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Agilent Technologies Management Discusses Q3 2012 Results - Earnings Call Transcript

You can find the press release and information to supplement today's discussion on our website at www.investor. agilent.com. While there, please click on the link for Financial Results, where you will find revenue breakouts, historical financials for Agilent's operations and an investor presentation. We will also post a copy of the prepared remarks following this call.

For any non-GAAP financial measures, you'll find the most directly comparable GAAP financial metrics and reconciliations on our website. We will make forward-looking statements about the financial performance of the company. These statements are subject to risks and uncertainties and are only valid as of today. The company assumes no obligation to update them. Please look at the company's recent SEC filings for a more complete picture of our risks and other factors.

And now, I'd like to turn the call over to Bill.

William P. Sullivan

Thanks, Alicia and hello, everyone. Agilent's Q3 orders were down 1% and Q3 revenues were up 2% over last year. Non-GAAP EPS was $0.79 per share and operating margin was 20.3%. Agilent's performance in the fiscal third quarter did not meet our revenue and EPS guidance. This was due to a softening of shippable orders, as well as a much higher-than-normal push-out to delivery from our customers at the end of the quarter.

While we are not seeing outright order cancellations, we're seeing all the classic signs of a slowdown. Deals are taking longer to close and customers are delaying shipments. We felt the full effect of this phenomenon in July, the last month of Agilent's third fiscal quarter.

The biggest headwind was in the aerospace and defense sector, where revenue was down 11% year-over-year. While U.S. government spending was stable, it was offset by decline in defense contract business. We would normally see an uptick at the end of the year, but we expect Q4 to be lower than normal due to fears of automatic spending cuts.

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