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Avago Technologies Limited Announces Third Quarter Fiscal Year 2014 Financial Results

Avago Technologies Limited Announces Third Quarter Fiscal Year 2014 Financial Results    *GAAP gross margin from continuing operations of 31 percent; Non-GAAP gross     margin from continuing operations of 57 percent   *GAAP diluted EPS loss of $0.65; Non-GAAP diluted EPS from continuing     operations of $1.26   *Fourth fiscal quarter revenue from continuing operations projected to be     up 18-22% sequentially  SAN JOSE, Calif., and SINGAPORE, Aug. 28, 2014 (GLOBE NEWSWIRE) -- Avago Technologies Limited (Nasdaq:AVGO), a leading semiconductor device supplier to the enterprise storage, wired, wireless and industrial end markets, today reported financial results for the third quarter of its fiscal year 2014, ended August 3, 2014, and provided guidance for the fourth quarter of its fiscal year 2014.  Basis of Presentation  On May 29, 2014, Avago entered into a definitive agreement to sell LSI's flash businesses to Seagate Technology plc and on August 13, 2014, Avago entered into a definitive agreement to sell its Axxia networking business to Intel Corporation, both of which transactions are currently expected to close in Avago's fourth fiscal quarter of 2014. Therefore the financial results from the flash and Axxia businesses, both of which were acquired by Avago in the LSI transaction, 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 indicated.  Avago's results for its third fiscal quarter of 2014 include the results from continuing operations of the acquired LSI businesses for the full quarter, while the prior periods presented do not, as the LSI acquisition was completed at the beginning of the third fiscal quarter. The financial results provided below for the third fiscal quarter do not include any operating results of PLX Technology, Inc., which the Company acquired on August 12, 2014, after the end of the third quarter.  Third Quarter Fiscal Year 2014 Total Revenue Compared to Guidance  Avago's guidance for its third fiscal quarter of 2014 included expected contributions from both the flash and Axxia businesses. On a comparable basis, including contributions from these businesses, which have been classified as discontinued operations, GAAP net revenue for the third quarter of fiscal year 2014 would have been $1,373 million and non-GAAP net revenue would have been $1,394 million.  Third Quarter Fiscal Year 2014 GAAP Results from Continuing Operations  Net revenue from continuing operations was $1,269 million, an increase of 81 percent compared with the previous quarter and an increase of 97 percent from the same quarter last year.  Gross margin from continuing operations was $393 million, or 31 percent of net revenue. This compares with gross margin of $357 million, or 51 percent of net revenue last quarter, and gross margin of $304 million, or 47 percent of net revenue in the same quarter last year.  Operating expenses from continuing operations were $555 million. This compares with $197 million in the prior quarter and $164 million for the same quarter last year.  Loss from operations was $162 million. This compares with income from operations of $160 million in the prior quarter and with income from operations of $140 million in the same quarter last year.  Third quarter net loss was $164 million, or ($0.65) per diluted share. This compares with net income of $158 million, or $0.61 per diluted share, for the prior quarter, and net income of $142 million, or $0.56 per diluted share, in the same quarter last year.  The Company's cash balance at the end of the third fiscal quarter was $1,277 million, prior to the closing of the PLX Technology transaction, compared to $1,278 million at the end of the prior quarter which was prior to the closing of the LSI transaction.  The Company generated $314 million in cash from operations in the third quarter and spent $95 million on capital expenditures.  On June 30, 2014 the Company paid a quarterly cash dividend of $0.29 per ordinary share, totaling approximately $73 million.  Third Quarter Fiscal Year 2014 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 $1,287 million.  Gross margin from continuing operations was $735 million, or 57 percent of net revenue. This compares with gross margin of $381 million, or 54 percent of net revenue last quarter, and gross margin of $328 million, or 51 percent of net revenue in the same quarter last year.  Income from continuing operations was $428 million. This compares with $233 million in the prior quarter and $191 million in the same quarter last year.  Net income from continuing operations was $347 million, or $1.26 per diluted share. This compares with net income of $223 million, or $0.85 per diluted share last quarter, and net income of $188 million, or $0.74 per diluted share in the same quarter last year.  Third Quarter Fiscal Year 2014 Non-GAAP                       Change Results (Dollars in millions, except EPS)            Q3 14  Q2 14 Q3 13 Q/Q    Y/Y Net Revenue                                   $1,287 $701  $644  +84%   +100% Gross Margin                                  57%    54%   51%   +3ppt  +6ppt Operating Expenses                            $307   $148  $137  +$159  +$170 Net Income                                    $347   $223  $188  +$124  +$159 Earnings Per Share - Diluted                  $1.26  $0.85 $0.74 +$0.41 +$0.52  "In the third fiscal quarter of the year, our first quarter operating as a combined Avago and LSI business, we experienced strength in all our end markets," said Hock Tan, President and CEO of Avago Technologies Limited. "We made substantial progress integrating the two companies and took decisive steps to reshape the business, announcing the sales of the non-core Flash and Axxia businesses. We expect both of these actions to significantly improve our operating performance going forward."  Other Quarterly Data                                      Percentage of Net Revenue Growth Rates Net Revenue by Target Market         Q3 14*    Q2 14   Q3 13   Q/Q    Y/Y Enterprise Storage                   32        N/A     N/A     N/A    N/A Wireless Communications              28        50      45      5%     26% Wired Infrastructure                 27        31      31      59%    73% Industrial & Other                   13        19      24      27%    10%                                                                   * Represents percentages of non-GAAP net revenue                                                                   Key Statistics (Dollars in millions) Q3 14     Q2 14   Q3 13          Cash From Operations                 $314      $251    $137           Depreciation                         $46       $35     $26            Amortization                         $211      $26     $20            Capital Expenditures                 $95       $73     $65            Non-GAAP Days Sales Outstanding      39        42      52             Non-GAAP Inventory Days On Hand      79        86      82              Fourth Quarter Fiscal Year 2014 Business Outlook  Based on current business trends and conditions, the outlook for continuing operations for the fourth quarter of fiscal year 2014, ending November 2, 2014, including projected contribution from the PLX Technology business, is expected to be as follows:                     GAAP                Reconciling Items Non-GAAP Revenue Range       Up 18% to 22%       $20M              Up 18% to 22% Gross Margin        46.5% plus/minus 1% $152M             56.0% plus/minus 1% Operating Expenses  $479M               $172M             $307M Interest and Other  $53M                                 $53M Taxes               -$55M               $93               $38M Diluted Share Count 271M                8M                279M  Reconciling items include:    *Non-GAAP Revenue includes $20 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 $20 million of LSI intellectual property     licensing revenue and excludes $106 million of amortization of intangible     assets, $6 million of share-based compensation expense, $4 million of     restructuring charges, and $16 million of inventory step-up charges to     record PLX inventory at fair value, as part of the purchase accounting for     the PLX Technology acquisition;   *Non-GAAP Operating Expenses exclude $90 million of amortization of     intangible assets, $46 million of share-based compensation, $22 million of     restructuring charges, and $14 million of acquisition-related costs; and   *$93 million provision at the Taxes line, which represents the tax effects     of the reconciling items noted above.  Capital expenditures for the fourth quarter are expected to be approximately $220 million. For the fourth quarter depreciation is expected to be $50 million and amortization is expected to be $196 million.  The guidance provided above is only an estimate of what the Company believes is realizable as of the date of this release, and does not include any contribution from the Flash and Axxia businesses, which are classified as discontinued operations. Among other things, this guidance is based on an initial estimate of purchase accounting adjustments and allocations, for the PLX transaction, all of which are subject to revision. The guidance also excludes any impact from any further 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 presenting at the Deutsche Bank Technology Conference in Las Vegas on September 10, 2014.   Financial Results Conference Call  Avago Technologies Limited will host a conference call to review its financial results for the third quarter fiscal year 2014, and to provide guidance for the fourth quarter of fiscal year 2014, today at 2:00 p.m. Pacific Time. Those wishing to access the call should dial (800) 591-6942; International +1 (617) 614-4909. The passcode is 86582481. A replay of the call will be accessible one week after the call. To access the replay dial (888) 286-8010; International +1 (617) 801-6888; and reference the passcode: 96631549. 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 includes the effect of purchase accounting on revenues, excludes amortization of intangible assets, share-based compensation expense, restructuring charges, acquisition-related costs, purchase accounting effect on inventory, loss from 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 semiconductor devices with a focus on III-V based products and complex digital and mixed signal CMOS based devices. Our product portfolio is extensive and includes thousands of products in four primary target markets:enterprise storage, wired infrastructure, wireless communications 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. Particular uncertainties that could materially affect future results include our ability to integrate and realize the expected benefits from our acquisition of LSI Corporation ("LSI"); loss of our significant customers; global economic conditions and concerns; cyclicality in the semiconductor industry or in our target markets; quarterly and annual fluctuations in operating results; fluctuation in the timing and volume of customer demand; increased dependence on the volatile, wireless handset market and on the enterprise storage market; delays, challenges and expenses associated with integrating acquired companies, including LSI and PLX Technology, Inc. ("PLX"), with our existing businesses and our ability to achieve the growth prospects and synergies expected from acquisitions we may make, including our recent acquisitions of LSI and PLX; 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; our ability to sell to new types of customers and to keep pace with technological advances; rates of growth in our target markets; failure to complete our planned asset dispositions, including the sale of LSI's flash businesses and the sale of the Axxia products business; the significant indebtedness incurred by us in connection with the LSI acquisition, including the need to generate sufficient cashflows to service and repay such debt; 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 Report on Form 10-Q filed on June 10, 2014 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      Three Fiscal Quarters                                                          Ended                             August 3, May 4,  August 4, August 3,  August 4,                             2014      2014    2013      2014       2013                                                                 Net revenue                  $1,269  $701  $644    $2,679   $1,782 Cost of products sold:                                           Cost of products sold        560      326    321      1,233     883 Purchase accounting effect   200      --     4        200       4 on inventory Amortization of intangible   105      18     14       141       42 assets Restructuring charges        11       --     1        16        1 Total cost of products sold  876      344    340      1,590     930 Gross margin                 393      357    304      1,089     852 Research and development     240      114    101      461       289 Selling, general and         137      67     57       278       162 administrative Amortization of intangible   91       8      6        106       17 assets Restructuring charges        87       8      --       107       2 Total operating expenses     555      197    164      952       470 (Loss)/income from           (162)    160    140      137       382 operations Interest expense             (55)     (1)    (1)      (56)      (2) Other (expense)/income, net  (2)      --     5        (2)       8 (Loss)/income before income  (219)    159    144      79        388 taxes (Benefit from)/provision for (99)     1      2        (93)      8 income taxes (Loss)/income from           (120)    158    142      172       380 continuing operations Loss from discontinued operations, net of income    (44)     --     --       (44)      -- taxes Net (loss)/income            $(164)  $158  $142    $128     $380                                                                                                                                 Basic (loss)/income per                                          share: (Loss)/income from           $(0.48) $0.63 $0.57   $0.69    $1.54 continuing operations Loss from discontinued operations, net of income    $(0.17) $--  $--    $(0.18)  $-- taxes Net (loss)/income            $(0.65) $0.63 $0.57   $0.51    $1.54                                                                 Diluted (loss)/income per                                        share: (Loss)/income from           $(0.48) $0.61 $0.56   $0.65    $1.51 continuing operations Loss from discontinued operations, net of income    $(0.17) $--  $--    $(0.17)  $-- taxes Net (loss)/income            $(0.65) $0.61 $0.56   $0.48    $1.51                                                                 Shares used in per share                                         calculations: Basic                        252      251    248      251       246 Diluted                      252      258    252      265       251                                                                 Share-based compensation expense included in                                              continuing operations: Cost of products sold        $6      $3    $3      $12      $7 Research and development     20       10     8        38        22 Selling, general and         24       17     9        54        26 administrative Total share-based            $50     $30   $20     $104     $55 compensation expense                                                                                                                                  AVAGO TECHNOLOGIES LIMITED NON-GAAP FINANCIAL SUMMARY- UNAUDITED (1) (IN MILLIONS, EXCEPT PERCENTAGES AND PER SHARE DATA)                                                                                     Fiscal Quarter Ended           Three Fiscal Quarters                                                        Ended                      August 3,   May 4,    August 4,  August 3,   August 4,                      2014        2014      2013       2014        2013                                                                Net revenue           $1,287    $701    $644     $2,697    $1,782 Gross margin          $735      $381    $328     $1,482    $908 % of net revenue      57%         54%       51%        55%         51% Research and          $219      $101    $91      $418      $265 development Selling, general and  $88       $47     $46      $179      $132 administrative Total operating       $307      $148    $137     $597      $397 expenses % of net revenue      24%         21%       21%        22%         22% Income from           $428      $233    $191     $885      $511 operations Income before income  $371      $232    $195     $827      $517 taxes Provision for income  $24       $9      $7       $40       $13 taxes                                                                Net income            $347      $223    $188     $787      $504 Net income per share  $1.26     $0.85   $0.74    $2.90     $1.99 - diluted Shares used in per share calculation -   276        263      253       271        253 diluted                                                                (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 acquisition-related revenue adjustments, purchase accounting effect on inventory, amortization of intangible assets, share-based compensation expense, restructuring charges, acquisition-related costs, loss from discontinued operations and income tax effects of non-GAAP reconciling adjustments.    AVAGO TECHNOLOGIES LIMITED FINANCIAL RECONCILIATION: GAAP TO NON-GAAP - UNAUDITED (IN MILLIONS, EXCEPT DAYS)                                                                                          Fiscal Quarter Ended        Three Fiscal Quarters                                                         Ended                          August 3,  May 4,  August 4,  August 3,   August 4,                          2014       2014    2013       2014        2013                                                                 Net revenue on GAAP basis $1,269   $701  $644     $2,679    $1,782 Acquisition-related purchase accounting       18        --     --        18         -- revenue adjustment Net revenue on non-GAAP   $1,287   $701  $644     $2,697    $1,782 basis                                                                 Net revenue on GAAP basis $1,269   $701  $644     $2,679    $1,782 Net revenue contribution from discontinued         104       --     --        104        -- operations Net revenue on GAAP basis including discontinued    1,373     701    644       2,783      1,782 operations Acquisition-related purchase accounting       18        --     --        18         -- revenue adjustment from continuing operations Acquisition-related purchase accounting       3         --     --        3          -- revenue adjustment from discontinued operations Net revenue on non-GAAP basis including           $1,394   $701  $644     $2,804    $1,782 discontinued operations                                                                 Gross margin on GAAP      $393     $357  $304     $1,089    $852 basis Acquisition-related purchase accounting       18        --     --        18         -- revenue adjustment Purchase accounting       200       --     4         200        4 effect on inventory Amortization of           105       18     14        141        42 intangible assets Share-based compensation  6         3      3         12         7 expense Restructuring charges     11        --     1         16         1 Acquisition-related costs 2         3      2         6          2 Gross margin on non-GAAP  $735     $381  $328     $1,482    $908 basis                                                                 Research and development  $240     $114  $101     $461      $289 on GAAP basis Share-based compensation  20        10     8         38         22 expense Acquisition-related costs 1         3      2         5          2 Research and development  $219     $101  $91      $418      $265 on non-GAAP basis                                                                 Selling, general and administrative expense on $137     $67   $57      $278      $162 GAAP basis Share-based compensation  24        17     9         54         26 expense Acquisition-related costs 25        3      2         45         4 Selling, general and administrative expense on $88      $47   $46      $179      $132 non-GAAP basis                                                                 Total operating expenses  $555     $197  $164     $952      $470 on GAAP basis Amortization of           91        8      6         106        17 intangible assets Share-based compensation  44        27     17        92         48 expense Restructuring charges     87        8      --        107        2 Acquisition-related costs 26        6      4         50         6 Total operating expenses  $307     $148  $137     $597      $397 on non-GAAP basis                                                                 (Loss)/income from        $(162)   $160  $140     $137      $382 operations on GAAP basis Acquisition-related purchase accounting       18        --     --        18         -- revenue adjustment Purchase accounting       200       --     4         200        4 effect on inventory Amortization of           196       26     20        247        59 intangible assets Share-based compensation  50        30     20        104        55 expense Restructuring charges     98        8      1         123        3 Acquisition-related costs 28        9      6         56         8 Income from operations on $428     $233  $191     $885      $511 non-GAAP basis                                                                 (Loss)/income before income taxes on GAAP      $(219)   $159  $144     $79       $388 basis Acquisition-related purchase accounting       18        --     --        18         -- revenue adjustment Purchase accounting       200       --     4         200        4 effect on inventory Amortization of           196       26     20        247        59 intangible assets Share-based compensation  50        30     20        104        55 expense Restructuring charges     98        8      1         123        3 Acquisition-related costs 28        9      6         56         8 Income before income      $371     $232  $195     $827      $517 taxes on non-GAAP basis                                                                 (Benefit from)/provision for income taxes on GAAP  $(99)    $1    $2       $(93)     $8 basis Income tax effects of non-GAAP reconciling      123       8      5         133        5 adjustments Provision for income      $24      $9    $7       $40       $13 taxes on non-GAAP basis                                                                 Net (loss)/income on GAAP $(164)   $158  $142     $128      $380 basis Acquisition-related purchase accounting       18        --     --        18         -- revenue adjustment Purchase accounting       200       --     4         200        4 effect on inventory Amortization of           196       26     20        247        59 intangible assets Share-based compensation  50        30     20        104        55 expense Restructuring charges     98        8      1         123        3 Acquisition-related costs 28        9      6         56         8 Income tax effects of non-GAAP reconciling      (123)     (8)    (5)       (133)      (5) adjustments Loss from discontinued operations, net of income 44        --     --        44         -- taxes Net income on non-GAAP    $347     $223  $188     $787      $504 basis                                                                 Shares used in per share calculation - diluted on  252       258    252       265        251 GAAP basis Non-GAAP adjustment       24        5      1         6          2 Shares used in per share calculation - diluted on  276       263    253       271        253 non-GAAP basis(1)                                                                 Days sales outstanding on 42                                     GAAP basis Non-GAAP adjustment       (3)                                    Days sales outstanding on 39                                     non-GAAP basis(2)                                                                 Inventory Days on Hand on 58        84     80                    GAAP basis Non-GAAP adjustment       21        2      2                     Inventory Days on Hand on 79        86     82                    non-GAAP basis(3)  (1) The number of shares used in the diluted per share calculations on a non-GAAP basis exclude 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 TARGET MARKET - UNAUDITED (IN MILLIONS, EXCEPT PERCENTAGES)                                                                                      Fiscal Quarter Ended                                                  August 3,                   May 4, August                                                                   4,                    2014                        2014   2013   Growth Rates                    GAAP          Non-GAAP      GAAP   GAAP   GAAP    Non-GAAP Net revenue by      $        %    $        %    $      $      Q/Q Y/Y Q/Q  Y/Y target market: Enterprise Storage  $404   32  $404   32  $--  $--  -- -- --  -- Wireless            364     29  364     28  348   288   5%  26% 5%   26% Communications Wired               352     27  349     27  219   202   61% 74% 59%  73% Infrastructure Industrial & Other  149     12  170     13  134   154   11% -3% 27%  10% Total net revenue   $1,269 100 $1,287 100 $701 $644                                                                                                                                                 AVAGO TECHNOLOGIES LIMITED CONDENSED CONSOLIDATED BALANCE SHEETS - UNAUDITED (IN MILLIONS)                                                                                                                                                                        August 3,       November 3,                                              2014            2013 (1) ASSETS                                                                                                                     Current assets:                                               Cash and cash equivalents                     $1,277        $985 Trade accounts receivable, net                590            418 Inventory                                     482            285 Assets held for sale                          1,029          -- Other current assets                          442            130 Total current assets                          3,820          1,818 Property, plant and equipment, net            1,016          661 Goodwill                                      1,526          391 Intangible assets, net                        3,620          492 Other long-term assets                        320            53 Total assets                                  $10,302       $3,415                                                              LIABILITIES AND SHAREHOLDERS' EQUITY                                                                                       Current liabilities:                                          Accounts payable                              $459          $278 Employee compensation and benefits            207            98 Current portion of long-term debt             46             -- Other current liabilities                     228            47 Total current liabilities                     940            423                                                              Long-term liabilities:                                        Pension and post-retirement benefit           481            62 obligations Long-term debt, less current portion          5,472          -- Other long-term liabilities                   311            44 Total liabilities                             7,204          529                                                              Shareholders' equity:                                         Ordinary shares, no par value                 1,875          1,587 Retained earnings                             1,230          1,305 Accumulated other comprehensive loss          (7)            (6) Total shareholders' equity                    3,098          2,886 Total liabilities and shareholders' equity    $10,302       $3,415                                                              (1) Amounts as of November 3, 2013 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          Three Fiscal Quarters                                                        Ended                       August 3,  May 4,    August 4,  August 3,   August 4,                       2014       2014      2013       2014        2013 (1) Cash flows from                                                 operating activities: Net (loss) income      $(164)   $158    $142     $128      $380                                                                Adjustments to reconcile net (loss) income to net cash                                              provided by operating activities:                                                                Depreciation and       257       61       46        375        129 amortization Share-based            55        30       20        109        55 compensation Tax benefits of share-based            (12)      8        6         --         6 compensation Excess tax benefits from share-based       11        (8)      (3)       --         (3) compensation Unrealized gain on     --        --       (4)       --         (5) trading securities Amortization of debt discount and debt      7         --       --        7          -- issuance costs Gain from post-retirement medical plan           --        --       --        (3)        -- curtailment and settlement Other                  10        --       3         10         4 Changes in assets and liabilities, net of                                             acquisitions: Trade accounts         11        4        (43)      110        27 receivable Inventory              215       (15)     (20)      199        (54) Accounts payable       (23)      8        11        (39)       13 Employee compensation  30        27       16        18         14 and benefits Other current assets and current            43        (4)      (33)      30         (54) liabilities Other long-term assets and long-term          (126)     (18)     (4)       (150)      (2) liabilities Net cash provided by   314       251      137       794        510 operating activities                                                                Cash flows from                                                 investing activities: Purchases of property, (95)      (73)     (65)      (220)      (179) plant and equipment Acquisitions, net of   (5,644)   --       (372)     (5,644)    (409) cash acquired Purchases of           --        --       (1)       --         (10) investments Proceeds from sale of  --        14       --        14         -- investment Net cash used in       (5,739)   (59)     (438)     (5,850)    (598) investing activities                                                                Cash flows from                                                 financing activities: Proceeds from          --        --       --        2          8 government grants Proceeds from term     4,600     --       --        4,600      -- loan borrowings Proceeds from issuance of convertible senior  1,000     --       --        1,000      -- notes Debt issuance costs    (124)     --       --        (124)      -- Payment on capital     (1)       --       --        (1)        (1) lease obligation Issuance of ordinary   33        34       32        86         60 shares Repurchases of         --        --       (38)      (12)       (62) ordinary shares Excess tax benefits from share-based       (11)      8        3         --         3 compensation Dividend payments to   (73)      (68)     (52)      (203)      (141) shareholders Net cash provided by (used in) financing    5,424     (26)     (55)      5,348      (133) activities                                                                Net increase (decrease) in cash and (1)       166      (356)     292        (221) cash equivalents Cash and cash equivalents at the     1,278     1,112    1,219     985        1,084 beginning of period Cash and cash equivalents at end of  $1,277   $1,278  $863     $1,277    $863 period                                                                (1) The statement of cash flows data for three fiscal quarters ended August 4, 2013 reflects a reclassification of $3 million of government grant reimbursements related to fixed assets from cash flows provided by operating activities to cash flows used in financing activities. As a result, net cash provided by operating activities and net cash used in financing activities for this period each decreased by a corresponding amount.                                                                 CONTACT: Avago Technologies Ltd.          Ashish Saran          Investor Relations          +1 408 435 7400          investor.relations@avagotech.com  company logo  
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