agilent 2002finalarfinancials

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  • 1. Notice of 2003 Annual Meeting and Proxy Statement 2002 Annual Report to StockholdersAnnual 2002 Annual Report Consolidated Financial StatementsReportFinancials

2. TABLE OF CONTENTSPageSelected Financial Data ***************************************************************1 Managements Discussion and Analysis of Financial Condition and Results of Operations ***3 Statement of Management Responsibility************************************************35 Report of Independent Accountants ****************************************************36 Consolidated Statement of Earnings **************************************************** 37 Consolidated Balance Sheet************************************************************38 Consolidated Statement of Cash Flows**************************************************39 Consolidated Statement of Stockholders Equity *****************************************40 Notes to Consolidated Financial Statements *********************************************42 Quarterly Summary ******************************************************************* 71 AnnualReportFinancials 3. SELECTED FINANCIAL DATA(Unaudited) Years Ended October 31,2002 2001 2000 19991998 (in millions, except per share amounts) Consolidated Statement of Operations Data (1, 2, 3, 4): Net revenue *********************************** $ 6,010 $8,396 $9,361 $6,830$6,612 (Loss) earnings from continuing operations before taxes**************************************** $(1,547)$ (477)$1,018 $ 463 $ 191 (Loss) earnings from continuing operations******* $(1,022)$ (406)$ 672$ 306 $ 126 Earnings from discontinued operations, net of taxes**************************************** 6 85206131 (Loss) gain from the sale of discontinued operations, net of taxes ***********************(10) 646 Annual (Loss) earnings before cumulative effect ofReport accounting changes***************************(1,032) 246 757512257 Financials Cumulative effect of adopting SFAS No. 133, net of taxes**************************************** (25) Cumulative effect of adopting SAB 101, net of taxes**************************************** (47) Net (loss) earnings ***************************** $(1,032)$ 174$ 757$ 512 $ 257 Net (loss) earnings per share Basic: (Loss) earnings from continuing operations, **** $ (2.20) $ (0.89) $ 1.49 $ 0.81$ 0.33 Earnings from discontinued operations ******** 0.010.19 0.540.35 (Loss) gain from the sale of discontinued operations, net***************************** (0.02)1.41 Cumulative effect of adopting SFAS No. 133, net(0.05) Cumulative effect of adopting SAB 101, net*****(0.10) Net (loss) earnings *************************** $ (2.22)$ 0.38 $ 1.68 $ 1.35$ 0.68 Net (loss) earnings per share Diluted: (Loss) earnings from continuing operations***** $ (2.20)$ (0.89) $ 1.48 $ 0.81$ 0.33 Earnings from discontinued operations ********0.010.18 0.540.35 (Loss) gain from the sale of discontinued operations, net*****************************(0.02) 1.41 Cumulative effect of adopting SFAS No. 133, net (0.05) Cumulative effect of adopting SAB 101, net***** (0.10) Net (loss) earnings *************************** $ (2.22)$ 0.38 $ 1.66 $ 1.35$ 0.68 Weighted average shares used in computing basicnet (loss) earnings per share ******************465 458 449380380 Weighted average shares used in computingdiluted net (loss) earnings per share *********** 465 458 455380380 1 4. October 31, 2002 20012000 1999 1998(in millions) Consolidated Balance Sheet Data (1, 4): Working capital ********************************$ 2,699 $2,797 $2,476$1,275 $1,010 Total assets************************************$ 8,203 $7,986 $8,330$5,364 $4,922 Senior Convertible Debentures ******************$ 1,150 $ $$ $ Stockholders equity **************************** $ 4,627 $5,659 $5,265$3,382 $3,022(1) Consolidated nancial data and notes for all periods present our healthcare solutions business as a discontinued operation. See Note 4, Discontinued Operations to the consolidated nancial statements. (2) Loss from continuing operations for the year ended October 31, 2002 includes a pre-tax restructuring charge of $474 million including a pre-tax asset impairment charge of $163 million. Loss from continuing operations for the year ended October 31, 2001 includes a pre-tax gain of $269 million relating to the sale of surplus land in California, a pre-tax restructuring charge of $154 million primarily relating to severance expenses and a pre-tax asset impairment charge of $74 million for our customer support software. Earnings from continuing operations for the year ended October 31, 1999 includes a pre-tax asset impairment charge of $51 million. Earnings from continuing operations for the year ended October 31, 1998 includes a pre-tax restructuring charge of $155 million. See Note 13, Restructuring and Asset Impairment, to the consolidated nancial statements. (3) Consolidated statement of operations data for the year ended October 31, 2001 and 2000 includes the impact of the sale of our portfolio of lease assets to CIT Group Inc. (formerly known as Tyco Capital Corporation). In 2001, net proceeds from this sales transaction were $287 million and we recognized $254 million in net revenue from continuing operations and $131 million in cost of products from continuing operations. In 2000, net proceeds from this sales transaction were $234 million and we recognized $197 million in net revenue from continuing operations and $83 million in cost of products from continuing operations. See Note 5, Acquisitions and Sale of Assets, to the consolidated nancial statements. (4) The historical nancial data from 1998 through 1999 was carved out from the historical nancial information of Hewlett-Packard using the historical results of operations and historical bases of the assets and liabilities of the Hewlett-Packard businesses that comprise our company. We began accumulating retained earnings on November 1, 1999. Therefore, the historical nancial data presented for 1998 and 1999 is not indicative of our future performance and does not reect what our consolidated nancial position and results of operations would have been had we operated as a separate, stand-alone entity during those periods. 2 5. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONAND RESULTS OF OPERATIONSThe following discussion should be read in conjunction with the consolidated nancial statements and notes thereto included elsewhere in this Annual Report. The following discussion contains forward-looking statements including, without limitation, statements regarding our liquidity position and our expected overall growth, the material impact from the adoption of new accounting pronouncements, our nancial results, the impact of the enterprise resource planning implementation, savings from restructuring programs, the length of the economic downturn, trends and growth in the markets we sell into, the anticipated completion of transactions and contracts, new product introductions and changes to our manufacturing process that involve risks and uncertainties. Our actual results could differ materially from the results contemplated by these forward-looking statements due to certain factors, including those discussed below in Factors That May Affect Future Results and elsewhere in this Annual Report.Overview AnnualAgilent Technologies, Inc. (we, Agilent or the Company), incorporated in Delaware in Report May 1999, is a global diversied technology organization that provides enabling solutions toFinancials technology markets within the communications, electronics, life sciences and chemical analysis industries. Prior to our initial public offering of 16 percent of our stock in November 1999, we were a wholly-owned subsidiary of Hewlett-Packard Company (Hewlett-Packard). Hewlett- Packard distributed the remaining 84 percent of our stock to its stockholders on June 2, 2000 in the form of a stock dividend. Our scal year end is October 31. Unless otherwise stated, all years and dates refer to our scal year.Reclassications Amounts in the consolidated nancial statements as of and for the years ended October 31, 2001 and October 31, 2000 have been reclassied to conform to the presentation in 2002.Critical Accounting Policies and EstimatesThe preparation of nancial statements in accordance with accounting principles generally accepted in the U.S. requires that management make a number of assumptions and estimates that affect the reported amounts of assets, liabilities, revenue and expenses in our consolidated nancial statements and accompanying notes. Management bases its estimates on historical experience and various other assumptions believed to be reasonable. Although these estimates are based on managements best knowledge of current events and actions that may impact the Company in the future, actual results may differ from these estimates and assumptions.Our critical accounting policies are those that affect our nancial statements materially and involve a signicant level of judgment by management. Those policies are revenue recognition, restructuring and impairment charges, inventory valuation, retirement and post retirement plan assumptions, valuation of long-lived assets and accounting for income taxes.Revenue is recognized on a sale to a customer only after the product or service has been delivered or installed and accepted by the customer. We record reductions to revenue for estimated product returns and distributor price protection, when appropriate. We monitor the creditworthiness of our customers and do not record revenue on sales if collection is not reasonably assured. Most of these conditions are subjective and actual results could vary from the estimated outcome, requiring future adjustments to revenue. We accrue for restructuring costs when management approves and commits to a rm plan. The three main components of our restructuring plans are related to workforce reductions, the 3 6. consolidati

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