An affiliate of Avago Finance has filed a registration statement with the SEC relating to a proposed offering which has not yet become effective. Such securities may not be sold nor may offers to buy be accepted prior to the time that the registration statement becomes effective. This press release is not an offer to sell nor a solicitation of an offer to buy any securities.
| AVAGO TECHNOLOGIES FINANCE PTE. LTD. | ||||||||||||||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - UNAUDITED | ||||||||||||||||||||
| (IN MILLIONS) | ||||||||||||||||||||
| Quarter ended | Year ended | |||||||||||||||||||
| November 2, | August 3, | October 31, | November 2, | October 31, | ||||||||||||||||
| 2008 | 2008 | 2007 | 2008 |
2007 |
||||||||||||||||
| Net revenue | $ | 447 | $ | 439 | $ | 391 | $ | 1,699 | $ | 1,527 | ||||||||||
| Costs and expenses: | ||||||||||||||||||||
| Cost of products sold: | ||||||||||||||||||||
| Cost of products sold | 263 | 251 | 241 | 981 | 936 | |||||||||||||||
| Amortization of intangible assets | 15 | 14 | 15 | 57 | 60 | |||||||||||||||
| Asset impairment charges | - | - | - | - | 140 | |||||||||||||||
| Restructuring charges | 1 | 3 | 6 | 6 | 29 | |||||||||||||||
| Total cost of products sold | 279 | 268 | 262 | 1,044 | 1,165 | |||||||||||||||
| Research and development | 69 | 68 | 51 | 265 | 205 | |||||||||||||||
| Selling, general and administrative | 48 | 50 | 45 | 196 | 193 | |||||||||||||||
| Amortization of intangible assets | 7 | 7 | 7 | 28 | 28 | |||||||||||||||
| Asset impairment charges | - | - | - | - | 18 | |||||||||||||||
| Restructuring charges | 1 | 2 | 8 | 6 | 22 | |||||||||||||||
| Acquired in-process research & development | - | - | - | - | 1 | |||||||||||||||
| Total costs and expenses | 404 | 395 | 373 | 1,539 | 1,632 | |||||||||||||||
| Income (loss) from operations | 43 | 44 | 18 | 160 | (105 | ) | ||||||||||||||
| Interest expense | (21 | ) | (20 | ) | (26 | ) | (86 | ) | (109 | ) | ||||||||||
| Loss on extinguishment of debt | - | - | (1 | ) | (10 | ) | (12 | ) | ||||||||||||
| Other income (expense), net | (6 | ) | - | 6 | (4 | ) | 14 | |||||||||||||
| Income (loss) from continuing operations before income taxes | 16 | 24 | (3 | ) | 60 | (212 | ) | |||||||||||||
| Provision for (benefit from) income taxes | (9 | ) | 5 | 2 | 3 | 8 | ||||||||||||||
| Income (loss) from continuing operations | 25 | 19 | (5 | ) | 57 | (220 | ) | |||||||||||||
| Income (loss) from and gain (loss) on discontinued operations, net of income taxes | (7 | ) | 25 | 3 | 26 | 61 | ||||||||||||||
| Net income (loss) | $ | 18 | $ | 44 | $ | (2 | ) | $ | 83 | $ | (159 | ) | ||||||||
| AVAGO TECHNOLOGIES FINANCE PTE. LTD. | ||||||||||||||||||||
| FINANCIAL SUMMARY (NON-GAAP) - UNAUDITED | ||||||||||||||||||||
| (IN MILLIONS, except percentages) | ||||||||||||||||||||
| Quarter ended | Year ended | |||||||||||||||||||
| November 2, | August 3, | October 31, | November 2, | October 31, | ||||||||||||||||
| 2008 | 2008 | 2007 | 2008 | 2007 |
|
|||||||||||||||
| Net revenue | $ | 447 | $ | 439 | $ | 391 | $ | 1,699 | $ | 1,527 | ||||||||||
| Gross margin | 184 | 188 | 150 | 718 | 592 | |||||||||||||||
| % of net revenue | 41 | % | 43 | % | 38 | % | 42 | % | 39 | % | ||||||||||
| Research and development | $ | 68 | $ | 67 | $ | 51 | $ | 262 | $ | 205 | ||||||||||
| Selling, general and administrative | $ | 46 | $ | 48 | $ | 46 | $ | 184 | $ | 182 | ||||||||||
| Total operating expenses | $ | 114 | $ | 115 | $ | 97 | $ | 446 | $ | 387 | ||||||||||
| % of net revenue | 26 | % | 26 | % | 25 | % | 26 | % | 25 | % | ||||||||||
| Income from operations | $ | 70 | $ | 73 | $ | 53 | $ | 272 | $ | 205 | ||||||||||
| Interest expense | $ | (21 | ) | $ | (20 | ) | $ | (26 | ) | $ | (86 | ) | $ | (109 | ) | |||||
| Net income | $ | 52 | $ | 48 | $ | 31 | $ | 179 | $ | 102 | ||||||||||
| The financial summary excludes amortization of acquisition-related intangibles, share-based compensation, restructuring and asset impairment charges, acquired in-process research and development, loss on extinguishment of debt, and income (loss) from and gain (loss) on discontinued operations. | ||||||||||||||||||||
| AVAGO TECHNOLOGIES FINANCE PTE. LTD. | |||||||||||||||||||
| FINANCIAL BRIDGE: GAAP TO NON-GAAP - UNAUDITED | |||||||||||||||||||
| (IN MILLIONS) | |||||||||||||||||||
| Quarter ended | Year ended | ||||||||||||||||||
| November 2, | August 3, | October 31, | November 2, | October 31, | |||||||||||||||
| 2008 | 2008 | 2007 | 2008 | 2007 | |||||||||||||||
| Net income (loss) on GAAP basis | $ | 18 | $ | 44 | $ | (2 | ) | $ | 83 | $ | (159 | ) | |||||||
|
Amortization of acquisition-related intangibles |
|||||||||||||||||||
| Cost of products sold | 15 | 14 | 15 | 57 | 60 | ||||||||||||||
| Operating Expenses | 7 | 7 | 7 | 28 | 28 | ||||||||||||||
| 22 | 21 | 22 | 85 | 88 | |||||||||||||||
| Share-based compensation expense | |||||||||||||||||||
| Cost of products sold | - | - | - | - | 1 | ||||||||||||||
| Operating Expenses | 3 | 3 | (1 | ) | 15 | 11 | |||||||||||||
| 3 | 3 | (1 | ) | 15 | 12 | ||||||||||||||
| Asset impairment charges | |||||||||||||||||||
| Cost of products sold | - | - | - | - | 140 | ||||||||||||||
| Operating Expenses | - | - | - | - | 18 | ||||||||||||||
| - | - | - | - | 158 | |||||||||||||||
| Restructuring charges | |||||||||||||||||||
| Cost of products sold | 1 | 3 | 6 | 6 | 29 | ||||||||||||||
| Operating Expenses | 1 | 2 | 8 | 6 | 22 | ||||||||||||||
| 2 | 5 | 14 | 12 | 51 | |||||||||||||||
| Acquired in-process research & development | - | - | - | - | 1 | ||||||||||||||
| Loss on extinguishment of debt | - | - | 1 | 10 | 12 | ||||||||||||||
| (Income) loss from and (gain) loss on discontinued operations | 7 | (25 | ) | (3 | ) | (26 | ) | (61 | ) | ||||||||||
| 2 | 2 | ||||||||||||||||||
| Net income on Non-GAAP basis | $ | 52 | $ | 48 | $ | 31 | $ | 179 | $ | 102 | |||||||||
|
To supplement our unaudited condensed consolidated financial statements presented in accordance with GAAP, we have shown above a non-GAAP presentation of the Company’s net income, which is adjusted to reflect the GAAP results excluding amortization of acquisition-related intangibles, share-based compensation, restructuring and asset impairment charges, acquired in-process research and development, loss on extinguishment of debt, and (income) loss from and (gain) loss on discontinued operations. This non-GAAP presentation is provided to enhance the reader's overall understanding of the comparability of the Company's financial performance among periods. |
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| AVAGO TECHNOLOGIES FINANCE PTE. LTD. | ||||||||||||||||||||
| RECONCILIATION OF NET INCOME (LOSS) TO EBITDA AND ADJUSTED EBITDA - UNAUDITED | ||||||||||||||||||||
| (IN MILLIONS) | ||||||||||||||||||||
| Quarter ended | Year ended | |||||||||||||||||||
| November 2, | August 3, | October 31, | November 2, | October 31, | ||||||||||||||||
| 2008 | 2008 | 2007 | 2008 | 2007 | ||||||||||||||||
| Net income (loss) | $ | 18 | $ | 44 | $ | (2 | ) | $ | 83 | $ | (159 | ) | ||||||||
| Interest expense | 21 | 20 | 26 | 86 | 109 | |||||||||||||||
| Provision for (benefit from) income taxes | (9 | ) | 5 | 2 | 3 | 8 | ||||||||||||||
| Depreciation and amortization expense | 42 | 40 | 42 | 159 | 176 | |||||||||||||||
| EBITDA | 72 | 109 | 68 | 331 | 134 | |||||||||||||||
| Asset impairment charges | - | - | - | - | 158 | |||||||||||||||
| Restructuring and other unusual charges | 6 | 7 | 15 | 20 | 57 | |||||||||||||||
| Purchase accounting adjustments | - | - | 2 | 1 | 16 | |||||||||||||||
| Share-based compensation | 3 | 3 | (1 | ) | 15 | 12 | ||||||||||||||
| Loss on extinguishment of debt | - | - | 1 | 10 | 12 | |||||||||||||||
| (Income) loss from and (gain) loss on discontinued operations | 7 | (25 | ) | (3 | ) | (26 | ) | (61 | ) | |||||||||||
| Adjusted EBITDA | $ | 88 | $ | 94 | $ | 82 | $ | 351 | $ | 328 | ||||||||||
| EBITDA represents net income (loss) before interest expense, provision for income taxes, depreciation and amortization. Adjusted EBITDA is defined as EBITDA further adjusted to give effect to certain items that are required in calculating covenant compliance under our senior and senior subordinated notes as well as under our senior secured credit facility. Adjusted EBITDA is calculated by subtracting from or adding to EBITDA items of income or expense described above. EBITDA and Adjusted EBITDA do not represent net income (loss), as that term is defined under GAAP, and should not be considered as an alternative to net income as an indicator of our operating performance. | ||||||||||||||||||||
| Additionally, EBITDA and Adjusted EBITDA are not intended to be measures of free cash flow available for management or discretionary use as such measures do not consider certain cash requirements such as capital expenditures, tax payments and debt service requirements. EBITDA and Adjusted EBITDA as presented herein are not necessarily comparable to similarly titled measures. | ||||||||||||||||||||
| AVAGO TECHNOLOGIES FINANCE PTE. LTD. | ||||||||
| CONDENSED CONSOLIDATED BALANCE SHEETS - UNAUDITED | ||||||||
| (IN MILLIONS) | ||||||||
| November 2, | October 31, | |||||||
| 2008 | 2007 (1) | |||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 213 | $ | 309 | ||||
| Trade accounts receivable, net | 184 | 218 | ||||||
| Inventory | 188 | 140 | ||||||
| Assets of discontinued operations | - | 25 | ||||||
| Other current assets | 34 | 25 | ||||||
| Total current assets | 619 | 717 | ||||||
| Property, plant and equipment, net | 299 | 292 | ||||||
| Goodwill | 169 | 122 | ||||||
| Intangible assets, net | 721 | 777 | ||||||
| Other long-term assets | 61 | 43 | ||||||
| Total assets | $ | 1,869 | $ | 1,951 | ||||
| LIABILITIES AND SHAREHOLDER'S EQUITY | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 174 | $ | 194 | ||||
| Employee compensation and benefits | 74 | 56 | ||||||
| Accrued interest | 32 | 34 | ||||||
| Capital lease obligations - current | 2 | 2 | ||||||
| Other current liabilities | 48 | 44 | ||||||
|
Total current liabilities |
330 | 330 | ||||||
| Long-term liabilities: | ||||||||
| Long-term debt | 703 | 903 | ||||||
| Capital lease obligations - non-current | 5 | 4 | ||||||
| Other long-term liabilities | 55 | 30 | ||||||
| Total liabilities | 1,093 | 1,267 | ||||||
| Shareholder's equity: | ||||||||
| Ordinary shares, no par value | 1,080 | 1,066 | ||||||
| Accumulated deficit | (312 | ) | (386 | ) | ||||
| Accumulated other comprehensive income | 8 | 4 | ||||||
| Total shareholder's equity | 776 | 684 | ||||||
| Total liabilities and shareholder's equity | $ | 1,869 | $ | 1,951 | ||||
| (1) Amounts as of October 31, 2007 have been derived from audited financial statements as of that date. | ||||||||
| AVAGO TECHNOLOGIES FINANCE PTE. LTD. | ||||||||||||||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - UNAUDITED | ||||||||||||||||||||
| (IN MILLIONS) | ||||||||||||||||||||
| Quarter ended | Year ended | |||||||||||||||||||
| November 2, | August 3, | October 31, | November 2, | October 31, | ||||||||||||||||
| 2008 | 2008 | 2007 | 2008 | 2007 | ||||||||||||||||
| Cash flows from operating activities: | ||||||||||||||||||||
| Net income (loss) | $ | 18 | $ | 44 | $ | (2 | ) | $ | 83 | $ | (159 | ) | ||||||||
| Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||||||||||||||||||||
| Depreciation and amortization | 42 | 40 | 42 | 159 | 176 | |||||||||||||||
| Amortization of debt issuance costs | 1 | 1 | 1 | 4 | 4 | |||||||||||||||
| Asset impairment charges | - | - | - | - | 158 | |||||||||||||||
| (Gain) loss on sale of discontinued operations | 7 | (25 | ) | (3 | ) | (27 | ) | (61 | ) | |||||||||||
| Non-cash portion of restructuring charges | - | - | 3 | - | 4 | |||||||||||||||
| Acquired in-process research & development | - | - | - | - | 1 | |||||||||||||||
| Loss on extinguishment of debt | - | - | 1 | 6 | 12 | |||||||||||||||
| Loss on disposal of property, plant and equipment | 1 | 1 | - | 2 | 2 | |||||||||||||||
| Share-based compensation | 3 | 3 | (1 | ) | 15 | 12 | ||||||||||||||
| Changes in assets and liabilities, net of acquisitions and dispositions: | ||||||||||||||||||||
| Trade accounts receivable | 29 | - | 1 | 38 | (31 | ) | ||||||||||||||
| Inventory | 7 | (27 | ) | (2 | ) | (45 | ) | 28 | ||||||||||||
| Accounts payable | - | 12 | 29 | (29 | ) | 29 | ||||||||||||||
| Employee compensation and benefits | 4 | 16 | 6 | 18 | (12 | ) | ||||||||||||||
| Other current assets and current liabilities | 21 | (8 | ) | 48 | (20 | ) | (28 | ) | ||||||||||||
| Other long-term assets and long-term liabilities | (22 | ) | 3 | (3 | ) | (3 | ) | 9 | ||||||||||||
| Net cash provided by operating activities | 111 | 60 | 120 | 201 | 144 | |||||||||||||||
| Cash flows from investing activities: | ||||||||||||||||||||
| Purchase of property, plant and equipment | (18 | ) | (19 | ) | (10 | ) | (65 | ) | (37 | ) | ||||||||||
| Purchase of intangible assets | - | - | - | (6 | ) | - | ||||||||||||||
| Acquisitions and investment, net of cash acquired | (32 | ) | - | - | (78 | ) | (27 | ) | ||||||||||||
| Proceeds from disposal of property, plant, and equipment | 5 | - | - | 5 | - | |||||||||||||||
| Proceeds from sale of discontinued operations | - | 25 | 4 | 50 | 69 | |||||||||||||||
| Net cash (used in) provided by investing activities | (45 | ) | 6 | (6 | ) | (94 | ) | 5 | ||||||||||||
| Cash flows from financing activities: | ||||||||||||||||||||
| Debt repayments | - | (2 | ) | (15 | ) | (202 | ) | (107 | ) | |||||||||||
| Cash settlement of equity awards | (1 | ) | - | (4 | ) | (2 | ) | (5 | ) | |||||||||||
| Payment on capital lease obligation | - | - | - | - | (1 | ) | ||||||||||||||
| Excess tax benefits from share-based compensation | - | 1 | 1 | 1 | 1 | |||||||||||||||
| Net cash used in financing activities | (1 | ) | (1 | ) | (18 | ) | (203 | ) | (112 | ) | ||||||||||
| Net increase (decrease) in cash and cash equivalents | 65 | 65 | 96 | (96 | ) | 37 | ||||||||||||||
| Cash and cash equivalents at the beginning of period | 148 | 83 | 213 | 309 | 272 | |||||||||||||||
| Cash and cash equivalents at end of period | $ | 213 | $ | 148 | $ | 309 | $ | 213 | $ | 309 | ||||||||||
