N@N

CHICAGO--([ BUSINESS WIRE ])--Fitch rates Agilent Technologies, Inc.'s (Agilent) (NYSE: A) $400 million senior unsecured notes offering at 'BBB+'. The Rating Outlook is Stable.

Agilent will use net proceeds from the offering for general corporate purposes, including the repayment of $250 million of senior notes due Sept. 14, 2012. The notes will be pari passu with Agilent's existing senior unsecured debt.

Pro forma for the $150 million net increase in debt, Fitch estimates total leverage (total debt to operating EBITDA) was 1.6x and interest coverage (operating EBITDA to gross interest expense) was approximately 15x. Total leverage should remain below 2x and interest coverage well in excess of 10x over the intermediate term.

The ratings continue to be supported by:

--Leading positions in faster growing and more stable life sciences and chemical analysis markets;

--Global footprint and substantial end-market, customer, and technology platform diversification;

--Conservative financial policies with sufficient overall liquidity, as well as solid and growing annual free cash flow (FCF).

Ratings concerns include:

--Mature growth rates and trends toward reduced testing within certain electronic measurement markets;

--Substantial R&D requirements to maintain technology leadership;

--Potential for higher debt levels over time due to anticipated overseas cash build.

Fitch believes positive rating actions could result from stronger annual FCF through the cycle, likely the result of market share consolidation and volume and restructuring-driven operating profitability expansion.

Negative rating actions could occur if:

--Organic revenue growth or operating margins are meaningfully below targeted levels for a sustained period, suggesting a potential loss of technology leadership, the faster than anticipated commoditization of markets, or less robust growth within developing economies;

--Share buybacks and acquisitions meaningfully exceed annual free cash flow, which likely will require incremental borrowing due to significant cash levels overseas.

Pro forma for the incremental debt, Fitch believes Agilent's liquidity was solid as of July 31, 2012, and consisted of:

--$2.1 billion of cash and cash equivalents, the majority of which was located outside the U.S. and repatriation of such could trigger tax liabilities;

--An undrawn $400 million senior unsecured credit facility expiring Oct. 20, 2016.

Also supporting liquidity is the $500 million to $1 billion of annual pre-dividend free cash flow, although a significant portion of cash flow is generated outside the U.S.

The ratings continue to consider Agilent using annual FCF for

a combination of acquisitions and share repurchases. Acquisitions are anticipated to be relatively small in size, although Fitch believes they could be substantial in aggregate, given Agilent's focus on growing in Life Sciences. Fitch expects the company will continue buying back shares to offset basic outstanding share dilution under the Nov. 19, 2009 share repurchase program, which has no fixed termination date or maximum number of shares to repurchase.

Pro forma for the net increase in debt, total debt was approximately $2.4 billion as of July 31, 2012 and consisted of:

--$250 million of 2.5% senior notes due July 15, 2013;

--$500 million of 5.5% senior notes due Sep. 14, 2015;

--$600 million of 6.5% senior notes due Nov. 1, 2017;

--$500 million of 5% senior notes due Nov. 15, 2020;

--$400 million of 10-year senior notes due 2022.

Fitch currently rates Agilent as follows:

--Issuer Default Rating (IDR) 'BBB+';

--Senior unsecured revolving credit facility 'BBB+';

--Senior unsecured notes 'BBB+'.

Additional information is available at '[ www.fitchratings.com ]'. The ratings above were solicited by, or on behalf of, the issuer, and therefore, Fitch has been compensated for the provision of the ratings.

Applicable Criteria and Related Research:

--'Corporate Rating Methodology' (Nov. 24, 2009);

--'Evaluating Corporate Governance' (Dec. 12, 2007);

--'Liquidity Considerations for Corporate Issuers' (June 12, 2007);

--'Cash Flow Measures in Corporate Analysis - Amended' (Oct. 12, 2005).

Applicable Criteria and Related Research:

Cash Flow Measures in Corporate Analysis

[ http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=243758 ]

Liquidity Considerations for Corporate Issuers

[ http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=328666 ]

Evaluating Corporate Governance

[ http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=657143 ]

ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: [ HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS ]. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE '[ WWW.FITCHRATINGS.COM ]'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE.