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, 2021
or
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.
For transition period from
to
Commission File Number: 001-15405
_____________________________________________________________
Agilent Technologies, Inc.
(Exact name of registrant as specified in its charter)
(State or other jurisdiction of incorporation or organization)
(IRS Employer Identification No.)
Delaware
77-0518772
Address of principal executive offices: 5301 Stevens Creek Blvd., Santa Clara, California 95051
Registrant's telephone number, including area code: (800) 227-9770
Securities registered pursuant to Section 12(b) of the Act:
Title of each Class
Common Stock, $0.01 par value
Trading Symbol
A
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 ☒ No ☐
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 ☒
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 whether the registrant is a large accelerated filer, an accelerated filff er, a non-accelerated filer, a 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
Smaller reporting company
☒
☐
Accelerated filer
☐
Non-accelerated filer
Emerging growth company
☐
☐
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 has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control
over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit
report. ☒
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, 2021, was approximately $30.9 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 8, 2021 there were 302,000,797 outstanding shares of common stock, par value $0.01 per share.
Document Description
_____________________________________________________________
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Proxy Statement for the Annual Meeting of Stockholders (the "Proxy Statement") to be held on March 16, 2022, and to be filed
pursuant to Regulation 14A within 120 days after registrant's fiscal year ended October 31, 2021 are incorporated by reference into Part III of this
Report
10-K Part
III
TABLE OF CONTENTS
Forward-Looking Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PART I
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 II
Item 5 Market for the Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities . . . .
Item 6
[Reserved] . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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
Item 9
Financial Statements and Supplementary Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure . . . . . . . . . . . . . . . . . . . . . . . .
Item 9A Controls and Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 9B Other Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PART III
Item 10 Directors, Executive Officers and Corporate Governance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 11 Executive Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PART IV
Item 15 Exhibits and Financial Statement Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 16 Form 10-K Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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2
Forward-Looking Statements
This report contains forward-looking statements including, without
limitation, statements regarding growth
opportunities, including for revenue and our end markets, strength and drivers of the markets we sell into, sales funnels, our
strategic direction, new product and service introductions and the position of our current products and services, market demand
for and adoption of our products, the ability of our products and solutions to address customer needs and meet industry
requirements, our focus on differentiating our product solutions, improving our customers’ experience and growing our
earnings, future financial results, our operating margin, mix, our investments, including in manufacturing infrastructure,
research and development and expanding and improving our applications and solutions portfolios, expanding our position in
al allocation, our contributions to our pension and other
developing countries and emerging markets, our focus on balanced capita
defined benefit plans, impairment of goodwill and other intangible assets, the impact of forei
gn currency movements, our
hedging programs and other actions to offset the effects of tariffs and foreign currency movements, our future effective tax rate,
tax valuation allowance and unrecognized tax benefits, the impact of local government regulations on our ability to pay vendors
or conduct operations, our ability to satisfy our liquidity requirements, including through cash generated from operations, the
potential impact of adopting new accounting pronouncements, indemnification, source and supply of materials used in our
al expenditures, the integration and effects of our acquisitions and
products, our sales, our purchase commitments, our capita
other transactions, our stock repurchase program and dividends and the potential or anticipated direct or indirect impact of
COVID-19 on our business that involve risks and uncertainties. Our actual results could differ materially fromff
the results
contemplated by these forward-looking statements dued
to various factors, including those discussed in Part I Item 1A and
elsewhere in this Form 10-K.
ff
t
PART I
Item 1. Business
Overview
Agilent Technologies Inc. ("we", "Agilent" or the "company"), incorporated in Delaware in May 1999, is a global leader
ciences, diagnostics and applied chemical markets, providing application focused solutions that include instruments,
in life s
ff
software, services and consumablea
s forff
the entire labora
a
tory workflow.
For fiscal year ended October 31, 2021, we have three business segments comprised of the life sciences and appl
a
ied
markets business, the diagnostics and genomics business and the Agilent CrossLab business.
a
s which enablea
Our life sciences and applied markets business provides appl
ication-focused solutions that include instruments and
customers to identify, quantify and analyze the physical and biological properties of substances and
software that enablea
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 active pharmaceutical
ingredients ("APIs") for oligo-based therapeutics as well as solutions that
instruments, software and
ciences research areas to interrogate samples at the cellular and
consumablea
molecular level. The Agilent CrossLab business spans the entire lab wa
ith 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 forff
manufacturing, engineering and strategic sourcing to our respective businesses. Each of our businesses, together with OFS and
Agilent Technologies Research Laborat
organization, which provides shared
ories, is supported by our global infrastructurett
services in the areas of finaff
nce, information technology, legal, certain procurement services, workplace services and human
resources.
customers in the clinical and life sff
include reagents,
a
We sell our products primarily through direct sales, but we also utilize distributors, resellers, manufacturers'
representatives and electronic commerce. As of October 31, 2021, we employed approximately 17,000 people worldwide. Our
primary research and development and manufacturing sites are in California, Colorado, Delaware, Massachusetts, Texas,
Vermont and Washington in the U.S. and in Australia, China, Denmark, Germany, Italy, Japan, Malaysia, Singapore and the
United Kingdom.
3
Life Sff
ciences and Applied Markets Business
a
Our life sciences and applied markets business provides appl
ication-focused solutions that include instruments and
software that enablea
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 absor
ion
("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;
information
real-time cell analyzer; cell
management and analytics; laborat
ory automation and robotic systems; dissolution testing; vacuum pumps and measurement
a
technologies.
laboratory software for sample tracking;
imaging systems; microplate reader;
ptrr
a
We employed approxi
a
mately 5,400 people as of October 31, 2021 in our life sciences and applied markets business.
Lifei Sciences and Applied MarkeMM
ts
Our life sciences and applied markets business focuses primarily on the following five markets:
The Pharmaceutical, Biopharmaceutical, CRO & CMOCC
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
includes biopharmaceutical companies ("biopharma"), contract research
companies ("pharma"). A second sub-segment
organizations ("CROs") and contract manufacturing organizations ("CMOs"). Biopharma 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
s and privately funded organizations. The academic and government market
academic institutions, large government institutett
plays an influential role in technology adoption and therapeutic developments forff
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 & EneEE rgy Market. Our products and solutions are used throughout
the chemicals sector in the
development, manufacturing, and quality control of commodity chemicals, specialty and agrochemicals, and fine chemicals.
Chemical market customers use our products to determine chemical composition, perform impurity analysis, qualify raw
materials, conduct materials characterization, and verify and ensure the environmental safety of operations and employees. The
natural
gas and petroleum exploration and refining markets use our products to analyze crude oil composition, perform
tt
intermediate material analysis, verify and improve refining processes and ensure the overall quality of gasoline, fuels, lubricants
and other products.
FF
industry customers include all
The Environmental & Forensi
cs Market. Our instruments, software and workflow solutions are used by the
ory and field analysis of chemical pollutants in air, water, soil and solid
environmental market for applications such as laborat
waste. Environmental
the industrial and manufacturing sectors,
engineering and consulting companies, commercial testing laboratories and colleges and universities. Drug testing and forensics
ories use our instruments, software and workflow solutions for applications such as analyzing evidence associated with
laborat
a
performance enhancing drugs, analyzing samples for recreational drugs, or detecting and
crime, screening athletes forff
identifying biological and chemical warfare agents. Some of our instruments are used in mobile laborat
ories as well. Customers
include local, state, federal, and international law enforcement agencies and health laboratories.
levels of government,
a
a
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.
4
Life Sff
cieSS
nces and Applied Markets
rr
Products and ApplA icll ations
Our products falff
spectroscopy, software and informatics, lab aa
l into eight main areas of work: liquid chromatography, gas chromatography,
utomation and robotics, vacuum technology and cell analysis.
a
mass spectrometry,
Our key products and applications include the following technologies:
Liquid Chromatography
A liquid chromatographa
("LC") or a high-performance liquid chromatographa
("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 appl
ication‑based analyzers (e.g., for bio-molecular separations,
a
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
models. GCs 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 forff
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.
("GC"), both laborat
ory and portablea
a
a
Mass Spectrome
tt
try
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").
Agilent's GC/MS portfolio includes instruments built around three main analyzer types - single quadrupole, triple quadrupole,
and quadrupole time-of-flight ("QTOF"). We significantly expanded our mass spectrometry portfolio in recent years with a
m
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"),
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.
ICP-OES,
ICP-MS,
tt
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 La
aboratory Software Suite, Agilent has a scalable, open software platform that
enablea
, analyze, and share scientific data throughout the lab aa
nd across the enterprise.
s customers to capture
a
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.
5
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 instruments, sensor gauges and meters) and vacuum components (valves, flaff nges 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 Analysisyy
c
Our cell analysis tools are used to study cell signaling pathways, general cell function and behavior through metaboli
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. Our cell analysis portfolio includes cell analysis plate-based assays, flow cytometer,
real-time cell analyzer, microplate reader, cell imaging system and related consumablea
s. Cell analysis customers are typically
academic instituti
ons and pharma and biopharma companies.
a
tt
Lifei Sciences and Applied MarkeMM
ts Customers
We had approximately 25,900 customers for our life sciences and applied markets business in fisca
customer represented a material amount of the net revenue of the life sciences and appl
number of our life sciences and applied markets customers are also customers of our Agilent CrossLab business.
a
l 2021. No single
ied markets business. A significant
ff
The life sciences and appl
ied 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
this group.
budgets. Historically, the result is that our first and fourth fiscal quarters tend to deliver the strongest profits forff
However, general economic trends, new product introductions and competm ition might overshadow this trend in any given year.
a
Lifei Sciences and Applied MarkeMM
ts Sales,
ll Marketingii
and Support
a
on the therapeut
The life sciences and appl
ied markets channels focus
ics and human disease research customer base
ff
(pharma, biopharma, CRO, CMO and generics), clinical customer base (high complexity clinical testing labs),
emerging life
sciences opportunities in life science research instituttt es and applied markets (chemical and energy, food, environmental and
forensics). 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, clinical, life science research and applied market accounts. Sales agents supplement
coverage and coverage of smaller accounts. Our active reseller program augments
direct sales by providing broader geographic
our ability to provide more complete solutions to our customers. We sell our consumablea
products through distributors,
electronic commerce and direct sales.
a
a
a
Our products typically come with standard warranties, and extended warranties are availablea
for additional cost.
Lifei Sciences and Applied MarkeMM
ts Manufacturingii
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
shipment to customers. We selectively use third parties to provide
these designs into standard as well as custom products forff
some supply chain processes forff manufacturing, warehousing and logistics. Inside the U.S., we have manufacturing facilities in
Californi
a, Delaware, Massachusetts and Vermont. Outside of the U.S., we have manufacturing facilities in Germany, Malaysia
ff
and Singapore.
a
We have FDA registered sites in California, Vermont, Germany and Singapore.
ff
6
Life Sff
cieSS
nces and Applied Markets
rr
Competitiii on
The markets forff
analytical instruments in which we compete are characterized by evolving industry standards and intense
competition. Our principal competitors in the life sciences and appl
ied 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.
a
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.
customers in the clinical and life sff
Our diagnostics and genomics business is comprised of six areas of activity providing active pharmaceutical ingredients
s, which
("APIs") for oligo-based therapeutics as well as solutions that include reagents, instruments, software and consumablea
enablea
ciences 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 enablea
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
on product
of drugs that utilize nucleic acid molecules forff
offerings
includes
for cancer diagnostics and anatomic pathology workflows. The broad portfolio of offerings
immunohistochemistry ("IHC"), in situ hybridization ("ISH"), hematoxylin and eosin ("H&E") staining and special staining.
Fourth, we also collabora
te with a number of major pharmaceutical companies to develop new potential tissue and liquid-based
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,
s and software, for quality control analysis of nucleic acid samples. Samples are analyzed using quantitative and
consumablea
qualitative techniques to ensure accuracy in further genomics analysis techniques utilized in clinical and life science research
applications.
Third, our pathology solutions business is focused
disease therapy.
a
a
ff
We employed approxi
a
mately 2,900 people as of October 31, 2021 in our diagnostics and genomics business.
t
Diagnostictt s and Genomics MarkeMM
Within the diagnostics and genomics business, we focus primarily on the diagnostics and clinical market. Our high-
quality, automated pathology tissue staining platforms and solutions are used most heavily by the large labsa
located in hospitals,
medical centers, and reference labsa . 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-
primarily purchase in vitro
ed testing kits, they often develop and validate their own molecular based tests. Analyte Specific
ories, hospital labs, and molecular diagnostic companies. While these labsa
profit” reference laborat
diagnostics ("IVD") label
Reagents ("ASRs") are often used by these labs.a
a
a
Diagnostictt s and Genomics Produc
PP
ts
Our products falff
l 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
tt
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
additional insights and detection of potentially carcinogenic tissue. Dako Omnis and Autostainer based IHC solution
stains forff
and Instant Quality Fluorescence In Situ Hybridization ("IQFISH") technologies provide advanced tumor typing through
7
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.
a
Specificff Proteins and Flow Reagentstt
Our reagent OEM business is a provider of clinical diagnostic products within the areas of specific proteins for
flow cytometry. These are sold to OEM customers as customized reagent solutions supplied to top
turbidimetry and reagents forff
IVD companies or through retail partners.
Companion
m
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.
We support pharmaceutical companies during
each phase of their drug development process, from early pre-clinical through
commercial launch activities. Companion diagnostics has a history of developing clinically relevant and validated tests, with
accurate and effective scoring and interpretation guidelines, that enablea
successful regulatory approvals in our worldwide
markets.
d
EE
Target Enrichm
ent
We provide a target enrichment portfolio composed of two main platforms, SureSelect and HaloPlex, both enablia
ng
customers to select specific target regions of the genome for sequencing. Customers can customize our products forff
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. 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 enablea
clinical labs to identify DNA variants associated with
genetic diseases and help direct cancer therapy.
a
t
Cytogenetic Research Solutions and Microarraysyy
We provide microarrays for comparative genomic hybridization (“CGH”), mostly used by customers in cytogenetic
ories. The arrays allow customers to detect genome-wide copy number alterations, with high levels of resolution (from
laborat
a
entire chromosomal copy number changes to specific microdeletions or duplications). The arrays are offered in many forma
ts
allowing the customers to choose from different levels of resolution and number of samples per arrays. Arrays can also be
sample
customized using the SureDesign software. In addition to the microarrays, Agilent's solution includes reagents forff
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. Additionally, Agilent provides a wide range of microarrays to the research market forff
different types
methylation, splice variants, and chromatin immunoprecipitation applications.
of applications: gene expression, microRNA,
Arrays are offered as catalog designs or customizable designs, with no minimum order size and short delivery time, which
differentiates us fromff
other vendors and enables researchers the maximum flexibility in their studies.
RR
ff
PCR aCC
nd qPCR Instrumentation and Molecular Biology Reagentstt
Polymerase chain reaction ("PCR") is a standard laborat
ory method used to amplify the amount of genetic material of a
further interrogation. Quantitative PCR ("qPCR") or real time PCR is also a standard method used in
given sample to enablea
genomic research faciliti
es 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.
a
ff
8
Nucleic Acid Solutions
Our nucleic acid solutions business 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. Our nucleic acid solutions business offers industry leading experience to efficiently advance our customers' oligo drug
candidates fromff
clinical trials to commercial launch with a common goal of patient health and safetyff
RR
.
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 examplem s are nucleic acid preparation products in front
of polymerase
chain reaction, NGS and microarrays.
ff
Diagnostictt s and Genomics Customers
We had approximately 11,500 customers for our diagnostics and genomics business in fisca
ff
l 2021. No single customer
represented a material amount of the net revenue of the diagnostics and genomics business.
Diagnostictt s and Genomics Sales, Marketingii
and Support
ff
a
on the therapeut
The diagnostics and genomics channels focus
ics and human disease research customer base (pharma,
and on
and high complexity clinical testing labs)a
biopharma, CRO, CMO and generics), clinical customer base (pathology labsa
emerging life sciences opportunities in life science research institutett
s. 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
coverage and coverage of smaller accounts. Our active reseller
supplement direct sales by providing broader geographic
a
program augments our ability to provide more complete solutions to our customers. We sell our consumablea
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.
Diagnostictt s and Genomics Manufac
MM
turingii
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 forff manufacturing, warehousing and logistics. In the U.S., we have manufacturing
facilities in California, Colorado and Texas. Outside of the U.S., we have manufacturing facilities in Denmark and Malaysia.
Our FDA registered sites include California, Colorado, Texas and Denmark.
Diagnostictt s and Genomics ComCC pem titiii on
a
The markets forff
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: Abbott
Laborat
ories, Affymetrix, Inc., a division of Thermo Fisher Scientific Inc., Illumina, Inc., Leica Biosystems, Inc., a division of
Danaher Corporation, Roche Ventana Medical Systems, Inc., a member of the Roche Group and Twist Bioscience Corporation.
e, reliability, support quality, applications expertise, whole solution
Agilent competes on the basis of product performanc
offering, global channel coverage and price.
ff
Diagnostictt s and Genomics Governm
GG
e
ent Regulat
iontt
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, froff m quality
management, design and development to label
ing, manufacturing, promotion, sales and distribution. We continually invest in
our manufacturing infrastructuret
to gain and maintain certifications necessary for the level of clearance.
a
9
Agilent CrossLab Business
The Agilent CrossLab business spans the entire lab wa
s and services portfolio, which is
designed to improve customer outcomes. The majori
ty 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.a Key product categories in consumablea
s include GC and LC columns, sample
ory instrument supplies. Services include startup,
preparation products, custom chemistries, and a large selection of laborat
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 consumablea
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.
ith its extensive consumablea
a
a
tt
Our Agilent CrossLab business employed approximately 6,100 people as of October 31, 2021.
ii
Agilent
CrossLab Markets
MM
Market. Our services and consumablea
The Pharmaceutical, Biopharmaceutical, CRO & CMOCC
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 biopharmaceutical companies ("biopharma"), contract research organizations ("CROs") and contract manufacturing
organizations ("CMOs"). Biopharma 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 consumablea
products support customers in this market that
consists primarily of “not-for-profit” organizations and includes academic institutions, large government institutett
s and privately
funded organizations. The academic and government market plays an influential role in technology adoption and therapeutic
developments forff
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 & EneEE rgy Market. Our services, software, technical support, and consumablea
s are used throughout the
chemicals sector in the development, manufacturing, and quality control of commodity chemicals, specialty and agrochemicals,
and fine chemicals. Chemical market customers use our services, software, technical support, and consumables to maintain,
optimize, and enablea
and support quality control and compliance with
gas and petroleum exploration and refining markets use our services,
environmental and safety regulations. The natural
software, technical support, and consumablea
s to support quality control, environmental safety reviews, analysis of crude oil
composition, and improve their refining processes and quality of products.
higher productivity and profitability for labs,a
tt
a
The Environmental & Forensi
cs Market. Our services and consumable products support the environmental industryrr
FF
customers that perform labora
tory 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
a
companies, commercial testing laboratori
es and colleges and universities. Our services and consumable products also support
ories that are involved with analyzing evidence associated with crime, screening athletes forff
drug testing and forensics laborat
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 enforce
ment agencies and commercial testing
a
laboratori
es.
u
a
ff
The Food Market. Our services and consumablea
inspection, new product development, quality control and assurance, and packaging. Our services and consumablea
support
u
modification, species verificff ation and others.
the food safety market in their work to analyze food
products support the food production chain, including incoming
products also
for concerns ranging from pathogen contamination, genetic
ff
The Diagnostics and Clinical Market. Our services and consumable products support clinical diagnostic customers in
throughout the world. The market is skewed towards the mature economies, with most of the market in North
pathology labsa
America, Western Europe and Japan. The mix is changing, however, as emerging markets increase spending on human health.
10
Agilent CroCC ssLass
b Produc
PP
ts and ApplA icll ations
Chemistries and Supplies
We offer a broad range of market specific consumables and supplies to complete customers' analytical workflows fromff
sample preparation through separation and analysis to storage, with the support of our technology platforms. This includes
GC and LC
sample preparation consumablea
columns, chemical standards, and instrument replacement parts. Consumable products also include scientific instrume
nt parts
and supplies such as filters and fittings for GC systems; xenon lamps and cuvettes for UV-Vis-NIR, fluore
scence, FT-IR and
raman spectroscopy instruments; and graphite furnace tube
s, hollow cathode lamps and specialized sample introduction
glassware for our AA, ICP-OES and ICP-MS products.
s such as solid phase extraction ("SPE") and filtration products, self-manufactured
rr
ff
t
t
Services and Support
tt
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. With advances in digital and virtual
support technologies, many
of those services can be offered remotely. Special service bundles have also been designed to meet the specific application
ory operations and consolidate suppliers, our enterprise
needs of various industries. As customers continue to outsource laborat
upply
services consist of a broad portfolio of integrated laboratory management services including instrument services, lab sa
management, asset management, procurement, informatics and scientific services. Advancements in our offering software and
service solutions will help our customers operate a more digitally connected smart lab ta
hat can derive more value out of data
analytics, artificial intelligence and robotics.
a
t
Remarketkk ed Instruments
We refurbish and resell certified pre-owned instruments to value-oriented customers who demand Agilent quality and
performance at a budget conscious price.
ii
Agilent
CrossLab CustCC ome
tt
rs
We had approximately 58,400 Agilent CrossLab customers in fiscal 2021 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 consumablea
and is less 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.
s business is mostly recurring in naturet
ii
Agilent
CrossLab Sales
SS
MM
, Ms
arketi
ngii
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. A substantial
sales are processed by our digital commerce infrastructure. All channels are supported by technical
portion of consumablea
product and application specialists to meet our customers' specific requirements.
a
tt
We deliver our support services to customers in a variety of ways, including on-site assistance with repair or exchange of
products, as well as a growing number of remote service delivery options. In addition to the traditional telephone
returned
support and on-site service, our teams remotely engage customers through various digital tools and omni-channel platforms. 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 full
y operational and compliant with the
respective industry requirements. Our products typically come with standard warranties, and extended warranties are available
for additional cost.
ff
11
Agilent CroCC ssLass
b Manufac
MM
turing
Our primary manufacturing sites for the consumablea
s 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 28 countries.
Agileii nt CrossLab Competm ittt iontt
Our principal competitors in the services and consumablea
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 consumablea
s 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 ("Agilent Labs")
is our central research organization based in Santa Clara,
California
. The Research Labs create competitive advantage through high-impact technology, driving market leadership and
ff
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 enablea
synergies across Agilent's businesses to create competitive
differentiation and compelling customer value.
a
The technical staff have advanced degrees that cover a wide range of scientific and engineering fields, including
molecular and cell biology, chemistry, physics, pathology, mathematics, software and informatics, artificial intelligence, deep
and machine learning, image processing, nano/microfabric
ation, and flui
dics.
a
ff
Global Infrastructure Organization
We provide support to our businesses through our global infrastructurett
organization. This support includes services in
the areas of finaff
nce, 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 fromff
, with operations and services provided worldwide. As of October 31, 2021, our global
infrastructurett
organization employed approximately 2,600 people worldwide.
Santa Clara, California
ff
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 forff 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.
ff
The following discussions of Research and Development, Backlog, Intellectual Property, Materials, Environmental,
Regulatory Affairs and Human Capital Management include information common to each of our businesses.
Research and Development
ff
We anticipate that we will continue to have significant research and development 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,
lds, we conduct research that is focused on
systems and solutions, life sciences and diagnostics. In each of these research fieff
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 majora
the futff urt e. 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 availablea markets and position ourselves to capture market share.
new product releases, and develop new product segments forff
12
Backlog
We believe that backlog is not a meaningful indicator of future business prospects forff
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
t
create a competitive advantage. While we believe that our licenses, patents and other intellectual
general no single license, patent or other intellectual
property right is in itself material. In addition, our intellectual
rights may be challenged, invalidated or circumvented or may otherwise not provide significant competitive advantage.
property rights covering significant inventions and other innovations in order to
property rights have value, in
property
t
tt
tt
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 fromff
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 mapsa
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 forff
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
ff
ral, state and local laws governing health and safety a
Our R&D, manufacturing and distribution operations involve the use of hazardous substances and are regulated under
strict standards for
international, fede
o sites inside and outside the U.S., even if not subject to
protection of the environment and occupational health and safety t
regulation imposed by foreign governments. We believe that our properties and operations at our facilities comply in all
cablea
material respects with appli
aws. We are also regulated under a
environmental laws and occupational health and safety l
ral, state, and local laws regarding recycling, product packaging and product content requirements.
number of international, fede
We believe we are substant
ially in compliance with such environmental, product content/disposal and recycling laws. We also
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.
nd the environment. We apply
u
a
a
ff
t
t
t
Climate change may impact our business by increasing operating costs due to impairments of our facilities and
distribution systems, disruptions to our manufacturing processes and additional regulatory requirements. Although we address
these potential risks in our business continuity planning, such events could make it difficul
us to deliver products and
services to our customers and cause us to incur substantial expense.
t forff
ff
In addition to monitoring and managing compliance with environmental regulations, we are also committed to
sustainability and environmental protection. In 2021, we announced our commitment to achieve net-zero greenhouse gas
emissions no later than 2050. For more information on our approach to sustainability management, refer to our annual
rr
Corporat
e Social Responsibility report, which is availablea
on our website.
Regulatory Affairs
A number of our products and services are subject to regulation by the FDA, the U.S. Department of Health and Human
gn regulatory agencies. These regulations
Services, the Centers for Medicare and Medicaid Services and certain similar forei
ing,
govern a wide variety of product and service related activities, from quality management, design and development to label
manufacturing, promotion, sales and distribution. If we fail to comply with FDA and other appl
icable regulatory requirements
or are perceived to potentially have failed to comply, we may facff e, among other things, warning letters; adverse publicity;
investigations or notices of non-compliance, fines, injunctions, and civil or criminal penalties; import or export restrictions;
partial suspensions or total shutdown of production facilities or the imposition of operating restrictions; suspension or
revocation of our license to operate; increased difficulty in obtaining required FDA clearances or approva
ls or foreign
equivalents; seizures or recalls of our products or those of our customers; or the inability to sell our products. In Europe, the
European Union is going to enforce new requirements, known as the EU In Vitro Diagnostic Regulation (the “EU IVDR”),
which imposes stricter requirements for the marketing and sale of in vitro diagnostics in the European Union. These new
a
a
a
ff
13
regulations are more stringent
surveillance activities. The new EU IVDR requirements become effective in May 2022.
in a variety of areas,
including clinical requirements, quality systems and post-market
We are subject to laws and regulations governing government contracts, and failure to address these laws and regulations
or comply with government contracts could harm our business by leading to a reduction in revenue associated with these
customers. We have agreements relating to the sale of our products to government entities and, as a result, we are subjeb ct to
s and regulations that apply to companies doing business with the government. We are also subject to
various statutett
investigation for compliance with the regulations governing government contracts. A faiff
lure to comply with these regulations
could result in suspension of these contracts, criminal, civil and administrative penalties or debarment.
We are also subject to various significant international, fede
ral, state and local regulations in the areas of health and
safety, packaging, product content, employment, labor and immigration, import/export controls, trade restrictions and anti-
competition. 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.
ff
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. Global privacy laws, including the EU's General Data Protection Regulation
Consumer Privacy Act, apply to our activities
("GDPR”), Brazil’s Lei Geral de Protecao de Dados, and the California
involving the processing of personal data, both in relation to our product and service offerings and the management of our
workforce. The global proliferation of privacy laws, with governmental authorities around the world passing or considering
passing legislative and regulatory proposals concerning privacy and data protection, continues to result in new requirements
non-compliance (including
regarding the handling of personal data, with many such laws imposing significant penalties forff
possible fines of up tu
percent of total company revenue under the GDPR). 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.
ff
o four
ff
While we believe we are in compliance in all material respects with such laws and regulations, any noncompliance could
s or otherwise restrict our ability to operate and thereby have an adverse effect on our financial
result in substantial fineff
condition. To date, none has had a material impact on our operations.
Human Capital Management
As of October 31, 2021, we employed approximately 17,000 persons, of whom approximately 6,400 were based in the
Americas, 4,200 in Europe and 6,400 in Asia Pacific. We also leverage temporary workers to provide flexibility for our
business and manufacturing needs.
Culture. Agilent instruments, software, services, solutions and people provide trusted answers to customers’ most
supplies safe, improve the quality of air, water
challenging questions. Whether we are working with our customers to keep foodff
and soil, or fight cancer with more precise diagnoses and targeted treatments, Agilent employees share a passion and
commitment to advancing the quality of life.ff We believe that our futff urt e success largely depends upon our continued abila
ity to
attract and retain highly skilled employees in order to fulff
fil that commitment.
Engagement. Agilent engages with our employees through consultation, surveys, ad-hoc feedback and reviews. Our
es and answer questions. We
executive officers hold all-managers meetings on a quarterly basis to provide business updat
conduct an annual leadership survey that allows employees to provide feedback on leadership effectiveness, culturett
and job
satisfaction. We have an open-door policy where employees are encouraged and empowered to bring issues to management’s
attention. Employees have regular performance reviews with immediate supervisors. Employee sessions are held regularly to
share business and market updates and answer employee questions.
u
Diversity and Inclusion. As a global company, much of our success is rooted in the diversity of our teams and our
commitment to inclusion. We value diversity at all levels and continue to focus on extending our diversity and inclusion
initiatives across our entire workforce, from providing managers transparency of their workforce pay equity to working with
managers to develop strategies forff
rent backgrounds.
Agilent is committed to creating a diverse work environment and is proud to be an equal opportunity employer. We believe in
a number of cultures and countries are engaged and encouraged to leverage their
an inclusive workforce, where employees fromff
collective talents. As of October 31, 2021, approximately 39 percent of our full-time employees were female. Approximately 42
building diverse teams to promoting the advancement of leaders from diffeff
14
percent of our board is comprised of directors representing underrepresented groups as of the date of this report. We also have
employee-network groups aimed at promoting engagement of women and Black employees. To furthe
r our commitment to
global diversity and inclusion efforts, in 2020 we hired an associate vice president of diversity and inclusion and launched a
number of company-wide initiatives.
ff
Retention. We provide our employees with competitive salaries and bonuses, opportunities for equity ownership,
continued learning and growth and a robust employment package that promotes well-being
development programs that enablea
across all aspects of their lives, including health care, retirement planning and paid time off. Our benefits are offered to eligible
employees and comply with local legal requirements. We have a number of programs and policies designed to help employees
in our diverse workforce manage their work and personal lives while meeting company objectives forff
business success,
including flexible work arrangements, health and welfare benefits, employee and family assistance plans and parental leave.
Development. As part of our promotion and retention efforts, we also invest in ongoing leadership development for
classroom experiences, on-the-job learning,
current and rising managers. Training at Agilent takes several forms: face-to-faceff
virtual
classroom events and self-paced e-learning. We are committed to providing an environment in which employees can
tt
expand their knowledge, develop new skills, and contribute their best work. Our culture of continuous development instills in
our employees the behaviors that bring our values to life every day. We encourage our people to stay up-to-date on current
research and technology while enhancing their current skills and growing new skills to meet future needs; we also put special
emphasis on training managers at all levels to effectively communicate, role model and reinforce our values and culture.
Health att
nd Safety. The health and safety ot
f our employees is a top priority for us. Our environmental, health and safety
management system provides a framework for assessing and managing risks relating to health and safety.t We regularly
evaluate and review with senior management the performance of our programs and processes. In response to the COVID-19
pandemic, we took proactive actions to protect the health and safety ot
f our employees, customers, partners and suppliers. In the
U.S., we enacted safety measures, including social distancing protocols, encouraging employees to work from home when
possible, suspending non-essential work travel, implementing various access controls at our facilities, frequently disinfecting
our workspaces and providing appropriate personal protective equipment to employees who are physically present at our
facilities. As COVID-19 conditions improved, we began implementing a phased reopening process, required our U.S.
employees to be fully vaccinated pursuant to federal, state and local guidelines and continued to prioritize health and safety.
We expect to continue to implement appropriate safety measures until the COVID-19 pandemic is contained, and we may take
further actions as government authorities require or recommend or as we determine to be in the best interests of our employees,
customers, partners and suppli
ers.
u
Community. Each year Agilent employees throughout the world devote thousands of volunteer hours to community
volunteer activities with charities and
service activities. Our employees may take up tu
organizations. We also support
a giving program, which provides employees the opportunity to support a broad range of
eligible non-profit organizations in their communities in the areas of health and human services, arts and culture, education and
literacy, environment and conservation, and family and civic betterment.
o six days of paid time off each year forff
u
Information about our Executive Officff
ers
The names of our current executive officers and their ages, titles and biographie
a
s appea
a
r below:
Henrik Ancher-Jensen, 56, has served as our 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 fromff
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.
Rodney Ge
onsalves, 56, 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.
ities for Agilent, including as vice president of Investor Relations, controller, corporate
Gonsalves served in various capac
a
governance and customer finaff
ncing 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 Company.
15
Dominique P. Grau, 62, has served as our Senior Vice President, Human Resources and Global Communications since
November 2018. From August 2014 to October 2018 he served as Senior Vice President, Human Resources. 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 capac
ities
for Agilent and Hewlett-Packard Company.
a
Padraig McDonnell, 50, has served as our Chief Commercial Officer and President, Agilent CrossLab Group since
November 2021. From May 2020 to November 2021, he served as Senior Vice President, Agilent and President, Agilent
CrossLab Ga
roup. From November 2016 to April 2020, he served as our Vice President and General Manager of the Chemistries
and Supplies Division. Prior to that, he served as our Vice President and General Manager of EMEAI Laboratory Solutions
Sales. Mr. McDonnell has previously held a variety of positions with Agilent and Hewlett-Packard Company.
Robert W. McMahon, 53, 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, 60, 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
capac
ities forff Agilent, including as our Vice President and General Manager of the Chemical Analysis Solutions Unit of the
a
Life Sciences and Chemical Analysis Group and Country Manager forff Agilent's China, Japan and Korea Life Sciences and
the Hewlett‑Packard Company and Yokogawa
Chemical Analysis Group. Prior to that, Mr. McMullen served as Controller forff
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, 49, 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, 47, 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.rr 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
joining Agilent, Mr. Tang worked at Wilson Sonsini Goodrich &
various capac
Rosati, a California law firm and Fenwick & West LLP, a California law firm.
ities in Agilent's legal department. Beforeff
a
Jacob Thaysen, 46, has served as our Senior Vice President, Agilent and President, Life Sff
ciences 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 capac
ities 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.
a
ff
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 (https://ww//
w.sec.gov) that contains reports, proxy and information statements and other
information regarding issuers that file electronically.
Our
financial and other
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 filff ed or furnished pursuant to Section 13(a) or 15(d)
Investor Relations website. The address
information can be accessed at our
16
of the Exchange Act as soon as reasonably practicablea
SEC.
after filff ing such material electronically or otherwise furnishing it to the
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
y to our principal executive officer, principal
Standards of Business Conduct (including code of ethics provisions that appl
at
accounting officer
financial officer, principal
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 availablea
by writing to the
company at the address on the cover of this Annual Report on Form 10-K.
a
financial officers)
on our website
and senior
availablea
are
Item 1A. Risk Factors
Business and Strategic Risks
TheTT COVID-19 pandemic has adversely impactm
tt
ed,
operations and financial condition,
and continue
the nature and extent of which are highly
s to ptt
ii
i
tt
ose risks to, certain elemll
ents of our business,
ii
resultsll of
uncertain aii
nd unpredictable.ll
Our global operations expose us to risks associated with public health crises, including epidemics and pandemics such as
COVID-19. The global spread of COVID-19 had, and may continue to have, an adverse impact on our operations, sales and
delivery and supply chains. Many countries including the United States implemented measures such as quarantine, shelter-in-
place, curfew, travel and activity restrictions and similar isolation measures, including government orders and other restrictions
on the conduct of business operations. Due to these measures we experienced significant and unpredictable reductions or
increases in demand for certain of our products. Moreover, these measures caused delays in installations and significantly
impacted our ability to service our customers on site. The COVID-19 pandemic also impacted our supply chain as we
experienced disruptions or delays in shipments of certain materials or components of our products. While many of our
customers have returned to work and economic activity continues to ramp up,u we are unable to accurately predict the full extent
and duration of the impact of the COVID-19 pandemic on our business and operations due to numerous uncertainties, including
the duration and severity of the pandemic, the efficacy and distribution of vaccines and containment measures. As COVID-19
conditions improved, there have been increases in demand for certain of our products, which posed challenges to our supply
chain. If there are supply shortages or delays and we are not able to meet increasing product demand, our results would be
adversely affecff
ted.
Additionally, the COVID-19 pandemic caused significant volatility in U.S. and international markets. The impact of the
pandemic may increase the possibility of uncertainty in the global financial markets, high inflation and extended economic
downturn, which could reduce our ability to incur debt or access capital and impact our results and financial condition even
after local conditions improve. There are no assurances that the credit markets or the capital markets will be available to us in
the future or that the lenders participating in our credit facilities will be able to provide financing in accordance with their
contractual obligations.
To the extent COVID-19 conditions improve, the duration and sustainability of any such improvements will be uncertain
and continuing adverse impacts and/or the degree of improvement may vary dramatically by geography and by business. The
actions we take in response to any improvements in conditions, such as our return-to-office plans, may also vary widely by
geography and by business and will likely be made with incomplete information; pose the risk that such actions may prove to
be premature, incorrect or insufficient; and could have a material, adverse impact on our business and results of operations.
U.S. President Biden has issued an Executive Order requiring federal employees and covered contractors to be
vaccinated against COVID-19. Additionally, on November 4, 2021, the U.S. Department of Labor’s Occupational Safety and
Health Administration (OSHA) issued a COVID-19 Vaccination and Testing Emergency Temporary Standard requiring all
employers with 100 or more employees to ensure that their employees are fully vaccinated or tested for COVID-19 on at least a
weekly basis. Notwithstanding legal and timing uncertainties relating to these regulations, we have implemented requirements
regarding mandatory vaccines for U.S. based covered employees, subject to approved exemptions. Additional vaccine and
testing mandates may be announced in other jurisdictions in which we operate our business. While it is not currently possible to
predict with any certainty the exact impact the new regulations would have on us, our suppliers and our customers, the
implementation of such government mandated vaccination or testing mandates may impact our ability to retain current
employees and attract new employees and result in labor disruptions. Further, implementation could also have similar
consequences for our subcontractors, which may impact their ability to deliver the goods and services we need from them.
17
Our operatingii
or do not grow as anticipated.
tt
resultsll and financialii
conditiii on could be harmed if the markets into wtt
hich we sell oll ur products decline
t to foreff
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 difficul
cast and may be cancelled by our customers. In
ff
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 capita
al 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,
due to sales,
pricing pressures could intensify. Since a significant portion of our operating expenses is relatively fixed in naturet
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 introduc
tt
e successful new products and services in a timtt
ely mll
anner to att
through frequent new product and service intr
products and services may become obsolete,tt and our operating rn
oductions, rapid technologic
esultsll may suffer.
ll
ii
al changes and changingii
ddress increased competm ittt iontt
standards, our
industrytt
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 facff
tors, including our ability to:
tely allocate our research and development spending to products and services with higher growth
•
•
•
properly identify customer needs and predict futff urett
innovate and develop new technologies, services and applications;
a
appropria
prospects;
successfully commercialize new technologies in a timely manner;
needs;
•
• manufacture and deliver new products in sufficient volumes and on time;
•
•
•
•
diffeff
price our products competm itively;
anticipate our competitors' development of new products, services or technological innovations; and
process.
control product quality in our manufacturing
rentiate our offerings from our competitors' offerings;
tt
In addition, if we fail to accurately predict future customer needs and preferences or fail to produce viablea
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
provide drug components like active pharmaceutical ingredients, we face risks that those drug programs may be cancelled upon
clinical trial faiff
lures.
General economic conditions
tt
may aa
dversely affect our operating rn
esultsll and financ
ii
ial condition.
tt
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:
•
•
•
•
d demand for our products, delays in the shipment of orders, or increases in order cancellations;
reduced
increased risk of excess and obsolete inventories;
increased price pressure for our products and services; and
greater risk of impaim rment to the value, and a detriment to the liquidity, of our investment portfolio.
18
Failure to adjudd st our purchases due to changing mn
ly affect our income.ee
demand could adverserr
arket conditions
tt
or failure to accurateltt y ell
stimate ott
ur customers'
Our income could be harmed if we are unable to adjust our purchases to reflect market fluctuations, including those
caused by the seasonal naturet
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 forff
some of our products. In addition, some of
the parts that require custom design are not readily available fromff
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
tors. In order to secure components for the production of products, we may continue to enter
a
capac
into non-cancelablea
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.
ity constraints or other facff
Demand forff
ll
developme
nt budgets and on government funding policll
ies.
some of our products and services depends odd
n thett
ii
capital
spending pn
olicies of our custome
tt
rs, research and
a
Our customers include pharmaceutical companies, laborat
ories, universities, healthcare providers, government agencies
and public and private research instituttt
ions. 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 capita
ions in the research and
development budgets at these organizations could have a significant effect on the demand for our products and services.
tuate due to changes in available resources, consolidation, spending priorities, general
Research and development budgets flucff
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 duedd
ast, including
changes in spending authorizations and budgetary priorities for our products and services. If demand for our products and
services is adversely affecff
ted, our revenue and operating results would suffer.
al spending policies of these entities. Fluctuat
to factors that can be difficult to forec
ff
tt
Our business
ii
willii
suffer if wi
e are not able t
ll o rtt
etain aii
nd 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 veryrr
competitive within the regions that we operate. However, there is intense competition for certain highly technical specialties in
a
geographic
, and it may become more difficult to hire and retain our key employees.
areas where we continue to recruit
rr
Economic, politiii cal, foreign currency and other risks associatedtt with i
tt nteii
rnational sales and operations
tt
could all
dversely
affect our results of operations.
tt
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. Foreign currency movements for the year ended
October 31, 2021 had an overall favorable impact on revenue of approximately 2 percentage points when compared to the same
period last year. When movements in foreign currency exchange rates have a positive impact on revenue, they will also have a
negative impact by increasing 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 fact
ors, including:
ff
•
•
•
•
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, as well as, new tariffs, trade protection measures, import or
export licensing requirements, new or different customs dutie
barriers;
tariffs iff mposed by the U.S. on goods from other countries and tariffsff
including the tariffs enacted by the U.S. government on various imports
government on certain U.S. goods;
from China and by the Chinese
s, trade embargoes and sanctions and other trade
imposed by other countries on U.S. goods,
m
d
19
•
•
•
•
•
•
•
negative consequences from changes in or differing interpretations of laws and regulations, including those
related to tax and import/ett xport;
diffiff culty in staffiff ng and managing widespread operations;
ring labor
a
diffeff
diffeff
ring protection of intellectual property;
unexpected changes in regulatory requirements;
geopolitical uncertainty or turmoil, terrorism and war; and
impact of public health crises, including pandemics and epidemics, such as COVID-19 on the global economy.
regulations;
We sell our products into many countries and we also source many components and materials for our products fromff
and
manufacture our products in various countries. Future tariffs aff
nd tariffs already implemented could have negative impact on our
business, results of operations and financial condition. It may be time-consuming and expensive for us to alter our business
operations in order to adapta
the scope and duration of which, if implemented,
remains uncertain, 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.
to any such change. Further, additional tariffs,ff
Most of our accounting and tax processes including general accounting, cost accounting, accounts payablea
, accounts
receivable and tax funct
ions are centralized at locations in India and Malaysia. If economical, political, health or other
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.
ff
In addition, although the majoa rity of our products are priced and paid forff
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 finaff
on 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.
ons as counterparties. The weakening or failure of financial instituti
ncial instituti
tt
tt
Our strategi
tt
tt
c init
iat
ii
ivtt es to adjust our cost structure could have long-term adverse effects on our business,
ii
and we may
not realizeii
the opeo rational or financial benefitsii
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 fromff
such actions. Any of the above
circumstances could have an adverse effecff
t on our business and operating results and financial condition.
t
Our acquisitions,
tt
strategi
results that are different than expecxx
stments and alliance
ted.
ii
c inve
tt
ll
finaii nciali
s, jointii
ventures, exitingii
ii
of businesse
s and divestiture
ii
s may result in
t
and divestitures,
from our own or the investment community's expectations in a given fisca
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 generally expect to complete several transactions per
tt
year. In addition, we may decide to exit a particular business within our product portfolio. As a result of such transactions, our
l quarter or over the long
financial results may differff
term. We may have difficulty developing, manufacturing and marketing the products of a newly acquired company in a way
that enhances the performanc
e 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.
ff
ff
20
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
and sales and distribution
with a different company culture, management team, business model, business infrastructurett
ally dispersed, decentralized operations and personnel. Depending on the size
methodology and assimilate and retain geographic
and complexity of an acquisition, our successful integration of the entity depends on a variety of facff
tors, including introducing
new products and meeting revenue targets as expected, the retention of key employees and key customers, increased exposure
to 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 difficul
t to manage. Any difficulties in the assimilation of acquired businesses into our control system could harm our
operating results or cause us to faiff
l to meet our financial reporting obligations.
a
ff
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,
property to be divested from the intellectual
facilities and employees to the purchaser, identify and separate the intellectual
d costs previously associated with the divested assets or business. In addition, if
property that we wish to keep and reduce fixeff
customers of the divested business do not receive the same level of service fromff
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 ot
f 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.
t
The impacm t of co
ll
onsolidat
iontt
and acquisitiii ons of competitors
ii
is difficult to predict and may harm our business.
ii
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.
Regulatory, Legal and Compliance Risks
ii
If we fail to maintain
eall d to att
ll which could l
an effectivtt e syst
eport our financial
of internal controls,ll we may not be able to accurateltt y r
loss of investor confidence in our financial statements and have an adverse effect on our stock
emtt
s
ll
ll
results,
price.ee
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
on investor confidence in our
to lose confidence in our reported financial information, which could have a negative effect
financial statements, the trading price of our stock and our access to capita
al.
ff
rs and we are subject
to v
tt
ant expenses, and if we fail to maintain
ons may cause us to incur significi
ons, we may be forced to recall pll
uch
ertain
roducts and cease their manufacture and distribution, and we could be subject tott
arious governmental regue
ii
satisfactor
lations. ComCC plim ance
with o
tt
y cr
r changes in s
ii
omplim ance
tt
with c
ii
ii
ii
tt
Our custome
ll
regulati
regulati
ll
civil oii
ii
r crimi
ii nal
penalties.
Our customers and we are subject to various significant international, fede
ral, state and local regulations, including but
not limited to regulations in the areas of health and safety,t
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. Global privacy laws,
including the EU's General Data Protection Regulation ("GDPR”), Brazil’s Lei Geral de Protecao de Dados, and the California
ff
ff
21
Consumer Privacy Act, apply to our activities involving the processing of personal data, both in relation to our product and
service offerings and the management of our workforce. The global proliferation of privacy laws, with governmental authorities
around the world passing or considering passing legislative and regulatory proposals concerning privacy and data protection,
continues to result in new requirements regarding the handling of personal data, with many such laws imposing significant
penalties forff
percent of total company revenue under the GDPR). Each
ff
o four
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.
non-compliance (including possible fines of up tu
ff
We must also comply with complex forei
gn 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 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
s.
Standards Organization, as well as regulation by other agencies such as the FDA. We also must comply with work safety r
If we fail to adequately address any of these regulations, our businesses could be harmed.
ulerr
t
We are subject to e
e
uch regulati
ve regulation by tb
tt
xtee ensi
ons could harm our reputation, business,
hett
complym with s
ii
tt
tt
FDA and certain similarll
foreign regulatory
ll
agencies, and failure to
ii
financ
ial conditiontt
and resultsll of operations.
ff
ff
a
a
ct to regulation by the FDA and certain similar forei
A number of our products and services are subject to regulation by the FDA, the U.S. Department of Health and Human
gn regulatory agencies. In addition, a number
Services, the Centers for Medicare & Medicaid Services and certain similar forei
of our products and services may in the future be subjeu
gn regulatory
agencies. These regulations govern a wide variety of product and service-related activities, from quality management, design
ing, manufacturing, promotion, sales and distribution. In addition, we are subject to inspections by
and development to label
If we or any of our suppliers, distributors or customers fail to comply with FDA and
these and other regulatory authorities.
other appl
icable regulatory requirements or are perceived to potentially have failed to comply, we may facff e, among other
things, warning letters; adverse publicity affecting both us and our customers; investigations or notices of non-compliance,
fines, injunctions, and civil or criminal penalties; import or export restrictions; partial suspensions or total shutdown of
production facilities or the imposition of operating restrictions; suspension or revocation of our license to operate, 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. In addition, the global regulatory environment has become increasingly stringent for our products and
services. For example, the EU is going to enforce new requirements, known as the EU In Vitro Diagnostic Regulation (the “EU
IVDR”), which imposes stricter requirements forff
the marketing and sale of in vitro diagnostics in the European Union. These
new regulations are more stringent in a variety of areas, including clinical requirements, quality systems and post-market
surveillance activities. The new EU IVDR requirements become effective in May 2022. Failure to meet these requirements
could adversely impact our business in the EU and other regions that tie their product registrations to the EU requirements.
22
Some of our products are subject to particularly
tt
uch regulat
ions
e
failure to comply wll
could hll
tt
ith s
ll
arm our busines
complexll
s.
ii
tt
regulat
ions
e
such as regulations
tt
of toxic substance
tt
s, and
Some of our products and related consumablea
s 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 the 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 adapta
to regulatory
icable countries as these requirements change. If we fail to comply with the notification, record-keeping
requirements in all appl
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.
a
Our business
ii
may sa uffer if wi
e faiff
l tii o ctt
omplym with gtt
rr
overnme
nt contractingii
laws aw nd regulati
e
ons.
We derive a portion of our revenue from direct and indirect sales to U.S. federal, 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, increased pricing pressure or suspension from future government contracting. If our
new contracts
government contracts are terminated, if we are suspended from government work, or if our ability to compete forff
is adversely affecff
ted, our business could suffer.
Our reputation, abilityii
ii
r business
ees, agents ott
to do business
ii
tt
partners.
employm
ii
and financ
ial statements may ba
e harmed by improper
m
conduct by ab
ny of our
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, employment practices and workplace behavior,
export and import compliance, money laundering and data privacy. 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
effeff ct on our business, reputation and financial statements.
Environi mental contamination from past and ongoingii
tt
operations
could subject us to stt
tt
ubstantial
ii
liabil
itll iett s.
Certain properties we have previously owned or leased are undergoing remediation for subsurface contamination.
Although we are indemnified forff
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 forff
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 Siemens Healthineers (formerly 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 liabia lities associated with any potential
environmental contamination at any of those properties or facilities, we may be exposed to material liabila
ity 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 significff ant costs or liabilities could
have an adverse effect on results of operations.
23
tt
We are subject to environmental laws and regulat
ions
e
that expose us to att
number of risks and could r
ll
esult in
signi
ificant liabil
itll iett s and costs.
ii
ct to liabilities for environmental contamination, and these liabilities may be substant
Our current and historical manufacturing and research and development processes and facilities are subject to various
foreign, federal, state and local environment protection and health and safety laws and regulations. As a result, we may become
subjeu
ial. Although our policy is to apply
strict standards for environmental protection and health and safety at
t our sites inside and outside the United States, we may not
be aware of all conditions that could subject us to liabia lity. Further, in the event that any future climate change legislation
would require that stricter standards be imposed by domestic or international environmental regulatory authorities, we may be
required to make certain changes and adaptaa
tions to our manufacturing processes and facilities. We cannot predict how changes
will affect our business operations or the cost of compliance to us, our customers or our suppliers. Failure to comply with these
aws and regulations could result in civil, criminal, regulatory, administrative or
environmental protection and health and safety l
contractual sanction, including fines, penalties or suspensions, restrictions on our operations and reputational damage.
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.
u
t
Third parties may claimll
ii
expenses or be prevented from sellill ngii
that we are infringing
their i
products or services.
ii nteii
llecll
licensingii
tual property,tt and we could suffer significi
ant litigii
ation or
property
From time to time, third parties may claim that one or more of our products or services infringe their intellectual
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
tt
property litigation and could divert our management and key personnel from our business operations.
uncertainty of intellectual
t
A claim of intellectual
property infringement could force us to enter into a costly or restrictive license agreement, which might
terms or at all, could require us to redesign our products, which would be costly and time-
not be available under acceptablea
consuming, and/or could subject us to significant damages or to an injunction against the development and sale of certain of our
property portfolio may not be useful in asserting a counterclaim, or negotiating a license,
products or services. Our intellectual
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 favorabl
e terms or at all.
ff
tt
t
tt
tt
t
Third parties may infringe
g on
ur rights.
resources enforcin
n
ii
our intellecll
tual property,tt
and we may suffer competm ittt ivtt e injuii
ry or expend significi
ant
Our success depends in large part on our proprietary technology, including technology we obtained through acquisitions.
property rights, including patents, copyrights, trademarks and trade secrets, as well as
sh our proprietary rights. If we do not enforce our intellectual
We rely on various intellectual
confidentiality provisions and licensing arrangements, to establia
property rights successfully, our competitive position may suffer, which could harm our operating results.
t
tt
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.
tt
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
property rights quickly or at all. In some circumstances, we may choose to not pursue
infringement and enforce our intellectual
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
market share and could result in lost revenues. Furthermore,
countries, which could make it easier for competitors to capture
some of our intellectual property is licensed to others which may allow them to compete with us using that intellectual property.
a
t
tt
t
We are subject to e
costs and risks
ii
complim ance
volving corporate gtt
.ee
of noncompliance
ll
ii
tt
overnance and public disclosll ure expec
ee
tt
tations
and regulati
ll
ons that impactm
We are subject to changing rules and regulations promulgated by a number of governmental and self-regulatory
organizations, including the SEC and NYSE, as well as evolving investor expectations around corporate governance and
environmental and social practices and disclosures. These rules and regulations continue to evolve in scope and complexity, and
many new requirements have been created in response to laws enacted by the U.S. and foreign governments, making
24
compliance more difficul
regulations, as well as any risk of noncompliance, could adversely impact us.
ff
t and uncertain. The increase in costs to comply with such evolving expectations, rules and
Regue
tt
lations
increase the cost of certain mii
ii
related to “conflict miner
sed in mii
etaltt s ull
als” may ca
anufacturing our products.
ause us to incur additional
tt
expenses and could limi
ii hett
t t
ii
supply all
nd
We are subject to the rules of the SEC which require disclosures by public companies of specified minerals, known as
that are necessary to the functionality or production of products manufactured or contracted to be
conflict minerals,
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 fromff
the Democratic Republic
of Congo or an adjoining country. Our ongoing implementation of these rules 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.
Operational Risks
tt
If we are unable t
not achieve desired efficff
uccessfullyll manage the consolidat
o s
iencies, and our abiliii tyii
and streamlininll
to deliver products to our custome
iontt
ll
tt
ll
f oo
rs could bll
g on
e disdd rupted.
tt
ur manufacturingii
operations, we may
Although we utilize manufacturing facilities throughout the world, we have consolidated, and may furthe
r consolidate,
our manufacturing operations to certain of our plants to achieve efficiencies and gross margin improvements. Additionally, we
our acquisitions into our supply chain and manufacturing processes,
typically consolidate the production of products fromff
which are technically complex and require expertise to operate. If we are unable to establia
sh 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.
ff
Our operating rn
esultsll may suffer if oi ur manufacturingii
capacityii does not matchtt
the demdd
and for our products.
our production capac
Because we cannot immediately adapta
to rapidly changing market
ity may exceed our production requirements.
conditions, when demand does not meet our expectations, our manufacturing capac
then our fixed costs associated with excess
If during an economic downturn we had excess manufacturing capac
ity would adversely affect our gross margins and operating results. If, during a general market upturn or an
manufacturing capac
upturn in one of our segments, we cannot increase our manufacturing capac
ity 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
inabila
ity could materially and adversely limit our ability to improve our results.
ity and related cost structures
a
ity,
a
a
a
a
t
Dependence on contract manufacturingii
ll
ervices, ms
y s
third-party package deliver
r
tt
reputati
operate effectivtt ely.ll
on. Dependence on outsourced information technology
and outsourcing other portions of oo
ay adversely affect our abilitll y t
tt
ll
tt
tt
and other administ
rativ
o b
ii
hain, incl
ur supply cll
s and
ii
ring products to market and damage our
ott
our abilitll y t
tions may impairm
uding logistic
ff
e func
ii
tt
ff
As part of our efforts to streamline operations and to manage costs, we outsource aspects of our manufacturing processes
ions and continue to evaluate additional outsourcing. If our contract manufacturers or other outsourcers fail to
and other funct
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
roviders experiences a
to perform is largely outside of our control. If one or more of the third-party package delivery prr
significant disruption in services or institutes a significant price increase, we may have to seek alternative providers, our costs
could increase, and the delivery orr
f our products could be prevented or delayed. Additionally, changing or replacing our contract
manufacturers, logistics 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
25
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.
If we suffer a loss
ll
harmed.
to our factorie
tt
s, faciliii tiii es or distribu
tt
tion system due to catastr
tt
ophe, our operations
tt
could be seriously
ff
ff
ff
a
ories in California
Our factories, facilities and distribution system are subject to catastrophic loss due to fire, flood,
terrorism, public health
crises, increasing severity or freque
ncy of extreme weather events, or other climate-change related risks. For example, in the
first quarter of fiscal year 2020, the outbreak of COVID-19 in China led to an extension of the Lunar New Year holiday, which
adversely impacted our business and results, reduced the number of selling days and otherwise impacted our supply chain. In
addition, several of our facilities could be subject to a catastrophic loss caused by earthquake due to their locations. Our
, and our production facilities in Japan, are all located in areas
production facilities, headquarters and laborat
with above
-average seismic activity. If any of our facilities were to experience a catastrophic loss, it could disrupt our
a
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 capabi
lity 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 financial condition will be harmed
by a catastrophic loss.
a
If we experience a significant disruptiu on in, or breach in s
ent new systems and software successfully,ll our busines
ii
ii
ecurityii
of, our informat
s could be adversely affected.
iontt
rr
to implm emll
technology systems
yy
, os
r if wi
ff
e fail
We rely on several centralized information technology systems throughout our company to provide products and
services, keep finaff
ncial 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. For example, in December 2020 it was widely reported that SolarWinds, an information technology
company, was the subject of a cyberattack that created security vulnerabilities for thousands of its clients. We identified an
impacted SolarWinds server and promptly took steps to contain and remediate the incidents. While we believe that there were
no disruptions to our operations as a result of this attack, other similar attacks could have a significant negative impact on our
systems and operations. 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 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.
Financial and Tax Risks
Our retireme
ii
ff
nt and post retirement pension plans are subject to f
inanc
tt
ial market risks that could adversely affect our
future resultsll of operations and cash flows.
ff
We have significant retirement and post retirement pension plan assets and obligations. The performanc
e 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.
ff
26
Changes in tax laa
awll
s,w unfavorable resolution of tax examinati
ii
ons, or exposure to additiii onal tax laa
iall bilitll iett s could hll
ave a
matertt
ial adverse effect on our resultsll of operations, financial conditiontt
.yy
and liqll uidityii
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.
a
t
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 liabia lities involves dealing with uncertainties in the application of complex tax laws and
regulations in multiple jurisdictions. There can be no assurance that the outcomes fromff
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 effecff
t on our financial results and condition.
tt
ii
If tax incentives change or cease to be in effect, our income taxes could i
ll ncr
i
ease signifi
cantly.ll
We benefit from tax incentives extended to our foreign subsidiaries to encourage investment or employment. Singapore
has 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 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
tt
debt and may incur other debt in the future, which could all
dversely affect our financial condition,
ii
liquidit
y att
nd resultsll of operations.
We are party to a $1.35 billion five-year unsecured credit facility that will expire on March 13, 2024. Furthermore, we
are permitted pursuant to the credit agreement to establia
sh incremental facilities of up to $500 million. As of October 31, 2021,
ilities. On June
we had no borrowings outstanding under the credit facff
ility and we had no borrowings under the incremental facff
18, 2021, we increased the maximum amount of our commercial paper program to $1.35 billion. As of October 31, 2021, we
had no borrowings outstanding under our U.S. commercial paper program.
also currently have outstanding an aggregate
principal amount of $2.7 billion in senior unsecured notes. 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 forff
other purposes, including
capita
acquisitions, stock repurchases and dividends; and
limiting our flexibility in planning for or reacting to changes in our business and our industry.
al expenditures,
tt
Our credit facility imposes restrictions on us, including restrictions on our ability to create liens on our assets and engage
in certain types of sale and leaseback transactions and the ability of our subsidiaries to incur indebtedness, and requires us to
ncial ratios. Our abia lity to comply with these ratios may be affeff cted by events beyond
maintain compliance with specified finaff
our control. In addition, the indentures
governing our senior notes contain 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 or noteholders, then, subject to appl
icable cure periods, our outstanding indebtedness could be
declared immediately due and payable.
a
tt
27
We cannot assure that we willii continue
ii
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, capita
al
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.
Adverserr
tt
conditions
investments or impair oii
i
ur liqui
dit
i
y.tt
in the global banking in
nduii
stry ar
nd credit mii
arkets may adversely impactm
the value of our cash
As of October 31, 2021, we had cash and cash equivalents of approxi
mately $1,484 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
ity to access assets such as money market funds that traditionally have been viewed as highly
some cases, result in an inabila
liquid. Any failure of our counterparty financial instituti
ons 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.
a
tt
Item 1B. Unresolved StaffSS
Comments
None.
Item 2. Properties
As of October 31, 2021, we owned or leased a total of approximately 6.6 million square feet of space worldwide. Of that,
we owned approximately 4.6 million square feet and leased the remaining 2.0 million square feet. Our sales and support
facilities occupied a total of approximately 0.8 million square feet. Our manufacturing plants, R&D facilities and warehouse
and administrative facilities occupied approxim
ately 5.8 million square feet. All of our businesses share sales offiff ces throughout
the world.
a
Information about each of our businesses appea
a
rs below:
Life Sciences & Appli
A
ed Markets Btt
usiness. 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, Germany, 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.
Item 3. Legal
e
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.
ff
tt
Item 4. Mine Safety Disclosures
Not applicable.
28
Item 5. Market forff
Securitiett s
tt
the Regist
rant'
e
s C'
omCC mon Equity,tt Relatedtt
PART II
Stockholder MattMM ertt
s arr
nd Issuer Purchases of Equitytt
Our common stock is listed on the New York Stock Exchange with the ticker symbol “A”. As of December 2, 2021,
there were 19,236 common stockholders of record.
The information required by this item with respect to equity compensation plans is included under the captia
on "EquEE ity
in our Proxy Statement for the Annual Meeting of Stockholders to be held March 16, 2022, to be filed
Compensation Plans"
with the Securities and Exchange Commission pursuant to Regulation 14A, and is incorporated herein by reference.
l
STOCK PRICE PERFORMANCE GRAPH
The graph below shows the cumulative total stockholder returnt
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, 2016 and the reinvestment of all dividends.
on our common stock with the cumulative total returntt
Agilent’s stock price performance shown in the following graph is not indicative of future stock price performance. The
data forff
this performance grapha was compiled forff
us by Standard and Poor’s.
Comparison of 5 Years (10/31/2016 to 10/31/2021) Cumulative Total Return
Among Agilent Technologies, the S&P 500 Index,
and the Peer Group Index
$400
$300
$200
$100
$0
10/31/16
10/31/17
10/31/18
10/31/19
10/31/20
10/31/21
Agilent Technologies
S&P 500
Peer Group
Base
Period
INDEXED RETURNS
Years Ending
Company Name / Index
Agilent Technologies . . . . . . . . . . . .
S&P 500 . . . . . . . . . . . . . . . . . . . . . .
Peer Group . . . . . . . . . . . . . . . . . . . .
10/31/2016
100
100
100
10/31/2017 10/31/2018
151.50
132.71
135.90
157.65
123.63
124.70
10/31/2019
178.70
151.73
148.46
10/31/2020
242.91
166.46
165.19
10/31/2021
376.87
237.90
222.11
29
ISSUER PURCHASES OF EQUITY SECURITIES
The tablea
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, 2021. The total number of
shares of common stock purchased by the company during the fiscal year ended October 31, 2021 was 6,072,532 shares.
Period
August 1, 2021 through
August 31, 2021 . . . . . . . . . . . . . . . . . . . .
September 1, 2021 through
September 30, 2021 . . . . . . . . . . . . . . . . . .
October 1, 2021 through
October 31, 2021 . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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)
282,919
283,569
264,003
830,491
$
$
$
$
163.12
172.02
154.47
163.41
282,919
283,569
264,003
830,491
$
$
$
1,667
1,618
1,577
(1)
On February 16, 2021 we announced that our board of directors had approved a new share repurchase program (the
"2021 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 2021 repurchase program authorizes the purchase
of up to $2.0 billion of our common stock at the company's discretion and has no fixed termination date. The 2021
repurchase program which became effective on February 18, 2021, replaced and terminated the 2019 repurchase
program on that date. The 2021 repurchase program does not require the company to acquire a specific number of
shares and may be suspended, amended or discontinued at any time. As of October 31, 2021, all repurchased shares to
date have been retired.
(2)
The weighted average price paid per share of common stock does not include the cost of commissions.
30
Item 6.
[Reserved]
Item 7. Management's D'
iscussion and Analysis of Finii ancial Conditiontt
and Results of Operationtt
s
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 growth opportunities, including for revenue and our end markets, strength and drivers of the
markets into which we sell, sales funnels, our strategic direction, new product and service introductions and the position of our
current products and services, market demand for and adoption of our products, the ability of our products and solutions to
address customer needs and meet industry requirements, our focus on differentiating our product solutions, improving our
customers’ experience and growing our earnings, future financial results, our operating margin, mix, our investments, including
in manufacturing infrastructure, research and development and expanding and improving our applications and solutions
portfolios, expanding our position in developing countries and emerging markets, our focus on balanced capita
al allocation, our
contributions to our pension and other defined benefit plans, impairment of goodwill and other intangible assets, 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, tax valuation allowance and unrecognized tax benefits, the impact of local government
regulations on our ability to pay vendors or conduct operations, our ability to satisfy our liquidity requirements, including
through cash generated from operations, the potential impact of adopting new accounting pronouncements, indemnification,
source and supply of materials used in our products, our sales, our purchase commitments, our capita
al expenditures, the
integration and effects of our acquisitions and other transactions, our stock repurchase program and dividends and the potential
or anticipated direct or indirect impact of COVID-19 on our business that involve risks and uncertainties. Our actual results
to various factors, including
the results contemplated by these forward-looking statements dued
could differ materially fromff
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
ciences, diagnostics and applied chemical markets, providing application focused solutions that include instruments,
in life s
ff
software, services and consumablea
s forff
the entire labora
a
tory workflow.
COVID-19 Pandemic
Both our domestic and international operations have been and continue to be affected by the ongoing global pandemic of
a novel strain of coronavirus (“COVID-19”) and the resulting volatility and uncertainty it has caused in the U.S. and
international markets. During the year ended October 31, 2021, many businesses and countries, including the U.S., continued
applying preventative and precautionary measures to mitigate the spread of the virus including government orders and other
restrictions on the conduct of business operations.
The health and safety of our employees is a top priority for us. In response to the COVID-19 pandemic, we took
proactive actions to protect the health and safety ot
f our employees, customers, partners and suppliers. We enacted safetyt
measures, including social distancing protocols, encouraging employees to work from home when possible, suspending non-
essential work travel, implementing various access controls at our facilities, frequently disinfecting our workspaces and
providing appropriate personal protective equipment to employees who are physically present at our facilities. As COVID-19
conditions improved, we began implementing a phased reopening process, required our U.S. employees to be fully vaccinated
pursuant to federal, state and local guidelines and continued to prioritize health and safety. We expect to continue to implement
appropriate safety measures until the COVID-19 pandemic is contained. We may take further
actions as government authorities
require or recommend or as we determine to be in the best interests of our employees, customers, partners and suppliers.
Currently, most of our employees are still working from home. When we determine it is safe f
to the
office, we will be moving towards a hybrid work model, giving our employees the flexibility to work offsite or at our onsite
locations.
our employees to returntt
orff
ff
ff
The COVID-19 pandemic continues to be dynamic, and near-term challenges across the economy remain. The ongoing
on and resurgence
effects of COVID-19 remain difficult to predict due to numerous uncertainties, including the severity, durati
of the outbreak, new variants, the effectiveness of health and safety measures including vaccines, managing the differen
t pace
of return-to-office in different locations, the pace and strength of the economic recovery, and supply chain pressures, among
others. We will continue to actively monitor the effects of the pandemic and will continue to take appropriate steps to mitigate
the impacts to our employees and on our business results.
d
ff
31
a
Despite the economic challenges duedd
to the COVID-19 pandemic, we ended our fiscal year 2021 with revenue growth of
18 percent year over year. This revenue growth was primarily non-COVID related revenue and came from all of our segments,
s. Revenue growth was also partly due to weakened sales in the prior year as the response to the
key end markets and geographie
early stages of the pandemic caused many of our customers to close or reduce operating capac
In fiscal year 2021, our
overall business performance was strong which also resulted in significant expense increases from our variable pay and long-
term performance plan-earnings per share ("LTPP-EPS") programs, along with sales commission increases year over year,
which was partially offset by the continued cost savings actions which included reduction in travel and non-essential spending
that we implemented last year.
ity.
a
Acquisition
On April 15, 2021 we completed the acquisition of privately-owned Resolution Bioscience, Inc., a biotechnology
company focused on the development and commercialization of next-generation sequencing-based ("NGS") precision oncology
solutions, for $561 million cash plus potential future contingent payments of up tu
o $145 million upon the achievement of
certain milestones which are based on certain revenue and technical targets. Resolution Bioscience complements and expands
our capabi
lities in NGS-based cancer diagnostics within our diagnostics and genomics segment and provides us with innovative
a
technology to further serve the needs of the fast-growing precision medicine market. The fair value of the contingent
consideration as of October 31, 2021 was $89 million which included a decrease of $21 million from the estimated fair value as
of the end of our third quarter.
2022 Senior Notes
On January 21, 2021, we redeemed $100 million of the $400 million outstanding aggregate principal amount of our 2022
senior notes dued October 1, 2022. On April 5, 2021, we redeemed the remaining outstanding $300 million of our 2022 senior
notes. The total redemption price of approxi
mately $417 million was computed in accordance with the terms of the 2022 senior
notes as the present value of the remaining scheduled payments of principal and unpaid interest on the notes being redeemed.
During the year ended October 31, 2021, we recorded a loss on extinguishment of debt of $17 million in other income
(expense), net in the consolidated statement of operations. In addition, $1 million of accrued interest, up to but not including the
applicable redemption date, was paid. The make-whole premium less partial amortization of previously deferred interest rate
swap gain together with the amortization of debt issuance costs and discount was recorded in other income (expense), net in the
consolidated statement of operations.
a
2031 Senior Notes
On March 12, 2021, we issued an aggregate principal amount of $850 million in senior notes ("2031 senior notes"). The
2031 senior notes were issued at 99.822% of their principal amount. The 2031 senior notes will mature on March 12, 2031, and
semi-annually on March 12th and September 12th of
bear interest at a fixff ed rate of 2.30% per annum. The interest is payablea
each year and payments commenced on September 12, 2021.
Actual Results
Agilent's net revenue of $6,319 million in 2021 increased 18 percent when compared to 2020. Foreign currency
movements for 2021 had an overall favorable impact on revenue growth of 2 percentage points when compared to 2020. Net
regions and key end markets. The favorable impact of COVID-related
revenue increased in all business segments, geographic
revenue and revenue from our recent acquisition for the year ended October 31, 2021 was not material. Revenue in the life
sciences and appl
ied markets business increased 18 percent in 2021 when compared to 2020. Foreign currency movements had
an overall favorable impact on revenue growth of 2 percentage points in 2021 when compared to 2020. Revenue in the
diagnostics and genomics business increased 24 percent in 2021 when compared to 2020. Foreign currency movements had an
overall favorable impact on revenue growth of 3 percentage points in 2021 when compared to 2020. Revenue in the Agilent
CrossLab ba
usiness increased 16 percent in 2021 when compared to 2020. Foreign currency movements had an overall favorable
impact on revenue growth of 4 percentage points in 2021 when compared to 2020.
a
a
Agilent's net revenue of $5,339 million increased 3 percent in 2020 when compared to 2019. Foreign currency
movements for 2020 had an overall unfavorable impact on revenue growth of 1 percentage point when compared to 2019. In
2020, acquisitions from 2019 had an overall favorable impact of 3 percentage points when compared to 2019. Revenue in the
life sciences and appl
ied markets business increased 4 percent in 2020 when compared to 2019. In 2020 acquisitions from 2019
had an overall favorable impact of 7 percentage points when compared to 2019. Foreign currency movements had no overall
a
32
impact on revenue growth in 2020 when compared to 2019. Revenue in the diagnostics and genomics business increased 2
percent in 2020 when compared to 2019. Foreign currency movements had an overall unfavorablea
impact on revenue growth of
1 percentage point in 2020 when compared to 2019. Revenue in the Agilent CrossLab business increased 3 percent in 2020
when compared to 2019. Foreign currency movements had an overall unfavorablea
impact on revenue growth of 1 percentage
point in 2020 when compared to 2019.
Net income was $1,210 million in 2021 compared to net income of $719 million and $1,071 million in 2020 and 2019,
respectively. Net income in 2021 was impacted by higher sales volume and net gains on fair value of equity securities partially
offset by significant expense increases from our variable pay, share-based compensation expense and sales commissions. Net
income for the year ended October 31, 2020 was impacted by revenue declines in certain of our businesses associated with the
COVID-19 pandemic and increased costs and expenses which included an impairment charge of $98 million related to the
closure of our sequencer development program. Net income for the year ended October 31, 2019 was impacted by a discrete tax
benefit of $299 million related to the extension of the company's tax incentives in Singapore. As of October 31, 2021 and 2020,
we had cash and cash equivalents balances of $1,484 million and $1,441 million, respectively.
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, 2019, we repurchased and retired 10.4 million shares for $723 million under this
authorization. During the year ended October 31, 2020, we repurchased and retired 5.2 million shares for $469 million under
this authorization. During the year ended October 31, 2021, we repurchased and retired approxi
mately 3.1 million shares for
18, 2021, the 2019 repurchase program was terminated and replaced
$365 million under this authorization. Effective February
by the new share repurchase program. The remaining authorization under the 2019 repurchase plan of $193 million expired on
February 18, 2021.
a
rr
On February 16, 2021 we announced that our board of directors had approved a new share repurchase program (the "2021
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 2021 repurchase program authorizes the purchase of up to $2.0 billion of
our common stock at the company's discretion and has no fixed termination date. The 2021 repurchase program which became
effective on February 18, 2021, replaced and terminated the 2019 repurchase program on that date. The 2021 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, 2021, we repurchased and retired 3.0 million shares for $423 million under this
authorization. As of October 31, 2021, we had remaining authorization to repurchase up to approximately $1.577 billion of our
common stock under the 2021 repurchase program.
During the year ended October 31, 2021, cash dividends of 0.776 per share, or $236 million were declared and paid on
the company's outstanding common stock. During the year ended October 31, 2020, cash dividends of 0.720 per share, or $222
million were declared and paid on the company's outstanding common stock. During the year ended October 31, 2019, cash
dividends of 0.656 per share, or $206 million were declared and paid on the company's outstanding common stock.
On November 17, 2021 we declared a quarterly dividend of $0.210 per share of common stock, or approximately $63
million which will be paid on January 26, 2022 to shareholders of record as of the close of business on January 4, 2022. The
timing and amounts of any future dividends are subject to determination and approval by our board of directors.
Looking forward, as we continue to navigate the impacts of the COVID-19 pandemic, our top priority continues to be the
health and safety of our employees, customers and community, as well as supporti
ng our customers' operations. We expect to
face additional logistical pressures, such as longer lead times and limited sources of supply in the near term that we will
continue to mitigate through various sourcing strategies. We also remain focused on improving our customers’ experience,
differentiating product solutions and productivity. We continue supporting our customers' needs related to the development of
new therapiea
l year 2021 and the continued recovery in our end markets, we
remain optimistic about our long-term growth opportunities in all of our end markets.
s and vaccines. With our strong results in fisca
u
ff
33
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 assumptim ons believed to be
reasonable. Although these estimates are based on management's best knowledge of current events and actions that may impact
l results may be different from the estimates. An accounting policy is deemed to be critical if it
the company in the future, actuat
requires an accounting estimate to be made based on assumptim ons 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, retirement and post-retirement plan assumptim ons, valuation of goodwill and purchased
intangible assets and accounting for income taxes.
Revenue Recognition. On November 1, 2018, we adopted Accounting Standard Codification Topic 606, Revenue from
Contracts wtt
ith Customers ("ASC 606").
We enter into contracts to sell products, services or combinations of products and services. Products may include
hardware or software and services may include one-time service events or services performed over time.
We derive revenue primarily from the sale of analytical and diagnostics products and services. A performance obligation
is a promise in a contract to transfer a distinct product or service to a customer and is the unit of account under ASC 606.
Revenue is recognized when control of the promised products or services is transferred to our customers and the performanc
e
obligation is fulfilled in an amount that reflects the consideration that we expect to be entitled in exchange for those products or
services, the transaction price. For equipment, consumablea
s, and most software licenses, control transfers to the customer at a
point in time. We use present right to payment, legal title, physical possession of the asset, and risks and rewards of ownership
as indicators to determine the transfer of control to the customer. Where acceptance is not a forma
lity, the customer must have
documented their acceptance of the product or service. For products that include installation, if the installation meets the criteria
to be considered a separate performanc
e obligation, product revenue is recognized when control has passed to the customer, and
recognition of installation revenue occurs once completed. Product revenue, including sales to resellers and distributors is
reduced for provisions for warranties, returns, and other adjustmd
ents in the period the related sales are recorded.
ff
ff
ff
Service revenue includes extended warranty, customer and software support including: Software as a Service, post
contract support, consulting including companion diagnostics, and training and education. Instrument service contracts and
software maintenance contracts are typically annual contracts, which are billed at the beginning of the contract or maintenance
period. Revenue for these contracts is recognized on a straight-line basis to revenue over the service period, as a time-based
measure of progress best reflects our performance in satisfying this obligation. There are no deferred costs associated with the
service contract, as the cost of the service is recorded when the service is performff
ed. Service calls not included in a support
contract are recognized to revenue at the time a service is performed.
We have sales from standalone software. These arrangements typically include software licenses and maintenance
contracts, both of which we have determined are distinct performance obligations. We determine the amount of the transaction
price to allocate to the license and maintenance contract based on the relative standalone selling price of each performance
obligation. Software license revenue is recognized at the point in time when control has been transferred to the customer. The
revenue allocated to the software maintenance contract is recognized on a straight-line basis over the maintenance period,
which is the contractual term of the contract, as a time-based measure of progress best reflects our performance in satisfying
this obligation. Unspecified rights to software upgrades are typically sold as part of the maintenance contract on a when-and-if-
available basis.
Our multiple-element arrangements are generally comprised of a combination of 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 when control passes to the customer. Service revenue is deferred and recognized over the
contractual period or as services are rendered and accepted by the customer. Our arrangements generally do not include any
provisions for cancellation, termination, or refunds that would significantly impact recognized revenue.
For contracts with multiple performance obligations, we allocate the consideration to which we expect to be entitled to
each performance obligation based on relative standalone selling prices and recognize the related revenue when or as control of
each individual performance obligation is transferred to customers. We estimate the standalone selling price by calculating the
average historical selling price of our products and services per country for each performance obligation. Stand-alone selling
34
prices are determined forff
those standalone selling prices by performance obligations.
each distinct good or service in the contract and then we allocate the transaction price in proportion to
A portion of our revenue relates to lease arrangements. Standalone lease arrangements are outside the scope of ASC 606
and are therefore accounted for in accordance with ASC 842, Leases ("ASC 842") beginning in 2020 and ASC 840, Leases
("ASC 840") for prior periods. Each of these contracts is evaluated as a lease arrangement, either as an operating lease or a
sales-type finance lease using the current lease classification guidance. In a lease arrangement that is a multiple-element
s, the revenue associated with the instrument rental is
arrangement that contains equipment leases and the supply of consumablea
treated under the lease accounting standard ASC 842, whereas the revenue associated with the consumables, the non-lease
component, is recognized in accordance with the ASC 606 revenue standard.
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
a
difficult to make under most economic conditions. The excess balance determined by this analysis becomes the basis for our
asts, managing product rollovers
excess inventory charge. Our excess inventory review process includes analysis of sales forec
than
and working with manufacturing to maximize recovery of excess inventory. If actual market conditions are less favorablea
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.
ff
Retirement and Post-Retirement Benefitff 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
assumptim ons using actuarial concepts within the framework of accounting principles generally accepted in the U.S. Two critical
on plan assets. Other important assumptim ons include
assumptim ons are the discount rate and the expected long-term returntt
expected future salary increases, expected future increases to benefit payments, expected retirement dates, employee turnove
r,
retiree mortality rates, and portfolio composition. We evaluate these assumptions at least annually.
ff
t
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 2021 and 2020, the U.S. discount rates were based on the results of matching expected
the U.S.
plan benefit payments with cash flows froff m a hypothetically constructed bond portfolio. In 2021, discount rates forff
to the increase in the corporate bond rates. For
retiree medical plans increased marginally compared to the previous year dued
2021 and 2020, the discount rates forff
high quality corporate bonds
and in 2021, increased marginally 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 $18 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.
non-U.S. plans were generally based on published rates forff
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 futff ure 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 forff
each year's gains and losses.
In the U.S., target asset allocations for our retirement and post-retirement benefit plans were approximately 80 percent to
equities and approximately 20 percent to fixed income investments as of October 31, 2020 and were changed to approxim
ately
50 percent to equities and approximately 50 percent to fixed income investments as of October 31, 2021. Our Deferred Profit-
Sharing Plan target asset allocation is approximately 60 percent to equities and approximately 40 percent to fixed income
investments. Approximately 1 percent of the retirement and post-retirement plans consists of limited partnerships. Outside the
U.S., our target asset allocation ranges fromff
15 percent to 60 percent to equities, from 38 percent to 85 percent to fixed income
investments, and from zero to 25 percent to real estate, 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, 2021 and 2020 differ fromff
the target
allocation. Our policy is to bring the actual allocation in line with the target allocation.
a
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 fromff
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.
rr
35
t
The expected long-term returntt
on plan assets is estimated using current and expected asset allocations as well as
on assets by 1 percent,
historical and expected returns.
the impact would be $5 million on U.S. pension expense and $10 milion on non-U.S. pension expense. The net periodic pension
and post-retirement benefit costs recorded were a $24 million expense in 2021, $22 million expense in 2020 and $10 million
expense in 2019. The years ended October 31, 2021 and 2020 included a loss on settlement of $1 million and $4 million,
respectively.
Plan assets are valued at fair value. If we changed our estimated returnt
Goodwill and Purchased Intangible Assets. We assess our goodwill and purchased intangible assets for impairment
annually or whenever events or changes in circumstances indicate that the carrying
. 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 quantitative 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 furthe
value may not be recoverablea
r testing will be required.
rr
ff
The guidance includes examplem s 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 performanc
e, 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.
a
ff
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, then we are required to perform a quantitative impairment test on goodwill to identify and
measure the amount of a goodwill impairment loss to be recognized. A goodwill impairment loss, if any, is measured as the
amount by which a reporting unit's carrying value, including goodwill, exceeds its faiff
amount
of goodwill. 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.
r value, not to exceed the carrying
rr
In fiscal year 2021, we assessed goodwill impairment for our three reporting units which consisted of our 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, 2021, our annual impairment test date. Based on the results of our
qualitative testing, we believe that it is more-likely-than-not that the fair value of each reporting unit is greater than its
respective carryrr ing value. 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, 2021, 2020 and 2019.
d
ff hat reflecff
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 t
t the pattern in which the
economic benefits are consumed or used up or a straight-line method ranging from 6 months to 15 years. Our determination of
the fair
value of the intangible assets acquired involves the use of significant estimates and assumptim ons. Specifically, our
ff
determination of the fair value of the developed product technology and in-process research and development ("IPR&D")
acquired involves significant estimates and assumptim ons related to revenue growth rates and discount rates. Our determination
of the fair value of customer relationships acquired involves significant estimates and assumptim ons related to revenue growth
rates, discount rates, and customer attrition rates. Our determination of the fair value of the tradename acquired involves the use
of significant estimates and assumptim ons related to revenue growth rates, royalty rates and discount rates. The company believes
that the fair value assigned to the assets acquired and liabilities assumed are based on reasonable assumptions and estimates that
marketplace participants would use. Actual results could differ materially fromff
alized at
impairment thereafter. When the IPR&D project is
fair value as an intangible asset with an indefinite life and assessed forff
If an
complete, it is reclassified as an amortizablea
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.
purchased intangible asset and is amortized over its estimated useful life.ff
these estimates. IPR&D is initially capita
We continually monitor events and changes in circumstances that could indicate carrying amounts of finit
e-lived
ity of
intangible assets may not be recoverablea
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.
. When such events or changes in circumstances occur, we assess the recoverabila
rr
ff
36
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
a qualitative test for impairment of indefinite-lived intangible assets as of September
calculating its faiff
30, 2021. 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 assets is indicated. During the year ended October 31,
2020, we recorded an impairment of in-process research and development of $90 million related to the shutdown of our
sequencer development program in our diagnostics and genomics segment. During the year ended October 31, 2021 and 2019
there were no impairments of indefinite-lived intangible assets.
r value. We performed
ff
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 facff
tors and adjust our effective income tax
rate on a timely basis. If actuat
these estimates, this could have a material effeff ct on our financial condition
and results of operations.
l results differ fromff
or in
Significant management judgment is also required in determining whether deferred tax assets will be realized in full
part. When it is more-likely-than-not that all or some portion of deferred tax assets may not be realized, a valuation allowance
shed against such deferred tax assets. We consider all available positive and negative evidence on a jurisdiction-
must be establia
by-jurisdiction basis when assessing whether it is more likely than not that deferred tax assets are recoverablea
. We consider
taxablea
evidence such as our past operating results, the existence of losses in recent years and our forecast of futurett
income.
ff
The calculation of our tax liabia lities 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, forff
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
what is currently estimated, which could result in a material impact on income
resolution of tax uncertainties may differ fromff
tax expense. If our estimate of income tax liabila
her charge to expense
ities proves to be less than the ultimate assessment, a furt
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.
ff
Adoption of New Pronouncements
See Note 2, "New Accounting Pronouncements," to the consolidated finaff
ncial statements for a description of new
accounting pronouncements.
37
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. Foreign currency movements for the year ended
October 31, 2021 had an overall favorable impact on revenue of 2 percentage points when compared to the same period last
year. Foreign currency movements for the year ended October 31, 2020, had an overall unfavorablea
impact on revenue of 1
percentage point when compared to 2019. When movements in foreign currency exchange rates have a positive impact on
revenue, they will also have a negative impact by increasing our costs and expenses. We calculate the impact of movements in
foreign currency exchange rates by applying the actual forff eign currency exchange rates in effect during the last month of each
quarter of the current year to both the applicablea
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
thirteen-month period). We may also hedge equity balances denominated in foreign currency on a long-term basis. To the
gn
extent that we are required to pay for all, or portions, of an acquisition price in forei
exchange contracts to reduce the risk that currency movements will impact the U.S. dollar cost of the transaction.
gn currencies, we may enter into forei
ff
ff
Results from Operations
Net Revenue
Years Ended October 31,
2021
2020
2019
2021 over 2020
Change
2020 over 2019
Change
(in millions)
Net revenue:
Products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Services and other . . . . . . . . . . . . . . . . . . . . . . . . $
Total net revenue . . . . . . . . . . . . . . . . . . . . . . . . . . $
4,756
1,563
6,319
$
$
$
3,993
1,346
5,339
$
$
$
3,877
1,286
5,163
19%
16%
18%
3%
5%
3%
Years Ended October 31,
2021
2020
2019
2021 over 2020
Change
2020 over 2019
Change
% of total net revenue:
Products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Services and other . . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
75 %
25 %
100 %
75 %
25 %
100 %
75 %
25 %
100 %
—
—
—
—
Agilent's net revenue of $6,319 million for the year ended October 31, 2021 increased 18 percent when compared to
2020. Foreign currency movements had an overall favorable impact on revenue growth of 2 percentage points in 2021 when
compared to 2020. The favorable impact of COVID-related revenue and revenue from our recent acquisition for the year ended
October 31, 2021 was not material. Net revenue increased in all business segments, geographic
regions and key end markets led
by strong growth from the pharmaceutical, chemical and energy and diagnostics and clinical markets when compared to 2020.
Agilent's net revenue of $5,339 million increased 3 percent in 2020 when compared to 2019. Foreign currency movements had
impact on revenue growth of 1 percentage point in 2020 when compared to 2019.
an overall unfavorablea
a
Product revenue includes revenue generated from the sales of our analytical instrumentation, software and consumablea
s.
Revenue from products increased 19 percent for the year ended October 31, 2021, when compared to 2020. The growth in
product revenue was driven by increased sales within our liquid chromatography and mass spectrometry businesses with
continued strong growth in our nucleic acid solutions and cell analysis businesses.
38
Revenue from products increased 3 percent for the year ended October 31, 2020, when compared to 2019. Revenue in
2020 was impacted by the global COVID-19 pandemic within most of our product lines as customers curtailed equipment
spending at various times when countries around the world were in the lockdown phase of the COVID-19 pandemic. Growth
was dued
to our cell analysis business, automation products and our nucleic acid solutions business. The increase in the cell
analysis business was primarily due to the contributions from our acquisitions and the increased demand for our products forff
use in COVID-19 testing and vaccine research.
Services and other revenue consist of revenue generated from our three business segments: Agilent CrossLab, diagnostics
and genomics and our life science and applied markets businesses. Some of the prominent services in the Agilent CrossLab
business include repair and maintenance on multi-vendor instruments, compliance services and installation services. Services in
the diagnostics and genomics business include consulting services related to the companion diagnostics and nucleic acid
businesses. Services in the life science and applied markets business include repair and maintenance and installation services.
Services and other revenue increased 16 percent in 2021 as compared to 2020. Service revenue from the Agilent
CrossLab business increased 16 percent, with a 3 percentage point favorable currency impact, for the year ended October 31,
2021 when compared to the same period last year. This strength in the Agilent CrossLab service business was evident across
all service regions and from contract services, on-demand repairs and nearly all other service types. Services sold with
instrument sales grew more than twice as fasff
t as the growth in after-market service revenue during that same period. For the
year ended October 31, 2021, service revenue within our diagnostics and genomics business increased 22 percent when
compared to 2020, primarily due to increases from our companion diagnostics and pathology businesses. For the year ended
October 31, 2021, service revenue within our life sciences and applied markets business increased 16 percent when compared to
2020, primarily due to increases from our cell analysis business.
Services and other revenue increased 5 percent in 2020 as compared to 2019. For the year ended October 31, 2020, the
service revenue from the Agilent CrossLab business increased 4 percent when compared to 2019, with a 1 percentage point
unfavorablea
currency impact. This growth for the year ended October 31, 2020 is reflective of the resilience of the contracted
service business throughout the year, as well as the recovery of the on-demand and installation service businesses in the latter
half of 2020, as customer sites gradually reopened following their COVID-19 related closures earlier in the year. Those site re-
openings were fastest in China. For the year ended October 31, 2020, the service revenue from the diagnostics and genomics
business remained flat when compared to 2019. For the year ended October 31, 2020, the service revenue from the life sciences
ied markets business increased 28 percent when compared to 2019. The increase in life sciences and applied markets
and appl
a
service revenue was due to the additional service revenue within the cell analysis business dued
to the Lionheart Technologies
LLC ("BioTek") acquisition.
Net Revenue By Segment
Years Ended October 31,
2021
2020
2019
2021 over 2020
Change
2020 over 2019
Change
(in millions)
Net revenue by segment:
Life sciences and applied markets . . . . . . . . . . . $
Diagnostics and genomics . . . . . . . . . . . . . . . . . $
Agilent CrossLab . . . . . . . . . . . . . . . . . . . . . . . . $
Total net revenue . . . . . . . . . . . . . . . . . . . . . . . . . . $
2,823
1,296
2,200
6,319
$
$
$
$
2,392
1,047
1,900
5,339
$
$
$
$
2,302
1,021
1,840
5,163
18%
24%
16%
18%
4%
2%
3%
3%
a
Revenue in the life sciences and appl
ied markets business increased 18 percent in 2021 when compared to 2020. Foreign
currency movements had an overall favorable impact on revenue growth of 2 percentage points in 2021 when compared to
2020. For the year ended October 31, 2021, we saw revenue growth across all key end markets when compared to the same
period last year. Revenue growth was led by strong demand for our products within the pharmaceutical and the chemical and
energy markets when compared to the same periods last year. Revenue in the life sciences and appl
ied markets business
increased 4 percent in 2020 when compared to 2019. Foreign currency movements had no overall impact on revenue growth in
ied markets was driven by strong growth in the
2020 when compared to 2019. Revenue growth within the life sciences and appl
academia and government, the pharmaceutical and the diagnostics and clinical markets with moderate growth from the food
market partially offset by declines in revenue within the environmental and forensics and chemical and energy markets.
a
a
Revenue in the diagnostics and genomics business increased 24 percent in 2021 when compared to 2020. Foreign
currency movements had an overall favorable impact on revenue growth of 3 percentage points in 2021 when compared to
39
2020. For the year ended October 31, 2021, we saw revenue growth across all key end markets when compared to the same
period last year. Revenue growth was strong within the pharmaceutical market led by performance fromff
our nucleic acid
solutions and biomolecular analysis businesses. Revenue growth was strong within the diagnostics and clinical markets led by
our pathology, companion diagnostics and genomics businesses. Revenue in the diagnostics and genomics
performance fromff
business increased 2 percent in 2020 when compared to 2019. Foreign currency movements had an overall unfavorablea
impact
on revenue growth of 1 percentage point in 2020 when compared to 2019. Revenue growth within the diagnostics and genomics
business was driven by strong growth in our nucleic acid solutions and biomolecular analysis businesses partially offset by
declines in our genomics business.
Revenue in the Agilent CrossLab business increased 16 percent in 2021 when compared to 2020. Foreign currency
movements had an overall favorable impact on revenue growth of 4 percentage points in 2021 when compared to 2020. For the
year ended October 31, 2021, we saw revenue growth across all key end markets led by strong growth from the pharmaceutical
and chemical and energy and food markets when compared to the same period last year. Revenue generated by Agilent
CrossLab increased 3 percent in 2020 when compared to 2019. Foreign currency movements had an overall unfavorablea
impact
on revenue growth of 1 percentage point in 2020 when compared to 2019. Revenue growth within Agilent CrossLab business
was strong within the pharmaceutical and food markets which was partially offset by declines in the academia and government
and clinical and diagnostics markets.
Costs and Expenses
Years Ended October 31,
2021
2020
2019
2021 over 2020
Change
2020 over 2019
Change
(in millions, except margin data)
Gross margin on products . . . . . . . . . . . . . . . . . . . .
56.3 %
Gross margin on services and other . . . . . . . . . . . . .
46.7 %
Total gross margin . . . . . . . . . . . . . . . . . . . . . . . . . .
53.9 %
441
Research and development . . . . . . . . . . . . . . . . . . . . $
Selling, general and administrative . . . . . . . . . . . . . $ 1,619
Operating margin . . . . . . . . . . . . . . . . . . . . . . . . . . .
21.3 %
55.0 %
47.5 %
53.1 %
495
$
$ 1,496
56.7 %
47.3 %
54.3 %
404
$
$ 1,460
15.8 %
18.2 %
1 ppt.
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1 ppt.
(11)%
8%
6 ppts.
(2) ppts.
—
(1) ppt.
22%
2%
(2) ppts.
Total gross margin for the year ended October 31, 2021 increased 1 percentage point when compared to 2020. Total gross
margin increased due to higher sales volume and favorablea
product mix which was partially offset by higher wages and variable
pay, higher shipping and logistics costs, higher intangible amortization expense and higher share-based compensation expense.
Total gross margin for the year ended October 31, 2020 decreased 1 percentage point when compared to 2019. Gross margin
currency
declined due to the impacts of pricing pressure, higher intangible amortization expense, higher wages, net unfavorablea
impact and higher fixeff
d costs related to the new manufacturing facility in Frederick, Colorado, partially offset by lower period
and travel costs.
Gross inventory charges were $29 million in 2021, $28 million in 2020 and $19 million in 2019. Sales of previously
written down inventory were $8 million in 2021, $7 million in 2020 and $6 million in 2019.
Research and development expenses for the year ended October 31, 2021 decreased 11 percent when compared to 2020.
Excluding the intangible and other assets impairments recorded in 2020, research and development expenses for the year ended
October 31, 2021 increased 11 percent due to increased wages and variable pay, higher program investments in our life sciences
and applied markets and diagnostics and genomics businesses, additional expenses related to our recent acquisition, and higher
share-based compensation expense. Research and development expenses for the year ended October 31, 2020 increased 22
percent when compared to 2019. Research and development expenses increased primarily due to intangible and other asset
impairments of $97 million related to the shutdown of our sequencer development program. The increase was also due to higher
wages and additional expenses related to our acquisition of BioTek partially offset by lower discretionary expenditures
including lower travel costs and favora
currency impact.
blea
ff
tt
Selling, general and administrative expenses increased 8 percent in 2021 when compared to 2020. The increase was due
to higher wages and variable pay, higher commissions and higher share-based compensation expense partially offset by a
decrease related to the change in the fair value of contingent consideration for our recent acquisition, lower legal costs and
lower transformational initiatives expenses. Selling, general and administrative expenses increased 2 percent in 2020 compared
to 2019. The increase in selling, general and administrative expenses was due to higher wages, higher intangible amortization
40
expense and higher transformational initiative expenses, which was partially offset by lower discretionary expenditures
including lower travel costs and favorable currency impact.
tt
Total operating margin for the year ended October 31, 2021 increased 6 percentage points when compared to 2020.
Operating margin increased due to higher sales volume and increased gross margin partially offset by increases in wages and
variable pay, commissions, share-based compensation expense and amortization of intangible assets. Total operating margin for
the year ended October 31, 2020, decreased 2 percentage points when compared to 2019. Operating margin declined due to
intangible and other asset impairments, higher wages, higher intangible amortization expense and higher transformational
initiative expenses partially offset by lower discretionary expenditures
currency
impact.
including lower travel costs and favorablea
tt
Interest income for the year ended October 31, 2021, 2020 and 2019 was $2 million, $8 million and $36 million,
respectively. The decrease in interest income in 2021 and 2020 was primarily due to lower interest rates for our cash and cash
equivalents.
Interest expense for the years ended October 31, 2021, 2020 and 2019 was $81 million, $78 million and $74 million,
respectively, and relates to the interest charged on our senior notes, credit facilities, commercial paper and the amortization of
the deferred loss recorded upon termination of the forward starting interest rate swap c
ontracts partially offset by the
amortization of deferred gains recorded upon termination of interest rate swap ca
ontracts.
a
At October 31, 2021, our headcount was approximately 17,000 compared to 16,400 in 2020.
Other income (expense), net
For the year ended October 31, 2021, other income (expense), net includes income of $7 million related to the provision
of site service costs to, and lease income from, Keysight Technologies, Inc. ("Keysight"). The costs associated with these
services are reported within income from operations. Other income (expense), net
includes a $17 million loss on
extinguishment of debt and net gains on the fair value of equity securities of approximately $98 million.
For the year ended October 31, 2020, other income (expense), net includes income of $12 million related to the provision
of site service costs to, and lease income from, Keysight. The costs associated with these services are reported within income
from operations. Other income (expense), net also includes net gains on the fair value of equity securities of approximately $27
million and income of $22 million related to the settlement of our legal claim against Twist Bioscience Corporation.
For the year ended October 31, 2019, other income (expense), net includes income of $12 million related to the provision
of site service costs to, and lease income from, Keysight and $9 million loss on the extinguishment of debt.
Income Taxes
Years Ended October 31,
2020
2019
2021
(in millions)
Provision (benefit) forff
income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
150
$
123
$
(152)
For 2021, our income tax expense was $150 million with an effective tax rate of 11 percent. For the year ended October
31, 2021, our effective tax rate and the resulting provision for income taxes were impacted by the discrete benefit of
s of
$93 million related to the release of tax reserves in various jurisdictions due to audit settlements and the expiration of statutet
limitations. The income taxes for the year ended October 31, 2021 also include the excess tax benefits fromff
stock-based
compensation of $29 million.
For 2020, our income tax expense was $123 million with an effective tax rate of 14.6 percent. For the year ended
October 31, 2020, our effective tax rate and the resulting provision for income taxes were impacted by foreign income taxed at
lower rates.
For 2019, our income tax benefitff was $152 million with an effective tax rate of (16.5) percent. For the year ended
October 31, 2019, our effective tax rate and the resulting provision for income taxes were significantly impacted by the discrete
benefit of $299 million related to the extension of the company’s tax incentive in Singapore.
a
41
a
a
We have negotiated a tax holiday in Singapore.
The tax holiday provides a lower rate of taxation on certain classes of
income and requires various thresholds of investments and employment or specific types of income. In December 2018, the tax
holiday in Singapore
was renegotiated and extended through 2027. As a result of the incentive, the impact of the tax holiday
decreased income taxes by $35 million, $71 million, and $368 million in 2021, 2020, and 2019, respectively. The benefit of the
tax holiday on net income per share (diluted) was approximately $0.11, $0.23, and $1.16 in 2021, 2020 and 2019, respectively.
Of the $1.16 benefit of the tax incentives on net income per share (diluted) in 2019, $0.94 of the benefit relates to one-time
a
items fromff
the extension of the company’s tax incentive in Singapore.
With these jurisdictions and the U.S., it is reasonably possible that there could be significant changes to our unrecognized
of limitation or a tax audit settlement which will
tax benefits in the next twelve months due to either the expiration of a statutet
be partially offset by an anticipated tax liability related to unremitted forei
gn 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.
ff
The calculation of our tax liabia lities 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
all U.S. and other tax jurisdictions, we recognize potential liabilities for anticipated tax audit
uncertainty in income taxes, forff
issues based on our estimate of whether, and the extent to which, additional taxes and interest will be due.dd
The ultimate
what is currently estimated, which could result in a material impact on income
resolution of tax uncertainties may differ fromff
tax expense. If our estimate of income tax liabilities proves to be less than the ultimate assessment, a furthe
r 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.
ff
Segment Overview
Through October 31, 2021, we have three business segments comprised of the life sciences and appl
a
ied markets
business, diagnostics and genomics business and the Agilent CrossLab business.
Life Sciences and Applied Markets
a
Our life sciences and applied markets business provides appl
ication-focused solutions that include instruments and
customers to identify, quantify and analyze the physical and biological properties of substances and
software that enablea
products, as well as enable customers in the clinical and life sciences research areas to interrogate samplm es at the molecular and
cellular level. Key product categories include: liquid chromatography ("LC") systems and components; liquid chromatographya
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; cell
information
management and analytics; labora
tory automation and robotic systems; dissolution testing; vacuum pumps and measurement
a
technologies.
laboratory software for sample tracking;
imaging systems; microplate reader;
Net Revenue
Years Ended October 31,
2021
2020
(in millions)
2019
2021 over 2020
Change
2020 over 2019
Change
Net revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
2,823
$
2,392
$
2,302
18%
4%
Life science and applied markets business revenue in 2021 increased 18 percent compared to 2020. Foreign currency
movements had an overall favorable impact on revenue growth of 2 percentage points in 2021 when compared to the same
period last year. Geographically, revenue increased 21 percent in the Americas with no currency impact, increased 22 percent
42
in Europe with a 5 percentage point favorable currency impact and increased 14 percent in Asia Pacific with a 3 percentage
point favorable currency impact. In 2021, revenue increases were broad based across our portfolio driven primarily by liquid
chromatography, liquid chromatography mass spectrometry, cell analysis and spectroscopy products when compared to the
same period last year.
End market revenue performance in 2021 was mixed with pharmaceutical, chemical and energy, diagnostics and clinical
and food markets delivering strong results, academia and government delivering moderate results and forensics and
environmental markets delivering modest results. The revenue growth in the pharmaceutical end market was driven by liquid
chromatography, liquid chromatography mass spectrometry and cell analysis products led by broad based strength across all
regions. Revenue growth in the chemical and energy market was mainly driven by strength in spectroscopy, vacuum, gas
chromatography, and gas chromatographya
mass spectrometry products with broad based strength across regions. Revenue
growth in the food and diagnostics and clinical markets was across all products and regions. Revenue growth in the academia
and government end market was moderate with strong growth in cell analysis partially offset by declines in gas phase mass
spectrometry and spectroscopy products. Environmental and forensics delivered modest growth with vacuum products
delivering strong growth and the rest of the products delivering modest results.
Life science and applied markets business revenue in 2020 increased 4 percent compared to 2019. Foreign currency
movements for 2020 had no overall impact on revenue growth when compared to 2019. Acquisitions had an overall favorable
impact on revenue growth of 7 percentage points when compared to 2019. Geographically, revenue increased 13 percent in the
currency impact, decreased 2 percent in Europe with no currency impact and
Americas with a 1 percentage point unfavorablea
increased 1 percent
liquid
chromatography mass spectrometry and cell analysis products fromff
our acquisitions, primarily in the Americas, were partially
offset by declines in other parts of the portfolio when comparem
in Asia Pacific with no currency impact. In 2020, revenue increases in our automation,
d to the same period last year.
End market revenue performance in 2020 was mixed with academia and government and diagnostics and clinical
markets delivering strong growth and the pharmaceutical and food markets delivering moderate growth which was partially
offset by chemical and energy and forensics and environmental markets. In 2020, despite the unfavorablea
impact fromff
COVID-19, revenue growth in the academia and government and pharmaceutical and diagnostics and clinical markets was
primarily driven by strong performance of our cell analysis products fromff
the Lionheart Technologies LLC ("BioTek")
acquisition. The growth in the diagnostics and clinical business was also due to the strength in liquid phase mass spectrometry
and cell analysis products.
Looking forward, despite short term uncertainties and the adverse effects of the COVID-19 pandemic, we are optimistic
about our long-term growth opportunities in the life sciences and appl
ied markets as our broad portfolio of products and
solutions are well suited to address customer needs. We anticipate growth from our new product introductions and acquisitions
in the last couple of years 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 in the long term.
a
Gross Margin and Operating Mn
arginMM
The following tablea
shows the life sciences and appl
a
ied markets business' margins, expenses and income from operations
for 2021 versus 2020, and 2020 versus 2019.
Years Ended October 31,
2021
2020
2019
2021 over 2020
Change
2020 over 2019
Change
(in millions, except margin data)
Total gross margin . . . . . . . . . . . . . . . . . . . . . . . . . .
Research and development
. . . . . . . . . . . . . . . . . . . $
Selling, general and administrative . . . . . . . . . . . . . $
Operating margin . . . . . . . . . . . . . . . . . . . . . . . . . . .
59.8 %
246
721
25.6 %
Income fromff
operations . . . . . . . . . . . . . . . . . . . . . . $
722
59.2 %
219
650
22.9 %
548
$
$
$
61.0 %
216
646
23.5 %
542
$
$
$
1 ppt.
12%
11%
3 ppts.
32%
(2) ppts.
1%
1%
(1) ppt.
1%
impacted by higher
Gross margin increased 1 percentage point in 2021 compared to 2020. Gross margin was favora
sales volume which was partially offset by higher wage and variable pay, higher material costs and unfavorablea
currency impact
and hedging losses. Gross margin decreased 2 percentage points in 2020 compared to 2019. Gross margin declined due to the
blea
increased impact of pricing pressures and a net unfavorablea
product mix and material cost savings.
currency movements partially offset by favora
impact fromff
blya
ff
ff
43
Research and development expenses increased 12 percent in 2021 when compared to 2020. Research and development
to higher wage and variable pay, higher program investments in informatics and cell analysis,
expenses increased dued
unfavorablea
currency impact and higher share-based compensation expense. Research and development expenses increased 1
percent in 2020 when compared to 2019. Research and development expenses increased due to higher wages and additional
expenses related to the BioTek acquisition partially offset by lower discretionary spending and favorablea
gn
currency movements.
impact froff m forei
ff
Selling, general and administrative expenses increased 11 percent in 2021 compared to 2020. Selling, general and
administrative expenses increased due to higher wages and variable pay, higher commissions, higher share-based compensation
expense and unfavorablea
currency movements. Selling, general and administrative expenses increased 1 percent in 2020
compared to 2019. Selling, general and administrative expenses increased due to higher wages and additional expenses related
to the BioTek acquisition partially offset by favorable impact from foreign currency movements and lower travel costs.
Operating margin increased 3 percentage points in 2021 compared to 2020. Operating margin increased due to higher
impact of currency on revenue which was partially offset by higher wages and variable pay,
sales volume and favorablea
unfavorablea
impact of currency on expenses and higher share-based compensation. Operating margin decreased 1 percentage
point in 2020 compared to 2019. Operating margin declined due to additional expenses related to our recent acquisitions and
unfavorablea
to pricing pressures partially offset by operational savings and favorable currency impact.
gross margin duedd
Income from Operations
Income fromff
operations in 2021 increased by $174 million or 32 percent when compared to 2020 on a revenue increase
operations in
of $431 million. The increase in income from operations was primarily due to higher sales volume. Income fromff
2020 increased by $6 million or 1 percent when compared to 2019 on a revenue increase of $90 million. The increase in income
from operations was mainly due to the impact of the BioTek acquisition.
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.
customers in the clinical and life sff
Our diagnostics and genomics business is comprised of six areas of activity providing active pharmaceutical ingredients
s, which
("APIs") for oligo-based therapeutics as well as solutions that include reagents, instruments, software and consumablea
enablea
ciences 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 enablea
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
a
oligonucleotides under pharmaceutical good manufacturing practices ("GMP") conditions for use as API in an emerging class
Third, our pathology solutions business is focused on product
of drugs that utilize nucleic acid molecules forff
offerings
includes
for cancer diagnostics and anatomic pathology workflows. The broad portfolio of offerings
immunohistochemistry ("IHC"), in situ hybridization ("ISH"), hematoxylin and eosin ("H&E") staining and special staining.
te with a number of major pharmaceutical companies to develop new potential tissue and liquid-based
Fourth, we also collabora
pharmacodiagnostics, also known as companion diagnostics, which may be used to identify patients most likely to benefit from
nd flow
a specific targeted therapy. Fifth, the reagent partnership business is a provider of reagents used for turbidimetry a
cytometry. Finally, our biomolecular analysis business provides complete workflow solutions,
nts,
rr
s and software, for quality control analysis of nucleic acid samples. Samples are analyzed using quantitative and
consumablea
qualitative techniques to ensure accuracy in further genomics analysis techniques utilized in clinical and life science research
applications.
including instrume
disease therapy.
a
a
rr
44
Net Revenue
Years Ended October 31,
2021
2020
(in millions)
2019
2021 over 2020
Change
2020 over 2019
Change
Net revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
1,296
$
1,047
$
1,021
24%
2%
Diagnostics and genomics business revenue increased 24 percent
in 2021 compared to 2020. Foreign currency
movements for 2021 had an overall favorable impact on revenue growth of 3 percentage points when compared to the same
period last year. Geographically, revenue increased 35 percent in the Americas with a 1 percentage point favorable currency
impact, increased 12 percent in Europe with a 5 percentage point favorable currency impact and increased 16 percent in Asia
Pacific with a 2 percentage point favorable currency impact. The increase in the Americas was driven by strong performance in
our nucleic acid solutions and genomics portfolios. In Europe, we saw strong demand for our genomics solutions as well as an
increase in our companion diagnostics and pathology businesses. In Asia Pacific, revenue growth was driven by our pathology
and genomics product portfolios.
In 2021 revenue performance in the diagnostics and genomics business was led by double-digit revenue growth in our
nucleic acid solutions, pathology and genomics businesses. The broad-based growth in the genomics product portfolio was
driven by our next generation sequencing quality control product portfolio. Pathology testing volume returning
to pre-pandemic
levels drove strong growth throughout all pathology product families. All key end markets had revenue increases when
compared to 2020.
tt
Diagnostics and genomics business revenue in 2020 increased 2 percent compared to 2019. Foreign currency movements
had an overall unfavorablea
impact on revenue growth of 1 percentage point in 2020 when compared to 2019. Geographically,
revenue increased 2 percent in the Americas with no currency impact, increased 1 percent in Europe with no currency impact
and increased 7 percent in Asia Pacific with no currency impact. The increase in the Americas was driven by strong
performance in the nucleic acid solutions and reagent partnership businesses. Revenue growth in the Americas was partly offset
by a decline in the pathology and genomics business driven by the COVID-19 related reduction in routine and cancer testing, as
well as the closure of academic and research laborat
ories. In Europe, strong revenue from our biomolecular analysis business
was partially offset by the COVID-19 related declines from our genomics business. In Asia Pacific, revenue growth was driven
by the pathology and biomolecular analysis businesses.
a
In 2020 revenue performance in the diagnostics and genomics business was led by strong revenue growth in the nucleic
acid solutions and biomolecular analyses businesses. This was partly offset by a COVID-19 related reduction in routine and
ories. The diagnostics and clinical research end
cancer testing, as well as the closure of most academic and research laborat
markets remain strong long-term and growing driven by an aging population and lifestyle developments such as poor diet and
physical inactivity.
a
Looking forward, we are optimistic about our long-term growth opportunities in our end markets and continue to invest
in expanding and improving our applications and solutions portfolio. We remain positive about our growth in our end markets
as our product portfolio around OMNIS, PD-L1 assays and SureFISH continues 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, and with our newly opened and planned
extension of our nucleic acid solutions production facility in Frederick, Colorado, we are well positioned to serve more of the
market demand. The acquisition of Resolution Bioscience will expand our capabi
lities in NGS-based cancer diagnostics and
provide innovative technology to further serve the needs of the fast-growing precision medicine market. We will continue to
invest in research and development and seek to expand our position in developing countries and emerging markets.
a
45
Gross Margin aii
nd Operatingii Marginii
The following tablea
shows the diagnostics and genomics business' margins, expenses and income from operations for
2021 versus 2020, and 2020 versus 2019.
Years Ended October 31,
2021
2020
2019
2021 over 2020
Change
2020 over 2019
Change
(in millions, except margin data)
Total gross margin . . . . . . . . . . . . . . . . . . . . . . . . . .
Research and development . . . . . . . . . . . . . . . . . . . . $
Selling, general and administrative . . . . . . . . . . . . . $
Operating margin . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income fromff
operations . . . . . . . . . . . . . . . . . . . . . . $
52.8 %
128
283
21.0 %
273
$
$
$
51.9 %
114
238
18.3 %
192
$
$
$
54.7 %
125
248
18.2 %
185
1 ppt.
12%
19%
3 ppts.
42%
(3) ppts
(9)%
(4)%
—
3%
Gross margin increased 1 percentage point in 2021 when compared to 2020. Gross margin increased dued
to higher sales
volume more than offsetting higher wages, variable pay, inventory charges and logistics expenses. Gross margin decreased 3
percentage points in 2020 when compared to 2019. Gross margin was impacted by unfavorablea
d
product mix and higher fixeff
costs related to the new manufacturing facility in Frederick, Colorado, partially offset by lower period and travel costs.
Research and development expenses increased 12 percent in 2021 when compared to 2020. Research and development
expenses included higher program investments related to satisfying regulatory requirements such as the EU IVDR guidelines,
wages and variable pay, and additional expenses related to our recent acquisition which were partially offset by the shutdown of
the sequencer development program in 2020. Research and development expenses decreased 9 percent in 2020 when compared
to 2019. Research and development expenses decreased dued
to the shutdown of our sequencer development program and a
reduction in discretionary expenditures
including travel costs.
t
Selling, general and administrative expenses increased 19 percent in 2021 when compared to 2020. Selling, general and
administrative expenses increased due to higher commissions, share based compensation expenses, higher wages and variable
pay. Selling, general and administrative expenses decreased 4 percent in 2020 when compared to 2019. Selling, general and
including travel costs partially offset by an
administrative expenses decreased due to a reduction in discretionary expenditures
increase in wages.
t
Operating margin increased 3 percentage points in 2021 when compared to 2020. Operating margin improved as revenue
growth more than offset the increase in commissions, wages and variable pay. Operating margin was flat in 2020 when
compared to 2019. Operating margin was aided by savings in operating expenses which were offset by gross margin decline.
Income from Operations
operations in 2021 increased by $81 million or 42 percent when compared to 2020 on a revenue increase of
Income fromff
$249 million. Income fromff
operations in 2020 increased by
$7 million or 3 percent when compared to 2019 on a revenue increase of $26 million. The increase was driven by gains from
higher volume and lower operating expenses more than offsetting the gross margin percentage decline.
operations increased due to strong sales performance. Income fromff
Agilent CrossLab
The Agilent CrossLab business spans the entire lab wa
ith 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.a Key product categories in consumablea
s include GC and LC columns, sample
ory instrument supplies. Services include startup,
preparation products, custom chemistries, and a large selection of laborat
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 consumablea
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
tt
46
Net Revenue
Total net revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . $
2,200
$
1,900
$
1,840
16%
3%
Years Ended October 31,
2021
2020
(in millions)
2019
2021 over 2020
Change
2020 over 2019
Change
Agilent CrossLab ba
usiness revenue increased 16 percent in 2021 when compared to 2020. Foreign currency movements
for 2021 had an overall favorable impact on revenue growth of 4 percentage points when compared to 2020. Geographically,
revenue increased 13 percent in the Americas with no currency impact, increased 15 percent in Europe with a 6 percentage
point favorable currency impact and increased 18 percent in Asia Pacific with a 5 percentage point favorable currency impact.
During the year ended October 31, 2021, the solid growth across the regions reflected consistently high demand for products
and services across the entire product portfolio and end markets. Revenue growth also reflected last year's weakened sales when
many of our customers closed their sites or reduced their operating capac
ity in response to the COVID-19 pandemic.
a
usiness revenue increased 3 percent in 2020 when compared to 2019. Foreign currency movements
Agilent CrossLab ba
impact on revenue growth of 1 percentage point in 2020 when compared to 2019. Geographically,
had an overall unfavorablea
revenue was flat in the Americas with a 1 percentage point unfavorablea
currency impact, increased 2 percent in Europe with a 1
percentage point favorable currency impact and increased 7 percent in Asia Pacific with a 1 percentage point unfavorablea
currency impact. As a consequence of the COVID-19 related impact on global commerce in 2020, consumablea
sales growth has
been low single digits in comparison to 2019 in most countries excluding China. In addition, the COVID-19 related customer
site closures have brought a temporary lull in our delivery of on-demand services and installation services, which has been
reopen. Consumable sales in China and the contracted service business
recovering in the latter half of the year as customer labsa
end markets, the pharmaceutical market and the
across most regions have seen solid gains throughout 2020. Among our majora
food market generated the strongest revenue growth when compared to 2019.
Looking forward, the Agilent CrossLab products and services are well positioned to continue their success in our key end
markets and with a growing installed base of instruments to support. We have been taking advantage of digital and remote
capabi
s to customers and will continue to do so. Geographically, the business is well
a
diversified across all regions to take advantage of local market opportunities and to hedge against weakness in any one region.
lities to offer services and consumablea
Gross Margin and Operating Mn
arginMM
The following tablea
versus 2020 and 2020 versus 2019.
shows the Agilent CrossLab business' margins, expenses and income from operations for 2021
Years Ended October 31,
2021
2020
2019
2021 over 2020
Change
2020 over 2019
Change
(in millions, except margin data)
Total gross margin . . . . . . . . . . . . . . . . . . . . . . . . . .
Research and development . . . . . . . . . . . . . . . . . . . . $
Selling, general and administrative . . . . . . . . . . . . . $
Operating margin . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income fromff
operations . . . . . . . . . . . . . . . . . . . . . . $
52.3 %
60
473
28.1 %
618
$
$
$
52.2 %
58
417
27.2 %
516
$
$
$
51.8 %
58
421
25.8 %
475
—
5%
13%
1 ppt
20%
—
—
(1)%
1 ppt
9%
Gross margin for products and services was flat
in 2021 when compared to 2020. Higher volumes and targeted price
increases did help elevate margins, but those benefits were offset by higher service delivery costs, higher variable pay and
higher hedging losses. Gross margin for products and services was relatively flat in 2020 when compared to 2019. Gross
as well as improved productivity in
margin benefited from lower service delivery costs which included travel, parts and labor
impact froff m currency
manufacturing in the consumables business. Those operational gains were offset by a net unfavorablea
movements.
a
ff
Research and development expenses increased 5 percent in 2021 when compared to 2020. Research and development
on digital service
investment within the Agilent CrossLab business increased due to higher wages and a continued focus
offerings. Research and development expenses were relatively flat in 2020 when compared to 2019. The higher wages and
ff
47
variable pay in research and development expenses were offset by lower travel costs and the reduction of other discretionary
.
expenditures
t
Selling, general and administrative expenses increased 13 percent in 2021 when compared to 2020. Selling, general and
administrative expenses increased duedd
to higher wages and variable pay, sales commissions and share-based compensation
expense. Selling, general and administrative expenses decreased 1 percent in 2020 when compared to 2019. Selling, general and
currency movements, reduced travel and training by the sales organization,
administrative expenses decreased duedd
lower sales commissions, and a reductd
which were partially offset by higher wages.
ion in discretionary expenditures
to favorablea
tt
Operating margin increased 1 percentage point in 2021 when compared to 2020. Operating margin grew slightly in 2021
due to higher sales volume offset by higher wages and variable pay, higher service delivery costs and hedging losses. Operating
margin increased 1 percentage point in 2020 when compared to 2019. The increase was primarily due to the growth in revenue
while lowering service delivery and selling costs and the reduction of discretionary expenditures,
partially offset by higher
wages.
t
Income from Operations
Income fromff
operations in 2021 increased by $102 million or 20 percent when compared to 2020 on a revenue increase
of $300 million. Income fromff
operations in 2020 increased by
operations increased primarily due to higher sales. Income fromff
$41 million or 9 percent when compared to 2019 on a revenue increase of $60 million. The increase was primarily due to the
growth in revenue while lowering service delivery and selling costs and the reduction of discretionary expenditures,
partially
offset by higher wages.
tt
Financial Condition
Liquidit
y att
ii
nd Capita
altt Resources
We believe our cash and cash equivalents, cash generated from operations, and ability to access capita
al markets and
for at least the next twelve months, our liquidity requirements, both globally and domestically,
credit lines will satisfy,ff
including the following: working capita
al 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. Our sources and uses of cash were not materially impacted by COVID-19 to date. We have not identified any
material liquidity concerns as a result of the COVID-19 pandemic. We will continue to monitor and assess the impact
COVID-19 may have on our business and financial results.
onomic stimulus legislation was passed in many countries in response to COVID-19. In March 2020 in the U.S., the
Coronavirus Aid, Relief, and Economic Security Act ("CARES Act") was enacted to provide for tax relief and government
loans, subsidies and other relief forff
entities in affected industries. In March 2021 in the U.S., the American Rescue Plan Act
("ARP Act") was enacted. The ARP Act strengthens and extends certain federal programs enacted through the CARES Act and
other COVID-19 relief measures and establia
shes new federal programs. As of October 31, 2021, the CARES Act, the ARP Act
and other government benefits outside the U.S. did not have a material impact on our consolidated financial statements and
related disclosures.
Our financial position as of October 31, 2021 consisted of cash and cash equivalents of $1,484 million as compared to
$1,441 million as of October 31, 2020.
We may, fromff
time to time, retire certain outstanding debt of ours through open market cash purchases, privately-
negotiated transactions or otherwise. Such transactions, if any, will depend on prevailing market conditions, our liquidity
requirements, contractual
restrictions and other factors.
t
48
Net Cash Provideddd
by Operating Activities
Net cash provided by operating activities was $1,485 million in 2021 as compared to $921 million provided in 2020 and
income taxes was approximately $211 million in 2021 compared to income
$1,021 million provided in 2019. Net cash paid forff
taxes paid of $361 million, which included a one-time payment of $231 million related to the transfer of intellectual
property, in
2020 and $159 million in 2019. For the years ended October 31, 2021, 2020 and 2019, other assets and liabilities used cash of
$14 million, $182 million and $40 million, respectively. The cash outflow for the year ended October 31, 2021 in other assets
and liabilities was primarily due to tax payments and changes in deferred revenue. The cash outflow in the year ended October
31, 2020 was largely the result of increased income tax payments, interest payments on senior notes and changes in deferred
revenue. Cash outflow for the year ended October 31, 2019 in other assets and liabilities is primarily due to tax payments and
interest on senior notes.
tt
In 2021, the change in accounts receivable used cash of $128 million, $107 million in 2020, and $106 million in 2019.
Days' sales outstanding as of October 31, were 64 days in 2021, 63 days in 2020 and 61 days in 2019. The change in accounts
payablea
provided cash of $64 million in 2021, $2 million in 2020 and $29 million in 2019. Cash used in inventory was $136
d to
million in 2021, $68 million in 2020 and $36 million in 2019. Inventory days on-hand increased to 98 days in 2021 comparem
93 days in 2020 and increased compared to 97 days in 2019. In the year ended October 31, 2021, we increased our inventory
levels to meet our customer needs in response to the COVID-19 pandemic and to compensate forff
long lead time in ordering
from our suppliers.
The change in the employee compensation and benefits liabia lity was $112 million for year ended October 31, 2021
to an increase in the vacation
compared to cash provided of $29 million in 2020 and $23 million in 2019. This was largely dued
liabia lity and variable and incentive pay liability. We paid approxi
mately $119 million in 2021 under our variable and incentive
pay programs compared to $79 million in 2020 and $118 million in 2019. The decrease in the amount for variable and incentive
pay programs paid in 2020 was primarily due to changes made for certain incentive pay programs which were paid annually
versus semi-annually as was done in 2019.
a
We made no contributions to our U.S defined benefit plans in 2021, 2020 and 2019. We contributed $19 million in 2021
and $31 million in 2020 and $21 million 2019 to our non-U.S. defined benefit plans, respectively. We did not contribute to our
U.S. post-retirement benefit plans in 2021, 2020 and 2019. Our non-U.S. defined benefit plans are generally funded ratably
throughout the year. The increase in 2020 mainly related to $12 million additional contribution in the Netherlands. 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 2022. We expect to
contribute $19 million to our non-U.S. defined benefit plans during 2022.
Net Cash UseUU d in InvII
esting Activities
Net cash used in investing activities in 2021 was $749 million and in 2020 was $147 million as compared to net cash
used of $1,590 million in 2019.
Investments in property, plant and equipment were $188 million in 2021, $119 million in 2020 and $155 million in 2019.
fiscal year 2022 will be $300 million. In 2021 we invested $546 million in a business
Our anticipated capital expenditures forff
and intangible assets, net of cash acquired forff
our acquisition of Resolution Bioscience compared to no acquisitions in 2020 and
$1,408 million invested in our acquisition of two businesses in 2019. In 2021 cash used to purchase fair value investments was
$22 million compared to $20 million outlay in 2020 and $23 million in 2019.
Net CashCC
Used in Financ
FF
ing Activities
Net cash used in financing activities in 2021 was $696 million compared to $717 million in 2020 and $299 million in
2019.
Treasury Stock Repurchases
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, 2019, we repurchased and retired 10.4 million shares for $723 million under this
49
authorization. During the year ended October 31, 2020, we repurchased and retired 5.2 million shares for $469 million under
this authorization. During the year ended October 31, 2021, we repurchased and retired approxi
mately 3.1 million shares for
$365 million under this authorization. Effective February 18, 2021, the 2019 repurchase program was terminated and replaced
by the new share repurchase program. The remaining authorization under the 2019 repurchase plan of $193 million expired on
February 18, 2021.
a
On February 16, 2021 we announced that our board of directors had approved a new share repurchase program (the
"2021 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 2021 repurchase program authorizes the purchase of up to
$2.0 billion of our common stock at the company's discretion and has no fixed termination date. The 2021 repurchase program
which became effective on February
18, 2021, replaced and terminated the 2019 repurchase program on that date. The 2021
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, 2021, we repurchased and retired 3.0 million shares for $423
million under this authorization. As of October 31, 2021, we had remaining authorization to repurchase up tu
mately
$1.577 billion of our common stock under the 2021 repurchase program.
o approxi
a
rr
Dividends
For the years ended October 31, 2021, 2020 and 2019 cash dividends of $236 million, $222 million and $206 million
were paid on the company's outstanding common stock, respectively. On November 17, 2021 we declared a quarterly dividend
of $0.210 per share of common stock, or approximately $63 million which will be paid on January 26, 2022 to shareholders of
record as of the close of business on January 4, 2022. The timing and amounts of any future dividends are subject to
determination and approval by our board of directors.
Creditdd Facilities
On March 13, 2019, we entered into a credit agreement with a group of financial instituti
ons which, as amended,
a $1 billion five-year unsecured credit facility that will expire on March 13, 2024 and incremental term loan
provides forff
facilities in an aggregate amount of up to $500 million. On April 21, 2021, we entered into an incremental assumptim on
agreement, pursuant to which the aggregate amount available forff
borrowing under the revolving credit facility was increased to
incremental facilities was refreff shed to remain at $500 million. As of both
$1.35 billion and the aggregate amount available forff
ility and we had no borrowings under the
October 31, 2021 and 2020, we had no borrowings outstanding under the credit facff
the year ended October 31, 2021.
incremental facilities. We were in compliance with the covenants for the credit facility during
dd
tt
Commercialii Papera
In May 2020, we established a U.S. commercial paper program, under which the company may issue and sell unsecured,
short-term promissory notes in the aggregate principal amount not to exceed $1.0 billion with up to 397-day maturities. On
June 18, 2021, we increased the authorized maximum amount of notes that may be outstanding to $1.35 billion. At any point in
time, the company intends to maintain available commitments under its revolving credit facility in an amount at least equal to
under the program may be borrowed, repaid and re-
the amount of the commercial paper notes outstanding. Amounts availablea
borrowed from time to time. The proceeds from issuances under the program may be used for general corporate purposes. As of
October 31, 2021, we had no borrowings outstanding under our U.S. commercial paper program. We had borrowings of
$75 million outstanding under the U.S. commercial paper program as of October 31, 2020.
Long-term Dr
ebt
2022 Senior Notes
On September 13, 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 fixff ed rate of 3.20% per annum. The interest is payablea
semi-annually on April 1st and October 1st of each year
and payments commenced on April 1, 2013.
50
On January 21, 2021, we redeemed $100 million of the $400 million outstanding aggregate principal amount of our 2022
senior notes dued October 1, 2022. On April 5, 2021, we redeemed the remaining outstanding $300 million of our 2022 senior
mately $417 million was computed in accordance with the terms of the 2022 senior
notes. The total redemption price of approxi
notes as the present value of the remaining scheduled payments of principal and unpaid interest on the notes being redeemed.
During the year ended October 31, 2021, we recorded a loss on extinguishment of debt of $17 million in other income
(expense), net in the consolidated statement of operations. In addition, $1 million of accrued interest, up to but not including the
applicable redemption date, was paid. The make-whole premium less partial amortization of previously deferred interest rate
swap gain together with the amortization of debt issuance costs and discount was recorded in other income (expense), net in the
consolidated statement of operations.
a
2023 Senior Notes
On June 21, 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 fixff ed rate of 3.875% per annum. The interest is payablea
semi-annually on January 15th and July 15th of each year
and payments commenced January 15, 2014.
2026 Senior Notes
On September 22, 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 fixff ed rate of 3.05% per annum. The interest is payablea
semi-annually on March 22nd and September 22nd
of each year and payments commenced March 22, 2017.
In February 2016, Agilent executed three forward-st
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 (loss) 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 aa
greements at October 31,
2021 was $5 million.
arting pay fixed/receive variable interest rate swaps forff
ff
2029 Senior Notes
On September 16, 2019, the company issued an aggregate principal amount of $500 million in senior notes ("2029 senior
notes"). The 2029 senior notes were issued at 99.316% of their principal amount. The notes will mature on September 15, 2029,
and bear interest at a fixff ed rate of 2.75% per annum. The interest is payablea
semi-annually on March 15th and September 15th
of each year and payments commenced on March 15, 2020.
In August 2019, Agilent executed treasury lock agreements forff
$250 million in connection with future interest payments
to be made on our 2029 senior notes issued on September 16, 2019. We designated the treasury lock as a cash flow hedge. The
treasury lock contracts were terminated on September 6, 2019 and we recognized a deferred loss of $6 million in accumulated
other comprehensive income (loss) which is being amortized to interest expense over the life of the 2029 senior notes. The
remaining loss to be amortized related to the treasury lock agreements at October 31, 2021 was $5 million.
2030 Senior Notes
On June 4, 2020, we issued an aggregate principal amount of $500 million in senior notes ("2030 senior notes"). The
2030 senior notes were issued at 99.812% of their principal amount. The 2030 senior notes will mature on June 4, 2030, and
bear interest at a fixff ed rate of 2.10% per annum. The interest is payablea
semi-annually on June 4th and December 4th of each
year and payments commenced on December 4, 2020.
2031 Senior Notes
On March 12, 2021, we issued an aggregate principal amount of $850 million in senior notes ("2031 senior notes"). The
2031 senior notes were issued at 99.822% of their principal amount. The 2031 senior notes will mature on March 12, 2031, and
bear interest at a fixff ed rate of 2.30% per annum. The interest is payablea
semi-annually on March 12th and September 12th of
each year and payments commenced on September 12, 2021.
51
Off Bff
alance SheSS et Arrangements att
nd Other
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 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 Commitmentstt
Our cash flows from operations are dependent on a number of facff
tors, 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 capita
periods should be analyzed in conjunction with such
factors.
al resources in future
ff
The following table summarizes our total contractual
amounts recorded in our consolidated balance sheet (in millions):
t
obligations at October 31, 2021 for Agilent operations and excludes
Less than one
year
One to three
years
Three to five
years
More than five
years
Commitments to contract manufacturers and suppliers . . . . $
Other purchase commitments . . . . . . . . . . . . . . . . . . . . . . . .
Retirement plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Transitional pension contributions to our U.S. 401(k) plan .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
832
83
19
3
937
$
$
69
—
—
—
69
$
$
— $
—
—
—
— $
—
—
—
—
—
MM
t Manufac
Commitmett
nts to Contractt
turers and Suppliers.rr 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 drr
ates. 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
ll most of our purchase commitments for inventory within
ff
business needs prior to firm orders being placed. We expect to fulfi
one year.
CC
Other Purchase Commi
tments.tt We have categorized "other purchase commitments" related to contracts with professional
services suppliers. Typically, we can cancel contracts with professional services suppliers without penalties. For those contracts
that are not cancelablea
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 $83 million. Approximately $22
million of the penalties for the new contracts will reduce over the next 12 years.
without penalties, there are termination feeff
s and costs or commitments forff
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, 2021 or October 31, 2020.
52
On Balance SheSS et Arrangements
The following tablea
summarizes our total contractual obligations on our October 31, 2021 balance sheet (in millions):
Less than one
year
One to three years
Three to five years More than five years
Senior notes . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Interest expense . . . . . . . . . . . . . . . . . . . . . . . .
Transition tax . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating leases . . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
— $
76
—
55
131
$
600
129
36
71
836
$
$
300
106
88
25
519
$
$
1,850
171
—
48
2,069
Other long-term liabilities as of October 31, 2021 and October 31, 2020 include $241 million and $323 million,
respectively, related to long-term income tax liabilities. Of these amounts, $117 million and $199 million related to uncertain
tax positions as of October 31, 2021 and October 31, 2020, 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 statutett
of limitations or a tax audit
settlement. The remaining $124 million included in other long-term liabilities relates to the one-time transition tax payable.
Item 7A. Quantittt ati
tt
ve and Qualitll ati
tt
ve Disclosures About Market
rr
Riskii
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 mainly 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
may also hedge equity balances denominated in foreign currency on a long-term basis. We do not currently and do not intend to
speculative trading purposes. To the extent that we are required to pay for all, or
utilize derivative financ
portions, of an acquisition price in forei
gn exchange contracts to reduce the risk that
currency movements will impact the cost of the transaction.
gn currencies, we may enter into forei
ial instruments forff
ff
ff
ff
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
to manage our currency risk. Approximately 53 percent of our
enter into such foreign exchange contracts as are described above
revenue in 2021, 52 percent of our revenue in 2020 and 51 percent of our revenue in 2019 were generated in U.S. dollars. The
overall favorable effect of changes in foreign currency exchange rates, principally as a result of the weakness of the U.S. dollar,
has increased revenue by approximately 2 percentage points in the year ended October 31, 2021. We calculate the impact of
movements in foreign currency exchange rates by applying the actual forff eign 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.
a
We perforff med 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, 2021 and 2020, the analysis indicated
that these hypothetical market movements would not have a material effeff ct 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 swapsa
to modify such market risk.
We performff
ed 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, 2021 and 2020, the sensitivity a
nalyses 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.
t
53
Item 8. Finaii ncial StaSS tements att
u
nd Supplem
entarytt
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, 2021 . . . . . . . . .
Consolidated Statement of Comprehensive Income forff
2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consolidated Balance Sheet at October 31, 2021 and 2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
each of the three years in the period ended October 31, 2021 . . . . . . . . .
Consolidated Statement of Cash Flows forff
each of the three years in the period ended October 31,
Consolidated Statement of Equity for each of the three years in the period ended October 31, 2021 . . . . . . . . . . . . .
Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Page
55
58
59
60
61
62
63
54
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders of Agilent Technologies, Inc.
Opinions on thett Financ
ii
ial Statemtt
rr
ents and Inter
nal
II
Control over Financ
ii
ee
ial Reporti
ngii
We have audited the accompanying consolidated balance sheets of Agilent Technologies, Inc. and its subsidiaries (the
“Company”) as of October 31, 2021 and 2020, and the related consolidated statements of operations, of comprehensive income,
of equity and of cash flows for each of the three years in the period ended October 31, 2021, including the related notes and
each of the three years in the period ended October 31, 2021 appearing under
schedule of valuation and qualifying accounts forff
ncial statements”). We also have audited the Company's internal
Item 15(a)(2) (collectively referred to as the “consolidated finaff
control over financial reporting as of October 31, 2021, based on criteria established in Internal Control - InteII
e
grated
Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
ncial statements referredr
to above present fairly, in all material respects, the financial
In our opinion, the consolidated finaff
position of the Company as of October 31, 2021 and 2020, and the results of its operations and its cash flows
for each of the
three years in the period ended October 31, 2021 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, 2021, based on criteria established in Internal Control - InteII
Framework (2013)
e
grated
issued by the COSO.
ff
s
Change in Accounting Principlei
As discussed in Note 1 to the consolidated finaff
leases in 2020 and the manner in which it accounts for revenue from contracts with customers in 2019.
ncial statements, the Company changed the manner in which it accounts for
Basis for Opinions
ii
The Company's management is responsible for these consolidated finaff
ncial statements, forff 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 rulrr es 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
ncial statements are free of material misstatement,
audits to obtain reasonable assurance about whether the consolidated finaff
whether dued
to error or fraud, and whether effective internal control over financial reporting was maintained in all material
respects.
ncial statements included performing procedures to assess the risks of material misstatement
Our audits of the consolidated finaff
of the consolidated finaff
ncial 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 finaff
ncial 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.
55
As described in Management’s Report on Internal Control Over Financial Reporting, management has excluded Resolution
its assessment of internal control over financial reporting as of October 31, 2021 because it was acquired by
Bioscience fromff
our audit of
the Company in a purchase business combination during 2021. We have also excluded Resolution Bioscience fromff
internal control over financial reporting. Resolution Bioscience is a wholly-owned subsidiary whose total assets and total
revenues excluded from management’s assessment and our audit of internal control over financial reporting represent less than
1% of the related consolidated finaff
ncial statement amounts as of and for the year ended October 31, 2021.
Definitiontt
and Limi
taii
ii
tions of Internal
tt
tt
Control
over FinFF ancial Reportingii
ity of finaff
ncial reporting and the preparation of financial statements forff
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the
reliabila
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 faiff
rly 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
of the company are being made only in accordance with authorizations of management and directors of the
expenditures
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.
t
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.
Criticatt
l Auditdd Matters
tt
The critical audit matter communicated below is a matter arising from the current period audit of the consolidated finaff
ncial
statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or
disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or
complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated
financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate
opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Uncertain TaxTT Positions
As described in Note 6 to the consolidated finaff
ncial statements, the Company has recorded liabilities for uncertain tax positions
of $159 million as of October 31, 2021. As disclosed by management, the estimate of the Company’s tax liabia lities relating to
the application of complex
uncertain tax positions requires management to assess uncertainties and to make judgments about
tax law and regulations in a multitude of jurisdictions. The Company is subject to taxes in the U.S., Singapore and various other
foreign jurisdictions and is subject to examinations of its tax returns
by tax authorities in various jurisdictions around the world.
tt
The Company has a number of years and matters which remain subject to examination by tax authorities in various jurisdictions
to either the expiration of a statute of limitation or a tax
that could result in significant changes to unrecognized tax benefits dued
audit settlement which will be partially offset by an anticipated tax liability related to unremitted forei
gn earnings, where
.
applicablea
a
ff
The principal considerations for our determination that performing procedures relating to uncertain tax positions is a critical
audit matter are the significant judgment by management when determining uncertain tax positions, including a high degree of
estimation uncertainty relative to the numerous and complex tax laws, tax audits, and potential for significff ant adjustments as a
result of such audits. This in turnt
led to a high degree of auditor judgment, effort, and subjectivity in performing procedures to
evaluate the timely identification and accurate measurement of uncertain tax positions. Also, the evaluation of audit evidence
availabla e to support the tax liabilities for uncertain tax positions is complex and required significff ant auditor judgment as the
nature of the evidence is often highly subjective.
56
Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall
opinion on the consolidated finaff
ncial statements. These procedures included testing the effectiveness of controls relating to the
identification and recognition of the liability for uncertain tax positions, and controls addressing completeness of the uncertain
tax positions, as well as controls over measurement of the liability. These procedures also included, among others, testing the
completeness, accuracy, and relevance of information used in the calculation of the liability for uncertain tax positions,
including intercompany agreements, international, fede
ral, and state filff ing positions, and the related final tax returns, testing the
calculation of the liability for uncertain tax positions by jurisdiction, including management’s assessment of the technical merits
of tax positions and estimates of the amount of tax benefit expected to be sustained, testing the completeness of management’s
assessment of both the identification of uncertain tax positions and possible outcomes of each uncertain tax position, and
evaluating the statustt
and results of income tax audits with the relevant tax authorities.
ff
/s/ PricewaterhouseCoopers LLP
San Jose, California
December 17, 2021
We have served as the Company’s auditor since 1999.
57
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 fromff
operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other income (expense), net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income beforeff
taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Provision (benefit) 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,
2021
2020
2019
(in millions, except per
share data)
$
$
$
$
4,756
1,563
6,319
2,078
834
2,912
441
1,619
4,972
1,347
2
(81)
92
1,360
150
1,210
3.98
3.94
304
307
$
$
$
$
3,993
1,346
5,339
1,796
706
2,502
495
1,496
4,493
846
8
(78)
66
842
123
719
2.33
2.30
309
312
3,877
1,286
5,163
1,680
678
2,358
404
1,460
4,222
941
36
(74)
16
919
(152)
1,071
3.41
3.37
314
318
The accompanying notes are an integral part of these consolidated financial statements.
58
AGILENT TECHNOLOGIES, INC.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
(in millions)
Years Ended October 31,
2021
2020
2019
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,210
Other comprehensive income (loss): . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gain (loss) on derivative instruments, net of tax expense (benefit) of $1, $(3) and $(2) . . . . . .
Amounts reclassified into earnings related to derivative instruments, net of tax expense
(benefit) of $4, $0 and $(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign currency translation, net of tax expense (benefit) of $2, $1 and $(10) . . . . . . . . . . . . .
Net defined benefit pension cost and post retirement plan costs: . . . . . . . . . . . . . . . . . . . . . . . .
Change in actuarial net loss, net of tax expense (benefit) of $74, $0 and $(25) . . . . . . . . . . . . .
Change in net prior service benefit, net of tax benefit of $0, $(1) and $(2) . . . . . . . . . . . . . . . .
13
9
1
218
(1)
Other comprehensive income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
240
$
719
$ 1,071
(9)
2
10
(5)
(6)
(8)
(4)
(6)
10
(93)
(6)
(99)
Total comprehensive income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,450
$
711
$
972
The accompanying notes are an integral part of these consolidated financial statements.
59
AGILENT TECHNOLOGIES, INC.
CONSOLIDATED BALANCE SHEET
October 31,
2021
2020
(in millions, except
par value and
share data)
ASSETS
assets:
r
Current
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Short-term investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
d revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ff
Deferre
Short-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other accrued liabia lities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Retirement and post-retirement benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other long-term liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Commitments and contingencies (Notes 3, 13 and 17)
Total equity:
Stockholders' equity:
$
$
$
1,484
91
1,172
830
222
3,799
945
3,975
981
185
820
10,705
446
493
441
—
328
1,708
2,729
220
659
5,316
Preferred stock;$0.01 par value; 125 million shares authorized; none issued and
outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Common stock; $0.01 par value; 2 billion shares authorized; 302 million shares at
October 31, 2021 and 306 million shares at October 31, 2020 issued and outstanding . . .
Additional paid-in-capita
al . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accumulated other comprehensive loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total stockholders' equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total liabilities and stockholders' equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
—
3
5,320
348
(282)
5,389
10,705
$
The accompanying notes are an integral part of these consolidated financial statements.
1,441
—
1,038
720
216
3,415
845
3,602
831
158
776
9,627
354
367
386
75
285
1,467
2,284
389
614
4,754
—
3
5,311
81
(522)
4,873
9,627
60
AGILENT TECHNOLOGIES, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
2021
Years Ended October 31,
2020
(in millions)
2019
Cash flows fromff
operating activities:
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
1,210
$
719
$
1,071
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Share-based compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Excess and obsolete inventory related charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Asset impairment charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Change in fair value of contingent consideration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net gain on equity securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Loss on extinguishment of debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other non-cash expense, net
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Changes in assets and liabilities:
Accounts receivablea
, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Employee compensation and benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Treasury lock agreement payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other assets and liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net cash provided by operating activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash flows fromff
investing activities:
Investments in property, plant and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Proceeds from the sale of property, plant and equipment
. . . . . . . . . . . . . . . . . . . . . . . .
Proceeds from the sale of equity securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Payment to acquire equity securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Payment in exchange for convertible note . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Payment to acquire intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Acquisitions of businesses and intangible assets, net of cash acquired . . . . . . . . . . . . . .
Net cash used in investing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash flows fromff
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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Repayment of senior notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Proceeds from commercial paper . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Repayment of commercial paper . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Repayment of finance leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Purchase of non-controlling interest
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ility and short-term loan . . . . . . . . . . . . . . . . . . . . . .
Proceeds from revolving credit facff
Repayment of debt and revolving credit facility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net cash used in finff ancing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Effect of exchange rate movements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net increase (decrease) in cash, cash equivalents and restricted cash . . . . . . . . . . .
Cash, cash equivalents and restricted cash at beginning of year . . . . . . . . . . . . . . . . . . . .
$$
Cash, cash equivalents and restricted cash at end of year . . . . . . . . . . . . . . . . . . . . . . . . . . $
321
110
14
29
2
(21)
(98)
17
3
(128)
(136)
64
112
—
(14)
1,485
(188)
1
12
(22)
(5)
(1)
(546)
(749)
55
(76)
(788)
(236)
848
(7)
(417)
1,647
(1,722)
—
—
—
—
(696)
3
43
1,447
1,490
Supplemental cash flow information:
Income tax payments, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Interest payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Net change in property, plant and equipment included in accounts payablea
liabilities-increase (decrease) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
and accruedrr
211
76
27
$$
$
$
$
$
308
83
29
28
99
—
(27)
—
8
(107)
(68)
2
29
—
(182)
921
(119)
1
—
(20)
(9)
—
—
(147)
60
(37)
(469)
(222)
499
(4)
—
420
(345)
(4)
—
798
(1,413)
(717)
2
59
1,388
1,447
361
71
$$
$
$
$
238
72
(255)
19
—
—
(4)
9
7
(106)
(36)
29
23
(6)
(40)
1,021
(155)
—
—
(23)
(3)
(1)
(1,408)
(1,590)
54
(16)
(723)
(206)
497
(4)
—
—
—
—
(4)
805
(702)
(299)
2
(866)
2,254
1,388
159
80
(1) $
(21)
The accompanying notes are an integral part of these consolidated financial statements.
61
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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
ciences, diagnostics and applied chemical markets, providing application focused solutions that include
global leader in life s
ff
instruments, softwa
ff
re, services and consumablea
s forff
the entire labora
a
tory workflow.
Basis of Presentation. The accompanying consolidated financial statements have been prepared by us pursuant to the
rules and regulations of the U.S. Securities and Exchange Commission ("SEC") and are 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 Consolidatidd
on. The consolidated financial statements include the accounts of the company and our wholly-
and majoa rity-owned subsidiaries. All intercompany accounts and transactions have been eliminated.
Use of Estimates. The preparation of financial statements in accordance with U.S. GAAP requires management to make
estimates and assumptim ons that affect the amounts reported in our consolidated financial statements and accompanying notes.
Management bases its estimates on historical experience and various other assumptim ons 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
l results may be different from the estimates. Our critical accounting policies are those that affect our financial
future, actuat
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, retirement and post-retirement plan
assumptim ons and accounting for income taxes.
ii
Risks
and Uncertainties. We are subject to risks common to companies in the analytical instrument industry, such as
global economic and financial market conditions, fluctuations in foreign currency exchange rates and fluctuations in customer
demand, among others.
Both our domestic and international operations have been and continue to be affected by the ongoing global pandemic of
a novel strain of coronavirus (“COVID-19”) and the resulting volatility and uncertainty it has caused in the U.S. and
international markets. The current supply chain disruptions being experienced globally have made it more challenging for
companies to manage operations. We cannot provide any assurances that any prolonged material disruptions in the supply chain
will not have a material impact on our consolidated financial statements. As of October 31, 2021, our consolidated financial
statements have not been materially impacted.
Revenue Recognition. On November 1, 2018, we adopted Accounting Standard Codification Topic 606, Revenue from
ustCC omers, (“ASC 606’’) using the modified retrospective approach only to contracts not completed as of this
Contracts wtt
date. Therefore, results for reporting periods beginning in fiscal year 2019 are presented under ASC 606.
ith Ctt
We enter into contracts to sell products, services or combinations of products and services. Products may include
hardware or software and services may include one-time service events or services performed over time.
We derive revenue primarily from the sale of analytical and diagnostics products and services. A performance obligation
is a promise in a contract to transfer a distinct product or service to a customer and is the unit of account under ASC 606. See
also Note 4, "Revenue" for additional information on revenue recognition.
Revenue is recognized when control of the promised products or services is transferred to our customers and the
performance obligation is fulfilled in an amount that reflects the consideration that we expect to be entitled in exchange for
those products or services, the transaction price. For equipment, consumablea
s, and most software licenses, control transfers to
the customer at a point in time. We use present right to payment, legal title, physical possession of the asset, and risks and
rewards of ownership as indicators to determine the transfer of control to the customer. Where acceptance is not a forma
lity, the
customer must have documented their acceptance of the product or service. For products that include installation, if the
installation meets the criteria to be considered a separate performanc
e obligation, product revenue is recognized when control
has passed to the customer, and recognition of installation revenue occurs once completed. Product revenue, including sales to
ff
ff
63
AGILENT TECHNOLOGIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
resellers and distributors is reduced for provisions for warranties, returns,
are recorded.
t
and other adjustments in the period the related sales
Service revenue includes extended warranty, customer and software support including: Software as a Service, post
contract support, consulting including companion diagnostics, and training and education. Instrument service contracts and
software maintenance contracts are typically annual contracts, which are billed at the beginning of the contract or maintenance
period. Revenue for these contracts is recognized on a straight-line basis to revenue over the service period, as a time-based
measure of progress best reflects our performance in satisfying this obligation. There are no deferred costs associated with the
service contract, as the cost of the service is recorded when the service is perforff med. Service calls not included in a support
contract are recognized to revenue at the time a service is performed.
We have sales from standalone software. These arrangements typically include software licenses and maintenance
contracts, both of which we have determined are distinct performance obligations. We determine the amount of the transaction
price to allocate to the license and maintenance contract based on the relative standalone selling price of each performance
obligation. Software license revenue is recognized at the point in time when control has been transferred to the customer. The
revenue allocated to the software maintenance contract is recognized on a straight-line basis over the maintenance period,
which is the contractual term of the contract, as a time-based measure of progress best reflects our performance in satisfying
this obligation. Unspecified rights to software upgrades are typically sold as part of the maintenance contract on a when-and-if-
available basis.
Our multiple-element arrangements are generally comprised of a combination of 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 when control passes to the customer. Service revenue is deferred and recognized over the
contractual period or as services are rendered and accepted by the customer. Our arrangements generally do not include any
provisions for cancellation, termination, or refunds that would significantly impact recognized revenue.
For contracts with multiple performance obligations, we allocate the consideration to which we expect to be entitled to
each performance obligation based on relative standalone selling prices and recognize the related revenue when or as control of
each individual performance obligation is transferred to customers. We estimate the standalone selling price by calculating the
average historical selling price of our products and services per country for each performance obligation. Standalone selling
prices are determined forff
each distinct good or service in the contract, and then we allocate the transaction price in proportion to
those standalone selling prices by performance obligations.
A portion of our revenue relates to lease arrangements. Standalone lease arrangements are outside the scope of ASC 606
and are therefore accounted for in accordance with ASC 842, Leases beginning in 2020 and ASC 840, Leases for prior periods.
Each of these contracts is evaluated as a lease arrangement, either as an operating lease or a sales-type finance lease using the
current lease classification guidance.
Deferred Revenue. Contract liabilities (deferred revenue) primarily relate to multiple element arrangements forff which
billing has occurred but transfer of control of all elements (performance obligations) to the customer has either partially or not
occurred at the balance sheet date. This includes cash received from customers for products and related installation and services
in advance of the transfer of control. Contract liabilities are classified as either in current liabilities in deferred revenue or long-
term in other long-term liabilities in the consolidated balance sheet based on the timing of when we expect to complete our
performance obligation.
TT
Sales Taxes
. Sales taxes collected from customers and remitted to governmental authorities are not included in our
revenue.
Shipping and Handling Costs.tt 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.
Research and Development. Costs related to research, design and development of our products are charged to research
and development expense as they are incurred.
ii
Advertising.
Advertising costs are generally expensed as incurred and amounted to $63 million in 2021, $48 million in
2020 and $36 million in 2019.
64
AGILENT TECHNOLOGIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Taxes on Income.
liabilities are recognized principally forff
and liabilities and their reported amounts. See Note 6, "Income Taxes" for more information.
Income tax expense or benefit is based on income or loss before taxes. Deferre
d tax assets and
the expected tax consequences of temporary differences between the tax bases of assets
ff
d by dividing net income - the numerator - by the weighted
Net Income Per Share. Basic net income per share is computem
of stock
the period excluding the dilutive effect
average number of common shares outstanding - the denominator - during
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 7, "Net Income Per Share".
d
ff
ff
ff
Cash, Cash Equivalents att
remaining maturity is three months or less at the date of purchase. Cash equivalents are stated at cost, which approxi
value.
nd Short-Term Investments. We classify investments as cash equivalents if their original or
r
mates faiff
a
As of October 31, 2021, approximately $1,049 million of our cash and cash equivalents is held outside of the U.S. by our
ncial
foreign subsidiaries. Our cash and cash equivalents mainly consist of short-term deposits held at major global finaff
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.
We classify equity investments as short-term investments based on their naturet
and our intent and ability to exit within a
year or less. As of October 31, 2021, we had short-term investments of $91 million.
Restricted Cash and Restricted Cash Equivalents.tt Restricted cash and restricted cash equivalents are 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. A reconciliation of cash, cash equivalents and restricted cash to the consolidated balance sheet folff
lows:
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
1,484 $
1,441 $
Restricted cash included in other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
6
6
Total cash, cash equivalents and restricted cash . . . . . . . . . . . . . . . . . . . . . $
1,490 $
1,447 $
1,382
6
1,388
October 31,
2021
2020
2019
(in millions)
Accounts Rtt
eceivable, net. Trade accounts receivable are recorded at the invoiced amount and do not bear interest. Such
accounts receivable have been reduced
d by an allowance for doubtful accounts, which is our best estimate of the amount of
probable credit losses in our existing accounts receivable. We determine the allowance based on customer specific experience
and the aging of such receivables, among other facff
tors. The allowance for doubtful accounts as of October 31, 2021 and 2020
was not material. We do not have any off-balance-sheet credit exposure related to our customers. Accounts receivable are also
recorded net of estimated product returns
which are not material.
tt
ii
Concentration of Credit Risk.
Financial instruments that potentially subject Agilent to significant concentration of credit
risk include money market fund investments, equity investments with readily determinable fair
value securities, time deposits
and demand deposit balances. These investments are categorized as cash and cash equivalents or short-term investments. In
addition, Agilent has credit risk from derivative financial instruments used in hedging activities and accounts receivable. We
invest in a variety of finaff
on. We have a
comprehensive credit policy in place and credit exposure is monitored on an ongoing basis.
ncial instruments and limit the amount of credit exposure with any one financial instituti
ff
tt
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 geographie
s. Credit evaluations are perforff med on
customers requiring credit over a certain amount, and we sell the majoa rity 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 forff more than 10 percent of accounts receivablea
as of October 31, 2021, or 2020.
a
65
AGILENT TECHNOLOGIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Inventory.
Inventory is valued at standard cost, which approximates actuat
t-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.
l cost computed on a firsff
a
i
Property, Pyy
nt. Property, plant and equipment are stated at cost less accumulated depreciation.
lant and Equipme
Additions, improvements and majora
alized; maintenance, repairs and minor renewals are expensed as
renewals are capita
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 3 years to 10 years. We use the straight-line method to depreciate assets.
Capitalized Software
alize 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 3 years to 5 years once
development is complete.
. We capita
tt
Leases. We determine whether an arrangement is, or contains, a lease at inception. Prior to November 1, 2019, for leases
where we are the lessee, we accounted forff
operating lease payments by charging them to expense as incurred. At the beginning
of fiscal 2020, the company adopted new lease accounting guidance issued by the Financial Accounting Standards Board
("FASB"). The most significant change requires lessees to record the present value of operating lease payments as right-of-use
("ROU") assets and lease liabilities on the consolidated balance sheet. Where we are the lessee, ROU assets represent the
the lease term, and lease liabilities represent an obligation to make lease
company’s right to use an underlying asset forff
payments based on the present value of lease payments over the lease term. Classificatio
n of operating lease liabilities as either
current or non-current is based on the expected timing of payments dued
under our obligations. As most of our leases do not
provide an implicit interest rate, we use our incremental borrowing rate based on the information available at commencement
date in determining the present value of lease payments. The incremental borrowing rate is the rate of interest that a lessee
would have to pay to borrow on a collateralized basis over a similar term and at an amount equal to the lease payments in a
similar economic environment. In order to determine the appropriate incremental borrowing rates, we have used a number of
factors including the company's credit rating, the lease term and the currency swap ra
ate. The ROU asset also consists of any
lease incentives received. The lease terms used to calculate the ROU asset and related lease liabia lity include options to extend or
terminate the lease when it is reasonably certain that we will exercise that option. Leases with an initial term of twelve months
or less are not recorded on the consolidated balance sheet and lease expense for these leases is recognized on a straight-line
basis over the lease term. Lease expense for operating leases with an initial term of more than twelve months is recognized on a
lease and
straight-line basis over the lease term as an operating expense. We have lease agreements which require payments forff
.
non-lease components. We have elected to account for these payments as a single lease component
m
ff
A portion of our revenue relates to lease arrangements where Agilent is the lessor. Standalone lease arrangements are
outside the scope of Accounting Standard Codification ("ASC") Topic 606, Revenue Contracts with Customers, and are
therefore accounted forff
in accordance with ASC Topic 842, Leases. Each of these contracts is evaluated as a lease arrangement,
either as an operating lease or a sales-type finance lease using the current lease classification guidance. In a lease arrangement
that is a multiple-element arrangement that contains equipment leases and the supply of consumablea
s, the revenue associated
with the instrument rental is treated under the lease accounting standard ASC 842, whereas the revenue associated with the
consumablea
s, the non-lease component, is recognized in accordance with the ASC 606 revenue standard.
See also Note 10, "Leases" forff
additional information about our leases.
Acquisitions. Agilent accounts forff
the acquisition of a business using the acquisition method of accounting, and we
allocate the fair value of the purchase price to the tangible assets acquired, liabilities assumed, and intangible assets acquired,
including in-process research and development (“IPR&D”), based on their estimated fair
values. The excess value of the cost of
an acquired business over the fair value of the assets acquired and liabilities assumed is recognized as goodwill. The fair value
of IPR&D is initially capitalized as an intangible asset with an indefinite life. When an IPR&D project is completed, the
IPR&D is reclassified as an amortizablea
purchased intangible asset and amortized to costs of revenues over the asset’s
estimated useful life.
ff
Our determination of the fair value of the intangible assets acquired involves the use of significant estimates and
assumptim ons. Specifically, our determination of the fair value of the developed product technology and IPR&D acquired
66
AGILENT TECHNOLOGIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
involve significant estimates and assumptions related to revenue growth rates and discount rates. Our determination of the fair
value of customer relationships acquired involved significant estimates and assumptions related to revenue growth rates,
discount rates, and customer attrition rates. Our determination of the fair value of the tradename acquired involved the use of
significant estimates and assumptions related to revenue growth rates, royalty rates and discount rates. The company believes
that the fair value assigned to the assets acquired and liabilities assumed are based on reasonable assumptim ons and estimates that
marketplat
ce participants would use. Actual results could differ materially fromff
these estimates.
Goodwill and Purchased Intangible Assets. We assess our goodwill and purchased intangible assets for impairment
annually or whenever events or changes in circumstances indicate that the carrying
. 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 quantitative 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 furthe
value may not be recoverablea
r testing will be required.
rr
ff
The guidance includes examplem s 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 performanc
e, 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.
a
ff
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, then we are required to perform a quantitative impairment test on goodwill to identify and
measure the amount of a goodwill impairment loss to be recognized. A goodwill impairment loss, if any, is measured as the
amount by which a reporting unit's carrying value, including goodwill, exceeds its faiff
r value, not to exceed the carrying amount
of goodwill. 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.
a
ciences and appli
In fiscal year 2021, we assessed goodwill impairment for our three reporting units which consisted of three segments:
life sff
ed markets, diagnostics and genomics and Agilent CrossLab. We performed a qualitative test for goodwill
impairment of the three reporting units, as of September 30, 2021, our annual impairment test date. Based on the results of our
qualitative testing, we believe that it is more-likely-than-not that the fair value of each reporting unit is greater than its
respective carrying value. 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, 2021, 2020 and 2019.
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 t
t the pattern in which the
economic benefits are consumed or used up or a straight-line method ranging from 6 months to 15 years. IPR&D is initially
capita
nd 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.ff
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.
alized at fair value as an intangible asset with an indefinite life aff
ff hat reflecff
Agilent's indefinite-lived intangible assets are IPR&D intangible assets. The accounting guidance allows a qualitative
approach forff
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 faiff
a qualitative test for impairment of indefinite-lived intangible assets as of September
30, 2021. Based on the results of our qualitative testing, we believe that it is more-likely-than-not that the fair values of these
indefinite-lived intangible assets are greater than their respective carrying values. Each quarter we review the events and
circumstances to determine if impairment of indefinite-lived intangible assets is indicated. During the year ended October 31,
2020, we recorded an impairment of in-process research and development of $90 million related to the shutdown of our
sequencer development program in our diagnostics and genomics segment. During the year ended October 31, 2021 and 2019
there were no impairm ments of indefinite-lived intangible assets.
r value. We performed
ff
67
AGILENT TECHNOLOGIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Impairment of Long-Lived Assets.tt We continually monitor events and changes in circumstances that could indicate
. When such events or changes in
carrying amounts of long-lived assets, including intangible assets, may not be recoverablea
value of such assets
circumstances occur, we assess the recoverabila
cash flows is less
will be recovered through undiscounted expected future cash flows. If the total of the undiscounted future
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 the year ended October 31, 2021 we recorded an impairment charge of long-lived assets of
$2 million. During the year ended October 31, 2020 we recorded an impairment charge of long-lived assets including
indefinite-lived in-process research and development of $98 million related to the shutdown of our sequencer development
program in our diagnostics and genomics segment. During fiscal year 2019, there were no impairments of other assets or
intangible assets.
ity of long-lived assets by determining whether the carrying
rr
rr
ff
Variable InteII
rest 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”). We evaluate our investments in privately held
companies on an ongoing basis. We have determined that as of October 31, 2021 and 2020, there were no VIEs required to be
consolidated in our consolidated financial statements because we do not have a controlling financial interest in any of the VIEs
in which we have invested nor are we the primary beneficiary. We account for these investments under either the equity method
or as equity investments without readily determinablea
fair value, 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 and vice-versa, based on changes in facts
and circumstances including changes in contractual arrangements and capia tal structure.
As of October 31, 2021 and 2020, the total carrying value of investments and loans in privately held companies
considered as VIEs was $76 million and $67 million respectively. The maximum exposure is equal to the carrying
value
because we do not have future funding commitments. The investments are included on the long-term investments line and the
loans on the other current assets and other assets lines (depending upon tenure of loan) on the consolidated balance sheet.
rr
Investments. Equity investments without readily determinablea
fair value consist of non-marketable equity securities
using the measurement alternative at
(typically investments in privately-held companies). These investments are accounted forff
impairments and observable price changes (orderly transactions for the identical or a similar security
cost, and we adjust forff
from the same issuer) included in net income as and when it occurs. Equity investments with readily determinablea
value
consist of marketable equity securities which were reclassified from non-marketable equity securities following the
commencement of public market trading of the issuers and are reported at fair value, with gains or losses resulting from
changes in fair value included in net income. Other investments with readily determinable fair value consist of shares we own in
a special fund and are reported at fair value, with gains or losses resulting from changes in fair value included in net income.
funds, bonds and other similar instruments and deferred compensation
Trading securities, which are comprised of mutual
liabilities are reported at fair value, with gains or losses resulting fromff
changes in fair value recognized currently in net income.
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,
2021 and 2020. The company assesses investments for impairment whenever events or changes in circumstances indicate that
.
the carrying value of an investment may not be recoverablea
ff
fair
t
, accrued compensation and other accrued liabia lities approximate faiff
, and which are not accounted under the equity method are reported at cost with adjustments forff
Fair ValVV ue of Financial Instruments. The carrying values of certain of our financial instruments including cash and cash
r value
equivalents, accounts receivable, accounts payablea
because of their short maturities. The fair value of short-term and long-term equity investments which are readily determinable,
and which are not accounted under the equity method are reported at fair
value using quoted market prices for those securities
when available with gains and losses included in net income. The fair value of long-term equity investments which are not
readily determinablea
observable
changes in prices or impairments included in net income. As of October 31, 2021, the fair value of our senior notes was
$2,806 million with a carrying value of $2,729 million. This compares to a faiff
r value of $2,446 million with a carrying value of
$2,284 million as of October 31, 2020. The fair value was calculated from quoted prices which are primarily Level 1 inputs
gn currency contracts used for hedging purposes is estimated internally by
under the accounting guidance. The fair value of forei
example, interest rate yield curves, foreign exchange rates, and forward
using inputs tied to active markets. These inputs, forff
and spot prices for currencies are observable in the market or can be corroborated by observable market data forff
ially
the full term of the assets or liabilities. See also Note 13, "Fair Value Measurements" for additional information on the fair
value of financial instruments.
u
substant
ff
ff
68
AGILENT TECHNOLOGIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Warranty.tt Our standard warranty terms typically extend for one year fromff
the date of delivery. We accrue for standard
warranty costs based on historical trends in warranty charges. The accrual is reviewed regularly and periodically adjusted to
reflect changes in warranty cost over the period. Estimated warranty charges are recorded within cost of products at the time
products are sold. See Note 16, "Guarantees".
Employee ComCC pensat
Amounts owed to employees, such as accrued salary, bonuses and vacation
benefits are accounted forff within employee compensation and benefits. The total amount of accrued vacation benefit was $129
million and $111 million as of October 31, 2021, and 2020, respectively.
ion and Benefitff s.tt
m
Retirement and Post-Retirement Plans. Substantially all of our employees are covered under various defined benefit
our eligible U.S.
these plans are derived annually. See
and/or defined contribution retirement plans. Additionally, we sponsor post-retirement health care benefits forff
employees. Assumptions used to determine the benefit obligations and the expense forff
additional information.
Note 15, “Retirement plans and post-retirement pension plans” forff
Retirement of Treasury Shares. Upon the formal retirement of treasury shares, we deductd
treasury shares from common stock and allocate the excess of cost over par as a deductdd
on the pro-rata portion of additional paid-in-capita
treasury shares revert to the status of authorized but unissued shares.
al, and the remaining excess as a deductd
ion to additional paid-in capita
the par value of the retired
al, based
ion to retained earnings. All retired
Share-Based Compensm
share-based awards made to
ation. For the years ended 2021, 2020 and 2019, we accounted forff
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
value method of accounting. Under the fair value method,
ff
Performance Program ("LTPP") using the estimated grant date fair
we recorded compensation expense for all share-based awards of $111 million in 2021, $84 million in 2020 and $72 million in
2019. See Note 5, "Share-based Compensation" for additional information.
ff
ff
II
a
Derivative Instrume
nts. Agilent is exposed to global forei
gn currency exchange rate and interest rate risks in the normal
gn exchange hedging contracts, primarily forward contracts and purchased options,
course of business. We enter into forei
and interest rate locks to manage financial exposures resulting from changes in foreign currency exchange
interest rate swapsa
rates and interest rates. In the vast majori
ty 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 establia
shed risk management
policies. Foreign exchange hedging contracts generally mature within twelve months, interest rate swapsa mature at the same
time as the maturity of the debt and interest rate locks mature at the same time as the issuance of debt. In order to manage
foreign currency exposures in a fewff
gn exchange contracts that do not qualify for
hedge accounting. In such circumstances, the local forei
gn currency exposure is offset by contracts owned by the parent
company. We do not use derivative financial instruments for trading or speculative purposes.
limited jurisdictions, we may enter into forei
ff
ff
All derivatives are recognized on the balance sheet at their fair values. For derivative instruments that are designated and
qualify as a cash flow hedge, changes in the value of the effective portion of the derivative instrument are recognized in
comprehensive income (loss), a component of stockholders' equity. For derivative instruments that are designated and qualify as
a net investment hedge, changes in the value of the effective portion of the derivative instrument are recognized in accumulated
other comprehensive income (loss)- translation adjustment. 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. The impact of the ineffectiveness measurement in 2021, 2020 and
2019 was not material. Cash flows fromff
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.
Foreigni 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
69
AGILENT TECHNOLOGIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
rates which approxi
as a separate component of accumulated other comprehensive income (loss) in stockholders' equity.
mate to average exchange rates in effect during each period. Resulting translation adjustments are reported
a
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
al 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 were $4 million loss for 2021, $4 million loss for 2020 and $7
million loss for 2019.
exchange rates except for non-monetary assets and capita
r
2. NEW ACCOUNTING PRONOUNCEMENTS
Recently All
dopted Accountingii
Pronouncementstt
In June 2016, the Financial Accounting Standards Board ("FASB") issued new guidance to require a finaff
ncial asset
measured at amortized cost basis, such as accounts receivable, to be presented at the net amount expected to be collected based
on relevant information about past events, including historical experience, current conditions, and reasonable and supportablea
forecasts that affect the collectability of the reported amount. During 2018 and 2019, the FASB issued additional guidance and
clarification. On November 1, 2020, we adopted this guidance which did not have a material impact on our consolidated
financial statements.
In January 2017, the FASB issued new guidance that simplifies the measurement of goodwill impairment by eliminating
the Step 2 requirement that an entity compute the implied fair value of goodwill based on the fair values of its assets and
liabilities to measure impairment. Instead, goodwill impairment will be measured as the difference
between the fair value of the
reporting unit and the carrying
value of the reporting unit. The standard also clarifies the treatment of the income tax effect of
tax deductible goodwill when measuring goodwill impairment loss. On November 1, 2020, we adopted this guidance which did
not have a material impact on our consolidated financial statements.
rr
ff
In August 2018, the FASB issued updat
es to improve the disclosure requirements for fair value measurements in Topic
820, Fair Value Measurement which eliminates certain disclosure requirements and modifies others. On November 1, 2020, we
adopted these amendments which did not have a material impact on our consolidated financial statements and disclosures. See
Note 13, "Fair Value Measurements" for additional information on the fair value of financial instruments disclosures.
u
In August 2018, the FASB issued updat
es 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. On November 1, 2020, we adopted this guidance which did not have a material impact on our consolidated financial
statements and disclosures.
u
In December 2019, the FASB issued new guidance to simplify the accounting for income taxes. This guidance eliminates
certain exceptions to existing guidance related to the approac
intraperiod tax allocation, the methodology for calculating
h forff
income taxes in an interim period and the recognition of deferred tax liabia lities for outside basis differences. The guidance also
improves consistent application by clarifying and amending existing guidance related to aspects of the accounting for franchise
taxes and enacted changes in tax laws or rates and clarifies the accounting for transactions that result in a step up in the tax basis
of goodwill. On November 1, 2020, we early adopted this guidance which did not have a material impact on our consolidated
financial statements and disclosures.
a
u
e forff
facilitation of the effects of reference rate reform on financial reporting.
In March 2020, the FASB issued an updat
This updat
e provides optional guidance for a limited period of time to ease the potential burden in accounting for (or
u
recognizing the effects of) reference rate reform on financial reporting. The amendments in the guidance provide optional
expedients and exceptions for applying generally accepted accounting principles to contracts, hedging relationships, and other
transactions affected by reference rate reform if certain criteria are met. The amendments apply to contracts, hedging
relationships, and other transactions that reference London Inter-bank Offered Rate ("LIBOR") or another reference rate
expected to be discontinued because of reference rate reform. When elected, the optional expedients forff
contract modifications
all eligible contracts or eligible transactions within the relevant Topic or Industry Subtopic in the
are applied consistently forff
ive upon issuance and may generally be applied through
FASB's Accounting Standards Codification. The guidance was effect
nce LIBOR. In
December 31, 2022 to any new or amended contracts, hedging relationships, and other transactions that refereff
ff
70
AGILENT TECHNOLOGIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
u
January 2021, the FASB issued an updat
e that provides supplemental guidance and clarification of the reference rate reform.
The update provides additional optional guidance on the transition from LIBOR to include derivative instruments that use an
interest rate forff margining, discounting or contract price alignment. The standard will ease, if warranted, the requirements for
accounting for the future effects of the rate reform. An entity may elect to appl
y the amendments prospectively through
December 31, 2022. Currently, this guidance has not had a material impact on our consolidated financial statements and
disclosures and we continue to monitor the impact that the discontinuance of LIBOR or another reference rate will have on our
contracts, hedging relationships and other transactions.
a
New Accountingtt
Pronouncements Ntt
otNN Yet Adopted
tt
In January 2020, accounting guidance was issued that clarifies the accounting guidance for equity method investments,
joint ventures
, and derivatives and hedging. The guidance clarifies the interaction between different sections of the accounting
guidance that could be applicable and helps clarify which guidance should be applied in certain situations which should
increase relevance and comparabila
ncial statement information. This guidance is effective for us beginning November
1, 2021, and for interim periods within that year. Early adoption is permitted. We do not expect that the adoption of this
standard will have a material impact on our consolidated finaff
ncial statements and disclosures.
ity of finaff
In October 2021, the FASB issued an updat
e to improve the accounting for acquired revenue contracts with customers in a
business combination. The amendments require an acquirer to use the guidance in ASC 606, Revenue from Contracts with
Customers, rather than using fair value, when recognizing and measuring contract assets and contract liabia lities related to
customer contracts assumed in a business combination. This guidance is effective for us beginning November 1, 2023, and for
interim periods within that year. Early adoption is permitted. We are currently evaluating the timing of adoption and the impact
the adoption of this standard will have on our consolidated financial statements and disclosures.
u
In November 2021, the FASB issued updat
es to increase the transparency in the annual disclosure requirements relating to
government assistance received by business entities in Topic 832, Government Assistance. The guidance requires certain
disclosures about transactions with a government that are accounted for by applying a grant or contribution model. These
amendments are effective for us beginning November 1, 2022, and for interim periods within that year. Early adoption is
permitted. We are currently evaluating the timing of adoption and the impact of this guidance on our consolidated financial
statements and disclosures.
u
Other amendments to GAAP in the U.S. that have been issued by the FASB or other standards-setting bodies that do not
date are not expected to have a material impact on our consolidated financial statements upon
require adoption until a future
adoption.
ff
3. ACQUISITIONS
Acquisitiontt
of Resolution Bioscience, Ie nc.
II
On April 15, 2021 we completed the acquisition of privately-owned Resolution Bioscience, Inc., a biotechnology
company focused on the development and commercialization of next-generation sequencing-based ("NGS") precision oncology
solutions, for $561 million cash plus potential future contingent payments of up tu
o $145 million upon the achievement of
certain milestones which are based on certain revenue and technical targets. As of October 31, 2021, the expected maximum
earn-out period for the contingent payments does not exceed 3.2 years. Resolution Bioscience complements and expands our
capabi
lities in NGS-based cancer diagnostics within our diagnostics and genomics segment and provides us with innovative
a
technology to further serve the needs of the fast-growing precision medicine market.
The results of operations of Resolution Bioscience have been included in the consolidated statements of operations since
ion is not presented as historical financial results of
ff
the acquisition date of April 15, 2021. Pro forma financial informat
Resolution Bioscience are not significant when compared to our actual results of operations.
As a result of this acquisition, we recorded a contingent consideration liability of $110 million which reflected the fair
value at acquisition date. See also Note 13, "Fair Value Measurements" for additional information about the fair value of the
contingent consideration. During the year ended October 31, 2021, we also recorded additions to goodwill of $365 million and
additions to other intangible assets of $343 million with a weighted-average life of 11 years, a deferred tax liabia lity of
$59 million and net tangible assets of $22 million The goodwill arising from the acquisition consists largely of the value of
intangible assets that do not qualify for separate recognition such as workforce in place, and cash flows from future product
technology and development services. For United States federal tax purposes, goodwill created as part of a stock acquisition
such as Resolution Bioscience is not deductible.
71
AGILENT TECHNOLOGIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Acquisiii
tioii n of Bo
ioTekTT and ACEAEE
On August 23, 2019 we completed the acquisition of privately-owned Lionheart Technologies LLC ("BioTek"), a leader
in the design, manufacture and distribution of innovative life science instrumentation for $1.17 billion, under the merger
agreement. As a result of the acquisition, BioTek became a wholly-owned subsidiary of Agilent and is included within our life
sciences and applied markets segment. Accordingly, the results of BioTek are included in Agilent's consolidated financial
statements fromff
the acquisition date. The acquisition of BioTek and its portfolio is another step to expand our position in the
cell analysis market.
The consideration paid was $1.17 billion. Agilent funded the acquisition using existing cash of $470 million and debt of
$700 million.
The BioTek acquisition was accounted for in accordance with the authoritative accounting guidance. The acquired assets
r values. Agilent determined the estimated fair values
and assumed liabilities were recorded by Agilent at their estimated faiff
with the assistance of appra
ed by third party specialists, discounted cash flow analyses, and estimates
made by management. We expect to realize revenue synergies, leverage and expand the existing sales channels and product
development resources, and utilize the assembled workforce. These factors, among others, contributed to a purchase price in
excess of the estimated fair value of BioTek’s net identifiable assets acquired (see summary of net assets below), and, as a
result, we have recorded goodwill in connection with this transaction.
isals or valuations performff
a
Goodwill acquired was allocated to our operating segments and reporting units as a part of the purchase price allocation.
All goodwill was allocated to the life sciences and applied markets reporting unit.
Agilent’s acquisition of BioTek is treated as an asset purchase for tax purposes. The tax basis of the acquired assets
equals the fair market value on acquisition date.
The following tablea
summarizes the allocation of the purchase price to the estimated fair values of the assets acquired
and liabilities assumed on the closing date of August 23, 2019 (in millions):
$
10
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
28
Accounts receivablea
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
21
Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2
Other current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
8
Property, plant and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
641
Intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
483
Total assets acquired . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,193
(4)
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(5)
Deferred revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(7)
Employee compensation and benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(2)
liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other accruedrr
(4)
Long-term debt
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 1,171
Net assets acquired . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
The fair value of cash and cash equivalents, accounts receivablea
, other current assets, accounts payable and other accrued
liabilities were generally determined using historical carrying values given the short-term nature of these assets and liabilities.
The fair values for acquired intangible assets and deferred revenue were determined with the input from third party
valuation specialists.
The fair values of certain other assets, inventory, property, plant and equipment, investments, long-term debt, and certain
other long-term liabilities were determined internally using historical carrying values and estimates made by management.
72
AGILENT TECHNOLOGIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Valuations of intangibl
n
e all
ssets att
cquired
The components of intangible assets acquired in connection with the BioTek acquisition were as follows
ff
(in millions):
Developed product technology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Customer relationships . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Backlog . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Tradenames and trademarks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total intangible assets subject to amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
In-process research and development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Estimated
Useful Life
5-13 years
3-8 years
2 months
10 years
Fair Value
387
$
202
5
43
637
4
641
$
$
a
As noted above
, the intangible assets, including in-process research and development, were valued with input from
ch in determining the fair value of intangible assets acquired
valuation specialists. Agilent used variations of the income approa
in the BioTek acquisition. Specifically, the developed product technology and in-process research and development were
valued using the multi-period excess earnings method under the income approa
directly
on contributory assets. The company utilized the
related to the products expecting to result from the projects, net of returns
royalty
incremental cash flow method for determining the fair value of the customer relationships acquired, and the relief fromff
method to determine the fair value of the tradename. Order backlog was valued on a direct cash flow basis.
ch by discounting forecasted cash flows
a
a
ff
t
The primary in-process research and development project acquired relates to a next version of a product which was
subsequently released to customers in 2020. Afteff
r release, the asset was moved to developed technology.
Acquisition and integration costs directly related to the BioTek acquisition totaled $25 million, $12 million and $4
million for the year ended October 31, 2021, 2020 and 2019, respectively, and were recorded in operating expenses and cost of
sales. Such costs are expensed in accordance with the authoritative accounting guidance.
On November 14, 2018, we acquired 100 percent of the stock of ACEA Biosciences (“ACEA”), a developer of cell
analysis tools, for $250 million. The financial results of ACEA have been included in our financial results within our life
sciences and applied markets segment fromff
the acquisition date.
The following represents the unaudited proforma operating results as if BioTek and ACEA had been included in the
company's consolidated statements of operations as of the beginning of fiscal 2018 (in millions, except per share amounts):
Net revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Net income per share — basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Net income per share — diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
2019
5,308
1,012
3.22
3.18
ff
The unaudited proforma financial informat
ion assumes that the companies were combined as of November 1, 2017 and
include business combination accounting effects fromff
the acquisition including amortization charges from acquired intangible
to the respective estimated fair value adjustments to inventory, changes to interest income
assets, the impact on cost of sales dued
for cash used in the acquisition, interest expense associated with debt paid in connection with the acquisition and acquisition
related transaction costs and tax related effects. The proforma informff
is for informational purposes only
and is not indicative of the results of operations that would have been achieved if the acquisition had taken place at the
beginning of fiscal 2019.
ation as presented above
a
The unaudited proforma financial information for the year ended October 31, 2019 combines the historical results of
Agilent for the year ended October 31, 2019 (which includes BioTek and ACEA after the acquisition date) and for BioTek for
the ten months ended August 23, 2019.
73
AGILENT TECHNOLOGIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
4. REVENUE
The following tabla e presents the company’s total revenue and segment revenue disaggregated by geographic
a
al region:
Life Sciences and
Applied Markets
Agilent CrossLab
Diagnostics and
Genomics
Total
Year Ended October 31, 2021:
Americas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Europe . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Asia Pacific . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Year Ended October 31, 2020:
Americas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Europe . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Asia Pacific . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Year Ended October 31, 2019:
Americas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Europe . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Asia Pacific . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
951
658
1,214
2,823
784
540
1,068
2,392
692
551
1,059
2,302
$
$
$
$
$
$
(in millions)
758
613
829
2,200
667
532
701
1,900
664
522
654
1,840
$
$
$
$
$
$
695
417
184
1,296
517
371
159
1,047
505
368
148
1,021
$
$
$
$
$
$
The following tabla e presents the company’s total revenue disaggregated by end markets and by revenue type:
2021
Years Ended October 31,
2020
(in millions)
2019
Revenue by End Markets
y
Pharmaceutical and Biopharmaceutical . . . . . . . . .
Chemical and Energy . . . . . . . . . . . . . . . . . . . . . . .
Diagnostics and Clinical . . . . . . . . . . . . . . . . . . . . .
Food . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Academia and Government
. . . . . . . . . . . . . . . . . .
Environmental and Forensics . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total
y yp
Revenue by Type
Instrume
ntation . . . . . . . . . . . . . . . . . . . . . . . . . . . .
rr
Non-instrumentation and other . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total
$
$
$
$
2,224
1,328
938
601
576
652
6,319 $
2,657
3,662
6,319 $
1,754 $
1,154
787
517
526
601
5,339 $
2,249 $
3,090
5,339 $
2,404
1,688
2,227
6,319
1,968
1,443
1,928
5,339
1,861
1,441
1,861
5,163
1,604
1,199
785
486
474
615
5,163
2,150
3,013
5,163
Revenue by region is based on the ship to location of the customer. Revenue by end market is determined by the market
instruments, remarketed
indicator of the customer and by customer type. Instrumentation revenue includes sales fromff
instruments and third-party products. Non-instrumentation and other revenue include sales from contract and per incident
services, our companion diagnostics and our nucleic acid solutions businesses as well as sales from spare parts, consumablea
s,
reagents, vacuum pumps, subscriptions, software licenses and associated services.
74
AGILENT TECHNOLOGIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Contratt
ct Balances
Contratt
ct Assets
Contract assets (unbilled accounts receivable) primarily relate to the company's right
to consideration for work
completed but not billed at the reporting date. The unbilled receivables are reclassified to trade receivables when billed to
customers. Contract assets are generally classified as current assets and are included in "Accounts receivable, net" in the
consolidated balance sheet. The balances of contract assets as of October 31, 2021 and 2020, were $197 million and $153
million, respectively.
Contract Liabiliii tiii es
The following tablea
provides information about contract liabila
ities (deferred revenue) and the significant changes in the
balances during the years ended October 31, 2020 and 2021:
Ending balance as of October 31, 2019
Contract
Liabilities
(in millions)
$
Net revenue deferred in the period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Revenue recognized that was included in the contract liability balance at the beginning of the
period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Change in deferrals from customer cash advances, net of revenue recognized . . . . . . . . . . . . . . . . . .
Currency translation and other adjustmd
ents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Ending balance as of October 31, 2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
Net revenue deferred in the period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Revenue recognized that was included in the contract liability balance at the beginning of the
period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Change in deferrals from customer cash advances, net of revenue recognized . . . . . . . . . . . . . . . . . .
Currency translation and other adjustments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Ending balance as of October 31,2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
386
347
(300)
9
4
446
406
(359)
24
2
519
Contract liabia lities primarily relate to multiple element arrangements forff which billing has occurred but transfer of
control of all elements to the customer has either partially or not occurred at the balance sheet date. This includes cash received
from customers for products and related installation and services in advance of the transfer of control. Contract liabilities are
classified as either current in deferred revenue or long-term in other long-term liabilities in the consolidated balance sheet based
on the timing of when we expect to complete our performance obligation.
Contractt
t CostsCC
alized. The changes in total capita
Incremental costs of obtaining a contract with a customer are recognized as an asset if we expect the benefit of those
costs to be longer than one year. We have determined that certain sales incentive programs meet the requirements to be
the years ended October 31, 2021
capita
and 2020 and are included in other current and long-term assets on the consolidated balance sheet. We have appli
ed the
costs to obtain a contract with a customer when the amortization period
practical expedient to expense costs as incurred forff
would have been one year or less. These costs include the company's internal sales force
compensation program, as we have
determined that annual compensation is commensurate with annual sales activities.
alized costs to obtain a contract were immaterial during
d
a
ff
Transaction Price Allocat
edtt
ll
to the Remaining Pn
erPP formr
ance Obligati
i
ons
We have applied the practical expedient in ASC 606-10-50-14 and have not disclosed information about transaction
price allocated to remaining performance obligations that have original expected durations of one year or less.
75
AGILENT TECHNOLOGIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
The estimated revenue expected to be recognized for remaining performance obligations that have an original term of
more than one year, as of October 31, 2021, was $299 million, the majoa rity of which is expected to be recognized over the next
12 months. Remaining performance obligations primarily include extended warranty, customer manufacturing contracts, and
software maintenance contracts and revenue associated with lease arrangements.
5.
SHARE-BASED COMPENSATION
Agilent accounts forff
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 restricted stock units, employee stock options, employee stock purchases made under our employee stock
purchase plan and performance share awards granted to selected members of our senior management under the long-term
performance plan ("LTPP") based on estimated faiff
r values.
Description of Share-Based Plans
Employee Stock Purchase Plan.
Effective May 1, 2020, we adopted the 2020 Employee Stock Purchase Plan ("ESPP")
which replaced our previous Employee Stock Purchase Plan. The ESPP allows eligible employees to contribute up tu
o 10
percent of their base compensation to purchase shares of our common stock at 85 percent of the closing market price at
purchase date. There are 31 million shares authorized forff
issuance in connection with the ESPP.
l
Under our ESPP, employees purchased 462,237 shares for $46 million in 2021, 628,644 shares for $41 million in 2020
and 603,488 shares for $37 million in 2019. As of October 31, 2021, the number of shares of common stock authorized and
issuance under our ESPP was 25,365,340. This excludes the number of shares of common stock to be issued to
available forff
participants in consideration of the aggregate participant contributions totaling $26 million as of October 31, 2021.
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 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, 2021, 23,284,195 shares were available for futff urt e awards
under the 2018 Plan.
O
Stock Options
be either "incentive stock options", as defined in Section 422 of the Internal Revenue Code, or non-statutory.
vest at a rate of 25 percent per year over a period of four years from the date of grant with a maximum contractual
years. The exercise price forff
on the date the stock award is granted. We issue new shares of common stock when employe
. In fiscal year 2021, we resumed granting stock options. Stock options granted under the 2018 Plan may
Options generally
term of ten
stock options is generally not less than 100 percent of the fair market value of our common stock
e stock options are exercised.
m
tt
tt
SS
Performance Shares.
We have two LTPP performance stock award programs, which are administered under the 2018
Stock Plan, for our executive officers and other key employees. Participants in our LTPP Total Stockholders’ Returntt
(“TSR”)
and LTPP Earnings Per Share (“EPS”) programs are entitled to receive shares of the company's stock after the end of a three-
the programs are met. The LTPP-TSR awards are generally designed to meet
year period, if specified performance targets forff
e metrics and peer group comparison based on the TSR set at the
ff
the criteria of a performance award with the performanc
e period. The LTPP-EPS awards are based on the company’s EPS performance over a three-year
beginning of the performanc
the LTPP-EPS for year 2 and year 3 of the performance period are set in the first quarter of
period. The performanc
year 2 and year 3, respectively. All LTPP awards are subject to a one-year post-vest holding period. Based on the performanc
e
ff
metrics, the final LTPP award may vary from zero to 200 percent of the target award. The maximum contractual
term forff
awards under the LTPP program is three years. 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.
e targets forff
ff
ff
t
Restricted Stock UnitsUU . 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.
ff
76
AGILENT TECHNOLOGIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
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 compensat
ion has been reduced forff
estimated forfei
tures.
m
ff
ff
The impact on our results for share-based compensat
m
ion was as follows:
Cost of products and services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Research and development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Selling, general and administrative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total share-based compensat
ion expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
m
Years Ended October 31,
2020
2019
2021
(in millions)
21
$
9
54
84
$
$
$
26
12
73
111
18
7
47
72
At October 31, 2021 and 2020, no share-based compensation was capitalized within inventory.
Valuation Assumptions
The fair value of share-based awards for our employee stock option awards was estimated using the Black-Scholes
option pricing model. Shares granted under the LTPP (TSR) were valued using a Monte Carlo simulation model. The ESPP
allows eligible employees to purchase shares of our common stock at 85 percent of the price at purchase and uses the purchase
require hthe use of
i
date to establia
stock.
k
underlyingying
d l
highlyy subjeubjectiive
highl
For hthe
lvola itilili yty of our LTPP ((TSR) g) grants, we usedd our own hi
ioption's expect ded lilife
historicall sto kck
i
Scholes a dnd Monte Ca lrlo isim lula ition f ifair v lalue
dmodells
iprice v lola itilili yty of hthe
dand com lplex assump itions, iincl di
lBlackk- h l
ludi gng hthe
sh the fair market value.
lvola itilili yty.
hBoth hthe
dand hthe
iprice
We use historical volatility to estimate the expected stock price volatility assumption for employee stock option awards.
In reaching the conclusion, we have considered many factors including the extent to which our options are currently traded and
our ability to find traded options in the current market with similar terms and prices to the options we are valuing. In estimating
the expected life off
f our options granted we considered the historical option exercise behavior of our executives, which we
believe is representative of future behavior.
The estimated fair value of restricted stock units and LTPP (EPS) awards is determined based on the market price of our
expected dividend yield. The compensation cost for LTPP (EPS) reflects the
common stock on the date of grant adjusted forff
cost of awards that are probable to vest at the end of the performance period.
All LTPP awards granted 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 mt
odel. The model calculates
the potential lost value if the employees were able to sell the shares during the lack of marketability period, instead of being
required to hold the shares. The model used the same historical stock price volatility and dividend yield assumptim on used for the
Monte Carlo simulation model and an expected dividend yield to compute the discount.
77
AGILENT TECHNOLOGIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
The folff
lowing assumptions were used to estimate the fair value of awards granted.
Stock Option Plan:
Weighted average risk-free interest rate . . . . . . . . . . . . . . . . . . . .
Dividend yield . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Weighted average volatility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Expected lifeff
LTPP:
Years Ended October 31,
2021
0.5%
0.7%
26%
5.5 years
2020
—
—
—
—
2019
—
—
—
—
Volatility of Agilent shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Volatility of selected peer-company shares . . . . . . . . . . . . . . . . .
Pair-wise correlation with selected peers . . . . . . . . . . . . . . . . . . .
30%
24%-57%
45%
23%
15%-44%
29%
22%
15%-66%
30%
Post-vest restriction discount for all executive awards . . . . . . . . .
6.8%
5.3%
5.0%
Share-Based Payment Award Activity
Employm
ee Stock OptiO ons
The following tabla e summarizes employee stock option award activity of our employees and directors for 2021.
Outstanding at October 31, 2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Exercised . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cancelled . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Outstanding at October 31, 2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Options
Outstanding
(in thousands)
$
870
391
$
(312) $
(6) $
$
943
Weighted
Average
Exercise Price
37
113
33
110
69
The options outstanding and exercisablea
for equity share-based payment awards at October 31, 2021 were as follows:
Range of
Exercise Prices
$25.01 - $30.00 . . . .
$30.01 - $40.00 . . . .
$40.01- $50.00 . . . . .
$100.00 - $110.00 . .
$110.01 & over . . . . .
Number
Outstanding
(in thousands)
42
105
412
338
46
943
Options Outstanding
Options Exercisable
Weighted
Average
Remaining
Contractual
Life
(in years)
Weighted
Average
Exercise
Price
1.1
2.1
3.0
9.0
9.6
5.3
$
$
$
$
$
$
26
39
41
110
133
69
Aggregate
Intrinsic
Value
(in thousands)
5,582
$
12,270
48,075
16,115
1,115
83,157
$
Number
Exercisable
(in thousands)
42
105
412
—
—
559
Weighted
Average
Remaining
Contractual
Life
(in years)
Weighted
Average
Exercise
Price
1.1
2.1
3.0
$
$
$
— $
— $
$
2.7
26
39
41
—
—
40
Aggregate
Intrinsic
Value
(in thousands)
5,582
$
12,270
48,075
—
—
65,927
$
The aggregate intrinsic value in the tablea
above represents the total pre-tax intrinsic value, based on the company's
closing stock price of $157.49 at October 31, 2021, 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, 2021 was approxim
ately 0.6 million.
a
78
AGILENT TECHNOLOGIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
The folff
lowing table summarizes the aggregate intrinsic value of options exercised in 2021, 2020 and 2019 and the fair
value of options granted in 2021:
Options exercised in fisff cal 2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Options exercised in fisff cal 2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Options exercised in fisff cal 2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Black Scholes per share value of options granted during
fiscal 2021 . . . .
d
Weighted
Average
Exercise
Price
Per Share Value
Using Black-
Scholes Model
Aggregate
Intrinsic Value
(in thousands)
24,409
30,481
34,305
$
$
$
33
34
33
$
26
As of October 31, 2021, the unrecognized share-based compensation cost forff
outstanding stock option awards, net of
expected forfeitures, was $5 million. The amount of cash received from the exercise of share-based awards granted was $55
million in 2021, $60 million in 2020 and $54 million in 2019.
Non-Vested Awards
The following tablea
summarizes non-vested award activity in 2021 primarily for our LTPP and restricted stock unit
awards.
Non-vested at October 31, 2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Vested . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Forfeited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Change in LTPP shares in the year dued
to exceeding performance targets . . . . . . . . . . . . . . . .
Non-vested at October 31, 2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Shares
(in thousands)
$
2,818
871
$
(1,252) $
(90) $
$
172
$
2,519
Weighted
Average
Grant Price
70
118
67
83
67
88
As of October 31, 2021, the unrecognized share-based compensation cost forff
non-vested restricted stock awards net of
t
expected forfeitures
years. The total faiff
2019.
a
was approxim
r value of restricted stock awards vested was $84 million for 2021, $85 million forff
ately $106 million which is expected to be amortized over a weighted average period of 2.2
2020 and $69 million forff
6.
INCOME TAXES
The domestic and foreign components of income before taxes are:
U.S. operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Non-U.S. operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total income before taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
876
484
1,360
$
$
54
788
842
$
$
189
730
919
Years Ended October 31,
2021
2020
(in millions)
2019
79
AGILENT TECHNOLOGIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
The provision for income taxes is comprised of:
U.S. federal taxes:
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Current
rr
Deferred . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-U.S. taxes:
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
rr
Current
Deferred . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
State taxes, net of federal benefit:
Current
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
rr
Deferred . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total provision (benefit) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Years Ended October 31,
2021
2020
(in millions)
2019
$
122
(1)
(3)
14
17
1
150
$
5
4
84
24
5
1
123
$
$
(191)
—
290
(267)
4
12
(152)
The differences between the U.S. federal statutory income tax rate and our effecff
tive 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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign-derived intangible income deduction . . . . . . . . . . . . . . . . . . . . . . .
Extension of the tax incentive in Singapore . . . . . . . . . . . . . . . . . . . . . . . . .
Excess tax benefits fromff
stock-based compensation . . . . . . . . . . . . . . . . . .
Other, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Provision (benefit) for income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Effective tax rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Years Ended October 31,
2021
2020
2019
286
18
5
(84)
(35)
—
(29)
(11)
150
11.0 %
$
$
(in millions)
177
6
(37)
(8)
(9)
—
(18)
12
123
14.6 %
$
$
193
16
(10)
(11)
—
(299)
(10)
(31)
(152)
(16.5)%
For 2021, our income tax expense was $150 million with an effective tax rate of 11 percent. For the year ended October
31, 2021, our effective tax rate and the resulting provision for income taxes were impacted by the discrete benefit of
s of
$93 million related to the release of tax reserves in various jurisdictions due to audit settlements and the expiration of statutet
limitations. The income taxes for the year ended October 31, 2021 also include the excess tax benefits fromff
stock-based
compensation of $29 million.
For 2020, our income tax expense was $123 million with an effective tax rate of 14.6 percent. For the year ended
October 31, 2020, our effective tax rate and the resulting provision for income taxes were impacted by foreign income taxed at
lower rates.
For 2019, our income tax benefitff was $152 million with an effective tax rate of (16.5) percent. For the year ended
October 31, 2019, our effective tax rate and the resulting provision for income taxes were significantly impacted by the discrete
benefit of $299 million related to the extension of the company’s tax incentive in Singapore.
a
As part of the business integration of some of our prior acquisitions, we undertook corporate restructurt
ings in the fourth
quarter of fiscal year 2019 that involved onshoring certain intangible properties held by our foreign subsidiaries to the United
States. These restructurings
resulted in a cash tax liability of $231 million. These taxes generate tax attributes that will offset
our transition tax liabia lity which is included in other long-term liabilities in our consolidated balance sheet.
t
We have negotiated a tax holiday in Singapore. The tax holiday provides a lower rate of taxation on certain classes of
income and requires various thresholds of investments and employment or specific types of income. In December 2018, the tax
holiday in Singapore was renegotiated and extended through 2027. As a result of the incentive, the impact of the tax holiday
decreased income taxes by $35 million, $71 million, and $368 million in 2021, 2020, and 2019, respectively. The benefit of the
80
AGILENT TECHNOLOGIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
tax holiday on net income per share (diluted) was approxi
mately $0.11, $0.23, and $1.16 in 2021, 2020 and 2019, respectively.
Of the $1.16 benefit of the tax incentives on net income per share (diluted) in 2019, $0.94 of the benefit relates to one-time
items fromff
the extension of the company’s tax incentive in Singapore.
a
The significant components of deferre
ff
d tax assets and deferred tax liabila
ities included on the consolidated balance sheet are:
Deferred Tax Assets
Intangibles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Pension benefits and retiree medical benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Employee benefits, other than retirement
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net operating loss, capital loss, and credit carryforwards . . . . . . . . . . . . . . . . . . . . . . .
Share-based compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Lease obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred tax assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Tax valuation allowance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred tax assets, net of valuation allowance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Deferred Tax Liabilities
Property, plant and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Pension benefits and retiree medical benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Right-of-use asset . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ff
Deferre
Net deferred tax assets (liabila
d tax liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
ities) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Years Ended October 31,
2021
2020
(in millions)
72
—
43
191
22
30
42
400
(120)
280
$
$
$
(11) $
(8)
(29)
(26)
(74) $
$
206
153
65
31
182
27
35
63
556
(132)
424
(19)
—
(35)
(14)
(68)
356
Valuation allowances require an assessment of both positive and negative evidence when determining whether it is more
. Such assessment is required on a jurisdiction by jurisdiction basis. As of
likely than not that deferred tax assets are recoverablea
October 31, 2021, we continued to maintain a valuation allowance of $120 million until sufficient positive evidence exists to
support reversal. The valuation allowance is primarily related to deferred tax assets for the states of California and Colorado,
along with the net operating losses in the Netherlands and capita
al losses in Australia.
ff
At October 31, 2021, we had federal, state and forei
gn net operating loss carryforwards of approximately $46 million,
$461 million and $484 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 2022. If not utilized, $15 million of the foreign net operating loss
carryforwards will begin to expire in 2022. The remaining $469 million of the foreign net operating losses carry forward
al loss carryforwards of $22 million and $127 million,
indefinitely. At October 31, 2021, we had federal and foreign capita
respectively. If not utilized, the federal capita
al losses carry forward
indefinitely. At October 31, 2021, we had state tax credit carryforwards of approximately $82 million. The state tax credits
carry forward indefinitely.
will expire in 2022. The foreign capita
al loss carryfrr orff wards
rr
The breakdown between long-term deferred tax assets and deferred tax liabilities was as folff
lows:
October 31,
2021
2020
Long-term deferred tax assets (included within other assets) . . . . . . . . . . . . . . . . . . . . . . . . . . $
Long-term deferred tax liabila
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
ities (included within other long-term liabilities) . . . . . . . . . . . .
81
$
(in millions)
309
(103)
206
$
380
(24)
356
AGILENT TECHNOLOGIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
The breakdown between current and long-term income tax assets and liabilities, excluding deferred tax assets and
liabilities, was as follow
ff
s:
Current income tax assets (included within other current assets) . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Long-term income tax assets (included within other assets) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Current income tax liabia lities (included within other accrued liabia lities) . . . . . . . . . . . . . . . . . . . . .
Long-term income tax liabia lities (included within other long-term liabilities) . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Uncertain Tii
axTT
tt
Positions
October 31,
2021
2020
$
(in millions)
66
6
(47)
(241)
(216) $
89
6
(63)
(323)
(291)
The aggregate changes in the balances of our gross unrecognized tax benefits including all fede
ff
ral, 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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
2021
2020
2019
(in millions)
206
$
6
—
—
—
(17)
195
$
$
$
195
6
4
—
(30)
(42)
133
214
7
12
(2)
—
(25)
206
As of October 31, 2021, we had $159 million of unrecognized tax benefits, including interest and penalties of which
$136 million, if recognized, would affect our effective tax rate. However, approximately $23 million of the unrecognized tax
benefits were related to state income tax positions that, if recognized, would be in the form of a deferred tax asset that would
likely not affecff
to a valuation allowance.
tive tax rate dued
t our effecff
We recognized tax benefit of $19 million in 2021, tax expense of $8 million and $9 million in 2020 and 2019,
respectively, for interest and penalties related to unrecognized tax benefits. Interest and penalties accrued as of October 31,
2021 and 2020 were $26 million and $45 million, respectively.
In the U.S., tax years remain open back to the year 2018 for federal income tax purposes and for significant states. In
other major jurisdictions where we conduct business, the tax years generally remain open back to the year 2011.
With these jurisdictions and the U.S., it is reasonably possible that there could be significant changes to our unrecognized
of limitation or a tax audit settlement which will
tax benefits in the next twelve months due to either the expiration of a statutet
be partially offset by an anticipated tax liability related to unremitted forei
gn 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.
ff
82
AGILENT TECHNOLOGIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
7. 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.
Numerator:
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Denominators:
Basic weighted average shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Potential common shares — stock options and other employee stock plans
Diluted weighted average shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Years Ended October 31,
2021
2020
(in millions)
2019
1,210
$
719
$
1,071
304
3
307
309
3
312
314
4
318
ff
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 effecff
potentially dilutive awards.
t fromff
ff
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 effeff ct 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
r value collectively were greater than the average market price of our common stock because their effect would
unamortized faiff
also be anti-dilutive.
In 2021, 2020 and 2019, we issued share-based awards of approximately 2.1 million, 2.4 million and 1.8 million,
respectively. For the years ended 2021, 2020 and 2019, the impacts of the anti-dilutive potential common shares that were
excluded from the calculation of diluted earnings per share were not material.
8.
INVENTORY
Inventory as of October 31, 2021 and 2020 consisted of the folff
lowing:
October 31,
2021
2020
Finished goods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Purchased parts and fabric
Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
ated assemblies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
a
$
(in millions)
463
367
830
$
417
303
720
Inventory-related excess and obsolescence charges of $29 million were recorded in cost of products in 2021, $28 million
in 2020 and $19 million in 2019. 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-cancelable purchase commitments.
tt
83
AGILENT TECHNOLOGIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
9.
PROPERTY, PLANT AND EQUIPMENT, NET
Property, plant and equipment as of October 31, 2021 and 2020, consisted of the following:
October 31,
2021
2020
Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Buildings and leasehold improvements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Machinery and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Software . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total property, plant and equipment
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accumulated depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Property, plant and equipment, net
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
$
(in millions)
61
1,147
638
221
2,067
(1,122)
945
$
58
1,055
579
182
1,874
(1,029)
845
During 2021 and 2020 we recorded $2 million and $6 million, respectively, in asset impairments. In 2020 asset impairments
related to the shutdown of our sequencer development program. There were no asset impairments in 2019. Depreciation
expenses were $122 million in 2021, $119 million in 2020 and $111 million in 2019. In 2021 and 2020 we retired
y depreciated and no longer
approximately $35 million and $29 million, respectively, of assets, the majora
in use.
ity of which were full
ff
10. LEASES
operating lease agreements forff
As a lessee, we have various non-cancelablea
office space, warehouses, distribution centers,
research and development facilities, manufacturing and production locations as well as vehicles, personal computers and other
equipment. Our real estate leases have remaining lease terms of one to thirty years, which represent the non-cancelablea
periods
of the leases and include extension options that we determined are reasonably certain to be exercised. We exclude options that
ears. Our lease payments
are not reasonably certain to be exercised from our lease terms, ranging from six months to twenty yt
consist primarily of fixed rental payments forff
the right to use the underlying leased assets over the lease terms. We often receive
incentives fromff
our landlords, such as rent abatement periods, which effectively reduce the total lease payments owed for these
leases. Vehicle, personal computer and other equipment operating leases have terms between three and five years.
The components of lease cost forff
operating leases were as follows:
Operating lease cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Short-term lease cost
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
lease cost (a)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Variablea
Sublease income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total lease cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
$
Year Ended October 31,
2021
2020
(in millions)
59 $
2
14
(13)
62
60
1
14
(14)
61
(a) Variable lease cost includes cancelablea
leases, non-fixed maintenance costs and non-recoverable transaction taxes.
Total rent expense was $75 million in 2019.
Supplemental cash flow information related to leases was as follows:
Year Ended October 31,
2021
2020
(in millions)
Cash paid forff
amounts included in the measurement of lease liabilities:
Operating cash flow from operating leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-cash right of use assets obtained in exchange for operating lease obligations . .
$
$
57
53
$
$
59
37
84
AGILENT TECHNOLOGIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Supplemental balance sheet information related to leases was as foll
ff
ows:
Financial Statement Line Item
2021
2020
(in millions, except lease term and discount
rate)
October 31,
Assets:
Operating lease:
Right of use asset . . . . . . . . . . . . . . . . . . . . . . . . . . . Other assets
Liabilities:
Current
Operating lease liabia lities . . . . . . . . . . . . . . . . . . . . . Other accrued liabia lities
Long-term
Operating lease liabia lities . . . . . . . . . . . . . . . . . . . . . Other long-term liabilities
Weighted average remaining lease term (in years)
Operating leases . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Weighted average discount rate
Operating leases . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
$
$
178
$
175
52
130
$
$
51
127
7.6 years
7.9 years
1.9 %
2.1 %
Future minimum rents payable as of October 31, 2021 under non-cancelable leases with initial terms exceeding one year
reconcile to lease liabia lities included in the consolidated balance sheet as follows:
2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2023 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2024 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2025 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2026 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Thereafter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
minimum lease payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less: amount of lease payments representing interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Present value of future minimum lease payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less: current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Long-term lease liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total undiscounted future
ff
Operating Leases
(in millions)
55
44
27
15
10
48
199
(17)
182
(52)
130
$
$
$
$
As of October 31, 2021, we had no additional significant operating or finance leases that had not yet commenced.
As a lessor, we have contracts forff
equipment leased to customers primarily in connection with our diagnostics business
which include both operating-type lease and sales-type finance lease arrangements. We account for the non-lease component
under the revenue recognition ASC 606 guidance and the lease component under the leasing ASC 842 guidance. Equipment
lease revenue for operating lease agreements is recognized as visualization kits and reagents are shipped over the life of the
lease. The cost of customer leased equipment is recorded within property, plant and equipment, and is netted in the consolidated
balance sheet with depreciation over the equipment’s estimated usefulff
life. For an arrangement that has been classified as a
sales-type lease, revenue is recognized when the transfer of control of the underlying leased asset has occurred and the net
investment lease recorded which is calculated at the present value of the remaining lease payments dued
from the lessee.
Revenue allocated to the lease income for both sales-type finance lease and operating lease rental arrangements represents
less than one percent of total net revenue in the year ended October 31, 2021.
As of October 31, 2021, the original cost and net book value of operating leased assets were $38 million and $7 million,
respectively. As of October 31, 2021, lease receivables related to sales-type leases were $48 million. As of October 31, 2020,
85
AGILENT TECHNOLOGIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
the original cost and net book value of operating leased assets was $43 million and $12 million, respectively. As of October 31,
2020, lease receivablea
s related to sales-type leases were $44 million.
11. GOODWILL AND OTHER INTANGIBLE ASSETS
The following tablea
ended October 31, 2020 and 2021:
presents goodwill balances and the movements forff
each of our reportable segments during the years
Life Sciences
and Applied
Markets
Diagnostics
and
Genomics
Agilent
CrossLab
Total
Goodwill as of October 31, 2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Foreign currency translation impact
Goodwill as of October 31, 2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
. . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign currency translation impact
Goodwill arising from acquisitions and adjustments . . . . . . . . . . . . . . .
Goodwill as of October 31, 2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
. . . . . . . . . . . . . . . . . . . . . . . . . . .
1,438
3
1,441
5
—
1,446
$
$
$
As of September 30, 2021, our annual impairment test date, we assessed goodwill forff
(in millions)
$
1,594
5
1,599
—
365
1,964
$
$
561
1
562
3
—
565
$
$
$
3,593
9
3,602
8
365
3,975
including impacts due to COVID-19, and determined no impairment of goodwill was indicated forff
triggering events and circumstances,
our reporting units.
The component parts of other intangible assets at October 31, 2020 and 2021 are shown in the tablea
below:
As of October 31, 2020:
Purchased technology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Trademark/Tradename . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Customer relationships . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Third-party technology and licenses . . . . . . . . . . . . . . . . . . . . . . . . .
Total amortizablea
intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . $
In-Process R&D . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
As of October 31, 2021:
Purchased technology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Backlog . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Trademark/Tradename . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Customer relationships . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Third-party technology and licenses . . . . . . . . . . . . . . . . . . . . . . . . .
Total amortizablea
intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . $
In-Process R&D . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Other Intangible Assets
Gross
Carrying
Amount
Accumulated
Amortization
(in millions)
Net Book
Value
1,429
196
330
11
1,966
10
1,976
1,742
8
196
357
11
2,314
11
2,325
$
$
$
$
$
$
863
117
158
7
1,145
—
1,145
972
3
133
228
8
1,344
—
1,344
$
$
$
$
$
$
566
79
172
4
821
10
831
770
5
63
129
3
970
11
981
During fiscal year 2021, we recorded additions to goodwill of $365 million and additions to other intangible assets of
$343 million with a weighted average life of 11 years related to the purchase of Resolution Bioscience. During the year other
intangible assets increased $2 million duedd
ign currency translation.
to the impact of foreff
During fiscal year 2020, we recorded no additions to goodwill or to intangible assets. During the year ended October 31,
2020 we moved $15 million of in-process research and development intangible assets to purchased technology on the
completion of three projects. The increase in other intangible assets due to foreign currency translation was not material in
2020.
86
AGILENT TECHNOLOGIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
In general, forff United States fede
ff
ral tax purposes, goodwill fromff
asset purchases is amortizablea
; however, any goodwill
created as part of a stock acquisition is not deductible.
There were no impairments of indefinite-lived intangible assets during fiscal years 2021 and 2019. During fiscal year
2020, we recorded an impairment of in-process research and development of $90 million in research and development expenses
in the consolidated statement of operations which was related to the shutdown of our sequencer development program in our
diagnostics and genomics segment. During fiscal years 2021, 2020 and 2019, there were no impairments of finite-lived
intangible assets recorded. During 2020, we also wrote-off the gross carrying amount of $17 million and the related
y amortized intangible assets which were no longer being used
accumulated amortization of full
ff
Amortization expense of intangible assets was $195 million in 2021, $186 million in 2020, and $128 million in 2019.
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:
2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
2023 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
2024 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
2025 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
2026 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Thereafter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
191
143
121
96
66
353
(in millions)
12. INVESTMENTS
The following tablea
summarizes the company's equity investments as of October 31, 2021 and 2020 (net book value):
Short-Term
Equity investments - with readily determinable faiff
r value . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
91
Long-Term
fair value . . . . . . . . . . . . . . . . . . . . . . . . . . $
Equity investments - without readily determinablea
Equity investments - with readily determinable faiff
r value . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Trading securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total long-term investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
120
31
34
185
$
$
—
103
25
30
158
October 31,
2021
2020
(in millions)
Equity investments without readily determinable fair value (RDFV) consist of non-marketable equity securities issued by
using the measurement alternative at cost adjusting for impairments
private companies. These investments are accounted forff
and observable price changes (orderly transactions for the identical or a similar security from the same issuer). The adjustments
are included in net income in the period in which they occur. Equity investments with RDFV consist of marketable equity
value, with gains or losses resulting from changes in fair value
securities which are publicly traded and are reported at fair
value,
included in net income. Other investments with RDFV consist of shares we own in a special fund and are reported at fair
with gains or losses resulting from changes in faiff
r value included in net income.
ff
ff
Trading securities, which are comprised of mutual
deferred compensation liability are reported at fair
currently in net income.
ff
t
funds, bonds and other similar instruments, other investments and
value, with gains or losses resulting from changes in fair value recognized
Our investments without RDFV and marketable equity securities with RDFV are subject to periodic impairment review.
The impairment analysis requires significant judgment to identify events or circumstances that would likely have a significant
adverse effect on the future value of the investment.
87
AGILENT TECHNOLOGIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Gains and losses reflected in other income (expense), net for our equity investments with RDFV and equity investments
without RDFV are summarized below:
Years Ended October 31,
2021
2020
( in millions)
2019
Net gain recognized during
dd
the period on equity securities . . . . . . . . . . . . . . . . . . . . . . . $
Less: Net gain on equity securities sold during the period . . . . . . . . . . . . . . . . . . . . . .
Unrealized gain on equity securities held as of the end of the period . . . . . . . . . . . . . . . $
98
(6)
92
$
$
27 $
—
27 $
4
—
4
Net unrealized gains on our equity securities without RDFV were $17 million, $27 million and $1 million in 2021, 2020
and 2019, respectively. Upon adoption of new accounting guidance relating to financial instruments beginning fiscal year 2019,
the gains and losses on such securities are recognized in other income (expense) and therefore not applicable in prior periods.
As of November 1, 2019, total impact of adoption of this accounting guidance to our consolidated balance sheet was an increase
of $7 million to equity securities with RDFV (included within long-term investments) and a net increase of $5 million to
beginning retained earnings.
Net unrealized gains on our trading securities portfolio were $8 million in 2021, $2 million in 2020 and $3 million in
2019.
13. 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
measurements forff
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 liabila
ity.
ff
Fair Value Hierarchyh
The guidance establishes a fair
value hierarchy that prioritizes the use of inputs used in valuation techniques into three
ncial instrument's categorization within the fair value hierarchy is based upon the lowest level of input that is
levels. A finaff
significant to the fair value measurement. There are three levels of inputs that may be used to measure fair value:
ff
Level 1 — appli
a
es to assets or liabilities for which there are quoted prices in active markets forff
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 — appli
a
es 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.
88
AGILENT TECHNOLOGIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Financial Assets and Liabilitll iett s MeaMM sured at Fair Value on a Recurringii Basis
Financial assets and liabia lities measured at fair value on a recurring basis as of October 31, 2021 were as follow
ff
s:
Fair Value Measurement
at October 31, 2021 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,
2021
Assets:
Short-term
Cash equivalents (money market funds) . . . . . . . . . . . . . . . $
Derivative instruments (foreign exchange contracts) . . . . .
Short-term investments - Equity securities with RDFV . . .
Long-term
Trading securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total assets measured at fair value . . . . . . . . . . . . . . . . . . . . . . . $
Liabilities:
Short-term
Derivative instruments (foreign exchange contracts) . . . . . $
Contingent consideration . . . . . . . . . . . . . . . . . . . . . . . . . .
Long-term
Deferred compensation liability . . . . . . . . . . . . . . . . . . . . .
Contingent consideration . . . . . . . . . . . . . . . . . . . . . . . . . .
Total liabilities measured at fair value . . . . . . . . . . . . . . . . . . . . $
919
9
91
34
31
1,084
5
62
34
27
128
$
$
$
$
919
—
83
34
—
1,036
$
$
$
— $
—
—
—
— $
— $
9
8
—
31
48
5
—
34
—
39
$
$
$
$
—
—
—
—
—
—
—
62
—
27
89
Financial assets and liabia lities measured at fair value on a recurring basis as of October 31, 2020 were as follows:
Fair Value Measurement
at October 31, 2020 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,
2020
Assets:
Short-term
Cash equivalents (money market funds) . . . . . . . . . . . . . . . $
Derivative instruments (foreign exchange contracts) . . . . .
Short-term investments - Equity securities with RDFV . . .
Long-term
Trading securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total assets measured at fair value . . . . . . . . . . . . . . . . . . . . . . . $
Liabilities:
Short-term
Derivative instruments (foreign exchange contracts) . . . . . $
Contingent consideration . . . . . . . . . . . . . . . . . . . . . . . . . .
Long-term
Deferred compensation liability . . . . . . . . . . . . . . . . . . . . .
Contingent consideration . . . . . . . . . . . . . . . . . . . . . . . . . .
Total liabilities measured at fair value . . . . . . . . . . . . . . . . . . . . $
740
2
—
30
25
797
17
—
30
—
47
$
$
$
$
740
—
—
30
—
770
$
$
— $
—
—
—
— $
— $
2
—
—
25
27
17
—
30
—
47
$
$
$
—
—
—
—
—
—
—
—
—
—
—
89
AGILENT TECHNOLOGIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
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. Short-term investments - equity s
ecurities with readily
fair value are shares in marketable equity securities which are classified as Level 1 in the fair value hierarchy as
determinablea
they are measured based on quotes in active markets. Equity securities with RDFV also includes potential shares received from
an equity investment in a company that went public and can vest under certain stock performance circumstances. These have
been classified as Level 2 because the fair value was calculated using the Monte Carlo simulation method in which quoted
market price and other observable inputs are used. Other investments represent shares we own in a special fund that targets
underlying investments of approximately 40 percent in debt securities and 60 percent in equity securities. It has been classified
as level 2 because, although the shares of the fund are not traded on any active stock exchange, each of the individual
underlying securities are or can be derived from and hence we have a readily determinable value for the underlying securities,
from which we are able to determine the fair market value for the special fund
itself.
ff
t
Certain derivative instruments are reported at fair value, with unrealized gains and losses, net of tax, included in
the sale of these
accumulated other comprehensive income (loss) within stockholders' equity. Realized gains and losses fromff
instruments are recorded in net income.
Contingent Consideration. The fair value of the contingent consideration liability relates to milestone payments in
connection with the April 2021 acquisition of Resolution Bioscience. The fair value of the potential future milestone payments,
which are set to certain revenue and technical targets, was based on (i) the probability of achieving the relevant revenue targets
and technical milestones and (ii) the timing of achieving such milestones, which are significant unobservable inputs, and has
been classified as Level 3. We used the Monte Carlo simulation approach to estimate the fair value of the revenue component
with an asset volatility of 55.8 percent and revenue volatilities ranging from 12.1 to 14.3 percent. The probability-weighted
expected returnt
method was used to estimate the fair value of the technical target component. Assumptions used in the
calculations include probability of success, duration of the earn-out and discount rate. A change in any of these unobservable
inputs can significantly change the fair value of the contingent consideration.
As of October 31, 2021, the expected maximum earn-out period for the contingent payments does not exceed 3.2 years
and potential future payments will not exceed $145 million. The fair value of the contingent consideration liability as of
October 31, 2021 was estimated to be $89 million of which $62 million was recorded in other accrued liabia lities and $27
million was recorded in other long-term liabilities on the consolidated balance sheet. The decrease in the fair value of the
contingent consideration was primarily driven by a change in the probabila
ity of achieving the relevant revenue targets.
The contingent consideration liability is our only Level 3 asset or liabila
ity. A summary of the Level 3 activity foll
ff
ows:
Balance at October 31, 2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Additions to contingent consideration (including measurement period adjustment) . . . . . . . . . . . . . . .
Change in fair value (included within selling, general and administrative expenses) . . . . . . . . . . . . . .
Balance at October 31, 2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
$
—
110
(21)
89
Contingent Consideration
(in millions)
90
AGILENT TECHNOLOGIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Assets and Liabil
itll iett s MeaMM sured at Fair Value on a Non-RNN
ii
ecurringii Basis
Long-Lived Assets
For assets measured at fair value on a non-recurring basis, the following tablea
summarizes the impairments included in
net income for the years ended October 31, 2021, 2020 and 2019:
Long-lived assets held and used . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Long-lived assets held forff
Years Ended
October 31,
2021
2020
(in millions)
98
2
$
$
— $
— $
2019
—
—
For the year ended October 31, 2021, long-lived assets held and used with a carrying value of $2 million were written
down to their fair value of zero, resulting in an impairment of $2 million. For the year ended October 31, 2020, long-lived
assets held and used, including indefinite lived in-process research and development intangible assets, with a carrying amount
of $98 million were written down to their fair value of zero, resulting in an impairment charge of $98 million related to the
shutdown of our sequencer development program and other assets in our diagnostics and genomics segment. There were no
impairments of long-lived assets held and used in 2019.
There were no impairments of long-lived assets held forff
sale in 2021, 2020 and 2019.
Fair values for the impaired long-lived assets during 2020 were measured using level 3 inputs. To determine the fair
ch based on projected discounted cash flows expected to be
a
value of long-lived assets in 2020, we used the income approa
generated by the long-lived assets over the remaining useful life.
For the years ended October 31, 2021, 2020 and 2019 , there were no impairments in non-marketable securities without
readily determinablea
fair value. For the years ended October 31, 2021, 2020 and 2019, net unrealized gains of $17 million,
$27 million and $1 million, respectively, were included in net income as an adjustment to the carrying value of non-marketable
fair value based on an observable market transaction. As of October 31, 2021 and
equity securities without readily determinablea
2020, the carrying amount of non-marketable equity securities without readily determinablea
fair values was $120 million and
$103 million, respectively.
Fair values for the non-marketable securities included in long-term investments on the consolidated balance sheet were
measured using Level 3 inputs because they are primarily equity stock issued by private companies without quoted market
prices. To estimate the fair value of our non-marketable securities, we use the measurement alternative to record these
investments at cost and adjust for impairments and observable price changes (orderly transactions for the identical or a similar
security from the same issuer) as and when they occur.
14. DERIVATIVES
ions and interest rate changes in the normal course of our
t
We are exposed to foreign currency exchange rate fluct
uat
business. As part of our risk management strategy, we use derivative instruments, primarily forward contracts and purchased
options to hedge economic and/or accounting exposures resulting from changes in foreign currency exchange rates.
ff
Cash FlowFF
Hedges
ff
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
ities between one and
twelve months. These derivative instruments are designated and qualify as cash flow hedges under the criteria prescribed in the
effectiveness against the underlying exposure every reporting period. For open
authoritative guidance and are assessed forff
the assessment
contracts as of October 31, 2021, changes in the time value of the foreign exchange contract are excluded fromff
of hedge effectiveness and are recognized in cost of sales over the life of the foreign exchange contract. The changes in faiff
r
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
value, have maturtt
ff
91
AGILENT TECHNOLOGIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
be de-designated and amounts accumulated in other comprehensive income (loss) will be reclassified to other income
(expense), net in the current period. Changes in the fair value of the ineffective portion of derivative instruments are recognized
in other income (expense), net 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 cost of sales over the life of the option
contract. For the years ended October 31, 2021, 2020 and 2019, ineffectiveness and gains and losses recognized in other
income (expense), net due to de-designation of cash flow hedge contracts were not significant.
In July 2012, Agilent executed treasury lock agreements forff
$400 million in connection with future interest payments to
be made on our 2022 senior notes issued on September 13, 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 (loss) which is being amortized to interest expense over the life of the 2022 senior notes. On January 21,
2021 we redeemed $100 million of the $400 million aggregate principal amount of our 2022 senior notes. On April 5, 2021, we
redeemed the remaining outstanding $300 million of our 2022 senior notes. We also recognized the remaining deferred gain on
the terminated treasury lock related to the 2022 senior notes to other income (expense), net. For more information see Note 19,
"Long-Term Debt".
ff
In February 2016, Agilent executed three forward-st
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 instrume
nts were designated and qualified as cash flow hedges under the criteria prescribed in the
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 (loss) which is being amortized to interest
greements at
expense over the life of the 2026 senior notes. The remaining loss to be amortized related to the interest rate swap aa
October 31, 2021 was $5 million.
arting pay fixed/receive variable interest rate swaps forff
rr
In August 2019, Agilent executed treasury lock agreements forff
$250 million in connection with future interest payments
to be made on our 2029 senior notes issued on September 16, 2019. We designated the treasury lock as a cash flow hedge. The
treasury lock contracts were terminated on September 6, 2019 and we recognized a deferred loss of $6 million in accumulated
other comprehensive income (loss) which is being amortized to interest expense over the life of the 2029 senior notes. The
remaining loss to be amortized related to the treasury lock agreements at October 31, 2021 was $5 million.
Net Investment Hedges
ff
We enter into foreign
exchange contracts to hedge net investments in foreign
operations to mitigate the risk of adverse
movements in exchange rates. These foreign exchange contracts are carried at fair value and are designated and qualify as net
value of the effective portion of
investment hedges under the criteria prescribed in the authoritative guidance. Changes in fair
effectiveness
the derivative instrument are recognized in accumulated other comprehensive income (loss) and are assessed forff
against the underlying exposure every reporting period. If the company’s net investment changes during
the year, the hedge
relationship will be assessed and de-designated if the hedge notional amount is outside of prescribed tolerance with a gain/loss
from other comprehensive income (loss) to other income (expense) in the current period. For the year ended
reclassifiedff
October 31, 2021, ineffectiveness and the resultant effect
of any gains or losses recognized in other income (expense) due to de-
ff
designation of the hedge contracts were not significant.
d
ff
ff
s
Other HedgeHH
ff
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), net 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.
ff
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 facff
shed policies and procedures for
tors. We have establia
mitigating credit risk that include establia
shing counterparty credit limits, monitoring credit exposures, and continually assessing
the creditworthiness of counterparties.
92
AGILENT TECHNOLOGIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
A number of our derivative agreements contain threshold limits to the net liability position with counterparties and are
credit rating agencies. The counterparties to the derivative
dependent on our corporate credit rating determined by the majora
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, 2021, was $3 million. The credit-risk-related contingent features underlying these
agreements had not been triggered as of October 31, 2021.
There were 264 foreign exchange forward contracts open as of October 31, 2021 and designated as cash flow hedges.
There were 181 foreign exchange forward contracts open as of October 31, 2021 not designated as hedging instruments. There
were 9 foreff
ign exchange forward contracts open as of October 31, 2021 and designated as a net investment hedge.
The aggregated notional amounts by currency and designation as of October 31, 2021 were as follows:
Currency
Euro . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
British Pound . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Canadian Dollar . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Japanese Yen . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Danish KroneKK
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Korean Won . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Singapore Dollar . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Swiss Franc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Chinese Yuan Renminbi . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Taiwan Dollar . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Brazilian Real
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
Derivatives
Designated as
Cash Flow Hedges
Forward
Contracts USD
Buy/(Sell)
Derivatives
Designated as
Net Investment
Hedges
Forward
Contracts USD
Buy/(Sell)
(in millions)
Derivatives
Not
Designated
as Hedging
Instruments
Forward
Contracts USD
Buy/(Sell)
(86) $
(66)
(53)
(87)
—
(60)
16
—
(87)
—
—
4
(419) $
(93) $
—
—
—
—
—
—
—
—
—
—
—
(93) $
65
(3)
(2)
(43)
36
(18)
26
(10)
(37)
(17)
(14)
(9)
(26)
Derivative instruments are subjecb
t to master netting arrangements and are disclosed gross in the balance sheet in
accordance with the authoritative guidance.
93
AGILENT TECHNOLOGIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
The gross fair values and balance sheet location of derivative instruments held in the consolidated balance sheet as of
October 31, 2021 and 2020 were as follows:
Asset Derivatives
Liability Derivatives
Fair Values of Derivative Instruments
Fair Value
October 31,
2021
October 31,
2020
(in millions)
Balance Sheet Location
Fair Value
October 31,
2021
October 31,
2020
Balance Sheet Location
Derivatives designated as hedging
instruments:
Cash floff w hedges
Foreign exchange contracts
Other current assets . . . . . . . . . . . . $
6
$
— Other accruedrr
liabilities
$
2
$
12
Derivatives not designated as
hedging instruments:
Foreign exchange contracts
Other current assets . . . . . . . . . . . . . $
Total derivatives . . . . . . . . . . . . . . . . . $
3
9
$
$
2 Other accruedrr
2
liabilities
$
$
3
5
$
$
5
17
The effects of derivative instruments forff
foreign exchange contracts designated as hedging instruments and not
designated as hedging instruments in our consolidated statement of operations were as follows:
ff
Derivatives designated as hedging instruments:
Cash floff w hedges
Foreign exchange contracts:
accumulated other comprehensive income (loss) into
Loss on interest rate swaps recognized in other comprehensive income (loss) . . . . $
Loss reclassified fromff
interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Gain (loss) recognized in accumulated other comprehensive income (loss) . . . . . . $
Gain (loss) reclassified fromff
cost of sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Gain on time value of forward contracts recorded in cost of sales . . . . . . . . . . . . . . $
accumulated other comprehensive income (loss) into
Years Ended October 31,
2021
2020
2019
(in millions)
— $
— $
(1) $
$
2
(16) $
— $
(1) $
(12) $
(1) $
$
2
Net investment hedges
Foreign exchange contracts:
Gain (loss) recognized in accumulated other comprehensive income (loss) -
translation adjustmd
Gain on time value of forward contracts recorded in other income (expense) . . . . .
ent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
$
1
1
(5) $
—
Derivatives not designated as hedging instruments:
Gain (loss) recognized in other income (expense), net
. . . . . . . . . . . . . . . . . . . . . . . $
— $
(1) $
(6)
(1)
—
9
2
—
—
2
At October 31, 2021 the total amount of existing net gain that is expected to be reclassified fromff
accumulated other
comprehensive income (loss) is $2 million. Within the next twelve months it is estimated that $5 million of gain included
within the net amount of accumulated other comprehensive income (loss) will be reclassifiedff
to cost of sales in respect of cash
flow hedges.
94
AGILENT TECHNOLOGIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
15. 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 forff
our eligible U.S. employees.
Agilent provides defined benefits to U.S. employees who meet eligibility criteria under the Agilent Technologies, Inc.
Retirement Plan (the "RP").
For eligible service through October 31, 1993, the benefit payablea
under the Agilent Retirement Plan 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.
As of October 31, 2021 and 2020, the fair value of plan assets of the DPSP was $136 million and $123 million,
respectively. Note that the projected benefit obligation for the DPSP equals the fair value of plan assets.
Effective November 1, 2014, Agilent’s U.S. defined benefit retirement plan was 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. Any pension
benefit earned in the U.S. Plans through April 30, 2016 remained fully vested, and there are no additional benefit accruals after
April 30, 2016.
Agilent also maintains a Supplemental Benefits Retirement Plan ("SBRP") in the U.S., which is a 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 tablea
s 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.
Post-Retirement Medical Benefitff 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.
As of January 1, 2020, the Health Plan for Retirees is comprised solely of insured pre-65 HMOs as the self-funded Pre-
Medicare Medical Plan was eliminated effective December 31, 2019. The Health Plan for Retirees was closed to new retiree
entrants after December 31, 2020.
If eligible, a retiree may receive a fixeff
d amount (different fixed amounts for different groups) under the Retiree
Medical Account (“RMA”) or a fixff ed monthly amount under the Agilent Reimbursement Arrangement (“ARA”).
RR
Any new employee hired on or after November 1, 2014, will not be eligible to participate in the post-retirement
medical benefit plans upon retiring.
401(k) Defined Contribution Plan. Eligible Agilent U.S. employees may participate in the Agilent Technologies, Inc.
401(k) Plan. We match 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
$43 million in 2021, $41 million in 2020 and $39 million in 2019.
95
AGILENT TECHNOLOGIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
f No
Components ott
etNN periodic cost. The service cost component is recorded in cost of sales and operating expenses in the
consolidated statement of operations. All other cost components are recorded in other income (expense), net in the consolidated
statement of operations. 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, 2021, 2020 and 2019, 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
2021
2020
2019
2021
2020
(in millions)
2019
2021
2020
2019
Net periodic benefit cost (benefit)
d
Service cost — benefits earned during
period . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ — $ — $ — $
Interest cost on benefit obligation . . . . . . .
the
14
18
15
Expected returntt
on plan assets . . . . . . . . .
(29)
Amortization of net actuarial loss . . . . . . .
4
(28)
3
(27)
1
Amortization of prior service benefit . . . .
Total periodic benefit cost (benefit)
—
. . . . . . $ (11) $ (10) $
—
—
(8) $
$
22
8
24
8
$
$
20
14
(49)
(47)
(43)
53
—
34
$
49
—
34
$
34
—
25
$ —
4
$
1
2
(6)
4
1
3
(7)
4
(1)
$ — $
(7)
(6) $
Settlement loss . . . . . . . . . . . . . . . . . . . . . . . $
Other changes in plan assets and benefit
obligations recognized in other
comprehensive (income) loss
1
$
4
$ — $ — $ — $ — $ — $ — $ —
Net actuarial (gain) loss . . . . . . . . . . . . . . $ (92) $
Amortization of net actuarial loss . . . . . . .
(4)
Amortization of prior service benefit . . . .
Loss due to settlement . . . . . . . . . . . . . . . .
Foreign currency . . . . . . . . . . . . . . . . . . . .
—
(1)
—
Total recognized in other comprehensive
(income) loss . . . . . . . . . . . . . . . . . . . . . . . . $ (97) $
Total recognized in net periodic benefit cost
(benefit) and other comprehensive (income)
loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (107) $
26
(3)
—
(4)
—
(7)
4
(8)
(7)
8
—
—
9
2
$
51
(1)
$ (114) $
(53)
20
(49)
$ 104
(34)
$ (30) $
(4)
$
5
(4)
5
(4)
—
—
—
—
—
5
—
—
10
—
—
(3)
1
—
—
7
—
—
19
$
50
$ (162) $ (19) $
67
$ (33) $
8
$
13
$
42
$ (128) $
15
$
92
$ (33) $
2
$
96
AGILENT TECHNOLOGIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Funded Status. As of October 31, 2021 and 2020, the funde
ff
d status of the defineff
d benefit and post-retirement benefit
plans was:
U.S. Defined
Benefit Plans
Non-U.S. Defined
Benefit Plans
U.S.
Post-Retirement
Benefit Plans
2021
2020
2021
2020
2021
2020
Change in fair value of plan assets:
Fair value — beginning of year . . . . . . . . . . . . . . . . . . . . . . $
Actual returnt
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 . . . . . . . . . . . . . . . . . . . . . . . . . . .
Actuari
al (gain) loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
t
Benefits paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
439
138
—
—
(8)
(18)
—
551
510
—
14
—
15
(8)
(19)
—
512
39
46
(1)
(6)
39
36
—
36
$
$
$
(in millions)
432
30
—
—
(8)
(15)
—
439
491
—
15
—
28
(9)
(15)
—
510
$
945
160
19
1
(31)
—
(1)
$ 1,093
$ 1,094
22
8
1
2
(31)
—
4
$ 1,100
$
$
911
(2)
32
1
(31)
—
34
945
$ 1,067
24
8
1
(19)
(31)
—
44
$ 1,094
$
$
$
$
(71) $
(7) $ (149) $
$
$
$
$
$
$ — $
$
160
—
123
—
$
(167)
(272)
(7) $ (149) $
(1)
(70)
(71) $
93
28
—
—
(5)
—
—
116
94
1
2
—
(8)
(5)
—
—
84
32
32
—
—
32
$
$
$
$
$
95
6
—
—
(8)
—
—
93
94
1
3
—
4
(8)
—
—
94
(1)
$ —
—
$
(1)
(1)
11
(5)
6
134
—
134
$
$
149
—
149
$
$
311
—
311
$
$
(23) $
(4)
(27) $
The actuarial gains and losses related to the change in plan obligations were a total of $9 million net loss and $13 million
net loss for the years ended October 31, 2021 and 2020, respectively. The actuarial net loss that arose in 2021 was primarily due
to changes in financial and demographic assumptions, losses due to plan experience offset by increases in discount rates. The
actuarial net loss that arose during
to plan experience
partially offset by financial and demographic assumption changes.
2020 was largely driven by a decline in discount rates and losses duedd
dd
97
AGILENT TECHNOLOGIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Investment Policies and Strategies as of October 31, 2021 and 2020. 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 as of October 31, 2020 and were changed to approximately 50 percent to equities and approximately 50
percent to fixed income investments as of October 31, 2021. Our DPSP target asset allocation is approximately 60 percent to
equities and approximately 40 percent to fixed income investments. Approximately 1 percent of the retirement and post-
retirement plans consist of limited partnerships. The general investment objective for all our plan assets is to obtain the
on the total investment portfolio consistent with the assumptim on of a reasonable level of risk.
optimum rate of investment returntt
the plans' portfolios are to: maintain and enhance the purchasing power of the plans' assets;
Specific investment objectives forff
achieve investment returns
in accordance with
15 percent to 60 percent
the benchmarks adopted for each asset class. Outside the U.S., our target asset allocation ranges fromff
to equities, from 38 percent to 85 percent to fixed income investments, and from zero to 25 percent to real estate, 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, 2021 and 2020 differ fromff
the target allocation. Our policy is to bring the actual allocation in line with the target
allocation.
consistent with the level of risk being taken; and earn performance rates of returnt
t
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.
ff
ff
Fair ValVV ue. The measurement of the fair value of pension and post-retirement plan assets uses the valuation
methodologies and the inputs as described in Note 13, "Fair Value Measurements".
Cash and Cash Equivalents - Cash and cash equivalents consist of short-term investment funds. The funds also invest in
ing short-term maturities
Other cash and cash equivalents are
short-term domestic fixff ed income securities and other securities with debt-like characteristics emphasiz
and quality. Some of our cash and cash equivalents are held in commingled funds.
classified as Level 1 investments.
m
ff
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 include partnership investments where, duedd
to their private naturt e, pricing
inputs are not readily observablea
. 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.
98
AGILENT TECHNOLOGIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
The folff
lowing 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, 2021 and 2020.
Fair Value Measurement
at October 31, 2021 Using
October 31,
2021
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 . . . . . . . . . . . . . . . . . . . . . . . . .
Total assets measured at fair value . . . . . . . . . . . $
2
276
271
2
551
$
$
— $
62
2
—
64
$
— $
—
—
—
— $
— $
—
—
2
2
$
2
214
269
—
485
(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, 2020 Using
October 31,
2020
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 . . . . . . . . . . . . . . . . . . . . . . . . .
Total assets measured at fair value . . . . . . . . . . . $
1
357
79
2
439
$
$
— $
77
39
—
116
$
— $
—
—
—
— $
— $
—
—
2
2
$
1
280
40
—
321
(1) Investments measured at the net asset value per share (or its equivalent) practical expedient have not been classified in the fair value
hierarchy.
For U.S. Defined Benefit Plans assets measured at fair value using significant unobservable inputs (level 3), the
following tablea
summarizes the change in balances during 2021 and 2020:
Balance, beginning of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Realized gains/(losses) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Unrealized gains/(losses) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Purchases, sales, issuances, and settlements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Transfers in (out) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Balance, end of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
2
1
—
(1)
—
2
$
$
4
(3)
2
(1)
—
2
Years Ended
October 31.
2021
2020
99
AGILENT TECHNOLOGIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
The folff
lowing 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, 2021 and 2020.
Fair Value Measurement
at October 31, 2021 Using
October 31,
2021
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 . . . . . . . . . . . . . . . . . . . . . . . . .
Total assets measured at fair value . . . . . . . . . . . $
3
55
57
1
116
$
$
— $
13
—
—
13
$
— $
—
—
—
— $
— $
—
—
1
1
$
3
42
57
—
102
(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, 2020 Using
October 31,
2020
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 . . . . . . . . . . . . . . . . . . . . . . . . .
Total assets measured at fair value . . . . . . . . . . . $
4
70
18
1
93
$
$
— $
17
9
—
26
$
— $
—
—
—
— $
— $
—
—
1
1
$
4
53
9
—
66
(1) Investments measured at the net asset value per share (or its equivalent) practical expedient have not been classified in the fair value
hierarchy.
For U.S. Post-Retirement Benefit Plans assets measured at fair value using significant unobservable inputs (level 3), the
following tablea
summarizes the change in balances during 2021 and 2020:
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,
2021
2020
1
1
—
(1)
—
1
$
$
2
(1)
1
(1)
—
1
100
AGILENT TECHNOLOGIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
The folff
lowing 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, 2021 and 2020:
Fair Value Measurement
at October 31, 2021 Using
October 31,
2021
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 . . . . . . . . . . . . . . . . . . . . . . . . .
Total assets measured at fair value . . . . . . . . . . . $
25
557
511
—
1,093
$
$
— $
380
151
—
531
$
24
12
242
—
278
$
$
— $
—
—
—
— $
1
165
118
—
284
(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, 2020 Using
Quoted Prices
in Active
Markets for
Identical Assets
(Level 1)
Significant
Other
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
October 31,
2020
Not Subject to
Leveling (1)
Cash and Cash Equivalents . . . . . . . . . . . . . . . . . . $
Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fixed Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other Investments . . . . . . . . . . . . . . . . . . . . . . . . .
Total assets measured at fair value . . . . . . . . . . . $
7
504
434
—
945
$
$
(in millions)
— $
315
102
—
417
$
6
48
238
—
292
$
$
— $
—
—
—
— $
1
141
94
—
236
(1) Investments measured at the net asset value per share (or its equivalent) practical expedient have not been classified in the fair value
hierarchy.
101
AGILENT TECHNOLOGIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
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, 2021 or 2020.
2021
2020
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
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
7
$
— $
510
$
U.S. defined benefit plans where fair value of plan assets exceeds PBO
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
505
512
$
551
551
$
—
510
$
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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
691
$
524
$
697
$
409
569
397
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
1,100
$
1,093
$
1,094
$
U.S. defined benefit plans where ABO exceeds the fair value of plan
assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
U.S. defined benefit plans where the faiff
ABO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
r value of plan assets exceeds
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
7
$
— $
510
$
505
512
$
551
551
—
$
510
$
ABO
ABO
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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
668
$
524
$
675
$
400
569
387
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
1,068
$
1,093
$
1,062
$
439
—
439
425
520
945
439
—
439
425
520
945
tt
Contribut
ions and Estimated Future Benefitff Payments. During fiscal year 2022, we expect to make no contributions to
the U.S. defined benefit plans and the Post-Retirement Medical Plans. We expect to contribute $19 million to plans outside the
U.S. The following tablea
presents expected future
benefit payments forff
the next 10 years:
ff
U.S. Defined
Benefit Plans
Non-U.S. Defined
Benefit Plans
(in millions)
U.S. Post-Retirement
Benefit Plans
2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
2023 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
2024 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
2025 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
2026 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
2027 - 2031 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
34
33
37
35
34
154
$
$
$
$
$
$
34
35
35
37
37
199
$
$
$
$
$
$
6
6
7
7
7
35
t
Assumptions. The assumptions used to determine the benefit obligations and expense for our defined benefit and post-
n assets below represents an estimate
retirement benefit plans are presented in the tablea
on investment portfolios consisting of a mixture of equities, fixed income and alternative investments in
of long-term returns
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
rate at which pension and post-retirement obligations could be settled based on the measurement dates
rates reflect the current
of the plans - October 31. The U.S. discount rates at October 31, 2021 and 2020, were determined based on the results of
s below. The expected long-term returt n or
r
tt
102
AGILENT TECHNOLOGIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
matching expected plan benefit payments with cash flows fromff
were generally based on published rates for high-quality corporate bonds. The range of assumptim ons that were used forff
U.S. defined benefit plans reflects the different economic environments within various countries.
a hypothetically constructed bond portfolio. The non-U.S. rates
the non-
Assumptions used to calculate the net periodic cost in each year were as follows:
For years ended October 31,
2021
2020
2019
U.S. defined benefit plans:
Discount rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Expected long-term return on assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2.75%
7.00%
3.25%
7.00%
4.50%
7.00%
Non-U.S. defined benefit plans:
Discount rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Average increase in compensation levels . . . . . . . . . . . . . . . . . . . . . . . . . .
Expected long-term return on assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
cash balance plans . . . . . . . . . . . . . . . . . . . . . . . .
Interest crediting rate forff
0.07-1.54%
2.00-3.00%
4.00-5.50%
0.10-0.50%
0.22-1.81%
2.25-3.00%
4.00-5.75%
0.00-0.75%
0.83-2.68%
2.25-3.25%
4.00-5.75%
0.75-0.90%
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 . . . . . . . . . . . . . .
2.50%
7.00%
6.25%
4.50%
2029
3.00%
7.00%
6.25%
4.50%
2029
4.25%
7.00%
6.00%
3.50%
2029
Assumptions used to calculate the benefit obligation were as follows:
As of the Years Ending October 31,
2021
2020
U.S. defined benefit plans:
Discount rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2.75%
2.75%
Non-U.S. defined benefit plans:
Discount rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Average increase in compensation levels . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
cash balance plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest crediting rate forff
0.29-1.76%
2.00-3.50%
0.30-0.50%
0.07-1.54%
2.00-3.00%
0.10-0.50%
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 . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2.75%
6.00%
4.50%
2027
2.50%
6.25%
4.50%
2029
.
16. GUARANTEES
Standard Warrantytt
We accrue for standard warranty costs based on historical trends in actual warranty charges over the past 12 months. The
accrual is reviewed regularly and periodically adjusted to reflect changes in warrant
y cost over the period. 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 year from the date of delivery, depending on the product.
r
103
AGILENT TECHNOLOGIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
A summary of the standard warranty accrual
rr
activity is shown in the table below.
October 31,
2021
2020
rr
, beginning balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Standard warranty accrual
Accruals for warranties including change in estimates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ng the period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Settlements made durid
rr
Standard warranty accrual
, ending balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
$
(in millions)
32
52
(54)
30
$
Accruals for warranties dued within one year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Accruals for warranties dued
Standard warranty accrual
, ending balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
after one year
rr
29
1
30
$
$
s
Bank Guaranteett
32
49
(49)
32
30
2
32
Guarantees consist primarily of outstanding standby letters of credit and bank guarantees and were approximately $46
million and $43 million as of October 31, 2021 and 2020, respectively. A standby letter of credit is a guarantee of payment
issued by a bank on behalf of us that is used as payment of last resort should we fail to fulfi
commitment with a
lt on a loan, the bank will
third party. A bank guarantee is a promise from a bank or other lending instituti
cover the loss.
on that if we defauff
ll a contractual
ff
t
tt
Indemnifici
ations in Connectiontt
withii Transactions
In connection with various divestitures, acquisitions, spin-offs aff
nd 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 liabia lities, including, but not limited to, employee, tax, environmental,
intellectual
property, litigation and other liabia lities 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, 2021.
tt
Indemnifici
ations to Officers and Directors
tt
Our corporate bylaws 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
ed officer of Agilent which provide for indemnification of these directors and officers under
director and each board-appoint
similar circumstances and under additional circumstances. The indemnification obligations are more fully described in the
bylaws 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 bylaws 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, 2021.
a
Other Indemnifi
II
tt
cations
As is customary in our industry and as provided forff
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
t
104
AGILENT TECHNOLOGIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
undiscovered liabia lities, 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, 2021.
In connection with the sale of several of our businesses, we have agreed to indemnify the buyers of such businesses, 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, 2021.
17. COMMITMENTS AND CONTINGENCIES
Other Purchase Commitments.tt Typically, we can cancel contracts with professional services suppliers without penalties.
For those contracts that are not cancelablea
continued
without penalties, there are termination feeff
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
$83 million. Approximately $22 million of the penalties for the new contracts will reduce over the next 12 years.
s and costs or commitments forff
Contingencies: We are involved in lawsuits, claims, investigations and proceedings, including, but not limited to,
property, commercial, real estate, environmental and employment matters, which arise in the ordinary course of
tt
intellectual
business. There are no matters pending that we currently believe are reasonably possible of having a material impact to our
business, consolidated finaff
ncial condition, results of operations or cash flows.
18. SHORT-TERM DEBT
Creditdd Facilities
On March 13, 2019, we entered into a credit agreement with a group of financial instituti
ons which, as amended,
a $1 billion five-year unsecured credit facility that will expire on March 13, 2024 and incremental term loan
provides forff
facilities in an aggregate amount of up to $500 million. On April 21, 2021, we entered into an incremental assumptim on
agreement, pursuant to which the aggregate amount available forff
borrowing under the revolving credit facility was increased to
$1.35 billion and the aggregate amount availablea
for incremental facilities was refreshed to remain at $500 million.
tt
As of both October 31, 2021 and 2020, we had no borrowings outstanding under the credit facff
borrowings outstanding under the incremental facff
the year ended October 31, 2021.
ilities. We were in compliance with the covenants forff
Commercialii Papera
ility and we had no
d
ility during
the credit facff
In May 2020, we established a U.S. commercial paper program, under which the company may issue and sell unsecured,
short-term promissory notes in the aggregate principal amount not to exceed $1.0 billion with up to 397-day maturities. On
June 18, 2021, we increased the authorized maximum amount of notes that may be outstanding to $1.35 billion. At any point in
time, the company intends to maintain available commitments under its revolving credit facility in an amount at least equal to
the amount of the commercial paper notes outstanding. Amounts availablea
under the program may be borrowed, repaid and re-
borrowed from time to time. The proceeds from issuances under the program may be used for general corporate purposes. As of
October 31, 2021, we had no borrowings outstanding under our U.S. commercial paper program. We had borrowings of
$75 million outstanding under the U.S. commercial paper program as of October 31, 2020.
2020 Senior Notes
On July 13, 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 were scheduled to mature on July 15,
2020, and bear interest at a fixeff
d rate of 5.00% per annum.
On August 9, 2011, we terminated our interest rate swap ca
ontracts related to our 2020 senior notes that represented the
notional amount of $500 million. The asset value, including interest receivabla e, upon termination for these contracts was
approximately $34 million. The gain was deferred and amortized to interest expense over the remaining life of the 2020 senior
notes.
105
AGILENT TECHNOLOGIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
redemption on August 16, 2019. The redemption price of approxi
On September 17, 2019, we repaid the $500 million outstanding aggregate principal amount of our 2020 senior notes dued
mately $512 million
July 15, 2020 that were called forff
included a $12 million prepayment penalty. The redemption price was computed in accordance with the terms of the 2020
senior notes as the present value of the remaining scheduled payments of principal and unpaid interest related to the
redemption. The prepayment penalty plus amortization of the previously deferred interest swap ga
ain of $4 million and
amortization of previously deferred debt issuance costs and discount of $1 million were recorded in other income (expense), net
in the consolidated statement of operations. We also paid accrued and unpaid interest of $4 million on the 2020 senior notes upu
to but not including the redemption date.
a
19. LONG-TERM DEBT
Senior Notes
The following tablea
summarizes the company's long-term senior notes:
2022 Senior Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
2023 Senior Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2026 Senior Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2029 Senior Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2030 Senior Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2031 Senior Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
October 31, 2021
October 31, 2020
Amortized
Principal
Amortized
Principal
(in millions)
—
$
599
298
494
496
842
2,729
$
400
598
298
493
495
—
2,284
2022 Senior Notes
On September 13, 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 fixff ed rate of 3.20% per annum. The interest is payablea
semi-annually on April 1st and October 1st of each year
and payments commenced on April 1, 2013.
On January 21, 2021, we redeemed $100 million of the $400 million outstanding aggregate principal amount of our 2022
senior notes dued October 1, 2022. On April 5, 2021, we redeemed the remaining outstanding $300 million of our 2022 senior
notes. The total redemption price of approxi
mately $417 million was computed in accordance with the terms of the 2022 senior
notes as the present value of the remaining scheduled payments of principal and unpaid interest on the notes being redeemed.
During the year ended October 31, 2021, we recorded a loss on extinguishment of debt of $17 million in other income
(expense), net in the consolidated statement of operations. In addition, $1 million of accrued interest, up to but not including the
applicable redemption date, was paid. The make-whole premium less partial amortization of previously deferred interest rate
swap gain together with the amortization of debt issuance costs and discount was recorded in other income (expense), net in the
consolidated statement of operations.
a
2023 Senior Notes
On June 21, 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
semi-annually on January 15th and July 15th of each year
and payments commenced January 15, 2014.
rate of 3.875% per annum. The interest is payablea
ff
2026 Senior Notes
On September 22, 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
106
AGILENT TECHNOLOGIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
and bear interest at a fixff ed rate of 3.05% per annum. The interest is payablea
of each year and payments commenced March 22, 2017.
semi-annually on March 22nd and September 22nd
In February 2016, Agilent executed three forwa
the notional
amount of $300 million in connection with future interest payments to be made on our 2026 senior notes issued on September
rrangements were terminated on September 15, 2016 with a payment of $10 million, and we recognized
15, 2016. The swap aa
this as a deferred loss in accumulated other comprehensive income (loss) 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 aa
greements at October 31,
2021 was $5 million.
rd-starting pay fixed/receive variable interest rate swaps forff
ff
2029 Senior Notes
On September 16, 2019, the company issued an aggregate principal amount of $500 million in senior notes ("2029 senior
notes"). The 2029 senior notes were issued at 99.316% of their principal amount. The notes will mature on September 15, 2029,
semi-annually on March 15th and September 15th
and bear interest at a fixff ed rate of 2.75% per annum. The interest is payablea
of each year and payments commenced on March 15, 2020.
In August 2019, Agilent executed treasury lock agreements forff
$250 million in connection with future interest payments
to be made on our 2029 senior notes issued on September 16, 2019. We designated the treasury lock as a cash flow hedge. The
treasury lock contracts were terminated on September 6, 2019 and we recognized a deferred loss of $6 million in accumulated
other comprehensive income which is being amortized to interest expense over the life of the 2029 senior notes. The remaining
loss to be amortized related to the treasury lock agreements at October 31, 2021 was $5 million.
2030 Senior Notes
On June 4, 2020, we issued an aggregate principal amount of $500 million in senior notes ("2030 senior notes"). The
2030 senior notes were issued at 99.812% of their principal amount. The 2030 senior notes will mature on June 4, 2030, and
semi-annually on June 4th and December 4th of each
bear interest at a fixff ed rate of 2.10% per annum. The interest is payablea
year and payments commenced on December 4, 2020.
2031 Senior Notes
On March 12, 2021, we issued an aggregate principal amount of $850 million in senior notes ("2031 senior notes"). The
2031 senior notes were issued at 99.822% of their principal amount. The 2031 senior notes will mature on March 12, 2031, and
bear interest at a fixff ed rate of 2.30% per annum. The interest is payablea
semi-annually on March 12th and September 12th of
each year and payments commenced on September 12, 2021.
All outstanding notes listed above are unsecured and rank equally in right of payment with all of Agilent's other senior
unsecured indebtedness.
20. STOCKHOLDERS' EQUITY
Stock Repurchase Program
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, 2019, we repurchased and retired 10.4 million shares forff
$723 million under this
authorization. During the year ended October 31, 2020, we repurchased and retired 5.2 million shares for $469 million under
this authorization. During the year ended October 31, 2021, we repurchased and retired approxi
mately 3.1 million shares for
18, 2021, the 2019 repurchase program was terminated and replaced
$365 million under this authorization. Effective February
by the new share repurchase program. The remaining authorization under the 2019 repurchase plan of $193 million expired on
February 18, 2021.
a
rr
On February 16, 2021 we announced that our board of directors had approved a new share repurchase program (the "2021
repurchase program") designed, among other things, to reduce or eliminate dilution resulting from issuance of stock under the
107
AGILENT TECHNOLOGIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
company's employee equity incentive programs. The 2021 repurchase program authorizes the purchase of up to $2.0 billion of
our common stock at the company's discretion and has no fixed termination date. The 2021 repurchase program which became
effective on February 18, 2021, replaced and terminated the 2019 repurchase program on that date. The 2021 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, 2021, we repurchased and retired 3.0 million shares forff
$423 million under this
authorization. As of October 31, 2021, we had remaining authorization to repurchase up to approximately $1.577 billion of our
common stock under the 2021 repurchase program.
Cash Dividends on Shares of Common Stock
During the year ended October 31, 2021, cash dividends of 0.776 per share, or $236 million were declared and paid on
the company's outstanding common stock. During the year ended October 31, 2020, cash dividends of 0.720 per share, or $222
million were declared and paid on the company's outstanding common stock. During the year ended October 31, 2019, cash
dividends of 0.656 per share, or $206 million were declared and paid on the company's outstanding common stock.
On November 17, 2021 we declared a quarterly dividend of $0.21 per share of common stock, or approximately $63
million which will be paid on January 26, 2022 to shareholders of record as of the close of business on January 4, 2022. The
timing and amounts of any future dividends are subject to determination and approva
l by our board of directors.
a
Accumulated Other Comprehensive Income (Loss)
The following table summarizes the components of our accumulated other comprehensive income (loss) as of October 31,
2021 and 2020, net of tax effecff
t:
Foreign currency translation, net of tax expense of $(8) and $(6) for 2021 and 2020,
respectively . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Unrealized losses (including prior service benefit) on defined benefit plans, net of tax benefit
of $80 and $154 for 2021 and 2020, respectively . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Unrealized gains (losses) on derivative instruments, net of tax benefit of $1 and $6 for 2021
and 2020, respectively . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total accumulated other comprehensive loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
October 31,
2021
2020
(in millions)
(185)
(100)
3
(282) $
(194)
(317)
(11)
(522)
108
AGILENT TECHNOLOGIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Changes in accumulated other comprehensive income (loss) by component and related tax effects forff
the years ended
October 31, 2021 and 2020 were as follows:
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, 2019 . . . . . . . . . . . . . . . . . .
$
(204)
$
131
(in millions)
$
(437)
$
(4)
$
(514)
Other comprehensive income (loss) before
reclassifications . . . . . . . . . . . . . . . . . . . . . . . .
Amounts reclassified out of accumulated
other comprehensive income (loss) . . . . . . . . .
Tax (expense) benefit
. . . . . . . . . . . . . . . . . . .
Other comprehensive income (loss) . . . . . . . .
11
—
(1)
10
—
(7)
1
(6)
(66)
(12)
(67)
61
—
(5)
2
3
(7)
56
3
(8)
As of October 31, 2020 . . . . . . . . . . . . . . . . . .
$
(194)
$
125
$
(442)
$
(11)
$
(522)
Other comprehensive income before
reclassifications . . . . . . . . . . . . . . . . . . . . . . . .
Amounts reclassified out of accumulated
other comprehensive income (loss) . . . . . . . . .
Tax expense . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other comprehensive income (loss) . . . . . . . .
11
—
(2)
9
—
(1)
—
(1)
228
64
(74)
218
2
17
(5)
14
241
80
(81)
240
As of October 31, 2021 . . . . . . . . . . . . . . . . . .
$
(185)
$
124
$
(224)
$
3
$
(282)
109
AGILENT TECHNOLOGIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Reclassifications out of accumulated other comprehensive income (loss) forff
the years ended October 31, 2021 and 2020
were as follows (in millions):
Details about Accumulated Other
Comprehensive Income components
Amounts Reclassified
from Other
Comprehensive Income
2021
2020
Affected line item in
statement of operations
Unrealized losses on derivatives . . . . . . . . . . . . . . . . . . . . .
$
Net defineff
costs:
d benefit pension cost and post retirement plan
Actuarial net loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Prior service benefit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(17)
(17)
4
(13)
(64)
1
(63)
15
(48)
$
(2) Cost of products and interest expense
(2) Total before income tax
— Benefit for income tax
(2) Total net of income tax
(61) Other (income) expense
7
Other (income) expense
(54) Total before income tax
16
Benefit for income tax
(38) Total net of income tax
Total reclassifications for the period . . . . . . . . . . . . . . . . . .
$
(61)
$
(40)
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 15, "Retirement Plans and Post Retirement Pension Plans").
21. SEGMENT INFORMATION
Description of Segments.tt We are a global leader in life sff
ciences, diagnostics and applied chemical markets, providing
application focused solutions that include instruments, softwff
are, services and consumablea
s forff
the entire labora
a
tory workflow.
ied markets business, diagnostics and
Agilent has three business segments comprised of the life sciences and appl
segment. The three operating
genomics business and the Agilent CrossLab business each of which comprises a reportablea
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.
a
A description of our three reportable segments is as follow
ff
s:
a
Our life sciences and applied markets business provides appl
ication-focused solutions that include instruments and
software that enablea
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 absor
ion
("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;
information
real-time cell analyzer; cell
imaging systems; microplate reader;
atory software for sample tracking;
a
labor
ptrr
a
110
AGILENT TECHNOLOGIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
management and analytics; laborat
technologies.
a
ory automation and robotic systems; dissolution testing; vacuum pumps and measurement
customers in the clinical and life sff
Our diagnostics and genomics business is comprised of six areas of activity providing active pharmaceutical ingredients
s, which
("APIs") for oligo-based therapeutics as well as solutions that include reagents, instruments, software and consumablea
ciences research areas to interrogate samples at the cellular and molecular level. First,
enablea
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 enablea
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
on product
of drugs that utilize nucleic acid molecules forff
offerings
includes
for cancer diagnostics and anatomic pathology workflows. The broad portfolio of offerings
immunohistochemistry ("IHC"), in situ hybridization ("ISH"), hematoxylin and eosin ("H&E") staining and special staining.
Fourth, we also collabora
te with a number of major pharmaceutical companies to develop new potential tissue and liquid-based
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
including instruments,
cytometry. Finally, our biomolecular analysis business provides complete workflow solutions,
consumablea
s 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.
Third, our pathology solutions business is focused
disease therapy.
a
a
ff
The Agilent CrossLab business spans the entire lab wa
ith 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
s include GC and LC columns, sample
software helping to connect the entire lab.a Key product categories in consumablea
preparation products, custom chemistries, and a large selection of laborat
ory 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 consumablea
cation needs
of various industries and to keep instruments fully
operational and compliant with the respective industry requirements.
bundles are tailored to meet the specific appli
a
a
ff
tt
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,
expenses and costs of centralized research and development.
treasury, order administration, other corporate infrastructuret
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 asset
impairments, amortization of acquisition-related intangible assets, change in the fair value of acquisition-related contingent
considerations, acquisition and integration costs, restructuring and transformational initiatives expenses, acceleration of share-
based compensation expense related to workforce reduction, business exit and divestiturett
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
the operating segments.
Transformational initiatives include expenses associated with targeted cost reducdd tion activities such as manufacturing transfers,
site consolidations, legal entity and other business reorganizations, in-sourcing or outsourcing of activities.
include this information in its measurement of
the performance of
The following tablea
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.
s reflect the results of our reportablea
111
AGILENT TECHNOLOGIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
The profitability of each of the segments is measured after excluding items such as asset impairment charges,
transformational initiatives, acquisition and integration costs, non-cash amortization of intangible assets related to business
combinations, interest income, interest expense, and other items as noted in the reconciliations below.
Year Ended October 31, 2021:
Life Sciences
and Applied
Markets
Diagnostics
and
Genomics
Agilent
CrossLab
Total
Segments
(in millions)
Total net revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Income fromff
operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Depreciation expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
. . . . . . . . . . . . . . . . . . . . . . . . . $
Share-based compensat
ion expense(1)
m
Year Ended October 31, 2020:
Total net revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Income fromff
Depreciation expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
ion expense (1) . . . . . . . . . . . . . . . . . . . . . . . . . $
Share-based compensat
m
Year Ended October 31, 2019:
Total net revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Income fromff
operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Depreciation expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
ion expense . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Share-based compensat
m
2,823
722
44
45
2,392
548
43
35
2,302
542
41
33
$
$
$
$
$
$
$
$
$
$
$
$
1,296
273
39
22
1,047
192
39
17
1,021
185
35
14
$
$
$
$
$
$
$
$
$
$
$
$
2,200
618
39
39
1,900
516
37
29
1,840
475
35
25
$
$
$
$
$
$
$
$
$
$
$
$
6,319
1,613
122
106
5,339
1,256
119
81
5,163
1,202
111
72
(1) Share-based compensation expense in 2020 and 2021 excludes amounts not allocated to the segments related to accelerated
ion and fromff
share-based compensat
our acquisition of BioTek and Resolution Bioscience.
ion expense from workforce reductd
m
The following tablea
reconciles reportable segments' income from operations to Agilent's total enterprise income before
taxes:
operations . . . . . . . . . . . . . . . . . . . . $
Total reportable segments' income fromff
Amortization of intangible assets related to business combinations . . . . . . .
Acquisition and integration costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Transformational initiatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Acceleration of share-based compensation expense related to workforce
reduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Asset impairments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Business exit and divestiture costs
Change in fair value of contingent consideration . . . . . . . . . . . . . . . . . . . . . .
NASD site costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Special compliance costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other (1)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest Expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other income (expense), net (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income beforeff
taxes, as reported . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Years Ended October 31,
2021
2020
(in millions)
2019
1,613
(194)
(41)
(37)
(1)
(2)
(5)
21
—
(1)
(6)
2
(81)
92
1,360
$
$
$
1,256
(184)
(41)
(53)
(2)
(99)
(2)
—
—
—
(29)
8
(78)
66
842
$
1,202
(125)
(48)
(44)
—
—
—
—
(12)
(2)
(30)
36
(74)
16
919
(1) For the years ended October 31, 2020 and 2019, the other category primarily includes legal costs related to a claim we
pursued against Twist Bioscience Corporation in addition to other miscellaneous adjustments.
(2) For the year ended October 31, 2021, other income (expense), net includes net gains on the fair value of equity
securities. For the year ended October 31, 2020, other income (expense), net includes the settlement of a legal claim
against Twist Bioscience Corporat
ion.
rr
Major Customers. No customer represented 10 percent or more of our total net revenue in 2021, 2020 or 2019.
112
AGILENT TECHNOLOGIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
The folff
lowing table reflects segment assets and capita
al 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, short-term and long-term investments, deferred tax assets, right-of use assets and other assets.
Life Sciences
and Applied
Markets
Diagnostics
and
Genomics
Agilent
CrossLab
Total
Segments
(in millions)
As of and for the Year Ended October 31, 2021:
Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Capital expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
As of and for the Year Ended October 31, 2020:
Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Capital expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
3,078
45
3,143
44
$
$
$
$
3,320
100
2,515
34
$
$
$
$
1,502
43
1,375
41
$
$
$
$
7,900
188
7,033
119
The following tabla e reconciles segment assets to Agilent's total assets:
October 31,
2021
2020
(in millions)
Total reportable segments' assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Short-term investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Prepaid expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Long-term investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Long-term and other receivablea
s . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
d tax assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ff
Deferre
Right of use assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
7,900
1,484
91
91
185
126
309
178
341
10,705
$
$
7,033
1,441
—
106
158
114
380
175
220
9,627
The other category primarily includes overfunded pension plans which are not allocated to the segments.
The following tablea
presents summarized information for net revenue by geographic
a
region. Revenues from external
customers are generally attributed to countries based upon
u
the customers' location.
Net revenue:
Year Ended October 31, 2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Year Ended October 31, 2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Year Ended October 31, 2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
2,159
1,752
1,619
$
$
$
1,273
1,087
1,019
$
$
$
2,887
2,500
2,525
$
$
$
6,319
5,339
5,163
1. China also includes Hong Kong net revenue.
United
States
China(1)
Rest of the
World
Total
(in millions)
The following tablea
presents summarized information for long-lived assets by geographic
a
consist of property, plant, and equipment, right-of-use assets, long-term receivablea
intangible assets. The rest of the world primarily consists of Asia and the rest of Europe.
region. Long lived assets
s and other long-term assets excluding
Long-lived assets:
October 31, 2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
October 31, 2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
912
727
$
$
134
126
$
$
587
538
$
$
1,633
1,391
United
States
Germany
Rest of the
World
Total
(in millions)
113
AGILENT TECHNOLOGIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
22. SUBSEQUENT EVENT
Segment Reporting Changes. To enablea
our growth strategies and strengthen our focus on customers, we announced
subsequent to year end that we will move our chemistries and supplies business as well as our remarketed instruments business
from our Agilent CrossLab business segment to our life sciences and applied markets business segment. In addition we will
move our service revenue and cost of sales related to the acquisition of BioTek from our life sciences and applied markets
business segment to our Agilent CrossLab business segment. Following this reorganization, Agilent will continue to have three
ied markets, diagnostics and genomics and Agilent CrossLab), each of which will
business segments (life sciences and appl
continue to comprise a reportable segment. All historical segment numbers for our life sciences and applied markets and
Agilent CrossLab segments will be recast to conform to this new reporting structurett
in our financial statements, beginning with
our Form 10-Q filing for the first quarter of fisca
l year 2022.
a
ff
114
Item 9. Changes in and Disagreements withii Accountants ott
n Accountingtt
and FinFF ancial Disclosure
None.
Item 9A. Control
tt
s all
nd Procedures
Evaluation of Disclosure Control
CC
s all
nd 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, 2021, 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, 2021, 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 filff ed 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
e
on Internal Control Over Financial Reporti
e
ng
Our management is responsible for establia
shing and maintaining adequate internal control over financial reporting, as
such term is defined in Exchange Act RulRR e 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
Framework (2013) issued by the Committee of
e
financial reporting based on the framework in Internal Control - InteII
grated
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, 2021 based on criteria in Internal Control -
Integrated
Framework (2013) issued by the COSO.
e
SEC staff guidance discusses the exclusion of an acquired business’s internal controls from management’s annual
assessment of the internal controls over financial reporting when it is not possible to conduct assessments forff
the acquired
business in the period between the acquisition date and the date of management’s assessment. We completed the acquisition of
Resolution Bioscience on April 15, 2021. Management excluded Resolution Bioscience fromff
its assessment of the effectiveness
of our internal control over financial reporting as of October 31, 2021. Resolution Bioscience constituted less than 1 percent of
our total revenue for the period ending October 31, 2021 and less than 1 percent of total assets, excluding acquired goodwill
and other intangible assets, as of October 31, 2021.
The effectiveness of our internal control over financial reporting as of October 31, 2021 has been audited by
ars in
PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report which appe
Item 8 of this Annual Report on Form 10-K.
a
Changes in Internal Control Over Financial Reporting
e
There were no changes in our internal control over financial reporting that occurred during Agilent's last fiscal quarter
that have materially affecff
ted, or are reasonably likely to materially affect, our internal control over financial reporting.
Item 9B. Other Inform
II
ation
None.
PART III
Item 10. Directors,
tt
Executivett Officers and Corporate Gtt
oveGG rnance
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 16, 2022. 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
115
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 in fiscal year 2021. Information regarding our code of ethics (the company's Standards of Business Conduct)
applicable to our principal executive officer, our principal finaff
ncial 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.
ncial officer, our controller and other senior finaff
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 Compe
CC
nsationtt
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 oii
f Co
erCC tain Bii
eneficialii Owners and Management and Related Stockh
SS
older MatteMM rs
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 tablea
summarizes information about our equity compensation plans as of October 31, 2021. All
outstanding awards relate to our common stock.
Plan Category
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)
Equity compensation plans approved by security
holders (1)(2)(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Equity compensation plans not approved by security
holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total
3,462,674
$
—
3,462,674
$
69
—
69
48,649,535
—
48,649,535
(1) The number of securities remaining available forff
future issuance in column (c) includes 25,365,340 shares of common
issuance under our current Employee Stock Purchase Plan ("ESPP"). The number of
stock authorized and available forff
shares authorized forff
issuance under the ESPP 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 ESPP, in no event shall the aggregate number of shares issued under the ESPP exceed
31 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
awards of stock-based incentive compensation to our employees (including officers), directors and
provides forff
the grant of awards in the form of stock options, stock appreciation rights,
consultants. The 2018 Plan provides forff
116
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.
Item 13. Certain Relati
ll
onshipsii
and Relatell
d Transac
TT
tions, and Directortt
Independen
ee
ce
Information about certain relationships and related transactions appears under "Related Person Transactions Policy and
Procedures" in the Proxy Statement. Information about director independence appe
ars 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.
a
Item 14. Principal
ii
Accountingtt
Fees and Services
Information about principal accountant fees and services as well as related pre-approval
policies appear 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.
a
Item 15. Exhibits and 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 54 of this report.
Financial Statement Schedule.
The following additional financial statement scheduledd
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
2021
Tax valuation allowance . . . . . . . . . . . . . . $
2020
Tax valuation allowance . . . . . . . . . . . . . . $
2019
Tax valuation allowance . . . . . . . . . . . . . . $
132
134
135
$
$
$
(in millions)
5
6
9
$
$
$
(17) $
(8) $
(10) $
120
132
134
* Additions include current year additions charged to expenses and current year build dued
to increases in net deferred tax
assets, returntt
to provision true-ups, other adjustmd
ents and other comprehensive income impact to deferred taxes.
** Deductions include current year releases credited to expenses and current year reductions due to decreases in net
deferred tax assets, returntt
to provision true-ups, other adjustmd
ents and other comprehensive income impact to deferred taxes.
117
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):
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) . . . . . .
u
3.1 Amended and Restated Certificate of Incorporation. . . . . .
3.2 Amended and Restated Bylaws. . . . . . . . . . . . . . . . . . . . . .
4.1 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.
. . . . . . . . .
Indenture,
t
Technologies, Inc. and the trustee forff
dated October 24, 2007, between Agilent
the debt securities.
.
dated as of June 21,
Seventh Supplemental Indenture,
2013, between the Company and U.S. Bank National
Association and Form of Global Note forff
3.875% Senior Notes dued
2023. . . . . . . . . . . . . . . . . . . . . .
the Company’s
tt
tt
Eighth Supplemental Indenture,
2016, between the Company and U.S. Bank National
Association and Form of Global Note forff
3.050% Senior Note due 2026 . . . . . . . . . . . . . . . . . . . . . .
dated as of September 22,
the Company’s
Incorporation by Reference
Form
8-K
Date
8/5/2014
Exhibit
Number
2.1
Filed
Herewith
S-1
10-K
8-K
8/16/1999
12/19/2019
11/27/2001
S-3ASR
10/24/2007
8-K
6/21/2013
3.1
3.2
99.3
4.01
4.01
8-K
9/22/2016
4.01
t
Indenture,
Company and U.S. Bank National Association . . . . . . . . .
dated as of September 16, 2019, between the
8-K
9/16/2019
First Supplemental Indenture,
t
2019, between the Company and U.S. Bank National
Association and Form of 2.750% Senior Note due 2029 . .
dated as of September 16,
8-K
9/16/2019
4.1
4.2
u
mental Indenture, dated as of June 4, 2020,
Second Supple
between the Company and U.S. Bank National
Association and Form of 2.100% Senior Note due 2030 . .
8-K
6/4/2020
4.1
Indenturet
Company and Citibank, N.A. . . . . . . . . . . . . . . . . . . . . . . .
dated as of March 12, 2021, between the
8-K
3/12/2021
First Supplemental Indenture, dated as of March 12, 2021,
between the Company and Citibank, N.A. and Form of
Global Note for the Company’s 2.300% Senior Notes dued
2031. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
8-K
3/12/2021
4.10 Description of Securities . . . . . . . . . . . . . . . . . . . . . . . . . .
10.1 Agilent Technologies, Inc. 1999 Stock Plan (Amendment
tive November 14, 2006).* . . . . . . .
and Restatement Effecff
10-K
10-K
12/19/2019
12/22/2006
4.1
4.2
4.8
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. 2020 Employee Stock
Purchase Plan effective May 1, 2020).* . . . . . . . . . . . . . . .
10-Q
6/1/2020
10.1
118
4.2
4.3
4.4
4.5
4.6
4.7
4.8
4.9
Exhibit
Number
Description
Form
Date
Exhibit
Number
Filed
Herewith
Incorporation by Reference
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 forff U.S. Employees (for awards made after
October 31, 2010).* . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
10‑K
12/20/2010
10.17
10.7
Form of Stock Option Award Agreement under the 2009
Stock Plan forff U.S. Employees.* . . . . . . . . . . . . . . . . . . . .
10-K
12/21/2009
10.31
10.8
10.9
10.10
10.11
10.12
10.13
Form of Stock Option Award Agreement under the 2009
Stock Plan forff
after October 31, 2010).* . . . . . . . . . . . . . . . . . . . . . . . . . .
non-U.S. Employees (for awards made
Form of Stock Option Award Agreement under the 2009
Stock Plan forff
non-U.S. Employees.* . . . . . . . . . . . . . . . .
Form of Stock Award Agreement for Standard Awards
granted to Employees (for awards made afteff
r October 31,
2010).* . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Form of Stock Award Agreement under the 2009 Stock
Plan forff Standard Awards granted to Employees (for
awards made afteff
r November 17, 2015).* . . . . . . . . . . . . .
Form of Stock Award Agreement under the 2009 Stock
Plan for Long-Term Performance Program Awards (for
awards made afteff
r 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
12/20/2010
10.19
10-K
12/21/2009
10.32
10‑K
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
2/7/2019
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 forff
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 afteff
r November 13, 2018). * . . . . . . . . . . . . .
10-K
12/20/2018
10.17
10-K
12/20/2018
10.18
10-K
12/21/2017
10.17
10.19 Agilent Technologies, Inc. Supple
u
mental Benefit
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
10-K
12/21/2009
10.39
Plan for Non-Employee Directors (Amended and Restated
Effective November 18, 2009).* . . . . . . . . . . . . . . . . . . . .
10.22 Agilent Technologies, Inc. 2005 Deferred Compensation
10-K
12/21/2017
10.20
Plan (Amended and Restated Effective May 20, 2014).* .
10.23 Agilent Technologies, Inc. 2010 Performance‑Based
Compensation Plan for Covered Employees. (as adopted
on November 19. 2014) . . . . . . . . . . . . . . . . . . . . . . . . . . .
DEF14A
2/6/2015
Annex A
119
Exhibit
Number
10.24
10.25
10.26
10.27
10.28
10.29
10.30
10.31
10.32
10.33
10.34
10.35
Description
Form of Amended and Restated Indemnification
Agreement between Agilent Technologies, Inc. and
Directors of the Company, Section 16 Officff
ers and
Board‑elected Officers of the Company.* . . . . . . . . . . . . .
Form of Tier I Change of Control Severance Agreement
between Agilent Technologies, Inc. and the Chief
Executive Officer* . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Form of Amended and Restated Change of Control
Severance Agreement between Agilent Technologies, Inc.
and Section 16 Officff ers (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
Officer)* . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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 afteff
r 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 March 13, 2019, by and among
the Company, the Lenders party thereto and BNP Paribas,
. . . . . . . . . . . . . . . . . . . . . . . . . .
as Administrative Agent.
Incorporation by Reference
Form
8-K
Date
4/10/2008
Exhibit
Number
10.1
Filed
Herewith
10-K
12/22/2014
10.35
8-K
4/10/2008
10.3
10-K
12/22/2014
10.37
10-K
12/21/2009
10.5
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
3/13/2019
10.1
10.36 Amendment No. 1 to Credit Agreement, dated August 7,
8-K
8/8/2019
10.1
2019, by and among the Company, the Lenders party
thereto and BNP Paribas, as Administrative Agent . . . . . .
10.37 Amendment No. 2 to Credit Agreement, dated October
8-K
10/22/2019
10.1
21, 2019, by and among the Company, the Lenders party
thereto and BNP Paribas, as Administrative Agent
10.38 Amendment No. 3 to Credit Agreement, dated April 17,
8-K
4/20/2020
10.1
2020, by and among the Company, the Lenders party
thereto and BNP Paribas, as Administrative Agent . . . . . .
10.39
Incremental Assumption Agreement dated as of April 21,
2021, by and among the Company, the Lenders party
thereto and BNP Paribas, as Administrative Agent . . . . . .
8-K
4/22/2021
10.1
120
Exhibit
Number
10.40
10.41
10.42
10.43
Description
Letter of Terms and Conditions International Long Term
Assignment, by and among Jacob Thaysen and the
Company* . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Letter of Terms and Conditions Localization Program by
and among Jacob Thaysen and the Company * . . . . . . . . .
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*
Incorporation by Reference
Form
10-K
Date
12/22/2014
Exhibit
Number
10.62
Filed
Herewith
10-K
12/21/2015
10.70
10-Q
3/8/2016
10.1
10-K
12/20/2018
10.41
10.44
Letter of Terms and Conditions Localization Program by
and among Padraig McDonnell and the Company* . . . . . .
10-Q
6/1/2020
10.2
10.45 Agilent Technologies, Inc. Excess Benefit Retirement
Plan (Amended and Restated Effective May 20, 2014)* . .
10-K
12/21/2017
10.40
21.1
23.1
24.1
31.1
31.2
32.1
32.2
Significant subsidiaries of Agilent Technologies, Inc. as
of October 31, 2021. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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 - the instance document does
not appear in the Interactive Data File because its XBRL
tags are embedded within the Inline XBRL document. . . .
101.SCH XBRL Taxonomy Extension Schema Document.
. . . . . . .
101.CAL XBRL Taxonomy Extension Calculation Linkbase
Document.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
101.LAB XBRL Taxonomy Extension Labea
l Linkbase Document.
.
101.PRE XBRL Taxonomy Extension Presentation Linkbase
Document.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
101.DEF XBRL Taxonomy Extension Definition Linkbase
Document.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
*
Indicates management contract or compensatory plan, contract or arrangement.
121
X
X
X
X
X
X
X
X
X
X
X
X
X
Item 16. Form 10-K Summary
None.
122
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 dulydd
authorized.
SIGNATURES
AGILENT TECHNOLOGIES, INC.
BY
/s/ MICHAEL TANG
Michael Tang
Senior Vice President,t
General Counsel and Secretary
Date: December 17, 2021
123
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signaturett
s 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
capac
ities, to sign any amendments to this report and to file the same, with exhibits thereto, and other documents in connection
a
therewith, with the Securities and Exchange Commission, hereby ratifying and confirming all that any of said attorneys-in-fact,
hereof. Pursuant to the requirements of the Securities
or substitutet
Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the
a
capac
s, may do or cause to be done by virtuett
ities and on the dates indicated.
appears below constitutett
or substitutett
Signature
g
Title
Date
/s/ MICHAEL R. MCMULLEN
Director, President and Chief Executive Officer
December 17, 2021
Michael R. McMullen
(Principal Executive Officer)
/s/ ROBERT W. MCMAHON
Senior Vice President and Chief Financial Officer
December 17, 2021
Robert W. McMahon
(Principal Financial Officer)
/s/ RODNEY GONSALVES
Vice President, Corporate Controllership
December 17, 2021
Rodney Gonsalves
(Principal Accounting Officer)
/s/ KOH BOON HWEE
Koh Boon Hwee
/s/ MALA ANAND
Mala Anand
/s/ HANS E. BISHOP
Hans E. Bishop
/s/ OTIS W. BRAWLEY, M.D.
Otis W. Brawley, M.D.
/s/ PAUL N. CLARK
Paul N. Clark
/s/ G. MIKAEL DOLSTEN, M.D., PH.D.
G. Mikael Dolsten, M.D., PH.D.
/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
Chairman of the Board of Directors
December 17, 2021
December 17, 2021
December 17, 2021
December 17, 2021
December 17, 2021
December 17, 2021
December 17, 2021
December 17, 2021
December 17, 2021
December 17, 2021
December 17, 2021
Director
Director
Director
Director
Director
Director
Director
Director
Director
Director
124