Financial News

• Quarterly net revenue up 15 percent sequentially, up 19 percent from Q4 last year
• Quarterly GAAP gross margin of 46.7 percent; Quarterly Non-GAAP gross margin of 50.5 percent
• Quarterly GAAP diluted EPS of $0.68; Quarterly Non-GAAP diluted EPS of $0.89

SAN JOSE, Calif., and SINGAPORE, Dec. 4, 2013 (GLOBE NEWSWIRE) -- Avago Technologies Limited (Nasdaq:AVGO), a leading supplier of analog interface components for communications, industrial, and consumer applications, today reported financial results for the fourth fiscal quarter and fiscal year ended November 3, 2013, and provided guidance for the first quarter of its fiscal year 2014.

Fourth Quarter Fiscal Year 2013 GAAP Results

Net revenue was $738 million, an increase of 15 percent compared with the previous quarter and an increase of 19 percent from the same quarter last year.

Gross margin was $345 million, or 46.7 percent of net revenue. This compares with gross margin of $304 million, or 47.2 percent of net revenue last quarter, and gross margin of $299 million, or 48.4 percent of net revenue in the same quarter last year.

Operating expenses were $175 million. This compares with $164 million in the prior quarter and $135 million for the same quarter the previous year.

Income from operations was $170 million. This compares with $140 million in the prior quarter and with $164 million in the same quarter last year.

Fourth quarter net income was $172 million, or $0.68 per diluted share. This compares with net income of $142 million, or $0.56 per diluted share for the prior quarter, and net income of $159 million, or $0.64 per diluted share in the same quarter last year.

The Company's cash balance at the end of the fourth quarter was $985 million, compared to $863 million at the end of the prior quarter.

The Company generated $212 million in cash from operations in the fourth quarter and spent $57 million on capital expenditures.

On September 30, 2013 the Company paid a quarterly cash dividend of 23 cents ($0.23) per ordinary share, totaling approximately $57 million.

Fourth Quarter Fiscal Year 2013 Non-GAAP Results

Gross margin was $373 million, or 50.5 percent of net revenue. This compares with gross margin of $328 million, or 50.9 percent of net revenue last quarter, and gross margin of $316 million, or 51.1 percent of net revenue in the same quarter last year.

Income from operations was $229 million. This compares with $191 million in the prior quarter and $199 million in the same quarter the previous year.

Net income was $227 million, or $0.89 per diluted share. This compares with net income of $188 million, or $0.74 per diluted share last quarter, and net income of $194 million, or $0.77 per diluted share in the same quarter last year.

"Major product ramps at both of the largest smartphone OEM customers, continued strength in datacenter spending and a stronger than expected contribution from the CyOptics business helped drive sequential revenue growth of 15% in the fourth quarter," said Hock Tan, President and CEO of Avago Technologies Limited. "Looking into the first quarter of 2014 we expect revenue to decline in all of our target markets with our typical seasonality. We also expect wireless will continue to face volatility throughout the year caused by major product launches."

Fiscal Year 2013 Financial Results

Net revenue grew 7 percent to $2.52 billion when compared to fiscal year 2012. GAAP gross margin was $1,197 million, or 47.5 percent of net revenue versus $1,142 million, or 48.3 percent of net revenue in fiscal year 2012. GAAP net income was $552 million, or $2.19 per diluted share. This compares with GAAP net income of $563 million, or $2.25 per diluted share in fiscal year 2012.

Non-GAAP gross margin was $1,281 million, or 50.8 percent of net revenue compared with $1,206 million or 51.0 percent of net revenue in fiscal year 2012. Non-GAAP net income of $731 million, or $2.89 per diluted share, compared with $700 million, or $2.77 per diluted share, last fiscal year.

First Quarter Fiscal Year 2014 Business Outlook

Based on current business trends and conditions, the outlook for the first quarter of fiscal year 2014, ending February 2, 2014, is expected to be as follows: 

Reconciling items include:

• $18 million of amortization of intangible assets, $3 million of share-based compensation expense, and $2 million of acquisition-related costs at the Gross Margin line;
• $7 million of amortization of intangible assets, $21 million of share-based compensation, $1 million of restructuring charges, and $7 million of acquisition-related costs at the Operating Expenses line; and
• $2 million at the Taxes line which represents the tax effects of the reconciling items noted above.

Capital expenditures for the first quarter are expected to be approximately $63 million. For the first quarter depreciation is expected to be $33 million and amortization is expected to be $25 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 excludes the impact from any future 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.

Avago will be presenting at the J.P. Morgan Tech Forum on January 7, 2014, and meeting with investors on January 7 and January 8, 2014, at the 2014 International CES 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 2013, and to provide guidance for the first quarter of fiscal year 2014, today at 2:00 p.m. Pacific Time. Those wishing to access the call should dial (866) 318-8613; International +1 (617) 399-5132. The passcode is 21696963. A replay of the call will be available through December 11, 2013. To access the replay dial 888-286-8010; International +1-617-801-6888 and reference the passcode: 93124509. 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 income, income from operations, gross margin, operating expenses and other data, on a non-GAAP basis. This non-GAAP information excludes amortization of acquisition-related intangibles, share-based compensation expense, restructuring charges, acquisition-related costs, debt extinguishment losses and the income tax effects of these excluded items. Management does not believe that the excluded items are reflective of the Company's underlying performance. The exclusion of these and other similar items from Avago's non-GAAP presentation should not be interpreted as implying that these items are non-recurring, infrequent or unusual. Avago believes this non-GAAP financial information provides additional insight into the Company's on-going performance and has therefore chosen to provide this information to investors for a more consistent basis of comparison and to help them evaluate the results of the Company's on-going operations and enable more meaningful period to period comparisons. These non-GAAP measures are 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 semiconductor devices with a focus on III-V based products. Our product portfolio is extensive and includes thousands of products in three primary target markets: wireless communications, wired infrastructure and industrial & 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. 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, as well as the timing of those design wins; market acceptance of the end products into which our products are designed; rates of growth in our target markets; our ability to achieve the growth prospects and synergies expected from acquisitions we may make, including CyOptics; delays, challenges and expenses associated with integrating acquired companies, including CyOptics, with our existing businesses; 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 any associated increases in litigation expenses; dependence on and risks associated with distributors of our products; any expenses or reputational damage associated with resolving customer product and warranty and indemnification claims; 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 13, 2013 and 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.

CONTACT: Avago Technologies Limited
         Bin Jiang
         Investor Relations
         +1 408 435 7400
         investor.relations@avagotech.com