AGILENT TECHNOLOGIES, INC. The following discussion should be read in conjunction with the condensed consolidated financial statements and notes thereto included elsewhere in this Form 10-Q and our Annual Report on Form 10-K. This report contains forward-looking statements including, without limitation, statements regarding growth opportunities, including for revenue and our end markets, strength and drivers of the markets into which we sell, sales funnels, our strategic direction, new product and service introductions and the position of our current products and services, market demand for and adoption of our products, the ability of our products and solutions to address customer needs and meet industry requirements, our focus on differentiating our product solutions, improving our customers' experience and growing our earnings, future financial results, our operating margin, mix, our investments, including in manufacturing infrastructure, research and development and expanding and improving our applications and solutions portfolios, expanding our position in developing countries and emerging markets, our focus on balanced capital allocation, our contributions to our pension and other defined benefit plans, impairment of goodwill and other intangible assets, the impact of foreign currency movements, our hedging programs and other actions to offset the effects of tariffs and foreign currency movements, our future effective tax rate, tax valuation allowance and unrecognized tax benefits, the impact of local government regulations on our ability to pay vendors or conduct operations, our ability to satisfy our liquidity requirements, including through cash generated from operations, the potential impact of adopting new accounting pronouncements, indemnification, source and supply of materials used in our products, our sales, our purchase commitments, our capital expenditures, the integration and effects of our acquisitions and other transactions, our stock repurchase program and dividends and the potential or anticipated direct or indirect impact of COVID-19 on our business that involve risks and uncertainties. Our actual results could differ materially from the results contemplated by these forward-looking statements due to various factors, including those discussed in Part II Item 1A and elsewhere in this Form 10-Q.
Basis of Presentation
The financial information presented in this Form 10-Q is not audited and is not necessarily indicative of our future consolidated financial position, results of operations, comprehensive income (loss) or cash flows. Our fiscal year-end isOctober 31 , and our fiscal quarters end onJanuary 31 ,April 30 andJuly 31 . Unless otherwise stated, these dates refer to our fiscal year and fiscal periods.
Executive Summary
Agilent Technologies, Inc. ("we", "Agilent" or the "company"), incorporated inDelaware inMay 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.
COVID-19 Pandemic
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. During the three and six months ended April 30,
2021 , many businesses and countries, including the United States , continued to
implement preventative and precautionary measures to mitigate the spread of the
virus such as quarantine, shelter-in-place, curfew, travel and activity
restrictions and similar isolation measures, including government orders and
other restrictions on the conduct of business operations at different times.
Our factories continue to operate around the world in accordance with the
guidance issued by local, state and national government authorities. We continue
to take proactive measures to ensure the health and safety of our global
employee base. The majority of the markets we serve, such as the pharmaceutical,
biopharmaceutical, food, environmental and diagnostics and clinical markets,
have continued to operate at various levels throughout the pandemic, and we
continue working closely with our customers to ensure their seamless operations.
In the academia and government markets, the recovery continues to improve as
more research laboratories are open and expanding capacity as vaccines are
deployed.
The COVID-19 pandemic continues to be dynamic, and near-term challenges across
the economy remain. Although vaccines are now being distributed and
administered, new variants of the virus are emerging in various parts of the
world that have shown to be more contagious, adding concerns whether the vaccine
is also effective against these new variants. We will continue to actively
monitor the pandemic and will continue to take appropriate steps to mitigate the
impacts to our employees and on our business posed by the on-going pandemic.
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Despite the economic challenges due to the COVID-19 pandemic, we ended our second fiscal quarter of 2021 with revenue growth of 23 percent year over year. This revenue growth was primarily non-COVID related revenue and came from all of our key end markets and geographies. Our life sciences and applied markets business saw an increase in demand for certain of our products that are being used in the development of new therapies and vaccines. Our Agilent CrossLab business continued to see an increase in revenue for our on-demand services and installation services due to more laboratories opening around the world. In our diagnostics and genomics business, we also saw revenue increase as elective medical procedures and non-COVID-19 routine testing continued to improve and are closer to pre-pandemic levels in the second quarter of fiscal year 2021. As a result of our strong business performance in the first half of fiscal year 2021, expense from our variable pay and LTPP-EPS programs, along with sales commission significantly increased year over year which was partially offset by the continued benefits from our cost savings actions which included reduction in travel and non-essential spending that we implemented last year.
Acquisition
OnApril 15, 2021 we completed the acquisition of privately-ownedResolution Bioscience, Inc. , a biotechnology company focused on the development and commercialization of next-generation sequencing-based ("NGS") precision oncology solutions, for$550 million cash plus potential future contingent payments of up to$145 million upon the achievement of certain milestones which are based on certain revenue and technical targets. Resolution Bioscience complements and expands our capabilities in NGS-based cancer diagnostics and provides us with innovative technology to further serve the needs of the fast-growing precision medicine market. The fair value of the future potential contingent payments was estimated to be$96 million at the date of the close.
2022 Senior Notes
OnJanuary 21, 2021 , we redeemed$100 million of the$400 million outstanding aggregate principal amount of our 2022 senior notes dueOctober 1, 2022 . OnApril 5, 2021 , we redeemed the remaining outstanding$300 million of our 2022 senior notes. The redemption price of approximately$417 million was computed in accordance with the terms of the 2022 senior notes as the present value of the remaining scheduled payments of principal and unpaid interest on the notes being redeemed. During the three and six months endedApril 30, 2021 , we recorded a loss on extinguishment of debt of$12 million and$17 million , respectively, in other income (expense), net in the condensed consolidated statement of operations. In addition,$1 million of accrued interest, up to but not including the applicable redemption date, was paid. The make-whole premium less partial amortization of previously deferred interest rate swap gain together with the amortization of debt issuance costs and discount was recorded in other income (expense), net in the condensed consolidated statement of operations.
2031 Senior Notes
OnMarch 12, 2021 , we issued an aggregate principal amount of$850 million in senior notes ("2031 senior notes"). The 2031 senior notes were issued at 99.822% of their principal amount. The 2031 senior notes will mature onMarch 12, 2031 , and bear interest at a fixed rate of 2.30% per annum. The interest is payable semi-annually onMarch 12th andSeptember 12th of each year and payments commence onSeptember 12, 2021 .
Actual Results
Net revenue of$1,525 million and$3,073 million for the three and six months endedApril 30, 2021 increased 23 percent and 18 percent, respectively, when compared to the same periods last year. This revenue growth was primarily non-COVID related revenue and came from all of our key end markets and geographies. Foreign currency movements for the three and six months endedApril 30, 2021 had an overall favorable impact on revenue of 4 percentage points and 3 percentage points, respectively, when compared to the same periods last year. Revenue generated by our life sciences and applied markets business increased 28 percent and 20 percent for the three and six months endedApril 30, 2021 , respectively, when compared to the same periods last year. Foreign currency movements for both the three and six months endedApril 30, 2021 had an overall favorable impact on revenue of 3 percentage points when compared to the same periods last year. Revenue generated by our diagnostics and genomics business for the three and six months endedApril 30, 2021 increased 20 percent and 19 percent, respectively, when compared to the same periods last year. Foreign currency movements for the three and six months endedApril 30, 2021 had an overall favorable impact on revenue of 4 percentage points and 3 percentage points, respectively, when compared to the same periods last year. Revenue generated by our Agilent CrossLab business in the three and six months endedApril 30, 2021 increased 19 percent and 16 percent, respectively, when compared to the same periods last year. Foreign 34 -------------------------------------------------------------------------------- Table of Contents currency movements for both the three and six months endedApril 30, 2021 had an overall favorable impact on revenue of 4 percentage points when compared to the same periods last year. Net income for the three and six months endedApril 30, 2021 was$216 million and$504 million , respectively, compared to net income of$101 million and$298 million , respectively, for the corresponding periods last year. In the six months endedApril 30, 2021 , cash provided by operations was$710 million compared to cash provided by operations of$254 million in the same period last year which included a one-time income tax outflow of$226 million related to a transfer of intangibles.
For the six months ended
OnNovember 19, 2018 we announced that our board of directors had approved a share repurchase program (the "2019 repurchase program") designed, among other things, to reduce or eliminate dilution resulting from issuance of stock under the company's employee equity incentive programs. The 2019 repurchase program authorizes the purchase of up to$1.75 billion of our common stock at the company's discretion and has no fixed termination date. The 2019 repurchase program does not require the company to acquire a specific number of shares and may be suspended, amended or discontinued at any time. During the three and six months endedApril 30, 2021 , we repurchased and retired 164,422 shares for$21 million and 3.050 million shares for$365 million , respectively, under this authorization. During the three and six months endedApril 30, 2020 , we repurchased and retired 1.663 million shares for$126 million and 2.389 million shares for$186 million , respectively, under this authorization. EffectiveFebruary 18, 2021 , the 2019 repurchase program was terminated and replaced by the new share repurchase program. The remaining authorization under the 2019 repurchase plan of$193 million expired onFebruary 18, 2021 . OnFebruary 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 which became effective onFebruary 18, 2021 , replaced and terminated the 2019 repurchase program on that date. The 2021 repurchase program does not require the company to acquire a specific number of shares and may be suspended, amended or discontinued at any time. During both the three and six months endedApril 30, 2021 , we repurchased and retired 1.388 million shares for$174 million under this authorization. As ofApril 30, 2021 , we had remaining authorization to repurchase up to approximately$1.826 billion of our common stock under this program. Looking forward, as we continue to navigate the impacts of the COVID-19 pandemic, our top priority continues to be the health and safety of our employees, customers and community, as well as supporting our customers' operations. We expect to face additional supply chain pressures in the near term that we will continue to mitigate through various sourcing strategies. We also remain focused on improving our customers' experience, differentiating product solutions and productivity especially during these extraordinary times. We continue supporting our customers' needs related to the development of new therapies and vaccines. With our strong first half results and the continued recovery in our end markets, we are optimistic about our long-term growth opportunities in all of our end markets. 35 -------------------------------------------------------------------------------- Table of Contents Critical Accounting Policies and Estimates Management's Discussion and Analysis of Financial Condition and Results of Operations is based upon our condensed consolidated financial statements, which have been prepared in accordance with generally accepted accounting principles ("GAAP") in theU.S. The preparation of condensed consolidated financial statements in conformity with GAAP in theU.S. requires management to make estimates, judgments and assumptions that affect the amounts reported in our condensed consolidated financial statements and accompanying notes. Our critical accounting policies are those that affect our financial statements materially and involve difficult, subjective or complex judgments by management. Those policies are revenue recognition, inventory valuation, retirement and post-retirement benefit plan assumptions, valuation of goodwill and purchased intangible assets and accounting for income taxes. Other than the accounting for goodwill impairment as described below, there have been no significant changes to our critical accounting policies as described in our Annual Report on Form 10-K for the fiscal year endedOctober 31, 2020 . Management bases its estimates on historical experience and various other assumptions believed to be reasonable. Although these estimates are based on management's best knowledge of current events and actions that may impact the company in the future, actual results may be different from the estimates. An accounting policy is deemed to be critical if it requires an accounting estimate to be made based on assumptions about matters that are highly uncertain at the time the estimate is made and if different estimates that reasonably could have been used or changes in the accounting estimate that are reasonably likely to occur could materially change the financial statements.
Goodwill Impairment Assessment. On
Under the new authoritative guidance, we still have the option to perform a qualitative assessment to determine whether further impairment testing is necessary. The accounting standard gives us the option to first assess qualitative factors to test a reporting unit's goodwill for impairment. If we believe, as a result of our qualitative assessment, that it is more-likely-than-not (i.e., greater than 50% chance) that the fair value of a reporting unit is less than its carrying amount, the quantitative impairment test will be required. Otherwise, no further testing will be required. In the quantitative test, we are required to compare the fair value of each reporting unit to its carrying value. Any excess of the reporting unit's carrying value over its fair value will be recorded as an impairment loss.
Adoption of New Pronouncements
See Note 2, "New Accounting Pronouncements," to the condensed consolidated financial statements for a description of new accounting pronouncements.
Foreign Currency
Our revenues, costs and expenses, and monetary assets and liabilities and equity are exposed to changes in foreign currency exchange rates as a result of our global operating and financing activities. Foreign currency movements for the six months endedApril 30, 2021 had an overall favorable impact on revenue of 3 percentage points when compared to the same period last year. When movements in foreign currency exchange rates have a positive impact on revenue, they will also have a negative impact by increasing our costs and expenses. We calculate the impact of movements in foreign currency exchange rates by applying the actual foreign currency exchange rates in effect during the last month of each quarter of the current year to both the applicable current and prior year periods. We hedge revenues, expenses and balance sheet exposures that are not denominated in the functional currencies of our subsidiaries on a short term and anticipated basis. We do experience some fluctuations within individual lines of the condensed consolidated statement of operations and balance sheet because our hedging program is not designed to offset the currency movements in each category of revenues, expenses, monetary assets and liabilities. Our hedging program is designed to hedge currency movements on a relatively short-term basis (up to a rolling thirteen-month period). We may also hedge equity balances denominated in foreign currency on a long-term basis. To the extent that we are required to pay for all, or portions, of an acquisition price in foreign currencies, we may enter into foreign exchange contracts to reduce the risk that currency movements will impact theU.S. dollar cost of the transaction. 36 -------------------------------------------------------------------------------- Table of Contents Results from Operations Net Revenue Three Months Ended Six Months Ended Year over Year Change April 30, April 30, Three Six 2021 2020 2021 2020 Months Months (in millions) Net revenue: Products$ 1,150 $ 923 $ 2,322 $ 1,946 25% 19% Services and other 375 315 751 649 19% 16% Total net revenue$ 1,525 $ 1,238 $ 3,073 $ 2,595 23% 18% Net revenue of$1,525 million and$3,073 million for the three and six months endedApril 30, 2021 increased 23 percent and 18 percent, respectively, when compared to the same periods last year. Foreign currency movements for the three and six months endedApril 30, 2021 had an overall favorable impact on revenue of 4 percentage points and 3 percentage points, respectively, when compared to the same periods last year. The favorable impact of COVID-related revenue for the three and six months endedApril 30, 2021 was not material. In the three and six months endedApril 30, 2021 , net revenue increased in all three of our business segments, geographic regions and all of our key end markets led by very strong growth from the pharmaceutical market and strong growth from the academia and government and food markets when compared to the same periods last year. Revenue from products increased 25 percent and 19 percent for the three and six months endedApril 30, 2021 , respectively, when compared to the same periods last year. The growth in product revenue was driven by increased sales within our liquid chromatography and mass spectrometry businesses with continued strong growth in our nucleic acid solutions and cell analysis businesses. Services and other revenue increased 19 percent and 16 percent for the three and six months endedApril 30, 2021 , respectively, when compared to the same periods last year. Services and other revenue consist of revenue generated from our three business segments: Agilent CrossLab, diagnostics and genomics and life science and applied markets businesses. Some of the prominent services in the Agilent CrossLab business include repair and maintenance on multi-vendor instruments, compliance services and installation services. Services in the diagnostics and genomics business include consulting services related to the companion diagnostics and nucleic acid businesses. Services in the life science and applied markets business include repair and maintenance and installation services. For the three months endedApril 30, 2021 , the service revenue from the Agilent CrossLab business increased 19 percent when compared to the same period last year, with a 4 percentage point favorable currency impact. Service revenue increases for the three months endedApril 30, 2021 reflected the contracted service business continuing to draw strong demand and non-contract service activity returning to pre-pandemic levels. A large portion of the growth is also a reflection of the early pandemic lock-downs during the three months endedApril 30, 2020 in multiple regions, where a significant portion of customer sites were closed and inaccessible for service visits. For the six months endedApril 30, 2021 , the service revenue from the Agilent CrossLab business increased 16 percent when compared to the same period last year, with a 4 percentage point favorable currency impact. For the six months endedApril 30, 2021 service revenue increased in all key customer offering categories. 37 --------------------------------------------------------------------------------
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Net Revenue By Segment
Three Months Ended Six Months Ended Year over Year Change
April 30, April 30, Three Six
2021 2020 2021 2020 Months Months
(in millions)
Net revenue by segment:
Life sciences and applied
markets $ 674 $ 526 $ 1,396 $ 1,164 28% 20%
Diagnostics and genomics 315 263 609 512 20% 19%
Agilent CrossLab 536 449 1,068 919 19% 16%
Total net revenue $ 1,525 $ 1,238 $ 3,073 $ 2,595 23% 18%
Revenue in the life sciences and applied markets business for the three and six
months ended April 30, 2021 increased 28 percent and 20 percent, respectively,
when compared to the same periods last year. Foreign currency movements for both
the three and six months ended April 30, 2021 had an overall favorable impact on
revenue of 3 percentage points when compared to the same periods last year. For
the three and six months ended April 30, 2021 , we saw revenue growth across all
key end markets when compared to the same period last year. Revenue growth was
led by strong demand for our products within the pharmaceutical market supported
by strong growth within the food and academic and government markets when
compared to the same periods last year.
Revenue in the diagnostics and genomics business for the three and six months
ended April 30, 2021 , increased 20 percent and 19 percent, respectively, when
compared to the same periods last year. Foreign currency movements for the three
and six months ended April 30, 2021 had an overall favorable impact on revenue
of 4 percentage points and 3 percentage points, respectively, when compared to
the same periods last year. For the three and six months ended April 30, 2021 ,
we saw revenue growth across all key end markets when compared to the same
periods last year. Revenue growth was very strong within the pharmaceutical
market led by performance from our nucleic acid solutions and biomolecular
analysis businesses. Revenue growth was strong within the diagnostics and
clinical markets led by performance from our pathology and genomics businesses.
Revenue generated by Agilent CrossLab in the three and six months ended
April 30, 2021 , increased 19 percent and 16 percent, respectively, when compared
to the same periods last year. Foreign currency movements for both the three and
six months ended April 30, 2021 had an overall favorable impact on revenue of 4
percentage points when compared to the same periods last year. For the three and
six months ended April 30, 2021 , we saw revenue growth across all key end
markets led by very strong growth from the pharmaceutical and food markets when
compared to the same periods last year.
Operating Results
Three Months Ended Six Months Ended Year over Year Change
April 30, April 30, Three Six
2021 2020 2021 2020 Months Months
(in millions, except margin data)
Total gross margin 53.6 % 53.0 % 53.9 % 53.2 % 1 ppt 1 ppt
Research and development $ 109 $ 197 $ 212 $ 301 (44)% (30)%
Selling, general and administrative $ 420 $ 358 $ 827 $ 762 17% 9%
Operating margin 18.9 % 8.2 % 20.0 % 12.2 % 11 ppts 8 ppts
Income from operations $ 288 $ 102 $ 616 $ 317 182% 94%
Total gross margin for both the three and six months ended April 30, 2021
increased 1 percentage point when compared to the same periods last year. Gross
margin for the three and six months ended April 30, 2021 increased due to higher
sales volume which was partially offset by higher wages and variable pay, higher
share-based compensation expense, higher inventory charges and logistics costs.
Research and development expenses for the three and six months ended April 30,
2021 decreased 44 percent and 30 percent, respectively, when compared to the
same periods last year. Research and development expenses in the three and six
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months ended April 30, 2020 included an impairment charge of $97 million related
to the shutdown of our sequencer development program. Excluding the impairment
in 2020, research and development expenses for the three and six months ended
April 30, 2021 increased slightly due to increased wages and variable pay and
unfavorable currency movements partially offset by savings from the shutdown of
our sequencer development program.
Selling, general and administrative expenses for the three and six months ended
April 30, 2021 increased 17 percent and 9 percent, respectively, when compared
to the same periods last year. The increase in selling, general and
administrative expenses for the three months ended April 30, 2021 was due to
higher wages and variable pay, higher commissions and higher share-based
compensation expense partially offset by lower discretionary spending. The
increase in selling, general and administrative expenses for the six months
ended April 30, 2021 was due to higher wages and variable pay, higher
commissions and higher share-based compensation expense partially offset by
lower legal costs, lower discretionary spending and lower intangible
amortization of intangible assets.
Total operating margin for the three and six months ended April 30, 2021
increased 11 percentage points and 8 percentage points, respectively, when
compared to the same periods last year. Operating margin for the three and six
months ended April 30, 2021 increased due to higher sales volume and increased
gross margin partially offset by increases in operating expenses.
Income from operations for the three and six months ended
At
Other income (expense), net
In the three and six months endedApril 30, 2021 other income and expense, net includes income of$2 million and$5 million , respectively, related to the provision of site service costs to, and lease income from Keysight Technologies, Inc. The costs associated with these services are reported within income from operations. In the three and six months endedApril 30, 2021 other income and expense, net also includes a$12 million and$17 million loss on extinguishment of debt, respectively and gains on the fair value of equity investment of approximately$11 million in both periods. In the three and six months endedApril 30, 2020 other income and expense, net includes income of$3 million and$6 million , respectively, related to the provision of site service costs to, and lease income from Keysight Technologies, Inc. The costs associated with these services are reported within income from operations. In the three and six months endedApril 30, 2020 , other income (expense), net also includes$22 million of income related to the settlement of our legal claim against Twist BioScience and gains on the fair value of equity investment of approximately$11 million and$27 million , respectively.
Income Taxes
For the three and six months endedApril 30, 2021 , our income tax expense was$57 million with an effective tax rate of 20.9 percent and$81 million with an effective tax rate of 13.8 percent, respectively. For the three months endedApril 30, 2021 , there were no significant discrete tax items. For the six months endedApril 30, 2021 , our effective tax rate and the resulting provision for income taxes were impacted by the expiration of various foreign statutes of limitations which resulted in the recognition of previously unrecognized tax benefits of$16 million . The income taxes for the six months endedApril 30, 2021 also include the excess tax benefits from stock-based compensation of$22 million .
Our calculation of income tax expense for the three and six months ended
For the three and six months endedApril 30, 2020 , our income tax expense was$20 million with an effective tax rate of 16.5 percent and$42 million with an effective tax rate of 12.4 percent, respectively. For the three months endedApril 30, 2020 , there were no significant discrete tax items. For the six months endedApril 30, 2020 , our effective tax rate and the resulting provision for income taxes were impacted by a discrete tax benefit of$14 million related to the excess tax benefits from stock compensation. In theU.S. , tax years remain open back to the year 2017 for federal income tax purposes and for significant states. In other major jurisdictions where the company conducts business, the tax years generally remain open back to the year 2009. 39
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With these jurisdictions and theU.S. , it is reasonably possible 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.
Segment Overview
We continue to have three business segments comprised of the life sciences and applied markets business, diagnostics and genomics business and the Agilent CrossLab business.
Life Sciences and Applied Markets
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. Key product categories include: liquid chromatography ("LC") systems and
components; liquid chromatography mass spectrometry ("LCMS") systems; gas
chromatography ("GC") systems and components; gas chromatography mass
spectrometry ("GCMS") systems; inductively coupled plasma mass spectrometry
("ICP-MS") instruments; atomic absorption ("AA") instruments; microwave
plasma-atomic emission spectrometry ("MP-AES") instruments; inductively coupled
plasma optical emission spectrometry ("ICP-OES") instruments; raman
spectroscopy; cell analysis plate based assays; flow cytometer; real-time cell
analyzer; cell imaging systems; microplate reader; laboratory software for
sample tracking; information management and analytics; laboratory automation and
robotic systems; dissolution testing; vacuum pumps and measurement technologies.
Net Revenue
Three Months Ended Six Months Ended Year over Year Change
April 30, April 30, Three Six
2021 2020 2021 2020 Months Months
(in millions)
Net revenue $ 674 $ 526 $ 1,396 $ 1,164 28% 20%
Life sciences and applied markets business revenue for the three and six months
ended April 30, 2021 increased 28 percent and 20 percent, respectively, when
compared to the same periods last year. For both the three and six months ended
April 30, 2021 , foreign currency movements had an overall favorable impact on
revenue of 3 percentage points when compared to the same periods last year.
Geographically, revenue increased 36 percent in the Americas with a 1 percentage
point unfavorable currency impact, increased 39 percent in Europe with an 8
percentage point favorable currency impact and increased 17 percent in Asia
Pacific with a 3 percentage point favorable currency impact for the three months
ended April 30, 2021 compared to the same period last year. For the three months
ended April 30, 2021 , revenue growth was strong across all businesses.
Revenue increased 20 percent in the Americas with a 1 percentage point
unfavorable currency impact, increased 24 percent in Europe with a 7 percentage
point favorable currency impact and increased 17 percent in Asia Pacific with a
3 percentage point favorable currency impact for the six months ended April 30,
2021 compared to the same period last year. For the six months ended April 30,
2021 , revenue growth was strong across all businesses.
For the three and six months ended April 30, 2021 , all end markets delivered
strong revenue growth. Revenue growth in the pharmaceutical end market was
driven by our cell analysis, liquid chromatography mass spectrometry and liquid
chromatography with strong growth across all regions. Revenue growth in the
academia and government end market was led by cell analysis, liquid
chromatography mass spectrometry business with strong growth in Americas .
Revenue growth in the diagnostics and clinical markets was mainly driven by
strength in liquid chromatography mass spectrometry and cell analysis business
with broad based growth across regions.
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For the three months endedApril 30, 2021 , revenue growth in the chemical and energy end market was led by spectroscopy, gas chromatography and gas chromatography mass spectrometry and liquid chromatography business with strong growth inAmericas andEurope . Revenue growth in the food market was mainly driven by strength in gas chromatography, gas chromatography mass spectrometry and liquid chromatography with broad based strength across regions. Revenue growth in the forensics and environmental end markets was mainly driven by strength in spectroscopy, gas chromatography mass spectrometry and liquid chromatography mass spectrometry mainly led by growth inAmericas . For the six months ended inApril 30, 2021 , revenue growth, in the chemical and energy end market was driven by spectroscopy, liquid chromatography and gas chromatography mass spectrometry led by strength inEurope andAmericas . Revenue growth in the food market was mainly driven by strength in gas chromatography, gas chromatography mass spectrometry, liquid chromatography mass spectrometry and liquid chromatography with broad based strength across regions. Revenue growth in the forensics and environmental end markets was mainly driven by strength in gas chromatography mass spectrometry, liquid chromatography mass spectrometry and gas chromatography mainly led by growth inAmericas . Looking forward, despite short term uncertainties and the adverse effects of the COVID-19 pandemic, we are optimistic about our long-term growth opportunities in the life sciences and applied markets as our broad portfolio of products and solutions are well suited to address customer needs. We anticipate growth from our new product introductions and acquisitions in the last couple of years as we continue to invest in expanding and improving our applications and solutions portfolio. While we anticipate volatility in our markets, we expect continued growth across most end markets in the long term. Operating Results Three Months Ended Six Months Ended Year over Year Change April 30, April 30, Three Six 2021 2020 2021 2020 Months Months (in millions, except margin data) Gross margin 59.4 % 58.1 % 60.0 % 59.2 % 1 ppt 1 ppt Research and development$ 62 $ 53 $ 121 $ 108 16% 12% Selling, general and administrative$ 184 $ 154 $ 363 $ 325 20% 12% Operating margin 22.9 % 18.7 % 25.3 % 22.0 % 4 ppts 3 ppts Income from operations$ 154 $ 98 $ 353 $ 256 57% 38% Gross margin for products and services for both the three and six months endedApril 30, 2021 , increased 1 percentage point when compared to the same periods last year. Gross margin for the three and six months endedApril 30, 2021 was impacted by higher sales volume which was partially offset by higher wage and variable pay, unfavorable currency impact and hedge losses. Research and development expenses for the three and six months endedApril 30, 2021 , increased 16 percent and 12 percent, respectively, when compared to the same periods last year. Research and development expenses for the three and six months endedApril 30, 2021 increased due to higher wage and variable pay, unfavorable currency impact and higher share-based compensation expense partially offset by operational savings. Selling, general and administrative expenses for the three and six months endedApril 30, 2021 , increased 20 percent and 12 percent, respectively, when compared to the same periods last year. Selling, general and administrative expenses for the three and six months endedApril 30, 2021 increased due to higher wages and variable pay, higher commissions, higher share-based compensation expense and unfavorable currency movements partially offset by operational savings. Operating margin for products and services for the three and six months endedApril 30, 2021 increased 4 percentage points and 3 percentage points, respectively, when compared to the same periods last year. Operating margin for the three and six months endedApril 30, 2021 increased due to higher sales volume and favorable impact of currency on revenue which was partially offset by higher wages and variable pay, unfavorable impact of currency on expenses and higher share-based compensation.
Income from operations for the three and six months ended
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Diagnostics and Genomics
Our diagnostics and genomics business includes the genomics, nucleic acid contract manufacturing and research and development, pathology, companion diagnostics, reagent partnership and biomolecular analysis businesses.
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. First, our genomics business includes arrays for DNA mutation detection,
genotyping, gene copy number determination, identification of gene
rearrangements, DNA methylation profiling, gene expression profiling, as well as
next generation sequencing ("NGS") target enrichment and genetic data management
and interpretation support software. This business also includes solutions that
enable clinical labs to identify DNA variants associated with genetic disease
and help direct cancer therapy. Second, our nucleic acid solutions business
provides equipment and expertise focused on production of synthesized
oligonucleotides under pharmaceutical good manufacturing practices ("GMP")
conditions for use as API in an emerging class of drugs that utilize nucleic
acid molecules for disease therapy. Third, our pathology solutions business is
focused on product offerings for cancer diagnostics and anatomic pathology
workflows. The broad portfolio of offerings includes immunohistochemistry
("IHC"), in situ hybridization ("ISH"), hematoxylin and eosin ("H&E") staining
and special staining. Fourth, we also collaborate with a number of major
pharmaceutical companies to develop new potential tissue and liquid-based
pharmacodiagnostics, also known as companion diagnostics, which may be used to
identify patients most likely to benefit from a specific targeted therapy.
Fifth, the reagent partnership business is a provider of reagents used for
turbidimetry and flow cytometry. Finally, our biomolecular analysis business
provides complete workflow solutions, including instruments, consumables and
software, for quality control analysis of nucleic acid samples. Samples are
analyzed using quantitative and qualitative techniques to ensure accuracy in
further genomics analysis techniques utilized in clinical and life science
research applications.
Net Revenue
Three Months Ended Six Months Ended Year over Year Change
April 30, April 30, Three Six
2021 2020 2021 2020 Months Months
(in millions)
Net revenue $ 315 $ 263 $ 609 $ 512 20% 19%
Diagnostics and genomics business revenue for the three and six months ended
April 30, 2021 increased 20 percent and 19 percent, respectively, when compared
to the same periods last year. For the three and six months ended April 30,
2021 , foreign currency movements had an overall favorable impact on revenue of 4
percentage points and 3 percentage points, respectively, when compared to the
same periods last year.
Geographically, revenue increased 30 percent in the Americas with no currency
impact, increased 15 percent in Europe with a 7 percentage point favorable
currency impact and increased 1 percent in Asia Pacific with a 3 percentage
point favorable currency impact for the three months ended April 30, 2021
compared to the same period last year. For the three months ended April 30,
2021 , the increase in the Americas was driven by strong performance in our
nucleic acid solutions and genomics portfolios. In Europe we saw strong demand
for our genomics solutions, as well as an increase in the companion diagnostics
business. In Asia Pacific , the revenue increase from the pathology product
portfolio was offset by a decline in the reagent partnership business.
For the six months ended April 30, 2021 , revenue increased 29 percent in the
Americas with no currency impact, increased 12 percent in Europe with a 7
percentage point favorable currency impact and increased 5 percent in Asia
Pacific with a 3 percentage point favorable currency impact when compared to the
same period last year. For the six months ended April 30, 2021 , the increase in
the Americas was driven by strong performance in our nucleic acid solutions and
genomics portfolios. In Europe we saw strong demand for our genomics solutions,
as well as an increase from our companion diagnostics business. In Asia Pacific
revenue growth was driven by our pathology product portfolio.
For the three and six months ended
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the six months ended April 30, 2021 , the aforementioned increase was partly
offset by a reduction in reagent partnership revenues. All key end markets had
revenue increases when compared to the same periods last year.
Looking forward we are optimistic about our long-term growth opportunities in
our end markets and continue to invest in expanding and improving our
applications and solutions portfolio. We remain positive about our growth in our
end markets as our product portfolio around OMNIS, PD-L1 assays and SureFISH
continues to gain strength with our customers in clinical oncology applications,
and our next generation sequencing target enrichment solutions continue to be
adopted. Market demand in the nucleic acid solutions business related to
therapeutic oligo programs continues, and with our newly opened and planned
extension of our nucleic acid solutions production facility in Frederick,
Colorado , we are well positioned to serve more of the market demand. The
acquisition of Resolution Bioscience will expand our capabilities in NGS-based
cancer diagnostics and provides innovative technology to further serve the needs
of the fast-growing precision medicine market. We will continue to invest in
research and development and seek to expand our position in developing countries
and emerging markets.
Operating Results
Three Months Ended Six Months Ended Year over Year Change
April 30, April 30, Three Six
2021 2020 2021 2020 Months Months
(in millions, except margin data)
Gross margin 53.4 % 55.1 % 52.5 % 53.4 % (2) ppts (1) ppt
Research and development $ 30 $ 30 $ 59 $ 62 - (5)%
Selling, general and
administrative $ 69 $ 58 $ 137 $ 121 18% 13%
Operating margin 21.9 % 21.6 % 20.3 % 17.7 % - 3 ppts
Income from operations $ 69 $ 57 $ 124 $ 91 21% 36%
Gross margin for products and services for the three and six months ended
April 30, 2021 , decreased 2 percentage points and 1 percentage point,
respectively, when compared to the same periods last year. Gross margin in the
three and six months ended April 30, 2021 decreased due to a change in business
mix, higher wages, variable pay, inventory charges and logistics expenses
partially offset by higher sales volume.
Research and development expenses for the three and six months ended April 30,
2021 , were flat and decreased 5 percent, respectively, when compared to the same
periods last year. Research and development expenses for the three months ended
April 30, 2021 included higher program investments, wages, and variable pay
offset by the shutdown of the sequencer development program in 2020. Research
and development expenses for the six months ended April 30, 2021 included higher
program investments, wages and variable pay which were more than offset by the
shutdown of the sequencer development program in 2020.
Selling, general and administrative expenses for the three and six months ended
April 30, 2021 , increased 18 percent and 13 percent, respectively, when compared
to the same periods last year. Selling, general and administrative expenses for
the three and six months ended April 30, 2021 increased due to higher
commissions, share based compensation expenses, higher wages and variable pay
which more than offset a reduction in discretionary expenditures.
Operating margin for products and services for the three and six months ended
April 30, 2021 was flat and increased 3 percentage points, respectively, when
compared to the same periods last year. Operating margin for the three months
ended April 30, 2021 had higher volume completely offset by higher commission,
wage and variable pay expenses which negatively impacted gross margin and drove
up operating expenses. Operating margin for the six months ended April 30, 2021
improved as the revenue growth more than offset the increase in commissions,
wages and variable pay.
Income from operations for the three and six months ended
The Agilent CrossLab business spans the entire lab with its extensive consumables and services portfolio, which is designed to improve customer outcomes. Most of the portfolio is vendor neutral, meaning Agilent can serve and supply
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customers regardless of their instrument purchase choices. Solutions range from
chemistries and supplies to services and software helping to connect the entire
lab. Key product categories in consumables include GC and LC columns, sample
preparation products, custom chemistries, and a large selection of laboratory
instrument supplies. Services include startup, operational, training and
compliance support, software as a service, as well as asset management and
consultative services that help increase customer productivity. Custom service
and consumable bundles are tailored to meet the specific application needs of
various industries and to keep instruments fully operational and compliant with
the respective industry requirements.
Net Revenue
Three Months Ended Six Months Ended Year over Year Change
April 30, April 30, Three Six
2021 2020 2021 2020 Months Months
(in millions)
Net revenue $ 536 $ 449 $ 1,068 $ 919 19% 16%
Agilent CrossLab business revenue for the three and six months ended April 30,
2021 increased 19 percent and 16 percent, respectively, when compared to the
same periods last year. Foreign currency movements for both the three and six
months ended April 30, 2021 had an overall favorable impact on revenue of 4
percentage points when compared to the same periods last year.
Geographically, revenue increased 15 percent in the Americas with a 1 percentage
point unfavorable currency impact, increased 18 percent in Europe with an 8
percentage point favorable currency impact and increased 24 percent in Asia
Pacific with a 6 percentage point favorable currency impact for the three months
ended April 30, 2021 compared to the same period last year. During the three
months ended April 30, 2021 , the solid growth across the regions reflected a
dramatic improvement against last year's weakened sales in the early months of
the COVID-19 pandemic response that slowed or halted the operations of many
customers.
Geographically, revenue increased 11 percent in the Americas with a 1 percentage
point unfavorable currency impact, increased 14 percent in Europe with a 7
percentage point favorable currency impact and increased 23 percent in Asia
Pacific with a 6 percentage point favorable currency impact for the six months
ended April 30, 2021 compared to the same period last year. During the six
months ended April 30, 2021 , the solid growth across the regions reflected
consistently high demand for products and services across the Agilent CrossLab
product portfolio. It also reflects last year's weakened sales of varying
magnitude and timing from each of the regions, as a result of the COVID-19
pandemic's response that slowed or halted the operations of many customers.
For the three and six months ended April 30, 2021 , the Agilent CrossLab business
continued to see exceptional growth from the pharmaceutical market, food market
and the environmental market. The chemical, energy and materials market
delivered moderate growth during that same period, but a large portion of that
growth can be attributable to the severe contraction that this market faced
during the overall business environment at the beginning of the COVID-19
pandemic last year.
Looking forward, the portfolio of Agilent CrossLab products and services are
well positioned to continue their success in our key end markets. The business
is taking advantage of digital and remote capabilities to offer services and
consumables to customers. Despite difficulty of predicting the impact of the
COVID-19 pandemic on the market, we remain confident about the long-term growth
opportunities as customer feedback remains very positive on the value Agilent
CrossLab brings to customer labs. Geographically, the business is well
diversified across all regions to take advantage of local market opportunities
and to hedge against weakness in any one region.
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Operating Results
Three Months Ended Six Months Ended Year over Year Change
April 30, April 30, Three Six
2021 2020 2021 2020 Months Months
(in millions, except margin data)
Gross margin 51.6 % 52.5 % 51.7 % 52.2 % (1) ppt (1) ppt
Research and development$ 15 $ 14 $ 30 $ 29 10% 5% Selling, general and administrative$ 121 $ 100 $ 239 $ 209 21% 14% Operating margin 26.3 % 27.2 % 26.5 % 26.3 % (1) ppt - Income from operations$ 141 $ 122 $ 283 $ 241 15% 17% Gross margin for products and services for both the three and six months endedApril 30, 2021 decreased 1 percentage point when compared to the same periods last year. As customer sites reopen, certain service delivery costs have been returning to pre-pandemic levels. In addition, higher variable pay, higher hedge losses, inventory charges and higher logistical costs all negatively impacted margins as well. The positive impact from higher sales partially offset most of these unfavorable factors. Research and development expenses for the three and six months endedApril 30, 2021 increased 10 percent and 5 percent, respectively, when compared to the same periods last year. Research and development investment within the Agilent CrossLab business is on the rise due to higher wages and a continued focus on digital service offerings. Selling, general and administrative expenses for the three and six months endedApril 30, 2021 increased 21 percent and 14 percent, respectively, when compared to the same periods last year. Selling, general and administrative expenses increased due to higher wages and variable pay, higher sales commissions and higher share-based compensation expense. Operating margin for products and services for the three and six months endedApril 30, 2021 decreased 1 percentage point and was flat, respectively, when compared to the same periods last year. Operating margin for the three months endedApril 30, 2021 decreased 1 percentage point because of higher variable pay and service delivery costs returning to pre-pandemic levels, which were partially offset by the positive impact of higher sales. Operating margin for the six months endedApril 30, 2021 was flat because of higher variable pay and higher service delivery costs, which were fully offset by the positive impact of higher sales.
Income from operations for the three and six months ended
FINANCIAL CONDITION
Liquidity and Capital Resources
We believe our cash and cash equivalents, cash generated from operations, and ability to access capital markets and credit lines will satisfy, for at least the next twelve months, our liquidity requirements, both globally and domestically, including the following: working capital needs, capital expenditures, business acquisitions, stock repurchases, cash dividends, contractual obligations, commitments, principal and interest payments on debt, and other liquidity requirements associated with our operations. Economic stimulus legislation was passed in many countries in response to COVID-19. InMarch 2020 in theU.S. , the Coronavirus Aid, Relief, and Economic Security Act ("CARES Act") was enacted to provide for tax relief and government loans, subsidies and other relief for entities in affected industries. InMarch 2021 in theU.S. , the American Rescue Plan Act ("ARP Act") was enacted. The ARP Act strengthens and extends certain federal programs enacted through the CARES Act and other COVID-19 relief measures and establishes new federal programs. As ofApril 30, 2021 , the CARES Act, the ARP Act and other government benefits outside theU.S. did not have a material impact on our condensed consolidated financial statements and related disclosures. Our financial position as ofApril 30, 2021 consisted of cash and cash equivalents of$1,380 million as compared to$1,441 million as ofOctober 31, 2020 . 45 -------------------------------------------------------------------------------- Table of Contents As ofApril 30, 2021 ,$1,326 million of our cash and cash equivalents was held outside of theU.S. by our foreign subsidiaries and can be repatriated to theU.S. as local working capital and other regulatory conditions permit. We utilize a variety of funding strategies to ensure that our worldwide cash is available in the locations in which it is needed. We may, from time to time, retire certain outstanding debt of ours through open market cash purchases, privately-negotiated transactions or otherwise. Such transactions, if any, will depend on prevailing market conditions, our liquidity requirements, contractual restrictions and other factors.
Net Cash Provided by Operating Activities
Net cash inflow from operating activities was$710 million for the six months endedApril 30, 2021 compared to cash inflow of$254 million for the same period in 2020. In the six months endedApril 30, 2021 and 2020, we paid approximately$119 million and$79 million , respectively, under our variable and incentive pay programs. Beginning in fiscal year 2020, all of our variable and incentive pay programs changed to be paid annually versus semi-annually in the prior years. The amount paid in the six months endedApril 30, 2021 for our variable and incentive pay programs reflects an annual payment versus a semi-annual payment in 2020. Net cash paid for income taxes in the six months endedApril 30, 2021 was approximately$116 million compared to income taxes paid of$286 million which included a one-time payment of$226 million related to the transfer of intellectual property in the prior year. For the six months endedApril 30, 2021 , deferred tax cash inflows were$31 million compared to cash outflows of$3 million in the prior year. For the six months endedApril 30, 2021 there was an unrealized gain on the fair value of an equity investment of$11 million compared to$27 million in 2020. For the six months endedApril 30, 2021 , there was an asset impairment charge of$2 million compared to an asset impairment charge of$99 million which was related to the closure of a business in our diagnostics and genomics group. For the six months endedApril 30, 2021 , other assets and liabilities had cash outflow of$19 million compared to cash outflow of$204 million for the same period in 2020. Cash outflow in the six months endedApril 30, 2021 compared to six months endedApril 30, 2020 was largely the result of lower income tax payments and pension contributions in 2021. In the six months endedApril 30, 2021 , accounts receivable used cash of$17 million compared to cash provided of$25 million for the same period in 2020. Days' sales outstanding as ofApril 30, 2021 and 2020 was 63 days and 64 days, respectively. Cash used for inventory was$80 million for the six months endedApril 30, 2021 compared to cash used of$85 million for the same period in 2020. Inventory days on-hand was 101 days as ofApril 30, 2021 compared to 116 days as ofApril 30, 2020 mainly due to higher sales. In the six months endedApril 30, 2021 , accounts payable provided cash of$51 million compared to cash used of$10 million for the same period in 2020. We contributed approximately$9 million and$19 million to our defined benefit plans in both the six months endedApril 30, 2021 and 2020, respectively. Our annual contributions are highly dependent on the relative performance of our assets versus our projected liabilities, among other factors. We expect to contribute approximately$13 million to our defined benefit plans during the remainder of 2021.
Net cash used in investing activities was$629 million for the six months endedApril 30, 2021 as compared to net cash used in investing activities of$88 million in the same period of 2020. Investments in property, plant and equipment were$72 million for the six months endedApril 30, 2021 compared to$67 million in the same period of 2020. We expect that total capital expenditures for the current year will be approximately$200 million . Cash used to purchase fair value investments for the six months endedApril 30, 2021 was$8 million compared to$18 million in the same period in 2020. In the six months endedApril 30, 2021 , we invested$547 million in our acquisition of Resolution Bioscience.
Net cash used in financing activities for the six months ended
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Treasury Stock Repurchases
On November 19, 2018 we announced that our board of directors had approved a
share repurchase program (the "2019 repurchase program") designed, among other
things, to reduce or eliminate dilution resulting from issuance of stock under
the company's employee equity incentive programs. The 2019 repurchase program
authorizes the purchase of up to $1.75 billion of our common stock at the
company's discretion and has no fixed termination date. The 2019 repurchase
program does not require the company to acquire a specific number of shares and
may be suspended, amended or discontinued at any time. During the three and six
months ended April 30, 2021 , we repurchased and retired 164,422 shares for $21
million and 3.050 million shares for $365 million , respectively, under this
authorization. During the three and six months ended April 30, 2020 , we
repurchased and retired 1.663 million shares for $126 million and 2.389 million
shares for $186 million , respectively, under this authorization. Effective
February 18, 2021 , the 2019 repurchase program was terminated and replaced by
the new share repurchase program. The remaining authorization under the 2019
repurchase plan of $193 million expired on February 18, 2021 .
On February 16, 2021 we announced that our board of directors had approved a new
share repurchase program (the "2021 repurchase program") designed, among other
things, to reduce or eliminate dilution resulting from issuance of stock under
the company's employee equity incentive programs. The 2021 repurchase program
authorizes the purchase of up to $2.0 billion of our common stock at the
company's discretion and has no fixed termination date. The 2021 repurchase
program which became effective on February 18, 2021 , replaced and terminated the
2019 repurchase program on that date. The 2021 repurchase program does not
require the company to acquire a specific number of shares and may be suspended,
amended or discontinued at any time. During both the three and six months ended
April 30, 2021 , we repurchased and retired 1.388 million shares for $174 million
under this authorization. As of April 30, 2021 , we had remaining authorization
to repurchase up to approximately $1.826 billion of our common stock under this
program.
Dividends
During the six months ended April 30, 2021 and 2020, we paid cash dividends of
$0.388 per common share or $118 million , and $0.360 per common share or $111
million , respectively, on the company's common stock.
On May 19, 2021 , our board of directors declared a quarterly dividend of $0.194
per share of common stock or approximately $59 million which will be paid on
July 28, 2021 to all shareholders of record at the close of business on July 6,
2021 . The timing and amounts of any future dividends are subject to
determination and approval by our board of directors.
Credit Facilities and Short-Term Debt
OnMarch 13, 2019 , we entered into a credit agreement with a group of financial institutions which, as amended, provided for a$1 billion five-year unsecured credit facility that will expire onMarch 13, 2024 and incremental term loan facilities in an aggregate amount of up to$500 million . OnApril 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 ofApril 30, 2021 , we had no borrowings outstanding under the credit facility and no borrowings under the incremental facilities. We were in compliance with the covenants for the credit facility during the six months endedApril 30, 2021 .
Commercial Paper
InMay 2020 , we established aU.S. commercial paper program, under which the company may issue and sell unsecured, short-term promissory notes in the aggregate principal amount not to exceed$1.0 billion with up to 397-day maturities. At any point in time, the company intends to maintain available commitments under its revolving credit facility in an amount at least equal to the amount of the commercial paper notes outstanding. Amounts available under the program may be borrowed, repaid and re-borrowed from time to time. The proceeds from issuances under the program may be used for general corporate purposes. As ofApril 30, 2021 , borrowings of$205 million were outstanding under ourU.S. commercial paper program and had a weighted average annual interest rate of 0.17 percent and a weighted average remaining maturity of approximately four days. 47
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Table of Contents Long-Term Debt 2022 Senior Notes OnSeptember 13, 2012 , the company issued an aggregate principal amount of$400 million in senior notes ("2022 senior notes"). The 2022 senior notes were issued at 99.80% of their principal amount. The notes will mature onOctober 1, 2022 , and bear interest at a fixed rate of 3.20% per annum. The interest is payable semi-annually onApril 1st andOctober 1st of each year and payments commenced onApril 1, 2013 . OnJanuary 21, 2021 , we redeemed$100 million of the$400 million outstanding aggregate principal amount of our 2022 senior notes dueOctober 1, 2022 . OnApril 5, 2021 , we redeemed the remaining outstanding$300 million of our 2022 senior notes. The redemption price of approximately$417 million was computed in accordance with the terms of the 2022 senior notes as the present value of the remaining scheduled payments of principal and unpaid interest on the notes being redeemed. During the six months endedApril 30, 2021 , we recorded a loss on extinguishment of debt of$17 million in other income (expense), net in the condensed consolidated statement of operations. In addition,$1 million of accrued interest, up to but not including the applicable redemption date, was paid. The make-whole premium less partial amortization of previously deferred interest rate swap gain together with the amortization of debt issuance costs and discount was recorded in other income (expense), net in the condensed consolidated statement of operations.
2031 Senior Notes
OnMarch 12, 2021 , we issued an aggregate principal amount of$850 million in senior notes ("2031 senior notes"). The 2031 senior notes were issued at 99.822% of their principal amount. The 2031 senior notes will mature onMarch 12, 2031 , and bear interest at a fixed rate of 2.30% per annum. The interest is payable semi-annually onMarch 12th andSeptember 12th of each year and payments commence onSeptember 12, 2021 . Other than the full redemption of the 2022 senior notes and issuance of the 2031 senior notes, there have been no other changes to the principal, maturity, interest rates and interest payment terms of the Agilent outstanding senior notes in the six months endedApril 30, 2021 as compared to the senior notes as described in our Annual Report on Form 10-K for the fiscal year endedOctober 31, 2020 .
Other
Our commitments to contract manufacturers and suppliers increased by$93 million from$557 million as reported in our Annual Report on Form 10-K for the fiscal year endedOctober 31, 2020 . These commitments are related to a variety of suppliers, and we use several contract manufacturers to provide manufacturing services for our products. During the normal course of business, we issue purchase orders with estimates of our requirements several months ahead of the delivery dates. These open purchase orders with our suppliers have not yet been received and our agreements usually provide us the option to cancel, reschedule and adjust our requirements based on our business needs prior to the firm orders being placed. There were no other substantial changes from our Annual Report on Form 10-K for the fiscal year endedOctober 31, 2020 to our contractual commitments in the first six months of fiscal 2021. We have no other material non-cancelable guarantees or commitments. Other long-term liabilities as ofApril 30, 2021 andOctober 31, 2020 include$312 million and$323 million , respectively, related to long-term income tax liabilities. Of these amounts,$188 million and$199 million related to uncertain tax positions as ofApril 30, 2021 andOctober 31, 2020 , respectively. We are unable to accurately predict when these amounts will be realized or released. However, it is reasonably possible that there could be significant changes to our unrecognized tax benefits in the next twelve months due to either the expiration of a statute of limitations or a tax audit settlement. The remaining$124 million in other long-term liabilities relates to the one-time transition tax payable. 48
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