agilent annualreport2005

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  • 1. Agilent Technologies, Inc. 2005 Annual Report to Stockholders 2005 Annual Report Consolidated Financial Statements

2. Annual Report 2005 Annual Report to Stockholders 2005 Annual Report Consolidated Financial Statements 3. To Our ShareholdersAnnual ReportThe story that ties together the data and narratives in this years Annual Report is the great progress we made in 2005 in transforming Agilent from a diversified technology company into a focused measurement company. We launched this strategic shift because we are convinced that greater emphasis on the strengths that make Agilent the worlds premier measurement company including our deep technical expertise and long-standing customer relationships will enable us to deliver optimal value to customers and to shareholders. To effect this transformation, in 2005 we sold the semiconductor products business; announced plans to spin off the semiconductor test business as an independent company; sold our interest in a joint venture to our partner Philips; retired our convertible debt; and launched a major share repurchase program. Were excited about the opportunities we see in the $40 billion dollar market for measurement in electronics, communications, life sciences and chemical analysis, and we will continue to pursue those opportunities aggressively.We are building a more focused Agilent on a very solid foundation. The company is in excellent financial condition, thanks to improved operating performance over the last several years and outstanding cash generation during 2005. We have robust new-product pipelines in all our businesses, leadership positions in our markets and close, collaborative relationships with customers who lead their industries. Our people have the skills, dedication and flexibility it will take for us to achieve our goals and to innovate in ways that make a difference to our customers. In 2006 our intent is to strengthen and build upon our position as the worlds premier measurement company. To do that we will deliver compelling products to our markets and will work to enhance customer preference and loyalty while maintaining tight operating and financial discipline. We are determined to deliver on our commitment to increase shareholder value as we lead Agilent to reach its full potential. 12JAN200603224524Bill Sullivan President and Chief Executive Officer January 18, 20061 4. Agilent at a GlanceAgilent is the worlds premier measurement company, providing core bio-analytical and electronic measurement solutions to the communications, electronics, life sciences and chemical analysis industries. About 65 percent of Agilents total net revenue was generated from outside of the United States in fiscal 2005. With approximately 21,000 employees around the world, our global presence offers a competitive advantage. Agilents manufacturing, R&D, sales and support capabilities around the world give customers the flexibility they need in todays competitive environment.Business Group2005 Net Revenue DescriptionElectronic Our electronic measurement business provides standard Measurement $3.3 billion and customized electronic measurement instrumentsand systems, monitoring, management and optimizationtools for communications networks and services,software design tools and related services that are usedin the design, development, manufacture, installation,deployment and operation of electronics equipment andcommunications networks and services. Our electronicmeasurement business employed approximately 11,500people worldwide as of October 31, 2005.Markets: The markets for our electronic measurementbusiness include communications test and generalpurpose test.Product areas: Communication test products includeproducts for the following types of networks andsystems: fiber optics networks, transport networks,broadband and data networks, wireless communicationsand microwave networks. We provide assistance withinstallation and maintenance and operations supportsystems. General purpose test products include generalpurpose instruments, modular instruments and testsoftware, digital design products, parametric testproducts, high frequency electronic design tools,electronics manufacturing test equipment and thin-filmtransistor array test equipment. 2 5. Business Group 2005 Net Revenue DescriptionBio-AnalyticalOur bio-analytical measurement business provides Measurement$1.4 billion application-focused solutions that include instruments, software, consumables and services that enable customers to identify, quantify and analyze the physical and biological properties of substances and products. Our bio-analytical measurement business employedAnnual Report approximately 4,000 people worldwide as of October 31, 2005. Markets: The markets for our bio-analytical measurement business include life sciences, including the pharmaceutical analysis, gene expression and proteomics markets, and chemical analysis, including the petrochemical, environmental, homeland security and forensics and bioagriculture and food safety markets. Product areas: The seven key product categories for the bio-analytical measurements business include: microarrays, microfluidics, gas chromatography, liquid chromatography, mass spectrometry, software and informatics, and related consumables, reagents and services. Semiconductor Agilents semiconductor test solutions business delivers Test Solutions$.5billion technologies and solutions for companies who design, manufacture and test systems-on-a-chip, systems-in-a- package and memory semiconductor devices. Our systems are used to test a wide range of devices, from the extremely price-sensitive to the most complex and high-performance. Our semiconductor test solutions business employed approximately 1,600 people worldwide as of October 31, 2005. Markets: Agilents semiconductor test solutions business sells to the semiconductor manufacturing markets. Product areas: Our semiconductor test solutions business designs, develops and manufactures semiconductor test equipment. We develop our products on scalable-system architecture and then deliver, over time, enhancements to that architecture that extend its testing capabilities to address changing device and production requirements.AgilentAgilent Labs is our central research organization based in Palo Alto,California, with satellite offices in Beijing, China; Everett, Washington; Laboratories Leuven, Belgium; and South Queensferry, Scotland. Agilent Labs engagesprimarily in two types of research: 1) applied research that leads totechnology that can be transferred to our existing businesses incommunications, electronics, life sciences and chemical analysis, and2) research that creates new businesses that are outside of our currentmarkets but within our fields of interest. Agilent Labs also providestechnology integration across our company.Agilent SalesWe sell our products primarily through direct sales, but we also utilizedistributors, resellers, manufacturers representatives, telesales and and Supportelectronic commerce. 3 6. Board OfficersDirectorsCommittees William P. Sullivan,Jack P. TrautmanJames G. CullenAudit & Finance President and Chief Senior Vice President ofChairman of the Board of Committee Executive Officer Agilent and President ofDirectors of Agilent,Heidi Kunz, Chairperson Semiconductor TestRetired President andRobert J. Herbold Adrian T. Dillon Solutions Chief Operating Officer of Robert L. Joss Executive Vice President, Bell Atlantic Corporation Finance and Chris van IngenCompensation Committee (now known as Verizon) Administration, Senior Vice President of David M. Lawrence, M.D., Chief Financial Officer Agilent and President ofRobert J. HerboldChairperson Life Sciences and Retired Executive Vice Walter B. Hewlett Patrick J. Byrne Chemical Analysis Group President of Microsoft Koh Boon Hwee Senior Vice President of CorporationA. Barry Rand Agilent and President ofThomas E. White Electronic MeasurementSenior Vice President ofWalter B. HewlettNominating/Corporate Group Agilent and President ofIndependent Researcher Governance Committee Operations Supportand Director, Center for James G. Cullen David B. Cooper, Jr. Systems Group Computer AssistedChairperson Senior Vice President, Research in theRobert J. Herbold Finance and Treasurer John R. Eaton Humanities Walter B. Hewlett Vice President, Corporate Jean M. Halloran Robert L. Joss Development Robert L. Joss Senior Vice President, Koh Boon Hwee Dean of the Graduate Human Resources Didier HirschHeidi Kunz School of Business of Vice President and David M. Lawrence, M.D. D. Craig Nordlund Stanford University Corporate Controller A. Barry Rand Senior Vice President, Koh Boon Hwee General Counsel and Marie Oh Huber Executive Committee Chairman of DBS Group Secretary Vice President, AssistantJames G. Cullen, Holdings Ltd and General Counsel andChairperson DBS Bank Ltd Assistant SecretaryWilliam P. Sullivan Heidi Kunz Darlene Solomon Executive Vice President Vice President and and Chief Financial Director of Agilent Officer of Blue Shield of Laboratories California David M. Lawrence, M.D. Retired Chairman Emeritus of Kaiser Foundation Health Plan, Inc. and Kaiser Foundation Hospitals A. Barry Rand Chairman Emeritus of Avis Group Holdings, Inc. All listed officers, except John R. Eaton, Didier Hirsch, Marie Oh Huber, Darlene Solomon, and Jack P. Trautman are executive officers of Agilent under Section 16 of the Securities Exchange Act of 1934.4 7. Agilents annual meeting of shareholders will take place on Wednesday, March 1, 2006 at 10:00 a.m. at the South San Francisco Conference Center, 255 South Airport Boulevard, South San Francisco, California.Investor InformationPlease see the full and audited financial statements and footnotes contained in this booklet. To receive paper copies of the annual report, proxy statement, Form 10-K, earningsAnnual Report announcements and other financial information, peopl


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