Agilent Technologies Inc. reported orders of $1.42 billion for the third fiscal quarter ended July 31, 2006, 10 percent above one year ago. Revenues during the quarter were $1.45 billion, 17 percent above last year. Third quarter GAAP income from continuing operations was $233 million, or $0.55 per diluted share, compared with $54 million, or $0.10 per share, in last year’s third quarter.

Included in GAAP results are $86 million of charges related principally to the spinoff of Verigy Ltd. and the reduction of Agilent’s infrastructure costs. Excluding these charges, $21 million of non-cash stock compensation expenses, and $145 million of net gains from the sale of assets and other items, Agilent reported third quarter adjusted net income of $195 million, or $0.46 per share. On a comparable basis, the company earned $95 million, or $0.19 per share, one year ago.(1)

“Agilent performed well in the third quarter of 2006,” said Bill Sullivan, Agilent president and chief executive officer. “Revenues were above expectations because of 10 percent year-to-year growth in the continuing operations of Agilent and the sustained strength of Verigy. Adjusted earnings per share were four cents above the high end of our guidance, and more than double last year’s results, because of higher-than-expected revenues and great operating discipline across the businesses.”

Sullivan noted that gross margins reached record levels during the quarter, and that the company’s 27 percent Return on Invested Capital(2) also represented a new high. “During the quarter, we also brought Verigy to market via an initial public offering, and preparations for a fiscal year-end spinoff of Verigy are on schedule.”

Sullivan added, “While remaining vigilant about the economic environment, Agilent’s focus going forward is to leverage the robust operating model we’ve built through higher sustainable growth.”

Looking ahead, Agilent (including Verigy) expects fourth quarter fiscal 2006 revenues of $1.48 billion to $1.53 billion, up 5 to 9 percent from last year. Adjusted net income is expected to be in the range of $0.50 to $0.55 per share(3), nearly double last year’s comparable earnings.

Segment Results
Bio-Analytical Measurement gained momentum during the third quarter, reflecting the strength of its new product portfolio and a diversified, global customer base. Orders of $387 million were 11 percent above last year, and up about 10 percent in local currency terms. Life Sciences orders were up 13 percent, while Chemical Analysis orders were 10 percent above one year ago. Geographically, robust growth in Asia and Europe was balanced by single-digit growth in the Americas due to ongoing weakness from traditional large pharmaceutical customers. Revenues of $391 million were 15 percent above last year as new product deliveries accelerated.

Segment income from operations of $60 million was $18 million above last year. Gross margins improved by 5 points, while operating expenses for acquisitions, new product introductions and incremental investments grew slightly ahead of revenues. The third quarter’s 15 percent operating margin was about 3 points better than last year and a new third-quarter high. Segment Return On Invested Capital(2) was about the same as last year due to the impact of acquisitions.

Third quarter Electronic Measurement orders of $838 million were up 4 percent from last year. Communications test orders were up 2 percent, with wireless test up 5 percent due to strength in Asia / Pacific and in R&D test demand. Wireline test orders were down 13 percent due to continued softness in router test and operations support solutions. General purpose test orders were up 7 percent from one year ago, with particular strength across the oscilloscopes product line and in electronic manufacturing test. Revenues of $848 million were 8 percent above last year.

Third quarter income from operations of $125 million was up $48 million on a $65 million increase in revenues. Gross margins improved 5 points to 58 percent, while segment operating expenses moved in line with revenues. Segment operating margin of 15 percent was 5 points above last year while ROIC(2) improved 9 points to 24 percent based on better operating margins and reductions in working capital.

In the third quarter, Verigy, a subsidiary of Agilent comprised of its semiconductor test systems business, completed the initial public offering of a minority interest of 15 percent. Agilent intends to distribute the remaining 85 percent of Verigy shares to Agilent stockholders immediately prior to the close of its current fiscal year. After distribution, the related operating results of Verigy will be reflected as discontinued operations. For additional information on Verigy’s standalone results, which differ in certain respects from Agilent’s presentation of Verigy as one of its segments, see Verigy’s third quarter 2006 press release issued today at http://investor.verigy.com.

About Agilent Technologies
Agilent Technologies Inc. (NYSE: A) is the world’s premier measurement company and a technology leader in communications, electronics, life sciences and chemical analysis. The company’s 20,000 employees serve customers in more than 110 countries. Agilent had net revenue of $5.1 billion in fiscal 2005. Information about Agilent is available on the Web at www.agilent.com.

 
Forward-Looking Statements
This news release contains forward-looking statements as defined in the Securities Exchange Act of 1934 and is subject to the safe harbors created therein. The forward-looking statements contained herein include, but are not limited to, information regarding Agilent’s future revenues, earnings and profitability (on a segment and consolidated basis); the pace of new product introductions and future demand for the Company’s products and services; the completion of the spinoff of the Company’s Semiconductor Test Solutions business, Verigy Ltd.; and guidance for the fourth quarter of fiscal year 2006. These forward-looking statements involve risks and uncertainties that could cause Agilent’s results to differ materially from management’s current expectations. Such risks and uncertainties include, but are not limited to, unforeseen changes in the strength of our customers’ businesses; unforeseen changes in the demand for current and new products and technologies; and changes in the planned spinoff of Verigy.

In addition, other risks that Agilent faces in running its operations include the ability to execute successfully through business cycles while it continues to implement cost reductions; the ability to meet and achieve the benefits of its cost-reduction goals and otherwise successfully adapt its cost structures to continuing changes in business conditions; ongoing competitive, pricing and gross margin pressures; the risk that our cost-cutting initiatives will impair our ability to develop products and remain competitive and to operate effectively; the impact of geopolitical uncertainties on our operations, our markets and our ability to conduct business, the ability to improve asset performance to adapt to changes in demand; the ability to successfully introduce new products at the right time, price and mix, and other risks detailed in Agilent’s filings with the Securities and Exchange Commission, including our Annual Report on Form 10-K for the year ended Oct. 31, 2005. Forward-looking statements are based on the beliefs and assumptions of Agilent’s management and on currently available information. Agilent undertakes no responsibility to publicly update or revise any forward-looking statement.