What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2021-12-17 compared with 2020-12-18 · 373 added, 329 removed, 1765 unchanged (28% of the section changed)

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Notes to Consolidated Financial Statements

Quarterly Summary (unaudited)

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

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We have audited the accompanying consolidated balance sheets of Agilent Technologies, Inc.

and its subsidiaries (the “Company”) as of October 31, 2020 and 2019, and the related consolidated statements of operations, comprehensive income, equity and cash flows for each of the three years in the period ended October 31, 2020, including the related notes and schedule of valuation and qualifying accounts for each of the three years in the period ended October 31, 2020 appearing under Item 15(a)(2) (collectively referred to as the “consolidated financial statements”).

and its subsidiaries (the “Company”) as of October 31, 2021 and 2020, and the related consolidated statements of operations, of comprehensive income, of equity and of cash flows for each of the three years in the period ended October 31, 2021, including the related notes and schedule of valuation and qualifying accounts for each of the three years in the period ended October 31, 2021 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, 2021, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

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Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of October 31, 2021, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO.

Change in Accounting Principle

Change in Accounting Principles

As discussed in Note 1 to the consolidated financial statements, the Company changed the manner in which it accounts for leases in 2020 and the manner in which it accounts for revenue from contracts with customers in 2019.

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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 Resolution Bioscience from its assessment of internal control over financial reporting as of October 31, 2021 because it was acquired by the Company in a purchase business combination during 2021.

We have also excluded Resolution Bioscience from our audit of internal control over financial reporting.

Resolution Bioscience is a wholly-owned subsidiary whose total assets and total revenues excluded from management’s assessment and our audit of internal control over financial reporting represent less than 1% of the related consolidated financial statement amounts as of and for the year ended October 31, 2021.

Definition and Limitations of Internal Control over Financial Reporting

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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;

(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.

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The Company has a number of years and matters which remain subject to examination by tax authorities in various jurisdictions that could result in significant changes to unrecognized tax benefits due to either the expiration of a statute of limitation or a tax audit settlement which will be partially offset by an anticipated tax liability related to unremitted foreign earnings, where applicable.

The principal considerations for our determination that performing procedures relating to uncertain tax positions is a critical audit matter are there was significant judgment by management when determining uncertain tax positions, including a high degree of estimation uncertainty relative to the numerous and complex tax laws, tax audits, and potential for significant adjustments as a result of such audits.

The principal considerations for our determination that performing procedures relating to uncertain tax positions is a critical audit matter are the significant judgment by management when determining uncertain tax positions, including a high degree of estimation uncertainty relative to the numerous and complex tax laws, tax audits, and potential for significant adjustments as a result of such audits.

This in turn led to a high degree of auditor judgment, effort, and subjectivity in performing procedures to evaluate the timely identification and accurate measurement of uncertain tax positions.

Also, the evaluation of audit evidence available to support the tax liabilities for uncertain tax positions is complex and required significant auditor judgment as the nature of the evidence is often highly subjective, and 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.

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These procedures also included, among others, testing the completeness, accuracy, and relevance of information used in the calculation of the liability for uncertain tax positions, including intercompany agreements, international, federal, and state filing positions, and the related final tax returns, testing the calculation of the liability for uncertain tax positions by jurisdiction, including management’s assessment of the technical merits of tax positions and estimates of the amount of tax benefit expected to be sustained, testing the completeness of management’s assessment of both the identification of uncertain tax positions and possible outcomes of each uncertain tax position, and evaluating the status and results of income tax audits with the relevant tax authorities.

Professionals with specialized skill and knowledge were used to assist in the evaluation of the Company's uncertain tax positions related to the application of relevant tax laws.

/s/ PricewaterhouseCoopers LLP

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( 1 ) ( 6 ) ( 6 )

Other comprehensive loss ( 8 ) ( 99 ) ( 62 )

Other comprehensive income (loss) 240 ( 8 ) ( 99 )

Total comprehensive income $ 1,450 $ 711 $ 972

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Cash and cash equivalents $ 1,484 $ 1,441

Short-term investments 91 —

Accounts receivable, net 1,172 1,038

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Total liabilities 5,316 4,754

Commitments and contingencies (Note 17)

Commitments and contingencies (Notes 3, 13 and 17)

Total equity:

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Additional paid-in-capital 5,320 5,311

Retained earnings (accumulated deficit) 81 ( 18 )

Retained earnings 348 81

Accumulated other comprehensive loss ( 282 ) ( 522 )

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Excess and obsolete inventory related charges 29 28 19

Gain on step acquisition — — ( 20 )

Asset impairment charges 2 99 —

Unrealized gain on equity securities, net ( 28 ) ( 1 ) —

Change in fair value of contingent consideration ( 21 ) — —

Net gain on equity securities ( 98 ) ( 27 ) ( 4 )

Loss on extinguishment of debt 17 — 9

Other non-cash expense, net 3 8 7

Changes in assets and liabilities:

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Employee compensation and benefits 112 29 23

Changes in assets and liabilities due to Tax Act — — 552

Treasury lock agreement payment — — ( 6 )

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Proceeds from the sale of property, plant and equipment 1 1 —

Payment to acquire fair value investment ( 20 ) ( 23 ) ( 11 )

Proceeds from the sale of equity securities 12 — —

Payment to acquire equity securities ( 22 ) ( 20 ) ( 23 )

Payment in exchange for convertible note ( 5 ) ( 9 ) ( 3 )

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Debt issuance costs ( 7 ) ( 4 ) ( 4 )

Repayment of senior notes ( 417 ) — —

Proceeds from commercial paper 1,647 420 —

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Purchase of non-controlling interest — — ( 4 )

Proceeds from credit facility and short-term loan 798 805 483

Repayment of debt and credit facility ( 1,413 ) ( 702 ) ( 693 )

Proceeds from revolving credit facility and short-term loan — 798 805

Repayment of debt and revolving credit facility — ( 1,413 ) ( 702 )

Net cash used in financing activities ( 696 ) ( 717 ) ( 299 )

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Balance as of October 31, 2018 317,715 $ 3 $ 5,308 $ ( 336 ) $ ( 408 ) $ 4,567 $ 4 $ 4,571

Effects of adoption of new accounting standards — — — 33 ( 7 ) 26 — 26

Components of comprehensive income, net of tax:

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— — — ( 206 ) — ( 206 ) — ( 206 )

Share-based awards issued 2,176 — 25 — — 25 — 25

Purchase of non-controlling interest — — — — — — ( 4 ) ( 4 )

Share-based awards issued, net of tax of $16

1,792 — 40 — — 40 — 40

Repurchase of common stock ( 10,436 ) — ( 143 ) ( 580 ) — ( 723 ) — ( 723 )

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Balance as of October 31, 2019 309,071 $ 3 $ 5,277 $ ( 18 ) $ ( 514 ) $ 4,748 $ — $ 4,748

Effects of adoption of new accounting standards — — — 33 ( 7 ) 26 — 26

Components of comprehensive income, net of tax:

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— — — ( 222 ) — ( 222 ) — ( 222 )

Purchase of non-controlling interest — — — — — — ( 4 ) ( 4 )

Share-based awards issued 1,792 — 40 — — 40 — 40

Share-based awards issued, net of tax of $37

2,354 — 22 — — 22 — 22

Repurchase of common stock ( 5,227 ) — ( 71 ) ( 398 ) — ( 469 ) — ( 469 )

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Net income — — — 1,210 — 1,210 — 1,210

Other comprehensive loss — — — — ( 8 ) ( 8 ) — ( 8 )

Other comprehensive income — — — — 240 240 — 240

Total comprehensive income 1,450 1,450

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— — — ( 236 ) — ( 236 ) — ( 236 )

Share-based awards issued 2,354 — 22 — — 22 — 22

Share-based awards issued, net of tax of $76

2,083 — ( 20 ) — — ( 20 ) — ( 20 )

Repurchase of common stock ( 6,073 ) — ( 81 ) ( 707 ) — ( 788 ) — ( 788 )

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The consolidated financial statements include the accounts of the company and our wholly- and majority-owned subsidiaries.

All significant intercompany accounts and transactions have been eliminated.

All intercompany accounts and transactions have been eliminated.

Use of Estimates.

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and international markets.

In March 2020, the World Health Organization declared COVID-19 a pandemic and recommended containment and mitigation measures worldwide.

As a result, academic and research laboratories had temporarily closed in our second and third quarters and hospitals and testing laboratories had halted or reduced certain elective medical procedures, which had an adverse effect on our customers' business.

The COVID-19 pandemic has caused significant volatility and uncertainty in U.S.

and international markets, which could result in a prolonged economic downturn that could disrupt our business.

The current supply chain disruptions being experienced globally have made it more challenging for companies to manage operations.

We cannot provide any assurances that any prolonged material disruptions in the supply chain will not have a material impact on our consolidated financial statements.

As of October 31, 2021, our consolidated financial statements have not been materially impacted.

Revenue Recognition.

On November 1, 2018, we adopted Accounting Standard Codification Topic 606, Revenue from Contracts with Customers , (“ASC 606’’) using the modified retrospective approach only to contracts not completed as of this date.

Therefore, results for reporting periods beginning in fiscal year 2019 are presented under ASC 606.

We enter into contracts to sell products, services or combinations of products and services.

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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’’).

A performance obligation is a promise in a contract to transfer a distinct product or service to a customer and is the unit of account under ASC 606.

See also Note 4, "Revenue" for additional information on revenue recognition.

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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 for 2020 and ASC 840, Leases for prior periods.

Each of these contracts is evaluated as a lease arrangement, either as an operating lease or a sales-type capital lease using the current lease classification guidance.

Standalone lease arrangements are outside the scope of ASC 606 and are therefore accounted for in accordance with ASC 842, Leases beginning in 2020 and ASC 840, Leases for prior periods.

Each of these contracts is evaluated as a lease arrangement, either as an operating lease or a sales-type finance lease using the current lease classification guidance.

Deferred Revenue.

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We continuously monitor the creditworthiness of the financial institutions and institutional money market funds in which we invest our funds.

We classify investments as short-term investments if their original maturities are greater than three months and their remaining maturities are one year or less.

Currently, we have no short-term investments.

We classify equity investments as short-term investments based on their nature and our intent and ability to exit within a year or less.

As of October 31, 2021, we had short-term investments of $ 91 million.

Restricted Cash and Restricted Cash Equivalents.

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Concentration of Credit Risk.

Financial instruments that potentially subject Agilent to significant concentration of credit risk include money market fund investments, time deposits and demand deposit balances.

These investments are categorized as cash and cash equivalents.

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.

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In a lease arrangement that is a multiple-element arrangement that contains equipment leases and the supply of consumables, the revenue associated with the instrument rental is treated under the lease accounting standard ASC 842, whereas the revenue associated with the consumables, the non-lease component, is recognized in accordance with the ASC 606 revenue standard.

See also Note 2, "New Accounting Pronouncements" and Note 10, "Leases" for additional information about the company’s leases.

See also Note 10, "Leases" for additional information about our leases.

Acquisitions.

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Goodwill and Purchased Intangible Assets.

We assess our goodwill and purchased intangible assets for impairment annually or whenever events or changes in circumstances indicate that the carrying 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 two-step test 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.

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or other events such as an expectation that a reporting unit will be sold or a sustained decrease in the stock price on either an absolute basis or relative to peers.

If it is determined, as a result of the qualitative assessment, that it is more-likely-than-not that the fair value of a reporting unit is less than its carrying amount, the provisions of authoritative guidance require that we perform a two-step impairment test on goodwill.

In the first step, we compare the fair value of each reporting unit to its carrying value.

The second step (if necessary) measures the amount of impairment by applying fair-value-based tests to the individual assets and liabilities within each reporting unit.

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.

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Based on the results of our qualitative testing, we believe that it is more-likely-than-not that the fair values of these indefinite-lived intangible assets are greater than their respective carrying values.

Each quarter we review the events and circumstances to determine if impairment of indefinite-lived intangible asset is indicated.

Each quarter we review the events and circumstances to determine if impairment of indefinite-lived intangible assets is indicated.

During the year ended October 31, 2020, we recorded an impairment of in-process research and development of $ 90 million related to the shutdown of our sequencer development program in our diagnostics and genomics segment.

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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, 2021 we recorded an impairment charge of long-lived assets of $ 2 million.

During the year ended October 31, 2020 we recorded an impairment charge of long-lived assets including indefinite-lived in-process research and development of $ 98 million related to the shutdown of our sequencer development program in our diagnostics and genomics segment.

During fiscal year 2019, there were no impairments of other assets or intangible assets.

During fiscal year 2018, we recorded an impairment charge of $ 21 million related to purchased intangible assets within the diagnostics and genomics segment that were deemed unrecoverable.

Variable Interest Entities.

We make a determination upon entering into an arrangement whether an entity in which we have made an investment is considered a Variable Interest Entity (“VIE”).

The company evaluates its investments in privately held companies on an ongoing basis.

We have determined that as of October 31, 2020 and 2019, there were no VIE's required to be consolidated in the company's consolidated financial statements because we do not have a controlling financial interest in any of the VIE's in which we have invested nor are we the primary beneficiary.

We evaluate our investments in privately held companies on an ongoing basis.

We have determined that as of October 31, 2021 and 2020, there were no VIEs required to be consolidated in our consolidated financial statements because we do not have a controlling financial interest in any of the VIEs in which we have invested nor are we the primary beneficiary.

We account for these investments under either the equity method or as equity investments without readily determinable fair value, depending on the circumstances.

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The reassessment process considers whether we have acquired the power to direct the most significant activities of the VIE through changes in governing documents or other circumstances.

We also reconsider whether entities previously determined not to be VIEs have become VIEs, based on changes in facts and circumstances including changes in contractual arrangements and capital structure.

During the year ended October 31, 2018, we exercised our option and acquired all of the remaining shares of Lasergen, Inc.

("Lasergen") that we did not already own for an additional cash consideration of approximately $ 107 million.

The fair value remeasurement of our previous investment immediately before the acquisition resulted in a net gain of $ 20 million and was recorded in other income.

Lasergen was previously considered a VIE.

As of October 31, 2020 and October 31, 2019, the total carrying value of investments and loans in privately held companies considered as VIEs was $ 67 million and $ 29 million respectively.

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, 2021 and 2020, the total carrying value of investments and loans in privately held companies considered as VIEs was $ 76 million and $ 67 million respectively.

The maximum exposure is equal to the carrying value because we do not have future funding commitments.

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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 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.

Prior to fiscal year 2019, both equity investments without determinable fair value and with determinable fair value were accounted for using cost method of accounting, measured at historical cost less other-than-temporary investment.

Trading securities, which are comprised of mutual funds, bonds and other similar instruments, other investments 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 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.

Other investments with readily determinable fair value consist of shares we own in a special fund and are reported at fair value, with gains or losses resulting from changes in fair value included in net income.

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.

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The carrying values of certain of our financial instruments including cash and cash equivalents, accounts receivable, accounts payable, accrued compensation and other accrued liabilities approximate fair value because of their short maturities.

The fair value of long-term equity investments 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 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.

The fair value of our senior notes, calculated from quoted prices which are primarily Level 1 inputs under the accounting guidance fair value hierarchy exceeds the carrying value by approximately $ 162 million as of October 31, 2020 and approximately $ 62 million as of October 31, 2019.

The change in the fair value over carrying value in the year ended October 31, 2020 is primarily due to decreased market interest rates.

As of October 31, 2021, the fair value of our senior notes was $ 2,806 million with a carrying value of $ 2,729 million.

This compares to a fair value of $ 2,446 million with a carrying value of $ 2,284 million as of October 31, 2020.

The fair value was calculated from quoted prices which are primarily Level 1 inputs 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

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.

AGILENT TECHNOLOGIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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.

Our standard warranty terms typically extend for one year from the date of delivery.

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For derivative instruments that are designated and qualify as a cash flow hedge, changes in the value of the effective portion of the derivative instrument are recognized in comprehensive income (loss), a component of stockholders' equity.

For derivative instruments that are designated and qualify as a net investment hedge, changes in the value of the effective portion of the derivative instrument are recognized in accumulated other comprehensive income (loss).

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.

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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.

AGILENT TECHNOLOGIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Foreign Currency Translation.

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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.

revenue and expenses are translated using monthly exchange

AGILENT TECHNOLOGIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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.

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Recently Adopted Accounting Pronouncements

In February 2016, the FASB issued Accounting Standards Update No.

2016-02, Leases (Topic 842), which requires lessees to record most leases on the balance sheet as lease liabilities, initially measured at the present value of future lease payments, with a corresponding right-of-use asset.

The accounting applied by a lessor is largely unchanged from that applied under the prior accounting standard.

On November 1, 2019, we adopted the new accounting guidance using the modified retrospective method, by applying the transition approach, for all lease arrangements at the beginning of the period of adoption.

Results for reporting periods beginning November 1, 2019 are presented under the new accounting standard, while prior period amounts have not been restated.

The standard had a significant impact on the opening consolidated balance sheet as of November 1, 2019, but did not have a significant impact on the consolidated statement of operations or consolidated statement of cash flows for the year ended October 31, 2020 when compared to prior periods.

The most significant impact was the recognition of ROU assets and lease liabilities for operating leases, while the accounting for finance leases remained substantially unchanged.

For leases that commenced before the effective date of the new accounting standard, we elected the permitted practical expedients to not reassess the following:

(i) whether any expired or existing contracts contain leases;

(ii) the lease classification for any expired or existing leases;

and (iii) initial direct costs for any existing leases.

We also elected to exclude leases with a term of 12 months or less in the ROU assets and lease liabilities.

Adoption of the new guidance impacted the consolidated balance sheet as follows:

October 31, 2019 Impact of Adopting November 1, 2019

As Reported Lease Guidance As Adopted

(in millions)

Other assets $ 611 $ 192 $ 803

Other accrued liabilities $ 440 $ 48 $ 488

Other long-term liabilities $ 473 $ 144 $ 617

On November 1, 2018, we adopted ASC Topic 606, Revenue from Contracts with Customers , using the modified retrospective approach only to contracts not completed as of this date.

Results for reporting periods after November 1, 2018 are presented under ASC 606, while prior period amounts were not adjusted and continue to be reported in accordance with ASC Topic 605, Revenue Recognition .

New Accounting Pronouncements Not Yet Adopted

In June 2016, the FASB issued new guidance to require a financial asset measured at amortized cost basis, such as accounts receivable, to be presented at the net amount expected to be collected based on relevant information about past events, including historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount.

In June 2016, the Financial Accounting Standards Board ("FASB") issued new guidance to require a financial asset measured at amortized cost basis, such as accounts receivable, to be presented at the net amount expected to be collected based on relevant information about past events, including historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount.

During 2018 and 2019, the FASB issued additional guidance and clarification.

The new guidance is effective for us beginning November 1, 2020.

We do not expect this guidance to have a material impact on our consolidated financial statements and disclosures.

AGILENT TECHNOLOGIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

In January 2017, the FASB issued an amendment to modify the concept of impairment from the condition that exists when the carrying amount of goodwill exceeds its implied fair value to the condition that exists when the carrying amount of a reporting unit exceeds its fair value.

The amendment also simplifies the subsequent measurement of goodwill by eliminating Step 2 from the goodwill impairment test.

The amendments are effective for us beginning November 1, 2020.

Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017.

We do not expect this guidance to have a material impact on our consolidated financial statements and disclosures.

In August 2018, the FASB issued updates to improve the disclosure requirements on fair value measurements in Topic 820, Fair Value Measurement which eliminates certain disclosure requirements and modifies others.

These amendments are effective for us beginning November 1, 2020, and for interim periods within that year with early adoption permitted.

We currently do not expect this guidance to have a material impact on our consolidated financial statements and disclosures.

On November 1, 2020, we adopted this guidance which did not have a material impact on our consolidated financial statements.

In January 2017, the FASB issued new guidance that simplifies the measurement of goodwill impairment by eliminating the Step 2 requirement that an entity compute the implied fair value of goodwill based on the fair values of its assets and liabilities to measure impairment.

Instead, goodwill impairment will be measured as the difference between the fair value of the reporting unit and the carrying value of the reporting unit.

The standard also clarifies the treatment of the income tax effect of tax deductible goodwill when measuring goodwill impairment loss.

On November 1, 2020, we adopted this guidance which did not have a material impact on our consolidated financial statements.

In August 2018, the FASB issued updates to improve the disclosure requirements for fair value measurements in Topic 820, Fair Value Measurement which eliminates certain disclosure requirements and modifies others.

On November 1, 2020, we adopted these amendments which did not have a material impact on our consolidated financial statements and disclosures.

See Note 13, "Fair Value Measurements" for additional information on the fair value of financial instruments disclosures.

In August 2018, the FASB issued updates to improve the effectiveness of disclosures for defined benefit plans under Accounting Standard Codification Topic 715-20.

The amendments in this guidance remove disclosures that no longer are considered cost beneficial, clarify the specific requirements of disclosures, and add disclosure requirements identified as relevant.

These amendments are effective for us beginning November 1, 2021, with early adoption permitted.

We currently do not expect this guidance to have a material impact on our consolidated financial statements and disclosures.

On November 1, 2020, we adopted this guidance which did not have a material impact on our consolidated financial statements and disclosures.

In December 2019, the FASB issued new guidance to simplify the accounting for income taxes.

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The guidance also improves consistent application by clarifying and amending existing guidance related to aspects of the accounting for franchise taxes and enacted changes in tax laws or rates and clarifies the accounting for transactions that result in a step up in the tax basis of goodwill.

The new guidance is effective for us beginning November 1, 2021, and for interim periods within that year.

Early adoption is permitted.

We do not expect that the adoption of this standard will have a material impact on our consolidated financial statements and disclosures.

In January 2020, accounting guidance was issued that clarifies the accounting guidance for equity method investments, joint ventures, and derivatives and hedging.

The guidance clarifies the interaction between different sections of the accounting guidance that could be applicable and helps clarify which guidance should be applied in certain situations which should increase relevance and comparability of financial statement information.

This guidance is effective for us beginning November 1, 2021, and for interim periods within that year.

Early adoption is permitted.

We do not expect that the adoption of this standard will have a material impact on our consolidated financial statements and disclosures.

On November 1, 2020, we early adopted this guidance which did not have a material impact on our consolidated financial statements and disclosures.

In March 2020, the FASB issued an update for facilitation of the effects of reference rate reform on financial reporting.

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The guidance was effective upon issuance and may generally be applied through December 31, 2022 to any new or amended contracts, hedging relationships, and other transactions that reference LIBOR.

We are currently evaluating our contracts and we do not expect that the adoption of this guidance will have a material impact on our consolidated financial statements and disclosures.

AGILENT TECHNOLOGIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

January 2021, the FASB issued an update that provides supplemental guidance and clarification of the reference rate reform.

The update provides additional optional guidance on the transition from LIBOR to include derivative instruments that use an interest rate for margining, discounting or contract price alignment.

The standard will ease, if warranted, the requirements for accounting for the future effects of the rate reform.

An entity may elect to apply the amendments prospectively through December 31, 2022.

Currently, this guidance has not had a material impact on our consolidated financial statements and disclosures and we continue to monitor the impact that the discontinuance of LIBOR or another reference rate will have on our contracts, hedging relationships and other transactions.

New Accounting Pronouncements Not Yet Adopted

In January 2020, accounting guidance was issued that clarifies the accounting guidance for equity method investments, joint ventures, and derivatives and hedging.

This guidance is effective for us beginning November 1, 2021, and for interim periods within that year.

Early adoption is permitted.

We do not expect that the adoption of this standard will have a material impact on our consolidated financial statements and disclosures.

In October 2021, the FASB issued an update to improve the accounting for acquired revenue contracts with customers in a business combination.

The amendments require an acquirer to use the guidance in ASC 606, Revenue from Contracts with Customers, rather than using fair value, when recognizing and measuring contract assets and contract liabilities related to customer contracts assumed in a business combination.

This guidance is effective for us beginning November 1, 2023, and for interim periods within that year.

Early adoption is permitted.

We are currently evaluating the timing of adoption and the impact the adoption of this standard will have on our consolidated financial statements and disclosures.

In November 2021, the FASB issued updates to increase the transparency in the annual disclosure requirements relating to government assistance received by business entities in Topic 832, Government Assistance.

The guidance requires certain disclosures about transactions with a government that are accounted for by applying a grant or contribution model.

These amendments are effective for us beginning November 1, 2022, and for interim periods within that year.

Early adoption is permitted.

We are currently evaluating the timing of adoption and the impact of this guidance on our consolidated financial statements and disclosures.

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.

Acquisition of BioTek and ACEA

On August 23, 2019 we completed the acquisition of privately-owned Lionheart Technologies LLC ("BioTek"), a leader in the design, manufacture and distribution of innovative life science instrumentation for $ 1.17 billion, under the merger agreement.

As a result of the acquisition, BioTek became a wholly-owned subsidiary of Agilent.

Accordingly, the results of

Acquisition of Resolution Bioscience, Inc.

On April 15, 2021 we completed the acquisition of privately-owned Resolution Bioscience, Inc., a biotechnology company focused on the development and commercialization of next-generation sequencing-based ("NGS") precision oncology solutions, for $ 561 million cash plus potential future contingent payments of up to $ 145 million upon the achievement of certain milestones which are based on certain revenue and technical targets.

As of October 31, 2021, the expected maximum earn-out period for the contingent payments does not exceed 3.2 years.

Resolution Bioscience complements and expands our capabilities in NGS-based cancer diagnostics within our diagnostics and genomics segment and provides us with innovative technology to further serve the needs of the fast-growing precision medicine market.

The results of operations of Resolution Bioscience have been included in the consolidated statements of operations since the acquisition date of April 15, 2021.

Pro forma financial information is not presented as historical financial results of Resolution Bioscience are not significant when compared to our actual results of operations.

As a result of this acquisition, we recorded a contingent consideration liability of $ 110 million which reflected the fair value at acquisition date.

See also Note 13, "Fair Value Measurements" for additional information about the fair value of the contingent consideration.

During the year ended October 31, 2021, we also recorded additions to goodwill of $ 365 million and additions to other intangible assets of $ 343 million with a weighted-average life of 11 years, a deferred tax liability of $ 59 million and net tangible assets of $ 22 million The goodwill arising from the acquisition consists largely of the value of intangible assets that do not qualify for separate recognition such as workforce in place, and cash flows from future product technology and development services.

For United States federal tax purposes, goodwill created as part of a stock acquisition such as Resolution Bioscience is not deductible.

AGILENT TECHNOLOGIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

BioTek are included in Agilent's consolidated financial statements from the acquisition date.

Acquisition of BioTek and ACEA

As a result of the acquisition, BioTek became a wholly-owned subsidiary of Agilent and is included within our life sciences and applied markets segment.

Accordingly, the results of BioTek are included in Agilent's consolidated financial statements from the acquisition date.

The acquisition of BioTek and its portfolio is another step to expand our position in the cell analysis market.

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After release, the asset was moved to developed technology.

Acquisition and integration costs directly related to the BioTek acquisition totaled $ 12 million and $ 4 million for the year ended October 31, 2020 and 2019, respectively, and were recorded in operating expenses and cost of sales.

Acquisition and integration costs directly related to the BioTek acquisition totaled $ 25 million, $ 12 million and $ 4 million for the year ended October 31, 2021, 2020 and 2019, respectively, and were recorded in operating expenses and cost of sales.

Such costs are expensed in accordance with the authoritative accounting guidance.

On November 14, 2018, we acquired 100 percent of the stock of ACEA Biosciences (“ACEA”), a developer of cell analysis tools, for $ 250 million.

The financial results of ACEA have been included in our financial results from the acquisition date.

The financial results of ACEA have been included in our financial results within our life sciences and applied markets segment from the acquisition date.

The following represents the unaudited proforma operating results as if BioTek and ACEA had been included in the company's consolidated statements of operations as of the beginning of fiscal 2018 (in millions, except per share amounts):

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The unaudited proforma financial information for the year ended October 31, 2019 combines the historical results of Agilent for the year ended October 31, 2019 (which includes BioTek and ACEA after the acquisition date) and for BioTek for the ten months ended August 23, 2019.

The unaudited proforma financial information for the year ended October 31, 2018 combines the historical results of

AGILENT TECHNOLOGIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Agilent and ACEA for the year ended October 31, 2018 and BioTek for the year ended December 31, 2018 (due to differences in reporting periods).

The following table presents the company’s total revenue and segment revenue disaggregated by geographical region:

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Total $ 2,392 $ 1,900 $ 1,047 $ 5,339

Year Ended October 31, 2019:

Americas $ 692 $ 664 $ 505 $ 1,861

Europe 551 522 368 1,441

Asia Pacific 1,059 654 148 1,861

Total $ 2,302 $ 1,840 $ 1,021 $ 5,163

The following table presents the company’s total revenue disaggregated by end markets and by revenue type:

Years Ended October 31,

2021 2020 2019

(in millions)

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Diagnostics and Clinical 938 787 785

Food 601 517 486

Academia and Government 576 526 474

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The balances of contract assets as of October 31, 2021 and 2020, were $ 197 million and $ 153 million, respectively.

The increase in unbilled receivables during the year ended October 31, 2020 is a result of recognition of revenue upon the transfer of the control to the customer.

Contract Liabilities

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Ending balance as of October 31, 2019 $ 386

Impact of adoption of new revenue recognition guidance ( 11 )

Net revenue deferred in the period 347

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Change in deferrals from customer cash advances, net of revenue recognized 9

Contract liabilities acquired in business combinations 9

Currency translation and other adjustments 4

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These costs include the company's internal sales force compensation program, as we have determined that annual compensation is commensurate with annual sales activities.

AGILENT TECHNOLOGIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Transaction Price Allocated to the Remaining Performance Obligations

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.

AGILENT TECHNOLOGIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The estimated revenue expected to be recognized for remaining performance obligations that have an original term of more than one year, as of October 31, 2021, was $ 299 million, the majority of which is expected to be recognized over the next 12 months.

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SHARE-BASED COMPENSATION

Agilent accounts for share-based awards in accordance with the provisions of the accounting guidance which requires the measurement and recognition of compensation expense for all share-based payment awards made to our employees and directors including restricted stock units, 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.

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.

Description of Share-Based Plans

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2009 Stock Plan (the "2009 Plan").

The 2009 plan replaced the Agilent Technologies, Inc.

Amended and Restated 1999 Stock Plan and 1999 Non-Employee Director Stock Plan.

The 2018 Plan provides for the grant of awards in the form of stock options, stock appreciation rights ("SARs"), restricted stock, restricted stock units ("RSUs"), performance shares and performance units with performance-based conditions on vesting or exercisability, and cash awards.

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As of October 31, 2021, 23,284,195 shares were available for future awards under the 2018 Plan.

Stock options under the 2018 Plan may be either "incentive stock options", as defined in Section 422 of the Internal Revenue Code, or non-statutory.

Options were granted prior to November 1, 2015 and generally vest at a rate of 25 percent per year over a period of four years from the date of grant with a maximum contractual term of ten years .

Stock Options.

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.

Agilent issues new shares of common stock when employee stock options are exercised.

Effective November 1, 2003, the Compensation Committee of the Board of Directors approved the LTPP, which is a performance stock award program administered under the 2018 Plan, for the company's executive officers and other key employees.

Participants in this program are entitled to receive unrestricted shares of the company's stock after the end of a three-year period if specified performance targets are met.

Certain LTPP awards are generally designed to meet the criteria of a performance award with the performance metrics and peer group comparison based on the Total Stockholders’ Return (“TSR”) set at the beginning of the performance period.

Effective November 1, 2015, the Compensation Committee of the Board of Directors approved another type of performance stock award for the company's executive officers and other key employees.

Participants in this program are also entitled to receive unrestricted shares of the company's stock after the end of a three-year period if specified performance targets over the three-year period are met.

The performance target for grants made beginning in 2017 and thereafter were based on Earnings Per Share ("EPS").

The performance targets for LTPP-EPS grants for year 2 and year 3 of the performance period are set in the first quarter of year 2 and year 3, respectively.

All LTPP awards granted after November 1, 2015, are subject to a one-year post-vest holding period.

AGILENT TECHNOLOGIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

We issue new shares of common stock when employee stock options are exercised.

Performance Shares.

We have two LTPP performance stock award programs, which are administered under the 2018 Stock Plan, for our executive officers and other key employees.

Participants in our LTPP Total Stockholders’ 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.

Based on the performance metrics, the final LTPP award may vary from zero to 200 percent of the target award.

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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.

Restricted Stock Units.

We also issue restricted stock units under our share-based plans.

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All restricted stock units granted to our executives after November 1, 2015, are subject to a one-year post-vest holding period.

AGILENT TECHNOLOGIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Impact of Share-based Compensation Awards

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Valuation Assumptions

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

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

The estimated fair value of restricted stock unit awards and LTPP (EPS) was determined based on the market price of Agilent's common stock on the date of grant adjusted for expected dividend yield and as appropriate, a discount related to the one-year post vesting.

The compensation cost for LTPP (EPS) awards reflects the cost of awards that are probable to vest at the end of the performance period.

The fair value of share-based awards for our employee stock option awards was estimated using the Black-Scholes option pricing model.

Shares granted under the LTPP (TSR) were valued using a Monte Carlo simulation model.

The ESPP allows eligible employees to purchase shares of our common stock at 85 percent of the price at purchase and uses the purchase date to establish the fair market value.

Both the Black-Scholes and Monte Carlo simulation fair value models require the use of highly subjective and complex assumptions, including the option's expected life and the price volatility of the underlying stock.

For 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.

AGILENT TECHNOLOGIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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

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2021 2020 2019

Stock Option Plan:

Weighted average risk-free interest rate 0.5 % — —

Dividend yield 0.7 % — —

Weighted average volatility 26 % — —

Expected life 5.5 years — —

Volatility of Agilent shares 30 % 23 % 22 %

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Post-vest restriction discount for all executive awards 6.8 % 5.3 % 5.0 %

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 LTPP (TSR) grants in 2017 and thereafter, we used our own historical stock price volatility.

AGILENT TECHNOLOGIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

All LTPP awards granted have a one-year post-vest holding restriction.

The estimated discount associated with post-vest holding restrictions is calculated using the Finnerty model.

The model calculates the potential lost value if the employee were able to sell the shares during the lack of marketability period instead of being required to hold the shares.

Share-Based Payment Award Activity

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Outstanding at October 31, 2020 870 $ 37

Granted 391 $ 113

Exercised ( 312 ) $ 33

Cancelled ( 6 ) $ 110

Outstanding at October 31, 2021 943 $ 69

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105 2.1 $ 39 12,270 105 2.1 $ 39 12,270

$ 40.01 - $ 50.00

412 3.0 $ 41 48,075 412 3.0 $ 41 48,075

$ 100.00 - $ 110.00

338 9.0 $ 110 16,115 — — $ — —

$ 110.01 & over

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The total number of in-the-money awards exercisable at October 31, 2021 was approximately 0.6 million.

The following table summarizes the aggregate intrinsic value of options exercised in 2020, 2019 and 2018:

AGILENT TECHNOLOGIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The following table summarizes the aggregate intrinsic value of options exercised in 2021, 2020 and 2019 and the fair value of options granted in 2021:

Intrinsic Value Weighted

Price Per Share Value Using Black-Scholes Model

(in thousands)

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Options exercised in fiscal 2021 $ 34,305 $ 33

As of October 31, 2020, the unrecognized share-based compensation cost for outstanding stock option awards, net of expected forfeitures, was zero .

Black Scholes per share value of options granted during fiscal 2021 $ 26

As of October 31, 2021, the unrecognized share-based compensation cost for outstanding stock option awards, net of expected forfeitures, was $ 5 million.

The amount of cash received from the exercise of share-based awards granted was $ 55 million in 2021, $ 60 million in 2020 and $ 54 million in 2019.

AGILENT TECHNOLOGIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Non-Vested Awards

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Non-vested at October 31, 2021 2,519 $ 88

As of October 31, 2020, the unrecognized share-based compensation cost for non-vested restricted stock awards was approximately $ 95 million which is expected to be amortized over a weighted average period of 2.1 years.

As of October 31, 2021, the unrecognized share-based compensation cost for non-vested restricted stock awards net of expected forfeitures was approximately $ 106 million which is expected to be amortized over a weighted average period of 2.2 years.

The total fair value of restricted stock awards vested was $ 84 million for 2021, $ 85 million for 2020 and $ 69 million for 2019.

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Total income before taxes $ 1,360 $ 842 $ 919

AGILENT TECHNOLOGIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The provision for income taxes is comprised of:

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Total provision (benefit) $ 150 $ 123 $ ( 152 )

AGILENT TECHNOLOGIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The differences between the U.S.

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Profit before tax times statutory rate $ 286 $ 177 $ 193

State income taxes, net of federal benefit 18 6 16

income taxed at different rates 5 ( 37 ) ( 10 )

Change in unrecognized tax benefits ( 84 ) ( 8 ) ( 11 )

Impact of the Tax Act — — 552

Foreign-derived intangible income deduction ( 35 ) ( 9 ) —

Extension of the tax incentive in Singapore — — ( 299 )

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Effective tax rate 11.0 % 14.6 % ( 16.5 ) %

For 2020, the company's income tax expense was $ 123 million with an effective tax rate of 14.6 percent.

For 2021, our income tax expense was $ 150 million with an effective tax rate of 11 percent.

For the year ended October 31, 2021, our effective tax rate and the resulting provision for income taxes were impacted by the discrete benefit of $ 93 million related to the release of tax reserves in various jurisdictions due to audit settlements and the expiration of statutes of limitations.

The income taxes for the year ended October 31, 2021 also include the excess tax benefits from stock-based compensation of $ 29 million.

For 2020, our income tax expense was $ 123 million with an effective tax rate of 14.6 percent.

For the year ended October 31, 2020, our effective tax rate and the resulting provision for income taxes were impacted by foreign income taxed at lower rates.

For 2019, the company's income tax benefit was $ 152 million with an effective tax rate of ( 16.5 ) percent.

For 2019, our income tax benefit was $ 152 million with an effective tax rate of ( 16.5 ) percent.

For the year ended October 31, 2019, our effective tax rate and the resulting provision for income taxes were significantly impacted by the discrete benefit of $ 299 million related to the extension of the company’s tax incentive in Singapore.

As part of the business integration of some of our prior acquisitions, we undertook corporate restructurings in the fourth quarter of fiscal year 2019 that involved on-shoring certain intangible properties held by our foreign subsidiaries to the United States.

As part of the business integration of some of our prior acquisitions, we undertook corporate restructurings in the fourth quarter of fiscal year 2019 that involved onshoring certain intangible properties held by our foreign subsidiaries to the United States.

These restructurings resulted in a cash tax liability of $ 231 million.

These taxes generate tax attributes that will offset our transition tax liability which is included in other long-term liabilities in our consolidated balance sheet.

For 2018, the company's income tax expense was $ 630 million with an effective tax rate of 66.6 percent.

For the year ended October 31, 2018, our effective tax rate and the resulting provision for income taxes were significantly impacted by the discrete charge of $ 552 million related to the enactment of the U.S.

Tax Cuts and Jobs Act (the “Tax Act”) consisting of (1) an expense of $ 499 million of U.S.

transition tax and correlative items on deemed repatriated earnings of non-U.S.

subsidiaries and (2) an expense of $ 53 million associated with the impact on deferred taxes resulting from the decreased U.S.

corporate tax rate.

The company has negotiated tax holidays in several different jurisdictions, most significantly in Singapore.

The tax holidays provide lower rates of taxation on certain classes of income and require various thresholds of investments and employment or specific types of income in those jurisdictions.

We have negotiated a tax holiday in Singapore.

The tax holiday provides a lower rate of taxation on certain classes of income and requires various thresholds of investments and employment or specific types of income.

In December 2018, the tax holiday in Singapore was renegotiated and extended through 2027.

As a result of the incentives, the impact of the tax holidays decreased income taxes by $ 71 million, $ 368 million, and $ 87 million in 2020, 2019, and 2018, respectively.

The benefit of the tax holidays on net income per share (diluted) was approximately $ 0.23 , $ 1.16 , and $ 0.27 in 2020, 2019 and 2018, respectively.

Of the $ 1.16 benefit of the tax incentives on net income per share (diluted) in 2019, $ 0.94 of the benefit relates to one-time items from the extension of the company’s tax incentive in Singapore.

As a result of the incentive, the impact of the tax holiday decreased income taxes by $ 35 million, $ 71 million, and $ 368 million in 2021, 2020, and 2019, respectively.

The benefit of the

AGILENT TECHNOLOGIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

tax holiday on net income per share (diluted) was approximately $ 0.11 , $ 0.23 , and $ 1.16 in 2021, 2020 and 2019, respectively.

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

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Share-based compensation 22 27

Deferred revenue 22 38

Lease obligations 30 35

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Property, plant and equipment $ ( 11 ) $ ( 19 )

Pension benefits and retiree medical benefits ( 8 ) —

Right-of-use asset ( 29 ) ( 35 )

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As of October 31, 2021, we continued to maintain a valuation allowance of $ 120 million until sufficient positive evidence exists to support reversal.

The valuation allowance is primarily related to deferred tax assets for the states of California and Colorado, along with the net operating losses in the Netherlands and capital losses in the U.S.

and Australia.

The valuation allowance is primarily related to deferred tax assets for the states of California and Colorado, along with the net operating losses in the Netherlands and capital losses in Australia.

At October 31, 2021, we had federal, state and foreign net operating loss carryforwards of approximately $ 46 million, $ 461 million and $ 484 million, respectively.

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Reductions for tax positions from prior years — — ( 2 )

Settlements with taxing authorities ( 30 ) — —

Statute of limitations expirations ( 42 ) ( 17 ) ( 25 )

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However, approximately $ 23 million of the unrecognized tax benefits were related to state income tax positions that, if recognized, would be in the form of a deferred tax asset that would likely not affect our effective tax rate due to a valuation allowance.

We recognized tax expense of $ 8 million, $ 9 million and $ 11 million for interest and penalties related to unrecognized tax benefits in 2020, 2019 and 2018, respectively.

We recognized tax benefit of $ 19 million in 2021, tax expense of $ 8 million and $ 9 million in 2020 and 2019, respectively, for interest and penalties related to unrecognized tax benefits.

Interest and penalties accrued as of October 31, 2021 and 2020 were $ 26 million and $ 45 million, respectively.

In the U.S., tax years remain open back to the year 2018 for federal income tax purposes and for significant states.

In other major jurisdictions where the company conducts business, the tax years generally remain open back to the year 2009.

In other major jurisdictions where we conduct business, the tax years generally remain open back to the year 2011.

With these jurisdictions and the U.S., it is reasonably possible that there could be significant changes to our unrecognized tax benefits in the next twelve months due to either the expiration of a statute of limitation or a tax audit settlement which will be partially offset by an anticipated tax liability related to unremitted foreign earnings, where applicable.

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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 2020, 2019 and 2018, we issued share-based awards of approximately 2 million each year.

In 2021, 2020 and 2019, we issued share-based awards of approximately 2.1 million, 2.4 million and 1.8 million, respectively.

For the years ended 2021, 2020 and 2019, the impacts of the anti-dilutive potential common shares that were excluded from the calculation of diluted earnings per share were not material.

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Property, plant and equipment, net $ 945 $ 845

In 2020 we recorded $ 6 million in asset impairments related to the shutdown of our sequencer development program.

There were no asset impairments in 2019 and less than $ 1 million in asset impairments in 2018.

During 2021 and 2020 we recorded $ 2 million and $ 6 million, respectively, in asset impairments.

In 2020 asset impairments related to the shutdown of our sequencer development program.

There were no asset impairments in 2019.

Depreciation expenses were $ 122 million in 2021, $ 119 million in 2020 and $ 111 million in 2019.

In 2020 and 2019 we retired approximately $ 29 million and $ 23 million, respectively, of fully depreciated assets that were no longer in use.

In 2021 and 2020 we retired approximately $ 35 million and $ 29 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.

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Vehicle, personal computer and other equipment operating leases have terms between three and five years.

Prior to the adoption of the new lease accounting standard, future minimum lease payments as of October 31, 2019 under non-cancelable leases with initial terms exceeding twelve months were as follows:

Operating Leases

(in millions)

Thereafter $ 56

The components of lease cost for operating leases were as follows:

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(a) Variable lease cost includes cancelable leases, non-fixed maintenance costs and non-recoverable transaction taxes.

Total rent expense was $ 75 million in 2019 and $ 64 million in 2018.

Total rent expense was $ 75 million in 2019.

Supplemental cash flow information related to leases was as follows:

AGILENT TECHNOLOGIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Year Ended October 31,

(in millions)

Cash paid for amounts included in the amounts included in the measurement of lease liabilities:

Cash paid for amounts included in the measurement of lease liabilities:

Operating cash flow from operating leases $ 57 $ 59

Non-cash right of use assets obtained in exchange for operating lease obligations $ 53 $ 37

AGILENT TECHNOLOGIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Supplemental balance sheet information related to leases was as follows:

Financial Statement Line Item October 31, 2020

Financial Statement Line Item 2021 2020

(in millions, except lease term and discount rate)

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Weighted average remaining lease term (in years)

Operating leases 7.9 years

Operating leases 7.6 years 7.9 years

Weighted average discount rate

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As of October 31, 2021, we had no additional significant operating or finance leases that had not yet commenced.

As a lessor, we have contracts for equipment leased to customers in connection with our diagnostics business which include both operating-type lease and sales-type lease arrangements.

As a lessor, we have contracts for equipment leased to customers primarily in connection with our diagnostics business which include both operating-type lease and sales-type finance lease arrangements.

We account for the non-lease component under the revenue recognition ASC 606 guidance and the lease component under the leasing ASC 842 guidance.

Equipment lease revenue for operating lease agreements is recognized as visualization kits and reagents are shipped over the life of the lease, and the cost of customer leased equipment is recorded within property, plant and equipment, net in the consolidated balance sheet and depreciated over the equipment’s estimated useful life.

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 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 year ended October 31, 2021.

As of October 31, 2021, the original cost and net book value of operating leased assets were $ 38 million and $ 7 million, respectively.

As of October 31, 2021, lease receivables related to sales-type leases were $ 48 million.

As of October 31, 2020,

AGILENT TECHNOLOGIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Revenue allocated to the lease income for both finance/sales-type lease and operating lease rental arrangements represents less than one percent of total net revenue in the year ended October 31, 2020.

As of October 31, 2020, the original cost and net book value of operating leased assets was $ 43 million and $ 12 million, respectively.

As of October 31, 2020, lease receivables related to sales-type leases were $ 44 million.

As of October 31, 2019, the original cost and net book value of operating leased assets was $ 49 million and $ 17 million, respectively.

the original cost and net book value of operating leased assets was $ 43 million and $ 12 million, respectively.

As of October 31, 2020, lease receivables related to sales-type leases were $ 44 million.

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Foreign currency translation impact 3 5 1 9

Goodwill arising from acquisitions 636 ( 11 ) — 625

Goodwill as of October 31, 2020 $ 1,441 $ 1,599 $ 562 $ 3,602

Foreign currency translation impact 5 — 3 8

Goodwill arising from acquisitions and adjustments — 365 — 365

Goodwill as of October 31, 2021 $ 1,446 $ 1,964 $ 565 $ 3,975

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Purchased technology $ 1,429 $ 863 $ 566

Backlog 5 5 —

Trademark/Tradename 196 117 79

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Purchased technology $ 1,742 $ 972 $ 770

Backlog 8 3 5

Trademark/Tradename 196 133 63

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Total $ 2,325 $ 1,344 $ 981

During fiscal year 2021, we recorded additions to goodwill of $ 365 million and additions to other intangible assets of $ 343 million with a weighted average life of 11 years related to the purchase of Resolution Bioscience.

During the year other intangible assets increased $ 2 million due to the impact of foreign currency translation.

During fiscal year 2020, we recorded no additions to goodwill or to intangible assets.

During the year ended October 31, 2020 we moved $ 15 million of in-process research and development intangible assets to purchased technology on the completion of three projects.

The increase in other intangible assets due to foreign currency translation was not material in 2020.

AGILENT TECHNOLOGIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

During fiscal year 2019, w e recorded additions to goodwill of $ 636 million and to other intangible assets of $ 744 million related to the acquisition of ACEA Biosciences and BioTek.

In the second quarter of fiscal year 2019, we recorded a measurement period adjustment to goodwill of $ 11 million for deferred tax assets related to pre-acquisition net operating losses of Advanced Analytical Technologies, Inc.

The increase to other intangible assets due to foreign currency translation was not material in 2019.

In general, for United States federal tax purposes, goodwill from asset purchases is amortizable;

however, any goodwill created as part of a stock acquisition is not deductible.

There were no impairments of indefinite-lived intangible assets during fiscal years 2021 and 2019.

During fiscal year 2020, we recorded an impairment of in-process research and development of $ 90 million in research and development expenses in the consolidated statement of operations which was related to the shutdown of our sequencer development program in our diagnostics and genomics segment.

There were no impairments of indefinite-lived intangible assets during fiscal year 2019 and 2018.

During fiscal years 2021, 2020 and 2019, there were no impairments of finite-lived intangible assets recorded.

During 2018, we recorded an impairment of $ 21 million related to purchased intangible assets within the diagnostics and genomics segment that were deemed unrecoverable.

During 2020, we also wrote-off the gross carrying amount of $ 17 million and the related accumulated amortization of fully amortized intangible assets which were no longer being used

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(in millions)

Equity investments - with readily determinable fair value $ 91 —

Equity investments - without readily determinable fair value $ 120 $ 103

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Trading securities 34 30

Total $ 158 $ 102

Total long-term investments $ 185 $ 158

Equity investments without readily determinable fair value (RDFV) consist of non-marketable equity securities issued by private companies.

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The adjustments are included in net income in the period in which they occur.

Equity 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.

Prior to fiscal year 2019, both equity investments without RDFV and with RDFV were accounted for using cost method of accounting, measured at historical cost less other-than-temporary impairment.

Trading securities are reported at fair value, with gains or losses resulting from changes in fair value recognized currently in earnings.

Equity investments with RDFV consist of marketable equity securities which are publicly traded and are reported at fair value, with gains or losses resulting from changes in fair value included in net income.

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.

AGILENT TECHNOLOGIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Our investments without 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.

We recorded a net unrealized loss on our equity securities with RDFV of $ 1 million in 2020 and a net unrealized gain of $ 3 million in 2019.

Net unrealized gains on our equity securities without RDFV were $ 27 million and $ 1 million in 2020 and 2019, respectively.

Gains and losses reflected in other income (expense), net for our equity investments with RDFV and equity investments without RDFV are summarized below:

Years Ended October 31,

2021 2020 2019

( in millions)

Net gain recognized during the period on equity securities $ 98 $ 27 $ 4

Net gain on equity securities sold during the period ( 6 ) — —

Unrealized gain on equity securities held as of the end of the period $ 92 $ 27 $ 4

Net unrealized gains on our equity securities without RDFV were $ 17 million, $ 27 million and $ 1 million in 2021, 2020 and 2019, respectively.

Upon adoption of new accounting guidance relating to financial instruments beginning fiscal year 2019, the gains and losses on such securities are recognized in other income (expense) and therefore not applicable in prior periods.

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Financial assets and liabilities measured at fair value on a recurring basis as of October 31, 2021 were as follows:

Fair Value Measurement at October 31, 2020 Using

Fair Value Measurement

at October 31, 2021 Using

2021 Quoted Prices

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Derivative instruments (foreign exchange contracts) 9 — 9 —

Short-term investments - Equity securities with RDFV 91 83 $ 8 $ —

Trading securities 34 34 — —

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Derivative instruments (foreign exchange contracts) $ 5 $ — $ 5 $ —

Contingent consideration 62 — — 62

Deferred compensation liability 34 — 34 —

Contingent consideration 27 — — 27

Total liabilities measured at fair value $ 128 $ — $ 39 $ 89

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Derivative instruments (foreign exchange contracts) 2 — 2 —

Short-term investments - Equity securities with RDFV — — — —

Trading securities 30 30 — —

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Derivative instruments (foreign exchange contracts) $ 17 $ — $ 17 $ —

Contingent consideration — — — —

Deferred compensation liability 30 — 30 —

Contingent consideration — — — —

Total liabilities measured at fair value $ 47 $ — $ 47 $ —

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

AGILENT TECHNOLOGIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

quoted market prices, the inputs used in the calculations are observable.

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 deferred compensation liability is classified as level 2 because, although the values are not directly based on quoted market prices, the inputs used in the calculations are observable.

Short-term investments - equity securities with readily determinable fair value are shares in marketable equity securities which are classified as Level 1 in the fair value hierarchy as they are measured based on quotes in active markets.

Equity securities with RDFV also includes potential shares received from an equity investment in a company that went public and can vest under certain stock performance circumstances.

These have been classified as Level 2 because the fair value was calculated using the Monte Carlo simulation method in which quoted market price and other observable inputs are used.

Other investments represent shares we own in a special fund that targets underlying investments of approximately 40 percent in debt securities and 60 percent in equity securities.

It has been classified as level 2 because, although the shares of the fund are not traded on any active stock exchange, each of the individual underlying securities are or can be derived from and hence we have a readily determinable value for the underlying securities, from which we are able to determine the fair market value for the special fund itself.

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.

Contingent Consideration.

The fair value of the contingent consideration liability relates to milestone payments in connection with the April 2021 acquisition of Resolution Bioscience.

The fair value of the potential future milestone payments, which are set to certain revenue and technical targets, was based on (i) the probability of achieving the relevant revenue targets and technical milestones and (ii) the timing of achieving such milestones, which are significant unobservable inputs, and has been classified as Level 3.

We used the Monte Carlo simulation approach to estimate the fair value of the revenue component with an asset volatility of 55.8 percent and revenue volatilities ranging from 12.1 to 14.3 percent.

The probability-weighted expected return method was used to estimate the fair value of the technical target component.

Assumptions used in the calculations include probability of success, duration of the earn-out and discount rate.

A change in any of these unobservable inputs can significantly change the fair value of the contingent consideration.

As of October 31, 2021, the expected maximum earn-out period for the contingent payments does not exceed 3.2 years and potential future payments will not exceed $ 145 million.

The fair value of the contingent consideration liability as of October 31, 2021 was estimated to be $ 89 million of which $ 62 million was recorded in other accrued liabilities and $ 27 million was recorded in other long-term liabilities on the consolidated balance sheet.

The decrease in the fair value of the contingent consideration was primarily driven by a change in the probability of achieving the relevant revenue targets.

The contingent consideration liability is our only Level 3 asset or liability.

A summary of the Level 3 activity follows:

Contingent Consideration

(in millions)

Balance at October 31, 2020 $ —

Additions to contingent consideration (including measurement period adjustment) 110

Change in fair value (included within selling, general and administrative expenses) ( 21 )

Balance at October 31, 2021 $ 89

AGILENT TECHNOLOGIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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

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Long-lived assets held for sale $ — $ — $ —

For the year ended October 31, 2021, long-lived assets held and used with a carrying value of $ 2 million were written down to their fair value of zero , resulting in an impairment of $ 2 million.

For the year ended October 31, 2020, long-lived assets held and used, including indefinite lived in-process research and development intangible assets, with a carrying amount of $ 98 million were written down to their fair value of zero , resulting in an impairment charge of $ 98 million related to the shutdown of our sequencer development program and other assets in our diagnostics and genomics segment.

There were no impairments of long-lived assets held and used in 2019.

For 2018, long lived assets held and used with a carrying amount of $ 21 million were written down to their fair value of zero , resulting in an impairment charge of $ 21 million, which relates to purchased intangible assets within the diagnostics and genomics segment that were deemed unrecoverable and were included in net income.

There were no impairments of long-lived assets held for sale in 2021, 2020 and 2019.

Fair values for the impaired long-lived assets during 2020 and 2018 were measured using level 3 inputs.

To determine the fair value of long-lived assets in 2020 and 2018, we used the income approach based on projected discounted cash flows expected to be generated by the long-lived assets over the remaining useful life.

For the year ended October 31, 2020 and 2019, there were no impairments in non-marketable securities without readily determinable fair value.

For the year ended October 31, 2020 and 2019, a net unrealized gain of $ 27 million and $ 1 million, respectively, was included in net income as an adjustment to the carrying value of non-marketable equity securities without readily determinable fair value based on an observable market transaction.

Fair values for the impaired long-lived assets during 2020 were measured using level 3 inputs.

To determine the fair value of long-lived assets in 2020, we used the income approach based on projected discounted cash flows expected to be generated by the long-lived assets over the remaining useful life.

For the years ended October 31, 2021, 2020 and 2019 , there were no impairments in non-marketable securities without readily determinable fair value.

For the years ended October 31, 2021, 2020 and 2019, net unrealized gains of $ 17 million, $ 27 million and $ 1 million, respectively, were included in net income as an adjustment to the carrying value of non-marketable equity securities without readily determinable fair value based on an observable market transaction.

As of October 31, 2021 and 2020, the carrying amount of non-marketable equity securities without readily determinable fair values was $ 120 million and $ 103 million, respectively.

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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.

AGILENT TECHNOLOGIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

We are exposed to foreign currency exchange rate fluctuations and interest rate changes in the normal course of our business.

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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.

If it becomes probable that the forecasted transaction will not occur, the hedge relationship will

AGILENT TECHNOLOGIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

be de-designated and amounts accumulated in other comprehensive income (loss) will be reclassified to other income (expense), net in the current period.

Changes in the fair value of the ineffective portion of derivative instruments are recognized in other income (expense), net in the consolidated statement of operations in the current period.

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The treasury lock contracts were terminated on September 10, 2012, and we recognized a deferred gain in accumulated other comprehensive income (loss) which is being amortized to interest expense over the life of the 2022 senior notes.

The remaining gain to be amortized related to the treasury lock agreements at October 31, 2020 was less than $ 1 million.

On January 21, 2021 we redeemed $ 100 million of the $ 400 million aggregate principal amount of our 2022 senior notes.

On April 5, 2021, we redeemed the remaining outstanding $ 300 million of our 2022 senior notes.

We also recognized the remaining deferred gain on the terminated treasury lock related to the 2022 senior notes to other income (expense), net.

For more information see Note 19, "Long-Term Debt".

In February 2016, Agilent executed three forward-starting pay fixed/receive variable interest rate swaps for the notional amount of $ 300 million in connection with future interest payments to be made on our 2026 senior notes issued on September 15, 2016.

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Net Investment Hedges

Starting in 2020, we enter into foreign exchange contracts to hedge net investments in foreign operations to mitigate the risk of adverse movements in exchange rates.

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.

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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.

As of October 31, 2020, we have 3 open forward contracts to sell euros to buy USD maturing in the first quarter of fiscal year 2021, and these are designated as a net investment hedge of the U.S.

parent's interest in foreign subsidiaries denominated in euro functional currency.

In the year ended October 31, 2020, the change in fair value of the net investment hedge resulted in

AGILENT TECHNOLOGIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

a net loss of $ 5 million recognized in accumulated other comprehensive income.

For the year ended October 31, 2021, 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.

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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.

AGILENT TECHNOLOGIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

A number of our derivative agreements contain threshold limits to the net liability position with counterparties and are dependent on our corporate credit rating determined by the major credit rating agencies.

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Japanese Yen ( 87 ) — ( 43 )

Danish Krone — — 36

Korean Won ( 60 ) — ( 18 )

Singapore Dollar 16 — 26

Swiss Franc — — ( 10 )

Chinese Yuan Renminbi ( 87 ) — ( 37 )

Swedish Krona — — ( 10 )

Taiwan Dollar — — ( 17 )

India Rupee — — ( 15 )

Brazilian Real — — ( 14 )

Other 4 — ( 9 )

$ ( 419 ) $ ( 93 ) $ ( 26 )

Derivative instruments are subject to master netting arrangements and are disclosed gross in the balance sheet in accordance with the authoritative guidance.

AGILENT TECHNOLOGIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Derivative instruments are subject to master netting arrangements and are disclosed gross in the balance sheet in accordance with the authoritative guidance.

The gross fair values and balance sheet location of derivative instruments held in the consolidated balance sheet as of October 31, 2021 and 2020 were as follows:

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Gain (loss) reclassified from accumulated other comprehensive income (loss) into cost of sales $ ( 16 ) $ ( 1 ) $ 9

Gain (loss) on time value of forward contracts recorded in cost of sales $ 2 $ 2 $ —

Gain on time value of forward contracts recorded in cost of sales $ — $ 2 $ 2

Net investment hedges

Foreign exchange contracts:

Loss recognized in accumulated other comprehensive income (loss) $ ( 5 ) $ — $ —

Gain (loss) recognized in accumulated other comprehensive income (loss) - translation adjustment $ 1 $ ( 5 ) $ —

Gain on time value of forward contracts recorded in other income (expense) 1 — —

Derivatives not designated as hedging instruments:

Gain (loss) recognized in other income (expense), net $ — $ ( 1 ) $ 2

At October 31, 2020 the estimated amount of existing net loss that is expected to be reclassified from accumulated other comprehensive income (loss) to cost of sales within the next twelve months is $ 7 million.

At October 31, 2021 the total amount of existing net gain that is expected to be reclassified from accumulated other comprehensive income (loss) is $ 2 million.

Within the next twelve months it is estimated that $ 5 million of gain included within the net amount of accumulated other comprehensive income (loss) will be reclassified to cost of sales in respect of cash flow hedges.

AGILENT TECHNOLOGIES, INC.

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Health Plan for Retirees.

– Eligible retirees who were less than age 50 as of January 1, 2005 and who retire after age 55 with 15 or more years of service are eligible for a fixed amount which can be utilized to pay for either sponsored plans and/or individual Medicare plans.

– Effective January 1, 2012, employees who were at least age 50 as of January 1, 2005 and who retire after age 55 with 15 or more years of service are eligible for fixed dollar subsidies and stipends.

Grandfathered retirees receive a fixed monthly subsidy toward pre-65 premium costs (subsidy capped at 2011 levels) and a fixed monthly stipend post-65.

The subsidy amounts will not increase.

– Any new employee hired on or after November 1, 2014, will not be eligible to participate in the retiree medical plans upon retiring.

– As of April 30, 2016, benefits under this plan were changed for Active employees who have not met the eligibility requirement - 55 years old with at least 15 years of Agilent service, as of April 30, 2016 - for the Retiree Medical Account (RMA) under the U.S.

Post Retirement Benefit Plan.

These employees will only be eligible for 50 percent of the current RMA reimbursement amount upon retirement.

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 Retiree Medical Account (“RMA”) or a fixed monthly amount under the Agilent Reimbursement Arrangement (“ARA”).

Any new employee hired on or after November 1, 2014, will not be eligible to participate in the post-retirement medical benefit plans upon retiring.

401(k) Defined Contribution Plan .

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Total periodic benefit cost (benefit) $ ( 11 ) $ ( 10 ) $ ( 8 ) $ 34 $ 34 $ 25 $ — $ ( 6 ) $ ( 7 )

Settlement (gain) loss $ 4 $ — $ — $ — $ — $ ( 5 ) $ — $ — $ —

Settlement loss $ 1 $ 4 $ — $ — $ — $ — $ — $ — $ —

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

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Total $ 36 $ 134 $ 149 $ 311 $ ( 27 ) $ 6

The amounts in accumulated other comprehensive income (loss) expected to be recognized by Agilent as components of net expense during 2021 are as follows:

Benefit Plans Non-U.S.

Benefit Plans U.S.

Post-Retirement

Benefit Plans

(in millions)

Amortization of net prior service cost (benefit) $ — $ — $ ( 1 )

Amortization of actuarial net loss $ 4 $ 52 $ 4

The actuarial gains and losses related to the change in plan obligations were a total of $ 9 million net loss and $ 13 million net loss for the years ended October 31, 2021 and 2020, respectively.

The actuarial net loss that arose in 2021 was primarily due to changes in financial and demographic assumptions, losses due to plan experience offset by increases in discount rates.

The actuarial net loss that arose during 2020 was largely driven by a decline in discount rates and losses due to plan experience partially offset by financial and demographic assumption changes.

AGILENT TECHNOLOGIES, INC.

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Investment Policies and Strategies as of October 31, 2021 and 2020.

In the U.S., target asset allocations for our retirement and post-retirement benefit plans are approximately 80 percent to equities and approximately 20 percent to fixed income investments.

In the U.S., target asset allocations for our retirement and post-retirement benefit plans are approximately 80 percent to equities and approximately 20 percent to fixed income investments as of October 31, 2020 and were changed to approximately 50 percent to equities and approximately 50 percent to fixed income investments as of October 31, 2021.

Our DPSP target asset allocation is approximately 60 percent to equities and approximately 40 percent to fixed income investments.

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4.00 - 5.75 %

Interest crediting rate for cash balance plans 0.10 - 0.50 %

0.00 - 0.75 %

0.75 - 0.90 %

post-retirement benefits plans:

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2.00 - 3.00 %

Interest crediting rate for cash balance plans 0.30 - 0.50 %

0.10 - 0.50 %

post-retirement benefits plans:

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Medical cost trend rate decreases to ultimate rate in year 2027 2029

Health care trend rates do not have a significant effect on the total service and interest cost components or on the post-retirement benefit obligation amounts reported for the U.S.

Post-Retirement Benefit Plan for the year ended October 31, 2020 .

Standard Warranty

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In our experience, claims made under such indemnifications are rare and the associated estimated fair value of the liability was not material as of October 31, 2021.

In connection with the sale of several of our businesses, we have agreed to indemnify the buyers of such business, their respective affiliates and other related parties against certain damages that they might incur in the future.

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.

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Credit Facilities

On March 13, 2019 , we entered into a credit agreement with a group of financial institutions which provides for a $ 1 billion five -year unsecured credit facility that will expire on March 13, 2024 .

For the year ended October 31, 2020, we borrowed $ 798 million and repaid $ 913 million under the credit facility.

As of October 31, 2020, the company had no borrowings outstanding under the credit facility.

On August 7, 2019, we entered into an amendment to the credit agreement, which provides for a $ 500 million short-term loan facility that was used in full to complete the BioTek acquisition and which was repaid in full as of October 31, 2020.

On October 21, 2019, we entered into a second amendment to the credit agreement, which refreshed the amount available for additional incremental term loan facilities under the credit agreement to permit additional incremental facilities of up to $ 500 million.

We had no borrowings under the additional incremental facilities as of October 31, 2020.

On April 17, 2020, we entered into a third amendment to the credit agreement which provides the company with the option to request the consent of the applicable class of lenders to extend the maturity date of revolving borrowings and swingline loans for an additional period of one year and of the 2019 incremental term loans for an additional period of up to 364 days.

On March 13, 2019 , we entered into a credit agreement with a group of financial institutions which, as amended, provides for a $ 1 billion five -year unsecured credit facility that will expire on March 13, 2024 and incremental term loan facilities in an aggregate amount of up to $ 500 million.

On April 21, 2021, we entered into an incremental assumption agreement, pursuant to which the aggregate amount available for borrowing under the revolving credit facility was increased to $ 1.35 billion and the aggregate amount available for incremental facilities was refreshed to remain at $ 500 million.

As of both October 31, 2021 and 2020, we had no borrowings outstanding under the credit facility and we had no borrowings outstanding under the incremental facilities.

We were in compliance with the covenants for the credit facility during the year ended October 31, 2021.

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commercial paper program, under which the company may issue and sell unsecured, short-term promissory notes in the aggregate principal amount not to exceed $ 1.0 billion with up to 397-day maturities.

On June 18, 2021, we increased the authorized maximum amount of notes that may be outstanding to $ 1.35 billion.

At any point in time, the company intends to maintain available commitments under its revolving credit facility in an amount at least equal to the amount of the commercial paper notes outstanding.

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The proceeds from issuances under the program may be used for general corporate purposes.

As of October 31, 2020 , borrowings outstanding under our U.S.

commercial paper program had a weighted average annual interest rate of 0.17 percent and a weighted average remaining maturity of approximately five days .

As of October 31, 2021 , we had no borrowings outstanding under our U.S.

commercial paper program.

We had borrowings of $ 75 million outstanding under the U.S.

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On August 9, 2011 , we terminated our interest rate swap contracts related to our 2020 senior notes that represented the notional amount of $ 500 million.

The asset value, including interest receivable, upon termination for these contracts was

The asset value, including interest receivable, upon termination for these contracts was approximately $ 34 million.

The gain was deferred and amortized to interest expense over the remaining life of the 2020 senior notes.

AGILENT TECHNOLOGIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

approximately $ 34 million.

The gain was deferred and amortized to interest expense over the remaining life of the 2020 senior notes.

On September 17, 2019 , we repaid the $ 500 million outstanding aggregate principal amount of our 2020 senior notes due July 15, 2020 that were called for redemption on August 16, 2019.

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2030 Senior Notes 496 495

2031 Senior Notes 842 —

Total $ 2,729 $ 2,284

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The interest is payable semi-annually on April 1st and October 1st of each year and payments commenced on April 1, 2013 .

In July 2012, Agilent executed treasury lock agreements for $ 400 million in connection with future interest payments to be made on our 2022 senior notes issued on September 13, 2012.

The treasury lock contracts were terminated on September 10, 2012 and we recognized a deferred gain in accumulated other comprehensive income (loss) which is being amortized to interest expense over the life of the 2022 senior notes.

The remaining gain to be amortized related to the treasury lock agreements at October 31, 2020 was less than $ 1 million.

On January 21, 2021, we redeemed $ 100 million of the $ 400 million outstanding aggregate principal amount of our 2022 senior notes due October 1, 2022 .

On April 5, 2021, we redeemed the remaining outstanding $ 300 million of our 2022 senior notes.

The total redemption price of approximately $ 417 million was computed in accordance with the terms of the 2022 senior notes as the present value of the remaining scheduled payments of principal and unpaid interest on the notes being redeemed.

During the year ended October 31, 2021, we recorded a loss on extinguishment of debt of $ 17 million in other income (expense), net in the consolidated statement of operations.

In addition, $ 1 million of accrued interest, up to but not including the applicable redemption date, was paid.

The make-whole premium less partial amortization of previously deferred interest rate swap gain together with the amortization of debt issuance costs and discount was recorded in other income (expense), net in the consolidated statement of operations.

2023 Senior Notes

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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 .

The notes will mature on September 22, 2026

AGILENT TECHNOLOGIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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 .

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The interest is payable semi-annually on June 4th and December 4th of each year and payments commenced on December 4, 2020 .

2031 Senior Notes

On March 12, 2021 , we issued an aggregate principal amount of $ 850 million in senior notes ("2031 senior notes").

The 2031 senior notes were issued at 99.822 % of their principal amount.

The 2031 senior notes will mature on March 12, 2031 , and bear interest at a 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 .

All outstanding notes listed above are unsecured and rank equally in right of payment with all of Agilent's other senior unsecured indebtedness.

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Stock Repurchase Program

On May 28, 2015 we announced that our board of directors had approved a share repurchase program (the "2015 repurchase program").

The 2015 repurchase program authorizes the purchase of up to $ 1.14 billion of our common stock at the company's discretion through and including November 1, 2018.

The 2015 repurchase program did not require the company to acquire a specific number of shares and could have been suspended or discontinued at any time.

During the year ended October 31, 2018, we repurchased and retired approximately 6.4 million shares for $ 422 million under this authorization.

As of October 31, 2018, we had remaining authorization to repurchase up to $ 188 million of our common stock under this program which expired on November 1, 2018.

On November 19, 2018 we announced that our board of directors had approved a new share repurchase program (the "2019 repurchase program") designed, among other things, to reduce or eliminate dilution resulting from issuance of stock under the company's employee equity incentive programs.

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During the year ended October 31, 2019, we repurchased and retired 10.4 million shares for $ 723 million under this authorization.

During the year ended October 31, 2020, we repurchased and retired 5.2 million shares for $ 469 million under this authorization.

During the year ended October 31, 2021, we repurchased and retired approximately 3.1 million shares for $ 365 million under this authorization.

As of October 31, 2020, we had remaining authorization to repurchase up to $ 558 million of our common stock under this program.

Effective February 18, 2021, the 2019 repurchase program was terminated and replaced by the new share repurchase program.

The remaining authorization under the 2019 repurchase plan of $ 193 million expired on February 18, 2021.

On February 16, 2021 we announced that our board of directors had approved a new share repurchase program (the "2021 repurchase program") designed, among other things, to reduce or eliminate dilution resulting from issuance of stock under the

AGILENT TECHNOLOGIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

company's employee equity incentive programs.

The 2021 repurchase program authorizes the purchase of up to $ 2.0 billion of our common stock at the company's discretion and has no fixed termination date.

The 2021 repurchase program which became effective on February 18, 2021, replaced and terminated the 2019 repurchase program on that date.

The 2021 repurchase program does not require the company to acquire a specific number of shares and may be suspended, amended or discontinued at any time.

During the year ended October 31, 2021, we repurchased and retired 3.0 million shares for $ 423 million under this authorization.

As of October 31, 2021, we had remaining authorization to repurchase up to approximately $ 1.577 billion of our common stock under the 2021 repurchase program.

Cash Dividends on Shares of Common Stock

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During the year ended October 31, 2019, cash dividends of 0.656 per share, or $ 206 million were declared and paid on the company's outstanding common stock.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

On November 17, 2021 we declared a quarterly dividend of $ 0.21 per share of common stock, or approximately $ 63 million which will be paid on January 26, 2022 to shareholders of record as of the close of business on January 4, 2022 .

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As of October 31, 2019 $ ( 204 ) $ 131 $ ( 437 ) $ ( 4 ) $ ( 514 )

Impact of adoption of new guidance on tax effects in accumulated other comprehensive income (loss) — 3 ( 9 ) ( 1 ) ( 7 )

As of November 1, 2018 ( 214 ) 137 ( 344 ) 6 ( 415 )

Other comprehensive loss before reclassifications — — ( 157 ) ( 6 ) ( 163 )

Other comprehensive income (loss) before reclassifications 11 — ( 66 ) ( 12 ) ( 67 )

Amounts reclassified out of accumulated other comprehensive income (loss) — ( 7 ) 61 2 56

Tax benefit 10 2 25 4 41

Tax (expense) benefit ( 1 ) 1 — 3 3

Other comprehensive income (loss) 10 ( 6 ) ( 5 ) ( 7 ) ( 8 )

As of October 31, 2020 $ ( 194 ) $ 125 $ ( 442 ) $ ( 11 ) $ ( 522 )

Other comprehensive income (loss) before reclassifications 11 — ( 66 ) ( 12 ) ( 67 )

Other comprehensive income before reclassifications 11 — 228 2 241

Amounts reclassified out of accumulated other comprehensive income (loss) — ( 1 ) 64 17 80

Tax (expense) benefit ( 1 ) 1 — 3 3

Tax expense ( 2 ) — ( 74 ) ( 5 ) ( 81 )

Other comprehensive income (loss) 9 ( 1 ) 218 14 240

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statement of operations

Unrealized gains and (losses) on derivatives $ ( 2 ) $ 8 Cost of products and interest expense

Unrealized losses on derivatives $ ( 17 ) $ ( 2 ) Cost of products and interest expense

( 17 ) ( 2 ) Total before income tax

— ( 2 ) (Provision)/benefit for income tax

4 — Benefit for income tax

( 13 ) ( 2 ) Total net of income tax

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The broad portfolio of offerings includes immunohistochemistry ("IHC"), in situ hybridization ("ISH"), hematoxylin and eosin ("H&E") staining and special staining.

Fourth, we also collaborate with a number of major pharmaceutical companies to develop new potential pharmacodiagnostics, also known as companion diagnostics, which may be used to identify patients most likely to benefit from a specific targeted therapy.

Fourth, we also collaborate with a number of major pharmaceutical companies to develop new potential tissue and liquid-based pharmacodiagnostics, also known as companion diagnostics, which may be used to identify patients most likely to benefit from a specific targeted therapy.

Fifth, the reagent partnership business is a provider of reagents used for turbidimetry and flow cytometry.

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Charges are allocated to the segments, and the allocations have been determined on a basis that we consider to be a reasonable reflection of the utilization of services provided to or benefits received by the segments.

In addition, we do not allocate amortization and impairment of acquisition-related intangible assets, pension curtailment or settlement gains, restructuring and transformational initiatives expenses, acquisition and integration costs, business exit and divestiture costs, special compliance costs, some nucleic acid solutions division ("NASD") site costs and certain other charges to the operating margin for each segment because management does not include this information in its measurement of the performance of the operating segments.

In addition, we do not allocate asset impairments, amortization of acquisition-related intangible assets, change in the fair value of acquisition-related contingent considerations, acquisition and integration costs, restructuring and transformational initiatives expenses, acceleration of share-based compensation expense related to workforce reduction, business exit and divestiture costs, special compliance costs, some nucleic acid solutions division ("NASD") site costs and certain other charges to the operating margin for each segment because management does not include this information in its measurement of the performance of the operating segments.

Transformational initiatives include expenses associated with targeted cost reduction activities such as manufacturing transfers, site consolidations, legal entity and other business reorganizations, in-sourcing or outsourcing of activities.

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Share-based compensation expense (1)

$ 35 $ 17 $ 29 $ 81

Year Ended October 31, 2019:

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Share-based compensation expense $ 33 $ 14 $ 25 $ 72

(1) Share-based compensation expense in 2020 excludes amounts not allocated to the segments related to accelerated share-based compensation expense from workforce reduction and from our acquisition of BioTek.

(1) Share-based compensation expense in 2020 and 2021 excludes amounts not allocated to the segments related to accelerated share-based compensation expense from workforce reduction and from our acquisition of BioTek and Resolution Bioscience.

The following table reconciles reportable segments' income from operations to Agilent's total enterprise income before taxes:

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Business exit and divestiture costs ( 5 ) ( 2 ) —

Change in fair value of contingent consideration 21 — —

NASD site costs — — ( 12 )

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(1) For the years ended October 31, 2020 and 2019, the other category primarily includes legal costs related to a claim we pursued against Twist Bioscience Corporation in addition to other miscellaneous adjustments.

(2) For the year ended October 31, 2021, other income (expense), net includes net gains on the fair value of equity securities.

For the year ended October 31, 2020, other income (expense), net includes the settlement of a legal claim against Twist Bioscience Corporation.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Major Customers.

No customer represented 10 percent or more of our total net revenue in 2021, 2020 or 2019.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The following table reflects segment assets and capital expenditures under our management reporting system.

Segment assets include allocations of corporate assets, goodwill, net other intangibles and other assets.

Unallocated assets primarily consist of cash, cash equivalents, the valuation allowance relating to deferred tax assets and other assets.

Unallocated assets primarily consist of cash, cash equivalents, short-term and long-term investments, deferred tax assets, right-of use assets and other assets.

Life Sciences and Applied Markets Diagnostics and Genomics Agilent CrossLab Total

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Cash and cash equivalents 1,484 1,441

Short-term investments 91 —

Prepaid expenses 91 106

Investments 158 102

Long-term investments 185 158

Long-term and other receivables 126 114

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Total assets $ 10,705 $ 9,627

The other category primarily includes overfunded pension assets which are not allocated to the segments.

The other category primarily includes overfunded pension plans which are not allocated to the segments.

The following table presents summarized information for net revenue by geographic region.

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The rest of the world primarily consists of Asia and the rest of Europe.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

States Germany Rest of the

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October 31, 2020 $ 727 $ 126 $ 538 $ 1,391

QUARTERLY SUMMARY

Three Months Ended

January 31, April 30, July 31, October 31,

(in millions, except per share data)

Net revenue $ 1,357 $ 1,238 $ 1,261 $ 1,483

Gross profit 723 657 669 788

Income from operations 215 102 230 299

Net income 197 101 199 222

Net income per share — Basic $ 0.64 $ 0.33 $ 0.64 $ 0.72

Net income per share — Diluted $ 0.63 $ 0.32 $ 0.64 $ 0.71

Weighted average shares used in computing net income per share:

Basic 310 309 309 308

Diluted 313 312 312 311

Cash dividends per common share $ 0.180 $ 0.180 $ 0.180 $ 0.180

Net revenue $ 1,284 $ 1,238 $ 1,274 $ 1,367

Gross profit 707 669 692 737

Income from operations 250 216 225 250

Net income 504 182 191 194

Net income per share — Basic $ 1.58 $ 0.57 $ 0.61 $ 0.63

Net income per share — Diluted $ 1.57 $ 0.57 $ 0.60 $ 0.62

Weighted average shares used in computing net income per share:

Basic 318 317 312 309

Diluted 322 321 316 313

Cash dividends per common share $ 0.164 $ 0.164 $ 0.164 $ 0.164

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

SUBSEQUENT EVENT

Segment Reporting Changes.

To enable our growth strategies and strengthen our focus on customers, we announced subsequent to year end that we will move our chemistries and supplies business as well as our remarketed instruments business from our Agilent CrossLab business segment to our life sciences and applied markets business segment.

In addition we will move our service revenue and cost of sales related to the acquisition of BioTek from our life sciences and applied markets business segment to our Agilent CrossLab business segment.

Following this reorganization, Agilent will continue to have three business segments (life sciences and applied markets, diagnostics and genomics and Agilent CrossLab), each of which will continue to comprise a reportable segment.

All historical segment numbers for our life sciences and applied markets and Agilent CrossLab segments will be recast to conform to this new reporting structure in our financial statements, beginning with our Form 10-Q filing for the first quarter of fiscal year 2022.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data