Seeking Alpha

  • GAAP gross margin from continuing operations of 31 percent; Non-GAAP gross margin from continuing operations of 57 percent
  • GAAP diluted EPS loss of $0.65; Non-GAAP diluted EPS from continuing operations of $1.26
  • Fourth fiscal quarter revenue from continuing operations projected to be up 18-22% sequentially

SAN JOSE, Calif., and SINGAPORE, Aug. 28, 2014 (GLOBE NEWSWIRE) -- Avago Technologies Limited (AVGO), a leading semiconductor device supplier to the enterprise storage, wired, wireless and industrial end markets, today reported financial results for the third quarter of its fiscal year 2014, ended August 3, 2014, and provided guidance for the fourth quarter of its fiscal year 2014.

Basis of Presentation

On May 29, 2014, Avago entered into a definitive agreement to sell LSI's flash businesses to Seagate Technology plc and on August 13, 2014, Avago entered into a definitive agreement to sell its Axxia networking business to Intel Corporation, both of which transactions are currently expected to close in Avago's fourth fiscal quarter of 2014. Therefore the financial results from the flash and Axxia businesses, both of which were acquired by Avago in the LSI transaction, have been classified as discontinued operations in the Company's financial statements and the results of operations from these businesses are not included in the results presented below, unless otherwise indicated.

Avago's results for its third fiscal quarter of 2014 include the results from continuing operations of the acquired LSI businesses for the full quarter, while the prior periods presented do not, as the LSI acquisition was completed at the beginning of the third fiscal quarter. The financial results provided below for the third fiscal quarter do not include any operating results of PLX Technology, Inc., which the Company acquired on August 12, 2014, after the end of the third quarter.

Third Quarter Fiscal Year 2014 Total Revenue Compared to Guidance

Avago's guidance for its third fiscal quarter of 2014 included expected contributions from both the flash and Axxia businesses. On a comparable basis, including contributions from these businesses, which have been classified as discontinued operations, GAAP net revenue for the third quarter of fiscal year 2014 would have been $1,373 million and non-GAAP net revenue would have been $1,394 million.

Third Quarter Fiscal Year 2014 GAAP Results from Continuing Operations

Net revenue from continuing operations was $1,269 million, an increase of 81 percent compared with the previous quarter and an increase of 97 percent from the same quarter last year.

Gross margin from continuing operations was $393 million, or 31 percent of net revenue. This compares with gross margin of $357 million, or 51 percent of net revenue last quarter, and gross margin of $304 million, or 47 percent of net revenue in the same quarter last year.

Operating expenses from continuing operations were $555 million. This compares with $197 million in the prior quarter and $164 million for the same quarter last year.

Loss from operations was $162 million. This compares with income from operations of $160 million in the prior quarter and with income from operations of $140 million in the same quarter last year.

Third quarter net loss was $164 million, or ($0.65) per diluted share. This compares with net income of $158 million, or $0.61 per diluted share, for the prior quarter, and net income of $142 million, or $0.56 per diluted share, in the same quarter last year.

The Company's cash balance at the end of the third fiscal quarter was $1,277 million, prior to the closing of the PLX Technology transaction, compared to $1,278 million at the end of the prior quarter which was prior to the closing of the LSI transaction.

The Company generated $314 million in cash from operations in the third quarter and spent $95 million on capital expenditures.

On June 30, 2014 the Company paid a quarterly cash dividend of $0.29 per ordinary share, totaling approximately $73 million.

Third Quarter Fiscal Year 2014 Non-GAAP Results From Continuing Operations

The differences between our GAAP and non-GAAP results are described generally under "Non-GAAP Financial Measures" below and presented in detail in the financial reconciliation tables attached to this release.

Net revenue from continuing operations was $1,287 million.

Gross margin from continuing operations was $735 million, or 57 percent of net revenue. This compares with gross margin of $381 million, or 54 percent of net revenue last quarter, and gross margin of $328 million, or 51 percent of net revenue in the same quarter last year.

Income from continuing operations was $428 million. This compares with $233 million in the prior quarter and $191 million in the same quarter last year.

Net income from continuing operations was $347 million, or $1.26 per diluted share. This compares with net income of $223 million, or $0.85 per diluted share last quarter, and net income of $188 million, or $0.74 per diluted share in the same quarter last year.

Third Quarter Fiscal Year 2014 Non-GAAP Results       Change
(Dollars in millions, except EPS)  Q3 14 Q2 14 Q3 13 Q/Q Y/Y
Net Revenue $1,287 $701 $644 +84% +100%
Gross Margin 57% 54% 51% +3ppt +6ppt
Operating Expenses $307 $148 $137 +$159 +$170
Net Income $347 $223 $188 +$124 +$159
Earnings Per Share - Diluted $1.26 $0.85 $0.74 +$0.41 +$0.52

"In the third fiscal quarter of the year, our first quarter operating as a combined Avago and LSI business, we experienced strength in all our end markets," said Hock Tan, President and CEO of Avago Technologies Limited. "We made substantial progress integrating the two companies and took decisive steps to reshape the business, announcing the sales of the non-core Flash and Axxia businesses. We expect both of these actions to significantly improve our operating performance going forward."

Other Quarterly Data

  Percentage of Net Revenue Growth Rates
Net Revenue by Target Market Q3 14* Q2 14 Q3 13 Q/Q Y/Y
Enterprise Storage 32 N/A N/A N/A N/A
Wireless Communications 28 50 45 5% 26%
Wired Infrastructure 27 31 31 59% 73%
Industrial & Other 13 19 24 27% 10%
           
* Represents percentages of non-GAAP net revenue
           
Key Statistics (Dollars in millions) Q3 14 Q2 14 Q3 13    
Cash From Operations $314 $251 $137    
Depreciation $46 $35 $26    
Amortization $211 $26 $20    
Capital Expenditures $95 $73 $65    
Non-GAAP Days Sales Outstanding 39 42 52    
Non-GAAP Inventory Days On Hand 79 86 82    

Fourth Quarter Fiscal Year 2014 Business Outlook

Based on current business trends and conditions, the outlook for continuing operations for the fourth quarter of fiscal year 2014, ending November 2, 2014, including projected contribution from the PLX Technology business, is expected to be as follows: 

  GAAP Reconciling Items Non-GAAP
Revenue Range Up 18% to 22% $20M Up 18% to 22%
Gross Margin 46.5% plus/minus 1% $152M 56.0% plus/minus 1%
Operating Expenses $479M $172M $307M
Interest and Other $53M   $53M
Taxes -$55M $93 $38M
Diluted Share Count 271M 8M 279M

Reconciling items include:

  • Non-GAAP Revenue includes $20 million of LSI intellectual property licensing revenue, not included in GAAP revenue as a result of the effects of purchase accounting for the LSI acquisition;   
  • Non-GAAP Gross Margin includes $20 million of LSI intellectual property licensing revenue and excludes $106 million of amortization of intangible assets, $6 million of share-based compensation expense, $4 million of restructuring charges, and $16 million of inventory step-up charges to record PLX inventory at fair value, as part of the purchase accounting for the PLX Technology acquisition;
  • Non-GAAP Operating Expenses exclude $90 million of amortization of intangible assets, $46 million of share-based compensation, $22 million of restructuring charges, and $14 million of acquisition-related costs; and
  • $93 million provision at the Taxes line, which represents the tax effects of the reconciling items noted above.

Capital expenditures for the fourth quarter are expected to be approximately $220 million. For the fourth quarter depreciation is expected to be $50 million and amortization is expected to be $196 million.

The guidance provided above is only an estimate of what the Company believes is realizable as of the date of this release, and does not include any contribution from the Flash and Axxia businesses, which are classified as discontinued operations.  Among other things, this guidance is based on an initial estimate of purchase accounting adjustments and allocations, for the PLX transaction, all of which are subject to revision. The guidance also excludes any impact from any further mergers, acquisitions and divestiture activity that may occur during the quarter. Actual results will vary from the guidance and the variations may be material. The Company undertakes no intent or obligation to publicly update or revise any of these projections, whether as a result of new information, future events or otherwise, except as required by law.

Avago will be presenting at the Deutsche Bank Technology Conference in Las Vegas on September 10, 2014.  

Financial Results Conference Call

Avago Technologies Limited will host a conference call to review its financial results for the third quarter fiscal year 2014, and to provide guidance for the fourth quarter of fiscal year 2014, today at 2:00 p.m. Pacific Time. Those wishing to access the call should dial (800) 591-6942; International +1 (617) 614-4909. The passcode is 86582481. A replay of the call will be accessible one week after the call. To access the replay dial (888) 286-8010; International +1 (617) 801-6888; and reference the passcode: 96631549. A webcast of the conference call will also be available in the "Investors" section of Avago's website at www.avagotech.com

Non-GAAP Financial Measures

In addition to GAAP reporting, Avago provides investors with net income, income from operations, gross margin, operating expenses and other data, on a non-GAAP basis. This non-GAAP information includes the effect of purchase accounting on revenues, excludes amortization of intangible assets, share-based compensation expense, restructuring charges, acquisition-related costs, purchase accounting effect on inventory, loss from discontinued operations and income tax effects of non-GAAP reconciling adjustments. Management does not believe that these items are reflective of the Company's underlying performance. The presentation of these and other similar items in Avago's non-GAAP financial results should not be interpreted as implying that these items are non-recurring, infrequent or unusual. Avago believes this non-GAAP financial information provides additional insight into the Company's on-going performance and has therefore chosen to provide this information to investors for a more consistent basis of comparison and to help them evaluate the results of the Company's on-going operations and enable more meaningful period to period comparisons. These non-GAAP measures are provided in addition to, and not as a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP. A reconciliation between GAAP and non-GAAP financial data is included in the supplemental financial data attached to this press release.

About Avago Technologies Limited

Avago Technologies Limited is a leading designer, developer and global supplier of a broad range of analog semiconductor devices with a focus on III-V based products and complex digital and mixed signal CMOS based devices. Our product portfolio is extensive and includes thousands of products in four primary target markets: enterprise storage, wired infrastructure, wireless communications and industrial & other.

Cautionary Note Regarding Forward-Looking Statements

This announcement contains forward-looking statements that address our expected future business and financial performance. These forward-looking statements are based on current expectations, estimates, forecasts and projections of future Company or industry performance, based on management's judgment, beliefs, current trends and market conditions, and involve risks and uncertainties that may cause actual results to differ materially from those contained in the forward-looking statements. Accordingly, we caution you not to place undue reliance on these statements. Particular uncertainties that could materially affect future results include our ability to integrate and realize the expected benefits from our acquisition of LSI Corporation ("LSI"); loss of our significant customers; global economic conditions and concerns; cyclicality in the semiconductor industry or in our target markets; quarterly and annual fluctuations in operating results; fluctuation in the timing and volume of customer demand; increased dependence on the volatile, wireless handset market and on the enterprise storage market; delays, challenges and expenses associated with integrating acquired companies, including LSI (LSI) and PLX Technology, Inc. ("PLX"), with our existing businesses and our ability to achieve the growth prospects and synergies expected from acquisitions we may make, including our recent acquisitions of LSI and PLX; our competitive performance and ability to continue achieving design wins with our customers, as well as the timing of those design wins; market acceptance of the end products into which our products are designed; our ability to sell to new types of customers and to keep pace with technological advances; rates of growth in our target markets; failure to complete our planned asset dispositions, including the sale of LSI's flash businesses and the sale of the Axxia products business; the significant indebtedness incurred by us in connection with the LSI acquisition, including the need to generate sufficient cashflows to service and repay such debt; our dependence on contract manufacturing and outsourced supply chain and our ability to improve our cost structure through our manufacturing outsourcing program; prolonged disruptions of our or our contract manufacturers' manufacturing facilities or other significant operations; our dependence on outsourced service providers for certain key business services and their ability to execute to our requirements; our ability to maintain or improve gross margin; our ability to maintain tax concessions in certain jurisdictions; our ability to protect our intellectual property and any associated increases in litigation expenses; dependence on and risks associated with distributors of our products; any expenses or reputational damage associated with resolving customer product and warranty and indemnification claims; and other events and trends on a national, regional and global scale, including those of a political, economic, business, competitive and regulatory nature. Our Report on Form 10-Q filed on June 10, 2014 and our other filings with the Securities and Exchange Commission, or "SEC" (which you may obtain for free at the SEC's website at http://www.sec.gov) discuss some of the important risk factors that may affect our business, results of operations and financial condition. We undertake no intent or obligation to publicly update or revise any of these forward looking statements, whether as a result of new information, future events or otherwise, except as required by law.

AVAGO TECHNOLOGIES LIMITED
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - UNAUDITED
(IN MILLIONS, EXCEPT PER SHARE DATA)
           
   Fiscal Quarter Ended  Three Fiscal Quarters Ended
  August 3, May 4, August 4, August 3, August 4,
  2014 2014 2013 2014 2013
           
Net revenue  $ 1,269  $ 701  $ 644  $ 2,679  $ 1,782
Cost of products sold:          
Cost of products sold  560  326  321  1,233  883
Purchase accounting effect on inventory  200  --  4  200  4
Amortization of intangible assets  105  18  14  141  42
Restructuring charges  11  --  1  16  1
Total cost of products sold  876  344  340  1,590  930
Gross margin  393  357  304  1,089  852
Research and development  240  114  101  461  289
Selling, general and administrative  137  67  57  278  162
Amortization of intangible assets  91  8  6  106  17
Restructuring charges  87  8  --  107  2
Total operating expenses  555  197  164  952  470
(Loss)/income from operations  (162)  160  140  137  382
Interest expense  (55)  (1)  (1)  (56)  (2)
Other (expense)/income, net  (2)  --  5  (2)  8
(Loss)/income before income taxes  (219)  159  144  79  388
(Benefit from)/provision for income taxes  (99)  1  2  (93)  8
(Loss)/income from continuing operations  (120)  158  142  172  380
Loss from discontinued operations, net of income taxes  (44)  --  --  (44)  --
Net (loss)/income  $ (164)  $ 158  $ 142  $ 128  $ 380
           
           
Basic (loss)/income per share:          
(Loss)/income from continuing operations  $ (0.48)  $ 0.63  $ 0.57  $ 0.69  $ 1.54
Loss from discontinued operations, net of income taxes  $ (0.17)  $ --   $ --   $ (0.18)  $ -- 
Net (loss)/income  $ (0.65)  $ 0.63  $ 0.57  $ 0.51  $ 1.54
           
Diluted (loss)/income per share:          
(Loss)/income from continuing operations  $ (0.48)  $ 0.61  $ 0.56  $ 0.65  $ 1.51
Loss from discontinued operations, net of income taxes  $ (0.17)  $ --   $ --   $ (0.17)  $ -- 
Net (loss)/income  $ (0.65)  $ 0.61  $ 0.56  $ 0.48  $ 1.51
           
Shares used in per share calculations:          
Basic  252  251  248  251  246
Diluted  252  258  252  265  251
           
Share-based compensation expense included in continuing operations:          
Cost of products sold  $ 6  $ 3  $ 3  $ 12  $ 7
Research and development  20  10  8  38  22
Selling, general and administrative  24  17  9  54  26
Total share-based compensation expense  $ 50  $ 30  $ 20  $ 104  $ 55
           
           
AVAGO TECHNOLOGIES LIMITED
NON-GAAP FINANCIAL SUMMARY - UNAUDITED (1)
(IN MILLIONS, EXCEPT PERCENTAGES AND PER SHARE DATA)
           
   Fiscal Quarter Ended  Three Fiscal Quarters Ended
  August 3, May 4, August 4, August 3, August 4,
  2014 2014 2013 2014 2013
           
Net revenue  $ 1,287  $ 701  $ 644  $ 2,697  $ 1,782
Gross margin  $ 735  $ 381  $ 328  $ 1,482  $ 908
% of net revenue 57% 54% 51% 55% 51%
Research and development  $ 219  $ 101  $ 91  $ 418  $ 265
Selling, general and administrative  $ 88  $ 47  $ 46  $ 179  $ 132
Total operating expenses  $ 307  $ 148  $ 137  $ 597  $ 397
% of net revenue 24% 21% 21% 22% 22%
Income from operations  $ 428  $ 233  $ 191  $ 885  $ 511
Income before income taxes  $ 371  $ 232  $ 195  $ 827  $ 517
Provision for income taxes  $ 24  $ 9  $ 7  $ 40  $ 13
           
Net income  $ 347  $ 223  $ 188  $ 787  $ 504
Net income per share - diluted  $ 1.26  $ 0.85  $ 0.74  $ 2.90  $ 1.99
Shares used in per share calculation - diluted  276  263  253  271  253
           
(1) A reconciliation of the non-GAAP measures presented above to the most directly comparable GAAP financial data appears on the next page. These non-GAAP measures are provided in addition to and not as a substitute for measures of financial performance prepared in accordance with GAAP. The financial summary excludes acquisition-related revenue adjustments, purchase accounting effect on inventory, amortization of intangible assets, share-based compensation expense, restructuring charges, acquisition-related costs, loss from discontinued operations and income tax effects of non-GAAP reconciling adjustments.
 
 
AVAGO TECHNOLOGIES LIMITED
FINANCIAL RECONCILIATION: GAAP TO NON-GAAP - UNAUDITED
(IN MILLIONS, EXCEPT DAYS)
           
   Fiscal Quarter Ended  Three Fiscal Quarters Ended
  August 3, May 4, August 4, August 3, August 4,
  2014 2014 2013 2014 2013
           
Net revenue on GAAP basis  $ 1,269  $ 701  $ 644  $ 2,679  $ 1,782
Acquisition-related purchase accounting revenue adjustment  18  --  --  18  --
Net revenue on non-GAAP basis  $ 1,287  $ 701  $ 644  $ 2,697  $ 1,782
           
Net revenue on GAAP basis  $ 1,269  $ 701  $ 644  $ 2,679  $ 1,782
Net revenue contribution from discontinued operations  104  --  --  104  --
Net revenue on GAAP basis including discontinued operations  1,373  701  644  2,783  1,782
Acquisition-related purchase accounting revenue adjustment from continuing operations  18  --  --  18  --
Acquisition-related purchase accounting revenue adjustment from discontinued operations  3  --  --  3  --
Net revenue on non-GAAP basis including discontinued operations  $ 1,394  $ 701  $ 644  $ 2,804  $ 1,782
           
Gross margin on GAAP basis  $ 393  $ 357  $ 304  $ 1,089  $ 852
Acquisition-related purchase accounting revenue adjustment  18  --  --  18  --
Purchase accounting effect on inventory  200  --  4  200  4
Amortization of intangible assets  105  18  14  141  42
Share-based compensation expense  6  3  3  12  7
Restructuring charges  11  --  1  16  1
Acquisition-related costs  2  3  2  6  2
Gross margin on non-GAAP basis  $ 735  $ 381  $ 328  $ 1,482  $ 908
           
Research and development on GAAP basis  $ 240  $ 114  $ 101  $ 461  $ 289
Share-based compensation expense  20  10  8  38  22
Acquisition-related costs  1  3  2  5  2
Research and development on non-GAAP basis  $ 219  $ 101  $ 91  $ 418  $ 265
           
Selling, general and administrative expense on GAAP basis  $ 137  $ 67  $ 57  $ 278  $ 162
Share-based compensation expense  24  17  9  54  26
Acquisition-related costs  25  3  2  45  4
Selling, general and administrative expense on non-GAAP basis  $ 88  $ 47  $ 46  $ 179  $ 132
           
Total operating expenses on GAAP basis  $ 555  $ 197  $ 164  $ 952  $ 470
Amortization of intangible assets  91  8  6  106  17
Share-based compensation expense  44  27  17  92  48
Restructuring charges  87  8  --  107  2
Acquisition-related costs  26  6  4  50  6
Total operating expenses on non-GAAP basis  $ 307  $ 148  $ 137  $ 597  $ 397
           
(Loss)/income from operations on GAAP basis  $ (162)  $ 160  $ 140  $ 137  $ 382
Acquisition-related purchase accounting revenue adjustment  18  --  --  18  --
Purchase accounting effect on inventory  200  --  4  200  4
Amortization of intangible assets  196  26  20  247  59
Share-based compensation expense  50  30  20  104  55
Restructuring charges  98  8  1  123  3
Acquisition-related costs  28  9  6  56  8
Income from operations on non-GAAP basis  $ 428  $ 233  $ 191  $ 885  $ 511
           
(Loss)/income before income taxes on GAAP basis  $ (219)  $ 159  $ 144  $ 79  $ 388
Acquisition-related purchase accounting revenue adjustment  18  --  --  18  --
Purchase accounting effect on inventory  200  --  4  200  4
Amortization of intangible assets  196  26  20  247  59
Share-based compensation expense  50  30  20  104  55
Restructuring charges  98  8  1  123  3
Acquisition-related costs  28  9  6  56  8
Income before income taxes on non-GAAP basis  $ 371  $ 232  $ 195  $ 827  $ 517
           
(Benefit from)/provision for income taxes on GAAP basis  $ (99)  $ 1  $ 2  $ (93)  $ 8
Income tax effects of non-GAAP reconciling adjustments  123  8  5  133  5
Provision for income taxes on non-GAAP basis  $ 24  $ 9  $ 7  $ 40  $ 13
           
Net (loss)/income on GAAP basis  $ (164)  $ 158  $ 142  $ 128  $ 380
Acquisition-related purchase accounting revenue adjustment  18  --  --  18  --
Purchase accounting effect on inventory  200  --  4  200  4
Amortization of intangible assets  196  26  20  247  59
Share-based compensation expense  50  30  20  104  55
Restructuring charges  98  8  1  123  3
Acquisition-related costs  28  9  6  56  8
Income tax effects of non-GAAP reconciling adjustments  (123)  (8)  (5)  (133)  (5)
Loss from discontinued operations, net of income taxes  44  --  --  44  --
Net income on non-GAAP basis  $ 347  $ 223  $ 188  $ 787  $ 504
           
Shares used in per share calculation - diluted on GAAP basis  252  258  252  265  251
Non-GAAP adjustment  24  5  1  6  2
Shares used in per share calculation - diluted on non-GAAP basis(1)  276  263  253  271  253
           
Days sales outstanding on GAAP basis  42        
Non-GAAP adjustment  (3)        
Days sales outstanding on non-GAAP basis(2)  39        
           
Inventory Days on Hand on GAAP basis  58  84  80    
Non-GAAP adjustment  21  2  2    
Inventory Days on Hand on non-GAAP basis(3)  79  86  82    
 
(1) The number of shares used in the diluted per share calculations on a non-GAAP basis exclude the impact of share-based compensation expense expected to be incurred in future periods and not yet recognized in the financial statements, which would otherwise be assumed to be used to repurchase shares under the GAAP treasury stock method.
(2) Days sales outstanding on a non-GAAP basis includes the impact of the acquisition-related purchase accounting revenue adjustment and excludes the impact of accounts receivable related to discontinued operations.
(3) Inventory days on hand on a non-GAAP basis excludes the impact of purchase accounting on inventory, amortization of intangible assets, share-based compensation expense, restructuring charges, acquisition-related costs, and cost of products sold attributable to discontinued operations.
           
           
AVAGO TECHNOLOGIES LIMITED
GAAP AND NON-GAAP NET REVENUE BY TARGET MARKET - UNAUDITED
(IN MILLIONS, EXCEPT PERCENTAGES)
                     
   Fiscal Quarter Ended         
  August 3, May 4, August 4,        
  2014 2014 2013 Growth Rates
  GAAP Non-GAAP GAAP GAAP GAAP Non-GAAP
Net revenue by target market: $ % $ % $ $ Q/Q Y/Y Q/Q Y/Y
Enterprise Storage  $ 404  32  $ 404  32  $ --  $ --  --  --  --  --
Wireless Communications  364  29  364  28  348  288 5% 26% 5% 26%
Wired Infrastructure  352  27  349  27  219  202 61% 74% 59% 73%
Industrial & Other  149  12  170  13  134  154 11% -3% 27% 10%
Total net revenue  $ 1,269  100  $ 1,287  100  $ 701  $ 644        
                     
                     
AVAGO TECHNOLOGIES LIMITED
CONDENSED CONSOLIDATED BALANCE SHEETS - UNAUDITED
(IN MILLIONS)
     
     
  August 3, November 3,
  2014 2013 (1)
ASSETS    
     
Current assets:    
Cash and cash equivalents  $ 1,277  $ 985
Trade accounts receivable, net  590  418
Inventory  482  285
Assets held for sale  1,029  --
Other current assets  442  130
Total current assets  3,820  1,818
Property, plant and equipment, net  1,016  661
Goodwill  1,526  391
Intangible assets, net  3,620  492
Other long-term assets  320  53
Total assets  $ 10,302  $ 3,415
     
LIABILITIES AND SHAREHOLDERS' EQUITY    
     
Current liabilities:    
Accounts payable  $ 459  $ 278
Employee compensation and benefits  207  98
Current portion of long-term debt  46  --
Other current liabilities  228  47
Total current liabilities  940  423
     
Long-term liabilities:    
Pension and post-retirement benefit obligations  481  62
Long-term debt, less current portion  5,472  --
Other long-term liabilities  311  44
Total liabilities  7,204  529
     
Shareholders' equity:    
Ordinary shares, no par value  1,875  1,587
Retained earnings  1,230  1,305
Accumulated other comprehensive loss  (7)  (6)
Total shareholders' equity  3,098  2,886
Total liabilities and shareholders' equity  $ 10,302  $ 3,415
     
(1) Amounts as of November 3, 2013 have been derived from audited financial statements as of that date.
     
AVAGO TECHNOLOGIES LIMITED
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - UNAUDITED
(IN MILLIONS)
           
   Fiscal Quarter Ended  Three Fiscal Quarters Ended
  August 3, May 4, August 4, August 3, August 4,
  2014 2014 2013 2014 2013 (1)
Cash flows from operating activities:          
Net (loss) income  $ (164)  $ 158  $ 142  $ 128  $ 380
           
Adjustments to reconcile net (loss) income to net cash provided by operating activities:          
           
Depreciation and amortization  257  61  46  375  129
Share-based compensation  55  30  20  109  55
Tax benefits of share-based compensation  (12)  8  6  --  6
Excess tax benefits from share-based compensation  11  (8)  (3)  --  (3)
Unrealized gain on trading securities  --  --  (4)  --  (5)
Amortization of debt discount and debt issuance costs  7  --  --  7  --
Gain from post-retirement medical plan curtailment and settlement  --  --  --  (3)  --
Other  10  --  3  10  4
Changes in assets and liabilities, net of acquisitions:          
Trade accounts receivable  11  4  (43)  110  27
Inventory  215  (15)  (20)  199  (54)
Accounts payable  (23)  8  11  (39)  13
Employee compensation and benefits  30  27  16  18  14
Other current assets and current liabilities  43  (4)  (33)  30  (54)
Other long-term assets and long-term liabilities  (126)  (18)  (4)  (150)  (2)
Net cash provided by operating activities  314  251  137  794  510
           
Cash flows from investing activities:          
Purchases of property, plant and equipment  (95)  (73)  (65)  (220)  (179)
Acquisitions, net of cash acquired  (5,644)  --  (372)  (5,644)  (409)
Purchases of investments  --  --  (1)  --  (10)
Proceeds from sale of investment  --  14  --  14  --
Net cash used in investing activities  (5,739)  (59)  (438)  (5,850)  (598)
           
Cash flows from financing activities:          
Proceeds from government grants  --  --  --  2  8
Proceeds from term loan borrowings  4,600  --  --  4,600  --
Proceeds from issuance of convertible senior notes  1,000  --  --  1,000  --
Debt issuance costs  (124)  --  --  (124)  --
Payment on capital lease obligation  (1)  --  --  (1)  (1)
Issuance of ordinary shares  33  34  32  86  60
Repurchases of ordinary shares  --  --  (38)  (12)  (62)
Excess tax benefits from share-based compensation  (11)  8  3  --  3
Dividend payments to shareholders  (73)  (68)  (52)  (203)  (141)
Net cash provided by (used in) financing activities  5,424  (26)  (55)  5,348  (133)
           
Net increase (decrease) in cash and cash equivalents  (1)  166  (356)  292  (221)
Cash and cash equivalents at the beginning of period  1,278  1,112  1,219  985  1,084
Cash and cash equivalents at end of period  $ 1,277  $ 1,278  $ 863  $ 1,277  $ 863
           
(1) The statement of cash flows data for three fiscal quarters ended August 4, 2013 reflects a reclassification of $3 million of government grant reimbursements related to fixed assets from cash flows provided by operating activities to cash flows used in financing activities. As a result, net cash provided by operating activities and net cash used in financing activities for this period each decreased by a corresponding amount.
           
CONTACT: Avago Technologies Ltd.
         Ashish Saran
         Investor Relations
         +1 408 435 7400
         investor.relations@avagotech.com
  

http://media.globenewswire.com/cache/19933/small/15023.jpg

Source: Avago Technologies 2014 GlobeNewswire, Inc.
Comments (0)
Be the first to comment