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Avago Technologies Limited Announces Fourth Quarter and Fiscal Year 2015 Financial Results
  • Quarterly GAAP gross margin of 54 percent; Quarterly non-GAAP gross margin from continuing operations of 62 percent
  • Quarterly GAAP diluted EPS of $1.49; Quarterly non-GAAP diluted EPS from continuing operations of $2.51


SAN JOSE, Calif., and SINGAPORE, Dec. 02, 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 fourth fiscal quarter and fiscal year ended November 1, 2015, and provided guidance for the first quarter of its fiscal year 2016. 

Basis of Presentation

Avago’s financial results include results from LSI Corporation’s (“LSI”) continuing operations starting the third fiscal quarter of 2014, from PLX Technology Inc. starting in the fourth fiscal quarter of 2014, and from Emulex Corporation (“Emulex”) starting the third fiscal quarter of 2015, in each case from the date of their acquisition. The financial results from businesses that have been classified as discontinued operations in the Company’s financial statements are not included in the results presented below, unless otherwise stated.

Fourth Quarter Fiscal Year 2015 GAAP Results

Net revenue was $1,840 million, an increase of 6 percent from $1,735 million in the previous quarter and an increase of 16 percent from $1,590 million in the same quarter last year.

Gross margin was $997 million, or 54 percent of net revenue. This compares with gross margin of $884 million, or 51 percent of net revenue last quarter, and gross margin of $788 million, or 50 percent of net revenue in the same quarter last year.

Operating expenses were $483 million. This compares with $585 million in the prior quarter and $487 million for the same quarter last year.

Operating income was $514 million, or 28 percent of net revenue. This compares with operating income of $299 million, or 17 percent of net revenue, in the prior quarter, and $301 million, or 19 percent of net revenue, in the same quarter last year.

Net income, which includes the impact of discontinued operations, was $429 million, or $1.49 per diluted share. This compares with net income of $240 million, or $0.84 per diluted share, for the prior quarter, and $135 million, or $0.50 per diluted share in the same quarter last year. 

The Company’s cash balance at the end of the fourth fiscal quarter was $1,822 million, compared to $1,354 million at the end of the prior quarter.  

The Company generated $582 million in cash from operations and spent $106 million on capital expenditures in the fourth fiscal quarter of 2015. In addition, during that quarter, the Company realized $47 million in net proceeds from the sale of Emulex’s prior headquarters building.

On September 30, 2015, the Company paid a cash dividend of $0.42 per ordinary share, totaling $116 million.

Fourth Quarter Fiscal Year 2015 Non-GAAP Results From Continuing Operations

The differences between the Company’s 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 $1,853 million, an increase of 6 percent from $1,750 million in the previous quarter, and an increase of 15 percent, from $1,610 million, in the same quarter last year.

Gross margin from continuing operations was $1,149 million, or 62 percent of net revenue. This compares with gross margin of $1,063 million, or 61 percent of net revenue, last quarter and gross margin of $939 million, or 58 percent of net revenue, in the same quarter last year. 

Operating income from continuing operations was $811 million, or 44 percent of net revenue. This compares with operating income from continuing operations of $733 million, or 42 percent of net revenue, in the prior quarter, and $636 million, or 40 percent of net revenue, in the same quarter last year.

Net income from continuing operations was $737 million, or $2.51 per diluted share. This compares with net income of $660 million, or $2.24 per diluted share last quarter, and net income of $556 million, or $1.99 per diluted share, in the same quarter last year.

                     
Fourth Quarter Fiscal Year 2015 Non-GAAP Results           Change
(Dollars in millions, except EPS)    Q4 15   Q3 15   Q4 14   Q/Q   Y/Y
Net Revenue   $ 1,853     $ 1,750     $ 1,610         +6 %       +15 %
Gross Margin     62 %     61 %     58 %     +1ppt       +4ppt  
Operating Expenses   $ 338     $ 330     $ 303       +$8M       +$35M  
Net Income   $ 737     $ 660     $ 556       +$77M       +$181M  
Earnings Per Share - Diluted   $ 2.51     $ 2.24     $ 1.99       +$ 0.27       +$ 0.52  


“We finished fiscal 2015 on a very strong note, delivering record levels of revenue and profitability in our recently completed fourth quarter. The LSI acquisition and the synergies we have been able to realize through its integration, as well as strong year on year growth in wireless revenues were significant contributors to our 2015 results” said Hock Tan, President and CEO of Avago Technologies Limited. “We are excited by the anticipated opportunities to further increase our earnings potential in fiscal 2016 following completion of our pending Broadcom acquisition.”

Other Quarterly Data

                     
    Percentage of Net Revenue*   Growth Rates
Net Revenue by Segment     Q4 15       Q3 15       Q4 14     Q/Q   Y/Y
Wireless Communications     37       35       39       10 %     8 %
Enterprise Storage     35       34       29       9 %     38 %
Wired Infrastructure     20       21       22       2 %     7 %
Industrial & Other     8       10       10       -10 %     -7 %
                     
* Represents percentages of non-GAAP net revenue. 
                     
Key Statistics (Dollars in millions)        Q4 15       Q3 15       Q4 14          
Cash From Operations   $ 582     $ 592     $ 381          
Depreciation   $ 58     $ 59     $ 51          
Amortization   $ 192     $ 197     $ 199          
Capital Expenditures   $ 106     $ 148     $ 189          
Non-GAAP Days Sales Outstanding     50       42       42          
Non-GAAP Inventory Days On Hand     68       67       70          


Fiscal Year 2015 Financial Results From Continuing Operations

GAAP net revenue from continuing operations was $6,824 million, an increase of 60 percent from $4,269 million in the prior year. GAAP gross margin was $3,553 million, or 52 percent of net revenue, versus $1,877 million, or 44 percent of net revenue, in fiscal year 2014. GAAP operating income was $1,632 million compared with $438 million in the prior year. GAAP net income, which includes the impact from discontinued operations, was $1,364 million, or $4.85 per diluted share. This compares with GAAP net income of $263 million, or $0.99 per diluted share, in fiscal year 2014.

Non-GAAP net revenue from continuing operations was $6,905 million, an increase of 60 percent from $4,307 million in the prior year. Non-GAAP gross margin was $4,184 million, or 61 percent of net revenue, versus $2,421 million, or 56 percent of net revenue, in fiscal year 2014. Non-GAAP operating income from continuing operations was $2,926 million. This compares with $1,521 million in the prior year. Non-GAAP net income was $2,613 million, or $8.98 per diluted share. This compares with non-GAAP net income of $1,343 million, or $4.90 per diluted share, in fiscal year 2014.

             
Fiscal Year 2015 Non-GAAP Results           Change
(Dollars in millions, except EPS)    2015       2014     Y/Y
Net Revenue   $ 6,905     $ 4,307       +60 %
Gross Margin     61 %     56 %   +5ppt
Operating Expenses   $ 1,258     $ 900     +$ 358  
Net Income   $ 2,613     $ 1,343     +$ 1,270  
Earnings Per Share - Diluted   $ 8.98     $ 4.90     +$ 4.08  


First Quarter Fiscal Year 2016 Business Outlook

Based on current business trends and conditions, the outlook for continuing operations for the first quarter of fiscal year 2016, ending January 31, 2016, is expected to be as follows: 

             
    GAAP   Reconciling Items   Non-GAAP
Net Revenue   $1,768M +/- $25M   $12M   $1,780 +/- $25M
Gross Margin   52.75% +/- 1%   $150M   61.00% +/- 1%
Operating Expenses   $472M   $158M   $314M
Interest and Other   $84M   $47M   $37M
Taxes   $30M   $10M   $40M
Diluted Share Count   289M   6M   295M


Projected reconciling items: 

  • Non-GAAP Net Revenue includes $12 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 $12 million of LSI intellectual property licensing revenue, and excludes the effects of $130 million of amortization of intangible assets, $7 million of share-based compensation expense and $1 million of acquisition-related costs;
  • Non-GAAP Operating Expenses exclude $53 million of amortization of intangible assets, $58 million of share-based compensation, $45 million of acquisition-related costs and $2 million of restructuring charges;
  • Non-GAAP Interest and Other excludes $47 million of ticking fees related to debt commitments for the pending Broadcom acquisition; and
  • $10 million provision at the Taxes line represents the tax effects of the reconciling items noted above.


Capital expenditures for the first fiscal quarter are expected to be approximately $140 million, which include the purchase of a fabrication facility in Eugene, Oregon for approximately $21 million. For the first fiscal quarter, depreciation is expected to be $61 million and amortization is expected to be $183 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.

Avago will be meeting investors at the Barclays Global Technology, Media and Telecommunications Conference on December 9, 2015 in San Francisco. Avago will also be meeting with investors on January 5-7, 2016, at the 2016 International CES and presenting at the J.P. Morgan Tech Forum CES 2016 and the Citi Internet, Media and Telecommunication Tech Forum CES 2016 in Las Vegas.

Financial Results Conference Call

Avago Technologies Limited will host a conference call to review its financial results for the fourth quarter and fiscal year ended November 1, 2015, and to provide guidance for the first quarter of fiscal year 2016, today at 2:00 p.m. Pacific Time. Those wishing to access the call should dial (866) 310-8712; International +1 (720) 634-2946. The passcode is 77298772. A replay of the call will be accessible for one week after the call. To access the replay dial (855) 859-2056; International +1 (404) 537-3406; and reference the passcode: 77298772. 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 and asset impairment charges, acquisition-related costs, including integration costs, purchase accounting effect on inventory, write-off of debt issuance costs, gain on extinguishment of debt, income (loss) from and gain (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; risks associated with our pending acquisition of Broadcom Corporation (“Broadcom”), including (1) the risk that the conditions to the closing of the transaction are not satisfied; (2) litigation challenging the transaction; (3) uncertainties as to the timing of the consummation of the transaction and the ability of each party to consummate the transaction; (4) risks that the proposed transaction disrupts our current plans and operations; (5) our ability to retain and hire key personnel; (6) competitive responses to the proposed transaction; (7) unexpected costs, charges or expenses resulting from the transaction; (8) potential adverse reactions or changes to business relationships resulting from the announcement or completion of the transaction; (9) our ability to realize the benefits of the acquisition of Broadcom, as well as delays, challenges and expenses associated with integrating the businesses and the indebtedness planned to be incurred in connection with the transaction; and (10) legislative, regulatory and economic developments; 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; 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; increased dependence on a small number of markets;  quarterly and annual fluctuations in operating results; cyclicality in the semiconductor industry or in our target markets; global economic conditions and concerns; 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, 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 September 10, 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.

Additional Information and Where to Find It

This document does not constitute an offer to sell or the solicitation of an offer to buy any securities or a solicitation of any vote or approval nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. Pavonia Limited (“Holdco”) and Safari Cayman L.P. (“Holdco LP”) filed with the SEC a Registration Statement on Form S-4 which includes the joint proxy statement of Avago and Broadcom and also constitutes a prospectus of Holdco and Holdco LP. On or about September 29, 2015, each of Avago and Broadcom commenced mailing the joint proxy statement/prospectus in definitive form to its shareholders of record as of the close of business on September 25, 2015. Broadcom and Avago also plan to file other documents with the SEC regarding the proposed transaction. This document is not a substitute for any prospectus, proxy statement or any other document which Broadcom and Avago has filed or may file with the SEC in connection with the proposed transaction. INVESTORS AND SECURITY HOLDERS OF BROADCOM AND AVAGO ARE URGED TO READ THE DEFINITIVE JOINT PROXY STATEMENT/PROSPECTUS AND ANY OTHER RELEVANT DOCUMENTS FILED OR TO BE FILED WITH THE SEC CAREFULLY AND IN THEIR ENTIRETY WHEN THEY BECOME AVAILABLE BECAUSE THEY CONTAIN OR WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION.

You may obtain copies of all documents filed with the SEC regarding this transaction, free of charge, at the SEC’s website (www.sec.gov). In addition, investors and shareholders will be able to obtain free copies of the joint proxy statement/prospectus and other documents filed with the SEC by the parties on Broadcom’s Investor Relations website (www.broadcom.com/investors) (for documents filed with the SEC by Broadcom) or Avago Investor Relations at (408) 433-8000 or investor.relations@avagotech.com (for documents filed with the SEC by Avago, Holdco or Holdco LP).

AVAGO TECHNOLOGIES LIMITED  
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - UNAUDITED  
(IN MILLIONS, EXCEPT PER SHARE DATA)  
                       
                       
     Fiscal Quarter Ended    Fiscal Year Ended  
    November 1,   August 2,   November 2,   November 1,   November 2,  
      2015       2015       2014       2015       2014    
                       
Net revenue   $   1,840     $   1,735     $   1,590     $   6,824     $   4,269    
Cost of products sold:                      
Cost of products sold       712         694         678         2,750         1,911    
Purchase accounting effect on inventory       -         26         10         30         210    
Amortization of intangible assets       129         129         108         484         249    
Restructuring charges       2         2         6         7         22    
Total cost of products sold       843         851         802         3,271         2,392    
Gross margin       997         884         788         3,553         1,877    
                       
Research and development       287         276         234         1,049         695    
Selling, general and administrative       118         143         129         486         407    
Amortization of intangible assets       63         68         91         249         197    
Restructuring and asset impairment charges       15         98         33         137         140    
Total operating expenses       483         585         487         1,921         1,439    
                                           
Operating income       514         299         301         1,632         438    
Interest expense       (41 )       (43 )       (54 )       (191 )       (110 )  
Other income, net       12         11         16         26         14    
Income from continuing operations before income taxes       485         267         263         1,467         342    
Provision for income taxes       15         23         126         76         33    
Income from continuing operations       470         244         137         1,391         309    
Loss from discontinued operations, net of income taxes       (41 )       (4 )       (2 )       (27 )       (46 )  
Net income   $   429     $   240     $   135     $   1,364     $   263    
                                           
Basic income per share:                                          
Income per share from continuing operations   $   1.70     $   0.92     $   0.54     $   5.27     $   1.23    
Loss per share from discontinued operations, net of income taxes   $   (0.15 )   $   (0.01 )   $   (0.01 )   $   (0.10 )   $   (0.18 )  
Net income per share   $   1.55     $   0.91     $   0.53     $   5.17     $   1.05    
                       
Diluted income per share:                      
Income per share from continuing operations   $   1.64     $   0.85     $   0.50     $   4.95     $   1.16    
Loss per share from discontinued operations, net of income taxes   $   (0.15 )   $   (0.01 )   $   -      $   (0.10 )   $   (0.17 )  
Net income per share   $   1.49     $   0.84     $   0.50     $   4.85     $   0.99    
                       
Shares used in per share calculations:                      
Basic       276         265         254         264         251    
Diluted       287         287         272         281         267    
                       
Share-based compensation expense included in continuing operations:                      
Cost of products sold   $   7     $   7     $   6     $   26     $   18    
Research and development       30         31         19         107         57    
Selling, general and administrative       26         25         24         99         78    
Total share-based compensation expense   $   63     $   63     $   49     $   232     $   153    
                                           

 

AVAGO TECHNOLOGIES LIMITED
FINANCIAL RECONCILIATION: GAAP TO NON-GAAP - UNAUDITED
(IN MILLIONS, EXCEPT DAYS)
                       
                       
       Fiscal Quarter Ended    Fiscal Year Ended
      November 1,   August 2,   November 2,   November 1,   November 2,
        2015       2015       2014       2015       2014  
                       
                       
Net revenue on GAAP basis     $   1,840     $   1,735     $   1,590     $   6,824     $   4,269  
Acquisition-related purchase accounting revenue adjustment         13         15         20         81         38  
Net revenue on non-GAAP basis     $   1,853     $   1,750     $   1,610     $   6,905     $   4,307  
                                           
                                           
Gross margin on GAAP basis     $   997     $   884     $   788     $   3,553     $   1,877  
Acquisition-related purchase accounting revenue adjustment         13         15         20         81         38  
Purchase accounting effect on inventory         -         26         10         30         210  
Amortization of intangible assets         129         129         108         484         249  
Share-based compensation expense         7         7         6         26         18  
Restructuring charges         2         2         6         7         22  
Acquisition-related costs         1         -         1         3         7  
Gross margin on non-GAAP basis     $   1,149     $   1,063     $   939     $   4,184     $   2,421  
                                           
                                           
Research and development on GAAP basis     $   287     $   276     $   234     $   1,049     $   695  
Share-based compensation expense         30         31         19         107         57  
Acquisition-related costs         -         -         1         9         6  
Research and development on non-GAAP basis     $   257     $   245     $   214     $   933     $   632  
                                           
                                           
Selling, general and administrative expense on GAAP basis     $   118     $   143     $   129     $   486     $   407  
Share-based compensation expense         26         25         24         99         78  
Acquisition-related costs         11         33         16         62         61  
Selling, general and administrative expense on non-GAAP basis     $   81     $   85     $   89     $   325     $   268  
                                           
                                           
Total operating expenses on GAAP basis     $   483     $   585     $   487     $   1,921     $   1,439  
Amortization of intangible assets         63         68         91         249         197  
Share-based compensation expense         56         56         43         206         135  
Restructuring and asset impairment charges         15         98         33         137         140  
Acquisition-related costs         11         33         17         71         67  
Total operating expenses on non-GAAP basis     $   338     $   330     $   303     $   1,258     $   900  
                                           
                                           
Operating income on GAAP basis     $   514     $   299     $   301     $   1,632     $   438  
Acquisition-related purchase accounting revenue adjustment         13         15         20         81         38  
Purchase accounting effect on inventory         -         26         10         30         210  
Amortization of intangible assets         192         197         199         733         446  
Share-based compensation expense         63         63         49         232         153  
Restructuring and asset impairment charges         17         100         39         144         162  
Acquisition-related costs         12         33         18         74         74  
Operating income on non-GAAP basis     $   811     $   733     $   636     $   2,926     $   1,521  
                                           
Other income, net on GAAP basis     $   12     $   11     $   16     $   26     $   14  
Write-off of debt issuance costs         -         -         -         13         -  
Other         (2 )       (3 )       -         (5 )       -  
Other income, net on non-GAAP basis     $   10     $   8     $   16     $   34     $   14  
                                           
Income from continuing operations before income taxes on GAAP basis     $   485     $   267     $   263     $   1,467     $   342  
Acquisition-related purchase accounting revenue adjustment         13         15         20         81         38  
Purchase accounting effect on inventory         -         26         10         30         210  
Amortization of intangible assets         192         197         199         733         446  
Share-based compensation expense         63         63         49         232         153  
Restructuring and asset impairment charges         17         100         39         144         162  
Acquisition-related costs         12         33         18         74         74  
Write-off of debt issuance costs         -         -         -         13         -  
Other         (2 )       (3 )       -         (5 )       -  
Income before income taxes on non-GAAP basis     $   780     $   698     $   598     $   2,769     $   1,425  
                                           
                                           
Provision for income taxes on GAAP basis     $   15     $   23     $   126     $   76     $   33  
Income tax effects of non-GAAP reconciling adjustments         28         15         (84 )       80         49  
Provision for income taxes on non-GAAP basis     $   43     $   38     $   42     $   156     $   82  
                                           
Net income on GAAP basis     $   429     $   240     $   135     $   1,364     $   263  
Acquisition-related purchase accounting revenue adjustment         13         15         20         81         38  
Purchase accounting effect on inventory         -         26         10         30         210  
Amortization of intangible assets         192         197         199         733         446  
Share-based compensation expense         63         63         49         232         153  
Restructuring and asset impairment charges         17         100         39         144         162  
Acquisition-related costs         12         33         18         74         74  
Write-off of debt issuance costs         -         -         -         13         -  
Other         (2 )       (3 )       -         (5 )       -  
Income tax effects of non-GAAP reconciling adjustments         (28 )       (15 )       84         (80 )       (49 )
Discontinued operations, net of income taxes         41         4         2         27         46  
Net income on non-GAAP basis     $   737     $   660     $   556     $   2,613     $   1,343  
                                           
                                           
Shares used in per share calculation - diluted on GAAP basis         287         287         272         281         267  
Non-GAAP adjustment         7         7         8         10         7  
Shares used in per share calculation - diluted on non-GAAP basis(1)         294         294         280         291         274  
                                           
Days sales outstanding on GAAP basis         50         43         45          
Non-GAAP adjustment         -         (1 )       (3 )        
Days sales outstanding on non-GAAP basis(2)         50         42         42          
                                           
Inventory Days on Hand on GAAP basis         67         64         69          
Non-GAAP adjustment         1         3         1          
Inventory Days on Hand on non-GAAP basis(3)         68         67         70          
                                           
                       
(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                 
  November 1,     August 2,     November 2,                
  2015     2015     2014   Growth Rates
  GAAP     Non-GAAP     GAAP     Non-GAAP     GAAP     Non-GAAP     GAAP   Non-GAAP
Net revenue by segment:                                                             Q/Q   Y/Y   Q/Q   Y/Y
Wireless Communications $   680     37 % $   680     37 % $   616     36 % $   616     35 % $   628     40 %   $   628     39 %     10 %     8 %     10 %     8 %
Enterprise Storage     639     35         639     35         588     34         588     34         463     29         463     29       9 %     38 %     9 %     38 %
Wired Infrastructure     378     20         378     20         372     21         372     21         352     22         352     22       2 %     7 %     2 %     7 %
Industrial & Other (1)     143     8         156     8         159     9         174     10         147     9         167     10       -10 %     -3 %     -10 %     -7 %
Total net revenue $   1,840     100 %   $   1,853     100 %   $   1,735     100 %   $   1,750     100 %   $   1,590     100 %   $   1,610     100 %                
                                                                           
 (1)Non-GAAP data includes the effect of acquisition-related purchase accounting revenue adjustment 
                                                                           

 

AVAGO TECHNOLOGIES LIMITED  
CONDENSED CONSOLIDATED BALANCE SHEETS - UNAUDITED  
(IN MILLIONS)  
             
    November 1,   November 2,    
      2015     2014 (1)    
             
ASSETS            
             
Current assets:            
Cash and cash equivalents   $   1,822     $   1,604      
Trade accounts receivable, net       1,019         782      
Inventory       524         519      
Assets held-for-sale       22         628      
Other current assets       388         302      
Total current assets       3,775         3,835      
Property, plant and equipment, net       1,460         1,158      
Goodwill       1,674         1,596      
Intangible assets, net       3,277         3,617      
Other long-term assets       406         285      
Total assets   $   10,592     $   10,491      
                     
LIABILITIES AND SHAREHOLDERS' EQUITY            
             
Current liabilities:            
Accounts payable   $   617     $   515      
Employee compensation and benefits       250         219      
Other current liabilities       206         236      
Current portion of long-term debt       46         46      
Total current liabilities       1,119         1,016      
             
Long-term liabilities:            
Long-term debt       3,903         4,543      
Convertible notes payable to related party - non-current       -         920      
Pension and post-retirement benefit obligations       475         506      
Other long-term liabilities       381         263      
Total liabilities       5,878         7,248      
                     
Shareholders' equity:                    
Ordinary shares, no par value       2,547         2,009      
Retained earnings       2,240         1,284      
Accumulated other comprehensive loss       (73 )       (50 )    
Total shareholders' equity       4,714         3,243      
Total liabilities and shareholders' equity   $   10,592     $   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    Fiscal Year Ended  
    November 1,   August 2,   November 2,   November 1,   November 2,  
      2015       2015       2014       2015       2014    
Cash flows from operating activities:                      
Net income   $   429     $   240     $   135     $   1,364     $   263    
                       
Adjustments to reconcile net income to net cash provided by operating activities:                      
Depreciation and amortization       250         256         250         962         625    
Amortization of debt issuance costs and accretion of debt discount       4         4         7         22         14    
Share-based compensation       63         63         54         232         163    
Tax benefits of share-based compensation       25         32         42         130         42    
Excess tax from share-based compensation       (23 )       (32 )       (39 )       (125 )       (39 )  
Non-cash portion of restructuring and asset impairment charges       2         70         9         77         9    
Loss (gain) on sale of businesses       28         -         (18 )       14         (18 )  
Deferred taxes       (185 )       (33 )       (72 )       (220 )       (92 )  
Other       8         1         (8 )       28         (1 )  
Changes in assets and liabilities, net of acquisitions and disposals:                      
Trade accounts receivable, net       (209 )       (2 )       (180 )       (187 )       (70 )  
Inventory       (1 )       20         (6 )       62         193    
Accounts payable       81         (29 )       52         29         13    
Employee compensation and benefits       20         29         2         8         20    
Other current assets and current liabilities       12         (39 )       188         (118 )       219    
Other long-term assets and long-term liabilities       78         12         (35 )       40         (166 )  
Net cash provided by operating activities        582         592         381         2,318         1,175    
                                           
Cash flows from investing activities:                                          
Proceeds from sale of businesses       -         -         450         650         450    
Acquisition of businesses, net of cash acquired       -         (394 )       (317 )       (394 )       (5,961 )  
Purchases of property, plant and equipment        (106 )       (148 )       (189 )       (593 )       (409 )  
Proceeds from disposals of property, plant and equipment       47         -         -       110         -    
Purchases of investments       (5 )       -         -         (14 )       -    
Proceeds from sale of investments       -         -         21         -         35    
Net cash used in investing activities       (64 )       (542 )       (35 )       (241 )       (5,885 )  
                                           
Cash flows from financing activities:                                          
Debt repayments       (12 )       (1,010 )       (12 )       (1,639 )       (12 )  
Payment of assumed debt       -         (178 )       -         (178 )       -    
Proceeds from term loan borrowings       -         -         -         -         4,600    
Proceeds from issuance of convertible senior notes       -         -         -         -         1,000    
Debt issuance costs       -         -         -         -         (124 )  
Issuance of ordinary shares       55         56         38         241         124    
Dividend payments to shareholders       (116 )       (104 )       (81 )       (408 )       (284 )  
Repurchases of ordinary shares       -         -         -         -         (12 )  
Excess tax from share-based compensation       23         32         39         125         39    
Other       -         -         (3 )       -         (2 )  
Net cash (used in) provided by financing activities       (50 )       (1,204 )       (19 )       (1,859 )       5,329    
                                           
Net change in cash and cash equivalents       468         (1,154 )       327         218         619    
Cash and cash equivalents at beginning of period       1,354         2,508         1,277         1,604         985    
Cash and cash equivalents at end of period   $   1,822     $   1,354     $   1,604     $   1,822     $   1,604    
                                           
                       
Contacts:
Avago Technologies Limited
Ashish Saran
Investor Relations
+1 408 433 8000
investor.relations@avagotech.com

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