What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2022-12-21 compared with 2021-12-17 · 272 added, 367 removed, 1771 unchanged (27% of the section changed)

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Consolidated Financial Statements:

Report of Independent Registered Public Accounting Firm

Report of Independent Registered Public Accounting Firm - (PCAOB ID:

Consolidated Statement of Operations for each of the three years in the period ended October 31, 202 2

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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, 2022, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO.

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.

Basis for Opinions

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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;

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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Income before taxes 1,504 1,360 842

Provision (benefit) for income taxes 150 123 ( 152 )

Provision for income taxes 250 150 123

Net income $ 1,254 $ 1,210 $ 719

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Gain (loss) on derivative instruments, net of tax expense (benefit) of $ 13 , $ 1 and $( 3 )

1 ( 9 ) ( 4 )

Amounts reclassified into earnings related to derivative instruments, net of tax expense (benefit) of $( 8 ), $ 4 and $ 0

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Net defined benefit pension cost and post retirement plan costs:

Change in actuarial net loss, net of tax expense (benefit) of $ 74 , $ 0 and $( 25 )

218 ( 5 ) ( 93 )

Change in net prior service benefit, net of tax benefit of $ 0 , $( 1 ) and $( 2 )

Change in actuarial net loss, net of tax expense of $ 9 , $ 74 and $ 0

Change in net prior service benefit, net of tax expense (benefit) of $ 0 , $ 0 and $( 1 )

( 1 ) ( 1 ) ( 6 )

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Stockholders' equity:

Preferred stock;$ 0.01 par value;

Preferred stock;

$ 0.01 par value;

125 million shares authorized;

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Change in fair value of contingent consideration ( 25 ) ( 21 ) —

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

Net (gain) loss on equity securities 67 ( 98 ) ( 27 )

Loss on extinguishment of debt 9 17 —

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Employee compensation and benefits ( 22 ) 112 29

Treasury lock agreement payment — — ( 6 )

Other assets and liabilities ( 8 ) ( 14 ) ( 182 )

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Payment in exchange for convertible note ( 4 ) ( 5 ) ( 9 )

Payment to acquire intangible assets ( 1 ) — ( 1 )

Acquisitions of businesses and intangible assets, net of cash acquired ( 52 ) ( 547 ) —

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Payment of dividends ( 250 ) ( 236 ) ( 222 )

Issuance of senior notes 848 499 497

Issuance of senior notes and long-term loan 600 848 499

Debt issuance costs — ( 7 ) ( 4 )

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Repayment of finance leases — — ( 4 )

Purchase of non-controlling interest — — ( 4 )

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

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Capital Retained

(Accumulated Deficit) Total Stockholders' Equity Non-

Interest Total

(Accumulated Deficit) Total Stockholders' Equity

(in millions, except number of shares in thousands)

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

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

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

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Net income — — — 1,210 — 1,210

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

Other comprehensive income — — — — 240 240

Total comprehensive income 1,450

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Net income — — — 1,254 — 1,254

Other comprehensive income — — — — 240 240 — 240

Other comprehensive loss — — — — ( 65 ) ( 65 )

Total comprehensive income 1,189

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("we", "Agilent" or the "company"), incorporated in Delaware in May 1999, is a global leader in life sciences, diagnostics and applied chemical markets, providing application focused solutions that include instruments, software, services and consumables for the entire laboratory workflow.

New Segment Structure.

In the first quarter of fiscal year 2022, we announced a change in organizational structure designed to enable our growth strategies and strengthen our focus on customers.

Our chemistries and supplies business and our remarketed instruments business moved from our Agilent CrossLab business segment to our life sciences and applied markets business segment.

We also moved BioTek's service revenue and related cost of sales from our life sciences and applied markets business segment to our Agilent CrossLab business segment.

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

We began reporting under this new structure with the Quarterly Report on Form 10-Q for the period ended January 31, 2022.

Historical financial segment information has been recast to conform to this new presentation in our financial statements and accompanying notes.

There was no change to our diagnostics and genomics business segment.

Basis of Presentation.

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and international markets.

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

The global supply chain and logistics pressures, high inflation, and COVID-related shutdowns in China 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.

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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 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 Accounting Standard Codification Topic 606, Revenue from Contracts with Customers , (“ASC 606’’).

See also Note 3, "Revenue" for additional information on revenue recognition.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Revenue is recognized when control of the promised products or services is transferred to our customers and the performance obligation is fulfilled in an amount that reflects the consideration that we expect to be entitled in exchange for those products or services, the transaction price.

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We use present right to payment, legal title, physical possession of the asset, and risks and rewards of ownership as indicators to determine the transfer of control to the customer.

For products that transfer control over time, revenue is recognized as the performance obligation is satisfied.

Product over time revenue is assessed against the following criteria:

the performance creates an asset that the customer controls as the asset is created;

the asset has no alternative use;

and we have an enforceable right to payment.

Where acceptance is not a formality, the customer must have documented their acceptance of the product or service.

For products that include installation, if the installation meets the criteria to be considered a separate performance obligation, product revenue is recognized when control has passed to the customer, and recognition of installation revenue occurs once completed.

Product revenue, including sales to

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

resellers and distributors is reduced for provisions for warranties, returns, and other adjustments in the period the related sales are recorded.

Product revenue, including sales to resellers and distributors is reduced for provisions for warranties, returns, and other adjustments in the period the related sales are recorded.

Service revenue includes extended warranty, customer and software support including:

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Sales taxes collected from customers and remitted to governmental authorities are not included in our revenue.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Shipping and Handling Costs.

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Advertising costs are generally expensed as incurred and amounted to $ 66 million in 2022, $ 63 million in 2021 and $ 48 million in 2020.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Taxes on Income.

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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.

As of October 31, 2022, we had no short-term investments.

Restricted Cash and Restricted Cash Equivalents.

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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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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

addition, Agilent has credit risk from derivative financial instruments used in hedging activities and accounts receivable.

We invest in a variety of financial instruments and limit the amount of credit exposure with any one financial institution.

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No single customer accounted for more than 10 percent of accounts receivable as of October 31, 2022, or 2021.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Inventory is valued at standard cost, which approximates actual cost computed on a first-in, first-out basis, not in excess of market value.

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See also Note 9, "Leases" for additional information about our leases.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Acquisitions.

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Our determination of the fair value of the intangible assets acquired involves the use of significant estimates and assumptions.

Specifically, our determination of the fair value of the developed product technology and IPR&D acquired

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

involve significant estimates and assumptions related to revenue growth rates and discount rates.

Specifically, our determination of the fair value of the developed product technology and IPR&D acquired involve significant estimates and assumptions related to revenue growth rates and discount rates.

Our determination of the fair value of customer relationships acquired involved significant estimates and assumptions related to revenue growth rates, discount rates, and customer attrition rates.

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life sciences and applied markets, diagnostics and genomics and Agilent CrossLab.

We performed a qualitative test for goodwill impairment of the three reporting units, as of September 30, 2021, our annual impairment test date.

We performed a quantitative test for goodwill impairment of the three reporting units as of November 1, 2021, due to the change in our segment structure.

As of November 1, 2021, there was no impairment of goodwill.

We also performed a qualitative test for goodwill impairment of the three reporting units as of September 30, 2022, our annual impairment test date.

Based on the results of our qualitative testing, we believe that it is more-likely-than-not that the fair value of each reporting unit is greater than its respective carrying value.

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Agilent's indefinite-lived intangible assets are IPR&D intangible assets.

The accounting guidance allows a qualitative approach for testing indefinite-lived intangible assets for impairment, similar to the issued impairment testing guidance for goodwill and allows the option to first assess qualitative factors (events and circumstances) that could have affected the significant inputs used in determining the fair value of the indefinite-lived intangible asset to determine whether it is more-likely-than-not (i.e., greater than 50% chance) that the indefinite-lived intangible asset is impaired.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

significant inputs used in determining the fair value of the indefinite-lived intangible asset to determine whether it is more-likely-than-not (i.e., greater than 50% chance) that the indefinite-lived intangible asset is impaired.

An organization may choose to bypass the qualitative assessment for any indefinite-lived intangible asset in any period and proceed directly to calculating its fair value.

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

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

During the year ended October 31, 2022 and 2021 there were no impairments of indefinite-lived intangible assets.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Impairment of Long-Lived Assets.

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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, 2022, there were no impairments of other long-lived assets or intangible 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.

Variable Interest Entities.

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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.

There are no equity investments with readily determinable fair value at October 31, 2022 and $ 91 million at October 31, 2021 .

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.

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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 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.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

when available with gains and losses included in net income.

The fair value of long-term equity investments which are not readily determinable, and which are not accounted under the equity method are reported at cost with adjustments for observable changes in prices or impairments included in net income.

As of October 31, 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.

As of October 31, 2022, the fair value of the term loans approximates its carrying value, and the fair value of our senior notes was $ 1,754 million with a carrying value of $ 2,133 million.

This compares to the fair value of our senior notes of $ 2,806 million with a carrying value of $ 2,729 million as of October 31, 2021.

The change in the fair value compared to carrying value in the year ended October 31, 2022, is primarily due to increased market interest rates.

The fair value was calculated from quoted prices which are primarily Level 1 inputs under the accounting guidance.

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See also Note 12, "Fair Value Measurements" for additional information on the fair value of financial instruments.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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

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Agilent is exposed to global foreign currency exchange rate and interest rate risks in the normal course of business.

We enter into foreign exchange hedging contracts, primarily forward contracts and purchased options, interest rate swaps and interest rate locks to manage financial exposures resulting from changes in foreign currency exchange rates and interest rates.

We enter into foreign exchange hedging contracts, primarily forward contracts, interest rate swaps and interest rate locks to manage financial exposures resulting from changes in foreign currency exchange rates and interest rates.

In the vast majority of cases, these contracts are designated at inception as hedges of the related foreign currency or interest exposures.

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Interest rate exposures are associated with the company's fixed-rate debt.

For option contracts, we exclude time value from the measurement of effectiveness.

To qualify for hedge accounting, contracts must reduce the foreign currency exchange rate and interest rate risk otherwise inherent in the amount and duration of the hedged exposures and comply with established risk management policies.

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All derivatives are recognized on the balance sheet at their fair values.

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

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

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

Amounts associated with cash flow hedges are reclassified and recognized in income when either the forecasted transaction occurs or it becomes probable the forecasted transaction will not occur.

Amounts associated with cash flow hedges are

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

reclassified and recognized in income when either the forecasted transaction occurs or it becomes probable the forecasted transaction will not occur.

Derivatives not designated as hedging instruments are recorded on the balance sheet at their fair value and changes in the fair values are recorded in the income statement in the current period.

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dollars using current exchange rates at the balance sheet date;

revenue and expenses are translated using monthly exchange

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

rates which approximate to average exchange rates in effect during each period.

revenue and expenses are translated using monthly exchange rates which approximate to average exchange rates in effect during each period.

Resulting translation adjustments are reported as a separate component of accumulated other comprehensive income (loss) in stockholders' equity.

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Recently Adopted Accounting Pronouncements

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.

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.

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.

This guidance eliminates certain exceptions to existing guidance related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period and the recognition of deferred tax liabilities for outside basis differences.

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

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

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

This update provides optional guidance for a limited period of time to ease the potential burden in accounting for (or recognizing the effects of) reference rate reform on financial reporting.

The amendments in the guidance provide optional expedients and exceptions for applying generally accepted accounting principles to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met.

The amendments apply to contracts, hedging relationships, and other transactions that reference London Inter-bank Offered Rate ("LIBOR") or another reference rate expected to be discontinued because of reference rate reform.

When elected, the optional expedients for contract modifications are applied consistently for all eligible contracts or eligible transactions within the relevant Topic or Industry Subtopic in the FASB's Accounting Standards Codification.

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.

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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.

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.

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 increases relevance and comparability of financial statement information.

On November 1, 2021, we adopted this guidance which did not 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.

On November 1, 2021 we early adopted this guidance which did not have a material impact on our consolidated financial statements and disclosures.

New Accounting Pronouncements Not Yet Adopted

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.

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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.

We do not expect that the adoption of this standard will have a material impact 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 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.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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 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.

The consideration paid was $ 1.17 billion.

Agilent funded the acquisition using existing cash of $ 470 million and debt of $ 700 million.

The BioTek acquisition was accounted for in accordance with the authoritative accounting guidance.

The acquired assets and assumed liabilities were recorded by Agilent at their estimated fair values.

Agilent determined the estimated fair values with the assistance of appraisals or valuations performed by third party specialists, discounted cash flow analyses, and estimates made by management.

We expect to realize revenue synergies, leverage and expand the existing sales channels and product development resources, and utilize the assembled workforce.

These factors, among others, contributed to a purchase price in excess of the estimated fair value of BioTek’s net identifiable assets acquired (see summary of net assets below), and, as a result, we have recorded goodwill in connection with this transaction.

Goodwill acquired was allocated to our operating segments and reporting units as a part of the purchase price allocation.

All goodwill was allocated to the life sciences and applied markets reporting unit.

Agilent’s acquisition of BioTek is treated as an asset purchase for tax purposes.

The tax basis of the acquired assets equals the fair market value on acquisition date.

The following table summarizes the allocation of the purchase price to the estimated fair values of the assets acquired and liabilities assumed on the closing date of August 23, 2019 (in millions):

Cash and cash equivalents $ 10

Accounts receivable 28

Inventories 21

Other current assets 2

Property, plant and equipment 8

Intangible assets 641

Total assets acquired $ 1,193

Accounts payable ( 4 )

Deferred revenue ( 5 )

Employee compensation and benefits ( 7 )

Other accrued liabilities ( 2 )

Long-term debt ( 4 )

Net assets acquired $ 1,171

The fair value of cash and cash equivalents, accounts receivable, other current assets, accounts payable and other accrued liabilities were generally determined using historical carrying values given the short-term nature of these assets and liabilities.

The fair values for acquired intangible assets and deferred revenue were determined with the input from third party valuation specialists.

The fair values of certain other assets, inventory, property, plant and equipment, investments, long-term debt, and certain other long-term liabilities were determined internally using historical carrying values and estimates made by management.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Valuations of intangible assets acquired

The components of intangible assets acquired in connection with the BioTek acquisition were as follows (in millions):

Fair Value Estimated

Developed product technology $ 387 5 - 13 years

Customer relationships 202 3 - 8 years

Backlog 5 2 months

Tradenames and trademarks 43 10 years

Total intangible assets subject to amortization $ 637

In-process research and development 4

Total intangible assets $ 641

As noted above, the intangible assets, including in-process research and development, were valued with input from valuation specialists.

Agilent used variations of the income approach in determining the fair value of intangible assets acquired in the BioTek acquisition.

Specifically, the developed product technology and in-process research and development were valued using the multi-period excess earnings method under the income approach by discounting forecasted cash flows directly related to the products expecting to result from the projects, net of returns on contributory assets.

The company utilized the incremental cash flow method for determining the fair value of the customer relationships acquired, and the relief from royalty method to determine the fair value of the tradename.

Order backlog was valued on a direct cash flow basis.

The primary in-process research and development project acquired relates to a next version of a product which was subsequently released to customers in 2020.

After release, the asset was moved to developed technology.

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

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

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

The financial results of ACEA have been included in our financial results within our life sciences and applied markets segment 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):

Net revenue $ 5,308

Net income $ 1,012

Net income per share — basic $ 3.22

Net income per share — diluted $ 3.18

The unaudited proforma financial information assumes that the companies were combined as of November 1, 2017 and include business combination accounting effects from the acquisition including amortization charges from acquired intangible assets, the impact on cost of sales due to the respective estimated fair value adjustments to inventory, changes to interest income for cash used in the acquisition, interest expense associated with debt paid in connection with the acquisition and acquisition related transaction costs and tax related effects.

The proforma information as presented above is for informational purposes only and is not indicative of the results of operations that would have been achieved if the acquisition had taken place at the beginning of fiscal 2019.

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.

AGILENT TECHNOLOGIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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

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Pharmaceutical and Biopharmaceutical $ 2,515 2,224 $ 1,754

Chemical and Energy 1,328 1,154 1,199

Chemicals and Advanced Materials 1,521 1,328 1,154

Diagnostics and Clinical 963 938 787

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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.

The final LTPP award may vary from zero to 200 percent of the target award.

The maximum contractual term for awards under the LTPP program is three years .

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For all share-based awards we have recognized compensation expense using a straight-line amortization method.

As the guidance requires that share-based compensation expense be based on awards that are ultimately expected to vest, estimated share-based compensation has been reduced for estimated forfeitures.

As the guidance requires that share-based compensation expense should be based on awards that are ultimately expected to vest, estimated share-based compensation has been reduced for estimated forfeitures.

The impact on our results for share-based compensation was as follows:

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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.

The Monte Carlo simulation fair value model requires the use of highly subjective and complex assumptions, including the price volatility of the underlying stock.

For the volatility of our LTPP (TSR) grants, we used our own historical stock price volatility.

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.

We use historical volatility to estimate the expected stock price volatility assumption for employee stock option awards.

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Weighted average volatility 26 % 26 % —

Expected life 5.5 years — —

Expected life 5.5 years 5.5 years —

Volatility of Agilent shares 29 % 30 % 23 %

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Options exercised in fiscal 2021 $ 34,305 $ 33

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

Options exercised in fiscal 2022 $ 10,765 $ 38

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Deferred 1 1 1

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

Total provision for income taxes $ 250 $ 150 $ 123

The differences between the U.S.

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Foreign-derived intangible income deduction ( 46 ) ( 35 ) ( 9 )

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

Excess tax benefits from stock-based compensation ( 19 ) ( 29 ) ( 18 )

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For 2022, our income tax expense was $ 250 million with an effective tax rate of 16.6 percent.

For the year ended October 31, 2022, our effective tax rate and the resulting provision for income taxes were impacted by the tax benefit of $ 46 million related to foreign-derived intangible income.

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.

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

For 2019, our income tax 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 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.

We have negotiated a tax holiday in Singapore.

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As a result of the incentive, the impact of the tax holiday decreased income taxes by $ 53 million, $ 35 million, and $ 71 million in 2022, 2021, and 2020, respectively.

The benefit of the

The benefit of the tax holiday on net income per share (diluted) was approximately $ 0.18 , $ 0.11 , and $ 0.23 in 2022, 2021 and 2020, respectively.

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.

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.

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

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Intangibles $ 62 $ 72

Pension benefits and retiree medical benefits — 65

Employee benefits, other than retirement 45 43

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The remaining $ 381 million of the foreign net operating losses carry forward indefinitely.

At October 31, 2021, we had federal and foreign capital loss carryforwards of $ 22 million and $ 127 million, respectively.

If not utilized, the federal capital loss carryforwards will expire in 2022.

At October 31, 2022, we had foreign capital loss carryforwards of $ 108 million.

The foreign capital losses carry forward indefinitely.

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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 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.

We recognized tax benefit of $ 2 million in 2022, tax benefit of $ 19 million in 2021, and tax expense of $ 8 million in 2020, for interest and penalties related to unrecognized tax benefits.

Interest and penalties accrued as of October 31, 2022 and 2021 were $ 21 million and $ 26 million, respectively.

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Property, plant and equipment, net $ 1,100 $ 945

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 2022.

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

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

Depreciation expenses were $ 120 million in 2022, $ 122 million in 2021 and $ 119 million in 2020.

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Year Ended October 31,

2022 2021 2020

(in millions)

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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.

Supplemental cash flow information related to leases was as follows:

Year Ended October 31,

2022 2021 2020

(in millions)

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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, 2022, the original cost and net book value of operating leased assets were $ 29 million and $ 4 million, respectively.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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

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.

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Foreign currency translation impact 5 — 3 8

Goodwill arising from acquisitions and adjustments — 365 — 365

Goodwill as of October 31, 2021 $ 1,743 $ 1,964 $ 268 $ 3,975

2 unchanged sentences

Goodwill as of October 31, 2022 $ 1,743 $ 1,953 $ 256 $ 3,952

As of September 30, 2021, our annual impairment test date, we assessed goodwill for triggering events and circumstances, including impacts due to COVID-19, and determined no impairment of goodwill was indicated for our reporting units.

In the first quarter of fiscal year 2022, we reorganized our operating segments and moved our chemistries and supplies business and our remarketed instruments business from our Agilent CrossLab business segment to our life sciences and applied markets business segment.

As a result, we reassigned approximately $ 307 million of goodwill from our Agilent Crosslab business segment to our life sciences and applied markets business segment using the relative fair value allocation approach.

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

As a result, we reassigned approximately $ 10 million of goodwill from our life sciences and applied markets segment to our Agilent Crosslab business segment using the relative fair value allocation approach.

Goodwill balances as of October 31, 2020, have been recast to conform to this new presentation.

There were no changes to our reporting units due to this reorganization.

In addition, we performed a goodwill impairment test, and the results of the analysis indicated that the fair values for all three of our reporting units were in excess of their carrying values by substantial amounts;

therefore, no impairment was indicated.

As of September 30, 2022, our annual impairment test date, we assessed goodwill for triggering events and circumstances, and determined no impairment of goodwill was indicated for our reporting units.

AGILENT TECHNOLOGIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The component parts of other intangible assets at October 31, 2021 and 2022 are shown in the table below:

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Purchased technology $ 1,742 $ 972 $ 770

Backlog 8 3 5

Trademark/Tradename 196 133 63

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Total $ 2,159 $ 1,338 $ 821

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.

In 2022, we acquired Polymer Standards Service GmbH (PSS), a provider of solutions in the field of polymer characterization for $ 41 million.

During fiscal year 2022, we recorded additions to goodwill of $ 19 million and additions to other intangible assets of $ 35 million related to the acquisition of PSS and advanced artificial intelligence technology.

During the year other intangible assets decreased $ 3 million due to the impact of foreign currency translation.

In 2021, we acquired 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.

See also Note 12, "Fair Value Measurements" for additional information.

During fiscal year 2021, we recorded additions to goodwill of $ 365 million and additions to other intangible assets of $ 343 million related to this acquisition.

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)

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

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During fiscal years 2022, 2021 and 2020, there were no impairments of finite-lived intangible assets recorded.

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

During 2022, we also wrote-off the gross carrying amounts of $ 184 million and the related accumulated amortization of fully amortized intangible assets which were no longer being used.

Amortization expense of intangible assets was $ 192 million in 2022, $ 195 million in 2021, and $ 186 million in 2020.

AGILENT TECHNOLOGIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Future amortization expense related to existing finite-lived purchased intangible assets associated with business combinations for the next five fiscal years and thereafter is estimated below:

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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)

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

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( in millions)

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

Net gain (loss) recognized during the period on equity securities $ ( 67 ) $ 98 $ 27

Net gain on equity securities sold during the period 11 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.

As of November 1, 2019, total impact of adoption of this accounting guidance to our consolidated balance sheet was an increase of $ 7 million to equity securities with RDFV (included within long-term investments) and a net increase of $ 5 million to beginning retained earnings.

Net unrealized gains on our trading securities portfolio were $ 8 million in 2021, $ 2 million in 2020 and $ 3 million in 2019.

Unrealized gain (loss) on equity securities held as of the end of the period $ ( 78 ) $ 92 $ 27

AGILENT TECHNOLOGIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Unrealized gains on our equity securities without RDFV were $ 6 million, $ 17 million and $ 27 million in 2022, 2021 and 2020, respectively.

In 2022, net unrealized losses on our trading securities were $ 7 million.

In 2021 and 2020, net unrealized gains on our trading securities were $ 8 million and $ 2 million, respectively.

There were no impairments of investments in 2022, 2021 and 2020.

FAIR VALUE MEASUREMENTS

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Derivative instruments (foreign exchange contracts) 31 — 31 —

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

Trading securities 31 31 — —

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

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

AGILENT TECHNOLOGIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Our money market funds and trading securities are generally valued using quoted market prices and therefore are classified within level 1 of the fair value hierarchy.

Our derivative financial instruments are classified within level 2, as there is not an active market for each hedge contract, but the inputs used to calculate the value of the instruments are tied to active markets.

not an active market for each hedge contract, but the inputs used to calculate the value of the instruments are tied to active markets.

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

Short-term investments - equity 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.

Short-term investments - equity securities with readily determinable fair value ("RDFV") 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.

Trading securities, which are comprised of mutual funds, bonds and other similar instruments, other investments and deferred compensation liability are reported at fair value, with gains or losses resulting from changes in fair value recognized currently in net income.

Certain derivative instruments are reported at fair value, with unrealized gains and losses, net of tax, included in accumulated other comprehensive income (loss) within stockholders' equity.

Realized gains and losses from the sale of these instruments are recorded in net income.

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

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

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 fair value of the contingent consideration liability relates to milestone payments in connection with the acquisition of advanced artificial intelligence technology in February 2022 and the acquisition of Resolution Bioscience in April 2021.

Resolution Bioscience.

The fair value of the potential future milestone payments, which is 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.

The fair value of the revenue component was zero at October 31, 2022.

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

2 unchanged sentences

As of October 31, 2022, the expected maximum earn-out period for the contingent payments does not exceed 2.2 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.

6 unchanged sentences

Balance at October 31, 2021 $ 89

Additions to contingent consideration 3

Change in fair value (included within selling, general and administrative expenses) ( 25 )

Balance at October 31, 2022 67

The fair value of the contingent consideration liability as of October 31, 2022 was estimated to be $ 67 million of which $ 66 million was recorded in other accrued liabilities and $ 1 million was recorded in other long-term liabilities on the consolidated balance sheet.

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

AGILENT TECHNOLOGIES, INC.

7 unchanged sentences

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

For the year ended October 31, 2022, there were no impairments of long-lived assets held and used.

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

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

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

There were no impairments of long-lived assets held for sale in 2022, 2021 and 2020.

1 unchanged sentence

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.

Non-Marketable Equity Securities

For the years ended October 31, 2022, 2021 and 2020, 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.

For the years ended October 31, 2022, 2021 and 2020, unrealized gains of $ 6 million, $ 17 million and $ 27 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, 2022, the cumulative net gain (loss) on our non-marketable equity securities without readily determinable fair values was comprised of a $ 35 million gain and no losses, and the carrying amount was $ 141 million.

As of October 31, 2021, the cumulative net gain (loss) on our non-marketable equity securities without readily determinable fair values was comprised of a $ 29 million gain and no losses, and the carrying amount was $ 120 million.

Fair values for the non-marketable securities included in long-term investments on the consolidated balance sheet were measured using Level 3 inputs because they are primarily equity stock issued by private companies without quoted market prices.

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We enter into foreign exchange contracts to hedge our forecasted operational cash flow exposures resulting from changes in foreign currency exchange rates.

These foreign exchange contracts, carried at fair value, have maturities between one and twelve months.

These foreign exchange contracts, carried at fair value, have maturities between one and

AGILENT TECHNOLOGIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

twelve months.

These derivative instruments are designated and qualify as cash flow hedges under the criteria prescribed in the authoritative guidance and are assessed for effectiveness against the underlying exposure every reporting period.

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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

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.

If it becomes probable that the forecasted transaction will not occur, the hedge relationship will be de-designated and amounts accumulated in other comprehensive income (loss) will be reclassified to other income (expense), net in the current period.

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

2 unchanged sentences

For the years ended October 31, 2022, 2021 and 2020, ineffectiveness and gains and losses recognized in other income (expense), net due to de-designation of cash flow hedge contracts were not significant.

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

We designated the treasury lock as a cash flow hedge.

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

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

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

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

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

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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These foreign exchange contracts are carried at fair value and are designated and qualify as net investment hedges under the criteria prescribed in the authoritative guidance.

Changes in fair value of the effective portion of the derivative instrument are recognized in accumulated other comprehensive income (loss) and are assessed for effectiveness against the underlying exposure every reporting period.

Changes in fair value of the effective portion of the derivative instrument are recognized in accumulated other comprehensive income (loss)- translation adjustment and are assessed for effectiveness against the underlying exposure every reporting period.

If the company’s net investment changes during the year, the hedge relationship will be assessed and de-designated if the hedge notional amount is outside of prescribed tolerance with a gain/loss reclassified from other comprehensive income (loss) to other income (expense) in the current period.

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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.

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

The counterparties to the derivative

AGILENT TECHNOLOGIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The counterparties to the derivative instruments may request collateralization, in accordance with derivative agreements, on derivative instruments in net liability positions.

instruments may request collateralization, in accordance with derivative agreements, on derivative instruments in net liability positions.

The aggregate fair value of all derivative instruments with credit-risk-related contingent features that were in a net liability position as of October 31, 2022, was $ 1 million.

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Taiwan Dollar — — ( 16 )

Brazilian Real — — ( 14 )

Other 4 — ( 9 )

India Rupee — — ( 11 )

$ ( 446 ) $ ( 10 ) $ ( 162 )

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Foreign exchange contracts:

Loss on interest rate swaps recognized in other comprehensive income (loss) $ — $ — $ ( 6 )

Loss reclassified from accumulated other comprehensive income (loss) into interest expense $ ( 2 ) $ ( 1 ) $ ( 1 )

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Retirement Plan (the "RP").

For eligible service through October 31, 1993, the benefit payable under the Agilent Retirement Plan is reduced by any amounts due to the eligible employee under the Agilent defined contribution Deferred Profit-Sharing Plan (the "DPSP"), which was closed to new participants as of November 1993.

As of October 31, 2021 and 2020, the fair value of plan assets of the DPSP was $ 136 million and $ 123 million, respectively.

Note that the projected benefit obligation for the DPSP equals the fair value of plan assets.

Effective November 1, 2014, Agilent’s U.S.

defined benefit retirement plan was closed to new entrants including new employees, new transfers to the U.S.

RP was closed to new entrants including new employees, new transfers to the U.S.

payroll and rehires.

1 unchanged sentence

Any pension benefit earned in the U.S.

Plans through April 30, 2016 remained fully vested, and there are no additional benefit accruals after April 30, 2016.

Plans through April 30, 2016, remained fully vested and is payable on termination, retirement, death, or permanent disability, based on an eligible participant’s years of credited service, age and other criteria.

There are no additional benefit accruals after April 30, 2016.

As of October 31, 2022 and 2021, the fair value of plan assets of the DPSP was $ 93 million and $ 136 million, respectively.

Note that the projected benefit obligation for the DPSP equals the fair value of plan assets.

Agilent also maintains a Supplemental Benefits Retirement Plan ("SBRP") in the U.S., which is a supplemental unfunded non-qualified defined benefit plan to provide benefits that would be provided under the RP but for limitations imposed by the Internal Revenue Code.

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We match contributions to employees up to a maximum of 6 percent of an employee's annual eligible compensation.

Effective May 1, 2016 until April 30, 2022, we will provide an additional transitional company contribution for certain eligible employees equal to 3 percent, 4 percent or 5 percent of an employee's annual eligible compensation due to the RP benefits being frozen.

The maximum contribution to the 401(k) Plan is 50 percent of an employee's annual eligible compensation, subject to regulatory limitations.

Effective May 1, 2016 until April 30, 2022, we provided an additional transitional company contribution for certain eligible employees equal to 3 percent, 4 percent or 5 percent of an employee's annual eligible compensation due to the RP benefits being frozen.

The maximum employee contribution to the 401(k) Plan is 50 percent of an employee's annual eligible compensation, subject to regulatory limitations.

The 401(k) Plan employer expense included in income from operations was $ 46 million in 2022, $ 43 million in 2021 and $ 41 million in 2020.

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Expected return on plan assets ( 27 ) ( 29 ) ( 28 ) ( 43 ) ( 49 ) ( 47 ) ( 6 ) ( 6 ) ( 7 )

Amortization of net actuarial loss 4 3 1 53 49 34 4 4 4

Amortization of net actuarial (gain) loss — 4 3 25 53 49 ( 2 ) 4 4

Amortization of prior service benefit — — — — — — ( 1 ) ( 1 ) ( 7 )

3 unchanged sentences

Net actuarial (gain) loss $ 16 $ ( 92 ) $ 26 $ ( 83 ) $ ( 114 ) $ 20 $ 15 $ ( 30 ) $ 5

Amortization of net actuarial loss ( 4 ) ( 3 ) ( 1 ) ( 53 ) ( 49 ) ( 34 ) ( 4 ) ( 4 ) ( 4 )

Amortization of net actuarial (gain) loss — ( 4 ) ( 3 ) ( 25 ) ( 53 ) ( 49 ) 2 ( 4 ) ( 4 )

Amortization of prior service benefit — — — — — — 1 1 7

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Total $ 48 $ 36 $ 52 $ 149 $ ( 9 ) $ ( 27 )

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

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

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

The actuarial gains and losses related to the change in plan obligations were a total of $ 412 million net gain for 2022 and $ 9 million net loss for 2021.

The actuarial net gain that arose in 2022 was primarily due to increases in discount rates and changes in other financial and demographic assumptions partially offset by losses due to plan experience.

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

AGILENT TECHNOLOGIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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

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

Investment Policies and Strategies as of October 31, 2022 .

In the U.S., target asset allocations for our retirement and post-retirement benefit plans were approximately 50 percent to equities and approximately 50 percent to fixed income investments.

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

Approximately 1 percent of the retirement and post-retirement plans consist of limited partnerships.

Approximately 1 percent of the retirement and post-retirement plans consists of limited partnerships.

The general investment objective for all our plan assets is to obtain the optimum rate of investment return on the total investment portfolio consistent with the assumption of a reasonable level of risk.

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and earn performance rates of return in accordance with the benchmarks adopted for each asset class.

Outside the U.S., our target asset allocation ranges from 15 percent to 60 percent to equities, from 38 percent to 85 percent to fixed income investments, and from zero to 25 percent to real estate, depending on the plan.

Outside the U.S., our target asset allocation ranges from 15 percent to 60 percent to equities, from 30 percent to 80 percent to fixed income investments, from zero to 25 percent to real estate and from zero to 55 percent to annuity contracts, depending on the plan.

All plans' assets are broadly diversified.

Due to fluctuations in equity markets, our actual allocations of plan assets at October 31, 2021 and 2020 differ from the target allocation.

Due to fluctuations in equity and bond markets, our actual allocations of plan assets at October 31, 2022, may differ from the target allocation.

Our policy is to bring the actual allocation in line with the target allocation.

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Fixed income securities include a global portfolio of corporate bonds of companies from diversified industries, government securities, mortgage-backed securities, asset-backed securities, derivative instruments and other.

Real estate securities include holdings of managed investment funds which invest primarily in the equity instruments of real estate investment trusts and other similar real estate investments.

Other investments include a group trust consisting primarily of private equity partnerships.

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In addition, some of the investments valued using NAV as the practical expedient may have limits on their redemption to weekly or monthly and/or may require prior written notice specified by each fund.

In December 2021, we entered into an insurance buy-in contract for a portion of benefit obligations under the U.K.

defined benefit plan which was funded from existing pension plan assets with no adjustment made to the benefit obligations.

It has been classified as an “Annuity Contract” since the insurance buy-in contract is similar to an annuity contract.

It matches cash flows with future benefit payments for listed pensioners as of the contract date with the obligation remaining with the plan.

This contract is issued by a third-party insurance company with no affiliation to us.

The measurement of the fair value of pension and post-retirement plan assets uses the valuation methodologies and the inputs as described in Note 12, "Fair Value Measurements".

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Some of our cash and cash equivalents are held in commingled funds.

Other cash and cash equivalents are classified as Level 1 investments.

Other cash and cash equivalents are generally classified as Level 2 investments.

Equity - Some equity securities consisting of common and preferred stock that are not traded on an active market are valued at quoted prices reported by investment dealers based on the underlying terms of the security and comparison to similar securities traded on an active market;

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Securities which have quoted prices in active markets are classified as Level 1 investments.

Real Estate - Real estate securities include holdings of managed investment funds which invest primarily in the equity instruments of real estate investment trust and other similar real estate investments.

Since the existing securities have quoted prices in active markets, it has been classified as level 1 and grouped with equity.

Annuity Contract – This consists of the U.K.

insurance buy-in contract.

Since it is valued on an insurer pricing basis, which reflects the purchase price adjusted for changes in discount rates and other actuarial assumptions which approximates fair value, it has been classified as level 3.

Other Investments - Other investments also include partnership investments where, due to their private nature, pricing inputs are not readily observable.

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Holdings of limited partnerships are classified as Level 3.

Agilent has adopted the accounting guidance related to the presentation of certain investments using the NAV practical expedient.

The accounting guidance exempts investments using this practical expedient from categorization within the fair value hierarchy.

AGILENT TECHNOLOGIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Agilent has adopted the accounting guidance related to the presentation of certain investments using the NAV practical expedient.

The accounting guidance exempts investments using this practical expedient from categorization within the fair value hierarchy.

The following tables present the fair value of U.S.

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Fixed Income 274 83 98 — 93

Other Investments — — — — —

Annuity Contract 92 — — 92 —

Total assets measured at fair value $ 748 $ 347 $ 120 $ 92 $ 189

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Fixed Income 525 151 242 — 132

Other Investments — — — — —

Total assets measured at fair value $ 1,093 $ 531 $ 278 $ — $ 284

(1) Investments measured at the net asset value per share (or its equivalent) practical expedient have not been classified in the fair value hierarchy.

(2) Certain prior year amounts have been reclassified for consistency with the current year presentation.

These reclassifications have no effect on the previously reported financial statements and other notes to the financial statements.

Defined Benefit Plans assets measured at fair value using significant unobservable inputs (level 3), the following table summarizes the change in balances during 2022 and 2021:

Balance, beginning of year $ — $ —

Realized gains/(losses) — —

Unrealized gains/(losses) ( 39 ) —

Purchases, sales, issuances, and settlements ( 5 ) —

Transfers in (out) 159 —

Currency impact ( 23 ) —

Balance, end of year $ 92 $ —

AGILENT TECHNOLOGIES, INC.

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Total $ 357 $ 396 $ 512 $ 551

defined benefit plans where PBO exceeds or is equal to the fair value of plan assets $ 691 $ 524 $ 697 $ 425

defined benefit plans where PBO exceeds the fair value of plan assets $ 172 $ 114 $ 691 $ 524

defined benefit plans where fair value of plan assets exceeds PBO 493 634 409 569

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Total $ 357 $ 396 $ 512 $ 551

defined benefit plans where ABO exceeds or is equal to the fair value of plan assets $ 668 $ 524 $ 675 $ 425

defined benefit plans where ABO exceeds the fair value of plan assets $ 167 $ 114 $ 668 $ 524

defined benefit plans where fair value of plan assets exceeds ABO 485 634 400 569

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2028 - 2032 $ 142 $ 187 $ 34

The assumptions used to determine the benefit obligations and expense for our defined benefit and post-retirement benefit plans are presented in the tables below.

The assumptions used to determine the benefit obligations and net periodic cost (benefit) for our defined benefit and post-retirement benefit plans are presented in the tables below.

The expected long-term return on assets below represents an estimate of long-term returns on investment portfolios consisting of a mixture of equities, fixed income and alternative investments in proportion to the asset allocations of each of our plans.

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Discount rates reflect the current rate at which pension and post-retirement obligations could be settled based on the measurement dates of the plans - October 31.

discount rates at October 31, 2021 and 2020, were determined based on the results of

discount rates at October 31, 2022 and 2021, were

AGILENT TECHNOLOGIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

matching expected plan benefit payments with cash flows from a hypothetically constructed bond portfolio.

determined based on the results of matching expected plan benefit payments with cash flows from a hypothetically constructed bond portfolio.

rates were generally based on published rates for high-quality corporate bonds.

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defined benefit plans reflects the different economic environments within various countries.

Assumptions used to calculate the net periodic cost in each year were as follows:

Assumptions used to calculate the net periodic cost (benefit) in each year were as follows:

For years ended October 31,

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Typically, we can cancel contracts with professional services suppliers without penalties.

For those contracts that are not cancelable without penalties, there are termination fees and costs or commitments for continued spending that we are obligated to pay to a supplier under each contact's termination period before such contract can be cancelled.

For those contracts that are not cancelable without penalties, there are termination fees and costs or commitments for continued spending that we are obligated to pay to a supplier under each contract's termination period before such contract can be cancelled.

Our contractual obligations with these suppliers under "other purchase commitments" were approximately $ 139 million.

Approximately $ 22 million of the penalties for the new contracts will reduce over the next 12 years.

Contingencies:

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Commercial Paper

In May 2020, we established a U.S.

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

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

Under our U.S.

commercial paper program, we may issue and sell unsecured, short-term promissory notes in the aggregate principal amount not to exceed $ 1.35 billion with up to 397-day maturities.

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

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

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

As of October 31, 2022 , we had borrowings of $ 35 million outstanding under our U.S.

commercial paper program and had a weighted average annual interest rate of 3.54 percent.

As of October 31, 2021, w e had no borrowings outstanding under the U.S.

commercial paper program .

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

commercial paper program as of October 31, 2020.

2020 Senior Notes

On July 13, 2010 , the company issued an aggregate principal amount of $ 500 million in senior notes ("2020 senior notes").

The 2020 senior notes were issued at 99.54 % of their principal amount.

The notes were scheduled to mature on July 15, 2020 , and bear interest at a fixed rate of 5.00 % per annum.

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 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)

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.

The redemption price of approximately $ 512 million included a $ 12 million prepayment penalty.

The redemption price was computed in accordance with the terms of the 2020 senior notes as the present value of the remaining scheduled payments of principal and unpaid interest related to the redemption.

The prepayment penalty plus amortization of the previously deferred interest swap gain of $ 4 million and amortization of previously deferred debt issuance costs and discount of $ 1 million were recorded in other income (expense), net in the consolidated statement of operations.

We also paid accrued and unpaid interest of $ 4 million on the 2020 senior notes up to but not including the redemption date.

LONG-TERM DEBT

Term Loan Facility

On April 15, 2022, we entered into a term loan agreement with a group of financial institutions, which provided for a $ 600 million delayed draw term loan that will mature on April 15, 2025.

As of October 31, 2022, we had $ 600 million borrowings outstanding under the term loan facility and had a weighted average interest rate of 3.98 percent.

Loans under the term loan agreement bear interest, at our option, either at:

(i) the alternate base rate, as defined in the term loan agreement, plus the applicable margin for such loans or (ii) adjusted term SOFR, as defined in the term loan agreement, plus the applicable margin for such loans.

The term loan agreement contains customary representations and warranties as well as customary affirmative and negative covenants.

We were in compliance with the covenants for the term loan during the year ended October 31, 2022.

The following table summarizes the company's long-term senior notes:

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2031 Senior Notes 843 842

2031 Senior Notes 842 —

Total $ 2,729 $ 2,284

Total Senior Notes $ 2,133 $ 2,729

2023 Senior Notes

On September 13, 2012 , the company issued an aggregate principal amount of $ 400 million in senior notes ("2022 senior notes").

On June 21, 2013 , the company issued aggregate principal amount of $ 600 million in senior notes ("2023 senior notes").

The 2023 senior notes were issued at 99.544 % of their principal amount.

The notes will mature on October 1, 2022 , and bear interest at a fixed rate of 3.20 % per annum.

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

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

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

The notes would have matured on July 15, 2023 with a fixed interest rate of 3.875 % per annum.

We paid interest semi-annually on January 15th and July 15th of each year and payments commenced January 15, 2014 .

On May 4, 2022, we used the proceeds from the term loan facility and repaid the $ 600 million outstanding aggregate principal amount of our 2023 senior notes.

The total redemption price of approximately $ 609 million was computed in accordance with the terms of the 2023 senior notes as the present value of the remaining scheduled payments of principal and unpaid interest on the notes being redeemed.

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 May 2022, we recorded a loss on extinguishment of debt of $ 9 million in other income (expense), net in the consolidated statement of operations.

In addition, $ 7 million of accrued interest, up to but not including the applicable redemption date, was paid.

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.

2026 Senior Notes

On June 21, 2013 , the company issued aggregate principal amount of $ 600 million in senior notes ("2023 senior notes").

The 2023 senior notes were issued at 99.544 % of their principal amount.

The notes will mature on July 15, 2023 and bear interest at a fixed rate of 3.875 % per annum.

The interest is payable semi-annually on January 15th and July 15th of each year and payments commenced January 15, 2014 .

2026 Senior Notes

On September 22, 2016 , the company issued aggregate principal amount of $ 300 million in senior notes ("2026 senior notes").

The 2026 senior notes were issued at 99.624 % of their principal amount.

The notes will mature on September 22, 2026

AGILENT TECHNOLOGIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

and bear interest at a fixed rate of 3.05 % per annum.

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 .

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The remaining loss to be amortized related to the interest rate swap agreements at October 31, 2022 was $ 4 million.

AGILENT TECHNOLOGIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

2029 Senior Notes

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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.

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

STOCKHOLDERS' EQUITY

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

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.

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

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

During the year ended October 31, 2022, we repurchased and retired 8.4 million shares for $ 1,139 million under this authorization.

As of October 31, 2022, we had remaining authorization to repurchase up to approximately $ 438 million of our common stock under the 2021 repurchase program.

AGILENT TECHNOLOGIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Cash Dividends on Shares of Common Stock

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(in millions)

Foreign currency translation, net of tax expense of $( 8 ) and $( 6 ) for 2021 and 2020, respectively

Foreign currency translation, net of tax (expense) benefit of $ 4 and $( 8 )

$ ( 335 ) ( 185 )

Unrealized losses (including prior service benefit) on defined benefit plans, net of tax benefit of $ 80 and $ 154 for 2021 and 2020, respectively

Unrealized losses (including prior service benefit) on defined benefit plans, net of tax benefit of $ 71 and $ 80

( 32 ) ( 100 )

Unrealized gains (losses) on derivative instruments, net of tax benefit of $ 1 and $ 6 for 2021 and 2020, respectively

Unrealized gains (losses) on derivative instruments, net of tax (expense) benefit of $( 4 ) and $ 1

Total accumulated other comprehensive loss $ ( 347 ) $ ( 282 )

Changes in accumulated other comprehensive income (loss) by component and related tax effects for the years ended October 31, 2022 and 2021 were as follows:

AGILENT TECHNOLOGIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Changes in accumulated other comprehensive income (loss) by component and related tax effects for the years ended October 31, 2021 and 2020 were as follows:

Net defined benefit pension cost and post retirement plan costs

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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

As of October 31, 2021 $ ( 185 ) $ 124 $ ( 224 ) $ 3 $ ( 282 )

Other comprehensive income before reclassifications 11 — 228 2 241

Other comprehensive income (loss) before reclassifications ( 162 ) — 50 56 ( 56 )

Amounts reclassified out of accumulated other comprehensive income (loss) — ( 1 ) 28 ( 34 ) ( 7 )

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

Tax (expense) benefit 12 — ( 9 ) ( 5 ) ( 2 )

Other comprehensive income (loss) ( 150 ) ( 1 ) 69 17 ( 65 )

As of October 31, 2022 $ ( 335 ) $ 123 $ ( 155 ) $ 20 $ ( 347 )

AGILENT TECHNOLOGIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Reclassifications out of accumulated other comprehensive income (loss) for the years ended October 31, 2022 and 2021 were as follows (in millions):

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statement of operations

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

Unrealized gains (losses) on derivatives $ 36 $ ( 16 ) Cost of products

Unrealized gains (losses) on derivatives ( 2 ) ( 1 ) Interest expense

34 ( 17 ) Total before income tax

4 — Benefit for income tax

( 8 ) 4 (Provision) benefit for income tax

26 ( 13 ) Total net of income tax

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Total reclassifications for the period $ 6 $ ( 61 )

AGILENT TECHNOLOGIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Amounts in parentheses indicate reductions to income and increases to other comprehensive income.

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We are a global leader in life sciences, diagnostics and applied chemical markets, providing application focused solutions that include instruments, software, services and consumables for the entire laboratory workflow.

Agilent has three business segments comprised of the life sciences and applied markets business, diagnostics and genomics business and the Agilent CrossLab business each of which comprises a reportable segment.

In the first quarter of fiscal year 2022, we announced a change in organizational structure designed to enable our growth strategies and strengthen our focus on customers.

Our chemistries and supplies business and our remarketed instruments business moved from our Agilent CrossLab business segment to our life sciences and applied markets business segment.

We also moved BioTek's service revenue and related cost of sales from our life sciences and applied markets business segment to our Agilent CrossLab business segment.

The historical financial segment information has been recast to conform to this new presentation.

There was no change to our diagnostics and genomics business segment.

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

The three operating segments were determined based primarily on how the chief operating decision maker views and evaluates our operations.

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laboratory software for sample tracking;

AGILENT TECHNOLOGIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

management and analytics;

information management and analytics;

laboratory automation and robotic systems;

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vacuum pumps and measurement technologies.

Our consumables portfolio is designed to improve customer outcomes.

Most of the portfolio is vendor neutral, meaning Agilent can serve and supply customers regardless of their instrument purchase choices.

Solutions range from chemistries to supplies.

Key product categories in consumables include GC and LC columns, sample preparation products, custom chemistries, and a large selection of laboratory instrument supplies.

Our diagnostics and genomics business is comprised of six areas of activity providing active pharmaceutical ingredients ("APIs") for oligo-based therapeutics as well as solutions that include reagents, instruments, software and consumables, which enable customers in the clinical and life sciences research areas to interrogate samples at the cellular and molecular level.

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This business also includes solutions that enable clinical labs to identify DNA variants associated with genetic disease and help direct cancer therapy.

Second, our nucleic acid solutions business provides equipment and expertise focused on production of synthesized oligonucleotides under pharmaceutical good manufacturing practices ("GMP") conditions for use as API in an emerging class of drugs that utilize nucleic acid molecules for disease therapy.

Second, our nucleic acid solutions business is a contract and development manufacturing organization that provides services related to and the production of synthesized oligonucleotides under pharmaceutical good manufacturing practices ("GMP") conditions for use as API in a class of drugs that utilize nucleic acid molecules for disease therapy.

Third, our pathology solutions business is focused on product offerings for cancer diagnostics and anatomic pathology workflows.

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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.

Fifth, the reagent partnership business provides clinical flow cytometry reagents for routine cancer diagnostics.

This business also provides bulk antibodies as raw materials and

AGILENT TECHNOLOGIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

associated assay development services to IVD manufacturers, biotechnology and pharmaceutical companies.

Finally, our biomolecular analysis business provides complete workflow solutions, including instruments, consumables and software, for quality control analysis of nucleic acid samples.

Samples are analyzed using quantitative and qualitative techniques to ensure accuracy in further genomics analysis techniques utilized in clinical and life science research applications.

The Agilent CrossLab business spans the entire lab with its extensive consumables and services portfolio, which is designed to improve customer outcomes.

Most of the portfolio is vendor neutral, meaning Agilent can serve and supply customers regardless of their instrument purchase choices.

Solutions range from chemistries and supplies to services and software helping to connect the entire lab.

Key product categories in consumables include GC and LC columns, sample preparation products, custom chemistries, and a large selection of laboratory instrument supplies.

Services include startup, operational, training and compliance support, software as a service, as well as asset management and consultative services that help increase customer productivity.

Custom service and consumable bundles are tailored to meet the specific application needs of various industries and to keep instruments fully operational and compliant with the respective industry requirements.

A significant portion of the segments' expenses arise from shared services and infrastructure that we have historically provided to the segments in order to realize economies of scale and to efficiently use resources.

These expenses, collectively called corporate charges, include legal, accounting, tax, real estate, insurance services, information technology services, treasury, order administration, other corporate infrastructure expenses and costs of centralized research and development.

Samples are analyzed using quantitative and qualitative techniques to ensure accuracy in further genomics analysis techniques including NGS, utilized in clinical and life science research applications.

The Agilent CrossLab business spans the entire lab with its extensive services portfolio, which is designed to improve customer outcomes.

The majority of the portfolio is vendor neutral, meaning we can serve and supply customers regardless of their instrument purchase choices.

The services portfolio include repairs, parts, maintenance, installations, training, compliance support, software as a service, asset management, consulting and various other custom services to support the customers' laboratory operations.

Custom services are tailored to meet the specific application needs of various industries and to keep instruments fully operational and compliant with the respective industry requirements.

A significant portion of the segments' expenses arises from shared services and infrastructure that we have historically provided to the segments in order to realize economies of scale and to efficiently use resources.

These expenses, collectively called corporate charges, include legal, accounting, tax, real estate, insurance services, information technology services, treasury, order administration, other corporate infrastructure expenses, costs of centralized research and development and joint sales and marketing.

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

In addition, we do not allocate asset impairments, amortization of acquisition-related intangible assets, change in the fair value of acquisition-related contingent considerations, acquisition and integration costs, restructuring and transformational initiatives expenses, acceleration of share-based compensation expense related to workforce reduction, business exit and 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 consideration, acquisition and integration costs, transformational initiatives expenses, acceleration of share-based compensation expense related to workforce reduction, business exit and divestiture costs, special compliance 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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These results are used, in part, by the chief operating decision maker in evaluating the performance of, and in allocating resources to, each of the segments.

AGILENT TECHNOLOGIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The profitability of each of the segments is measured after excluding items such as asset impairment charges, transformational initiatives, acquisition and integration costs, non-cash amortization of intangible assets related to business combinations, interest income, interest expense, and other items as noted in the reconciliations below.

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Share-based compensation expense (1)

$ 46 $ 17 $ 18 $ 81

(1) Share-based compensation expense in 2022, 2021 and 2020 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.

AGILENT TECHNOLOGIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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

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Change in fair value of contingent consideration 25 21 —

NASD site costs — — ( 12 )

Special compliance costs — ( 1 ) —

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Income before taxes, as reported $ 1,504 $ 1,360 $ 842

(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.

(1) For the year ended October 31, 2020, 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, 2022 and 2021, other income (expense), net includes net gains and losses 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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No customer represented 10 percent or more of our total net revenue in 2022, 2021 or 2020.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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

9 unchanged sentences

Capital expenditures $ 64 $ 100 $ 24 $ 188

AGILENT TECHNOLOGIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The following table reconciles segment assets to Agilent's total assets:

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Total assets $ 10,532 $ 10,705

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

The other category primarily includes over funded 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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October 31, 2021 $ 912 $ 134 $ 587 $ 1,633

AGILENT TECHNOLOGIES, INC.

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