- Quarterly net revenue up 3 percent sequentially; FY2011 revenue up 12 percent from the prior year
- Quarterly GAAP gross margin of 48.8 percent; Quarterly Non-GAAP gross margin of 51.2 percent
-
Quarterly GAAP diluted EPS of
$0.61 ; Quarterly Non-GAAP diluted EPS of$0.73
Fourth Quarter Fiscal Year 2011 GAAP Results
Net revenue was a record
Gross margin was
Operating expenses were
Income from operations was
Fourth quarter net income was
The Company’s cash balance at the end of the fourth quarter was
During the quarter the Company spent
Fourth Quarter Fiscal Year 2011 Non-GAAP Results
Gross margin was
Income from operations was a record
Net income was
Fourth Quarter Fiscal Year 2011 Non-GAAP Results | Change | |||||||||
(Dollars in millions, except EPS) |
Q4 11 |
Q3 11 |
Q4 10 |
Q/Q |
Y/Y |
|||||
Net Revenue | $623 | $603 | $572 | +3% | +9% | |||||
Gross Margin | 51.2% | 51.7% | 50.9% | -50bps | +30bps | |||||
Operating Expenses | $128 | $135 | $120 | -$7 | +$8 | |||||
Net Income | $186 | $176 | $190 | +$10 | -$4 | |||||
Earnings Per Share - Diluted | $0.73 | $0.68 | $0.76 | +$0.05 | -$0.03 |
“Despite a slowdown in our Industrial market, we delivered sequential
revenue growth in the fourth quarter as we ramped with next generation
smartphones,” said Hock Tan, President and CEO of
Other Quarterly Data
Percentage of Net Revenue | Growth Rates | |||||||||
Net Revenues by Target Market |
Q4 11 |
Q3 11 |
Q4 10 |
Q/Q |
Y/Y |
|||||
Wireless Communications | 42 | 37 | 38 | 16% | 18% | |||||
Wired Infrastructure | 28 | 28 | 25 | 4% | 24% | |||||
Industrial & Automotive | 26 | 30 | 30 | -10% | -6% | |||||
Consumer & Computing Peripherals | 4 | 5 | 7 | -18% | -31% | |||||
Key Statistics |
Q4 11 |
Q3 11 |
Q4 10 |
|||||||
(Dollars in millions) | ||||||||||
Cash From Operations | $195 | $211 | $217 | |||||||
Depreciation | $19 | $20 | $21 | |||||||
Amortization | $20 | $19 | $19 | |||||||
Capital Expenditures | $37 | $24 | $30 | |||||||
Days Sales Outstanding | 48 | 43 | 45 | |||||||
Inventory Days On Hand | 58 | 63 | 61 |
Fiscal Year 2011 Financial Results
Net revenue grew 12 percent to
Non-GAAP gross margin was
Fiscal Year Non-GAAP Results | Change | |||||
(Dollars in millions, except EPS) |
2011 |
2010 |
Y/Y |
|||
Net Revenue | $2,336 | $2,093 | +12% | |||
Gross Margin | 51.7% | 49.1% | +260bps | |||
Operating Expenses | $503 | $454 | +$49 | |||
Net Income | $692 | $547 | +$145 | |||
Earnings Per Share - Diluted | $2.70 | $2.19 | +$0.51 |
First Quarter Fiscal Year 2012 Business Outlook
Based on current business trends and conditions, the outlook for the
first quarter of fiscal year 2012, ending
GAAP |
Reconciling Items |
Non-GAAP |
||||
Sequential Change in Net Revenue | Down 10% to 14% | Down 10% to 14% | ||||
Gross Margin | 47.5% plus/minus 100bps | $15M | 50.5% plus/minus 100bps | |||
Operating Expenses | $142M | $17M | $125M | |||
Interest and Other | -$1M | -$1M | ||||
Taxes | $4M | $4M | ||||
Diluted Share Count | 251M | 3M | 254M |
Reconciling items include
Capital expenditures for the first quarter are expected to be in the
range of
The guidance provided above is only an estimate of what the Company believes is realizable as of the date of this release. The guidance excludes any impact from share repurchases or mergers and acquisitions 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.
Financial Results Conference Call
Non-GAAP Financial Measures
In addition to GAAP reporting,
About
Cautionary Note Regarding Forward-Looking Statements
This announcement contains forward-looking statements which 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. For
AVAGO TECHNOLOGIES LIMITED | ||||||||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - UNAUDITED | ||||||||||||||||||
(IN MILLIONS, EXCEPT PER SHARE DATA) | ||||||||||||||||||
Quarter ended | Year ended | |||||||||||||||||
October 30, | July 31, | October 31, | October 30, | October 31, | ||||||||||||||
2011 | 2011 | 2010 | 2011 |
2010 (1) |
||||||||||||||
Net revenue | $ | 623 | $ | 603 | $ | 572 | $ | 2,336 | $ | 2,093 | ||||||||
Cost of products sold: | ||||||||||||||||||
Cost of products sold | 305 | 292 | 282 | 1,133 | 1,068 | |||||||||||||
Amortization of intangible assets | 14 | 14 | 14 | 56 | 58 | |||||||||||||
Restructuring charges | - | - | - | - | 1 | |||||||||||||
Total cost of products sold | 319 | 306 | 296 | 1,189 | 1,127 | |||||||||||||
Gross margin | 304 | 297 | 276 | 1,147 | 966 | |||||||||||||
Research and development | 83 | 85 | 75 | 317 | 280 | |||||||||||||
Selling, general and administrative | 55 | 60 | 51 | 220 | 196 | |||||||||||||
Amortization of intangible assets | 6 | 5 | 5 | 22 | 21 | |||||||||||||
Restructuring charges | 1 | 2 | - | 4 | 3 | |||||||||||||
Total operating expenses | 145 | 152 | 131 | 563 | 500 | |||||||||||||
Income from operations | 159 | 145 | 145 | 584 | 466 | |||||||||||||
Interest expense | - | - | (7 | ) | (4 | ) | (34 | ) | ||||||||||
Loss on extinguishment of debt | - | - | - | (20 | ) | (24 | ) | |||||||||||
Other income (expense), net | - | - | - | 1 | (2 | ) | ||||||||||||
Income before income taxes | 159 | 145 | 138 | 561 | 406 | |||||||||||||
Provision for (benefit from) income taxes | 5 | 1 | (26 | ) | 9 | (9 | ) | |||||||||||
Net income | $ | 154 | $ | 144 | $ | 164 | $ | 552 | $ | 415 | ||||||||
Net income per share: | ||||||||||||||||||
Basic | $ | 0.63 | $ | 0.59 | $ | 0.69 | $ | 2.25 | $ | 1.74 | ||||||||
Diluted | $ | 0.61 | $ | 0.57 | $ | 0.66 | $ | 2.19 | $ | 1.69 | ||||||||
Shares used in per share calculations: | ||||||||||||||||||
Basic | 246 | 246 | 239 | 245 | 238 | |||||||||||||
Diluted | 252 | 253 | 248 | 252 | 246 | |||||||||||||
Share-based compensation included in: | ||||||||||||||||||
Cost of products sold | $ | 1 | $ | 1 | $ | 1 | $ | 4 | $ | 3 | ||||||||
Research and development | 4 | 4 | 3 | 14 | 8 | |||||||||||||
Selling, general and administrative | 6 | 6 | 3 | 20 | 14 | |||||||||||||
Total share-based compensation | $ | 11 | $ | 11 | $ | 7 | $ | 38 | $ | 25 | ||||||||
(1) Amounts for the year ended October 31, 2010 have been derived from audited financial statements as of that date. |
AVAGO TECHNOLOGIES LIMITED | ||||||||||||||||||||
NON-GAAP FINANCIAL SUMMARY - UNAUDITED(1) | ||||||||||||||||||||
(IN MILLIONS, EXCEPT PERCENTAGES AND PER SHARE DATA) | ||||||||||||||||||||
Quarter ended | Year ended | |||||||||||||||||||
October 30, | July 31, | October 31, | October 30, | October 31, | ||||||||||||||||
2011 | 2011 | 2010 | 2011 | 2010 | ||||||||||||||||
Net revenue | $ | 623 | $ | 603 | $ | 572 | $ | 2,336 | $ | 2,093 | ||||||||||
Gross margin | $ | 319 | $ | 312 | $ | 291 | $ | 1,207 | $ | 1,028 | ||||||||||
% of net revenue | 51 | % | 52 | % | 51 | % | 52 | % | 49 | % | ||||||||||
Research and development | $ | 79 | $ | 81 | $ | 72 | $ | 303 | $ | 272 | ||||||||||
Selling, general and administrative | $ | 49 | $ | 54 | $ | 48 | $ | 200 | $ | 182 | ||||||||||
Total operating expenses | $ | 128 | $ | 135 | $ | 120 | $ | 503 | $ | 454 | ||||||||||
% of net revenue | 21 | % | 22 | % | 21 | % | 22 | % | 22 | % | ||||||||||
Income from operations | $ | 191 | $ | 177 | $ | 171 | $ | 704 | $ | 574 | ||||||||||
Interest expense | $ | - | $ | - | $ | (7 | ) | $ | (4 | ) | $ | (34 | ) | |||||||
Net income | $ | 186 | $ | 176 | $ | 190 | $ | 692 | $ | 547 | ||||||||||
Net income per share - diluted | $ | 0.73 | $ | 0.68 | $ | 0.76 | $ | 2.70 | $ | 2.19 | ||||||||||
Shares used in per share calculation - diluted | 255 | 257 | 251 | 256 | 250 | |||||||||||||||
(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 amortization of intangible assets, share-based compensation, restructuring charges, and loss on extinguishment of debt. |
AVAGO TECHNOLOGIES LIMITED | |||||||||||||||
FINANCIAL RECONCILIATION: GAAP TO NON-GAAP - UNAUDITED | |||||||||||||||
(IN MILLIONS) | |||||||||||||||
Quarter ended | Year ended | ||||||||||||||
October 30, | July, 31 | October 31, | October 30, | October 31, | |||||||||||
2011 | 2011 | 2010 | 2011 | 2010 | |||||||||||
Net income on GAAP basis | $ | 154 | $ | 144 | $ | 164 | $ | 552 | $ | 415 | |||||
Amortization of intangible assets | 20 | 19 | 19 | 78 | 79 | ||||||||||
Share-based compensation expense | 11 | 11 | 7 | 38 | 25 | ||||||||||
Restructuring charges | 1 | 2 | - | 4 | 4 | ||||||||||
Loss on extinguishment of debt | - | - | - | 20 | 24 | ||||||||||
Net income on Non-GAAP basis | $ | 186 | $ | 176 | $ | 190 | $ | 692 | $ | 547 | |||||
Gross margin on GAAP basis | $ | 304 | $ | 297 | $ | 276 | $ | 1,147 | $ | 966 | |||||
Amortization of intangible assets | 14 | 14 | 14 | 56 | 58 | ||||||||||
Share-based compensation expense | 1 | 1 | 1 | 4 | 3 | ||||||||||
Restructuring charges | - | - | - | - | 1 | ||||||||||
Gross margin on Non-GAAP basis | $ | 319 | $ | 312 | $ | 291 | $ | 1,207 | $ | 1,028 | |||||
Research and development on GAAP basis | $ | 83 | $ | 85 | $ | 75 | $ | 317 | $ | 280 | |||||
Share-based compensation expense | 4 | 4 | 3 | 14 | 8 | ||||||||||
Research and development on Non-GAAP basis | $ | 79 | $ | 81 | $ | 72 | $ | 303 | $ | 272 | |||||
Selling, general and administrative on GAAP basis | $ | 55 | $ | 60 | $ | 51 | $ | 220 | $ | 196 | |||||
Share-based compensation expense | 6 | 6 | 3 | 20 | 14 | ||||||||||
Selling, general and administrative on Non-GAAP basis | $ | 49 | $ | 54 | $ | 48 | $ | 200 | $ | 182 | |||||
Total operating expenses on GAAP basis | $ | 145 | $ | 152 | $ | 131 | $ | 563 | $ | 500 | |||||
Amortization of intangible assets | 6 | 5 | 5 | 22 | 21 | ||||||||||
Share-based compensation expense | 10 | 10 | 6 | 34 | 22 | ||||||||||
Restructuring charges | 1 | 2 | - | 4 | 3 | ||||||||||
Total operating expenses on Non-GAAP basis | $ | 128 | $ | 135 | $ | 120 | $ | 503 | $ | 454 | |||||
Income from operations on GAAP basis | $ | 159 | $ | 145 | $ | 145 | $ | 584 | $ | 466 | |||||
Amortization of intangible assets | 20 | 19 | 19 | 78 | 79 | ||||||||||
Share-based compensation expense | 11 | 11 | 7 | 38 | 25 | ||||||||||
Restructuring charges | 1 | 2 | - | 4 | 4 | ||||||||||
Income from operations on Non-GAAP basis | $ | 191 | $ | 177 | $ | 171 | $ | 704 | $ | 574 | |||||
Shares used in per share calculation - diluted on GAAP basis | 252 | 253 | 248 | 252 | 246 | ||||||||||
Non-GAAP adjustment | 3 | 4 | 3 | 4 | 4 | ||||||||||
Shares used in per share calculation - diluted on Non-GAAP basis(1) | 255 | 257 | 251 | 256 | 250 | ||||||||||
(1) The number of shares used in the diluted per share calculations on a non-GAAP basis excludes 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. |
AVAGO TECHNOLOGIES LIMITED | |||||||
CONDENSED CONSOLIDATED BALANCE SHEETS - UNAUDITED | |||||||
(IN MILLIONS) | |||||||
October 30, | October 31, | ||||||
2011 |
2010 (1) |
||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 829 | $ | 561 | |||
Trade accounts receivable, net | 328 | 285 | |||||
Inventory | 194 | 189 | |||||
Other current assets | 42 | 52 | |||||
Total current assets | 1,393 | 1,087 | |||||
Property, plant and equipment, net | 316 | 281 | |||||
Goodwill | 177 | 172 | |||||
Intangible assets, net | 499 | 573 | |||||
Other long-term assets | 61 | 44 | |||||
Total assets | $ | 2,446 | $ | 2,157 | |||
LIABILITIES AND SHAREHOLDERS' EQUITY | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 221 | $ | 198 | |||
Employee compensation and benefits | 89 | 82 | |||||
Accrued interest | - | 12 | |||||
Capital lease obligations - current | 2 | 2 | |||||
Other current liabilities | 38 | 41 | |||||
Current portion of long-term debt | - | 230 | |||||
Total current liabilities | 350 | 565 | |||||
Long-term liabilities: | |||||||
Capital lease obligations - non-current | 4 | 4 | |||||
Other long-term liabilities | 86 | 83 | |||||
Total liabilities | 440 | 652 | |||||
Shareholders' equity: | |||||||
Ordinary shares, no par value | 1,479 | 1,450 | |||||
Retained earnings | 525 | 59 | |||||
Accumulated other comprehensive income (loss) | 2 | (4 | ) | ||||
Total shareholders' equity | 2,006 | 1,505 | |||||
Total liabilities and shareholders' equity | $ | 2,446 | $ | 2,157 | |||
(1) Amounts for the year ended October 31, 2010 have been derived from audited financial statements as of that date. | |||||||
|
|
|
AVAGO TECHNOLOGIES LIMITED | ||||||||||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - UNAUDITED | ||||||||||||||||||||
(IN MILLIONS) | ||||||||||||||||||||
Quarter ended | Year ended | |||||||||||||||||||
October 30, | July 31, | October 31, | October 30, | October 31, | ||||||||||||||||
2011 | 2011 | 2010 | 2011 |
2010 (1) |
||||||||||||||||
Cash flows from operating activities: | ||||||||||||||||||||
Net income | $ | 154 | $ | 144 | $ | 164 | $ | 552 | $ | 415 | ||||||||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||||||||||||
Depreciation and amortization | 39 | 39 | 40 | 157 | 159 | |||||||||||||||
Amortization of debt issuance costs | - | 1 | 1 | 1 | 2 | |||||||||||||||
Loss on extinguishment of debt | - | - | - | 6 | 8 | |||||||||||||||
Loss on disposal of property, plant and equipment | - | - | 1 | 1 | 2 | |||||||||||||||
Share-based compensation | 11 | 11 | 7 | 38 | 25 | |||||||||||||||
Tax benefits of share-based compensation | 6 | - | - | 14 | - | |||||||||||||||
Excess tax benefits from share-based compensation | (6 | ) | - | (1 | ) | (8 | ) | (2 | ) | |||||||||||
Changes in assets and liabilities, net of acquisitions: | ||||||||||||||||||||
Trade accounts receivable | (43 | ) | 4 | (6 | ) | (42 | ) | (96 | ) | |||||||||||
Inventory | 6 | (6 | ) | (4 | ) | (5 | ) | (26 | ) | |||||||||||
Accounts payable | 23 | (13 | ) | 19 | 25 | 23 | ||||||||||||||
Employee compensation and benefits | 1 | 26 | 13 | 7 | 27 | |||||||||||||||
Other current assets and current liabilities | 12 | 5 | 6 | (13 | ) | (16 | ) | |||||||||||||
Other long-term assets and long-term liabilities | (8 | ) | - | (23 | ) | (7 | ) | (11 | ) | |||||||||||
Net cash provided by operating activities | 195 | 211 | 217 | 726 | 510 | |||||||||||||||
Cash flows from investing activities: | ||||||||||||||||||||
Purchase of property, plant and equipment | (37 | ) | (24 | ) | (30 | ) | (112 | ) | (79 | ) | ||||||||||
Acquisitions and investments, net of cash acquired | - | - | - | (9 | ) | (9 | ) | |||||||||||||
Proceeds from disposal of property, plant, and equipment | - | - | - | - | 2 | |||||||||||||||
Loan receivable from cost method investee | (1 | ) | - | (1 | ) | - | ||||||||||||||
Net cash used in investing activities | (38 | ) | (24 | ) | (30 | ) | (122 | ) | (86 | ) | ||||||||||
Cash flows from financing activities: | ||||||||||||||||||||
Debt repayments | - | - | - | (230 | ) | (364 | ) | |||||||||||||
Debt financing costs | - | - | - | (2 | ) | - | ||||||||||||||
Payments on capital lease obligations | (1 | ) | - | (1 | ) | (3 | ) | (2 | ) | |||||||||||
Issuance of ordinary shares | 15 | 11 | 6 | 70 | 28 | |||||||||||||||
Repurchases of ordinary shares | (25 | ) | (68 | ) | - | (93 | ) | - | ||||||||||||
Excess tax benefits from share-based compensation | 6 | - | 2 | 8 | 3 | |||||||||||||||
Dividend payments to shareholders | (27 | ) | (22 | ) | - | (86 | ) | - | ||||||||||||
Net cash provided by (used in) financing activities | (32 | ) | (79 | ) | 7 | (336 | ) | (335 | ) | |||||||||||
Net increase in cash and cash equivalents | 125 | 108 | 194 | 268 | 89 | |||||||||||||||
Cash and cash equivalents at the beginning of period | 704 | 596 | 367 | 561 | 472 | |||||||||||||||
Cash and cash equivalents at end of period | $ | 829 | $ | 704 | $ | 561 | $ | 829 | $ | 561 | ||||||||||
(1) Amounts for the year ended October 31, 2010 have been derived from audited financial statements as of that date. |
Source:
Avago Technologies Ltd.
Jacob Sayer, 408-435-7400
VP Business
Development and Investor Relations
investor.relations@avagotech.com