- Net revenue down 7 percent sequentially to
$576 million , up 2 percent from Q1 last year - GAAP gross margin of 47.9 percent; Non-GAAP gross margin of 50.7 percent
- GAAP diluted EPS of
$0.50 ; Non-GAAP diluted EPS of$0.65
First Quarter Fiscal Year 2013 GAAP Results
Net revenue was
Gross margin was
Operating expenses were
Income from operations was
First quarter net income was
The Company's cash balance at the end of the first quarter was
The Company generated
On
First Quarter Fiscal Year 2013 Non-GAAP Results
Gross margin was
Income from operations was
Net income was
| First Quarter Fiscal Year 2013 Non-GAAP Results | Change | ||||
| (Dollars in millions, except EPS) | Q1 13 | Q4 12 | Q1 12 | Q/Q | Y/Y |
| Net Revenue | $576 | $618 | $563 | -6.8% | +2.3% |
| Gross Margin | 50.7% | 51.1% | 50.6% | -40bps | +10bps |
| Operating Expenses | $130 | $117 | $122 | +$13 | +$8 |
| Net Income | $163 | $194 | $156 | -$31 | +$7 |
| Earnings Per Share - Diluted | $0.65 | $0.77 | $0.62 | -$0.12 | +$0.03 |
"During the first fiscal quarter, wireless demand remained steady, helped by multiple smart phone launches," said Hock Tan, President and CEO of
Other Quarterly Data
| Percentage of Net Revenue | Growth Rates | ||||
| Net Revenues by Target Market | Q1 13 | Q4 12 | Q1 12 | Q/Q | Y/Y |
| Wireless Communications | 53 | 51 | 45 | -2% | 21% |
| Wired Infrastructure | 25 | 26 | 29 | -10% | -12% |
| Industrial & Other | 22 | 23 | 26 | -14% | -15% |
| Key Statistics | Q1 13 | Q4 12 | Q1 12 | ||
| (Dollars in millions) | |||||
| Cash From Operations | $185 | $215 | $139 | ||
| Depreciation | $22 | $21 | $18 | ||
| Amortization | $19 | $19 | $19 | ||
| Capital Expenditures | $67 | $73 | $47 | ||
| Days Sales Outstanding | 46 | 51 | 50 | ||
| Inventory Days On Hand | 72 | 58 | 63 | ||
Due to the Company's 52/53 week reporting cycle, fiscal year 2013 includes an extra week, compared to fiscal year 2012, which fell in the first quarter of fiscal year 2013.
Second Quarter Fiscal Year 2013 Business Outlook
Based on current business trends and conditions, the outlook for the second quarter of fiscal year 2013, ending
| GAAP | Reconciling Items | Non-GAAP | |
| Sequential Change in Net Revenue | Down 2% to 5% | Down 2% to 5% | |
| Gross Margin | 47.5% plus/minus 1% | $17M | 50.75% plus/minus 1% |
| Operating Expenses | $153M | $23M | $130M |
| Interest and Other | $1M | $1M | |
| Taxes | $6M | $6M | |
| Diluted Share Count | 252M | 2M | 254M |
Reconciling items include
Capital expenditures for the second 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
The
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, particular uncertainties that could materially affect future results include global economic conditions and concerns; cyclicality in the semiconductor industry or in our target markets; quarterly and annual fluctuations in operating results; loss of our significant customers; increased dependence on the volatile, wireless handset market; our competitive performance and ability to continue achieving design wins with our customers; 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 gross margin; our ability to maintain tax concessions in certain jurisdictions; our ability to protect our intellectual property and any associated increases in litigation expenses; dependence on and risks associated with distributors of our products; any expenses associated with resolving customer product and warranty and indemnification claims; our ability to achieve the growth prospects and synergies expected from acquisitions we may make; delays, challenges and expenses associated with integrating acquired companies with our existing businesses; and other events and trends on a national, regional and global scale, including those of a political, economic, business, competitive and regulatory nature. Our Annual Report on Form 10-K filed on
| AVAGO TECHNOLOGIES LIMITED | |||
| CONDENSED CONSOLIDATED STATEMENTS OF INCOME - UNAUDITED | |||
| (IN MILLIONS, EXCEPT PER SHARE DATA) | |||
| Fiscal Quarter Ended | |||
| February 3, 2013 |
October 28, 2012 |
January 29, 2012 | |
| Net revenue | $ 576 | $ 618 | $ 563 |
| Cost of products sold: | |||
| Cost of products sold | 286 | 304 | 279 |
| Amortization of intangible assets | 14 | 14 | 14 |
| Restructuring charges | -- | 1 | -- |
| Total cost of products sold | 300 | 319 | 293 |
| Gross margin | 276 | 299 | 270 |
| Research and development | 93 | 80 | 82 |
| Selling, general and administrative | 53 | 49 | 50 |
| Amortization of intangible assets | 5 | 5 | 5 |
| Restructuring charges | 1 | 1 | 1 |
| Total operating expenses | 152 | 135 | 138 |
| Income from operations | 124 | 164 | 132 |
| Interest expense | -- | -- | (1) |
| Other income (expense), net | 2 | 1 | (1) |
| Income before income taxes | 126 | 165 | 130 |
| Provision for income taxes | 1 | 6 | 5 |
| Net income | $ 125 | $ 159 | $ 125 |
| Net income per share: | |||
| Basic | $ 0.51 | $ 0.65 | $ 0.51 |
| Diluted | $ 0.50 | $ 0.64 | $ 0.50 |
| Shares used in per share calculations: | |||
| Basic | 246 | 245 | 245 |
| Diluted | 251 | 250 | 250 |
| Share-based compensation expense included in: | |||
| Cost of products sold | $ 2 | $ 2 | $ 1 |
| Research and development | 7 | 5 | 4 |
| Selling, general and administrative | 9 | 7 | 6 |
| Total share-based compensation expense | $ 18 | $ 14 | $ 11 |
| AVAGO TECHNOLOGIES LIMITED | |||
| NON-GAAP FINANCIAL SUMMARY - UNAUDITED(1) | |||
| (IN MILLIONS, EXCEPT PERCENTAGES AND PER SHARE DATA) | |||
| Fiscal Quarter Ended | |||
| February 3, 2013 |
October 28, 2012 |
January 29, 2012 | |
| Net revenue | $ 576 | $ 618 | $ 563 |
| Gross margin | $ 292 | $ 316 | $ 285 |
| % of net revenue | 51% | 51% | 51% |
| Research and development | $ 86 | $ 75 | $ 78 |
| Selling, general and administrative | $ 44 | $ 42 | $ 44 |
| Total operating expenses | $ 130 | $ 117 | $ 122 |
| % of net revenue | 23% | 19% | 22% |
| Income from operations | $ 162 | $ 199 | $ 163 |
| Net income | $ 163 | $ 194 | $ 156 |
| Net income per share - diluted | $ 0.65 | $ 0.77 | $ 0.62 |
| Shares used in per share calculation - diluted | 252 | 253 | 253 |
| (1) A reconciliation of the non-GAAP measures presented above to the most directly comparable GAAP financial data appears on the next page. These non-GAAP measures are provided in addition to and not as a substitute for measures of financial performance prepared in accordance with GAAP. The financial summary excludes amortization of acquisition-related intangible assets, share-based compensation, and restructuring charges. | |||
| AVAGO TECHNOLOGIES LIMITED | |||
| FINANCIAL RECONCILIATION: GAAP TO NON-GAAP - UNAUDITED | |||
| (IN MILLIONS) | |||
| Fiscal Quarter Ended | |||
| February 3, 2013 |
October 28, 2012 |
January 29, 2012 | |
| Net income on GAAP basis | $ 125 | $ 159 | $ 125 |
| Amortization of intangible assets | 19 | 19 | 19 |
| Share-based compensation expense | 18 | 14 | 11 |
| Restructuring charges | 1 | 2 | 1 |
| Net income on Non-GAAP basis | $ 163 | $ 194 | $ 156 |
| Gross margin on GAAP basis | $ 276 | $ 299 | $ 270 |
| Amortization of intangible assets | 14 | 14 | 14 |
| Share-based compensation expense | 2 | 2 | 1 |
| Restructuring charges | -- | 1 | -- |
| Gross margin on Non-GAAP basis | $ 292 | $ 316 | $ 285 |
| Research and development on GAAP basis | $ 93 | $ 80 | $ 82 |
| Share-based compensation expense | 7 | 5 | 4 |
| Research and development on Non-GAAP basis | $ 86 | $ 75 | $ 78 |
| Selling, general and administrative on GAAP basis | $ 53 | $ 49 | $ 50 |
| Share-based compensation expense | 9 | 7 | 6 |
| Selling, general and administrative on Non-GAAP basis | $ 44 | $ 42 | $ 44 |
| Total operating expenses on GAAP basis | $ 152 | $ 135 | $ 138 |
| Amortization of intangible assets | 5 | 5 | 5 |
| Share-based compensation expense | 16 | 12 | 10 |
| Restructuring charges | 1 | 1 | 1 |
| Total operating expenses on Non-GAAP basis | $ 130 | $ 117 | $ 122 |
| Income from operations on GAAP basis | $ 124 | $ 164 | $ 132 |
| Amortization of intangible assets | 19 | 19 | 19 |
| Share-based compensation expense | 18 | 14 | 11 |
| Restructuring charges | 1 | 2 | 1 |
| Income from operations on Non-GAAP basis | $ 162 | $ 199 | $ 163 |
| Shares used in per share calculation - diluted on GAAP basis | 251 | 250 | 250 |
| Non-GAAP adjustment | 1 | 3 | 3 |
| Shares used in per share calculation - diluted on Non-GAAP basis(1) | 252 | 253 | 253 |
| (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) | ||
| February 3, 2013 |
October 28, 2012 (1) | |
| ASSETS | ||
| Current assets: | ||
| Cash and cash equivalents | $ 1,151 | $ 1,084 |
| Trade accounts receivable, net | 266 | 341 |
| Inventory | 208 | 194 |
| Other current assets | 88 | 72 |
| Total current assets | 1,713 | 1,691 |
| Property, plant and equipment, net | 529 | 503 |
| Goodwill | 180 | 180 |
| Intangible assets, net | 403 | 422 |
| Other long-term assets | 67 | 66 |
| Total assets | $ 2,892 | $ 2,862 |
| LIABILITIES AND SHAREHOLDERS' EQUITY | ||
| Current liabilities: | ||
| Accounts payable | $ 196 | $ 248 |
| Employee compensation and benefits | 48 | 61 |
| Capital lease obligations - current | 1 | 1 |
| Other current liabilities | 32 | 36 |
| Total current liabilities | 277 | 346 |
| Long-term liabilities: | ||
| Capital lease obligations - non-current | 2 | 2 |
| Other long-term liabilities | 95 | 95 |
| Total liabilities | 374 | 443 |
| Shareholders' equity: | ||
| Ordinary shares, no par value | 1,493 | 1,479 |
| Retained earnings | 1,034 | 951 |
| Accumulated other comprehensive loss | (9) | (11) |
| Total shareholders' equity | 2,518 | 2,419 |
| Total liabilities and shareholders' equity | $ 2,892 | $ 2,862 |
| (1) Amounts as of October 28, 2012 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 | |||
| February 3, 2013 |
October 28, 2012 |
January 29, 2012 | |
| Cash flows from operating activities: | |||
| Net income | $ 125 | $ 159 | $ 125 |
| Adjustments to reconcile net income to net cash provided by operating activities: | |||
| Depreciation and amortization | 41 | 40 | 37 |
| Share-based compensation | 17 | 14 | 11 |
| Tax benefits of share-based compensation | -- | 3 | -- |
| Excess tax benefits from share-based compensation | -- | (3) | -- |
| Other | (2) | -- | 2 |
| Changes in assets and liabilities, net of acquisitions: | |||
| Trade accounts receivable | 75 | (11) | 20 |
| Inventory | (14) | 22 | 1 |
| Accounts payable | (34) | 12 | (8) |
| Employee compensation and benefits | (13) | (8) | (38) |
| Other current assets and current liabilities | (11) | (7) | (10) |
| Other long-term assets and long-term liabilities | 1 | (6) | (1) |
| Net cash provided by operating activities | 185 | 215 | 139 |
| Cash flows from investing activities: | |||
| Purchases of property, plant and equipment | (67) | (73) | (47) |
| Acquisitions and investment, net of cash acquired | (9) | (2) | -- |
| Proceeds from insurance claims | -- | 1 | -- |
| Net cash used in investing activities | (76) | (74) | (47) |
| Cash flows from financing activities: | |||
| Proceeds from government grants | 3 | -- | 1 |
| Issuance of ordinary shares | 10 | 16 | 5 |
| Repurchases of ordinary shares | (13) | (10) | (79) |
| Excess tax benefits from share-based compensation | -- | 3 | -- |
| Dividend payments to shareholders | (42) | (39) | (29) |
| Net cash used in financing activities | (42) | (30) | (102) |
| Net increase (decrease) in cash and cash equivalents | 67 | 111 | (10) |
| Cash and cash equivalents at the beginning of period | 1,084 | 973 | 829 |
| Cash and cash equivalents at end of period | $ 1,151 | $ 1,084 | $ 819 |
| AVAGO TECHNOLOGIES LIMITED | ||||
| NET REVENUE BY TARGET MARKET - UNAUDITED | ||||
| (IN MILLIONS, EXCEPT PERCENTAGES) | ||||
| Commencing in our first quarter of fiscal year 2013, we will cease to separately present revenues from our legacy consumer and computing peripherals target market. Instead they will be combined and presented with revenues from our industrial and automotive electronics market, which will be referred to as our 'Industrial & Other' target market. For comparison purposes, the below tables present net revenue by target market for the four quarters in fiscal year 2012, assuming the change in presentation occurred at the beginning of fiscal year 2012. | ||||
| Fiscal Quarter Ended | ||||
| Net Revenue | January 29, 2012 |
April 29, 2012 |
July 29, 2012 |
October 28, 2012 |
| Wireless Communications | $ 254 | $ 255 | $ 241 | $ 314 |
| Wired Infrastructure | 162 | 168 | 173 | 159 |
| Industrial & Other | 147 | 154 | 192 | 145 |
| Total Net Revenue | $ 563 | $ 577 | $ 606 | $ 618 |
| Fiscal Quarter Ended | ||||
| % of Net Revenue | January 29, 2012 |
April 29, 2012 |
July 29, 2012 |
October 28, 2012 |
| Wireless Communications | 45% | 44% | 40% | 51% |
| Wired Infrastructure | 29 | 29 | 29 | 26 |
| Industrial & Other | 26 | 27 | 31 | 23 |
| Total Net Revenue | 100% | 100% | 100% | 100% |
Contacts:
VP Corporate Development
+1 408 435 7400
investor.relations@avagotech.com