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Excrept from filing document 2024-10-31

Indicate by checkmark whether any of those error corrections are restatements that required a recovery analysis of incentive based compensation received by any of the registrant s executive officers during the relevant recovery period pursuant to 240 10D 1 b
The aggregate market value of the registrant s common equity held by non affiliates as of April 30 2024 was approximately 30 0 billion Shares of stock held by officers directors and 5 percent or more stockholders have been excluded in that such persons may be deemed to be affiliates This determination of affiliate status is not necessarily a conclusive determination for other purposes
Portions of the Proxy Statement for the Annual Meeting of Stockholders the Proxy Statement to be held on March 13 2025 and to be filed pursuant to Regulation 14A within 120 days after registrant s fiscal year ended October 31 2024 are incorporated by reference into Part III of this Report
This report contains forward looking statements including without limitation statements regarding growth opportunities including for and in our end markets new product and service introductions the position and strength of our businesses products and services market demand for and adoption of our products and solutions the ability of our products and solutions to address customer needs and meet industry requirements our focus on enhancing our customers experience delivering differentiated product solutions and driving productivity improvements 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 contributions to our defined benefit plans our hedging programs and other actions to offset the effects of foreign currency and interest rate movements our future effective tax rate unrecognized tax benefits reimbursement incentives our ability to satisfy our liquidity requirements including through cash generated from operations the potential impact of adopting new accounting pronouncements indemnification obligations our sales our purchase commitments our capital expenditures the integration effects and timing of our acquisitions and other transactions expense reduction and other results from our restructuring programs and other cost saving initiatives our stock repurchase program and dividends macroeconomic and market conditions the recovery and health of our end markets seasonality mix future financial results our operating margin our geographical diversification interest rates inflationary pressures and local regulations and restrictions that involve risks and uncertainties Our actual results could differ materially from the results contemplated by these forward looking statements due to various factors including those discussed in Part I Item 1A and elsewhere in this Form 10 K
Agilent Technologies Inc we Agilent or the company incorporated in Delaware in May 1999 is a global leader in life sciences diagnostics and applied chemical markets providing application focused solutions that include instruments software services and consumables for the entire laboratory workflow
In the first quarter of fiscal year 2024 we announced a change in our operating segments to move our cell analysis business from our life sciences and applied markets segment to our diagnostics and genomics operating segment in order to further strengthen growth opportunities for both organizations Following this reorganization we continued to have three business segments comprised of life sciences and applied markets diagnostics and genomics and Agilent CrossLab each of which continues to comprise a reportable segment All historical financial segment information has been recast to conform to this new presentation in our consolidated financial statements and accompanying notes There was no change to our Agilent CrossLab business segment See also Note 23 Subsequent Event for additional information on recent changes to our organizational structure
Our life sciences and applied markets business provides application focused solutions that include instruments consumables and software that enable customers to identify quantify and analyze the physical and biological properties of substances and products as well as enable customers in the clinical and life sciences research areas to interrogate samples at the molecular and cellular level Our consumables portfolio is designed to improve customer outcomes Our diagnostics and genomics business is comprised of seven areas of activity providing active pharmaceutical ingredients APIs for oligo based therapeutics as well as solutions that include reagents instruments software and consumables which enable customers in the clinical and life sciences research areas to interrogate samples at the cellular and molecular level The Agilent CrossLab business spans the entire lab with its extensive services portfolio which is designed to improve customer outcomes In addition we conduct centralized order fulfillment and supply chain operations for our businesses through the order fulfillment and supply chain organization OFS OFS provides resources for manufacturing engineering and strategic sourcing to our respective businesses Each of our businesses together with OFS is supported by our global infrastructure organization which provides shared services in the areas of finance information technology legal certain procurement services workplace services and human resources
We sell our products primarily through direct sales but we also utilize distributors resellers manufacturers representatives and electronic commerce As of October 31 2024 we employed approximately 17 900 people worldwide Our primary research and development and manufacturing sites are in California Colorado Delaware Massachusetts Texas and Vermont in the U S and in Australia Canada China Denmark Germany Italy Japan Malaysia Singapore and the United Kingdom
Our life sciences and applied markets business provides application focused solutions that include instruments consumables and software that enable customers to identify quantify and analyze the physical and biological properties of substances and products as well as enable customers in the clinical and life sciences research areas to interrogate samples at the molecular and cellular level Key product categories include liquid chromatography LC systems and components liquid chromatography mass spectrometry LCMS systems gas chromatography GC systems and components gas chromatography mass spectrometry GCMS systems inductively coupled plasma mass spectrometry ICP MS instruments atomic absorption AA instruments microwave plasma atomic emission spectrometry MP AES instruments inductively coupled plasma optical emission spectrometry ICP OES instruments raman spectroscopy laboratory software for sample tracking information management and analytics laboratory automation and robotic systems dissolution testing vacuum pumps and measurement technologies Our consumables portfolio 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 to supplies Key product categories in consumables include GC and LC columns sample preparation products custom chemistries and a large selection of laboratory instrument supplies
This market consists of for profit companies which participate across the pharmaceutical value chain in the areas of therapeutic research discovery development clinical trials manufacturing and quality assurance and quality control One sub segment of this market is core and emerging pharmaceutical companies pharma A second sub segment includes 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
This market consists primarily of not for profit organizations and includes academic institutions large government institutes and privately funded organizations The academic and government market plays an influential role in technology adoption and therapeutic developments for pharmaceutical and molecular diagnostics companies After decades of investment in basic biomedical research by government funding bodies the focus has widened to include translational research multidisciplinary scientific efforts directed at accelerating therapy development
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 Our products are used to test for safety quality and compliance across the value chains of advanced materials including semiconductors electronics batteries specially engineered polymers and polymeric materials minerals metals thin film optics consumer products and packing materials from the upstream raw materials materials production and final products to the end markets and recycling The upstream petroleum exploration and refining markets use our products to analyze natural gas crude oil composition perform intermediate material analysis verify and improve refining processes and ensure the overall quality of gasoline fuels lubricants and other products
Our instruments software and workflow solutions are used by the environmental market for applications such as laboratory and field analysis of regulated and unregulated chemical pollutants in air water soil and solid waste Environmental industry customers include all levels of government the industrial and manufacturing sectors engineering and consulting companies commercial testing laboratories public and private utilities and colleges and universities Drug testing and forensics laboratories use our instruments software and workflow solutions for applications such as analyzing evidence associated with crime screening athletes for performance enhancing drugs analyzing samples for recreational drugs or detecting and identifying biological and chemical warfare agents Some of our instruments are used in mobile laboratories as well Customers include local state federal and international law enforcement agencies and health laboratories
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
The diagnostics and clinical market focus within our life sciences and applied markets business is to provide instruments software reagents and consumables that enable customers performing life sciences pharmaceutical and clinical research to interrogate biologically relevant metabolites lipids protein and cellular systems to understand fundamental biological processes as well as the underlying mechanisms of cancer and other disease initiation and progression The goal is to use this information to develop new therapeutic strategies and drugs as well as new diagnostic tests Our mass spectrometry technologies are employed by researchers to identify and quantify individual or whole classes of metabolites lipids or proteins involved in basic cellular processes and elucidate those which are quantitatively or qualitatively altered in disease states as well as to identify those which may be useful as biomarkers for a disease
Our products fall into the following main areas of work liquid chromatography gas chromatography mass spectrometry spectroscopy software and informatics lab automation and robotics vacuum technology remarketed instruments and chemistries and supplies
A liquid chromatograph high performance liquid chromatograph HPLC or ultra high performance liquid chromatograph UHPLC is used to separate molecules of a liquid mixture to determine the quantity and identity of the molecules present The Agilent LC portfolio is largely modular in construction and can be configured as analytical and preparative systems These systems can be stepwise upgraded to highly sophisticated automated workflow solutions such as method development multi method walk up high capacity high throughput or multi dimensional LC and can be extended to application based analyzers e g for bio molecular separations chiral analysis or size exclusion chromatography As a leader in liquid chromatography we continue to expand our application space with new HPLC columns new services and ongoing instrument and software product enhancements
Agilent is the world s leading provider of gas chromatographs both laboratory and portable models Gas chromatographs are used to separate any gas liquid or solid that can be vaporized and then detect the molecules present to determine their identity and quantity Agilent provides custom or standard analyzers configured for specific chemical analysis applications such as detailed speciation of a complex hydrocarbon stream calculation of gas calorific values in the field or analysis of a new bio fuel formulation We also offer related software accessories and consumable products for these and other similar instruments
A mass spectrometer MS identifies and quantifies compounds based on their molecular mass and characteristic patterns of fragment ion masses that result when a molecule is broken apart MS is an important tool in analyzing a broad spectrum of analytes from small molecules such as pesticides to large molecules such as intact proteins and other biological entities Liquid chromatography LC and gas chromatography GC are commonly used to separate compounds and introduce them to the MS system 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 focus on improving performance sensitivity precision robustness ease of use and onboard intelligence
Spectroscopy is a technique for analyzing the individual chemical components of substances based on the absorption or emission of electromagnetic radiation of specific wavelengths of light Our spectroscopy instruments include AA spectrometers microwave plasma atomic emission spectrometers MP AES ICP OES ICP MS fluorescence spectrophotometers ultraviolet visible UV Vis spectrophotometers Fourier Transform infrared FT IR spectrometers near infrared NIR spectrometers raman spectrometers and sample automation products We also offer related software accessories and consumable products for these and other similar instruments
We provide informatics and scientific software for instrument control data acquisition data analysis secure storage of results and laboratory information workflow management Our software facilitates the compliant use of instruments in pharmaceutical quality assurance quality control environments With our OpenLab Laboratory Software Suite Agilent has a scalable open software platform that enables customers to capture analyze and share scientific data throughout the lab and across the enterprise
We offer a portfolio of unique sample preparation automated solutions that are key to a comprehensive suite of workflow solutions to our life science and genomics customers This includes liquid handling plate management unique consumables and scheduling software with solutions that range from standalone instrumentation to bench top automation solutions These solutions strengthen our offering of automated sample preparation across a broad range of applications which are integrated with several of our analytical and NGS platforms across the company
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 turbo molecular and ion getter primary vacuum pumps rotary vane and dry scroll vacuum instrumentation vacuum control instruments sensor gauges and meters and vacuum components valves flanges and other mechanical hardware These products also include helium mass spectrometry and helium sensing leak detection instruments used to identify and measure leaks in hermetic or vacuum environments In addition to product sales we also offer a wide range of services including an exchange and rebuild program assistance with the design and integration of vacuum systems applications support and training in basic and advanced vacuum technologies
We offer a broad range of market specific consumables and supplies to complete customers analytical workflows from sample preparation through separation and analysis to storage with the support of our technology platforms This includes sample preparation consumables such as solid phase extraction SPE and filtration products self manufactured GC and LC columns chemical standards and instrument replacement parts Consumable products also include scientific instrument parts and supplies such as filters and fittings for GC systems xenon lamps and cuvettes for UV Vis NIR fluorescence FT IR and raman spectroscopy instruments and graphite furnace tubes hollow cathode lamps and specialized sample introduction glassware for our AA ICP OES and ICP MS products
We had approximately 52 000 customers for our life sciences and applied markets business in fiscal year 2024 A significant number of our life sciences and applied markets customers are also customers of our Agilent CrossLab business
The life sciences and applied markets business is susceptible to seasonality in its orders and revenues primarily related to U S and foreign government budgets chemicals and advanced materials and environmental customers and large pharmaceutical company budgets Historically the result is that our first and fourth fiscal quarters tend to deliver the strongest profits for the life sciences and applied markets business However general economic trends new product introductions and competition might overshadow this trend in any given year
The life sciences and applied markets channels focus on the therapeutics and human disease research customer base pharma biopharma CRO CMO and generics clinical customer base high complexity clinical testing labs emerging life sciences opportunities in life science research institutes and applied markets chemicals and advanced materials 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 direct sales by providing broader geographic coverage and coverage of smaller accounts Our active reseller program augments our ability to provide more complete solutions to our customers We sell our consumable products through distributors electronic commerce and direct sales
Our manufacturing supports our diverse product range and customer centric focus We assemble highly configurable products to individual customer orders and make standard products to stock We employ advanced manufacturing techniques and supply chain management systems to reduce costs and manufacturing cycle times Our manufacturing process then converts these designs into standard as well as custom products for shipment to customers We selectively use third parties to provide some supply chain processes for manufacturing warehousing and logistics Inside the U S we have manufacturing facilities in California Delaware and Rhode Island Outside of the U S we have manufacturing facilities in Australia China Germany Italy Malaysia Netherlands Singapore and the United Kingdom We have FDA registered sites in California Germany and Singapore
The markets for analytical instruments in which we compete are characterized by evolving industry standards and intense competition Our principal competitors in the life sciences and applied markets arena include Danaher Corporation PerkinElmer Inc Shimadzu Corporation Thermo Fisher Scientific Inc and Waters Corporation We compete on the basis of product performance reliability support quality applications expertise global channel coverage and price
Our diagnostics and genomics business includes the cell analysis advanced manufacturing partnerships and research and development pathology companion diagnostics reagent partnership genomics and biomolecular analysis businesses
Our diagnostics and genomics business is comprised of seven areas of activity providing active pharmaceutical ingredients APIs for oligo based therapeutics as well as solutions that include reagents instruments software and consumables which enable customers in the clinical and life sciences research areas to interrogate samples at the cellular and molecular level First our cell analysis business includes instruments reagents software and labware associated with unique live cell analysis platforms in addition to mainstream flow cytometers plate readers and plate washers dispensers which are used across a broad range of applications Second our advanced manufacturing partnerships business is a contract and development manufacturing organization that provides services related to and the production of synthesized oligonucleotides under pharmaceutical good manufacturing practices GMP conditions for use as API in a class of drugs that utilize nucleic acid molecules for disease therapy Together our BIOVECTRA and nucleic acid solutions businesses offer a broader range of contract and development manufacturing services to our customers They also provide clinical to commercial scale production capabilities focused mainly on mRNA manufacturing Third our pathology solutions business is focused on product offerings for cancer diagnostics and anatomic pathology workflows The broad portfolio of offerings includes immunohistochemistry
IHC in situ hybridization ISH hematoxylin and eosin H E staining and special staining Fourth we also collaborate with a number of major pharmaceutical companies to develop new potential tissue 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 provides clinical flow cytometry reagents for routine cancer diagnostics This business also provides bulk antibodies as raw materials and associated assay development services to in vitro diagnostics IVD manufacturers biotechnology and pharmaceutical companies Sixth our genomics business includes arrays and next generation sequencing NGS This business also includes solutions that enable clinical labs to identify DNA variants associated with genetic disease and help direct cancer therapy Finally our biomolecular analysis business provides complete workflow solutions including instruments consumables and software for quality control analysis of nucleic acid samples Samples are analyzed using quantitative and qualitative techniques to ensure accuracy in further genomics analysis techniques including NGS utilized in clinical and life science research applications
The diagnostics and clinical market focus within the diagnostics and genomics business is to provide instruments software reagents and consumables that enable customers to perform clinical research and routine testing Our high quality automated pathology tissue staining platforms and solutions are used most heavily by the large labs located in hospitals medical centers and reference labs The market focus is on mature economies primarily in North America Western Europe and Japan The mix is changing however as emerging markets increase spending on human health The clinical market for genomics consists of high complexity clinical labs performing patient testing including for profit reference laboratories hospital labs and molecular diagnostic companies While some labs purchase IVD labeled testing kits others often develop and validate their own molecular based tests Analyte Specific Reagents ASRs are often used by these labs Additionally our Seahorse xCELLigence Novocyte and BioTek platform technologies are used both stand alone and in conjunction with mass spectrometry to understand underlying cellular physiology and interactions in normal and diseased states as well to help understand how new drugs and therapies alter the composition function or interaction of cells In addition our XCELLigence and Novocyte technologies can be used to characterize and quantify immune cell response for example cytotoxicity
This market consists of for profit companies which participate across the pharmaceutical value chain in the areas of therapeutic research discovery development clinical trials manufacturing and quality assurance and quality control One sub segment of this market is core and emerging pharmaceutical companies pharma A second sub segment includes biopharmaceutical companies biopharma contract research organizations CROs and contract manufacturing organizations CMOs Our primary focus is on biopharma working with advanced therapeutic modalities e g cell and gene therapies where we provide a suite of research tools and companion diagnostic development services Additionally we provide active pharmaceutical ingredient API contract development and manufacturing services for oligonucleotide based therapeutic modalities With the acquisition of BIOVECTRA we will offer our pharmaceutical customers even more specialized manufacturing capabilities for targeted therapeutics from sterile fill finish to a single source for gene editing solutions
Our products fall into these main areas of work pathology products cell analysis specific proteins and flow cytometry reagents companion diagnostics target enrichment cytogenetic research solutions and microarrays qPCR instrumentation and molecular biology reagents advanced manufacturing partnerships and automated electrophoresis and microfluidics solutions
This area consists of routine clinical solutions for tissue based cancer diagnostics with solutions that comprise antibodies reagents instruments and software targeting both primary and advanced cancer diagnostics Our CoverStainer and Artisan based product families target primary cancer diagnostics through hematoxylin and eosin staining as well as special stains for additional insights and detection of potentially carcinogenic tissue Dako Omnis and Autostainer based IHC solution and Instant Quality Fluorescence In Situ Hybridization IQFISH technologies provide advanced tumor typing through investigation of protein and gene expression These products also include companion diagnostic tests that are used to help identify patients most likely to benefit from a specific targeted therapy
Our cell analysis tools are used to study cell signaling pathways general cell function and behavior through metabolic profile analysis real time cellular impedance measurements and traditional cytometry techniques Characterizing cellular behavior and function is an increasingly critical step in understanding normal behavior versus diseased states advancements of those diseases and response to therapies providing researchers with a more targeted approach for drug discovery and ultimately more effective therapeutics Our cell analysis portfolio includes cell analysis plate based assays flow cytometer real time cell analyzer microplate reader cell imaging system and related consumables
In our Bulk Antibodies business we partner with IVD manufacturers biotechnology and pharmaceutical companies by offering antibodies as raw materials and a range of associated assay development services and solutions We operate in several areas of clinical relevance for the customers and address multiple technologies such as turbidimetry gel techniques and chemiluminescence immunoassays In the area of Flow Cytometry Reagents we provide reagents and kits directly to clinical laboratories working in routine cancer diagnostics with particular focus on blood cancers
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 enable successful regulatory approvals in our worldwide markets
We provide a target enrichment portfolio via our SureSelect products which enables customers to select specific target regions of the genome for sequencing Customers can customize our products for their regions of interest using the SureDesign software or they can choose from a range of catalog products including gene panels for specific applications and Exome designs which allow analysis of the entire coding sequences of the genome SureSelect provides a sample prep workflow that can be automated with the Agilent Bravo platform for scalability or leverages the Magnis NGS sample prep ecosystem of instruments and consumables for maximum ease of use These products are used for mutation detection and genotyping Our solutions also enable clinical labs to identify DNA variants associated with genetic diseases and help direct cancer therapy
We provide microarrays for comparative genomic hybridization CGH mostly used by customers in cytogenetic laboratories The arrays allow customers to detect genome wide copy number alterations with high levels of resolution from entire chromosomal copy number changes to specific microdeletions or duplications The arrays are offered in many formats allowing the customers to choose from different levels of resolution and number of samples per arrays Arrays can also be customized using the SureDesign software In addition to the microarrays our solution includes reagents for sample processing hardware for reading the microarrays and software to help users view the data in a meaningful way In addition to the CGH portfolio the cytogenetics solution comprises a line of oligonucleotide probes for fluorescent in situ hybridization FISH called SureFISH Additionally we provide a wide range of microarrays to the research market for different types of applications gene expression microRNA methylation splice variants and chromatin immunoprecipitation applications Arrays are offered as catalog designs or customizable designs with no minimum order size and short delivery time which differentiates us from other vendors and enables researchers the maximum flexibility in their studies
Quantitative PCR qPCR or real time PCR is also a standard method used in genomic research facilities to measure the amount of a specific nucleic acid sequence within a sample There are several applications for qPCR among the most common are identifying the expression level of a specific gene or calculating the amount of a specific pathogen present in a sample We offer a complete portfolio of qPCR instruments as well as specialty enzymes for amplifying difficult sample types In addition to qPCR enzymes we offer a wide range of molecular biology reagents including tools for cloning and mutagenesis applications
Our advanced manufacturing partnerships 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 a 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 guide RNA 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 from clinical trials to commercial scale volumes with a common goal of patient health and safety With the acquisition of BIOVECTRA we will offer our pharmaceutical customers even more specialized manufacturing capabilities for targeted therapeutics from sterile fill finish to a single source for gene editing solutions
Automated electrophoresis is a separation technique for biomolecules such as proteins peptides and nucleic acids RNA and DNA and is used to determine the identity of a molecule by either size or charge It is widely used as a QC tool to check sample integrity prior to subsequent analysis Prominent examples are nucleic acid preparation products in front of polymerase chain reaction NGS and microarrays More recently quality control based on automated electrophoresis products has become essential throughout in vitro transcription IVT mRNA workflows including vaccine development and therapeutics
The diagnostics and genomics channels focus on the therapeutics and human disease research customer base pharma biopharma CRO CMO and generics clinical customer base pathology labs and high complexity clinical testing labs and on emerging life sciences opportunities in life science research institutes We deploy a multi channel approach marketing products to our customers through direct sales electronic commerce resellers manufacturers representatives and distributors We primarily use direct sales to market our solutions to our pharmaceutical biopharmaceutical and clinical accounts Sales agents supplement direct sales by providing broader geographic coverage and coverage of smaller accounts Our active reseller program augments our ability to provide more complete solutions to our customers We sell our consumable products through distributors telesales electronic commerce and direct sales We utilize telesales for more mature product lines as well as for reorders of reagent products
Our manufacturing supports our diverse product range and customer centric focus We assemble highly configurable products to individual customer orders and make standard products to stock We employ advanced manufacturing techniques and supply chain management systems to reduce costs and manufacturing cycle times We selectively use third parties to provide some supply chain processes for manufacturing warehousing and logistics In the U S we have manufacturing facilities in California Colorado Iowa Massachusetts Texas and Vermont Outside of the U S we have manufacturing facilities in Canada China Denmark Germany Malaysia and Singapore Our FDA registered sites include California Colorado Texas Vermont and Denmark
The markets for diagnostics and genomics analytical products in which we compete are characterized by evolving industry standards and intense competition Our principal competitors in the diagnostics and genomics arena include Abbott Laboratories Affymetrix Inc a division of Thermo Fisher Scientific Inc Avecia a division of Nitto Denko Illumina Inc Leica Biosystems Inc a division of Danaher Corporation Revvity Inc Roche Ventana Medical Systems Inc a member of the Roche Group Sartorius and Twist Bioscience Corporation We compete on the basis of product performance reliability support quality applications expertise whole solution offering global channel coverage and price
Some of the products the diagnostics and genomics business sells are subject to regulatory approval by the FDA and other regulatory bodies throughout the world These regulations govern a wide variety of product related activities from quality management design and development to labeling manufacturing promotion sales and distribution We continually invest in our manufacturing infrastructure to gain and maintain certifications necessary for the level of clearance
The Agilent CrossLab business spans the entire lab with its extensive services portfolio which is designed to improve customer outcomes and represents a broad range of offerings designed to serve customer needs across end markets regardless of instrument manufacturer The services portfolio includes repairs parts maintenance installations training compliance support software as a service
Our services support customers in this market consisting of for profit companies which 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 contract development and manufacturing organizations CDMOs and contract manufacturing organizations CMOs Biopharma companies and to a somewhat lesser extent CROs CDMOs 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
Our services support customers in this market that consist primarily of not for profit organizations and include academic institutions large government institutes and privately funded organizations The academic and government market plays an influential role in technology adoption and therapeutic developments for pharmaceutical and molecular diagnostics companies After decades of investment in basic biomedical research by government funding bodies the focus has widened to include translational research multidisciplinary scientific efforts directed at accelerating therapy development
Our services software and technical support 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 and technical support to maintain optimize and enable higher productivity and profitability for labs and support quality control and compliance with environmental and safety regulations Additionally our services software and technical support are used to support the testing for safety quality and compliance across the value chains of advanced materials including semiconductors batteries and specially engineered polymers and polymeric materials The natural gas and petroleum exploration and refining markets use our services software and technical support to support quality control environmental safety reviews analysis of crude oil composition and improve their refining processes and quality of products
Our services support the environmental industry customers that perform laboratory and field analysis of chemical pollutants in air water soil and solid waste Environmental industry customers include all levels of government the industrial and manufacturing sectors engineering and consulting companies commercial testing laboratories and colleges and universities Our services also support drug testing and forensics laboratories that are involved with analyzing evidence associated with crime screening athletes for performance enhancing drugs analyzing samples for recreational drugs or detecting and identifying biological and chemical warfare agents Customers include local state federal and international law enforcement agencies and commercial testing laboratories
Our services support the food production chain including incoming inspection new product development quality control and assurance and packaging Our services also support the food safety market in their work to analyze food for concerns ranging from pathogen contamination and genetic modification to species verification and others
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 needs of various industries As customers continue to outsource laboratory operations and consolidate suppliers our enterprise services consist of a broad portfolio of integrated laboratory management services including instrument services lab supply management asset management procurement informatics and scientific services Advancements in our offering of software and service solutions will help our customers more efficiently operate a digitally connected smart lab that can derive value out of data analytics artificial intelligence and robotics
The service business is mostly recurring in nature 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
We deploy a multi channel approach marketing 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 Some of our service contract sales are processed by our digital commerce infrastructure All channels are supported by technical product and application specialists to meet our customers specific requirements
We deliver our support services to customers in a variety of ways including on site assistance with repair or exchange of returned products as well as a growing number of remote service delivery options In addition to the traditional telephone 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 pharmaceutical and biopharmaceutical advanced materials environmental and hydrocarbon processing customers to keep instruments fully operational and compliant with the respective industry requirements Our products typically come with standard warranties and extended warranties are available for additional cost
Our principal competitors in the services 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 service providers We compete on the basis of reliability support quality applications expertise global channel coverage and price
We provide support to our businesses through our global infrastructure organization This support includes services in the areas of finance tax treasury legal real estate insurance services workplace services human resources information technology services quality and regulatory services corporate development and other corporate infrastructure expenses Generally these organizations are managed from Santa Clara California with operations and services provided worldwide As of October 31 2024 our global infrastructure organization employed approximately 1 900 people worldwide
Our order fulfillment and supply chain organization OFS focuses on order fulfillment and supply chain operations in our businesses OFS provides resources for manufacturing engineering logistics and strategic sourcing to our respective businesses In general OFS employees are dedicated to specific businesses and the associated costs are directly allocated to those businesses
The following discussions of Research and Development Backlog Intellectual Property Materials Environmental Regulatory Affairs and Human Capital Management include information common to each of our businesses
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 systems and solutions In each of these research fields we conduct research that is focused on specific product development for release in the short term as well as other research that is intended to be the foundation for future products over a longer time horizon Most of our product development research is designed to improve products already in production focus on major new product releases and develop new product segments for the future We remain committed to invest significantly in research and development and have focused our development efforts on key strategic opportunities to align our business with available markets and position ourselves to capture market share
We believe that backlog is not a meaningful indicator of future business prospects for our business segments since a significant portion of our revenue for a given quarter is derived from the current quarter s orders Therefore we believe that backlog information is not material to an understanding of our business
We generate patent and other intellectual property rights covering significant inventions and other innovations in order to create a competitive advantage While we believe that our licenses patents and other intellectual property rights have value in general no single license patent or other intellectual property right is in itself material In addition our intellectual property rights may be challenged invalidated or circumvented or may otherwise not provide significant competitive advantage
Our life sciences and applied markets diagnostics and genomics and Agilent CrossLab businesses all purchase materials from thousands of suppliers on a global basis Some of the parts that require custom design work are not readily available from alternate suppliers due to their unique design or the length of time necessary for design work Our long term relationships with suppliers allow us to proactively manage technology road maps and product discontinuance plans and monitor their financial health To address any potential disruption in our supply chain we use a number of techniques including qualifying multiple sources of supply and redesign of products for alternative components In addition while we generally attempt to keep our inventory at minimal levels we do purchase incremental inventory as circumstances warrant to protect the supply chain
Our research and development manufacturing and distribution operations involve the use of hazardous substances and are regulated under international federal state and local laws governing health and safety and the environment We apply strict standards for protection of the environment and occupational health and safety to sites inside and outside the U S even if not subject to regulation imposed by foreign governments We believe that our properties and operations at our facilities comply in all material respects with applicable environmental laws and occupational health and safety laws We are also regulated under a number of international federal state and local laws regarding recycling product packaging and product content requirements We believe we are substantially in compliance with such environmental product content disposal and recycling laws We 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
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 difficult for us to deliver products and services to our customers and cause us to incur substantial expense
In addition to monitoring and managing compliance with environmental regulations we strive to advance our sustainability practices In 2021 we announced our goal to achieve net zero greenhouse gas emissions by 2050 In 2023 we announced near and long
term greenhouse gas emission reduction targets which were validated by the Science Based Targets initiative SBTi We also aim to provide transparency on our approach to sustainability management through our annual ESG report
A number of our products and services are subject to regulation by the FDA the U S Department of Health and Human Services the Centers for Medicare and Medicaid Services and certain similar foreign regulatory agencies These regulations govern a wide variety of product and service related activities from quality management design and development to manufacturing labeling promotion sales and distribution If we fail to comply with FDA regulations and other applicable regulatory requirements or are perceived to potentially have failed to comply we may face 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 approvals 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 has started to enforce new requirements known as the EU In Vitro Diagnostic Regulation EU IVDR which imposes stricter requirements for the marketing and sale of in vitro diagnostics in the European Union These regulations are more stringent in a variety of areas including clinical evidence requirements quality management systems and post market surveillance activities The EU IVDR requirements became effective starting in May 2022
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 subject to various statutes and regulations that apply to companies doing business with the government We are also subject to investigation for compliance with the regulations governing government contracts A failure 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 federal 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
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
China s Personal Information Protection Law and Data Security Law and the California 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 for non compliance including possible fines of up to four 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
While we believe we are in compliance in all material respects with such laws and regulations any noncompliance could result in substantial fines or otherwise restrict our ability to operate and thereby have an adverse effect on our financial condition To date none has had a material impact on our operations
As of October 31 2024 we employed approximately 17 900 persons of whom approximately 7 000 were based in the Americas 4 400 in Europe and 6 500 in Asia Pacific We also leverage temporary workers to provide flexibility for our business and manufacturing needs
Our instruments software services solutions and people provide trusted answers to customers most challenging questions Whether we are working with our customers to keep food supplies safe improve the quality of air water and soil or fight cancer with more precise diagnoses and targeted treatments our employees share a passion and commitment to advancing the quality of life We believe that our future success largely depends upon our continued ability to attract and retain highly skilled employees in order to fulfill that commitment
We engage with our employees through consultation surveys ad hoc feedback and reviews Our executive officers hold all managers meetings on a quarterly basis to provide business updates and answer questions We conduct an annual leadership survey that allows employees to provide feedback on leadership effectiveness culture 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
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 for building diverse teams to promoting the advancement of leaders from different backgrounds Agilent is committed to creating a diverse work environment and is proud to be an equal opportunity employer We believe in an inclusive workforce where employees from a number of cultures and countries are engaged and encouraged to leverage their collective talents As of October 31 2024 approximately 38 percent of our full time employees were female Approximately 50 percent of our board is comprised of directors representing underrepresented groups as of the date of this report We have launched a number of company wide initiatives including employee network groups aimed at promoting engagement of traditionally historically underrepresented groups of employees
We provide our employees with competitive salaries and bonuses opportunities for equity ownership development programs that enable continued learning and growth and a robust employment package that promotes well being 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 for business success including flexible work arrangements health and welfare benefits employee and family assistance plans and parental leave
As part of our promotion and retention efforts we also invest in ongoing leadership development for current and rising managers Training at Agilent takes several forms face to face classroom experiences on the job learning virtual classroom events and self paced e learning We are committed to providing an environment in which employees can 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
The health and safety of our employees is a top priority for us Our environmental health and safety EHS management system provides a framework for assessing and managing risks relating to health and safety We ensure managers and employees receive periodic workplace safety training and provide wellness programs that contribute to the productivity health and well being of employees In addition our crisis management program includes a global tool that
Each year our employees throughout the world devote thousands of volunteer hours to community service activities Our employees may take up to six days of paid time off each year for volunteer activities with charities and 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
59 has served as our Senior Vice President Agilent and President Order Fulfillment and Supply chain since September 2013 From September 2012 to September 2013 Mr Ancher Jensen served as our Vice President Global Product Supply Diagnostics and Genomics Group From September 2010 to September 2012 he served as Corporate Vice President Global Operations of Dako A S a Danish diagnostics company and as Dako s Vice President Supply Chain and Chief Information Officer from 2006 to September 2010 Prior to joining Dako he spent more than 15 years in senior management roles and management consulting with Chr Hansen Deloitte Consulting and NVE
56 has served as our Senior Vice President Agilent and Chief Legal Officer and Secretary since July 2024 Prior to joining Agilent he served as the Chief Legal Officer at Pendo io Incorporated a privately held company from September 2022 to June 2024 From June 2006 to July 2022 he held several positions at Coherent Inc including Executive Vice President General Counsel Chief Legal Officer and Corporate Secretary until its acquisition by II VI Incorporated after which he served as a Special Advisor to the President until September 2022 Since September 2004 Mr DiMarco has been an Adjunct Associate Professor of Law at the University of California College of the Law San Francisco From October 2023 to present Mr DiMarco has been the Chair of the Nasdaq Exchange Nominating Committee and a member of the Nasdaq Exchange Review Council Mr DiMarco was previously a member and associate at Wilson Sonsini Goodrich Rosati P C a multinational law firm
59 has served as our Vice President Corporate Controllership and Chief Accounting Officer since May 2015 From September 2009 to May 2015 Mr Gonsalves served as Vice President and operational CFO for various business groups within the company most recently for the Life Sciences and Applied Markets Group Prior to that Mr Gonsalves served in various capacities for Agilent including as vice president of Investor Relations controller corporate governance and customer financing in Agilent s Global Infrastructure Organization and controller for the Photonics Systems Business Unit Before joining Agilent Mr Gonsalves held a variety of positions in finance with Hewlett Packard Company
has served as our Senior Vice President Agilent and Chief Commercial Officer Commercial Organization since November 2024 From June 2023 to October 2024 Mr Kirkwood led Agilent s Global Sales organization for Laboratory Solution Sales as well as the Greater China Sales organization Mr Kirkwood led our Commercial Marketing and Operations teams from November 2021 to May 2023 Prior to that he held various positions in Agilent Mr Kirkwood first joined Agilent in 2010 after Agilent acquired Varian
53 has served as our Senior Vice President Agilent and President Diagnostics and Genomics Group since May 2024 Prior to joining Agilent he served as Executive Vice President and President of the Life Science Group at Bio Rad Laboratories Bio Rad from January 2022 to May 2024 During his 10 year tenure at Bio Rad Mr May held various leadership roles including that of Senior Vice President General Manager of the Digital Biology Group from January 2020 to December 2021 and as Senior Vice President of Global Commercial Operations from October 2015 to January 2020 Before joining Bio Rad in 2014 Mr May held positions at Thermo Fisher Scientific for 10 years
53 has served as our President and Chief Executive Officer since May 2024 From February 2024 to May 2024 he served as Senior Vice President Chief Operating Officer and CEO elect Mr McDonnell served as Chief Commercial Officer and President Agilent CrossLab Group from November 2021 to February 2024 From May 2020 to November 2021 he served as Senior Vice President Agilent and President Agilent CrossLab Group 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
56 has served as our Senior Vice President Agilent since August 2018 and as our 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 Since July 2023 Mr McMahon has served as a member of the Board of Directors of Orasure Technologies Inc
54 has served as our Senior Vice President Agilent and President Agilent CrossLab Group since February 2024 From August 2021 to February 2024 she served as Vice President and General Manager of Agilent CrossLab Services Division Ms Riemann served as Vice President and General Manager of the Chemistries and Supplies Division from May 2020 to August 2021 From March 2019 to May 2020 she was Vice president and General Manager of the Chemistries Division Prior to March 2019 she held leadership roles in the Chemistries Division Mass Spectrometry Division and the Americas Field Organization sales organization
49 has served as our Senior Vice President Agilent and President Applied Markets Group since November 2024 From August to November 2024 he served as Vice President and General Manager of the Gas Phase Division within the former Life Sciences and Applied Markets Group Prior to that Mr Zhang was Vice President and General Manager for the Gas Phase Separations Division from January 2020 to August 2024 He previously held various leadership roles in manufacturing over the span of his 22 years at Agilent He was a manufacturing engineer at Agilent s Shanghai site from March 2002 to December 2019 He also held various leadership roles in Agilent s Order Fulfillment and Supply Chain organization and was named global manufacturing manager for GC operations and general manager of Agilent s Shanghai site in April 2016
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 www sec gov that contains reports proxy and information statements and other information regarding issuers that file electronically
Our financial and other information can be accessed at our Investor Relations website The address is www investor agilent com We make available free of charge on our website electronic copies of our annual report on Form 10 K quarterly reports on Form 10 Q current reports on Form 8 K and amendments to those reports filed or furnished pursuant to Section 13 a or 15 d of the Exchange Act as soon as reasonably practicable after filing such material electronically or otherwise furnishing it to the SEC
Our Amended and Restated Bylaws Corporate Governance Standards the charters of our Audit and Finance Committee our Compensation Committee our Executive Committee and our Nominating Corporate Governance Committee as well as our Standards of Business Conduct including code of ethics provisions that apply to our principal executive officer principal financial officer principal accounting officer and senior financial officers are available on our website at www investor agilent com under Governance
Our business is sensitive to negative changes in general economic conditions both inside and outside the United States Slower global economic growth increasing interest rates inflationary pressures instability and uncertainty in the markets in which we operate may adversely impact our business resulting in
Visibility into our markets is limited Our quarterly sales and operating results are highly dependent on the volume and timing of orders received during the fiscal quarter which are difficult to forecast and may be cancelled by our customers In addition our revenue and earnings forecasts for future fiscal quarters are often based on the expected seasonality of our markets However the markets we serve do not always experience the seasonality that we expect as customer spending policies and budget allocations particularly for capital items may change Any decline in our customers markets or in general economic conditions has in the past and may in the future result in a reduction in demand for our products and services Also if our customers markets decline we may not be able to collect on outstanding amounts due to us Such declines could harm our consolidated financial position results of operations cash flows and stock price and could limit our profitability Also in such an environment pricing pressures could intensify Since a significant portion of our operating expenses is relatively fixed in nature due to sales research and development and manufacturing costs if we were unable to respond quickly enough these pricing pressures could further reduce our operating margins
If we do not introduce successful new products and services in a timely manner to address increased competition through frequent new product and service introductions rapid technological changes and changing industry standards our products and services may become obsolete and our operating results may suffer
We generally sell our products in industries that are characterized by increased competition through frequent new product and service introductions rapid technological changes and changing industry standards Without the timely introduction of new products services and enhancements our products and services may become technologically obsolete over time in which case our revenue and operating results could suffer The success of our new products and services will depend on several factors including our ability to
In addition if we fail to accurately predict future customer needs and preferences or fail to produce viable technologies we may invest in research and development of products and services that do not lead to significant revenue which would adversely affect our profitability Even if we successfully innovate and develop new and enhanced products and services we may incur substantial costs in doing so and our operating results may suffer In addition promising new products may fail to reach the market or realize only limited commercial success because of real or perceived concerns of our customers Furthermore as we collaborate with pharmaceutical customers to develop drugs such as companion diagnostics assays or provide drug components like active pharmaceutical ingredients we face risks that those drug programs may be cancelled upon clinical trial failures
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 Overall foreign currency movements for the year ended October 31 2024 had no overall impact on revenue growth when compared to the same period last year Typically when movements in foreign currency exchange rates have a negative impact on revenue they will also have a positive impact by reducing our costs and expenses In addition many of our employees contract manufacturers suppliers job functions outsourcing activities and manufacturing facilities are located outside the United States Accordingly our future results could be harmed by a variety of factors including
ongoing instability or changes in a specific country s or region s political economic or other conditions including inflation recession interest rate fluctuations and actual or anticipated military or political conflicts including uncertainties and instability in economic and market conditions caused by pandemics like COVID 19 the current conflicts in Ukraine Russia and the Middle East and political and trade uncertainties in the greater China region
changes in diplomatic and trade relationships as well as new tariffs trade protection measures import or export licensing requirements new or different customs duties trade embargoes and sanctions and other trade barriers
tariffs imposed by the U S on goods from other countries and tariffs imposed by other countries on U S goods including the tariffs enacted by the U S government on various imports from China and by the Chinese government on certain U S goods
We sell our products into many countries and we also source many components and materials for our products from and manufacture our products in various countries Future tariffs and 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 adapt to any such change Further additional tariffs 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
Most of our accounting and tax processes including general accounting cost accounting accounts payable accounts receivable and tax functions 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
In addition a significant amount of certain types of expenses such as payroll utilities tax and marketing expenses are paid in local currencies Our hedging programs reduce but do not always entirely eliminate within any given twelve month period the impact of currency exchange rate movements and therefore fluctuations in exchange rates including those caused by currency controls could impact our business operating results and financial condition by resulting in lower revenue or increased expenses For expenses beyond that twelve month period our hedging strategy does not mitigate our exposure In addition our currency hedging programs involve third party financial institutions as counterparties The weakening or failure of financial institution counterparties may adversely affect our hedging programs and our financial condition through among other things a reduction in available counterparties increasingly unfavorable terms and the failure of the counterparties to perform under hedging contracts
Our customers include pharmaceutical companies laboratories universities healthcare providers government agencies and public and private research institutions Many factors including public policy spending priorities available resources mergers and consolidations institutional and governmental budgetary policies and spending priorities and product and economic cycles have a significant effect on the capital spending policies of these entities Fluctuations in the research and development budgets at these organizations could have a significant effect on the demand for our products and services Research and development budgets fluctuate due to changes in available resources consolidation spending priorities general economic conditions medical reimbursement policies and institutional and governmental budgetary policies The timing and amount of revenue from customers that rely on government or research funding may vary significantly due to factors that can be difficult to forecast including changes in spending authorizations and budgetary priorities for our products and services If demand for our products and services is adversely affected our revenue and operating results would suffer
Our income could be harmed if we are unable to adjust our purchases to reflect market fluctuations including those caused by the seasonal nature of the markets in which we operate The sales of our products and services are dependent to a large degree on customers whose industries are subject to seasonal trends in the demand for their products During a market upturn we may not be able to purchase sufficient supplies or components to meet increasing product demand which could materially affect our results In the past we have experienced a shortage of parts for some of our products In addition some of the parts that require custom design are not readily available from alternate suppliers due to their unique design or the length of time necessary for design work Should a supplier cease manufacturing such a component we would be forced to reengineer our product In addition to discontinuing parts suppliers may also extend lead times limit supplies or increase prices due to capacity constraints or other factors In order to secure components for the production of products we may enter into non cancelable purchase commitments with vendors or at times make advance payments to suppliers which could impact our ability to adjust our inventory to declining market demands If demand for our products is less than we expect we may experience additional excess and obsolete inventories and be forced to incur additional expenses
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 We believe our pay levels are very competitive within the regions that we operate However there is intense competition for certain highly technical specialties in geographic areas where we continue to recruit and it may become more difficult to hire and retain our key employees
We have implemented multiple strategic initiatives across our businesses to adjust our cost structure and we may engage in similar activities in the future These strategic initiatives and our regular ongoing cost reduction activities may distract management could slow improvements in our products and services and limit our ability to increase production quickly if demand for our products increases In addition delays in implementing our strategic initiatives unexpected costs or failure to meet targeted improvements may diminish the operational and financial benefits we realize from such actions Any of the above circumstances could have an adverse effect on our business and operating results and financial condition
In the normal course of business we frequently engage in discussions with third parties relating to possible acquisitions strategic investments and alliances joint ventures and divestitures and generally expect to complete several transactions per year In addition we may decide to exit a particular business within our product portfolio As a result of such transactions our financial results may differ from our own or the investment community s expectations in a given fiscal quarter or over the long term We may have difficulty developing manufacturing and marketing the products of a newly acquired company in a way that enhances the performance of our combined businesses or product lines Acquired businesses may also expose us to new risks and new markets and we may have difficulty addressing these risks in a cost effective and timely manner Transactions such as acquisitions have resulted and may in the future result in unexpected significant costs and expenses In the future we
may be required to record charges to earnings during the period if we determine there is an impairment of goodwill or intangible assets up to the full amount of the value of the assets or in the case of strategic investments and alliances consolidate results including losses of third parties or write down investment values or loans and convertible notes related to the strategic investment
Integrating the operations of acquired businesses within Agilent could be a difficult costly and time consuming process that involves a number of risks Acquisitions and strategic investments and alliances may require us to integrate and collaborate with a different company culture management team business model business infrastructure and sales and distribution methodology and assimilate and retain geographically dispersed decentralized operations and personnel Depending on the size and complexity of an acquisition our successful integration of the entity depends on a variety of factors including introducing new products and meeting revenue targets as expected the retention of key employees and key customers increased exposure to certain governmental regulations and compliance requirements and increased costs and use of resources Further the integration of acquired businesses is likely to result in our systems and internal controls becoming increasingly complex and more difficult to manage Any difficulties in the assimilation of acquired businesses into our control system could harm our operating results or cause us to fail to meet our financial reporting obligations
Even if we are able to successfully integrate acquired businesses within Agilent we may not be able to realize the revenue and other synergies and growth that we anticipated from the acquisition in the time frame that we expected and the costs of achieving these benefits may be higher than what we expected As a result the acquisition and integration of acquired businesses may not contribute to our earnings as expected we may not achieve our operating margin targets when expected or at all and we may not achieve the other anticipated strategic and financial benefits of such transactions
A successful divestiture depends on various factors including our ability to effectively transfer liabilities contracts facilities and employees to the purchaser identify and separate the intellectual property to be divested from the intellectual property that we wish to keep and reduce fixed costs previously associated with the divested assets or business In addition if customers of the divested business do not receive the same level of service from the new owners this may adversely affect our other businesses to the extent that these customers also purchase other Agilent products In exiting a business we may still retain liabilities associated with the support and warranty of those businesses and other indemnification obligations All of these efforts require varying levels of management resources which may divert our attention from other business operations If we do not realize the expected benefits or synergies of such transactions our consolidated financial position results of operations cash flows and stock price could be negatively impacted
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 adversely affect 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
Public health crises such as the COVID 19 pandemic may adversely impact and pose risks to certain elements of our business results of operations and financial condition the nature and extent of which are highly uncertain and unpredictable
Our global operations expose us to risks associated with public health crises including epidemics and pandemics such as COVID 19 Public health crises and any related remediation measures such as quarantine curfew and other travel and activity restrictions may impact our operations and sales and delivery of products and services Our supply chain has in the past and may in the future be impacted and we could experience disruptions or delays in shipments of certain materials or components of our products We may be unable to accurately predict the full extent and duration of the impact of a public health crisis on our business and operations due to numerous uncertainties including the duration and severity of the crisis the efficacy and distribution of vaccines containment measures and additional waves of infection
If we fail to maintain an effective system of internal controls we may not be able to accurately report our financial results which could lead to a loss of investor confidence in our financial statements and have an adverse effect on our stock price
Effective internal controls are necessary for us to provide reliable and accurate financial statements and to effectively prevent fraud We devote significant resources and time to comply with the internal control over financial reporting requirements of the Sarbanes Oxley Act of 2002 and continue to enhance our controls However we cannot be certain that we will be able to prevent future significant deficiencies or material weaknesses Inadequate internal controls could cause investors to lose confidence in our reported financial information which could have a negative effect on investor confidence in our financial statements the trading price of our stock and our access to capital
Our customers and we are subject to various governmental regulations Compliance with or changes in such regulations may cause us to incur significant expenses and if we fail to maintain satisfactory compliance with certain regulations we may be forced to recall products and cease their manufacture and distribution and we could be subject to civil or criminal penalties
Our customers and we are subject to various significant international federal state and local regulations including but not limited to regulations in the areas of health and safety packaging product content employment labor and immigration import export controls trade restrictions and anti competition In addition as a global organization we are subject to data privacy and security laws regulations and customer imposed controls in numerous jurisdictions as a result of having access to and processing confidential personal sensitive and or patient health data in the course of our business Global privacy laws including the EU s General Data Protection Regulation GDPR Brazil s Lei Geral de Protecao de Dados the California Consumer Privacy Act and China s Personal Information Protection Law and Data Security Law 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 and when personal data may be transferred outside the country where it was collected Many such laws impose significant penalties for non compliance including possible fines of up to four percent of total company revenue under the GDPR or orders to stop processing personal data in a particular jurisdiction 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 personal data and could harm our results of operations and expose us to significant fines penalties and other damages
We must also comply with complex foreign and U S laws and regulations such as the U S Foreign Corrupt Practices Act the U K Bribery Act and other local laws prohibiting corrupt payments to governmental officials anti competition regulations and sanctions imposed by the U S Office of Foreign Assets Control and other similar laws and regulations Such laws demand that we implement test and monitor an effective compliance program in order to detect and prevent instances of non compliance Violations of these laws and regulations could result in fines and penalties criminal sanctions suspension of government contracts or debarment 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 suspension of government contracts or debarment and restrictions on our ability to carry on or expand our operations In addition because many of our products are regulated or sold into regulated industries we must comply with additional regulations in marketing our products We develop configure and market our products to meet customer needs created by these regulations Any significant change in these regulations could reduce demand for our products force us to modify our products to comply with new regulations or increase our costs of producing these products If demand for our products is adversely affected or our costs increase our operating results and business would suffer
Our products and operations are also often subject to the rules of industrial standards bodies like the International Standards Organization as well as regulation by other agencies such as the FDA We also must comply with work safety rules If we fail to adequately address any of these regulations our businesses could be harmed
We are subject to extensive regulation by the FDA and certain similar foreign regulatory agencies and failure to comply with such regulations could harm our reputation business financial condition and results of operations
A number of our products and services are subject to regulation by the FDA the U S Department of Health and Human Services the Centers for Medicare Medicaid Services and certain similar foreign regulatory agencies In addition a number of our products and services may in the future be subject to regulation by the FDA and certain similar foreign regulatory agencies These regulations govern a wide variety of product and service related activities from quality management design and development to manufacturing labeling promotion sales and distribution In addition we are subject to inspections by these and other regulatory authorities If we or any of our suppliers distributors or customers fail to comply with FDA regulations and other applicable regulatory requirements or are perceived to potentially have failed to comply we may face among other things warning letters adverse publicity affecting both us and our customers investigations or notices of non compliance fines injunctions and civil 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 has started 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 regulations are more stringent in a variety of areas including clinical evidence requirements quality management systems and post market surveillance activities The new EU IVDR requirements became effective starting 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
Some of our products and related consumables are used in conjunction with chemicals whose manufacture processing distribution and notification requirements are regulated by the U S Environmental Protection Agency EPA under the Toxic Substances Control Act TSCA and by regulatory bodies in other countries under similar laws to prevent unreasonable risks to human health or the environment Under the TSCA the EPA has authority to require reporting record keeping and testing and to implement restrictions relating to chemical substances and or mixtures The TSCA prohibits persons from manufacturing domestic production or importation of any chemical in the United States that has not been reviewed by the EPA for its effect on health and safety or which is not listed on the EPA TSCA chemical substance inventory We must ensure conformance of the manufacturing storing processing distribution of and notification about these chemicals to these laws and adapt to regulatory requirements in all applicable countries as these requirements change If we fail to comply with the notification record keeping and other requirements in the manufacture or distribution of our products then we could be subject to civil penalties criminal prosecution and in some cases prohibition from distributing or marketing our products until the products or component substances are brought into compliance
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 suspension of government contracts or debarment termination of contracts forfeiture of profits suspension of payments increased pricing pressure or suspension from future government contracting If our government contracts are terminated if we are suspended from government work or if our ability to compete for new contracts is adversely affected our business could suffer
Our internal controls and compliance systems may not 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 effect on our business reputation and financial statements
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 local and foreign governments making compliance more difficult and uncertain The increase in costs to comply with such evolving expectations rules and regulations as well as any risk of noncompliance could adversely impact us
In addition we face increasing scrutiny from stakeholders with respect to environmental social and governance ESG practices and disclosures Also various legal and regulatory requirements specific to ESG matters in the U S EU local or other jurisdictions in which we operate are complex change frequently and have tended to become more stringent For instance we are subject to various laws against forced labor which have been promulgated by many regulatory authorities in the jurisdictions where we operate Any failure to adequately address stakeholder expectations with respect to ESG matters may result in an adverse impact on our business financial results stock price or reputation Our ability to achieve our current and future ESG goals is uncertain and remains subject to numerous risks including evolving regulatory requirements and stakeholder expectations our ability to recruit and retain a diverse workforce the availability of suppliers and other business partners that can meet our ESG expectations and standards cost considerations and the development and availability of cost effective technologies or resources that support our ESG goals
Certain properties we have previously owned or leased are undergoing remediation for subsurface contamination Although we are indemnified for liability relating to the required remediation at some of those properties we may be subject to liability if these indemnification obligations are not fulfilled In other cases we have agreed to indemnify the current owners of certain properties for liabilities related to contamination including companies with which we have previously been affiliated such as HP Inc Hewlett Packard Enterprise formerly Hewlett Packard Company and 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 certain actual or contingent environmental liabilities may or do require remediation While we are not aware of any material liabilities associated with any potential environmental contamination at any of those properties or facilities we may be exposed to material liability if environmental contamination at material levels is found to exist In addition in connection with the acquisition of certain companies we have assumed other costs and potential or contingent liabilities for environmental matters Any significant costs or liabilities could have an adverse effect on results of operations
Our current and historical manufacturing 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 subject to liabilities for environmental contamination and these liabilities may be substantial Although our policy is to apply strict standards for environmental protection and health and safety at our sites inside and outside the United States we may not be aware of all conditions that could subject us to liability 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 adaptations 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 environmental protection and health and safety laws and regulations could result in civil criminal regulatory administrative or 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
Issues in the development deployment and use of artificial intelligence technologies in our business operations services and products may result in reputational harm regulatory action or legal liability and any failure to adapt to such technological developments or industry trends could adversely affect the competitiveness of our business
We are integrating artificial intelligence and machine learning technologies AI into our business operations products and services while continuing to explore the opportunities that AI could bring to the company The use of AI particularly generative AI presents opportunities as well as risks that could negatively impact the business The development deployment and use of AI including within the life sciences industry is still in its early stages where the use of insufficiently developed AI technologies and premature deployment practices could result in unintended outcomes that harm the business AI technologies may be developed using inaccurate incomplete flawed or biased algorithms training methodologies or data which could result in competitive harm regulatory penalties legal liability or brand or reputational harm Further a failure to timely and effectively use or deploy AI and integrate it into new product offerings and services could negatively impact our competitiveness particularly ahead of evolving industry trends and evolving consumer demands We may be unable to devote adequate financial resources to develop or acquire new AI technologies and systems in the future
Use of AI to improve internal business operations or in the development or provision of products or services poses risks and challenges AI can pose risks from an intellectual property confidential data leakage data protection privacy perspective as well as raise ethical concerns compliance issues and security risks The input of confidential information or trade secrets into AI systems may result in the loss of intellectual property proprietary rights or attorney client privilege in such information or trade secrets The use of AI technologies for developing products or services may adversely affect or preclude the company s intellectual property rights in such products or services or may expose the company to liability related to the infringement misappropriation or other violation of third party intellectual property The use of AI technologies with personally identifiable information may also result in legal liability Further particularly given the nascent stage of the technology the use of AI can lead to unintended consequences including the generation of outputs that appear correct but are factually inaccurate misleading or that result in unintended biases and discriminatory outcomes or are otherwise flawed which could harm our reputation and business and expose us to risks related to such inaccuracies or errors in these outputs
Moreover AI is subject to a dynamic and rapidly evolving legal and regulatory environment which without appropriate review governance and risk management could expose the company to unforeseen legal or regulatory scrutiny and liabilities As such it remains uncertain how AI laws and regulations will impact our business or the associated cost or risks related to compliance therewith or with respect to embedding compliance mechanisms appropriately and effectively into our operations The use of AI may be subject to new legal or regulatory requirements the impact of which may be prohibitive or pose further risks from a legal or regulatory action perspective
From time to time third parties may claim that one or more of our products or services infringe their intellectual property rights We analyze and take action in response to such claims on a case by case basis Any dispute or litigation regarding patents or other intellectual property could be costly and time consuming due to the complexity of our technology and the uncertainty of intellectual property litigation and could divert our management and key personnel from our business operations A claim of intellectual property infringement could force us to enter into a costly or restrictive license agreement which might not be available under acceptable terms or at all could require us to redesign our products which would be costly and time
consuming and or could subject us to significant damages or to an injunction against the development and sale of certain of our products or services Our intellectual property portfolio may not be useful in asserting a counterclaim or negotiating a license in response to a claim of intellectual property infringement In certain of our businesses we rely on third party intellectual property licenses and we cannot ensure that these licenses will continue to be available to us in the future or can be expanded to cover new products on favorable terms or at all
Our success depends in large part on our proprietary technology including technology we obtained through acquisitions We rely on various intellectual property rights including patents copyrights trademarks and trade secrets as well as confidentiality provisions and licensing arrangements to establish maintain and enforce our proprietary rights If we do not enforce our intellectual property rights successfully our competitive position may suffer which could harm our operating results
Our pending patent copyright and trademark registration applications may not be allowed or competitors may challenge the validity or scope of our patents copyrights or trademarks In addition our patents copyrights trademarks and other intellectual property rights may not provide us with a significant competitive advantage
We may need to spend significant resources monitoring and enforcing our intellectual property rights and we may not be aware of or able to detect or prove infringement by third parties Our competitive position may be harmed if we cannot detect infringement and enforce our intellectual property rights quickly or at all In some circumstances we may choose to not pursue enforcement because an infringer has a dominant intellectual property position or for other business reasons In addition competitors might avoid infringement by designing around our intellectual property rights or by developing non infringing competing technologies Intellectual property rights and our ability to enforce them may be unavailable or limited in some countries which could make it easier for competitors to capture market share and could result in lost revenues Furthermore some of our intellectual property is licensed to others which may allow them to compete with us using that intellectual property
Because we cannot immediately adapt our production capacity and related cost structures to rapidly changing market conditions when demand does not meet our expectations our manufacturing capacity may exceed our production requirements If during an economic downturn we had excess manufacturing capacity which could occur due to our plans to expand certain manufacturing capacities then our fixed costs associated with excess manufacturing capacity would adversely affect our gross margins and operating results If during a general market upturn or an upturn in one of our segments we cannot increase our manufacturing capacity to meet product demand we may not be able to fulfill orders in a timely manner which could lead to order cancellations contract breaches or indemnification obligations This inability could materially and adversely limit our ability to improve our results
If we are unable to successfully manage the consolidation and streamlining of our manufacturing operations we may not achieve desired efficiencies and our ability to deliver products to our customers could be disrupted
Although we utilize manufacturing facilities throughout the world we have consolidated and may further consolidate our manufacturing operations to certain of our facilities to achieve efficiencies and gross margin improvements Additionally we typically consolidate the production of products from our acquisitions into our supply chain and manufacturing processes which are technically complex and require expertise to operate If we are unable to establish processes to efficiently and effectively produce high quality products in the consolidated locations we may not achieve the anticipated synergies and production may be disrupted which could adversely affect our business and operating results
Dependence on contract manufacturing and outsourcing other portions of our supply chain including logistics and third party package delivery services may adversely affect our ability to bring products to market and damage our reputation Dependence on outsourced information technology and other administrative functions may impair our ability to operate effectively
As part of our efforts to streamline operations and to manage costs we outsource aspects of our manufacturing processes and other functions and continue to evaluate additional outsourcing If our contract manufacturers or other outsourcers fail to perform their obligations in a timely manner or at satisfactory quality levels our ability to bring products to market and our reputation could suffer For example during a market upturn our contract manufacturers may be unable to meet our demand requirements which may preclude us from fulfilling our customers orders on a timely basis The ability of these manufacturers to perform is largely outside of our control If one or more of the third party package delivery or other logistics providers we use experiences a significant disruption in services or institutes a significant price increase we may have to seek alternative providers which could result in increased costs and or delay the delivery of our products 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 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
Our factories facilities and distribution system are subject to catastrophic loss due to fire flood terrorism public health crises increasing severity or frequency of extreme weather events or other climate change related risks including resource scarcity rationing or unexpected costs from increases in fuel and raw material prices that may be caused by extreme weather conditions In addition several of our facilities could be subject to a catastrophic loss caused by earthquake due to their locations Our production facilities headquarters and laboratories in California and our production facilities in Japan are all located in areas with above average seismic activity In addition our facilities in California are susceptible to extreme weather conditions such as drought flooding and wildfires If any of our facilities were to experience a catastrophic loss it could disrupt our operations delay production shipments and revenue and result in large expenses to repair or replace the facility If such a disruption were to occur we could breach agreements our reputation could be harmed and our business and operating results could be adversely affected In addition because we have consolidated our manufacturing facilities and we may not have redundant manufacturing capability readily available we are more likely to experience an interruption to our operations in the event of a catastrophe in any one location Although we carry insurance for property damage and business interruption these coverages are subject to deductibles as well as caps and may not be sufficient to cover the entirety of potential losses in certain catastrophic events 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
If we experience a significant disruption in or breach in security of our information technology systems or if we fail to implement new systems and software successfully our business could be adversely affected
We rely on several centralized information technology systems throughout our company to provide products and services keep financial records process orders manage inventory process shipments to customers and operate other critical functions Our information technology systems may be susceptible to damage disruptions or shutdowns due to power outages hardware failures computer viruses attacks by computer hackers telecommunication failures user errors catastrophes or other unforeseen events 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 or products 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 Concern over increasingly prevalent cyberattacks or other forms of security breaches of information technology systems can result in additional legal and regulatory requirements in the markets we operate our business and may lead to increased compliance burdens and costs to meet the regulatory obligations For example as a U S publicly traded company we are subject to the U S Securities and Exchange Commission Final Rule on Cybersecurity Risk Management Strategy Governance and Incident Disclosure which requires enhanced disclosure requirements for cybersecurity with similar applicable requirements under the EU s NIS2 Directive and China s Data Security Law
We have significant retirement and post retirement pension plan assets and obligations The performance of the financial markets and interest rates impact our plan expenses and funding obligations Significant decreases in market interest rates decreases in the fair value of plan assets and investment losses on plan assets will increase our funding obligations and adversely impact our results of operations and cash flows
Changes in tax laws unfavorable resolution of tax examinations or exposure to additional tax liabilities could have a material adverse effect on our results of operations financial condition and liquidity
We are subject to taxes in the U S Singapore and various foreign jurisdictions Governments in the jurisdictions in which we operate implement changes to tax laws and regulations periodically Any implementation of tax laws that fundamentally change the taxation of corporations in the U S or Singapore could materially impact our effective tax rate and could have a significant adverse impact on our financial results
The Organization for Economic Co operation and Development OECD has introduced rules to establish a global minimum tax rate of 15 percent commonly referred to as the Pillar Two rules Many countries have enacted legislation to implement the Pillar Two rules We are currently evaluating the potential impacts that Pillar Two may have on future periods and will continue to monitor the implementation of the Pillar Two rules in the jurisdictions in which we operate
We are also subject to examinations of our tax returns by tax authorities in various jurisdictions around the world We regularly assess the likelihood of adverse outcomes resulting from ongoing tax examinations to determine the adequacy of our provision for taxes These assessments can require a high degree of judgment and estimation Intercompany transactions associated with the sale of inventory services intellectual property and cost share arrangements are complex and affect our tax liabilities The calculation of our tax liabilities involves dealing with uncertainties in the application of complex tax laws and regulations in multiple jurisdictions There can be no assurance that the outcomes from ongoing tax examinations will not have an adverse effect on our operating results and financial condition A difference in the ultimate resolution of tax uncertainties from what is currently estimated could have an adverse effect on our financial results and condition
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 are party to a 1 5 billion five year unsecured credit facility that will expire on June 7 2028 Furthermore we are permitted pursuant to the credit agreement to establish an incremental revolving credit facility of up to 750 million We also entered into an Uncommitted Money Market Line Credit agreement which provides for an aggregate borrowing capacity of 300 million Under our U S commercial paper program the company may issue and sell unsecured short term promissory notes in the aggregate principal amount not to exceed 1 5 billion with up to 397 day maturities As of October 31 2024 we had approximately 3 4 billion in outstanding indebtedness which included an aggregate outstanding principal amount of 3 3 billion in unsecured senior notes We may borrow additional amounts in the future and use the proceeds from any future
requiring the dedication of an increased portion of our expected cash flows from operations to service our indebtedness thereby reducing the amount of expected cash flows available for other purposes including capital expenditures acquisitions stock repurchases and dividends and
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 maintain compliance with specified financial ratios Our ability to comply with these ratios may be affected by events beyond 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 applicable cure periods our outstanding indebtedness could be declared immediately due and payable
Since the first quarter of fiscal year 2012 we have paid a quarterly dividend on our common stock The timing declaration amount and payment of any future dividends fall within the discretion of our Board of Directors and will depend on many factors including our available cash estimated cash needs earnings financial condition operating results capital requirements as well as limitations in our contractual agreements applicable law regulatory constraints industry practice and other business considerations that our Board of Directors considers relevant A change in our dividend program could have an adverse effect on the market price of our common stock
As of October 31 2024 we had cash and cash equivalents of approximately 1 329 million invested or held in a mix of money market funds time deposit accounts and bank demand deposit accounts Disruptions and volatility in the financial markets may in some cases result in an inability to access assets such as money market funds that traditionally have been viewed as highly liquid or hinder our ability to borrow money in the amounts at interest rates or upon the more favorable terms and conditions that might be available under different economic circumstances Any failure of our counterparty financial institutions or funds in which we have invested may adversely impact our cash and cash equivalent positions and in turn our operating results and financial condition
Agilent is committed to maintaining a secure environment for our data complying with applicable legal requirements and effectively supporting our business objectives and customer needs Our cybersecurity strategy emphasizes the cultivation of a security minded culture through education and training and a programmatic and layered approach to prevention detection of and response to cybersecurity threats
We maintain cybersecurity policies that articulate Agilent s expectations and requirements regarding technology use data privacy risk management and incident management Regular exercises and assessments against recognized cybersecurity frameworks are conducted to improve the effectiveness of our processes These are conducted by third party organizations in addition to internal audit teams Cybersecurity is considered the responsibility of every Agilent employee with regular education and best practice sharing to raise awareness of threats Layered controls are
implemented to prevent and detect cybersecurity threats with policies and processes designed to provide timely notifications and compliance with legal requirements These include controls to assess third party suppliers and their services
Our cybersecurity program under the Chief Information Officer CIO is led by our Chief Information Security Officer CISO The Board of Directors delegates oversight of cybersecurity risks to the Audit Committee which receives updates from the CISO and CIO at least annually Cybersecurity is integrated into the risk management process for the company through various mechanisms including quarterly business reviews annual budget planning and linkage to the Enterprise Risk Management ERM process
As of the date of this report we do not believe any risks from cybersecurity threats have materially affected Agilent including our business strategy results of operations or financial condition However
As of October 31 2024 we owned or leased a total of approximately 6 8 million square feet of space worldwide Of that we owned approximately 5 3 million square feet and leased the remaining 1 5 million square feet Our sales and support facilities occupied a total of approximately 0 5 million square feet Our manufacturing plants R D facilities and warehouse and administrative facilities occupied approximately 6 3 million square feet All of our businesses share sales offices throughout the world
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
in our Proxy Statement for the Annual Meeting of Stockholders to be held March 13 2025 to be filed with the Securities and Exchange Commission pursuant to Regulation 14A and is incorporated herein by reference
The graph below shows the cumulative total stockholder return on our common stock with the cumulative total return of the S P 500 Index and our peer group consisting of all companies in the Health Care and Materials Indexes of the S P 500 assuming an initial investment of 100 on October 31 2019 and the reinvestment of all dividends
The table below summarizes information about the company s purchases based on trade date of its equity securities registered pursuant to Section 12 of the Exchange Act during the quarterly period ended October 31 2024 The total number of shares of common stock purchased by the company during the fiscal year ended October 31 2024 was 8 402 882 shares
On January 9 2023 we announced that our board of directors had approved a share repurchase program the 2023 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 2023 repurchase program authorizes the purchase of up to 2 0 billion excluding excise taxes of our common stock at the company s discretion and has no fixed termination date The 2023 repurchase program does not require the company to acquire a specific number of shares and may be suspended amended or discontinued at any time The 2023 repurchase program commenced on March 1 2023 and also terminated and replaced the 2021 repurchase program As of October 31 2024 all repurchased shares to date have been retired
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 and in our end markets new product and service introductions the position and strength of our businesses products and services market demand for and adoption of our products and solutions the ability of our products and solutions to address customer needs and meet industry requirements our focus on enhancing our customers experience delivering differentiated product solutions and driving productivity improvements 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 contributions to our defined benefit plans our hedging programs and other actions to offset the effects of foreign currency and interest rate movements our future effective tax rate unrecognized tax benefits reimbursement incentives our ability to satisfy our liquidity requirements including through cash generated from operations the potential impact of adopting new accounting pronouncements indemnification obligations our sales our purchase commitments our capital expenditures the integration effects and timing of our acquisitions and other transactions expense reduction and other results from our restructuring programs and other cost saving initiatives our stock repurchase program and dividends macroeconomic and market conditions the recovery and health of our end markets seasonality mix future financial results our operating margin our geographical diversification interest rates inflationary pressures and local regulations and restrictions that involve risks and uncertainties Our actual results could differ materially from the results contemplated by these forward looking statements due to various factors including those discussed in Part I Item 1A and elsewhere in this Form 10 K
Agilent Technologies Inc we Agilent or the company incorporated in Delaware in May 1999 is a global leader in life sciences diagnostics and applied chemical markets providing application focused solutions that include instruments software services and consumables for the entire laboratory workflow
In the first quarter of fiscal year 2024 we announced a change in our operating segments to move our cell analysis business from our life sciences and applied markets segment to our diagnostics and genomics operating segment in order to further strengthen growth opportunities for both organizations Following this reorganization we continue to have three business segments comprised of life sciences and applied markets diagnostics and genomics and Agilent CrossLab each of which continues to comprise a reportable segment We began reporting under this new structure with the Quarterly Report on Form 10 Q for the period ended January 31 2024 All historical financial segment information has been recast to conform to this new presentation in our consolidated financial statements and accompanying notes There was no change to our Agilent CrossLab business segment
On September 20 2024 we acquired 100 percent of the stock of BIOVECTRA for total consideration of 915 million in cash The acquisition expands our contract development and manufacturing organization As a result of the acquisition BIOVECTRA became a wholly owned subsidiary of Agilent The acquisition has been accounted for in accordance with the authoritative accounting guidance and the results of BIOVECTRA are included in Agilent s consolidated financial statements from the date of acquisition
On September 9 2024 we issued an aggregate principal amount of 600 million in senior notes 2027 senior notes The 2027 senior notes were issued at 99 866 of their principal amount The notes will mature on September 9 2027 and bear interest at a fixed rate of 4 20 per annum The interest is payable semi annually on March 9th and September 9th of each year and payments will commence on March 9 2025
On September 9 2024 we issued an aggregate principal amount of 600 million in senior notes 2034 senior notes The 2034 senior notes were issued at 99 638 of their principal amount The 2034 senior notes will mature on September 9 2034 and bear interest at a fixed rate of 4 75 per annum The interest is payable semi annually on March 9th and September 9th of each year and payments will commence on March 9 2025
Agilent s net revenue of 6 510 million in 2024 decreased 5 percent when compared to 2023 Foreign currency movements for 2024 had no overall impact on revenue growth when compared to 2023 Net revenue declined in our life sciences and applied markets and diagnostics and genomics segments mostly in the pharmaceutical market due primarily to the overall pressures on our customers capital expenditure spending which continued in 2024 Revenue declines were partially offset by revenue growth in our Agilent CrossLab segment Revenue in the life sciences and applied markets business decreased 8 percent in 2024 when compared to 2023 Foreign currency movements had no overall impact on revenue growth in 2024 when compared to 2023 Revenue in the diagnostics and genomics business decreased 6 percent in 2024 when compared to 2023 Foreign currency movements had no overall impact on revenue growth in 2024 when compared to 2023 Revenue in the Agilent CrossLab business increased 5 percent in 2024 when compared to 2023 Foreign currency movements had no overall impact on revenue growth in 2024 when compared to 2023
Agilent s net revenue of 6 833 million was slightly down in 2023 when compared to 2022 Foreign currency movements for 2023 had an overall unfavorable impact on revenue growth of 2 percentage points when compared to 2022 Net revenue declined in our life sciences and applied markets segment in the pharmaceutical market and in the Asia Pacific region primarily related to weaker demand in China and an overall pressure on our customers capital expenditures compared to 2022 The net revenue decline was partially offset by revenue growth from our other segments primarily in Agilent CrossLab Revenue in the life sciences and applied markets business decreased 3 percent in 2023 when compared to 2022 Foreign currency movements had an overall unfavorable impact on revenue growth of 2 percentage points in 2023 when compared to 2022 Revenue in the diagnostics and genomics business decreased 1 percent in 2023 when compared to 2022 Foreign currency movements had an
overall unfavorable impact on revenue growth of 2 percentage points in 2023 when compared to 2022 Revenue in the Agilent CrossLab business increased 8 percent in 2023 when compared to 2022 Foreign currency movements had an overall unfavorable impact on revenue growth of 2 percentage points in 2023 when compared to 2022
Net income was 1 289 million in 2024 compared to net income of 1 240 million and 1 254 million in 2023 and 2022 respectively Net income in 2024 was impacted by cost saving initiatives and higher interest income Net income in 2023 was impacted by the asset impairment charges primarily related to the exit of our Resolution Bioscience business and lower tax expense Net income in 2022 was impacted by higher sales volume partially offset by supply chain logistics and inflationary pressures increasing our costs As of October 31 2024 and 2023 we had cash and cash equivalents balances of 1 329 million and 1 590 million respectively
During the year ended October 31 2022 we repurchased and retired 8 4 million shares for 1 139 million under this authorization During the year ended October 31 2023 we repurchased and retired 661 739 shares for 99 million excluding excise taxes under this authorization On March 1 2023 the 2021 repurchase program was terminated and the remaining authorization of 339 million expired
On January 9 2023 we announced that our board of directors had approved a share repurchase program the 2023 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 2023 repurchase program authorizes the purchase of up to 2 0 billion excluding excise taxes of our common stock at the company s discretion and has no fixed termination date The 2023 repurchase program does not require the company to acquire a specific number of shares and may be suspended amended or discontinued at any time The 2023 repurchase program commenced on March 1 2023 and also terminated and replaced the 2021 repurchase program During the year ended October 31 2023 we repurchased and retired 3 9 million shares for 476 million excluding excise taxes under this authorization During the year ended October 31 2024 we repurchased and retired 8 4 million shares for 1 150 million excluding excise taxes under this authorization As of October 31 2024 we had remaining authorization to repurchase up to approximately 374 million of our common stock under the 2023 repurchase program
On May 29 2024 we announced that our board of directors had approved a new share repurchase program the 2024 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 2024 repurchase program authorizes the purchase of up to 2 0 billion excluding excise taxes of our common stock at the company s discretion and has no fixed termination date The 2024 repurchase program does not require the company to acquire a specific number of shares and may be suspended amended or discontinued at any time The 2024 repurchase program became effective on August 1 2024 and will commence upon the termination of our 2023 repurchase program
The Inflation Reduction Act of 2022 which was enacted into law on August 16 2022 imposed a nondeductible 1 excise tax on the net value of certain stock repurchases made after December 31 2022 During the year ended October 31 2024 we recorded the applicable excise taxes payable of approximately 10 million as an incremental cost of the shares repurchased and a corresponding liability for the excise tax payable in other accrued liabilities on our consolidated balance sheet In fiscal year 2023 we recorded excise taxes payable of approximately 3 million related to shares repurchased in 2023 and paid the tax in 2024
During the year ended October 31 2024 cash dividends of 0 944 per share or 274 million were declared and paid on the company s outstanding common stock During the year ended October 31 2023 cash dividends of 0 900 per share or 265 million were declared and paid on the company s outstanding common stock During the year ended October 31 2022 cash dividends of 0 840 per share or 250 million were declared and paid on the company s outstanding common stock
On November 20 2024 we declared a quarterly dividend of 0 248 per share of common stock or approximately 71 million which will be paid on January 22 2025 to shareholders of record as of the close of business on December 31 2024 The timing and amounts of any future dividends are subject to determination and approval by our board of directors
Looking forward our primary focus remains on enhancing our customers experience delivering differentiated product solutions and driving productivity improvements While customer capital budgets continue to be constrained we anticipate a gradual and steady recovery in the short term We also remain optimistic about the long term health of our key end markets Although inflationary pressures are uncertain we will continue to mitigate their impact through targeted pricing strategies and various other cost saving initiatives
The preparation of financial statements in accordance with accounting principles generally accepted in the U S requires management to make estimates and assumptions that affect the amounts reported in our consolidated financial statements and accompanying notes Management bases its estimates on historical experience and various other assumptions believed to be reasonable Although these estimates are based on management s best knowledge of current events and actions that may impact the company in the future actual results may be different from the estimates An accounting policy is deemed to be critical if it requires an accounting estimate to be made based on assumptions about matters that are highly uncertain at the time the estimate is made and if different estimates that reasonably could have been used or changes in the accounting estimate that are reasonably likely to occur could materially change the financial statements Our critical accounting policies are those that affect our financial statements materially and involve difficult subjective or complex judgments by management Those policies are revenue recognition inventory valuation retirement and post retirement plan assumptions valuation of goodwill and purchased intangible assets restructuring and accounting for income taxes
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 Accounting Standard Codification Topic 606 Revenue from Contracts with Customers ASC 606 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 consumables 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 For products that transfer control over time revenue is recognized as the performance obligation is satisfied Product over time revenue is assessed against the following criteria the performance creates an asset that the customer controls as the asset is created the asset has no alternative use and we have an enforceable right to payment Where acceptance is not a formality 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 performance 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 adjustments in the period the related sales are recorded
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 performed 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 geographic region for each performance obligation Stand alone selling prices are determined for 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 ASC 842 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 the revenue associated with the lease component is treated under the lease accounting standard ASC 842 whereas the revenue associated with the non lease component is recognized in accordance with the ASC 606 revenue standard
Inventory is valued at standard cost which approximates actual cost computed on a first in first out basis not in excess of market value We assess the valuation of our inventory on a periodic basis and make adjustments to the value for estimated excess and obsolete inventory based upon estimates and assumptions about future demand economic conditions and actual usage which require management judgment Such estimates are difficult to make under most economic conditions The excess balance determined by this analysis becomes the basis for our excess inventory charge Our excess inventory review process includes analysis of inventory levels sales trends and forecasts managing product rollovers and working with manufacturing to maximize recovery of excess inventory and to estimate and record reserves for excess slow moving and obsolete inventory If actual market conditions are less favorable than those projected by management additional write downs may be required If actual market conditions are more favorable than anticipated inventory previously written down may be sold to customers resulting in lower cost of sales and higher income from operations than expected in that period
Retirement and post retirement benefit plan costs are a significant cost of doing business They represent obligations that will ultimately be settled sometime in the future and therefore are subject to estimation Pension accounting is intended to reflect the recognition of future benefit costs over the employees average expected future service to Agilent based on the terms of the plans and investment and funding decisions To estimate the impact of these future payments and our decisions concerning funding of these obligations we are required to make assumptions using actuarial concepts within the framework of accounting principles generally accepted in the U S Two critical assumptions are the discount rate and the expected long term return on plan assets Other important assumptions include expected future salary increases expected future increases to benefit payments expected retirement dates employee turnover retiree mortality rates and portfolio composition We evaluate these assumptions at least annually
The discount rate is used to determine the present value of future benefit payments at the measurement date October 31 for both U S and non U S plans For 2024 and 2023 the U S discount rates were based on the results of matching expected plan benefit payments with cash flows from a hypothetically constructed bond portfolio In 2024 discount rates for the U S defined benefit plans and post retirement benefit plans decreased compared to the previous year due to the decrease in the corporate bond rates For 2024 and 2023 the discount rates for non U S defined benefit plans were generally based on published rates for high quality corporate bonds and in 2024 mostly decreased compared to the previous year If we had changed our discount rate by 1 percent the impact would have been approximately 1 million on U S defined benefit plans and post retirement benefit plans expense and 11 million on non U S defined benefit plans expense for the year ended October 31 2024 Lower discount rates usually increase present values of the pension benefit obligation and subsequent year pension expense higher discount rates usually decrease present values of the pension benefit obligation and subsequent year pension expense
The company uses alternate methods of amortization as allowed by the authoritative guidance which amortizes the actuarial gains and losses on a consistent basis for the years presented For U S defined benefit plans gains and losses are amortized over the average future lifetime of participants using the corridor method For most non U S defined benefit plans and U S post retirement benefit plans gains and losses are amortized over the average remaining future service period or remaining lifetime of participants depending upon the plan using a separate layer for each year s gains and losses
In the U S target asset allocations for our retirement and post retirement benefit plans were approximately 50 percent to equities and approximately 50 percent to fixed income investments as of October 31 2024 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 excluding annuity contracts in the U K ranges from zero percent to 60 percent to equities from 38 percent to 100 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 and bond markets our actual allocations of plan assets at October 31 2024 may differ from the target allocation Our policy is to bring the actual allocation in line with the target allocation
Equity securities include exchange traded common stock and preferred stock of companies from broadly diversified industries Fixed income securities include a global portfolio of corporate bonds of companies from diversified industries government securities mortgage backed securities asset backed securities derivative instruments and other The annuity contracts are insurance buy in contracts issued by a third party insurance company to cover the benefit obligations of all participants under the U K defined benefit plan and are funded with existing pension plan assets with no adjustment made to the benefit obligations Real estate securities include holdings of managed investment funds which invest primarily in the equity instruments of real estate investment trusts and other similar real estate investments Other investments include a group trust consisting primarily of private equity partnerships
The expected long term return on plan assets is estimated using current and expected asset allocations as well as historical and expected returns Plan assets are valued at fair value If we had changed our estimated return on assets by 1 percent the impact would have been 4 million on U S defined benefit plans and post retirement benefit plans expense and 8 million on non U S defined benefit plans expense for the year ended October 31 2024 The total net periodic pension and post retirement benefit costs recorded were a 9 million benefit in 2024 6 million expense in 2023 and 2 million benefit in 2022 These costs included a loss on settlement of 2 million 4 million and 4 million for the years ended October 31 2024 2023 and 2022 respectively
We assess our goodwill and purchased intangible assets for impairment annually or whenever events or changes in circumstances indicate that the carrying value may not be recoverable 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 further testing will be required
The guidance includes examples of events and circumstances that might indicate that a reporting unit s fair value is less than its carrying amount These include macro economic conditions such as deterioration in the entity s operating environment or industry or market considerations entity specific events such as increasing costs declining financial performance or loss of key personnel or other events such as an expectation that a reporting unit will be sold or a sustained decrease in the stock price on either an absolute basis or relative to peers
If it is determined as a result of the qualitative assessment that it is more likely than not that the fair value of a reporting unit is less than its carrying amount 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 fair 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
At the beginning of fiscal year 2024 in connection with the change in our segment reporting 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 quantitative test for goodwill impairment of the three reporting units as of November 1 2023 due to the change in our segment structure As of November 1 2023 there was no impairment of goodwill
In fiscal year 2024 we again 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 2024 our annual impairment test date Based on the results of our qualitative testing there was no impairment of goodwill as of September 30 2024 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 2024 2023 and 2022
Purchased intangible assets consist primarily of acquired developed technologies proprietary know how trademarks and customer relationships and are amortized using the best estimate of the asset s useful life that reflects 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 assumptions Specifically our determination of the fair value of the developed product technology and in process research and development IPR D acquired involves significant estimates and assumptions related to revenue growth rates and discount rates Our determination of the fair value of customer relationships acquired involves significant estimates and assumptions related to revenue growth rates discount rates and customer attrition rates Our determination of the fair value of the trade name acquired involves the
use of significant estimates and assumptions related to revenue growth rates royalty rates and discount rates We value backlog using the discounted cash flows based on the estimated revenue from pending orders We value license agreements based on the expected future cash receipts from license agreements discounted to present value over the term of the agreement We believe 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 from these estimates IPR D is initially capitalized at fair value as an intangible asset with an indefinite life and assessed for impairment thereafter When the IPR D project is complete it is reclassified as an amortizable purchased intangible asset and is amortized over its estimated useful life If an IPR D project is abandoned we will record a charge for the value of the related intangible asset to our consolidated statement of operations in the period it is abandoned
We continually monitor events and changes in circumstances that could indicate carrying amounts of finite lived intangible assets may not be recoverable When such events or changes in circumstances occur we assess the recoverability of finite lived intangible assets by determining whether the carrying value of such assets will be recovered through undiscounted expected future cash flows If the total of the undiscounted future cash flows is less than the carrying amount of those assets we recognize an impairment loss based on the excess of the carrying amount over the fair value of the assets
Our indefinite lived intangible assets are IPR D intangible assets The accounting guidance allows a qualitative approach for testing indefinite lived intangible assets for impairment similar to the issued impairment testing guidance for goodwill and allows the option to first assess qualitative factors events and circumstances that could have affected the significant inputs used in determining the fair value of the indefinite lived intangible asset to determine whether it is more likely than not i e greater than 50 chance that the indefinite lived intangible asset is impaired An organization may choose to bypass the qualitative assessment for any indefinite lived intangible asset in any period and proceed directly to calculating its fair value As of October 31 2024 we do not have any indefinite lived intangible assets
During fiscal year 2024 we recorded an impairment of in process research and development of 6 million in research and development in the consolidated statement of operations related to a project in our life sciences and applied markets segment There were no impairments of indefinite lived intangible assets during fiscal years 2023 and 2022
The main components of our restructuring plan are related to workforce reductions consolidation of excess leased facilities and site closures Workforce reduction charges are accrued when payment of benefits becomes probable that the employees are entitled to the severance and the amounts can be estimated Consolidation of facilities costs primarily consists of accelerated depreciation of right of use assets classified as held and used In accordance with the accounting guidance it was determined that certain assets had been abandoned and an assessment was made of the remaining useful lives and potential alternative uses If the amounts and timing of cash flows from restructuring activities are significantly different from what we have estimated the actual amounts of restructuring and other related charges could be materially different either higher or lower than those we have recorded See Note 16 Restructuring and Other Related Costs to the consolidated financial statements for additional information
We must make certain estimates and judgments in determining income tax expense for financial statement purposes These estimates and judgments occur in the calculation of tax credits benefits and deductions and in the calculation of certain tax assets and liabilities which arise from differences in the timing of recognition of revenue and expense for tax and financial statement purposes as well as interest and penalties related to uncertain tax positions Significant changes to these estimates may result in an increase or decrease to our tax provision in a subsequent period On a quarterly basis we provide for income taxes based upon an estimated annual effective tax rate The effective tax rate is highly dependent upon the geographic composition of worldwide earnings tax regulations governing each region availability of tax credits and the effectiveness of our tax planning strategies We monitor the changes in many factors and adjust our effective income tax rate on a timely basis If actual results differ from these estimates this could have a material effect on our financial condition and results of operations
Significant management judgment is also required in determining whether deferred tax assets will be realized in full or in part When it is more likely than not that all or some portion of deferred tax assets may not be realized a valuation allowance must be established against such deferred tax assets We consider all available positive and negative evidence on a jurisdiction by jurisdiction basis when assessing whether it is more likely than not that deferred tax assets are recoverable We consider evidence such as our past operating results the existence of losses in recent years and our forecast of future taxable income
The calculation of our tax liabilities involves dealing with uncertainties in the application of complex tax law and regulations in a multitude of jurisdictions Although the guidance on the accounting for uncertainty in income taxes prescribes the use of a recognition and measurement model the determination of whether an uncertain tax position has met those thresholds will continue to require significant judgment by management In accordance with the guidance on the accounting for
uncertainty in income taxes for all U S and other tax jurisdictions we recognize potential liabilities for anticipated tax audit issues based on our estimate of whether and the extent to which additional taxes and interest will be due The ultimate resolution of tax uncertainties may differ from what is currently estimated which could result in a material impact on income tax expense If our estimate of income tax liabilities proves to be less than the ultimate assessment a further charge to expense would be required If events occur and the payment of these amounts ultimately proves to be unnecessary the reversal of the liabilities would result in tax benefits being recognized in the period when we determine the liabilities are no longer necessary We include interest and penalties related to unrecognized tax benefits within the provision for income taxes on the consolidated statements of operations
In fiscal years 2024 and 2023 we announced restructuring plans that were both designed to reduce costs and expenses in response to macroeconomic conditions These actions impact all three of our business segments The costs associated with these restructuring plans were not allocated to our business segments results however each business segment will benefit from the future cost savings from these actions When completed the restructuring programs are expected to result in the reduction in annual cost of sales and operating expenses over the three business segments
Non cash settlements include accelerated share based compensation expense related to workforce reductions and accelerated depreciation expense of right of use and machinery and equipment assets related to the consolidation of excess facilities The aggregate restructuring liability of 13 million at October 31 2024 was recorded in other accrued liabilities on the consolidated balance sheet and reflects estimated future cash outlays
In the third quarter of fiscal year 2024 we initiated a new restructuring plan designed to further reduce costs and expenses in response to current macroeconomic conditions The plan includes a reduction of our total headcount by approximately 500 regular employees representing approximately 3 percent of our global workforce
In connection with the FY24 Plan we have recorded restructuring expenses of 72 million in fiscal year 2024 The costs associated with this workforce reduction include severance accelerated share based compensation expense and other personnel related costs The timing and scope of the workforce reductions will vary based on local legal requirements While the majority of the workforce reduction was completed in fiscal year 2024 we expect to substantially complete the remaining restructuring activities by the end of the second quarter of fiscal year 2025 When completed the restructuring program is expected to result in the reduction of approximately 100 million in annual cost of sales and operating expenses over our three business segments
In the fourth quarter of fiscal year 2023 we initiated the restructuring plan designed to reduce costs and expenses in response to the macroeconomic conditions The plan included a reduction of our total headcount by approximately 400 regular employees representing approximately 2 percent of our global workforce and the consolidation of our excess facilities including some site closures
In connection with the FY23 Plan we recorded restructuring expenses of 4 million in 2024 and 46 million in 2023 The restructuring plan expenses include severance accelerated share based compensation expense and other personnel costs associated with the workforce reduction The consolidation of excess facilities includes accelerated depreciation expenses of right of use and machinery and equipment assets and other facilities related costs The timing and scope of the workforce reductions will vary based on local legal requirements While the majority of the workforce reduction was completed in 2024 we expect to substantially complete the remaining restructuring activities by the end of the first quarter of fiscal year 2025 When completed the restructuring program is expected to result in the reduction of approximately 80 million in annual cost of sales and operating expenses over our three business segments
Non cash settlements include accelerated share based compensation expense related to workforce reductions and accelerated depreciation expense of right of use and machinery and equipment assets related to the consolidation of excess facilities
Our revenues costs and expenses and monetary assets and liabilities and equity are exposed to changes in foreign currency exchange rates as a result of our global operating and financing activities Foreign currency movements had no overall impact on revenue growth in the year ended October 31 2024 when compared to the same period last year Foreign currency movements for the year ended October 31 2023 had an overall unfavorable impact on revenue of 2 percentage points when compared to 2022 When movements in foreign currency exchange rates have a negative impact on revenue they will also have a positive impact by reducing our costs and expenses We calculate the impact of movements in foreign currency exchange rates by applying the actual foreign currency exchange rates in effect during the last month of each quarter of the current year to both the applicable current and prior year periods We hedge revenues expenses and balance sheet exposures that are not denominated in the functional currencies of our subsidiaries on a short term and anticipated basis We do experience some fluctuations within individual lines of the consolidated statement of operations and balance sheet because our hedging program is not designed to offset the currency movements in each category of revenues expenses monetary assets and liabilities Our hedging program is designed to hedge currency movements on a relatively short term basis up to a rolling twelve month period We may also hedge equity balances denominated in foreign currency on a long term basis To the extent that we are required to pay for all or portions of an acquisition price in foreign currencies we may enter into foreign exchange contracts to reduce the risk that currency movements will impact the U S dollar cost of the transaction
Agilent s net revenue of 6 510 million for the year ended October 31 2024 decreased 5 percent when compared to 2023 Foreign currency movements had no overall impact on revenue growth in 2024 when compared to 2023 For the year ended October 31 2024 net revenue declined in our life sciences and applied markets and diagnostics and genomics segments mostly in the pharmaceutical market due primarily to the overall pressures on our customers capital expenditure spending which continued in 2024 Revenue declines were partially offset by revenue growth in our Agilent CrossLab segment Agilent s net revenue of 6 833 million was slightly down in 2023 when compared to 2022 Foreign currency movements had an overall unfavorable impact on revenue growth of 2 percentage points in 2023 when compared to 2022 For the year ended October 31 2023 net revenue declined in our life sciences and applied markets segment in the pharmaceutical market and in the Asia Pacific region primarily related to weaker demand in China and an overall pressure on our customers capital expenditures compared to the same period last year The net revenue decline was partially offset by revenue growth from our other segments primarily in Agilent CrossLab
Product revenue includes revenue generated from the sales of our analytical instrumentation software and consumables Revenue from products decreased 7 percent for the year ended October 31 2024 when compared to 2023 The product revenue decline was primarily driven by decreases in our liquid chromatography mass spectrometry cell analysis and nucleic acid solutions businesses partially offset by increases in our consumables and pathology businesses when compared to 2023 Overall product revenue declined due to our customers continued capital expenditure pressures and mostly impacted the pharmaceutical market within our life sciences and applied markets and diagnostics and genomics segments
Revenue from products decreased 3 percent for the year ended October 31 2023 when compared to 2022 The decrease in product revenue in the year ended October 31 2023 was primarily due to significant declines in our mass spectrometry genomics gas chromatography and cell analysis businesses partially offset by strong growth in our nucleic acid solutions and pathology businesses and modest growth in our spectroscopy business Overall product revenue declined due to our customers capital expenditure pressures and mostly impacted the pharmaceutical market within our life sciences and applied markets segment
Services and other revenue consist of contract repair preventative maintenance compliance services relocation services installation services and consulting services related to the companion diagnostics and nucleic acid solutions businesses Services and other revenue increased 3 percent in 2024 as compared to 2023
Services and other revenue reflected strong growth from contract repair and preventative maintenance services partly offset by declines in installation services related to the decline of the product revenues
Services and other revenue increased 7 percent in 2023 as compared to 2022 Service revenue increases reflected strong growth from contract repair services consultative services per incident repair and maintenance services and relocation services in all key end markets
Revenue in the life sciences and applied markets business decreased 8 percent in 2024 when compared to 2023 Foreign currency movements had no overall impact on revenue growth in 2024 when compared to 2023 For the year ended October 31 2024 revenue declined in all of our end markets We saw a significant decline in revenue in the pharmaceutical chemical and advanced materials food and academia and government markets when compared to 2023 Revenue in the life sciences and applied markets business decreased 3 percent in 2023 when compared to 2022 Foreign currency movements had an overall unfavorable impact on revenue growth of 2 percentage points in 2023 when compared to 2022 For the year ended October 31 2023 we saw a significant decline in revenue in the pharmaceutical and the diagnostics and clinical markets partially offset by strong growth in the academia and government market when compared to 2022
Revenue in the diagnostics and genomics business decreased 6 percent in 2024 when compared to 2023 Foreign currency movements had no overall impact on revenue growth in 2024 when compared to 2023 In 2024 we saw a significant decline in revenue in the pharmaceutical market due to lower sales in our nucleic acid solutions cell analysis and genomics businesses when compared to 2023 Revenue in the diagnostics and genomics business decreased 1 percent in 2023 when compared to 2022 Foreign currency movements had an overall unfavorable impact on revenue growth of 2 percentage points in 2023 when compared to 2022 Revenue declined in the academia and government and pharmaceutical markets partially offset by revenue growth in the diagnostics and clinical market when compared to 2022
Revenue in the Agilent CrossLab business increased 5 percent in 2024 when compared to 2023 Foreign currency movements had no overall impact on revenue growth in 2024 when compared to 2023 For the year ended October 31 2024
Revenue generated by Agilent CrossLab increased 8 percent in 2023 when compared to 2022 Foreign currency movements had an overall unfavorable impact on revenue growth of 2 percentage points in 2023 when compared to 2022 For the year ended October 31 2023 we saw revenue growth across all of our end markets led by strong revenue growth in the pharmaceutical academia and government diagnostics and clinical and chemical and advanced materials markets when compared to 2022
Total gross margin for the year ended October 31 2024 increased 4 percentage points when compared to 2023 Total gross margin as well as gross margin on products for 2024 improved from the prior year as 2023 had asset impairment charges of 253 million primarily related to the exit of our Resolution Bioscience business In addition total gross margin was favorably impacted by targeted price increases lower shipping costs and intangible amortization expense partially offset by lower sales volume higher share based compensation expense higher wages and restructuring charges Total gross margin for the year ended October 31 2023 decreased 4 percentage points when compared to 2022 Total gross margin as well as gross
margin on products for the year ended October 31 2023 was significantly impacted by asset impairment charges of 253 million primarily related to the exit of our Resolution Bioscience business Excluding these asset impairment charges total gross margin for the year ended October 31 2023 was relatively flat when compared to 2022 Total gross margin was also impacted by targeted price increases lower shipping and logistics costs variable pay expenses and intangible amortization expense offset by the unfavorable impact of currency movements higher wages restructuring and other related costs and inventory charges
Research and development expenses for the year ended October 31 2024 were flat when compared to 2023 Research and development expenses slightly decreased due to lower salary expense related to workforce reduction activities mostly offset by restructuring charges and an impairment of in process research and development when compared to 2023 Research and development expenses for the year ended October 31 2023 increased 3 percent when compared to 2022 Research and development expenses increased due to higher wages program costs in our life sciences and applied markets and diagnostics and genomics businesses and restructuring and other related costs partially offset by the lower variable pay expenses and favorable impact of currency movements
Selling general and administrative expenses decreased 4 percent in 2024 when compared to 2023 Selling general and administrative expenses decreased due to lower intangible amortization expenses transformational initiatives advertising expenses variable pay and salary expense related to workforce reduction activities partially offset by higher restructuring charges and share based compensation expense Selling general and administrative expenses were flat in 2023 compared to 2022 Selling general and administrative expenses in 2022 included a decrease in expenses of 25 million related to the change in the fair value of contingent consideration Excluding this amount selling general and administrative expenses decreased 2 percent when compared to 2022 The decrease was due to lower variable pay intangible amortization expense sales commissions and the favorable impact of currency movements partially offset by higher wages restructuring and other related costs and asset impairment charges primarily related to the exit of our Resolution Bioscience business
Total operating margin for the year ended October 31 2024 increased 3 percentage points when compared to 2023 Total operating margin for the year ended October 31 2024 increased mostly due to lower impairment charges in 2024 compared to 2023 partially offset by restructuring charges Total operating margin for the year ended October 31 2023 decreased 4 percentage points when compared to 2022 Total operating margin for the year ended October 31 2023 decreased mainly due to asset impairment charges primarily related to the exit of our Resolution Bioscience business and restructuring and other related costs
Interest income for the years ended October 31 2024 2023 and 2022 was 80 million 51 million and 9 million respectively The increase in interest income in 2024 and 2023 was primarily due to higher cash balances and increases in interest rates related to our cash and cash equivalents
Interest expense for the years ended October 31 2024 2023 and 2022 was 96 million 95 million and 84 million respectively and primarily relates to the interest charged on our senior notes term loan credit facilities commercial paper and the amortization of the deferred loss recorded upon termination of the forward starting interest rate swap contracts partially offset by the amortization of deferred gains recorded upon termination of interest rate swap contracts The increase in interest expense from 2022 is primarily related to higher interest rates on short term commercial paper and the variable rate on the term loan facility
For the year ended October 31 2024 other income expense net of 49 million income includes 8 million of income related to foreign currency translation reclassified out of accumulated comprehensive income loss and 12 million income 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 also includes 25 million income related to the defined benefit retirement and post retirement benefit plans interest cost expected return on assets amortization of net actuarial gain loss prior service credits and settlement loss
For the year ended October 31 2023 other income expense net of 33 million income includes 43 million income related to the net gain on the divestiture of our Resolution Bioscience business and 12 million income 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 10 million income related to the defined benefit retirement and post retirement benefit plans interest cost expected return on assets amortization of net actuarial gain loss prior service credits and settlement loss partially offset by the net loss on the fair value of equity securities of approximately 41 million
For the year ended October 31 2022 other income expense net of 39 million expense includes the net loss on the fair value of equity securities of approximately 67 million and a 9 million loss on extinguishment of debt partially offset by income of 25 million income related to the defined benefit retirement and post retirement benefit plans and 11 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
For 2024 our income tax expense was 232 million with an effective tax rate of 15 3 percent For the year ended October 31 2024 our effective tax rate and the resulting provision for income taxes were impacted by the tax benefit of 47 million related to foreign derived intangible income
For 2023 our income tax expense was 99 million with an effective tax rate of 7 4 percent For the year ended October 31 2023 our effective tax rate and the resulting provision for income taxes were impacted by the federal tax benefit of 104 million related to the realized loss on the divestiture of a business The income taxes for the year ended October 31 2023 also include the tax benefit of 41 million related to foreign derived intangible income along with the tax benefit of 30 million related to the release of tax reserves in the U S due to the settlement of the audit with the Internal Revenue Service IRS for tax years 2018 and 2019
For 2022 our income tax expense was 250 million with an effective tax rate of 16 6 percent For the year ended October 31 2022 our effective tax rate and the resulting provision for income taxes were impacted by the tax benefit of 46 million related to foreign derived intangible income
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 The tax holiday in Singapore was renegotiated and extended through 2030 As a result of the incentive the impact of the tax holiday decreased income taxes by 84 million 54 million and 53 million in 2024 2023 and 2022 respectively The benefit of the tax holiday on net income per share diluted was approximately 0 29 0 18 and 0 18 in 2024 2023 and 2022 respectively
With these jurisdictions and the U S it is reasonably possible that some tax audits may be completed over the next twelve months However management is not able to provide a reasonably reliable estimate of the timing of any other future tax payments or change in unrecognized tax benefits if any
The calculation of our tax liabilities involves dealing with uncertainties in the application of complex tax law and regulations in a multitude of jurisdictions Although the guidance on the accounting for uncertainty in income taxes prescribes the use of a recognition and measurement model the determination of whether an uncertain tax position has met those thresholds will continue to require significant judgment by management In accordance with the guidance on the accounting for uncertainty in income taxes for all U S and other tax jurisdictions we recognize potential liabilities for anticipated tax audit issues based on our estimate of whether and the extent to which additional taxes and interest will be due The ultimate resolution of tax uncertainties may differ from what is currently estimated which could result in a material impact on income tax expense If our estimate of income tax liabilities proves to be less than the ultimate assessment a further charge to expense would be required If events occur and the payment of these amounts ultimately proves to be unnecessary the reversal of the liabilities would result in tax benefits being recognized in the period when we determine the liabilities are no longer necessary We include interest and penalties related to unrecognized tax benefits within the provision for income taxes on the consolidated statements of operations
In the first quarter of fiscal year 2024 we announced a change in our operating segments to move our cell analysis business from our life sciences and applied markets segment to our diagnostics and genomics operating segment in order to further strengthen growth opportunities for both organizations Following this reorganization we continued to have three business segments comprised of life sciences and applied markets diagnostics and genomics and Agilent CrossLab each of which continued to comprise a reportable segment All historical financial segment information has been recast to conform to this new presentation in our consolidated financial statements and accompanying notes There was no change to our Agilent CrossLab business segment
Our life sciences and applied markets business provides application focused solutions that include instruments consumables and software that enable customers to identify quantify and analyze the physical and biological properties of substances and products as well as enable customers in the clinical and life sciences research areas to interrogate samples at the molecular and cellular level Key product categories include liquid chromatography LC systems and components liquid chromatography mass spectrometry LCMS systems gas chromatography GC systems and components gas chromatography mass spectrometry GCMS systems inductively coupled plasma mass spectrometry ICP MS instruments atomic absorption AA instruments microwave plasma atomic emission spectrometry MP AES instruments inductively coupled plasma optical emission spectrometry ICP OES instruments raman spectroscopy laboratory software for sample tracking information management and analytics laboratory automation and robotic systems dissolution testing vacuum pumps and measurement technologies Our consumables portfolio 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 to supplies Key product categories in consumables include GC and LC columns sample preparation products custom chemistries and a large selection of laboratory instrument supplies
Life sciences and applied markets business revenue in 2024 decreased 8 percent compared to 2023 Foreign currency movements had no overall impact on revenue growth in 2024 when compared to the same period last year Geographically revenue decreased 9 percent in the Americas with no currency impact decreased 5 percent in Europe with a 1 percentage point favorable currency impact and decreased 10 percent in Asia Pacific with a 1 percentage point unfavorable currency impact
The revenue decline in the Americas was driven by weakness in our liquid chromatography liquid chromatography mass spectrometry gas chromatography mass spectrometry and gas chromatography businesses partially offset by strength in the consumables business when compared to 2023 The revenue decline in Europe was driven by weakness in our liquid chromatography gas chromatography automation and gas chromatography mass spectrometry businesses partially offset by strength in the consumables business when compared to 2023 The revenue decline in Asia Pacific was driven by lower demand in China within our liquid chromatography liquid chromatography mass spectrometry gas chromatography mass spectrometry and spectroscopy businesses when compared to 2023
Revenue in the pharmaceutical market declined significantly due to weakness in our liquid chromatography liquid chromatography mass spectrometry and gas chromatography businesses when compared to 2023 Revenue in the chemicals and advanced materials market declined significantly due to weakness in our liquid chromatography gas chromatography and liquid chromatography mass spectrometry businesses partially offset by strength in our consumables business when compared to 2023 Revenue in the food market declined significantly due to weakness in our liquid chromatography gas chromatography mass spectrometry and spectroscopy businesses partially offset by strength in our consumables business when compared to 2023 Revenue in the academia and government market declined significantly due to weakness in our liquid chromatography and liquid chromatography mass spectrometry businesses when compared to 2023
Life sciences and applied markets business revenue in 2023 decreased 3 percent compared to 2022 Foreign currency movements for 2023 had an overall unfavorable impact on revenue growth of 2 percentage points when compared to 2022 Geographically revenue decreased 1 percent in the Americas with no currency impact increased 1 percent in Europe with a 1 percentage point unfavorable currency impact and decreased 7 percent in Asia Pacific with a 3 percentage point unfavorable currency impact The revenue decline in the Americas was driven by weakness in our liquid chromatography mass spectrometry and liquid chromatography businesses partially offset by strength in the consumables business when compared to 2022 The revenue growth in Europe was driven by strength in our liquid chromatography business partially offset by weakness in the liquid chromatography mass spectrometry business when compared to 2022 The revenue decline in Asia Pacific was driven by China with weakness in our liquid chromatography gas chromatography and gas chromatography mass spectrometry businesses partially offset by strength in the spectroscopy business when compared to 2022
End market revenue performance in 2023 was mixed as the pharmaceutical and diagnostics and clinical markets declined significantly environmental and forensics market declined modestly chemicals and advance materials and food markets remained relatively flat while the academia and government market delivered strong growth when compared to 2022 Revenue decline in the pharmaceutical market was driven by weakness in our liquid chromatography liquid chromatography mass spectrometry and gas chromatography businesses when compared to 2022 Revenue decline in the diagnostics and clinical market was driven by weakness in our liquid chromatography mass spectrometry business partially offset by strength in our consumables business when compared to 2022 Revenue decline in the environmental and forensics market was driven by weakness in our gas chromatography and spectroscopy businesses partially offset by strength in our liquid chromatography business when compared to 2022 Revenue growth in the academia and government end market was mainly driven by strength in the liquid chromatography spectroscopy gas chromatography and liquid chromatography mass spectrometry businesses when compared to 2022
Looking forward we anticipate continued and steady market recovery and are optimistic about our long term growth opportunities in the life sciences and applied markets as our broad portfolio of products and solutions are well suited to address customer needs We will continue to invest in expanding and improving our applications and solutions portfolio
Gross margin decreased 1 percentage point in 2024 compared to 2023 Gross margin was impacted by lower sales volume unfavorable impact of currency movements and higher warranty costs which were partially offset by lower salary expense related to workforce reduction activities and shipping costs when compared to 2023 Gross margin was flat in 2023 compared to 2022 Gross margin was impacted by lower revenue the unfavorable impact of currency movements higher wages and warranty costs which were fully offset by targeted price increases lower variable pay logistics and materials cost
salary expense related to workforce reduction activities lower consumables costs and depreciation expenses partially offset by the unfavorable impact of currency movements when compared to 2023 Research and development expenses increased 2 percent in 2023 when compared to 2022 Research and development expenses increased due to higher wages and program investments in our software and informatics business partially offset by lower variable pay
Selling general and administrative expenses decreased 2 percent in 2024 compared to 2023 Selling general and administrative expenses decreased due to lower salary expense related to workforce reduction activities variable pay and
marketing costs when compared to 2023 Selling general and administrative expenses decreased 3 percent in 2023 compared to 2022 Selling general and administrative expenses decreased due to lower variable pay sales commissions and marketing expenses and the favorable impact of currency movements when compared to 2022
Operating margin decreased 3 percentage points in 2024 compared to 2023 Operating margin was impacted by lower sales volume and the unfavorable impact of currency movements partially offset by lower salary expense related to workforce reduction activities and shipping costs when compared to 2023 Operating margin was flat in 2023 compared to 2022 Operating margin was impacted by lower sales volume and the unfavorable impact of currency movements offset by lower variable pay and logistics costs
Income from operations in 2024 decreased by 172 million or 16 percent when compared to 2023 on a revenue decrease of 295 million Income from operations in 2023 decreased by 48 million or 4 percent when compared to 2022 on a revenue decrease of 120 million
Our diagnostics and genomics business includes the cell analysis advanced manufacturing partnerships contract manufacturing and research and development pathology companion diagnostics reagent partnership genomics and biomolecular analysis businesses
Our diagnostics and genomics business is comprised of seven areas of activity providing active pharmaceutical ingredients APIs for oligo based therapeutics as well as solutions that include reagents instruments software and consumables which enable customers in the clinical and life sciences research areas to interrogate samples at the cellular and molecular level First our cell analysis business includes instruments reagents software and labware associated with unique live cell analysis platforms in addition to mainstream flow cytometers plate readers and plate washers dispensers which are used across a broad range of applications Second our advanced manufacturing partnerships business is a contract and development manufacturing organization that provides services related to and the production of synthesized oligonucleotides under pharmaceutical good manufacturing practices GMP conditions for use as API in a class of drugs that utilize nucleic acid molecules for disease therapy Together our BIOVECTRA and nucleic acid solutions businesses offer a broad range of contract and development manufacturing services to our customers They provide clinical to commercial scale production capabilities focused mainly on mRNA manufacturing Third our pathology solutions business is focused on product offerings for cancer diagnostics and anatomic pathology workflows The broad portfolio of offerings includes immunohistochemistry IHC in situ hybridization ISH hematoxylin and eosin H E staining and special staining Fourth we also collaborate with a number of major pharmaceutical companies to develop new potential tissue 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 provides clinical flow cytometry reagents for routine cancer diagnostics This business also provides bulk antibodies as raw materials and associated assay development services to in vitro diagnostics IVD manufacturers biotechnology and pharmaceutical companies Sixth our genomics business includes arrays and next generation sequencing NGS This business also includes solutions that enable clinical labs to identify DNA variants associated with genetic disease and help direct cancer therapy Finally our biomolecular analysis business provides complete workflow solutions including instruments consumables and software for quality control analysis of nucleic acid samples Samples are analyzed using quantitative and qualitative techniques to ensure accuracy in further genomics analysis techniques including NGS utilized in clinical and life science research applications
Diagnostics and genomics business revenue decreased 6 percent in 2024 compared to 2023 Foreign currency movements for 2024 had no overall impact on revenue growth when compared to the same period last year Geographically revenue decreased 10 percent in the Americas with no currency impact increased 4 percent in Europe with a 1 percentage point favorable currency impact and decreased 11 percent in Asia Pacific with a 2 percentage point unfavorable currency impact The
revenue decline in the Americas was primarily driven by our cell analysis genomics and nucleic acid solutions businesses Revenue increased in Europe due to strong performance in our pathology genomics and biomolecular analysis businesses partially offset by a decline in our cell analysis business The revenue decline in Asia Pacific was driven by our cell analysis business partially offset by increased revenue in our pathology business
In 2024 revenue performance in the pharmaceutical market declined significantly due to our cell analysis business which was impacted by the continuing slow availability of the customer capital budgets and by unfavorable mix in our nucleic acid solutions business when compared to the same period last year We also saw a modest revenue increase in the diagnostics and clinical markets primarily from our pathology business which was partially offset by a decline in our genomics business Revenue in the academia and government markets declined
Diagnostics and genomics business revenue in 2023 decreased 1 percent compared to 2022 Foreign currency movements had an overall unfavorable impact on revenue growth of 2 percentage points in 2023 when compared to 2022 Geographically revenue decreased 1 percent in the Americas with no currency impact increased 3 percent in Europe with a 1 percentage point unfavorable currency impact and decreased 6 percent in Asia Pacific with a 5 percentage point unfavorable currency impact The decrease in the Americas was driven by a decline in our genomics and cell analysis businesses which was partially offset by strong growth in our nucleic acid solutions reagent partnership and pathology businesses The increase in Europe was driven by growth in our pathology reagent partnership and cell analysis businesses The revenue decline in Asia Pacific was driven by our biomolecular analysis and genomics businesses and an overall weakness in China
In 2023 the decline in revenue in the pharmaceutical market was led by our cell analysis biomolecular analysis and genomics businesses which was partially offset by strong revenue growth in our nucleic acid solutions business We saw moderate revenue growth in the diagnostics and clinical markets led by our pathology reagent partnership and cell analysis businesses when compared to 2022 Revenue in the academia and government markets declined due to softness in our cell analysis and genomics businesses
Looking forward despite the challenging market conditions 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 and PD L1 assays continues to gain strength with our customers in clinical oncology applications and our next generation sequencing related solutions continue to be adopted Market demand in the advanced manufacturing partnerships business related to therapeutic oligo programs continues and we are well positioned to serve more of the market demand We will also continue to invest in research and development and seek to expand our position in developing countries and emerging markets
Gross margin decreased 1 percentage point in 2024 when compared to 2023 Gross margin was impacted by lower sales volume and higher infrastructure costs which were partially offset by lower salary expense related to workforce reduction activities and expenses attributed to business exit activities Gross margin decreased 2 percentage points in 2023 when compared to 2022 Gross margin decreased due to volume decline in our cell analysis and genomics businesses resulting in unfavorable business mix Gross margin was also impacted by the unfavorable impact of currency movements higher wages and infrastructure costs partially offset by lower variable pay
Research and development expenses decreased 9 percent in 2024 when compared to 2023 Research and development expenses decreased primarily due to lower expenses attributed to business exit activities and salary expenses related to workforce reduction activities Research and development expenses increased 2 percent in 2023 when compared to 2022 Research and development expenses increased due to higher wages additional expenses related to a recent acquisition and higher infrastructure costs
Selling general and administrative expenses decreased 3 percent in 2024 when compared to 2023 Selling general and administrative expenses decreased due to lower expenses attributed to business exit activities and lower salary expense related to workforce reduction activities partially offset by higher infrastructure costs Selling general and administrative expenses decreased 3 percent in 2023 when compared to 2022 Selling general and administrative expenses decreased due to lower variable pay the favorable impact of currency movements and lower infrastructure costs
Operating margin decreased 1 percentage point in 2024 when compared to 2023 Operating margin decreased due to lower revenue higher infrastructure costs and higher wages partially offset by lower salary expense related to workforce reduction activities and expenses attributed to business exit activities Operating margin decreased 1 percentage point in 2023 when compared to 2022 The decrease in operating margin resulted from lower gross margins the unfavorable impact of currency movements and additional costs related to a recent acquisition partially offset by lower variable pay
Income from operations in 2024 decreased by 43 million or 12 percent when compared to 2023 on a revenue decrease of 104 million Income from operations in 2023 decreased by 27 million or 7 percent when compared to 2022 on a revenue decrease of 11 million
The Agilent CrossLab business spans the entire lab with its extensive services portfolio which is designed to improve customer outcomes and represents a broad range of offerings designed to serve customer needs across end markets and regardless of instrument manufacturer
The services portfolio includes repairs parts maintenance installations training compliance support software as a service asset management consulting and various other custom services to support the customers laboratory operations Custom services are tailored to meet the specific application needs of various industries and to keep instruments fully operational and compliant with the respective industry requirements
Agilent CrossLab business revenue increased 5 percent in 2024 when compared to 2023 Foreign currency movements for 2024 had no overall impact on revenue growth when compared to 2023 Geographically revenue increased 6 percent in the Americas with no currency impact increased 8 percent in Europe with a 2 percentage point favorable currency impact and was flat in Asia Pacific with a 2 percentage point unfavorable currency impact During the year ended October 31 2024
revenue in all three regions reflected consistent high demand for repair and maintenance services across the entire portfolio In Americas and Europe revenue growth was partially offset by weakness in installation revenue In the Asia Pacific region the weakness in installation revenue offset the revenue growth seen from repair and maintenance services
Agilent CrossLab business revenue increased 8 percent in 2023 when compared to 2022 Foreign currency movements had an overall unfavorable impact on revenue growth of 2 percentage points in 2023 when compared to 2022 Geographically revenue increased 12 percent in the Americas with a 1 percentage point favorable currency impact increased 10 percent in Europe with no currency impact and increased 3 percent in Asia Pacific with a 5 percentage point unfavorable currency impact During the year ended October 31 2023 revenue growth in all three regions was driven by contract repair services per incident repair services and consultative services with installation related service in China partially offsetting the overall growth in Asia Pacific
we saw strong revenue growth in the environmental and forensics diagnostics and clinical and pharmaceutical markets mainly driven by our spectroscopy gas chromatography and liquid chromatography businesses when compared to the same period last year
we saw strong revenue growth in the pharmaceutical academia and government diagnostics and clinical and chemical and advanced materials markets mainly driven by our spectroscopy liquid and gas chromatography mass spectrometry and liquid chromatography businesses when compared to the same period the previous year
Looking forward Agilent CrossLab services are well positioned to continue their success in our key end markets by supporting a growing installed base of instruments Digital and remote capabilities will continue to be a key factor in improving the service quality and the customers experience Geographically the business is well diversified across all regions to take advantage of local market opportunities and to hedge against weakness in any one region
Gross margin increased 2 percentage points in 2023 when compared to 2022 Gross margin was impacted by higher sales volume targeted price increases and lower variable pay that improved margins which were partially offset by higher wages service delivery costs for logistics and parts and the unfavorable impact of currency movements
Income from operations in 2024 increased by 61 million or 13 percent when compared to 2023 on a revenue increase of 76 million Income from operations in 2023 increased by 93 million or 25 percent when compared to 2022 on a revenue increase of 116 million
We believe our cash and cash equivalents cash generated from operations and ability to access capital markets and credit lines will satisfy for at least the next twelve months and beyond our liquidity requirements both globally and domestically including the following working capital needs capital expenditures business acquisitions stock repurchases cash dividends contractual obligations commitments principal and interest payments on debt and other liquidity requirements associated with our operations
We may from 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
Net cash provided by operating activities was 1 751 million in 2024 compared to net cash provided of 1 772 million in 2023 and net cash provided of 1 312 million in 2022 Net cash paid for income taxes was approximately 314 million in 2024 compared to income taxes paid of 199 million in 2023 and 279 million in 2022 For the years ended October 31 2024 2023 and 2022 other assets and liabilities used cash of 49 million provided cash of 47 million and used cash of 8 million respectively
In 2024 accounts receivable provided cash of 7 million compared to cash provided of 132 million in 2023 and cash used of 321 million in 2022 Days sales outstanding as of October 31 were 70 days in 2024 69 days in 2023 and 68 days in 2022 In 2024 the decrease in cash provided by accounts receivable was primarily due to lower collectible sales compared to 2023 In 2023 cash provided in accounts receivable was driven by stronger collections compared to 2022 The change in accounts payable provided cash of 103 million in 2024 used cash of 171 million in 2023 and provided cash of 121 million in 2022 In 2024 the change was mainly due to less expenditures for direct materials as we continued optimizing our inventory levels and to timing of payments Cash provided by inventory was 34 million in 2024 compared to cash used of 33 million in 2023 and cash used of 248 million in 2022 Inventory days on hand decreased to 111 days in 2024 compared to 120 days in 2023 and 112 days in 2022
The employee compensation and benefits liability used cash of 12 million in 2024 compared to cash used of 91 million in 2023 and cash used of 22 million in 2022 In 2024 the change was largely due to a decrease in variable and incentive pay compared to 2023 In 2023 the change was largely due to a lower accrual for variable pay compared to 2022 We paid approximately 105 million in 2024 under our variable and incentive pay programs compared to 185 million in 2023 and 201 million in 2022
We made no contributions to our U S defined benefit plans in 2024 2023 and 2022 We contributed 20 million in 2024 and 21 million in 2023 and 17 million in 2022 to our non U S defined benefit plans respectively We did not contribute to our U S post retirement benefit plans in 2024 2023 and 2022 Our non U S defined benefit plans are generally funded ratably throughout the year 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 2025 We expect to contribute 19 million to our non U S defined benefit plans during 2025
Investments in property plant and equipment were 378 million in 2024 298 million in 2023 and 291 million in 2022 Our anticipated capital expenditures for fiscal year 2025 will be approximately 450 million These continued investments in property plant and equipment are primarily due to the planned expansion of our manufacturing capacity for production of nucleic acid based therapeutics in Frederick Colorado Some of our investment may be eligible to qualify for reimbursement incentives which will not fully be known until the expansion is substantially complete
In 2024 we invested 862 million primarily for our acquisition of BIOVECTRA and one other acquisition compared to 51 million for two acquisitions in 2023 and 52 million for our acquisition of Polymer Standards Service and advanced artificial intelligence technology in 2022 In 2023 proceeds from the divestiture of our Resolution Bioscience business were 50 million
Net cash used in financing activities was 752 million in 2024 compared to net cash used of 930 million in 2023 and net cash used of 1 372 million in 2022 Net cash from financing activities consisted primarily of cash flows associated with the issuances and repurchases of common stock payments of cash dividends borrowings and repayments under credit facilities and commercial paper issuances and repayments of long term debt and payments of contingent consideration
In 2024 we repurchased and retired 8 4 million shares for 1 150 million excluding excise tax liability of approximately 10 million compared to repurchases in 2023 of 4 6 million shares for 575 million excluding excise tax liability of approximately 3 million which was paid in 2024 and 8 4 million shares for 1 139 million in 2022
The 2024 repurchase program authorizes the purchase of up to 2 0 billion excluding excise taxes of our common stock at the company s discretion and has no fixed termination date The 2024 repurchase program does not require the company to acquire a specific number of shares and may be suspended amended or discontinued at any time The 2024 repurchase program became effective on August 1 2024 and will commence upon the termination of our 2023 repurchase program
On November 20 2024 we declared a quarterly dividend of 0 248 per share of common stock or approximately 71 million which will be paid on January 22 2025 to shareholders of record as of the close of business on December 31 2024 The timing and amounts of any future dividends are subject to determination and approval by our board of directors
On June 7 2023 we entered into a new credit agreement with a group of financial institutions which provides for a 1 5 billion five year unsecured credit facility that will expire on June 7 2028 and an incremental revolving credit facility in an aggregate amount of up to 750 million During 2024 we made no borrowings or repayments under these credit facilities compared to 360 million borrowed and repaid in 2023 and no borrowings or repayments in 2022
On June 2 2023 we entered into an Uncommitted Money Market Line Credit agreement with Societe Generale which provides for an aggregate borrowing capacity of 300 million The credit facility is an uncommitted short term cash advance facility where each request must be at least 1 million The interest rate is set by the lender at the time of the borrowing and is fixed for the duration of the advance During 2024 we borrowed and repaid 215 million under this credit facility compared to 61 million borrowed and repaid in 2023 As of October 31 2024 we had no borrowings outstanding under the credit facility
Under our U S commercial paper program we may issue and sell unsecured short term promissory notes in the aggregate principal amount not to exceed 1 5 billion with up to 397 day maturities 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 available 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 During 2024 we borrowed 1 19 billion and repaid 1 15 billion compared to 1 67 billion borrowed and 1 70 billion repaid in 2023 and 1 29 billion borrowed and 1 26 billion repaid in 2022
In September 2024 we completed the BIOVECTRA acquisition and assumed two interest free loans from the Strategic Innovation Fund SIF in the amount of 20 million with 2 million recorded at fair value in short term debt The loans are repayable in quarterly and yearly installments at a weighted average imputed interest rate of 4 7 percent In addition we assumed two interest free loans with the Atlantic Canada Opportunities Agency ACOA in the amount of 4 million with 3 million recorded at fair value in short term debt The loans are repayable in monthly installments at a weighted average imputed interest rate of 4 5 percent
In 2024 proceeds from the issuance of long term debt of 1 197 million related to the issuance of our 2027 and 2034 senior notes Repayments of long term debt of 600 million related to the full payment of the outstanding principal amount of our term loan In 2022 we used the proceeds of 600 million from the term loan facility and repaid the 600 million outstanding aggregate principal amount of our 3 875 2023 senior notes The total redemption price of approximately 609 million was computed in accordance with the terms of the 2023 senior notes as the present value of the remaining scheduled payments of principal and unpaid interest on the notes being redeemed In addition 7 million of accrued interest up to but not including the applicable redemption date was paid
On April 15 2022 we entered into a term loan agreement with a group of financial institutions which provided for a 600 million delayed draw term loan that will mature on April 15 2025 Loans under the term loan agreement bear interest at our option either at i the alternate base rate as defined in the term loan agreement plus the applicable margin for such loans or ii adjusted term SOFR as defined in the term loan agreement plus the applicable margin for such loans As of October 31 2024 the term loan facility was terminated
In September 2024 we completed the BIOVECTRA acquisition and assumed two interest free loans from the Strategic Innovation Fund SIF in the amount of 20 million with 18 million recorded at fair value in long term debt The loans are repayable in quarterly and yearly installments through 2040 at a weighted average imputed interest rate of 4 7 percent In addition we assumed two interest free loans with the Atlantic Canada Opportunities Agency ACOA in the amount of 4 million with 1 million recorded at fair value in long term debt The loans are repayable in monthly installments through 2029 at a weighted average imputed interest rate of 4 5 percent
During the year ended October 31 2023 we paid a total of 72 million in contingent consideration payments of which 4 million is included as an outflow in cash from operations We paid 65 million related to the achievement of a certain technical milestone associated with our acquisition of Resolution Bioscience and 7 million related to other acquisitions
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
Our cash flows from operations are dependent on a number of factors including fluctuations in our operating results accounts receivable collections inventory management and the timing of tax and other payments As a result the impact of contractual obligations on our liquidity and capital resources in future periods should be analyzed in conjunction with such factors
We purchase components from a variety of suppliers and use several contract manufacturers to provide manufacturing services for our products During the normal course of business we issue purchase orders with estimates of our requirements several months ahead of the delivery dates The above amounts represent the commitments under the open purchase orders with our suppliers that have not yet been received However our agreements with these suppliers usually provide us the option to cancel reschedule and adjust our requirements based on our business needs prior to firm orders being placed We expect to fulfill most of our purchase commitments for inventory within one year
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 cancelable without penalties there are termination fees and costs or commitments for continued spending that we are obligated to pay to a supplier under each contact s termination period before such contract can be cancelled Our contractual obligations with these suppliers under other purchase commitments were approximately 136 million
Other long term liabilities as of October 31 2024 and October 31 2023 include 115 million and 162 million respectively related to long term income tax liabilities Of these amounts 64 million and 68 million related to uncertain tax positions as of October 31 2024 and October 31 2023 respectively We are unable to accurately predict when these amounts
will be realized or released However it is reasonably possible that there could be significant changes to our unrecognized tax benefits in the next twelve months due to either the expiration of a statute of limitations or a tax audit settlement As of October 31 2024 the remaining 51 million included in other long term liabilities relates to the U S transition tax payment which is due within the next two years
We are exposed to foreign currency exchange rate risks inherent in our sales commitments anticipated sales and assets and liabilities and equity 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 utilize derivative financial instruments for speculative trading purposes To the extent that we are required to pay for all or portions of an acquisition price in foreign currencies we may enter into foreign exchange contracts to reduce the risk that currency movements will impact the cost of the transaction
Our operations generate non functional currency cash flows such as revenues third party vendor payments and inter company payments In anticipation of these foreign currency cash flows and in view of volatility of the currency market we enter into such foreign exchange contracts as are described above to manage our currency risk Approximately 48 percent of our revenue in 2024 52 percent of our revenue in 2023 and 56 percent of our revenue in 2022 was generated in U S dollars Foreign currency movements had no overall impact on revenue growth in the year ended October 31 2024 We calculate the impact of movements in foreign currency exchange rates by applying the actual foreign currency exchange rates in effect during the last month of each quarter of the current year to both the applicable current and prior year periods
We performed a sensitivity analysis assuming a hypothetical 10 percent adverse movement in foreign exchange rates to the hedging contracts and the underlying exposures described above As of October 31 2024 and 2023 the analysis indicated that these hypothetical market movements would not have a material effect on our consolidated financial position results of operations statement of comprehensive income or cash flows
We are also exposed to interest rate risk due to the mismatch between the interest expense we pay on our loans at fixed rates and the variable rates of interest we receive from cash cash equivalents and other short term investments We have issued long term debt in U S dollars or foreign currencies at fixed interest rates based on the market conditions at the time of financing We believe that the fair value of our fixed rate debt changes when the underlying market rates of interest change and we may use interest rate swaps to modify such market risk
We performed a sensitivity analysis assuming a hypothetical 10 percent adverse movement in interest rates relating to the underlying fair value of our fixed rate debt As of October 31 2024 and 2023 the sensitivity analyses indicated that a hypothetical 10 percent adverse movement in interest rates would result in an immaterial impact to the fair value of our fixed interest rate debt
We have audited the accompanying consolidated balance sheets of Agilent Technologies Inc and its subsidiaries the Company as of October 31 2024 and 2023 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 2024 including the related notes and schedule of valuation and qualifying accounts for each of the three years in the period ended October 31 2024 appearing under Item 15 a 2 collectively referred to as the consolidated financial statements We also have audited the Company s internal control over financial reporting as of October 31 2024 based on criteria established in
In our opinion the consolidated financial statements referred to above present fairly in all material respects the financial position of the Company as of October 31 2024 and 2023 and the results of its operations and its cash flows for each of the three years in the period ended October 31 2024 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 2024 based on criteria established in
The Company s management is responsible for these consolidated financial statements for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in Management s Report on Internal Control over Financial Reporting appearing under Item 9A Our responsibility is to express opinions on the Company s consolidated financial statements and on the Company s internal control over financial reporting based on our audits We are a public accounting firm registered with the Public Company Accounting Oversight Board United States PCAOB and are required to be independent with respect to the Company in accordance with the U S federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB
We conducted our audits in accordance with the standards of the PCAOB Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement whether due to error or fraud and whether effective internal control over financial reporting was maintained in all material respects
Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements whether due to error or fraud and performing procedures that respond to those risks Such procedures included examining on a test basis evidence regarding the amounts and disclosures in the consolidated financial statements Our audits also included evaluating the accounting principles used and significant estimates made by management as well as evaluating the overall presentation of the consolidated financial statements Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting assessing the risk that a material weakness exists and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk Our audits also included performing such other procedures as we considered necessary in the circumstances We believe that our audits provide a reasonable basis for our opinions
As described in Management s Report on Internal Control Over Financial Reporting management has excluded BIOVECTRA from its assessment of internal control over financial reporting as of October 31 2024 because it was acquired by the Company in a purchase business combination during 2024 We have also excluded BIOVECTRA from our audit of internal control over financial reporting BIOVECTRA 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 3 and less than 1 respectively of the related consolidated financial statement amounts as of and for the year ended October 31 2024
A company s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles A company s internal control over financial reporting includes those policies and procedures that i pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the company ii provide reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with generally accepted accounting principles and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company and iii provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition use or disposition of the company s assets that could have a material effect on the financial statements
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
The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial 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
As described in Notes 1 3 and 11 to the consolidated financial statements on September 20 2024 the Company acquired 100 percent of the stock of BIOVECTRA for total consideration paid of 915 million in cash As of October 31 2024 gross carrying amount of customer relationships includes approximately 165 million related to BIOVECTRA which was valued by management using the multi period excess earnings method under the income approach which values the customer relationships by discounting the direct cash flow expected to be generated by the customers Of the customer relationships related to BIOVECTRA the majority relates to certain customer relationships Management s 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
The principal considerations for our determination that performing procedures relating to the valuation of certain customer relationships acquired in the acquisition of BIOVECTRA is a critical audit matter are i the significant judgment by management when estimating the fair value of certain customer relationships acquired ii a high degree of auditor judgment subjectivity and effort in performing procedures and evaluating management s significant assumption related to revenue growth rates and iii the audit effort involved the use of professionals with specialized skill and knowledge
Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements These procedures included testing the effectiveness of controls relating to the acquisition accounting including controls over management s valuation of certain customer relationships acquired These procedures also included among others i reading the purchase agreement ii testing management s process for estimating the fair value of certain customer relationships acquired iii evaluating the appropriateness of the multi period excess earnings method used by management iv testing the completeness and accuracy of the underlying data used in the multi period excess earnings method and v evaluating the reasonableness of the significant assumption used by management related to revenue growth rates Evaluating management s assumption related to the revenue growth rates involved considering i the current performance of the BIOVECTRA business and ii whether the assumption was consistent with evidence obtained in other areas of the audit Professionals with specialized skill and knowledge were used to assist in evaluating the appropriateness of the multi period excess earnings method
Agilent Technologies Inc we Agilent or the company incorporated in Delaware in May 1999 is a global leader in life sciences diagnostics and applied chemical markets providing application focused solutions that include instruments software services and consumables for the entire laboratory workflow
In the first quarter of fiscal year 2024 we announced a change in our operating segments to move our cell analysis business from our life sciences and applied markets segment to our diagnostics and genomics operating segment in order to further strengthen growth opportunities for both organizations Following this reorganization we continue to have three business segments comprised of life sciences and applied markets diagnostics and genomics and Agilent CrossLab each of which continues to comprise a reportable segment We began reporting under this new structure with the Quarterly Report on Form 10 Q for the period ended January 31 2024 All historical financial segment information has been recast to conform to this new presentation in our consolidated financial statements and accompanying notes There was no change to our Agilent CrossLab business segment
On September 20 2024 we acquired 100 percent of the stock of BIOVECTRA for total consideration of 915 million in cash The acquisition expands our contract development and manufacturing organization As a result of the acquisition BIOVECTRA became a wholly owned subsidiary of Agilent The acquisition has been accounted for in accordance with the authoritative accounting guidance and the results of BIOVECTRA are included in Agilent s consolidated financial statements from the date of acquisition
During the third quarter of fiscal year 2023 we made the decision to exit the Resolution Bioscience business within our diagnostics and genomics segment and recorded a long lived asset impairment charge of 270 million In the fourth quarter of fiscal year 2023 we received an unsolicited offer and entered into an agreement to divest the Resolution Bioscience business for 50 million As a result we recorded a gain on the divestiture of 43 million in other income expense net in the consolidated statement of operations which included an adjustment to goodwill of 13 million
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
The preparation of financial statements in accordance with U S GAAP requires management to make estimates and assumptions that affect the amounts reported in our consolidated financial statements and accompanying notes Management bases its estimates on historical experience and various other assumptions believed to be reasonable Although these estimates are based on management s best knowledge of current events and actions that may impact the company in the future actual results may be different from the estimates Our critical accounting policies are those that affect our financial statements materially and involve difficult subjective or complex judgments by management Those policies are revenue recognition valuation of goodwill and purchased intangible assets inventory valuation retirement and post retirement plan assumptions restructuring and accounting for income taxes
The main components of our restructuring plan are related to workforce reductions consolidation of excess leased facilities and site closures Workforce reduction charges are accrued when payment of benefits becomes probable that the employees are entitled to the severance and the amounts can be estimated Consolidation of facilities costs primarily consists of accelerated depreciation of right of use assets classified as held and used In accordance with the accounting guidance it was determined that certain assets had been abandoned and an assessment was made of the remaining useful lives and potential alternative uses If the amounts and timing of cash flows from restructuring activities are significantly different from what we have estimated the actual amounts of restructuring and other related charges could be materially different either higher or lower than those we have recorded
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
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 Accounting Standard Codification Topic 606
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 consumables 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 For products that transfer control over time revenue is recognized as the performance obligation is satisfied Product over time revenue is assessed against the following criteria the performance creates an asset that the customer controls as the asset is created the asset has no alternative use and we have an enforceable right to payment Where acceptance is not a formality 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 performance 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 adjustments in the period the related sales are recorded
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 performed 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 geographic region for each performance obligation Standalone selling prices are determined for 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
Contract liabilities deferred revenue primarily relate to multiple element arrangements for 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
Income tax expense or benefit is based on income or loss before taxes Deferred tax assets and liabilities are recognized principally for the expected tax consequences of temporary differences between the tax bases of assets and liabilities and their reported amounts See Note 6 Income Taxes for more information
Basic net income per share is computed by dividing net income the numerator by the weighted average number of common shares outstanding the denominator during the period excluding the dilutive effect of stock options and other employee stock plans Diluted net income per share gives effect to all potential common shares outstanding during the period unless the effect is anti dilutive The dilutive effect of share based awards is reflected in diluted net income per share by application of the treasury stock method which includes consideration of unamortized share based compensation expense and the dilutive effect of in the money options and non vested restricted stock units Under the treasury stock method the amount the employee must pay for exercising stock options and unamortized share based compensation expense are assumed proceeds to be used to repurchase hypothetical shares See Note 7 Net Income Per Share
As of October 31 2024 approximately 1 313 million of our cash and cash equivalents is held outside of the U S by our foreign subsidiaries Our cash and cash equivalents mainly consist of short term deposits held at major global financial institutions institutional money market funds and similar short duration instruments with original maturities of 90 days or less We continuously monitor the creditworthiness of the financial institutions and institutional money market funds in which we invest our funds
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 follows
Trade accounts receivable are recorded at the invoiced amount and do not bear interest Such accounts receivable have been reduced by an allowance for doubtful accounts which is our best estimate of the amount of probable credit losses in our existing accounts receivable We determine the allowance based on customer specific experience and the aging of such receivables among other factors The allowance for doubtful accounts as of October 31 2024 and 2023 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
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 financial instruments and limit the amount of credit exposure with any one financial institution We have a comprehensive credit policy in place and credit exposure is monitored on an ongoing basis
Credit risk with respect to our accounts receivable is diversified due to the large number of entities comprising our customer base and their dispersion across many different industries and geographies Credit evaluations are performed on customers requiring credit over a certain amount and we sell the majority of our products through our direct sales force Credit risk is mitigated through collateral such as letter of credit bank guarantees or payment terms like cash in advance No single customer accounted for more than 10 percent of accounts receivable as of October 31 2024 or 2023
Inventory is valued at standard cost which approximates actual cost computed on a first in first out basis not in excess of market value We assess the valuation of our inventory on a periodic basis and make adjustments to the value for estimated excess and obsolete inventory based on estimates and assumptions about future demand economic conditions and actual usage which require management judgment The excess balance determined by this analysis becomes the basis for our excess inventory charge Our excess inventory review process includes analysis of inventory levels sales trends and forecasts managing product rollovers and working with manufacturing to maximize recovery of excess inventory and to estimate and record reserves for excess slow moving and obsolete inventory
Property plant and equipment are stated at cost less accumulated depreciation Additions improvements and major renewals are capitalized maintenance repairs and minor renewals are expensed as incurred When assets are retired or disposed of the assets and related accumulated depreciation and amortization are removed from our general ledger and the resulting gain or loss is reflected in the consolidated statement of operations Buildings and improvements are depreciated over the lesser of their useful lives or the remaining term of the lease and machinery and equipment over 3 years to 10 years We use the straight line method to depreciate assets
We capitalize certain internal and external costs incurred to acquire or create internal use software Capitalized software is included in property plant and equipment and is depreciated over 3 years to 5 years once development is complete
We determine whether an arrangement is or contains a lease at inception We 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 company s right to use an underlying asset for the lease term and lease liabilities represent an obligation to make lease payments based on the present value of lease payments over the lease term Classification of operating lease liabilities as either current or non current is based on the expected timing of payments due 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 rate The ROU asset also consists of any lease incentives received The lease terms used to calculate the ROU asset and related lease liability 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 straight line basis over the lease term as an operating expense We have lease agreements which require payments for lease and non lease components We have elected to account for these payments as a single lease component
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 for 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 the revenue associated with the lease component is treated under the lease accounting standard ASC 842 whereas the revenue associated with the non lease component is recognized in accordance with the ASC 606 revenue standard
Agilent accounts for 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 amortizable purchased intangible asset and amortized to costs of revenues over the asset s estimated useful life
Our determination of the fair value of the intangible assets acquired involves the use of significant estimates and assumptions Specifically our determination of the fair value of the developed product technology and IPR D acquired 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 trade name acquired involved the use of significant estimates and assumptions related to revenue growth rates royalty rates and discount rates We value backlog using the discounted cash flows based on the estimated revenue from pending orders We value license agreements based on the expected future cash receipts from license agreements discounted to present value over the term of the agreement We believe 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 from these estimates
We assess our goodwill and purchased intangible assets for impairment annually or whenever events or changes in circumstances indicate that the carrying value may not be recoverable 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 further testing will be required
The guidance includes examples of events and circumstances that might indicate that a reporting unit s fair value is less than its carrying amount These include macro economic conditions such as deterioration in the entity s operating environment or industry or market considerations entity specific events such as increasing costs declining financial performance or loss of key personnel or other events such as an expectation that a reporting unit will be sold or a sustained decrease in the stock price on either an absolute basis or relative to peers
If it is determined as a result of the qualitative assessment that it is more likely than not that the fair value of a reporting unit is less than its carrying amount 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 fair 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
In fiscal year 2024 in connection with the change in our segment reporting 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 quantitative test for goodwill impairment of the three reporting units as of November 1 2023 due to the change in our segment structure As of November 1 2023 there was
In fiscal year 2024 we assessed goodwill impairment for our three reporting units which consisted of three segments life sciences and applied markets diagnostics and genomics and Agilent CrossLab We performed a qualitative test for goodwill impairment of the three reporting units as of September 30 2024 our annual impairment test date Based on the results of our qualitative testing there was no impairment of goodwill as of September 30 2024 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 2024 2023 and 2022
Purchased intangible assets consist primarily of acquired developed technologies proprietary know how trademarks and customer relationships and are amortized using the best estimate of the asset s useful life that reflect the pattern in which the economic benefits are consumed or used up or a straight line method ranging from 2 years to 15 years IPR D is initially capitalized at fair value as an intangible asset with an indefinite life and assessed for impairment thereafter When the IPR D project is complete it is reclassified as an amortizable purchased intangible asset and is amortized over its estimated useful life If an IPR D project is abandoned Agilent will record a charge for the value of the related intangible asset to Agilent s consolidated statement of operations in the period it is abandoned
Our indefinite lived intangible assets are IPR D intangible assets The accounting guidance allows a qualitative approach for testing indefinite lived intangible assets for impairment similar to the issued impairment testing guidance for goodwill and allows the option to first assess qualitative factors events and circumstances that could have affected the significant inputs used in determining the fair value of the indefinite lived intangible asset to determine whether it is more likely than not i e greater than 50 chance that the indefinite lived intangible asset is impaired An organization may choose to bypass the qualitative assessment for any indefinite lived intangible asset in any period and proceed directly to calculating its fair value As of October 31 2024 we do not have any indefinite lived intangible assets
During fiscal year 2024 we recorded an impairment of in process research and development of 6 million in research and development in the consolidated statement of operations related to a project in our life sciences and applied markets segment There were no impairments of indefinite lived intangible assets during fiscal years 2023 and 2022
We continually monitor events and changes in circumstances that could indicate carrying amounts of long lived assets including intangible assets may not be recoverable When such events or changes in circumstances occur we assess the recoverability of long lived assets by determining whether the carrying value of such assets will be recovered through undiscounted expected future cash flows If the total of the undiscounted future cash flows is less than the carrying amount of those assets we recognize an impairment loss based on the excess of the carrying amount over the fair value of the assets
During the year ended October 31 2024 we recorded an impairment charge of long lived assets including indefinite lived intangible assets of 19 million During the year ended October 31 2023 we recorded an impairment charge of long lived assets including intangible assets of 277 primarily related to the exit of our Resolution Bioscience business During the year ended October 31 2022 there were no impairments of long lived assets
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 2024 and 2023 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 determinable 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 capital structure
As of October 31 2024 and 2023 the total carrying value of investments and loans in privately held companies considered as VIEs was 79 million and 82 million respectively The maximum exposure is equal to the carrying value because we do not have future funding commitments The investments are classified as long term investments and the loans are classified within other current assets and other assets depending upon tenure of loan on the consolidated balance sheet
Equity investments without readily determinable fair value consist of non marketable equity securities typically investments in privately held companies These investments are accounted for using the measurement alternative at cost and we adjust for impairments and observable price changes orderly transactions for the identical or a similar security from the same issuer included in net income as and when it occurs Equity investments with readily determinable fair 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
Trading securities which are comprised of mutual funds bonds and other similar instruments and deferred compensation liabilities are reported at fair value with gains or losses resulting from 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 2024 and 2023 The company assesses investments for impairment whenever events or changes in circumstances indicate that the carrying value of an investment may not be recoverable
The carrying values of certain of our financial instruments including cash and cash equivalents accounts receivable accounts payable accrued compensation and other accrued liabilities approximate fair value because of their short maturities The fair value of 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 determinable and which are not accounted under the equity method are reported at cost with adjustments for observable changes in prices or impairments included in net income As of October 31 2024 the fair value of the commercial paper approximates its carrying value As of October 31 2023 the fair value of the term loan approximates its carrying value As of October 31 2024 the fair value of our senior notes was 3 083 million with a carrying value of 3 326 million This compares to the fair value of our senior notes of 1 747 million with a carrying value of 2 135 million as of October 31 2023 The change in the fair value compared to carrying value in the year ended October 31 2024 is primarily due to decreased market interest rates The fair value was calculated from quoted prices which are primarily Level 1 inputs under the accounting guidance The fair value of foreign currency contracts used for hedging purposes is estimated internally by using inputs tied to active markets These inputs for example interest rate yield curves foreign exchange rates and forward and spot prices for currencies are observable in the market or can be corroborated by observable market data for substantially the full term of the assets or liabilities See also Note 13 Fair Value Measurements for additional information on the fair value of financial instruments and contingent consideration
Our standard warranty terms typically extend for one year from the date of delivery We accrue for standard warranty costs based on historical trends in warranty charges 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 17 Guarantees
Amounts owed to employees such as accrued salary bonuses and vacation benefits are accounted for within employee compensation and benefits The total amount of accrued vacation benefit was 116 million and 120 million as of October 31 2024 and 2023 respectively
We have various defined benefit and defined contribution retirement plans Additionally we sponsor post retirement health care benefits for our eligible U S employees Assumptions used to determine the benefit obligations and the expense for these plans are derived annually See Note 15 Retirement plans and post retirement pension plans for additional information
Upon the formal retirement of treasury shares we deduct the par value of the retired treasury shares from common stock and allocate the excess of cost over par as a deduction to additional paid in capital based on the pro rata portion of additional paid in capital and the remaining excess as a deduction to retained earnings All retired treasury shares revert to the status of authorized but unissued shares
For the years ended 2024 2023 and 2022 we accounted for share based awards made to our employees and directors including employee stock option awards restricted stock units employee stock purchases made under our Employee Stock Purchase Plan ESPP and performance share awards under the Agilent Technologies Inc Long Term Performance Program LTPP using the estimated grant date fair value method of accounting Under the fair value method we recorded compensation expense for all share based awards of 130 million in 2024 112 million in 2023 and 126 million in 2022 See Note 5 Share based Compensation for additional information
Agilent is exposed to global foreign currency exchange rate and interest rate risks in the normal course of business We enter into foreign exchange hedging contracts primarily forward contracts interest rate swaps and interest rate locks to manage financial exposures resulting from changes in foreign currency exchange rates and interest rates In the vast majority of cases these contracts are designated at inception as hedges of the related foreign currency or interest exposures Foreign currency exposures include committed and anticipated revenue and expense transactions and assets and liabilities that are denominated in currencies other than the functional currency of the subsidiary Interest rate exposures are associated with the company s fixed rate debt To qualify for hedge accounting contracts must reduce the foreign currency exchange rate and interest rate risk otherwise inherent in the amount and duration of the hedged exposures and comply with established risk management policies Foreign exchange hedging contracts generally mature within twelve months interest rate swaps 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 few limited jurisdictions we may enter into foreign exchange contracts that do not qualify for hedge accounting In such circumstances the local foreign currency exposure is offset by contracts owned by the parent company We do not use derivative financial instruments for trading or speculative purposes
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 accumulated 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 2024 2023 and 2022 was not material Cash flows from derivative instruments are classified in the statement of cash flows in the same category as the cash flows from the hedged or economically hedged item primarily in operating activities
We translate and remeasure balance sheet and income statement items into U S dollars For those subsidiaries that operate in a local currency functional environment all assets and liabilities are translated into U S dollars using current exchange rates at the balance sheet date revenue and expenses are translated using monthly exchange rates which approximate to average exchange rates in effect during each period Resulting translation adjustments are reported as a separate component of accumulated other comprehensive income loss in stockholders equity
For those subsidiaries that operate in a U S dollar functional environment foreign currency assets and liabilities are remeasured into U S dollars at current exchange rates except for non monetary assets and capital accounts which are remeasured at historical exchange rates Revenue and expenses are generally remeasured at monthly exchange rates which approximate average exchange rates in effect during each period Gains or losses from foreign currency remeasurement are included in consolidated net income Net gains or losses resulting from foreign currency transactions including hedging gains and losses are reported in other income expense net and were 4 million gain for 2024 2 million gain for 2023 and 6 million loss for 2022
In November 2023 the FASB issued guidance to improve segment reporting through enhanced disclosure requirements of significant segment expenses These amendments are effective for our fiscal year 2025 and interim periods within fiscal year 2026 with early adoption permitted These amendments apply on a retrospective basis We are currently evaluating the impact of these amendments on our consolidated financial statements
In December 2023 the FASB issued guidance to expand the disclosure requirements for income taxes specifically related to the rate reconciliation and income taxes paid These amendments are effective for our fiscal year 2026 with early adoption permitted These amendments apply on a prospective basis with a retrospective option We do not expect that the adoption of this guidance will have a material impact on our consolidated financial statements
In November 2024 the FASB issued guidance requiring new income statement disclosures to provide disaggregated information for certain types of costs and expenses included in each income statement line The amendments are effective for our fiscal year 2028 and interim periods within fiscal year 2029 with early adoption permitted We are currently evaluating the impact of these amendments on our consolidated financial statements
Other amendments to GAAP in the U S that have been issued by the FASB or other standards setting bodies that do not require adoption until a future date are not expected to have a material impact on our consolidated financial statements upon adoption
On September 20 2024 we acquired 100 percent of the stock of BIOVECTRA for total consideration paid of 915 million in cash The acquisition expands our contract development and manufacturing organization As a result of the acquisition BIOVECTRA became a wholly owned subsidiary of Agilent Accordingly the results of BIOVECTRA are included in Agilent s consolidated financial statements from the acquisition date
The BIOVECTRA acquisition was accounted for in accordance with the authoritative accounting guidance The acquired assets and assumed liabilities were recorded at their estimated fair values We determined the estimated fair values with the assistance of appraisals or valuations performed 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 BIOVECTRA s net identifiable assets acquired see summary of net assets below and as a result we have recorded goodwill in connection with this transaction
Pro forma results of operations and the revenue and net income subsequent to the acquisition date for BIOVECTRA have not been presented because the effects of the acquisition were not material to our financial results
Revenue by region is based on the ship to location of the customer Revenue by end market is determined by the market indicator of the customer and by customer type Instrumentation revenue includes sales from instruments remarketed 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 consumables reagents vacuum pumps subscriptions software licenses and associated services
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 2024 and 2023 were 247 million and 252 million respectively
Contract liabilities primarily relate to multiple element arrangements for 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
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 capitalized The changes in total capitalized costs to obtain a contract were immaterial during the years ended October 31 2024 and 2023 and are included in other current and long term assets on the consolidated balance sheet We have applied the practical expedient to expense costs as incurred for costs to obtain a contract with a customer when the amortization period 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
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
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 2024 was 409 million the majority 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
Agilent accounts for share based awards in accordance with the provisions of the accounting guidance which requires the measurement and recognition of compensation expense for all share based payment awards made to our employees and directors including 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 fair values
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 to 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 for issuance in connection with the ESPP
Under our ESPP employees purchased 576 467 shares for 58 million in 2024 487 735 shares for 57 million in 2023 and 469 701 shares for 54 million in 2022 As of October 31 2024 the number of shares of common stock authorized and available for issuance under our ESPP was 23 775 073 This includes 249 755 shares for 28 million of common stock to be settled in November 2024 to participants in consideration of the aggregate participant contributions as of October 31 2024
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 2024 17 135 988 shares were available for future awards under the 2018 Plan
In fiscal year 2021 we resumed granting stock options Stock options granted under the 2018 Plan may be either incentive stock options as defined in Section 422 of the Internal Revenue Code or non statutory Options generally vest at a rate of 25 percent per year over a period of four years from the date of grant with a maximum contractual term of ten years The exercise price for stock options is generally not less than 100 percent of the fair market value of our common stock on the date the stock award is granted We issue new shares of common stock when employee stock options are exercised
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 Return TSR and LTPP Earnings Per Share EPS programs are entitled to receive shares of the company s stock after the end of a three year period if specified performance targets for the programs are met The LTPP TSR awards are generally designed to meet the criteria of a performance award with the performance metrics and peer group comparison based on the TSR set at the beginning of the performance period The LTPP EPS awards are based on the company s EPS performance over a three year period The performance targets for the LTPP EPS for year 2 and year 3 of the performance period are set in the first quarter of year 2 and year 3 respectively All LTPP awards are subject to a one year post vest holding period The final LTPP award may vary from zero to 200 percent of the target award The maximum contractual term for awards under the LTPP program is three years We consider the dilutive impact of these programs in our diluted net income per share calculation only to the extent that the performance conditions are expected to be met
We also issue restricted stock units under our share based plans The estimated fair value of the restricted stock unit awards granted under the Stock Plans is determined based on the market price of Agilent s common stock on the date of grant adjusted for expected dividend yield Restricted stock units generally vest with some exceptions at a rate of 25 percent per year over a period of four years from the date of grant All restricted stock units granted to our executives after November 1 2015 are subject to a one year post vest holding period
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 should be based on awards that are ultimately expected to vest estimated share based compensation has been reduced for estimated forfeitures
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 Monte Carlo simulation fair value model requires the use of highly subjective and complex assumptions including the price volatility of the underlying stock For the volatility of our LTPP TSR grants we used our own historical stock price volatility
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 of 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 common stock on the date of grant adjusted for expected dividend yield The compensation cost for LTPP EPS reflects the 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 model 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 assumption used for the Monte Carlo simulation model and an expected dividend yield to compute the discount
The aggregate intrinsic value in the table above represents the total pre tax intrinsic value based on the company s closing stock price of 130 31 at October 31 2024 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 2024 was approximately 0 2 million
As of October 31 2024 the unrecognized share based compensation cost for outstanding stock option awards net of expected forfeitures was 10 million The amount of cash received from the exercise of share based awards granted was 77 million in 2024 67 million in 2023 and 58 million in 2022
As of October 31 2024 the unrecognized share based compensation cost for non vested restricted stock awards net of expected forfeitures was approximately 129 million which is expected to be amortized over a weighted average period of 2 1 years The total fair value of restricted stock awards vested was 103 million for 2024 99 million for 2023 and 89 million for 2022
For 2024 our income tax expense was 232 million with an effective tax rate of 15 3 percent For the year ended October 31 2024 our effective tax rate and the resulting provision for income taxes were impacted by the tax benefit of 47 million related to foreign derived intangible income
For 2023 our income tax expense was 99 million with an effective tax rate of 7 4 percent For the year ended October 31 2023 our effective tax rate and the resulting provision for income taxes were impacted by the federal tax benefit of 104 million related to the realized loss on the divestiture of a business The income taxes for the year ended October 31 2023 also include the tax benefit of 41 million related to foreign derived intangible income along with the tax benefit of 30 million related to the release of tax reserves in the U S due to the settlement of the audit with the Internal Revenue Service IRS for tax years 2018 and 2019
For 2022 our income tax expense was 250 million with an effective tax rate of 16 6 percent For the year ended October 31 2022 our effective tax rate and the resulting provision for income taxes were impacted by the tax benefit of 46 million related to foreign derived intangible income
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 The tax holiday in Singapore was renegotiated and extended through 2030 As a result of the incentive the impact of the tax holiday decreased income taxes by 84 million 54 million and 53 million in 2024 2023 and 2022 respectively The benefit of the tax holiday on net income per share diluted was approximately 0 29 0 18 and 0 18 in 2024 2023 and 2022 respectively
Valuation allowances require an assessment of both positive and negative evidence when determining whether it is more likely than not that deferred tax assets are recoverable Such assessment is required on a jurisdiction by jurisdiction basis As of October 31 2024 we continued to maintain a valuation allowance of 113 million until sufficient positive evidence exists to support reversal The valuation allowance is primarily related to deferred tax assets for the state of California along with the net operating losses in the Netherlands and capital losses in Australia
At October 31 2024 we had federal state and foreign net operating loss carryforwards of approximately 12 million 39 million and 280 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 2025 If not utilized 82 million of the foreign net operating loss carryforwards will begin to expire in 2029 The remaining 198 million of the foreign net operating losses carry forward indefinitely At October 31 2024 we had foreign capital loss carryforwards of 110 million The foreign capital losses carry forward indefinitely At October 31 2024 we had state tax credit carryforwards of approximately 92 million The state tax credits carry forward indefinitely At October 31 2024 we had foreign tax credit carryforwards of approximately 17 million If not utilized the foreign tax credit carryforwards will begin to expire in 2039
Interest and penalties accrued as of October 31 2024 and 2023 were 17 million and 16 million respectively We recognized tax expense of 1 million in 2024 tax benefit of 5 million in 2023 and tax benefit of 2 million in 2022 for interest and penalties related to unrecognized tax benefits
In the U S tax years remain open back to the year 2021 for federal income tax purposes and 2020 for significant states In other major jurisdictions where we conduct business the tax years generally remain open back to the year 2014
With these jurisdictions and the U S it is reasonably possible that some tax audits may be completed over the next twelve months However management is not able to provide a reasonably reliable estimate of the timing of any other future tax payments or change in unrecognized tax benefits if any
The dilutive effect of share based awards is reflected in diluted net income per share by application of the treasury stock method which includes consideration of unamortized share based compensation expense and the dilutive effect of in the money options and non vested restricted stock units Under the treasury stock method the amount the employee must pay for exercising stock options and unamortized share based compensation expense collectively are assumed proceeds to be used to repurchase hypothetical shares An increase in the fair market value of the company s common stock can result in a greater dilutive effect from potentially dilutive awards
We exclude stock options with exercise prices greater than the average market price of our common stock from the calculation of diluted earnings per share because their effect would be anti dilutive In addition we exclude from the calculation of diluted earnings per share stock options ESPP LTPP and restricted stock awards whose combined exercise price and unamortized fair value collectively were greater than the average market price of our common stock because their effect would also be anti dilutive
In 2024 2023 and 2022 we issued share based awards of approximately 1 5 million 1 5 million and 1 4 million respectively For the years ended 2024 2023 and 2022 the impacts of the anti dilutive potential common shares that were excluded from the calculation of diluted earnings per share were not material
Inventory related excess and obsolescence charges of 45 million were recorded in cost of products in 2024 40 million in 2023 and 24 million in 2022 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
During 2022 there were no asset impairments Depreciation expenses were 149 million in 2024 128 million in 2023 and 120 million in 2022 In 2024 and 2023 we retired approximately 78 million and 68 million respectively of assets the majority of which were fully depreciated and no longer in use
As a lessee we have various non cancelable operating lease agreements for 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 cancelable periods of the leases and include extension options that we determined are reasonably certain to be exercised We exclude options that are not reasonably certain to be exercised from our lease terms ranging from six months to twenty years Our lease payments consist primarily of fixed rental payments for the right to use the underlying leased assets over the lease terms We often receive incentives from 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
In the fourth quarter of fiscal year 2023 we initiated a new restructuring plan FY23 Plan designed to reduce costs and expenses in response to the current macroeconomic conditions In 2024 and 2023 the consolidation of excess facilities under the FY23 Plan resulted in 1 million and 8 million respectively of accelerated depreciation of our ROU assets
During fiscal year 2024 and 2022 there were no ROU asset impairments During fiscal year 2023 we recorded ROU asset impairments of 8 million primarily related to the exit of our Resolution Bioscience business
Future minimum rents payable as of October 31 2024 under non cancelable leases with initial terms exceeding one year reconcile to lease liabilities included in the consolidated balance sheet as follows
As a lessor we have contracts for equipment leased to customers primarily in connection with our diagnostics and advanced manufacturing partnerships 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 Diagnostics 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 useful 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 has been recorded which is calculated at the present value of the remaining lease payments due 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 years ended October 31 2024 2023 and 2022 respectively
As of October 31 2024 the original cost and net book value of operating leased assets were 75 million and 50 million respectively As of October 31 2024 lease receivables related to sales type leases were 46 million As of October 31 2023 the original cost and net book value of operating leased assets were 30 million and 7 million respectively As of October 31 2023 lease receivables related to sales type leases were 42 million
In the first quarter of fiscal year 2024 we reorganized our operating segments and moved our cell analysis business from our life sciences and applied markets business segment to our diagnostics and genomics business segment As a result we reassigned approximately 168 million of goodwill from our life sciences and applied markets business segment to our diagnostics and genomics business segment using the relative fair value allocation approach Goodwill balances as of October 31 2022 and 2023 have been recast to conform to this new presentation As a result of the reorganization there was no change to our reporting units In addition we performed a goodwill impairment test and the results of the analysis indicated that the fair values for all three of our reporting units were in excess of their carrying values by substantial amounts therefore no impairment was indicated
In connection with the divestiture of our Resolution Bioscience business in the fourth quarter of fiscal year 2023 we received 50 million in cash and recorded a gain on the divestiture of 43 million in other income expense net in the consolidated statement of operations which included an adjustment to goodwill of 13 million in our diagnostics and genomics segment We used the relative fair value approach in determining the adjustment to goodwill
As of September 30 2024 our annual impairment test date we assessed goodwill for our reporting units and no impairment of goodwill was indicated There was no impairment of goodwill in fiscal years 2023 and 2022
In fiscal year 2024 we recorded additions of 526 million to goodwill in our diagnostics and genomics segment related to the BIOVECTRA acquisition In addition we recorded 188 million to other intangible assets related to BIOVECTRA and another acquisition As of October 31 2024 gross carrying amount of customer relationships includes approximately 165 million related to BIOVECTRA which was valued using the multi period excess earnings method under the income approach which values the customer relationships by discounting the direct cash flow expected to be generated by the customers
During fiscal year 2024 we reclassified 4 million of in process research and development intangible assets to purchased technology upon the completion of a project During fiscal year 2024 other intangible assets in total decreased 5 million due to the impact of foreign currency translation During 2024 we also wrote off the gross carrying amounts of 18 million and the related accumulated amortization of fully amortized intangible assets which were no longer being used
In fiscal year 2023 we acquired two businesses for a total purchase price of 51 million As a result we recorded additions of 15 million to goodwill and 50 million to other intangible assets in our diagnostics and genomics and life sciences and applied markets segments primarily related to these two acquisitions During fiscal year 2023 other intangible assets in total increased 2 million due to the impact of foreign currency translation During 2023 we also wrote off the gross carrying amounts of 7 million and the related accumulated amortization of fully amortized intangible assets which were no longer being used
During fiscal year 2024 we recorded an impairment of in process research and development of 6 million in research and development in the consolidated statement of operations related to a project in our life sciences and applied markets segment There were no impairments of indefinite lived intangible assets during fiscal years 2023 and 2022
During fiscal years 2024 and 2022 there were no impairments of finite lived intangible assets recorded During the third quarter of fiscal year 2023 we recorded an impairment of finite lived intangible assets of 258 million related to the exit of our Resolution Bioscience business in our diagnostics and genomics segment Of the 258 million 249 million was recorded in cost of sales and 9 million was recorded in selling general and administrative expenses on our consolidated statement of operations
Equity investments without readily determinable fair value RDFV consist of non marketable equity securities issued by private companies and include VIEs These investments are accounted for using the measurement alternative at cost adjusting for impairments 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 Other investments with RDFV 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
Trading securities which are comprised of mutual funds bonds and other similar instruments other investments and deferred compensation liability are reported at fair value with gains or losses resulting from changes in fair value recognized currently in net income
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
In 2024 unrealized gains on our equity securities without RDFV were 1 million In 2023 unrealized losses on our equity securities without RDFV were 26 million In 2022 unrealized gains on our equity securities without RDFV were 6 million
In 2024 net unrealized gains on our trading securities were 10 million In 2023 net unrealized gains were 2 million on our trading securities In 2022 net unrealized losses were 7 million on our trading securities
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 for assets and liabilities required or permitted to be recorded at fair value we consider the principal or most advantageous market and assumptions that market participants would use when pricing the asset or liability
The guidance establishes a fair value hierarchy that prioritizes the use of inputs used in valuation techniques into three levels A financial instrument s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement There are three levels of inputs that may be used to measure fair value
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
Our money market funds and trading securities are generally valued using quoted market prices and therefore are classified within level 1 of the fair value hierarchy Our derivative financial instruments are classified within level 2 as there is not an active market for each hedge contract but the inputs used to calculate the value of the instruments are tied to active markets Our deferred compensation liability is classified as level 2 because although the values are not directly based on quoted market prices the inputs used in the calculations are observable
Trading securities which are comprised of mutual funds bonds and other similar instruments other investments and deferred compensation liability are reported at fair value with gains or losses resulting from changes in fair value recognized currently in net income Certain derivative instruments are reported at fair value with unrealized gains and losses net of tax included in accumulated other comprehensive income loss within stockholders equity Realized gains and losses from the sale of these instruments are recorded in net income
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 These shares have 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
During fiscal year 2023 we made contingent consideration payments totaling 72 million related to the achievement of certain technical milestones associated with our acquisition of Resolution Bioscience and another acquisition
In the third quarter of fiscal year 2023 we decided to exit the Resolution Bioscience business and subsequently divested our interest in the business in the fourth quarter of fiscal year 2023 We project that there are no potential future milestone payments related to the Resolution Bioscience business
For the year ended October 31 2024 long lived assets held and used with a carrying amount of 19 million were written down to fair value of zero resulting in an impairment charge of 19 million For the year ended October 31 2023 long lived assets held and used with a carrying amount of 277 million were written down to fair value of zero resulting in an impairment charge of 277 million primarily related to the exit of our Resolution Bioscience business in our diagnostics and genomics segment For the year ended October 31 2022 there were no impairments of long lived assets held and used
Fair values for the impaired long lived assets during 2023 were measured using level 3 inputs To determine the fair value of long lived assets in 2023 we primarily used an estimate of undiscounted future cash flows expected over the life of the primary asset Since the carrying value was greater than the undiscounted cash flow the loss was measured by the excess of the carrying amount of the asset over its fair value of zero
For the year ended October 31 2024 the unrealized gain loss on our non marketable equity securities without readily determinable fair values was comprised of 2 million of upward adjustments 1 million of downward adjustments and an impairment of 11 million which were included in net income as adjustments to the carrying value
For the year ended October 31 2023 the unrealized gain loss on our non marketable equity securities without readily determinable fair values was comprised of only downward adjustments of 26 million which were included in net income as adjustments to the carrying value
For the year ended October 31 2022 the unrealized gain loss on our non marketable equity securities without readily determinable fair values was comprised of only upward adjustments of 6 million which were included in net income as adjustments to the carrying value
As of October 31 2024 the cumulative net gain loss on our non marketable equity securities without readily determinable fair values was comprised of 40 million upward adjustments 11 million impairment loss and 30 million downward adjustments and the carrying amount was 101 million
As of October 31 2023 the cumulative net gain loss on our non marketable equity securities without readily determinable fair values was comprised of a 38 million upward adjustments and 29 million downward adjustments and the carrying amount was 102 million
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
We are exposed to foreign currency exchange rate fluctuations and interest rate changes in the normal course of our business As part of our risk management strategy we use derivative instruments primarily forward contracts and purchased options to hedge economic and or accounting exposures resulting from changes in foreign currency exchange rates
We enter into foreign exchange contracts to hedge our forecasted operational cash flow exposures resulting from changes in foreign currency exchange rates These foreign exchange contracts carried at fair value have maturities between one and twelve months These derivative instruments are designated and qualify as cash flow hedges under the criteria prescribed in the authoritative guidance and are assessed for effectiveness against the underlying exposure every reporting period For open contracts as of October 31 2024 changes in the time value of the foreign exchange contract are excluded from the assessment of hedge effectiveness and are recognized in cost of sales over the life of the foreign exchange contract The changes in fair value of the effective portion of the derivative instrument are recognized in accumulated other comprehensive income loss Amounts associated with cash flow hedges are reclassified to cost of sales in the consolidated statement of operations when the forecasted transaction occurs If it becomes probable that the forecasted transaction will not occur the hedge relationship will be de designated and amounts accumulated in other comprehensive income 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 2024 2023 and 2022 ineffectiveness and gains and losses recognized in other income expense net due to de designation of cash flow hedge contracts were not significant
In February 2016 we executed three forward starting pay fixed receive variable interest rate swaps for the notional amount of 300 million in connection with future interest payments to be made on our 2026 senior notes issued on September 15 2016 These derivative instruments were designated and qualified as cash flow hedges under the criteria prescribed in the 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
In August 2019 we executed treasury lock agreements for 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 2024 was 3 million
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 investment hedges under the criteria prescribed in the authoritative guidance Changes in fair value of the effective portion of the derivative instrument are recognized in accumulated other comprehensive income loss translation adjustment and are assessed for effectiveness 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 reclassified from other comprehensive income loss to other income expense in the current period For the years ended October 31 2024 2023 and 2022 ineffectiveness and the resultant effect of any gains or losses recognized in other income expense due to de designation of the hedge contracts were not significant
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
Our use of derivative instruments exposes us to credit risk to the extent that the counterparties may be unable to meet the terms of the agreement We do however seek to mitigate such risks by limiting our counterparties to major financial institutions which are selected based on their credit ratings and other factors We have established policies and procedures for mitigating credit risk that include establishing counterparty credit limits monitoring credit exposures and continually assessing the creditworthiness of counterparties
A number of our derivative agreements contain threshold limits to the net liability position with counterparties and are dependent on our corporate credit rating determined by the major credit rating agencies The counterparties to the derivative instruments may request collateralization in accordance with derivative agreements on derivative instruments in net liability positions
The aggregate fair value of all derivative instruments with credit risk related contingent features that were in a net liability position as of October 31 2024 was 7 million The credit risk related contingent features underlying these agreements had not been triggered as of October 31 2024
The effects of derivative instruments for foreign exchange contracts designated as hedging instruments and not designated as hedging instruments in our consolidated statement of operations were as follows
At October 31 2024 the total amount of existing net gain that is expected to be reclassified from accumulated other comprehensive income loss is 9 million Within the next twelve months it is estimated that 1 million of loss included within the net amount of accumulated other comprehensive income loss will be reclassified to cost of sales in respect of cash flow hedges
Effective November 1 2014 Agilent s U S RP 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 is payable on termination retirement death or permanent disability based on an eligible participant s years of credited service age and other criteria There are no additional benefit accruals after April 30 2016
For eligible service through October 31 1993 the benefit payable under the Agilent RP is reduced by any amounts due to the eligible employee under the Agilent Technologies Inc Deferred Profit Sharing Plan the DPSP which is a defined contribution plan that was frozen and closed to new participants as of November 1993
As of October 31 2024 and 2023 the fair value of plan assets of the DPSP was 74 million and 81 million respectively Note that the projected benefit obligation for the DPSP equals the fair value of plan assets
Agilent also maintains a Supplemental Benefit Retirement Plan SBRP in the U S which is an unfunded non qualified defined benefit plan to provide supplemental retirement benefits to certain employees 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 defined benefit plans in the tables below
Eligible employees outside the U S generally receive retirement benefits under various retirement plans based upon factors such as years of service and or employee compensation levels Eligibility is generally determined in accordance with local statutory requirements
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 fixed amount different fixed amounts for different groups under the Agilent Technologies Inc Retiree Medical Account Plan RMA or a fixed monthly amount under the Agilent Technologies Inc Reimbursement Arrangement Plan ARA
Eligible Agilent U S employees may participate in the Agilent Technologies Inc 401 k Plan We match an employee s contributions both pre tax and Roth up to a maximum of 6 percent of an employee s annual eligible compensation subject to the annual regulatory limit All matching contributions vest immediately Effective May 1 2016 until April 30 2022 we provided 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 employee contribution to the 401 k Plan is 50 percent of an employee s annual eligible compensation subject to regulatory limitations We also sponsor and make contributions to various other defined contribution plans that cover employees outside of the U S
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 defined benefit plans gains and losses are amortized over the average future lifetime of participants using the corridor method For most Non U S defined benefit plans and U S Post Retirement Benefit Plans gains and losses are amortized over the average remaining future service period or remaining lifetime of participants depending upon the plan using a separate layer for each year s gains and losses
The actuarial gains and losses related to the change in plan obligations were a total of 97 million net loss for 2024 and 35 million net gain for 2023 The actuarial net loss that arose in 2024 was primarily due to decreases in discount rates and changes in other financial and demographic assumptions partially offset by gains due to plan experience The actuarial net gain that arose in 2023 was primarily due to increases in discount rates and changes in other financial and demographic assumptions partially offset by losses due to plan experience In November 2024 we entered into a buy out contract in the amount of approximately 54 million with an unaffiliated insurance company effective January 1 2025 to transfer the assets and obligations of our Netherlands defined benefit pension plan The final settlement is anticipated by the end of the first quarter of 2025 when we will be recognizing the financial impact
In the U S target asset allocations for our retirement and post retirement benefit plans were approximately 50 percent to equities and approximately 50 percent to fixed income investments Our DPSP target asset allocation is approximately 60 percent to equities and approximately 40 percent to fixed income investments Approximately 1 percent of the retirement and post retirement plans consists of limited partnerships The general investment objective for all our plan assets is to obtain the optimum rate of investment return on the total investment portfolio consistent with the assumption of a reasonable level of risk Specific investment objectives for the plans portfolios are to maintain and enhance the purchasing power of the plans assets achieve investment returns consistent with the level of risk being taken and earn performance rates of return in accordance with the benchmarks adopted for each asset class Outside the U S our target asset allocation excluding annuity contracts in the U K ranges from zero to 60 percent to equities from 38 percent to 100 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 and bond markets our actual allocations of plan assets at October 31 2024 may differ from the target allocation Our policy is to bring the actual allocation in line with the target allocation
Equity securities include exchange traded common stock and preferred stock of companies from broadly diversified industries Fixed income securities include a global portfolio of corporate bonds of companies from diversified industries government securities mortgage backed securities asset backed securities derivative instruments and other Real estate securities include holdings of managed investment funds which invest primarily in the equity instruments of real estate investment trusts and other similar real estate investments 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 In December 2021 we entered into an insurance buy in contract for a portion of the benefit obligations under the U K defined benefit plan which was funded from existing pension plan assets without any adjustment to the benefit obligations In December 2023 we entered into another insurance buy in contract for the remaining portion of benefit obligations under the same plan which was also funded from existing pension plan assets with no adjustment made to the benefit obligations These have been classified as Annuity Contracts since the insurance buy in contract is similar to an annuity contract They match cash flows with future benefit payments for participants as of the contract date with the obligation remaining with the plan Both contracts are issued by the same third party insurance company with no affiliation to us
Cash and Cash Equivalents Cash and cash equivalents consist of short term investment funds The funds also invest in short term domestic fixed income securities and other securities with debt like characteristics emphasizing short term maturities and quality Some of our cash and cash equivalents are held in commingled funds Other cash and cash equivalents are generally classified as Level 2 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
Real Estate Real estate securities include holdings of managed investment funds which invest primarily in the equity instruments of real estate investment trust and other similar real estate investments Since the existing securities have quoted prices in active markets it has been classified as level 1 and grouped with equity
Annuity Contract This consists of the U K insurance buy in contracts Since they are valued on an insurer pricing basis which reflects the purchase price adjusted for changes in discount rates and other actuarial assumptions which approximates fair value they have been classified as level 3
Other Investments Other investments also include partnership investments where due to their private nature pricing inputs are not readily observable Asset valuations are developed by the general partners that manage the partnerships These valuations are based on proprietary appraisals application of public market multiples to private company cash flows utilization
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
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 2024 or 2023
During fiscal year 2025 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 table presents expected future benefit payments for the next 10 years
The assumptions used to determine the benefit obligations and net periodic cost benefit for our defined benefit and post retirement benefit plans are presented in the tables below The expected long term return on assets below represents an estimate of long term returns on investment portfolios consisting of a mixture of equities fixed income and alternative investments in proportion to the asset allocations of each of our plans We consider long term rates of return which are weighted based on the asset classes both historical and forecasted in which we expect our pension and post retirement funds to be invested Discount rates reflect the current rate at which pension and post retirement obligations could be settled based on the measurement dates of the plans October 31 The U S discount rates at October 31 2024 and 2023 were
determined based on the results of matching expected plan benefit payments with cash flows from a hypothetically constructed bond portfolio The non U S rates were generally based on published rates for high quality corporate bonds The range of assumptions that were used for the non U S defined benefit plans reflects the different economic environments within various countries
In fiscal years 2024 and 2023 we announced restructuring plans that were both designed to reduce costs and expenses in response to macroeconomic conditions These actions impact all three of our business segments The costs associated with these restructuring plans were not allocated to our business segments results however each business segment will benefit from the future cost savings from these actions When completed the restructuring programs are expected to result in the reduction in annual cost of sales and operating expenses over the three business segments
Non cash settlements include accelerated share based compensation expense related to workforce reductions and accelerated depreciation expense of right of use and machinery and equipment assets related to the consolidation of excess facilities The aggregate restructuring liability of 13 million at October 31 2024 was recorded in other accrued liabilities on the consolidated balance sheet and reflects estimated future cash outlays
In the third quarter of fiscal year 2024 we initiated a new restructuring plan designed to further reduce costs and expenses in response to current macroeconomic conditions The plan includes a reduction of our total headcount by approximately 500 regular employees representing approximately 3 percent of our global workforce
In connection with the FY24 Plan we have recorded restructuring expenses of 72 million in fiscal year 2024 The costs associated with this workforce reduction include severance accelerated share based compensation expense and other personnel related costs The timing and scope of the workforce reductions will vary based on local legal requirements While the majority of the workforce reduction was completed in fiscal year 2024 we expect to substantially complete the remaining restructuring activities by the end of the second quarter of fiscal year 2025
In the fourth quarter of fiscal year 2023 we initiated the restructuring plan designed to reduce costs and expenses in response to the macroeconomic conditions The plan included a reduction of our total headcount by approximately 400 regular employees representing approximately 2 percent of our global workforce and the consolidation of our excess facilities including some site closures
In connection with the FY23 Plan we recorded restructuring expenses of 4 million in 2024 and 46 million in 2023 The restructuring plan expenses include severance accelerated share based compensation expense and other personnel costs associated with the workforce reduction The consolidation of excess facilities includes accelerated depreciation expenses of right of use and machinery and equipment assets and other facilities related costs The timing and scope of the workforce reductions will vary based on local legal requirements While the majority of the workforce reduction was completed in 2024 we expect to substantially complete the remaining restructuring activities by the end of the first quarter of fiscal year 2025
Non cash settlements include accelerated share based compensation expense related to workforce reductions and accelerated depreciation expense of right of use and machinery and equipment assets related to the consolidation of excess facilities
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 warranty 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
Guarantees consist primarily of outstanding standby letters of credit and bank guarantees and were approximately 37 million and 39 million as of October 31 2024 and 2023 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 fulfill a contractual commitment with a third party A bank guarantee is a promise from a bank or other lending institution that if we default on a loan the bank will cover the loss
In connection with various divestitures acquisitions spin offs and other transactions we have agreed to indemnify certain parties their affiliates and or other related parties against certain damages and expenses that might occur in the future These indemnifications may cover a variety of liabilities including but not limited to employee tax environmental intellectual property litigation and other liabilities related to the business conducted prior to the date of the transaction In our opinion the fair value of these indemnification obligations was not material as of October 31 2024
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 director and each board appointed officer of Agilent which provide for indemnification of these directors and officers under similar circumstances and under additional circumstances The indemnification obligations are more fully described in the 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 2024
As is customary in our industry and as provided for in local law in the U S and other jurisdictions many of our standard contracts provide remedies to our customers and others with whom we enter into contracts such as defense settlement or payment of judgment for intellectual property claims related to the use of our products From time to time we indemnify customers as well as our suppliers contractors lessors lessees companies that purchase our businesses or assets and others with whom we enter into contracts against combinations of loss expense or liability arising from various triggering events related to the sale and the use of our products and services the use of their goods and services the use of facilities and state of our owned facilities the state of the assets and businesses that we sell and other matters covered by such contracts usually up to a specified maximum amount In addition from time to time we also provide protection to these parties against claims related to undiscovered liabilities additional product liability or environmental obligations In our experience claims made under such indemnifications are rare and the associated estimated fair value of the liability was not material as of October 31 2024
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 2024
Typically we can cancel contracts with professional services suppliers without penalties For those contracts that are not cancelable without penalties there are termination fees and costs or commitments for continued spending that we are obligated to pay to a supplier under each contract s termination period before such contract can be cancelled Our contractual obligations with these suppliers under other purchase commitments were approximately 136 million
We are involved in lawsuits claims investigations and proceedings including but not limited to intellectual property commercial real estate environmental and employment matters which arise in the ordinary course of business There are no matters pending that we currently believe are reasonably possible of having a material impact to our business consolidated financial condition results of operations or cash flows
On June 7 2023 we entered into a new credit agreement with a group of financial institutions which provides for a 1 5 billion five year unsecured credit facility that will expire on June 7 2028 and an incremental revolving credit facility in an aggregate amount of up to 750 million The credit facility replaced the existing credit facility which was terminated on the closing date of the new facility During the year ended October 31 2024 we made no borrowings or repayments under these credit facilities During the year ended October 31 2023 we borrowed and repaid 360 million under the credit facility As of both October 31 2024 and 2023 we had no borrowings outstanding under either the credit facility or the incremental revolving credit facility
On June 2 2023 we entered into an Uncommitted Money Market Line Credit agreement with Societe Generale which provides for an aggregate borrowing capacity of 300 million The credit facility is an uncommitted short term cash advance facility where each request must be at least 1 million The interest rate is set by the lender at the time of the borrowing and is fixed for the duration of the advance During the year ended October 31 2024 we borrowed and repaid 215 million under this credit facility During the year ended October 31 2023 we borrowed and repaid 61 million under this credit facility As of October 31 2024 and 2023 we had no borrowings outstanding under the credit facility
Under our U S commercial paper program we may issue and sell unsecured short term promissory notes in the aggregate principal amount not to exceed 1 5 billion with up to 397 day maturities 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 available 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 During the year ended October 31 2024 we borrowed 1 19 billion and repaid 1 15 billion under our U S commercial paper program During the year ended October 31 2023 we borrowed 1 67 billion and repaid 1 70 billion under our U S commercial paper program
In September 2024 we completed the BIOVECTRA acquisition and assumed two interest free loans from the Strategic Innovation Fund SIF in the amount of 20 million with 2 million recorded at fair value in short term debt The loans are repayable in quarterly and yearly installments at a weighted average imputed interest rate of 4 7 percent In addition we assumed two interest free loans with the Atlantic Canada Opportunities Agency ACOA in the amount of 4 million with 3 million recorded at fair value in short term debt The loans are repayable in monthly installments at a weighted average imputed interest rate of 4 5 percent
On April 15 2022 we entered into a term loan agreement with a group of financial institutions which provided for a 600 million delayed draw term loan that will mature on April 15 2025 Loans under the term loan agreement bear interest at our option either at i the alternate base rate as defined in the term loan agreement plus the applicable margin for such loans or ii adjusted term SOFR as defined in the term loan agreement plus the applicable margin for such loans The term loan agreement contains customary representations and warranties as well as customary affirmative and negative covenants We were in compliance with the covenants for the term loan during the year ended October 31 2024
On May 4 2022 we used the proceeds from the term loan facility and repaid the 600 million outstanding aggregate principal amount of our 3 875 2023 senior notes The total redemption price of approximately 609 million was computed in accordance with the terms of the 2023 senior notes as the present value of the remaining scheduled payments of principal and unpaid interest on the notes being redeemed In May 2022 we recorded a loss on extinguishment of debt of 9 million in other income expense net in the consolidated statement of operations In addition 7 million of accrued interest up to but not including the applicable redemption date was paid
In September 2024 we completed the BIOVECTRA acquisition and assumed two interest free loans from the Strategic Innovation Fund SIF in the amount of 20 million with 18 million recorded at fair value in long term debt The loans are repayable in quarterly and yearly installments through 2040 at a weighted average imputed interest rate of 4 7 percent In addition we assumed two interest free loans with the Atlantic Canada Opportunities Agency ACOA in the amount of 4 million with 1 million recorded at fair value in long term debt The loans are repayable in monthly installments through 2029 at a weighted average imputed interest rate of 4 5 percent
On September 22 2016 we issued aggregate principal amount of 300 million in senior notes 2026 senior notes The 2026 senior notes were issued at 99 624 of their principal amount The notes will mature on September 22 2026 and bear interest at a fixed rate of 3 05 per annum The interest is payable semi annually on March 22nd and September 22nd of each year and payments commenced March 22 2017
In February 2016 we executed three forward starting pay fixed receive variable interest rate swaps for the notional amount of 300 million in connection with future interest payments to be made on our 2026 senior notes issued on September 15 2016 The swap arrangements were terminated on September 15 2016 with a payment of 10 million and we recognized this as a deferred loss in accumulated other comprehensive income 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 agreements at October 31 2024 was 2 million
On September 9 2024 we issued an aggregate principal amount of 600 million in senior notes 2027 senior notes The 2027 senior notes were issued at 99 866 of their principal amount The notes will mature on September 9 2027 and bear interest at a fixed rate of 4 20 per annum The interest is payable semi annually on March 9th and September 9th of each year and payments will commence on March 9 2025
On September 16 2019 we 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 fixed rate of 2 75 per annum The interest is payable semi annually on March 15th and September 15th of each year and payments commenced on March 15 2020
In August 2019 we executed treasury lock agreements for 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 2024 was 3 million
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 fixed rate of 2 10 per annum The interest is payable semi annually on June 4th and December 4th of each year and payments commenced on December 4 2020
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 fixed rate of 2 30 per annum The interest is payable semi annually on March 12th and September 12th of each year and payments commenced on September 12 2021
On September 9 2024 we issued an aggregate principal amount of 600 million in senior notes 2034 senior notes The 2034 senior notes were issued at 99 638 of their principal amount The 2034 senior notes will mature on September 9 2034 and bear interest at a fixed rate of 4 75 per annum The interest is payable semi annually on March 9th and September 9th of each year and payments will commence on March 9 2025
On February 16 2021 we announced that our board of directors had approved a 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 which commenced on February 18 2021 authorized the purchase of up to 2 0 billion excluding excise taxes of our common stock at the company s discretion and had no fixed termination date The 2021 repurchase program did not require the company to acquire a specific number of shares and could be suspended amended or discontinued at any time During the year ended October 31 2022 we repurchased and retired 8 4 million shares for 1 139 million under this authorization During the year ended October 31 2023 we repurchased and retired 661 739 shares for 99 million excluding excise taxes under this authorization On March 1 2023 the 2021 repurchase program was terminated and the remaining authorization of 339 million expired
On January 9 2023 we announced that our board of directors had approved a share repurchase program the 2023 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 2023 repurchase program authorizes the purchase of up to 2 0 billion excluding excise taxes of our common stock at the company s discretion and has no fixed termination date The 2023 repurchase program does not require the company to acquire a specific number of shares and may be suspended amended or discontinued at any time The 2023 repurchase program commenced on March 1 2023 and also terminated and replaced the 2021 repurchase program During the year ended October 31 2023 we repurchased and retired 3 9 million shares for 476 million excluding excise taxes under this authorization During the year ended October 31 2024 we repurchased and retired 8 4 million shares for 1 150 million excluding excise taxes under this authorization As of October 31 2024 we had remaining authorization to repurchase up to approximately 374 million of our common stock under the 2023 repurchase program
On May 29 2024 we announced that our board of directors had approved a new share repurchase program the 2024 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 2024 repurchase program authorizes the purchase of up to 2 0 billion excluding excise taxes of our common stock at the company s discretion and has no fixed termination date The 2024 repurchase program does not require the company to acquire a specific number of shares and may be suspended amended or discontinued at any time The 2024 repurchase program became effective on August 1 2024 and will commence upon the termination of our 2023 repurchase program
The Inflation Reduction Act of 2022 which was enacted into law on August 16 2022 imposed a nondeductible 1 excise tax on the net value of certain stock repurchases made after December 31 2022 During the year ended October 31 2024 we recorded the applicable excise taxes payable of approximately 10 million as an incremental cost of the shares repurchased and a corresponding liability for the excise tax payable in other accrued liabilities on our consolidated balance sheet In fiscal year 2023 we recorded excise taxes payable of approximately 3 million related to shares repurchased in 2023 and paid the tax in 2024
During the year ended October 31 2024 cash dividends of 0 944 per share or 274 million were declared and paid on the company s outstanding common stock During the year ended October 31 2023 cash dividends of 0 900 per share or 265 million were declared and paid on the company s outstanding common stock During the year ended October 31 2022 cash dividends of 0 840 per share or 250 million were declared and paid on the company s outstanding common stock
On November 20 2024 we declared a quarterly dividend of 0 248 per share of common stock or approximately 71 million which will be paid on January 22 2025 to shareholders of record as of the close of business on December 31 2024 The timing and amounts of any future dividends are subject to determination and approval by our board of directors
Reclassifications out of accumulated other comprehensive income loss of actuarial net gain loss and prior service benefit in respect of retirement plans and post retirement pension plans are included in the computation of net periodic benefit cost income see Note 15 Retirement Plans and Post Retirement Pension Plans
We are a global leader in life sciences diagnostics and applied chemical markets providing application focused solutions that include instruments software services and consumables for the entire laboratory workflow
In the first quarter of fiscal year 2024 we announced a change in our operating segments to move our cell analysis business from our life sciences and applied markets segment to our diagnostics and genomics operating segment in order to further strengthen growth opportunities for both organizations All historical financial segment information has been recast to conform to this new presentation There was no change to our Agilent CrossLab business segment
Following this reorganization we continue to have three business segments comprised of life sciences and applied markets diagnostics and genomics and Agilent CrossLab each of which comprises a reportable segment The three operating segments were determined based primarily on how the chief operating decision maker views and evaluates our operations Operating results are regularly reviewed by the chief operating decision maker to make decisions about resources to be allocated to the segment and to assess its performance Other factors including market separation and customer specific applications go to market channels products and services and manufacturing are considered in determining the formation of these operating segments
Our life sciences and applied markets business provides application focused solutions that include instruments consumables and software that enable customers to identify quantify and analyze the physical and biological properties of substances and products as well as enable customers in the clinical and life sciences research areas to interrogate samples at the molecular and cellular level Key product categories include liquid chromatography LC systems and components liquid chromatography mass spectrometry LCMS systems gas chromatography GC systems and components gas chromatography mass spectrometry GCMS systems inductively coupled plasma mass spectrometry ICP MS instruments atomic absorption AA instruments microwave plasma atomic emission spectrometry MP AES instruments inductively coupled plasma optical emission spectrometry ICP OES instruments raman spectroscopy laboratory software for sample tracking information management and analytics laboratory automation and robotic systems dissolution testing vacuum pumps and measurement technologies Our consumables portfolio 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 to supplies Key product categories in consumables include GC and LC columns sample preparation products custom chemistries and a large selection of laboratory instrument supplies
Our diagnostics and genomics business is comprised of seven areas of activity providing active pharmaceutical ingredients APIs for oligo based therapeutics as well as solutions that include reagents instruments software and consumables which enable customers in the clinical and life sciences research areas to interrogate samples at the cellular and molecular level First our cell analysis business includes instruments reagents software and labware associated with unique live cell analysis platforms in addition to mainstream flow cytometers plate readers and plate washers dispensers which are used across a broad range of applications Second our advanced manufacturing partnerships business is a contract and development manufacturing organization that provides services related to and the production of synthesized oligonucleotides under pharmaceutical good manufacturing practices GMP conditions for use as API in a class of drugs that utilize nucleic acid molecules for disease therapy Together our BIOVECTRA and nucleic acid solutions businesses offer a broad range of contract and development manufacturing services to our customers They also provide clinical to commercial scale production capabilities focused mainly on mRNA manufacturing Third our pathology solutions business is focused on product offerings for cancer diagnostics and anatomic pathology workflows The broad portfolio of offerings includes immunohistochemistry IHC in situ hybridization ISH hematoxylin and eosin H E staining and special staining Fourth we also collaborate with a number of major pharmaceutical companies to develop new potential tissue 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 provides clinical flow cytometry reagents for routine cancer diagnostics This business also provides bulk antibodies as raw materials and associated assay development services to in vitro diagnostics IVD manufacturers biotechnology and pharmaceutical companies Sixth our genomics business includes arrays and next generation sequencing NGS This business also includes solutions that enable clinical labs to identify DNA variants associated with genetic disease and help direct cancer therapy Finally our biomolecular analysis business provides complete workflow solutions including instruments consumables and software for quality control analysis of nucleic acid samples Samples are analyzed using quantitative and qualitative techniques to ensure accuracy in further genomics analysis techniques including NGS utilized in clinical and life science research applications
The Agilent CrossLab business spans the entire lab with its extensive services portfolio which is designed to improve customer outcomes The majority of the portfolio is vendor neutral meaning we can serve and supply customers regardless of their instrument purchase choices
The services portfolio includes repairs parts maintenance installations training compliance support software as a service asset management consulting and various other custom services to support the customers laboratory operations
A significant portion of the segments expenses arises 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 finance tax treasury legal real estate insurance services workplace services human resources information technology services corporate development and other corporate infrastructure expenses costs of centralized research and development and joint sales and marketing costs 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 certain costs to the operating margin for each segment because management does not include this information in its measurement of the performance of the operating segments Unallocated costs consist of asset impairments amortization of acquisition related intangible assets acquisition and integration costs changes in the fair value of acquisition related contingent consideration transformational initiatives expenses
restructuring and other related costs business exit and divestiture costs and certain other charges Transformational initiatives include expenses associated with targeted cost reduction activities such as manufacturing transfers site consolidations legal entity and other business reorganizations in sourcing or outsourcing of activities
The 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
Segment assets include allocations of corporate assets goodwill net other intangibles and other assets Unallocated assets primarily consist of cash cash equivalents prepaid expenses long term investments deferred tax assets right of use assets and other assets
The following table presents summarized information for long lived assets by geographic region Long lived assets consist of property plant and equipment right of use assets long term receivables and other long term assets excluding intangible assets The rest of the world primarily consists of Asia and the rest of Europe
In November 2024 we announced a change in our organizational structure to support our market focused customer centric strategy Our diagnostics and genomics segment combined with our liquid chromatography and mass spectrometry instrument platforms will form our new life sciences and diagnostics markets segment Our chemistries and supplies laboratory automation and robotics and software and informatics divisions moved from our life sciences and applied markets segment to our Agilent CrossLab segment The remaining divisions in our life sciences and applied markets segment which includes our gas chromatography gas chromatography mass spectrometry remarketed instruments spectroscopy and vacuum divisions will form our new applied markets segment
Following this re organization we will have three businesses life sciences and diagnostics markets applied markets and Agilent CrossLab each of which will comprise a reportable segment All historical segment financial information will be recast to conform to this new reporting structure in our financial statements and accompanying notes beginning with our Form 10 Q filing for the first quarter of fiscal year 2025
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 2024 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 2024 the company s disclosure controls and procedures as defined by Rule 13a 15 e under the Exchange Act were effective and designed to ensure that i information required to be disclosed in the company s reports filed under the Exchange Act is recorded processed summarized and reported within the time periods specified in the SEC s rules and forms and ii information is accumulated and communicated to management including the Chief Executive Officer and Chief Financial Officer as appropriate to allow timely decisions regarding required disclosures
Our management is responsible for establishing and maintaining adequate internal control over financial reporting as such term is defined in Exchange Act Rule 13a 15 f Under the supervision and with the participation of our management including our Chief Executive Officer and Chief Financial Officer we assessed the effectiveness of our internal control over financial reporting based on the framework in
2013 issued by the Committee of Sponsoring Organizations of the Treadway Commission COSO As a result of that assessment management concluded that our internal control over financial reporting was effective as of October 31 2024 based on criteria in
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 for the acquired business in the period between the acquisition date and the date of management s assessment The company completed the acquisition of BIOVECTRA on September 20 2024 Management excluded BIOVECTRA from its assessment of the effectiveness of the company s internal control over financial reporting as of October 31 2024 BIOVECTRA constituted less than 1 percent of total revenue for the period ending October 31 2024 and 3 percent of total assets excluding acquired goodwill and other intangible assets as of October 31 2024
The effectiveness of our internal control over financial reporting as of October 31 2024 has been audited by PricewaterhouseCoopers LLP an independent registered public accounting firm as stated in their report which appears in Item 8 of this Annual Report on Form 10 K
There were no changes in our internal control over financial reporting that occurred during Agilent s last fiscal quarter that have materially affected or are reasonably likely to materially affect our internal control over financial reporting
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 13 2025 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 Information about our Executive Officers Information regarding our Audit and Finance Committee and our Audit and Finance Committee s financial expert appears under Audit and Finance Committee Report and Corporate Governance in our Proxy Statement That portion of the Proxy Statement is incorporated by reference into this report
There were no material changes to the procedures by which security holders may recommend nominees to our Board of Directors in fiscal year 2024 Information regarding our code of ethics the company s Standards of Business Conduct applicable to our principal executive officer our principal financial officer our controller and other senior financial officers appears in Item 1 of this report under Investor Information We will post amendments to or waivers from a provision of the Standards of Business Conduct with respect to those persons on our website at www investor agilent com
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
We have adopted an Insider Trading policy and procedures governing the purchase sale and or other disposition of our securities by directors officers and employees or Agilent itself that we believe are reasonably designed to promote compliance with insider trading laws rules and regulations and applicable NYSE listing standards A copy of our Insider Trading policy is filed with this Annual Report on Form 10 K as Exhibit 19 1
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
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
The number of securities remaining available for future issuance in column c includes 23 775 073 shares of common stock authorized and available for issuance under our current Employee Stock Purchase Plan ESPP The number of shares authorized for 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
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 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 awards of stock based incentive compensation to our employees including officers and directors The 2018 Plan provides for the grant of awards in the form of stock options stock appreciation rights restricted stock restricted stock units performance shares and performance units with performance based conditions on vesting or exercisability and cash awards The 2018 Plan has a term of ten years
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
Information about certain relationships and related transactions appears under Related Person Transactions Policy and Procedures in the Proxy Statement Information about director independence appears under the heading Corporate Governance Director Independence in the Proxy Statement Each of those portions of the Proxy Statement is incorporated by reference into this report
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
The following additional financial statement schedule should be considered in conjunction with our consolidated financial statements All other schedules have been omitted because the required information is either not applicable or not sufficiently material to require submission of the schedule
Additions include current year additions charged to expenses and current year build due to increases in net deferred tax assets return to provision true ups other adjustments and 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 return to provision true ups other adjustments and other comprehensive income impact to deferred taxes
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
Pursuant to the requirements of Section 13 or 15 d of the Securities Exchange Act of 1934 the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized
KNOW ALL PERSONS BY THESE PRESENTS that each person whose signature appears below constitutes and appoints Bret DiMarco and P Diana Chiu or either of them his or her attorneys in fact for such person in any and all capacities to sign any amendments to this report and to file the same with exhibits thereto and other documents in connection therewith with the Securities and Exchange Commission hereby ratifying and confirming all that any of said attorneys in fact or substitute or substitutes may do or cause to be done by virtue hereof Pursuant to the requirements of the Securities Exchange Act of 1934 this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated

Company Name	AGILENT TECHNOLOGIES, INC. Vist SEC web-site
Category	LABORATORY ANALYTICAL INSTRUMENTS
Trading Symbol	A