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Avago Technologies Limited Announces Second Quarter Fiscal Year 2015 Financial Results
  • Quarterly GAAP gross margin of 52 percent; Quarterly non-GAAP gross margin from continuing operations of 61 percent
  • Quarterly GAAP diluted EPS of $1.21; Quarterly non-GAAP diluted EPS from continuing operations of $2.13

SAN JOSE, Calif. and SINGAPORE, May 28, 2015 (GLOBE NEWSWIRE) -- Avago Technologies Limited (Nasdaq:AVGO), a leading semiconductor device supplier to the wireless, enterprise storage, wired, and industrial end markets, today reported financial results for the second quarter of its fiscal year 2015, ended May 3, 2015, and provided guidance for the third quarter of its fiscal year 2015.

Basis of Presentation

Avago's financial results include results from LSI Corporation's ("LSI") continuing operations starting the third fiscal quarter of 2014, and from PLX Technology Inc. ("PLX") starting in the fourth fiscal quarter of 2014, in each case from the date of their acquisition. The financial results from LSI's flash and Axxia businesses, which were sold, 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 stated.

The financial results provided below for the second fiscal quarter do not include any operating results of Emulex Corporation, which the Company acquired on May 5, 2015, after the end of the second quarter.

Second Quarter Fiscal Year 2015 GAAP Results

Net revenue was $1,614 million, a decrease of 1 percent from $1,635 million in the previous quarter and an increase of 130 percent from $701 million in the same quarter last year.

Gross margin was $846 million, or 52 percent of net revenue. This compares with gross margin of $826 million, or 51 percent of net revenue last quarter, and gross margin of $357 million, or 51 percent of net revenue in the same quarter last year.

Operating expenses were $428 million. This compares with $425 million in the prior quarter and $197 million for the same quarter last year.

Operating income was $418 million, or 26 percent of net revenue. This compares with operating income of $401 million, or 25 percent of net revenue, in the prior quarter, and $160 million, or 23 percent of net revenue, in the same quarter last year.

Net income, which includes the impact of discontinued operations, was $344 million, or $1.21 per diluted share. This compares with net income of $351 million, or $1.26 per diluted share, for the prior quarter, and net income of $158 million, or $0.61 per diluted share in the same quarter last year.

The Company's cash balance at the end of the second fiscal quarter was $2.5 billion, compared to $2.6 billion at the end of the prior quarter.

The Company generated $663 million in cash from operations and spent $177 million on capital expenditures in the second fiscal quarter of 2015.

Within the quarter, the Company repaid $605 million of its outstanding term loan.

On March 31, 2015, the Company paid a quarterly cash dividend of $0.38 per ordinary share, totaling approximately $99 million.

Second Quarter Fiscal Year 2015 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 $1,645 million, a decrease of 1 percent from $1,657 million in the previous quarter, and an increase of 135 percent from $701 million, in the same quarter last year.

Gross margin from continuing operations was $998 million, or 61 percent of net revenue. This compares with gross margin of $974 million, or 59 percent of net revenue last quarter, and gross margin of $381 million, or 54 percent of net revenue, in the same quarter last year.

Operating income from continuing operations was $701 million, or 43 percent of net revenue. This compares with operating income from continuing operations of $681 million, or 41 percent of net revenue, in the prior quarter, and $233 million, or 33 percent of net revenue, in the same quarter last year.

Net income from continuing operations was $620 million, or $2.13 per diluted share. This compares with net income of $596 million, or $2.09 per diluted share last quarter, and net income of $223 million, or $0.85 per diluted share, in the same quarter last year.

Second Quarter Fiscal Year 2015 Non-GAAP Results Change
(Dollars in millions, except EPS) Q2 15 Q1 15 Q2 14 Q/Q Y/Y
Net Revenue $1,645 $1,657 $701 -1% +135%
Gross Margin 61% 59% 54% +2ppt +7ppt
Operating Expenses $297 $293 $148 +$4 +$149
Net Income $620 $596 $223 +$24 +$397
Earnings Per Share - Diluted $2.13 $2.09 $0.85 +$0.04 +$1.28

"We delivered solid second quarter revenue while significantly exceeding gross margin and EPS expectations for the quarter," said Hock Tan, President and CEO of Avago Technologies Limited. "We expect to resume revenue growth in the third quarter driven by strength in our wireless and enterprise storage segments".

Other Quarterly Data

  Percentage of Net Revenue Growth Rates
Net Revenue by Segment Q2 15* Q1 15* Q2 14 Q/Q Y/Y
Wireless Communications 35 40 50 -13% 66%
Enterprise Storage 28 29  --  -4%  -- 
Wired Infrastructure 23 21 31 10% 74%
Industrial & Other 14 10 19 38% 64%
           
* Represents percentages of non-GAAP net revenue
           
Key Statistics (Dollars in millions)   Q2 15 Q1 15 Q2 14    
Cash From Operations $663 $481 $251    
Depreciation $58 $54 $35    
Amortization $172 $172 $26    
Capital Expenditures $177 $162 $73    
Non-GAAP Days Sales Outstanding 42 39 42    
Non-GAAP Inventory Days On Hand 69 67 86    

Third Quarter Fiscal Year 2015 Business Outlook

Based on current business trends and conditions, the outlook for continuing operations for the third quarter of fiscal year 2015, ending August 2, 2015, including projected contributions from the Emulex acquisition, is expected to be as follows:

  GAAP Reconciling Items Non-GAAP
Sequential Change in Net Revenue $1,729M +/- $25M $11M $1,740M +/- $25M
Gross Margin 49.5% +/- 1% $187M 60.00% +/- 1%
Operating Expenses $513M $178M $335M
Interest and Other $42M ($1M) $43M
Taxes $15M $25M $40M
Diluted Share Count 287M 8M 295M

Projected reconciling items:

  • Non-GAAP Revenue includes $11 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 the effects of $11 million of LSI intellectual property licensing revenue and excludes the effects of $118 million of amortization of intangible assets, $46 million of inventory step-up charges to record Emulex inventory at fair value, as part of the purchase accounting for the Emulex acquisition, $8 million of share-based compensation expense, $3 million of restructuring charges, and $1 million of acquisition-related costs;
     
  • Non-GAAP Operating Expenses exclude $74 million of share-based compensation, $62 million of amortization of intangible assets, $25 million of restructuring charges and $17 million of acquisition-related costs;
     
  • Non-GAAP interest and other excludes $1 million of gain on extinguishment of debt; and
     
  • $25 million provision at the Taxes line represents the tax effects of the reconciling items noted above.

Capital expenditures for the third fiscal quarter are expected to be approximately $160 million. For the third fiscal quarter, depreciation is expected to be $52 million and amortization is expected to be $180 million.

The guidance provided above is only an estimate of what the Company believes is realizable as of the date of this release. The guidance also excludes any impact from any 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.

Financial Results Conference Call

Avago Technologies Limited will host a conference call to review its financial results for the second quarter of fiscal year 2015, and to provide guidance for the third quarter of fiscal year 2015, today at 5:00 a.m. Pacific Time. Those wishing to access the call should dial (877) 703-6103; International +1 (857) 244-7302. The passcode is 44092275. A replay of the call will be accessible for one week after the call. To access the replay dial (888) 286-8010; International +1 (617) 801-6888; and reference the passcode: 12012367. 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 revenue, net income, operating income, gross margin, operating expenses and other data, on a non-GAAP basis. This non-GAAP information includes the effect of purchase accounting on revenues, and excludes amortization of intangible assets, share-based compensation expense, restructuring charges, acquisition-related costs, including integration costs, purchase accounting effect on inventory, write-off of debt issuance costs, income (loss) from and gain or loss on 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, digital, mixed signal and optoelectronics components and subsystems with a focus in III-V compound and CMOS based semiconductor design and processing. Avago's extensive product portfolio serves four primary target markets: wireless communications, enterprise storage, wired infrastructure, and industrial and 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 any loss of our significant customers and fluctuations in the timing and volume of significant customer demand; delays, challenges and expenses associated with integrating acquired companies with our existing businesses and our ability to achieve the benefits, growth prospects and synergies expected from acquisitions we may make, including our recent acquisitions of LSI Corporation, PLX Technology Inc., and Emulex Corporation; our ability to increase our internal manufacturing capacity to meet customer demand; our ability to accurately estimate customers' demand and adjust supply chain and third party manufacturing capacity accordingly; our ability to improve our manufacturing efficiency and quality; cyclicality in the semiconductor industry or in our target markets; increased dependence on the volatile wireless handset market and on the enterprise storage market;  global economic conditions and concerns; quarterly and annual fluctuations in operating results; our competitive performance and ability to continue achieving design wins with our customers, as well as the timing of those design wins; rates of growth in our target markets; 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 the unpredictability of any associated litigation expenses; any expenses or reputational damage associated with resolving customer product and warranty and indemnification claims; dependence on and risks associated with distributors of our products; our ability to sell to new types of customers and to keep pace with technological advances; market acceptance of the end products into which our products are designed; the significant indebtedness incurred by us in connection with the LSI Corporation acquisition, including the need to generate sufficient cash flows to service and repay such debt; 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 11, 2015 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 Two Fiscal Quarters Ended
  May 3, February 1, May 4, May 3, May 4,
  2015 2015 2014 2015 2014
           
Net revenue  $ 1,614  $ 1,635  $ 701  $ 3,249  $ 1,410
Cost of products sold:          
Cost of products sold  654  690  326  1,344  673
Purchase accounting effect on inventory  --  4  --  4  --
Amortization of intangible assets  113  113  18  226  36
Restructuring charges  1  2  --  3  5
Total cost of products sold  768  809  344  1,577  714
Gross margin  846  826  357  1,672  696
Research and development  251  235  114  486  221
Selling, general and administrative  108  117  67  225  141
Amortization of intangible assets  59  59  8  118  15
Restructuring charges  10  14  8  24  20
Total operating expenses  428  425  197  853  397
Operating income  418  401  160  819  299
Interest expense  (53)  (54)  (1)  (107)  (1)
Other income (expense), net  (1)  4  --  3  --
Income from continuing operations before income taxes  364  351  159  715  298
Provision for income taxes  25  13  1  38  6
Income from continuing operations  339  338  158  677  292
Income from discontinued operations (including a gain on disposal of $14 million in the fiscal quarter ended February 1, 2015), net of income taxes  5  13  --  18  --
Net income  $ 344  $ 351  $ 158  $ 695  $ 292
           
Basic income per share:          
Income per share from continuing operations  $ 1.31  $ 1.33  $ 0.63  $ 2.63  $ 1.17
Income per share from discontinued operations, net of income taxes  $ 0.02  $ 0.05  $ --   $ 0.07  $ -- 
Net income per share  $ 1.33  $ 1.38  $ 0.63  $ 2.70  $ 1.17
           
Diluted income per share:          
Income per share from continuing operations  $ 1.19  $ 1.22  $ 0.61  $ 2.41  $ 1.14
Income per share from discontinued operations, net of income taxes  $ 0.02  $ 0.04  $ --   $ 0.06  $ -- 
Net income per share  $ 1.21  $ 1.26  $ 0.61  $ 2.47  $ 1.14
           
Shares used in per share calculations:          
Basic  258  255  251  257  250
Diluted  284  278  258  281  256
           
Share-based compensation expense included in continuing operations:          
Cost of products sold  $ 6  $ 6  $ 3  $ 12  $ 6
Research and development  27  19  10  46  18
Selling, general and administrative  24  24  17  48  30
Total share-based compensation expense  $ 57  $ 49  $ 30  $ 106  $ 54
           
AVAGO TECHNOLOGIES LIMITED
FINANCIAL RECONCILIATION: GAAP TO NON-GAAP - UNAUDITED
(IN MILLIONS, EXCEPT DAYS)
 
 
  Fiscal Quarter Ended Two Fiscal Quarters Ended
  May 3, February 1, May 4, May 3, May 4,
  2015 2015 2014 2015 2014
           
           
Net revenue on GAAP basis  $ 1,614  $ 1,635  $ 701  $ 3,249  $ 1,410
Acquisition-related purchase accounting revenue adjustment  31  22  --  53  --
Net revenue on non-GAAP basis  $ 1,645  $ 1,657  $ 701  $ 3,302  $ 1,410
           
           
Gross margin on GAAP basis  $ 846  $ 826  $ 357  $ 1,672  $ 696
Acquisition-related purchase accounting revenue adjustment  31  22  --  53  --
Purchase accounting effect on inventory  --  4  --  4  --
Amortization of intangible assets  113  113  18  226  36
Share-based compensation expense  6  6  3  12  6
Restructuring charges  1  2  --  3  5
Acquisition-related costs  1  1  3  2  4
Gross margin on non-GAAP basis  $ 998  $ 974  $ 381  $ 1,972  $ 747
           
           
Research and development on GAAP basis  $ 251  $ 235  $ 114  $ 486  $ 221
Share-based compensation expense  27  19  10  46  18
Acquisition-related costs  3  6  3  9  4
Research and development on non-GAAP basis  $ 221  $ 210  $ 101  $ 431  $ 199
           
           
Selling, general and administrative expense on GAAP basis  $ 108  $ 117  $ 67  $ 225  $ 141
Share-based compensation expense  24  24  17  48  30
Acquisition-related costs  8  10  3  18  20
Selling, general and administrative expense on non-GAAP basis  $ 76  $ 83  $ 47  $ 159  $ 91
           
           
Total operating expenses on GAAP basis  $ 428  $ 425  $ 197  $ 853  $ 397
Amortization of intangible assets  59  59  8  118  15
Share-based compensation expense  51  43  27  94  48
Restructuring charges  10  14  8  24  20
Acquisition-related costs  11  16  6  27  24
Total operating expenses on non-GAAP basis  $ 297  $ 293  $ 148  $ 590  $ 290
           
           
Operating income on GAAP basis  $ 418  $ 401  $ 160  $ 819  $ 299
Acquisition-related purchase accounting revenue adjustment  31  22  --  53  --
Purchase accounting effect on inventory  --  4  --  4  --
Amortization of intangible assets  172  172  26  344  51
Share-based compensation expense  57  49  30  106  54
Restructuring charges  11  16  8  27  25
Acquisition-related costs  12  17  9  29  28
Operating income on non-GAAP basis  $ 701  $ 681  $ 233  $ 1,382  $ 457
           
Other income (expense), net on GAAP basis  $ (1)  $ 4  $ --  $ 3  $ --
Write-off of debt issuance costs  13  --  --  13  --
Other income, net on non-GAAP basis  $ 12  $ 4  $ --  $ 16  $ --
           
Income from continuing operations before income taxes on GAAP basis  $ 364  $ 351  $ 159  $ 715  $ 298
Acquisition-related purchase accounting revenue adjustment  31  22  --  53  --
Purchase accounting effect on inventory  --  4  --  4  --
Amortization of intangible assets  172  172  26  344  51
Share-based compensation expense  57  49  30  106  54
Restructuring charges  11  16  8  27  25
Acquisition-related costs  12  17  9  29  28
Write-off of debt issuance costs  13  --  --  13  --
Income before income taxes on non-GAAP basis  $ 660  $ 631  $ 232  $ 1,291  $ 456
           
           
Provision for income taxes on GAAP basis  $ 25  $ 13  $ 1  $ 38  $ 6
Income tax effects of non-GAAP reconciling adjustments  15  22  8  37  10
Provision for income taxes on non-GAAP basis  $ 40  $ 35  $ 9  $ 75  $ 16
           
Net income on GAAP basis  $ 344  $ 351  $ 158  $ 695  $ 292
Acquisition-related purchase accounting revenue adjustment  31  22  --  53  --
Purchase accounting effect on inventory  --  4  --  4  --
Amortization of intangible assets  172  172  26  344  51
Share-based compensation expense  57  49  30  106  54
Restructuring charges  11  16  8  27  25
Acquisition-related costs  12  17  9  29  28
Write-off of debt issuance costs  13  --  --  13  --
Income tax effects of non-GAAP reconciling adjustments  (15)  (22)  (8)  (37)  (10)
Discontinued operations, net of income taxes  (5)  (13)  --  (18)  --
Net income on non-GAAP basis  $ 620  $ 596  $ 223  $ 1,216  $ 440
           
           
Shares used in per share calculation - diluted on GAAP basis  284  278  258  281  256
Non-GAAP adjustment  7  7  5  7  5
Shares used in per share calculation - diluted on non-GAAP basis(1)  291  285  263  288  261
           
Days sales outstanding on GAAP basis  43  40      
Non-GAAP adjustment  (1)  (1)      
Days sales outstanding on non-GAAP basis(2)  42  39      
           
Inventory Days on Hand on GAAP basis  68  66  84    
Non-GAAP adjustment  1  1  2    
Inventory Days on Hand on non-GAAP basis(3)  69  67  86    
           
           
(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.
(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 SEGMENT - UNAUDITED
(IN MILLIONS, EXCEPT PERCENTAGES)
 
 
  Fiscal Quarter Ended        
  May 3, February 1, May 4,  
  2015 2015 2014 Growth Rates
  GAAP Non-GAAP GAAP Non-GAAP GAAP GAAP Non-GAAP
Net revenue by segment:                   Q/Q Y/Y Q/Q Y/Y
Wireless Communications  $ 576 36%  $ 576 35%  $ 664 41%  $ 664 40%  $ 348 -13% 66% -13% 66%
Enterprise Storage  467 29  467 28  486 30  486 29  -- -4%  -- -4%  --
Wired Infrastructure  382 23  382 23  347 21  347 21  219 10% 74% 10% 74%
Industrial & Other  189 12  220 14  138 8  160 10  134 37% 41% 38% 64%
Total net revenue  $ 1,614 100%  $ 1,645 100%  $ 1,635 100%  $ 1,657 100%  $ 701        
                           
AVAGO TECHNOLOGIES LIMITED
CONDENSED CONSOLIDATED BALANCE SHEETS - UNAUDITED
(IN MILLIONS)
 
 
  May 3, November 2,
  2015 2014 (1)
     
ASSETS    
     
Current assets:    
Cash and cash equivalents  $ 2,508  $ 1,604
Trade accounts receivable, net  758  782
Inventory  490  519
Assets held-for-sale  4  628
Other current assets  316  302
Total current assets  4,076  3,835
Property, plant and equipment, net  1,344  1,158
Goodwill  1,596  1,596
Intangible assets, net  3,280  3,617
Other long-term assets  236  285
Total assets  $ 10,532  $ 10,491
     
LIABILITIES AND SHAREHOLDERS' EQUITY    
     
Current liabilities:    
Accounts payable  $ 501  $ 515
Employee compensation and benefits  181  219
Other current liabilities  178  236
Current portion of long-term debt  46  46
Total current liabilities  906  1,016
     
Long-term liabilities:    
Long-term debt  3,926  4,543
Convertible notes payable to related party - non-current  926  920
Pension and post-retirement benefit obligations  481  506
Other long-term liabilities  232  263
Total liabilities  6,471  7,248
     
Shareholders' equity:    
Ordinary shares, no par value  2,319  2,009
Retained earnings  1,791  1,284
Accumulated other comprehensive loss  (49)  (50)
Total shareholders' equity  4,061  3,243
Total liabilities and shareholders' equity  $ 10,532  $ 10,491
     
(1) Amounts as of November 2, 2014 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 Two Fiscal Quarters Ended
  May 3, February 1, May 4, May 3, May 4,
   2015 2015 2014 2015 2014
Cash flows from operating activities:          
Net income   $ 344  $ 351  $ 158  $ 695  $ 292
           
Adjustments to reconcile net income to net cash provided by operating activities:          
Depreciation and amortization  230  226  61  456  118
Amortization of debt issuance costs and accretion of debt discount  7  7  --  14  --
Share-based compensation  57  49  30  106  54
Tax benefits of share-based compensation  52  21  8  73  12
Excess tax benefits from share-based compensation  (50)  (20)  (8)  (70)  (11)
Gain on sale of business  --  (14)  --  (14)  --
Deferred taxes  4  (6)  (2)  (2)  (2)
Other  13  11  --  24  (3)
Changes in assets and liabilities, net of acquisitions and disposals:          
Trade accounts receivable, net  (40)  64  4  24  99
Inventory  10  33  (15)  43  (16)
Accounts payable  55  (78)  8  (23)  (16)
Employee compensation and benefits  49  (90)  27  (41)  (12)
Other current assets and current liabilities  (25)  (66)  (4)  (91)  (11)
Other long-term assets and long-term liabilities  (43)  (7)  (16)  (50)  (24)
Net cash provided by operating activities   663  481  251  1,144  480
           
Cash flows from investing activities:          
Proceeds from sales of businesses  --  650  --  650  --
Purchases of property, plant and equipment   (177)  (162)  (73)  (339)  (125)
Proceeds from disposals of property, plant and equipment  37 26  -- 63  --
Purchases of investments  (9)  --  --  (9)  --
Proceeds from sale of investments  --  --  14  --  14
Net cash provided by (used in) investing activities  (149)  514  (59)  365  (111)
           
Cash flows from financing activities:          
Debt repayments  (605)  (12)  --  (617)  --
Issuance of ordinary shares  79  51  34  130  53
Repurchases of ordinary shares  --  --  --  --  (12)
Dividend payments to shareholders  (99)  (89)  (68)  (188)  (130)
Excess tax benefits from share-based compensation  50  20  8  70  11
Proceeds from government grants  --  --  --  --  2
Net cash used in financing activities  (575)  (30)  (26)  (605)  (76)
           
Net change in cash and cash equivalents  (61)  965  166  904  293
Cash and cash equivalents at beginning of period  2,569  1,604  1,112  1,604  985
Cash and cash equivalents at end of period  $ 2,508  $ 2,569  $ 1,278  $ 2,508  $ 1,278
CONTACT: Avago Technologies Limited
         Ashish Saran
         Investor Relations
         +1 408 435 7400
         investor.relations@avagotech.com

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Avago Technologies