What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2023-12-20 compared with 2022-12-21 · 362 added, 337 removed, 1706 unchanged (29% of the section changed)

33 unchanged sentences

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

and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

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The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Uncertain Tax Positions

As described in Note 5 to the consolidated financial statements, the Company has recorded liabilities for uncertain tax positions of $144 million as of October 31, 2022.

As disclosed by management, the estimate of the Company’s tax liabilities relating to uncertain tax positions requires management to assess uncertainties and to make judgments about the application of complex tax law and regulations in a multitude of jurisdictions.

The Company is subject to taxes in the U.S., Singapore and various other foreign jurisdictions and is subject to examinations of its tax returns by tax authorities in various jurisdictions around the world.

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

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

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

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

Valuation of Inventory – Estimate of Excess and Obsolete Inventory

As described in Notes 1 and 7 to the consolidated financial statements, inventory is valued at standard cost, which approximates actual cost computed on a first-in, first-out basis, not in excess of market value.

As of October 31, 2023, the Company’s inventory balance was $1,031 million and inventory-related excess and obsolescence charges were $40 million for the year ended October 31, 2023.

Management assesses the valuation of inventory on a periodic basis and makes adjustments to the value for estimated excess and obsolete inventory based on estimates and assumptions about future demand, economic conditions and actual usage, which require management judgment.

Management’s excess inventory review process includes analysis of inventory levels, sales trends and forecasts, managing product rollovers and working with manufacturing to maximize recovery of excess inventory and to estimate and record reserves for excess, slow-moving and obsolete inventory.

The principal considerations for our determination that performing procedures relating to the valuation of inventory – estimate of excess and obsolete inventory is a critical audit matter are (i) the significant judgment by management when developing the estimate of excess and obsolete inventory and (ii) a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating management’s significant assumption related to future demand.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements.

These procedures included testing the effectiveness of controls relating to the identification and recognition of the liability for uncertain tax positions, and controls addressing completeness of the uncertain tax positions, as well as controls over measurement of the liability.

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

These procedures included testing the effectiveness of controls relating to management’s analysis of the estimated excess and obsolete inventory, including controls over the significant assumption related to future demand and the data utilized.

These procedures also included, among others (i) testing management’s process for developing the estimate of excess and obsolete inventory;

(ii) evaluating the appropriateness of management’s estimation methodology;

(iii) testing the completeness and accuracy of underlying data used in developing the estimate of excess and obsolete inventory;

(iv) testing, on a sample basis, the accuracy of the inventory-related excess and obsolescence charges by recalculating the reserve;

and (v) evaluating the reasonableness of management’s significant assumption related to future demand.

Evaluating management’s assumption related to future demand involved evaluating whether the assumption used by management was reasonable considering (i) current and past results, including recent sales;

(ii) a comparison of the prior year estimates to actual results in the current year;

and (iii) whether the assumption was consistent with evidence obtained in other areas of the audit.

/s/ PricewaterhouseCoopers LLP

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Other comprehensive income (loss):

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

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

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

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Net defined benefit pension cost and post retirement plan costs:

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

Change in actuarial net gain (loss), net of tax expense (benefit) of $( 5 ), $ 9 and $ 74

( 10 ) 69 218

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

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(in millions, except

par value and

par value and share data)

Current assets:

Cash and cash equivalents $ 1,590 $ 1,053

Short-term investments — 91

Accounts receivable, net 1,291 1,405

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$ 0.01 par value;

125 million shares authorized;

125,000,000 shares authorized;

none issued and outstanding

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$ 0.01 par value;

2 billion shares authorized;

295 million shares at October 31, 2022 and 302 million shares at October 31, 2021 issued and outstanding

2,000,000,000 shares authorized;

292,123,241 shares at October 31, 2023 and 295,259,092 shares at October 31, 2022 issued and outstanding

Additional paid-in-capital 5,387 5,325

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Excess and obsolete inventory related charges 40 24 29

Net (gain) loss on equity securities 41 67 ( 98 )

Asset impairment charges 277 — 2

Change in fair value of contingent consideration 1 ( 25 ) ( 21 )

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

Loss on extinguishment of debt — 9 17

Net gain on divestiture of business ( 43 ) — —

Other non-cash expense, net 6 11 3

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Cash flows from investing activities:

Investments in property, plant and equipment ( 291 ) ( 188 ) ( 119 )

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

Payments to acquire property, plant and equipment ( 298 ) ( 291 ) ( 188 )

Proceeds from the sale of equity securities 5 22 12

Payment to acquire equity securities ( 13 ) ( 22 ) ( 20 )

Payments to acquire equity securities ( 8 ) ( 13 ) ( 22 )

Proceeds from convertible note 4 — —

Payment in exchange for convertible note ( 12 ) ( 4 ) ( 5 )

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

Proceeds from divestiture of business 50 — —

Payments to acquire businesses and intangible assets, net of cash acquired ( 51 ) ( 52 ) ( 547 )

Net cash used in investing activities ( 310 ) ( 338 ) ( 749 )

Cash flows from financing activities:

Issuance of common stock under employee stock plans 58 55 60

Proceeds from the issuance of common stock under employee stock plans 67 58 55

Payment of taxes related to net share settlement of equity awards ( 54 ) ( 67 ) ( 76 )

Treasury stock repurchases ( 1,139 ) ( 788 ) ( 469 )

Payments for repurchase of common stock ( 575 ) ( 1,139 ) ( 788 )

Payment of dividends ( 265 ) ( 250 ) ( 236 )

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

Debt issuance costs — ( 7 ) ( 4 )

Repayment of senior notes ( 609 ) ( 417 ) —

Proceeds from commercial paper 1,295 1,647 420

Repayment of commercial paper ( 1,260 ) ( 1,722 ) ( 345 )

Repayment of finance leases — — ( 4 )

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

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

Proceeds from issuance of long-term debt — 600 848

Repayment of long-term debt — ( 609 ) ( 417 )

Payments of debt issuance costs — — ( 7 )

Net proceeds from (repayments of) short term debt ( 35 ) 35 ( 75 )

Payment for contingent consideration ( 68 ) — —

Net cash used in financing activities ( 930 ) ( 1,372 ) ( 696 )

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Supplemental cash flow information:

Income tax payments, net $ 279 $ 211 $ 361

Interest payments $ 85 $ 76 $ 71

Income tax payments, net of refunds received $ 199 $ 279 $ 211

Interest payments, net of capitalized interest $ 89 $ 85 $ 76

Net change in property, plant and equipment included in accounts payable and accrued liabilities-increase (decrease) $ 4 $ 26 $ 27

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Net income — — — 1,210 — 1,210

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

Other comprehensive income

— — — — 240 240

Total comprehensive income 1,450

8 unchanged sentences

Net income — — — 1,254 — 1,254

Other comprehensive income — — — — 240 240

Other comprehensive loss

— — — — ( 65 ) ( 65 )

Total comprehensive income 1,189

8 unchanged sentences

Net income — — — 1,240 — 1,240

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

Other comprehensive income

— — — — 20 20

Total comprehensive income 1,260

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1,473 — 13 — — 13

Repurchase of common stock ( 8,368 ) — ( 111 ) ( 1,028 ) — ( 1,139 )

Repurchase of common stock, including excise taxes ( 4,609 ) — ( 62 ) ( 517 ) — ( 579 )

Share-based compensation — — 111 — — 111

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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.

Announced Exit and Subsequent Divestiture of Resolution Bioscience Business .

During the third quarter of fiscal year 2023, we made the decision to exit the Resolution Bioscience business within our diagnostics and genomics segment and recorded a long-lived asset impairment charge of $ 270 million.

In the fourth quarter of fiscal year 2023, we received an unsolicited offer and entered into an agreement to divest the Resolution Bioscience business for $ 50 million.

As a result, we recorded a gain on the divestiture of $ 43 million in other income (expense), net in the consolidated statement of operations, which included an adjustment to goodwill of $ 13 million.

Basis of Presentation.

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Our critical accounting policies are those that affect our financial statements materially and involve difficult, subjective or complex judgments by management.

Those policies are revenue recognition, valuation of goodwill and purchased intangible assets, inventory valuation, retirement and post-retirement plan assumptions and accounting for income taxes.

Those policies are revenue recognition, valuation of goodwill and purchased intangible assets, inventory valuation, retirement and post-retirement plan assumptions, restructuring and accounting for income taxes.

Restructuring.

The main components of our restructuring plan are related to workforce reductions, consolidation of excess leased facilities and site closures.

Workforce reduction charges are accrued when payment of benefits becomes probable that the employees are entitled to the severance and the amounts can be estimated.

Consolidation of facilities costs primarily consists of accelerated depreciation of right-of-use assets classified as held and used.

In accordance with the accounting guidance, it was determined that certain assets had been abandoned, and an assessment was made of the remaining useful lives and potential alternative uses.

If the amounts and timing of cash flows from restructuring activities are significantly different from what we have estimated, the actual amounts of restructuring and other related charges could be materially different, either higher or lower, than those we have recorded.

Risks and Uncertainties.

We are subject to risks common to companies in the analytical instrument industry, such as global economic and financial market conditions, fluctuations in foreign currency exchange rates and fluctuations in customer demand, among others.

Both our domestic and international operations have been and continue to be affected by the ongoing global pandemic of a novel strain of coronavirus (“COVID-19”) and the resulting volatility and uncertainty it has caused in the U.S.

and international markets.

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.

As of October 31, 2022, our consolidated financial statements have not been materially impacted.

Revenue Recognition.

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

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

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

those products or services, the transaction price.

For equipment, consumables, and most software licenses, control transfers to the customer at a point in time.

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For contracts with multiple performance obligations, we allocate the consideration to which we expect to be entitled to each performance obligation based on relative standalone selling prices and recognize the related revenue when or as control of each individual performance obligation is transferred to customers.

We estimate the standalone selling price by calculating the average historical selling price of our products and services per country for each performance obligation.

We estimate the standalone selling price by calculating the average historical selling price of our products and services per geographic region for each performance obligation.

Standalone selling prices are determined for each distinct good or service in the contract, and then we allocate the transaction price in proportion to those standalone selling prices by performance obligations.

A portion of our revenue relates to lease arrangements.

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

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

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

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

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Shipping and Handling Costs.

Our shipping and handling costs charged to customers are included in net revenue, and the associated expense is recorded in cost of products for all periods presented.

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Research and Development.

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These investments are categorized as cash and cash equivalents or short-term investments.

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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.

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

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

We have a comprehensive credit policy in place and credit exposure is monitored on an ongoing basis.

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Credit risk with respect to our accounts receivable is diversified due to the large number of entities comprising our customer base and their dispersion across many different industries and geographies.

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

We assess the valuation of our inventory on a periodic basis and make adjustments to the value for estimated excess and obsolete inventory based on estimates about future demand.

We assess the valuation of our inventory on a periodic basis and make adjustments to the value for estimated excess and obsolete inventory based on estimates and assumptions about future demand, economic conditions and actual usage, which require management judgment.

The excess balance determined by this analysis becomes the basis for our excess inventory charge.

Our excess inventory review process includes analysis of sales forecasts, managing product rollovers and working with manufacturing to maximize recovery of excess inventory.

Our excess inventory review process includes analysis of inventory levels, sales trends and forecasts, managing product rollovers and working with manufacturing to maximize recovery of excess inventory and to estimate and record reserves for excess, slow-moving and obsolete inventory.

Property, Plant and Equipment.

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We determine whether an arrangement is, or contains, a lease at inception.

Prior to November 1, 2019, for leases where we are the lessee, we accounted for operating lease payments by charging them to expense as incurred.

At the beginning of fiscal 2020, the company adopted new lease accounting guidance issued by the Financial Accounting Standards Board ("FASB").

The most significant change requires lessees to record the present value of operating lease payments as right-of-use ("ROU") assets and lease liabilities on the consolidated balance sheet.

We record the present value of operating lease payments as right-of-use ("ROU") assets and lease liabilities on the consolidated balance sheet.

Where we are the lessee, ROU assets represent the company’s right to use an underlying asset for the lease term, and lease liabilities represent an obligation to make lease payments based on the present value of lease payments over the lease term.

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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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The excess value of the cost of an acquired business over the fair value of the assets acquired and liabilities assumed is recognized as goodwill.

The fair value of IPR&D is initially capitalized as an intangible asset with an indefinite life.

The fair value

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of IPR&D is initially capitalized as an intangible asset with an indefinite life.

When an IPR&D project is completed, the IPR&D is reclassified as an amortizable purchased intangible asset and amortized to costs of revenues over the asset’s estimated useful life.

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

We performed a quantitative test for goodwill impairment of the three reporting units as of November 1, 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.

We performed a quantitative test for goodwill impairment of the three reporting units as of September 30, 2023, our annual impairment test date.

Based on the results of our quantitative testing, there was no impairment of goodwill as of September 30, 2023.

Each quarter we review the events and circumstances to determine if goodwill impairment is indicated.

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

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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.

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

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

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

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

Each quarter we review the events and

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circumstances to determine if impairment of indefinite-lived intangible assets is indicated.

During the year ended October 31, 2023, 2022 and 2021, there were no impairments of indefinite-lived intangible assets.

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.

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, 2023, we recorded an impairment charge of long-lived assets including intangible assets of $ 277 million primarily related to the exit of our Resolution Bioscience business.

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.

Variable Interest Entities.

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

The investments are included on the long-term investments line and the loans on the other current assets and other assets lines (depending upon tenure of loan) on the consolidated balance sheet.

The investments are classified as long-term investments and the loans are classified within other current assets and other assets (depending upon tenure of loan) on the consolidated balance sheet.

Equity investments without readily determinable fair value consist of non-marketable equity securities (typically investments in privately-held companies).

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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.

There are no equity investments with readily determinable fair value at October 31, 2023 and 2022 .

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

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

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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

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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, 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.

As of October 31, 2023, and October 31, 2022, the fair value of the term loan approximates its carrying value.

As of October 31, 2023, the fair value of our senior notes was $ 1,747 million with a carrying value of $ 2,135 million.

This compares to the fair value of our senior notes of $ 1,754 million with a carrying value of $ 2,133 million as of October 31, 2022.

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The fair value of foreign currency contracts used for hedging purposes is estimated internally by using inputs tied to active markets.

These inputs, for example, interest rate yield curves, foreign exchange rates, and forward and spot prices for currencies are observable in the market or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

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

These inputs, for example, interest rate yield curves, foreign

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exchange rates, and forward and spot prices for currencies are observable in the market or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

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

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

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Retirement and Post-Retirement Plans.

Substantially all of our employees are covered under various defined benefit and/or defined contribution retirement plans.

We have various defined benefit and defined contribution retirement plans.

Additionally, we sponsor post-retirement health care benefits for our eligible U.S.

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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

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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 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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Cash flows from derivative instruments are classified in the statement of cash flows in the same category as the cash flows from the hedged or economically hedged item, primarily in operating activities.

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Foreign Currency Translation.

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Gains or losses from foreign currency remeasurement are included in consolidated net income.

Net gains or losses resulting from foreign currency transactions, including hedging gains and losses, are reported in other income (expense), net and were $ 6 million loss for 2022, $ 4 million loss for 2021 and $ 4 million loss for 2020.

Net gains or losses resulting from foreign currency transactions, including hedging gains and losses, are reported in other income (expense), net and were $ 2 million gain for 2023, $ 6 million loss for 2022 and $ 4 million loss for 2021.

NEW ACCOUNTING PRONOUNCEMENTS

Recently Adopted Accounting Pronouncements

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 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.

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.

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

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

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

On November 1, 2022, we 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 2023, the FASB issued guidance to improve segment reporting through enhanced disclosure requirements of significant segment expenses.

These amendments are effective for our fiscal year 2025, and interim periods within fiscal year 2026, with early adoption permitted.

These amendments apply on a retrospective basis.

We are currently evaluating the impact of these amendments on our consolidated financial statements.

On December 14, 2023, the FASB issued guidance to expand the disclosure requirements for income taxes, specifically related to the rate reconciliation and income taxes paid.

These amendments are effective for our fiscal year 2026, with early adoption permitted.

These amendments apply on a prospective basis with a retrospective option.

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

Other amendments to GAAP in the U.S.

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As of October 31, 2023, the number of shares of common stock authorized and available for issuance under our ESPP was 24,277,203 .

This excludes the number of shares of common stock to be issued to participants in consideration of the aggregate participant contributions totaling $ 27 million as of October 31, 2022.

This includes 324,092 shares for $ 28 million of common stock to be settled in November 2023 to participants in consideration of the aggregate participant contributions as of October 31, 2023.

Incentive Compensation Plans.

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Weighted average volatility 28 % 26 % 26 %

Expected life 5.5 years 5.5 years —

Expected life 5.5 years 5.5 years 5.5 years

Volatility of Agilent shares 31 % 29 % 30 %

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319 8.8 $ 143 — 40 8.3 $ 136 —

$ 110.01 - $ 150.00

65 8.9 $ 128 687 9 8.5 $ 127 99

$ 150.01 & Over

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The following table summarizes the aggregate intrinsic value of options exercised in 2022, 2021 and 2020 and the fair value of options granted in 2022:

The following table summarizes the aggregate intrinsic value of options exercised and the fair value of options granted in 2023, 2022 and 2021:

Intrinsic Value Weighted

2 unchanged sentences

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

48 unchanged sentences

Foreign-derived intangible income deduction ( 41 ) ( 46 ) ( 35 )

Realized loss on divestiture of business ( 104 ) — —

Excess tax benefits from stock-based compensation ( 14 ) ( 19 ) ( 29 )

3 unchanged sentences

For 2023, our income tax expense was $ 99 million with an effective tax rate of 7.4 percent.

For the year ended October 31, 2023, our effective tax rate and the resulting provision for income taxes were impacted by the federal tax benefit of $ 104 million related to the realized loss on the divestiture of a business.

The income taxes for the year ended October 31, 2023, also include the tax benefit of $ 41 million related to foreign-derived intangible income along with the tax benefit of $ 30 million related to the release of tax reserves in the U.S.

due to the settlement of the audit with the Internal Revenue Service ("IRS") for tax years 2018 and 2019.

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

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

2 unchanged sentences

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

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

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

We have negotiated a tax holiday in Singapore.

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

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

The tax holiday in Singapore was renegotiated and extended through 2030.

As a result of the incentive, the impact of the tax holiday decreased income taxes by $ 54 million, $ 53 million, and $ 35 million in 2023, 2022, and 2021, respectively.

10 unchanged sentences

Share-based compensation 24 23

Capitalized R&D 41 —

Lease obligations 37 29

48 unchanged sentences

As of October 31, 2023, we had $ 114 million of unrecognized tax benefits, including interest and penalties of which $ 68 million, if recognized, would affect our effective tax rate.

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 $ 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.

We recognized tax benefit of $ 5 million in 2023, tax benefit of $ 2 million in 2022, and tax benefit of $ 19 million in 2021, for interest and penalties related to unrecognized tax benefits.

Interest and penalties accrued as of October 31, 2023 and 2022 were $ 16 million and $ 21 million, respectively.

In the U.S., tax years remain open back to the year 2020 for federal income tax purposes and 2019 for significant states.

On October 30, 2023, we reached an agreement with the IRS for tax years 2018 and 2019.

The settlement resulted in the recognition of previously unrecognized tax benefits of $ 30 million.

In other major jurisdictions where we conduct business, the tax years generally remain open back to the year 2012.

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

Given the number of years and numerous matters that remain subject to examination in various tax jurisdictions, management is unable to estimate the range of possible changes to the balance of our unrecognized tax benefits.

With these jurisdictions and the U.S., it is reasonably possible that some tax audits may be completed over the next twelve months.

However, management is not able to provide a reasonably reliable estimate of the timing of any other future tax payments or change in unrecognized tax benefits, if any.

AGILENT TECHNOLOGIES, INC.

36 unchanged sentences

Property, plant and equipment, net $ 1,270 $ 1,100

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.

During 2023, we recorded asset impairments of $ 11 million .

During 2022, there were no asset impairments.

During 2021, we recorded asset impairments of $ 2 million.

Depreciation expenses were $ 128 million in 2023, $ 120 million in 2022 and $ 122 million in 2021.

16 unchanged sentences

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

In the fourth quarter of fiscal year 2023, we initiated a new restructuring plan ("FY23 Plan") designed to reduce costs and expenses in response to the current macroeconomic conditions.

The consolidation of excess facilities under the FY23 Plan resulted in $ 7 million of accelerated depreciation of our ROU assets.

During fiscal year 2023, we recorded ROU asset impairments of $ 8 million primarily related to the exit of our Resolution Bioscience business.

There were no impairments for fiscal years 2022 and 2021.

AGILENT TECHNOLOGIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Supplemental cash flow information related to leases was as follows:

5 unchanged sentences

Non-cash right of use assets obtained in exchange for operating lease obligations $ 70 $ 38 $ 53

AGILENT TECHNOLOGIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Supplemental balance sheet information related to leases was as follows:

23 unchanged sentences

The cost of customer leased equipment is recorded within property, plant and equipment, and is netted in the consolidated balance sheet with depreciation over the equipment’s estimated useful life.

For an arrangement that has been classified as a sales-type lease, revenue is recognized when the transfer of control of the underlying leased asset has occurred and the net investment lease recorded which is calculated at the present value of the remaining lease payments due from the lessee.

For an arrangement that has been classified as a

AGILENT TECHNOLOGIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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 years ended October 31, 2023, 2022 and 2021, respectively.

1 unchanged sentence

As of October 31, 2023, lease receivables related to sales-type leases were $ 42 million.

As of October 31, 2021,

AGILENT TECHNOLOGIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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

As of October 31, 2022, the original cost and net book value of operating leased assets were $ 29 million and $ 4 million, respectively.

As of October 31, 2022, lease receivables related to sales-type leases were $ 38 million.

9 unchanged sentences

Goodwill arising from acquisitions and adjustments — 15 — 15

Goodwill adjustment related to divestiture of business — ( 13 ) — ( 13 )

Goodwill as of October 31, 2023 $ 1,747 $ 1,956 $ 257 $ 3,960

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.

In connection with the divestiture of our Resolution Bioscience business in the fourth quarter of fiscal year 2023, we received $ 50 million in cash and recorded a gain on the divestiture of $ 43 million in other income (expense), net in the consolidated statement of operations which included an adjustment to goodwill of $ 13 million in our diagnostics and genomics segment.

We used the relative fair value approach in determining the adjustment to goodwill.

Based on the results of our quantitative testing, there was no impairment of goodwill for our reporting units in fiscal year 2023.

There was no impairment of goodwill in fiscal years 2022 and 2021.

AGILENT TECHNOLOGIES, INC.

16 unchanged sentences

Purchased technology $ 1,467 $ 1,093 $ 374

Backlog 8 8 —

Trademark/Tradename 196 163 33

4 unchanged sentences

Total $ 1,856 $ 1,381 $ 475

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

In fiscal year 2023, we acquired two businesses for a total purchase price of $ 51 million.

As a result, we recorded additions of $ 15 million to goodwill and $ 50 million to other intangible assets in our diagnostics and genomics and life sciences and applied markets segments primarily related to these two acquisitions.

During fiscal year 2023, other intangible assets in total increased $ 2 million due to the impact of foreign currency translation.

In fiscal year 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.

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

1 unchanged sentence

There were no impairments of indefinite-lived intangible assets during fiscal years 2023, 2022 and 2021.

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

During the third quarter of fiscal year 2023, we recorded an impairment of finite-lived intangible assets of $ 258 million related to the exit of our Resolution Bioscience business in our diagnostics and genomics segment.

Of the $ 258 million, $ 249 million was recorded in cost of sales and $ 9 million was recorded in selling, general and administrative expenses on our consolidated statement of operations.

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

9 unchanged sentences

(in millions)

Equity investments - with readily determinable fair value $ — 91

Equity investments - without readily determinable fair value $ 102 $ 141

Equity investments - with readily determinable fair value 23 31

Other investments - with readily determinable fair value 26 23

Trading securities 36 31

Total long-term investments $ 164 $ 195

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

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

These investments are accounted for using the measurement alternative at cost adjusting for impairments and observable price changes (orderly transactions for the identical or a similar security from the same issuer).

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

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

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

7 unchanged sentences

Net gain (loss) recognized during the period on equity securities $ ( 41 ) $ ( 67 ) $ 98

Net gain on equity securities sold during the period 11 6 —

Net gain (loss) on equity securities sold during the period ( 15 ) 11 6

Unrealized gain (loss) on equity securities held as of the end of the period $ ( 26 ) $ ( 78 ) $ 92

Unrealized losses on our equity securities without RDFV were $ 26 million in 2023.

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

In 2023, net unrealized gains on our trading securities were $ 2 million.

In 2022 and 2021, net unrealized losses were $ 7 million and net unrealized gains were $ 8 million, respectively, on our trading securities.

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 2023, 2022 and 2021.

31 unchanged sentences

Deferred compensation liability 36 — 36 —

Contingent consideration 1 — — 1

Total liabilities measured at fair value $ 39 $ — $ 38 $ 1

9 unchanged sentences

Derivative instruments (foreign exchange contracts) 31 — 31 —

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

Trading securities 31 31 — —

7 unchanged sentences

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

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

AGILENT TECHNOLOGIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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 ("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.

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.

4 unchanged sentences

Contingent Consideration.

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.

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

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

As of October 31, 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.

As of October 31, 2023, the fair value of the contingent consideration liability relates to milestone payments in connection with one acquisition.

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

3 unchanged sentences

Balance at October 31, 2021 $ 89

Additions to contingent consideration (including measurement period adjustment) 110

Additions to contingent consideration 3

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

1 unchanged sentence

Additions to contingent consideration 5

Payments ( 72 )

Change in fair value (included within selling, general and administrative expenses) 1

Balance at October 31, 2023 $ 1

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.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The fair value of the contingent consideration liability as of October 31, 2023 was estimated to be $ 1 million and was recorded in other accrued liabilities on the consolidated balance sheet.

During fiscal year 2023, we made contingent consideration payments totaling $ 72 million related to the achievement of certain technical milestones associated with our acquisition of Resolution Bioscience and another acquisition.

Resolution Bioscience .

In the third quarter of fiscal year 2023, we decided to exit the Resolution Bioscience business and subsequently divested our interest in the business in the fourth quarter of fiscal year 2023.

We project that there are no potential future milestone payments related to the Resolution Bioscience business.

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

4 unchanged sentences

Long-lived assets held and used $ 277 $ — $ 2

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, 2023, long-lived assets held and used with a carrying amount of $ 277 million were written down to fair value of zero , resulting in an impairment charge of $ 277 million primarily related to the exit of our Resolution Bioscience business in our diagnostics and genomics segment.

For the year ended October 31, 2022, there were no

AGILENT TECHNOLOGIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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 for sale in 2022, 2021 and 2020.

Fair values for the impaired long-lived assets during 2023 were measured using level 3 inputs.

To determine the fair value of long-lived assets in 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.

To determine the fair value of long-lived assets in 2023, we primarily used an estimate of undiscounted future cash flows expected over the life of the primary asset.

Since the carrying value was greater than the undiscounted cash flow, the loss was measured by the excess of the carrying amount of the asset over its fair value of zero.

Non-Marketable Equity Securities

For the years ended October 31, 2023, 2022 and 2021, there were no impairments in non-marketable securities without readily determinable fair value.

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.

For the years ended October 31, 2023, 2022 and 2021, net unrealized losses of $ 26 million, and net unrealized gains of $ 6 million and $ 17 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, 2023, the cumulative net gain (loss) on our non-marketable equity securities without readily determinable fair values was comprised of $ 38 million gains and $ 29 million losses, and the carrying amount was $ 102 million.

5 unchanged sentences

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

AGILENT TECHNOLOGIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

twelve months.

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

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

9 unchanged sentences

These derivative instruments were designated and qualified as cash flow hedges under the criteria prescribed in the authoritative guidance.

The swap arrangements were terminated on September 15, 2016 with a payment of $ 10 million, and we recognized this as a deferred loss in accumulated other comprehensive income (loss) which is being amortized to interest expense over the life of the 2026 senior notes.

AGILENT TECHNOLOGIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

expense over the life of the 2026 senior notes.

The remaining loss to be amortized related to the interest rate swap agreements at October 31, 2023 was $ 3 million.

8 unchanged sentences

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

For the year ended October 31, 2022, ineffectiveness and the resultant effect of any gains or losses recognized in other income (expense) due to de-designation of the hedge contracts were not significant.

For the years ended October 31, 2023, 2022 and 2021 ineffectiveness and the resultant effect of any gains or losses recognized in other income (expense) due to de-designation of the hedge contracts were not significant.

Additionally, we enter into foreign exchange contracts to hedge monetary assets and liabilities that are denominated in currencies other than the functional currency of our subsidiaries.

5 unchanged sentences

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)

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

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

The aggregate fair value of all derivative instruments with credit-risk-related contingent features that were in a net liability position as of October 31, 2023, was $ 1 million.

The credit-risk-related contingent features underlying these agreements had not been triggered as of October 31, 2023.

There were 270 foreign exchange forward contracts open as of October 31, 2022, and designated as cash flow hedges.

There were 190 foreign exchange forward contracts open as of October 31, 2022, not designated as hedging instruments.

There were 3 foreign exchange forward contracts open as of October 31, 2022, and designated as a net investment hedge.

The aggregated notional amounts by currency and designation as of October 31, 2022 were as follows:

Derivatives Designated as

Cash Flow Hedges

Derivatives Designated as

Net Investment Hedges Derivatives

Contracts USD Forward

Contracts USD

Currency Buy/(Sell) Buy/(Sell) Buy/(Sell)

(in millions)

Euro $ ( 78 ) $ ( 10 ) $ ( 18 )

British Pound ( 66 ) — 13

Canadian Dollar ( 55 ) — ( 17 )

Japanese Yen ( 93 ) — ( 42 )

Danish Krone — — 25

Korean Won ( 90 ) — ( 10 )

Singapore Dollar 19 — 24

Swiss Franc — — ( 13 )

Chinese Yuan Renminbi ( 87 ) — ( 100 )

Taiwan Dollar — — ( 16 )

India Rupee — — ( 11 )

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

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

AGILENT TECHNOLOGIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The number of open foreign exchange forward contracts and aggregated notional amounts by designation as of October 31, 2023 were as follows:

Number of Open Forward

Contracts Aggregate Notional Amount

($ in millions)

Derivatives designated as hedging instruments:

Cash Flow Hedges

Foreign exchange forward contracts 270 $ ( 383 )

Net Investment Hedges

Foreign exchange forward contracts 3 $ ( 11 )

Derivatives not designated as hedging instruments:

Foreign exchange forward contracts 194 $ ( 162 )

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

The gross fair values and balance sheet location of derivative instruments held in the consolidated balance sheet as of October 31, 2023 and 2022 were as follows:

11 unchanged sentences

Other current assets $ 15 $ 23 Other accrued liabilities $ 1 $ 2

Net investment hedges

Foreign exchange contracts

Other current assets $ 1 $ — Other accrued liabilities $ — $ —

Derivatives not designated as hedging instruments:

2 unchanged sentences

Total derivatives $ 19 $ 31 $ 2 $ 5

AGILENT TECHNOLOGIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The effects of derivative instruments for foreign exchange contracts designated as hedging instruments and not designated as hedging instruments in our consolidated statement of operations were as follows:

14 unchanged sentences

Derivatives not designated as hedging instruments:

Gain (loss) recognized in other income (expense), net $ 10 $ — $ ( 1 )

Gain recognized in other income (expense), net $ 3 $ 10 $ —

At October 31, 2023 the total amount of existing net gain that is expected to be reclassified from accumulated other comprehensive income (loss) is $ 20 million.

Within the next twelve months it is estimated that $ 12 million of gain included within the net amount of accumulated other comprehensive income (loss) will be reclassified to cost of sales in respect of cash flow hedges.

AGILENT TECHNOLOGIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

RETIREMENT PLANS AND POST RETIREMENT PENSION PLANS

Substantially all of our employees are covered under various defined benefit and/or defined contribution retirement plans.

We have various defined benefit and defined contribution retirement plans.

Additionally, we sponsor post-retirement health care benefits for our eligible U.S.

9 unchanged sentences

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

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, 2023 and 2022, the fair value of plan assets of the DPSP was $ 81 million and $ 93 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.

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

The RP and the SBRP comprise the "U.S.

Plans" in the tables below.

AGILENT TECHNOLOGIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Eligible employees outside the U.S.

9 unchanged sentences

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

401(k) Defined Contribution Plan .

401(k) and Other Defined Contribution Plans .

Eligible Agilent U.S.

employees may participate in the Agilent Technologies, Inc.

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

We match an employee's contributions (both pre-tax and Roth) up to a maximum of 6 percent of an employee's annual eligible compensation, subject to the annual regulatory limit.

All matching contributions vest immediately.

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

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

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.

We also sponsor and make contributions to various other defined contribution plans that cover employees outside of the U.S.

Our defined contribution plan expenses included in income from operations were as follows:

Years Ended October 31,

2023 2022 2021

(in millions)

Contributions to the 401(k) Plan $ 47 $ 46 $ 43

Contributions to plans outside the U.S 51 47 43

Total defined contribution plan expense $ 98 $ 93 $ 86

AGILENT TECHNOLOGIES, INC.

7 unchanged sentences

Plans and U.S.

Post-Retirement Benefit Plans, gains and losses are amortized using a separate layer for each year's gains and losses.

Post-Retirement Benefit Plans, gains and losses are amortized over the average remaining future service period or remaining lifetime of participants depending upon the plan, using a separate layer for each year's gains and losses.

For the years ended October 31, 2023, 2022 and 2021, components of net periodic benefit cost and other amounts recognized in other comprehensive income were comprised of:

59 unchanged sentences

Total $ 66 $ 48 $ 43 $ 52 $ 2 $ ( 9 )

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.

The actuarial gains and losses related to the change in plan obligations were a total of $ 35 million net gain for 2023 and $ 412 million net gain for 2022.

The actuarial net gain that arose in 2023 and 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.

AGILENT TECHNOLOGIES, INC.

9 unchanged sentences

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 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.

Outside the U.S., our target asset allocation (excluding annuity contracts in the U.K.) ranges from zero to 60 percent to equities, from 38 percent to 100 percent to fixed income investments, and from zero to 25 percent to real estate, depending on the plan.

All plans' assets are broadly diversified.

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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;

these are classified as Level 2 investments.

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

Equity - This consists of equity securities which have quoted prices in active markets and has been classified as Level 1 investments.

Fixed Income - Some of the fixed income securities are not actively traded and are valued at quoted prices based on the terms of the security and comparison to similar securities traded on an active market;

119 unchanged sentences

Fixed Income 274 83 98 — 93

Annuity Contract 92 — — 92 —

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

(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 2023 and 2022:

Balance, beginning of year $ 92 $ —

Realized gains/(losses) — —

Unrealized gains/(losses) ( 39 ) —

Unrealized losses ( 5 ) ( 39 )

Purchases, sales, issuances, and settlements ( 6 ) ( 5 )

89 unchanged sentences

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

RESTRUCTURING AND OTHER RELATED COSTS

In the fourth quarter of fiscal year 2023, we initiated a new restructuring plan ("FY23 Plan") designed to reduce costs and expenses in response to the current macroeconomic conditions.

The plan includes a reduction of our total headcount by approximately 400 regular employees, representing approximately 2 percent of our global workforce, and the consolidation of our excess facilities, including some site closures.

In connection with this plan, we have recorded approximately $ 46 million in restructuring and other related costs in fiscal year 2023.

These costs include severance and other personnel costs associated with the workforce reduction.

The consolidation of excess facilities includes accelerated depreciation expenses of ROU and machinery and equipment assets, and other facilities-related costs.

The timing and scope of the workforce reductions will vary based on local legal requirements.

AGILENT TECHNOLOGIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

These actions impact all three of our business segments.

The costs associated with this restructuring plan have not been allocated to our business segments' results;

however, each business segment will benefit from the future cost savings from these actions.

When completed, the restructuring program is expected to result in the reduction in annual cost of sales and operating expenses over the three business segments.

While the majority of the workforce reduction will be completed in the first quarter of 2024, we expect to substantially complete the remaining restructuring activities by the end of fiscal year 2024.

A summary of total restructuring activity is shown in the table below:

Reduction Consolidation of Excess Facilities Total

(in millions)

Balance at October 31, 2022 $ — $ — $ —

Income statement expense 33 13 46

Accelerated share-based compensation expense ( 1 ) — ( 1 )

Accelerated depreciation expenses of ROU and machinery and equipment — ( 8 ) ( 8 )

Cash payments ( 1 ) — ( 1 )

Balance at October 31, 2023 $ 31 $ 5 $ 36

The restructuring and other related costs, which totaled $ 36 million at October 31, 2023, are recorded in other accrued liabilities on the consolidated balance sheet and reflect estimated future cash outlays.

A summary of the charges in the consolidated statement of operations resulting from the restructuring plan is shown below:

(in millions)

Cost of products and services $ 11

Research and Development 6

Selling, general and administrative 29

Total restructuring costs $ 46

Standard Warranty

12 unchanged sentences

Accruals for warranties due within one year $ 29 $ 30

Accruals for warranties due after one year — 1

Standard warranty accrual, ending balance $ 30 $ 30

Bank Guarantees

35 unchanged sentences

Credit Facilities

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

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

As of both October 31, 2022 and 2021, we had no borrowings outstanding under the credit facility and we had no borrowings outstanding under the incremental facilities.

On June 7, 2023 , we entered into a new credit agreement with a group of financial institutions which provides for a $ 1.5 billion five -year unsecured credit facility that will expire on June 7, 2028 , and an incremental revolving credit facility in an aggregate amount of up to $ 750 million.

The credit facility replaced the existing credit facility which was terminated on the closing date of the new facility.

During the year ended October 31, 2023, we borrowed and repaid $ 360 million under the credit facility.

As of both October 31, 2023 and 2022, we had no borrowings outstanding under both the credit facility and the incremental revolving credit facility.

We were in compliance with the covenants for the credit facility during the year ended October 31, 2023.

On June 2, 2023 , we entered into an Uncommitted Money Market Line Credit agreement with Societe Generale which provides for an aggregate borrowing capacity of $ 300 million.

The credit facility is an uncommitted short-term cash advance facility where each request must be at least $ 1 million.

The interest rate is set by the lender at the time of the borrowing and is fixed for the duration of the advance.

During the year ended October 31, 2023, we borrowed and repaid $ 61 million.

As of October 31, 2023, we had no borrowings outstanding under the credit facility.

Commercial Paper

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

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.

During the year ended October 31, 2023, we borrowed $ 1.67 billion and repaid $ 1.70 billion.

As of October 31, 2023 , we had no borrowings outstanding under our U.S.

commercial paper program.

As of October 31, 2022, w e had borrowings of $ 35 million outstanding under the U.S.

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

AGILENT TECHNOLOGIES, INC.

3 unchanged sentences

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.

As of October 31, 2023 and 2022, we had $ 600 million borrowings outstanding under the term loan facility and had weighted average interest rates of 6.22 percent and 3.98 percent, respectively.

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

2 unchanged sentences

We were in compliance with the covenants for the term loan during the year ended October 31, 2023.

On May 4, 2022, we used the proceeds from the term loan facility and repaid the $ 600 million outstanding aggregate principal amount of our 3.875 % 2023 senior notes.

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

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

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

O n December 14, 2023, we prepaid $ 120 million of our outstanding $ 600 million term loan .

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

6 unchanged sentences

2031 Senior Notes 844 843

2031 Senior Notes 843 842

Total Senior Notes $ 2,135 $ 2,133

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 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.

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.

2026 Senior Notes

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

33 unchanged sentences

During the year ended October 31, 2021, we repurchased and retired 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.

1 unchanged sentence

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 company's employee equity incentive programs.

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

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

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

2 unchanged sentences

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.

During the year ended October 31, 2023 we repurchased and retired 661,739 shares for $ 99 million, excluding excise taxes, under this authorization.

On March 1, 2023, the 2021 repurchase program was terminated and the remaining authorization of $ 339 million expired.

On January 9, 2023, we announced that our board of directors had approved a share repurchase program (the "2023 repurchase program") designed, among other things, to reduce or eliminate dilution resulting from issuance of stock under the

AGILENT TECHNOLOGIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

company's employee equity incentive programs.

The 2023 repurchase program authorizes the purchase of up to $ 2.0 billion, excluding excise taxes, of our common stock at the company's discretion and has no fixed termination date.

The 2023 repurchase program does not require the company to acquire a specific number of shares and may be suspended, amended or discontinued at any time.

The 2023 repurchase program commenced on March 1, 2023, and also terminated and replaced the 2021 repurchase program.

During the year ended October 31, 2023 we repurchased and retired 3.9 million shares for $ 476 million, excluding excise taxes, under this authorization.

As of October 31, 2023, we had remaining authorization to repurchase up to approximately $ 1,524 million of our common stock under the 2023 repurchase program.

The Inflation Reduction Act of 2022, which was enacted into law on August 16, 2022, imposed a nondeductible 1% excise tax on the net value of certain stock repurchases made after December 31, 2022.

As a result, we recorded the applicable excise tax of $ 3.2 million during the year ended October 31, 2023 as an incremental cost of the shares repurchased and a corresponding liability for the excise tax payable in other accrued liabilities on our consolidated balance sheet.

Cash Dividends on Shares of Common Stock

5 unchanged sentences

Accumulated Other Comprehensive Income (Loss)

The following table summarizes the components of our accumulated other comprehensive income (loss) as of October 31, 2022 and 2021, net of tax effect:

(in millions)

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 $ 71 and $ 80

( 32 ) ( 100 )

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, 2023 and 2022 were as follows:

AGILENT TECHNOLOGIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Net defined benefit pension cost and post retirement plan costs

2 unchanged sentences

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 )

2 unchanged sentences

Amounts reclassified out of accumulated other comprehensive income (loss) — ( 1 ) 2 — 1

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

Tax benefit 1 — 5 1 7

Other comprehensive income (loss) 34 ( 1 ) ( 10 ) ( 3 ) 20

As of October 31, 2023 $ ( 301 ) $ 122 $ ( 165 ) $ 17 $ ( 327 )

AGILENT TECHNOLOGIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Reclassifications out of accumulated other comprehensive income (loss) for the years ended October 31, 2023 and 2022 were as follows (in millions):

3 unchanged sentences

statement of operations

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

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

Unrealized gains on derivatives $ 2 $ 36 Cost of products

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

— 34 Total before income tax

( 8 ) 4 (Provision) benefit for income tax

— ( 8 ) Provision for income tax

— 26 Total net of income tax

6 unchanged sentences

Total reclassifications for the period $ ( 1 ) $ 6

AGILENT TECHNOLOGIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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

3 unchanged sentences

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

In the first quarter of fiscal year 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.

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

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

2 unchanged sentences

A description of our three reportable segments is as follows:

Our life sciences and applied markets business provides application-focused solutions that include instruments and software that enable customers to identify, quantify and analyze the physical and biological properties of substances and products, as well as enable customers in the clinical and life sciences research areas to interrogate samples at the molecular and cellular level.

Our life sciences and applied markets business provides application-focused solutions that include instruments, consumables and software that enable customers to identify, quantify and analyze the physical and biological properties of substances and products, as well as enable customers in the clinical and life sciences research areas to interrogate samples at the molecular and cellular level.

Key product categories include:

22 unchanged sentences

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

AGILENT TECHNOLOGIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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.

4 unchanged sentences

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

Fourth, we also collaborate with a number of major pharmaceutical companies to develop new potential tissue 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.

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

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

This business also provides bulk antibodies as raw materials and

AGILENT TECHNOLOGIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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

This business also provides bulk antibodies as raw materials and 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.

5 unchanged sentences

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 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.

In addition, we do not allocate certain costs to the operating margin for each segment because management does not include this information in its measurement of the performance of the operating segments.

Unallocated costs consist of asset impairments, amortization of acquisition-related intangible assets, acquisition and integration costs, changes in the fair value of acquisition-related contingent consideration, transformational initiatives expenses, restructuring and other related costs, business exit and divestiture costs and certain other charges.

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

The following tables reflect the results of our reportable segments under our management reporting system.

AGILENT TECHNOLOGIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The performance of each segment is measured based on several metrics, including segment income from operations.

These results are used, in part, by the chief operating decision maker in evaluating the performance of, and in allocating resources to, each of the segments.

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.

Life Sciences and Applied Markets Diagnostics and Genomics Agilent CrossLab Total

(in millions)

Year Ended October 31, 2022:

Total net revenue $ 4,007 $ 1,389 $ 1,452 $ 6,848

Income from operations $ 1,186 $ 301 $ 370 $ 1,857

Depreciation expense $ 59 $ 39 $ 22 $ 120

Share-based compensation expense (1)

The following tables reflect segment results under our management reporting system after excluding certain unallocated costs as noted in the reconciliations below:

Years Ended October 31,

2023 2022 2021

Year Ended October 31, 2021:

(in millions)

Life Sciences and Applied Markets $ 3,856 $ 4,007 $ 3,663

Diagnostics and Genomics 1,409 1,389 1,296

Agilent CrossLab 1,568 1,452 1,360

Total net revenue $ 6,833 $ 6,848 $ 6,319

Income from Operations:

Depreciation expense $ 60 $ 39 $ 23 $ 122

Life Sciences and Applied Markets $ 1,116 $ 1,186 $ 1,017

Diagnostics and Genomics 296 301 273

Agilent CrossLab 463 370 323

Total reportable segment income from operations 1,875 1,857 1,613

Share-Based Compensation Expense:

$ 60 $ 22 $ 24 $ 106

Year Ended October 31, 2020:

Total net revenue $ 3,115 $ 1,047 $ 1,177 $ 5,339

Income from operations $ 792 $ 192 $ 272 $ 1,256

Life Sciences and Applied Markets $ 66 $ 69 $ 60

Diagnostics and Genomics 22 25 22

Agilent CrossLab 24 26 24

Unallocated share-based compensation expenses (1)

Total share-based compensation expense $ 112 $ 126 $ 111

Depreciation Expense:

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.

Life Sciences and Applied Markets $ 63 $ 59 $ 60

Diagnostics and Genomics 40 39 39

Agilent CrossLab 25 22 23

Total depreciation expense $ 128 $ 120 $ 122

(1) Share-based compensation expense amounts not allocated to the segments relate to accelerated share-based compensation expense from workforce reduction and from acquisition of businesses.

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

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

AGILENT TECHNOLOGIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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

(in millions)

Life Sciences and Applied Markets $ 3,820 $ 3,955

Diagnostics and Genomics 3,307 3,489

Agilent CrossLab 897 869

Total reportable segment assets $ 8,024 $ 8,313

Capital Expenditures:

Life Sciences and Applied Markets $ 70 $ 77

Diagnostics and Genomics 206 181

Agilent CrossLab 22 33

Total capital expenditures $ 298 $ 291

Major Customers.

No customer represented 10 percent or more of our total net revenue in 2023, 2022 or 2021.

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

3 unchanged sentences

Total reportable segments' income from operations $ 1,875 $ 1,857 $ 1,613

Unallocated Costs

Amortization of intangible assets related to business combinations ( 139 ) ( 191 ) ( 194 )

1 unchanged sentence

Transformational initiatives ( 25 ) ( 30 ) ( 37 )

Acceleration of share-based compensation expense related to workforce reduction — ( 1 ) ( 2 )

Asset impairments ( 277 ) — ( 2 )

1 unchanged sentence

Change in fair value of contingent consideration ( 1 ) 25 21

Special compliance costs — ( 1 ) —

( 11 ) ( 6 ) ( 29 )

Restructuring and other related costs ( 46 ) — —

Other ( 21 ) ( 11 ) ( 8 )

Total unallocated costs ( 525 ) ( 239 ) ( 266 )

Income from operations 1,350 1,618 1,347

Interest income 51 9 2

1 unchanged sentence

Other income (expense, net 33 ( 39 ) 92

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

(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.

Major Customers.

No customer represented 10 percent or more of our total net revenue in 2022, 2021 or 2020.

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

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

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

Life Sciences and Applied Markets Diagnostics and Genomics Agilent CrossLab Total

(in millions)

As of and for the Year Ended October 31, 2022:

Assets $ 3,955 $ 3,489 $ 869 $ 8,313

Capital expenditures $ 77 $ 181 $ 33 $ 291

As of and for the Year Ended October 31, 2021:

Assets $ 3,741 $ 3,320 $ 839 $ 7,900

Capital expenditures $ 64 $ 100 $ 24 $ 188

Income before taxes $ 1,339 $ 1,504 $ 1,360

AGILENT TECHNOLOGIES, INC.

4 unchanged sentences

Cash and cash equivalents 1,590 1,053

Short-term investments — 91

Prepaid expenses 139 119

3 unchanged sentences

Right of use assets 154 150

Other 322 341

Others 281 322

Total assets $ 10,763 $ 10,532

2 unchanged sentences

Revenues from external customers are generally attributed to countries based upon the customers' location.

States China (1)

Years Ended October 31,

2023 2022 2021

(in millions)

Year Ended October 31, 2022 $ 2,385 $ 1,499 $ 2,964 $ 6,848

Year Ended October 31, 2021 $ 2,159 $ 1,273 $ 2,887 $ 6,319

Year Ended October 31, 2020 $ 1,752 $ 1,087 $ 2,500 $ 5,339

China also includes Hong Kong net revenue.

United States $ 2,410 $ 2,385 $ 2,159

China including Hong Kong 1,383 1,499 1,273

Rest of the world 3,040 2,964 2,887

Total net revenue 6,833 6,848 6,319

The following table presents summarized information for long-lived assets by geographic region.

1 unchanged sentence

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

States Germany Rest of the

(in millions)

Long-lived Assets:

October 31, 2022 $ 1,080 $ 151 $ 492 $ 1,723

October 31, 2021 $ 912 $ 134 $ 587 $ 1,633

United States $ 1,188 $ 1,080

Germany 192 151

Rest of World 471 492

Total Long-lived Assets $ 1,851 $ 1,723

AGILENT TECHNOLOGIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

SUBSEQUENT EVENT

Segment Reporting Changes .

In December 2023, we decided to re-organize our operating segments and move our cell analysis business, which currently is included in our life science and applied markets segment, to our diagnostics and genomics operating segment.

Following this re-organization, we will continue to have three businesses - life sciences and applied markets, diagnostics and genomics and Agilent CrossLab- each of which will comprise a reportable segment.

All historical segment financial information will be recast to conform to this new reporting structure in our financial statements and accompanying notes, beginning with our Form 10-Q filing for the first quarter of fiscal year 2024.

There will be no change to our Agilent CrossLab business segment.

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