UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

AMENDMENT NO. 5
TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

Verigy Ltd.
No. 1 Yishun Ave 7
Singapore 768923
(+65) 6377-1688
(Address, including zip code, and telephone number, including area code, of Registrant's principal executive offices)

Kenneth M. Siegel, Esq.
Verigy Ltd.
395 Page Mill Road
Palo Alto, California 94306
(650) 752-5000
(Name, address, including zip code, and telephone number, including area code, of agent for service)

Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date of this Registration Statement.

If the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, as amended (the "Securities Act"), please check the following box. o

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box. o

The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.

The information in this preliminary prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell nor does it seek an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.

This is an initial public offering of ordinary shares of Verigy Ltd. All of the 8,500,000 ordinary shares are being sold by Verigy Ltd.

Prior to this offering, there has been no public market for the ordinary shares. It is currently estimated that the initial public offering price per share will be between $16.00 and $18.00. Application has been made for quotation on the Nasdaq National Market under the symbol "VRGY."

After the offering, Agilent Technologies, Inc. will own 50,000,000 of our ordinary shares, representing approximately 85.5% of our ordinary shares.

See "Risk Factors" on page 9 to read about factors you should consider before buying our ordinary shares.

Neither the Securities and Exchange Commission nor any other regulatory body has approved or disapproved of these securities or passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense.

	Per Share	Total
Initial public offering price	$	$
Underwriting discount	$	$
Proceeds to Verigy	$	$

The underwriters have agreed to reimburse Agilent for some costs and expenses incurred in connection with this offering. See "Underwriting."

To the extent that the underwriters sell more than 8,500,000 ordinary shares, the underwriters have the option to purchase up to an additional 1,275,000 ordinary shares from Verigy at the initial public offering price less the underwriting discount.

The underwriters expect to deliver the shares against payment in New York, New York on , 2006.

You should read the following summary together with the entire prospectus, including the more detailed information regarding us and the ordinary shares being sold in this offering and our combined financial statements and the related notes appearing elsewhere in this prospectus. You should carefully consider, among other things, the matters discussed in the section entitled "Risk Factors."

The design and manufacture of semiconductor devices is a complex and capital-intensive multi-step process, involving many different types of equipment to manufacture, assemble and test semiconductor devices. Semiconductor designers and manufacturers are under increasing pressure to bring high quality and increasingly complex integrated circuits, or ICs, to market faster and at lower cost. Semiconductor test equipment plays an important role in enabling semiconductor designers and manufacturers to lower their overall costs and get products to market quickly in addition to improving the quality and reliability of the end product. As a direct result of the increasing pressure placed on semiconductor designers and manufacturers, semiconductor test equipment and services suppliers are facing new challenges in meeting their needs.

We believe we are well-positioned to meet the challenges posed by semiconductor designers and manufacturers. More than a decade ago, we introduced the concept of a scalable and flexible platform architecture for semiconductor testing. We believe our advanced SOC/SIP/high-speed memory and memory test solutions provide optimal combinations of flexibility, cost and performance to a wide range of designers and manufacturers in the semiconductor industry at all stages of bringing a semiconductor product to market, from design to production prototype to high-volume manufacturing. The key elements of our solutions are:

semiconductor designers and manufacturers, and we will remain committed to providing outstanding service and support to our customers. We plan to do this by:

We believe that we are well-positioned to capitalize on the growing semiconductor market. According to Gartner, the global semiconductor market will grow from $235 billion in 2005 to over $318 billion in 2009. The total market for semiconductor test equipment, not including service and support, was $3.8 billion in 2005 and is forecast to grow to $5.7 billion in 2009.

We have a broad installed customer base, having sold over 1,200 93000 Series systems and over 2,000 Versatest Series systems to a wide range of customers, including integrated device manufacturers, test subcontractors and fabless design companies. We sell our products and services directly to these customers through our direct worldwide sales team that has substantial experience and technical expertise in the SOC/SIP/high-speed memory and memory test markets. We believe an ongoing service and support business is critical to providing sustained value to customers and maintaining customer loyalty.

Our business is subject to numerous risks, as more fully described in the section entitled "Risk Factors" immediately following this prospectus summary. We may be unable, for many reasons, including those that are beyond our control, to implement our current business strategy and to become profitable. Those reasons could include: the highly cyclical nature of the semiconductor industry in which we operate; the fact that we have a relatively small number of customers; risks related to the implementation of our strategy to reduce our operating expenses as we transition to operating as an entity independent from Agilent; our transition to a completely outsourced manufacturing model, which is currently underway; and the reduction or withdrawal by foreign authorities of tax concessions provided to us or adverse changes in tax policies applicable to us.

Our net loss for the three months ended January 31, 2006 was $16 million, and for the year ended October 31, 2005, was $119 million. We are unable to predict the extent of future losses or when we will become profitable, if at all.

We were organized in Singapore on January 23, 2006, and are currently a wholly owned subsidiary of Agilent Technologies, Inc. Our principal executive offices are located at No. 1 Yishun Ave 7, Singapore 768923, and our telephone number at that address is (+65) 6377-1688. Our U.S. headquarters are located at 5301 Stevens Creek Blvd., Santa Clara, California, and our telephone number at that address is (408) 553-2424. Our website address is http://www.verigy.com. Information on or accessed through our website is not incorporated into this prospectus and is not a part of this prospectus.

We are currently a wholly owned subsidiary of Agilent. Immediately following the completion of this offering, Agilent will own 50,000,000 of our ordinary shares, representing approximately 85.5% of our outstanding ordinary shares or 83.6% of our outstanding ordinary shares if the underwriters exercise their over-allotment option in full.

In August 2005, Agilent announced a series of actions, including a plan to spin-off our business, intended to enhance Agilent's focus on its measurement business. We and Agilent each believe that, by separating our business from Agilent's measurement business, each company will be in a position to better serve its respective customers and reduce its respective costs through a more efficient allocation of resources. By separating the businesses, the senior management of each company will have an opportunity to focus upon their respective business and concentrate their efforts to make their business successful. In addition, as a result of the separation, existing Agilent stockholders will have the opportunity to concentrate their investment on Agilent's retained measurement business, our semiconductor test business, or both businesses.

We and Agilent, and, in some cases, our respective subsidiaries, have entered into agreements providing for the separation of our business from Agilent, including a master separation and distribution agreement. These agreements cover a variety of matters, including the transfer, ownership and licensing of intellectual property and other assets and liabilities relating to our businesses, the use of shared facilities, employee and tax-related matters and the transitional services Agilent is providing to us. The agreements relating to our separation from Agilent have been negotiated in the context of a parent-subsidiary relationship and our separation from Agilent. The terms of these agreements may be less favorable than similar agreements negotiated between unaffiliated third parties. For more information regarding the separation arrangements, see "Arrangements Between Verigy and Agilent."

Agilent will have no contractual obligation to retain our ordinary shares, except that it will not sell or transfer any of our ordinary shares without the consent of Goldman, Sachs & Co. on behalf of the underwriters of this offering until 180 days after the date of this prospectus as described under "Underwriting." This restriction will not apply to the distribution by Agilent of its remaining ownership interest in us to its common stockholders.

Agilent has advised us that it currently intends to distribute to its stockholders all of our ordinary shares that it holds by the end of its fiscal year, October 31, 2006. The distribution is expected to be effected through a special dividend by Agilent to its stockholders. Agilent will determine the timing, structure and all terms of the distribution taking into account factors such as market conditions. However, Agilent will not be obligated to complete the distribution, and the distribution may not occur by the contemplated time or at all. In addition, subject to the lock-up obligation described above and compliance with applicable U.S. federal and state securities laws, Agilent may sell all or some of our ordinary shares that it holds in the public market or in private transactions prior to the distribution.

Agilent and Agilent InstaPin are trademarks of Agilent Technologies, Inc. in the United States and other countries. Verigy, Tester-Per-Site and Versatest are registered or pending trademarks of Agilent in the United States and other countries that have been or will be transferred to Verigy in connection with Verigy's separation from Agilent. All other trademarks, trade names or service marks appearing in this prospectus are the property of their respective owners.

References in this prospectus to "Verigy," "we," "Company," "us" and "our" refer to Verigy Ltd.

The number of ordinary shares to be outstanding upon completion of this offering is based on 50,000,000 shares outstanding as of May 31, 2006 and excludes a total of 12,000,000 ordinary shares available for future issuance under our share option and share purchase plans as of May 31, 2006. If the underwriters exercise their over-allotment in full, a total of 59,775,000 ordinary shares will be outstanding after this offering.

Unless otherwise noted, this prospectus assumes no exercise by the underwriters of their option to purchase additional ordinary shares in this offering.

Our second quarter ended on April 30, 2006. Set forth below are our selected unaudited combined results of operations for the three months ended April 30, 2006 and 2005 which are discussed in "Management's Discussion and Analysis of Financial Condition and Results of Operations — Recent Development."

The following table sets forth a summary of our combined financial data for the periods presented. This summary financial information is derived from the combined financial statements and related notes thereto included elsewhere in this prospectus. It should be read in conjunction with "Selected Financial Data," "Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Unaudited Pro Forma Condensed Combined Financial Information." We have derived our combined statement of operations data for the fiscal years ended October 31, 2005, 2004 and 2003 from the audited combined financial statements included elsewhere in this prospectus. We have derived our combined statement of operations data for the three months ended January 31, 2006 and 2005 and historical combined balance sheet data as of January 31, 2006 from the interim unaudited combined financial statements included elsewhere in this prospectus. Historical results are not necessarily indicative of results to be expected for future periods and may not reflect what our financial position and results of operations would have been had we been a separate, stand-alone entity during the historical periods presented. See Note 20 of our audited combined financial statements included elsewhere in this prospectus for an explanation of the calculation of net loss per share.

As a result of Agilent's agreement to make a payment or other transfer of value to us equal to the amount by which the net proceeds to us of this offering are less than $140 million, the net proceeds available to us after this offering, including any funding from Agilent, will be at least $140 million. This will be the case even if the initial public offering price is reduced to less than the assumed $17.00 per share. At an initial public offering price at or above $17.71 per share (or $15.40 per share if the underwriters' over-allotment option is exercised in full), we would receive net proceeds of $140 million or more from this offering alone and would not receive any payment or other transfer from Agilent under the terms of our agreement with Agilent. On a pro forma, as adjusted basis, each of cash and cash equivalents, working capital, total assets and shareholders' equity shall be as set forth in the above table unless the net proceeds to us from this offering exceed $140 million, in which case each of cash and cash equivalents, working capital, total assets and shareholders' equity shall be increased from the amount set forth in the above table by the amount by which the net proceeds of this offering to us exceed $140 million. Each $1.00 increase in the initial public offering price above $17.71 per share (or $15.40 per share if the underwriters' over-allotment option is exercised in full) would increase the net proceeds available to us from this offering by approximately $7.9 million (or approximately $9.1 million if the underwriters' over-allotment option is exercised in full), assuming the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting underwriting discounts and commissions.

You should carefully consider the risks described below and the other information in this prospectus before investing in our ordinary shares. Our business could be seriously harmed by any of these risks. The trading price of our ordinary shares could decline due to any of these risks, and you may lose all or part of your investment.

Our quarterly operating results may fluctuate significantly from period to period and this may cause our share price to decline.

In the past we have experienced, and in the future we expect to continue to experience, fluctuations in revenue and operating results from quarter to quarter for a variety of reasons, including:

As a result of these and other risks, as well as our having been a wholly owned subsidiary of Agilent in prior periods, we believe that quarter-to-quarter comparisons of our revenue and operating results may not be meaningful, and that these comparisons may not be an accurate indicator of our future performance. In addition, sales of a relatively limited number of our test systems account for a substantial portion of our net revenue in any particular quarter. In contrast, our costs are relatively fixed in the short-term. Thus, changes in the timing or terms of a small number of transactions could disproportionately affect our operating results in any particular quarter. Moreover, our operating results in one or more future quarters may fail to meet the expectations of securities analysts or investors. If this occurs, we would expect to experience an immediate and significant decline in the trading price of our shares.

Our business and operating results could be harmed by the highly cyclical nature of the semiconductor industry.

Our business and operating results depend in significant part upon capital expenditures of semiconductor designers and manufacturers, which in turn depend upon the current and anticipated market demand for products incorporating semiconductors from these designers and manufacturers. Historically, the semiconductor industry has been highly cyclical with recurring periods of diminished product demand. During these periods, semiconductor designers and manufacturers, facing reduced demand for their products, have significantly reduced their capital and other expenditures, including expenditures for semiconductor test equipment and services such as those we offer. These periods of reduced product demand have been characterized by excessive inventory levels, cancellation of customer orders and erosion of selling prices, as well as excessive semiconductor test capacity. As a consequence, during these periods, we have experienced significant reductions in customer orders for new test equipment, fewer upgrades to existing test equipment and less demand for our test services. We have also experienced order cancellations, delays in commitments and delays in collecting accounts receivable. Furthermore, because we have a high proportion of customers that are subcontractors, which during market downturns tend to reduce or cancel orders for new test systems and test services more quickly and dramatically than other customers, any downturn may cause a quicker and more significant adverse impact on our business than on the broader semiconductor industry. In addition, although a decline in orders for semiconductor capital equipment, including test equipment, may accompany or precede the timing of a decline in the semiconductor market as a whole, any recovery in spending for semiconductor capital equipment, including test equipment, may lag any recovery by the semiconductor industry.

We have a limited ability to quickly or significantly reduce our costs, which makes us particularly vulnerable to the highly cyclical nature of the semiconductor industry.

Historically, downturns in the semiconductor industry have affected the test equipment and services market more significantly than the overall semiconductor industry. A significant portion of our overall costs are fixed. In addition, our products require long manufacturing lead times, which require us to make material purchasing commitments from our suppliers well in advance of product

sales. Because a high proportion of our costs are fixed, we have a limited ability to reduce expenses and manufacturing inventory purchases quickly in response to decreases in orders and revenues. Moreover, to remain competitive, even during downturns in the semiconductor industry or generally we are required to maintain significant fixed costs for research and development. As a consequence, in a downturn, we may not be able to reduce our costs quickly, or by a significant enough amount, and our financial performance may suffer.

Failure to accurately estimate our customers' demand and plan the production of our new and existing products could adversely affect our inventory levels and our income.

Given the cyclical nature of the semiconductor industry, we cannot reliably forecast the timing and size of our customers' orders. In order to meet anticipated demand, we must order components and build some inventory before we actually receive purchase orders. Our results could be harmed if we do not accurately estimate our customers' product demands and are unable to adjust our purchases with market fluctuations, including those caused by the cyclical nature of the semiconductor industry. During a market upturn, our results could be materially and adversely impacted if we cannot increase our purchases of components, parts and services quickly enough to meet increasing demand for our products, and during a market downturn, we could have excess inventory that we would not be able to sell, likely resulting in inventory write-offs. Either of these results could have a material adverse effect on our business, financial condition and results of operations.

In addition to difficulties associated with the cyclical nature of the semiconductor industry, if we do not successfully manage the introduction of our new products and estimate customer demand for such products, our ability to sell existing inventory may be adversely affected. If demand for our new products exceeds our projections, we might have insufficient quantities of products for sale to our customers which could cause us to miss opportunities to increase revenues during market upturns. If our projections exceed demand for our new products, we may have excess inventories of our new products which could result in inventory write-offs that would adversely affect our financial performance. In addition, if some of our customers cancel their current orders for our old products in anticipation of our new products, we may have additional excess and obsolete inventories and be forced to incur additional charges.

In addition, our customers tend to make large purchases of our products on an inconsistent basis, rather than smaller purchases on a consistent basis, which makes it difficult to predict the timing of customer orders. Failure to accurately predict our customer's varying ordering patterns may cause us to experience insufficient or excess product inventories. If our competitors are more successful than us at timing new product introductions and inventory levels to customers' ordering patterns, we may lose important sales opportunities and our business and results of operations may be harmed.

We have undertaken a significant restructuring of our operations and are incurring significant expenses to increase operational efficiencies. If we are unable to successfully implement this initiative or if it fails to generate significant cost savings, our business, financial condition and results of operation could be materially adversely affected.

Our wide-ranging cost saving initiative will affect our operations both domestically and internationally and will entail our incurring significant expenses. This initiative involves a number of significant changes, including changes to:

This initiative is multi-faceted and we are implementing each component of our initiative simultaneously in order to achieve the desired results in a timely manner. Each of these initiatives is complex. Our management, which will initially consist of officers who are new to our business, will have to respond to a variety of risks related to implementation of this initiative, including the loss of key employees who desire more certain compensation structures or are unwilling or unable to relocate to different locations, the operational and administrative complexity associated with transitioning to new supply chain and manufacturing processes and the inherent intricacy of installing a new IT environment. If we fail to successfully implement these initiatives in full in a timely manner, or if they fail to generate significant cost savings, our business, financial condition, results of operations and cash flows would be materially adversely affected.

Our dependence on sole source suppliers and contract manufacturers and our transition to a completely outsourced manufacturing model may prevent us from delivering our products on a timely basis.

As of the date of this prospectus, we have two manufacturing models, a hybrid internal and contract manufacturing model for our 93000 Series and a total contract manufacturing model for our Versatest series. We are currently in the process of transitioning to a contract manufacturing model for all of our test systems.

In March 2006, we selected Flextronics as our primary contract manufacturer and entered into a global manufacturing services agreement with Flextronics Telecom Services Ltd. Our agreement with Flextronics will expire in March 2010 although it may be automatically extended for subsequent terms of one year, absent nine-months notice of an intention to terminate the agreement from us or Flextronics. The agreement may also be terminated by us or Flextronics for other customary reasons, including if the other party becomes subject to bankruptcy proceedings or materially breaches the agreement. In addition, generally, we may terminate this agreement if Flextronics fails to make a delivery on more than 15% of our placed orders in any three-month period. Under this agreement, we are not obligated to use Flextronics exclusively to manufacture our products, and Flextronics is not obligated to manufacture test equipment exclusively for us. We and Flextronics have entered into several asset purchase agreements under which we have transferred or will transfer certain assets and employees to Flextronics.

We rely on third parties to manufacture some subassemblies for our products, and we also rely on sole source suppliers, some of whom are relatively small in size, for many of the components we use in our products. As custom integrated circuits are found in virtually every product that we sell, virtually all of our products contain some components from sole source suppliers.

Our current and future reliance on third-party manufacturers gives us less control over the manufacturing process and exposes us to significant risks, especially inadequate capacity, late delivery, substandard quality and high costs. We cannot be certain that existing or future contract manufacturers will devote the resources and attention required to manufacture our products on a timely and cost-effective basis to our quality and performance specifications. Additionally, our contract manufacturers and suppliers are generally under no obligation to provide us with materials for as long as our requirements exist. As a result, the loss or failure to perform by any of these

providers, or difficulties in transitioning manufacturing to Flextronics, could adversely affect our business and operating results.

Our executive officers and certain key personnel are critical to our business.

Our future operating results will depend substantially upon the performance of our executive officers and key personnel. Our current chief financial officer is acting on an interim basis, although we have hired a chief financial officer who we expect to commence employment with us shortly after this offering. In addition, our chief executive officer and general counsel were hired recently. Therefore, our chief executive officer and general counsel have not been, and our future chief financial officer will not have been, involved with our business for a significant period of time. Our chief executive officer is, and our future chief financial officer will be, new to our business and their focus and attention may be diverted while they familiarize themselves with our business.

In addition, our senior management team will not have worked together as a team for a significant period of time. Operating our business separately from Agilent's broader infrastructure and resources could present operational and organizational challenges to our senior management team, particularly during the initial stage of our transition to a stand-alone structure. Our inability to effectively manage these challenges could hinder the implementation of our business strategies and have a material adverse effect on our operating results.

Our future operating results also depend in significant part upon our ability to attract and retain qualified management, manufacturing, technical, application engineering, marketing, sales and support personnel. Competition for qualified personnel is intense, and we cannot ensure success in attracting or retaining qualified personnel. Our business is particularly dependent on expertise which only a very limited number of engineers possess and it may be increasingly difficult for us to hire personnel over time. We operate in several geographic locations, including parts of Asia and Silicon Valley, where the labor markets, especially for application engineers, are particularly competitive. Our business, financial condition and results of operations could be materially adversely affected by the loss of any of our key employees, by the failure of any key employee to perform in his or her current position, or by our inability to attract and retain skilled employees, particularly engineers.

Existing customers may be unwilling to bear expenses associated with transitioning to new and enhanced products.

In order to grow our business, we need to sell enhancements and upgrades for our existing test equipment, in addition to selling new test equipment. Certain customers may be unwilling, or unable, to bear the costs of implementing enhancements and upgrades to our test equipment platforms, particularly during semiconductor industry downturns. As a result, it may be difficult to market and sell enhancements and upgrades to customers. In addition, as we introduce new enhancements and upgrades, we cannot predict with certainty if and when our customers will transition to those enhancements or upgrades.

The market for semiconductor test equipment and services is highly concentrated, and we have limited opportunities to sell our test equipment and services.

The semiconductor industry is highly concentrated in that a small number of semiconductor designers and manufacturers and subcons account for a substantial portion of the purchases of semiconductor test equipment and services generally, including our test equipment and services. Consolidation in the semiconductor industry may increase this concentration. Accordingly, we expect that sales of our products will be concentrated with a limited number of large customers for the foreseeable future. We believe that our financial results will depend in significant part on our success in establishing and maintaining relationships with, and effecting substantial sales to, these

potential customers. Even if we establish these relationships, our financial results will be dependent in large part on these customers' sales and business results.

The loss of, or a significant reduction in the number of sales to, our significant customers could materially harm our business.

For the three months ended January 31, 2006, ten customers accounted for approximately 66% of our total net revenue and two customers accounted for approximately 19% and 11% of our total net revenue. For the fiscal year ended October 31, 2005, ten customers accounted for approximately 54% of our total net revenue and one customer accounted for approximately 9% of our total revenue.

Our relationships with our significant customers, who frequently evaluate competitive products prior to placing new orders, could be adversely affected by a number of factors, including:

Moreover, the contracts we enter into with our customers generally are for annual periods and our customers may cancel orders with little or no penalty. Our business and operating results could be materially adversely affected by the loss of, or any reduction in orders by, any of our significant customers, particularly if we were not able to replace that lost revenue with additional orders from new or existing customers.

If we do not maintain and expand existing customer relationships, and establish new customer relationships, our ability to generate revenue growth will be adversely affected.

Our ability to increase our sales will depend in large part upon our ability to obtain orders for new test systems, enhancements for existing test systems and services from our existing and new customers. Maintaining and expanding our existing relationships and establishing new ones can require substantial investment without any assurance from customers that they will place significant orders. Moreover, if we are unable to provide new test systems, enhancements for existing test systems and services to our customers in a timely fashion or in sufficient quantities, our business will be harmed. In our industry it is not unusual to experience difficulty in delivering new test equipment, as well as product enhancements and upgrades. When this has happened to us, it has damaged our customer relationships and harmed our ability to generate additional revenue from customers. Our inability to meet the demands of customers would severely damage our reputation, which would make it more difficult for us to sell test equipment, enhancements and services to existing, as well as new, customers and would adversely affect our ability to generate revenue.

In addition, we face significant obstacles in establishing new customer relationships. It is difficult for us to establish relationships with new customers, because such companies may have

existing relationships with our competitors, may be unfamiliar with our product and service offerings, may have an installed base of test equipment sufficient for their current needs or may not have the resources necessary to transition to, and train their employees on, our test equipment. Even if we do succeed in establishing new relationships, these new customers may nonetheless continue to favor our competitors, as our competitors may have had longer relationships with these customers or may maintain a larger installed base of their competing test equipment in the facilities of new customers and only purchase limited quantities from us. In addition, we could face difficulties in our efforts to develop new customer relationships abroad as a result of buying practices that may favor local competitors or non-local competitors with a larger presence in local economies than we have. As a result, we may be forced to partner with local companies in order to compete for business and such arrangements, if available, may not be achieved on economically favorable terms, which could negatively impact our financial performance.

Our long and variable sales cycle depends upon factors outside of our control, could cause us to expend significant time and resources prior to our ever earning associated revenues and may therefore cause fluctuations in our operating results.

Sales of our semiconductor test equipment and services depend in significant part upon semiconductor designers and manufacturers upgrading existing manufacturing equipment to accommodate the requirements of new semiconductor devices and expanding existing, and adding new, manufacturing facilities. As a result, our sales are subject to a variety of factors we cannot control, including:

The decision to purchase our equipment and services generally involves a significant commitment of capital. As a result, our test equipment has lengthy and variable sales cycles during which we may expend substantial funds and management effort to secure a sale prior to receiving any commitment from a customer to purchase our test equipment or services. Prior to completing sales to our customers, we are often subject to a number of significant risks, including the risk that our competitors may compete for the sale or that the customer may change its technological requirements. Our business, financial condition and results of operations may be materially adversely affected by our long and variable sales cycle and the uncertainty associated with expending substantial funds and effort with no guarantee that sales will be made.

We face substantial competition which, among other things, may lead to price pressure and adversely affect our sales.

We face substantial competition throughout the world in each of our product areas. Our most significant competitors include Advantest Corporation, Credence Systems Corporation, Eagle Test Systems, Inc., LTX Corporation, Nextest Systems Corporation, Teradyne, Inc. and Yokogawa Electric Corporation. Many of our competitors have substantially greater financial resources, broader product offerings and more extensive engineering, manufacturing, marketing and customer support capabilities than we do. We may have less leverage with component vendors than our larger competitors may have. Also, some of our larger competitors have greater resources and may be more willing or able than we are to put capital at risk to win business. For example, some of our competitors may be willing to loan or provide equipment at no charge to customers or bid for

business with new customers at very low prices. We expect our current competitors to continue to improve the performance of their current products and to introduce new products, technologies or services that could adversely affect sales of our current and future test equipment and services.

In addition, new and existing competitors, including semiconductor manufacturers themselves, may introduce testing technologies, equipment and services, which may in turn reduce the value of our own test equipment and services. Furthermore, some of our competitors have greater presence abroad, which makes it more difficult for us to compete for foreign customers and we may not be able to compete effectively with such competitors.

In addition, many of our competitors offer test solutions that may be less expensive in the short term than our scalable products. Furthermore, our competitors may also elect to reduce the price of their products, which could lead to a reduction in average selling prices throughout the semiconductor test equipment and services industry. The overall demand for production test equipment is not likely to increase substantially as prices are reduced. Accordingly, price reductions by our competitors may force us to lower our prices, even though demand for our test systems stays the same. This may limit our opportunities for growth and negatively impact our financial performance.

Pursuant to the intellectual property matters agreement between us and Agilent, Agilent has agreed that, except as described below, for a period of three years after the distribution date, Agilent will not develop, manufacture, distribute, support or service automated semiconductor test systems for providing high-volume functional test of ICs (including memory and high speed memory devices and SOCs) or SIPs, or components for such products. However, during this three-year period, Agilent may compete with us with respect to:

While none of these areas has provided material revenues to us in the past, nor are expected areas of our focus for the near future, we can provide no assurance that the limitations contained in the intellectual property matters agreement, which was entered into in the context of a parent-subsidiary relationship and may be less favorable to us than if it had been negotiated between unaffiliated third parties, will be effective at protecting us from competition from Agilent.

In addition, the intellectual property matters agreement permits Agilent to fulfill its obligations under contracts in existence as of March 1, 2006, even though fulfilling such obligations would

otherwise have been precluded during the non-competition period and even if fulfilling such obligations would result in Agilent competing with us. This exception will allow Agilent to fulfill its obligations to a semiconductor manufacturer pursuant to which Agilent will develop and sell components to the manufacturer for use in the manufacturer's semiconductor test systems purchased from a competitor of Verigy. While we do not believe that Agilent fulfilling these obligations will have a material effect on our business or prospects, we may in the future be less successful at selling test systems to this semiconductor manufacturer than would have been the case were the manufacturer not able to combine products from Agilent with the test systems of our competitor.

Although under the intellectual property matters agreement Agilent is transferring to us all of the intellectual property rights Agilent holds that relate exclusively to our products, Agilent is retaining and only licensing to us the intellectual property rights to underlying technologies used in both our products and the products of Agilent. Under the agreement, Agilent remains free to use the retained underlying technologies without restriction (other than as described above with respect to the three-year non-compete period), and is also free to license the intellectual property rights to the retained underlying technologies to any party, including to our competitors. Any unaffiliated third party that is licensed to use such retained intellectual property would not be subject to the non-compete described above. Use of the retained underlying technologies by our competitors could potentially harm any or all parts of our business.

After the three-year non-compete period, Agilent will be free to compete with any portion or all of our business without restriction, and in doing so will be free to use the retained underlying technologies. Agilent will not be permitted to use the intellectual property rights transferred to us, and licensed from us back to Agilent, to compete with us with respect to automated semiconductor test systems for high-volume functional test of ICs or SIPs, but will be able to use such intellectual property rights to develop and sell components therefor.

Competition from Agilent during or after the three-year non-compete period described above, and competition at any time by third parties using the retained underlying technologies, or other actions taken by Agilent that create real or perceived competition with us, could harm our business and operating results.

Our new name is not yet recognized as a brand in the marketplace, which could cause our product sales to suffer, and building a new brand identity will require significant amounts of time and resources.

Historically, we have conducted our business under Agilent's brand name. In connection with our separation from Agilent, we are now conducting our business under the "Verigy" brand name. We believe that sales of our products have benefited from the use of the "Agilent" brand name. Our customers and suppliers, as well as potential employees we are trying to recruit, may not recognize the "Verigy" brand name, which could negatively influence their business decisions concerning us. We will need to expend significant time, effort and resources to establish the "Verigy" brand name in the marketplace. We cannot guarantee that this effort will ultimately be successful. If our effort to establish a new brand identity is unsuccessful, our business, financial condition and results of operations may suffer. In addition, although we investigated the availability of "Verigy" before selecting it, our right to use the "Verigy" brand name may be challenged by others.

If we do not continue to introduce new test equipment platforms and upgrade existing test equipment platforms in a timely manner such that our test equipment at all times reflects the latest advances in test technology, and if we do not offer comprehensive and competitive services for our test equipment platforms, our test equipment and services will become obsolete, we will lose existing customers and our operating results will suffer.

The semiconductor design and manufacturing industry into which we sell our test equipment is characterized by rapid technological changes, frequent new product introductions, including upgrades to existing test equipment, and evolving industry standards. The success of our new or upgraded test equipment offerings will depend on several factors, including our ability to:

In many cases our test equipment and services are used by our customers to develop, test and manufacture their new products. We therefore must anticipate industry trends and develop new test equipment platforms or upgrade existing test equipment platforms in advance of the commercialization of our customers' products. In addition, new methods of testing integrated circuits, such as self-testing integrated circuits, may be developed which would render our test equipment uncompetitive or obsolete if we failed to adopt and incorporate these new methods into our new or existing test equipment platforms. Developing new test equipment platforms and upgrading existing test equipment platforms requires a substantial investment before we can determine the commercial viability of the new or upgraded platform.

As our customers' product requirements are diverse and subject to frequent change, we will also need to ensure that we have an adequate mix of products that meet our customers' varying requirements. If we fail to adequately predict our customers' needs and technological advances, we may invest heavily in research and development of test equipment that does not lead to significant revenue, or we may fail to invest in technology necessary to meet changing customer demands. Without the timely introduction of new or upgraded test equipment that reflects technological advances, our test equipment and services will likely become obsolete, we may have difficulty retaining customers and our revenue and operating results would suffer.

Test systems that contain defects that harm our customers could damage our reputation and cause us to lose customers and revenue.

Our test equipment is highly complex and employs advanced technologies. The use of complex technology in our test equipment increases the likelihood that we could experience design, performance or manufacturing problems. If any of our products have defects or reliability or quality problems, we may, in some circumstances, be exposed to liability, our reputation could be damaged significantly and customers might be reluctant to buy our products, which could result in a decline in revenues, an increase in product returns and the loss of existing customers and the failure to attract new customers.

We may need additional financing, which could be difficult to obtain on favorable terms or at all.

Historically, Agilent has provided funds to finance our working capital and other cash requirements. However, as a result of the completion of our separation from Agilent, we have a limited amount of cash. We do not expect Agilent to provide any further funding to us following this offering. In the event we need to raise additional funds, we cannot be certain that we will be able to obtain such additional financing on favorable terms, if at all. Our future capital requirements will depend on many factors, including the timing and extent of spending to support product development efforts, the expansion of sales and marketing activities, the timing of introductions of new products and enhancements to existing products, the costs to ensure access to adequate manufacturing capacity, market acceptance of our products and the cyclical and seasonal demand for our products. If we issue additional equity securities, shareholders may experience additional dilution or the new equity securities may have rights, preferences or privileges senior to those of existing holders of our ordinary shares. If we incur debt, we may become subject to restrictions on how we operate our business. If we cannot raise funds on acceptable terms, if and when needed, we may not be able to develop or enhance our products and services, take advantage of future opportunities, grow our business or respond to competitive pressures, which could materially adversely affect our business, financial condition and results of operations. In addition, our agreements with Agilent, and in particular the tax sharing agreement, may limit our ability to incur debt or sell equity securities or to obtain additional financing. See "— Risks Related to Our Separation from Agilent."

We are in the process of implementing the governance and accounting practices and policies required of a publicly-traded company in the United States. Any delay in implementing such governance and accounting practices and policies could harm our business.

As a publicly-traded company in the United States, we will be subject to many rules and regulations, including the Securities Act of 1933, as amended, and the Securities Exchange Act of 1934, as amended. We will also need to comply with the Sarbanes-Oxley Act of 2002, as amended, and the rules and regulations implemented thereunder that are currently becoming applicable to most companies listed on U.S. markets, including Section 404 of the Sarbanes-Oxley Act beginning with our fiscal year ending October 31, 2007. While we are diligently developing the systems, procedures and processes to enable us to fully meet the requirements associated with being publicly traded in the United States, we may encounter problems or delays in completing these activities. Any failure on our part to meet the requirements of operating as a publicly-traded company could jeopardize our ability to produce reliable financial statements, subject us to disciplinary proceedings by the SEC or the Nasdaq National Market, cause investors to lose confidence in the accuracy and reliability of our financial reporting, or otherwise harm our business or results of operations.

Our results could be adversely affected if we do not comply with certain operating conditions agreed to with the Singapore authorities. In addition, our new legal structure could cause our effective tax rate to vary significantly from period to period, and we could owe significant taxes even during periods when we experience low operating profit or operating losses.

We have negotiated agreements relating to taxes with the Singapore Economic Development Board, an agency of the Government of Singapore, which have been approved by Singapore's Ministry of Finance and Ministry of Trade and Industry. Under the agreements, a portion of the income we earn in Singapore during 10- to 15-year incentive periods is subject to reduced rates of Singapore income tax. In order to comply with the agreements, we must fulfill operating conditions in Singapore relating to headcount, activities and investment in Singapore. If we do not fulfill these

conditions for any reason, our incentive could lapse, and we may incur significant tax liabilities in Singapore during the remainder of the incentive period, reducing our profitability.

In addition, after our separation from Agilent, our new structure could cause our effective tax rate to vary significantly from period to period because we may owe significant taxes in jurisdictions other than Singapore during periods when we are profitable in those jurisdictions even though we may be experiencing low operating profit or operating losses on a consolidated basis. Our effective tax rate will vary based on a variety of factors, including overall profitability, the geographical mix of income before taxes and the related tax rates in the jurisdictions where we operate, as well as discrete events, such as settlements of future audits. Certain combinations of these factors could cause us to owe significant taxes even during periods when we experience low operating profit or operating losses.

Economic and political instability, resulting from ongoing or potential future armed international conflicts or terrorist activities, could adversely affect our sales and operations.

Since we sell our products and services worldwide, our business is subject to risks associated with doing business internationally. Revenue from customers in Japan accounted for approximately 20.6%, 15.8% and 13.5% of total net revenue for the fiscal years ended October 31, 2005, 2004 and 2003, respectively, and revenue from customers in other countries in Asia accounted for approximately 42.8%, 45.5% and 40.2% of total net revenue for the years ended October 31, 2005, 2004 and 2003, respectively. The economies of Asia have been highly volatile and recessionary in the past, resulting in significant fluctuations in local currencies. Our exposure to the business risks presented by the economies of Asia will increase to the extent that we continue to expand our operations in that region, including establishing our headquarters in Singapore and transitioning our contract manufacturing activities to China through our contract with Flextronics.

International turmoil, exacerbated by the war in Iraq, and the escalating tensions in North Korea and the Middle East, have contributed to an uncertain political and economic climate, both in the United States and globally. In addition, terrorist attacks and the threat of future terrorist attacks both domestically and internationally have negatively impacted the worldwide economy. Terrorist acts and other acts of war, and any response to them, may lead to armed hostilities and such developments would likely cause instability in financial markets. Because we sell products both in the United States and internationally, the threat of future terrorist attacks may adversely affect our business. Severe terrorist attacks or acts of war may result in temporary halts of commercial activity in the affected region, and may result in reduced demand for our products. Armed hostilities and terrorism may directly impact our facilities, personnel and operations, as well as those of our suppliers, third-party manufacturers and customers. These conditions make it difficult for us and for our customers to accurately forecast and plan future business activities and could have a material adverse effect on our business, financial condition and results of operations.

We sell our products and services and incur a variety of costs outside of the United States. Therefore we are exposed to foreign currency exchange movements, particularly in the Euro and the Japanese Yen. With respect to revenue, our primary exposure exists during the period between the recognition of revenue denominated in a foreign currency and collection of the related receivable. During this period, changes in the exchange rates of the foreign currency to the U.S. Dollar could result in exchange gains or losses. While a significant portion of our purchase orders to date have been denominated in U.S. Dollars, competitive conditions may require us to enter into an increasing number of purchase orders denominated in foreign currencies. With respect to expenses, we incur a variety of costs denominated in foreign currencies, including some of our manufacturing costs, component costs and sales costs. A decline in the value of the U.S. Dollar would cause these costs and expenses to increase. In addition, as we expand our operations in

Asia, we may become more exposed to a strengthening of currencies in the region against the U.S. Dollar. While Agilent has entered into foreign currency hedging arrangements for all of Agilent including on our behalf in the past, we will need to do so for ourselves in the future. We cannot assure you that any hedging transactions we may enter into will be effective or will not result in foreign exchange hedging gains or losses.

Third parties may claim we are infringing their intellectual property, and we could suffer significant litigation or licensing expenses or be prevented from selling our products or services.

Our industry has been and continues to be characterized by uncertain and conflicting intellectual property claims and vigorous protection and pursuit of these rights. As a result, third parties may claim that we are infringing their intellectual property rights and we may be unaware of intellectual property rights of others that may cover some of our technology, products and services. Any litigation regarding patents or other intellectual property could be costly and time-consuming, and divert our management and key personnel from our business operations. The complexity of the technology involved and the uncertainty of intellectual property litigation increase these risks. Claims of intellectual property infringement might also require us to enter into costly royalty or license agreements. However, we may not be able to obtain royalty or license agreements on terms acceptable to us, or at all. We also may be subject to significant damages or injunctions against development and sale of certain of our products and services.

In addition, there may be third parties who have refrained from asserting intellectual property infringement claims against our products while we were a wholly owned subsidiary of Agilent that elect to pursue such claims against us now that our separation from Agilent is complete because we no longer have the benefit of being able to counterclaim based on Agilent's patent portfolio and we are no longer able to provide licenses of Agilent's patent portfolio in order to resolve such claims.

Third parties may infringe our intellectual property, and we may expend significant resources enforcing our rights or suffer competitive injury.

Our success depends in large part on our proprietary technology. We rely on a combination of patents, copyrights, trademarks, trade secrets, confidentiality provisions and licensing arrangements to establish and protect our proprietary rights. If we fail to protect our intellectual property rights, our competitive position could suffer, which could harm our operating results. Our pending patent and trademark registration applications may not be allowed or competitors may challenge the validity or scope of these patent applications or trademark registrations. In addition, our patents may not provide us with a significant competitive advantage.

We may be required to spend significant resources to monitor and protect our intellectual property rights. We may not be able to detect infringement and may lose competitive position in the market before we do so. In addition, competitors may design around our technology or develop competing technologies. Furthermore, the laws of some foreign countries do not offer the same level of protection of our proprietary rights as the laws of the United States, and we may be subject to unauthorized use of our products or technologies in those countries, particularly in Asia, where we expect our business to expand significantly in the foreseeable future.

In addition, our agreements with Agilent, and in particular the intellectual property matters agreement, set forth the terms and provisions under which we received the intellectual property rights necessary to operate our business. Under our agreements with Agilent, we do not have the right to enforce against third parties intellectual property rights we license from Agilent, and Agilent is under no obligation to enforce such rights on our behalf. See "— Risks Related to Our Separation from Agilent."

Intellectual property rights are difficult to enforce in the People's Republic of China, which may inhibit our ability to protect our intellectual property rights or those of our suppliers and customers in that country.

Commercial law in the People's Republic of China is relatively undeveloped compared to the commercial law in the U.S. Limited protection of intellectual property is available under Chinese law. Consequently, operating in the People's Republic of China may subject us to an increased risk that unauthorized parties may attempt to copy or otherwise obtain or use our intellectual property or the intellectual property of our suppliers, customers or business partners. We cannot assure you that we will be able to protect our intellectual property rights or those of our suppliers and customers or have adequate legal recourse in the event that we encounter difficulties with infringements of intellectual property under Chinese law.

We may incur a variety of costs to engage in future acquisitions of companies, products or technologies, and the anticipated benefits of any acquisitions we may make may never be realized.

Agilent has made and we may continue to make acquisitions of, or significant or minority investments in, complementary businesses, products or technologies, although no significant acquisitions or investments are currently pending. Any future acquisitions or investments could be accompanied by risks such as:

We cannot guarantee that we will realize any benefit from the integration of any business, products or technologies that we might acquire in the future, and our failure to do so could harm our business.

In the event that environmental contamination was to occur as a result of our ongoing operations, we could be subject to substantial future liabilities.

Our manufacturing processes involve the use of substances regulated under various international, federal, state and local laws governing the environment. Any failure or inability by us, or in some instances by our contract manufacturers, to comply with existing or future laws could result in significant remediation liabilities, the imposition of fines or the suspension or termination of production. In general, we are responsible for any liabilities resulting from our operation of the business and also for future costs of compliance with these laws. New laws and regulations, the

discovery of previously unknown contamination at our or others' sites or the imposition of new cleanup requirements could require us to curtail our operations, restrict our future expansion, subject us to liability or cause us to incur future costs that would have a negative effect on our operating results and cash flow.

If our facilities or the facilities of our contract manufacturers were to experience catastrophic loss due to natural disasters, our operations would be seriously harmed.

Our facilities and the facilities of our contract manufacturers could be subject to a catastrophic loss caused by natural disasters, including fires and earthquakes. We and our contract manufacturers have significant facilities in areas with above average seismic activity, such as California, Japan and Taiwan. If any of these facilities were to experience a catastrophic loss, it could disrupt our operations, delay production and shipments, reduce revenue and result in large expenses to repair or replace the facility. We do not carry catastrophic insurance policies that cover potential losses caused by earthquakes.

Our historical financial information as a business segment of Agilent may not be representative of our results as an independent public company.

The historical financial information we have included in this prospectus has been derived from the consolidated financial statements of Agilent and does not necessarily reflect what our financial position, results of operations or cash flows would have been had we been an independent entity during the historical periods presented. The historical costs and expenses reflected in our combined financial statements include an allocation for certain corporate functions historically provided by Agilent, including centralized legal, accounting, tax, treasury, information technology and other corporate services and infrastructure costs. We and Agilent believe these allocations are reasonable reflections of the historical utilization levels of these services in support of our business. The historical financial information is not necessarily indicative of our future results of operations, financial position, cash flows or costs and expenses. We have not made adjustments to reflect many significant changes that will occur in our cost structure, funding and operations as a result of our separation from Agilent, including changes in our employee base, changes in our legal structure, potential increased costs associated with reduced economies of scale, increased marketing expenses related to establishing a new brand identity and increased costs associated with being a publicly traded, stand-alone company. For additional information, see "Selected Financial Data," "Management's Discussion and Analysis of Financial Condition and Results of Operations," "Unaudited Pro Forma Condensed Combined Financial Information" and our historical combined financial statements and notes thereto.

As long as Agilent controls us, your ability to influence matters requiring shareholder approval will be extremely limited.

After this offering, Agilent will own 50,000,000, or approximately 85.5%, of our outstanding ordinary shares. If the underwriters exercise their over-allotment option in full in connection with this offering, Agilent will own approximately 83.6% of our outstanding ordinary shares. As long as Agilent owns a majority of our outstanding ordinary shares, Agilent will have the ability to take shareholder action without the vote of any other shareholder, and investors in this offering will not be able to affect the outcome of any shareholder vote during this period. As a result, Agilent will have the ability to control all matters affecting us, including:

Agilent's voting control may discourage transactions involving a change of control of us, including transactions in which you as a holder of our ordinary shares might otherwise receive a premium for your shares over the then-current market price. Subject to the lock-up agreement described elsewhere in this prospectus, Agilent is not prohibited from selling a controlling interest in us to a third party and may do so without your approval and without providing for a purchase of your ordinary shares. Accordingly, your ordinary shares may be worth less than they would be if Agilent did not maintain voting control over us.

Our ability to operate our business effectively may suffer if we do not, quickly and cost-effectively, establish our own fully-functional financial, administrative, operational and other support systems in order to operate as a stand-alone company, and the transitional services Agilent has agreed to provide to us may not be sufficient to meet our needs.

As a business unit of Agilent, we have relied on the financial resources and the administrative and operational support systems of Agilent to operate our business. Some of the Agilent systems we are using include enterprise resource planning (ERP), human resource management systems, and sales and service support applications. Many of these systems are complex and either highly customized or proprietary. In conjunction with our separation from Agilent, we are in the process of separating our assets from those of Agilent and creating our own financial, administrative, operational and other support systems or contract with third parties to replace Agilent's systems. Many of the new systems in place at the time of the offering, including our ERP system, will have been in effect only since the separation date and it may take additional time to fully implement and stabilize these systems. In order to successfully implement our own systems and operate as a stand-alone business, we must be able to attract and retain a number of highly skilled employees.

We have entered into a transition services agreement which governs the provision by Agilent to us of certain support services, on an interim or transitional basis. We currently expect these transition services to include, but not be limited to, facilities management, site information technology infrastructure, usage of various applications and support systems, as well as employee related services for any transitional employees remaining with Agilent.

See "Arrangements Between Verigy and Agilent — Transition Services Agreement" for a description of these services. These services may not compare favorably with those we receive as a business unit of Agilent, and we may not be able to obtain the same benefits now that our separation from Agilent is complete. These transitional service arrangements generally have a term of less than six months after the separation, and the transition services agreement will terminate and Agilent will have no obligation to provide any further transition services to us two years after the separation date. These services may not be sufficient to meet our needs and, after our agreement with Agilent expires, we may not be able to replace these services or facilities at favorable costs and on favorable terms, if at all. Any failure or significant downtime in our own

financial or administrative systems or in Agilent's financial or administrative systems during the transitional period, and any difficulty in separating our assets from Agilent's assets and integrating newly acquired assets into our business, could result in unexpected costs, impact our results and/or prevent us from paying our suppliers and employees and performing other administrative services on a timely basis and could materially harm our business, financial condition, results of operations and cash flows.

The price of our ordinary shares may decline if Agilent and others distribute or sell our ordinary shares.

Sales of substantial amounts of our ordinary shares after this offering, or the possibility of those sales, could harm the market price of our ordinary shares and impede our ability to raise capital through the issuance of equity securities. See "Shares Eligible for Future Sale" for a discussion of possible future sales of our ordinary shares.

After this offering, Agilent will own approximately 85.5% of our outstanding ordinary shares. Agilent has no contractual obligation to retain our ordinary shares, except that it has agreed not to sell or transfer any of its shares of our ordinary shares without the consent of Goldman, Sachs & Co. on behalf of the underwriters of this offering until 180 days after the date of this prospectus, subject to extension in specified circumstances as described under "Underwriting." Subject to applicable U.S. federal and state securities laws, Agilent may sell or distribute to its stockholders any or all of our ordinary shares that it owns either (1) after the expiration of this 180-day period or (2) before the expiration of this 180-day period with the consent of Goldman, Sachs & Co. on behalf of the underwriters. In addition, the lockup restrictions described above do not apply to the pro rata distribution of our ordinary shares by Agilent to its common stockholders, which we expect to occur on or prior to October 31, 2006.

If Agilent distributes ordinary shares that it owns to its stockholders, substantially all of these shares would be eligible for immediate resale in the public market. We are unable to predict whether significant amounts of our ordinary shares would be sold in the open market in anticipation of, or after, any such distribution. We also are unable to predict whether a sufficient number of buyers for our ordinary shares would be in the market at that time.

Any sale by Agilent or us of our ordinary shares in the public market or the perception that sales could occur, whether as a result of any distribution of our ordinary shares by Agilent to its stockholders or otherwise, could harm the prevailing market price of our ordinary shares.

In connection with this offering, we intend to file a registration statement on Form S-8 to register 12,000,000 of our ordinary shares that will be registered for issuance under our equity incentive plans. Significant sales of our ordinary shares pursuant to our share plans could also harm the prevailing market price for our ordinary shares.

As an independent public company, we may experience increased costs resulting from a decrease in the purchasing power we currently have as a result of being a wholly owned subsidiary of Agilent.

Prior to our separation from Agilent, we were able to take advantage of Agilent's size and purchasing power in procuring goods, technology and services, including insurance, employee benefit support and audit services. We are a smaller company than Agilent, and we cannot assure you that we will have access to financial and other resources comparable to those available to us prior to the separation. As a separate company, we may be unable to obtain goods, technology and services at prices and on terms as favorable as those available to us prior to the separation, which could increase our costs and reduce our profitability.

Our separation agreements with Agilent may be less favorable to us than similar agreements between unaffiliated third parties.

We entered into our separation agreements with Agilent while we were a wholly owned subsidiary of Agilent. These agreements may be less favorable to us than similar agreements negotiated between unaffiliated third parties. Pursuant to our agreements with Agilent, we have agreed to indemnify Agilent for, among other matters, liabilities related to our business, and we have assumed these and certain other liabilities as part of our separation from Agilent. See "Arrangements Between Verigy and Agilent" for a description of these indemnification obligations, as well as the other terms and obligations of our agreements with Agilent. The allocation of assets and liabilities between Agilent and us may not reflect the allocation that would have been reached by two unaffiliated parties.

Our tax sharing agreement with Agilent may require us to indemnify Agilent for certain tax liabilities, including liabilities that may arise in connection with a distribution of our ordinary shares by Agilent, and may limit our ability to obtain additional financing or participate in future acquisitions.

Under our tax sharing agreement with Agilent, we and Agilent have agreed to indemnify one another for certain taxes and similar obligations that the other party could incur under certain circumstances. In general, under the tax sharing agreement we are responsible for taxes relating to our business that arise after our separation from Agilent. For a more complete description of the tax sharing agreement, please see the section titled "Arrangements Between Verigy and Agilent — Tax Sharing Agreement."

If Agilent distributes our ordinary shares to its stockholders, Agilent intends such distribution to qualify as a distribution subject to Section 355 of the Internal Revenue Code of 1986, as amended, which is referred to as the Code. Under our tax sharing agreement with Agilent, we are obligated to indemnify Agilent for any taxes imposed on Agilent under Section 355(e) of the Code arising as a result of our actions. Under Section 355(e) of the Code, the distribution would be fully taxable to Agilent if shares representing 50% or more of our voting power or economic value are acquired as part of a plan or series of related transactions. In computing whether a 50% ownership change has occurred, this offering of our ordinary shares will be taken into account but the distribution will not be taken into account. If we violate the restrictions imposed by Section 355(e) of the Code and we are required to indemnify Agilent for additional taxes imposed on Agilent with respect to the distribution of our ordinary shares to its stockholders, our results of operations may be materially impaired.

Our indemnity obligation to Agilent only arises if we breach our obligation to refrain from any action that would cause the distribution to be fully taxable to Agilent. The amount of our potential indemnity obligation is equal to the sum of (a) the tax, which Agilent incurs as a result of the distribution being fully taxable, on the gain inherent in the Company's ordinary shares distributed by Agilent, less (b) the tax, based upon the composition of Agilent's stockholders on the date of the distribution, that Agilent owes as a result of the distribution, regardless of the Company's action giving rise to the indemnity obligation (referred to as the Section 367 Tax), plus (c) all costs and expenses of Agilent relating to claims by Agilent stockholders resulting from the distribution becoming fully taxable as a result of our actions (referred to as the Stockholder Costs). The amount of the potential obligation is difficult to quantify at this time because it is contingent on future facts and events. To provide an estimate of the potential indemnity obligation we assumed that, as of the distribution date: (i) Agilent has a $535 million tax basis in the distributed shares, (ii) the shares distributed by Agilent have a fair market value of $850 million, (iii) the gain inherent in our ordinary shares distributed by Agilent is $315 million, (iv) the applicable tax rate is 35%, (v) the composition of Agilent's stockholders is such that the Section 367 Tax amount is zero, and (vi) the estimated

amount of the Stockholder Costs is zero. Based upon these assumptions, our potential indemnity obligation would equal approximately $110 million.

In addition, under our tax sharing agreement with Agilent, for two years following the distribution we are subject to certain covenants that are intended to ensure that the distribution of our ordinary shares by Agilent is not fully taxable to Agilent. Those covenants require us to obtain the consent of Agilent (which cannot be unreasonably withheld) before we can:

The restrictive covenants in our tax sharing agreement with Agilent will restrict our ability to obtain additional financing or to engage in acquisition or disposition transactions for a period of two years after the distribution. If we breach those covenants, we may incur substantial additional liabilities and may be exposed to costly and time-consuming litigation.

Third parties may seek to hold us responsible for liabilities of Agilent that we did not assume in our agreements.

In connection with our separation from Agilent, Agilent has generally agreed to retain all liabilities that did not historically arise from our business. Third parties may seek to hold us responsible for Agilent's retained liabilities. Under our agreements with Agilent, Agilent has agreed to indemnify us for claims and losses relating to these retained liabilities. However, if those liabilities are significant and we are ultimately held liable for them, we cannot assure you that we will be able to recover the full amount of our losses from Agilent.

Any disputes that arise between us and Agilent with respect to our past and ongoing relationships could harm our business operations.

Disputes may arise between Agilent and us in a number of areas relating to our past and ongoing relationships, including:

We may not be able to resolve any potential conflicts, and even if we do, the resolution may be less favorable than if we were dealing with an unaffiliated party.

The agreements we have entered into with Agilent may be amended upon agreement between the parties. While we are controlled by Agilent, Agilent may be able to require us to agree to

amendments to these agreements that may be less favorable to us that the original terms of the agreements.

Some of our directors and executive officers may have conflicts of interest because of their ownership of Agilent common stock, options to acquire Agilent common stock and positions with Agilent.

Some of our directors and executive officers own Agilent common stock and options to purchase Agilent common stock. In addition, some of our executive officers and directors are executive officers and/or directors of Agilent. Ownership of Agilent common stock and options to purchase Agilent common stock by our directors and officers after this offering and the presence of executive officers or directors of Agilent on our board of directors could create, or appear to create, potential conflicts of interest and other issues with respect to their fiduciary duties to us when our directors and officers are faced with decisions that could have different implications for Agilent than for us. For information regarding the ownership of Agilent common stock and options to purchase Agilent common stock, see "Management — Stock Ownership of Directors and Executive Officers."

Our agreements with Agilent may act as a deterrent to transactions that would result in a change of control of us that may be in the best interest of our shareholders.

Our ability to engage in transactions that would result in a change in control of us will be limited by the intellectual property matters agreement and the tax sharing agreement that we entered into with Agilent as part of our separation. Specifically, under the intellectual property matters agreement, Agilent's consent is required for us to transfer intellectual property rights we have licensed from Agilent, which may act as a deterrent to an acquisition of us by a third party. Under the tax sharing agreement, for a period of two years from the distribution date we may not, without Agilent's consent, engage in transactions that would cause us to undergo a 35% or greater change in our share ownership (including the shares issued in this offering but excluding the distribution) to ensure that the distribution of our ordinary shares by Agilent is not fully taxable to Agilent under Section 355(e) of the Code. These limitations may act as a deterrent to transactions involving a change in control of us that might be in the best interest of our shareholders. For more information, see "Arrangements Between Verigy and Agilent."

Agilent is not obligated to distribute our ordinary shares that it owns to its stockholders, and our business and your investment in our ordinary shares may be harmed if Agilent does not complete such a distribution.

Agilent has advised us that it currently intends to distribute to its stockholders all of our ordinary shares that it holds by the end of its fiscal year, October 31, 2006. However, Agilent is not obligated to complete the distribution, and the distribution may not occur by the contemplated time or at all.

Unless and until such a distribution occurs or Agilent otherwise disposes of its controlling interest in us, we will continue to face the risks described above relating to Agilent's control of us and potential conflicts of interest between Agilent and us. We may be unable to realize potential benefits that could result from such a distribution by Agilent, such as greater strategic focus, incentives for employees that are more closely aligned with our performance and an increased ability to attract investors that are focused on the semiconductor test equipment and services market, although we cannot guarantee that we would realize any of these potential benefits if such a distribution did occur. In addition, speculation by the press, investment community, our customers, our competitors or others regarding whether Agilent intends to complete such a distribution or otherwise dispose of its controlling interest in us could harm our business.

So long as Agilent continues to hold a controlling interest in us or is otherwise a significant shareholder, the liquidity and market price of our ordinary shares may be adversely impacted.

Risks Related to the Securities Markets and Ownership of Our Ordinary Shares

Our securities have no prior trading history, and the price of our ordinary shares may fluctuate significantly and may decline below the initial public offering price.

Before this offering, there has not been a public market for our ordinary shares. An active public market for our ordinary shares may not develop or be sustained after this offering, which would adversely impact the liquidity and market price of our ordinary shares.

The market price of our ordinary shares may fluctuate significantly after this offering and may decline below the initial public offering price, which will be determined by negotiations between the representatives of the underwriters and us. See "Underwriting" for a discussion of the factors to be considered in determining the initial public offering price. This price may not be indicative of the market price of our ordinary shares after this offering. We cannot assure you that you will be able to resell your shares at or above the initial public offering price.

Among the factors that could affect the market price of our ordinary shares are the risk factors described in this section and other factors including:

The stock markets have experienced extreme volatility that has often been unrelated to the operating performance of particular companies. These broad market fluctuations may harm the trading price of our ordinary shares.

We may become involved in securities class action litigation that could divert management's attention and harm our business.

The stock market in general, and the Nasdaq National Market and the securities of semiconductor capital equipment companies in particular, has experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of the impacted companies. Further, the market prices of securities of semiconductor test system companies have been particularly volatile. These market and industry factors may materially harm the market price of our ordinary shares, regardless of our operating performance. In the past, following periods of volatility in the market price of a particular company's securities, securities class action litigation has often been brought against that company. We may become involved in this type of litigation in the future. Such litigation, whether or not meritorious, could result in the expenditure of substantial funds, divert management's attention and resources, and harm our reputation in the industry and the securities markets, which would reduce our profitability and harm our business.

It may be difficult for investors to effect service of process within the United States on us or to enforce civil liabilities under the federal securities laws of the United States against us.

We are incorporated in Singapore under the Companies Act, Chapter 50 of Singapore, or Singapore Companies Act. Some of our officers reside outside the United States. A substantial portion of our assets is located outside the United States. As a result, it may not be possible for investors to effect service of process within the United States upon us. Similarly, investors may be unable to enforce judgments obtained in U.S. courts predicated upon the civil liability provisions of the federal securities laws of the United States against us in U.S. courts. Judgments of U.S. courts based upon the civil liability provisions of the federal securities laws of the United States are not directly enforceable in Singapore courts and are not given the same effect in Singapore as judgments of a Singapore court. Accordingly, there can be no assurance as to whether Singapore courts will enter judgments in actions brought in Singapore courts based upon the civil liability provisions of the federal securities laws of the United States.

Singapore corporate law and our tax sharing and intellectual property matters agreements with Agilent may impede a takeover of our company by a third party, which could adversely affect the value of our ordinary shares.

Under the Singapore Code on Take-overs and Mergers, generally when a person acquires shares having 30% or more of the voting rights of a company or holds at least 30% but not more than 50% of the voting rights of a company and thereafter acquires in any period of six months additional shares carrying more than 1% of the voting rights, then such person is required by law to make an offer to acquire the remaining voting shares of the company.

Furthermore, under our intellectual property matters agreement, in connection with any takeover of our company, and subject to compliance with applicable antitrust and competition laws, Agilent's consent is required to transfer intellectual property we have licensed from Agilent.

These legal and contractual requirements may impede or delay a takeover of our company by a third party, which could adversely affect the value of our ordinary shares.

Our public shareholders may have more difficulty protecting their interests than they would as shareholders of a U.S. corporation.

Our corporate affairs are governed by our amended and restated memorandum and articles of association and by the laws governing corporations incorporated in Singapore. The rights of our shareholders and the responsibilities of the members of our board of directors under Singapore law are different from those applicable to a corporation incorporated in the United States. Therefore, our public shareholders may have more difficulty in protecting their interests in connection with actions taken by our management, members of our board of directors or our controlling shareholder than

they would as shareholders of a corporation incorporated in the United States. For example, controlling shareholders in U.S. corporations are subject to fiduciary duties while controlling shareholders in Singapore corporations are not subject to such duties. Please see "Arrangements Between Verigy and Agilent" and "Principal Shareholder" for a discussion relating to our controlling shareholder, Agilent, and "Comparison of Shareholder Rights" for a discussion of differences between Singapore and Delaware corporate law.

You will experience immediate and substantial dilution in pro forma net tangible book value per share.

Dilution per share represents the difference between the initial public offering price and the net book value per share immediately after this offering. Purchasers of our ordinary shares in this offering will experience immediate dilution of $11.89 in pro forma net tangible book value per share. See "Dilution."

SPECIAL NOTE ABOUT FORWARD-LOOKING STATEMENTS
AND ENFORCEMENT OF CIVIL LIABILITIES

This prospectus, including the sections entitled "Prospectus Summary," "Risk Factors," "Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Business," contains forward-looking statements. These statements relate to future events or our future financial performance and involve known and unknown risks, uncertainties and other factors that may cause our or our industry's actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by the forward-looking statements. These risks and other factors include those listed under "Risk Factors" and elsewhere in this prospectus. In some cases, you can identify forward-looking statements by terminology such as "may," "will," "should," "could," "expects," "intends," "plans," "anticipates," "believes," "estimates," "predicts," "potential," "continue" or the negative of these terms or other comparable terminology. These statements are only predictions. Actual events or results may differ materially. In evaluating these statements, you should specifically consider various factors, including the risks outlined under "Risk Factors." These factors may cause our actual results to differ materially from any forward-looking statement.

Although we believe that the expectations reflected in the forward-looking statements contained herein are reasonable, we cannot guarantee our future results, levels of activity, performance or achievements. We are under no duty to update any of the forward-looking statements after the date of this prospectus to conform our prior statements to actual results.

We are incorporated in Singapore under the Singapore Companies Act. Some of our directors and officers reside outside the United States. A substantial portion of our assets are located outside the United States. As a result, it may not be possible for investors to effect service of process within the United States upon us or to enforce, against us in United States courts, judgments obtained in such courts predicated upon the civil liability provisions of the federal securities laws of the United States. Judgments of United States courts based upon the civil liability provisions of the federal securities laws of the United States are not directly enforceable in Singapore courts and there can be no assurance as to whether Singapore courts will enter judgments in original actions brought in Singapore courts based upon the civil liability provisions of the federal securities laws of the United States.

On August 15, 2005, Agilent announced its intention to separate its semiconductor test business into a stand-alone, publicly traded company. The separation of our business from Agilent occurred on June 1, 2006. Until the completion of this offering, we will operate as a wholly owned subsidiary of Agilent organized under the laws of Singapore. After this offering, Agilent will continue to own approximately 85.5% of our ordinary shares, or approximately 83.6% of our ordinary shares if the underwriters exercise their over-allotment option in full, until the date on which it distributes the remainder of our ordinary shares which it holds to its stockholders, which we refer to as the distribution date. Agilent expects to complete the distribution by the end of its fiscal year, October 31, 2006.

We believe that we will realize certain benefits from our separation from Agilent, including the following:

The agreements relating to our separation from Agilent have been negotiated in the context of a parent-subsidiary relationship and our separation from Agilent. The terms of these agreements may be less favorable than similar agreements negotiated between unaffiliated third parties. For more information regarding the separation arrangements, see "Arrangements Between Verigy and Agilent."

Until the completion of this offering, we will be a wholly owned subsidiary of Agilent. Immediately following the completion of this offering, Agilent will own 50,000,000 of our ordinary shares, representing approximately 85.5% of our outstanding ordinary shares, or approximately 83.6% of our outstanding shares, if the underwriters exercise their over-allotment option in full.

Agilent has no contractual obligation to retain the ordinary shares that it holds, except that it has agreed not to sell or transfer any of our ordinary shares that it holds without the consent of Goldman, Sachs & Co. on behalf of the underwriters of this offering until 180 days after the date of this prospectus as described under "Underwriting." This restriction does not apply to the distribution by Agilent of its remaining ownership interest in us to its common stockholders.

Agilent has advised us that it currently intends to distribute to its stockholders all of our ordinary shares that it holds by the end of its fiscal year, October 31, 2006. The distribution is expected to be effected through a special dividend by Agilent to its stockholders. Agilent will determine the timing, structure and all terms of the distribution taking into account factors such as market conditions. However, Agilent is not obligated to complete the distribution, and the distribution may not occur by the contemplated time or at all. In addition, subject to the lock-up obligation described above and compliance with applicable U.S. federal and state securities law, Agilent may sell our ordinary shares in the public market or in private transactions prior to the distribution.

We estimate that the net proceeds from the sale of 8,500,000 ordinary shares by us in this offering will be approximately $134 million, based on an assumed initial public offering price of $17.00 per share, the midpoint of the range appearing on the cover page of this prospectus, and after deducting estimated underwriting discounts and commissions. If the underwriters exercise in full their option to purchase additional shares, we expect to receive approximately $20 million of additional net proceeds. In addition, Agilent has agreed to make a payment or other transfer of value to us after the closing of this offering if the proceeds to us from this offering, net of underwriting discounts and commissions, are less than $140 million. The payment or other transfer of value will be in an amount equal to the difference between the net proceeds of this offering and $140 million.

The principal purposes of this offering are to obtain additional capital and to create a public market for our ordinary shares. We anticipate that we will use $25 million of the net proceeds from this offering to repay our $25 million short-term revolving credit facility from Agilent that we entered into on the date of our separation from Agilent. We borrowed $25 million from Agilent under this facility. The loan from Agilent bears interest at one-month LIBOR plus 50 basis points (equal to 5.54% as of April 28, 2006). The amounts borrowed under the credit facility will mature on the 30^th day after the closing of this offering. We will also reimburse Agilent for approximately $7 million of payments that Agilent made to Flextronics on our behalf related to future severance and other employee-related benefits associated with employees transferred to Flextronics under the various Flextronics asset purchase agreements described elsewhere in this prospectus. These amounts are required to be repaid within 30 days after the closing of this offering. We also expect to use $1 million of the proceeds of this offering to make a payment directly to Flextronics by June 30, 2006. We expect to use the remaining $107 million of the net proceeds of this offering for general corporate purposes, including working capital, and to pay approximately $40 million in costs we expect to incur through the end of fiscal 2006 related to our separation from Agilent.

Pending such uses, we plan to invest the net proceeds in highly liquid, investment grade securities. By establishing a public market for our ordinary shares, this offering is also intended to facilitate our future access to the public markets.

As a result of Agilent's agreement to make a payment or other transfer of value to us equal to the amount by which the net proceeds to us of this offering are less than $140 million, the net proceeds available to us after this offering, including any funding from Agilent, will be at least $140 million. This will be the case even if the initial public offering price is reduced to less than the assumed $17.00 per share. At an initial public offering price at or above $17.71 per share (or $15.40 per share if the underwriters' over-allotment option is exercised in full), we would receive net proceeds of $140 million or more from this offering alone and would not receive any payment or other transfer from Agilent under the terms of our agreement with Agilent. Each $1.00 increase in the initial public offering price above $17.71 per share (or $15.40 per share if the underwriters' over-allotment option is exercised in full) would increase the net proceeds available to us from this offering by approximately $7.9 million (or approximately $9.1 million if the underwriters' over-allotment option is exercised in full), assuming the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting underwriting discounts and commissions.

We currently intend to retain any future earnings for use in the operation and expansion of our business. Therefore, we do not anticipate paying any cash dividends in the foreseeable future. In addition, pursuant to Singapore law and our Articles of Association, no dividends may be paid except out of our profits.

The following table sets forth our capitalization as of January 31, 2006. Our capitalization is presented:

As a result of Agilent's agreement to make a payment or other transfer of value to us equal to the amount by which the net proceeds to us of this offering are less than $140 million, the net proceeds available to us after this offering, including any funding from Agilent, will be at least $140 million. This will be the case even if the initial public offering price is reduced to less than the assumed $17.00 per share. At an initial public offering price at or above $17.71 per share (or $15.40 per share if the underwriters' over-allotment option is exercised in full), we would receive net proceeds of $140 million or more from this offering alone and would not receive any payment or other transfer from Agilent under the terms of our agreement with Agilent. On a pro forma, as adjusted basis, each of shareholders' equity (ordinary shares), total shareholders' equity and total capitalization shall be as set forth in the above table unless the net proceeds to us from this offering exceed $140 million, in which case each of cash and cash equivalents, working capital, total assets and shareholders' equity shall be increased from the amount set forth in the above table by the amount by which the net proceeds of this offering to us exceed $140 million. Each $1.00 increase in the initial public offering price above $17.71 per share (or $15.40 per share if the underwriters' over-allotment option is exercised in full) would increase the net proceeds available to us from this offering by approximately $7.9 million (or approximately $9.1 million if the underwriters' over-allotment option is exercised in full), assuming the number of shares offered by us, as set forth

on the cover page of this prospectus, remains the same and after deducting underwriting discounts and commissions.

In addition to the 58,500,000 ordinary shares to be outstanding after the offering, we may issue a total of 12,000,000 ordinary shares under our option and share purchase plans. We may also issue an additional 1,275,000 ordinary shares if the underwriters exercise in full their over-allotment option in connection with this offering.

You should read this table together with the sections of this prospectus entitled "Selected Financial Data," "Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Unaudited Pro Forma Condensed Combined Financial Information" and with the financial statements and related notes beginning on page F-1.

Our pro forma net tangible book value as of January 31, 2006 was approximately $159 million, or approximately $3.18 per ordinary share. Pro forma net tangible book value per share represents the amount of our pro forma total tangible assets reduced by the amount of our pro forma total liabilities and divided by the total number of ordinary shares outstanding assuming the completion of our separation from Agilent, which occurred on June 1, 2006. Dilution in pro forma, as adjusted net tangible book value per share represents the difference between the amount per share paid by purchasers of ordinary shares in this offering and the pro forma, as adjusted net tangible book value per ordinary share immediately after the completion of this offering. After giving effect to the sale of the 8,500,000 ordinary shares offered by us at an assumed initial public offering price of $17.00 per share, the midpoint of the range appearing on the cover page of this prospectus, and after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us and the payment or transfer of value of $6 million from Agilent, our pro forma, as adjusted net tangible book value as of January 31, 2006 would have been approximately $299 million, or $5.11 per ordinary share. This represents an immediate increase in net tangible book value of $1.93 per share to our existing shareholder and an immediate dilution of $11.89 per share to new investors in our ordinary shares. The following table illustrates this dilution on a per share basis:

Assumed initial public offering price per share				$	17.00
	Pro forma net tangible book value per share as of January 31, 2006	$	3.18
	Increase per share attributable to new investors		1.93

Pro forma, as adjusted net tangible book value per share after this offering					5.11

Dilution per share to new investors				$	11.89

As a result of Agilent's agreement to make a payment or other transfer of value to us equal to the amount by which the net proceeds to us of this offering are less than $140 million, the net proceeds available to us after this offering, including any funding from Agilent, will be at least $140 million. This will be the case even if the initial public offering price is reduced to less than the assumed $17.00 per share. At an initial public offering price at or above $17.71 per share (or $15.40 per share if the underwriters' over-allotment option is exercised in full), we would receive net proceeds of $140 million or more from this offering alone and would not receive any payment or other transfer from Agilent under the terms of our agreement with Agilent. Each $1.00 increase in the initial public offering price above $17.71 per share (or $15.40 per share if the underwriters' over-allotment option is exercised in full) would increase the net proceeds available to us from this offering by approximately $7.9 million (or approximately $9.1 million if the underwriters' over-allotment option is exercised in full), assuming the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting underwriting discounts and commissions.

At an initial public offering price of $17.71 per share (or $15.40 per share if the underwriters' over-allotment option is exercised in full), our pro forma, as adjusted net tangible book value, the increase per share attributable to new investors, our pro forma, as adjusted net tangible book value per share after this offering and the dilution per share to new investors would be $299 million, $1.93, $5.11 and $12.60, respectively (or $299 million, $1.82, $5.00 and $10.40, respectively, if the underwriters' over-allotment option per share is exercised in full). Each $1.00 decrease in the initial public offering price below $17.71 per share (or $15.40 per share if the underwriters' over-allotment option is exercised in full) would decrease the dilution per share to new investors by $1.00 and result in no change to our pro forma, as adjusted net tangible book value, the increase per share

attributable to new investors, our pro forma, as adjusted net tangible book value per share after this offering. Each $1.00 increase in the initial public offering price above $17.71 per share (or $15.40 per share if the underwriters' over-allotment option is exercised in full) would increase our pro forma, as adjusted net tangible book value, the increase per share attributable to new investors, our pro forma, as adjusted net tangible book value per share after this offering and the dilution per share to new investors by approximately $7.9 million, $0.14, $0.14 and $0.86, respectively (or approximately $9.1 million, $0.15, $0.15 and $0.85, respectively, if the underwriters' over-allotment option is exercised in full). The foregoing assume that the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same and are after deducting underwriting discounts and commissions.

The following table summarizes, after giving effect to the offering on the pro forma basis described above, based on an assumed initial public offering price of $17.00 per share, as of January 31, 2006, the differences between our existing shareholder and new investors with respect to the number of ordinary shares purchased from us, the total consideration paid to us and the average price per share paid.

	Shares Purchased			Total Consideration
	Shares Purchased			Total Consideration				Average Price Per Share
	Number	Percent		Amount		Percent		Average Price Per Share
Existing shareholder	50,000,000	85.5	%	$	181,000,000	55.6	%	$	3.62
New investors	8,500,000	14.5			144,500,000	44.4		$	17.00

Total	58,500,000	100.0	%	$	325,500,000	100.0	%

At an initial public offering price of $17.71 per share (or $15.40 per share if the underwriters' over-allotment option is exercised in full), the total consideration and average price per share paid by the existing shareholder would be $175 million and $3.50, respectively. Each $1.00 decrease in the initial public offering price below $17.71 per share (or $15.40 per share if the underwriters' over-allotment option is exercised in full) would increase the total consideration and average price per share paid by the existing shareholder by approximately $7.9 million and $0.16, respectively (or $9.1 million and $0.18, respectively, if the underwriters' over-allotment option is exercised in full). Any increase in the initial public offering price above $17.71 per share (or $15.40 per share if the underwriters' over-allotment option is exercised in full) would result in no change to the total consideration and average price per share paid by the existing shareholder. The foregoing assume that the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same and are after deducting underwriting discounts and commissions.

The foregoing discussion and tables above assume no exercise of options outstanding under our 2006 Equity Incentive Plan and no issuance of shares reserved for future issuance under our 2006 Employee Share Purchase Plan. As of January 31, 2006, there were no options outstanding to purchase ordinary shares. To the extent that the Agilent options held by Verigy employees are not vested as of the distribution date, such options will expire in accordance with their terms. Verigy will provide to such employees new Verigy options with substantially the same terms and conditions as the Agilent options that were terminated. In addition, with respect to the new Verigy options, in order to determine the number of shares subject to the option and per share exercise price, we will multiply the number of shares purchasable under each such Agilent option by a ratio based on the Agilent stock price prior to the distribution compared to the Verigy share price following the distribution. Assuming that (1) the distribution of our ordinary shares was to occur concurrently with this offering, (2) Agilent's stock price on the day prior to the pricing of this offering was $34.40 and an initial offering price of $17.00 per share, approximately 1.6 million Agilent options would be converted into approximately 3.2 million Verigy options with a weighted average exercise price of $13.84. To the extent that any additional Verigy options are granted and exercised, there will be further dilution to new investors. See "Management's Discussion and Analysis of Financial Condition and Results of Operations — Critical Accounting Policies and Estimates" for additional information.

The selected financial data set forth below is derived in part from and should be read in conjunction with "Management's Discussion and Analysis of Financial Condition and Results of Operations" and our combined financial statements and related notes thereto included elsewhere in this prospectus. We have derived our combined statement of operations data for the fiscal years ended October 31, 2005, 2004 and 2003 and combined balance sheet data as of October 31, 2005 and 2004 from the audited combined financial statements included elsewhere in this prospectus. The combined statements of operations data for the fiscal years ended October 31, 2002 and 2001 and combined balance sheet data as of October 31, 2003, 2002 and 2001 were derived from our unaudited financial statements that are not included in this prospectus. We have derived our combined statement of operations data for the three months ended January 31, 2006 and 2005 and combined balance sheet data as of January 31, 2006 from the interim unaudited combined financial statements included elsewhere in this prospectus. Historical results are not necessarily indicative of results to be expected for future periods and may not reflect what our financial position and results of operations would have been had we been a separate, stand-alone entity during the historical periods presented. See Note 20 of our audited combined financial statements included elsewhere in this prospectus for an explanation of the calculation of net loss per share.

MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion should be read in conjunction with the combined financial statements and notes thereto included elsewhere in this prospectus. This prospectus contains forward-looking statements including, without limitation, statements regarding trends, cyclicality, seasonality and growth in the markets we sell into, our strategic direction, expenditures in research and development, contracts, our future effective tax rate, new product introductions, product pricing, changes to our manufacturing processes, our liquidity position, our ability to generate cash from continuing operations, our expected growth, our expectations regarding our transition to a stand-alone company, the potential impact of our adopting new accounting pronouncements, our potential future financial results, revenue generated from international sales, the impact of our enterprise resource planning systems implementation, the impact of our variable cost structure, our obligations under and assumptions about our retirement and post-retirement benefit plans, our lease payment obligations, savings from our restructuring programs and the existence or length of an economic recovery that involve risks and uncertainties. Our actual results could differ from the results contemplated by these forward-looking statements due to certain factors, including those discussed in under "Risk Factors" and elsewhere in this prospectus.

The accompanying financial data for the fiscal years ended October 31, 2005, 2004 and 2003 has been prepared by us pursuant to the rules and regulations of the Securities and Exchange Commission. Unless otherwise stated, all years and dates refer to our fiscal year. Our fiscal quarters end on January 31, April 30 and July 31.

Historically, we have operated as part of Agilent, and not as a stand-alone company. Financial statements were not previously prepared for Verigy, since we have not been operated as a separate legal entity prior to our separation from Agilent, which occurred on June 1, 2006. The accompanying combined financial statements have been presented in accordance with accounting principles generally accepted in the United States and derived from the accounting records of Agilent using the historical basis of assets and liabilities of our business and differ from Agilent's "STS" segment disclosures under SFAS 131, "Disclosure About Segments of an Enterprise and Related Information." The most significant differences between Agilent's presentation of STS assets and the presentation in this prospectus relate to deferred tax assets, goodwill, other intangibles and other assets since Agilent discloses STS assets through its management approach under SFAS 131.

Agilent has historically used a centralized approach to cash management and financing of its operations. Accordingly, none of the cash, cash equivalents or debt at the Agilent corporate level are reflected in our combined financial statements. Agilent has entered into a $25 million short-term revolving credit facility with us to allow us to fund our operations prior to the closing of this offering. We will repay to Agilent the amounts owed under this facility out of the proceeds of this offering. Our credit facility with Agilent will terminate following this offering. We will also reimburse Agilent for approximately $7 million of payments that Agilent has made to Flextronics related to future severance and other employee-related benefits associated with employees transferred to Flextronics under the various Flextronics asset purchase agreements described elsewhere in this prospectus. We will also pay to Flextronics employee-related benefit costs of $1 million by June 30, 2006 and an additional payment of approximately $2 million in the future. It is anticipated that Verigy will keep all of the proceeds raised from the offering, other than amounts we use to repay our debt to Agilent, reimburse Agilent for approximately $7 million of payments to Flextronics that Agilent will

make on our behalf. For the three months ended January 31, 2006 and 2005, our business required a net investment of $52 million and $38 million, respectively, from Agilent because our cash from operations was not sufficient to cover our operating expenses. In fiscal 2005 and 2003, our business required cash infusions of $88 million and $35 million, respectively, from Agilent because our cash from operations was not sufficient to cover our operating expenses. In fiscal 2004, a positive cash flow from our operating activities, coupled with an improved working capital position, enabled us to return $43 million of cash to Agilent.

We historically have received substantial management and shared administrative services from Agilent and we have engaged in certain intercompany transactions with Agilent. We have relied on Agilent for substantially all of our operational and administrative support. The combined financial statements include allocations of certain Agilent corporate expenses, including information technology resources and support; finance, accounting, and auditing services; real estate and facility management services; human resources activities; certain procurement activities; and treasury services, customer contract administration, legal advisory services, and central research services. We have also benefited from license agreements that Agilent has entered into with third parties related to intellectual property.

Management believes the assumptions and allocations underlying the combined financial statements are reasonable and appropriate under the circumstances. The expenses and cost allocations have been determined on a basis that Agilent and we consider to be a reasonable reflection of the utilization of services provided or the benefit received by us during the years presented.

The amounts recorded for these transactions and allocations are not, however, necessarily representative of the amounts that would have been incurred had we been a separate, stand-alone entity that operated independently of Agilent. Our future results of operations after our separation from Agilent will include costs and expenses for us to operate as a stand-alone company, and, consequently, these costs and expenses may be materially different than our historical results of operations. We expect that we will incur significantly higher expenses such as audit fees, professional fees, and costs to maintain our corporate functions, such as board of directors fees and expenses, annual audit costs, SEC reporting costs and costs to comply with Sarbanes-Oxley Act and other internal control requirements. Also, as a stand-alone company, we may not be able to negotiate as favorable terms in contracts, such as those for materials, services and intellectual property, as those negotiated in the past by Agilent. Accordingly, the financial statements for these years may not be indicative of our future results of operations, financial position and cash flows.

We design, develop, manufacture and sell advanced test systems and solutions for the semiconductor industry. As part of our single scalable platform strategy, we are continually developing and periodically offering performance and capability enhancements to our platforms as part of our product development roadmap. We offer a single platform for each of the two general categories of devices being tested: our 93000 Series platform, designed to test SOCs, SIPs and high-speed memory devices, and our Versatest V5000 Series platform, designed to test memory devices, including flash memory and multi-chip packages. We also provide a range of services that assist our customers in quickly and cost effectively delivering the innovative, feature-rich products demanded by their end users.

reduced research and development costs, engineering headcount, support requirements and inventory risk.

We sell our products and services directly to a wide range of customers, including integrated device manufacturers, or IDMs, test subcontractors, which includes specialty assembly, package and test companies as well as wafer foundries, and fabless design companies. We have a broad installed customer base, having sold over 1,200 93000 Series systems and over 2,000 Versatest Series systems.

For the three months ended January 31, 2006, two customers, STATS ChipPAC Ltd. and Intel Corporation, represented greater than 10% of our net revenue while one customer, Spansion Inc., accounted for more than 10% of our net revenue for the three months ended January 31, 2005. In fiscal 2005, no single customer represented greater than 10% of our net revenue. In fiscal 2004, one customer, Spansion Inc., accounted for more than 10% of our net revenue. In fiscal 2003, three customers, ASE Test, Inc., Intel Corporation and Spansion Inc., each accounted for more than 10% of our net revenue.

We derive a significant percent of our net revenue from outside of North America. Net revenue from customers located outside of North America represented 59.5% and 72.1% of total net revenue in the three months ended January 31, 2006 and 2005, respectively. Net revenue from customers located outside of North America represented 72.8% of total net revenue in fiscal 2005, 72.0% in fiscal 2004 and 61.5% in fiscal 2003. Net revenue from customers located in the Asia-Pacific region (excluding Japan) represented 45.9% and 36.7% of total net revenue in the three months ended January 31, 2006 and 2005, respectively. Net revenue from customers located in the Asia-Pacific region (excluding Japan) represented 42.8% of total net revenue in fiscal 2005, 45.5% in fiscal 2004 and 40.2% in fiscal 2003. Net revenue from customers located in Japan represented 6.5% and 25.3% of total net revenue in the three months ended January 31, 2006 and 2005, respectively. Net revenue from customers located in Japan represented 20.6% of total net revenue in fiscal 2005, 15.8% in fiscal 2004 and 13.5% in fiscal 2003. Although we had an increase in net revenue in the three months ended January 31, 2006 spurred by increased sales to key customers in the U.S., we expect the trend of increasing sales in the Asia-Pacific region to continue as semiconductor manufacturing activities continue to concentrate in that region.

The sales of our products and services are dependent, to a large degree, on customers who are subject to cyclical trends in the demand for their products. These cyclical periods have had and will have significant impacts on our business since our customers often delay or accelerate purchases in reaction to changes in their businesses and to demand fluctuations in the semiconductor industry. Historically, these demand fluctuations have resulted in significant variations in our results of operations. For example, our revenues increased 12% from $540 million in fiscal 2003 to $607 million in fiscal 2004, but decreased 25% from $607 million in fiscal 2004 to $456 million in fiscal 2005, reflecting trends in the semiconductor industry during those periods. Upturns and downturns in the semiconductor industry in recent years have generally affected the semiconductor test equipment and services industry more significantly than the overall capital equipment sector. Furthermore, we sell to a variety of customers, including subcontractors. Because we sell to subcontractors, which during market downturns tend to reduce or cancel orders for new test systems and test services more quickly and dramatically than other customers, any downturn may cause a quicker and more significant adverse impact on our business than on the broader semiconductor industry. In addition, although a decline in orders for semiconductor capital equipment may accompany or precede the timing of a decline in the semiconductor market as a whole, recovery in semiconductor capital equipment spending may lag the recovery by the semiconductor industry.

In order to enhance our ability to maintain financial strength in a cyclical business environment and as part of our separation from Agilent, we initiated a restructuring plan in 2005, as part of Agilent's 2005 restructuring plan, which involves reducing our workforce and consolidating facilities. Under the 2005 restructuring plan, we took an $8 million charge in fiscal 2005, $5 million of which related to a reduction in headcount, $2 million of which related to headcount reduction by Agilent for corporate and administrative personnel that had supported our business and $1 million of which related to the consolidation of facilities. We recorded a $7 million charge in the first quarter of fiscal 2006 and expect to record an additional charge in the range of $15 to $20 million in the remainder of fiscal 2006 as we complete the rest of our restructuring plan which includes additional headcount reductions and further consolidation of facilities. As part of our agreements with Agilent, Agilent will pay these restructuring costs and expenses. The anticipated reduction in operating expenses associated with these headcount reductions of approximately 300 people and facility consolidations will be offset in part by the addition of approximately 100 people in lower cost locations where we will be continuing operations. Nonetheless, we expect the cumulative effect of these actions to significantly lower our cost of ongoing operations when compared to historical levels.

In addition, as part of our effort of becoming a separate stand-alone publicly held company, we have also incurred, and expect to incur, one-time separation costs such as information technology set-up costs, consulting, legal and other professional fees and other spin-off related costs. We incurred $3 million in separation costs in fiscal 2005. In the first quarter of 2006, we incurred $15 million in separation expenses. We anticipate an additional $60-70 million of such expenses, plus an additional $25 million in capitalized costs, during the remainder of fiscal 2006, with most of it expected in the second and third quarters of fiscal 2006. To the extent that these costs have been incurred as of the separation date, Agilent will pay for these liabilities. Separation costs incurred after the separation will be paid by Verigy.

Historically, our manufacturing strategy consisted of a hybrid internal model and a contract manufacturing model. We are shifting to greater reliance on independent contractors to manufacture both our 93000 Series and Versatest Series platforms, and expect all manufacturing activities to be performed by these manufacturers by the middle of 2006. We believe that relying upon independent contract manufacturers will decrease our fixed costs and better position us to respond to changes in the demand for our products. We have selected Flextronics as our primary independent manufacturing supplier in order to leverage their worldwide processes, tools, and infrastructure and to expand our manufacturing in Asia, where Flextronics already has a significant capability for manufacturing complex technologies. As a result of this outsourcing arrangement, we expect to lower our fixed costs by reducing our capital investments in inventory and manufacturing equipment and by reducing the size of our manufacturing work force located in high-cost geographies. In addition, we expect to reduce our material costs by leveraging Flextronics' supply chain expertise and securing local suppliers. As a result of these actions, we expect to have improved gross margins and a reduced level of inventory when compared to historical levels.

approximately $7 million on June 1, 2006 for known future severance and other employee related benefits associated with the transferred employees. We will then reimburse Agilent for these costs in accordance with the master separation and distribution agreement within 30 days of the closing of this offering. We will also pay to Flextronics employee-related benefits costs of approximately $1 million by June 30, 2006 and an additional payment of approximately $2 million in the future.

Our third and fourth fiscal quarters tend to be our strongest quarters for new orders, while our first fiscal quarter tends to be our weakest quarter for orders. We believe that the most significant factor driving these seasonal patterns is the holiday buying season for consumer electronics products. The seasonality of our business is often masked to a significant extent, however, by the high degree of cyclicality of the semiconductor industry.

The preparation of financial statements in accordance with accounting principles generally accepted in the U.S. ("U.S. GAAP") requires management to make estimates and assumptions that affect the amounts reported in our combined financial statements and accompanying notes. 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 of actions that may impact the company in the future, actual results may be different from the estimates. Our critical accounting policies are those that affect our financial statements materially and involve difficult, subjective or complex judgments by management. Those policies include revenue recognition, restructuring and asset impairment charges, inventory valuation, warranty, stock-based compensation, retirement and post-retirement plan assumptions, valuation of goodwill and intangible assets and accounting for income taxes.

Revenue recognition. Consistent with the SEC's Staff Accounting Bulletin No. 104, or "SAB 104," we recognize revenue on the sale of semiconductor test equipment when there is persuasive evidence of an arrangement, delivery has occurred or services have been rendered, the sales price is fixed or determinable and collectibility is reasonably assured. Delivery is considered to have occurred when title and risk of loss have transferred to the customer, for products, or when service has been performed. The point at which title and risk of loss are transferred varies by customer, contract and location. For some customers, title and risk of loss are transferred at destination while other customers take delivery, title and risk of loss at the point of shipment. We consider the price to be fixed or determinable when the price is not subject to refund or adjustments. Such refunds or adjustments have been insignificant for all periods presented. We consider arrangements with extended payment terms beyond 90 days not to be fixed or determinable, and accordingly we defer revenue until amounts become due. At the time we take an order, we evaluate the creditworthiness of our customers to determine the appropriate timing of revenue recognition. For sales or arrangements that include customer-specified acceptance criteria, including those where acceptance is required upon achievement of performance milestones or fulfillment of other future obligations, revenue is recognized after the acceptance criteria have been met. If the criteria are not met, then revenue is deferred until such criteria are met or until the period(s) over which the last undelivered element is delivered.

Our product revenue is generated predominantly from the sales of various types of test equipment. Software is embedded in many of our test equipment products, but the software component is considered to be incidental. For revenue arrangements that include multiple elements, we recognize revenue in accordance with EITF 00-21. For products that include installation, if the installation meets the criteria to be considered a separate element, product revenue is recognized upon delivery, and recognition of installation revenue is delayed until the installation is complete. Otherwise, neither the product nor the installation revenue is recognized until the installation is complete. Revenue from services includes extended warranty, customer

support, consulting, training and education services. Service revenue is deferred and recognized over the contractual period or as services are rendered to the customer. For example, customer support contracts are recognized ratably over the contractual period, while training revenue is recognized as the training is provided to the customer. In addition, all of the revenue recognition criteria described above must be met before service revenue is recognized. We use objective evidence of fair value to allocate revenue to elements in multiple element arrangements and recognize revenue when the criteria for revenue recognition have been met for each element. In the absence of objective evidence of fair value of a delivered element, we allocate revenue to the fair value of the undelivered elements and the residual revenue to the delivered elements. The price charged when an element is sold separately generally determines fair value.

Restructuring and asset impairment charges. We recognize a liability for restructuring costs at fair value only when the liability is incurred. The three main components of our restructuring charges are workforce reductions, consolidating facilities and asset impairments. Workforce-related charges are accrued when it is determined that a liability has been incurred, which is generally after individuals have been notified of their termination dates and expected severance payments. The length of period from the notification date to the termination date varies by country due to local legal requirements and is generally less than one year. Also, since we accrue on a per individual basis, the timing and recognition of the charge depends on whether or not an employee is required to render future services until a specified termination date in order to receive severance benefits. If no further service is required from the individual, we record a charge for the entire severance cost at that point measured at fair value on the communication date. If employees are required to render future services until a specified termination date in order to receive termination benefits, then the accrual is either recognized up front, if the employee's services are not required beyond a minimum retention period, or, in all other cases, ratably over the period between the communication date and the termination date and measured at fair value on the communication date. The notification date is the date upon which the SFAS 146 required criteria have been met and there are no expected significant changes to the plan. Plans to eliminate excess facilities result in charges for lease termination fees and future commitments to pay lease charges, net of estimated future sublease income. We recognize charges for elimination of excess facilities when we have vacated the premises. Asset impairments primarily consist of property, plant and equipment associated with excess facilities being eliminated, and are based on an estimate of the amounts and timing of future cash flows related to the expected future remaining use and ultimate sale or disposal of the property, plant and equipment. The charges associated with consolidating facilities and asset impairment charges incurred by Agilent were allocated to Verigy to the extent the underlying benefits related to our business. These estimates were derived using the guidance of Statement of Financial Accounting Standards ("SFAS") No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets" ("SFAS No. 144"), Staff Accounting Bulletin 100, "Restructuring and Impairment Charges" ("SAB 100"), Emerging Issues Task Force 94-3, "Liability Recognition for Costs to Exit an Activity (Including Certain Costs Incurred in a Restructuring)" ("EITF 94-3") and lastly, SFAS No. 146 "Accounting for Exit or Disposal Activities" ("SFAS No. 146") which was effective for exit and disposal activities initiated after December 31, 2002. If the amounts and timing of cash flows from restructuring activities are significantly different from what we have estimated, the actual amount of restructuring and asset impairment charges could be materially different, either higher or lower, than those we have recorded.

Inventory valuation. We assess the valuation of our inventory, including demonstration inventory, on a quarterly basis based upon estimates about future demand and actual usage. To the extent that we determine that we are holding excess or obsolete inventory, we write down the value of our inventory to its net realizable value. Such write-downs are reflected in cost of products and can be material in amount. For example, we recorded a charge of $25 million in fiscal 2005 for excess and obsolete inventory. Our inventory assessment involves difficult estimates of future

events and, as a result, additional write-downs may be required. If actual market conditions are more favorable than anticipated, inventory previously written down may be sold to customers, resulting in lower cost of products and higher income from operations than expected in that period. Excess and obsolete inventory resulting from shifts in demand or changes in market conditions for raw materials and components can result in significant volatility in our costs of products.

In our inventory valuation analysis, we also include inventory that we could be obligated to purchase from our suppliers based on our production forecasts. To the extent that our committed inventory purchases exceed our forecasted productions needs, we write down the value of those inventories by taking a charge to our cost of products and increasing our supplier liability.

Warranty. We generally provide a one-year warranty on products commencing upon installation or delivery. We accrue for warranty costs in accordance with Statement of Financial Standards No. 5, "Accounting for Contingencies" ("SFAS No. 5"), based on historical trends in warranty charges as a percent of gross product shipments. Estimated warranty charges are recorded within cost of products at the time revenue is recognized and the liability is reported in other current liabilities on the combined balance sheet. The accrual is reviewed regularly and periodically adjusted to reflect changes in warranty cost estimates. For some products we also offer extended warranties beyond one year. Costs associated with our extended warranty contracts beyond one year are expensed as incurred.

Stock-based compensation. In December 2004, the Financial Accounting Standards Board ("FASB") issued Statement of Financial Accounting Standards No. 123 (Revised 2004) "Share-Based Payment" ("SFAS 123R"). SFAS 123R addresses all forms of share-based payment ("SBP") awards, including shares issued under employee stock purchase plans, stock options, restricted stock and stock appreciation rights. SFAS 123R, which became effective for us beginning in the first quarter of fiscal 2006, superseded our prior accounting for SBP awards under APB No. 25 and requires us to recognize compensation expense for all SBP awards based on fair value. In March 2005, the SEC released Staff Accounting Bulletin No. 107, "Share-Based Payment" ("SAB No. 107") relating to the adoption of SFAS 123R. With respect to valuing SBP awards outstanding at the time of adoption of SFAS 123R, we used the modified prospective transition method using the Black-Scholes option pricing model. Our estimate of compensation expense requires a number of complex and subjective assumptions including our stock price volatility, employee exercise patterns (expected life of the options), future forfeitures and related tax effects. We will recognize SBP compensation expense for awards issued after November 1, 2005 on a straight-line basis over the vesting period of the award. For awards issued prior to November 1, 2005, we will recognize SBP compensation expense based on FASB Interpretation 28 "Accounting for Stock Appreciation Rights and Other Variable Stock Option or Award Plans an interpretation of APB Opinions No. 15 and 25," which provides for accelerated expensing. We estimate stock compensation expenses for the fiscal year ended October 31, 2006 to be at least $10 million based on Agilent stock awards issued prior to January 31, 2006. In addition, we expect to have additional share compensation expense related to newly issued Verigy options. Upon final distribution of Verigy shares by Agilent, unvested Agilent stock options held by Verigy employees will terminate. To the extent options are vested as of the date of distribution, Verigy employees will have a period of three months in which to exercise the Agilent option before such options terminate. Exercise of Agilent options by Verigy employees will have no impact on our financial statements nor on our outstanding ordinary shares. To the extent that the Agilent options were not vested as of the distribution date, Verigy will replace the Agilent options with new Verigy options based on the ratio of Agilent's stock price prior to the distribution to Verigy's share price after the distribution.

Retirement and post-retirement plan assumptions. Retirement and post-retirement benefit plan costs are a significant cost of doing business. They represent obligations that will ultimately be

settled sometime in the future and therefore are subject to estimation. Pension accounting is intended to reflect the recognition of future benefit costs over the employees' average expected future service based on the terms of the plans and the investment and funding decisions made by us. To estimate the impact of these future payments and our decisions concerning funding of these obligations, we are required to make assumptions using actuarial concepts within the framework of U.S. GAAP. Two critical assumptions are the discount rate and the expected long-term return on plan assets. Other important assumptions include the health care cost trend rate, expected future salary increases, expected future increases to benefit payments, expected retirement dates, employee turnover and retiree mortality rates. We evaluate these assumptions at least annually.

The discount rate is used to determine the present value of future benefit payments at each measurement date (October 31). The discount rate for U.S. plans was determined based on published rates for high quality corporate bonds. The discount rate for non-U.S. plans was determined in a similar manner. Differences between the expected future cash flows of our plans and the maturities of the high quality corporate bonds are not expected to have a material impact on the selection of discount rates. In recent years, decreasing interest rates, particularly outside the U.S., have increased our net plan costs. The increase in net plan costs has been in large part offset by a declining number of plan participants as a result of our various restructuring programs. The entire impact of declining discount rates is not recognized immediately under current accounting standards. As of January 31, 2006 and October 31, 2005, delayed recognition of the impact of declining discount rates was the primary factor in approximately $18 million and $16 million, respectively, in unrecognized net actuarial losses for non-U.S. plans that have been or will be transferred to Verigy. These losses are being recognized over the expected average future service lives of plan participants.

The expected long-term return on plan assets is estimated using current and expected asset allocations, as well as historical and expected returns. Our estimate of expected long-term rates of return has declined in recent years. Declining rate of return assumptions generally result in increased pension expense. This trend has been offset by the impact of Agilent's contributions to the plans and growth in plan assets resulting in increased expected returns on plans assets in 2003 through 2005.

In fiscal 2005, 2004 and 2003 we incurred expenses of $3 million, $4 million and $5 million, respectively, for our defined benefit retirement and post-retirement plans in the U.S. and $6 million, $6 million, and $6 million for the same respective periods for our non-U.S plans. In connection with our separation from Agilent, Agilent has transferred to us the liabilities for the defined benefit plans for our employees located in Germany, France, Korea, Italy and Taiwan. Agilent will fund these plans (with the exception of the plan for employees in Italy) based on the amount of the accumulated benefit obligations as of June 1, 2006. We expect to incur expenses of approximately $4 million in fiscal 2006 for the retirement plans that have been transferred to Verigy.

Workforce-related events such as restructurings or divestitures can result in curtailment and settlement gains or losses to the extent they have an impact on the average future working lifetime or total number of participants in our retirement and postretirement plans. We currently do not expect the restructuring undertaken in fiscal 2006 to result in any curtailment or settlement gains or losses. Under the terms of the Germany asset purchase agreement with Flextronics, Flextronics has agreed to assume pension assets and liabilities associated with the employees transferred on June 1, 2006. We anticipate this transaction will result in a curtailment loss of approximately $0.1 million.

Valuation of goodwill and intangible assets. We performed our annual goodwill impairment analysis in the fourth quarter of 2005. Based on our estimates of forecasted discounted cash flows, we concluded that we did not have any impairment at that time.

Our accounting for goodwill and purchased intangible assets complies with SFAS No. 142 "Goodwill and Other Intangible Assets" ("SFAS No. 142"). We test goodwill for possible impairment on an annual basis and at any other time that impairment indicators arise. Circumstances that could trigger an impairment test include but are not limited to: significant decrease in market price of an asset, significant adverse changes in the extent or use or physical condition of an asset, significant adverse change in legal or regulatory factors affecting an asset, unanticipated competition, loss of key personnel, accumulation of costs significantly in excess of expected costs to acquire or construct an asset, operating or cash flow losses (or projections of losses) that demonstrates continuing losses associated with the use of an asset, or a current expectation that more likely than not, an asset will be sold or disposed of significantly before the end of its previously estimated useful life. Purchased intangible assets are carried at cost less accumulated amortization. Amortization is computed using the straight-line method over the economic lives of the respective assets, generally three to five years.

The process of evaluating the potential impairment of goodwill and other intangibles is highly subjective and requires significant judgment. We estimate expected future cash flows then compare the carrying value including goodwill and other intangibles to the discounted future cash flows. If the total of future cash flows is less than the carrying amount of the assets, we recognize an impairment loss based on the excess of the carrying amount over the fair value of the assets. Estimates of the future cash flows associated with the assets are critical to these assessments. Changes in these estimates based on changed economic conditions or business strategies could result in material impairment charges in future periods.

Accounting for income taxes. Our operating results have historically been included in Agilent's consolidated tax returns. The provisions for income taxes in our combined financial statements have been determined on a separate return basis. We are required to assess the realization of our net deferred tax assets and the need for a valuation allowance on a separate return basis, and exclude from that assessment any utilization of those losses by Agilent. This assessment requires that our management make judgments about benefits that could be realized from future taxable income, as well as other positive and negative factors influencing the realization of deferred tax assets. Due to the losses we incurred in the U.S. and Japan, prior to fiscal 2003, we recorded a valuation allowance against any net deferred tax assets in these jurisdictions. We recorded a valuation allowance in Japan in 2001 and in the U.S. in 2002. We will maintain a full valuation allowance in these jurisdictions until sufficient positive evidence exists to support reversal of the valuation allowance. Upon separation, we did not retain deferred tax assets and liabilities related to temporary differences, net operating losses and credit carryforwards. We did retain certain prepaid tax assets upon our separation. As a result, for periods after June 1, 2006, our deferred tax assets and liabilities will be based on assets transferred in connection with our separation from Agilent and our operating activities beginning as of June 1, 2006.

Because Agilent's global tax model has been developed based on its entire portfolio of businesses, our historical financial information as presented, including tax information, is not necessarily indicative of future results of operations. Historically, Agilent has operated with a U.S.-incorporated parent company, while Verigy is operated with a Singapore parent. We have negotiated agreements relating to taxes with the Singapore Economic Development Board, an agency of the Government of Singapore, which have been approved by Singapore's Ministry of Finance and Ministry of Trade and Industry. Under the agreements, a portion of the income we earn in Singapore during 10- to 15-year incentive periods is subject to reduced rates of Singapore income tax. In order to comply with the agreements, we must fulfill operating conditions in Singapore relating to headcount, activities and investment in Singapore. If we do not fulfill these conditions for any reason, our incentive could lapse, and we may incur significant tax liabilities in

Singapore during the remainder of the incentive period, reducing our profitability and the amount of cash available for distribution to shareholders.

Going forward, our effective tax rate will vary based on a variety of factors, including overall profitability, the geographical mix of income before taxes and the related tax rates in the jurisdictions where we operate, as well as discrete events, such as settlements of future audits. In particular, we may owe significant taxes in jurisdictions outside Singapore during periods when we are profitable in those jurisdictions even though we may be experiencing low operating profit or operating losses on a consolidated basis, potentially resulting in significant tax liabilities on a consolidated basis during those periods. Conversely, we expect to realize more favorable effective tax rates as our profitability increases. Our historical income tax provisions are not necessarily reflective of our future results of operations on a stand-alone basis.

We will be subject to audits and examinations of our tax returns by tax authorities in various jurisdictions, including the Internal Revenue Service. We will regularly assess the likelihood of adverse outcomes resulting from these examinations to determine the adequacy of our provision for income taxes.

Our second quarter ended on April 30, 2006. Set forth below are our selected unaudited combined results of operations for the three months ended April 30, 2006 and 2005.

Total orders in the three months ended April 30, 2006 were $313 million, up 229.5%, over the three months ended April 30, 2005, reflecting improved market conditions and continued acceptance of our products. Product orders in the three months ended April 30, 2006 were $260 million, up 306.3%, over the three months ended April 30, 2005. We experienced strong growth in orders for our 93000 Series and Versatest V5000 Series systems, including key strategic customer wins for both platforms. Our order performance is a result of strength in the broadened markets that we have targeted as well as increased acceptance of the products we have introduced over the past 24 months.

Net revenue increased by 92.0% for the three months ended April 30, 2006 compared to the three months ended April 30, 2005 primarily due to a higher volume of sales driven by increased overall demand for our products. Sales of both our SOC/SIP/high-speed memory test systems and memory test systems contributed to this increase. Increased customer demand for our 93000 Series platform reflects our increased penetration in key test markets. Our enhanced version of the Versatest V5000 Series platform also contributed to the net revenue increase as a result of greater demand for memory test systems, including systems for testing NAND flash included in hand-held

and other consumer products. Our growing installed base and services associated with our increased product shipments in the first half of fiscal 2006 resulted in a 41.7% increase in services revenue for the three months ended April 30, 2006 compared to the comparable period in 2005.

Cost of sales increased by $35 million for the three months ended April 30, 2006 compared to the comparable period in 2005 as a result of increased sales. Cost of products as a percent of net product revenue was 51.3% for the three months ended April 30, 2006 compared to 64.5% for the comparable period in 2005. The improved gross margin on products was primarily due to improved capacity utilization resulting from the higher level of sales, higher margins from our recently introduced SOC/SIP/high-speed memory test systems and continued progress in transforming our operational cost structure. Our cost of products included $2.4 million of restructuring charges and $3.7 million of separation costs in the three months ended April 30, 2006 compared to no such charges for the comparable period in 2005. Cost of sales also included approximately $0.7 million of SFAS 123R share-based compensation expense in the three months ended April 30, 2006 compared to no such expenses for the comparable period in 2005.

Our cost of products also included excess and obsolete inventory-related charges of $4 million in the three months ended April 30, 2006 compared to $3 million in the three months ended April 30, 2005. We also sold previously written down inventory for $5 million in the three months ended April 30, 2006 compared to $2 million for the three months ended April 30, 2005. The sales of previously written down inventory had no significant gross margin impact for the three months ended April 2006 and 2005, respectively.

Cost of services as a percent of services revenue was 73.5% for the three months ended April 30, 2006 compared to 91.7% for the three months ended April 30, 2005. The improvement in cost of services margin reflects better utilization of service personnel as our installed base increased as well as the benefit of the improved reliability and quality of our current product offering.

Research and development expenses were down slightly in absolute dollars despite higher performance-based variable pay expenses and decreased as a percent of revenue due to the increase in revenue in the quarter ended April 30, 2006. Research and development expenses included approximately $0.4 million of share-based compensation expense for the three months ended April 30, 2006 compared to no such expenses for the three months ended April 30, 2005. Our research and development expenses have historically varied only modestly in absolute dollars but have varied more significantly as a percent of revenue. We have maintained, and expect to maintain in the future, a significant level of research and development spending in order to remain competitive.

Selling, general and administrative expenses increased 11.1% to $40 million for the three months ended April 30, 2006, up from $36 million in the three months ended April 30, 2005. The increase in SG&A expenses in the three months ended April 30, 2006 compared to the three months ended April 30, 2005 was a result of higher commission costs on increased sales, higher performance-based variable pay expenses and share-based compensation expenses that are now being recorded in accordance with SFAS 123R. SG&A expenses included approximately $1.5 million of share-based compensation expenses in the three months ended April 30, 2006 compared to no such expenses for the three months ended April 30, 2005.

We recorded $8 million of restructuring charges in the three months ended April 30, 2006 compared to no such charges for the three months ended April 30, 2005. These charges primarily related to headcount reductions and consolidation of facilities. We also recorded $2.4 million of restructuring charges, which are included in cost of sales. As we complete the rest of our restructuring plan, we expect to record additional charges in the range of $5 to $10 million during the third and fourth quarters of fiscal 2006 primarily related to employee severance payments.

Under our separation agreements with Agilent, Agilent will bear the cash cost associated with these restructuring charges.

Also, as part of our effort to become a separate stand-alone publicly held company, we incurred $20 million in separation costs in the three months ended April 30, 2006 compared to no such expenses in the comparable period in 2005. These expenses represent one-time separation expenses such as information technology set-up costs and consulting, legal and other professional fees. We also incurred $3.7 million of separation expenses, which are included in cost of sales. We anticipate an additional $35 to $45 million of such expenses during the third and fourth quarters of fiscal 2006, with most of these expenses expected in the third quarter of fiscal 2006. To the extent that these costs have been incurred as of the separation date, Agilent will pay for these liabilities. We will be responsible for the payment of all separation-related costs incurred after the separation date, which we expect to be approximately $40 million.

The following table sets forth certain operating data as a percent of net revenue for the periods presented.

Our revenues by geographic region for fiscal 2005, 2004 and 2003 are as follows:

Net Revenue. Net revenue is derived from the sale of products and services and is adjusted for returns and allowances, which historically have been insignificant. Our product revenue is generated predominantly from the sales of our test equipment products. Revenue from services includes extended warranty, customer support, consulting, training and education activities. Service revenue is recognized over the contractual period or as services are rendered to the customer.

Net revenue in the three months ended January 31, 2006 was $170 million, an increase of $91 million, or 115.2%, from the $79 million achieved in the corresponding three months ended 2005. Net product revenue in the three months ended January 31, 2006 was $143 million, an increase of $88 million, or 160.0%, from the $55 million achieved in the three months ended January 31, 2005. The increase in net product revenue was primarily a result of a higher volume of sales enabled by increased overall demand for our products. Net product revenue from our SOC/SIP/high-speed memory test systems increased by $71 million, or 165.1%, with most of the sales being of the enhanced version of our 93000 Series platform, including our Pin-scale digital cards, which was introduced in early fiscal 2005. Continued customer demand for our 93000 Series

platform increased our penetration in a breadth of applications from next generation graphics and wireless gaming to high-end SOC applications and digital consumer applications. Sales of our memory test systems also contributed to the net product revenue increase, with net product revenue from our memory test systems increasing by $17 million, or 141.7%. Substantially all of these sales were of the enhanced version of our Versatest V5000 Series platform, which was introduced in late fiscal 2004. This demand was primarily a result of strong sales of flash memory devices as a result of greater demand for hand-held consumer products, as well as expansion of our addressable market into NAND flash. Services revenue for the three months ended January 31, 2006 accounted for $27 million, or 15.9% of net revenue, compared to $24 million, or 30.4% of net revenue for the three months ended January 31, 2005. The increase in services revenue dollars is attributed to our growing installed base and increased services associated with a strong order demand for products at the end of fiscal 2005.

Net revenue in fiscal 2005 was $456 million, a decrease of $151 million, or 24.9%, from the $607 million achieved in fiscal 2004. Net product revenue in fiscal 2005 was $355 million, a decrease of $146 million, or 29.1%, from the $501 million achieved in fiscal 2004. The decrease in overall and product revenue in fiscal 2005 was due in large part to weakness in the semiconductor industry which resulted in under-utilization of the installed test equipment and a decline in spending on new test equipment, particularly as the weakness in the semiconductor industry that began towards the end of fiscal 2004 continued into the first half of fiscal 2005. This resulted in net product revenue declines of 27.8% and 32.8% for our SOC/SIP/high-speed memory and memory test systems, respectively, primarily due to volume declines. Increased price pressure contributed to approximately 2.5% of the 29.1% decline in our net product revenue. Product revenue was also adversely affected by delayed customer purchases in anticipation of our enhanced product platforms. This decrease was partially offset by the expansion of our addressable market into new markets, including NAND flash. Services revenue for fiscal 2005 accounted for $101 million, or 22.1% of net revenue, compared to $106 million, or 17.5% of net revenue, for fiscal 2004. Services revenue tends to rise and fall in direct relation to product revenue although services revenue tends to show lower volatility than product revenue due to services being provided over time.

Net revenue in fiscal 2004 was $607 million, an increase of $67 million, or 12.4%, from the $540 million achieved in fiscal 2003. Net product revenue in fiscal 2004 was $501 million, an increase of $49 million, or 10.8%, from the $452 million achieved in fiscal 2003. The increase in net product revenue was primarily a result of volume increases due to increasing demand for our SOC/SIP/high-speed memory test platform, particularly in the first half of fiscal 2004, driven by increasing demand for graphics IC's, PC chip sets and wireless baseband IC's resulting in the need to expand manufacturing capacity. The increase in product revenue was also a result of revenue from a new customer in Japan. This increase was partially offset by weakness in our sales of memory test systems, particularly in North America. Services revenue for fiscal 2004 accounted for $106 million, or 17.5% of net revenue, and $88 million, or 16.3% of net revenue for fiscal 2003. The increase in services revenue is attributed to our growing installed base and strong order demand for products in late fiscal 2003 that resulted in higher services backlog that was recognized as revenue in fiscal 2004.

Net revenue in North America was significantly higher in the three months ended January 31, 2006 compared to the three months ended January 31, 2005 primarily due to increased sales to key customers for both our SOC/SIP/high-speed memory and memory test systems in the United States. Although the source of our net revenue has steadily shifted from customers in North America to customers in the Asia-Pacific region in recent years, we had a rebound in the North American market in the three months ended January 31, 2006 due to strong demand from our memory test customers. The prior trend away from the North American market was largely due to general weakness in the North American market beginning in 2004. In the three months ended

January 31, 2006, net revenue from customers located in Japan decreased significantly due to some of our Japanese customers outsourcing to contract manufacturers located in other Asia-Pacific countries. Net revenue from customers located in Japan represented 20.6% of total net revenue in fiscal 2005 compared to 13.5% in fiscal 2003. Despite the rebound in sales to the North American market in the three months ended January 31, 2006, we expect the trend of increasing sales in the Asia Pacific region to continue as semiconductor manufacturing activities continue to concentrate in that region.

Orders. Product orders represent purchase commitments from our customers that are recorded in the period indicated where the ordered products are expected to be delivered within six months. Service orders represent commitments to engage us to provide services that are recorded in the period indicated, regardless of the period over which the services are expected to be provided. Orders are cancelable and delivery may, in some cases be delayed, without cancellation or rescheduling penalties. Accordingly, while orders may indicate trends in our business, orders are not a reliable indicator of future revenue. Service orders tend to be less volatile than product orders from period to period because they reflect a mix of services ordered as a result of new product orders as well as ongoing maintenance renewals for our installed customer base.

Product orders in the three months ended January 31, 2006 were up 109% over the three months ended January 31, 2005, primarily due to improved market conditions and a strong recovery in the semiconductor market as a whole. Increased orders for enhanced versions of both our 93000 series platform and our Versatest V5000 Series platform primarily contributed to this increase, with substantially all of the orders for the 93000 series systems and all of the orders for the Versatest V5000 series systems being for the enhanced versions, including our first orders for our Versatest V5500 series systems for high volume production testing of packaged devices.

Product orders in fiscal 2005 were up 1.8% over fiscal 2004, with much of the growth occurring in the second half of the year as a result of improved market conditions and continued acceptance of our products. Order growth in the second half was derived from across our customer base driven by increasing demand for PC chipset and graphics devices, wireless baseband and radio frequency, or RF testing, communication networking infrastructure devices, flash memory products used in cellular phones, cameras, MP3 players and other digital consumer devices. A substantial majority of our orders in fiscal 2005 were for the enhanced versions of our Versatest V5000 Series and 93000 Series platforms, which first became available in late fiscal 2004 and early in fiscal 2005, respectively. These introductions expanded our addressable market into areas such as NAND flash.

Product orders in fiscal 2004 decreased 21.7% compared to orders in fiscal 2003 primarily due to a declining demand for semiconductor products and excess manufacturing capacity in the second half in fiscal 2004. Orders in fiscal 2004 were also adversely affected by delayed customer purchases in anticipation of our enhanced Versatest V5000 Series and 93000 Series platforms.

Cost of Products. Cost of products consists primarily of manufacturing materials, outsourced manufacturing costs, direct labor, manufacturing and administrative overhead, warranty costs and provisions for excess and obsolete inventory, partially offset, when applicable, by benefits from sales of previously written-down inventory.

The increase in cost of products in dollars in the three months ended January 31, 2006 compared to the three months ended January 31, 2005 was directly related to the increase in product shipments. The decrease in cost of products as a percent of net product revenue was a result of higher revenues, higher margins from our recently introduced SOC/SIP/high-speed memory systems and continued progress in transforming the operational structure of our cost structure, partially offset by higher inventory write-offs for discontinued products. Excess and obsolete inventory-related charges in the three months ended January 31, 2006 were $10 million, compared to inventory-related charges of $2 million in the three months ended January 31, 2005. In addition, we sold previously written down inventory for $2 million in each of the three months ended January 31, 2006 and 2005. The sales of previously written down inventory had no significant gross margin impact for the three months ended January 2006 and 2005, respectively. Our cost of products also included $1 million of restructuring charges in the three months ended January 31, 2006 compared to no such charges for the three months ended January 31, 2005. Our cost of products also included $0.5 million of SFAS 123R share-based compensation expense in the three months ended January 31, 2006 compared to no such charges for the three months ended January 31, 2005.

As of January 31, 2006, we held inventory that was previously written down by $48 million and is primarily composed of component raw material. We continue to dispose of the remaining inventory on a recurring basis.

The decrease in cost of products in fiscal 2005 compared to fiscal 2004 was directly related to the decrease in products shipped in 2005. The increase in cost of products as a percent of net product revenue in fiscal 2005 compared to fiscal 2004 was also a result of aggressive price discounting for our legacy products as well as higher inventory write-offs for discontinued products. Aggressive price discounting negatively impacted our cost of products as a percent of net product revenue by approximately 2 percentage points. Excess and obsolete inventory-related charges in 2005 were $25 million compared to inventory-related charges of $3 million in fiscal 2004. In addition, we sold previously written down inventory for $7 million and $1 million in fiscal 2005 and 2004, respectively. Approximately $11 million of our inventory write-downs in 2005 related to inventory held by our suppliers including the Versatest V4400 memory test system which we have discontinued. The sales of previously written down inventory had no significant gross margin impact in fiscal 2005 and 2004. Our cost of products also included $1 million of restructuring charges in 2005 compared to $1 million in 2004.

We held inventory that was previously written down by $35 million and $27 million as of October 31, 2005 and 2004, respectively. Most of this inventory was component raw material.

The increase in cost of products in fiscal 2004 compared to fiscal 2003 is reflected in the increase in product revenue. The slight increase in cost of products as a percent of net product revenue in fiscal 2004 was due to pricing pressure we experienced for our legacy products as well as inventory-related charges. Excess and obsolete inventory-related charges in fiscal 2004 were $3 million compared to $2 million in fiscal 2003. In addition, we sold previously written down inventory for $1 million and $7 million in fiscal 2004 and 2003, respectively. The $7 million in sales of previously written down inventory in 2003 was primarily a result of unexpected demand from one key customer for our Versatest V3300 system which had been previously written down which more than offset the gross inventory charges recorded in the period. Our cost of products also included $1 million restructuring charges in 2004 compared to $2 million in 2003.

Our cost of products in absolute amount is expected to increase or decrease with revenue. As a percent of net product revenue, these costs will vary depending on a variety of factors, including the mix of system configurations in a particular period, competitive and other pressures on pricing and our ability to manage inventory levels to avoid excess and obsolete inventory charges. In order to mitigate the risk and to manage our costs through the peaks and valleys of the semiconductor industry, we are further streamlining our cost structure by reducing our fixed costs and adding more flexibility to our manufacturing model through the outsourcing of the majority of our manufacturing. We believe our efforts will provide us with the flexibility to respond more rapidly to changes in industry conditions and to better capitalize on market opportunities during market upturns, and will provide us with more consistent cost of products. Our cost of products for periods after November 1, 2005 will also be impacted by stock option expensing under SFAS 123R.

		Three Months Ended January 31,				Year Ended October 31,
		2006 over 2005 Change		2005 over 2004 Change		2004 over 2003 Change
		2006		2005		2005		2004		2003
		($ in millions)
Cost of services		$	24		$	21		14.3	%	$	88		$	91		$	76		(3.3	)%	19.7	%
	As a percent of services revenue			88.9	%		87.5	%				87.1	%		85.8	%		86.4	%

Cost of Services. Cost of services includes cost of field service and support personnel, spare parts consumed in service activities and administrative overhead allocations.

The increase in cost of services in dollars in the three months ended January 31, 2006 compared to the three months ended January 31, 2005 reflects the increase in professional services revenue generated from higher product shipments. As a percent of net services revenue these costs will vary depending on a variety of factors, including our ability to weather price erosion, the reliability and quality of our products and our need to maintain customer service and support centers worldwide.

The decrease in cost of services in dollars in fiscal 2005 compared to fiscal 2004 was primarily due to less service revenue being generated from product shipments. Also, lower costs of service driven by improvements in product quality were more than offset by investments we made in application development resources through the downturn in order to capitalize on future upturns.

The increase in cost of services in dollars in fiscal 2004 compared to fiscal 2003 reflects the increase in services revenue. Our cost of services in absolute amount is expected to increase or

decrease with services revenue. As a percent of net services revenue, these costs will vary depending on a variety of factors, including our ability to weather price erosion, the reliability and quality of our products and our need to maintain customer service and support centers worldwide. Our cost of services for periods after November 1, 2005 will also be impacted by stock option expensing under SFAS 123R.

Research and Development. Research and development ("R&D") expense includes costs related to:

Research and development expense declined slightly in dollars in the three months ended January 31, 2006 compared to the three months ended January 31, 2005 primarily due to lower allocated costs from Agilent, partially offset by $0.5 million share-based compensation expense recorded in research and development for the three months ended January 31, 2006. Research and development expense decreased as a percent of revenue due to our higher revenue level.

Research and development expense declined slightly in dollars in fiscal 2005 compared to fiscal 2004 reflecting a slight decrease in research and development activity in fiscal 2005 following the successful release of updated versions of our products in late fiscal 2004 and the beginning of fiscal 2005. Research and development expense increased as a percent of revenue in fiscal 2005 due to our declining revenue level. We believe that we need to maintain a significant level of research and development spending in order to remain competitive and, as a result, our research and development expenses have varied only modestly in dollars but vary more significantly as a percent of revenue. Our research and development expenses for periods after November 1, 2005 will be impacted by stock option expensing under SFAS 123R.

Research and development expense increased in fiscal 2004 over fiscal 2003 reflecting the peak of our research and development for the newly enhanced testers that we introduced in late 2004.

Selling, General and Administrative. Selling, general and administrative ("SG&A") expense includes costs related to:

The increase in SG&A expense in dollars in the three months ended January 31, 2006 compared to the three months ended January 31, 2005 was primarily due to share-based compensation expense that is now being recorded in accordance with SFAS 123R, higher administrative expenses and higher commission costs associated with increased sales. In the three months ended January 31, 2006, we recorded $3 million in share-based compensation expense compared to no such charges for the three months ended January 31, 2005.

The decrease in SG&A expense in dollars in fiscal 2005 compared to fiscal 2004 was primarily due to reduced facilities and IT costs, as well as cost control efforts implemented in light of our declining revenue. During the market downturn, we maintained our spending in our sales and support team to be positioned to accelerate the roll-out of enhanced versions of our products.

The decrease in SG&A expense in dollars in fiscal 2004 compared to fiscal 2003 was primarily due to reduced facilities and IT costs.

In general, we believe our SG&A expenses will decrease in absolute amount compared to prior periods due to our efforts to streamline our infrastructure and consolidate excess facilities. The savings realized from our cost reduction efforts will be partially offset by incremental costs associated with operating as a stand-alone public company, including professional fees such as legal, regulatory and accounting compliance costs that we will incur. Our SG&A expenses for periods after November 1, 2005 will also be impacted by stock option expensing under SFAS 123R. In addition, commission expenses included in SG&A expenses can fluctuate with changes in sales volume and customer mix.

Agilent initiated several restructuring plans in fiscal years 2003, 2002 and 2001 (collectively, the Prior Plans) that were designed to reduce costs and expenses in order to return Agilent to profitability. The two main components of these plans were workforce reduction and consolidation

of excess facilities. We directly incurred and recorded charges for workforce management and we recorded charges allocated to us by Agilent for our share of the expenses it incurred to reduce costs for support services such as finance, information technology, and workplace services. Agilent achieved these cost reductions by moving global shared services operations sites to lower cost regions, reducing the number of properties, particularly sales and administrative sites, and by reducing total workforce through involuntary terminations and selected outsourcing of manufacturing and administrative functions.

We recorded approximately $19 million in charges under the Prior Plans, comprised of $6 million we directly incurred and recorded and $13 million Agilent allocated to us. In 2003, we incurred direct charges of $4 million for workforce management and Agilent allocated approximately $9 million ($7 million for workforce management and $2 million for consolidation of excess facilities) to us. In 2004, we recorded an additional $1 million in direct charges for workforce management reductions and Agilent allocated approximately $4 million ($2 million for workforce management and $2 million for consolidation of excess facilities) to us. There were no charges under the prior plans in 2005.

In fiscal 2005 we initiated a plan, as part of Agilent's 2005 restructuring plan, to further reduce operating costs, primarily through headcount reductions and consolidating facilities. Under the 2005 restructuring plan, we took an $8 million charge in fiscal 2005, $5 million of which related to a reduction in headcount, $2 million of which related to headcount reduction by Agilent for corporate and administrative personnel that had supported our business and $1 million of which related to consolidation of facilities.

We recorded a $7 million charge in the first quarter of fiscal 2006 and expect to record an additional charge in the range of $15 million to $20 million in the remainder of fiscal 2006 (excluding any severance and other employee benefits-related liabilities to Flextronics) as we complete the rest of our restructuring plan, which primarily consists of additional headcount reductions and to some extent further consolidation of facilities. As part of our agreements with Agilent, Agilent will pay these restructuring costs and expenses. The restructuring costs and expenses are not considered to be part of our separation costs incurred in connection with our separation from Agilent. We anticipate headcount reductions of approximately 300 people, primarily in the U.S., Japan and Germany. These headcount reductions will be partially offset by the addition of approximately 100 people in locations where we will be continuing operations, such as China and Singapore.

We expect the cumulative effect of these actions to lower our cost of ongoing operations when compared to historical levels. We will start to realize cost savings associated with these headcount reductions starting in the second quarter of fiscal 2006, although most of the cost savings are not expected to be realized until the fourth quarter of fiscal 2006. We expect to realize most of the cost savings as a reduction in our R&D and SG&A expense, although we expect some level of cost reductions in cost of products and services as well.

	Three Months Ended January 31,		Year Ended October 31,
	2006		2005		2005	2004		2003
	(in millions)
Separation costs	$	15		$	—	$	3		$	—	$	—

As part of our effort of becoming a separate stand-alone publicly held company, we have incurred, and will incur, one-time separation costs such as information technology set-up costs and consulting, legal and other professional fees. We incurred $3 million in separation expenses in fiscal 2005. In the first quarter of 2006, we incurred $15 million in separation expenses and anticipate an additional $60 to 70 million of such expenses during the remainder of fiscal 2006, with most of it expected in the second and third quarters of fiscal 2006, respectively.

	Three Months Ended January 31,		Year Ended October 31,
	2006		2005		2005	2004		2003
	(in millions)
Provision for income taxes	$	5		$	5	$	13		$	14	$	5

We recorded income tax provisions of approximately $5 million for each of the three months ended January 31, 2006 and January 31, 2005. We recorded income tax provisions of $13 million, $14 million and $5 million for fiscal years ended 2005, 2004 and 2003, respectively. In each period, the provision reflects taxes on income generated in certain jurisdictions other than the United States.

We had net deferred tax assets related to our business of $10 million as of October 31, 2005 and $7 million as of October 31, 2004. Due to the losses we incurred in the United States and Japan, we recorded a valuation allowance prior to 2003 against any deferred tax assets in these jurisdictions. Until our separation, we maintained a full valuation allowance in these jurisdictions because sufficient positive evidence did not exist to support reversal of the valuation allowance. Upon separation, we did not retain deferred tax assets and liabilities related to temporary differences, net operating losses and credit carryforwards. We retained certain prepaid tax assets upon our separation. As a result, for periods on or after June 1, 2006, our deferred tax assets and

liabilities will be based solely on the transfer of assets on separation and our operating activities beginning as of June 1, 2006.

Because Agilent's global tax model has been developed based on its entire portfolio of businesses, our historical financial information as presented, including tax information, is not necessarily indicative of future results of operations. Historically, Agilent has operated with a U.S.-incorporated parent company, while Verigy is operated with a Singapore parent. We have negotiated agreements relating to taxes with the Singapore Economic Development Board, an agency of the Government of Singapore, which have been approved by Singapore's Ministry of Finance and Ministry of Trade and Industry. Under the agreements, a portion of the income we earn in Singapore during 10- to 15-year incentive periods is subject to reduced rates of Singapore income tax. In order to comply with the agreements, we must fulfill certain operating conditions in Singapore relating to headcount, activities and investment in Singapore. If we do not fulfill these conditions for any reason, our incentive could lapse, and we may incur significant tax liabilities in Singapore during the remainder of the incentive period, reducing our profitability and the amount of cash available for distribution to shareholders.

The following table presents our unaudited quarterly results of operations, in millions, for each of our last nine quarters through the quarter ended January 31, 2006. You should read the following table in conjunction with the combined audited annual financial statements and related notes contained elsewhere in this prospectus. We have prepared the unaudited information on the same basis as our audited combined financial statements. Results of operations for any quarter are not necessarily indicative of results for any future quarters or years.

The following table presents our historical results for the periods indicated as a percent of net revenue:

Net Revenue. The semiconductor test equipment market is cyclical and highly volatile. We experienced strong revenue growth in the first half of fiscal 2004 as demand for our test systems increased. An industry-wide downturn beginning in the second half of fiscal 2004 negatively impacted our results of operations starting in the second half of fiscal 2004 and continuing through the first half of fiscal 2005. Starting with the second half of fiscal 2005, the semiconductor test market exhibited a recovery driven by increasing demand for PC chipset and graphics devices, wireless baseband and RF devices, communication networking infrastructure devices, flash memory products used in cellular phones, cameras, MP3 players and other digital consumer devices. A substantial majority of our orders in fiscal 2005 were for the enhanced versions of our Versatest V5000 Series and 93000 Series platforms, which first became available in late fiscal 2004 and early in fiscal 2005, respectively. These introductions expanded our addressable market into areas such as NAND flash and increased our penetration in a breadth of applications from next-generation graphics and wireless gaming to high-end SOC applications, as well as digital consumer applications. Improved market conditions and a strong recovery in the semiconductor industry as a whole contributed to the continuing trend of increasing revenue in the three months ended January 31, 2006.

Cost of Products. As a percent of net revenue, cost of products will vary depending on a variety of factors, including the mix of system configurations in a particular period, competitive and other pressures on pricing, and our ability to manage inventory levels to avoid excess and obsolete inventory charges. As a result, our gross product margin has been highly volatile. During the first half of fiscal 2004, our cost of products as a percent of product revenue averaged 48% for both quarters spurred by the strong revenue growth. As revenues decreased thereafter, however, our cost of products as a percent of product revenue increased to 57% in the third quarter of fiscal 2004. This increase was primarily due to lower volumes in the second half of fiscal 2004 as well as pricing pressure we experienced for our legacy products.

Lower revenue continued to adversely impact our cost of products as a percent of revenue through the first half of fiscal 2005. When revenues started increasing in the third quarter of fiscal 2005, so did our gross margins, reflecting substantial improvements in utilization of overhead costs and manufacturing personnel. In the third and fourth quarter of fiscal 2005, charges for excess and obsolete inventory related to discontinued products adversely impacted our cost of products as a percent of revenue. In the three months ended January 31, 2006, cost of products as a percentage of product revenue decreased to 52% primarily due to increased volumes, higher margins from our recently introduced SOC/SIP/high-speed memory test systems and continued progress in transforming our operational cost structure. This was partially offset by $10 million of inventory write-downs for discontinued products.

Our cost of products in absolute amount is expected to increase or decrease with revenue. Effective fiscal 2006, our cost of products will also be impacted by stock option expensing under SFAS 123R. In the three months ended January 31, 2006, we recorded $0.5 million in share-based compensation expense in cost of products. In order to mitigate the risk and to manage our costs through the peaks and valleys of the semiconductor industry, we are currently streamlining our cost structure by reducing our fixed costs and adding more flexibility to our manufacturing model through the outsourcing of the majority of our manufacturing. We believe our efforts will provide us with the flexibility to respond more rapidly to changes in industry conditions and to better capitalize on market opportunities during market upturns, and will provide us with more consistent cost of products.

Cost of Services. Our cost of services in absolute amount is expected to increase or decrease with services revenue. As a percent of net services revenue, these costs will vary depending on a variety of factors, including our ability to weather price erosion, the reliability and quality of our products and our need to maintain customer service and support centers worldwide.

Research and Development. Our research and development expenses have fluctuated from quarter to quarter as a percent of net revenue, but have generally remained level in absolute dollars, reflecting management's commitment to product innovation without regard to demand cycles. R&D spending levels tend to fluctuate modestly from quarter to quarter based on the timing of project activities. Also, in the three months ended January 31, 2006, we recorded $0.5 million in share-based compensation expense to research and development.

Selling, General and Administrative. SG&A expenses have generally stayed flat over time but have fluctuated and will continue to fluctuate from quarter to quarter as a percent of net revenue. In general, we believe our SG&A expenses will decrease as a stand alone company due to our efforts to streamline our infrastructure, consolidate excess facilities and right-size our business. These cost reductions will be partially offset by incremental costs associated with professional fees such as legal, regulatory and accounting compliance costs that we will incur as a stand-alone company. Our SG&A expenses will also be impacted as we implement our new manufacturing model, expand in China and implement stock option expensing as required by changes in generally accepted accounting principles. In the three months ended January 31, 2006, we recorded $3 million in share-based compensation expense to SG&A. In addition, commission expenses included in SG&A expenses can fluctuate with changes in sales volume and customer mix.

As part of our effort of becoming a separate stand-alone publicly held company, we have incurred, and will incur, one-time separation costs such as information technology set-up costs, consulting, legal and other professional fees and other spin-off related costs. We incurred $3 million in separation expenses in fiscal 2005. In the first quarter of 2006, we incurred $15 million in separation expenses and anticipate an additional $60-70 million of such expenses during the remainder of fiscal 2006, with most of it expected in the second and third quarters of fiscal 2006.

Our quarterly results of operations have varied in the past and are likely to do so again in the future primarily due to the cyclical nature of the semiconductor industry. As such, we believe that period-to-period comparisons of our results of operations should not be relied upon as an indication of future performance. In future periods, the market price of our ordinary shares could decline if our revenues and results of operations are below the expectations of analysts and investors. Factors that may cause our revenue and results of operations to fluctuate include those discussed in the "Risk Factors" section of this prospectus.

Agilent uses a centralized approach to cash management and financing of its operations. Transactions relating to our business have been accounted for through the Agilent net invested equity account for our business. Accordingly, none of the cash, cash equivalents or debt at the Agilent corporate level have been assigned to our business in the historical combined financial statements. When we became a separate stand-alone company, Agilent made a short-term revolving credit facility available to us that is expected to be sufficient for our working capital requirements prior to receiving the proceeds of this offering. We will retain the proceeds of the offering, other than amounts used to repay amounts owed under the $25 million loan from Agilent, amounts used to reimburse Agilent for approximately $7 million of payments to Flextronics that Agilent will make on our behalf and payments of approximately $3 million we will make directly to Flextronics (approximately $1 million by June 30, 2006 and approximately $2 million in the future). In addition, Agilent has agreed to make a payment or other transfer of value to us after the closing of this offering if the proceeds to us from this offering, net of underwriting discounts and commissions, are less than $140 million. The payment or other transfer of value will be in an amount equal to the difference between the net proceeds of this offering and $140 million. We also

anticipate additional cash of approximately $20 million in our third and fourth quarters from the sale of inventory and equipment as we transition manufacturing activity to Flextronics.

Cash used for operating activities was $49 million in the three months ended January 31, 2006 compared to cash used for operating activities of $33 million in the three months ended January 31, 2005. Operating activities during the three months ended January 31, 2006 resulted in cash usage of $49 million due to our net loss of $16 million, working capital used for increased accounts receivable of $51 million (due to increased revenue) and inventory of $14 million, offset by depreciation expense of $2 million, and increases in other assets and liabilities of $7 million and in deferred revenue of $5 million. Restructuring payments included net cash payments of $1 million and $0.1 million for the three months ended January 31, 2006 and 2005, respectively.

Cash used for operating activities was $74 million in fiscal 2005 compared to cash generated from operating activities of $48 million in fiscal 2004 and cash used for operations of $29 million in fiscal 2003. Operating activities during fiscal 2005 resulted in cash usage of $74 million due to our net loss of $119 million, working capital used for increased accounts receivable of $18 million and inventory of $10 million, offset by depreciation expense of $6 million that did not require cash, and an increase in other assets and liabilities of $23 million and an increase in deferred revenue of $10 million. Restructuring payments included net cash payments of $4 million, $1 million, and $5 million during fiscal 2005, 2004, and 2003, respectively.

Net cash used in investing activities for the three months ended January 31, 2006 was $3 million compared to $5 million for the three months ended January 31, 2005. The $2 million decrease for the three months ended January 31, 2006 is primarily due to higher than usual capital expenditures for test and computer equipment, office furniture as well as new research and development equipment for use in product and applications development in the three months ended January 31, 2005.

Net cash used in investing activities for fiscal 2005 was $14 million compared to $5 million in fiscal 2004 and $6 million in fiscal 2003. The $9 million increase in fiscal 2005 is primarily due to capital expenditures for test and computer equipment, office furniture as well as new research and development equipment for use in product and applications development.

As we establish Verigy as a stand-alone company, we will be making additional investments in new site set-ups as well as leasehold improvements for new headquarters facilities where we expect to relocate by the end of fiscal 2006. We estimate most of these investments will occur during the third and fourth quarter of fiscal 2006 and be in the range of $15 million to $20 million of which approximately $10 million will be capitalized.

We have also incurred and expect to continue to incur additional costs for the completion of a new enterprise resource planning (ERP) system and other IT infrastructure set-up costs. During the three months ended January 31, 2006, we incurred approximately $13 million of these costs of which $5 million was capitalized. We anticipate additional ERP- and IT-related costs in the range of $40 million to $50 million during the second and third quarters of fiscal 2006 of which approximately $15 million will be capitalized. We also expect to incur approximately $30 million for the remainder of fiscal 2006 in connection with other separation-related activities.

Agilent will pay for all costs incurred in connection with our separation, including costs related to the completion and development of our new enterprise resource planning (ERP) system, other IT set-up costs and consulting, legal and other professional fees, to the extent these costs were

incurred prior to the June 1, 2006 separation date. We will pay all separation-related costs incurred after the separation date, which we expect to be approximately $40 million, and not receive any reimbursement from Agilent. In addition, we will pay for approximately $10 million of payments expected to be made to Flextronics related to future severance and other employee-related benefits associated with employees transferred to Flextronics under the various asset purchase agreements with Flextronics described elsewhere in this prospectus (including the approximately $7 million of payments that Agilent made on our behalf and which we have agreed to reimburse Agilent for).

Net cash provided by Agilent for the three months ended January 31, 2006 was $52 million compared to $38 million for the three months ended January 31, 2005. Net cash provided by Agilent for fiscal 2005 was $88 million compared to $43 million cash returned to Agilent in fiscal 2004 and $35 million cash provided by Agilent in fiscal 2003. In the three months ended January 31, 2006 and 2005 and fiscal 2005 and 2003, our business required cash infusion from Agilent because our cash from operations was not sufficient to cover our operating expenses. In fiscal 2004, a positive cash flow from our operating activities, coupled with an improved working capital position, enabled us to return $43 million cash to Agilent. As a result of our separation from Agilent, we will no longer receive cash from Agilent nor will we provide cash to Agilent.

We have contractual commitments for non-cancelable operating leases and vendor financing arrangements with CIT and others. We have in the past provided lease residual value guarantees on these financing arrangements and we have no other material guarantees or commitments.

For up to two years following our separation from Agilent, Agilent will continue to provide services and access to resources necessary for our operations. In general, these services and resources include facilities management, site information technology infrastructure, usage of various applications and support systems, as well as employee related services for any transitional employees remaining with Agilent. We estimate the cost of these services will be in the range of $10 million to $15 million for a period of approximately six months after the separation date and that the majority of these services will terminate on or before the distribution date. We expect that the services provided by transitional employees may last for up to two years following the separation date, for an additional cost to us of approximately $3 million to $5 million. In all cases, the charges for these interim services are generally intended to allow Agilent to recover the cost of providing such services plus an appropriate return on such services, which, consistent with Agilent's intercompany pricing practices, will generally be 10%. Agilent is only obligated to provide transition services to us for a period of two years after the separation date.

We believe that the net proceeds of this offering, together with cash generated from operations, will be sufficient to satisfy our working capital, capital expenditure and other liquidity needs at least through the next twelve months. Until we realize the proceeds from the offering, we will require funding from the short-term revolving credit facility which Agilent has made available to us. We may require or choose to obtain debt or equity financing in the future. We cannot assure you that additional financing, if needed, will be available on favorable terms or at all.

Our cash flows from operations are dependent on a number of factors, including fluctuations in our operating results, accounts receivable collections, inventory management and the timing of tax and other payments. As a result, the impact of contractual obligations on our liquidity and capital resources in future periods should be analyzed in conjunction with such factors.

The following table summarizes our contractual obligations at October 31, 2005 (in millions):

Operating leases. Commitments under operating leases relate primarily to leasehold property.

Commitments to contract manufacturers and suppliers. We purchase components from a variety of suppliers and historically we have used 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. However, our agreements with these suppliers usually allow us the option to cancel, reschedule, and adjust our requirements based on our business needs prior to firm orders being placed. Typically purchase orders outstanding with delivery dates within 30 days are non-cancelable. Therefore, only approximately 20% of our reported purchase commitments arising from these agreements are firm, non-cancelable, and unconditional commitments. We expect to fulfill the purchase commitments for inventory within one year.

In addition to the above, we record a liability for firm, non-cancelable, and unconditional purchase commitments for quantities in excess of our future demand forecasts. The liability for our firm, non-cancelable, and unconditional purchase commitments was $13 million as of October 31, 2005 and $2 million as of October 31, 2004. These amounts are included in other accrued liabilities in our combined balance sheets at October 31, 2005 and October 31, 2004.

Other purchase commitments. These commitments relate primarily to contracts with professional services suppliers, which include third-party consultants for legal, finance, engineering and other administrative services. Purchase commitments are typically cancelable within a 90-day period without significant penalties.

Retirement plans. Retirement plan funding for the current year is not practical to estimate due to the fact that when we separated from Agilent, Agilent transferred to us the liabilities associated with the defined benefit plans for our employees located in Germany, France, Korea, Italy and Taiwan and will fund these plans (other than the plan for employees in Italy) based on the accumulated benefit obligations. We expect expenses of approximately $4 million in 2006 for the retirement plans that have been or will be transferred to us.

We had no material off-balance sheet arrangements as defined by SEC rules as of January 31, 2006, October 31, 2005 or October 31, 2004.

In December 2004, the Financial Accounting Standards Board ("FASB") issued Statement of Financial Accounting Standards No. 123 (Revised 2004), "Share-Based Payment" ("SFAS 123R"). SFAS 123R addresses all forms of share-based payment ("SBP") awards, including shares issued under employee stock purchase plans, stock options, restricted stock and stock appreciation rights. SFAS 123R requires us to expense SBP awards with compensation cost for SBP awards measured at fair value beginning in our first quarter of 2006. In March 2005, the SEC released Staff accounting Bulletin No. 107 "Share-Based Payment" ("SAB No. 107"), which expresses views of the SEC Staff about the application of SFAS 123R.

We adopted the provisions of SFAS 123R using the modified prospective transition method beginning November 1, 2005, the first day of the first quarter of fiscal 2006. In accordance with that transition method, we have not restated prior periods for the effect of compensation expense calculated under SFAS 123R. We have selected the Black-Scholes option-pricing model as the most appropriate method for determining the estimated fair value of all our awards.

Under this new standard, our estimate of compensation expense will require a number of complex and subjective assumptions including our share price volatility, employee exercise patterns (expected life of the options), future forfeitures and related tax effects. Compensation expense for share-based equity awards issued after November 1, 2005 is being recognized on a straight-line basis over the vesting period of the award. For awards issued prior to November 1, 2005, we are recognizing SBP compensation expenses based on the accelerated method described in FASB Interpretation No. 28 "Accounting for Stock Appreciation Rights and Other Variable Stock Option or Award Plans" ("FIN 28"). The adoption of SFAS 123R also requires additional accounting related to income taxes as well as additional disclosure related to the cash flow effects resulting from share-based compensation. We recorded a $4 million charge for share compensation expenses in the three months ended January 31, 2006. We estimate share compensation expenses for fiscal 2006 to be at least $10 million based on Agilent stock awards issued prior to January 31, 2006. In addition, we may have additional share compensation expense related to newly issued Verigy options.

Upon final distribution of Verigy shares by Agilent, unvested Agilent stock options held by Verigy employees will terminate. To the extent options are vested as of the date of distribution, Verigy employees will have a period of three months in which to exercise the Agilent option before such options terminate. Exercise of Agilent options by Verigy employees will have no impact on our financial statements nor on our outstanding ordinary shares. To the extent that the Agilent options were not vested as of the distribution date, Verigy will replace the Agilent options with new Verigy options based on the ratio of Agilent stock price prior to the distribution to Verigy's share price after the distribution.

In November 2005, the FASB issued FASB Staff Position ("FSP") FAS No. 123(R)-3, "Transition Election Related to Accounting for the Tax Effects of Share-Based Payment Awards." ("FSP FAS 123(R)-3") FSP FAS 123(R)-3 provides a practical exception when a company transitions to the accounting requirements in SFAS 123R. SFAS 123R requires a company to calculate the pool of excess tax benefits available to absorb tax deficiencies recognized subsequent to adopting SFAS 123R (termed the APIC Pool), assuming the company had been following the recognition provisions prescribed by FAS 123. We have elected to use the guidance in FSP FAS 123(R)-3 to calculate our APIC Pool. FSP FAS 123(R)-3 is effective immediately. The adoption of the FSP did not have an impact on our overall results of operations or financial position.

In May 2005, the FASB issued SFAS No. 154, "Accounting Changes and Error Corrections." SFAS No. 154 is a replacement of Accounting Principles Board Opinion ("APB") No. 20 and FASB Statement No. 3. SFAS No. 154 provides guidance on the accounting for and reporting of accounting changes and error corrections. It establishes retrospective application as the required method for reporting a change in accounting principle. SFAS No. 154 provides guidance for determining whether retrospective application of a change in accounting principle is impracticable and for reporting a change when retrospective application is impracticable. SFAS No. 154 also addresses the reporting of a correction of an error by restating previously issued financial statements. SFAS No. 154 is effective for accounting changes and corrections of errors made in fiscal years beginning after December 15, 2005. We will be adopting this pronouncement beginning in our fiscal 2007 and do not currently believe that it will have a material impact on our financial statements.

In June 2005, the FASB issued FSP FAS 143-1, "Accounting for Electronic Equipment Waste Obligations" ("FSP 143-1"), which provides guidance on the accounting for certain obligations associated with the Directive on Waste Electrical and Electronic Equipment (the "Directive"), which was adopted by the European Union ("EU"). Under the Directive, the waste management obligation for historical equipment (products put on the market on or prior to August 13, 2005) remains with the commercial user until the equipment is replaced. We are required to apply FSP 143-1 to the later of the first reporting period ending after June 8, 2005 or the date of the Directive's adoption into law by the applicable EU member countries in which we have significant operations. The effect that the adoption of FSP 143-1 had on our combined financial statements was insignificant. Such effects will depend on the respective laws adopted by the EU member countries.

In November 2005, the FASB issued FSP FAS 115-1 and FAS 124-1, "The Meaning of Other-Than-Temporary Impairment and Its Application to Certain Investments" ("FSP 115-1 and 124-1"), which clarifies when an investment is considered impaired, whether the impairment is other than temporary, and the measurement of an impairment loss. It also includes accounting considerations subsequent to the recognition of an other-than-temporary impairment and requires certain related disclosures. FSP 115-1 and 124-1 will be effective for all reporting periods beginning after December 15, 2005. We do not believe that adopting or applying either standard will have a material impact on our financial statements.

With the exception of Japan, where products are primarily sold in Yen, our products are generally sold in U.S. Dollars. Services and support sales are sold primarily in local currency when sold after the initial product sale. As such, our revenues, costs and expenses, and monetary assets and liabilities are somewhat exposed to changes in foreign currency exchange rates as a result of our global operating and financing activities. As part of Agilent, the historical results of our business reflect the hedging program in place at Agilent. We have not yet implemented a similar hedging program and are currently evaluating the magnitude and value-at-risk of our net currency exposures. We would expect to implement a hedging program if and when appropriate.

The following unaudited pro forma condensed combined balance sheet has been prepared by applying pro forma adjustments to our historical unaudited balance sheet as of January 31, 2006. The unaudited pro forma condensed combined balance sheet has been prepared assuming that we separated from Agilent on January 31, 2006, under the terms of our separation agreements with Agilent including the Master Separation and Distribution Agreement and the related General Assignment and Assumption Agreement and that the transfers associated with the asset purchase agreements with Flextronics were complete. To reflect this separation, the transaction with Flextronics and this offering, we have applied pro forma adjustments to reflect that:

Assumptions underlying the pro forma adjustments are described in the accompanying notes, which should be read in conjunction with this unaudited pro forma condensed combined balance sheet. The unaudited pro forma adjustments are based upon available information and certain assumptions that we believe are reasonable under the circumstances. The unaudited pro forma condensed combined balance sheet does not purport to represent what our financial position would have been had the events actually occurred on the dates indicated or project our financial position for any future date. The actual adjustments to our combined balance sheet upon the separation will be based on the net assets at that date. Therefore, the actual adjustments will differ from these pro forma adjustments, and the differences may be material. We have not included any pro forma statement of operations data because there are no adjustments that are directly attributable to the transaction that are expected to have a continuing impact and are capable of being determined objectively and based on facts currently known to us. The unaudited pro forma condensed combined balance sheet should be read in conjunction with the information contained in "Management's Discussion and Analysis of Financial Condition and Results of Operations" and the combined financial statements and related notes thereto appearing elsewhere in this prospectus.

We design, develop, manufacture and sell advanced test systems and solutions for the semiconductor industry. We offer a single platform for each of the two general categories of devices being tested: our 93000 Series platform, designed to test System-on-a-Chip (SOC), System-in-a-Package (SIP) and high-speed memory devices, and our Versatest V5000 Series platform, designed to test memory devices, including flash memory and multi-chip packages. Our test solutions are both scalable and flexible. Our test platforms are scalable across different frequency ranges, different pin counts and different numbers of devices. Our test platforms' flexibility allows for a single test system to test a wide range of applications for semiconductor devices. Our scalable platform architecture provides us with internal operating model efficiencies such as reduced research and development costs, engineering headcount, support requirements and inventory risk. The scalability and flexibility of our test solutions also provides economic benefits to our customers by allowing them to get their complex, feature-rich semiconductor devices to market quickly and to reduce their overall costs. We also provide test and application expertise, service and support through our worldwide service organization.

We have a broad installed customer base, having sold over 1,200 93000 Series systems and over 2,000 Versatest Series systems. Our customers include integrated device manufacturers, or IDMs, test subcontractors, also referred to as subcons, which includes specialty assembly, package and test companies as well as wafer foundries, and fabless design companies. As of January 31, 2006, we had 1,558 employees worldwide.

Semiconductor devices, also referred to as integrated circuits, or ICs, are the fundamental building blocks used in all electronic systems. They have played an important role in enabling the proliferation of computing, communications and consumer electronic products. As technology continues to penetrate most aspects of daily life, semiconductor devices are playing an increasingly important role in a growing number and variety of products. Consequently, the global semiconductor industry, while experiencing significant cyclical fluctuations in its growth rate, has exhibited strong overall growth over the last 30 years. With the continued development of new growth segments within the semiconductor market, we believe the semiconductor market should continue to experience periods of strong growth. According to estimates from Gartner, an industry research firm, the global semiconductor market will grow from $235 billion in 2005 to over $318 billion in 2009, driven primarily by the convergence of consumer, computing and communications devices.

The design and manufacture of semiconductor devices is a complex and capital-intensive multi-step process. This process involves different types of equipment used to manufacture, assemble and test semiconductor devices. Semiconductor test equipment and services are a critical part of this complex design and manufacturing process, and are utilized in each of the key design and manufacturing stages.

The total market for semiconductor test equipment, not including service and support, was $3.8 billion in 2005 and is forecast to grow to $5.7 billion in 2009, according to Gartner. Demand for new semiconductor test equipment is driven by two primary forces: growth in semiconductor unit volume that drives the need for additional testing capacity, and the adoption of new technologies in semiconductor design, manufacturing and packaging that require new types of semiconductor testing equipment.

Due to the different architectures and functionalities of semiconductors, semiconductor test equipment and services are generally categorized by the type of semiconductors tested. The two general categories are equipment used to test memory semiconductors, referred to as memory testing, and equipment used to test non-memory semiconductors, which includes testers for testing less complex, discrete semiconductors, and testers designed to test very complex, highly integrated semiconductors commonly referred to as System-on-a-Chip, or SOC, or System-in-a-Package, or SIP, testing. Of the total semiconductor test market in 2005, Gartner estimates that 30% consisted of memory testing, 62% consisted of SOC and SIP testing and the remainder consisted of testing less complex, discrete semiconductors.

SOCs and SIPs are semiconductors that integrate the functionality of multiple individual ICs onto a single IC or package of ICs, and often contain both digital and analog functionalities, including radio frequency (RF) capabilities, communication interfaces and embedded memory. By combining multiple technologies onto a single, more complex chip or package, these devices provide the benefits of lower cost, smaller size, higher performance and lower power consumption and facilitate faster time-to-market that is critical, particularly for products targeted to the consumer electronics market. According to Gartner, SOC and SIP test revenues in 2005, not including service and support, were $2.3 billion and are forecast to reach $3.8 billion in 2009.

Memory devices, particularly flash memory devices, represent a significant and growing portion of the semiconductor industry. The flash memory market for NAND and NOR flash, as measured by megabits shipped, has doubled every year since 2000. According to Gartner, this trend will continue through 2009 with an average megabits shipped, for NAND and NOR flash, compound annual growth rate from 2005 to 2009 in excess of 115%. This growth has been fueled largely by the extensive use of flash memory in consumer products such as MP3 players, cell phones, digital cameras and other handheld devices. There are two key types of flash memory: NAND flash, which is suited to the storage of large amounts of data in devices such as MP3 players and digital cameras, and NOR flash, which is typically used for the storage of basic operating instructions and programs that enable devices such as cell phones to start-up and function. Given the compact nature of consumer electronics products and the increasing need for more memory in these products, complex and more compact memory device packaging techniques such as stacked and multi-chip packages, or MCPs, are being adopted. According to Gartner, memory test revenues, not including service and support, were $1.1 billion in 2005 and are forecast to reach $1.5 billion in 2009.

Semiconductor test equipment plays an important role in enabling semiconductor designers and manufacturers to lower their overall costs and get products to market quickly in addition to improving the quality and reliability of their end products. By detecting and sometimes repairing manufacturing defects, test equipment enables semiconductor designers and manufacturers to improve manufacturing yield, meaning the proportion of semiconductor devices that perform to specifications. Improving manufacturing yields is a key factor in improving the profitability of semiconductor manufacturers. In addition, we believe that scalable and flexible test equipment represents a key competitive advantage because it reduces test time, assists in achieving faster time to market and lowers capital investment requirements by allowing semiconductor designers and manufacturers to test different types of semiconductors with the same test equipment.

Bringing semiconductor products to market is a multi-step process, which includes stages referred to as production prototype, production ramp and high-volume production. Semiconductor test equipment plays an important role in each of these steps, as shown on the diagram below:

Production Prototype. Once an initial design of a semiconductor has been created, the first stage in bringing an actual IC to market is to produce a small quantity of prototype ICs to validate the design and ensure that it performs according to its specifications. What the semiconductor designer needs most from the test equipment and services provider at this stage is advanced test equipment and test strategy expertise. The engineering validation and device characterization that occurs at this stage requires high precision test equipment to ensure accuracy and high flexibility to modify test procedures and parameters, because the IC design may iterate multiple times. Test strategies and methodologies are developed early to ensure that the test solution implemented is capable of testing the ICs across the entire manufacturing process. Of all the stages of bringing a new semiconductor to market, it is at this stage that the most advanced test equipment is required.

Production Ramp. Once a semiconductor passes the production prototype stage, the next stage in bringing it to market is the ramp to high volume production. In the production ramp stage the semiconductor designer and manufacturer is focused on transitioning as quickly as possible to the high-volume production stage. What the semiconductor designer and manufacturer needs from the test equipment and services provider at this stage is application expertise and an understanding of manufacturing processes. Test solutions at this stage are no longer focused on validating the product design, but are focused on fine-tuning the manufacturing process to optimize yield. Test optimization is critical in this step, with software analysis being used to determine which tests are unnecessary and can be streamlined or eliminated in order to save time in the manufacturing process while maintaining the appropriate thoroughness of the test process.

High Volume Production. The final stage in bringing a semiconductor to market is high-volume production. The key focus for the semiconductor manufacturer at this stage is to reduce the overall cost of test by achieving high throughput of quality semiconductor devices. To achieve this goal, semiconductor manufacturers require high-reliability test equipment with maximum up-time, and tailored service and support, from their semiconductor test equipment and services provider. Integration of the test equipment into the production process is optimized to improve efficiency and minimize the time that test equipment is not utilized. In order to achieve high throughput, test equipment that is not only fast but can test multiple devices at the same time is critical, especially in the testing of memory devices.

Because of the competitiveness of the broader consumer electronics market, semiconductor designers and manufacturers are increasingly focused on bringing high quality complex ICs to market faster and at lower costs. As a result, semiconductor test equipment and services suppliers are facing new challenges confronted by semiconductor designers and manufacturers due to:

Continued cost pressures are driving semiconductor designers and manufacturers to demand higher utilization of test systems, as well as test systems that can be re-used across different types and generations of ICs. Test systems are required to demonstrate the scalability and flexibility necessary to permit desired levels of utilization and extend their useful life. Rapid technology change within the semiconductor industry can quickly render non-scalable test equipment obsolete for the testing of new generations of semiconductors.

Today's semiconductor market is characterized by shortening product life cycles as a result of increased exposure to and reliance on the consumer electronics market. Semiconductor designers and manufacturers that are first to market and that quickly adapt to changing technological advances gain a significant competitive advantage. The complex nature of manufacturing semiconductor devices requires that test solutions providers offer their customers more than just delivery of test equipment. Semiconductor designers and manufacturers require tailored test solutions and a breadth of application expertise in order to accelerate their time-to-market with new ICs and maximize their revenue opportunity. Equipment suppliers that are not able to complement their hardware systems with application expertise have limited ability to impact their customers' time to market.

The trend towards SOCs, SIPs and MCPs has created new challenges for semiconductor designers and manufacturers. These increasingly complex semiconductor designs, which enable improved performance, form and function, require sophisticated test solutions. In addition, advances in interface technology, the adoption of new design protocols and process technology innovations have only added to this complexity. Low cost test equipment that lacks a high level of sophistication and broad application can end up being more costly in the long run.

Test subcontractors face specific test challenges. Subcons provide test services to a diverse group of semiconductor designers and manufacturers, which include both fabless design companies and integrated device manufacturers, referred to as IDMs. As a result, subcons are continually challenged to provide the capabilities to test a wide range of ICs. Optimizing the utilization of a subcon's installed capital equipment is therefore important to its success. In order to optimize this utilization, subcons require flexible semiconductor test systems that are capable of testing a broad spectrum of ICs. Additionally, subcons require systems that can test ICs with varying pin counts while maintaining cost efficiencies and high throughput levels. For this reason, test solutions providers who fail to offer scalable and flexible architectures, as well as a breadth of application expertise, may fall short in meeting the needs of subcons.

We design, develop, manufacture and sell advanced test systems and solutions for the semiconductor industry. Unlike competitors who provide multiple platforms for SOC/SIP/high-speed memory and memory test, we provide a single platform for each of the two general categories of devices being tested. As part of our single scalable platform strategy, we are continually developing and periodically offer performance and capability enhancements to our platforms as part of our product development roadmap. Our 93000 Series platform is designed to test SOC, SIP and high-speed memory devices, and our Versatest V5000 Series platform is designed to test memory devices, including flash memory and MCPs. We also provide a range of services that assist our customers in quickly and cost effectively delivering the innovative, feature-rich products demanded by their end users.

More than a decade ago, we introduced the concept of a scalable platform architecture for semiconductor testing, and we are continuing to capitalize on the benefits of that strategy today. Our scalable platform architecture provides us with internal operating model efficiencies such as reduced research and development costs, engineering headcount, support requirements and inventory risk. The scalability and flexibility of our solution also provides economic benefits to our customers by allowing them to get their complex, feature-rich semiconductor devices to market quickly and to reduce overall costs. We believe our advanced SOC/SIP/high-speed memory and memory test solutions provide optimal combinations of flexibility, cost and performance to a wide range of designers and manufacturers in the semiconductor industry at all stages of bringing a semiconductor product to market, from design to production prototype to high-volume manufacturing. The key elements of our solutions are:

Reducing the overall cost of test is critical for our customers. Our test platforms are scalable in a number of ways, including frequency range of the applied test signals, the number of pins to accommodate ICs with different pin counts and the number of devices that can be tested in parallel. This scalability allows semiconductor manufacturers considerable flexibility in selecting the right test solution to meet their needs, at an optimal level of capital investment. In addition, our test systems can be quickly reconfigured or upgraded as requirements change. The combination of scalability, speed and ease of reconfiguration of our test systems enables our customers to reduce their long-term capital equipment requirements and minimize manufacturing downtime.

The scalability of our test platforms is enabled by a"tester-per-pin" architecture, in the case of our SOC/SIP/high-speed memory test platform, and a "tester-per-site" architecture, in the case of our memory test platform. Our "tester-per-pin" architecture utilizes a separate and independent test processor for each pin of each device being tested, enabling each pin to be tested independently and in parallel to the testing of other pins. Our "tester-per-site" architecture is tailored to make use of the parallel structure of memory devices to test a large number of devices in parallel because it utilizes a separate and independent test processor for each physical interface of the test system to a device under test. We refer to those interfaces as test sites. With our optional Programmable Interface Matrix, our Versatest V5500 System for the final test of packaged devices can further capitalize on the parallel structure of memory devices to test multiple devices per test site, thereby increasing its parallel testing capabilities. For our SOC/SIP/high-speed memory test systems, the process of frequency performance scaling is often done "instantly" through a software upload as the device test program is loaded into the system. For all of our test systems, the process of scaling up the number of devices a test system is capable of testing in parallel is often accomplished quickly, typically requiring only a few hours for basic scaling and only a few days for more extensive scaling. The per-pin architecture of our SOC/SIP/high-speed memory test systems also enables us to offer customers innovative licensing models. For example, we currently offer our

customers the unique ability to purchase and share performance licenses across different devices on a per-pin basis. As a result, our customers are able to buy only the performance they need for each pin of the system.

Our test platforms are also highly flexible in that they allow a single test system to test a wide range of applications for semiconductor devices. The high level of software reconfigurability of our test platforms, and the support and enhancements we offer, enable our customers to implement a broad range of application tests tailored to their needs, including tests for high-speed digital, analog/mixed signal, flash memory, RF and high-speed memory devices. In addition to enabling our customers to test a broad range of products, our test systems also support through software reconfiguration a number of advanced test methodologies, such as built-in self test, or BIST, design-for-test, or DFT, reduced pin count test, or RPC, and concurrent test. These methodologies can simplify testing complex devices, thereby increasing our customers' throughput as well as improving their time to market. We are continually developing additional enhancements to our test platforms to support additional application tests and test methodologies.

Competing test platforms often require an IC device manufacturer to have devices tested by multiple test systems in order to complete the tests required for different applications contained in the devices. This process is not only expensive, cumbersome and time-consuming, but it also takes up valuable floor space in the manufacturing facility. In comparison, our test platforms are able to run the tests for a significant number of different applications without having to move devices to different test systems. The flexible test capabilities of our 93000 Series and V5000 Series test platforms enable our customers to reduce their overall cost of equipment acquisition, employee training and test equipment maintenance while simultaneously increasing equipment utilization.

As a result of the competitive pressures our customers face, they continually need to develop and bring to market increasingly complex products. We develop advanced technology solutions in order to assist our customers in accomplishing this goal in a cost effective and timely manner. From our history as part of Agilent, which was part of HP until its spin-off in 1999, we have a legacy of introducing new and innovative designs to market. Some of these key innovations include the development of scalable platforms for both SOC/SIP/high-speed memory and memory test through our "tester-per-pin" and "tester-per-site" architectures, our test processors utilizing high performance application-specific integrated circuits, or ASICs, and our liquid cooling technology for our test system hardware.

Since 1991, we have used ASICs for our test processors in place of larger, less integrated and less sophisticated designs, allowing our test processors to be very small and providing our test systems with the high performance and accuracy expected from an ASIC-based design. The small size of our ASIC-based test processors enables our "tester-per-pin" and "tester-per-site" architectures. Along with the additional performance, scalability and flexibility benefits of those architectures, our ASIC-based architectures result in test systems that are able to test large numbers of devices in parallel in a small test platform footprint.

Our products use liquid cooling technology, which provides lower operating temperatures, greater system reliability, reduced operating costs, improved accuracy and speed and quieter and cooler operation than the traditional air cooled technology used in some competitive products. This allows our test platforms to achieve high performance, accuracy, reliability and parallelism while simultaneously achieving a small test platform footprint. We released our first liquid cooled tester in

1991 and have extensive experience in the application of liquid cooling technology to semiconductor test systems.

Getting semiconductors to market quickly is vital for our customers. Our worldwide professional staff of highly trained applications engineers provides our customers with a high level of technical expertise to assist our customers as they develop test applications for their semiconductor devices. Our extensive expertise spans a broad range of semiconductor devices, including chipsets and graphics, wireless and wired communication, flash memory, video and audio, high-speed memory and complex multi-chip memory packages. We also produce leading-edge innovative test technologies and deliver, on a global basis, expertise across a wide range of applications to assist our customers in quickly delivering new feature-rich products to the market.

We have designed our platforms to be versatile and reconfigurable. As a result, our customers are able to select a configuration to meet their current test requirements and, as those requirements change, to upgrade the capabilities of their test equipment to meet their future needs without having to purchase completely new systems. Our high quality and reliable test solutions provide high uptime as measured by the reliability of the test equipment. Additionally, our ability to provide innovative solutions and technical expertise across a wide variety of applications helps our customers optimize test equipment performance for the specific semiconductor device being tested, which reduces test times and increases both yield and cost efficiencies. Consequently, we believe our solutions lower our customers' cost of test in high volume manufacturing.

To achieve fast time to market, our customers require scalable and flexible test platforms and application expertise and support at each stage of the manufacturing process. We provide scalable and flexible test platforms based on our established architectures, which can be changed and reconfigured quickly to address new test technologies. Our highly trained applications engineers provide support for the development of test strategies, test applications analysis and optimization and test equipment utilization for our customers.

Our objective is to be the leading semiconductor test equipment and services supplier, providing the highest return on our customers' investment in test equipment. We will continue to maintain our focus on our customers' evolving needs by offering innovative and versatile semiconductor test equipment and services solutions that address the challenges facing semiconductor designers and manufacturers and we will remain committed to providing outstanding service and support to our customers. Additionally, we intend to continue to streamline our business and capitalize on our research and development resources in an effort to achieve profitable growth in excess of the broader semiconductor test industry. We are also in the process of implementing a more flexible cost structure to enable us to increase and decrease spending in

response to cycles in the semiconductor industry, and thereby deliver improved overall profitability. Key elements of our strategy include:

We believe scalable platforms offer our customers the best return on their investment in test equipment. The scalable architecture of our solutions coupled with the proven stability of our platforms facilitates our focus on innovative enhancements, application improvements and technical solutions in step with our customers' needs. The pace of innovation in the semiconductor industry is so rapid that performance doubles roughly every 18 months. Semiconductor companies thus require substantial technical expertise and constant innovation to successfully compete. We believe that with our scalable product architecture, wide-ranging technical capabilities and expertise and established global delivery platform, we are well positioned to be an innovator in the semiconductor test market and to assist our customers in competing successfully in the semiconductor market.

We will continue to look to increase our market penetration by focusing on market opportunities where we can capitalize on our technical expertise and add value to our customers who demand the most sophisticated and complex test solutions. We believe that these opportunities have attractive characteristics, such as the potential for increased customer adoption of our solutions and the potential for high returns on our investment. Recent examples of such emerging opportunities include game consoles that utilize high-speed memory and full-featured mobile handsets that utilize complex SOCs, SIPs and MCPs.

The scalability and flexibility of our platform architecture has led to our success in attracting subcons to our test solutions. We believe that the same advantages of our solutions that subcons find compelling will continue to drive the increased adoption of our solutions by IDM customers. IDMs are facing increasingly intense competition, time-to-market pressures and shorter product lifecycles associated with consumer driven demand, which has led them to begin to outsource an increasing percentage of their semiconductor test business. We believe that our success with our subcon customers will drive IDMs to direct a greater percentage of their test business to us, as IDMs have an interest in maintaining consistency across their internal and external test platforms. These factors, combined with the cost and capital expenditures restrictions that many IDMs experience, are increasing the need for better asset utilization by IDMs. We have existing relationships or recent customer wins at the ten largest IDMs as defined by revenue in 2004.

Application support through all phases of the product life cycle is critical to our customers' ability to achieve fast time-to-market for their products while achieving a high return on their test equipment investments. We will strive to continue to provide our customers with thorough application expertise and maintain the global delivery capabilities of our customer-facing teams, and will also continue to efficiently service our customers with an emphasis on responsiveness. We are also increasing our presence in Asia in the areas of application engineering, research and development and order fulfillment in order to gain proximity to and further strengthen our relationships with customers in Asia. Additionally, we will continue to accentuate and reward the values of professionalism, technical expertise and uncompromising integrity in all our employees in an effort to continually enhance our customers' experience.

The semiconductor industry has historically been cyclical. This requires semiconductor test suppliers to have flexible cost structures in order to sustain profitability through the peaks and valleys of the industry's cycles. We have continued to focus on increasing our profit margins and lowering our break-even point. To accomplish this we have negotiated flexible supply agreements, introduced flexible pay structures for all employees and optimized our information technology infrastructure for our business. Additionally, we are in the process of transitioning a significant portion of our manufacturing to a new contract manufacturer with a strong presence in Asia. We believe our enhanced presence in Asia will help us to achieve lower manufacturing costs. We expect to continue to streamline our cost structure and our global supply chain in an effort improve our profitability in the highly cyclical semiconductor industry.

We offer a single platform for each of the two general categories of devices being tested: our 93000 Series platform, designed to test SOCs, SIPs and high-speed memory devices, and our Versatest V5000 Series platform, designed to test memory devices, including flash memory and multi-chip packages. Each of these platforms is highly scalable and flexible and contains advanced, innovative test technology. We also provide high levels of test application expertise, services and support for our customers who use these platforms.

Our 93000 Series platform, introduced in 1999, tests SOCs, SIPs and high-speed memory devices, which are used in a very wide range of electronic products including MP3 players, digital televisions, television set-top boxes, PCs, gaming consoles and cell phones and other wireless communication devices. The scalability and flexibility of the 93000 platform, enabled by its advanced, innovative test technology, allows it to cover the testing requirements for a wide range of devices and applications in all stages of bringing a semiconductor product to market, from production prototype to high-volume manufacturing, assisting device manufacturers in speeding time to market and lowering the overall cost of test.

Scalability. Our 93000 platform, with its "tester-per-pin" architecture, is highly scalable in a number of ways, including with respect to the frequency range of the applied test signals, the number of pins to accommodate ICs with different pin counts and the number of devices that can be tested in parallel. The 93000 Series platform with our latest generation Pin Scale digital cards is scalable in frequency performance from 800 Mbits/second to 12 Gbits/second, addressing the test needs for a wide range of today's high-speed interfaces, including PCI Express, HyperTransport, Serial ATA and ultra-high-speed I/O buses required for wired communications. With up to 32 channels per digital card and the ability to use from 4 to 64 cards per system, the 93000 Series platform can scale in the number of pins that it tests simultaneously, from 128 to 2,048 pins, enabling it to test large numbers of devices in parallel. Our 93000 Series platform's scalability allows a customer to initially buy a 93000 Series platform with just a few test pins and moderate frequency performance capabilities today and then upgrade to more pins and greater frequency performance capabilities as test requirements change.

Our 93000 Series platform's scalability is enabled by its "tester-per-pin" architecture. SOCs, SIPs and high-speed memory devices are complex and sophisticated, and each device pin may need to be tested independently for a thorough and complete test. Different SOCs, SIPs and high-speed memory devices have different numbers of pins. By being able to select the number of digital cards and pins in the system, the exact test system can be specified. A single 93000 Series system can test both different types and different numbers of devices by loading different test

programs onto the test processor. This ability to quickly change the type and number of devices being tested makes our test systems particularly well suited for subcons who test a wide range of products.

With its scalable "tester-per-pin" architecture, the 93000 Series platform is the only SOC/SIP/high-speed memory test platform to offer a floating, per-pin licensing program. Our InstaPin performance library gives customers instant access to the different speed and memory settings in the test processors, pin-by-pin. Because these licenses are able to be assigned from pin to pin within a tester, resources are utilized only when needed, where needed and without having to reconfigure system hardware. We believe that competing test platforms require manufacturers to manually reconfigure hardware or swap out entire test systems, lengthening test time and increasing cost of test. With the 93000 Series platform's InstaPin performance library, our customers buy only the capability they need, pin-by-pin, and can easily use software to configure their test systems to meet the next device's test requirements.

Flexibility. Our 93000 Series platform can test a wide range of applications with only one test system. Some competitors require a device manufacturer to switch between different test systems in order to run the tests required for different applications. This is a cumbersome and time-consuming process. Not only can this process take hours to perform, which raises the overall cost of test, but the extra test system required to run the different application tests takes up valuable floor space within the manufacturing facility. In contrast, a single 93000 Series system is able to test the high-speed digital, analog/mixed signal, RF, embedded memory, high-speed memory and high speed interface I/O buses found in a wide range of applications without having to move devices between different test systems. Our 93000 Series platform also supports a number of advanced test methodologies such as BIST, DFT and concurrent test. As a result, our customers can test their portfolio of devices on a single platform, enabling them to cost-effectively address the changing test needs common in the semiconductor industry. This flexibility is particularly well suited to subcons, who test a wide variety of products.

In addition to our 93000 Series platform's ability to adapt to a constantly changing test environment, the platform was built to be ready for future requirements. This means as devices get faster, interfaces and specifications of devices change or more capabilities are integrated into devices, the 93000 Series platform can be quickly updated or upgraded to accommodate the new technology as it becomes available. This is critically important to large, cutting-edge device manufacturers who constantly seek to remain at the head of the technology curve. When companies have to invest in new test systems, rather than simply upgrade their existing systems, their cost of test inevitably increases. The flexibility of the 93000 Series platform means that our customers' investments in our test platforms are protected as they can continue to use the 93000 Series platform over several generations of products.

Enabled by advanced, innovative test technology. Our 93000 Series platform's "tester-per-pin" architecture enabled by its ASIC-based and liquid cooled design is what makes the platform scalable, flexible and able to achieve high performance and accuracy in a small test platform footprint. Its "tester-per-pin" architecture provides for an ASIC-based test processor which tests each pin of each device, with all test processing done locally in the test processors and each test processor operating independently and in parallel to the other test processors testing the other pins of the devices. The use of high performance ASICs in the test processors is what allows the test processors to achieve high performance and test a large number of devices in parallel while being capable of fitting into a test system that occupies a relatively small footprint on the floor of the manufacturing facility.

Our use of liquid cooling technology is another key element of the 93000 Series platform's design. The combination of the 93000 Series' "tester-per-pin" architecture and small test platform

footprint means that there are a very large number of high performance ASICs concentrated into a small amount of space. Maintaining the test system's high performance, accuracy and reliability for sustained periods of time in real world operational conditions requires an efficient means of dissipating the considerable amount of heat generated by the high performance ASICs. To address this issue we introduced our first liquid cooled tester in 1991 and have continued to utilize liquid cooling in the 93000 Series platform because it provides lower operating temperatures, greater system reliability, reduced operating costs, improved accuracy and speed and quieter and cooler operation than the traditional air cooling used in many of our competitors' products. As a result, our 93000 Series systems provide our customers with a high performance and reliable test solution which, when compared to some of our competitors' air cooled products, utilizes a relatively small amount of space on the semiconductor test floor and is quiet and cool in its operation.

Our Versatest V5000 Series platform, introduced in 2004, tests flash memory, SRAM, DRAM and mixed memory devices contained in a very wide range of electronic products. It can also test multi-chip packages containing single or multiple types of memory, addressing the emerging use of MCPs to satisfy the increasing memory requirements of consumer electronics devices. Different systems are available that can be optimized for wafer test, final test or engineering development. The flexibility of this platform ensures that customers can test a number of different memory types at different stages of manufacturing, allowing them to change their mix of products without having to change test platforms.

Scalability. Our Versatest V5000 Series platform, with its "tester-per-site" architecture, is a highly scalable test solution designed specifically for the testing of memory devices to enable highly parallel and efficient testing to lower customers' overall cost of test and shorten customers' time to market. Low cost of test is achieved through testing efficiency and parallelism. Testing more devices in parallel can significantly reduce cost of test, especially in high volume manufacturing, but only if the tester architecture does not result in increased test times. The Versatest Series platform's "tester-per-site" architecture enables increased parallelism without any effect on test time, thus supporting highly parallel tests with high throughput. As a result of the scalability of our Versatest Series platforms, customers can buy test systems to meet their current exact requirements at the lowest capital cost, and then upgrade as their test requirements change.

We have three Versatest V5000 Series systems, each with a distinct purpose in semiconductor testing and with different levels of scalability depending on that purpose:

The scalability of our Versatest V5000 Series systems is enabled by a patented "tester-per-site" architecture. Designed specifically for memory testing, this architecture enables highly parallel and efficient testing of memory devices as well as a high level of scalability by utilizing a separate and independent test processor for each test site of the system. This test processor contains a dedicated set of resources, including power supplies, test pattern generators, test sequence controllers and error detection circuitry, that can be independently applied to each device under test. This independent control of each device under test ensures the flexibility of testing a wide variety of different memory types without a change in tester hardware. In addition, we believe our tester-per-site architecture is more efficient than some competitive systems that share resources across several devices under test. Competing systems that do not apply a tester-per-site architecture must test these devices sequentially, causing test times to increase compared to our parallel approach.

Flexibility. There are fewer and fewer pure NOR and NAND flash manufacturers, and the test mix for most manufacturers now includes several different types of memory such as Flash, DRAM and SRAM. In addition, device densities are increasing and use of new test methodologies, such as RPC, DFT and BIST, is increasing. The V5000 Series platform has the ability to test Flash, DRAM, SRAM and stacked memory devices on a single platform, and can provide a wide variety of test methodologies, including RPC, DFT and BIST. This flexibility enables our customers to cost-effectively test a wide range of parts without having to change test platforms.

Enabled by advanced, innovative test technology. Our Versatest V5000 Series system's "tester-per-site" architecture enabled by its ASIC-based design is what makes the platform scalable, flexible and able to achieve high performance and accuracy in a small test platform footprint. The "tester-per-site" architecture of the Versatest V5000 Series system provides for an ASIC-based test processor for the testing of devices at each test site of the system. All test processing is done locally in the test processors at each test site, with each test processor operating independently and in parallel to the other test processors testing devices at the other test sites. As in the 93000 Series platform, the test processors use high performance ASICs to achieve high performance and test a large number of devices in parallel while being capable of fitting into a test system that occupies a relatively small footprint on the floor of the manufacturing facility. Through the addition of additional test sites and test processors, the Versatest V5000 Series system can be easily scaled to test more devices in parallel as customers' requirements change, and the use of a separate and independent test processor at each site of the system means that the speed of the test will stay the same as sites are added for additional parallel testing.

Our optional Programmable Interface Matrix, another of our advanced innovative technologies, helps to further boost the parallelism of our Versatest V5500 Series system for high volume production testing of packaged devices. Much like a telephone switching system routes callers to their destinations, the Programmable Interface Matrix routes testing resources to the individual memory or MCP that requires testing. The switching is purely electronic, resulting in a faster and more reliable resource switching than mechanical relays, with less downtime. It enables testing of up to 512 devices in parallel for complex and high-pin-count MCPs and the flash memory prevalent in mobile devices. The Programmable Interface Matrix's 24,576 pins ensure that even highly complex memory devices can be tested with high parallelism and thus at lower cost.

Like our 93000 Series systems, our Versatest V5000 Series systems utilize liquid cooling technology that provides them with lower operating temperatures, greater system reliability, reduced

operating costs, improved accuracy and speed and quieter and cooler operation than the traditional air cooling used in many of our competitors' products. In addition to enabling our Versatest V5000 Series systems to utilize a relatively small amount of space on the semiconductor test floor and be quiet and cool in the operation compared to some of our competitors' air cooled products, our liquid cooling technology enables the very high tester density, and hence the high parallelism of test, of our Versatest V5000 Series systems and our optional Programmable Interface Matrix.

Addressing unique challenges of multi-chip packages. The rapid emergence of multi-chip packages, or MCPs, creates special testing challenges for memory device manufacturers in the final test of packaged devices. State-of-the-art consumer devices, especially mobile devices, continue to pack more functionality into smaller spaces. We are able to test concurrently the flash memory, SRAM and DRAM devices that are often stacked into a single multi-chip package. All of the memory types in an MCP must be tested, but each memory type requires very different test capabilities. We believe that competing test solutions providers cannot effectively or efficiently test all memory types in MCPs without multiple insertions of the devices, usually on different test systems. In these situations, the increased test time and test floor complexity can significantly increase the cost of test. The scalable "tester-per-site" architecture of our Versatest V5000 Series platform has allowed us to develop product enhancements and upgrades to enable our Versatest V5000 Series systems to test each MCPs with flash memory, SRAM and DRAM, the most common memory devices contained in MCPs, without repeated insertions, providing our customers with high tester utilization and lower cost of test. The Versatest V5000 Series platform's scalable architecture and software tools shared across different test systems have further benefited MCP testing as programs previously created for testing single memories can be reused for testing the same type of memory on MCPs, reducing engineering time and thereby lowering overall cost of test.

Our worldwide service organization performs a wide variety of services for our customers including professional test expertise services and total system support and professional services. Professional services include value-added, proactive services such as yield optimization and test program development assistance. We deliver, on a global basis, expertise across a wide range of applications to assist our customers in quickly delivering new feature-rich products to the market. Systems support includes ongoing and reactive services such as repair, calibration and relocation as well as education and training.

We strive to provide high levels of support and service through the life-cycle of our products. To this end, generally we provide a standard one-year warranty which can be extended by our customers on an annual basis.

We believe that our test platforms are among the most highly scalable platforms in the semiconductor test industry. At the same time, in an effort to keep our test platforms as technologically advanced as possible, we have in the past introduced and expect to introduce in the future new test platforms, such as our introduction in 1999 of the 93000 Series platform which succeeded our 83000 Series platform. We also expect that from time to time we may make upgrades to our test platforms that are so significant that upgrading older platform versions through simply replacing the test processors will not be cost effective. While these new introductions and significant upgrades give our platforms a finite lifespan as the technology in devices being tested continues to advance, we generally provide continued support for our test platforms for a number of years after we have introduced a new or upgraded test platform and believe that we offer among the most scalable test platforms in the semiconductor test industry, enabling manufacturers to

purchase only the amount and performance level of hardware that they are able to use while retaining the ability to upgrade that hardware as the need arises later.

Our scalable platform architectures provide for operating model efficiencies such as streamlined research and development and reduced total engineering headcount. Our research and development strategy focuses on designing test solutions that lower the overall cost of test for semiconductor designers and manufacturers. We strive to design high performance, low overall cost per test semiconductor test equipment that has high throughput, scalability and flexibility and is efficient to manufacture, easy to use and simple to support.

From our history as part of Agilent, which was part of HP until its spin-off in 1999, we have a legacy of introducing new and innovative designs to market. We have a highly structured approach to maximize research and development efficiency. A group of internal advisors formulates a long-term technology plan with clear objectives. Through our direct engagement with customers, high-priority projects are identified and appropriate resources are allocated. Engineering resources are organized by area of competence to effectively develop expertise and to share technologies across product lines.

Our primary development center for SOC/SIP/high-speed memory test solutions is in Boeblingen, Germany, and our primary development center for memory test solutions is in Santa Clara, California. Our test processor and ASIC development is done in Colorado for both SOC/SIP/high-speed memory and memory test solutions, where we have a center of core competency in VLSI SOC design. The R&D team has years of experience in the semiconductor test industry, with many key personnel having over 20 years of experience in semiconductor test systems design.

Our expenditures for research and development was $25 million, or 14.7% of net revenue, and $26 million, or 32.9% of net revenue, for the three months ended January 31, 2006 and 2005, respectively.

Our expenditures for research and development for fiscal years 2005, 2004 and 2003 were $101 million, $105 million and $97 million, representing 22.1%, 17.3% and 18.0% of net revenue in each year, respectively.

We employ a direct worldwide sales and support model that enables us to meet strategic support commitments. Our experienced sales personnel have the knowledge to address the technical benefits as well as the economic advantages of our systems. Our sales organization is tightly integrated with our services and support organization, which allows us to better understand our customers' needs and to tailor solutions to meet those needs. We believe an ongoing service and support business is critical to providing sustained value to customers and maintaining customer loyalty.

We sell our products and services directly to our customers. We have established specialized sales and services teams to meet the needs of our different types of customers, including IDMs, subcons and fabless design companies. Our sales organization is structured to foster collaboration between our customers. This collaboration allows us to better address our customers' semiconductor test needs and positions us to help IDMs find solutions to their outsourced provider requirements and to help introduce subcons to IDMs who may need their services. As of January 31, 2006, we had 103 people in our sales organization with offices located in all of the major semiconductor manufacturing markets.

Applications engineers work as part of the sales team before a sale is made and assist customers in the use of the product after a sale is made. In the pre-sale role they provide in-depth technical communication with customers, writing complex test programs and performing demonstrations to show how our products solve specific test problems. Post-sale, our sales team assists in the creation of final test programs, and in the integration of the test cell into the customer's environment. We believe that the quality of our applications sales force is a key differentiator in our ability to generate sales and provide customer satisfaction.

Our worldwide service organization represents approximately 31% of our total employee base. Our services organization is supported by a dedicated staff of approximately 485 professionals at our product development centers to address escalations when needed.

For our largest customers, we have dedicated global account managers with dedicated account teams. Account managers are responsible for both sales performance and customer satisfaction. We recognize that we must have strong, long-term customer relationships to grow our business over the semiconductor cycle. For that reason, each account manager is specifically responsible for the general relationship with the customer, including the coordination and preparation of technology roadmap exchanges. The account manager is also responsible for the support services for that account and achieving a high level of customer satisfaction.

Our customers are broadly distributed across geographic and product markets. For the fiscal year ended October 31, 2005, no customer accounted for 10% or more of our total net revenue. For the fiscal years ended October 31, 2004 and 2003, one customer and three customers each accounted for more than 10% of our total net revenue, respectively.

Revenue from customers in North America accounted for approximately 27.2%, 28.0% and 38.5% of total net revenue for the fiscal years ended October 31, 2005, 2004, and 2003, respectively. Revenue from customers in Europe accounted for approximately 9.4%, 10.7% and 7.8% of total net revenue for the fiscal years ended October 31, 2005, 2004, and 2003, respectively; revenue from customers in Japan accounted for approximately 20.6%, 15.8% and 13.5% of total net revenue for the fiscal years ended October 31, 2005, 2004 and 2003, respectively; and revenue from companies in other countries in Asia accounted for approximately 42.8%, 45.5% and 40.2% of total net revenue for the fiscal years ended October 31, 2005, 2004 and 2003, respectively.

Our top ten customers based on total net revenue for the year ended October 31, 2005, in alphabetical order, include: Amkor Technology, Inc., Freescale Semiconductor, Inc., Global Testing Corporation, Philips Semiconductors, Siliconware Precision Industries Co., Ltd., Spansion Inc., STATS ChipPAC Ltd. and STMicroelectronics NV.

As of January 2006, we operated under two manufacturing models: a hybrid internal/contract manufacturing, or CM, model for the 93000 Series platform, and a pure CM model for the Versatest V5000 Series platforms. We are shifting to greater reliance on independent CMs to manufacture both our 93000 Series and Versatest Series platforms.

We have selected Flextronics as our primary CM and we will shift our production to its facilities in China. We expect Flextronics to begin manufacturing our Versatest V5000 Series platforms in China beginning in the middle of calendar 2006. The complete transfer of the Versatest V5000 Series platform manufacturing to China is planned to be completed by the end of calendar 2006. We expect Flextronics to begin manufacturing our 93000 Series platform in China in the second half of calendar 2006. The complete transfer of volume manufacturing of the 93000 Series platform is

expected to occur in the first half of calendar 2007. Flextronics will continue to do limited early production runs of the 93000 Series platform in Germany. We expect this model to improve our ability to manage costs in a cyclical market, drive down inventory costs and exposure, improve our responsiveness to customer demand and place us closer to emerging markets.

Our agreement with Flextronics will expire in March 2010 although it may be automatically extended for subsequent terms of one year, absent nine-months notice of an intention to terminate the agreement from us or Flextronics. The agreement may also be terminated by us or Flextronics for other customary reasons, including if the other party becomes subject to bankruptcy proceedings or materially breaches the agreement. In addition, generally, we may terminate this agreement if Flextronics fails to make a delivery on more than 15% of our placed orders in any three-month period. Under this agreement, we are not obligated to use Flextronics exclusively to manufacture our products, and Flextronics is not obligated to manufacture test equipment exclusively for us. We and Flextronics have entered into several asset purchase agreements under which we have transferred or will transfer certain assets and employees to Flextronics.

We will continue to maintain direct relationships with our key component suppliers and to control procurement of critical system components. This will allow us to respond quickly to changes in market demand and assure availability of parts. Effective component procurement is also critical to product quality, manufacturing cycle time and cost. We believe that the timely availability of low-cost, quality components provided by our planning and procurements teams, coupled with the large and variable capacity of our contract manufacturers, is an effective manufacturing strategy for our cyclical market.

Our scalable platform architecture means we can reuse many component and subsystems in many different test system configurations. Component reuse helps us keep lower inventory levels, while helping us get better prices for the higher volumes of parts we buy. This is true both for the 93000 Series and the Versatest V5000 Series platforms.

Our quality assurance program focuses on continuous improvement in product quality. Engineering teams assess quality at critical manufacturing stages to identify potential problems. Manufacturing engineers work with our CM to fine-tune the production process, improve quality and efficiency and solve problems as they arise. Customer service personnel extend the quality process into the field by monitoring the quality and reliability of systems at customer sites.

The market for semiconductor test systems is highly competitive, rapidly evolving and subject to changing technology, customer needs and new product introductions. We face substantial competition throughout the world in each of our product areas. Our primary competitors include Advantest, Credence Systems, LTX Corporation, Nextest, Teradyne and Yokogawa. We also compete with products developed internally by our customers.

We believe that we compete effectively with our competitors on the basis of these factors. Our ability to remain competitive will depend to a great extent upon our ongoing performance in the areas of product development and customer support. To be successful in the future, we believe that we must respond promptly and effectively to the challenges of technical change and our competitors' innovations by continually enhancing our product offerings. Additionally, our ability to compete effectively may also be adversely affected by, among other things, the implementation by semiconductor designers and manufacturers of chip designs that include built-in self test capabilities, the long-standing relationships between our competitors and certain semiconductors designers and manufacturers and the use by semiconductor designers and manufacturers of test strategies that include less expensive, single-purpose semiconductor test platforms.

We may also face competition from Agilent in the future. Pursuant to the intellectual property matters agreement between us and Agilent, Agilent has agreed that, except as described below, for a period of three years after the distribution date, Agilent will not develop, manufacture, distribute, support or service automated semiconductor test systems for providing high-volume functional test of ICs (including memory and high speed memory devices and SOCs) or SIPs, or components for such test systems. However, during this three-year period, Agilent may compete with us with respect to:

In addition, the intellectual property matters agreement permits Agilent to fulfill its obligations under contracts in existence as of March 1, 2006, even though fulfilling such obligations would otherwise have been precluded during the non-competition period and even if fulfilling such obligations would result in Agilent competing with us. This exception will allow Agilent to fulfill its obligations to a semiconductor manufacturer pursuant to which Agilent will develop and sell components to the manufacturer for use in the manufacturer's semiconductor test systems

purchased from a competitor of Verigy. While we do not believe that Agilent fulfilling these obligations will have a material effect on our business or prospects, we may in the future be less successful at selling test systems to this semiconductor manufacturer than would have been the case were the manufacturer not able to combine products from Agilent with the test systems of our competitor.

Our success depends in large part on our proprietary technology. We are not depending on any individual patent but instead we rely on a combination of patents, copyrights, trademarks, trade secrets, confidentiality provisions and licensing arrangements to establish and protect our proprietary rights. We may be required to spend significant resources to monitor and protect our intellectual property rights. We may not be able to detect infringement and may lose our competitive position in the market before we do so. In addition, competitors may design around our technology or develop competing technologies. Intellectual property rights may also be unavailable or limited in some foreign countries, which could make it easier for competitors to capture market share. We often rely on licenses of intellectual property useful for our business. We cannot be sure that these licenses will be available in the future on favorable terms or at all. In addition, our position with respect to the negotiation of licenses may change as a result of our separation from Agilent.

non-compete described above. Use of the retained underlying technologies by our competitors could potentially harm any or all parts of our business.

Our international headquarters are located in Singapore, in space which we currently share with Agilent. Following our separation, we are occupying approximately 37,000 square feet of office space under a long-term sublease from Agilent. Our U.S. headquarters, primary customer training and demonstration facilities and flash memory development center are located in Northern California, in space which we currently share with Agilent. We expect to enter into a lease for approximately 90,000 square feet in Santa Clara, California, separate from Agilent, to be occupied by the end of 2006. Following our separation, until such time as this new space is available, we are operating under a short-term sublease from Agilent.

Boeblingen, Germany is the site of our 93000 Series platform development and currently includes research and development, marketing and manufacturing. It is also the primary site for our European sales and support operation. We expect to remain in our existing location following our separation from Agilent under a long-term lease for approximately 105,000 square feet.

In Shanghai, China, we currently operate out of space shared with Agilent which is the home to sales, support and marketing for China. In addition, it houses the Application Development Center, which develops applications for our worldwide customer base. We expect to enter into a new lease for a facility with approximately 42,000 square feet to be occupied by the end of 2006. Until that time, we are operating in our current location under a short-term sublease from Agilent.

Our other facilities include domestic sales and support offices in Austin, Texas, San Diego, California and Andover, Massachusetts; foreign sales and support offices in France, Italy, Japan, Korea and Taiwan; and an ASIC development office in Colorado. Our facilities in each of these locations have been leased, in some cases from Agilent, following our separation from Agilent. In addition, we expect to occupy several other locations under leases for transitional periods of varying lengths following our separation from Agilent.

We believe that our existing facilities are adequate for our current needs and that suitable additional or alternative space will be available on commercially reasonable terms if and when it becomes needed.

As of January 31, 2006, we had 1,558 employees, of which 487 were located in Europe, 452 were located in Asia (including 161 in Japan and 86 in China) and 619 were located in North America. Of our total employees, 350 were principally dedicated to research and development, 270 were dedicated to sales, general and administrative, 696 were dedicated to customer service, marketing, applications and services and support and 242 were dedicated to manufacturing. We consider our relationship with our employees to be good. None of our domestic employees are represented by a labor union or covered by collective bargaining agreements, although works councils exist in various foreign jurisdictions where we have employees.

We are a party to litigation matters and claims that are normal in the course of our operations. While we believe that the ultimate outcome of these matters will not have a material adverse effect on us, the outcome of these matters is not determinable and negative outcomes may adversely affect our financial position, liquidity, cash flows or results of operations.

For information on the geographic concentration of our net revenues and long-lived assets, please see note 19 to our combined financial statements which appear elsewhere in this prospectus.

Our directors and executive officers and certain information about them as of June 2, 2006 are as follows:

Name	Age	Position
Keith L. Barnes	54	President, Chief Executive Officer and Director Designee
Adrian Dillon	52	Director and Interim Vice President, Chief Financial Officer and Treasurer
Robert J. Nikl	51	Chief Financial Officer Designee
Gayn Erickson	41	Vice President, Memory Test
Kristen Robinson	43	Vice President, Human Resources
Pascal Ronde	43	Vice President, Sales, Service and Support
Kenneth M. Siegel	47	Vice President and General Counsel
Hans-Juergen Wagner	46	Vice President, SOC Test
Yih-Neng Lee	47	Director
Paul Chan Kwai Wah	52	Director Designee
C. Scott Gibson	53	Director Designee
Ernest L. Godshalk	61	Director Designee

Keith L. Barnes has served as our President and Chief Executive Officer since May 1, 2006. Mr. Barnes is also expected to be appointed as a director effective as of June 5, 2006. From October 2003 through April 2006, Mr. Barnes was Chief Executive Officer and Chairman of Electroglas, Inc., an integrated circuit prober manufacturer located in San Jose, California. From August 2002 to October 2003 Mr. Barnes was a management consultant. He served as Chairman of the Board and Chief Executive Officer of Integrated Measurement Systems, Inc., a manufacturer of engineering test stations and test software, from 1995 until 2001 when it was acquired by Credence Systems Corporation. Prior to joining IMS, Mr. Barnes was a division president at Valid Logic Systems and later Cadence Design Systems. Mr. Barnes is a director of Cascade Microtech, Inc. and Clarity Visual Systems, and a Regent at The University of Portland.

Adrian Dillon has served as our Interim Vice President, Chief Financial Officer and Treasurer since February 2006 and as a director since March 2006. Mr. Dillon has been the Executive Vice President, Finance and Administration, Chief Financial Officer of Agilent since December 2001. Prior to assuming this position, Mr. Dillon served as Executive Vice President and Chief Financial and Planning Officer of Eaton Corporation from April 1997 to December 2001. Mr. Dillon held various management positions at Eaton Corporation from 1979 to 1997. Mr. Dillon is a member of the board of directors of Williams-Sonoma, Inc.

Robert J. Nikl was appointed as our Chief Financial Officer in May 2006, effective no later than June 20, 2006. From September 2004 through May 2006 he served as Senior Vice President, Finance and Chief Financial Officer of Asyst Technologies, Inc., an integrated automated semiconductor solutions company. Prior to joining Asyst, Mr. Nikl held several positions from 1994 to 2003 in finance, operations management and administration with Solectron Corporation, a provider of electronics manufacturing and integrated supply chain services, most recently as Corporate Vice President, Finance of global operations from 1999 to November 2003. Prior to joining Solectron in 1994, Mr. Nikl held a number of senior financial management positions for Xerox Corporation, including Vice President, Finance for Xerox Engineering Systems. Mr. Nikl is a certified public accountant with active licenses in the states of California and New York.

Gayn Erickson has served as our Vice President, Memory Test since February 2006. Mr. Erickson has served as Vice President of the Memory Test business within the Automated Test

Group of Agilent since May 2005. Prior to assuming that position, Mr. Erickson served as Vice President, Sales and Marketing, of the Memory Test business from August 2004 to May 2005. He served as Senior Marketing Manager of the Memory Test business from 2000 to 2004.

Kristen Robinson has served as our Vice President, Human Resources since February 2006. Ms. Robinson has served as Vice President, Human Resources of the Semiconductor Test Solutions business of Agilent since November 2005. Prior to assuming that position, Ms. Robinson served as Vice President, Global Compensation and Benefits, of Agilent from May 2004 to November 2005. She served as Strategic Human Resources Manager of Agilent from 2001 to 2004. Ms. Robinson was an Operations Manager of Agilent from 2000 to 2001.

Pascal Ronde has served as our Vice President, Sales, Service and Support since February 2006. Mr. Ronde has served as the Vice President of Sales, Service and Support for the Automated Test Group of Agilent since October 2000.

Kenneth M. Siegel has served as our Vice President and General Counsel since February 2006. Prior to assuming that position, Mr. Siegel was Senior Vice President and General Counsel of Agile Software Corporation from October 2003 to January 2006. Mr. Siegel served as Senior Vice President of Efficient Networks, Inc. from 2000 to 2002, and General Counsel from 2000 to 2001.

Hans-Juergen Wagner has served as our Vice President, SOC Test since February 2006. Mr. Wagner has served as Vice President, SOC Test, of the Semiconductor Test Solutions business of Agilent since September 2005. Prior to assuming that position, Mr. Wagner served as Vice President, Memory Test, of the Automated Test Group from November 2004 to September 2005. He served as Vice President, Computer Test from 2003 to 2004. Mr. Wagner was a Research and Development Manager in the Automated Test Group from 1998 to 2003.

Yih-Neng Lee has served as a Director since March 2006. Mr. Lee has been a Vice President and General Manager, Asia Field Operation, of the Automated Test Group since July 2005. From November 2004 until July 2005, Mr. Lee was a Vice President and General Manager of worldwide Fabless and Sub Contract Manufacturing for Agilent's semiconductor test business. Prior to that time, Mr. Lee served as Vice President and General Manager, Sales, Marketing and Support, for the worldwide Fabless Semiconductor Test business from November 2001 until October 2004. Mr. Lee was Vice President and General Manager of Sales, Marketing and Support, for the Asia Semiconductor Test business for HP.

Paul Chan Kwai Wah was appointed as a director in May 2006, effective June 5, 2006. Mr. Chan served as Senior Vice President and Managing Director, Asia Pacific, for Hewlett-Packard Asia Pacific Pte Ltd from May 2002 until April 2006. From August 1995 to April 2002, Mr. Chan served as Vice President and Managing Director, Asia Pacific, for Compaq Computer Asia/Pacific Pte Ltd. Mr. Chan currently serves on the board of directors of Singapore Telecommunications Limited since November 1999 and has previously served on the board of several other institutions, including the Singapore Economic Development Board from February 2004 to January 2006.

C. Scott Gibson was appointed as a director in May 2006, effective June 5, 2006. Mr. Gibson has served as a Director of Radysis Corporation since June 1993 and as Chairman of its board of directors since October 2002. From January 1983 through March 1992, Mr. Gibson co-founded Sequent Computer Systems, Inc., a computer systems company, and served as President from January 1988 to March 1992. Before co-founding Sequent, Mr. Gibson served as General Manager, Memory Components Operation, at Intel Corporation. Mr. Gibson serves on the board of directors of several other companies, including Triquint Semiconductor, Inc., Pixelworks, Inc., NW Natural, Electroglas, Inc., Oregon Health and Science University, the Oregon Community Foundation and the Franklin W. Olin College of Engineering.

Ernest L. Godshalk was appointed as a director in May 2006, effective June 5, 2006. Mr. Godshalk is Managing Director of ELGIN Management Group, a private investment company. From February 2001 until he retired in December 2004, Mr. Godshalk served as President, Chief Operating Officer and a director of Varian Semiconductor Equipment Associates, Inc., a supplier of semiconductor manufacturing equipment. From April 1999 until February 2001, Mr. Godshalk served as Varian Semiconductor's Vice President and Chief Financial Officer. From November 1998 until April 1999, Mr. Godshalk was Vice President, Finance of the semiconductor equipment business of Varian Associates, Inc.

Our board of directors currently consists of two members, who are currently subject to election at our annual meeting of shareholders. We expect to expand the size of our board prior to the closing of this offering and expect that one-third of our board members will become subject to re-election each year.

Executive officers are elected by the board of directors on an annual basis and serve until their successors have been duly elected and qualified. There are no family relationships among any of our directors or executive officers.

As of the closing of this offering, our board of directors will have a nominating and corporate governance committee, an audit committee and a compensation committee, each of which will have the composition and general responsibilities described below:

Audit Committee. Our audit committee will initially be comprised of two or more independent members of our board of directors and will be comprised of three or more independent members of our board of directors within one year of the date of this offering. This committee will have general responsibility for the oversight of, among other things:

Our audit committee will contain at least one audit committee financial expert as required under applicable rules of the SEC and the Nasdaq National Market.

Compensation Committee. Our compensation committee will be comprised of two or more independent members of our board of directors. Furthermore, pursuant to our compensation committee charter, at least two members of the compensation committee will be outside directors as that term is defined in Section 162(m) of the Internal Revenue Code of 1986, as amended, which we refer to as the Code, and at least two members will be non-employee directors within the meaning of Rule 16b-3 of the rules promulgated under the Securities Exchange Act of 1934, as amended. The compensation committee will be responsible for, among other things:

Nominating and Corporate Governance Committee. Our nominating and corporate governance committee will be comprised of two or more independent members of our board of directors. The nominating and corporate governance committee will be responsible for, among other things:

We expect that our non-employee directors, other than Mr. Dillon, will receive an annual cash retainer of $55,000 at the beginning of each fiscal year and will also receive annual, automatic, non-discretionary grants of nonqualified share options and share units, as described below. Each non-employee director, other than Mr. Dillon, will initially receive both of the following grants:

Upon the conclusion of each of our regular annual shareholders' meetings, beginning in 2007, each non-employee director who will continue to be a director after that meeting will automatically receive both of the following grants:

However, a new non-employee director who is receiving the initial grants will not receive the annual grants in the same calendar year.

All automatic grants to a non-employee director will vest on the first anniversary of the date of grant. The share unit grants, however, will not be settled until the third anniversary of the date of grant, at which time a number of ordinary shares equal to the number of share units will be issued to the non-employee director unless deferred. A non-employee director's options will become fully vested in the event of his or her death, total and permanent disability, or retirement after attaining age 65. If a change in control of Verigy occurs, all outstanding options held by non-employee directors will become fully vested.

The exercise price of the non-employee directors' options will be equal to the fair market value of our ordinary shares on the option grant date. A director may pay the exercise price by using cash, ordinary shares that the director already owns, or an immediate sale of the option shares through a broker approved by us. The non-employee directors' options have a 7-year term, except that they expire one year after the optionee leaves the board for any reason.

Additionally, directors will receive a $10,000 retainer for acting as chair of the audit or compensation committees and a $5,000 retainer for acting as chair of other committees.

We expect that our compensation committee will make all compensation decisions regarding the executive officers. We expect that no interlocking relationship will exist between any member of our compensation committee and any member of any other company's board of directors or compensation committee.

All of our ordinary shares are currently owned by Agilent, and thus none of our officers, directors or director nominees own any of our ordinary shares. To the extent our directors and officers own shares of Agilent common stock at the time of the distribution, they will participate in the distribution on the same terms as other holders of Agilent common stock.

The following table sets forth the number of shares of Agilent common stock beneficially owned on April 30, 2006 by each director, each of the executive officers named in the Summary Compensation Table in "Management — Executive Compensation" below, and all of our directors and executive officers as a group. Except as otherwise noted, the individual director or executive officer or their family members had sole voting and investment power with respect to such securities. The total number of shares of Agilent common stock outstanding as of April 30, 2006

was 426,038,654. Unless otherwise indicated, the address of each person listed below is c/o Verigy Ltd., 395 Page Mill Road, Palo Alto, California 94306.

		Shares of Agilent Beneficially Owned
Name of Beneficial Owner
	Number		Percentage
Keith L. Barnes		—		*
Jack P. Trautman(1)		311,591		*
Adrian Dillon(2)		512,850		*
Gayn Erickson(3)		32,293		*
Kristen Robinson(4)		6,544		*
Pascal Ronde(5)		90,273		*
Yih-Neng Lee(6)		40,988		*
All directors and executive officers as a group (9 persons)(7)		1,021,427		*

The following table sets forth all compensation paid for services rendered in all capacities to us during fiscal 2005, to our chief executive officer and our four next most highly compensated executive officers, to whom we refer collectively as the named executive officers in this prospectus. All information is based on the salary and bonus compensation information from Agilent and its subsidiaries.

		Annual Compensation		Long-Term Compensation
Name and Position(s)	Fiscal Year	Salary ($)		Bonus ($)		Other Annual Compensation(1)	Restricted Stock Awards ($)	Shares Underlying Options	All Other Compensation ($)(2)
Jack P. Trautman Former President and Chief Executive Officer	2005	397,200		84,263		—	—	48,000	8,400
Adrian Dillon Interim Vice President, Chief Financial Officer and Treasurer	2005 2004 2003	650,000 650,000 650,000		459,640 526,361 116,706		557,500 569,375 639,069	— — —	80,000 54,000 250,000	8,400 8,200 8,000
Gayn Erickson Vice President, Versatest Series	2005	240,000		30,000		—	—	7,000	8,400
Kristen Robinson Vice President, Human Resources	2005	205,000		84,857		—	—	15,000	2,050
Pascal Ronde Vice President, Sales, Service and Support	2005	292,979	(3)	211,442	(3)(4)	—	—	40,000	7,265	(3)

The following table sets forth certain information concerning grants of Agilent stock options to each of the named executive officers for Agilent's fiscal year ended October 31, 2005.

All Agilent stock options granted to named executive officers in fiscal 2005, other than Mr. Ronde, vest as to 25% of the shares subject to the option on the first anniversary of the vesting commencement date and yearly thereafter. Mr. Ronde's stock options vest in full on March 28, 2009. Under Agilent's 1999 Stock Plan, the Agilent board of directors retains discretion to modify the terms of outstanding options. The percentage of total options granted was based on an aggregate of options to purchase 10,799,719 shares of Agilent common stock granted to Agilent's employees and executive officers in fiscal 2005.

Options were granted at an exercise price equal to the fair market value of Agilent common stock on the date of grant, calculated as the average of the high and low quoted sales price on that date.

The table sets forth the hypothetical gains or "option spreads" that would exist for the option at the end of their respective ten-year terms based on assumed annualized rates of compound stock price appreciation of 5% and 10% from the dates the options were granted until the expiration of the ten-year option term. The 5% and 10% assumed rates are promulgated by the SEC and do not represent our estimate or projection of future share prices or share price growth.

Aggregated Option Exercises in Last Fiscal Year and Fiscal Year End Option Values

The following table sets forth certain information regarding the value of Agilent options held by the named executive officers at the end of Agilent's fiscal 2005.

The value realized is calculated as the fair market value of Agilent common stock at the exercise date minus the per share exercise price multiplied by the number of shares acquired on

exercise. The value of unexercisable in-the-money options is deemed to be the market value at fiscal year end minus the per share exercise price multiplied by the number of unexercisable in-the-money options. The fair market value of Agilent common stock on October 31, 2005, was $31.55 per share, which is equal to the average of the highest and lowest quoted sales price for Agilent's common stock on that date.

The following table shows the estimated annual benefits payable on retirement to Agilent's eligible employees in the United States under Agilent's Deferred Profit Sharing Plan, Retirement Plan and Excess Benefit Retirement Plan. To calculate the number of years of an eligible employee's service, the pension plans will include each eligible employee's service, if any, with HP to that eligible employee's service with Agilent.

	Years of Service
Highest 5 Year Average Compensation	Years of Service
Highest 5 Year Average Compensation	5		10		15		20		25		30
$220,000	$	14,970	$	29,939	$	44,909	$	59,879	$	74,848	$	89,818
300,000		20,970		41,939		62,909		83,879		104,848		125,818
400,000		28,470		56,939		85,409		113,879		142,348		170,818
500,000		35,970		71,939		107,909		143,879		179,848		215,818
600,000		43,470		86,939		130,409		173,879		217,348		260,818
700,000		50,970		101,939		152,909		203,879		254,848		305,818

Benefits exceeding $170,000 for fiscal 2005 and $175,000 for fiscal 2006 will be paid pursuant to Agilent's Excess Benefit Plan. For the 2005 calendar year, no more than $210,000 (as adjusted from time to time by the U.S. Internal Revenue Service) of eligible compensation may be taken into account in calculating benefits payable under the Retirement Plan or the Deferred Profit Sharing Plan. Benefits attributable to annual earnings over $210,000 for fiscal 2005 and $220,000 for fiscal 2006 are payable under the Excess Benefit Retirement Plan. Benefits are payable under the Excess Benefit Plan either in a lump sum or annual installments.

The covered compensation for purposes of calculating benefits under the plans for each of Messrs. Trautman, Dillon and Erickson and Ms. Robinson is the highest five-year average of base pay for such named executive officer.

Messrs. Trautman, Dillon and Erickson and Ms. Robinson have been credited with the following years of service as of October 31, 2005: Mr. Trautman, 4 years; Mr. Dillon, 4 years; Ms. Robinson, 14 years; and Mr. Erickson, 18 years. Retirement benefits shown are expressed as a single life annuity at age 65 and reflect the maximum offset currently in effect under Section 401(l) of the Code to compute the offset for such benefits under the plans. For purposes of calculating the benefit, an employee cannot be credited with more than 30 years of service. Benefits under the Retirement Plan are payable in the form of a single life annuity, a qualified joint and survivor annuity or a lump sum.

Participants in the U.S. tax-qualified retirement plans who become Verigy employees ceased to accrue benefits under the Agilent retirement plans as of the separation date. Upon the distribution date, these employees will be entitled to take a distribution from the plans in accordance with the terms of such plans.

We currently expect that we will enter into change in control and severance agreements with each of our executive officers prior to the closing of this offering.

On April 6, 2006, Keith L. Barnes accepted an offer to become our chief executive officer, effective May 1, 2006, upon the terms and conditions set forth below. Mr. Barnes will be paid an annual base salary of $500,000 per year. His target variable compensation bonus opportunity will be 100%, broken out as follows: (1) 15% target bonus opportunity based upon Verigy's long-term financial goals; and (2) 85% target bonus opportunity based upon other short-term financial and operational goals to be determined. For his first year of employment, Mr. Barnes is guaranteed a payout at 50% ($250,000) of his target annual bonus, contingent on his continued service.

For a period of up to 3 years, we will reimburse Mr. Barnes up to $6,500 per month for his actual and reasonable living expenses (including lodging, car rental, meals, and travel to and from Portland, Oregon for Mr. Barnes and on occasion for his family). After 3 years, Mr. Barnes must relocate to the Bay Area in California at which time we will reimburse him for his reasonable moving expenses plus any taxes he incurs on our payment to him.

On the effective date of this offering, subject to approval of the Verigy board, Mr. Barnes will receive (1) an initial grant of share units of Verigy equivalent to $800,000 in value where the number of shares will be determined using the price at which the shares will first be offered to the public (referred to as the "Public Offering Price"), and (2) a non-qualified option to purchase 750,000 shares, with an exercise price equal to the Public Offering Price. Both components of this award will be effective as of the date of the IPO and will vest 25% per year on an annual basis commencing on the first anniversary of the grant date.

Prior to the date of the IPO, in the event of his involuntary termination without cause, his voluntary termination with good reason or if the IPO is not completed by December 31, 2006, Mr. Barnes will be eligible to receive the following severance benefits: payment equal to 12 months of his then-current annual base salary, 100% of his annual target bonus plus COBRA coverage until the earlier of (1) 12 months after his termination or (2) his commencing employment with another employer that offers medical coverage. After the date of the IPO, in the event of his involuntary termination without cause or his voluntary termination for good reason within 24 months from the date of the IPO, his unvested stock options and restricted stock will immediately vest, and he will be eligible to receive payments from Verigy equal to 100% of his current annual base salary, 100% of his annual target bonus and COBRA coverage until the earlier of (1) 12 months after his termination or (2) his commencing employment with another employer that offers medical coverage. Mr. Barnes will also participate in Verigy's change of control program which will include a severance payment equal to 200% of his annual base salary and target annual bonus as well as accelerated vesting of all outstanding stock options and share units in the event of his termination of employment with us under specified conditions following a change in control.

On May 26, 2006, Robert J. Nikl accepted an offer to become our chief financial officer, effective no later than June 20, 2006, upon the terms and conditions set forth below. Mr. Nikl will be paid an annual base salary of $325,000 per year. His annual target variable compensation bonus opportunity will be 70%, paid semiannually and broken out as follows: (1) 15% target bonus opportunity based upon Verigy's long-term financial goals; and (2) 55% target bonus opportunity based upon other short-term financials and operational goals to be determined. For his first year of employment, Mr. Nikl is guaranteed a payout of at least 50% ($113,750) of his target annual bonus, paid semiannually and contingent on his continued service. We have agreed to make a one-time cash bonus payment to Mr. Nikl equal to $50,000 upon commencement of his employment with us. We have also agreed to reimburse Mr. Nikl for reasonable relocation costs up to a maximum amount of $100,000.

On a date subsequent to the date on which Mr. Nikl commences his employment, subject to the approval of the Verigy board or a committee thereof, Mr. Nikl will receive (1) an initial grant of share units of Verigy equivalent to $250,000 in value and (2) a non-qualified option to purchase shares equivalent to $680,000 in value. The grant date for each of the restricted stock and non-qualified option will be the date that the compensation committee, the executive committee or a management committee authorized by one of them meets to award these shares. The option exercise price will be the fair market value (average of high and low of Verigy stock price) on the date of grant. Both components of this initial grant will vest 25% per year, on an annual basis, with the first 25% vesting on the first anniversary of the grant date. In addition, Mr. Nikl is entitled to receive, on a date subsequent to the date on which he commences his employment, an additional share units grant equivalent to $200,000 in value, which will vest 100% on the first anniversary of the grant date. The terms and conditions of the grant will be governed by the Verigy stock plan and subject to the Verigy board of directors' approval.

Upon commencement of his employment with us, Mr. Nikl will also have the opportunity to enter into a severance agreement with us which will provide, among other things, a payment of one year's base salary plus 100% of his targeted annual bonus. Mr. Nikl will also participate in Verigy's change of control program which will include a severance payment equal to 200% of his annual base salary and target annual bonus as well as accelerated vesting of all outstanding stock options and share units in the event of his termination of employment with us under specified conditions following a change in control.

We have entered into retention bonus agreements with Jack P. Trautman, our former President and Chief Executive Officer, and Pascal Ronde, our Vice President, Sales, Service and Support. Under these agreements, each of Mr. Trautman and Mr. Ronde will be paid, on the payment date described in the next sentence, a retention bonus equal to the sum of (1) 12 months of the executive's annual base salary in effect on the payment date and (2) an amount equal to one year's target bonus payable to the executive under Agilent's applicable bonus plan in effect on the payment date. The "payment date" for these purposes is defined as the earlier to occur of (a) the closing date of the distribution by Agilent of its ordinary shares of Verigy to Agilent stockholders and (b) December 31, 2006. Each of Mr. Trautman and Mr. Ronde must remain employed by Agilent or us through the payment date in order to receive the bonus payment. If and when these bonuses are paid, we expect that Mr. Trautman's retention bonus payment would be approximately $675,000 and that Mr. Ronde's retention bonus payment would be approximately $450,000.

All of our employees will continue to be eligible to participate in the Agilent 1999 Stock Plan until the date, if any, on which Agilent distributes our ordinary shares to its stockholders or, if earlier, the date on which Agilent ceases to own at least 50% of the total combined voting power of all classes of our share capital. At such time, each of our employees will be deemed terminated from Agilent for purposes of the Agilent 1999 Stock Plan and each employee will have a 3-month period of time during which to exercise his or her vested options as is indicated in his or her stock option agreement. Each outstanding and vested option to purchase shares of Agilent common stock held by our employees that is not exercised within the applicable post-termination exercise period will be cancelled. At the time of the distribution or, if earlier, the date upon which Agilent ceases to own at least 50% of the total combined voting power of all classes of our share capital, each unvested option to purchase shares of Agilent common stock held by our employees will be replaced by options to purchase ordinary shares of Verigy. The new options will have substantially the same terms and conditions as the unvested Agilent options which were cancelled. In addition, with

respect to the new options to purchase our ordinary shares, in order to determine the number of shares subject to the new option and the per share exercise price, we will multiply the number of shares purchasable under each unvested Agilent option by a ratio determined at the time of the distribution and divide the exercise price per share of each such new option by the same ratio. The ratio will be based upon the stock price of Agilent common stock prior to the distribution date compared to the share price of our ordinary shares following the distribution date. The number of shares subject to the new options will be rounded down to the nearest whole number and the exercise price per share of such new option will be rounded up to the nearest whole cent. In general, Agilent stock options vest as to 25% of the shares subject to the option on the first anniversary of the vesting commencement date and yearly thereafter. Agilent options are granted at an exercise price equal to the fair market value of Agilent common stock on the date of grant, calculated as the average of the high and low quoted sales price on that date. Agilent stock options generally have a term of 10 years.

We do not currently know how many new options we will issue following the cancellation of the unvested Agilent options because the ratio variables will not be known until the distribution date. As of January 31, 2006, Verigy employees held options to purchase approximately 4,336,000 shares of Agilent common stock with a weighted average exercise price of approximately $29.00. Of such options, we estimate that options to purchase approximately 1.6 million shares, with a weighted average exercise price of approximately $28.00 per share, will remain unvested as of October 31, 2006 (assuming no additional grants and no cancellations prior to such date) and will be replaced by Verigy options as described above.

Under the Agilent 1999 Stock Plan, certain key employees of Agilent were granted awards of restricted Agilent common stock. Restricted shares of Agilent common stock held by our employees prior to the distribution date will be cancelled at such time and replaced by restricted ordinary shares with a value that is comparable to the value of the cancelled Agilent restricted common stock plus the dividend by Agilent to its stockholders of our ordinary shares.

Generally, all of our employees were eligible to participate in Agilent's employee stock purchase plan until our separation from Agilent. At such time, our employees ceased to be eligible for the plan, and no further payroll deductions will be made. In addition, outstanding rights to purchase shares of Agilent common stock under Agilent's employee stock purchase plan were terminated, and any amounts withheld will be refunded.

Our board of directors expects to adopt our 2006 Equity Incentive Plan, or 2006 Plan, prior to the completion of this offering. Agilent, as our sole shareholder, also expects to approve this plan.

Share Reserve. We expect to reserve 10,300,000 ordinary shares for issuance under our 2006 Plan. In general, if restricted shares or shares issued pursuant to the exercise of options awarded under the 2006 Plan are forfeited, then those options shares will again become available for awards under the 2006 Plan. If options, share appreciation rights or share units are forfeited or terminated before being exercised or settled, the shares subject to such awards will again be available for issuance under the 2006 Plan. The number of shares issued pursuant to the settlement of share appreciation rights or share units shall reduce the share reserve with respect to such awards under the 2006 Plan. We have not yet granted any options or other awards under the 2006 Plan.

Administration. The compensation committee of our board of directors will administer the 2006 Plan. The compensation committee will have the complete discretion to make all decisions relating to the interpretation and operation of the 2006 Plan. For example, the committee will have the discretion to determine who will receive an award, what type of award it will be, how many shares will be covered by the award, what the vesting requirements will be, if any, and what the other features and conditions of each award will be. The compensation committee, however, may not reduce the exercise price of outstanding options or share appreciation rights. The compensation committee may implement rules and procedures that differ from those described below in order to adapt the 2006 Plan to the requirements of countries other than the United States.

Eligibility. The following groups of individuals will be eligible to participate in the 2006 Plan:

Types of Awards. The 2006 Plan will provide for the following types of awards:

Options and Share Appreciation Rights. Options may be incentive share options or nonstatutory share options. An optionee who exercises an incentive share option may qualify for favorable tax treatment under Section 422 of the Code. On the other hand, nonstatutory share options do not qualify for such favorable tax treatment. The exercise price of options and share appreciation rights granted under the 2006 Plan may not be less than 100% of the fair market value of our ordinary shares on the grant date. Optionees may pay the exercise price by using cash or, with the consent of the compensation committee:

Options and share appreciation rights will vest at the time or times determined by the compensation committee. In most cases, our options will vest over the four-year period following the date of grant. Vesting may accelerate in the event of death, disability or retirement. Options will generally expire 7 years after they are granted, except that they will generally expire earlier if the optionee's service terminates earlier and except that non-employees may not receive options with a term in excess of 10 years. The 2006 Plan provides that no participant may receive options covering more than 750,000 shares and share appreciation rights covering more than 750,000 shares in the same year, except that a newly hired employee may receive options covering up to 1,500,000 shares and share appreciation rights covering up to 1,500,000 shares in the first year of employment.

Restricted Shares and Share Units. Restricted shares may be awarded under the 2006 Plan in return for cash or services already provided to us and share units may be awarded in return for services already provided or to be provided in the future.

Restricted shares and share units vest at the time or times determined by the compensation committee. Vesting may be based on length of service, the attainment of performance-based milestones, or a combination of both, as determined by the compensation committee. No participant may receive awards with performance-based vesting covering more than 400,000 restricted shares and more than 400,000 share units in the same fiscal year, except that a newly hired employee may receive awards with performance-based vesting covering up to 800,000 restricted shares and up to 800,000 share units in the first year of employment. The performance criteria that may be applied by the compensation committee include:

Vesting may accelerate in the event of death, disability, retirement or in certain circumstances as a result of a change in control of Verigy or participation in a voluntary severance program. Settlement of vested share units may be made in the form of cash, shares of common stock, or a combination of both at the option of the compensation committee.

Automatic Grants to Non-Employee Directors. Each non-employee director who first joins our board after the effective date of this offering will initially receive both of the following grants:

However, a new non-employee director who is receiving the initial grants will not receive the annual grants in the same calendar year.

All automatic option grants to a non-employee director will vest on the first anniversary of the date of grant. The share unit grants will vest on the 13-month anniversary of the date of grant, but the share units will not be settled until the third anniversary of the date of grant, at which time a number of ordinary shares equal to the number of share units will be issued to the non-employee director. A non-employee director's options will become fully vested in the event of his or her death, total and permanent disability, or retirement after attaining age 65. If a change in control of Verigy occurs, all outstanding options held by non-employee directors will become fully vested.

The exercise price of the non-employee directors' options will be equal to the fair market value of our ordinary shares on the option grant date. A director may pay the exercise price by using cash, ordinary shares that the director already owns, or an immediate sale of the option shares through a broker approved by us. The non-employee directors' options have a term of up to ten years, except that they expire one year after the optionee leaves the board for any reason.

Change in Control. If a change in control of Verigy occurs, an award under the 2006 Equity Incentive Plan may vest on an accelerated basis to the extent determined by the compensation committee. The compensation committee may determine that outstanding grants will vest in full or in part at the time of the change in control. It may also determine that the grants will vest on an accelerated basis only if the participant is actually or constructively discharged within a specified period of time after the change in control. Finally, the compensation committee may determine that the grants will remain outstanding without acceleration of vesting. However, if the surviving corporation fails to assume an outstanding award or replace it with a comparable award, then the award will always become fully vested as a result of a merger or consolidation. A change in control includes:

Amendments or Termination. Our board of directors may amend or terminate the 2006 Plan at any time. If our board of directors amends the plan, it does not need to ask for shareholder approval of the amendment unless applicable law requires it. Amendments to increase the number of shares reserved for issuance under the 2006 Plan will be submitted to shareholders for approval. The 2006 Plan will continue in effect for 10 years, unless our board of directors decides to terminate the plan earlier.

Our board of directors is expected to adopt our 2006 Employee Shares Purchase Plan prior to the completion of this offering. Agilent, as our sole shareholder, also expects to approve this plan.

Share Reserve and Administration. In the case of participants who reside in the U.S., this Plan is intended to qualify under Section 423 of the Code. We have reserved 1,700,000 ordinary shares for issuance under the plan. The compensation committee of our board of directors will administer the plan. The compensation committee may implement rules and procedures that differ from those described below in order to adapt the 2006 Employee Shares Purchase Plan to the requirements of countries other than the U.S.

Eligibility. All of our employees are eligible to participate after three months of service, if we employ them for more than 20 hours per week and for more than five months per year. However, these requirements may be waived in countries where they are not legally permissible or in situations where a collective bargaining agreement prescribes different eligibility standards, provided, that where this plan is intended to qualify under Section 423 of the Code, eligibility will apply on a uniform basis. Eligible employees may begin participating in the 2006 Employee Shares Purchase Plan at the start of any offering period. In general, offering periods will start on June 1 and December 1 of each year and will last six months. However, the first offering period will start on the effective date of this offering and will end on November 30, 2006, and employees will be eligible to participate in the first offering period without regard to how long they have been in service with us.

Amount of Contributions. Our 2006 Employee Shares Purchase Plan permits each eligible employee to purchase ordinary shares through payroll deductions. Each employee's payroll deductions may not exceed 10% of the employee's cash compensation. Purchases of our ordinary shares will generally occur on May 31 and November 30 of each year. Each participant may purchase up to 2,500 shares on any purchase date (5,000 shares per year). But the value of the shares purchased in any calendar year (measured as of the beginning of the applicable offering period) may not exceed $25,000.

Purchase Price. The price of each ordinary share purchased under our 2006 Employee Shares Purchase Plan will be 85% of the lower of:

In the case of the first offering period, the price per share under the plan will be 85% of the lower of:

Other Provisions. Employees may end their participation in the 2006 Employee Shares Purchase Plan at any time. Participation ends automatically upon termination of employment with us. If a change in control of Verigy occurs, our 2006 Employee Shares Purchase Plan will end and shares will be purchased with the payroll deductions accumulated to date by participating employees, unless the plan is assumed by the surviving corporation or its parent. Our board of directors may amend or terminate the 2006 Employee Shares Purchase Plan at any time. If our board of directors increases the number of ordinary shares reserved for issuance under the plan, it must seek the approval of our shareholders. The 2006 Employee Shares Purchase Plan will continue in effect for 20 years, unless the board of directors decides to terminate the plan earlier or unless the board extends the term of the plan and our shareholders approve the extension within 12 months thereafter.

We expect to establish our own 401(k) plan before the closing of this offering. Assets held in the accounts of our employees under Agilent's 401(k) plan will be transferred to our 401(k) plan as soon as reasonably practicable following our separation from Agilent. Our 401(k) plan will provide for an annual employer matching contribution expressed as (i) a 100% match on each participant's pre-tax contributions to the plan (not to exceed 3% of the participant's eligible compensation) and (ii) a 50% match on each participant's pre-tax contributions to the plan (not to exceed an additional 2% of the participant's eligible compensation) and a discretionary annual employer profit sharing contribution based on our profitability with respect to such year.

Subject to the Singapore Companies Act, Article 92 of our amended and restated memorandum and articles of association provides that every director or other officer of Verigy and its subsidiaries and affiliates shall be entitled to be indemnified out of our assets against any liability incurred by him in defending any proceedings, civil or criminal, in which judgment is given in his favor, in which he is acquitted, or in connection with any application under the Singapore Companies Act in which relief is granted to him by the court.

In addition, no director, manager or other officer shall be liable for the acts, receipts, neglects or defaults of any other director or officer or any other loss, damage or misfortune which happens in the execution of his duties, unless the same happens through his own negligence, willful default, breach of duty or breach of trust.

The Singapore Companies Act prohibits a company from indemnifying its directors or officers against any liability, which by law would otherwise attach to them for any negligence, default, breach of duty or breach of trust of which they may be guilty relating to us. However, a company is not prohibited from (a) purchasing and maintaining for any such officer insurance against any such liability, or (b) indemnifying such officer against any liability incurred by him in defending any proceedings, whether civil or criminal, in which judgment is given in his favor or in which he is acquitted, or in connection with any application under any provision of the Singapore Companies Act in which relief is granted to him by the court.

We will enter into indemnification agreements with our officers and directors. These indemnification agreements will provide our officers and directors with indemnification to the maximum extent permitted by the Singapore Companies Act. We will also obtain a policy of directors' and officers' liability insurance that will insure directors and officers against the cost of defense, settlement or payment of a judgment under certain circumstances which are permitted under the Singapore Companies Act.

On February 5, 2002, Agilent made a relocation loan to Adrian T. Dillon, Executive Vice President and Chief Financial Officer of Agilent, as part of the employment package required to induce Mr. Dillon to join Agilent and move from Cleveland, Ohio to the San Francisco Bay Area. In place of a standard relocation bonus, Agilent provided a loan of $2.5 million to be used for the purchase of a home. Provided that Mr. Dillon remains at Agilent, the loan will continue to be forgiven over a five-year period at 20% per year. The loan is secured by a deed of trust on the house. The unforgiven portion of the note plus 10% per annum interest will be due in full (i) upon insolvency of Mr. Dillon, (ii) upon any transfer of the property without the prior written consent of Agilent, (iii) within three months of termination of employment for any reason and (iv) within one year following the death of Mr. Dillon. If the amount due is not paid within five days of the due date, at the option of Agilent, the unforgiven portion shall begin to accrue interest equal to 15% per annum. In accordance with the Sarbanes-Oxley Act, Agilent will not materially modify or renew this loan and, in the future, will not provide any new loans to its executive officers as required under the Sarbanes-Oxley Act. As of the date of this prospectus, $500,000 of this loan is still outstanding.

We derived revenue from the sales of products to Agilent for the three months ended January 31, 2006 and fiscal years ended October 31, 2005, 2004 and 2003 of $0.5 million, $2 million, $3 million and $2 million, respectively. The revenue was recorded using a cost-plus methodology and may not necessarily represent a price an unrelated third party would pay.

We design and develop our own application specific ICs or ASICs for our test equipment. These complex highly-integrated ICs are key components in the test processors of our scalable and flexible test platforms. As part of our ASIC development process, we outsource the manufacturing of these ICs to wafer foundries. To achieve more favorable foundry pricing we work with Agilent's former semiconductor group, which Agilent divested in December 2005 and is now called Avago Technologies, Pte., to manage certain foundry relationships for us. In addition to managing these relationships, Avago also assists us with the physical layout of our ASIC designs. As part of these arrangements, Avago managed the purchase of ASICs for us. During the three months ended January 31, 2006 and fiscal years 2005, 2004 and 2003, we purchased approximately $3 million, $9 million, $7 million and $7 million, respectively, of products from other Agilent businesses with the majority of these purchases being purchases of ASICs from Avago. During these periods, both we and Avago were owned by Agilent and these purchases were made from Avago at Avago's cost rather than at market prices. Therefore, we would expect that our purchases of ASICs starting from December 2005 and beyond, whether or not from Avago, will be at a higher total cost to us than our purchases during 2005 and prior periods. For future periods, Avago and other vendors are expected to bid competitively for our future ASIC requirements.

We have provided below a summary description of the master separation and distribution agreement between Verigy and Agilent and the other key agreements that relate to our separation from Agilent. This description summarizes the material terms of these agreements. You should read the full text of these agreements, which will be included as exhibits to the registration statement of which this prospectus is a part.

The master separation and distribution agreement contains many of the key provisions related to our separation from Agilent, this offering and the distribution of our ordinary shares to Agilent's common stockholders. The various ancillary agreements referenced in the master separation and distribution agreement govern certain aspects relating to the separation and various interim and ongoing relationships between Agilent and us following the completion of this offering. These agreements include:

Overview. The master separation and distribution agreement contains many of the key provisions relating to the separation of our business from Agilent's other businesses. The master separation and distribution agreement describes generally the agreements and other documents that were delivered on the separation date, including the ancillary agreements described above as well as certificates representing specified investments and specified resignation letters. In addition, the master separation and distribution agreement provides for the revolving credit facility that Agilent made available to us on the separation date. The revolving credit facility bears interest at one-month LIBOR plus 50 basis points (equal to 5.54% as of April 28, 2006). Any amounts borrowed under the credit facility will mature on the 30^th day after the closing of this offering. The master separation and distribution agreement also sets forth our agreement with Agilent with respect to our initial public offering, including an agreement that the parties will use commercially reasonable efforts to consummate our initial public offering.

Purchase Price. The purchase price for the net assets that were transferred to us by Agilent in connection with our separation was approximately $535 million, which price was determined based on Agilent's estimate of the fair market value of the transferred assets and liabilities. This purchase price was funded through a share subscription agreement, pursuant to which Agilent purchased approximately 50 million shares from us for an aggregate purchase price of $535 million on May 31, 2006.

Conditions to Our Initial Public Offering. The master separation and distribution agreement provides that our initial public offering is subject to several customary conditions that must be satisfied or waived by Agilent in its sole discretion.

Overview. The master separation and distribution agreement also governs the rights and obligations of Agilent and us regarding the proposed distribution by Agilent to its stockholders of all of our ordinary shares that it holds, which is also referred to in this prospectus as the "distribution." Although Agilent has announced that it intends to complete the distribution by October 31, 2006, there are various conditions to the completion of the distribution. Consequently, we cannot assure you as to when or whether the distribution will occur.

Conditions to the Distribution. The master separation and distribution agreement provides that the distribution is subject to several conditions that must be satisfied, or waived by Agilent in its sole discretion, including, among others:

In addition, Agilent has the right not to complete the distribution if, at any time, its board of directors determines, in its sole discretion, that the distribution is not in the best interest of Agilent or its stockholders, or if the distribution has not occurred by December 31, 2006.

If Agilent's board of directors decides not to complete the distribution or waives a material condition to the distribution after the date of this offering, we intend to issue a press release disclosing this waiver or file a report on Form 8-K with the Securities and Exchange Commission.

Pursuant to the master separation and distribution agreement, we are required to cooperate with Agilent to accomplish the distribution and, at Agilent's direction, to promptly take any and all actions necessary or desirable to effect the distribution.

We have agreed that, for so long as Agilent beneficially owns at least 50% of the total voting power of our outstanding share capital entitled to vote in the election of our board of directors, we will not:

In addition, we have agreed to cause Agilent to be released by October 31, 2007 from specified guarantees or other security obligations that Agilent has entered into or will enter into on our behalf. Agilent will have no obligation to maintain any such guarantees or other security obligations on our behalf following October 31, 2007. These guarantees and security arrangements relate to real property lease deposits and guarantees, security for company credit card programs and other credit arrangements, and required deposits with governmental trade and tax agencies and are currently estimated to be approximately $13 million in the aggregate.

We have also agreed to reimburse Agilent for approximately $7 million of payments that Agilent made to Flextronics related to future severance and other employee-related benefits associated with employees transferred to Flextronics under the various Flextronics asset purchase agreements described elsewhere in this prospectus.

We have agreed that, for so long as Agilent is required to consolidate our results of operations and financial position or account for its investment in us under the equity method of accounting, we will use commercially reasonable efforts to enable our independent auditors to complete their audit of our financial statements in a timely manner so as to permit timely filing of Agilent's financial statements. We have also agreed to use our best efforts to provide to Agilent and its independent auditors all information required for Agilent to meet its schedule for the filing and distribution of its financial statements and to make available to Agilent and its independent auditors all documents necessary for the annual audit of our company as well as access to the responsible company personnel so that Agilent and its independent auditors may conduct their audits relating to our financial statements. We have also agreed to ensure our accounting estimates and principles are consistent with those of Agilent. Further, we have agreed to notify and consult with Agilent before making any changes to our accounting principles and estimates and to report to them any deficiencies in, or violations of law in connection with, our internal control over financial reporting.

Under the master separation and distribution agreement, our company and each of our affiliates that received assets or assumes liabilities in connection with the separation agreed to indemnify Agilent and its representatives and affiliates from all losses, whether such losses arise or occur prior to or after this offering, suffered by Agilent or its representatives or affiliates arising out of or due to any of the following:

The foregoing indemnity shall not apply, however, to actions that were taken by us at the written direction of Agilent.

Agilent and each of Agilent's affiliates that transferred assets to us in connection with the contribution and separation agreed to indemnify our company and our representatives and affiliates from any and all losses suffered by our company or our representatives or affiliates arising out of or due to any of the following:

All indemnification amounts will be reduced by any insurance proceeds and other offsetting amounts recovered by the party entitled to indemnification, and no party will be liable to any other party for any punitive damages other than as a reimbursement for punitive damages paid to an unrelated party.

Under the master separation and distribution agreement, following the separation, we and Agilent are obligated to provide each other access to information for a specified amount of time as follows:

The master separation and distribution agreement and the related agreements may be terminated at any time prior to the separation date by Agilent in its sole discretion.

The master separation and distribution agreement and related ancillary agreements provide that Agilent will pay for all costs incurred in connection with our separation to the extent these costs were incurred prior to the June 1, 2006 separation date, provided that we will reimburse Agilent for approximately $7 million of payments that Agilent made to Flextronics related to future severance and other employee-related benefits associated with employees transferred to Flextronics under the various Flextronics asset purchase agreements described elsewhere in this prospectus. We will generally pay all separation costs that we incur after the separation date, except to the extent such costs are "excluded liabilities" under the general assignment and assumption agreement.

Until the distribution date, Agilent has agreed to allow us to participate in its directors' and officers' insurance program and, subject to insurance market conditions and other factors beyond Agilent's control, to maintain for our company and its subsidiaries other policies of insurance that are comparable to those maintained generally for Agilent and its subsidiaries. We have agreed to reimburse Agilent for all costs and expenses incurred by it in connection with providing insurance coverage to our company and its subsidiaries in accordance with its practice with respect to our business as of the separation date, and we also have agreed to reimburse Agilent for any incremental costs or expenses incurred by it that are attributable to us as a result of any changes to insurance policies that relate to us. After the distribution date, we have agreed with Agilent that we will obtain directors' and officers' insurance coverage for our and any of our subsidiaries' directors and officers.

In addition to the restrictions imposed on us pursuant to the tax sharing agreement, our company is prohibited, through the date on which the distribution occurs, from acquiring any other businesses or assets or disposing of any of our own assets with an aggregate value for all such transactions in excess of $50 million without Agilent's prior consent. We also have agreed through

the date on which the distribution occurs not to acquire any equity interests in, or loan any funds to, third parties in excess of $25 million in the aggregate without Agilent's prior consent.

All disagreements and misunderstandings related to the master separation and distribution agreement or any ancillary agreement will be submitted to a dispute committee comprised of four members, two of whom will be appointed by Agilent and two of whom will be appointed by us. The dispute committee will make a good faith attempt to resolve any disputes and all decisions regarding disputes will require the unanimous consent of the dispute committee members. In the event a dispute cannot be resolved by the dispute committee, we and Agilent have agreed that either party may elect to submit the matter to mediation or some other form of non-binding alternative dispute resolution process. Either Agilent or we may choose to commence formal litigation proceedings at any time.

The general assignment and assumption agreement governs the transfer of assets and assumption of liabilities relating to our business, to the extent that the other agreements do not provide for the specific transfer of those assets or the assumption of those liabilities. This agreement also describes when and how these transfers and assumptions did or will occur.

We assumed all liabilities, obligations, guarantees, commitments, damages, losses, debts, claims, demands, judgments or settlements of any nature of Agilent to the extent, but only to the extent, arising out of or related to our business, the transferred assets, the transferred employees, or the transferred intellectual property or rights related to the transferred intellectual property, whether arising on, prior to or after our separation from Agilent, other than specified "excluded liabilities." The liabilities we assumed include, among other things:

Unless specifically provided otherwise, the transfer of assets and the assumption of liabilities became effective as of the separation date. Each party has agreed to execute and deliver to the other party those bills of sale, certificates of title, assignments of contracts and other instruments of transfer and assumption, to the extent necessary to complete the transfer of assets and assumption of liabilities.

If the transfer of assets or assignment of contracts would violate any laws or require any third-party consents, then such transfer or assignment shall be deemed deferred until the appropriate impediments to transfer are removed and/or consents obtained. For those approvals or consents that were not received by the date of the separation, we and Agilent have agreed to use commercially reasonable efforts to obtain them as soon as possible. Until these transfers can be completed, Agilent will act as a custodian and trustee on our behalf with respect to those assets. In an effort to place Agilent and our company, insofar as reasonably possible, in the same economic position as each of us would have been had the transfers occurred, the agreement provides that, to the extent possible, prior to the distribution Agilent will pass on to our company the economic benefits derived by it from those assets as if the transfers had occurred as contemplated, and our company, to the extent possible, will perform, on behalf of Agilent, any obligations it has with respect to those assets. Notwithstanding the foregoing, in no event will Agilent be required to retain any assets on our behalf on or after the distribution date.

Pursuant to this agreement, in connection with the separation, Agilent did not represent or warrant to us as to the condition or quality of any assets transferred to us, the liabilities to be assumed by us, or any other matters relating to our business. We received all assets in connection with the separation on an "as is, where is" basis, which means we received these assets from Agilent in the same condition that they were in when they were owned by Agilent and we have no ability to make claims against Agilent with respect to these assets. For example, we have no recourse against Agilent if the assets are not sufficient to operate our business, if the condition or quality of such assets is other than as we expected or if there is a defect in title that prevents us from taking good title to any such asset.

In connection with the separation, we entered into a tax sharing agreement with Agilent, which governs the respective rights, responsibilities and obligations of Agilent and us with respect to tax liabilities and benefits, tax attributes, tax contests and other matters regarding income taxes, non-income taxes and related tax returns.

Agilent intends that any distribution of our ordinary shares to its stockholders qualify as a distribution under Section 355 of the Code, subject to the corporate gain recognition provisions under Section 367 of the Code. Agilent intends to seek an opinion from tax counsel to such effect. In connection with this opinion, we will be required to make certain representations regarding our company and our business and Agilent will be required to make certain representations regarding it and its business. In addition, under our tax sharing agreement with Agilent, for two years following the distribution we are subject to certain covenants that are intended to ensure that the distribution of our ordinary shares by Agilent is not fully taxable to Agilent. Those covenants require us to obtain the consent of Agilent (which cannot be unreasonably withheld) before we can:

We have agreed to indemnify Agilent and its affiliates against any and all tax-related liabilities incurred by them relating to the distribution to the extent caused by an acquisition of our assets or shares, or other actions by us. These liabilities include any additional tax-related liability imposed on Agilent as a result of our actions. This indemnification applies even if Agilent has permitted us to take an action that would otherwise have been prohibited under the tax-related covenants described above.

We entered into an employee matters agreement with Agilent to allocate assets, liabilities and responsibilities relating to our current and former employees and their participation in the benefit plans, including stock plans, which Agilent currently sponsors and maintains.

On June 1, 2006, all of our U.S. employees were transferred to our U.S. payroll. At that time we adopted specified plans associated with our U.S. payroll system, such as our deferred compensation plans, leave of absence programs, health and welfare plans, and retirement plans. We may modify or terminate such plans in accordance with the terms of such plans, provided, however, that any change to such plans prior to the distribution date may only be announced or made with Agilent's prior written consent. In general, unless otherwise specified in the employee matters agreement, each benefit plan will assume any liabilities under the corresponding Agilent benefit plan for our employees. In certain instances, assets related to the employee liabilities will also be transferred to us or our related plans and trusts from trusts and other funding vehicles associated with Agilent's benefit plans.

Any options to purchase shares of Agilent common stock held by our employees immediately prior to the distribution date will be treated in the manner described in "Management — Treatment of Agilent Options." Any shares of restricted Agilent common stock held by our employees immediately prior to the distribution date will be treated in the manner described in "Management — Treatment of Agilent Restricted Stock." In general, until our separation from Agilent, our employees continued to participate in the Agilent employee stock purchase plan as discussed in "Management — Outstanding Purchase Rights under the Agilent Employee Stock Purchase Plan."

In general, as of immediately prior to our separation from Agilent, our U.S. employees ceased accruing benefits and otherwise actively participating in Agilent's Retirement Plan and Deferred Profit Sharing Plan. As soon as practicable after the distribution, our employees who are eligible to receive their vested accrued benefits under such plans will be able to elect to take a distribution from such plans.

In Korea, Taiwan, France, Italy and Germany, liabilities for pension and other severance plans associated with our transferred employees were transferred to us. As soon as practicable after the separation, Agilent will fund our plans, excluding Italy, to the level of the accumulated benefit obligation for the transferred employees.

Participation in Agilent's 401(k) plan and establishment of our own 401(k) plan will be as discussed in "Management — 401(k) Plan."

Agilent retained and will be solely responsible for all liabilities of our employees under Agilent's Excess Retirement Benefit Plan, International Relocation Benefit Plan and International Retirement Guarantee.

We have established the Verigy Deferred Compensation Plan, the Verigy 2006 Deferred Compensation Plan and the Verigy Guaranteed Relocation Subsidies Plan, the material features of which are substantially identical to the respective Agilent plans. Agilent determined the amount of liabilities under such plans as of our separation from Agilent attributable to our employees and we assumed such liabilities, to the extent permitted under the terms of the applicable plans. If we were not permitted to assume the liabilities attributable to our employees under such plans, Agilent retained and will be solely responsible for such liabilities.

The intellectual property matters agreement provides the mechanisms by which Agilent assigned or will assign intellectual property rights to us, and license other intellectual property rights to us on a non-exclusive basis, each as in existence as of the separation date, and by which we will license the assigned intellectual property rights back to Agilent on a non-exclusive basis. The agreement covers our respective rights to patents, patent applications and associated invention disclosures, trademarks and domain names, software used in or with our products and the copyrights in that software, other copyrights as well as maskworks and trade secrets, all of which are referred to together as intellectual property rights.

Under the intellectual property matters agreement, Agilent assigned or will assign to us ownership of intellectual property rights owned by Agilent and used exclusively in our business as follows:

Under the intellectual property matters agreement, in addition to the intellectual property assigned to us as described above, Agilent also granted us a license to use all Agilent intellectual property rights (other than trademarks) in existence as of the separation date for use in our field-of-use as described below. The license is non-exclusive and royalty free, and will continue in effect for the duration of the covered intellectual property rights.

The license permits us to use the Agilent intellectual property rights in our field-of-use. Our field-of-use is comprised of both (1) our primary field, which consists of the design, development, research, manufacture, supply, distribution, sale, support (including consulting and other services), and maintenance of any automated semiconductor test systems (ASTS), as well as (2) a limited field of use that overlaps with activities conducted by Agilent, including the design, development, research, manufacture, supply, distribution, sale, support (including consulting and other services), and maintenance of: any automated semiconductor test systems components; products for providing functional test of integrated circuits; automated semiconductor test system development test systems; products (other than ASTSs) for providing parametric test, design verification, engineering characterization or functional test of wireless devices, systems on a chip, and RF devices in IC form. We are permitted to use the intellectual property we licensed from Agilent to offer products or services that fall within Agilent's primary field, as described below.

The license granted by Agilent is not assignable by us without Agilent's prior consent, including in connection with a sale of our company or business, except that we may grant sublicenses to our contract manufacturers and to certain other third parties acting on our behalf, subject to inclusion of appropriate confidentiality protections.

Under the intellectual property matters agreement, we granted back to Agilent a license to the intellectual property rights (other than trademarks) assigned to us as described above. The license is non-exclusive and royalty-free and will continue in effect for the duration of the covered intellectual property rights.

The license permits Agilent to use such licensed intellectual property rights in Agilent's field-of-use. Agilent's field-of-use is comprised of both (1) Agilent's primary field, which consists of the design, development, research, manufacture, supply, distribution, sale, support (including consulting and other services), and maintenance of: general purpose test and measurement products and services, including those that operate under automatic or semi-automatic control of a computer or other device; products (other than ASTSs and ASTS components) for providing parametric test, design verification or engineering characterization of ICs; products for testing electronic parts, components and devices in forms other than ICs, SOCs or SIPs; as well as (2) a limited field of use that overlaps with activities conducted by us, including the distribution, sale, support (including consulting and other services), and maintenance of: ASTS components; products for providing functional test of certain ICs; test capability embedded in an IC; and products (other than ASTSs) for providing parametric test, design verification, engineering characterization or functional test of wireless, RF and other devices.

Under the intellectual property matters agreement, in addition to the limitations on the right to use licensed intellectual property rights as described above and except as described below, Agilent

agreed that, for a period of three years after the distribution date, Agilent will not develop, manufacture, distribute, support or service products that fall in our primary field as described above. In addition, the intellectual property matters agreement permits Agilent to fulfill its obligations under contracts in existence as of March 1, 2006, even though fulfilling such obligations would otherwise have been precluded during the non-competition period and even if fulfilling such obligations would result in Agilent competing with us. This exception will allow Agilent to fulfill its obligations to a semiconductor manufacturer pursuant to which Agilent will develop and sell components to the manufacturer for use in the manufacturer's semiconductor test systems purchased from a competitor of Verigy. While we do not believe that Agilent fulfilling these obligations will have a material effect on our business or prospects, we may in the future be less successful at selling test systems to this semiconductor manufacturer than would have been the case were the manufacturer not able to combine products from Agilent with the test systems of our competitor. See "Risk Factors — We May Face Competition from Agilent in the Future."

We similarly agreed that, for the same three-year period, we will not develop, manufacture, distribute, support or service products that fall within Agilent's primary field as described above.

We have identified a number of patent cross-license agreements to which Agilent is a party and under which we are likely to be receiving a benefit. The patents assigned and licensed to us as described above will be subject to these pre-existing licenses. Agilent has agreed to use reasonable efforts to facilitate extending to us the benefits of these selected third-party patent cross licenses, through a sublicense or otherwise. We are responsible for payment of consideration, if any, required for that extension.

The intellectual property matters agreement addresses the following additional terms:

We entered into a trademark license agreement with Agilent which granted us the right to use certain Agilent trademarks, service marks and other symbols and words used to identify Agilent products. The grant provides us a non-exclusive, worldwide, non-transferrable license to use specified Agilent marks generally and an exclusive, worldwide, non-transferrable license to use the

Agilent InstaPin mark. In addition, the grant precludes Agilent from licensing the marks to third parties, whose products and services compete with our products and services, for eighteen months.

Under the agreement, we are able to sublicense the marks to our subsidiaries and to parties to whom we have transferred a marketable product and tangible assets whose value exceeds $10 million. In addition, we are able to transfer our licenses to our subsidiaries and to other parties, subject to Agilent's written consent in the latter case.

Under the agreement, we agreed to discontinue using licensed marks as quickly as possible. In any event (i) we will not be able to use licensed marks in corporate identify materials after six months following the separation date, (ii) we will not be able to use licensed marks (except for the InstaPin mark) in marketing materials after eighteen months following the separation date, (iii) we will not be able to use the InstaPin mark in marketing materials after thirty-six months following the separation date, (iv) we will not be able to use the licensed marks in connection with Verigy products on a royalty free basis after thirty-six months following the separation date, and (v) we must cease all use of licensed marks and the agreement will terminate after sixty months following the separation date.

We are required to pay royalties to Agilent for sales of Verigy products which bear the licensed marks occurring between thirty-six and sixty months after our separation from Agilent. The royalty amount are payable each quarter and will equal 5% of the gross invoice price for the affected products.

We entered into a transition services agreement which governs the provision by Agilent to us of certain support services, on an interim or transitional basis. We currently expect these transition services to include, but are not limited to, facilities management, site information technology infrastructure, usage of various applications and support systems, as well as employee related services for any transitional employees remaining with Agilent.

Under the agreement, Agilent will perform these transition services in the manner and at the level of service substantially similar to that immediately prior to the separation and our use of these services shall not be substantially greater than the level of use required by us immediately prior to the separation.

Under the agreement, we will have the ability to negotiate with Agilent for the provision of additional transition services not set forth in the agreement, which additional services will generally be subject to the provisions of the agreement. Generally, we are obligated to assume the performance of all transition services Agilent will perform, including by obtaining any necessary permits and licenses necessary to perform such services, as soon as practicable following the separation. The agreement will terminate and Agilent will have no obligation to provide any further transition services to us two years after the separation date.

Except as noted below, we expect that the majority of the services provided will terminate on or before the distribution date, provided that such services may extend beyond the distribution date if mutually agreed upon by Agilent and Verigy. Transitional employees located in Santa Rosa, California, Loveland, Colorado and Hachioji, Japan will provide interim services to us for up to two years following the separation, as we transition out of those locations. In all cases, the charges for these interim services are generally intended to allow Agilent to recover the cost of providing such services plus an appropriate return on such services, which, consistent with Agilent's intercompany pricing practices, will generally be 10%.

Prior to this offering, all of our outstanding ordinary shares will be owned by Agilent. Immediately after this offering, Agilent will own 50,000,000 ordinary shares, representing approximately 85.5% of our outstanding ordinary shares or approximately 83.6% of our outstanding ordinary shares if the underwriters exercise their over-allotment option in full. For as long as Agilent continues to own at least a majority of our ordinary shares, Agilent will be able, acting alone, to elect a majority of our board of directors and to approve any action requiring shareholder approval. Except for Agilent, we are not aware of any person or group that will beneficially own more than 5% of the outstanding ordinary shares following this offering.

The following statements are brief summaries of our capital structure and important rights and privileges of shareholders conferred by the laws of Singapore and our amended and restated memorandum and articles of association, which we refer to below as our articles of association. These statements summarize the material provisions of the laws of Singapore and our articles of association, but are qualified in their entirety by reference to our articles of association, a copy of which has been filed as an exhibit to the registration statement of which this prospectus forms a part and which is available at our principal U.S. executive offices located at 395 Page Mill Road, Palo Alto, California. A copy of our articles of association is also available for inspection at our registered office in Singapore.

As of the date of this prospectus, our issued share capital consists of 50,000,000 ordinary shares. We currently have only one class of shares, ordinary shares, which have identical rights in all respects and rank equally with one another. There is a provision in our articles of association to enable us in specified circumstances to issue shares with preferential, deferred or other special rights or restrictions as our directors may determine, subject to the provisions of the Singapore Companies Act and our articles of association. All shares presently issued are fully paid and existing shareholders are not subject to any calls on shares. All shares are in registered form. We cannot, except in the circumstances permitted by the Singapore Companies Act, grant any financial assistance for the acquisition or proposed acquisition of our own shares.

Under Singapore law, new shares may be issued only with the prior approval of our shareholders in a general meeting. General approval may be sought from our shareholders in a general meeting for the issue of shares. Approval, if granted, will lapse at the earlier to occur of:

Agilent, our sole shareholder as of the date of this prospectus, has provided such general authority to issue new shares until our 2007 Annual General Meeting. Subject to this and the provisions of the Singapore Companies Act and our articles of association, all new shares are under the control of the directors who may allot and issue new shares to such persons on such terms and conditions and with the rights and restrictions as they may think fit to impose.

Our articles of association provide that we may issue shares of a different class with preferential, deferred, qualified or other special rights, privileges or conditions as our board of

directors may determine. Our preference shareholders must also have the right to vote at any meeting:

We may, subject to the prior approval in a general meeting of our shareholders, issue preference shares which are, or at our option, subject to redemption provided that such preference shares may not be redeemed out of capital unless:

Subject to applicable securities laws and our articles of association, our ordinary shares are freely transferable. Shares may be transferred by a duly signed instrument of transfer in any usual or common form or in a form approved by the directors. The directors may decline to register any transfer unless, among other things, evidence of payment of any stamp duty payable with respect to the transfer is provided together with other evidence of ownership and title as the directors may require. Stamp duty will not be payable with respect to share transfers occurring through a branch register located outside of Singapore. We will replace lost or destroyed certificates for shares upon notice to us and upon, among other things, the applicant furnishing evidence and indemnity as the directors may require and the payment of all applicable fees.

Under our articles of association, at each annual general meeting, at least one-third of the directors, or, if their number is not a multiple of three, then the number nearest to but not less than one-third of the directors, are required to retire from office. The directors required to retire in each year are those who have been in office longest since their last re-election or appointment. As between persons who became or were last re-elected directors on the same day, those required to retire are (unless they otherwise agree among themselves) determined by lot. Retiring directors are eligible for re-election.

We are required to hold an annual general meeting in each year. The directors may convene an extraordinary general meeting whenever they think fit and they must do so upon the written request of shareholders representing not less than one-tenth of the total voting rights of all shareholders. In addition, two or more shareholders holding not less than one-tenth of our issued share capital may call a meeting of our shareholders.

Unless otherwise required by law or by our articles of association, voting at general meetings is by ordinary resolution, requiring the affirmative vote of a majority of the shares present in person or represented by proxy at the meeting and entitled to vote on the resolution. An ordinary resolution suffices, for example, for appointments of directors. A special resolution, requiring an affirmative vote of not less than three-fourths of the shares present in person or represented by proxy at the

meeting and entitled to vote on the resolution, is necessary for certain matters under Singapore law, such as an alteration of our articles of association.

Voting at any meeting of shareholders is by poll. On a poll every shareholder who is present in person or by proxy or by attorney, or in the case of a corporation, by a representative, has one vote for every share held by him.

The directors may declare a dividend. No dividend may be paid except out of our profits. To date, we have not declared any cash dividends on our ordinary shares and have no current plans to pay cash dividends in the foreseeable future.

In a general meeting, our shareholders may, upon the recommendation of the directors, capitalize any reserves or profits and distribute them as bonus shares to the shareholders in proportion to their shareholdings.

The acquisition of our ordinary shares is regulated by the Securities and Futures Act and the Singapore Code on Take-overs and Mergers. Under the Singapore Code on Take-overs and Mergers, a person is required to extend a mandatory take-over offer for the remaining voting shares of the company (the Securities Industry Council is empowered to waive compliance with this requirement), where:

Subject to certain exceptions, a mandatory offer made must be in cash or be accompanied by a cash alternative at not less than the highest price paid by the offeror or any person acting in concert with him for voting rights of the offeree company during the offer period and within six months prior to its commencement. These legal requirements may impede or delay a takeover of our company by a third party.

In addition, we will be subject to contractual restrictions under our tax sharing and intellectual property matters agreements that also may impede or delay a takeover of our company by a third party, as further described in "Risk Factors," "Arrangements Between Verigy and Agilent — Tax Sharing Agreement" and "Arrangements Between Verigy and Agilent — Intellectual Property Matters Agreement."

On a winding-up or other return of capital, subject to any special rights attaching to any other class of shares, holders of ordinary shares will be entitled to participate in any surplus assets in proportion to their shareholdings.

As permitted by the laws of Singapore, our articles of association provide that, subject to the Singapore Companies Act, our directors and officers will be indemnified by us against any liability incurred by them in defending any proceedings, whether civil or criminal, which relate to anything done or omitted or alleged to have been done or omitted by him as an officer, director or employee of us and in which judgment is given in their favor or in which they are acquitted, or in connection with any application under the provisions of the Singapore Companies Act in which relief is granted by the court. Directors and officers may not be indemnified by us against any liability which by law would otherwise attach to them relating to any negligence, default, breach of duty or breach of trust of which they may be guilty in relation to us.

Except as discussed above under "— Takeovers," there are no limitations imposed by the laws of Singapore or by our articles of association on the right of non-resident shareholders to hold or vote ordinary shares.

We have applied to list our ordinary shares on the Nasdaq National Market for quotation under the symbol "VRGY."

Our transfer agent is Computershare Investor Services LLC. Shareholders can also contact our transfer agent via the Internet at www.computershare.com.

We are incorporated under the laws of Singapore. The following discussion summarizes certain material differences between the rights of holders of our ordinary shares and the rights of holders of the common stock of a typical corporation incorporated under the laws of the state of Delaware which result from differences in governing documents and the laws of Singapore and Delaware.

This discussion does not purport to be a complete statement of the rights of holders of our ordinary shares under applicable law in Singapore and our amended and restated memorandum and articles of association or the rights of holders of the common stock of a typical corporation under applicable Delaware law and a typical certificate of incorporation and bylaws.

The Singapore Companies Act contains the default articles that apply to a Singapore-incorporated company to the extent they are not excluded or modified by a company's articles of association. They provide examples of the common provisions adopted by companies in their memorandum and articles of association. However, as is the usual practice for companies incorporated in Singapore, we have specifically excluded the application of these provisions in our amended and restated memorandum and articles of association, which we refer to below as our articles.

Delaware		Singapore—Verigy Ltd.
Board of Directors
A typical certificate of incorporation and bylaws would provide that the number of directors on the board of directors will be fixed from time to time by a vote of the majority of the authorized directors. Under Delaware law, a board of directors can be divided into classes and cumulative voting in the election of directors is only permitted if expressly authorized in a corporation's certificate of incorporation.		Typically under Singapore law, the memorandum and articles of association of companies will state the maximum number of directors as well as provide that the number of directors may be increased or reduced by shareholders via ordinary resolution passed at a general meeting. Our articles provide that the maximum number of directors will be nine and that this number may be increased or reduced by ordinary resolution. Subject to the maximum fixed by our articles, the directors may determine the number of seats on the board.
Limitation on Personal Liability of Directors
A typical certificate of incorporation provides for the elimination of personal monetary liability of directors for breach of fiduciary duties as directors to the fullest extent permissible under the laws of Delaware, except for liability (i) for any breach of a director's loyalty to the corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) under Section 174 of the Delaware General Corporation Law (relating to the liability of directors for unlawful payment of a dividend or an unlawful stock purchase or redemption) or (iv) for any transaction from which the director derived an improper personal benefit. A typical certificate of incorporation would also provide that if the Delaware General Corporation Law is amended so as to allow further elimination of, or limitations on, director liability, then the liability of directors will be eliminated or limited to the fullest extent permitted by the Delaware General Corporation Law as so amended.		Pursuant to the Singapore Companies Act, any provision (whether in the articles of association, contract or otherwise) exempting or indemnifying a director against any liability for negligence, default, breach of duty or breach of trust will be void. Nevertheless, under common law in Singapore, a director can be released from liability for breaches of duty to a company except in the case of fraud, illegality or insolvency. Our articles provide that subject to the provisions of the Singapore Companies Act, every director, managing director, agent, secretary and other officer of the Company and its subsidiaries and affiliates, will be indemnified out of our assets against any liability incurred by him in defending any proceedings, whether civil or criminal, in which judgment is given in his favor or in which he is acquitted or in connection with any application under the Singapore Companies Act in which relief is granted to him by the court in respect of any negligence, default, breach of duty or breach of trust.

Prior to this offering, there has been no public market for our ordinary shares. The sale of a substantial amount of our ordinary shares in the public market after this offering, or the perception that such sales may occur, could adversely affect the prevailing market price of our ordinary shares. Furthermore, because some of our shares will not be available for sale shortly after this offering due to the contractual and legal restrictions on resale described below, the sale of a substantial amount of ordinary shares in the public market after these restrictions lapse could adversely affect the prevailing market price of our ordinary shares and our ability to raise equity capital in the future.

Upon the completion of this offering, we will have 58,500,000 ordinary shares outstanding, which includes the 8,500,000 ordinary shares sold by us in this offering and 50,000,000 ordinary shares held by Agilent.

All of the ordinary shares sold in this offering will be freely tradeable without restriction under the Securities Act, except for any shares which be may acquired by an affiliate of ours, as that term is defined in Rule 144 under the Securities Act. Persons who may be deemed to be affiliates generally include individuals or entities that control, are controlled by, or are under common control with us, and may include directors and officers of Agilent as well as significant stockholders of Agilent, if any. Our ordinary shares held by Agilent are restricted securities as that term is defined in Rule 144 under the Securities Act. These restricted securities may be sold in the public market only if they are registered or if they qualify for an exemption from registration, such as Rule 144.

We will issue ordinary shares pursuant to our equity-based incentive plans. We have reserved 10,300,000 ordinary shares for issuance under 2006 Equity Incentive Plan and 1,700,000 ordinary shares for issuance under our 2006 Employee Share Purchase Plan. See "Management — 2006 Equity Incentive Plan" and "Management — 2006 Employee Shares Purchase Plan." We currently expect to file a registration statement under the Securities Act to register shares reserved for issuance under our 2006 Equity Incentive Plan and 2006 Employee Share Purchase Plan. Shares issued pursuant to awards after the effective date of such registration statement (other than shares issued to affiliates) generally will be freely tradable without further registration under the Securities Act, subject to the underwriter lock-up described below.

Agilent, our directors and executive officers and we have agreed not to offer or sell any of our ordinary shares, subject to exceptions, for a period of 180 days after the date of this prospectus, without the prior written consent of Goldman, Sachs & Co. on behalf of the underwriters. This restriction does not apply to the distribution by Agilent of its remaining ownership interest in us to its common stockholders. See "Underwriting." Notwithstanding the foregoing, if (1) during the last 17 days of the 180-day restricted period, we issue an earnings release or announce material news or a material event; or (2) prior to the expiration of the 180-day restricted period, we announce that we will release earnings results during the 15-day period following the last day of the 180-day period, in which case the foregoing restrictions will continue to apply until the expiration of the 18-day period beginning on the date of issuance of the earnings release or the announcement of the material news or material event.

Agilent has advised us that it currently intends to distribute to its stockholders all of our ordinary shares that it holds by the end of its fiscal year, October 31, 2006. The distribution is expected to be effected through a special dividend by Agilent to its stockholders. Agilent will determine the timing, structure and all terms of the distribution taking into account factors such as market conditions. However, Agilent is not obligated to complete the distribution, and the distribution may not occur by the contemplated time or at all. In addition, subject to the lock-up obligation described above and compliance with applicable U.S. federal and state securities law, Agilent may sell our ordinary shares in the public market or in private transactions prior to the distribution.

The following summary of the material U.S. federal income tax and Singapore tax consequences of an investment in our ordinary shares is based upon laws and relevant interpretations thereof in effect as of the date of this prospectus, all of which are subject to change. This summary does not address all possible tax consequences relating to an investment in our ordinary shares, such as the tax consequences under state, local and other tax laws. Each prospective investor should consult an independent tax advisor regarding the investor's particular circumstances and the effect of state, local or foreign tax laws which may apply to such investor.

This section describes the material U.S. federal income tax considerations that may be relevant to an investor who acquires our ordinary shares in the offering. The summary is based upon the Internal Revenue Code of 1986, as amended (or the Code), the Treasury Regulations promulgated under the Code, rulings and other administrative pronouncements issued by the Internal Revenue Service (or the IRS) and judicial decisions, all as currently in effect, and all of which are subject to differing interpretations or to change, possibly with retroactive effect. We can provide no assurance that the IRS will not assert, or that a court will not sustain, a position contrary to any of the positions described below. We have not and will not seek an advance ruling from the IRS regarding any matter discussed in this prospectus.

This summary does not purport to discuss all aspects of U.S. federal income taxation that may be material to you in light of your particular circumstances. This summary assumes that you will acquire our ordinary shares in the offering and that you will hold such shares as "capital assets" within the meaning of Section 1221 of the Code, which generally means as property held for investment. This summary does not discuss considerations relevant to investors subject to special treatment under U.S. federal income tax laws (such as financial institutions, real estate investment trusts, regulated investment companies, grantor trusts, insurance companies, pension funds, tax-exempt organizations, expatriates, brokers, dealers or traders in securities or foreign currencies, traders in securities that elect to apply a mark-to-market method of accounting, persons who hold our shares as part of a position in a "straddle" or as part of a "hedging," "conversion" or "integrated" transaction for U.S. federal income tax purposes, persons deemed to sell our shares under the constructive sale provisions of the Code, persons who hold our shares through a partnership or other pass through entity, persons subject to the alternative minimum tax provisions of the Code, persons who have a "functional currency" other than the U.S. Dollar, or persons who are not U.S. Holders (as defined below)). In addition, this summary does not discuss considerations relevant to investors who acquire and own directly, indirectly or constructively, 10% or more of the voting power or value of our outstanding shares. Except as provided below, this summary does not consider the effect of any federal, state, local, estate or gift, foreign, or other tax law that may apply to particular investors.

As used herein, the term "U.S. Holder" means a beneficial owner of our ordinary shares that is (i) a citizen or resident of the United States for U.S. tax purposes, (ii) a corporation or other entity taxable as a corporation created or organized in the United States or under the laws of the United States, any state thereof or the District of Columbia, (iii) an estate the income of which is subject to U.S. federal income tax without regard to its source or (iv) a trust if a court within the United States is able to exercise primary supervision over the administration of the trust and one or more U.S. persons have the authority to control all substantial decisions of the trust, as well as certain electing trusts.

If a partnership (including for this purpose any entity classified as a partnership for U.S. federal income tax purposes) is a beneficial owner of our ordinary shares, the U.S. federal income tax

treatment of a partner in the partnership will generally depend on the status of the partner and the activities of the partnership. If a partnership acquires our ordinary shares, the partnership and its partners should each consult an independent tax advisor regarding the U.S. federal income tax consequences of the partnership's investment in our shares.

Each prospective investor should consult an independent tax advisor regarding the U.S. federal income tax consequences of owning or disposing of our ordinary shares, and the application of U.S. federal estate or gift tax laws, foreign, state, or local tax laws, and tax treaties, in light of the investor's particular circumstances.

A U.S. Holder will be required to include in gross income as dividend income, for the year in which received, the amount of any distributions of cash or other property made by us with respect to our ordinary shares to the extent the distribution is paid out of our current or accumulated earnings and profits, as determined under U.S. federal income tax principles. Such dividends will not be eligible for the dividends-received deduction otherwise allowable to U.S. corporations in respect of dividends received from other U.S. corporations.

To the extent that the amount of any distribution exceeds our current and accumulated earnings and profits, it will be applied against and will reduce the U.S. Holder's basis in our ordinary shares and, to the extent in excess of such basis, will be treated as gain from the sale or exchange of our ordinary shares.

Dividends that we distribute generally will be treated as "passive income" or, in the case of certain U.S. Holders, "financial services income," from foreign sources for U.S. foreign tax credit limitation purposes. U.S. Holders should note that recently enacted legislation eliminates the "financial services income" category with respect to taxable years beginning after December 31, 2006. Under this legislation, any dividends distributed by us with respect to our ordinary shares generally would constitute "passive category income" but could, in the case of certain U.S. Holders, constitute "general category income." A U.S. Holder's ability to credit foreign taxes paid by us against its U.S. federal income tax liability will depend on whether dividend income is classified as "general" or "passive" income to such U.S. Holder.

A portion of any dividends that we distribute may be recharacterized as U.S. source income if we constitute a "United States-owned foreign corporation." A U.S. Holder will not be able to credit foreign taxes paid by us against its U.S. federal income tax liability to the extent of any dividend income that is recharacterized as U.S. source income. We will constitute a United States-owned foreign corporation if U.S. persons own 50% or more of our total combined voting power or 50% or more of the total aggregate value of all our classes of share capital. Following the offering, we will be a United States-owned foreign corporation because Agilent will own more than 50% of our ordinary shares. Following the distribution of our shares by Agilent (or any other disposition of our shares by Agilent), there can be no assurance that we will not be a United States-owned foreign corporation. Each prospective investor should consult an independent tax advisor regarding the application of the foreign tax credit rules in light of the investor's particular circumstances.

Subject to certain limitations, "qualified dividend income" received by a noncorporate U.S. Holder in tax years beginning on or before December 31, 2008 may be eligible for a reduced rate of taxation. Distributions taxable as dividends paid on our ordinary shares generally will qualify for the reduced rate if our ordinary shares are readily tradable on an established securities market in the United States and the U.S. Holder satisfies other applicable requirements. Under existing guidance, we believe that our ordinary shares will be considered readily tradable on an established securities market in the United States. However, there can be no assurance that our ordinary shares

will remain readily tradable, or that dividends paid on our ordinary shares will continue to qualify for a reduced rate of taxation.

The reduced tax rate generally applicable to qualified dividend income does not apply unless the noncorporate U.S. Holder satisfies applicable holding period requirements. With respect to our ordinary shares, the U.S. Holder must have held such shares for at least 61 days during the 121-day period beginning 60 days before the ex-dividend date. The reduced tax rate also does not apply to dividends received from passive foreign investment companies (see "— U.S. Federal Income Tax Considerations — Passive Foreign Investment Company Considerations" below), and may not apply in respect of hedged positions in our ordinary shares. Special rules apply for computing the foreign tax credit limitation of a taxpayer who receives dividends subject to the reduced tax rate. Prospective investors should consult an independent tax advisor regarding the effect of these rules in their particular circumstances.

A U.S. Holder generally will recognize gain or loss upon the sale, exchange or other disposition of an ordinary share in an amount equal to the difference between the amount realized and the U.S. Holder's adjusted tax basis in the share. Any gain or loss recognized by a U.S. Holder generally will be treated as U.S. source gain or loss and will be long-term capital gain or loss if the share has been held for more than one year. Long-term capital gain of noncorporate taxpayers is currently taxed at lower rates than those applicable to ordinary income. The deductibility of capital losses is subject to certain limitations.

We believe that Verigy will not be treated as a passive foreign investment company (or PFIC) for United States federal income tax purposes for the current taxable year or for future taxable years. However, an actual determination of PFIC status is fundamentally factual in nature and cannot be made until the close of the applicable taxable year. A non-U.S. corporation will be a PFIC for any taxable year in which either (1) 75% or more of its gross income is passive income or (2) the average percentage of its assets which produce passive income or which are held for the production of passive income is at least 50%. If Verigy were characterized as a PFIC during any taxable year, each U.S. Holder would be subject to adverse U.S. federal income tax consequences, including a penalty tax at the time of the sale at a gain of, or receipt of an "excess distribution" with respect to our ordinary shares, unless the U.S. Holder makes a "qualified electing fund" election or a "mark-to-market" election, in which case certain other adverse tax consequences could apply. All or a portion of a distribution to a U.S. Holder will be treated as an "excess distribution" for such purposes if the aggregate amount of distributions during a taxable year is greater than 125% of the average annual distributions to the U.S. Holder during the shorter of (i) the three preceding taxable years or (ii) the U.S. Holder's holding period for our ordinary shares. Each prospective investor should consult an independent tax advisor regarding the potential application of the PFIC rules to such investor.

In general, information reporting requirements will apply to dividends paid in respect of our ordinary shares or the proceeds received on the sale, exchange or other disposition of ordinary shares within the United States (and in certain cases, outside the United States) by U.S. Holders other than certain exempt recipients (such as corporations). A backup withholding tax may apply to such payments if the U.S. Holder fails to provide an accurate taxpayer identification number and any other required certification or the U.S. Holder otherwise fails to establish an exemption. Any amounts withheld under the backup withholding rules will be allowed as a refund or a credit against

the U.S. Holder's federal income tax liability provided the required information is furnished to the IRS.

The following discussion is a summary of Singapore tax, stamp duty and estate duty considerations relevant to the purchase, ownership and disposition of our ordinary shares by an investor who is not tax resident and who does not carry on business or otherwise have a presence in Singapore or, in the case of estate duty, is not domiciled in Singapore. The statements made herein regarding taxation are based on certain aspects of the tax laws of Singapore and administrative guidelines issued by the relevant authorities in force as of the date hereof and are subject to any changes in such laws or administrative guidelines, or in the interpretation of those laws or guidelines, occurring after such date, which changes could be made on a retroactive basis. The statements made herein do not describe all of the tax considerations that may be relevant to all Verigy shareholders, some of which (such as dealers in securities) may be subject to special rules. Each prospective investor should consult an independent tax advisor regarding the Singapore and other tax consequences of owning or disposing of our ordinary shares in light of the investor's particular circumstances.

Distributions with Respect to Ordinary Shares. Singapore does not impose withholding tax on dividends. As of January 1, 2003, tax on corporate profits is final, and dividends paid by a Singapore resident company will be tax exempt in the hands of a shareholder, whether or not the shareholder is a company or an individual and whether or not the shareholder is a Singapore resident.

Capital Gains upon Disposition of Ordinary Shares. Under current Singapore tax law there is no tax on capital gains. As such, any profits from the disposal of our ordinary shares would not ordinarily be taxable in Singapore. However, if the gains from the disposal of ordinary shares are construed to be of an income nature (which could be the case if, for instance, gains arise from activities which the Inland Revenue Authority of Singapore regards as the carrying on of a trade or business in Singapore), the disposal profits would be taxable as trade profits rather than capital gains.

There is no stamp duty payable in respect of the issuance or holding of our ordinary shares. If outstanding ordinary shares are transferred in Singapore, stamp duty will be payable on the instrument of transfer of the shares at the rate of S$2 for every S$1,000 of the market value of the shares. The stamp duty is borne by the purchaser unless there is an agreement to the contrary. Where the instrument of transfer is executed outside of Singapore, stamp duty must be paid if the instrument of transfer is received in Singapore. Under Singapore law as currently in effect, there will be no Singapore stamp duty because we will maintain at all times following this offering a branch share register maintained outside of Singapore.

In the case of an individual who is not domiciled in Singapore, Singapore estate duty is imposed on the value of immovable properties situated in Singapore passing at death. Estate duty is not imposed on movable properties in Singapore owned by a non-domiciled person. Our ordinary shares are considered to be movable properties situated in Singapore. Thus, an individual holder of our common shares who is not domiciled in Singapore at the time of his or her death will

not be subject to Singapore estate duty on the value of our ordinary shares held by the individual at death.

There is no reciprocal income tax treaty between the United States and Singapore regarding withholding taxes on dividends or capital gains.

We and the underwriters named below have entered into an underwriting agreement with respect to the shares being offered. Subject to certain conditions, each underwriter has severally agreed to purchase the number of shares indicated in the following table. Goldman, Sachs & Co., Credit Suisse Securities (USA) LLC, Cowen and Company, LLC and Thomas Weisel Partners LLC are the representatives of the underwriters.

The underwriters are committed to take and pay for all of the shares being offered, if any are taken, other than the shares covered by the option described below unless and until this option is exercised.

If the underwriters sell more shares than the total number set forth in the table above, the underwriters have an option to buy up to an additional 1,275,000 shares from us to cover such sales. The underwriters may exercise that option for 30 days. If any shares are purchased pursuant to this option, the underwriters will severally purchase shares in approximately the same proportion as set forth in the table above.

The following tables show the per share and total underwriting discounts and commissions to be paid to the underwriters by us. Such amounts are shown assuming both no exercise and full exercise of the underwriters' option to purchase 1,275,000 additional shares.

Paid by Verigy
	No Exercise	Full Exercise
Per Share	$	$
Total	$	$

Shares sold by the underwriters to the public will initially be offered at the initial public offering price set forth on the cover of this prospectus. Any shares sold by the underwriters to securities dealers may be sold at a discount of up to $ per share from the initial public offering price. Any such securities dealers may resell any shares purchased from the underwriters to certain other brokers or dealers at a discount of up to $ per share from the initial public offering price. If all the shares are not sold at the initial public offering price, the representatives may change the offering price and the other selling terms.

We and our officers, directors, and Agilent, have agreed with the underwriters, subject to certain exceptions, not to dispose of or hedge any of their ordinary shares or securities convertible into or exchangeable for ordinary shares during the period from the date of this prospectus continuing through the date 180 days after the date of this prospectus, except with the prior written consent of Goldman, Sachs & Co., on behalf of the underwriters. This agreement does not apply to any existing employee benefit plans or the distribution of our shares by Agilent to its stockholders. See "Shares Eligible for Future Sale" for a discussion of certain transfer restrictions on our ordinary shares.

The 180-day restricted period described in the preceding paragraph will be automatically extended if: (1) during the last 17 days of the 180-day restricted period we issue an earnings release or announce material news or a material event; or (2) prior to the expiration of the 180-day restricted period, we announce that we will release earnings results during the 15-day period following the last day of the 180-day period, in which case the restrictions described in the preceding paragraph will continue to apply until the expiration of the 18-day period beginning on the issuance of the earnings release or the announcement of the material news or material event.

Prior to the offering, there has been no public market for the shares. The initial public offering price will be negotiated among us and the representatives. Among the factors to be considered in determining the initial public offering price of the shares, in addition to prevailing market conditions, will be our historical performance, estimates of our business potential and earnings prospects, an assessment of our management and the consideration of the above factors in relation to market valuation of companies in related businesses. We offer no assurances that the initial public offering price will correspond to the price at which the shares will trade in the public market subsequent to this offering or that an active trading market for the shares will develop and continue after the offering.

An application has been made to quote the ordinary shares on the Nasdaq National Market under the symbol "VRGY."

In connection with the offering, the underwriters may purchase and sell ordinary shares in the open market. These transactions may include short sales, stabilizing transactions and purchases to cover positions created by short sales. Shorts sales involve the sale by the underwriters of a greater number of shares than they are required to purchase in the offering. "Covered" short sales are sales made in an amount not greater than the underwriters' option to purchase additional shares from us in the offering. The underwriters may close out any covered short position by either exercising their option to purchase additional shares or purchasing shares in the open market. In determining the source of shares to close out the covered short position, the underwriters will consider, among other things, the price of shares available for purchase in the open market as compared to the price at which they may purchase additional shares pursuant to the option granted to them. "Naked" short sales are any sales in excess of such option. The underwriters must close out any naked short position by purchasing shares in the open market. A naked short position is more likely to be created if the underwriters are concerned that there may be downward pressure on the price of the ordinary shares in the open market after pricing that could adversely affect investors who purchase in the offering. Stabilizing transactions consist of various bids for or purchases of ordinary shares made by the underwriters in the open market prior to the completion of the offering.

The underwriters may also impose a penalty bid. This occurs when a particular underwriter repays to the underwriters a portion of the underwriting discount received by it because the representatives have repurchased shares sold by or for the account of such underwriter in stabilizing or short covering transactions.

Purchases to cover a short position and stabilizing transactions, as well as other purchases by the underwriters for their own accounts, may have the effect of preventing or retarding a decline in the market price of our shares, and together with the imposition of the penalty bid, may stabilize, maintain or otherwise affect the market price of the ordinary shares. As a result, the price of the ordinary shares may be higher than the price that otherwise might exist in the open market. If these activities are commenced, they may be discontinued at any time. These transactions may be effected on the Nasdaq National Market, in the over-the-counter market or otherwise.

In relation to each Member State of the European Economic Area which has implemented the Prospectus Directive (each, a Relevant Member State), each Underwriter has represented and agreed that with effect from and including the date on which the Prospectus Directive is implemented in that Relevant Member State (the Relevant Implementation Date) it has not made and will not make an offer of shares to the public in that Relevant Member State prior to the publication of a prospectus in relation to the shares which has been approved by the competent authority in that Relevant Member State or, where appropriate, approved in another Relevant Member State and notified to the competent authority in that Relevant Member State, all in accordance with the Prospectus Directive, except that it may, with effect from and including the Relevant Implementation Date, make an offer of shares to the public in that Relevant Member State at any time:

For the purposes of this provision, the expression an offer of shares to the public in relation to any shares in any Relevant Member State means the communication in any form and by any means of sufficient information on the terms of the offer and the shares to be offered so as to enable an investor to decide to purchase or subscribe the shares, as the same may be varied in that Relevant Member State by any measure implementing the Prospectus Directive in that Relevant Member State and the expression "Prospectus Directive" means Directive 2003/71/EC and includes any relevant implementing measure in each Relevant Member State.

The shares may not be offered or sold by means of any document other than to persons whose ordinary business is to buy or sell shares or debentures, whether as principal or agent, or in circumstances which do not constitute an offer to the public within the meaning of the Companies Ordinance (Cap. 32) of Hong Kong, and no advertisement, invitation or document relating to the

shares may be issued, whether in Hong Kong or elsewhere, which is directed at, or the contents of which are likely to be accessed or read by, the public in Hong Kong (except if permitted to do so under the securities laws of Hong Kong) other than with respect to shares which are or are intended to be disposed of only to persons outside Hong Kong or only to "professional investors" within the meaning of the Securities and Futures Ordinance (Cap. 571) of Hong Kong and any rules made thereunder.

This prospectus has not been lodged or registered as a prospectus with the Monetary Authority of Singapore. Accordingly, this prospectus and any other document or material in connection with the offer or sale, or invitation for subscription or purchase, of the shares may not be circulated or distributed, nor may the shares be offered or sold, or be made the subject of an invitation for subscription or purchase, whether directly or indirectly, to persons in Singapore other than (i) to an institutional investor under Section 274 of the Securities and Futures Act, Chapter 289 of Singapore (the "SFA"), (ii) to a relevant person, as defined in Section 275(2), or any person pursuant to an offer referred to in Section 275(1A), and in accordance with the conditions, specified in Section 275 of the SFA or (iii) otherwise pursuant to, and in accordance with the conditions of, any other applicable provision of the SFA.

Where the shares are subscribed or purchased under Section 275 by a relevant person which is: (a) a corporation (which is not an accredited investor) the sole business of which is to hold investments and the entire share capital of which is owned by one or more individuals, each of whom is an accredited investor; or (b) a trust (where the trustee is not an accredited investor) whose sole purpose is to hold investments and each beneficiary is an accredited investor, securities, debentures and units of shares and debentures of that corporation or the beneficiaries' rights and interest in that trust shall not be transferable for 6 months after that corporation or that trust has acquired the shares under Section 275 except: (1) to an institutional investor under Section 274 of the SFA or to a relevant person, as defined in Section 275(2), or any person pursuant to Section 275(1A), and in accordance with the conditions, specified in Section 275 of the SFA; (2) where no consideration is or will be given for the transfer; or (3) by operation of law.

The securities have not been and will not be registered under the Securities and Exchange Law of Japan (the Securities and Exchange Law) and each underwriter has agreed that it will not offer or sell any securities, directly or indirectly, in Japan or to, or for the benefit of, any resident of Japan (which term as used herein means any person resident in Japan, including any corporation or other entity organized under the laws of Japan), or to others for re-offering or resale, directly or indirectly, in Japan or to a resident of Japan, except pursuant to an exemption from the registration requirements of, and otherwise in compliance with, the Securities and Exchange Law and any other applicable laws, regulations and ministerial guidelines of Japan.

The underwriters do not expect sales to discretionary accounts to exceed 5% of the total number of shares offered.

We estimate that our share of the total expenses of the offering, excluding underwriting discounts and commissions, will be approximately $3 million. Agilent has agreed to pay all of our costs and expenses in connection with this offering, other than underwriting discounts and commissions. The underwriters have agreed to reimburse Agilent for its costs and expenses incurred in connection with this offering up to an amount equal to 0.5% of the gross proceeds raised in this offering.

We have agreed to indemnify the several underwriters against certain liabilities, including liabilities under the Securities Act of 1933.

Certain of the underwriters and their respective affiliates have, from time to time, performed, and may in the future perform, various financial advisory and investment banking services for us

and for Agilent, for which they received or will receive customary fees and expenses. Specifically, Goldman, Sachs & Co. acted as financial advisor to Agilent in connection with Agilent's divestiture of its semiconductor group, Avago Technologies, and other corporate matters and is a party to a 10b5-1 purchase plan with Agilent. In addition, an affiliate of Credit Suisse Securities (USA) LLC is a party to an international swap dealers association master agreement with Agilent under which such affiliate has in the past been and continues to be actively engaged in providing over-the-counter derivative transactions, including foreign exchange transactions, for Agilent, and Thomas Weisel Partners LLC has been engaged by Agilent as one of a number of brokerage firms to execute trades in connection with Agilent's announced share buyback program.

A prospectus in electronic format may be made available on the web sites maintained by one or more of the underwriters, or selling group members, if any, participating in this offering and one or more of the underwriters participating in this offering may distribute prospectuses electronically. The representatives may agree to allocate a number of shares to underwriters and selling group members for sale to their online brokerage account holders. Internet distributions will be allocated by the underwriters and selling group members that will make internet distributions on the same basis as other allocations.

The validity of the ordinary shares offered hereby and selected legal matters will be passed upon for us by Baker & McKenzie. Wong & Leow, Singapore. Selected legal matters as to U.S. law in connection with this offering will be passed upon for us by Simpson Thacher & Bartlett LLP, Palo Alto, California. Selected legal matters will be passed upon for the underwriters by Latham & Watkins LLP, Menlo Park, California.

The financial statements as of October 31, 2005 and 2004 and for each of the three years in the period ended October 31, 2005 included in this prospectus have been so included in reliance on the report (which contains an explanatory paragraph relating to the extensive intercompany transactions between our business and our parent, Agilent, and our reliance on Agilent for substantially all of our operational and administrative support as described in Note 3 to the financial statements) of PricewaterhouseCoopers LLP, an independent registered public accounting firm, given on the authority of said firm as experts in auditing and accounting.

We have filed with the Securities and Exchange Commission, or SEC, a registration statement on Form S-1 under the Securities Act with respect to the ordinary shares offered by this prospectus. This prospectus does not contain all of the information set forth in the registration statement and the exhibits and schedules filed as part of the registration statement. For further information with respect to us and our ordinary shares, we refer you to the registration statement and the exhibits and schedules filed as a part of the registration statement. Statements contained in this prospectus concerning the contents of any contract or any other document constitute a summary of the material terms of such contract or document. If a contract or document has been filed as an exhibit to the registration statement, we refer you to the copy of the contract or document that has been filed. Each statement in this prospectus relating to a contract or document filed as an exhibit is qualified in all respects by the filed exhibit. The reports and other information we file with the SEC can be read and copied at the SEC's Public Reference Room at 100 F Street, N.E., Washington D.C. 20549. You may obtain information regarding the operation of the public reference room by calling 1(800) SEC-0330. The SEC also maintains a web site (http://www.sec.gov) that contains

reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC.

As a result of this offering, we will become subject to the informational requirements of the Securities Exchange Act of 1934, as amended. We will fulfill our obligations with respect to those requirements by filing periodic reports and other information with the SEC.

		Page
Report of Independent Registered Public Accounting Firm		F-2
Combined Statements of Operations		F-3
Combined Balance Sheets		F-4
Combined Statements of Cash Flows		F-5
Combined Statements of Invested Equity		F-6
Notes to Combined Financial Statements		F-7

In our opinion, the accompanying combined balance sheets and the related combined statements of operations, of invested equity and of cash flows present fairly, in all material respects, the financial position of Verigy ("Verigy" or the "Business"), a business segment of Agilent Technologies, Inc., at October 31, 2005 and 2004 and the results of its operations and its cash flows for each of the three years in the period ended October 31, 2005 in conformity with accounting principles generally accepted in the United States of America. These financial statements are the responsibility of the Business management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

As disclosed in Note 3, the Business and its parent, Agilent Technologies, Inc., engage in extensive intercompany transactions, and the Business relies on its parent for substantially all of its operational and administrative support for which it is allocated costs on a basis that management believes is appropriate in the circumstances. The amounts recorded for these transactions and allocations are not necessarily representative of the amounts that would have been reflected in the financial statements had the Business been an entity operated independently of the parent.

VERIGY

A BUSINESS SEGMENT OF
AGILENT TECHNOLOGIES, INC.

COMBINED STATEMENTS OF OPERATIONS

The accompanying notes are an integral part of these combined financial statements.

VERIGY

A BUSINESS SEGMENT OF
AGILENT TECHNOLOGIES, INC.

COMBINED BALANCE SHEETS

The accompanying notes are an integral part of these combined financial statements.

VERIGY

A BUSINESS SEGMENT OF
AGILENT TECHNOLOGIES, INC.

COMBINED STATEMENTS OF CASH FLOWS

The accompanying notes are an integral part of these combined financial statements.

VERIGY

A BUSINESS SEGMENT OF
AGILENT TECHNOLOGIES, INC.

COMBINED STATEMENTS OF INVESTED EQUITY

The accompanying notes are an integral part of these combined financial statements.

VERIGY

A BUSINESS SEGMENT OF
AGILENT TECHNOLOGIES, INC.

NOTES TO COMBINED FINANCIAL STATEMENTS

Verigy ("we," "us" or the "Business") is a business segment of Agilent Technologies, Inc. ("Agilent" or "Parent"). We design, develop and manufacture semiconductor test equipment and provide test system solutions that are used in the manufacture of System-on-a-Chip (SOC), System-in-a-Package (SIP), high-speed memory and memory devices. In addition to test equipment, our solutions include consulting, service and support offerings such as start-up assistance, application services and system calibration and repair.

On August 15, 2005, Agilent announced its intention to separate the Business into a stand-alone publicly traded company focused on technology and innovation in semiconductor testing. The separation of our business from Agilent was completed on June 1, 2006. We will offer shares in an initial public offering ("IPO"). Until the completion of the IPO, we will be a wholly owned subsidiary of Agilent. The expected IPO date is in the third quarter of our fiscal 2006, with an expected completion date for the distribution of Agilent's shares in Verigy to its stockholders by October 31, 2006.

We historically have operated as part of Agilent, and not as a stand-alone company. Financial statements were not previously prepared for Verigy as we had no separate existence prior to June 1, 2006. The accompanying combined financial statements have been derived in accordance with accounting principles generally accepted in the United States of America from the accounting records of Agilent using the historical basis of assets and liabilities of Verigy.

We have prepared the accompanying interim financial data for the three months ended January 31, 2006 and 2005 pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC"). Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the U.S. have been condensed or omitted pursuant to such rules and regulations. In the opinion of management, the accompanying interim combined financial statements contain all normal and recurring adjustments necessary to present fairly our combined financial position as of January 31, 2006, combined results of operations for the three months ended January 31, 2006 and 2005 and cash flow activities for the three months ended January 31, 2006 and 2005.

We historically have received substantial management and shared administrative services from Agilent and we and Agilent engage in certain intercompany transactions. We have relied on Agilent for substantially all of our operational and administrative support. The combined financial statements include allocations of certain Agilent corporate expenses, including information technology resources and support; finance, accounting, and auditing services; real estate and facility management services; human resources activities; certain procurement activities; treasury services, customer contract administration, legal advisory services, and Agilent Labs services. We have benefited from Agilent agreements with third parties related to: cost sharing arrangements covering branding and marketing expenses, intellectual property licenses and agreements related to the use of real property.

However, the amounts recorded for these transactions and allocations are not necessarily representative of the amounts that would have been reflected in the financial statements had we been an entity that operated independently of Agilent. Our future results of operations after our separation from Agilent will include costs and expenses for us to operate as an independent company, and, consequently, these costs and expenses may be materially different than our historical results of operations, financial position, and cash flows. Accordingly, the financial statements for these years are not necessarily indicative of our future results of operations, financial position, and cash flows.

Agilent has historically used a centralized approach to cash management and financing of its operations. Transactions relating to Verigy are accounted for through the Agilent invested equity account for Verigy. Accordingly, none of the cash, cash equivalents or debt at the Agilent corporate level has been assigned to Verigy in the combined financial statements.

See Note 3, "Transactions with Agilent" for further information regarding the relationships we have with Agilent.

Our fiscal year end is October 31. Unless otherwise stated, all years and dates refer to our fiscal year.

Principles of combination. Our combined financial statements include the global historical assets, liabilities and operations of the Business. All significant intra-company transactions within Verigy have been eliminated. All significant intercompany transactions between us and other Agilent businesses are included in these combined financial statements. All intercompany transactions are

considered to be effectively settled for cash in the combined statements of cash flows at the time the transaction is recorded. Certain assets and liabilities of Verigy, which are included in these combined financial statements, may, or may not, be indicative of our business on a stand-alone basis.

Use of estimates. The preparation of financial statements in accordance with accounting principles generally accepted in the U.S. requires management to make estimates and assumptions that affect the amounts reported in our combined financial statements and accompanying notes. 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 us in the future, actual results may be different from the estimates. 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, restructuring and asset impairment charges, inventory valuation, warranty, stock-based compensation, retirement and post-retirement plan assumptions, valuation of goodwill and intangible assets and accounting for income taxes.

Revenue recognition. We enter into agreements to sell products, services, and other arrangements (multiple element arrangements) that include combinations of products and services.

We recognize revenue, net of trade discounts and allowances, provided that (1) persuasive evidence of an arrangement exists, (2) delivery has occurred, (3) the price is fixed or determinable and (4) collectibility is reasonably assured. Delivery is considered to have occurred when title and risk of loss have transferred to the customer, for products, or when service has been provided. The point at which title and risk of loss is transferred varies by customer, contract and location. For some customers, title and risk of loss are transferred at destination while other customers take delivery, title and risk of loss at point of shipment. We consider the price to be fixed or determinable when the price is not subject to refund or adjustments. Such adjustments have been insignificant for all periods presented. We consider arrangements with extended payment terms beyond 90 days not to be fixed or determinable, and accordingly we defer revenue until amounts become due. At the time we take an order, we evaluate the creditworthiness of our customers to determine the appropriate timing of revenue recognition.

Product revenue. Our product revenue is generated predominantly from the sales of various types of test equipment. Software is embedded in many of our test equipment products, but the software component is considered to be incidental. For sales or arrangements that include customer-specified acceptance criteria, including those where acceptance is required upon achievement of performance milestones or fulfillment of other future obligations, revenue is recognized after the acceptance criteria have been met. For products that include installation, if the installation meets the criteria to be considered a separate element, product revenue is recognized upon delivery, and recognition of installation revenue is delayed until the installation is complete. Otherwise, neither the product nor the installation revenue is recognized until the installation is complete.

Service revenue. Revenue from services includes extended warranty, customer support, consulting, training and education. Service revenue is deferred and recognized over the contractual period or as services are rendered to the customer. For example, customer support contracts are recognized ratably over the contractual period, while training revenue is recognized as the training is provided to the customer. In addition the four revenue recognition criteria described above must be met before service revenue is recognized.

Multiple element arrangements. We use objective evidence of fair value to allocate revenue to elements in multiple element arrangements and recognize revenue when the criteria for revenue recognition have been met for each element. If the criteria are not met, then revenue is deferred until such criteria are met or until the period(s) over which the last undelivered element is delivered. In the absence of objective evidence of fair value of a delivered element, we allocate revenue to the fair value of the undelivered elements and the residual revenue to the delivered elements. The price charged when an element is sold separately determines fair value.

Warranty revenue and cost. We generally provide a one-year warranty on products commencing upon installation or delivery. We accrue for warranty costs in accordance with Statement of Financial Standards No. 5, "Accounting for Contingencies" ("SFAS No. 5"), based on historical trends in warranty charges as a percentage of gross product shipments. Estimated warranty charges are recorded within cost of products at the time revenue is recognized and the liability is reported in other current liabilities on the combined balance sheet. The accrual is reviewed regularly and periodically adjusted to reflect changes in warranty cost estimates. For some products we also sell extended warranties beyond one year. Revenue related to our extended warranty contracts beyond one year is recorded as deferred revenue in the combined balance sheet and recognized on a straight-line basis over the contract period. Related costs are expensed as incurred.

Deferred revenue. Deferred revenue is primarily comprised of advanced billing and customer deposits for service, support and maintenance agreements.

Trade accounts receivable, net. Trade accounts receivable are recorded at the invoiced amount and do not bear interest. Our accounts receivable have been reduced by an allowance for doubtful accounts, which is our best estimate of the amount of probable credit losses in our existing accounts receivable. We determine the allowance based on customer specific experience and the aging of our receivables, among other factors. We do not have any off-balance-sheet credit exposure related to our customers. Our bad debt allowances were $0.4 million, $0.2 million and $0.3 million as of January 31, 2006 (unaudited), October 31, 2005 and October 31, 2004, respectively.

Stock-based compensation. Our employees participate in Agilent's stock-based compensation plans. Until November 1, 2005, we accounted for stock-based awards, based on Agilent's stock, using the intrinsic value method of accounting in accordance with Accounting Principles Board Opinion No. 25 "Accounting for Stock Issued to Employees" ("APB 25") and related interpretations. Under the intrinsic value method, we record compensation expense related

to stock options in our combined statements of operations when the exercise price of our employee stock-based award is less than the market price of the underlying Agilent stock on the date of the grant. We had no stock option expenses where the exercise price was less than the market price on the date of the grant in any of the periods presented.

Pro forma information. Pro forma net income (loss) information, as required by Statement of Financial Accounting Standards No. 123, "Accounting for Stock-Based Compensation," ("SFAS No. 123") has been determined as if we had accounted for the employee stock options we granted, including shares issuable to our employees under the Agilent Employee Stock Purchase Plan (the "423(b) Plan"), and the Option Exchange Program described below, under SFAS No. 123's fair value method. The calculations are based on Agilent stock options held by our employees and Agilent's assumptions. At the distribution date, employees will have a period of 3 months in which to exercise their vested Agilent options. To the extent that employees' Agilent options were not vested as of distribution date, Verigy will replace the Agilent options with new Verigy options using a conversion ratio determined at the distribution date. The ratio will be based upon the stock price of Agilent common stock prior to the distribution date compared to the share price of our ordinary shares following the distribution date. After the separation, our company's option program and practices may, or may not, be similar to Agilent's. As a result of these changes, the expense associated with future options may be substantially different than the historical data provided below.

The pro forma effect of recognizing compensation expense in accordance with SFAS No. 123 is as follows:

				Year Ended October 31,
	Three Months Ended January 31, 2005			Year Ended October 31,
	Three Months Ended January 31, 2005			2005			2004			2003
	(in millions)
	(unaudited)
Net loss — as reported	$	(45	)	$	(119	)	$	(8	)	$	(28	)
SFAS No. 123 stock-based compensation(1)		(6	)		(17	)		(19	)		(13	)
Tax impact(2)		—			1			2			1

Net loss — pro forma	$	(51	)	$	(135	)	$	(25	)	$	(40	)

SFAS No. 123 requires the use of highly subjective assumptions within option pricing models to determine the value of employee stock options. For purposes of pro forma disclosures, the estimated fair value of the options is amortized to expense using an accelerated method over the vesting period of the options and amortized over six months to two years for the 423(b) Plan.

Impact of the Adoption of SFAS 123R We adopted SFAS 123R using the modified prospective transition method beginning November 1, 2005. Accordingly, during the three-month period ended January 31, 2006, we recorded share-based compensation expense for awards granted prior to but not yet vested as of November 1, 2005 as if the fair value method required for pro forma disclosure under SFAS No. 123 were in effect for expense recognition purposes adjusted for estimated forfeitures. For these awards, we have continued to recognize compensation expense using the accelerated amortization method under FIN 28. For share-based awards granted after November 1, 2005 we have recognized compensation expense based on the estimated grant date fair value method required under SFAS 123R. For these awards we have recognized compensation expense using a straight-line amortization method. As SFAS 123R requires that share-based compensation expense be based on awards that are ultimately expected to vest, estimated share-based compensation for the three-month period ended January 31, 2006 has been reduced for estimated forfeitures. The impact on our results of continuing operations of recording share-based compensation for the three-month period ended January 31, 2006 was as follows:

The fair value of options granted was estimated at grant date using a Black-Scholes option-pricing model with the following weighted-average assumptions:

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 in the combined statements of operations for all years presented.

Goodwill and purchased intangible assets. We adopted SFAS No. 142 "Goodwill and Other Intangible Assets" ("SFAS No. 142") on November 1, 2002 and recorded an allocation of goodwill from Agilent. Goodwill is not amortized but is reviewed annually (or more frequently if impairment indicators arise) for impairment. Impairment indicators include the significant decrease in market price of an asset, significant adverse changes in the extent or use or physical condition of an asset, significant adverse change in legal or regulatory factors affecting an asset, accumulation of costs significantly in excess of expected costs to acquire or construct an asset, operating or cash flow losses (or projections of losses) that demonstrates continuing losses associated with the use of an asset, or a current expectation that is more likely than not, that an asset will be sold or disposed of significantly before the end of its previously estimated useful life. Purchased intangible assets are carried at cost less accumulated amortization. Amortization is computed using the straight-line method over the economic lives of the respective assets, generally three to five years.

Advertising. Business specific advertising costs are expensed as incurred. Advertising costs were insignificant for all periods presented. Some corporate advertising expenses are allocated to us by Agilent as part of corporate allocations described in Note 3 but are not separately identifiable.

Research and development. Costs related to research, design and development of our products are charged to research and development expense as they are incurred.

Taxes on income. Income tax expense or benefit is based on income or loss before taxes and was calculated on a separate return basis although we were included in Agilent's U.S. Federal and State tax returns and non-U.S. jurisdiction tax returns. Deferred tax assets and liabilities are recognized principally for the expected tax consequences of temporary differences between the tax basis of assets and liabilities and their reported amounts. Tax expense is also affected by any valuation allowance against deferred tax assets and changes in other comprehensive income (loss).

Fair value of financial instruments. The carrying values of accounts receivable, accounts payable, accrued employee compensation and benefits and other accrued liabilities approximate fair value because of their short maturities.

Concentration of credit risk. We sell our products through our direct sales force. For the three months ended January 31, 2006 (unaudited) two of our customers accounted for 29.7% of our net revenue. In fiscal 2005, no single customer accounted for 10% or more of our net revenue. In fiscal 2004, one customer accounted for 15.1% of our net revenue. In fiscal 2003, three customers accounted for 41% of our net revenue with one accounting for 11.1%, one accounting for 14.4% and one accounting for 15.5%. As of January 31, 2006 (unaudited), one customer accounted for 14.4% of the combined account receivable balance. No single customer accounted for 10% or more of the combined accounts receivable balance at October 31, 2005. Credit risk with respect to accounts receivable is generally diversified due to the large number of entities comprising our customer base and their dispersion across many different industries and geographies. We perform ongoing credit evaluations of our customers' financial conditions, and require collateral, such as letters of credit and bank guarantees, in certain circumstances.

Derivative instruments. We do not enter directly into any derivative instrument contracts, however Agilent uses such instruments and part of its gain or loss has been allocated to us. Agilent enters into foreign exchange contracts, primarily forward contracts and purchased options, to hedge exposures to changes in foreign currency exchange rates. These contracts are designated at inception as hedges of the related foreign currency exposures, which include committed and anticipated revenue and expense transactions and assets and liabilities that are denominated in currencies other than the functional currency of the entity that has the exposure. To achieve hedge accounting, contracts must reduce the foreign currency exchange rate risk otherwise inherent in the amount and duration of the hedged exposures and comply with established risk management policies. Hedging contracts generally mature within twelve months. Agilent does not use derivative financial instruments for speculative or trading purposes.

For derivative instruments that are designated and qualify as a cash flow hedge, changes in the value of the effective portion of the derivative instrument are recognized in accumulated

comprehensive income (loss), a component of invested equity. These amounts are reclassified and recognized in cost of sales when either the forecasted transaction occurs or it becomes probable the forecasted transaction will not occur, and allocated to us based on our forecasted revenue and cost exposures. For all periods presented, amounts recorded were insignificant. For derivative instruments that are designated and qualify as a fair value hedge, changes in the value of the derivative are recognized in other income and expense in the current period, and allocated to us along with other general corporate expenses. These amounts were not material in any of the periods presented. Changes in the fair value of the ineffective portion of derivative instruments, if any, are recognized in income in the current period. Amounts recorded in any of the periods presented were insignificant.

Inventory. Inventory is valued at standard cost, which approximates actual cost computed on a first-in, first-out basis, not in excess of market value and includes equipment used for sales demonstrations to our customers. We assess the valuation of our inventory, including demonstration inventory, on a quarterly basis and periodically write down the value for estimated excess and obsolete inventory based on estimates about future demand. The excess balance determined by this analysis becomes the basis for our excess inventory charge. Our marketing department plays a key role in our excess inventory review process by providing updated sales forecasts, managing product rollovers and working with manufacturing to maximize recovery of excess inventory.

Property, plant and equipment. Property, plant and equipment are stated at cost less accumulated depreciation and amortization. Additions, improvements and major renewals are capitalized; maintenance, repairs and minor renewals are expensed as incurred. When assets are retired or disposed of, the assets and related accumulated depreciation and amortization are removed from our general ledger and the resulting gain or loss is reflected in the combined statement of operations. Buildings and improvements are depreciated over ten to forty years and machinery and equipment over three to ten years. We are currently using the straight-line method to depreciate assets. However, prior to November 1, 2001, assets were being depreciated principally using accelerated methods and will continue to be depreciated under those methods until they are fully depreciated or retired.

Capitalized software. We capitalize certain internal and external costs incurred to acquire or create internal use software in accordance with AICPA Statement of Position 98-1, "Accounting for the Costs of Computer Software Developed or Obtained for Internal Use." Capitalized software is included in property, plant and equipment and is depreciated over three to six years when development is complete.

Impairment of long-lived assets. We continually monitor events and changes in circumstances that could indicate carrying amounts of long-lived assets, including intangible assets, may not be recoverable. When such events or changes in circumstances occur, we assess the recoverability of long-lived assets by determining whether the carrying value of such assets will be recovered through undiscounted expected future cash flows. 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.

Foreign currency translation. We follow SFAS No. 52 "Foreign Currency Translation" for both the translation and remeasurement of balance sheet and income statement items into U.S. Dollars. For those business units that operate in a local currency functional environment, all assets and liabilities are translated into U.S. Dollars using the exchange rates in effect at the end of the period; revenue and expenses are translated using average exchange rates in effect during each period. Resulting translation adjustments are reported as a separate component of accumulated comprehensive income (loss) in invested equity.

For those business units that operate in a U.S. Dollar functional environment, foreign currency assets and liabilities are remeasured into U.S. Dollars using the exchange rates in effect at the end of the period except for nonmonetary assets and capital accounts, which are remeasured at historical exchange rates. Revenue and expenses are generally remeasured at monthly exchange rates which approximate average exchange rates in effect during each year, except for those expenses related to balance sheet amounts that are remeasured at historical exchange rates. An allocation from Agilent of the applicable gains or losses from foreign currency remeasurement is included in other income (expense) in the combined statements of operations.

We derived revenue from the sales of products to other Agilent businesses of $0.5 million and $0.5 million for the three months ended January 31, 2006 and 2005 (unaudited) and $2 million, $3 million and $2 million for the three years ended October 31, 2005, 2004 and 2003, respectively. The revenue was recorded using a cost plus methodology and may not necessarily represent a price an unrelated third party would pay.

During the three months ended January 31, 2006 and 2005 (unaudited), we purchased materials from other Agilent business of approximately $3 million and $1 million, respectively. We purchased materials from other Agilent businesses during 2005, 2004 and 2003 of $9 million, $7 million and $7 million, respectively. All purchases were at cost and were recorded in cost of products for the respective years.

The combined statements of operations include our direct expenses as well as allocations of expenses arising from shared services and infrastructure provided to us by Agilent. These allocated expenses include costs of centralized research and development, legal and accounting services, employee benefits, real estate and facilities, corporate advertising, insurance services, information technology, treasury and other corporate and infrastructure services. These expenses are allocated to us using estimates that we consider to be a reasonable reflection of the utilization of services provided to or benefits received by us. The allocation methods include headcount, square footage, actual consumption and usage of services, adjusted invested capital and others.

Allocated costs included in the accompanying combined statements of operations are as follows:

	Three Months Ended January 31,				Year Ended October 31,
	2006		2005		2005		2004			2003
	(in millions)
	(unaudited)
Cost of products	$	7	$	6	$	26	$	30		$	37
Research and development		4		4		21		21			24
Selling, general and administrative		18		12		55		62			78
Other (income) expense, net		—		—		—		(1	)		1

Total allocated costs	$	29	$	22	$	102	$	112		$	140

The average annual balances on Agilent's Net Investment account were $102 million, $143 million and $164 million for the years ended October 31, 2005, 2004 and 2003, respectively. The average balances on Agilent's Net Investment account for the three months ended January 31, 2006 and 2005 (unaudited) were $104 million and $114 million, respectively.

We share and operate under numerous agreements executed by Agilent with third parties, including but not limited to purchasing, manufacturing, supply, and distribution agreements; use of

facilities owned, leased, and managed by Agilent; and software, technology and other intellectual property agreements.

On February 5, 2002, Agilent made an interest free relocation loan of $2.5 million to our current interim Vice President, Chief Financial Officer and Treasurer, Adrian Dillon. Provided he remains with Agilent, Agilent will forgive the loan over a 5-year period at 20% per year. The loan is secured by a deed of trust on his house. Certain provisions govern the repayment of the unforgiven portion of the note. This loan was made in connection with Mr. Dillon's employment with Agilent and is not recorded on our combined financial statements. As of January 31, 2006 (unaudited), October 31, 2005 and 2004, Agilent had recorded the outstanding loan amount of $1 million, $1 million and $1.5 million, respectively.

In December 2004, FASB issued Statement of Financial Accounting Standards No. 123 (Revised 2004) "Share-Based Payment" ("SFAS 123R"). SFAS 123R addresses all forms of share-based payment ("SBP") awards, including shares issued under employee stock purchase plans, stock options, restricted stock and stock appreciation rights. SFAS 123R requires us to expense SBP awards with compensation cost for SBP awards based on fair value. In March 2005, the Securities and Exchange Commission ("SEC") released Staff accounting Bulletin No. 107 "Share-Based Payment" ("SAB No. 107"), which expresses views of the SEC Staff about the application of SFAS 123R.

Under this new standard, our estimate of compensation expense will require a number of complex and subjective assumptions including our share price volatility, employee exercise patterns (expected life of the options), future forfeitures and related tax effects. Compensation expense for share-based equity awards issued after November 1, 2005 is being recognized on a straight-line basis over the vesting period of the award. For awards issued prior to November 1, 2005, we are recognizing SBP compensation expense based on the accelerated method described in FASB Interpretation No. 28 "Accounting for Stock Appreciation Rights and Other Variable Stock Option or Award Plans" ("FIN 28"). The adoption of SFAS 123R also requires additional accounting related to income taxes as well as additional disclosure related to the cash flow effects resulting from share-based compensation. We recorded a $4 million charge for share compensation expenses in the three months ended January 31, 2006 (unaudited). We estimate share compensation expenses for fiscal 2006 to be at least $10 million based on Agilent stock awards issued prior to January 31, 2006. In addition, we may have additional share compensation expense related to newly issued

Verigy options. Our separation will result in new shares whose value and volatility may be significantly different than Agilent's, new options with no historical base to estimate or moderate changes in values and other variables, and new management, including a new board of directors, whose philosophy about and use of options may differ from Agilent's historical pattern, particularly given the additional expense reporting required by SFAS 123R.

Upon final distribution of Verigy shares by Agilent, unvested Agilent stock options held by Verigy employees will terminate. To the extent options are vested as of the date of distribution, Verigy employees will have a period of three months in which to exercise the Agilent option before such options terminate. Exercise of Agilent options by Verigy employees will have no impact on our financial statements nor on our outstanding ordinary shares. To the extent that the Agilent options were not vested as of the distribution date, Verigy will replace the Agilent options with new Verigy options based on the ratio of the Agilent stock price prior to the distribution to the Verigy share price after the distribution.

In May 2005, the FASB issued SFAS No. 154, "Accounting Changes and Error Corrections" ("SFAS No. 154"). SFAS No. 154 is a replacement of Accounting Principles Board ("APB") Opinion No. 20 and FASB Statement No. 3. SFAS No. 154 provides guidance on the accounting for and reporting of accounting changes and error corrections. It establishes retrospective application as the required method for reporting a change in accounting principle. SFAS No. 154 provides guidance for determining whether retrospective application of a change in accounting principle is impracticable and for reporting a change when retrospective application is impracticable. SFAS No. 154 also addresses the reporting of a correction of an error by restating previously issued financial statements. SFAS No. 154 is effective for accounting changes and corrections of errors made in fiscal years beginning after December 15, 2005. We will be adopting this pronouncement beginning in our fiscal 2007 and do not currently believe that it will have a material impact on our financial statements.

into law by the applicable EU member countries in which we have significant operations. The effect that the adoption of FSP 143-1 had on our combined financial statements was insignificant. Such effects will depend on the respective laws adopted by the EU member countries.

Our operating results have historically been included in Agilent's consolidated U.S. federal and state income tax returns and non-U.S. jurisdictions tax returns. The provisions for income taxes in the combined financial statements have been determined on a separate return basis. We are required to assess the realization of our net deferred tax assets and the need for a valuation allowance on a separate return basis, and exclude from that assessment any utilization of those losses by Agilent. This assessment requires that our management make judgments about benefits that could be realized from future taxable income, as well as other positive and negative factors influencing the realization of deferred tax assets. Due to the cumulative losses we incurred in the U.S. and Japan, we recorded a valuation allowance against any net deferred tax assets in these jurisdictions. Until our separation from Agilent, we maintained a full valuation allowance in these jurisdictions because sufficient positive evidence did not exist to support reversal of the valuation allowance. Upon separation, we did not retain deferred tax assets and liabilities related to temporary differences, net operating losses and credit carryforwards. We retained certain prepaid tax assets upon our separation. As a result, for periods after June 1, 2006, our deferred tax assets and liabilities will be based solely on the transfer of assets on separation and our operating activities beginning as of June 1, 2006. Since Agilent's global tax model has been developed based on its entire portfolio of businesses, our tax results as presented are not necessarily reflective of our future tax results on a stand-alone basis.

We recorded income tax provisions of approximately $5 million and $5 million for the three-month periods ended January 31, 2006 and 2005 (unaudited), respectively. For the fiscal years ended October 31, 2005, 2004 and 2003, we recorded income tax provisions of $13 million, $14 million and $5 million, respectively.

		Year Ended October 31,
		2005			2004			2003
		(in millions)
U.S. federal taxes:
	Current	$	—		$	—		$	—
	Deferred		—			(1	)		—
Non-U.S. taxes:
	Current		15			13			14
	Deferred		(2	)		2			(9	)
State taxes, net of federal benefit:
	Current		—			—			—
	Deferred		—			—			—

Total tax provision		$	13		$	14		$	5

Deferred incomes taxes reflect the net effect of temporary differences between the carrying amounts of assets and liabilities used for financial reporting and tax purposes. The significant components of deferred tax assets and deferred tax liabilities included on the combined balance sheets are:

		October 31,
		2005					2004
		Deferred Tax Assets			Deferred Tax Liabilities		Deferred Tax Assets			Deferred Tax Liabilities
		(in millions)
Inventory		$	4		$	—	$	3		$	—
Property, plant and equipment			—			—		1			—
Warranty			3			—		3			—
Employee benefits, other than retirement			17			—		13			—
Other retirement benefits			—			—		—			3
Net operating losses and credit carryforwards			120			—		94			—
Other			1			—		2			—

	Subtotal		145			—		116			3
Tax valuation allowance			(135	)		—		(106	)		—

Total deferred tax asset or liability		$	10		$	—	$	10		$	3

At October 31, 2005, we had federal net operating tax loss carryforwards of approximately $213 million, state net operating tax loss carryforwards of approximately $200 million, foreign net operating tax loss carryforwards of $59 million, and total U.S. tax credit carryforwards of approximately $13 million. The net operating loss and credit carryforwards will expire in 2012 through 2025.

Upon separation, we did not retain deferred tax assets and liabilities related to temporary differences, net operating losses and credit carryforwards.

The differences between the U.S. federal statutory income tax rate and our effective tax rate are:

	Year Ended October 31,
	2005		2004		2003
U.S. federal statutory income tax rate	35.0	%	35.0	%	35.0	%
State income taxes, net of federal benefit	0.0		1.6		(0.4	)
Non-U.S. income taxed at different rates	(21.6	)	177.4		0.1
R&D credits	1.3		(22.5	)	6.3
Other, net	0.7		(30.8	)	11.1
Valuation allowance	(27.5	)	65.4		(72.4	)

	(12.1	)%	226.1	%	(20.3	)%

		Year Ended October 31,
		2005			2004			2003
		(in millions)
U.S. net income (loss) before taxes		$	(81	)	$	(7	)	$	(21	)
Non-U.S. net income (loss) before taxes			(25	)		13			(2	)

	Total net income (loss) before taxes	$	(106	)	$	6		$	(23	)

Income taxes payable as of January 31, 2006 (unaudited) were $34 million. At October 31, 2005, 2004 and 2003 these amounts were $31 million, $23 million and $23 million, respectively. These amounts are included within income taxes and other taxes payable and represent amounts that had not been settled through the Agilent invested equity account at the end of each year.

Agilent is subject to ongoing tax examinations of its tax returns by the Internal Revenue Service and other tax authorities in various jurisdictions. We regularly assess the likelihood of adverse outcomes resulting from these examinations to determine the adequacy of our provision for income taxes.

Our employees participate in Agilent's various incentive award plans, including employee stock purchase and incentive plans. Stock options are generally granted to employees at an exercise price equal to the fair market value of Agilent stock at the date of grant. Under the provisions of the 423(b) Plan, eligible employees may contribute up to 10% percent of their base compensation to purchase shares of Agilent's common stock at 85% of the lower of the fair market value at the entry date or the purchase date as defined by the 423(b) Plan. Generally, options vest 25% per year, are fully vested four years from the grant date and have a maximum term of ten years.

Until November 1, 2005, we followed the accounting provisions of Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees" ("APB No. 25") and related interpretations for stock-based compensation granted to employees. Accordingly, until November 1, 2005 compensation expense was recognized in our combined statements of operations only when options are granted at an exercise price that is less than the market price of the underlying Agilent stock on the date of the grant. Any compensation expense is recognized ratably over the associated service period, which is generally the option vesting term. There was no compensation expense related to discounted options, stock appreciation rights and restricted stock recorded for any years presented. We adopted SFAS 123R using the modified prospective transition method beginning November 1, 2005.

On March 4, 2003, Agilent's stockholders approved an amendment to the Agilent Stock Plan. The amendment permitted Agilent to offer a one-time exchange of options issued under the Stock Plan having an exercise price greater than $25 for a lesser number of options to be granted at least six months and one day from the cancellation of surrendered options (the "Option Exchange Program"). On May 20, 2003, Agilent implemented the Option Exchange Program by filing a Tender Offer Statement with the SEC, which allowed eligible employees a one-time opportunity to exchange options to purchase shares of the company's common stock, whether vested or unvested, which were granted under Agilent's Stock Plan, with exercise prices greater than $25 per share. The Option Exchange Program was offered from May 20, 2003 to June 18, 2003 and the number of shares cancelled and new ones granted are listed in the table below. Under the provisions of APB No. 25, no compensation expense has been, or will be recognized in our combined operations for the issuance of the replacement shares.

The following table summarizes option activity for the three months ended January 31, 2006 and for the years ended October 31, 2005, 2004 and 2003:

	Shares		Weighted Average Exercise Price
	(in thousands)
Outstanding as of October 31, 2002	3,455		$	40
Granted	623		$	14
Exercised	(41	)	$	10
Cancelled under Option Exchange Program	(1,434	)	$	53
Other Cancellations	(46	)	$	28

Outstanding as of October 31, 2003	2,557		$	27
Granted under Option Exchange Program	692		$	28
Other Grants	957		$	25
Exercised	(92	)	$	15
Cancellations	(5	)	$	16

Outstanding as of October 31, 2004	4,109		$	29
Granted	682		$	18
Exercised	(282	)	$	22
Cancellations	(11	)	$	19

Outstanding as of October 31, 2005	4,498		$	28
Granted (unaudited)	547		$	34
Exercised (unaudited)	(468	)	$	25
Cancellations (unaudited)	(241	)	$	27

Outstanding as of January 31, 2006 (unaudited)	4,336		$	29

The following table summarizes options exercisable and the fair value of options granted:

The following table summarizes information about all options outstanding at January 31, 2006 (unaudited):

The aggregate intrinsic value in the table above represents the total pretax intrinsic value, based on Agilent's closing stock price of $33.91 at January 31, 2006, which would have been received by award holders had all award holders exercised their awards that were in-the-money as of that date. The total number of in-the-money awards exercisable as of January 31, 2006 (unaudited) was approximately 2.1 million. The aggregate intrinsic value of awards exercised during the three-month period ended January 31, 2006 (unaudited) was $4.2 million.

The following table summarizes information about all options outstanding at October 31, 2005:

Finished goods inventory includes demonstration products of $20 million as of January 31, 2006 (unaudited) and $20 million and $18 million as of October 31, 2005 and 2004, respectively.

The total cost of products in the combined statements of operations included inventory-related charges of $10 million and $2 million for the three months ended January 31, 2006 and 2005 (unaudited), respectively. In addition, we sold previously written down inventory for $2 million in each of the three months ended January 31, 2006 and 2005.

For fiscal 2005, 2004 and 2003, we incurred inventory-related charges of $25 million, $3 million and $2 million, respectively, for excess and obsolete inventory on our site as well as inventory at our contract manufacturers and suppliers where we have non-cancelable purchase commitments. In addition, we sold previously written down inventory of $7 million, $1 million, and $7 million, respectively, for the same periods.

				October 31,
	January 31, 2006			October 31,
	January 31, 2006			2005			2004
	(in millions)
	(unaudited)
Buildings and leasehold improvements	$	1		$	1		$	1
Software		8			4			4
Machinery and equipment		58			55			50

Total property, plant and equipment		67			60			55
Accumulated depreciation and amortization		(43	)		(42	)		(42	)

Total property, plant and equipment, net	$	24		$	18		$	13

			October 31,
	January 31, 2006		October 31,
	January 31, 2006		2005		2004
	(in millions)
	(unaudited)
Deferred Tax Assets	$	7	$	8	$	10
Pension assets		2		3		7
Prepaid taxes		—		2		9
Investments		3		3		1
Other		14		10		10

Total other long term assets	$	26	$	26	$	37

Information about our pension plans and associated assets are presented in Note 14, "Retirement Plans and Post-Retirement Benefits."

Our investments consist of investments in private companies accounted for using the cost method as we have no significant influence over the investee. All of our investments are subject to periodic impairment review, which requires significant judgment to identify events or circumstances that would likely have a significant adverse effect on the future use of the investment. Charges related to other than temporary impairments were $0.3 million in fiscal 2005. This impairment charge was included in other income (expense), net in the combined statements of operations. No impairment charges were recorded in the other periods presented.

The goodwill balance was $17 million as of January 31, 2006 (unaudited) and as of October 31, 2005 and $18 million as of October 31, 2004. The reduction in the value of goodwill from 2004 to 2005 was due to a foreign currency translation adjustment.

Other intangible assets were all classified as purchased intangibles and are included in other assets in the combined balance sheets. The gross carrying amount and net book values as of January 31, 2006, October 31, 2005 and October 31, 2004 are shown in the table below:

We had no amortization of intangible assets for the three months ended January 31, 2006 and 2005 (unaudited), respectively. For fiscal 2005, 2004 and 2003 amortization of intangibles was $0 million, $0.4 million and $0.5 million, respectively. Our current intangible assets are fully amortized so there will be no future amortization expenses related to our current intangible assets.

A summary of our standard warranty accrual activity for the three months ended January 31, 2006 and 2005 (unaudited) and fiscal years ended October 31, 2005 and 2004 is shown in the table below; also see Note 15, "Other Accrued Liabilities":

	Three Months Ended January 31,						Year Ended October 31,
	2006			2005			2005			2004
	(in millions)
	(unaudited)
Balance at beginning of period	$	6		$	7		$	7		$	10
Accruals for warranties issued during the period		3			1			8			12
Accruals related to pre-existing warranties (including changes in estimates)		(1	)		(1	)		—			(1	)
Settlements made during the period		(2	)		(2	)		(9	)		(14	)

Balance at end of period	$	6		$	5		$	6		$	7

A summary of our extended warranty deferred revenue activity for the three months ended January 31, 2006 and 2005 (unaudited) and fiscal years ended October 31, 2005 and 2004 is shown in the table below:

	Three Months Ended January 31,						Year Ended October 31,
	2006			2005			2005			2004
	(in millions)
	(unaudited)
Balance at beginning of period	$	13		$	13		$	13		$	10
Recognition of revenue		(2	)		(1	)		(5	)		(4	)
Deferral of revenue for new contracts		4			1			5			7

Balance at end of period	$	15		$	13		$	13		$	13

In our combined balance sheets, current deferred revenue is reported separately and long-term deferred revenue is included in long-term liabilities. See Note 16, Other Accrued Liabilities and Long-Term Liabilities.

As is customary in our industry and as provided for in local law in the U.S. and other jurisdictions, many of our standard contracts provide remedies to our customers and others with

whom we enter into contracts, such as defense, settlement, or payment of judgment for intellectual property claims related to the use of our products. From time to time, we indemnify customers, as well as our suppliers, contractors, lessors, lessees, companies that purchase our businesses or assets and others with whom we enter into contracts, against combinations of loss, expense, or liability arising from various triggering events related to the sale and the use of our products, the use of their goods and services, the use of facilities and state of our owned facilities, the state of the assets and businesses that we sell and other matters covered by such contracts, usually up to a specified maximum amount. In addition, from time to time we also provide protection to these parties against claims related to undiscovered liabilities, additional product liability or environmental obligations. In our experience, claims made under such indemnifications are rare and the associated estimated fair value of the liability is not material.

Under the agreements with Agilent, Verigy has agreed to indemnify Agilent in connection with Verigy activities conducted prior to and following its separation from Agilent in connection with the businesses that constitute Verigy and the liabilities that Verigy will be specifically assuming under the agreements. These indemnifications cover a variety of aspects of Verigy's business, including, but not limited to, employee, tax, intellectual property and environmental matters.

Agilent initiated several restructuring plans in prior years; the 2001 Plan, the 2002 Plan and the 2003 Plan (collectively, the "Prior Plans"). Agilent's Prior Plans were designed to reduce costs and expenses in order to return Agilent to profitability. Agilent launched a new restructuring program in 2005 to align its workforce with its smaller organization size after the announced sale of its semiconductor products business, completed on December 1, 2005, and its announced intention to spin us off. Overall, we reduced our workforce since October 31, 2002 by 183 people to approximately 1,550 employees as of January 31, 2006 through attrition and involuntary terminations.

The two main components of these plans are workforce reduction and consolidation of excess facilities. Under all plans, we directly incurred and recorded only charges for workforce management. In addition, we recorded charges allocated to us by Agilent for our share of the expenses they incurred to reduce costs for support services such as finance, information technology, and workplace services. Agilent achieved these cost reductions by moving global shared services operations sites to lower cost regions, reducing the number of properties, particularly sales and administrative sites, and by reducing their workforce through involuntary terminations and selected outsourcing of manufacturing and administrative functions. Our allocated portion of these costs is included in our combined financial statements and the schedules below. All accrued liabilities associated with the allocated costs were recorded by Agilent and not us.

The 2001 Plan had little direct impact on Verigy, but we were affected by Agilent's later plans that focused on the segments most severely impacted by the market downturn. Under the 2002 Plan, we reduced employees at production facilities that had experienced declining demand. Actions we took as part of the 2002 Plan were completed by the end of 2002. Approximately $1 million was accrued for workforce management expenses at the end of 2002 and paid in 2003.

From 2003 through 2005, we recorded additional direct charges under the 2003 plan and Agilent allocated additional costs under the Prior Plans. In 2003, we incurred direct charges of $4 million for workforce management and Agilent allocated approximately $9 million ($7 million for workforce management and $2 million consolidation of excess facilities) to us. In 2004, we recorded an additional $1 million in direct charges for workforce management reductions and Agilent allocated approximately $4 million ($2 million for workforce management and $2 million for consolidation of excess facilities) to us.

The workforce reduction portion of the Prior Plans was completed in the middle of 2005 for Agilent and Verigy. The facilities portion of Prior Plans is expected to be completed within the next five years.

A summary of Prior Plans restructuring activity (including restructuring costs allocated to us by Agilent) by year is shown below:

	Three Months Ended January 31,				Year Ended October 31,
	2006		2005		2005		2004		2003
	(in millions)
	(unaudited)
Workforce management	$	—	$	—	$	—	$	3	$	11
Consolidation of facilities		—		—		—		2		2

Total restructuring charges	$	—	$	—	$	—	$	5	$	13

We had no accrued balances at the end of the respective reporting years for activities related to consolidation of facilities. Accrued liabilities for workforce management restructuring costs and

changes between years related to the Prior Plans are shown in the table below (excludes costs allocated and paid by Agilent):

	Workforce Management
	(in millions)
Balance at October 31, 2002	$	1
Total charge		4
Cash payments		(5	)

Balance at October 31, 2003		—
Total charge		1
Cash payments		(1	)

Balance at October 31, 2004		—
Total charge		—
Cash payments		—

Balance at October 31, 2005	$	—

Total charges (unaudited)		—
Cash payments (unaudited)		—

Balance at January 31, 2006 (unaudited)	$	—

In fiscal 2005 we initiated a plan, as part of Agilent's 2005 restructuring plan, to further reduce operational costs, primarily through closing, consolidating, and relocating some sites and reducing and realigning our workforce ("2005 Plan"). Under this plan, we took an $8 million charge in fiscal 2005, $5 million of which related to a reduction in headcount, $2 million of which related to headcount reduction by Agilent for corporate and administrative personnel that had supported our business and $1 million of which related to consolidation of facilities.

We recorded $7 million in charges for the three months ended January 31, 2006 (unaudited) and expect to record an additional charge of $15 million to $20 million for the remainder of fiscal 2006.

A summary of the 2005 Plan restructuring activity during 2005 is shown in the table below:

	Workforce Reduction			Asset Impairment and Consolidation of Excess Facilities			Total
	(in millions)
Balance at October 31, 2004	$	—		$	—		$	—
Total charge including amounts allocated by Agilent		7			1			8
Less allocated and paid by Agilent		(2	)		(1	)		(3	)
Less cash payments		(4	)		—			(4	)

Balance at October 31, 2005	$	1		$	—		$	1
Total charges including amount allocated by Agilent (unaudited)		7			—			7
Less allocated and paid by Agilent (unaudited)		(1	)		—			(1	)
Less cash payments (unaudited)		(1	)		—			(1	)

Balance at January 31, 2006 (unaudited)	$	6			—		$	6

The restructuring accrual for all plans, which totaled $6 million as of January 31, 2006 (unaudited) and $1 million as of October 31, 2005, is recorded in other accrued liabilities on the combined balance sheet and represents estimated future cash outlays. Workforce reduction payments, primarily severance, are expected within a one-year period.

A summary of the statement of operations impact of the charges resulting from all restructuring plans is shown below.

	Three Months Ended January 31,				Year Ended October 31,
	2006		2005		2005		2004		2003
	(in millions)
	(unaudited)
Cost of sales	$	1	$	—	$	1	$	1	$	2
Research and development		2		—		2		1		1
Selling, general and administrative		4		—		5		3		10

Total restructuring charges	$	7	$	—	$	8	$	5	$	13

The restructuring costs allocated to us by Agilent and included in the table above are shown separately below:

	Three Months Ended January 31,				Year Ended October 31,
	2006		2005		2005		2004		2003
	(in millions)
	(unaudited)
Cost of sales	$	—	$	—	$	—	$	1	$	—
Research and development		—		—		—		—		1
Selling, general and administrative		2		—		3		3		8

Total restructuring charges	$	2	$	—	$	3	$	4	$	9

General. Substantially all of our employees are covered under various Agilent defined benefit and/or defined contribution plans. Additionally, Agilent sponsors post-retirement health care benefits and a death benefit under the Retiree Survivor's Benefit Plan for our eligible U.S. employees.

U.S. Retirement-related Plans. Agilent provides U.S. employees, who meet eligibility criteria under the retirement and deferred profit-sharing plans, defined benefits which are generally based on an employee's highest five consecutive years' average pay during the years of employment and on length of service. 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 Agilent's fixed and frozen defined contribution Deferred Profit-Sharing Plan ("DPSP"), which was closed to new participants in November 1993.

401(k) defined contribution plan. Agilent's U.S. eligible employees may participate in the Agilent 401(k) Plan ("the 401(k) Plan"). Enrollment in the 401(k) Plan is automatic for employees who meet eligibility requirements unless they decline participation. Under the 401(k) Plan, Agilent provides matching contributions to employees up to a maximum of 4% of an employee's annual eligible compensation. The maximum contribution to the 401(k) Plan is 50% of an employee's annual eligible compensation, subject to regulatory and plan limitations. The 401(k) Plan expense is included in the corporate employee overhead rate allocation and not separately identifiable.

Post-retirement medical benefit plans. In addition to receiving pension benefits, our U.S. employees who meet retirement eligibility requirements as of their termination dates may participate in Agilent's Non-Medicare Medical or Medicare Medical Plans (the "Post-retirement Medical Plans"). Under the Agilent health plan, Agilent's current U.S. employees could become eligible for these benefits, and the existing benefit obligation relates primarily to those employees. Once participating in a medical plan, retirees may choose from managed-care and indemnity options, with their contributions dependent on the options chosen and length of service.

Plan amendments. In July 2004, the Compensation Committee of the Agilent Board of Directors approved design changes to Agilent's Post-retirement Medical Plans. One option available to existing post-65 retirees is a new Medicare Supplement Plan in 2005. The Medicare Supplement Plan supplements Medicare coverage by reimbursing Medicare Parts A and B deductibles at 100% after Medicare pays its portion of the retiree's expenses. The Post-retirement Medical Plan for a majority of future retirees was revised to establish retiree medical accounts for the benefit of such retirees and will be funded with amounts as determined by Agilent.

Medicare Prescription Drug, Improvement and Modernization Act of 2003. In December 2003, the Medicare Prescription Drug, Improvement and Modernization Act of 2003 ("the Act") was passed which expands Medicare to include an outpatient prescription drug benefit beginning in 2006. In May 2004, the FASB issued FSP 106-2, "Accounting and Disclosure Requirements Related to the Medicare Prescription Drug, Improvement and Modernization Act of 2003," which provides guidance on how companies should account for the impact of the Act on its postretirement healthcare plans. Beginning in 2006, the federal government will provide a non-taxable subsidy to employers that sponsor prescription drug benefits to retirees that are "actuarially equivalent" to Medicare Part D benefits. We have determined that the prescription drug benefits offered under our plans qualify for this subsidy. Effective fourth quarter 2004, assuming that we will continue to offer these benefits, we have reflected the expected subsidy according to the guidance in FSP 106-2 prospectively in our financial statements. The adoption of FSP 106-2 had no material impact on our accumulated postretirement benefit obligation or net plan costs.

Non-U.S. Retirement Benefit Plans. Eligible employees outside the U.S. generally receive retirement benefits under various retirement plans based upon factors such as years of service and employee compensation levels. Eligibility is generally determined in accordance with local statutory requirements.

Change in Plans at Spin Off of Business. When the separation of the business from Agilent occurred (See Note 1, "Overview"), the defined benefit plans in the U.S., United Kingdom, Switzerland and Japan were not transferred while the liabilities associated with plans in Germany, France, Korea, Italy and Taiwan were transferred. For the latter, with the exception of Italy, Verigy will receive funding from Agilent based on the amount of the accumulated net benefit obligation of our employees in these plans. Verigy employees in the U.S. will cease participating in Agilent's U.S. defined contribution plan as of the separation date and will be enrolled in a new Verigy defined contribution plan. As it is still early in the transition process, estimated future benefit payments for each of the next five fiscal years and the fiscal years thereafter are not known.

Costs for All U.S. and Non-U.S. Plans. The following tables provide the principal components of total retirement related benefit plans impact on income (loss) of Verigy:

Non-U.S. Defined Benefit. For the three months ended January 31, 2006 and 2005 (unaudited) and for the years ended October 31, 2005, 2004 and 2003, the net pension costs related to our employees participating in our non-U.S. defined benefit plans that will be transferred were comprised of:

Funded status. As of October 31, 2005 and 2004, the funded status of our non-U.S. defined benefit plans that will be transferred was:

		Non-U.S. Defined Benefit Plans Year Ended October 31,
		2005			2004
		(in millions)
Change in fair value of plan assets:
	Fair value — beginning of year	$	33.2		$	28.2
	Actual return on plan assets		5.2			2.6
	Employer contributions		0.3			0.7
	Participants' contributions		—			—
	Benefits paid		(0.3	)		(0.2	)
	Currency impact		(1.3	)		1.9

Fair value — end of year		$	37.1		$	33.2

Change in benefit obligation:
	Benefit obligation — beginning of year	$	39.7		$	34.6
	Service cost		2.9			2.7
	Interest cost		2.2			1.9
	Participants' contributions		—			—
	Plan amendment		0.5			—
	Actuarial (gain)/loss		10.4			(1.5	)
	Benefits paid		(0.2	)		(0.2	)
	Currency impact		(2.0	)		2.2

	Benefit obligation — end of year	$	53.5		$	39.7

Plan assets less than benefit obligation		$	(16.4	)	$	(6.5	)
Unrecognized net actuarial loss			15.7			10.8
Unrecognized prior service cost			0.5			0.1

Net prepaid (accrued) costs		$	(0.2	)	$	4.4

Amounts recognized in the combined balance sheet consist of:
Prepaid defined benefit plan costs		$	2.9		$	6.5
Accrued defined benefit plan costs			(3.9	)		(2.1	)
Deferred tax assets			0.3			—
Accumulated other comprehensive income			0.5			—

Net prepaid (accrued) costs		$	(0.2	)	$	4.4

Investment policies and strategies. Plan assets consist primarily of listed stocks and bonds. Agilent desires to obtain the optimum rate of investment return on the total investment portfolio consistent with the assumption of a reasonable level of risk. The safety and protection of principal is

a primary concern, and Agilent believes that a well-diversified investment portfolio will result in the highest attainable investment return (income plus capital appreciation) with the lowest overall risk. Specific investment objectives for the plans are: maintain and enhance the purchasing power of the plans' assets; achieve investment returns consistent with the level of risk being taken; and earn rates of return in accordance with the benchmarks adopted for each asset class. For the non-U.S. plans, Agilent's assets are allocated from 45 to 70% to equities, from 25 to 55% to fixed income investments, and from 0 to 5% to real estate investments, depending on the plan. All plans' assets are broadly diversified. The actual allocation of plan assets are consistent with the target allocations.

As of January 31, 2006, October 31, 2005 and 2004, the non-U.S. defined benefit plans expected to be transferred to us and the amounts of the obligations and assets for these plans were:

	Non-U.S. Defined Benefit Plans to be Transfered
	January 31,		October 31,
	2006		2005		2004
	(in millions)
	(unaudited)
Aggregate projected benefit obligation ("PBO")	$	56	$	54	$	40
Aggregate accumulated benefit obligation ("ABO")	$	40	$	38	$	28
Aggregate fair value of plan assets	$	37	$	37	$	33

As of January 31, 2006, October 31, 2005 and 2004, there were some non-U.S. defined benefit plans expected to be transferred with accumulated benefit obligations ("ABO") that were in excess of the fair value of the plan assets. The amounts of the obligations and assets for these plans were:

	Non-U.S. Defined Benefit Plans to be Transfered
	January 31,		October 31,
	2006		2005		2004
	(in millions)
	(unaudited)
Aggregate accumulated benefit obligation ("ABO")	$	11	$	5	$	1
Aggregate fair value of plan assets	$	7	$	3	$	—

Additional Minimum Liability. An additional minimum pension liability adjustment was required in 2005 for one pension plan in Germany as the accumulated benefit obligation of $2.0 million for that plan exceeded the $1.2 million of pension plan assets as of the measurement date. The impact

of the additional minimum liability on accumulated comprehensive loss was $0.5 million with $0.3 million applied to deferred tax assets. No minimum pension liability was required for 2004.

Assumptions. The assumptions used to determine the benefit obligations and expense for all of Agilent's defined benefit and post-retirement benefit plans are presented in the tables below. The impacts of the assumptions listed for the three months ended January 31, 2006 and the fiscal years 2005, 2004 and 2003 have already been recognized in our combined statement of operations. The expected long-term return on assets below is based on the historical rate of return for our chosen asset mix of equities and fixed income investments adjusted for anticipated future movements. Assumptions used to calculate the net periodic cost in each year were as follows:

Assumptions used to calculate the benefit obligations and the resulting additional minimum pension liability were as follows:

	Year ended October 31,
	2005		2004
Non-U.S. defined benefit plans:
Discount rate	3.5% – 6.0	%	3.5% – 6.0	%
Average increase in compensation levels	3.0% – 5.0	%	3.25% – 5.0	%
Expected long-term return on assets	6.75	%	6.75	%

As part of our effort of becoming a separate stand-alone publicly held company, we have incurred, and expect to incur, one-time internal and external separation expenses such as: information technology set-up costs, consulting and legal and other professional fees. We incurred $15 million in separation expenses in the three months ended January 31, 2006 (unaudited) and $3 million in fiscal 2005.

Other accrued liabilities at January 31, 2006 (unaudited), October 31, 2005 and 2004 were as follows:

		January 31,		October 31,
		2006		2005		2004
		(in millions)
		(unaudited)
Other accrued liabilities
	Supplier liabilities	$	11	$	13	$	2
	Accrued warranty costs		6		6		7
	Separation costs		9		—		—
	Other		7		4		5

Total other accrued liabilities		$	33	$	23	$	14

Supplier liabilities reflect our obligations to suppliers for materials they purchased to meet our production forecasts. The increase in liabilities at October 31, 2005 from October 31, 2004 reflects decreases in anticipated needs for materials already purchased by suppliers for certain specific products and product components. See Note 12, "Guarantees" for additional information regarding warranty accruals.

Long-term liabilities at January 31, 2006 (unaudited), October 31, 2005 and 2004 were as follows:

		January 31,		October 31,
		2006		2005		2004
		(in millions)
		(unaudited)
Long-term liabilities
	Long-term extended warranty and deferred revenue	$	13	$	10	$	10
	Deferred income taxes		—		—		3
	Retirement plans		4		4		2
	Other		1		1		3

Total Long-term liabilities		$	18	$	15	$	18

Our accrued vacation balance totaled $21 million at January 31, 2006 (unaudited), $19 million, and $19 million at October 31, 2005 and 2004, respectively, and is recorded in employee compensation and benefits in the combined balance sheets.

Operating Lease Commitments: Agilent leases certain real and personal property from unrelated third parties under non-cancelable operating leases. Our portion of the future minimum lease payments under those leases as of October 31, 2005 is as follows:

Certain leases require Agilent to pay property taxes, insurance and routine maintenance, and include escalation clauses, recorded on a straight line basis. A portion of these charges are allocated to Verigy. Rent expense was $0.5 million and $0.4 million for the three months ended January 31, 2006 and 2005 (unaudited), respectively and $2 million per year for the fiscal years ended October 31, 2005, 2004 and 2003.

From time to time, we are involved in lawsuits, claims, investigations and proceedings, including patent, commercial and environmental matters that arise in the ordinary course of

business. There are no such matters pending that we expect to be material in relation to our business, combined financial condition, results of operations or cash flows.

SFAS No. 131, "Disclosures About Segments of an Enterprise and Related Information," requires us to identify the segment or segments we operate in. Based on the standards set forth in SFAS 131, we operate in one reportable segment: we provide test system solutions that are used in the manufacture of semiconductor devices. Below is the revenue detail for the two product platforms within this segment:

Major customers. During the three months ended January 31, 2006 (unaudited), two customers accounted for 29.7% of our net revenue with one accounting for 19.0% and the other accounting for 10.7%. During the three months ended January 31, 2005 (unaudited), one customer accounted for 10.7% of our net revenue.

In fiscal 2005, no single customer accounted for 10% or more of our net revenue. In fiscal 2004, one customer accounted for 15.1% of our net revenue. In fiscal 2003, three customers accounted for 41% of our net revenue with one accounting for 11.1%, one accounting for 14.4% and one accounting for 15.5%.

Net revenue is attributed to geographic areas based on the country in which the customer takes title of our products.

On March 5, 2006, we selected Flextronics Telecom Services Ltd. ("Flextronics") as our primary contract manufacturer and entered into a global manufacturing services agreement with Flextronics. All these agreements were entered into with Agilent, but upon the separation date, Verigy assumed all of Agilent's rights and obligations under these agreements. Our agreement with Flextronics will expire in March 2010 although it may be automatically extended for subsequent terms of one year, absent nine-months notice of an intention to terminate the agreement from us or Flextronics. The agreement may also be terminated by us or Flextronics for other customary reasons, including if the other party becomes subject to bankruptcy proceedings or materially breaches the agreement. In addition, generally, we may terminate this agreement if Flextronics fails to make a delivery on more than 15% of our placed orders in any three-month period. We are not obligated to use Flextronics exclusively to manufacture our products, nor is Flextronics obligated to

manufacture test equipment exclusively for us. However, the agreement does require our consent for Flextronics to sell any of our products to unaffiliated third parties.

As of May 31, 2006, Verigy had issued 50,000,000 ordinary shares to our sole shareholder, Agilent. Basic and diluted net loss per share have been computed by dividing the net loss for each period presented by the 50,000,000 ordinary shares currently held by Agilent.

Effective March 31, 2006, the Company signed several asset purchase agreements with Flextronics in connection with the transfer of its manufacturing activities to Flextronics. Under these agreements, we sold to Flextronics approximately $19 million of inventory and approximately $2 million of machinery and equipment for approximately net book value effective June 1, 2006. In addition, we paid Flextronics $1.5 million effective June 1, 2006 for transition-related services, which we will record as a prepaid asset and recognize ratably over the manufacturing contract period. Also, in connection with these agreements, Flextronics will pay us $3 million of additional consideration that we will defer and recognize ratably over the manufacturing contract period. Also under these agreements, we will transfer approximately 85 employees to Flextronics and Flextronics will assume certain pension and other employee liabilities associated with these employees. Agilent paid Flextronics approximately $7 million on June 1, 2006 for severance and other employee related benefits associated with the transferred employees. Verigy will reimburse Agilent for these costs in accordance with the master separation and distribution agreement within 30 days of the closing of our IPO. Verigy will also pay employee related benefits liabilities of approximately $1 million by June 30, 2006 and an additional payment of approximately $2 million in the future. Approximately $5 million of these payments relate to known future severance payments for the transferred employees. We will defer these costs and recognize them ratably over the employees' period of service until the date of the employees' date of termination from Flextronics. These services are benefiting us as these employees will be working exclusively on Verigy products and Verigy is able to control the employees' period of service prior to termination.

Verigy and Agilent entered into a master separation and distribution agreement prior to the completion of our initial public offering that contains the key provisions relating to the separation, initial public offering and the distribution. The master separation and distribution agreement describes generally the agreements and other documents that were delivered on the separation date, including the ancillary agreements. These ancillary agreements include the general assignment and assumption agreement, the tax sharing agreement, the employee matters agreement, the intellectual property matters agreement, the manufacturing trademark license agreement and the transition services agreement. In addition, pursuant to the master separation and distribution agreement, we entered into a revolving credit facility with Agilent on the separation date. The master separation and distribution agreement also sets forth our agreement with Agilent

with respect to our initial public offering, including an agreement that the parties will use commercially reasonable efforts to consummate our initial public offering.

In addition, Agilent has agreed to make a payment or otherwise transfer value to us after the closing of this offering if the proceeds to us from this offering, net of underwriting discounts and commissions, are less than $140 million. The payment or other transfer of value will be in an amount equal to the difference between the net proceeds of this offering and $140 million. We have also agreed to cause Agilent to be released by October 31, 2007 from specified guarantees or other security obligations that Agilent has entered into or will enter into on our behalf. Agilent will have no obligation to maintain any such guarantees or other security obligations on our behalf following October 31, 2007. These guarantees and security arrangements relate to real property lease deposits and guarantees, security for company credit card programs and other credit arrangements, and required deposits with governmental trade and tax agencies and are currently estimated to be approximately $13 million in the aggregate.

The general assignment and assumption agreement governs the transfer of assets and assumption of liabilities relating to our business, to the extent that the other agreements do not provide for the specific transfer of those assets or the assumption of those liabilities. It also describes when and how these transfers and assumptions did or will occur.

The tax sharing agreement governs the respective rights, responsibilities, and obligations of Agilent and us with respect to tax liabilities and benefits, tax attributes, tax contests and other matters regarding income taxes, non-income taxes and related tax returns.

The employee matters agreement with Agilent allocates assets, liabilities and responsibilities relating to our current and former employees and their participation in benefit plans, including share plans. In general, separate agreements address similar issues relating to foreign employment and benefit matters.

For up to two years following our separation from Agilent, Agilent will continue to provide services and access to resources necessary for Verigy under the transition services agreement. In general, these services and resources include facilities management, site information technology infrastructure, usage of various applications and support systems, as well as employee related services for any transitional employees remaining with Agilent. Under the transition services agreement, Verigy has the ability to negotiate with Agilent for the provision of additional transition services not set forth in the agreement, which additional services will generally be subject to the provisions of the agreement. The agreement will terminate and Agilent will have no obligation to provide any further transition services to Verigy two years after the separation date. We estimate the cost of these services will be in the range of $10 million to $15 million for a period of approximately six months after the separation date and that the majority of these services will terminate on or before the distribution date. We expect that the services provided by transitional employees may last for up to two years following the separation date, for an additional cost to us of approximately $3 million to $5 million. In all cases, the charges for these interim services are generally intended to allow Agilent to recover the cost of providing such services plus an appropriate return on such services, which, consistent with Agilent's intercompany pricing practices, will generally be 10%.

No dealer, salesperson or other person is authorized to give any information or to represent anything not contained in this prospectus. You must not rely on any unauthorized information or representations. This prospectus is an offer to sell only the shares offered hereby, but only under circumstances and in jurisdictions where it is lawful to do so. The information contained in this prospectus is current only as of its date.

Through and including , 2006 (the 25th day after the date of this prospectus), all dealers effecting transactions in these securities, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to a dealer's obligation to deliver a prospectus when acting as an underwriter and with respect to an unsold allotment or subscription.

The following table sets forth the costs and expenses, other than the underwriting discounts, payable by the Registrant in connection with the sale of the securities being registered. All offering-related expenses will be paid on the Registrant's behalf by Agilent. All amounts are estimates except the SEC registration fee, the NASD filing fee and the Nasdaq National Market Listing Fee.

SEC Registration Fee	$	18,827
NASD Filing Fee		18,095
Nasdaq National Market Listing Fee		150,000
Printing and Engraving Costs		500,000
Legal Fees and Expenses		1,500,000
Accounting Fees and Expenses		600,000
Blue Sky Fees and Expenses		5,000
Transfer Agent and Registrar Fees		25,000
Miscellaneous		183,078

Total	$	3,000,000

Subject to the Singapore Companies Act and every other Act for the time being in force concerning companies and affecting the Registrant, Article 92 of the Registrant's Articles of Association provides that, subject to the Singapore Companies Act and every other Act for the time being in force concerning companies and affecting the Registrant, every director or other officer of the Registrant and its subsidiaries and affiliates shall be entitled to be indemnified out of the assets of the Registrant against any liability incurred by him in defending any proceedings, civil or criminal, in which judgment is given in his favor; or in which he is acquitted; or in connection with any application under the Singapore Companies Act in which relief is granted to him by the Court.

In addition, no director, manager or other officer shall be liable for the acts, receipts, neglects or defaults of any other director or officer, or for joining in any receipt or other act for conformity, or for any loss or expense incurred by the Registrant, through the insufficiency or deficiency of title to any property acquired by order of the directors for the Registrant or for the insufficiency or deficiency of any security upon which any of the moneys of the Registrant are invested or for any loss or damage arising from the bankruptcy, insolvency or tortious act of any person with whom any moneys, securities or effects are deposited, or any other loss, damage or misfortune which happens in the execution of his duties, unless the same happens through his own negligence, willful default, breach of duty or breach of trust.

Section 172 of the Singapore Companies Act prohibits a company from indemnifying its directors or officers against liability, which by law would otherwise attach to them for any negligence, default, breach of duty or breach of trust of which they may be guilty relating to the Registrant. However, a company is not prohibited from (a) purchasing and maintaining for any such officer insurance against any such liability, or (b) indemnifying such officer against any liability incurred by him in defending any proceedings, whether civil or criminal, in which judgment is given in his favor or in which he is acquitted, or in connection with any application under Section 76A(13) or 391 or any other provision of the Singapore Companies Act in which relief is granted to him by the court.

The Registrant will enter into indemnification agreements with its officers and directors. These indemnification agreements provide the Registrant's officers and directors with indemnification to the maximum extent permitted by the Singapore Companies Act. The Registrant has also obtained a policy of directors' and officers' liability insurance that will insure directors and officers against the cost of defense, settlement or payment of a judgment under certain circumstances which are permitted under the Singapore Companies Act.

Reference is made to the following documents filed as exhibits to this registration statement regarding relevant indemnification provisions described above and elsewhere herein:

On January 23, 2006, in connection with the initial formation of Verigy Pte. Ltd., the Registrant issued one ordinary share for one U.S. Dollar to a nominee holder in a transaction that was not registered under the Securities Act of 1933, as amended. The sale of these securities was considered to be exempt from registration under the Securities Act in reliance on Section 4(2) of the Securities Act, as a transaction by an issuer not involving a public offering.

On May 31, 2006, in connection with the separation of the Registrant's business from Agilent Technologies, Inc., the Registrant issued 49,999,999 shares to Agilent for approximately $535 million in a transaction that was not registered under the Securities Act. The sale of these securities was considered to be exempt from registration under the Securities Act in reliance on Section 4(2) of the Securities Act, as a transaction by an issuer not involving a public offering.

The undersigned Registrant hereby undertakes to provide the underwriters at the closing specified in the underwriting agreements certificates in such denominations and registered in such names as required by the underwriter to permit prompt delivery to each purchaser.

Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is therefore unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer, or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.

Pursuant to the requirements of the Securities Act of 1933, the Registrant has duly caused this amendment to the registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Palo Alto, State of California, on June 2, 2006.

Pursuant to the requirements of the Securities Act of 1933, this amendment to the registration statement has been signed by the following persons in the capacities and on the dates indicated:

Goldman, Sachs & Co.		Credit Suisse
Cowen and Company		Thomas Weisel Partners LLC

Ordinary shares offered		8,500,000 shares
Ordinary shares to be outstanding immediately after this offering		58,500,000 shares
Ordinary shares to be held by Agilent immediately after this offering		50,000,000 shares
Use of proceeds		We estimate our net proceeds from this offering will be approximately $134 million, based on an assumed initial public offering price of $17.00 per share, the mid-point of the range on the cover page of this prospectus, and after deducting underwriting discounts and commissions. If the underwriters exercise in full their option to purchase additional shares, we expect to receive approximately $20 million of additional net proceeds. Agilent has agreed to make a payment or other transfer of value to us after the closing of this offering if the proceeds to us from this offering, net of underwriting discounts and commissions, are less than $140 million. The payment or other transfer of value will be in an amount equal to the difference between the net proceeds of this offering and $140 million. We intend to use $25 million of the net proceeds from this offering to repay the amounts owing under a short-term revolving credit facility entered into with Agilent on the date of our separation from Agilent and approximately $8 million to reimburse Agilent for payments Agilent has made to Flextronics and to make a payment to Flextronics, in both cases related to future severance and other employee-related benefits associated with employees transferred to Flextronics. We intend to use the remaining approximately $107 million for general corporate purposes, including working capital, and to pay approximately $40 million in costs we expect to incur through the end of fiscal 2006 related to our separation from Agilent.
		As a result of Agilent's agreement to make a payment or other transfer of value to us equal to the amount by which the net proceeds to us of this offering are less than $140 million, the net proceeds available to us after this offering, including any funding from Agilent, will be at least $140 million. This will be the case even if the initial public offering price is reduced to less than the assumed $17.00 per share. At an initial public offering price at or above $17.71 per share (or $15.40 per share if the underwriters' over-allotment option is exercised in full), we would receive net proceeds of $140 million or more from this offering alone and

	As of January 31, 2006
	Historical		Pro Forma		Pro Forma As Adjusted
	(in millions)
Combined Balance Sheet Data:
Cash and cash equivalents	$	—	$	25	$	132
Working capital		74		131		271
Total assets		324		344		451
Shareholders' equity		123		176		316

	As of January 31,		As of October 31,
	2006		2005		2004		2003		2002		2001
	(in millions)
Combined Balance Sheet Data:
Total assets	$	324	$	260	$	265	$	309	$	290	$	296
Invested equity	$	123	$	87	$	119	$	169	$	158	$	152

			Quarter Ended
			Jan. 31, 2006		Oct. 31, 2005		Jul. 31, 2005		Apr. 30, 2005		Jan. 31, 2005		Oct. 31, 2004		Jul. 31, 2004		Apr. 30, 2004		Jan. 31, 2004
Net revenue:
	Products		84.1	%	82.4	%	78.8	%	76.0	%	69.6	%	77.4	%	83.9	%	84.5	%	82.7	%
	Services		15.9		17.6		21.2		24.0		30.4		22.6		16.1		15.5		17.3

		Total net revenue	100.0		100.0		100.0		100.0		100.0		100.0		100.0		100.0		100.0
Cost of sales:
	Cost of products		43.5		50.9		49.2		49.0		50.6		47.0		47.7		39.6		40.6
	Cost of services		14.2		14.5		18.6		22.0		26.6		20.0		15.5		13.4		12.7

		Total cost of sales	57.7		65.4		67.8		71.0		77.2		67.0		63.2		53.0		53.3

		Gross margin	42.3		34.6		32.2		29.0		22.8		33.0		36.8		47.0		46.7
Operating expenses:
	Research and development		14.7		15.7		20.3		26.0		32.9		20.9		16.8		15.5		17.3
	Selling, general and administrative		21.8		20.8		28.0		36.0		40.5		27.8		23.2		19.8		22.7
	Restructuring charges		3.5		3.8		0.8		0.0		0.0		1.7		0.0		0.5		0.7
	Separation costs		8.8		1.8		0.0		0.0		0.0		0.0		0.0		0.0		0.0

		Total operating expenses	48.8		42.1		49.1		62.0		73.4		50.4		40.0		35.8		40.7

Income (loss) from operations			(6.5	)%	(7.5	)%	(16.9	)%	(33.0	)%	(50.6	)%	(17.4	)%	(3.2	)%	11.2	%	6.0	%

		would not receive any payment or other transfer from Agilent under the terms of our agreement with Agilent. Each $1.00 increase in the initial public offering price above $17.71 per share (or $15.40 per share if the underwriters' over-allotment option is exercised in full) would increase the net proceeds available to us from this offering by approximately $7.9 million (or approximately $9.1 million if the underwriters' over-allotment option is exercised in full), assuming the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting underwriting discounts and commissions.
		See "Use of Proceeds" for additional information.
Proposed Nasdaq National Market trading symbol		VRGY

			Three Months Ended April 30,
			2006			2005
			(in millions, except per share amounts)
Orders			$	313		$	95
Net revenue:
	Products		$	158		$	76
	Services			34			24

		Total net revenue		192			100
Net loss			$	(11	)	$	(37	)

Basic and diluted net loss per share			$	(0.22	)	$	(0.74	)
Basic and diluted weighted average shares used in computing net loss per share				50			50

				As of January 31, 2006
				Historical		Pro Forma		Pro Forma As Adjusted
				(in millions, except share data)
Long-term liabilities				$	18	$	17	$	17
Shareholders' equity:
	Ordinary shares; no shares issued or outstanding, historical; 50,000,000 shares issued and outstanding, pro forma; 58,500,000 shares issued and outstanding, pro forma as adjusted				—		175		315
	Invested equity by Agilent				122		—		—
	Accumulated other comprehensive income				1		1		1

		Total shareholders' equity			123		176		316

			Total capitalization	$	141	$	193	$	333

			Three Months Ended January 31,						Year Ended October 31,
			Three Months Ended January 31,				2006 over 2005 Change		Year Ended October 31,						2005 over 2004 Change		2004 over 2003 Change
			2006		2005		2006 over 2005 Change		2005		2004		2003		2005 over 2004 Change		2004 over 2003 Change
			($ in millions)
Net revenue from products:
	SOC/SIP/High-Speed Memory		$	114	$	43	165.1	%	$	267	$	370	$	301	(27.8	)%	22.9	%
	Memory Test			29		12	141.7	%		88		131		151	(32.8	)%	(13.2	)%
		Net revenue from products		143		55	160.0	%		355		501		452	(29.1	)%	10.8	%
Net revenue from services				27		24	12.5	%		101		106		88	(4.7	)%	20.5	%

Total net revenue			$	170	$	79	115.2	%	$	456	$	607	$	540	(24.9	)%	12.4	%

		Three Months Ended January 31,								Year Ended October 31,
								2006 over 2005 Change
																			2005 over 2004 Change		2004 over 2003 Change
		2006			2005					2005			2004			2003			2005 over 2004 Change		2004 over 2003 Change
		($ in millions)
Research and development		$	25		$	26		(3.8	)%	$	101		$	105		$	97		(3.8	)%	8.2	%
	As a percent of net revenue		14.7	%		32.9	%				22.1	%		17.3	%		18.0	%

	Total		Less than one year		One to three years		Three to five years		More than five years
Operating leases	$	5	$	2	$	3	$	—	$	—

Commitments to contract manufacturers and suppliers		87		86		1		—		—
Other purchase commitments		21		8		11		2		—
Long term liabilities		15		—		15		—		—

Total	$	128	$	96	$	30	$	2	$	—

			Historical		Adjustments for Separation			Adjustments for Flextronics			Pro Forma		Adjustments for Offering			Pro Forma As Adjusted
			(in millions)
Assets
Current assets:
	Cash and cash equivalents(1)(2)		$	—	$	25	(A)	$	—		$	25	$	107	(D)	$	132
	Trade accounts receivable, net			126		—			—			126		—			126
	Inventory			114		—			(19	)(E)		95		—			95
	Other current assets			17		(7	)(B)		26	(E,F,I)		36		—			36

		Total current assets(2)		257		18			7			282		107			389
Property, plant and equipment, net				24		—			(1	)(E)		23		—			23
Goodwill				17		—			—			17		—			17
Other assets				26		(8	)(B)		4	(G,I)		22		—			22

		Total assets(2)	$	324	$	10		$	10		$	344	$	107		$	451

Liabilities and shareholders' equity
Current liabilities:
	Accounts payable		$	25	$	—		$	2	(G)	$	27	$	—		$	27
	Employee compensation and benefits			42		(18	)(B)		(1	)(H)		23		—			23
	Deferred revenue			47		—			—			47		—			47
	Income taxes and other taxes payable			36		(36	)(B)		—			—		—			—
	Other accrued liabilities			33		(15	)(B)		4	(F,H)		22		(1)	(D)		21
	Payable to Agilent			—		25	(A)		7	(H,I)		32		(32	)(D)		—

		Total current liabilities		183		(44	)		12			151		(33	)(D)		118
Long-term liabilities				18		1	(C)		(2)	(F,H)		17		—			17

		Total liabilities		201		(43	)		10			168		(33	)		135
Shareholders' equity:
	Ordinary shares(2)		$	—	$	175	(B,C)	$	—		$	175	$	140	(D)	$	315
	Invested equity by Agilent			122		(122	)(B)		—	(E,H)		—		—			—
	Accumulated other comprehensive income			1		—			—			1		—			1

		Total shareholders' equity(2)		123		53			—			176		140			316

		Total liabilities and shareholders' equity(2)	$	324	$	10		$	10		$	344	$	107		$	451

							Potential Realizable Value at Assumed Annual Rates of Stock Price Appreciation for Option Term
		% of Total Options Granted to Employees in Fiscal Year
	Number of Securities Underlying Options Granted
				Exercise or Base Price Per Share
Name						Expiration Date
Name						Expiration Date	5%		10%
Jack P. Trautman	48,000	0.44	%	$	22.80	Nov. 2014	$	688,262	$	1,744,192
Adrian Dillon	80,000	0.74	%		22.80	Nov. 2014		1,147,104		2,906,986
Gayn Erickson	7,000	0.06	%		21.65	Jan. 2015		95,309		241,532
Kristen Robinson	15,000	0.14	%		21.65	Jan. 2015		204,234		517,568
Pascal Ronde	40,000	0.37	%		22.60	Mar. 2015		568,521		1,440,743

Name	Shares Acquired on Exercise (#)	Value Realized ($)	Number of Securities Underlying Unexercised Options at Fiscal Year End (#) Exercisable/Unexercisable	Value of Unexercised In-The-Money Options at Fiscal Year End ($) Exercisable/Unexercisable
Jack P. Trautman	—	—	217,250 / 164,250	$	1,304,055	/	$	1,575,865
Adrian Dillon	—	—	288,500 / 295,500		2,635,905	/		2,992,715
Gayn Erickson	—	—	21,002 / 30,095		109,020	/		216,131
Kristen Robinson	—	—	14,639 / 27,712		93,329	/		223,522
Pascal Ronde	—	—	19,547 / 188,000		19,065	/		991,860

Interested Shareholders
Section 203 of the Delaware General Corporation Law generally prohibits a Delaware corporation from engaging in specified corporate transactions (such as mergers, stock and asset sales, and loans) with an "interested stockholder" for three years following the time that the stockholder becomes an interested stockholder. Subject to specified exceptions, an "interested stockholder" is a person or group that owns 15% or more of the corporation's outstanding voting stock (including any rights to acquire stock pursuant to an option, warrant, agreement, arrangement or understanding, or upon the exercise of conversion or exchange rights, and stock with respect to which the person has voting rights only), or is an affiliate or associate of the corporation and was the owner of 15% or more of the voting stock at any time within the previous three years.		There are no comparable provisions in Singapore with respect to public companies which are not listed on the Singapore Stock Exchange.
A Delaware corporation may elect to "opt out" of, and not be governed by, Section 203 through a provision in either its original certificate of incorporation or its bylaws, or an amendment to its original certificate or bylaws that was approved by majority stockholder vote. With a limited exception, this amendment would not become effective until 12 months following its adoption.
Removal Of Directors
A typical certificate of incorporation and bylaws provide that, subject to the rights of holders of any preferred stock, directors may be removed at any time by the affirmative vote of the holders of at least a majority, or in some instances a supermajority, of the voting power of all of the then outstanding shares entitled to vote generally in the election of directors, voting together as a single class. A certificate of incorporation could also provide that such a right is only exercisable when a director is being removed for cause (removal of a director only for cause is the default rule in the case of a classified board).		According to the Singapore Companies Act, directors of a public company may be removed before expiration of their term of office with or without cause by ordinary resolution (i.e., a resolution which is passed by a simple majority of those shareholders present and voting in person or by proxy) passed at a meeting called on not less than 21 days written notice. Where any director removed in this manner was appointed to represent the interests of any particular class of securityholders the resolution to remove him will not take effect until his successor has been appointed.
Filling Vacancies On The Board Of Directors
A typical certificate of incorporation and bylaws provide that, subject to the rights of the holders of any preferred stock, any vacancy, whether arising through death, resignation, retirement, disqualification, removal, an increase in the number of directors or any other reason, may be filled by a majority vote of the remaining directors, even if such directors remaining in office constitute less than a quorum, or by the sole remaining director. Any newly elected director usually holds office for the remainder of the full term expiring at the annual meeting of stockholders at which the term of the class of directors to which the newly elected director has been elected expires.		The articles of a Singapore company typically provide that the directors have the power to appoint any person to be a director, either to fill a vacancy or as an addition to the existing directors, but so that the total number of directors will not at any time exceed the maximum number fixed in the articles. Any newly elected director usually holds office till the next following annual general meeting, where he will then be eligible for re-election. Our articles provide that the directors may appoint any person to be a director as an additional director or to fill a vacancy provided that any person so appointed will only hold office until the next annual general meeting, and will then be eligible for re-election.

Amendment of Governing Documents
Under the Delaware General Corporation Law, amendments to a corporation's certificate of incorporation require the approval of stockholders holding a majority of the outstanding shares entitled to vote on the amendment. If a class vote on the amendment is required by the Delaware General Corporation Law, a majority of the outstanding stock of the class is required, unless a greater proportion is specified in the certificate of incorporation or by other provisions of the Delaware General Corporation Law. Under the Delaware General Corporation Law, the board of directors may amend bylaws if so authorized in the charter. The stockholders of a Delaware corporation also have the power to amend bylaws.		Alteration to memorandum and articles of association Our memorandum and articles may generally be altered by special resolution (i.e., a resolution passed by three-fourths majority of the shares entitled to vote present in person or by proxy at a meeting for which not less than 21 days written notice is given). The board of directors has no right to amend the memorandum or articles.
Meetings of Shareholders
Annual and Special Meetings Typical bylaws provide that annual meetings of stockholders are to be held on a date and at a time fixed by the board of directors. Under the Delaware General Corporation Law, a special meeting of stockholders may be called by the board of directors or by any other person authorized to do so in the certificate of incorporation or the bylaws.		Annual General Meetings All companies are required to hold an annual general meeting once every calendar year. The first annual general meeting generally must be held within 18 months of the company's incorporation and subsequently, not more than 15 months may elapse between annual general meetings.
		Extraordinary General Meetings Any general meeting other than the annual general meeting is called an "extraordinary general meeting." Two or more shareholders holding not less than 10% of the total number of issued shares (excluding treasury shares) may call a general meeting. In addition, the articles usually also provide that general meetings may be convened in accordance with the articles by the directors.
		Notwithstanding anything in the articles, the directors are required to convene a general meeting if required to do so by requisition (i.e., written notice to directors requiring that a meeting be called) by any shareholders holding not less than 10% of the share capital of the company carrying voting rights.
		Our articles provide that the directors may, whenever they think fit, convene an extraordinary general meeting.
Quorum Requirements		Quorum Requirements
Under the Delaware General Corporation Law, a corporation's certificate of incorporation or bylaws can specify the number of shares which constitute the quorum required to conduct business at a meeting, provided that in no event shall a quorum consist of less than one-third of the shares entitled to vote at a meeting.		Our articles provide that shareholders holding a majority of the number of our issued shares, present in person or by proxy at a meeting, shall be a quorum. In the event a quorum is not present, the meeting may be adjourned for one week. When reconvened, the quorum for the meeting will be shareholders holding one-third of the number of our issued shares, present in person or by proxy at such meeting.

Indemnification of Officers, Directors and Employees.
Under the Delaware General Corporation Law, subject to specified limitations in the case of derivative suits brought by a corporation's stockholders in its name, a corporation may indemnify any person who is made a party to any third-party action, suit or proceeding on account of being a director, officer, employee or agent of the corporation (or was serving at the request of the corporation in such capacity for another corporation, partnership, joint venture, trust or other enterprise) against expenses, including attorney's fees, judgments, fines and amounts paid in settlement actually and reasonably incurred by him or her in connection with the action, suit or proceeding through, among other things, a majority vote of a quorum consisting of directors who were not parties to the suit or proceeding, if the person: • acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the best interests of the corporation or, in some circumstances, at least not opposed to its best interests; and • in a criminal proceeding, had no reasonable cause to believe his or her conduct was unlawful. Delaware corporate law permits indemnification by a corporation under similar circumstances for expenses (including attorneys' fees) actually and reasonably incurred by such persons in connection with the defense or settlement of a derivative action or suit, except that no indemnification may be made in respect of any claim, issue or matter as to which the person is adjudged to be liable to the corporation unless the Delaware Court of Chancery or the court in which the action or suit was brought determines upon application that the person is fairly and reasonably entitled to indemnity for the expenses which the court deems to be proper. To the extent a director, officer, employee or agent is successful in the defense of such an action, suit or proceeding, the corporation is required by Delaware corporate law to indemnify such person for reasonable expenses incurred thereby. Expenses (including attorneys' fees) incurred by such persons in defending any action, suit or proceeding may be paid in advance of the final disposition of such action, suit or proceeding upon receipt of an undertaking by or on behalf of that person to repay the amount if it is ultimately determined that that person is not entitled to be so indemnified.		The Singapore Companies Act specifically provides that a company is allowed to: • purchase and maintain for any officer insurance against any liability which by law would otherwise attach to him in respect of any negligence, default, breach of duty or breach of trust of which he may be guilty in relation to the company; or • indemnify such officer or auditor against any liability incurred by him: • in defending any proceedings (whether civil or criminal) in which judgment is given in his favor or in which he is acquitted; or • in connection with any application under specified portions of the Singapore Companies Act. In cases where a director is sued by the company, the Singapore Companies Act gives the court the power to relieve directors from the consequences of their negligence, default, breach of duty or breach of trust. However, this does not apply to excuse directors who have received the company's property in breach of trust. In order for relief to be obtained, it must be shown that (i) the director acted reasonably and honestly; and (ii) it is fair, having regard to all the circumstances of the case including those connected with his appointment, to excuse the director even if he did act honestly and reasonably. Our articles provide that subject to the provisions of the Singapore Companies Act, every director, managing director, agent, secretary and other officer for the time being of our company and our subsidiaries and affiliates, will be indemnified out of the assets of the company against any liability incurred by him in defending any proceedings, whether civil or criminal, in which judgment is given in his favor or in which he is acquitted or in connection with any application under the Singapore Companies Act in which relief is granted to him by the court in respect of any negligence, default, breach of duty or breach of trust.
Shareholder Approval of Business Combinations
Generally, under the Delaware General Corporation Law, completion of a merger, consolidation, or the sale, lease or exchange of substantially all of a corporation's assets or dissolution requires approval by the board of directors and by a majority (unless the certificate of incorporation requires a higher percentage) of outstanding stock of the corporation entitled to vote. The Delaware General Corporation Law also requires a special vote of stockholders in connection with a business combination with an "interested stockholder" as defined in section 203 of the Delaware General Corporation Law. See "— Interested Stockholders" above.		The Singapore Companies Act mandates that some business combinations require approval by the shareholders in a general meeting, notably: • notwithstanding anything in the company's memorandum or articles, directors are not permitted to carry into effect any proposals for disposing of the whole or substantially the whole of the company's assets unless those proposals have been approved by shareholders in a general meeting; • subject to the memorandum of each amalgamating company, an amalgamation proposal must be approved by the shareholders of each amalgamating company via special resolution at a general meeting; and

		• notwithstanding anything in the company's memorandum or articles, the directors may not, without the prior approval of shareholders, issue shares, including shares being issued in connection with business combinations.
Shareholder Action Without A Meeting
Under the Delaware General Corporation Law, unless otherwise provided in a corporation's certificate of incorporation, any action that may be taken at a meeting of stockholders may be taken without a meeting, without prior notice and without a vote if the holders of outstanding stock, having not less than the minimum number of votes that would be necessary to authorize such action, consent in writing. It is not uncommon for a corporation's certificate of incorporation to prohibit such action.		There are no equivalent provisions in respect of public companies which are not listed in Singapore.
Shareholder Suits
Under the Delaware General Corporation Law, a stockholder may bring a derivative action on behalf of the corporation to enforce the rights of the corporation. An individual also may commence a class action suit on behalf of himself or herself and other similarly situated stockholders where the requirements for maintaining a class action under the Delaware General Corporation Law have been met. A person may institute and maintain such a suit only if such person was a stockholder at the time of the transaction which is the subject of the suit or his or her shares thereafter devolved upon him or her by operation of law. Additionally, under Delaware case law, the plaintiff generally must be a stockholder not only at the time of the transaction which is the subject of the suit, but also through the duration of the derivative suit. The Delaware General Corporation Law also requires that the derivative plaintiff make a demand on the directors of the corporation to assert the corporate claim before the suit may be prosecuted by the derivative plaintiff, unless such demand would be futile.		Derivative actions The Singapore Companies Act has a provision, which is limited in its scope to companies that are not listed on the securities exchange in Singapore, which provides a mechanism enabling shareholders to apply to the court for leave to bring a derivative action on behalf of the company. Applications are generally made by shareholders of the company or individual directors, but courts are given the discretion to allow such persons as they deem proper to apply (e.g., beneficial owner of shares). It should be noted that this section of the Singapore Companies Act is primarily used by minority shareholders to bring an action in the name and on behalf of the company or intervene in an action to which the company is a party for the purpose of prosecuting, defending or discontinuing the action on behalf of the company. Class actions The concept of class action suits, which allows individual shareholders to bring an action qua shareholders, does not exist in Singapore. Although there have been suggestions that shareholders may bring a representative action under the Singapore court's procedural rules, there is no reported case in Singapore where such an action has been pursued. The representative action is merely a procedural device which generally allows a person to act in a representative capacity for the others. Accordingly, it is doubtful whether such a procedural provision would be of much applicability in relation to class actions.
Distributions and Dividends; Repurchases and Redemptions
The Delaware General Corporation Law permits a corporation to declare and pay dividends out of statutory surplus or, if there is no surplus, out of net profits for the fiscal year in which the dividend is declared and/or for the preceding fiscal year as long as the amount of capital of the corporation following the declaration and payment of the dividend is not less than the aggregate amount of the capital represented by the issued and outstanding stock of all classes having a preference upon the distribution of assets.		The Singapore Companies Act provides that no dividends can be paid to the shareholders except out of profits. The Singapore Companies Act does not provide a definition on when dividends are deemed to be available and this is accordingly governed by case law from which the following principles may be derived: • capital subscribed by the shareholders of the company does not have to be intact for a dividend to be paid, and a dividend may be paid even if the total assets of the company are less than the original capital subscribed by the shareholders as long as the company makes a profit on the revenue account;

		• the company may pay a dividend even if there are no revenue profits, provided that there has been an increase in the value of its capital assets.
		Our articles provide that no dividend can be paid otherwise than out of the profits.
Under the Delaware General Corporation Law, any corporation may purchase or redeem its own shares, except that generally it may not purchase or redeem these shares if the capital of the corporation is impaired at the time or would become impaired as a result of the redemption. A corporation may, however, purchase or redeem out of capital shares that are entitled upon any distribution of its assets to a preference over another class or series of its shares if the shares are to be retired and the capital reduced.		Acquisition of a company's own shares and the shares of its holding company The Singapore Companies Act generally prohibits a company from acquiring its own shares or shares in its holding company. Any contract or transaction by which a company acquires or transfers its own shares is void. The following are some exceptions to the general rule: • redemption of redeemable preference shares out of profits or out of a fresh issue of shares (the redemption of these shares will not reduce the capital of the company) or out of capital, provided all the directors make a solvency statement;
		• order of court for buy-back as a remedy in cases of oppression or injustice;
		• the company (whether listed on a securities exchange or not), may make an off-market purchase of its own shares in accordance with an equal access scheme authorized in advance at a general meeting;
		• the company (not listed on a securities exchange) may make a selective off-market purchase of its own shares in accordance with an agreement authorized in advance by a special resolution where persons whose shares are to be acquired have abstained from voting; and
		• the company (whether listed on a securities exchange or not), may make an acquisition of its own shares under a contingent purchase contract which has been authorized in advance by a special resolution.
		It should be noted that there are various conditions attached to the permitted buy-backs.
		• the articles of the company must expressly permit buy-backs;
		• payment must be made out of the company's distributable profits (every director or manager of the company who has authorized payment out of what he knows are not distributable profits will be guilty of an offence and will also be liable to the creditors of the company for the amount of debts due by the company to them respectively to the extent by which the amount paid as consideration for the buy-back has exceeded the distributable profits) or out of capital, provided the company is solvent;
		• the total number of shares that may be acquired by a company in a relevant period may not exceed 10% of the total number of shares in that class as of the last annual general meeting of the company or as of the date of the resolution to acquire the shares, whichever is higher; and
		• additionally, each permitted acquisition has its own special conditions.

		Financial assistance for the acquisition of shares A company may not give financial assistance to any person whether directly or indirectly for the purpose of:
		• the acquisition or proposed acquisition of shares in the company or units of such shares; or
		• the acquisition or proposed acquisition of shares in its holding company or units of such shares.
		Financial assistance may take the form of a loan, the giving of a guarantee, the provision of security, the release of an obligation, the release of a debt or otherwise.
		However, it should be noted that a company may provide financial assistance for the acquisition of its shares or shares in its holding company if it complies with the requirements (including approval by special resolution) set out in the Singapore Companies Act.
		Our articles provide that subject to the provisions of the Singapore Companies Act, we may purchase or otherwise acquire our own shares upon such terms and subject to such conditions as we may deem fit. These shares may be held as treasury shares or cancelled as provided in the Singapore Companies Act or dealt with in such manner as may be permitted under the Singapore Companies Act. On cancellation of the shares, the rights and privileges attached to those shares will expire.
Transactions with Officers or Directors
Under the Delaware General Corporation Law, some contracts or transactions in which one or more of a corporation's directors has an interest are not void or voidable because of such interest provided that some conditions, such as obtaining the required approval and fulfilling the requirements of good faith and full disclosure, are met. Under the Delaware General Corporation Law, either (a) the stockholders or the board of directors must approve in good faith any such contract or transaction after full disclosure of the material facts or (b) the contract or transaction must have been "fair" as to the corporation at the time it was approved. If board approval is sought, the contract or transaction must be approved in good faith by a majority of disinterested directors after full disclosure of material facts, even though less than a majority of a quorum.		Under the Singapore Companies Act, directors are not prohibited from dealing with the company, but where they have an interest in a transaction with the company, that interest must be disclosed to the board of directors. In particular, every director who is in any way, whether directly or indirectly, interested in a transaction or proposed transaction with the company must, as soon practicable after the relevant facts have come to his knowledge, declare the nature of his interest at a board of directors' meeting. In addition, a director who holds any office or possesses any property which directly or indirectly might create interests in conflict with his duties as director is required to declare the fact and the nature, character and extent of the conflict at a meeting of directors.
		The Singapore Companies Act extends the scope of this statutory duty of a director to disclose any interests by pronouncing that an interest of a member of a director's family (including his spouse, son, adopted son, step-son, daughter, adopted daughter and step-daughter) will be treated as an interest of the director.
		There is however no requirement for disclosure where the interest of the director consists only of being a member or creditor of a corporation which is interested in the proposed transaction with the company and that the interest may properly be regarded as immaterial. Where the proposed transaction relates to any loan to the company, no disclosure need be made where the director has only guaranteed the repayment of such loan, unless the articles of association provide otherwise.

		Further, where the proposed transaction pertains to a related corporation (i.e. the holding company, subsidiary or subsidiary of the holding company of another corporation) no disclosure need be made of the fact that the director is also a director of that corporation, unless the articles of association provide otherwise.
		Subject to specified exceptions, the Singapore Companies Act prohibits a company from making a loan to its directors or to directors of a related corporation, or giving a guarantee or security in connection with such a loan. Companies are also prohibited from making loans to its directors' spouse or children (whether adopted or naturally or step-children), or giving a guarantee or security in connection with such a loan.
Dissenters' Rights
Under the Delaware General Corporation Law, a stockholder of a corporation participating in some types of major corporate transactions may, under varying circumstances, be entitled to appraisal rights pursuant to which the stockholder may receive cash in the amount of the fair market value of his or her shares in lieu of the consideration he or she would otherwise receive in the transaction.		There are no equivalent provisions in Singapore under the Singapore Companies Act.

Underwriters		Number of Shares
Goldman, Sachs & Co.
Credit Suisse Securities (USA) LLC
Cowen and Company, LLC
Thomas Weisel Partners LLC

	Total	8,500,000

			Agilent's Net Investment			Accumulated Other Comprehensive Income			Total
			(in millions)
Invested equity, October 31, 2002			$	159		$	(1	)	$	158
Components of comprehensive loss:
	Net loss			(28	)		—			(28	)
	Foreign currency translation			—			2			2
	Unrealized gain on derivatives			—			(1	)		(1	)
	Minimum pension liability			—			1			1

		Total comprehensive loss								(26	)
Net book value of assets transferred by Agilent				2			—			2
Net investment by Agilent				35			—			35

Invested equity, October 31, 2003				168			1			169
Components of comprehensive loss:
	Net loss			(8	)		—			(8	)
	Foreign currency translation			—			1			1
	Unrealized gain on derivatives			—			—			—
	Minimum pension liability			—			—			—

		Total comprehensive loss								(7	)
Net return of investment to Agilent				(43	)		—			(43	)

Invested equity, October 31, 2004				117			2			119
Components of comprehensive loss:
	Net loss			(119	)		—			(119	)
	Foreign currency translation			—			(1	)		(1	)
	Unrealized gain on derivatives			—			1			1
	Minimum pension liability			—			(1	)		(1	)

		Total comprehensive loss								(120	)
Net investment by Agilent				88			—			88

Invested equity, October 31, 2005			$	86		$	1		$	87
Components of comprehensive loss (unaudited):
	Net loss (unaudited)			(16	)		—			(16	)
	Foreign currency translation (unaudited)			—			—			—
	Unrealized gain on derivatives (unaudited)			—			—			—
	Minimum pension liability (unaudited)			—			—			—

		Total comprehensive loss (unaudited)								(16	)
Net investment by Agilent (unaudited)				52			—			52

Invested equity, January 31, 2006 (unaudited)			$	122		$	1		$	123

		Three Months Ended January 31, 2006
		(in millions) (unaudited)
Cost of products and services		$	0.5
Research and development			0.5
Selling, general and administrative expense			3.0

	Total share-based compensation expense	$	4.0

	Shares	Weighted Average Exercise Price		Value using Black-Scholes model
	(in thousands)
Options exercisable as of October 31, 2003	1,153	$	34
Black-Scholes value of options granted during 2004				$	16
Options exercisable as of October 31, 2004	1,500	$	32
Black-Scholes value of options granted during 2005				$	8
Options exercisable as of October 31, 2005	2,182	$	31
Black-Scholes value of options granted during 2006 (unaudited)				$	3
Options exercisable as of January 31, 2006 (unaudited)	2,686	$	30

	Options Outstanding						Options Exercisable
Range of Exercise Prices	Number Outstanding	Weighted Average Remaining Contractual Life	Weighted Average Exercise Price		Aggregate Intrinsic Value		Number Exercisable	Weighted Average Remaining Contractual Life	Weighted Average Exercise Price		Aggregate Intrinsic Value
	(in thousands)				(in thousands)		(in thousands)				(in thousands)
$ 0 – 15	91	6.7 years	$	13	$	1,886	67	6.7 years	$	13	$	1,390
$15.01 – 25	1,175	7.8 years	$	20	$	16,169	496	6.8 years	$	19	$	7,230
$25.01 – 30	1,159	5.3 years	$	27	$	7,894	1,099	5.0 years	$	27	$	7,404
$30.01 – 40	1,592	7.2 years	$	34	$	1,179	704	4.8 years	$	34	$	664
$40.01 – 50	227	3.2 years	$	44		—	228	3.2 years	$	44		—
$50 and over	92	3.9 years	$	72		—	92	3.9 years	$	72		—

	4,336	6.6 years	$	29	$	27,128	2,686	5.2 years	$	30	$	16,688

	Options Outstanding
	Options Outstanding				Options Exercisable
		Weighted Average Remaining Contractual Life			Options Exercisable
Range of Exercise Prices	Number Outstanding	Weighted Average Remaining Contractual Life	Weighted Average Exercise Price		Number Exercisable	Weighted Average Exercise Price
	(in thousands)				(in thousands)
$ 0 – 15	106	7.0 years	$	13	81	$	13
$15.01 – 25	1,397	8.1 years	$	20	344	$	19
$25.01 – 30	1,481	5.5 years	$	27	822	$	27
$30.01 – 40	1,176	6.4 years	$	34	597	$	34
$40.01 – 50	241	3.4 years	$	44	241	$	44
$50 and over	97	4.2 years	$	72	97	$	72

	4,498	6.4 years	$	28	2,182	$	31

		Three Months Ended January 31, 2006		Year Ended October 31,
		Three Months Ended January 31, 2006		2005		2004		2003
		(unaudited)
U.S. defined benefit plans:
	Discount rate	5.75	%	5.75	%	6.25	%	6.75	%
	Average increase in compensation levels	4.0	%	4.0	%	4.25	%	5.25	%
	Expected long-term return on assets	8.50	%	8.50	%	8.75	%	8.75	%
Non-U.S. defined benefit plans:
	Discount rate	2.25 – 6.0	%	2.25 – 6.0	%	2.0 – 6.0	%	2.25 – 6.0	%
	Average increase in compensation levels	2.5 – 5.0	%	2.5 – 5.0	%	2.5 – 5.0	%	3.25 – 5.0	%
	Expected long-term return on assets	4.5 – 7.5	%	4.5 – 7.5	%	5.0 – 7.5	%	5.5 – 7.75	%
U.S. post-retirement benefits plans:
	Discount rate	5.75	%	5.75	%	6.25	%	6.75	%
	Expected long-term return on assets	8.50	%	8.50	%	8.75	%	8.75	%
	Current medical cost trend rate	10.0	%	10.0	%	10.0	%	9.0	%
	Ultimate medical cost trend rate	5.0	%	5.0	%	5.0	%	5.5	%
	Medical cost trend rate decreases to ultimate rate in year	2011		2010		2009		2007

Fiscal Year	Amount
	(in millions)
2006	$	1.8
2007		1.3
2008		1.1
2009		0.6
2010		0.2
Thereafter		0.1

		United States		Singapore		Japan		Rest of the World		Total
		(in millions)
Net revenue:
	Three months ended January 31, 2006 (unaudited)	$	69	$	73	$	11	$	17	$	170
	Three months ended January 31, 2005 (unaudited)	$	19	$	27	$	20	$	13	$	79

		United States		Singapore		Japan		Rest of the World		Total
		(in millions)
Net revenue:
	Year ended October 31, 2005	$	118	$	180	$	94	$	64	$	456
	Year ended October 31, 2004	$	168	$	259	$	96	$	84	$	607
	Year ended October 31, 2003	$	208	$	198	$	73	$	61	$	540

		United States		Germany		Japan		Rest of the World		Total
		(in millions)
Long-lived assets:
	January 31, 2006 (unaudited)	$	13	$	4	$	16	$	8	$	41
	October 31, 2005	$	8	$	4	$	16	$	7	$	35
	October 31, 2004	$	5	$	2	$	17	$	6	$	30

		Page
Prospectus Summary		1
Risk Factors		9
Special Note about Forward-Looking Statements and Enforcement of Civil Liabilities		32
Our Separation from Agilent		33
Use of Proceeds		35
Dividend Policy		35
Capitalization		36
Dilution		38
Selected Financial Data		40
Management's Discussion and Analysis of Financial Condition and Results of Operations		41
Unaudited Pro Forma Condensed Combined Financial Information		72
Business		76
Management		95
Certain Relationships and Related Transactions		113
Arrangements Between Verigy and Agilent		114
Principal Shareholder		129
Description of Share Capital		129
Comparison of Shareholder Rights		133
Shares Eligible for Future Sale		141
Tax Considerations		142
Underwriting		147
Legal Matters		151
Experts		151
Where You Can Find Additional Information		151
Index to Combined Financial Statements		F-1

Document		Exhibit Number
Form of Underwriting Agreement		1.1
Memorandum and Articles of Association of Registrant		3.1
Amended and Restated Memorandum and Articles of Association of Registrant to be filed prior to the closing of the offering made under the registration statement		3.2
Form of Indemnification Agreement		10.1

Exhibit Number		Description
1.1		Form of Underwriting Agreement
2.1		Master Separation and Distribution Agreement between Agilent and the Registrant effective May 31, 2006
2.2		General Assignment and Assumption Agreement between Agilent and the Registrant effective June 1, 2006
2.3		Intellectual Property Matters Agreement among Agilent, Verigy (Singapore) Pte. Ltd. and the Registrant effective June 1, 2006
2.4		Employee Matters Agreement between Agilent and the Registrant effective June 1, 2006
2.5		Tax Sharing Agreement between Agilent and the Registrant effective June 1, 2006
2.6		Transition Services Agreement between Agilent and the Registrant effective June 1, 2006