Financial News Release
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|Avago Technologies Limited Announces Second Quarter Fiscal Year 2011 Financial Results|
SAN JOSE, Calif. & SINGAPORE, May 24, 2011 (BUSINESS WIRE) -- Avago Technologies Limited (Nasdaq:AVGO), a leading supplier of analog interface components for communications, industrial and consumer applications, today reported financial results for the second quarter of its fiscal year 2011, ended May 1, 2011, and provided guidance for the third quarter of its fiscal year 2011.
Second Quarter Fiscal Year 2011 GAAP Results
Net revenue was $560 million, an increase of 2 percent compared with the previous quarter, and up 9 percent from the same quarter last year.
Gross margin was $275 million, or 49.1 percent of net revenue. This compares with gross margin of $271 million, or 49.3 percent of net revenue last quarter, and gross margin of $233 million, or 45.2 percent of net revenue in the same quarter last year.
Operating expenses were $137 million. This compares with $129 million in the prior quarter and $125 million in the same quarter the previous year.
Income from operations was $138 million. This compares with $142 million in the prior quarter and $108 million in the same quarter last year.
Second quarter net income was $135 million, or $0.54 per diluted share. This compares with net income of $119 million, or $0.48 per diluted share last quarter, and net income of $90 million, or $0.37 per diluted share in the same quarter last year.
The Company's cash and cash equivalents balance at the end of the second quarter was $596 million, compared to $363 million at the end of the prior quarter. The increase over the previous quarter is primarily due to cash provided by operating activities of $251 million.
In addition, on March 30, 2011 the Company paid an interim cash dividend of 8 cents ($0.08) per ordinary share, totaling approximately $20 million.
Second Quarter Fiscal Year 2011 Non-GAAP Results
Gross margin was $290 million, or 51.8 percent of net revenue. This compares with gross margin of $286 million, or 52.0 percent of net revenue last quarter, and gross margin of $248 million, or 48.2 percent of net revenue in the same quarter last year.
Income from operations was $167 million. This compares with $169 million in the prior quarter and $135 million in the same quarter the previous year.
Net income was $165 million, or $0.64 per diluted share. This compares with net income of $165 million, or $0.65 per diluted share last quarter, and net income of $117 million, or $0.47 per diluted share in the same quarter last year.
"During the first half of fiscal 2011, we worked through the excess inventory in the supply chain that we saw coming into the year," said Hock Tan, President and CEO of Avago Technologies Limited. "We believe the business is poised for strong seasonal growth for the second half of fiscal 2011, led by strength in our wireless communications target market."
Other Quarterly Data
Third Quarter Fiscal Year 2011 Business Outlook
Based on current business trends, the outlook for the third fiscal quarter of 2011, ending July 31, 2011, is expected to be as follows:
Reconciling items include $14 million of amortization of acquisition-related intangibles and $1 million of share-based compensation expense at the Gross Margin line and $5 million of amortization of acquisition-related intangibles, $11 million of share-based compensation and $3 million of restructuring charges at the Operating Expenses line.
The guidance provided above is only an estimate of what the Company believes is realizable as of the date of this release. 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 Barclays Capital Global Communications, Media and Technology Conference in New York on May 25 and at the Sterne Agee Technology Conference also in New York on May 26. Both of these presentations will be webcast and available for replay on the "Investors" section of Avago's website at www.avagotech.com.
Financial Results Conference Call
Avago Technologies Limited will host a conference call to review its financial results for the second quarter of fiscal year 2011, and to provide guidance for the third quarter of fiscal year 2011, today at 2:00 p.m. Pacific Time. Those wishing to access the call should dial 800-295-4740; International 617-614-3925. The passcode is 64003788. A replay of the call will be available through May 31, 2011. To access the replay dial 888-286-8010; International 617-801-6888 and reference the passcode: 48965422. A webcast of the conference call will also be available in the "Investors" section of Avago's website.
Non-GAAP Financial Measures
In addition to GAAP reporting, Avago provides investors with net income or loss, as well as gross margin and operating expenses, on a non-GAAP basis. This non-GAAP information excludes amortization of acquisition-related intangibles, share-based compensation expense, restructuring charges and debt extinguishment losses. Management does not believe that the excluded items are reflective of the Company's underlying performance. The exclusion of these and other similar items from Avago's non-GAAP presentation 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 in addition to, and not 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. Our product portfolio is extensive and includes over 6,500 products in four primary target markets: wireless communications, wired infrastructure, industrial and automotive electronics and consumer and computing peripherals.
Cautionary Note Regarding Forward-Looking Statements
This announcement contains forward-looking statements which address our expected future business and financial performance. All statements other than statements of historical fact could be deemed forward-looking, including, but not limited to, any statements of the plans, strategies and objectives of management for future operations; any statements of expectation or belief regarding future events, our products, product sales, expenses, liquidity, cash flow and growth rates; technology developments or enforceability of our intellectual property rights and related litigation expenses; and any statements of assumptions underlying any of the foregoing. 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. For Avago, particular uncertainties that could materially affect future results include cyclicality in the semiconductor industry or in our target markets and general economic conditions; quarterly and annual fluctuations in operating results; our competitive performance and ability to continue achieving design wins with our customers; our ability to generate cash sufficient to fund our research and development, capital expenditures and other business needs; our increased dependence on outsourced service providers for certain key business services and their ability to execute to our requirements; our dependence on contract manufacturing and outsourced supply chain; loss of our significant customers; our ability to maintain tax concessions in certain jurisdictions; our ability to protect our intellectual property and any associated increases in litigation expenses; any expenses associated with resolving customer product and warranty and indemnification claims; costs associated with and our ability to achieve the growth prospects and synergies expected from our acquisitions; delays and challenges associated with integrating acquired companies with our existing businesses; our ability to improve our cost structure through our manufacturing outsourcing program; and other events and trends on a national, regional and global scale, including those of a political, economic, business, competitive and regulatory nature. Our Quarterly Report on Form 10-Q filed on March 10, 2011 and other filings with the Securities and Exchange Commission, or "SEC" (which you may obtain for free at the SEC's website at 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.
SOURCE: Avago Technologies Limited
Avago Technologies Ltd.