operations

Income (loss) from discontinued operations, net of taxes

Net income per share - diluted

Weighted average shares used in computing basic net
income per share

Weighted average shares used in computing diluted net
income per share

Years Ended October 31,

2018

2017

2016

2015

2014

(in millions, except per share data)

$

$

$

$

$

$

$

$

$

4,914

946

316

$

$

$

4,472

803

684

$

$

$

4,202

544

462

$

$

$

— $

— $

— $

$

$

$

$

$

316

0.98

—
0.98

0.97

—

0.97

321

325

$

$

$

$

684

2.12

—
2.12

2.10

—

$

$

$

$

462

1.42

—
1.42

1.40

—

2.10

$

1.40

$

322

326

326

329

4,038

480

$

$

438
$
(37) $
$
401

$

$

$

$

1.32
(0.12)
1.20

1.31
(0.11)
1.20

333

335

4,048

229

232

317

549

0.70

0.95
1.65

0.69

0.93

1.62

333

338

Cash dividends declared per common share

$

0.596

$

0.528

0.460

$

0.400

$

0.528

Consolidated Balance Sheet Data:
Cash and cash equivalents
Working capital
Total assets
Long-term debt
Stockholders' equity

October 31,

2018

2017

2016

2015

2014

(in millions)

$
$
$
$
$

2,247
2,677
8,541
1,799
4,567

$
$
$
$
$

2,678
2,906
8,426
1,801
4,831

$
$
$
$
$

2,289
2,690
7,794
1,904
4,243

$
$
$
$
$

2,003
2,710
7,479
1,655
4,167

$
$
$
$
$

(1)
2,218
3,817
10,815
1,663
5,301

(1) The above consolidated balance sheet includes Keysight which is presented as a discontinued operation until October 31,
2014.

28

Item 7.    Management's Discussion and Analysis of Financial Condition and Results of Operations

The following discussion should be read in conjunction with the consolidated financial statements and notes thereto included 
elsewhere in this Annual Report on Form 10-K.  This report contains forward-looking statements including, without limitation, 
statements regarding trends, seasonality and growth in, and drivers of, the markets we sell into, our strategic direction, new product 
and service introductions and future products and services, adoption of our products, the ability of our products to meet market 
and customer needs, improving our customers’ experience, future financial results, our operating margin, mix, our investments, 
including in manufacturing infrastructure and research and development, our ability to identify and enable synergies across our 
businesses, our focus on balanced capital allocation, competition, our contributions to our pension and other defined benefit plans, 
impairment of goodwill and other intangible assets, the effect of the U.S. Tax Cuts and Jobs Act of 2017 and U.S. and other tariffs, 
the impact of foreign currency movements, our hedging programs and other actions to offset the effects of tariffs and foreign 
currency movements, our future effective tax rate and tax valuation allowance, earnings from our foreign subsidiaries, repatriation 
of our earnings from foreign jurisdictions, the impact of local government regulations on our ability to pay vendors or conduct 
operations, our liquidity position, our ability to generate cash from operations, the potential impact of adopting new accounting 
pronouncements,indemnification, the use of contract manufacturers, out sourcing and third-party package delivery services, source 
and supply of materials used in our products, our sales, our purchase commitments, our capital expenditures, the integration of 
our acquisitions and other transactions, write down of investment values or loans and convertible notes, our stock repurchase 
program, our declared dividends, and the existence of economic instability, that involve risks and uncertainties. Our actual results 
could differ materially from the results contemplated by these forward-looking statements due to various factors, including those 
discussed in Part I Item 1A and elsewhere in this Form 10-K.

Overview and Executive Summary

Agilent Technologies Inc. ("we", "Agilent" or the "company"), incorporated in Delaware in May 1999, is a global leader 
in  life  sciences,  diagnostics  and  applied  chemical  markets,  providing  application  focused  solutions  that  include  instruments, 
software, services and consumables for the entire laboratory workflow.

In 2018, we acquired seven businesses for a combined purchase price of approximately $536 million. The largest of which 
was Advanced Analytical Technologies, Inc. ("AATI") for approximately $268 million in cash. On November 14, 2018, we acquired 
100 percent of the stock of ACEA Biosciences Inc. ("ACEA"), a developer of cell analysis tools, for $250 million in cash. The 
financial results of ACEA will be included within our financial results from the date of the close. In 2017, we acquired two 
businesses for a combined purchase price of approximately $125 million in cash. 

Agilent's net revenue of $4,914 million in 2018 increased 10 percent when compared to 2017. Foreign currency movements 
for 2018 had an overall favorable impact on revenue of approximately 2 percentage points compared to 2017. Acquisitions in 
2018 had an overall favorable impact of 1 percentage point when compared to 2017. Revenue in the life sciences and applied 
markets business increased 9 percent in 2018 when compared to 2017. Foreign currency movements had an favorable impact on 
revenue of 2 percentage points in 2018 when compared to 2017.  Revenue in the diagnostics and genomics business  increased 
10 percent in 2018 when compared to 2017. Foreign currency movements had an favorable impact on revenue of 3 percentage 
points in 2018 when compared to 2017. Revenue in the Agilent CrossLab business increased 11 percent in 2018 when compared 
to 2017. Foreign currency movements had an favorable impact on revenue of 2 percentage points in 2018 when compared to 2017. 

Agilent's net revenue of $4,472 million increased 6 percent in 2017 when compared to 2016. Foreign currency movements 
for 2017 had an overall unfavorable impact on revenue of approximately 1 percentage point compared to 2016. Revenue in the 
life sciences and applied markets business increased 4 percent in 2017 when compared to 2016. Foreign currency movements had 
an overall unfavorable impact on revenue of less than 1 percentage point in 2017 when compared to 2016. Revenue in the diagnostics 
and genomics business increased 9 percent in 2017 when compared to 2016. Foreign currency movements had no overall impact 
on revenue in 2017 when compared to 2016. Revenue in the Agilent CrossLab business increased 8 percent in 2017 when compared 
to 2016. Foreign currency movements had an overall unfavorable impact on revenue of less than 1 percentage point in 2017 when 
compared to 2016. 

Net  income  was  $316  million  in  2018  compared  to  net  income  of  $684  million  and  $462  million  in  2017  and  2016, 
respectively. Net income for the year ended October 31, 2018 was impacted by a  discrete tax charge of $552 million related to 
the enactment of the Tax Act passed on December 22, 2017. See  Note 4, "Income Taxes" for more details.  As of October 31, 
2018 and 2017, we had cash and cash equivalents balances of $2,247 million and $2,678 million, respectively. 

 On November 22, 2013 we announced that our board of directors had authorized a share repurchase program. The program 
was designed to reduce or eliminate dilution resulting from issuance of stock under the company's employee equity incentive 
29

programs to target maintaining a weighted average share count of approximately 335 million diluted shares.  For the year ended 
October 31, 2016 we repurchased 2 million shares for $98 million which completed the purchases under this authorization.

On May 28, 2015 we announced that our board of directors had approved a new share repurchase program (the "2015 
repurchase program"). The 2015 share repurchase program authorizes the purchase of up to $1.14 billion of our common stock at 
the company's discretion through and including November 1, 2018.  The 2015 repurchase program does not require the company 
to acquire a specific number of shares and may be suspended or discontinued at any time.  During the year ended October 31, 
2016,  upon the completion of our previous repurchase program, we repurchased approximately 8.3 million shares for $336 million
under this authorization. During the year ended October 31, 2017, we repurchased approximately 4.1 million shares for $194 
million under this authorization. During the year ended October 31, 2018 we repurchased and retired approximately 6.4 million
shares for $422 million under this authorization. As of October 31, 2018, we had remaining authorization to repurchase up to $188 
million of our common stock under this program which expired on November 1, 2018.

On November 19, 2018 we announced that our board of directors had approved a new share repurchase program (the "2019 
repurchase program") designed, among other things, to reduce or eliminate dilution resulting from issuance of stock under the 
company's employee equity incentive programs. The 2019 share repurchase program authorizes the purchase of up to $1.75 billion
of our common stock at the company's discretion and has no fixed termination date. The 2019 repurchase program does not require 
the company to acquire a specific number of shares and may be suspended, amended or discontinued at any time. 

  During the year ended October 31, 2018, cash dividends of $0.596 per share, or $191 million were declared and paid on 
the company's outstanding common stock. During the year ended October 31, 2017, cash dividends of $0.528 per share, or $170 
million were declared and paid on the company's outstanding common stock. During the year ended October 31, 2016, cash 
dividends of $0.460 per share, or $150 million were declared and paid on the company's outstanding common stock. 

On November 14, 2018 we declared a quarterly dividend of $0.164 per share of common stock, or approximately $52 million 
which will be paid on January 23, 2019 to shareholders of record as of the close of business on December 31, 2018. The timing 
and amounts of any future dividends are subject to determination and approval by our board of directors.

Looking  forward,  we  continue  to  focus  on  differentiating  product  solutions,  improving  our  customers'  experience  and 
growing our operating margin. In addition, we remain focused on a balanced capital allocation through our dividend and share 
repurchase programs. We expect foreign currency to negatively impact revenue in 2019 but we also anticipate the contribution 
from our recent acquisitions to partially offset the currency impact.

Critical Accounting Policies and Estimates

The preparation of financial statements in accordance with accounting principles generally accepted in the U.S. requires 
management to make estimates and assumptions that affect the amounts reported in our consolidated financial statements and 
accompanying  notes.  Management  bases  its  estimates  on  historical  experience  and  various  other  assumptions  believed  to  be 
reasonable. Although these estimates are based on management's best knowledge of current events and actions that may impact 
the company in the future, actual results may be different from the estimates.  An accounting policy is deemed to be critical if it 
requires an accounting estimate to be made based on assumptions about matters that are highly uncertain at the time the estimate 
is made and if different estimates that reasonably could have been used or changes in the accounting estimate that are reasonably 
likely to occur could materially change the financial statements. Our critical accounting policies are those that affect our financial 
statements  materially  and  involve  difficult,  subjective  or  complex  judgments  by  management.  Those  policies  are  revenue 
recognition,  inventory  valuation,  share-based  compensation,  retirement  and  post-retirement  plan  assumptions,  valuation  of 
goodwill and purchased intangible assets and accounting for income taxes.

Revenue Recognition.    We enter into agreements to sell products (hardware or software), services, and other arrangements 
(multiple element arrangements) that include combinations of products and services. Revenue from product sales, net of trade 
discounts and allowances, is recognized provided that persuasive evidence of an arrangement exists, delivery has occurred, the 
price is fixed or determinable, and collectability is reasonably assured. Delivery is considered to have occurred when title and risk 
of loss have transferred to the customer. Revenue is reduced for estimated product returns, when appropriate. For sales that include 
customer-specified acceptance criteria, revenue is recognized after the acceptance criteria have been met. For products that include 
installation, if the installation meets the criteria to be considered a separate element, product revenue is recognized upon delivery, 
and recognition of installation revenue occurs when the installation is complete. Otherwise, neither the product nor the installation 
revenue is recognized until the installation is complete. Revenue from services is deferred and recognized over the contractual 
period or as services are rendered and accepted by the customer. We allocate revenue to each element in our multiple-element 
arrangements based upon their relative selling prices. We determine the selling price for each deliverable based on a selling price 
hierarchy. The selling price for a deliverable is based on our vendor specific objective evidence (VSOE) if available, third-party 
30

evidence (TPE) if VSOE is not available, or estimated selling price (ESP) if neither VSOE nor TPE is available. Revenue from 
the sale of software products that are not required to deliver the tangible product's essential functionality are accounted for under 
software revenue recognition rules. Revenue allocated to each element is then recognized when the basic revenue recognition 
criteria for that element have been met. The amount of product revenue recognized is affected by our judgments as to whether an 
arrangement includes multiple elements.

The  aforementioned  factors  may  result  in  a  different  allocation  of  revenue  to  the  deliverables  in  multiple  element 
arrangements, which may change the pattern and timing of revenue recognition for these elements but will not change the total 
revenue recognized for the arrangement.

Inventory Valuation.    We assess the valuation of our inventory on a periodic basis and make adjustments to the value for 
estimated excess and obsolete inventory based upon estimates about future demand and actual usage. Such estimates are difficult 
to make under most economic conditions. The excess balance determined by this analysis becomes the basis for our excess inventory 
charge. Our excess inventory review process includes analysis of sales forecasts, managing product rollovers and working with 
manufacturing to maximize recovery of excess inventory. If actual market conditions are less favorable than those projected by 
management, additional write-downs may be required. If actual market conditions are more favorable than anticipated, inventory 
previously written down may be sold to customers, resulting in lower cost of sales and higher income from operations than expected 
in that period. 

Share-Based Compensation.    We account for share-based awards in accordance with the authoritative guidance. Under 
the authoritative guidance, share-based compensation expense is primarily based on estimated grant date fair value and is recognized 
on a straight-line basis. The fair value of share-based awards for employee stock option awards was estimated using the Black-
Scholes option pricing model. Stock options were granted in years prior to fiscal year 2016. Shares granted under the Long-Term 
Performance Program based on Total Shareholders Return ("LTPP-TSR") were valued using the Monte Carlo simulation model. 
The estimated fair value of restricted stock unit awards, LTPP based on Operating Margin (“LTPP-OM”) and LTPP based on 
Earnings per share (“LTPP-EPS”) is determined based on the market price of Agilent's common stock on the date of grant adjusted 
for expected dividend yield. The compensation cost for LTPP (OM) and LTPP (EPS) reflects the cost of awards that are probable 
to vest at the end of the performance period. In the case of LTPP-OM, the performance targets for all the three years of performance 
period is set at the time of grant. The performance targets for LTPP-EPS grants for year 2 and year 3 of the performance period 
will be set in the first quarter of year 2 and year 3, respectively. The probable shares to vest are estimated based on the forecasted 
OM and EPS at the time of the grant and updated every quarter with latest forecast and actual information. The Employee Stock 
Purchase Plan ("ESPP") allows eligible employees to purchase shares of our common stock at 85 percent of the fair market value 
at  the  purchase  date. All  awards  granted  after  2015  to  our  senior  management  employees  have  a  one  year  post-vest  holding 
restriction. The estimated discount associated with post-vest holding restrictions is calculated using the Finnerty model.

Both the Black-Scholes and Monte Carlo simulation fair value models require the use of highly subjective and complex 
assumptions, including the option's expected life and the price volatility of the underlying stock. For LTPP (TSR) grants in 2016, 
we used the 3-year average historical stock price volatility of a group of our peer companies. We believed our historical volatility 
prior to the separation of Keysight in 2015 was no longer relevant to use. For the 2017 and 2018 LTPP (TSR) grants and calculation 
of the post-vest discount using the Finnerty model, we used our own post-separation historical stock price volatility. See Note 3, 
"Share-based Compensation," to the consolidated financial statements for more information.

The assumptions used in calculating the fair value of share-based awards represent our best estimates, but these estimates 
involve inherent uncertainties and the application of management judgment. Although we believe the assumptions and estimates 
we have made are reasonable and appropriate, changes in assumptions could materially impact our reported financial results.

Retirement  and  Post-Retirement  Benefit  Plan  Assumptions.    Retirement  and  post-retirement  benefit  plan  costs  are  a 
significant cost of doing business. They represent obligations that will ultimately be settled sometime in the future and therefore 
are subject to estimation. Pension accounting is intended to reflect the recognition of future benefit costs over the employees' 
average expected future service to Agilent based on the terms of the plans and investment and funding decisions. To estimate the 
impact of these future payments and our decisions concerning funding of these obligations, we are required to make assumptions 
using actuarial concepts within the framework of accounting principles generally accepted in the U.S. Two critical assumptions 
are the discount rate and the expected long-term return on plan assets. Other important assumptions include, expected future salary 
increases, expected future increases to benefit payments, expected retirement dates, employee turnover, retiree mortality rates, 
and portfolio composition. We evaluate these assumptions at least annually.

The discount rate is used to determine the present value of future benefit payments at the measurement date - October 31 
for both U.S. and non-U.S. plans. For 2018 and 2017, the U.S. discount rates were based on the results of matching expected plan 
benefit payments with cash flows from a hypothetically constructed bond portfolio. In 2018, discount rates for the U.S. plans 
31

increased compared to the previous year. For 2018 and 2017, the discount rate for non-U.S. plans was generally based on published 
rates for high quality corporate bonds and in 2018, slightly increased compared to the previous year. If we changed our discount 
rate by 1 percent, the impact would be less than $1 million in U.S. pension expense and $16 million on non-U.S. pension expense. 
Lower discount rates increase present values of the pension benefit obligation and subsequent year pension expense; higher discount 
rates decrease present values of the pension benefit obligation and subsequent year pension expense.

The company uses alternate methods of amortization as allowed by the authoritative guidance which amortizes the actuarial 
gains and losses on a consistent basis for the years presented. For U.S. Plans, gains and losses are amortized over the average 
future lifetime of participants using the corridor method. For most Non-U.S. Plans and U.S. Post-Retirement Benefit Plans, gains 
and losses are amortized using a separate layer for each year's gains and losses. The expected long-term return on plan assets is 
estimated using current and expected asset allocations as well as historical and expected returns. Plan assets are valued at fair 
value. If we changed our estimated return on assets by 1 percent, the impact would be $4 million on U.S. pension expense and $9 
million on non-U.S. pension expense. For 2018, actual return on assets was below expectations which, along with contributions 
during the year, increased next year’s pension cost as well as resulting in a decrease of the funded status at year end. The net 
periodic pension and post-retirement benefit costs recorded were a $3 million benefit in 2018, $15 million benefit in 2017 and $3 
million expense in 2016. The years ended October 31, 2018, 2017 and 2016, included a gain on curtailment and settlements of $5 
million,  $32 million and $16 million, respectively.

Goodwill and Purchased Intangible Assets. Under the authoritative guidance, we have the option to perform a qualitative 
assessment to determine whether further impairment testing is necessary. The accounting standard gives an entity the option to 
first assess qualitative factors to determine whether performing the two-step test is necessary. If an entity believes, as a result of 
its qualitative assessment, that it is more-likely-than-not (i.e. greater than 50% chance) that the fair value of a reporting unit is less 
than its carrying amount, the quantitative impairment test will be required. Otherwise, no further testing will be required.

The guidance includes examples of events and circumstances that might indicate that a reporting unit's fair value is less 
than its carrying amount. These include macro-economic conditions such as deterioration in the entity's operating environment or 
industry or market considerations; entity-specific events such as increasing costs, declining financial performance, or loss of key 
personnel; or other events such as an expectation that a reporting unit will be sold or a sustained decrease in the stock price on 
either an absolute basis or relative to peers.

If it is determined, as a result of the qualitative assessment, that it is more-likely-than-not that the fair value of a reporting 
unit is less than its carrying amount, the provisions of authoritative guidance require that we perform a two-step impairment test 
on goodwill. In the first step, we compare the fair value of each reporting unit to its carrying value. The second step (if necessary) 
measures the amount of impairment by applying fair-value-based tests to the individual assets and liabilities within each reporting 
unit. As defined in the authoritative guidance, a reporting unit is an operating segment, or one level below an operating segment. 
We aggregate components of an operating segment that have similar economic characteristics into our reporting units.

  In fiscal year 2018, we assessed goodwill impairment for our three reporting units which consisted of three segments: life 
sciences  and  applied  markets,  diagnostics  and  genomics  and Agilent  CrossLab. We  performed  a  qualitative  test  for  goodwill 
impairment of the three reporting units, as of September 30, 2018. Based on the results of our qualitative testing, we believe that 
it is more-likely-than-not that the fair value of these reporting units are greater than their respective carrying values. Each quarter 
we review the events and circumstances to determine if goodwill impairment is indicated. There was no impairment of goodwill 
during the years ended October 31, 2018, 2017 and 2016.

Purchased intangible assets consist primarily of acquired developed technologies, proprietary know-how, trademarks, and 
customer relationships and are amortized using the best estimate of the asset's useful life that reflect the pattern in which the 
economic benefits are consumed or used up or a straight-line method ranging from 6 months to 15 years. In-process research and 
development ("IPR&D") is initially capitalized at fair value as an intangible asset with an indefinite life and assessed for impairment 
thereafter. When the IPR&D project is complete, it is reclassified as an amortizable purchased intangible asset and is amortized 
over its estimated useful life. If an IPR&D project is abandoned, we will record a charge for the value of the related intangible 
asset to our consolidated statement of operations in the period it is abandoned.

We continually monitor events and changes in circumstances that could indicate carrying amounts of finite-lived intangible 
assets may not be recoverable. When such events or changes in circumstances occur, we assess the recoverability of finite-lived 
intangible assets by determining whether the carrying value of such assets will be recovered through undiscounted expected future 
cash flows. If the total of the undiscounted future cash flows is less than the carrying amount of those assets, we recognize an 
impairment loss based on the excess of the carrying amount over the fair value of the assets. During 2018, we recorded an impairment 
charge  of  $21  million  related  to  purchased  intangible  assets  within  the  diagnostics  and  genomics  segment  that  were  deemed 
unrecoverable.

32

Our indefinite-lived intangible assets are IPR&D intangible assets. The accounting guidance allows a qualitative approach 
for testing indefinite-lived intangible assets for impairment, similar to the issued impairment testing guidance for goodwill and 
allows the option to first assess qualitative factors (events and circumstances) that could have affected the significant inputs used 
in determining the fair value of the indefinite-lived intangible asset to determine whether it is more-likely-than-not (i.e. greater 
than 50% chance) that the indefinite-lived intangible asset is impaired.  An organization may choose to bypass the qualitative 
assessment for any indefinite-lived intangible asset in any period and proceed directly to calculating its fair value. We performed 
a qualitative test for impairment of indefinite-lived intangible assets as of September 30, 2018. Based on the results of our qualitative 
testing, we believe that it is more-likely-than-not that the fair value of these indefinite-lived intangible assets is greater than their 
respective carrying values. Each quarter we review the events and circumstances to determine if impairment of indefinite-lived 
intangible asset is indicated. During the years ended October 31, 2018 and 2017, there were no impairments of indefinite-lived 
intangible assets. Based on triggering events in the year ended October 31, 2016, we recorded an impairment of $4 million due 
to the cancellation of certain IPR&D projects.

Accounting  for  Income  Taxes.  We  must  make  certain  estimates  and  judgments  in  determining  income  tax  expense  for 
financial statement purposes. These estimates and judgments occur in the calculation of tax credits, benefits and deductions, and 
in the calculation of certain tax assets and liabilities which arise from differences in the timing of recognition of revenue and 
expense for tax and financial statement purposes, as well as interest and penalties related to uncertain tax positions. Significant 
changes to these estimates may result in an increase or decrease to our tax provision in a subsequent period. On a quarterly basis, 
we provide for income taxes based upon an estimated annual effective tax rate.  The effective tax rate is highly dependent upon 
the geographic composition of worldwide earnings, tax regulations governing each region, availability of tax credits and the 
effectiveness of our tax planning strategies.  We monitor the changes in many factors and adjust our effective income tax rate on 
a timely basis.  If actual results differ from these estimates, this could have a material effect on our financial condition and results 
of operations.

Significant management judgment is also required in determining whether deferred tax assets will be realized in full or in 
part. When it is more-likely-than-not that all or some portion of deferred tax assets may not be realized, a valuation allowance 
must be established against such deferred tax assets. We consider all available positive and negative evidence on a jurisdiction-
by-jurisdiction basis when assessing whether it is more likely than not that deferred tax assets are recoverable. We consider evidence 
such as our past operating results, the existence of losses in recent years and our forecast of future taxable income. At October 31, 
2018, we continue to recognize a valuation allowance for certain U.S. and U.S state and foreign deferred tax assets. We intend to 
maintain a valuation allowance in these jurisdictions until sufficient positive evidence exists to support its reversal.

The calculation of our tax liabilities involves dealing with uncertainties in the application of complex tax law and regulations 
in a multitude of jurisdictions. Although the guidance on the accounting for uncertainty in income taxes prescribes the use of a 
recognition and measurement model, the determination of whether an uncertain tax position has met those thresholds will continue 
to require significant judgment by management. In accordance with the guidance on the accounting for uncertainty in income 
taxes, for all U.S. and other tax jurisdictions, we recognize potential liabilities for anticipated tax audit issues based on our estimate 
of whether, and the extent to which, additional taxes and interest will be due. The ultimate resolution of tax uncertainties may 
differ from what is currently estimated, which could result in a material impact on income tax expense. If our estimate of income 
tax liabilities proves to be less than the ultimate assessment, a further charge to expense would be required. If events occur and 
the payment of these amounts ultimately proves to be unnecessary, the reversal of the liabilities would result in tax benefits being 
recognized in the period when we determine the liabilities are no longer necessary. We include interest and penalties related to 
unrecognized tax benefits within the provision for income taxes on the consolidated statements of operations.

On December 22, 2017, the Tax Act was enacted into law.  The Tax Act significantly changes the existing U.S. tax law and 
includes numerous provisions that affect our business.  ASC 740, Income Taxes, requires companies to recognize the effect of the 
tax law changes in the period of enactment.  However, the SEC staff issued Staff Accounting Bulletin 118 which allowed companies 
to record provisional amounts during a measurement period that should not extend beyond one year from the Tax Act enactment 
date.   We have recognized the tax charge of $499 million due to transition tax liability and $53 million due to the impact of 
reduction in U.S. tax rates in the period when the tax law was enacted as a component of provision for income taxes from continuing 
operations. We have completed the accounting for all the impacts of the Tax Act except for the policy election for the treatment 
of  the  tax  on  global  intangible  low-tax  income  (“GILTI”)  inclusions.  See  Note  4,  "Income  Taxes"  for  more  details.  These 
computations are based on the regulations and guidance already provided by federal and state tax authorities. The company will 
continue to assess the impact of the further guidance from federal and state tax authorities on its business and consolidated financial 
statements. Any future adjustments will be recognized as discrete income tax expense or benefit in the period the adjustments are 
determined.

33

Adoption of New Pronouncements

See Note 2, "New Accounting Pronouncements," to the consolidated financial statements for a description of new accounting 

pronouncements.

Foreign Currency

Our revenues, costs and expenses, and monetary assets and liabilities are exposed to changes in foreign currency exchange 
rates as a result of our global operating and financing activities. The favorable effects of changes in foreign currency exchange 
rates has increased revenue by approximately 2 percentage point for the year ended October 31, 2018. When movements in foreign 
currency exchange rates have a positive impact on revenue it will also have a negative impact on our costs and expenses. The 
unfavorable effects of changes in foreign currency exchange rates has decreased revenue by approximately 1 percentage point for 
the year ended October 31, 2017.   When movements in foreign currency exchange rates have a negative impact on revenue it will 
also have a positive impact on our costs and expenses. We calculate the impact of foreign currency exchange rates movements by 
applying the actual foreign currency exchange rates in effect during the last month of each quarter of the current year to both the 
applicable current and prior year periods. We hedge revenues, expenses and balance sheet exposures that are not denominated in 
the functional currencies of our subsidiaries on a short term and anticipated basis. We do experience some fluctuations within 
individual lines of the consolidated statement of operations and balance sheet because our hedging program is not designed to 
offset the currency movements in each category of revenues, expenses, monetary assets and liabilities. Our hedging program is 
designed to hedge currency movements on a relatively short-term basis (up to a rolling twelve-month period). Therefore, we are 
exposed to currency fluctuations over the longer term. To the extent that we are required to pay for all, or portions, of an acquisition 
price in foreign currencies, we may enter into foreign exchange contracts to reduce the risk that currency movements will impact 
the U.S. dollar cost of the transaction.

Results from Operations

Net Revenue

Net revenue:
Products
Services and other

Total net revenue

% of total net revenue:

Products
Services and other
Total

Years Ended October 31,

2018

2017

2016

2018 over 2017
% Change

2017 over 2016   
% Change

(in millions)

$
$
$

3,746
1,168
4,914

$
$
$

3,397
1,075
4,472

$
$
$

3,213
989
4,202

10%
9%
10%

6%
9%
6%

Years Ended October 31,

2018

2017

2016

2018 over 2017
ppts Change

2017 over 2016
ppts Change

76%
24%
100%

76%
24%
100%

76%
24%
100%

—
—

—
—

Agilent's net revenue of $4,914 million in October 31, 2018 increased 10 percent when compared to 2017. Foreign currency 
movements for 2018 had an favorable impact of approximately 2 percentage points compared to 2017. Agilent's net revenue of 
$4,472 million increased 6 percent in 2017 when compared to 2016. Foreign currency movements for 2017 had an unfavorable 
impact of approximately 1 percentage point compared to 2016.

Product revenue includes revenue generated from the sales of our analytical instrumentation, software and consumables. 
Services and other revenue primarily consists of revenue generated from Agilent CrossLab services and services in the diagnostics 
and genomics business including consulting services related to the companion diagnostics and nucleic acid businesses.  Some of 
the prominent services include repair and maintenance on multi-vendor instruments, compliance services and installation services.

Services and other revenue increased 9 percent in 2018 as compared to 2017.  Services and other revenue increased in all 
major service categories within our Agilent CrossLab business. Services in the diagnostics and genomics business is increasing 
due to growth in our genomics and pathology businesses. 

34

Services and other revenue increased 9 percent in 2017 as compared to 2016. The service and other revenue growth is 
impacted by a portion of the revenue being driven by the current and previously installed product base. Service and other revenue 
increased due to strong companion diagnostics revenue and increases across nearly all service types.

Net Revenue By Segment

Net revenue by segment:

Life sciences and applied markets
Diagnostics and genomics
Agilent CrossLab

Total net revenue

Years Ended October 31,

2018

2017

2016

2018 over 2017
% Change

2017 over 2016   
% Change

(in millions)

$
$
$
$

2,270
943
1,701
4,914

$
$
$
$

2,081
860
1,531
4,472

$
$
$
$

1,992
790
1,420
4,202

9%
10%
11%
10%

4%
9%
8%
6%

Revenue in the life sciences and applied markets business increased 9 percent in 2018 when compared to 2017. Foreign 
currency movements had an overall favorable impact on revenue of 2 percentage point in 2018 when compared to 2017.  Our 
performance within the life science and applied markets business  was led by strong growth throughout the year in the pharmaceutical 
market.    Chemical  and  energy  markets  and  the  environmental  and  forensics  markets  continued  to  show  strong  growth  when 
compared to last year. Revenue in the life sciences and applied markets business increased 4 percent in 2017 when compared to 
2016. Foreign currency movements had an unfavorable impact of less than 1 percentage point in 2017 when compared to 2016. 
For the year ended October 31, 2017, our performance within the life sciences markets was led by solid growth in the biotechnology 
and  pharmaceutical  markets.    Within  the  applied  markets,  there  was  strong  growth  in  the  chemical  and  energy,  food  and 
environmental markets. 

Revenue in the diagnostics and genomics business increased 10 percent in 2018 when compared to 2017. Foreign currency 
movements had an overall favorable impact on revenue of 3 percentage point in 2018 when compared to 2017. Our performance 
within the diagnostics and genomics business was led by strong growth in our genomics, companion diagnostics and biomolecular 
analysis businesses. Revenue in the diagnostics and genomics business increased 9 percent in 2017 when compared to 2016. 
Foreign currency movements had no overall currency impact on revenue growth in 2017 when compared to 2016. For the year 
ended October 31, 2017, our performance within the clinical and diagnostics market continued to improve with strong revenue 
growth from our companion diagnostics and pathology businesses. 

Revenue in the Agilent CrossLab business increased 11 percent in 2018 when compared to 2017. Foreign currency movements 
had an overall favorable impact on revenue of 2 percentage point in 2018 when compared to 2017. Our performance in the Agilent 
CrossLab business saw continued growth in all key end markets with strong growth in the pharmaceutical and food markets. 
Revenue generated by Agilent CrossLab increased 8 percent in 2017 when compared to 2016. Foreign currency movements had 
an unfavorable impact of less than 1 percentage point in 2017 when compared to 2016.  Revenue grew across all key end markets 
led by strong growth in the biotechnology and pharmaceutical, chemical and energy and food markets.

35

Costs and Expenses

Gross margin on products
Gross margin on services and other
Total gross margin
Operating margin

(in millions)
Research and development

Selling, general and administrative

Years Ended October 31,

2018

2017

2016

57.6%
45.3%
54.7%
18.9%

57.0%
44.1%
53.9%
18.8%

54.7%
44.6%
52.3%
14.6%

2018 over 2017
Change
1 ppt
1 ppt
1 ppt
—

2017 over 2016
Change
2 ppts
—
2 ppts
4 ppts

$

$

385

1,374

$

$

339

1,229

$

$

329

1,253

14%

12%

3%

(2)%

Total gross margin for the year ended October 31, 2018 increased 1 percentage point when compared to last year. Increases 
in total gross margins for the year ended October 31, 2018 reflects higher sales volume, favorable business mix, lower manufacturing 
material  costs  and  lower  amortization  expense  of  intangible  assets  partially  offset  by  increased  wages  and  variable  pay,  an 
impairment of certain intangible assets and unfavorable currency movements. Total gross margin for the year ended October 31, 
2017 increased 2 percentage points when compared to last year. Increases in total gross margins for the year ended October 31, 
2017 reflects higher sales volume, results from margin improvement initiatives, lower amortization expense of intangible assets 
and the impact of an employee pension settlement gain partially offset by higher wages and variable pay.

Total operating margin was flat for the year ended October 31, 2018, when compared to last year. Operating margins was 
impacted by higher gross margins, lower acquisition and integration costs and lower amortization expense offset by increased 
wages and variable pay, an impairment of certain intangible assets, higher transformational initiative costs and the additional 
research and development and selling, general and administrative expenses related to our recent acquisitions. Total operating 
margin increased 4 percentage points for the year ended October 31, 2017, when compared to 2016. Operating margins increased 
due  to  improvements  in  gross  margins,  the  impact  of  lower  amortization  expense  of  intangible  assets,  lower  transformation 
initiatives costs, lower acquisition and integration costs and the impact of an employee pension settlement gain when compared 
to 2016.

Gross inventory charges were $26 million in 2018, $24 million in 2017 and  $20 million in 2016. Sales of previously written 

down inventory were $8 million in 2018, $9 million in 2017 and $9 million in 2016. 

 Research and development expenses increased 14 percent for the year ended October 31, 2018 when compared with last 
year. Research and development expenses increased due to increased program spending on new products related to all of our 
businesses in addition to higher wages and variable pay, unfavorable currency movements and additional expenses related to 
acquired businesses when compared to spending in 2017. Research and development expenses increased 3 percent for the year 
ended October 31, 2017 when compared with 2016. Research and development expenditures increased due to increased spending 
on new products related to all of our businesses, additional expenses related to increased headcount from acquisitions, and higher 
wages and variable pay. 

  Selling,  general  and  administrative  expenses  increased  12  percent  in  2018  compared  to  2017.  Selling,  general  and 
administrative expenses increase was due to higher wages and variable pay, higher commissions, increased corporate costs, higher 
share-based  compensation  expense,  higher  transformational  initiative  costs,  an  impairment  of  certain  intangible  assets  and 
unfavorable currency movements. Selling, general and administrative expenses decreased 2 percent in 2017 compared to 2016. 
Selling,  general  and  administrative  expenses  decreased  due  to  lower  amortization  expense  from  intangible  assets,  lower 
transformational initiatives, lower acquisition and integration costs, the impact of an employee pension settlement gain and reduced 
costs due to business improvement initiatives partially offset by higher wages and variable pay and additional selling, general and 
administrative expenses associated with our acquisitions in 2017. 

Interest  expense  for  the  years  ended  October 31,  2018,  2017  and  2016  was  $75  million,  $79  million  and  $72  million, 
respectively,  and  relates  to  the  interest  charged  on  our  senior  notes  and  the  amortization  of  the  deferred  loss  recorded  upon 
termination of the forward starting interest rate swap contracts offset by the amortization of deferred gains recorded upon termination 
of interest rate swap contracts. 

At October 31, 2018, our headcount was approximately 14,800 compared to 13,500 in 2017. 

36

Other income (expense), net

For the year ended October 31, 2018, other income (expense), net includes the net gain of $20 million related to the step-
up of our initial investment in Lasergen, $15 million of income related to a special one-time settlement with a third-party and 
income  of  $12  million  related  to  the  provision  of  site  service  costs  to,  and  lease  income  from,  Keysight  Technologies,  Inc. 
("Keysight").  

For the year ended October 31, 2017, other income (expense), net includes $12 million of income related to the provision 

of site service costs to and lease income from Keysight. 

For the year ended October 31, 2016, other income (expense), net includes $12 million of income related to the provision 
of certain IT and site service costs to and lease income from Keysight and an $18 million expense related to the impairment of an 
investment. The costs associated with Keysight services are reported within income from operations in 2018, 2017 and 2016. 

Income Taxes

Provision for income taxes

Years Ended October 31,

2018

2017

(in millions)

2016

$

630

$

119

$

82

For 2018, the company's income tax expense was $630 million with an effective tax rate of 66.6 percent.  For the year ended 
October 31, 2018, our effective tax rate and the resulting provision for income taxes were significantly impacted by the discrete 
charge of $552 million related to the enactment of the U.S. Tax Cuts and Jobs Act (the “Tax Act”) as discussed below.

For 2017, the company's income tax expense was $119 million with an effective tax rate of 14.8 percent. Our effective tax 
rate is impacted by earnings realized in foreign jurisdictions with statutory tax rates lower than the federal statutory tax rate. During 
the year, the company determined a portion of current year foreign earnings from its low tax jurisdictions would not be considered 
as indefinitely reinvested. As such, a deferred tax liability for that portion of unremitted foreign earnings was accrued causing an 
increase in the annual tax expense.  Our annual effective tax rate also included tax benefits due to the settlement of an audit in 
Germany for the years 2005 through 2008 and the lapse of U.S. statute of limitation for the fiscal years 2012 and 2013. This benefit 
was offset by a deferred tax liability required for the tax expected upon repatriation of related unremitted foreign earnings that 
were not asserted as indefinitely invested outside the U.S.

For 2016, the company’s income tax expense was $82 million with an effective tax rate of 15.1 percent. The income tax 
provision for the year ended October 31, 2016 included net discrete tax expense of $17 million primarily due to tax expense related 
to the establishment of a valuation allowance on an equity method investment impairment that would generate a capital loss when 
realized.

The company has negotiated tax holidays in several different jurisdictions, most significantly in Singapore. The tax holidays 
provide lower rates of taxation on certain classes of income and require various thresholds of investments and employment or 
specific types of income in those jurisdictions. In December 2018, the tax holiday in Singapore was renegotiated and extended 
through 2027 see Note 19, "Subsequent Events" for more information. Other tax holidays are due for renewal between 2019 and 
2020. As a result of the incentives, the impact of the tax holidays decreased income taxes by $87 million, $93 million, and $86 
million in 2018, 2017, and 2016, respectively. The benefit of the tax holidays on net income per share (diluted) was approximately 
$0.27, $0.29, and $0.26 in 2018, 2017 and 2016, respectively.

2017 U.S. Tax Reform - Tax Cuts and Jobs Act 

On December 22, 2017, the Tax Act was enacted into law.  The Tax Act enacted significant changes affecting our fiscal 
year 2018, including, but not limited to, (1) reducing the U.S. federal corporate tax rate and (2) imposing a one-time transition tax 
on certain unrepatriated earnings of foreign subsidiaries that had not been previously taxed in the U.S.

The Tax Act also establishes new tax provisions affecting our fiscal year 2019, including, but not limited to, (1) creating a 
new provision designed to tax global intangible low-tax income (“GILTI”); (2) generally eliminating U.S. federal taxes on dividends 
from foreign subsidiaries; (3) eliminating the corporate alternative minimum tax (“AMT”); (4) creating the base erosion anti-
abuse tax (“BEAT”); (5) establishing a deduction for foreign derived intangible income ("FDII"); (6) repealing domestic production 
activity deduction; and (7) establishing new limitations on deductible interest expense and certain executive compensation.

37

The Tax Act reduced the U.S. federal corporate tax rate from 35 percent to 21 percent effective January 1, 2018. Due to 
our fiscal year end, the lower corporate tax rate will be phased in, resulting in a U.S. statutory federal rate of 23 percent for our 
fiscal year ending October 31, 2018 and 21 percent for subsequent fiscal years.

ASC 740, Income Taxes, requires companies to recognize the effect of the tax law changes in the period of enactment. 
However, the SEC staff issued Staff Accounting Bulletin 118 ("SAB 118") which allowed companies to record provisional amounts 
during a measurement period not extending beyond one year from the Tax Act enactment date. For the year ended October  31, 
2018, the company recognized income tax expense related to the Tax Act of $552 million which includes (1) an expense of $499 
million of U.S. transition tax and correlative items on deemed repatriated earnings of non-U.S. subsidiaries and (2) an expense of 
$53 million associated with the impact on deferred taxes resulting from the decreased U.S. corporate tax rate as described below. 
As of October 31, 2018, the company has completed the accounting for all the impacts of the Tax Act except for the policy election 
for the treatment of the tax on GILTI inclusions. 

Deemed Repatriation Transition Tax ("Transition Tax"): The Transition Tax is based on the company’s total unrepatriated 
post-1986 earnings and profits ("E&P") of its foreign subsidiaries and the amount of non-U.S. taxes paid (Tax Pools) on such 
earnings. Historically, the company permanently reinvested a significant portion of these post-1986 E&P outside the U.S. For the 
remaining portion, the company previously accrued deferred taxes. Since the Tax Act required all foreign earnings to be taxed 
currently, the company recorded an income tax expense of $651 million for its one-time transition U.S. federal tax and a benefit 
of $152 million for the reversal of related deferred tax liabilities. The resulting $499 million net transition tax, reduced by existing 
tax credits, will be paid over 8 years in accordance with the election available under the Tax Act. We have completed our accounting 
for charges related to the Transition Tax.

Reduction of U.S. Federal Corporate Tax Rate:  The reduction of the corporate income tax rate requires companies to 
remeasure their deferred tax assets and liabilities as of the date of enactment. The amount recorded for the year ended October31, 
2018 for the remeasurement due to tax rate change is $53 million. We have completed our accounting for the measurement of 
deferred taxes. 

GILTI:  The Tax Act subjects a U.S. corporation to tax on its GILTI. U.S. GAAP allows companies to make an accounting 
policy election to either (1) treat taxes due on future GILTI inclusions in the U.S. taxable income as a current-period expense when 
incurred (“period cost method”) or (2) factoring such amounts into a company’s measurement of its deferred taxes (“deferred 
method”).  Our analysis of the new GILTI rules and how they may impact us is incomplete. Accordingly, we have not made a 
policy election regarding the treatment of GILTI tax.

Indefinite Reinvestment Assertion: Prior to the enactment of the Tax Act, the company had indefinite investment assertion 
on a significant portion of its undistributed earnings from foreign subsidiaries. As a result of the enactment of the Tax Act, we 
have reevaluated our historic assertion and no longer consider these earnings to be indefinitely reinvested in our foreign subsidiaries. 
The company repatriated $1,921 million of foreign earnings in fiscal year 2018. The company has recorded a deferred tax liability 
of $11 million for foreign withholding taxes on repatriation of remaining undistributed earnings.

In the U.S., tax years remain open back to the year 2015 for federal income tax purposes and the year 2000 for significant 
states. There were no substantial changes to the status of these open tax years during 2018. The U.S. statute of limitation for audit 
of tax returns for the fiscal years 2014 expired in July 2018.  The statute expiration resulted in the recognition of previously 
unrecognized tax benefits of $23 million. 

In other major jurisdictions where the company conducts business, the tax years generally remain open back to the year 

2001. 

With these jurisdictions and the U.S., it is reasonably possible that there could be significant changes to our unrecognized 
tax benefits in the next twelve months due to either the expiration of a statute of limitation or a tax audit settlement which will be 
partially offset by an anticipated tax liability related to unremitted foreign earnings, where applicable. Given the number of years 
and numerous matters that remain subject to examination in various tax jurisdictions, management is unable to estimate the range 
of possible changes to the balance of our unrecognized tax benefits.

The calculation of our tax liabilities involves dealing with uncertainties in the application of complex tax law and regulations 
in a multitude of jurisdictions. Although the guidance on the accounting for uncertainty in income taxes prescribes the use of a 
recognition and measurement model, the determination of whether an uncertain tax position has met those thresholds will continue 
to require significant judgment by management. In accordance with the guidance on the accounting for uncertainty in income 
taxes, for all U.S. and other tax jurisdictions, we recognize potential liabilities for anticipated tax audit issues based on our estimate 
38

of whether, and the extent to which, additional taxes and interest will be due. The ultimate resolution of tax uncertainties may 
differ from what is currently estimated, which could result in a material impact on income tax expense. If our estimate of income 
tax liabilities proves to be less than the ultimate assessment, a further charge to expense would be required. If events occur and 
the payment of these amounts ultimately proves to be unnecessary, the reversal of the liabilities would result in tax benefits being 
recognized in the period when we determine the liabilities are no longer necessary.

Segment Overview

In 2018, we re-organized our operating segments and moved the microfluidics business from our life sciences and applied 
markets operating segment to our diagnostics and genomics operating segment. Following this re-organization, we continue to 
have three business segments comprised of the life sciences and applied markets business, diagnostics and genomics business and 
the Agilent CrossLab business. All historical financial segment information for both the life sciences and applied markets segment 
and the diagnostics and genomics segment has been recast to reflect this reorganization in our financial statements.

Life Sciences and Applied Markets

Our life sciences and applied markets business provides application-focused solutions that include instruments and software 
that enable customers to identify, quantify and analyze the physical and biological properties of substances and products, as well 
as enable customers in the clinical and life sciences research areas to interrogate samples at the molecular and cellular level. Key 
product categories include: liquid chromatography ("LC") systems and components; liquid chromatography mass spectrometry 
("LCMS") systems; gas chromatography ("GC") systems and components; gas chromatography mass spectrometry ("GCMS") 
systems;  inductively  coupled  plasma  mass  spectrometry  ("ICP-MS")  instruments;  atomic  absorption  ("AA")  instruments; 
microwave  plasma-atomic  emission  spectrometry  (“MP-AES”)  instruments;  inductively  coupled  plasma  optical  emission 
spectrometry  ("ICP-OES")  instruments;  Raman  spectroscopy,  cell  analysis  plate  based  assays,  flow  cytometer;  real-time  cell 
analyzer, laboratory software for sample tracking, information management and analytics; laboratory automation and robotic 
systems; dissolution testing; vacuum pumps and measurement technologies.

Net Revenue

Years Ended October 31,

2018

2017

2016

2018 over 2017
Change

2017 over 2016
Change

(in millions)

Net revenue

$

2,270

$

2,081

$

1,992

9%

4%

Life  science  and  applied  markets  business  revenue  in  2018  increased  9  percent  compared  to  2017.  Foreign  currency 
movements for 2018 had an overall favorable currency impact of 2 percentage points on revenue growth when compared to the 
same period last year. Geographically, revenue increased 8 percent in the Americas with no currency impact, increased 12 percent 
in Europe with a 5 percentage point favorable currency impact and increased 8 percent in Asia Pacific with a 1 percentage point 
favorable currency impact. From a product standpoint liquid chromatography mass spectrometry, spectroscopy and cell analysis 
systems led with double digit growth. Gas chromatography mass spectrometry and gas chromatography also posted strong results 
helped by growth in the chemical and energy markets.

End market performance in 2018 was led by pharmaceutical markets which were strong throughout the year. Chemical and 
energy markets kept the momentum from 2017 and delivered strong growth. Academic and government and environmental markets 
also delivered strong growth. Food market contracted mainly driven by consolidations of governmental agencies in China.

Life science and applied markets business revenue in 2017 increased 4 percent compared to 2016.  From a product standpoint, 
gas chromatography mass spectrometry, software and informatics systems, and cell analysis systems led with double digit growth 
during the year.  Gas chromatography returned to strong growth on the strength of rebounding chemical and energy markets. 
Liquid chromatography grew single digits compared to 2016 as the pharmaceutical markets moderated.

End  market  performance  in  2017  showed  a  shift  in  growth  trends  from  those  of  2016.    Chemical  and  energy  markets 
rebounded sharply from the depressed levels of 2016 and delivered strong growth.  The growth from pharmaceutical markets, 
which led the way in 2016, was modest reflecting difficult year on year comparisons.  Food and environmental markets demonstrated 
continued growth during the year.  Academic and government and diagnostic and clinical market sales saw improvement as the 
year progressed.

39

Looking forward, we are optimistic about our growth opportunities in the life sciences and applied markets as our broad 
portfolio of products and solutions are well suited to address customer needs. We anticipate strong sales funnels given new product 
introductions as we continue to invest in expanding and improving our applications and solutions portfolio. While we anticipate 
volatility in our markets, we expect continued growth across most end markets.

Gross Margin and Operating Margin

The following table shows the life sciences and applied markets business' margins, expenses and income from operations 

for 2018 versus 2017, and 2017 versus 2016.

Total gross margin

Operating margin

(in millions)
Research and development

Selling, general and administrative

Income from operations

Years Ended October 31,

2018

2017

2016

61.3%

24.1%

60.2%

22.5%

58.8%

20.7%

2018 over 2017
Change
1 ppt

2017 over 2016
Change
1 ppt

2 ppts

2 ppts

$

$

$

219

625

547

$

$

$

201

585

468

$

$

$

191

569

412

9%

7%

17%

5%

3%

14%

Gross margin increased 1 percentage point in 2018 compared to 2017.  The increase was due to increased volume and lower 
manufacturing material costs.  Gross margin increased 1 percentage point in 2017 compared to 2016. The increase was due to a 
combination of moderate price increases, margin improvement initiatives, and reduced logistics costs.

Research and development expenses increased 9 percent in 2018 when compared to 2017.  The increase in research and 
development  was due to higher program funding in product development as well as wage and variable pay increases and unfavorable 
currency related effects.  Research and development expenses increased 5 percent in 2017 when compared to 2016. Research and 
development expenses increased due to higher project investments across our businesses as well as higher wages and variable 
pay.

Selling,  general  and  administrative  expenses  increased  7  percent  in  2018  compared  to  2017.  Selling,  general  and 
administrative  expenses  increased  due  to  increased  marketing  and  sales  force  investments  as  well  as  wage  and  variable  pay 
increases, higher share-based compensation expense and unfavorable currency related effects.  Selling, general and administrative 
expenses increased 3 percent in 2017 compared to 2016. Selling, general and administrative expenses increased due to higher 
funding in marketing programs to promote newly released products as well as higher wages and variable pay.

Operating margin increased 2 percentage points in 2018 compared to 2017.  The increase in operating margin was a product 
of revenue growth and improved gross margin offset slightly by unfavorable currency impact. Operating margin increased 2
percentage points in 2017 compared to 2016.  Operating margin increased due to revenue growth paired with improvements from 
gross margin initiatives and moderate price increases.

Income from Operations 

Income from operations in 2018 increased by $79 million or 17 percent when compared to 2017 on a revenue increase of 
$189  million.  The increase was due to higher revenues and lower cost of sales on incremental revenues. Income from operations 
in 2017 increased by $56 million or 14 percent when compared to 2016 on a revenue increase of $89 million.  The increase was 
due to higher revenues and lower cost of sales on incremental revenues.

Diagnostics and Genomics

Our  diagnostics  and  genomics  business  includes  the  genomics,  nucleic  acid  contract  manufacturing  and  research  and 

development, pathology, companion diagnostics, reagent partnership and biomolecular analysis businesses.

Our diagnostics and genomics business is comprised of six areas of activity providing active pharmaceutical ingredients 
("APIs") for oligo-based therapeutics as well as solutions that include reagents, instruments, software and consumables, which 
enable customers in the clinical and life sciences research areas to interrogate samples at the cellular and molecular level. First, 

40

our genomics business includes arrays for DNA mutation detection, genotyping, gene copy number determination, identification 
of gene rearrangements, DNA methylation profiling, gene expression profiling, as well as next generation sequencing ("NGS") 
target enrichment and genetic data management and interpretation support software. This business also includes solutions that 
enable clinical labs to identify DNA variants associated with genetic disease and help direct cancer therapy. Second, our nucleic 
acid  solutions  business  provides  equipment  and  expertise  focused  on  production  of  synthesized  oligonucleotides  under 
pharmaceutical good manufacturing practices ("GMP") conditions for use as API in an emerging class of drugs that utilize nucleic 
acid molecules for disease therapy. Third, our pathology solutions business is focused on product offerings for cancer diagnostics 
and anatomic pathology workflows. The broad portfolio of offerings includes immunohistochemistry (“IHC”), in situ hybridization 
(“ISH”),  hematoxylin  and  eosin  (“H&E”)  staining  and  special  staining.  Fourth,  we  also  collaborate  with  a  number  of  major 
pharmaceutical companies to develop new potential pharmacodiagnostics, also known as companion diagnostics, which may be 
used to identify patients most likely to benefit from a specific targeted therapy. Fifth, the reagent partnership business is a provider 
of reagents used for turbidimetry and flow cytometry. Finally, our biomolecular analysis business provides complete workflow 
solutions, including instruments, consumables and software, for quality control analysis of nucleic acid samples.  Samples are 
analyzed  using  quantitative  and  qualitative  techniques  to  ensure  accuracy  in  further  genomics  analysis  techniques  utilized  in 
clinical and life science research applications.

Net Revenue

Years Ended October 31,

2018

2017

2016

2018 over 2017
Change

2017 over 2016
Change

(in millions)

Net revenue

$

943

$

860

$

790

10%

9%

Diagnostics and genomics business revenue in 2018 increased 10 percent compared to 2017. Foreign currency movements 
for 2018 had an overall favorable impact on revenue growth of 3 percentage points when compared to the same period last year 
and acquisitions had an overall favorable impact on revenue growth of 2 percentage points when compared to the same period 
last year. Geographically, revenue increased 11 percent in the Americas with a 1 percentage point unfavorable currency impact, 
increased 11 percent in Europe with a 6 percentage point favorable currency impact and increased 2 percent in Asia Pacific with 
a 1 percentage point favorable currency impact. The growth in the Americas was supported by continued strength in our genomics 
business, strong growth in the companion diagnostic business and our biomolecular analysis business. Europe results represented 
growth in our genomics and the biomolecular analysis business. The performance in Americas and Europe were led by growth in 
sales in genomics (particularly target enrichment and arrays). Asia Pacific, our relatively smaller region, increased due to higher 
shipment volumes in China. 

The 10 percent revenue growth in 2018 was due to positive growth from all businesses and strength in Americas, Europe 
and China regions. This was led by revenue growth in our arrays and next generation sequencing solution portfolio offering within 
the genomics business mainly driven by SureSelect NGS target enrichment products, continued ramp in revenue growth in our 
reagent partnership business due to demand for our reagents and strength in our biomolecular analysis business consumables 
portfolio. The end markets in diagnostics and clinical research remain strong and growing driven by an aging population and 
lifestyle.

Diagnostics and genomics business revenue in 2017 increased 9 percent compared to 2016. The growth in the Americas 
was assisted by continued demand in our nucleic acid solutions division, growth in sales in our pathology business and continuing 
strong growth in the companion diagnostic business. Pathology growth was a result of strength in all regions led by our companion 
diagnostics ("CDx") assays and molecular pathology products. Europe results were assisted by growth in our genomics, pathology, 
and the companion diagnostic business. Growth in Asia Pacific reflected strength mainly in China and Japan.

Looking forward, we are optimistic about our growth opportunities in the diagnostics markets and continue to invest in 
expanding and improving our applications and solutions portfolio. We remain positive about our growth in these markets, as our 
OMNIS products, PD-L1 assays and SureFISH continue to gain strength with our customers in clinical oncology applications and 
our next generation sequencing target enrichment solutions continue to be adopted. Market demand in the nucleic acid solutions 
business related to therapeutic oligo programs continues to be strong. We are investing in building further capacity in our nucleic 
acid business to address the future demand for the oligos. We will continue to invest in research and development and seek to 
expand our position in developing countries and emerging markets. For example, we completed the acquisitions of Lasergen and 
Advanced Analytical Technologies, Inc. ("AATI") during 2018.

41

Gross Margin and Operating Margin

The following table shows the diagnostics and genomics business's margins, expenses and income from operations for 2018

versus 2017, and 2017 versus 2016.

Total gross margin

Operating margin

(in millions)
Research and development

Selling, general and administrative

Income from operations

Years Ended October 31,

2018

2017

2016

56.5%

18.9%

55.2%

19.5%

54.5%

16.6%

2018 over 2017
Change
1 ppt

2017 over 2016
Change
1 ppt

(1) ppt

3 ppts

$

$

$

109

246

178

$

$

$

89

218

168

$

$

$

87

212

131

22%

13%

6%

2%

3%

28%

Gross margin increased 1 percentage point in 2018 when compared to 2017 as gains from higher volumes were partially 
offset by increased wage and variable pay. Gross margin increased 1 percentage point in 2017 when compared to 2016, mainly 
driven out of higher volumes. 

Research and development expenses increased 22 percent in 2018 when compared to 2017. The increase was mainly due 
to  additional  expenses  related  to  the  acquisition  of  Lasergen,  increase  in  wages  and  variable  pay  and  unfavorable  currency 
movements. Research and development expenses increased 2 percent in 2017 when compared to 2016.  The spending increase 
was related to an acquisition and higher wages and variable pay.

Selling, general and administrative expenses increased 13 percent in 2018 when compared to 2017. Selling, general and 
administrative expenses increase was due to the additional expenses related to the acquisitions of Lasergen and AATI, increases 
in wages and variable pay and unfavorable currency movements. Selling, general and administrative expenses increased 3 percent 
in 2017 when compared to 2016. Selling, general and administrative expenses increase was related to additional operating expenses 
associated with an acquisition and higher wages and variable pay partially offset by reduced expenses due to business improvement 
initiatives.

Operating margin decreased 1 percentage point in 2018 when compared to 2017.  The decline in operating margin was due 
additional expenses related to the acquisitions of Lasergen and AATI. Operating margin increased 3 percentage points in 2017 
when compared to 2016.   The margin improvement was driven by higher revenue volumes partially offset by adding the cost 
structure of an acquisition and higher wages and variable pay.

Income from Operations

Income from operations in 2018 increased by $10 million or 6 percent when compared to 2017 on a revenue increase of 
$83 million.  The increase was due to higher volumes partially offset by higher expenses related to the acquisitions.  Income from 
operations in 2017 increased by $37 million or 28 percent when compared to 2016 on a revenue increase of $70 million.  The 
increase was due to higher volumes and controlled expenses.

Agilent CrossLab

The Agilent CrossLab business spans the entire lab with its extensive consumables and services portfolio, which is designed 
to improve customer outcomes.  Most of the portfolio is vendor neutral, meaning Agilent can serve and supply customers regardless 
of their instrument purchase choices.  Solutions range from chemistries and supplies to services and software helping to connect 
the  entire  lab.    Key  product  categories  in  consumables  include  GC  and  LC  columns,  sample  preparation  products,  custom 
chemistries, and a large selection of laboratory instrument supplies.  Services include startup, operational, training and compliance 
support, software as a service, as well as asset management and consultative services that help increase customer productivity. 
Custom service and consumable bundles are tailored to meet the specific application needs of various industries and to keep 
instruments fully operational and compliant with the respective industry requirements.

42

Net Revenue

Total net revenue

$

1,701

$

1,531

$

1,420

11%

8%

Years Ended October 31,

2018

2017

2016

2018 over 2017
Change

2017 over 2016
Change

(in millions)

Agilent CrossLab business revenue in 2018 increased 11 percent when compared to 2017.  Foreign currency movements 
for 2018 had an overall favorable impact of 2 percentage points when compared to 2017.  Revenue growth in 2018 was driven by 
the entire portfolio, including all consumables, all major service categories and remarketed instruments. Geographically, revenue 
increased 7 percent in the Americas with no currency impact, increased 12 percent in Europe with a 6 percentage point favorable 
currency impact and increased 15 percent in Asia Pacific with a 2 percentage point favorable currency impact. 

Agilent CrossLab business saw a broad based and sustained revenue growth in most key end markets throughout 2018, 
especially from the pharmaceutical and food markets.  Agilent CrossLab business revenue in 2017 increased 8 percent when 
compared to 2016. Revenue growth in 2017 was led by increases in most service categories and in the remarketed instruments 
business.

Agilent CrossLab business saw positive revenue growth in all the key end markets in 2017, except in the forensics market. 
In 2017, revenue growth, from a percentage perspective, was led by the food market.  The pharmaceutical and biotechnology 
market in 2017 saw slower growth than in 2016, but was still the primary growth driver from a volume perspective.  The chemical 
and energy market provided the same level of solid revenue growth in 2017 as it did in 2016.

Looking forward, we anticipate that the balanced strength in nearly all key end markets will continue to drive the revenue 
growth in the near term.  The Agilent CrossLab portfolio of products and services are well positioned to succeed in both accelerating 
and decelerating market conditions in any of our key end markets.  Geographically, we remain optimistic on the market growth 
and market penetration opportunities in China and emerging markets.  Other factors for near term revenue growth include our 
recently completed acquisitions of Ultra Scientific and ProZyme, as well as investment in our laboratory enterprise offerings and 
in our continuing expansion of our e-commerce sales channel.

Gross Margin and Operating Margin

The following table shows the Agilent CrossLab business's margins, expenses and income from operations for 2018 versus 

2017 and 2017 versus 2016.

Total gross margin
Operating margin

(in millions)
Research and development
Selling, general and administrative
Income from operations

Years Ended October 31,

2018

2017

2016

50.7%
23.3%

49.5%
22.1%

49.4%
22.3%

2018 over 2017
Change
1 ppt
1 ppt

2017 over 2016
Change
—
—

$
$
$

55
410
397

$
$
$

49
370
338

$
$
$

46
339
316

12%
11%
17%

7%
9%
7%

Gross margin for products and services increased 1 percentage points in 2018 when compared to 2017.  Gross margin 
increase came primarily from higher sales volume.  Gross margin was flat in 2017 when compared to 2016, due to the higher 
sales volume offset by higher wages and variable pay.

Research and development expenses increased 12 percent in 2018 when compared to 2017.  Research and development 

increase was primarily due to higher wages across the various research organizations, and due to increased headcount in the 
areas of software development, iLab development and customer training curriculum development.  Research and development 
expenses increased 7 percent in 2017 when compared to 2016, due to increased investment related to an acquisition, as well as 
higher wages and variable pay.

43

Selling, general and administrative expenses increased 11 percent in 2018 when compared to 2017. Selling, general and 
administrative expenses increased due to higher wages, higher variable pay, increased corporate infrastructure costs, and increased 
sales force investments.  Selling, general and administrative expenses increased 9 percent in 2017 when compared to 2016, due 
to higher orders driving higher selling costs, as well as higher wages and variable pay and the additional operating expenses from 
an acquisition.

Operating margin increased 1 percentage point in 2018 when compared to 2017. The increase in operating margin was 
primarily due to higher sales volume.  Operating margin was flat in 2017 when compared to 2016, due to higher sales volume 
helping to offset growth in the number of service workforce, higher wages and variable pay and higher field selling costs.

Income from Operations

Income from operations in 2018 increased by $59 million or 17 percent when compared to 2017 on a revenue increase of 
$170 million.  Income from operations in 2017 increased by $22 million or 7 percent when compared to 2016 on a revenue increase 
of $111 million. 

Financial Condition

Liquidity and Capital Resources

Our financial position as of October 31, 2018 consisted of cash and cash equivalents of $2,247 million as compared to 

$2,678 million as of October 31, 2017.

As of October 31, 2018, approximately $1,361 million of our cash and cash equivalents is held outside of the U.S. by our 
foreign subsidiaries. In 2018, we repatriated $1,921 million of the cash held outside the U.S. The cash remaining outside the U.S. 
can be repatriated to the U.S. as local working capital and other regulatory conditions permit. As a result of the Tax Act, our cash 
and cash equivalents are no longer subjected to U.S. federal tax on repatriation into the U.S. We utilize a variety of funding 
strategies to ensure that our worldwide cash is available in the locations in which it is needed.

As a result of the Tax Act, we are required to pay a one-time transition tax of $426 million on deferred foreign income not 
previously subject to U.S. federal income tax.  The transition tax is payable, beginning in fiscal year 2019 over eight years with 
8 percent due in each of the first five years, 15 percent in year six, 20 percent in year seven and 25 percent in year eight.

We believe our cash and cash equivalents, cash generated from operations, and ability to access capital markets and credit 
lines will satisfy, for at least the next twelve months, our liquidity requirements, both globally and domestically, including the 
following:  working  capital  needs,  capital  expenditures,  business  acquisitions,  stock  repurchases,  cash  dividends,  contractual 
obligations, commitments, principal and interest payments on debt, and other liquidity requirements associated with our operations.

Net Cash Provided by Operating Activities

Net cash provided by operating activities was $1,087 million in 2018 as compared to $889 million provided in 2017 and 
$793 million provided in 2016. We paid approximately $103 million under our variable and incentive pay programs, as compared 
to a total of $91 million paid during the same period of 2017. Net cash paid for income taxes was approximately $102 million in 
2018, as compared to $63 million in 2017 and $67 million in 2016. For the year ended October 31, 2018, the net change in tax-
related assets and liabilities of $552 million was due to the enactment of the U.S. Tax Act and primarily consisted of an estimated 
provision of $499 million of U.S. transition tax on deemed repatriated earnings of non-U.S. subsidiaries as well as an estimated 
$53 million associated with the impact on deferred taxes resulting from the decreased U.S. corporate income tax rate. For the years 
ended October 31, 2018, 2017 and 2016, other assets and liabilities used cash of $4 million, used cash of $98 million and provided 
cash of $10 million, respectively. The increase in cash usage for the year ended October 31, 2017 in other assets and liabilities is 
primarily due to pension contributions and taxes.

In 2018, the change in accounts receivable used cash of $65 million, $81 million in 2017, and $33 million in 2016. Days' 
sales outstanding as of October 31, were 54 days in 2018, 55 days in 2017 and 51 days in 2016. The change in accounts payable 
provided cash of $40 million in 2018, provided cash of $2 million in 2017 and used cash of $15 million in 2016. Cash used in 
inventory was $83 million in 2018, in $61 million in 2017 and $7 million in 2016. Inventory days on-hand increased to 98 days 
in 2018 compared to 95 days in 2017 and increased compared to 92 days in 2016. 

We contributed zero, $25 million and zero to our U.S. defined benefit plans in 2018, 2017 and 2016, respectively. We 

44

contributed $21 million, $21 million and $24 million to our non-U.S. defined benefit plans in 2018, 2017 and 2016, respectively. 
We contributed less than $1 million in 2018, 2017 and 2016 to our U.S. post-retirement benefit plans. Our non-U.S. defined benefit 
plans are generally funded ratably throughout the year.  Total contributions in 2018 were $21 million or 54 percent less than 2017. 
Our annual contributions are highly dependent on the relative performance of our assets versus our projected liabilities, among 
other factors. We  do not expect to contribute to our U.S. plans and U.S. post-retirement benefit plans during 2019.  We expect to 
contribute $23 million to our non-U.S. defined benefit plans during 2019.

Net Cash Used in Investing Activities

Net cash used in investing activities in 2018 was $704 million and in 2017 was $305 million as compared to net cash used 

of $238 million in 2016. 

Investments in property, plant and equipment were $177 million in 2018, $176 million in 2017 and $139 million in 2016. 
In 2018 we invested $516 million in acquisitions of businesses and intangible assets, net of cash acquired for the acquisition of 
seven businesses compared to the acquisition of two businesses for $128 million in 2017 and the acquisition of two businesses 
for $261 million in 2016.  In 2018 there were approximately $11 million purchases of cost method investments compared to $1 
million outlay in 2017 and $80 million in 2016. Change in restricted cash and cash equivalents was $1 million inflow in 2018, $1 
million outflow in 2017 and $245 million inflow in 2016, respectively (changes in 2016 related to our Seahorse Biosciences 
acquisition).

Net Cash Used in Financing Activities

Net cash used in financing activities in 2018 was $797 million compared to $202 million in 2017 and $268 million in 2016, 

respectively. 

Treasury Stock Repurchases 

On November 22, 2013 we announced that our board of directors had authorized a share repurchase program. The program 
was designed to reduce or eliminate dilution resulting from issuance of stock under the company's employee equity incentive 
programs to target maintaining a weighted average share count of approximately 335 million diluted shares.  For the year ended 
October 31, 2016 we repurchased 2 million shares for $98 million which completed the purchases under this authorization. 

On May 28, 2015 we announced that our board of directors had approved a new share repurchase program (the "2015 
repurchase program"). The 2015 share repurchase program authorizes the purchase of up to $1.14 billion of our common stock at 
the company's discretion through and including November 1, 2018.  The 2015 repurchase program does not require the company 
to acquire a specific number of shares and may be suspended or discontinued at any time.  During the year ended October 31, 
2016,  upon the completion of our previous repurchase program, we repurchased approximately 8.3 million shares for $336 million
under this authorization. During the year ended October 31, 2017, we repurchased approximately 4.1 million shares for $194 
million under this authorization. During the year ended October 31, 2018 we repurchased and retired approximately 6.4 million
shares for $422 million under this authorization. As of October 31, 2018, we had remaining authorization to repurchase up to $188 
million of our common stock under this program which expired on November 1, 2018.

On November 19, 2018 we announced that our board of directors had approved a new share repurchase program (the "2019 
repurchase program") designed, among other things, to reduce or eliminate dilution resulting from issuance of stock under the 
company's employee equity incentive programs. The 2019 share repurchase program authorizes the purchase of up to $1.75 billion
of our common stock at the company's discretion and has no fixed termination date. The 2019 repurchase program does not require 
the company to acquire a specific number of shares and may be suspended, amended or discontinued at any time. 

Dividends

 For the years ended October 31, 2018, 2017 and 2016 cash dividends of $191 million, $170 million and $150 million were 
paid on the company's outstanding common stock, respectively. On November 14, 2018 we declared a quarterly dividend of $0.164
per share of common stock, or approximately $52 million which will be paid on January 23, 2019 to shareholders of record as of 
the close of business on December 31, 2018. The timing and amounts of any future dividends are subject to determination and 
approval by our board of directors.

45

Credit Facility

On September 15, 2014, Agilent entered into a credit agreement with a financial institution which provides for a $400 million
five-year unsecured credit facility that will expire on September 15, 2019. On June 9, 2015, the commitments under the existing 
credit facility were increased by $300 million and on July 14, 2017, the commitments under the existing credit facility were 
increased by an additional $300 million so that the aggregate commitments under the facility now total $1 billion. As of October 31, 
2018, the company had no borrowings outstanding under the facility. We were in compliance with the covenants for the credit 
facility during the years ended October 31, 2018 and 2017. 

Short-term and Long-term Debt

In October 2007, the company issued an aggregate principal amount of $600 million in senior notes ("2017 senior notes"). 
On October 20, 2014, we settled the redemption of $500 million of the $600 million outstanding aggregate principal amount of 
our 2017 senior notes.  The remaining $100 million in senior notes matured and were paid in full on November 1, 2017.

In July 2010, the company issued an aggregate principal amount of $500 million in senior notes ("2020 senior notes"). The 
2020 senior notes were issued at 99.54% of their principal amount. The notes will mature on July 15, 2020, and bear interest at a 
fixed  rate  of  5.00%  per  annum. The  interest  is  payable  semi-annually  on  January 15th and  July 15th of  each  year,  payments 
commenced on January 15, 2011.

On August 9, 2011, we terminated our interest rate swap contracts related to our 2020 senior notes that represented the 
notional  amount  of  $500  million.  The  asset  value,  including  interest  receivable,  upon  termination  for  these  contracts  was 
approximately $34 million and the amount to be amortized at October 31, 2018 was $7 million. The gain is being deferred and 
amortized to interest expense over the remaining life of the 2020 senior notes.

In September 2012, the company issued an aggregate principal amount of $400 million in senior notes ("2022 senior notes"). 
The 2022 senior notes were issued at 99.80% of their principal amount. The notes will mature on October 1, 2022, and bear interest 
at a fixed rate of 3.20% per annum. The interest is payable semi-annually on April 1st and October 1st of each year, payments 
commenced on April 1, 2013.

In July 2012, Agilent executed treasury lock agreements for $400 million in connection with future interest payments to 
be made on our 2022 senior notes issued on September 10, 2012. The treasury lock contracts were terminated on September 10, 
2012 and we recognized a deferred gain in accumulated other comprehensive income which is being amortized to interest expense 
over the life of the 2022 senior notes. The remaining gain to be amortized related to the treasury lock agreements at October 31, 
2018 was $1 million. 

In June 2013, the company issued aggregate principal amount of $600 million in senior notes ("2023 senior notes"). The 
2023 senior notes were issued at 99.544% of their principal amount. The notes will mature on July 15, 2023 and bear interest at 
a fixed rate of 3.875% per annum. The interest is payable semi-annually on January 15th and July 15th of each year and payments 
commenced January 15, 2014.  

On September 15, 2016, the company issued aggregate principal amount of $300 million in senior notes ("2026 senior 
notes"). The 2026 senior notes were issued at 99.624% of their principal amount. The notes will mature on September 22, 2026
and bear interest at a fixed rate of 3.050% per annum. The interest is payable semi-annually on March 22nd  and September 22nd 
of each year and payments commenced March 22, 2017.  

In February 2016, Agilent executed three forward-starting pay fixed/receive variable interest rate swaps for the notional 
amount of $300 million in connection with future interest payments to be made on our 2026 senior notes issued on September 15, 
2016. The swap arrangements were terminated on September 15, 2016 with a payment of $10 million and we recognized this as 
a deferred loss in accumulated other comprehensive income which is being amortized to interest expense over the life of the 2026 
senior notes.The remaining loss to be amortized related to the interest rate swap agreements at October 31, 2018 was $7 million. 

Off Balance Sheet Arrangements and Other

We have contractual commitments for non-cancelable operating leases. See Note 14, "Commitments and Contingencies", 

to our consolidated financial statements for further information on our non-cancelable operating leases.

Our liquidity is affected by many factors, some of which are based on normal ongoing operations of our business and some 
of which arise from fluctuations related to global economics and markets. Our cash balances are generated and held in many 
46

locations throughout the world. Local government regulations may restrict our ability to move cash balances to meet cash needs 
under certain circumstances. We do not currently expect such regulations and restrictions to impact our ability to pay vendors and 
conduct operations throughout our global organization.

Contractual Commitments

Our  cash  flows  from  operations  are  dependent  on  a  number  of  factors,  including  fluctuations  in  our  operating  results, 
accounts receivable collections, inventory management, and the timing of tax and other payments. As a result, the impact of 
contractual obligations on our liquidity and capital resources in future periods should be analyzed in conjunction with such factors.

The following table summarizes our total contractual obligations at October 31, 2018 for Agilent operations and excludes 

amounts recorded in our consolidated balance sheet (in millions):

Less than one
year

One to three
years

Three to five
years

More than five
years

Operating leases
Commitments to contract manufacturers and suppliers
Other purchase commitments
Retirement plans
Transitional pension contributions to our U.S. 401(k) plan

Total

$

$
$

42
412
80
23
7
564

$

$
$

58
2
—
—
15
75

$

$
$

23
—
—
—
3
26

$

$
$

57
—
—
—
—
57

Operating  Leases.    Commitments  under  operating  leases  relate  primarily  to  leasehold  property,  see  Note 14, 

"Commitments and Contingencies".

Commitments to Contract Manufacturers and Suppliers.    We purchase components from a variety of suppliers and use 
several contract manufacturers to provide manufacturing services for our products. During the normal course of business, we issue 
purchase orders with estimates of our requirements several months ahead of the delivery dates. The above amounts represent the 
commitments under the open purchase orders with our suppliers that have not yet been received. However, our agreements with 
these suppliers usually provide us the option to cancel, reschedule, and adjust our requirements based on our business needs prior 
to firm orders being placed. We expect to fulfill most of our purchase commitments for inventory within one year.

In addition to the above mentioned commitments to contract manufacturers and suppliers, in the past we recorded a liability 
for firm, non-cancelable and unconditional purchase commitments for quantities in excess of our future demand forecasts consistent 
with our policy relating to excess inventory. As of October 31, 2018, the liability for our firm, non-cancelable and unconditional 
purchase commitments was less than $1 million, $1 million as of October 31, 2017 and less than $1 million as of October 31, 
2016. These amounts are included in other accrued liabilities in our consolidated balance sheet. 

Other Purchase Commitments.    We have categorized "other purchase commitments" related to contracts with professional 
services suppliers. Typically, we can cancel contracts without penalties. For those contracts that are not cancelable without penalties, 
we are disclosing the termination fees and costs or commitments for continued spending that we are obligated to pay to a supplier 
under each contact's termination period before such contract can be cancelled. Our contractual obligations with these suppliers 
under "other purchase commitments" were approximately $80 million within the next year. Approximately $27 million of the new 
contracts relate to penalties that will reduce over the next 15 years.

Retirement Plans.    Commitments under the retirement plans relate to expected contributions to be made to our U.S. and 
non-U.S. defined benefit plans and to our post-retirement medical plans for the next year only. Contributions after next year are 
impractical to estimate. Effective May 1, 2016 until April 30, 2022, we will provide an additional transitional company contribution 
for certain eligible employees equal to 3 percent, 4 percent or 5 percent of an employee's annual eligible compensation due to the 
U.S. Retirement Plan benefits being frozen.

We had no material off-balance sheet arrangements as of October 31, 2018 or October 31, 2017.

47

On Balance Sheet Arrangements

The following table summarizes our total contractual obligations on our October 31, 2018 balance sheet (in millions):

Senior notes
Credit facility(1)
Interest expense
Transition tax(2)
Total

$

$

Less than one
year

One to three years
500
—
116
68
684

— $
—
70
34
104

$

$

Three to five years More than five years
300
$
—
27
256
583

1,000
—
79
68
1,147

$

$

(1)  The credit facility expires on September 15, 2019.
(2)  The transition tax payable may be adjusted based on our 2018 tax return filings.

Other long-term liabilities as of October 31, 2018 and October 31, 2017 include $607 million and $131 million, respectively, 
related to long-term income tax liabilities.  Of these amounts, $215 million and $131 million related to uncertain tax positions as 
of October 31, 2018 and October 31, 2017, respectively. We are unable to accurately predict when these amounts will be realized 
or released. However, it is reasonably possible that there could be significant changes to our unrecognized tax benefits in the next 
twelve months due to either the expiration of a statute of limitations or a tax audit settlement.  The remaining $392 million in other 
long-term liabilities relates to the one-time transition tax payable after fiscal year 2019. The transition tax is payable, beginning 
in fiscal year 2019 over eight years with 8 percent due in each of the first five years, 15 percent in year six, 20 percent in year 
seven and 25 percent in year eight. 

48

Item 7A.    Quantitative and Qualitative Disclosures About Market Risk

We are exposed to foreign currency exchange rate risks inherent in our sales commitments, anticipated sales, and assets 
and  liabilities  denominated  in  currencies  other  than  the  functional  currency  of  our  subsidiaries. We  hedge  future  cash  flows 
denominated in currencies other than the functional currency using sales forecasts up to twelve months in advance. Our exposure 
to exchange rate risks is managed on an enterprise-wide basis. This strategy utilizes derivative financial instruments, including 
option and forward contracts, to hedge certain foreign currency exposures with the intent of offsetting gains and losses that occur 
on the underlying exposures with gains and losses on the derivative contracts hedging them. We do not currently and do not intend 
to utilize derivative financial instruments for speculative trading purposes. To the extent that we are required to pay for all, or 
portions, of an acquisition price in foreign currencies, we may enter into foreign exchange contracts to reduce the risk that currency 
movements will impact the cost of the transaction.

Our  operations  generate  non-functional  currency  cash  flows  such  as  revenues,  third  party  vendor  payments  and  inter-
company payments. In anticipation of these foreign currency cash flows and in view of volatility of the currency market, we enter 
into such foreign exchange contracts as are described above to manage our currency risk. Approximately 53 percent of our revenue 
in 2018, 51 percent of our revenue in 2017 and 54 percent of our revenues in 2016 were generated in U.S. dollars.The favorable 
effects of changes in foreign currency exchange rates, principally as a result of the strengthening of the U.S. dollar, has increased 
revenue by approximately 2 percentage points in the year ended October 31, 2018. We calculate the impact of foreign currency 
exchange rates movements by applying the actual foreign currency exchange rates in effect during the last month of each quarter 
to the current year to both the applicable current and prior year periods. 

We performed a sensitivity analysis assuming a hypothetical 10 percent adverse movement in foreign exchange rates to the 
hedging contracts and the underlying exposures described above. As of October 31, 2018 and 2017, the analysis indicated that 
these hypothetical market movements would not have a material effect on our consolidated financial position, results of operations, 
statement of comprehensive income or cash flows.

We are also exposed to interest rate risk due to the mismatch between the interest expense we pay on our loans at fixed 
rates and the variable rates of interest we receive from cash, cash equivalents and other short-term investments. We have issued 
long-term debt in U.S. dollars or foreign currencies at fixed interest rates based on the market conditions at the time of financing. 
We believe that the fair value of our fixed rate debt changes when the underlying market rates of interest change, and we may use 
interest rate swaps to modify such market risk.  

We performed a sensitivity analysis assuming a hypothetical 10 percent adverse movement in interest rates relating to the 
underlying fair value of our fixed rate debt. As of October 31, 2018 and 2017, the sensitivity analyses indicated that a hypothetical 
10 percent adverse movement in interest rates would result in an immaterial impact to the fair value of our fixed interest rate debt.

49

Item 8.    Financial Statements and Supplementary Data

Index to Consolidated Financial Statements

Consolidated Financial Statements:

Report of Independent Registered Public Accounting Firm

Consolidated Statement of Operations for each of the three years in the period ended October 31, 2018

Consolidated Statement of Comprehensive Income for each of the three years in the period ended October 31, 
2018

Consolidated Balance Sheet at October 31, 2018 and 2017

Consolidated Statement of Cash Flows for each of the three years in the period ended October 31, 2018

Consolidated Statement of Equity for each of the three years in the period ended October 31, 2018

Notes to Consolidated Financial Statements

Quarterly Summary (unaudited)

Page

51

53

54

55

56

57

58

102

50

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of Agilent Technologies, Inc.

Opinions on the Financial Statements and Internal Control over Financial Reporting

We have audited the accompanying consolidated balance sheets of Agilent Technologies, Inc. and its subsidiaries (the “Company”) 
as of October 31, 2018 and October 31, 2017, and the related consolidated statements of operations, comprehensive income, cash 
flows and equity for each of the three years in the period ended October 31, 2018, including the related notes and financial statement 
schedule appearing under Item 15(a)(2). (collectively referred to as the “consolidated financial statements”). We also have audited 
the Company's internal control over financial reporting as of October 31, 2018, based on criteria established in Internal Control 
- Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).  

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position 
of the Company as of October 31, 2018 and October 31, 2017, and the results of its operations and its cash flows for each of the 
three years in the period ended October 31, 2018 in conformity with accounting principles generally accepted in the United States 
of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting 
as of October 31, 2018, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO.

Basis for Opinions

The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control 
over  financial  reporting,  and  for  its  assessment  of  the  effectiveness  of  internal  control  over  financial  reporting,  included  in 
Management’s Report on Internal Control Over Financial Reporting appearing under Item 9A. Our responsibility is to express 
opinions on the Company’s consolidated financial statements and on the Company's internal control over financial reporting based 
on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) 
(PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and 
the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the 
audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether 
due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.  

Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement 
of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. 
Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial 
statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, 
as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial 
reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness 
exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits 
also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits 
provide a reasonable basis for our opinions.

Definition and Limitations of Internal Control over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability 
of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted 
accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain 
to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets 
of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial 
statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are 
being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable 
assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that 
could have a material effect on the financial statements.

51

Because  of  its  inherent  limitations,  internal  control  over  financial  reporting  may  not  prevent  or  detect  misstatements. Also, 
projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because 
of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ PRICEWATERHOUSECOOPERS LLP

San Jose, California
December 20, 2018

We have served as the Company’s auditor since 1999.

52

AGILENT TECHNOLOGIES, INC.

CONSOLIDATED STATEMENT OF OPERATIONS

Net revenue:

Products

Services and other

Total net revenue

Costs and expenses:

Cost of products

Cost of services and other

Total costs

Research and development

Selling, general and administrative

Total costs and expenses

Income from operations

Interest income

Interest expense

Other income (expense), net

Income before taxes

Provision for income taxes

Net income

Net income per share:

Basic

Diluted

Weighted average shares used in computing net income per share:

Basic

Diluted

Years Ended October 31,

2018

2017

2016

(in millions, except per
share data)

$

3,746

$

3,397

$

1,168

4,914

1,588

639

2,227

385

1,374

3,986

928

38
(75)
55

946

630

316

0.98

0.97

321

325

$

$

$

1,075

4,472

1,462

601

2,063

339

1,229

3,631

841

22
(79)
19

803

119

684

2.12

2.10

322

326

$

$

$

$

$

$

3,213

989

4,202

1,457

548

2,005

329

1,253

3,587

615

11
(72)
(10)
544

82

462

1.42

1.40

326

329

Cash dividends declared per common share

$

0.596

$

0.528

$

0.460

The accompanying notes are an integral part of these consolidated financial statements.

53

  AGILENT TECHNOLOGIES, INC.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME   
(in millions)

Net income
Other comprehensive income (loss):
Gain (loss) on derivative instruments, net of tax expense (benefit) of $1, $0 and $(4)
Amounts reclassified into earnings related to derivative instruments, net of tax expense of $1,
$0 and $0
Foreign currency translation, net of tax expense of $7, $3 and $3
Net defined benefit pension cost and post retirement plan costs:
Change in actuarial net loss, net of tax expense (benefit) of $(3), $52, and $(42)
Change in net prior service benefit, net of tax benefit of $(2), $(3), and $(8)
Other comprehensive income (loss)
Total comprehensive income

Years Ended October 31,

2018

2017

2016

$

316

$

684

$

462

6

3
(58)

(7)
(6)
(62)
254

$

—

(1)
41

123
(6)
157
841

(6)

3
(8)

(86)
(15)
(112)
350

$

$

The accompanying notes are an integral part of these condensed consolidated financial statements.

54

AGILENT TECHNOLOGIES, INC.

CONSOLIDATED BALANCE SHEET

ASSETS

Current assets:

Cash and cash equivalents
Accounts receivable, net
Inventory
Other current assets

Total current assets

Property, plant and equipment, net
Goodwill
Other intangible assets, net
Long-term investments
Other assets

Total assets

LIABILITIES AND EQUITY

Current liabilities:
Accounts payable
Employee compensation and benefits
Deferred revenue
Short-term debt
Other accrued liabilities

Total current liabilities

Long-term debt
Retirement and post-retirement benefits
Other long-term liabilities
Total liabilities

Commitments and contingencies (Note 14)
Total equity:

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; 318 million shares at
October 31, 2018 and 322 million shares at October 31, 2017 issued
Additional paid-in-capital
Accumulated deficit
Accumulated other comprehensive loss

Total stockholders' equity
Non-controlling interest
Total equity
Total liabilities and equity

October 31,

2018

2017

(in millions, except
par value and
share data)

2,247
776
638
187
3,848
822
2,973
491
68
339
8,541

340
304
324
—
203
1,171
1,799
239
761
3,970

—

3
5,308
(336)
(408)
4,567
4
4,571
8,541

$

$

$

$

2,678
724
575
192
4,169
757
2,607
361
138
394
8,426

305
276
291
210
181
1,263
1,801
234
293
3,591

—

3
5,300
(126)
(346)
4,831
4
4,835
8,426

$

$

$

$

   The accompanying notes are an integral part of these consolidated financial statements.

55

AGILENT TECHNOLOGIES, INC.

CONSOLIDATED STATEMENT OF CASH FLOWS

Years Ended October 31,

2018

2017

2016

(in millions)

Cash flows from operating activities:

Net income

Adjustments to reconcile net income to net cash provided by operating activities:

$

316

$

684

$

Depreciation and amortization
Share-based compensation
Deferred taxes
Excess and obsolete inventory related charges
Gain on step acquisition
Asset impairment charges
Impairment of equity method investment and loans
Other
Changes in assets and liabilities:
Accounts receivable, net
Inventory
Accounts payable
Employee compensation and benefits
Changes in assets and liabilities due to Tax Act
Interest rate swap payments
Other assets and liabilities

Net cash provided by operating activities

Cash flows from investing activities:

Investments in property, plant and equipment
Proceeds from the sale of property, plant and equipment
Proceeds from the sale of investment securities
Proceeds from divestitures
Payment to acquire cost method investment
Payment in exchange for convertible note
Loan to equity method investment
Change in restricted cash, cash equivalents and investments, net
Acquisitions of businesses and intangible assets, net of cash acquired

Net cash used in investing activities

Cash flows from financing activities:

Issuance of common stock under employee stock plans
Payment of taxes related to net share settlement of equity awards
Treasury stock repurchases
Payment of dividends
Issuance of senior notes
Debt issuance costs
Proceeds from debts and credit facility
Repayment of debts and credit facility

Net cash used in financing activities

Effect of exchange rate movements

Net increase (decrease) in cash and cash equivalents

Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year

210
70
(16)
26
(20)
21
—
9

(65)
(83)
40
31
552
—
(4)
1,087

(177)
1
—
—
(11)
(2)
—
1
(516)
(704)

56
(30)
(422)
(191)
—
—
483
(693)
(797)
(17)
(431)
2,678
2,247

$

212
60
102
24
—
—
—
7

(81)
(61)
2
38
—
—
(98)
889

(176)
—
—
2
(1)
(1)
—
(1)
(128)
(305)

66
(14)
(194)
(170)
—
—
400
(290)
(202)
7
389
2,289
2,678

$

Supplemental cash flow information:

$
Income tax payments, net
Interest payments
$
Non-cash change in investments in property, plant and equipment -increase (decrease) $

$
102
80
$
(5) $

63
82
29

The accompanying notes are an integral part of these consolidated financial statements.

56

$

$
$
$

462

246
58
3
20
—
4
25
15

(33)
(7)
(15)
15
—
(10)
10
793

(139)
—
1
—
(80)
(1)
(3)
245
(261)
(238)

62
(6)
(434)
(150)
299
(2)
255
(292)
(268)
(1)
286
2,003
2,289

67
73
(12)

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T

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
AGILENT TECHNOLOGIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. OVERVIEW AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Overview.    Agilent Technologies, Inc. ("we", "Agilent" or the "company"), incorporated in Delaware in May 1999, is a 
global leader in life sciences, diagnostics and applied  chemical markets, providing application focused solutions that include 
instruments, software, services and consumables for the entire laboratory workflow.

Basis of Presentation.    The accompanying financial data has been prepared by us pursuant to the rules and regulations of 
the U.S. Securities and Exchange Commission ("SEC") and is in conformity with U.S. generally accepted accounting principles 
("GAAP"). Our fiscal year end is October 31. Unless otherwise stated, all years and dates refer to our fiscal year.

Principles of Consolidation.    The consolidated financial statements include the accounts of the company and our wholly- 

and majority-owned subsidiaries. All significant intercompany accounts and transactions have been eliminated.

Revision of Services and Other, Product Net Revenue and related Cost of Sales.  In 2018, we identified a stream of service 
revenue that had been presented as product revenue in the prior years.  We have revised prior year's presentation to show the 
revenue within services and other to conform with the current presentation in fiscal 2018.   The cost of sales associated with these 
newly identified service revenue has also been revised to align with the new presentation. For the years ended October 31, 2017
and 2016 service and other revenue increased $13 million and $14 million, respectively, and service and other cost of sales increased 
$7  million  in  both  periods,  with  corresponding  reductions  in  product  revenue  and  cost  of  sales.    These  corrections  to  the 
classifications are not considered to be material to current or prior periods and had no impact to our results of operations previously 
reported in our consolidated statement of operations.

Use of Estimates.    The preparation of financial statements in accordance with U.S. GAAP requires management to make 
estimates and assumptions that affect the amounts reported in our consolidated financial statements and accompanying notes. 
Management bases its estimates on historical experience and various other assumptions believed to be reasonable. Although these 
estimates are based on management's best knowledge of current events and actions that may impact the company in the future, 
actual results may be different from the estimates. Our critical accounting policies are those that affect our financial statements 
materially and involve difficult, subjective or complex judgments by management. Those policies are revenue recognition, valuation 
of goodwill and purchased intangible assets, inventory valuation, share-based compensation, retirement and post-retirement plan 
assumptions and accounting for income taxes.

Retirement of Treasury Shares.  Upon the formal retirement of treasury shares, we deduct the par value of the retired treasury 
shares from common stock and allocate the excess of cost over par as a deduction to additional paid-in capital, based on the pro-
rata portion of additional paid-in-capital, and the remaining excess as a deduction to retained earnings.  All retired treasury shares 
revert to the status of authorized but unissued shares.

Revenue  Recognition.    We  enter  into  agreements  to  sell  products  (hardware  and/or  software),  services  and  other 

arrangements (multiple element arrangements) that include combinations of products and services.

We recognize revenue, net of trade discounts and allowances, provided that (1) persuasive evidence of an arrangement 
exists, (2) delivery has occurred, (3) the price is fixed or determinable and (4) collectability is reasonably assured. Delivery is 
considered to have occurred when title and risk of loss have transferred to the customer for products, or when the service has been 
provided. We consider the price to be fixed or determinable when the price is not subject to refund or adjustments. At the time of 
the transaction, we evaluate the creditworthiness of our customers to determine the appropriate timing of revenue recognition. 
Provisions for discounts, warranties, returns, extended payment terms, and other adjustments are provided for in the period the 
related sales are recorded.

Product Revenue.   Product revenue includes revenue generated from the sales of our analytical instrumentation, software 
and consumables.  Our product revenue is generated predominantly from the sales of various types of analytical instrumentation. 
Product revenue, including sales to resellers and distributors, is reduced for estimated returns when appropriate. For sales or 
arrangements that include customer-specified acceptance criteria, including those where acceptance is required upon achievement 
of performance milestones, revenue is recognized after the acceptance criteria have been met. For products that include installation, 
if the installation meets the criteria to be considered a separate element, product revenue is recognized upon delivery, and recognition 
of installation revenue is delayed until the installation is complete. Otherwise, neither the product nor the installation revenue is 
recognized until the installation is complete.

58

Where software is licensed separately, revenue is recognized when the software is delivered and has been transferred to the 
customer or, in the case of electronic delivery of software, when the customer is given access to the licensed software programs. 

We also evaluate whether collection of the receivable is probable, the fee is fixed or determinable and whether any other 
undelivered elements of the arrangement exist on which a portion of the total fee would be allocated based on vendor-specific 
objective evidence.

Service Revenue.  Revenue from services includes extended warranty, customer and software support including, Software 
as a Service (SaaS), consulting including companion diagnostics and training and education. Service revenue is deferred and 
recognized over the contractual period or as services are rendered and accepted by the customer. For example, customer support 
contracts are recognized ratably over the contractual period, while training revenue is recognized as the training is provided to the 
customer. In addition, the four revenue recognition criteria described above must be met before service revenue is recognized.

Revenue  Recognition  for  Arrangements  with  Multiple  Deliverables.  Our  multiple-element  arrangements  are  generally 
comprised of a combination of measurement instruments, installation or other start-up services, and/or software and/or support or 
services. Hardware and software elements are typically delivered at the same time and revenue is recognized upon delivery once 
title and risk of loss pass to the customer. Delivery of installation, start-up services and other services varies based on the complexity 
of the equipment, staffing levels in a geographic location and customer preferences, and can range from a few days to a few months. 
Service revenue is deferred and recognized over the contractual period or as services are rendered and accepted by the customer. 
Revenue from the sale of software products that are not required to deliver the tangible product's essential functionality are accounted 
for under software revenue recognition rules which require vendor specific objective evidence (VSOE) of fair value to allocate 
revenue in a multiple element arrangement. Our arrangements generally do not include any provisions for cancellation, termination, 
or refunds that would significantly impact recognized revenue.

We have evaluated the deliverables in our multiple-element arrangements and concluded that they are separate units of 
accounting if the delivered item or items have value to the customer on a standalone basis and for an arrangement that includes a 
general right of return relative to the delivered item(s), delivery or performance of the undelivered item(s) is considered probable 
and substantially in our control. We allocate revenue to each element in our multiple-element arrangements based upon their relative 
selling  prices. We  determine  the  selling  price  for  each  deliverable  based  on  a  selling  price  hierarchy. The  selling  price  for  a 
deliverable is based on VSOE if available, third-party evidence (TPE) if VSOE is not available, or estimated selling price (ESP) 
if neither VSOE nor TPE is available. Revenue allocated to each element is then recognized when the basic revenue recognition 
criteria for that element have been met.

We use VSOE of selling price in the selling price allocation in all instances where it exists. VSOE of selling price for 
products and services is determined when a substantial majority of the selling prices fall within a reasonable range when sold 
separately.  TPE  of  selling  price  can  be  established  by  evaluating  largely  interchangeable  competitor  products  or  services  in 
standalone sales to similarly situated customers. As our products contain a significant element of proprietary technology and the 
solution offered differs substantially from that of competitors, it is difficult to obtain the reliable standalone competitive pricing 
necessary to establish TPE. ESP represents the best estimate of the price at which we would transact a sale if the product or service 
were sold on a standalone basis. We determine ESP for a product or service by using historical selling prices which reflect multiple 
factors including, but not limited to customer type, geography, market conditions, competitive landscape, gross margin objectives 
and pricing practices. The determination of ESP is made through consultation with and approval by management. We may modify 
or develop new pricing practices and strategies in the future. As these pricing strategies evolve changes may occur in ESP. The 
aforementioned factors may result in a different allocation of revenue to the deliverables in multiple element arrangements, which 
may change the pattern and timing of revenue recognition for these elements but will not change the total revenue recognized for 
the arrangement.

For  sales  arrangements  that  include  equipment  lease  along  with  other  products  or  services,  revenue  is  allocated  to  the 
different elements based on the Revenue Recognition for Multiple Element Arrangements.  Each of these contracts is evaluated 
as a lease arrangement, either as an operating lease or a capital (sales-type) lease using lease classification guidance.

Deferred Revenue.    Deferred revenue represents the amount that is allocated to undelivered elements in multiple element 
arrangements. We limit the revenue recognized to the amount that is not contingent on the future delivery of products or services 
or meeting other specified performance conditions.

Accounts Receivable, net.    Trade accounts receivable are recorded at the invoiced amount and do not bear interest. Such 
accounts receivable have been reduced by an allowance for doubtful accounts, which is our best estimate of the amount of probable 
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credit losses in our existing accounts receivable. We determine the allowance based on customer specific experience and the aging 
of such receivables, among other factors. The allowance for doubtful accounts as of October 31, 2018 and 2017 was not material. 
We do not have any off-balance-sheet credit exposure related to our customers. Accounts receivable are also recorded net of product 
returns.

Shipping and Handling Costs.  Our shipping and handling costs charged to customers are included in net revenue, and the 

associated expense is recorded in cost of products for all periods presented.

Inventory.    Inventory is valued at standard cost, which approximates actual cost computed on a first-in, first-out basis, not 
in excess of market value. We assess the valuation of our inventory on a periodic basis and make adjustments to the value for 
estimated excess and obsolete inventory based on estimates about future demand. The excess balance determined by this analysis 
becomes the basis for our excess inventory charge. Our excess inventory review process includes analysis of sales forecasts, 
managing product rollovers and working with manufacturing to maximize recovery of excess inventory.

Goodwill and Purchased Intangible Assets. Under the authoritative guidance we have the option to perform a qualitative 
assessment to determine whether further impairment testing is necessary. The accounting standard gives an entity the option to 
first assess qualitative factors to determine whether performing the two-step test is necessary. If an entity believes, as a result of 
its qualitative assessment, that it is more-likely-than-not (i.e. greater than 50% chance) that the fair value of a reporting unit is less 
than its carrying amount, the quantitative impairment test will be required. Otherwise, no further testing will be required.

The guidance includes examples of events and circumstances that might indicate that a reporting unit's fair value is less 
than its carrying amount. These include macro-economic conditions such as deterioration in the entity's operating environment or 
industry or market considerations; entity-specific events such as increasing costs, declining financial performance, or loss of key 
personnel; or other events such as an expectation that a reporting unit will be sold or a sustained decrease in the stock price on 
either an absolute basis or relative to peers. 

If it is determined, as a result of the qualitative assessment, that it is more-likely-than-not that the fair value of a reporting 
unit is less than its carrying amount, the provisions of authoritative guidance require that we perform a two-step impairment test 
on goodwill. In the first step, we compare the fair value of each reporting unit to its carrying value. The second step (if necessary) 
measures the amount of impairment by applying fair-value-based tests to the individual assets and liabilities within each reporting 
unit. As defined in the authoritative guidance, a reporting unit is an operating segment, or one level below an operating segment. 
We aggregate components of an operating segment that have similar economic characteristics into our reporting units. 

 In May 2018, we re-organized our operating segments and moved our microfluidics business from our life sciences and 
applied markets operating segment to our diagnostics and genomics operating segment. As a result, we reassigned approximately 
$45 million of goodwill from our life sciences and applied markets segment to our diagnostics and genomics segment using the 
relative fair value allocation approach.  Goodwill balances as of October 31, 2017 and 2016, have been recast to conform to this 
new presentation.

 In fiscal year 2018, we assessed goodwill impairment for our three reporting units which consisted of three segments: life 
sciences  and  applied  markets,  diagnostics  and  genomics  and Agilent  CrossLab. We  performed  a  qualitative  test  for  goodwill 
impairment of the three reporting units, as of September 30, 2018. Based on the results of our qualitative testing, we believe that 
it is more-likely-than-not that the fair value of these reporting units are greater than their respective carrying values. Each quarter 
we review the events and circumstances to determine if goodwill impairment is indicated. There was no impairment of goodwill 
during the years ended October 31, 2018, 2017 and 2016. 

Purchased intangible assets consist primarily of acquired developed technologies, proprietary know-how, trademarks, and 
customer relationships and are amortized using the best estimate of the asset's useful life that reflect the pattern in which the 
economic benefits are consumed or used up or a straight-line method ranging from 6 months to 15 years. In-process research and 
development ("IPR&D") is initially capitalized at fair value as an intangible asset with an indefinite life and assessed for impairment 
thereafter. When the IPR&D project is complete, it is reclassified as an amortizable purchased intangible asset and is amortized 
over its estimated useful life. If an IPR&D project is abandoned, Agilent will record a charge for the value of the related intangible 
asset to Agilent's consolidated statement of operations in the period it is abandoned.

Agilent's  indefinite-lived  intangible  assets  are  IPR&D  intangible  assets. The  accounting  guidance  allows  a  qualitative 
approach for testing indefinite-lived intangible assets for impairment, similar to the issued impairment testing guidance for goodwill 
and allows the option to first assess qualitative factors (events and circumstances) that could have affected the significant inputs 
used in determining the fair value of the indefinite-lived intangible asset to determine whether it is more-likely-than-not (i.e. greater 
60

than 50% chance) that the indefinite-lived intangible asset is impaired.  An organization may choose to bypass the qualitative 
assessment for any indefinite-lived intangible asset in any period and proceed directly to calculating its fair value. We performed 
a qualitative test for impairment of indefinite-lived intangible assets as of September 30, 2018. Based on the results of our qualitative 
testing, we believe that it is more-likely-than-not that the fair value of these indefinite-lived intangible assets is greater than their 
respective carrying values. Each quarter we review the events and circumstances to determine if impairment of indefinite-lived 
intangible asset is indicated. During the year ended October 31, 2018 and 2017, there were no impairments of indefinite-lived 
intangible assets. Based on triggering events in the year ended October 31, 2016, we recorded an impairment of $4 million due to 
the cancellation of certain IPR&D projects. 

Share-Based Compensation.    For the years ended 2018, 2017 and 2016, we accounted for share-based awards made to our 
employees and directors including employee stock option awards, restricted stock units, employee stock purchases made under 
our  Employee  Stock  Purchase  Plan  ("ESPP")  and  performance  share  awards  under  Agilent  Technologies, Inc.  Long-Term 
Performance Program ("LTPP") using the estimated grant date fair value method of accounting.  Under the fair value method, we 
recorded compensation expense for all share-based awards of $71 million in 2018, $61 million in 2017 and $60 million in 2016. 
See Note 3, "Share-based Compensation" for additional information.

Retirement and Post-Retirement Plans.   Substantially all of our employees are covered under various defined benefit and/
or  defined  contribution  retirement  plans.   Additionally,  we  sponsor  post-retirement  health  care  benefits  for  our  eligible  U.S. 
employees.   Assumptions used to determine the benefit obligations and the expense for these plans are derived annually.   See 
Note 12, “Retirement plans and post-retirement pension plans” for additional information. 

Taxes on Income.    Income tax expense or benefit is based on income or loss before taxes. Deferred tax assets and liabilities 
are recognized principally for the expected tax consequences of temporary differences between the tax bases of assets and liabilities 
and their reported amounts. See Note 4, "Income Taxes" for more information.

Warranty.    Our standard warranty terms typically extend for one year from the date of delivery. We accrue for standard 
warranty costs based on historical trends in warranty charges as a percentage of net product revenue. The accrual is reviewed 
regularly and periodically adjusted to reflect changes in warranty cost estimates. Estimated warranty charges are recorded within 
cost of products at the time products are sold. See Note 13, "Guarantees".

Advertising.    Advertising costs are generally expensed as incurred and amounted to $41 million in 2018, $38 million in 

2017 and $30 million in 2016.

Research and Development.    Costs related to research, design and development of our products are charged to research 

and development expense as they are incurred.

Sales Taxes.    Sales taxes collected from customers and remitted to governmental authorities are not included in our revenue.

Net Income Per Share.    Basic net income per share is computed by dividing net income - the numerator - by the weighted 
average number of common shares outstanding - the denominator - during the period excluding the dilutive effect of stock options 
and other employee stock plans. Diluted net income per share gives effect to all potential common shares outstanding during the 
period unless the effect is anti-dilutive. The dilutive effect of share-based awards is reflected in diluted net income per share by 
application of the treasury stock method, which includes consideration of unamortized share-based compensation expense and the 
dilutive effect of in-the-money options and non-vested restricted stock units. Under the treasury stock method, the amount the 
employee must pay for exercising stock options and unamortized share-based compensation expense are assumed proceeds to be 
used to repurchase hypothetical shares. See Note 5, "Net Income Per Share".

Cash,  Cash  Equivalents  and  Short  Term  Investments.  We  classify  investments  as  cash  equivalents  if  their  original  or 
remaining maturity is three months or less at the date of purchase. Cash equivalents are stated at cost, which approximates fair 
value.

As of October 31, 2018, approximately $1,361 million of our cash and cash equivalents is held outside of the U.S. by our 
foreign subsidiaries. In 2018, we repatriated $1,921 million  of the cash held outside the U.S. The cash remaining outside the U.S. 
can be repatriated to the U.S. as local working capital and other regulatory conditions permit. As a result of the U.S. Tax Cuts and 
Jobs Act (the "Tax Act"), our cash and cash equivalents are no longer subjected to U.S. federal tax on repatriation into the U.S. 
Our cash and cash equivalents mainly consist of short term deposits held at major global financial institutions, institutional money 
market funds, and similar short duration instruments with original maturities of 90 days or less. We continuously monitor the 
creditworthiness of the financial institutions and institutional money market funds in which we invest our funds.

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We classify investments as short-term investments if their original maturities are greater than three months and their remaining 

maturities are one year or less. Currently, we have no short-term investments.

Variable Interest Entities. We make a determination upon entering into an arrangement whether an entity in which we have 
made an investment is considered a Variable Interest Entity (“VIE”).  The company evaluates its investments in privately held 
companies  on  an  ongoing  basis. We  account  for  these  investments  under  either  the  equity  or  cost  method,  depending  on  the 
circumstances.  We periodically reassess whether we are the primary beneficiary of a VIE. The reassessment process considers 
whether we have acquired the power to direct the most significant activities of the VIE through changes in governing documents 
or other circumstances. We also reconsider whether entities previously determined not to be VIEs have become VIEs, based on 
changes in facts and circumstances including changes in contractual arrangements and capital structure. During 2016, we wrote 
down an equity method investment to its fair value of zero, resulting in an impairment charge of $18 million.  In addition, we 
recorded an impairment of $7 million of uncollectible loans related to this equity method investment.

During the year ended October 31, 2016, Agilent made a preferred stock investment in Lasergen for $80 million.  This 
investment in Lasergen was accounted for under the cost method.  Agilent’s initial ownership stake was 48 percent and included 
an option to acquire the remaining shares until March 2018. During the year ended October 31, 2018, we exercised our option and 
acquired  all  of  the  remaining  shares  of  Lasergen,  Inc.  that  we  did  not  already  own  for  an  additional  cash  consideration  of 
approximately  $107 million. The fair value remeasurement of our previous investment immediately before the acquisition resulted 
in a net gain of $20 million and was recorded in other income.  Lasergen was previously considered a VIE. As of October 31, 
2018, we have no VIE's.

Investments. Cost method investments consist of non-marketable equity securities and are accounted for at historical cost. 
Trading securities are reported at fair value, with gains or losses resulting from changes in fair value recognized currently in 
earnings. Equity method investments are reported at the amount of the company’s initial investment and adjusted each period for 
the company’s share of the investee’s income or loss and dividend paid. The company assesses investments for impairment whenever 
events or changes in circumstances indicate that the carrying value of an investment may not be recoverable.

Fair Value of Financial Instruments. The carrying values of certain of our financial instruments including cash and cash 
equivalents, accounts receivable, accounts payable, accrued compensation and other accrued liabilities approximate fair value 
because of their short maturities. The fair value of long-term equity investments is determined using quoted market prices for those 
securities when available. For those long-term equity investments accounted for under the cost or equity method, their carrying 
value approximates their estimated fair value. Equity method investments are reported at the amount of the company’s initial 
investment and adjusted each period for the company’s share of the investee’s income or loss and dividend paid. There are no 
equity method investments as of October 31, 2018 or 2017 . The fair value of our senior notes, calculated from quoted prices which 
are primarily Level 1 inputs under the accounting guidance fair value hierarchy is lower than the carrying value by approximately 
$15 million as of October 31, 2018 and exceeds the carrying value by approximately $58 million  as of October 31, 2017. The 
change in the fair value over carrying value in the year ended October 31, 2018 is primarily due to increased market interest rates. 
The fair value of foreign currency contracts used for hedging purposes is estimated internally by using inputs tied to active markets. 
These  inputs,  for  example,  interest  rate  yield  curves,  foreign  exchange  rates,  and  forward  and  spot  prices  for  currencies  are 
observable in the market or can be corroborated by observable market data for substantially the full term of the assets or liabilities. 
See also Note 10, "Fair Value Measurements" for additional information on the fair value of financial instruments.

Concentration of Credit Risk.    Financial instruments that potentially subject Agilent to significant concentration of credit 
risk include money market fund investments, time deposits and demand deposit balances. These investments are categorized as 
cash and cash equivalents. In addition, Agilent has credit risk from derivative financial instruments used in hedging activities and 
accounts receivable. We invest in a variety of financial instruments and limit the amount of credit exposure with any one financial 
institution. We have a comprehensive credit policy in place and credit exposure is monitored on an ongoing basis. 

 Credit risk with respect to our accounts receivable is diversified due to the large number of entities comprising our customer 
base and their dispersion across many different industries and geographies. Credit evaluations are performed on customers requiring 
credit over a certain amount and we sell the majority of our products through our direct sales force. Credit risk is mitigated through 
collateral such as letter of credit, bank guarantees or payment terms like cash in advance. No single customer accounted for more 
than 10 percent of combined accounts receivable as of October 31, 2018, or 2017.

Derivative Instruments.    Agilent is exposed to global foreign currency exchange rate and interest rate risks in the normal 
course of business. We enter into foreign exchange hedging contracts, primarily forward contracts and purchased options and, in 
the past, interest rate swaps to manage financial exposures resulting from changes in foreign currency exchange rates and interest 

62

rates. In the vast majority of cases, these contracts are designated at inception as hedges of the related foreign currency or interest 
exposures.  Foreign  currency  exposures  include  committed  and  anticipated  revenue  and  expense  transactions  and  assets  and 
liabilities  that  are  denominated  in  currencies  other  than  the  functional  currency  of  the  subsidiary.  Interest  rate  exposures  are 
associated with the company's fixed-rate debt. For option contracts, we exclude time value from the measurement of effectiveness. 
To qualify for hedge accounting, contracts must reduce the foreign currency exchange rate and interest rate risk otherwise inherent 
in the amount and duration of the hedged exposures and comply with established risk management policies; foreign exchange 
hedging contracts generally mature within twelve months and interest rate swaps, if any, mature at the same time as the maturity 
of the debt. In order to manage foreign currency exposures in a few limited jurisdictions we may enter into foreign exchange 
contracts that do not qualify for hedge accounting. In such circumstances, the local foreign currency exposure is offset by contracts 
owned by the parent company. We do not use derivative financial instruments for speculative trading purposes.

All derivatives are recognized on the balance sheet at their fair values. For derivative instruments that are designated and 
qualify as a fair value hedge, changes in value of the derivative are recognized in the consolidated statement of operations in the 
current period, along with the offsetting gain or loss on the hedged item attributable to the hedged risk. For derivative instruments 
that are designated and qualify as a cash flow hedges, changes in the value of the effective portion of the derivative instrument is 
recognized in comprehensive income (loss), a component of stockholders' equity. Amounts associated with cash flow hedges are 
reclassified and recognized in income when either the forecasted transaction occurs or it becomes probable the forecasted transaction 
will not occur. Derivatives not designated as hedging instruments are recorded on the balance sheet at their fair value and changes 
in the fair values are recorded in the income statement in the current period. Derivative instruments are subject to master netting 
arrangements  and  are  disclosed  gross  in  the  balance  sheet.  Changes  in  the  fair  value  of  the  ineffective  portion  of  derivative 
instruments are recognized in earnings in the current period. Ineffectiveness in 2018, 2017 and 2016 was not material.  Cash flows 
from derivative instruments are classified in the statement of cash flows in the same category as the cash flows from the hedged 
or economically hedged item, primarily in operating activities.

Property, Plant and Equipment.    Property, plant and equipment are stated at cost less accumulated depreciation. Additions, 
improvements and major renewals are capitalized; maintenance, repairs and minor renewals are expensed as incurred. When assets 
are retired or disposed of, the assets and related accumulated depreciation and amortization are removed from our general ledger, 
and the resulting gain or loss is reflected in the consolidated statement of operations. Buildings and improvements are depreciated 
over the lesser of their useful lives or the remaining term of the lease and machinery and equipment over three to ten years. We 
use the straight-line method to depreciate assets.

Leases.    We lease buildings, machinery and equipment under operating leases for original terms ranging generally from 
one year to twenty years. Certain leases contain renewal options for periods up to six years. In addition, we lease equipment to 
customers in connection with our diagnostics business using both capital and operating leases. As of October 31, 2018 and 2017
our diagnostics and genomics segment has approximately $32 million and $27 million, respectively, of lease receivables related 
to capital leases and approximately $20 million and $22 million, respectively, of net assets for operating leases.  We depreciate 
the assets related to the operating leases over their estimated useful lives, typically five years.

Capitalized Software.    We capitalize certain internal and external costs incurred to acquire or create internal use software. 
Capitalized software is included in property, plant and equipment and is depreciated over three to five years once development is 
complete.

Impairment of Long-Lived Assets.    We continually monitor events and changes in circumstances that could indicate carrying 
amounts of long-lived assets, including intangible assets, may not be recoverable. When such events or changes in circumstances 
occur, we assess the recoverability of long-lived assets by determining whether the carrying value of such assets will be recovered 
through undiscounted expected future cash flows. If the total of the undiscounted future cash flows is less than the carrying amount 
of those assets, we recognize an impairment loss based on the excess of the carrying amount over the fair value of the assets. 
During 2018, we recorded an impairment charge of $21 million related to purchased intangible assets within the diagnostics and 
genomics segment that were deemed unrecoverable.

Employee Compensation and Benefits.    Amounts owed to employees, such as accrued salary, bonuses and vacation benefits 
are accounted for within employee compensation and benefits. The total amount of accrued vacation benefit was $107 million and 
$101 million as of October 31, 2018, and 2017, respectively.

Foreign Currency Translation.    We translate and remeasure balance sheet and income statement items into U.S. dollars. 
For those subsidiaries that operate in a local currency functional environment, all assets and liabilities are translated into U.S. 
dollars using current exchange rates at the balance sheet date; revenue and expenses are translated using monthly exchange rates 

63

which approximate to average exchange rates in effect during each period. Resulting translation adjustments are reported as a 
separate component of accumulated other comprehensive income (loss) in stockholders' equity.

For  those  subsidiaries  that  operate  in  a  U.S.  dollar  functional  environment,  foreign  currency  assets  and  liabilities  are 
remeasured into U.S. dollars at current exchange rates except for non-monetary assets and capital accounts which are remeasured 
at historical exchange rates. Revenue and expenses are generally remeasured at monthly exchange rates which approximate average 
exchange rates in effect during each period. Gains or losses from foreign currency remeasurement are included in consolidated 
net income. Net gains or losses resulting from foreign currency transactions, including hedging gains and losses, are reported in 
other income (expense), net and was $3 million loss for 2018, $2 million loss for 2017 and $5 million loss for 2016, respectively. 

2. NEW ACCOUNTING PRONOUNCEMENTS

New Accounting Pronouncements Not Yet Adopted

In May 2014, the FASB issued new revenue recognition guidance, Accounting Standard Codification Topic 606, Revenue 
from contract with customers, which provides a single comprehensive model for entities to use in accounting for revenue arising 
from contracts with customers and will supersede most current revenue recognition guidance. The objective of the new revenue 
standard is to significantly enhance comparability and clarify principles of revenue recognition practices across entities, industries, 
jurisdictions and capital markets. The guidance is effective for us at the beginning of our fiscal year 2019. We will adopt this 
standard on November 1, 2018 through application of the modified retrospective method reflecting the cumulative effect of initially 
applying the new guidance to revenue recognition in the first quarter of fiscal 2019. Under the new guidance, there are specific 
criteria to determine if a performance obligation should be recognized over time or at a point in time. We expect that in some cases 
the revenue recognition timing under the new guidance will change from current practice.  We have substantially completed our 
analysis of the impact of the new guidance in 2018. While the timing of revenue recognition for some of the company’s sales 
transactions will be affected by the new guidance, the impact is not expected to be material. The cumulative impact to beginning 
retained earnings from adopting the new revenue standard is expected to be a credit of less than $30 million. 

In January 2016, the FASB issued amendments to address certain aspects of recognition, measurement, presentation, and 
disclosure of financial instruments. The standard requires entities to measure equity investments that do not result in consolidation 
and are not accounted for under the equity method at fair value and recognize any changes in fair value in net income. The provisions 
under this amendment are effective for us beginning November 1, 2018, and for interim periods within that year. Early adoption 
is not permitted. We do not expect this guidance to have a material impact on our consolidated financial statements and disclosures.

In February 2016, the FASB issued guidance which amends the existing accounting standards for leases. Consistent with 
existing guidance, the recognition, measurement, and presentation of expenses and cash flows arising from a lease by a lessee 
primarily will depend on its classification. Under the new guidance, a lessee will be required to recognize right-of-use assets and 
lease liabilities on the balance sheet. The new guidance is effective for us beginning November 1, 2019 using a modified retrospective 
approach. We are in the process of assessing the impact of the new guidance on our financial statements and consider that the most 
notable impact upon the adoption of the new standard will be the recognition of a material right-of-use asset and lease liability for 
our real estate and automobile leases.

In August 2016, the FASB issued amendments to address eight specific cash flow issues with the objective of reducing the 
existing diversity in practice. The amendments are effective for us beginning November 1, 2018, and for interim periods within 
that year.  We do not expect the impact of the amendments to have a material impact on our consolidated statement of cash flows 
and disclosures.

In October 2016, the FASB issued amendments to improve the accounting for the income tax consequences of intra-entity 
transfers of assets other than inventory. The amendments are effective for us beginning November 1, 2018, and for interim periods 
within that year. There is no material impact expected to our cumulative retained earnings on adoption of these amendments.  

In November 2016, the FASB issued amendments to require amounts generally described as restricted cash and restricted 
cash equivalents be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total 
amounts shown on the statement of cash flows.  The amendments are effective for us beginning November 1, 2018, and for interim 
periods within that year.  We do not expect the impact of the amendments to have a material impact on our consolidated statement 
of cash flows and disclosures.  

In January 2017, the FASB issued guidance intended to clarify the definition of a business in connection with business 
combinations with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted 
64

for as acquisitions (or disposals) of assets or businesses.  This guidance is effective for us beginning November 1, 2018, and for 
interim  periods  within  that  year.   Adjustments  will  be  recorded  in  the  period  that  they  are  determined  rather  than  applied 
retrospectively via revision to the period of acquisition and each period thereafter.   We do not expect this guidance to have a 
material impact on our consolidated financial statements and disclosures.

In January 2017, the FASB issued an amendment to modify the concept of impairment from the condition that exists when 
the carrying amount of goodwill exceeds its implied fair value to the condition that exists when the carrying amount of a reporting 
unit exceeds its fair value. The amendment also simplifies the subsequent measurement of goodwill by eliminating Step 2 from 
the goodwill impairment test. The amendments are effective for us beginning November 1, 2020.  Early adoption is permitted for 
interim or annual goodwill impairment tests performed on testing dates after January 1, 2017.  We do not expect to early adopt 
nor do we expect this guidance to have a material impact on our consolidated financial statements and disclosures.

In March 2017, the FASB issued guidance on the presentation of the net periodic pension and postretirement benefit cost. 
This guidance also specifies that only the service cost component of net benefit cost is eligible for capitalization. The standard 
requires employers to report the service cost component in the same line item as other compensation costs and to report the other 
components of net periodic benefit costs (which include interest costs, expected return on plan assets, amortization of prior service 
cost or credits and actuarial gains and losses) separately and below operating income in the statement of operations. The amendments 
are effective for us beginning November 1, 2018, including interim periods within those annual periods.  We expect the adoption 
of this guidance to result in an impact of approximately $20 million of income reclassified from our income from operations to 
other income (expense) on our consolidated statement of operations in fiscal year 2019. In future filings, we will revise our prior 
periods to conform to the new presentation required under this guidance.

In May 2017, the FASB issued an update to clarify when to account for a change to the terms or conditions of a share-based 
payment award as a modification. Under the new guidance, modification accounting is required only if the fair value, the vesting 
conditions, or the classification of the award (as equity or liability) changes as a result of the change in terms or conditions. The 
amendments are effective for us beginning November 1, 2018. We do not expect this guidance to have a material impact on our 
consolidated financial statements and disclosures.

In August 2017, the FASB issued amendments to hedge accounting intended to better align a company's risk management 
strategies and financial reporting for hedging relationships through changes to both the designation and measurement guidance 
for qualifying hedging relationships and presentation of hedge results.  The amendments expand and refine accounting for both 
nonfinancial and financial risk components and align the recognition and presentation of the effects of the hedging instrument and 
hedged item in the financial statements.   The amendments are effective for us beginning November 1, 2019, including the interim 
periods within those annual periods.  We expect to early adopt this guidance beginning November 1, 2018.  We do not expect the 
the adoption of this guidance to have a material impact on our consolidated financial statements and disclosures.

In  February  2018,  the  FASB  issued  amendments  to  reporting  comprehensive  income  to  allow  a  reclassification  from 
accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the Tax Cuts and Jobs Act 
that was enacted in December 2017 that reduced the U.S. federal corporate income tax rate and made other changes to U.S. federal 
tax laws.  The amendments in this update also require certain disclosures about stranded tax effects.   The amendments are effective 
for us beginning November 1, 2019, and for interim periods within that fiscal year and should be applied either in the period of 
adoption or retrospectively to each period (or periods) in which the effect of the change in the U.S. federal corporate income tax 
rate in the Tax Cuts and Jobs Act is recognized. We expect to adopt this guidance on November 1, 2018. We do not expect the 
adoption of this guidance to have a material impact on our consolidated financial statements and disclosures upon adoption.

In February 2018, the FASB issued technical corrections and improvements to amendments published in January 2016 to 
address certain aspects of recognition, measurement, presentation, and disclosure of financial instruments. The provisions under 
these corrections and improvements are effective for us beginning November 1, 2018, and for interim periods within that year. 
Early adoption is not permitted. We currently do not expect this guidance to have a material impact on our consolidated financial 
statements and disclosures.

65

In August 2018, the FASB issued updates to improve the disclosure requirements on fair value measurements in Topic 820, 
Fair Value Measurement which eliminates certain disclosure requirements and modifies others. These amendments are effective 
for us beginning November 1, 2020, and for interim periods within that year with early adoption permitted. We currently do not 
expect this guidance to have a material impact on our consolidated financial statements and disclosures.

In August  2018,  the  FASB  issued  updates  to  improve  the  effectiveness  of  disclosures  for  defined  benefit  plans  under 
Accounting Standard Codification Topic 715-20. The amendments in this guidance remove disclosures that no longer are considered 
cost beneficial, clarify the specific requirements of disclosures, and add disclosure requirements identified as relevant. These 
amendments are effective for us beginning November 1, 2021, with early adoption permitted. We currently do not expect this 
guidance to have a material impact on our consolidated financial statements and disclosures.

Other amendments to GAAP in the U.S. that have been issued by the FASB or other standards-setting bodies that do not 
require adoption until a future date are not expected to have a material impact on our consolidated financial statements upon 
adoption.

3.

SHARE-BASED COMPENSATION

Agilent accounts for share-based awards in accordance with the provisions of the accounting guidance which requires the
measurement and recognition of compensation expense for all share-based payment awards made to our employees and directors 
including employee stock option awards, restricted stock units, employee stock purchases made under our ESPP and performance 
share awards granted to selected members of our senior management under the LTPP based on estimated fair values. 

Description of Share-Based Plans

Employee Stock Purchase Plan.    Effective November 1, 2000, we adopted the ESPP. The ESPP allows eligible employees 
to contribute up to ten percent of their base compensation to purchase shares of our common stock at 85 percent of the closing 
market price at purchase date. Currently, there are 75 million shares authorized for issuance in connection with the ESPP.

Under our ESPP, employees purchased 558,116 shares for $32 million in 2018, 618,270 shares for $26 million in 2017 and 
696,178 shares for $23 million in 2016. As of October 31, 2018, the number of shares of common stock authorized and available 
for issuance under our ESPP was 26,937,115. This excludes the number of shares of common stock to be issued to participants in 
consideration of the aggregate participants contributions totaling $17 million as of October 31, 2018.

Incentive Compensation Plans.    On November 15, 2017 and March 21, 2018, the Board of Directors and the stockholders, 
respectively, approved the Agilent Technologies, Inc. 2018 Stock Plan (the "2018 Plan") which amends, including renaming and 
extending the term of, the Agilent Technologies, Inc. 2009 Stock Plan (the "2009 Plan").  The 2009 plan replaced the Agilent 
Technologies, Inc. Amended and Restated 1999 Stock Plan and 1999 Non-Employee Director Stock Plan. The 2018 Plan provides 
for the grant of awards in the form of stock options, stock appreciation rights ("SARs"), restricted stock, restricted stock units 
("RSUs"), performance shares and performance units with performance-based conditions on vesting or exercisability, and cash 
awards. The 2018 Plan has a term of ten years. As of October 31, 2018, 6,158,260 shares were available for future awards under 
the 2018 Stock Plan.

Stock options under the 2018 Stock Plan may be either "incentive stock options", as defined in Section 422 of the Internal 
Revenue Code, or non-statutory. Options were granted prior to November 1, 2015 and generally vest at a rate of 25 percent per 
year over a period of four years from the date of grant with a maximum contractual term of ten years. The exercise price for stock 
options is generally not less than 100 percent of the fair market value of our common stock on the date the stock award is granted. 
Agilent issues new shares of common stock when employee stock options are exercised. 

Effective  November 1,  2003,  the  Compensation  Committee  of  the  Board  of  Directors  approved  the  LTPP,  which  is  a 
performance stock award program administered under the 2018 Stock Plan, for the company's executive officers and other key 
employees. Participants in this program are entitled to receive unrestricted shares of the company's stock after the end of a three-
year  period,  if  specified  performance  targets  are  met.  Certain  LTPP  awards  are  generally  designed  to  meet  the  criteria  of  a 
performance award with the performance metrics and peer group comparison based on the Total Stockholders’ Return (“TSR”) 
set at the beginning of the performance period. Effective November 1, 2015, the Compensation Committee of the Board of Directors 
approved another type of performance stock award, for the company's executive officers and other key employees. Participants 
in this program are also entitled to receive unrestricted shares of the company's stock after the end of a three-year period, if specified 
performance targets over the three-year period are met.   The performance target for grants made in 2016  were based on Operating 
66

Margin (“OM”) and the performance grants made in 2017 and 2018 were based on Earnings Per Share ("EPS"). In the case of 
LTPP-OM, the performance targets for all the three years of performance period are set at the time of grant. The performance 
targets for LTPP-EPS grants for year 2 and year 3 of the performance period are set in the first quarter of year 2 and year 3, 
respectively. All LTPP awards granted after November 1, 2015, are subject to a one-year post-vest holding period.

Based on the performance metrics the final LTPP award may vary from zero to 200 percent of the target award. The maximum 
contractual term for awards under the LTPP program is three years and the maximum award value for awards granted in 2017 and 
2016 cannot exceed 300 percent of the grant date target value. We consider the dilutive impact of these programs in our diluted 
net income per share calculation only to the extent that the performance conditions are expected to be met.

We also issue restricted stock units under our share-based plans. The estimated fair value of the restricted stock unit awards 
granted under the Stock Plans is determined based on the market price of Agilent's common stock on the date of grant adjusted 
for expected dividend yield. Restricted stock units generally vest, with some exceptions, at a rate of 25 percent per year over a 
period of four years from the date of grant. All restricted stock units granted to our executives after November 1, 2015, are subject 
to a one-year post-vest holding period.

Impact of Share-based Compensation Awards

We have recognized compensation expense based on the estimated grant date fair value method under the authoritative 
guidance. For all share-based awards we have recognized compensation expense using a straight-line amortization method. As 
the guidance requires that share-based compensation expense be based on awards that are ultimately expected to vest, estimated 
share-based compensation has been reduced for estimated forfeitures.

The impact on our results for share-based compensation was as follows:

Cost of products and services
Research and development
Selling, general and administrative
Total share-based compensation expense

Years Ended October 31,

2018

2017

2016

$

$

(in millions)
15
$
6
40
61

$

$

$

16
7
48
71

14
6
40
60

At October 31, 2018 and 2017 there was no share-based compensation capitalized within inventory. 

Valuation Assumptions

For all periods presented, shares granted under the LTPP (TSR) were valued using a Monte Carlo simulation. The ESPP 

allows eligible employees to purchase shares of our common stock at 85 percent of the fair market value at the purchase date.

The estimated fair value of restricted stock unit awards, LTPP (OM) and LTPP (EPS) was determined based on the market 
price of Agilent's common stock on the date of grant adjusted for expected dividend yield and as appropriate, a discount related 
to the one-year post vesting. The compensation cost for LTPP (OM) and LTPP (EPS) awards reflect the cost of awards that are 
probable to vest at the end of the performance period.

The following assumptions were used to estimate the fair value of awards granted.

LTPP:

Volatility of Agilent shares
Volatility of selected peer-company shares
Pair-wise correlation with selected peers

Years Ended October 31,

2018

2017

2016

21%
14%-66%
32%

23%
15%-63%
36%

24%
14%-50%
35%

Post-vest restriction discount for all executive awards

4.8%

5.3%

5.5%

67

Shares granted under the LTPP (TSR) were valued using a Monte Carlo simulations model. The Monte Carlo simulation 
fair value model requires the use of highly subjective and complex assumptions, including the price volatility of the underlying 
stock. For the LTPP (TSR) grants in 2016, we used the 3-year average historical stock price volatility of a group of our peer 
companies and an expected dividend yield to compute the discount. We believed our historical volatility prior to the separation 
of Keysight in 2015 was no longer relevant to use. For LTPP (TSR) grants in 2017 and thereafter, we used our own historical stock 
price volatility.

         All LTPP awards granted to our executives have a one-year post-vest holding restriction. The estimated discount associated 
with post-vest holding restrictions is calculated using the Finnerty model. The model calculates the potential lost value if the 
employee were able to sell the shares during the lack of marketability period, instead of being required to hold the shares. 

Share-Based Payment Award Activity

Employee Stock Options

The following table summarizes employee stock option award activity of our employees and directors for 2018. 

Outstanding at October 31, 2017
Exercised
Forfeited
Outstanding at October 31, 2018

Options
Outstanding 

(in thousands)
2,761
$
(753) $
(11) $
$

1,997

Weighted
Average
Exercise Price

34
32
41
35

The options outstanding and exercisable for equity share-based payment awards at October 31, 2018 were as follows:

Range of
Exercise Prices

Number
Outstanding

Options Outstanding

Weighted
Average
Remaining
Contractual
Life

Weighted
Average
Exercise
Price

Aggregate
Intrinsic
Value

Number
Exercisable

Options Exercisable

Weighted
Average
Remaining
Contractual
Life

Weighted
Average
Exercise
Price

Aggregate
Intrinsic
Value

$0 - 25

$25.01 - 30

$30.01 - 40

$40.01 - over

(in thousands)

(in years)

(in thousands)

(in thousands)

(in years)

(in thousands)

87

674

375

861

1,997

1.0

3.5

5.1

6.0

4.8

$

$

$

$

$

22

26

39

41

35

$

$

3,744

25,862

9,635

20,579

59,820

87

674

375

577

1,713

1.0

3.5

5.1

6.0

4.6

$

$

$

$

$

22

26

39

41

34

$

$

3,744

25,862

9,635

13,793

53,034

The aggregate intrinsic value in the table above represents the total pre-tax intrinsic value, based on the company's closing 
stock price of $64.79 at October 31, 2018, which would have been received by award holders had all award holders exercised 
their awards that were in-the-money as of that date. The total number of in-the-money awards exercisable at October 31, 2018
was approximately 1.7 million.

The following table summarizes the aggregate intrinsic value of options exercised in  2018, 2017 and 2016:

Options exercised in fiscal 2016
Options exercised in fiscal 2017
Options exercised in fiscal 2018

68

Aggregate
Intrinsic Value

(in thousands)

$
$
$

26,913
36,175
28,417

$
$
$

Weighted
Average
Exercise
Price

25
30
32

As of October 31, 2018, the unrecognized share-based compensation costs for outstanding stock option awards, net of 
expected forfeitures, was not material. The amount of cash received from the exercise of share-based awards granted was $56 
million in 2018, $66 million in 2017 and $62 million in 2016. 

Non-Vested Awards

The following table summarizes non-vested award activity in 2018 primarily for our LTPP and restricted stock unit awards. 

Non-vested at October 31, 2017
Granted
Vested
Forfeited
Change in LTPP shares in the year due to exceeding performance targets
Non-vested at October 31, 2018

Shares

(in thousands)
$
3,302
1,136
$
(1,377) $
(172) $
$
292
$
3,181

Weighted
Average
Grant Price

43
68
42
51
—
49

As of October 31, 2018, the unrecognized share-based compensation costs for non-vested restricted stock awards, net of 
expected forfeitures, was approximately $74 million which is expected to be amortized over a weighted average period of 2.2 years. 
The total fair value of restricted stock awards vested was $58 million for 2018, $42 million for 2017 and $21 million for 2016.

69

4.

INCOME TAXES

The domestic and foreign components of income before taxes are:

U.S. operations
Non-U.S. operations
Total income before taxes

The provision for income taxes is comprised of:

U.S. federal taxes:

Current
Deferred

Non-U.S. taxes:

Current
Deferred

State taxes, net of federal benefit:

Current
Deferred

Total provision

Years Ended October 31,

2018

2017

(in millions)

2016

169
777
946

$

$

116
687
803

$

$

27
517
544

Years Ended October 31,

2018

2017

(in millions)

2016

$

520
51

95
(22)

1
(15)
630

$

$

15
110

1
(7)

1
(1)
119

$

(1)
19

77
(14)

3
(2)
82

$

$

$

$

The differences between the U.S. federal statutory income tax rate and our effective tax rate are:

Profit before tax times statutory rate
State income taxes, net of federal benefit
Non-U.S. income taxed at different rates
Change in unrecognized tax benefits
U.S Tax Reform
Valuation allowances
Adjustments to earnings of foreign subsidiaries
Other, net
Provision for income taxes
Effective tax rate

Years Ended October 31,

2018

2017

2016

$

$

$

$

(in millions)
281
2
(43)
(110)
—
1
—
(12)
119
14.8%

$

$

221
—
(93)
(17)
552
—
—
(33)
630
66.6%

190
2
(68)
(27)
—
18
(11)
(22)
82
15.1%

For 2018, the company's income tax expense was $630 million with an effective tax rate of 66.6 percent.  For the year 
ended October 31, 2018, our effective tax rate and the resulting provision for income taxes were significantly impacted by the 
discrete charge of $552 million related to the enactment of the U.S. Tax Cuts and Jobs Act (the “Tax Act”) as discussed below.

For 2017, the company's income tax expense was $119 million with an effective tax rate of 14.8 percent. Our effective 
tax rate is impacted by earnings realized in foreign jurisdictions with statutory tax rates lower than the federal statutory tax rate. 
During the year, the company determined a portion of current year foreign earnings from its low tax jurisdictions would not be 
considered as indefinitely reinvested. As such, a deferred tax liability for that portion of unremitted foreign earnings was accrued 
causing an increase in the annual tax expense.  Our annual effective tax rate also included tax benefits due to the settlement of 
an audit in Germany for the years 2005 through 2008 and the lapse of U.S. statute of limitation for the fiscal years 2012 and 

70

2013. This benefit was offset by a deferred tax liability required for the tax expected upon repatriation of related unremitted 
foreign earnings that were not asserted as indefinitely invested outside the U.S.

For 2016, the company’s income tax expense was $82 million with an effective tax rate of 15.1 percent. The income tax 
provision for the year ended October 31, 2016 included net discrete tax expense of $17 million primarily due to tax expense 
related to the establishment of a valuation allowance on an equity method impairment that would generate a capital loss when 
realized.

The  company  has  negotiated  tax  holidays  in  several  different  jurisdictions,  most  significantly  in  Singapore. The  tax 
holidays  provide  lower  rates  of  taxation  on  certain  classes  of  income  and  require  various  thresholds  of  investments  and 
employment or specific types of income in those jurisdictions. In December 2018, the tax holiday in Singapore was renegotiated 
and extended through 2027, see Note 19, "Subsequent Events" for more information. Other tax holidays are due for renewal 
2019 and 2020. As a result of the incentives, the impact of the tax holidays decreased income taxes by $87 million, $93 million, 
and $86 million in 2018, 2017, and 2016, respectively. The benefit of the tax holidays on net income per share (diluted) was 
approximately $0.27, $0.29, and $0.26 in 2018, 2017 and 2016, respectively.

2017 U.S. Tax Reform - Tax Cuts and Jobs Act 

On December 22, 2017, the Tax Act was enacted into law.  The Tax Act enacted significant changes affecting our fiscal 
year 2018, including, but not limited to, (1) reducing the U.S. federal corporate tax rate and (2) imposing a one-time transition 
tax on certain unrepatriated earnings of foreign subsidiaries that had not been previously taxed in the U.S.

The Tax Act also establishes new tax provisions affecting our fiscal year 2019, including, but not limited to, (1) creating 
a new provision designed to tax global intangible low-tax income (“GILTI”); (2) generally eliminating U.S. federal taxes on 
dividends from foreign subsidiaries; (3) eliminating the corporate alternative minimum tax (“AMT”); (4) creating the base 
erosion anti-abuse tax (“BEAT”); (5) establishing a deduction for foreign derived intangible income ("FDII"); (6) repealing 
domestic production activity deduction; and (7) establishing new limitations on deductible interest expense and certain executive 
compensation.

The Tax Act reduced the U.S. federal corporate tax rate from 35 percent to 21 percent effective January 1, 2018. Due to 
our fiscal year end, the lower corporate tax rate will be phased in, resulting in a U.S. statutory federal rate of 23 percent for our 
fiscal year ending October 31, 2018 and 21 percent for subsequent fiscal years.

ASC 740, Income Taxes, requires companies to recognize the effect of the tax law changes in the period of enactment. 
However, the SEC staff issued Staff Accounting Bulletin 118 ("SAB 118") which allowed companies to record provisional 
amounts during a measurement period not extending beyond one year from the Tax Act enactment date. For the year ended 
October 31, 2018, the company recognized  income tax expense related to the Tax Act of $552 million which includes (1) an 
expense of $499 million of U.S. transition tax and correlative items on deemed repatriated earnings of non-U.S. subsidiaries 
and (2) an expense of $53 million associated with the impact on deferred taxes resulting from the decreased U.S. corporate tax 
rate as described below.  As of October 31, 2018, the company has completed the accounting for all the impacts of the Tax Act 
except for the policy election for the treatment of the tax on GILTI inclusions. 

Deemed Repatriation Transition Tax ("Transition Tax"): The Transition Tax is based on the company’s total unrepatriated 
post-1986 earnings and profits ("E&P") of its foreign subsidiaries and the amount of non-U.S. taxes paid (Tax Pools) on such 
earnings. Historically, the company permanently reinvested a significant portion of these post-1986 E&P outside the U.S. For 
the remaining portion, the company previously accrued deferred taxes. Since the Tax Act required all foreign earnings to be 
taxed currently, the company recorded an income tax expense of $651 million for its one-time transition U.S. federal tax and a 
benefit of $152 million for the reversal of related deferred tax liabilities. The resulting $499 million net transition tax, reduced 
by existing tax credits, will be paid over 8 years in accordance with the election available under the Tax Act. We have completed 
our accounting for charges related to the Transition Tax.

Reduction of U.S. Federal Corporate Tax Rate:  The reduction of the corporate income tax rate requires companies to 
remeasure their deferred tax assets and liabilities as of the date of enactment. The amount recorded for the year ended October31, 
2018 for the remeasurement due to tax rate change is $53 million. We have completed our accounting for the measurement of 
deferred taxes. 

GILTI:  The Tax Act subjects a U.S. corporation to tax on its GILTI.  U.S. GAAP allows companies to make an accounting 
policy election to either (1) treat taxes due on future GILTI inclusions in the U.S. taxable income as a current-period expense 

71

when incurred (“period cost method”) or (2) factoring such amounts into a company’s measurement of its deferred taxes (“deferred 
method”).  Our analysis of the new GILTI rules and how they may impact us is incomplete. Accordingly, we have not made a 
policy election regarding the treatment of GILTI tax.

Indefinite Reinvestment Assertion: Prior to the enactment of the Tax Act, the company had indefinite investment assertion 
on a significant portion of its undistributed earnings from foreign subsidiaries. As a result of the enactment of the Tax Act, we 
have  reevaluated  our  historic  assertion  and  no  longer  consider  these  earnings  to  be  indefinitely  reinvested  in  our  foreign 
subsidiaries.  The company repatriated $1,921 million of foreign earnings in fiscal year 2018. The company has recorded a 
deferred tax liability of $11 million for foreign withholding taxes on repatriation of remaining undistributed earnings.

The significant components of deferred tax assets and deferred tax liabilities included on the consolidated balance sheet 

are:

October 31,

2018

2017

Deferred
Tax Assets

Deferred Tax
Liabilities

Deferred
Tax Assets

Deferred Tax
Liabilities

Inventory
Intangibles
Property, plant and equipment
Warranty reserves
Pension benefits and retiree medical benefits
Employee benefits, other than retirement
Net operating loss, capital loss, and credit carryforwards
Unremitted earnings of foreign subsidiaries
Share-based compensation
Deferred revenue
Other

Subtotal

Tax valuation allowance
Total deferred tax assets or deferred tax liabilities

$

$

7
—
8
8
49
34
185
—
31
38
4
364
(135)
229

$

$

(in millions)
— $
112
—
—
—
—
—
18
—
—
3
133
—
133

$

16
—
12
12
70
28
328
—
45
45
1
557
(138)
419

$

$

—
93
—
—
—
—
—
163
—
—
—
256
—
256

The decrease in 2018 as compared to 2017 for the deferred tax asset and liabilities was primarily due to the Tax Act. 

Valuation allowances require an assessment of both positive and negative evidence when determining whether it is more 
likely than not that deferred tax assets are recoverable. Such assessment is required on a jurisdiction by jurisdiction basis. As 
of October 31, 2018, we continued to maintain a valuation allowance of $135 million until sufficient positive evidence exists 
to support reversal. The valuation allowance is mainly related to deferred tax assets for California R&D credits, net operating 
losses in the state of Colorado and the Netherlands and capital losses in the U.S. and foreign jurisdictions.

At October 31, 2018, we had federal, state and foreign net operating loss carryforwards of approximately $21 million, 
$671  million  and  $330  million,  respectively. The  federal  and  state  net  operating  loss  carryforwards  are  subject  to  various 
limitations under Section 382 of the Internal Revenue Code and applicable state tax laws. If not utilized, the federal and state 
net operating loss carryforwards will begin to expire in 2019. If not utilized, $140 million of the foreign net operating loss 
carryforwards  will  begin  to  expire  in  2019. The  remaining  $190  million  of  the  foreign  net  operating  losses  carry  forward 
indefinitely. At  October 31,  2018,  we  had  federal  and  foreign  capital  loss  carryforwards  of  $48  million  and  $119  million, 
respectively. If not utilized, the federal capital loss carryforwards will expire in 2022. The foreign capital losses carry forward 
indefinitely. At October 31, 2018, we had state tax credit carryforwards, net of reserves of approximately $41 million. The state 
tax credits carry forward indefinitely. 

72

The breakdown between long-term deferred tax assets and deferred tax liabilities was as follows:

October 31,

2018

2017

Long-term deferred tax assets (included within other assets)
Long-term deferred tax liabilities (included within other long-term liabilities)
Total

$

$

$

(in millions)
165
(69)
96

$

240
(77)
163

The  breakdown  between  current  and  long-term  income  tax  assets  and  liabilities,  excluding  deferred  tax  assets  and 

liabilities, was as follows:

Current income tax assets (included within other current assets)
Long-term income tax assets (included within other assets)
Current income tax liabilities (included within other accrued liabilities)
Long-term income tax liabilities (included within other long-term liabilities)
Total

October 31,

2018

2017

$

(in millions)
59
19
(71)
(607)
(600) $

77
18
(55)
(131)
(91)

$

$

The  aggregate  changes  in  the  balances  of  our  unrecognized  tax  benefits  including  all  federal,  state  and  foreign  tax 

jurisdictions are as follows:

Balance, beginning of year

Additions for tax positions related to the current year
Additions for tax positions from prior years
Reductions for tax positions from prior years
Settlements with taxing authorities
Statute of limitations expirations

Balance, end of year

2018

2017

2016

(in millions)
293
$
32
1
(3)
(52)
(47)
224

$

$

$

224
27
2
(13)
—
(26)
214

$

$

289
31
1
(27)
—
(1)
293

As of October 31, 2018, we had $214 million of unrecognized tax benefits of which $190 million, if recognized, 

would affect our effective tax rate. 

We recognized a tax expense of $11 million, a tax benefit of $9 million and a tax expense of $2 million of interest and 
penalties related to unrecognized tax benefits in 2018, 2017 and 2016, respectively. Interest and penalties accrued as of October 31, 
2018 and 2017 were $27 million and $16 million, respectively.

In the U.S., tax years remain open back to the year 2015 for federal income tax purposes and the year 2000 for significant 
states. There were no substantial changes to the status of these open tax years during 2018. The U.S. statute of limitation for 
audit of tax returns for fiscal year 2014 expired in July 2018.  The statute expiration resulted in the recognition of previously 
unrecognized tax benefits of $23 million. 

In other major jurisdictions where the company conducts business, the tax years generally remain open back to the year 

2001. 

With these jurisdictions and the U.S., it is reasonably possible that there could be significant changes to our unrecognized 
tax benefits in the next twelve months due to either the expiration of a statute of limitation or a tax audit settlement which will 
be partially offset by an anticipated tax liability related to unremitted foreign earnings, where applicable. Given the number of 
years and numerous matters that remain subject to examination in various tax jurisdictions, management is unable to estimate 
the range of possible changes to the balance of our unrecognized tax benefits.

73

5. NET INCOME PER SHARE

The  following  is  a  reconciliation  of  the  numerators  and  denominators  of  the  basic  and  diluted  net  income  per  share 

computations for the periods presented below. 

Years Ended October 31,

2018

2017

(in millions)

2016

Numerator:
Net income
Denominators:

$

316

$

Basic weighted average shares
Potential common shares — stock options and other employee stock
plans
Diluted weighted average shares

321

4
325

$

$

684

322

4
326

462

326

3
329

The dilutive effect of share-based awards is reflected in diluted net income per share by application of the treasury stock 
method, which includes consideration of unamortized share-based compensation expense and the dilutive effect of in-the-money 
options and non-vested restricted stock units. Under the treasury stock method, the amount the employee must pay for exercising 
stock options and unamortized share-based compensation expense collectively are assumed proceeds to be used to repurchase 
hypothetical shares. An increase in the fair market value of the company's common stock can result in a greater dilutive effect 
from potentially dilutive awards. 

We exclude stock options with exercise prices greater than the average market price of our common stock from the calculation 
of diluted earnings per share because their effect would be anti-dilutive. In addition, we exclude from the calculation of diluted 
earnings per share, stock options, ESPP, LTPP and restricted stock awards whose combined exercise price and unamortized fair 
value collectively were greater than the average market price of our common stock because their effect would also be anti-dilutive.

In 2018, 2017 and 2016, we issued approximately 2 million, 3 million and 3 million, of share-based awards, respectively. 
 For the years ended 2018, 2017 and 2016, options to purchase 36,200 shares, 200 shares and 1.1 million shares, respectively, 
were excluded from the calculation of diluted earnings per share as their effect would be anti-dilutive.

6.

INVENTORY

October 31,

2018

2017

Finished goods
Purchased parts and fabricated assemblies
Inventory

$

$

$

(in millions)
386
252
638

$

363
212
575

Inventory-related excess and obsolescence charges, included in continuing operations, of $26 million were recorded in total 
cost of products in 2018, $24 million in 2017 and $20 million in 2016, respectively. We record excess and obsolete inventory 
charges  for  both  inventory  on  our  site  as  well  as  inventory  at  our  contract  manufacturers  and  suppliers  where  we  have  non-
cancellable purchase commitments.

74

7.

PROPERTY, PLANT AND EQUIPMENT, NET

Land
Buildings and leasehold improvements
Machinery and equipment
Software

Total property, plant and equipment
Accumulated depreciation and amortization
Property, plant and equipment, net

October 31,

2018

2017

(in millions)

$

$

55
952
512
141
1,660
(838)
822

$

$

56
886
470
188
1,600
(843)
757

In 2018, we retired approximately $68 million of fully depreciated assets, primarily related to software, that were no longer 
in use. There were less than $1 million asset impairments in 2018 and no asset impairments in 2017 and 2016. Depreciation 
expenses were $102 million in 2018, $94 million in 2017 and $95 million in 2016. 

8. GOODWILL AND OTHER INTANGIBLE ASSETS

The goodwill balances at October 31, 2018, 2017 and 2016 and the movements in 2018 and 2017 for each of our reportable 

segments are shown in the table below:

Goodwill as of October 31, 2016
Foreign currency translation impact
Goodwill arising from acquisitions
Goodwill as of October 31, 2017
Foreign currency translation impact
Goodwill arising from acquisitions
Goodwill as of October 31, 2018

Life Sciences
and Applied
Markets

Diagnostics
and
Genomics

Agilent
CrossLab

Total

745
2
26
773
(7)
37
803

$

$

$

(in millions)

1,268
10
52
1,330
(4)
281
1,607

$

$

$

504
—
—
504
(4)
63
563

$

$

$

2,517
12
78
2,607
(15)
381
2,973

$

$

$

In May 2018, we re-organized our operating segments and moved our microfluidics business from our life sciences and applied 
markets operating segment to our diagnostics and genomics operating segment. As a result, we reassigned approximately $45 
million of goodwill from our life sciences and applied markets segment to our diagnostics and genomics segment using the relative 
fair value allocation approach.  Goodwill balances as of October 31, 2017 and 2016, have been recast to conform to this new 
presentation.

As of September 30, 2018, we assessed goodwill impairment for our reporting units and no impairment was indicated.

75

The component parts of other intangible assets at October 31, 2018 and 2017 are shown in the table below:

As of October 31, 2017:
Purchased technology
Trademark/Tradename
Customer relationships
Third-party technology and licenses
Total amortizable intangible assets

In-Process R&D

Total

As of October 31, 2018:
Purchased technology
Trademark/Tradename
Customer relationships
Third-party technology and licenses
Total amortizable intangible assets

In-Process R&D

Total

Gross
Carrying
Amount

Other Intangible Assets

Accumulated
Amortization
and Impairments

(in millions)

Net Book
Value

$

$
$

$

$

$
$

$

855
149
151
27
1,182
24
1,206

947
151
107
28
1,233
111
1,344

$

$
$

$

$

$
$

$

646
73
112
14
845
—
845

683
88
63
19
853
—
853

$

$
$

$

$

$
$

$

209
76
39
13
337
24
361

264
63
44
9
380
111
491

In 2018, we acquired seven businesses, for a combined purchase price of approximately $536 million. The largest of which 
was Advanced Analytical Technologies, Inc. ("AATI") for approximately $268 million in cash.  The financial results of all these 
businesses have been included in our financial results from the date of the business’ respective close. We have not included the 
pro forma impact of these acquisitions since they are not material individually or in aggregate to our current or prior period results. 
During  2018, we recorded additions to goodwill of $381 million and to other intangible assets of $262 million related to the 
acquisition of these businesses. During 2018, other intangible assets, net decreased $1 million, due to the impact of foreign exchange 
translation. 

During 2017, we recorded additions to goodwill of $78 million and to intangible assets of $52 million related to the acquisition 
of  two businesses. During the year other intangible assets decreased $5 million, due to the impact of foreign exchange translation. 

During 2018, we also wrote-off the gross carrying amount of $89 million and the related accumulated amortization of fully 

amortized intangible assets which were no longer being used.

In general, for United States federal tax purposes, goodwill from asset purchases is deductible, however any goodwill 

created as part of a stock acquisition is not deductible.

During 2018, we recorded an impairment charge of $21 million related to purchased intangible assets within the diagnostics 
and genomics segment that were deemed unrecoverable.  In 2017, there were no impairments of other intangible assets recorded. 
In 2016, we recorded impairments of other intangibles related to the cancellation of in-process research and development projects 
of $4 million.

Amortization expense of intangible assets was $110 million in 2018, $120 million in 2017, and $154 million in 2016. 

76

Future  amortization  expense  related  to  existing  finite-lived  purchased  intangible  assets  associated  with  business 

combinations for the next five fiscal years and thereafter is estimated below:

Estimated future amortization expense:

2019
2020
2021
2022
2023
Thereafter

9. INVESTMENTS

(in millions)
$
$
$
$
$
$

94
79
65
51
41
50

The following table summarizes the company's equity investments as of October 31, 2018 and 2017 (net book value):

Long-Term
Cost method investments
Trading securities

Total

October 31,

2018

2017

(in millions)

$

$

38
30
68

$

$

106
32
138

During 2018, we acquired all of the remaining shares of Lasergen, Inc. (Lasergen), for an additional cash consideration of 
approximately $107 million, an investment that was accounted for under the cost method in 2017 for approximately $80 million. 
The fair value remeasurement of our previous investment immediately before the acquisition resulted in a net gain of $20 million
and  was  recorded  in  other  income.  Cost  method  investments  consist  of  non-marketable  equity  securities  and  a  fund  and  are 
accounted for at historical cost. Trading securities are reported at fair value, with gains or losses resulting from changes in fair 
value recognized currently in earnings. 

All of our investments, excluding trading securities, are subject to periodic impairment review. The impairment analysis 
requires significant judgment to identify events or circumstances that would likely have significant adverse effect on the future 
value of the investment. We consider various factors in determining whether an impairment is other-than-temporary, including 
the severity and duration of the impairment, forecasted recovery, the financial condition and near-term prospects of the investee, 
and our ability and intent to hold the investment for a period of time sufficient to allow for any anticipated recovery in market 
value. During the year ended October 31, 2016, we identified certain events and circumstances that indicated the decline in value 
of an equity method investment was other-than-temporary.  As a result, we wrote down the investment to its fair value of zero, 
resulting in an impairment charge of approximately $18 million.

Amounts included in other income (expense), net for the appropriate share of loss on equity method investments and other 

than temporary impairments were as follows:

Years Ended October 31,

2018

2017

(in millions)

2016

Equity method investments - share of losses
Equity method investments - other than temporary impairments
Total

$

$

— $
—
— $

— $
—
— $

(10)
(18)
(28)

Net unrealized gains on our trading securities portfolio were $1 million in 2018, $4 million in 2017 and $1 million in 2016.

10. FAIR VALUE MEASUREMENTS

The authoritative guidance defines fair value as the price that would be received from selling an asset or paid to transfer a 
liability  in  an  orderly  transaction  between  market  participants  at  the  measurement  date.  When  determining  the  fair  value 
77

measurements  for  assets  and  liabilities  required  or  permitted  to  be  recorded  at  fair  value,  we  consider  the  principal  or  most 
advantageous market and assumptions that market participants would use when pricing the asset or liability.

Fair Value Hierarchy

The guidance establishes a fair value hierarchy that prioritizes the use of inputs used in valuation techniques into three 
levels. A financial instrument's categorization within the fair value hierarchy is based upon the lowest level of input that is significant 
to the fair value measurement. There are three levels of inputs that may be used to measure fair value:

Level 1 — applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities.

Level 2 — applies to assets or liabilities for which there are inputs other than quoted prices included within level 1 that are 
observable, either directly or indirectly, for the asset or liability such as: quoted prices for similar assets or liabilities in active 
markets; quoted prices for identical or similar assets or liabilities in less active markets; or other inputs that can be derived principally 
from, or corroborated by, observable market data.

Level 3 — applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are 

significant to the measurement of the fair value of the assets or liabilities.

Financial Assets and Liabilities Measured at Fair Value on a Recurring Basis

Financial assets and liabilities measured at fair value on a recurring basis as of October 31, 2018 were as follows:

Fair Value Measurement
at October 31, 2018 Using

Quoted Prices
in Active
Markets for
Identical Assets
(Level 1)

Significant
Other
Observable
Inputs
(Level 2)

(in millions)

Significant
Unobservable
Inputs
(Level 3)

October 31,
2018

Assets:

Short-term

Cash equivalents (money market funds)
Derivative instruments (foreign exchange
contracts)

Long-term

Trading securities

Total assets measured at fair value
Liabilities:

Short-term

Derivative instruments (foreign exchange
contracts)

Long-term

Deferred compensation liability

Total liabilities measured at fair value

$

$

$

$

1,355

$

1,355

$

— $

16

—

30
1,401

$

30
1,385

$

5

$

30
35

$

— $

—
— $

16

—
16

$

5

$

30
35

$

—

—

—
—

—

—
—

78

Financial assets and liabilities measured at fair value on a recurring basis as of October 31, 2017 were as follows:

Fair Value Measurement
at October 31, 2017 Using

Quoted Prices
in Active
Markets for
Identical Assets
(Level 1)

Significant
Other
Observable
Inputs
(Level 2)

(in millions)

Significant
Unobservable
Inputs
(Level 3)

October 31,
2017

Assets:

Short-term

Cash equivalents (money market funds)
Derivative instruments (foreign exchange
contracts)

Long-term

Trading securities

Total assets measured at fair value
Liabilities:

Short-term

Derivative instruments (foreign exchange
contracts)

Long-term

Deferred compensation liability

Total liabilities measured at fair value

$

$

$

$

1,659

$

1,659

$

— $

4

—

32
1,695

$

32
1,691

$

6

$

32
38

$

— $

—
— $

4

—
4

$

6

$

32
38

$

—

—

—
—

—

—
—

Our money market funds and trading securities are generally valued using quoted market prices and therefore are classified 
within level 1 of the fair value hierarchy. Our derivative financial instruments are classified within level 2, as there is not an active 
market for each hedge contract, but the inputs used to calculate the value of the instruments are tied to active markets. Our deferred 
compensation liability is classified as level 2 because although the values are not directly based on quoted market prices, the inputs 
used in the calculations are observable.

Trading securities, which is comprised of mutual funds, bonds and other similar instruments, and deferred compensation 
liability are reported at fair value, with gains or losses resulting from changes in fair value recognized currently in net income. 
Certain derivative instruments are reported at fair value, with unrealized gains and losses, net of tax, included in accumulated 
other comprehensive loss within stockholders' equity. Realized gains and losses from the sale of these instruments are recorded 
in net income.

Assets and Liabilities Measured at Fair Value on a Non-Recurring Basis

Long-Lived Assets

For assets measured at fair value on a non-recurring basis, the following table summarizes the impairments included in net 

income for the years ended October 31, 2018, 2017 and 2016:

Long-lived assets held and used
Long-lived assets held for sale

Years Ended
October 31,

2018

2017

2016

$
$

(in millions)
21
$
— $

— $
— $

4
—

For 2018,  long-lived assets held and used with a carrying amount of $21 million were written down to their fair value of 
zero, resulting in an impairment charge of $21 million, which was included in net income. The impairment charge in 2018 of  $21 
million relates to purchased intangible assets within the diagnostics and genomics segment  that were deemed unrecoverable. For 
2017, there were no impairments of long-lived assets held and used. For 2016, long-lived assets held and used with a carrying 
amount of $4 million were written down to their fair value of zero, resulting in an impairment charge of $4 million, which was 

79

included in net income.  The impairment charge in 2016 of $4 million relates to IPR&D projects that were abandoned and written 
down to their fair value of zero. 

There were no impairments of long-lived assets held for sale in 2018, 2017 and 2016. 

Fair values for the impaired long-lived assets during 2018 and 2016 were measured using level 3 and 2 inputs respectively. 
To determine the fair value of long-lived assets in 2018, we used the income approach based on projected discounted cash flows 
expected to be generated by the long-lived assets over the remaining useful life.

11. DERIVATIVES

We are exposed to foreign currency exchange rate fluctuations and interest rate changes in the normal course of our business. 
As part of our risk management strategy, we use derivative instruments, primarily forward contracts, purchased options, and interest 
rate swaps, to hedge economic and/or accounting exposures resulting from changes in foreign currency exchange rates and interest 
rates.

Fair Value Hedges

We are exposed to interest rate risk due to the mismatch between the interest expense we pay on our loans at fixed rates 
and the variable rates of interest we receive from cash, cash equivalents and other short-term investments. We have issued long-
term debt in U.S. dollars at fixed interest rates based on the market conditions at the time of financing. The fair value of our fixed 
rate debt changes when the underlying market rates of interest change, and, in the past, we have used interest rate swaps to change 
our fixed interest rate payments to U.S. dollar LIBOR-based variable interest expense to match the floating interest income from 
our cash, cash equivalents and other short term investments. As of October 31, 2018, all interest rate swap contracts had either 
been terminated or had expired. 

On August 9, 2011, we terminated five interest rate swap contracts related to our 2020 senior notes that represented the 
notional amount of $500 million. The remaining gain to be amortized at October 31, 2018 was $7 million. All deferred gains from 
terminated interest rate swaps are being amortized over the remaining life of the respective senior notes. 

Cash Flow Hedges

We enter into foreign exchange contracts to hedge our forecasted operational cash flow exposures resulting from changes 
in foreign currency exchange rates. These foreign exchange contracts, carried at fair value, have maturities between one and twelve 
months. These derivative instruments are designated and qualify as cash flow hedges under the criteria prescribed in the authoritative 
guidance and are assessed for effectiveness against the underlying exposure every reporting period. Changes in the time value of 
the foreign exchange contract are excluded from the assessment of hedge effectiveness and are recognized in other income (expense) 
each period. The changes in fair value of the effective portion of the derivative instrument are recognized in accumulated other 
comprehensive income (loss). Amounts associated with cash flow hedges are reclassified to cost of sales in the consolidated 
statement of operations when the forecasted transaction occurs. If it becomes probable that the forecasted transaction will not 
occur, the hedge relationship will be de-designated and amounts accumulated in other comprehensive income will be reclassified 
to other income (expense) in the current period. Changes in the fair value of the ineffective portion of derivative instruments are 
recognized in other income (expense) in the consolidated statement of operations in the current period. We record the premium 
paid (time value) of an option on the date of purchase as an asset. For options designated as cash flow hedges, changes in the time 
value are excluded from the assessment of hedge effectiveness and are recognized in other income (expense) over the life of the 
option contract.  For the years ended October 31, 2018, 2017 and 2016, ineffectiveness and gains and losses recognized in other 
income (expense) due to de-designation of cash flow hedge contracts were not significant. 

In July 2012, Agilent executed treasury lock agreements for $400 million in connection with future interest payments to 
be made on our 2022 senior notes issued on September 10, 2012.  We designated the treasury lock as a cash flow hedge. The 
treasury  lock  contracts  were  terminated  on  September  10,  2012  and  we  recognized  a  deferred  gain  in  accumulated  other 
comprehensive income which is being amortized to interest expense over the life of the 2022 senior notes. The remaining gain to 
be amortized related to the treasury lock agreements at October 31, 2018 was $1 million. 

In February 2016, Agilent executed three forward-starting pay fixed/receive variable interest rate swaps for the notional 
amount of $300 million in connection with future interest payments to be made on our 2026 senior notes issued on September 15, 
2016.  These  derivative  instruments  were  designated  and  qualified  as  cash  flow  hedges  under  the  criteria  prescribed  in  the 

80

authoritative guidance. The swap arrangements were terminated on September 15, 2016 with a payment of $10 million and we 
recognized this as a deferred loss in accumulated other comprehensive income which is being amortized to interest expense over 
the life of the 2026 senior notes. The remaining loss to be amortized related to the interest rate swap agreements at October 31, 
2018 was $7 million. 

Other Hedges

Additionally, we enter into foreign exchange contracts to hedge monetary assets and liabilities that are denominated in 
currencies other than the functional currency of our subsidiaries. These foreign exchange contracts are carried at fair value and 
do not qualify for hedge accounting treatment and are not designated as hedging instruments. Changes in value of the derivative 
instruments are recognized in other income (expense) in the consolidated statement of operations, in the current period, along with 
the offsetting foreign currency gain or loss on the underlying assets or liabilities.

Our use of derivative instruments exposes us to credit risk to the extent that the counterparties may be unable to meet the 
terms of the agreement. We do, however, seek to mitigate such risks by limiting our counterparties to major financial institutions 
which are selected based on their credit ratings and other factors. We have established policies and procedures for mitigating credit 
risk that include establishing counterparty credit limits, monitoring credit exposures, and continually assessing the creditworthiness 
of counterparties.

A number of our derivative agreements contain threshold limits to the net liability position with counterparties and are 
dependent on our corporate credit rating determined by the major credit rating agencies. The counterparties to the derivative 
instruments may request collateralization, in accordance with derivative agreements, on derivative instruments in net liability 
positions.

The aggregate fair value of all derivative instruments with credit-risk-related contingent features that were in a net liability 
position as of October 31, 2018, was not material. The credit-risk-related contingent features underlying these agreements had not 
been triggered as of October 31, 2018.

There were 158 foreign exchange forward contracts open as of October 31, 2018 and designated as cash flow hedges. There 
were 171 foreign exchange forward contracts open as of October 31, 2018 not designated as hedging instruments. The aggregated 
notional amounts by currency and designation as of October 31, 2018 were as follows:

Derivatives 
Designated as 
Cash Flow Hedges

Derivatives
Not
Designated
as Hedging
Instruments

Forward
Contracts USD

Forward
Contracts USD

Buy/(Sell)

Buy/(Sell)

$

$

(in millions)
(44) $
(54)
(39)
4
—
(91)
—
(34)
14
—
(38)
—
—
—
(282) $

37
16
13
1
(2)
14
25
(31)
6
(9)
(25)
(5)
(9)
(14)
17

Currency

Euro
British Pound
Canadian Dollar
Australian Dollars
Malaysian Ringgit
Japanese Yen
Danish Krone
Korean Won
Singapore Dollar
Swiss Franc
Chinese Yuan Renminbi
Polish Zloty
Swedish Krona
Other

81

 Derivative instruments are subject to master netting arrangements and are disclosed gross in the balance sheet in accordance 
with the authoritative guidance. The gross fair values and balance sheet location of derivative instruments held in the consolidated 
balance sheet as of October 31, 2018 and 2017 were as follows:

Asset Derivatives

Liability Derivatives

Fair Values of Derivative Instruments

Balance Sheet Location

Derivatives designated as hedging
instruments:
Cash flow hedges
Foreign exchange contracts

Other current assets

Derivatives not designated as
hedging instruments:
Foreign exchange contracts

Other current assets

Total derivatives

Fair Value

October 31,
2018

October 31,
2017

(in millions)

Balance Sheet Location

Fair Value

October 31,
2018

October 31,
2017

$
$

$
$

11
11

5
16

$
$

$
$

2 Other accrued liabilities
2

2 Other accrued liabilities
4

$
$

$
$

1
1

4
5

$
$

$
$

2
2

4
6

The effect of derivative instruments for foreign exchange contracts designated as hedging instruments and not designated 

as hedging instruments in our consolidated statement of operations were as follows:

Years Ended October 31,

2018

2017

2016

(in millions)

Derivatives designated as hedging instruments:
Cash flow hedges

Loss on interest rate swaps recognized in other comprehensive income (loss)

Loss reclassified from accumulated other comprehensive income into interest
expense
Gain (loss) recognized in accumulated other comprehensive income (loss)
Gain (loss) reclassified from accumulated other comprehensive income (loss) into
cost of sales

$

$
$

$

— $

— $

(1) $
$
7

(3) $

— $
— $

1

$

(9)

—
(1)

(3)

Derivatives not designated as hedging instruments:

Gain (loss) recognized in other income (expense), net within continuing operations

$

(2) $

5

$

1

At  October 31,  2018  the  estimated  amount  of  existing  net  gain  expected  to  be  reclassified  from  accumulated  other 

comprehensive income to cost of sales within the next twelve months is $12 million.

12. RETIREMENT PLANS AND POST RETIREMENT PENSION PLANS

General.    Substantially  all  of  our  employees  are  covered  under  various  defined  benefit  and/or  defined  contribution 

retirement plans. Additionally, we sponsor post-retirement health care benefits for our eligible U.S. employees.

Agilent provides U.S. employees, who meet eligibility criteria under the Agilent Technologies, Inc. Retirement Plan (the 
"RP"), defined benefits which are based on an employee's base or target pay during the years of employment and on length of 
service. For eligible service through October 31, 1993, the benefit payable under the Agilent Retirement Plans is reduced by any 
amounts due to the eligible employee under the Agilent defined contribution Deferred Profit-Sharing Plan (the "DPSP"), which 
was closed to new participants as of November 1993. Effective November 1, 2014, Agilent’s U.S. defined benefit retirement plan 
is closed to new entrants including new employees, new transfers to the U.S. payroll and rehires. As of April 30, 2016, benefits 
under the RP were frozen.  See Plan Amendments below.

82

As of October 31, 2018 and 2017, the fair value of plan assets of the DPSP was $141 million and $156 million, respectively. 

Note that the projected benefit obligation for the DPSP equals the fair value of plan assets.

In addition to the DPSP, in the U.S., Agilent maintains a Supplemental Benefits Retirement Plan ("SBRP"), supplemental 
unfunded non-qualified defined benefit plan to provide benefits that would be provided under the RP but for limitations imposed 
by the Internal Revenue Code. The RP and the SBRP comprise the "U.S. Plans" in the tables below.

Eligible employees outside the U.S. generally receive retirement benefits under various retirement plans based upon factors 
such as years of service and/or employee compensation levels. Eligibility is generally determined in accordance with local statutory 
requirements.

401(k) Defined Contribution Plan.    Eligible Agilent U.S. employees may participate in the Agilent Technologies, Inc. 
401(k)  Plan.    Effective April  30,  2016,  we  began  matching  contributions  to  employees  up  to  a  maximum  of  6  percent  of  an 
employee's annual eligible compensation.  Effective May 1, 2016 until April 30, 2022, we will provide an additional transitional 
company contribution for certain eligible employees equal to 3 percent, 4 percent or 5 percent of an employee's annual eligible 
compensation due to the RP benefits being frozen.  The maximum contribution to the 401(k) Plan is 50 percent of an employee's 
annual  eligible  compensation,  subject  to  regulatory  limitations. The  401(k)  Plan  employer  expense  included  in  income  from 
operations was $37 million in 2018, $33 million in 2017 and $24 million in 2016.

Post-Retirement Medical Benefit Plans.    In addition to receiving retirement benefits, Agilent U.S. employees who meet 
eligibility requirements as of their termination date may participate in the Agilent Technologies, Inc. Health Plan for Retirees. 
Eligible retirees who were less than age 50 as of January 1, 2005 and who retire after age 55 with 15 or more years of service are 
eligible for a fixed amount which can be utilized to pay for either sponsored plans and/or individual medicare plans. Effective 
January 1, 2012, employees who were at least age 50 as of January 1, 2005 and who retire after age 55 with 15 or more years of 
service are eligible for fixed dollar subsidies and stipends. Grandfathered retirees receive a fixed monthly subsidy toward pre-65 
premium costs (subsidy capped at 2011 levels) and a fixed monthly stipend post-65. The subsidy amounts will not increase. In 
addition, any new employee hired on or after November 1, 2014, will not be eligible to participate in the retiree medical plans 
upon retiring.  As of April 30, 2016, benefits under this plan were changed - see Plan Amendments below.

Plan Amendments. In 2016, we made changes to our U.S. Retirement Plan and Supplemental Benefits Retirement Plan 
("U.S. Plans").  Effective April 30, 2016, benefit accruals under the U.S. Plans were frozen.  Any pension benefit earned in the 
U.S. Plans through April 30, 2016 remained fully vested, and there were no additional benefit accruals after April 30, 2016.  In 
addition, active employees who have not met the eligibility requirement for the Retiree Medical Account (RMA) under the U.S. 
Post Retirement Benefit Plan - 55 years old with at least 15 years of Agilent service - as of April 30, 2016 - will only be eligible 
for 50 percent of the current RMA reimbursement amount upon retirement.

Due to these plan amendments, we recorded a curtailment gain of $15 million in the U.S. Plans during the year ended 
October 31, 2016. In addition, we recognized a settlement gain of $1 million related to the U.S. Supplemental Benefits Retirement 
Plan during the year ended October 31, 2016.

Japanese Welfare Pension Insurance Law. In Japan, Agilent has employees' pension fund plans, which are defined benefit 
pension  plans  established  under  the  Japanese  Welfare  Pension  Insurance  Law  (JWPIL).  The  plans  are  composed  of  (a)  a 
substitutional portion based on the pay-related part of the old-age pension benefits prescribed by JWPIL (similar to social security 
benefits in the United States) and (b) a corporate portion based on a contributory defined benefit pension arrangement established 
at the discretion of the company. During the year ended October 31, 2017, Agilent received government approval and returned 
the substitutional portion of Japan's pension plan to the Japanese government, as allowed by the JWPIL. The initial transfer resulted 
in a net gain of $32 million recorded within cost of sales and operating expenses in the consolidated statement of operations. The 
net gain consisted of two parts - a gain of $41 million, representing the difference between the fair values of the Accumulated 
Benefit Obligation (ABO) settled of $65 million and the assets transferred from the pension trust to the government of Japan of 
$24 million, offset by a settlement loss of $9 million related to the recognition of previously unrecognized actuarial losses included 
in accumulated other comprehensive income. In the first quarter of fiscal year 2018, after the Japanese government’s final review 
of our initial payment, we received a refund of  $5 million which was recorded as a settlement gain.

83

Components of Net periodic cost.    The company uses alternate methods of amortization as allowed by the authoritative 
guidance which amortizes the actuarial gains and losses on a consistent basis for the years presented. For U.S. Plans, gains and 
losses are amortized over the average future lifetime of participants using the corridor method. For most Non-U.S. Plans and U.S. 
Post-Retirement Benefit Plans, gains and losses are amortized using a separate layer for each year's gains and losses. For the years 
ended  October 31,  2018,  2017  and  2016,  components  of  net  periodic  benefit  cost  and  other  amounts  recognized  in  other 
comprehensive income were comprised of:

Pensions

U.S. Plans

Non-U.S. Plans

U.S. Post-Retirement Benefit
Plans

2018

2017

2016

2018

2017

2016

2018

2017

2016

(in millions)

Net periodic benefit cost (benefit)

Service cost — benefits earned during the
period
Interest cost on benefit obligation
Expected return on plan assets
Amortization of net actuarial loss

$ — $ — $

16
(28)
1

15
(25)
3

$

12
16
(25)
3

$

20
13
(46)
29

$

19
12
(41)
36

$

19
16
(44)
27

$

1
3
(7)
8

$

1
3
(7)
11

1
4
(7)
10

Amortization of prior service benefit

Total periodic benefit cost (benefit)

—
$ (11) $

—
(7) $

(3)
3

$

—
16

$

—
26

$

—
18

$

(8)
(3) $

(9)
(1) $

(10)
(2)

Curtailments and settlements
Other changes in plan assets and benefit
obligations recognized in other
comprehensive (income) loss

$ — $ — $ (16) $

(5) $ (32) $ — $ — $ — $ —

Net actuarial (gain) loss
Amortization of net actuarial loss
Prior service cost (benefit)

$

2
(1)
—

$ (19) $
(3)
—

Amortization of prior service benefit
Gain due to settlement

Foreign currency

—
—

—

—
—

—

22
(3)
15

3
—

—

$

49
(29)
—

$ (128) $ 149
(27)
—

(36)
—

$

(2) $
(8)
—

(9) $
(11)
—

3
(10)
(7)

—
—

1

—
32

2

—
—

(3)

8
—

—

9
—

—

10
—

—

Total recognized in other comprehensive
(income) loss

Total recognized in net periodic benefit cost
(benefit) and other comprehensive
(income) loss

$

1

$ (22) $

37

$

21

$ (130) $ 119

$

(2) $ (11) $

(4)

$ (10) $ (29) $

24

$

32

$ (136) $ 137

$

(5) $ (12) $

(6)

84

Funded Status.    As of October 31, 2018 and 2017, the funded status of the defined benefit and post-retirement benefit 

plans was:

U.S. Defined
Benefit Plans

Non-U.S. Defined
Benefit Plans

U.S.
Post-Retirement
Benefit Plans

2018

2017

2018

2017

2018

2017

Change in fair value of plan assets:
Fair value — beginning of year
Actual return on plan assets
Employer contributions
Participants' contributions
Benefits paid
Settlements
Currency impact

Fair value — end of year
Change in benefit obligation:

Benefit obligation — beginning of year
Service cost
Interest cost
Participants' contributions
Plan amendment
Actuarial (gain) loss
Benefits paid
Curtailments
Settlements
Currency impact

Benefit obligation — end of year

Overfunded (underfunded) status of PBO

Amounts recognized in the consolidated balance sheet
consist of:

Other assets
Employee compensation and benefits
Retirement and post-retirement benefits

Total net asset (liability)
Amounts Recognized in Accumulated Other Comprehensive
Income (loss):
Actuarial (gains) losses
Prior service costs (benefits)
Total

$

$

$

$

$

$

$

$

414
8
—
—
(21)
—
—
401

$

$

$

445
—
16
—
—
(19)
(22)
—
—
—
$
420
(19) $

341
66
25
—
(18)
—
—
414

$

$

$

434
—
15
—
—
15
(19)
—
—
—
$
445
(31) $

$ — $ — $

(1)
(18)
(19) $

(1)
(30)
(31) $

(in millions)

855
(9)
21
—
(26)
5
(21)
825

$

$

774
81
21
—
(23)
(26)
28
855

$

$

$

935
20
13
—
1
(6)
(27)
—
—
(23)
$
913
(88) $

$ 1,002
19
12
—
(1)
(43)
(22)
—
(70)
38
$
935
(80) $

95
1
—
—
(6)
—
—
90

97
1
3
—
—
(7)
(7)
—
—
—
87

3

$

$

$

$

$

88
14
—
—
(7)
—
—
95

103
1
3
—
—
(3)
(7)
—
—
—
97
(2)

$

95
—
(183)
(88) $

$

86
—
(166)
(80) $

3
—
—
3

$ —
—
(2)
(2)

$

65
—
65

$

$

65
—
65

$

$

263
—
263

$

$

243
(1)
242

$

$

$

10
(20)
(10) $

20
(28)
(8)

The amounts in accumulated other comprehensive income expected to be recognized by Agilent as components of net 

expense during 2019 are as follows:

Amortization of net prior service cost (benefit)
Amortization of actuarial net loss (gain)

U.S. Defined
Benefit Plans

Non-U.S. Defined
Benefit Plans

U.S. Post-Retirement
Benefit Plans

$
$

(in millions)

— $
$
1

— $
$
35

(8)
4

85

Investment Policies and Strategies as of October 31, 2018 and 2017. In the U.S., target asset allocations for our retirement 
and  post-retirement  benefit  plans  are  approximately  80  percent  to  equities  and  approximately  20  percent  to  fixed  income 
investments. Our DPSP target asset allocation is approximately 60 percent to equities and approximately 40 percent to fixed income 
investments. Approximately 3 percent of our U.S. equity portfolio consists of limited partnerships. The general investment objective 
for all our plan assets is to obtain the optimum rate of investment return on the total investment portfolio consistent with the 
assumption of a reasonable level of risk. Specific investment objectives for the plans' portfolios are to: maintain and enhance the 
purchasing power of the plans' assets; achieve investment returns consistent with the level of risk being taken; and earn performance 
rates of return in accordance with the benchmarks adopted for each asset class. Outside the U.S., our target asset allocation is from 
31 to 60 percent to equities, from 38 to 61 percent to fixed income investments, and from zero to 25 percent to real estate investments 
and from zero to 12 percent to cash, depending on the plan. All plans' assets are broadly diversified. Due to fluctuations in equity 
markets, our actual allocations of plan assets at October 31, 2018 and 2017 differ from the target allocation. Our policy is to bring 
the actual allocation in line with the target allocation.

Equity  securities  include  exchange-traded  common  stock  and  preferred  stock  of  companies  from  broadly  diversified 
industries.  Fixed  income  securities  include  a  global  portfolio  of  corporate  bonds  of  companies  from  diversified  industries, 
government securities, mortgage-backed securities, asset-backed securities, derivative instruments and other. Other investments 
include a group trust consisting primarily of private equity partnerships. Portions of the cash and cash equivalent, equity, and fixed 
income investments are held in commingled funds that are valued using Net Asset Value (“NAV”) as the practical expedient.   In 
addition, some of the investments valued using NAV as the practical expedient may have limits on their redemption to weekly or 
monthly and/or may require prior written notice specified by each fund.

Fair Value.    The measurement of the fair value of pension and post-retirement plan assets uses the valuation methodologies 

and the inputs as described in Note 10, "Fair Value Measurements".

Cash and Cash Equivalents - Cash and cash equivalents consist of short-term investment funds. The funds also invest in 
short-term domestic fixed income securities and other securities with debt-like characteristics emphasizing short-term maturities 
and quality. Some of our cash and cash equivalents are held in commingled funds. Other cash and cash equivalents are classified 
as Level 1 investments.

Equity - Some equity securities consisting of common and preferred stock that are not traded on an active market are valued 
at quoted prices reported by investment dealers based on the underlying terms of the security and comparison to similar securities 
traded on an active market; these are classified as Level 2 investments. Securities which have quoted prices in active markets are 
classified as Level 1 investments.

Fixed Income - Some of the fixed income securities are not actively traded and are valued at quoted prices based on the 
terms of the security and comparison to similar securities traded on an active market; these are classified as Level 2 investments. 
Securities which have quoted prices in active markets are classified as Level 1 investments.

Other Investments - Other investments also includes partnership investments where, due to their private nature, pricing 
inputs are not readily observable. Asset valuations are developed by the general partners that manage the partnerships. These 
valuations are based on proprietary appraisals, application of public market multiples to private company cash flows, utilization 
of market transactions that provide valuation information for comparable companies and other methods. Holdings of limited 
partnerships are classified as Level 3.

Agilent has adopted the accounting guidance related to the presentation of certain investments using the NAV practical 
expedient. The accounting guidance exempts investments using this practical expedient from categorization within the fair value 
hierarchy. 

86

The following tables present the fair value of U.S. Defined Benefit Plans assets classified under the appropriate level of 

the fair value hierarchy as of October 31, 2018 and 2017.

Fair Value Measurement
at October 31, 2018 Using

October 31,
2018

Quoted Prices
in Active
Markets for
Identical Assets
(Level 1)

Significant
Other
Observable
Inputs
(Level 2)

(in millions)

Significant
Unobservable
Inputs
(Level 3)

Not Subject to 
Leveling (1)

$

$

4
308
83
6
401

$

$

— $
69
36
—
105

$

— $
—
5
—
5

$

— $
—
—
6
6

$

4
239
42
—
285

Cash and Cash Equivalents
Equity
Fixed Income
Other Investments

Total assets measured at fair value

(1) Investments measured at the net asset value per share (or its equivalent) practical expedient have not been classified in the fair value hierarchy.

Fair Value Measurement
at October 31, 2017 Using

Quoted Prices
in Active
Markets for
Identical Assets
(Level 1)

Significant
Other
Observable
Inputs
(Level 2)

Significant
Unobservable
Inputs
(Level 3)

October 31,
2017

Not Subject to 
Leveling (1)

Cash and Cash Equivalents
Equity
Fixed Income
Other Investments

3
4
239
327
38
76
—
7
280
414
(1) Investments measured at the net asset value per share (or its equivalent) practical expedient have not been classified in the fair value hierarchy.

— $
—
—
—
— $

— $
—
—
7
7

Total assets measured at fair value

1
88
38
—
127

$

$

$

$

$

$

(in millions)
$

For U.S. Defined Benefit Plans assets measured at fair value using significant unobservable inputs (level 3), the following 

table summarizes the change in balances during 2018 and 2017:

Balance, beginning of year
Realized gains/(losses)
Unrealized gains/(losses)
Purchases, sales, issuances, and settlements
Transfers in (out)
Balance, end of year

Years Ended
October 31.

2018

2017

7
—
1
(2)
—
6

$

$

9
(3)
3
(2)
—
7

$

$

87

The following tables present the fair value of U.S. Post-Retirement Benefit Plans assets classified under the appropriate 

level of the fair value hierarchy as of October 31, 2018 and 2017.

Fair Value Measurement
at October 31, 2018 Using

October 31,
2018

Quoted Prices
in Active
Markets for
Identical Assets
(Level 1)

Significant
Other
Observable
Inputs
(Level 2)

(in millions)

Significant
Unobservable
Inputs
(Level 3)

Not Subject to 
Leveling (1)

Cash and Cash Equivalents
Equity
Fixed Income
Other Investments

3
3
50
65
9
18
—
4
62
90
(1) Investments measured at the net asset value per share (or its equivalent) practical expedient have not been classified in the fair value hierarchy.

— $
—
—
—
— $

— $
—
—
4
4

— $
15
9
—
24

Total assets measured at fair value

$

$

$

$

$

$

Fair Value Measurement
at October 31, 2017 Using

Quoted Prices
in Active
Markets for
Identical Assets
(Level 1)

Significant
Other
Observable
Inputs
(Level 2)

Significant
Unobservable
Inputs
(Level 3)

October 31,
2017

Not Subject to 
Leveling (1)

Cash and Cash Equivalents
Equity
Fixed Income
Other Investments

1
6
50
68
8
17
—
4
59
95
(1) Investments measured at the net asset value per share (or its equivalent) practical expedient have not been classified in the fair value hierarchy.

— $
—
—
—
— $

— $
—
—
4
4

Total assets measured at fair value

5
18
9
—
32

$

$

$

$

$

$

(in millions)
$

For U.S. Post-Retirement Benefit Plans assets measured at fair value using significant unobservable inputs (level 3), the 

following table summarizes the change in balances during 2018 and 2017:

Balance, beginning of year
Realized gains/(losses)
Unrealized gains/(losses)
Purchases, sales, issuances, and settlements
Transfers in (out)
Balance, end of year

Years Ended
October 31,

2018

2017

4
—
1
(1)
—
4

$

$

5
(2)
2
(1)
—
4

$

$

88

The following tables present the fair value of non-U.S. Defined Benefit Plans assets classified under the appropriate level 

of the fair value hierarchy as of October 31, 2018 and 2017:

Fair Value Measurement
at October 31, 2018 Using

October 31,
2018

Quoted Prices
in Active
Markets for
Identical Assets
(Level 1)

Significant
Other
Observable
Inputs
(Level 2)

(in millions)

Significant
Unobservable
Inputs
(Level 3)

Not Subject to 
Leveling (1)

Cash and Cash Equivalents
Equity
Fixed Income
Other Investments

—
2
157
489
30
334
—
—
187
825
(1) Investments measured at the net asset value per share (or its equivalent) practical expedient have not been classified in the fair value hierarchy.

— $
—
—
—
— $

Total assets measured at fair value

2
34
228
—
264

298
76
—
374

— $

$

$

$

$

$

$

$

Fair Value Measurement
at October 31, 2017 Using

Quoted Prices
in Active
Markets for
Identical Assets
(Level 1)

Significant
Other
Observable
Inputs
(Level 2)

Significant
Unobservable
Inputs
(Level 3)

October 31,
2017

Not Subject to 
Leveling (1)

$

$

8
539
307
1
855

$

$

(in millions)
— $

326
60
—
386

$

8
28
229
1
266

$

$

— $
—
—
—
— $

—
185
18
—
203

Cash and Cash Equivalents
Equity
Fixed Income
Other Investments

Total assets measured at fair value

(1) Investments measured at the net asset value per share (or its equivalent) practical expedient have not been classified in the fair value hierarchy.

89

The table below presents the combined projected benefit obligation ("PBO"), accumulated benefit obligation ("ABO") and 
fair value of plan assets, grouping plans using comparisons of the PBO and ABO relative to the plan assets as of October 31, 2018
or 2017.

2018

2017

Benefit
Obligation

PBO

Fair Value of
Plan Assets

Benefit
Obligation

PBO

Fair Value of
Plan Assets

(in millions)

U.S. defined benefit plans where PBO exceeds the fair value of plan
assets

U.S. defined benefit plans where fair value of plan assets exceeds PBO

Total

Non-U.S. defined benefit plans where PBO exceeds or is equal to the
fair value of plan assets

Non-U.S. defined benefit plans where fair value of plan assets exceeds
PBO

Total

U.S. defined benefit plans where ABO exceeds the fair value of plan
assets

U.S. defined benefit plans where the fair value of plan assets exceeds
ABO

Total

Non-U.S. defined benefit plans where ABO exceeds or is equal to the
fair value of plan assets

Non-U.S. defined benefit plans where fair value of plan assets exceeds
ABO

Total

$

$

$

$

$

$

$

$

420

$

401

$

445

$

—
420

563

350
913

$

$

$

—
401

380

445
825

$

$

$

—
445

563

372
935

$

$

$

ABO

ABO

420

$

401

$

445

$

—

—

—

420

$

401

$

445

$

543

$

380

$

539

$

343

886

$

445

825

$

365

904

$

414

—
414

397

458
855

414

—

414

397

458

855

Contributions and Estimated Future Benefit Payments.    During fiscal year 2019, we  do not expect to contribute to the 
U.S. defined benefit plans and the  Post-Retirement Medical Plans.  We expect to contribute $23 million to plans outside the U.S. 
The following table presents expected future benefit payments for the next 10 years:

2019
2020
2021
2022
2023
2024 - 2028

U.S. Defined
Benefit Plans

Non-U.S. Defined
Benefit Plans

U.S. Post-Retirement
Benefit Plans

(in millions)

$
$
$
$
$
$

29
31
30
29
30
142

$
$
$
$
$
$

23
25
28
31
33
175

$
$
$
$
$
$

8
8
8
7
7
33

Assumptions.    The assumptions used to determine the benefit obligations and expense for our defined benefit and post-
retirement benefit plans are presented in the tables below. The expected long-term return on assets below represents an estimate 
of long-term returns on investment portfolios consisting of a mixture of equities, fixed income and alternative investments in 
proportion to the asset allocations of each of our plans. We consider long-term rates of return, which are weighted based on the 
asset classes (both historical and forecasted) in which we expect our pension and post-retirement funds to be invested. Discount 
rates reflect the current rate at which pension and post-retirement obligations could be settled based on the measurement dates of 
the plans - October 31. The U.S. discount rates at October 31, 2018 and 2017, were determined based on the results of matching 
expected plan benefit payments with cash flows from a hypothetically constructed bond portfolio. The non-U.S. rates were generally 

90

based on published rates for high-quality corporate bonds. The range of assumptions that were used for the non-U.S. defined 
benefit plans reflects the different economic environments within various countries.

Assumptions used to calculate the net periodic cost in each year were as follows:

U.S. defined benefit plans:

Discount rate
Average increase in compensation levels
Expected long-term return on assets

Non-U.S. defined benefit plans:

Discount rate
Average increase in compensation levels
Expected long-term return on assets

U.S. post-retirement benefits plans:

Discount rate
Expected long-term return on assets
Current medical cost trend rate
Ultimate medical cost trend rate
Medical cost trend rate decreases to ultimate rate in year

Assumptions used to calculate the benefit obligation were as follows:

For years ended October 31,

2018

2017

2016

3.75%
n/a
7.00%

3.75%
n/a
7.25%

4.20%
3.50%
7.50%

0.67-2.52%
2.00-3.25%
4.00-6.00%

0.22-2.66%
2.00-4.25%
4.00-6.25%

0.77-3.76%
2.25-4.00%
4.25-6.50%

3.50%
7.00%
6.00%
3.50%
2029

3.50%
7.25%
6.00%
3.50%
2029

4.00%
7.50%
7.00%
3.50%
2029

U.S. defined benefit plans:

Discount rate

Non-U.S. defined benefit plans:

Discount rate
Average increase in compensation levels

U.S. post-retirement benefits plans:

Discount rate
Current medical cost trend rate
Ultimate medical cost trend rate
Medical cost trend rate decreases to ultimate rate in year

As of the Years Ending October 31,

2018

2017

4.50%

3.75%

0.83-2.68%
2.25-3.25%

0.67-2.52%
2.00-3.25%

4.25%
6.00%
3.50%
2029

3.50%
6.00%
3.50%
2029

Health care trend rates do not have a significant effect on the total service and interest cost components or on the post-
retirement benefit obligation amounts reported for the U.S. Post-Retirement Benefit Plan for the year ended October 31, 2018.

13. GUARANTEES

Standard Warranty

We accrue for standard warranty costs based on historical trends in warranty charges as a percentage of net product shipments. 
The accrual is reviewed regularly and periodically adjusted to reflect changes in warranty cost estimates. Estimated warranty 
charges are recorded within cost of products at the time products are sold. The standard warranty accrual balances are held in other 
accrued and other long-term liabilities on our consolidated balance sheet. Our standard warranty terms typically extend to one 
years from the date of delivery, depending on the product.

91

A summary of the standard warranty accrual activity is shown in the table below. The standard warranty accrual balances 

are held in other accrued and other long-term liabilities.

Balance as of October 31, 2017 and 2016
Accruals for warranties including change in estimates
Settlements made during the period
Balance as of October 31, 2018 and 2017

Accruals for warranties due within one year
Accruals for warranties due after one year
Balance as of October 31, 2018 and 2017

Indemnifications in Connection with Transactions

October 31,

2018

2017

(in millions)

34
53
(52)
35

35
—
35

$

$

$

35
53
(54)
34

33
1
34

$

$

$

In connection with various divestitures, acquisitions, spin-offs and other transactions, we have agreed to indemnify certain 
parties, their affiliates and/or other related parties against certain damages and expenses that might occur in the future.  These 
indemnifications may cover a variety of liabilities, including, but not limited to, employee, tax, environmental, intellectual property, 
litigation and other liabilities related to the business conducted prior to the date of the transaction.  In our opinion, the fair value 
of these indemnification obligations was not material as of October 31, 2018.  

Indemnifications to Officers and Directors

Our corporate by-laws require that we indemnify our officers and directors, as well as those who act as directors and officers 
of other entities at our request, against expenses, judgments, fines, settlements and other amounts actually and reasonably incurred 
in connection with any proceedings arising out of their services to Agilent and such other entities, including service with respect 
to employee benefit plans. In addition, we have entered into separate indemnification agreements with each director and each 
board-appointed officer of Agilent which provide for indemnification of these directors and officers under similar circumstances 
and under additional circumstances. The indemnification obligations are more fully described in the by-laws and the indemnification 
agreements. We purchase standard insurance to cover claims or a portion of the claims made against our directors and officers. 
Since a maximum obligation is not explicitly stated in our by-laws or in our indemnification agreements and will depend on the 
facts and circumstances that arise out of any future claims, the overall maximum amount of the obligations cannot be reasonably 
estimated. Historically, we have not made payments related to these obligations, and the fair value for these indemnification 
obligations was not material as of October 31, 2018.

Other Indemnifications

As is customary in our industry and as provided for in local law in the U.S. and other jurisdictions, many of our standard 
contracts provide remedies to our customers and others with whom we enter into contracts, such as defense, settlement, or payment 
of judgment for intellectual property claims related to the use of our products. From time to time, we indemnify customers, as 
well as our suppliers, contractors, lessors, lessees, companies that purchase our businesses or assets and others with whom we 
enter into contracts, against combinations of loss, expense, or liability arising from various triggering events related to the sale 
and the use of our products and services, the use of their goods and services, the use of facilities and state of our owned facilities, 
the state of the assets and businesses that we sell and other matters covered by such contracts, usually up to a specified maximum 
amount. In addition, from time to time we also provide protection to these parties against claims related to undiscovered liabilities, 
additional product liability or environmental obligations. In our experience, claims made under such indemnifications are rare and 
the associated estimated fair value of the liability was not material as of October 31, 2018.

In connection with the sale of several of our businesses, we have agreed to indemnify the buyers of such business, their 
respective  affiliates  and  other  related  parties  against  certain  damages  that  they  might  incur  in  the  future.  The  continuing 
indemnifications primarily cover damages relating to liabilities of the businesses that Agilent retained and did not transfer to the 
buyers, as well as other specified items. In our opinion, the fair value of these indemnification obligations was not material as of 
October 31, 2018.

92

14. COMMITMENTS AND CONTINGENCIES

Operating  Lease  Commitments:    We  lease  certain  real  and  personal  property  from  unrelated  third  parties  under  non-
cancelable operating leases.  Certain leases require us to pay property taxes, insurance and routine maintenance, and include 
escalation clauses. Total rent expense was $64 million in 2018, $57 million in 2017 and $61 million in 2016.

Future minimum lease payments and future minimum lease income under operating leases at October 31, 2018:

2019
2020
2021
2022
2023
Thereafter

Future Minimum 
Lease Payments

Future Minimum
Lease Income

(in millions)
42
35
23
13
10
57

$
$
$
$
$
$

9
8
9
4
—
—

$
$
$
$
$
$

Other Purchase Commitments.   Typically, we can cancel contracts with professional services suppliers without penalties. 
For those contracts that are not cancelable without penalties, the termination fees and costs or commitments for continued spending 
that we are obligated to pay to a supplier under each contact's termination period before such contract can be cancelled were 
approximately $80 million. Approximately $27 million of the penalties for the new contracts will reduce over the next 15 years.

Contingencies:    We are involved in lawsuits, claims, investigations and proceedings, including, but not limited to, intellectual 
property, commercial, real estate, environmental and employment matters, which arise in the ordinary course of business. There 
are no matters pending that we currently believe are reasonably possible of having a material impact to our business, consolidated 
financial condition, results of operations or cash flows.

15. SHORT-TERM DEBT

Credit Facilities

On September 15, 2014, Agilent entered into a credit agreement with a financial institution which provides for a $400 
million five-year unsecured credit facility that will expire on September 15, 2019. On June 9, 2015, the commitments under the 
existing credit facility were increased by $300 million and on July 14, 2017, the commitments under the existing credit facility 
were increased by an additional $300 million so that the aggregate commitments under the facility now total $1 billion. As of 
October 31, 2018, the company had no borrowings outstanding under the credit facility. We were in compliance with the covenants 
for the credit facility during the years ended October 31, 2018 and 2017. 

2017 Senior Notes 

In October 2007, the company issued an aggregate principal amount of $600 million in senior notes ("2017 senior notes"). 
On October 20, 2014, we settled the redemption of $500 million of the $600 million outstanding aggregate principal amount of 
our 2017 senior notes.  The 2017 senior notes were repayable within one year as of October 31, 2017 and were reclassified to 
short-term debt. The remaining $100 million in senior notes matured and were paid in full on November 1, 2017.

93

16. LONG-TERM DEBT

Senior Notes

The following table summarizes the company's long-term senior notes and the related interest rate swaps:

October 31, 2018

October 31, 2017

Amortized
Principal

Swap

Total

Amortized
Principal

Swap

Total

2020 Senior Notes
2022 Senior Notes
2023 Senior Notes
2026 Senior Notes
Total

2020 Senior Notes

$

$

499
399
597
297
1,792

$

$

7
—
—
—
7

$

$

(in millions)
506
399
597
297
$ 1,799

$

499
398
596
297
1,790

$

$

11
—
—
—
11

$

510
398
596
297
$ 1,801

In July 2010, the company issued an aggregate principal amount of $500 million in senior notes ("2020 senior notes"). The 
2020 senior notes were issued at 99.54% of their principal amount. The notes will mature on July 15, 2020, and bear interest at a 
fixed  rate  of  5.00%  per  annum. The  interest  is  payable  semi-annually  on  January 15th and  July 15th of  each  year,  payments 
commenced on January 15, 2011.

On August 9, 2011, we terminated our interest rate swap contracts related to our 2020 senior notes that represented the 
notional  amount  of  $500  million.  The  asset  value,  including  interest  receivable,  upon  termination  for  these  contracts  was 
approximately $34 million and the amount to be amortized at October 31, 2018 was $7 million. The gain is being deferred and 
amortized to interest expense over the remaining life of the 2020 senior notes.

2022 Senior Notes

In September 2012, the company issued an aggregate principal amount of $400 million in senior notes ("2022 senior notes"). 
The 2022 senior notes were issued at 99.80% of their principal amount. The notes will mature on October 1, 2022, and bear interest 
at a fixed rate of 3.20% per annum. The interest is payable semi-annually on April 1st and October 1st of each year, payments 
commenced on April 1, 2013.

In July 2012, Agilent executed treasury lock agreements for $400 million in connection with future interest payments to 
be made on our 2022 senior notes issued on September 10, 2012. The treasury lock contracts were terminated on September 10, 
2012 and we recognized a deferred gain in accumulated other comprehensive income which is being amortized to interest expense 
over the life of the 2022 senior notes. The remaining gain to be amortized related to the treasury lock agreements at October 31, 
2018 was $1 million. 

2023 Senior Notes

In June 2013, the company issued aggregate principal amount of $600 million in senior notes ("2023 senior notes"). The 
2023 senior notes were issued at 99.544% of their principal amount. The notes will mature on July 15, 2023 and bear interest at 
a fixed rate of 3.875% per annum. The interest is payable semi-annually on January 15th and July 15th of each year and payments 
commenced January 15, 2014.  

2026 Senior Notes

On September 15, 2016, the company issued aggregate principal amount of $300 million in senior notes ("2026 senior 
notes"). The 2026 senior notes were issued at 99.624%% of their principal amount. The notes will mature on September 22, 2026
and bear interest at a fixed rate of 3.050% per annum. The interest is payable semi-annually on March 22nd and September 22nd 
of each year and payments commenced March 22, 2017.  

94

In February 2016, Agilent executed three forward-starting pay fixed/receive variable interest rate swaps for the notional 
amount of $300 million in connection with future interest payments to be made on our 2026 senior notes issued on September 15, 
2016. The swap arrangements were terminated on September 15, 2016 with a payment of $10 million and we recognized this as 
a deferred loss in accumulated other comprehensive income which is being amortized to interest expense over the life of the 2026 
senior notes.The remaining loss to be amortized related to the interest rate swap agreements at October 31, 2018 was $7 million. 

17. STOCKHOLDERS' EQUITY

Stock Repurchase Program

 On November 22, 2013 we announced that our board of directors had authorized a share repurchase program. The program 
was designed to reduce or eliminate dilution resulting from issuance of stock under the company's employee equity incentive 
programs to target maintaining a weighted average share count of approximately 335 million diluted shares.  For the year ended 
October 31, 2016 we repurchased 2 million shares for $98 million which completed the purchases under this authorization.

On May 28, 2015 we announced that our board of directors had approved a new share repurchase program (the "2015 
repurchase program"). The 2015 share repurchase program authorizes the purchase of up to $1.14 billion of our common stock at 
the company's discretion through and including November 1, 2018.  The 2015 repurchase program does not require the company 
to acquire a specific number of shares and may be suspended or discontinued at any time.  During the year ended October 31, 
2016,  upon the completion of our previous repurchase program, we repurchased approximately 8.3 million shares for $336 million
under this authorization. During the year ended October 31, 2017, we repurchased approximately 4.1 million shares for $194 
million under this authorization. During the year ended October 31, 2018 we repurchased and retired approximately 6.4 million
shares for $422 million under this authorization. As of October 31, 2018, we had remaining authorization to repurchase up to $188 
million of our common stock under this program which expired on November 1, 2018.

On November 19, 2018 we announced that our board of directors had approved a new share repurchase program (the "2019 
repurchase program") designed, among other things, to reduce or eliminate dilution resulting from issuance of stock under the 
company's employee equity incentive programs. The 2019 share repurchase program authorizes the purchase of up to $1.75 billion 
of our common stock at the company's discretion and has no fixed termination date. The 2019 repurchase program does not require 
the company to acquire a specific number of shares and may be suspended, amended or discontinued at any time.  

Cash Dividends on Shares of Common Stock

 During the year ended October 31, 2018, cash dividends of $0.596 per share, or $191 million were declared and paid on 
the company's outstanding common stock. During the year ended October 31, 2017, cash dividends of $0.528 per share, or $170 
million  were  declared  and  paid  on  the  company's  outstanding  common  stock.  During  the  year  ended  October 31,  2016,  cash 
dividends of $0.460 per share, or $150 million were declared and paid on the company's outstanding common stock. 

On November 14, 2018 we declared a quarterly dividend of $0.164 per share of common stock, or approximately $52 million
which will be paid on January 23, 2019 to shareholders of record as of the close of business on December 31, 2018. The timing 
and amounts of any future dividends are subject to determination and approval by our board of directors.

95

Accumulated Other Comprehensive Income (Loss)

The following table summarizes the components of our accumulated other comprehensive income (loss) as of October 31, 

2018 and 2017, net of tax effect:

Foreign currency translation, net of tax expense of $(15) and $(8) for 2018 and 2017,
respectively

Unrealized losses (including prior service benefit) on defined benefit plans, net of tax benefit
of $132 and $127 for 2018 and 2017, respectively

Unrealized gains (losses) on derivative instruments, net of tax benefit of $0 and $2 for 2018
and 2017, respectively
Total accumulated other comprehensive loss

$

$

October 31,

2018

2017

(in millions)

(214)

(201)

7
(408) $

(156)

(188)

(2)
(346)

Changes  in  accumulated  other  comprehensive  income  (loss)  by  component  and  related  tax  effects  for  the  years  ended 

October 31, 2018 and 2017 were as follows (in millions):

Net defined benefit pension cost
and post retirement plan costs

Foreign
currency
translation

Prior service
credits

Actuarial
Losses

Unrealized
gains (losses)
on derivatives

Total

As of October 31, 2016

$

(197)

$

146

(in millions)
$

(451)

$

(1)

$

(503)

Other comprehensive income before
reclassifications

Amounts reclassified out of accumulated
other comprehensive income

Tax (expense) benefit

Other comprehensive income (loss)

44

—

(3)

41

—

(9)

3

(6)

116

59

(52)

123

—

(1)

—

(1)

160

49

(52)

157

As of October 31, 2017

$

(156)

$

140

$

(328)

$

(2)

$

(346)

Other comprehensive income (loss) before
reclassifications

Amounts reclassified out of accumulated
other comprehensive income

Tax (expense) benefit

Other comprehensive income (loss)

(51)

—

(7)

(58)

—

(8)

2

(6)

(49)

39

3

(7)

As of October 31, 2018

$

(214)

$

134

$

(335)

$

7

4

(2)

9

7

(93)

35

(4)

(62)

$

(408)

96

Reclassifications out of accumulated other comprehensive income (loss) for the years ended October 31, 2018 and 2017

were as follows (in millions):  

Details about Accumulated Other
Comprehensive Income components

Unrealized gains and (losses) on derivatives

$

Amounts Reclassified
from Other 
Comprehensive Income

2018

2017

Affected line item in
statement of operations

$

(4)
(4)

1
(3)

Cost of products and
interest expense

Total before income tax

(Provision)/benefit for
income tax

Total net of income tax

1

1

—

1

Net defined benefit pension cost and post retirement plan costs:

Actuarial net loss

Prior service benefit

(39)

8
(31)

10
(21)

(59)

Cost of sales and
operating expenses
Cost of sales and
operating expenses
(50) Total before income tax

9

(Provision)/benefit for
income tax

14
(36) Total net of income tax

Total reclassifications for the period

$

(24)

$

(35)

Amounts in parentheses indicate reductions to income and increases to other comprehensive income.

Reclassifications of prior service benefit and actuarial net loss in respect of retirement plans and post retirement pension 
plans are included in the computation of net periodic cost (see Note 12, "Retirement Plans and Post Retirement Pension Plans").

18. SEGMENT INFORMATION

Description of Segments.  We are a global leader in life sciences, diagnostics and applied chemical markets, providing 

application focused solutions that include instruments, software, services and consumables for the entire laboratory workflow. 

Agilent has three business segments comprised of the life sciences and applied markets business, diagnostics and genomics 
business and the Agilent CrossLab business each of which comprises a reportable segment. The three operating segments were 
determined based primarily on how the chief operating decision maker views and evaluates our operations. Operating results are 
regularly reviewed by the chief operating decision maker to make decisions about resources to be allocated to the segment and to 
assess its performance. Other factors, including market separation and customer specific applications, go-to-market channels, 
products and services and manufacturing are considered in determining the formation of these operating segments.

In 2018, we re-organized our operating segments and moved our microfluidics business from our life sciences and applied 
markets operating segment to our diagnostics and genomics operating segment. Following this re-organization, we continue to 
have three business segments comprised of the life sciences and applied markets business, diagnostics and genomics business and 
the Agilent CrossLab business. All historical financial segment information for both the life sciences and applied markets segment 
and the diagnostics and genomics segment has been recast to reflect this reorganization in our financial statements.

97

A description of our three reportable segments is as follows:

Our life sciences and applied markets business provides application-focused solutions that include instruments and software 
that enable customers to identify, quantify and analyze the physical and biological properties of substances and products, as well 
as enable customers in the clinical and life sciences research areas to interrogate samples at the molecular and cellular level. Key 
product categories include: liquid chromatography ("LC") systems and components; liquid chromatography mass spectrometry 
("LCMS") systems; gas chromatography ("GC") systems and components; gas chromatography mass spectrometry ("GCMS") 
systems;  inductively  coupled  plasma  mass  spectrometry  ("ICP-MS")  instruments;  atomic  absorption  ("AA")  instruments; 
microwave  plasma-atomic  emission  spectrometry  (“MP-AES”)  instruments;  inductively  coupled  plasma  optical  emission 
spectrometry  ("ICP-OES")  instruments;  raman  spectroscopy,  cell  analysis  plate  based  assays,  flow  cytometer;  real-time  cell 
analyzer, laboratory software for sample tracking, information management and analytics; laboratory automation and robotic 
systems; dissolution testing; vacuum pumps and measurement technologies.

Our diagnostics and genomics business is comprised of six areas of activity providing active pharmaceutical ingredients 
("APIs") for oligo-based therapeutics as well as solutions that include reagents, instruments, software and consumables, which 
enable customers in the clinical and life sciences research areas to interrogate samples at the cellular and molecular level. First, 
our genomics business includes arrays for DNA mutation detection, genotyping, gene copy number determination, identification 
of gene rearrangements, DNA methylation profiling, gene expression profiling, as well as next generation sequencing ("NGS") 
target enrichment and genetic data management and interpretation support software. This business also includes solutions that 
enable clinical labs to identify DNA variants associated with genetic disease and help direct cancer therapy. Second, our nucleic 
acid  solutions  business  provides  equipment  and  expertise  focused  on  production  of  synthesized  oligonucleotides  under 
pharmaceutical good manufacturing practices ("GMP") conditions for use as API in an emerging class of drugs that utilize nucleic 
acid molecules for disease therapy. Third, our pathology solutions business is focused on product offerings for cancer diagnostics 
and anatomic pathology workflows. The broad portfolio of offerings includes immunohistochemistry (“IHC”), in situ hybridization 
(“ISH”),  hematoxylin  and  eosin  (“H&E”)  staining  and  special  staining.  Fourth,  we  also  collaborate  with  a  number  of  major 
pharmaceutical companies to develop new potential pharmacodiagnostics, also known as companion diagnostics, which may be 
used to identify patients most likely to benefit from a specific targeted therapy. Fifth, the reagent partnership business is a provider 
of reagents used for turbidimetry and flow cytometry. Finally, our biomolecular analysis business provides complete workflow 
solutions, including instruments, consumables and software, for quality control analysis of nucleic acid samples.  Samples are 
analyzed  using  quantitative  and  qualitative  techniques  to  ensure  accuracy  in  further  genomics  analysis  techniques  utilized  in 
clinical and life science research applications.

 The Agilent CrossLab business spans the entire lab with its extensive consumables and services portfolio, which is designed 
to improve customer outcomes.  Most of the portfolio is vendor neutral, meaning Agilent can serve and supply customers regardless 
of their instrument purchase choices.  Solutions range from chemistries and supplies to services and software helping to connect 
the  entire  lab.    Key  product  categories  in  consumables  include  GC  and  LC  columns,  sample  preparation  products,  custom 
chemistries, and a large selection of laboratory instrument supplies.  Services include startup, operational, training and compliance 
support, software as a service, as well as asset management and consultative services that help increase customer productivity. 
Custom service and consumable bundles are tailored to meet the specific application needs of various industries and to keep 
instruments fully operational and compliant with the respective industry requirements.

A  significant  portion  of  the  segments'  expenses  arise  from  shared  services  and  infrastructure  that  we  have  historically 
provided to the segments in order to realize economies of scale and to efficiently use resources. These expenses, collectively called 
corporate charges, include legal, accounting, tax, real estate, insurance services, information technology services, treasury, order 
administration, other corporate infrastructure expenses and costs of centralized research and development. Charges are allocated 
to the segments, and the allocations have been determined on a basis that we consider to be a reasonable reflection of the utilization 
of services provided to or benefits received by the segments. In addition, we do not allocate amortization and impairment of 
acquisition-related  intangible  assets,  pension  curtailment  or  settlement  gains,  restructuring  and  transformational  initiatives 
expenses, acquisition and integration costs, business exit and divestiture costs, special compliance costs, some nucleic acid solutions 
division ("NASD) site costs and certain other charges to the operating margin for each segment because management does not 
include this information in its measurement of the performance of the operating segments.Transformational initiatives include 
expenses associated with targeted cost reduction activities such as manufacturing transfers, site consolidations, legal entity and 
other business reorganizations, in-sourcing or outsourcing of activities.

The following tables reflect the results of our reportable segments under our management reporting system. The performance 
of each segment is measured based on several metrics, including segment income from operations. These results are used, in part, 
by the chief operating decision maker in evaluating the performance of, and in allocating resources to, each of the segments.

98

The  profitability  of  each  of  the  segments  is  measured  after  excluding  restructuring  and  asset  impairment  charges, 
transformational initiatives, investment gains and losses, interest income, interest expense, acquisition and integration costs, non-
cash amortization and other items as noted in the reconciliations below.

Year ended October 31, 2018:

Total net revenue
Income from operations
Depreciation expense
Share-based compensation expense

Year ended October 31, 2017:

Total net revenue
Income from operations
Depreciation expense
Share-based compensation expense

Year ended October 31, 2016:

Total net revenue
Income from operations
Depreciation expense
Share-based compensation expense

Life Sciences
and Applied
Markets

Diagnostics
and
Genomics

Agilent
CrossLab

Total
Segments

(in millions)

$
$
$
$

$
$
$
$

$
$
$
$

2,270
547
38
33

2,081
468
35
30

1,992
412
36
29

$
$
$
$

$
$
$
$

$
$
$
$

943
178
33
14

860
168
30
10

790
131
31
10

$
$
$
$

$
$
$
$

$
$
$
$

1,701
397
31
24

1,531
338
29
21

1,420
316
28
21

$
$
$
$

$
$
$
$

$
$
$
$

4,914
1,122
102
71

4,472
974
94
61

4,202
859
95
60

The following table reconciles reportable segments' income from operations to Agilent's total enterprise income before 

taxes:

Total reportable segments' income from operations
Amortization of intangible assets related to business combinations
Acquisition and integration costs
Transformational initiatives
Asset Impairments
Business exit and divestiture costs ( primarily our NMR business)
Impairment of loans
NASD site costs
Pension curtailment gain
Pension settlement gain
Special compliance costs
Other
Interest Income
Interest Expense
Other income (expense), net
Income before taxes, as reported

Years Ended October 31,

2018

2017

(in millions)

2016

$

$

1,122
(105)
(23)
(25)
(21)
(9)
—
(8)
—
5
(4)
(4)
38
(75)
55
946

$

$

974
(117)
(30)
(12)
—
—
—
—
—
32
—
(6)
22
(79)
19
803

$

$

859
(152)
(41)
(38)
(4)
(11)
(7)
—
15
1
—
(7)
11
(72)
(10)
544

Major Customers.    No customer represented 10 percent or more of our total net revenue in 2018, 2017 or 2016.

99

The following table reflects segment assets and capital expenditures under our management reporting system. Segment 
assets include allocations of corporate assets, goodwill, net other intangibles and other assets. Unallocated assets primarily consist 
of cash, cash equivalents, the valuation allowance relating to deferred tax assets and other assets.

As of October 31, 2018:

Assets
Capital expenditures
As of October 31, 2017:

Assets
Capital expenditures

Life Sciences
and Applied
Markets

Diagnostics
and
Genomics

Agilent
CrossLab

Total
Segments

(in millions)

$
$

$
$

1,744
47

1,681
39

$
$

$
$

2,679
92

2,191
111

$
$

$
$

1,267
38

1,138
26

$
$

$
$

5,690
177

5,010
176

The following table reconciles segment assets to Agilent's total assets:

Total reportable segments' assets
Cash, cash equivalents
Prepaid expenses
Investments
Long-term and other receivables
Other
Total assets

October 31,

2018

2017

(in millions)

5,690
2,247
80
68
102
354
8,541

$

$

5,010
2,678
92
138
105
403
8,426

$

$

The other category primarily includes deferred tax assets and overfunded pension assets which are not allocated to the 
segments.

The following table represents total revenue by product category:

Instrumentation
Analytical lab services
Analytical lab consumables
Diagnostics and genomics solutions
Informatics and other
Total

Years Ended October 31,

2018

2017

(in millions)

2016

$

$

2,032
1,083
618
943
238
4,914

$

$

1,858
991
540
860
223
4,472

$

$

1,790
910
510
790
202
4,202

The  following  table  presents  summarized  information  for  net  revenue  by  geographic  region.  Revenues  from  external 

customers are generally attributed to countries based upon the customer's location.  

Net revenue:

Year ended October 31, 2018
Year ended October 31, 2017
Year ended October 31, 2016

1. China also includes Hong Kong net revenue.

100

United
States

China(1)

Rest of the
World

Total

(in millions)

$
$
$

1,414
1,314
1,251

$
$
$

1,015
900
839

$
$
$

2,485
2,258
2,112

$
$
$

4,914
4,472
4,202

The following table presents summarized information for long-lived assets by geographic region. Long lived assets consist 
of property, plant, and equipment, long-term receivables and other long-term assets excluding intangible assets. The rest of the 
world primarily consists of Asia and the rest of Europe.

Long-lived assets:
October 31, 2018
October 31, 2017

19. SUBSEQUENT EVENTS

United
States

Germany

Rest of the
World

Total

(in millions)

$
$

565
556

$
$

117
118

$
$

362
358

$
$

1,044
1,032

On November 14, 2018, we acquired 100 percent of the stock of ACEA Biosciences Inc. (ACEA), a developer of cell 
analysis tools, for approximately $250 million in cash. The financial results of ACEA will be included within our financial results 
from the date of the close. Due to the timing of the completion of the acquisition, our valuation for the tangible and intangible 
assets are not yet complete.

On December 20, 2018, we received the Letters of Award from Singapore Authorities extending the company’s tax incentives 
in Singapore through December 30, 2027.  These incentives, coupled with application of the new accounting rules for income tax 
consequences of intra-entity transfer of assets as adopted on November 1, 2018, are expected to result in approximately $265 
million benefit to our tax expense in the first quarter of fiscal 2019.   

101

QUARTERLY SUMMARY

(Unaudited)

2018
Net revenue
Gross profit
Income from operations
Net income (loss)

Net income (loss) per share — Basic
Net income (loss) per share — Diluted

Weighted average shares used in computing net income
per share:
Basic
Diluted

Cash dividends per common share

2017
Net revenue
Gross profit
Income from operations
Net income

Net income per share — Basic
Net income per share — Diluted

$

$
$

$

$

$
$

Three Months Ended

January 31,

April 30,

July 31,

October 31,

(in millions, except per share data)

$

1,211
673
239
(320)

(0.99) $
(0.99) $

$

1,206
644
215
205

0.64
0.63

$
$

$

1,203
661
225
236

0.74
0.73

$
$

323
323

322
326

320
324

1,294
709
249
195

0.61
0.61

319
322

0.149

$

0.149

$

0.149

$

0.149

$

1,067
574
206
168

0.52
0.52

$
$

$

1,102
592
201
164

0.51
0.50

$
$

$

1,114
596
201
175

0.55
0.54

$
$

Weighted average shares used in computing net income
per share:
Basic
Diluted

322
326

321
325

321
326

Cash dividends per common share

$

0.132

$

0.132

$

0.132

$

0.132

102

1,189
647
233
177

0.55
0.54

322
326

Item 9.    Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

None.

Item 9A.    Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Our management has evaluated, under the supervision and with the participation of our Chief Executive Officer and Chief 
Financial Officer, the effectiveness of our disclosure controls and procedures as of October 31, 2018, pursuant to and as required 
by Rule 13a-15(b) under the Securities Exchange Act of 1934 (“Exchange Act”). Based on that evaluation, our Chief Executive 
Officer and Chief Financial Officer have concluded that, as of October 31, 2018, the company's disclosure controls and procedures, 
as defined by Rule 13a-15(e) under the Exchange Act, were effective and designed to ensure that (i) information required to be 
disclosed in the company's reports filed under the Exchange Act is recorded, processed, summarized and reported within the time 
periods specified in the SEC's rules and forms, and (ii) information is accumulated and communicated to management, including 
the Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosures.

Management's Report on Internal Control Over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such 
term is defined in Exchange Act Rule 13a-15(f). Under the supervision and with the participation of our management, including 
our  Chief  Executive  Officer  and  Chief  Financial  Officer,  we  assessed  the  effectiveness  of  our  internal  control  over  financial 
reporting based on the framework in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring 
Organizations of the Treadway Commission ("COSO").  As a result of that assessment, management concluded that our internal 
control over financial reporting was effective as of October 31, 2018 based on criteria in Internal Control - Integrated Framework
(2013) issued by the COSO.

The  effectiveness  of  our  internal  control  over  financial  reporting  as  of  October 31,  2018  has  been  audited  by 
PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report which appears in Item 8 
of this Annual Report on Form 10-K.

Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting that occurred during Agilent's last fiscal quarter that 

have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Item 9B.    Other Information

None.

Item 10.  Directors, Executive Officers and Corporate Governance

PART III

Information regarding our directors appears under “Proposal No. 1 - Election of Directors” in our Proxy Statement for the 
Annual  Meeting  of  Stockholders  (“Proxy  Statement”),  to  be  held  March 20,  2019.  That  portion  of  the  Proxy  Statement  is 
incorporated by reference into this report. Information regarding our executive officers appears in Item 1 of this report under 
“Executive  Officers  of  the  Registrant.”  Information  regarding  our Audit  and  Finance  Committee  and  our Audit  and  Finance 
Committee's financial expert appears under “Audit and Finance Committee Report” and “Corporate Governance” in our Proxy 
Statement. That portion of the Proxy Statement is incorporated by reference into this report.

There were no material changes to the procedures by which security holders may recommend nominees to our Board of 
Directors. Information regarding our code of ethics (the company's Standards of Business Conduct) applicable to our principal 
executive officer, our principal financial officer, our controller and other senior financial officers appears in Item 1 of this report 
under “Investor Information.” We will post amendments to or waivers from a provision of the Standards of Business Conduct with 
respect to those persons on our website at www.investor.agilent.com.

103

Compliance with Section 16(a) of the Exchange Act

Information about compliance with Section 16(a) of the Exchange Act appears under “Section 16(a) Beneficial Ownership 
Reporting Compliance” in the Proxy Statement. That portion of the Proxy Statement is incorporated by reference into this report.

Item 11.    Executive Compensation

Information about compensation of our named executive officers appears under “Executive Compensation” in the Proxy 
Statement.  Information  about  compensation  of  our  directors  appears  under  “Compensation  of  Non-Employee  Directors”  and 
“Compensation Committee Report” in the Proxy Statement. Those portions of the Proxy Statement are incorporated by reference 
into this report.

Item 12.    Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

Information about security ownership of certain beneficial owners and management appears under "Beneficial Ownership" 

in the Proxy Statement. That portion of the Proxy Statement is incorporated by reference into this report.

EQUITY COMPENSATION PLAN INFORMATION

The following table summarizes information about our equity compensation plans as of October 31, 2018. All outstanding 

awards relate to our common stock.

Plan Category

Equity compensation plans approved by security

holders (1)(2)(3)

Equity compensation plans not approved by security

holders

Total

Number of Securities
to be Issued upon
Exercise of
Outstanding Options,
Warrants and Rights

Weighted-average
Exercise Price of
Outstanding
Options,
Warrants and
Rights

Number of Securities
Remaining Available for
Future Issuance under
Equity Compensation Plans
(Excluding Securities
Reflected in Column
(a))

(a)

(b)

(c)

5,178,290

$

—

5,178,290

$

35

—

35

33,095,375

—

33,095,375

(1)  The number of securities remaining available for future issuance in column (c) includes 26,937,115 shares of common stock 
authorized and available for issuance under the Agilent Technologies, Inc. Employee Stock Purchase Plan ("423(b) Plan"). 
The number of shares authorized for issuance under the 423(b) Plan is subject to an automatic annual increase of the lesser 
of one percent of the outstanding common stock of Agilent or an amount determined by the Compensation Committee of 
our Board of Directors. Under the terms of the 423(b) Plan, in no event shall the aggregate number of shares issued under 
the Plan exceed 75 million shares. 

(2)  We issue securities under our equity compensation plans in forms other than options, warrants or rights. On November 15, 
2017 and March 21, 2018, the Board and the stockholders, respectively, approved the Agilent Technologies, Inc. 2018 Stock 
Plan (the “2018 Plan”), which was an amendment and restatement of the Company’s 2009 Stock Plan, approved by the 
Board and the stockholders, respectively, on November 19, 2008 and March 11, 2009. The 2018 Plan provides for awards 
of stock-based incentive compensation to our employees (including officers), directors and consultants. The 2018 Plan 
provides for the grant of awards in the form of stock options, stock appreciation rights, restricted stock, restricted stock 
units, performance shares and performance units with performance-based conditions to vesting or exercisability, and cash 
awards. The 2018 Plan has a term of ten years.

(3)  We issue securities under our equity compensation plans in forms which do not require a payment by the recipient to us at 
the time of exercise or vesting, including restricted stock, restricted stock units and performance units. Accordingly, the 
weighted-average exercise price in column (b) does not take these awards into account.

104

Item 13.    Certain Relationships and Related Transactions, and Director Independence

Information about certain relationships and related transactions appears under "Related Person Transactions Policy and 
Procedures" in the Proxy Statement. Information about director independence appears under the heading "Corporate Governance — 
Director Independence" in the Proxy Statement. Each of those portions of the Proxy Statement is incorporated by reference into 
this report.

Item 14.    Principal Accounting Fees and Services

Information about principal accountant fees and services as well as related pre-approval policies appears under "Fees Paid 
to  PricewaterhouseCoopers  LLP"  and  "Policy  on  Preapproval  of Audit  and  Permissible  Non-Audit  Services  of  Independent 
Registered Public Accounting Firm" in the Proxy Statement. Those portions of the Proxy Statement are incorporated by reference 
into this report.

Item 15.    Exhibits, Financial Statement Schedules

(a) 

The following documents are filed as part of this report:

PART IV

1.

2.

Financial Statements.

See Index to Consolidated Financial Statements under Item 8 on Page 50 of this report.

Financial Statement Schedule.

The following additional financial statement schedule should be considered in conjunction with our consolidated financial 
statements. All other schedules have been omitted because the required information is either not applicable or not sufficiently 
material to require submission of the schedule:

SCHEDULE II
VALUATION AND QUALIFYING ACCOUNTS

SCHEDULE II

Column A

Description

Column B

Balance at
Beginning
of Period

Column C

Column D

Additions Charged to
Expenses or
Other Accounts*

Deductions Credited
to Expenses or
Other Accounts**

Column E

Balance at
End of
Period

2018

Tax valuation allowance
2017

Tax valuation allowance
2016

Tax valuation allowance

$

$

$

138

129

131

$

$

$

(in millions)

4

14

22

$

$

$

(7) $

(5) $

(24) $

135

138

129

* Additions include current year additions charged to expenses and current year build due to increases in net deferred tax

assets, return to provision true-ups, other adjustments and OCI impact to deferred taxes. 

** Deductions include current year releases credited to expenses and current year reductions due to decreases in net deferred 

tax assets, return to provision true-ups, other adjustments and OCI impact to deferred taxes. 

105

3.

Exhibits.

Exhibits  are  incorporated  herein  by  reference  or  are  filed  with  this  report  as  indicated  below  (numbered  in

accordance with Item 601 of Regulation S-K):

Incorporation by Reference

Form

8-K

Date

8/5/2014

Exhibit
Number

2.1

Filed
Herewith

Exhibit
Number

2.1

Description

Separation and Distribution Agreement, dated August 1, 
2014, by and between Agilent Technologies, Inc. and 
Keysight Technologies, Inc. (pursuant to Item 601(b)(2) 
of Regulation S-K, schedules to the Separation and 
Distribution Agreement have been omitted; they will be 
supplementally provided to the SEC upon request)

3.1 Amended and Restated Certificate of Incorporation.

3.2 Amended and Restated Bylaws.

Registration Rights Agreement between Agilent 
Technologies, Inc. and Credit Suisse First Boston 
Corporation, J.P. Morgan Securities, Inc. and Salomon 
Smith Barney, Inc. dated November 27, 2001.

4.1

4.2

4.3

4.4

4.5

4.6

S-1

8-K

8-K

8/16/1999

11/20/2012

11/27/2001

3.1

3.1

99.3

4.01

4.02

8-K

9/13/2012

4.01

8-K

6/21/2013

4.01

8-K

9/22/2016

4.01

Indenture, dated October 24, 2007, between Agilent 
Technologies, Inc. and the trustee for the debt securities.

S-3ASR

10/24/2007

8-K

7/20/2010

Fifth Supplemental Indenture, dated as of July 20, 2010, 
between the Company and U.S. Bank National 
Association and Form of Global Note for the Company's 
5.00% Senior Notes due 2020.

Sixth Supplemental Indenture, dated as of September 13, 
2012, between the Company and U.S. Bank National 
Association

Seventh Supplemental Indenture, dated as of June 21, 
2013, between the Company and U.S. Bank National 
Association and Form of Global Note for the Company’s 
3.875% Senior Notes due 2023.

Eighth Supplemental Indenture, dated as of September 
22, 2016, between the Company and U.S. Bank National 
Association and Form of Global Note for the Company’s 
3.050% Senior Note due 2026

10.1 Agilent Technologies, Inc. 1999 Stock Plan (Amendment 
and Restatement Effective November 14, 2006).*

10-K

12/22/2006

10.8

10.2

10.3

Form of Award Agreement (U.S.) for grants under the 
Agilent Technologies, Inc. 1999 Stock Plan.*

8-K

11/12/2004

10.1

Form of Award Agreement (Non-U.S.) for grants under 
the Agilent Technologies, Inc. 1999 Stock Plan.*

8-K

11/12/2004

10.2

10.4 Agilent Technologies, Inc. Employee Stock Purchase Plan 

10-Q

9/5/2008

10.1

(Amended and Restated, effective November 1, 2008).*

10.5 Agilent Technologies, Inc. 2009 Stock Plan.*

DEF14A

1/27/2009

Appendix A

10.6

Form of Stock Option Award Agreement under the 2009 
Stock Plan for U.S. Employees (for awards made after 
October 31, 2010).*

12/20/2010

10.17

10.7

Form of Stock Option Award Agreement under the 2009 
Stock Plan for U.S. Employees.*

10-K

12/21/2009

10.31

106

Description

Form

Date

Incorporation by Reference

Exhibit
Number

10.19

Filed
Herewith

12/20/2010

Exhibit
Number

10.8

10.9

10.10

10.11

10.12

10.13

Form of Stock Option Award Agreement under the 2009 
Stock Plan for non-U.S. Employees (for awards made 
after October 31, 2010).*

Form of Stock Option Award Agreement under the 2009 
Stock Plan for non-U.S. Employees.*

Form of Stock Award Agreement for Standard Awards 
granted to Employees (for awards made after October 31, 
2010).*

Form of Stock Award Agreement under the 2009 Stock 
Plan for Standard Awards granted to Employees (for 
awards made after November 17, 2015).*

Form of Stock Award Agreement under the 2009 Stock 
Plan for Long-Term Performance Program Awards (for 
awards made after November 17, 2015). *

Form of Stock Award Agreement under the 2009 Stock 
Plan for New Executives (for awards made after 
November 17, 2015). *

10-K

12/21/2009

10.32

12/20/2010

10.21

10-K

12/21/2015

10.26

10-K

12/21/2015

10.28

10-K

12/21/2015

10.29

10.14 Agilent Technologies, Inc. 2018 Stock Plan.*

DEF14A

2/8/2018

Appendix B

10.15

10.16

10.17

10.18

Form of Stock Award Agreement under the 2018 Stock 
Plan for Standard Awards granted to Employees. *

10-Q

5/31/2018

10.1

Form of Stock Award Agreement under the 2018 Stock 
Plan for Long-Term Performance Program Awards. *

10-Q

5/31/2018

10.2

Form of Stock Award Agreement under the 2018 Plan for 
Standard Awards granted to Employees (for awards made 
after November 13, 2018). *

Form of Stock Award Agreement under the 2018 Stock 
Plan for Long-Term Performance Program Awards (for 
awards made after November 13, 2018). *

X

X

10.19 Agilent Technologies, Inc. Supplemental Benefit 

10-K

12/21/2017

10.17

Retirement Plan (Amended and Restated Effective 
May 20, 2014).*

10.20 Agilent Technologies, Inc. Long-Term Performance 

10-Q

3/9/2006

10.63

Program (Amended and Restated through November 1, 
2005).*

10.21 Agilent Technologies, Inc. 2005 Deferred Compensation 
Plan for Non-Employee Directors (Amended and 
Restated Effective November 18, 2009).*

10-K

12/21/2009

10.39

10.22 Agilent Technologies, Inc. 2005 Deferred Compensation 
Plan (Amended and Restated Effective May 20, 2014).*

10-K

12/21/2017

10.20

10.23 Agilent Technologies, Inc. 2010 Performance Based 

Compensation Plan for Covered Employees. (as adopted 
on November 19. 2014)

10.24

Form of Amended and Restated Indemnification 
Agreement between Agilent Technologies, Inc. and 
Directors of the Company, Section 16 Officers and 
Board elected Officers of the Company.*

10.25

Form of Tier I Change of Control Severance Agreement 
between Agilent Technologies, Inc. and the Chief 
Executive Officer*

DEF14A

2/6/2015

Annex A

8-K

4/10/2008

10.1

10-K

12/22/2014

10.35

107

Exhibit
Number

10.26

10.27

10.28

10.29

10.30

10.31

10.32

10.33

10.34

10.35

10.36

Description

Form of Amended and Restated Change of Control 
Severance Agreement between Agilent Technologies, Inc. 
and Section 16 Officers (other than the Company's Chief 
Executive Officer).*

Form of Tier II Change of Control Severance Agreement 
between Agilent Technologies, Inc. and Section 16 
Officers (other than the Company’s Chief Executive 
Offier)*

Form of New Executive Officer Change of Control 
Severance Agreement between Agilent Technologies, Inc. 
and specified executives of the Company (for executives 
hired, elected or promoted after July 14, 2009).*

Form of Tier III Change of Control Severance Agreement 
between Agilent Technologies, Inc. and specified 
executives of the Company*

Tax Matters Agreement, dated August 1, 2014, by and 
between Agilent Technologies, Inc. and Keysight 
Technologies, Inc.

Employee Matters Agreement, dated August 1, 2014, by 
and between Agilent Technologies, Inc. and Keysight 
Technologies, Inc.

Intellectual Property Matters Agreement, dated August 1, 
2014, by and between Agilent Technologies, Inc. and 
Keysight Technologies, Inc.

Trademark License Agreement, dated August 1, 2014, by 
and between Agilent Technologies, Inc. and Keysight 
Technologies, Inc.

Real Estate Matters Agreement, dated August 1, 2014, by 
and between Agilent Technologies, Inc. and Keysight 
Technologies, Inc.

Credit Agreement, dated September 15, 2014, by and 
among the Company, the Lenders party thereto and BNP 
Paribas, as Administrative Agent.

Letter Agreement dated as of June 9, 2015 by and among 
the Company, BNP Paribas, as Administrative Agent 
under the Credit Agreement and certain banks

Incorporation by Reference

Form

8-K

Date

4/10/2008

Exhibit
Number

10.3

Filed
Herewith

10-K

12/22/2014

10.37

10-K

12/21/2009

10.50

10-K

12/22/2014

10.39

8-K

8/5/2014

10.1

8-K

8/5/2014

10.2

8-K

8/5/2014

10.3

8-K

8/5/2014

10.4

8-K

8/5/2014

10.5

8-K

9/17/2014

10.2

8-K

6/10/2015

10.1

10.37 Amendment No. 1 to Credit Agreement, dated July 14, 

8-K

7/17/2017

10.1

10.38

10.39

10.40

10.41

2017, by and among the Company, the Lenders party 
thereto and BNP Paribas, as Administrative Agent

Letter of Terms and Conditions International Long Term 
Assignment, by and among Jacob Thaysen and the 
Company*

10-K

12/22/2014

10.62

Letter of Terms and Conditions Localization Program by 
and among Jacob Thaysen and the Company *

10-K

12/21/2015

10.70

Letter of Terms and Conditions of U.S. Indefinite 
Relocation and U.S. Domestic Relocation Agreement, 
each by and among Michael R. McMullen and the 
Company*

Letter of Terms and Conditions of U.S. Indefinite 
Relocation and U.S. Domestic Relocation Agreement, 
each by and among Robert McMahon and the Company*

10-Q

3/8/2016

10.1

X

108

Exhibit
Number Description

10.42 Agilent Technologies, Inc. Excess Benefit Retirement 
Plan (Amended and Restated Effective May 20, 2014)*

21.1

23.1

24.1

31.1

31.2

32.1
32.2

Significant subsidiaries of Agilent Technologies, Inc. as 
of October 31, 2018.

Consent of Independent Registered Public Accounting 
Firm.

Powers of Attorney. Contained in the signature page of 
this Annual Report on Form 10-K.

Certification of Chief Executive Officer pursuant to 
Section 302 of the Sarbanes Oxley Act of 2002.

Certification of Chief Financial Officer pursuant to 
Section 302 of the Sarbanes Oxley Act of 2002.

Certification of Chief Executive Officer pursuant to 
Section 906 of the Sarbanes Oxley Act of 2002.
Certification of Chief Financial Officer pursuant to 
Section 906 of the Sarbanes Oxley Act of 2002.

101.INS XBRL Instance Document.

101.SCH XBRL Taxonomy Extension Schema Document.

101.CAL XBRL Taxonomy Extension Calculation Linkbase

Document.

101.LAB XBRL Taxonomy Extension Label Linkbase Document.

101.PRE XBRL Taxonomy Extension Presentation Linkbase

Document.

101.DEF XBRL Taxonomy Extension Definition Linkbase

Document.

Incorporation by Reference

Form

Date

10-K

12/21/2017

Exhibit
Number

10.40

Filed
Herewith

X

X

X

X

X

X
X

X

X

X

X

X

X

*

Indicates management contract or compensatory plan, contract or arrangement.

109

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused 

this report to be signed on its behalf by the undersigned, thereunto duly authorized.

SIGNATURES

AGILENT TECHNOLOGIES, INC.

BY

/s/ MICHAEL TANG
Michael Tang
Senior Vice President,

General Counsel and Secretary

Date: December 20, 2018 

110

POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints 
Michael Tang and P. Diana Chiu, or either of them, his or her attorneys-in-fact, for such person in any and all capacities, to sign 
any amendments to this report and to file the same, with exhibits thereto, and other documents in connection therewith, with the 
Securities  and  Exchange  Commission,  hereby  ratifying  and  confirming  all  that  any  of  said  attorneys-in-fact,  or  substitute  or 
substitutes, may do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Exchange Act of 1934, 
this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates 
indicated.

Signature

Title

Date

/s/ MICHAEL R. MCMULLEN

Director, President and Chief Executive Officer

December 20, 2018

Michael R. McMullen

(Principal Executive Officer)

/s/ ROBERT W. MCMAHON

Senior Vice President and Chief Financial Officer

December 20, 2018

Robert W. McMahon

(Principal Financial Officer)

/s/ RODNEY GONSALVES

Vice President, Corporate Controllership

December 20, 2018

Rodney Gonsalves

/s/ KOH BOON HWEE

Koh Boon Hwee

/s/ HANS E. BISHOP

Hans E. Bishop

/s/ PAUL N. CLARK

Paul N. Clark

/s/ HEIDI KUNZ

Heidi Kunz

/s/ DANIEL K. PODOLSKY, M.D.

Daniel K. Podolsky, M.D.

/s/ SUE H. RATAJ

Sue H. Rataj

/s/ GEORGE A. SCANGOS, Ph D

George A. Scangos, Ph D.

/s/ DOW R. WILSON

Dow R. Wilson

/s/ TADATAKA YAMADA, M.D.

Tadataka Yamada, M.D.

(Principal Accounting Officer)

Chairman of the Board of Directors

December 20, 2018

December 20, 2018

December 20, 2018

December 20, 2018

December 20, 2018

December 20, 2018

December 20, 2018

December 20, 2018

December 20, 2018

Director

Director

Director

Director

Director

Director

Director

Director

111

Shareholder Information

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Stock Listing
Agilent Technologies, Inc. common stock is traded on the

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symbol A.

Transfer Agent and Registrar 
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pertaining to your stock account. 

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Louisville, KY 40202 

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www.computershare.com/investor

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Independent Registered 
Public Accounting Firm
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Suite 1800

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Annual Meeting
Agilent Technologies, Inc.’s 2019 Annual Meeting of 
Stockholders is scheduled to be held at 8:00 am on
March 20, 2019 at Agilent’s headquarters, 5301 Stevens

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The meeting will also be audio webcast on our website

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Investor Contact
Agilent Technologies, Inc.

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Santa Clara, CA 95051
Email: investor_relations@agilent.com

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Shareholder Information 

Agilent Technologies, Inc.

 
 
 
Board of Directors

Hans E. Bishop 
Former President and  

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Juno Therapeutics, Inc. 

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Paul N. Clark
Former Operating Partner 
Genstar Capital, LLC

Koh Boon Hwee
Non-executive Chairman 
Agilent Technologies, Inc.
Managing Partner 
Credence Capital Fund II    
(Cayman) Ltd.

Heidi Kunz
Former Executive Vice President 

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Blue Shield of California

Senior Executives

Michael R. McMullen*
President and Chief Executive 
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Henrik Ancher-Jensen*
Senior Vice President, Agilent
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Mark Doak*
Senior Vice President, Agilent 
President, Agilent CrossLab Group

Rodney Gonsalves*
Vice President, 
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Dominique Grau*
Senior Vice President, 
Human Resources

Dow R. Wilson
President and  

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Varian Medical Systems, Inc.

Tadataka Yamada, M.D.
Venture Partner, Life Sciences Team
Frazier Healthcare Partners

Michael R. McMullen
President and 

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Agilent Technologies, Inc.

Daniel K. Podolsky, M.D.
President 
University of Texas Southwestern 
Medical Center

Sue H. Rataj
Former Chief Executive, 
Petrochemicals 
BP plc

George A. Scangos, Ph.D.
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Vir Biotechnology, Inc.

Nancy Lelicoff
Vice President, Regulatory Affairs, 
Quality Assurance and Clinical 
Affairs

Michael Tang*
Senior Vice President, 
General Counsel and 
Secretary

Robert McMahon*
Senior Vice President and
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Samraat S. Raha*
Senior Vice President, Agilent
President, Diagnostics and 
Genomics

Darlene J.S. Solomon, Ph.D.
Senior Vice President, 
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Jacob Thaysen*
Senior Vice President, Agilent 
President, Life Sciences and 
Applied Markets

*These individuals are executive 
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  the Securities Exchange Act of 1934.

2018 Annual Report 

Shareholder Information

 
 
 
 
 
© Agilent Technologies, Inc. 2019       
www.agilent.com