Avago technologies limited announces third quarter fiscal year 2011
financial results
San jose, calif. & singapore--(business wire)--avago technologies limited (nasdaq:avgo), a leading supplier of analog interface components for communications, industrial and consumer applications, today reported financial results for the third quarter of its fiscal year 2011, ended july 31, 2011, and provided guidance for the fourth quarter of its fiscal year 2011. third quarter fiscal year 2011 gaap results net revenue was $603 million, an increase of 8 percent compared with the previous quarter, and up 10 percent from the same quarter last year. gross margin was $297 million, or 49.3 percent of net revenue. this compares with gross margin of $275 million, or 49.1 percent of net revenue last quarter, and gross margin of $263 million, or 47.8 percent of net revenue in the same quarter last year. operating expenses were $152 million. this compares with $137 million in the prior quarter and $128 million in the same quarter the previous year. the increase this quarter was primarily due to increased investment in research and development. income from operations was $145 million. this compares with $138 million in the prior quarter and $135 million in the same quarter last year. third quarter net income was $144 million, or $0.57 per diluted share. this compares with net income of $135 million, or $0.54 per diluted share last quarter, and net income of $123 million, or $0.50 per diluted share in the same quarter last year. the company’s cash and cash equivalents balance at the end of the third quarter was $704 million, compared to $596 million at the end of the prior quarter. the increase over the previous quarter is primarily due to cash provided by operating activities of $211 million. during the quarter the company repurchased and cancelled approximately 1.9 million ordinary shares for an aggregate $68 million and spent $24 million on capital expenditures. in addition, on june 30, 2011 the company paid a quarterly cash dividend of 9 cents ($0.09) per ordinary share, totaling approximately $22 million. third quarter fiscal year 2011 non-gaap results gross margin was $312 million, or 51.7 percent of net revenue. this compares with gross margin of $290 million, or 51.8 percent of net revenue last quarter, and gross margin of $280 million, or 50.9 percent of net revenue in the same quarter last year. income from operations was a record $177 million. this compares with $167 million in the prior quarter and $164 million in the same quarter the previous year. net income was $176 million, or $0.68 per diluted share. this compares with net income of $165 million, or $0.64 per diluted share last quarter, and net income of $152 million, or $0.61 per diluted share in the same quarter last year. “during the third quarter of fiscal 2011, our four target markets performed as we expected and we outperformed these markets as our revenue growth for the quarter came in at the high end of guidance,” said hock tan, president and ceo of avago technologies limited. “while uncertainties prevail in the global economy today, we continue to believe revenue will grow for the balance of the fiscal year due to share gains with certain wireless and wired oems.” other quarterly data q3 11 q2 11 q3 10 q/q y/y q3 11 q2 11 q3 10 fourth quarter fiscal year 2011 business outlook based on current business trends, the outlook for the fourth fiscal quarter of 2011, ending october 30, 2011, is expected to be as follows: gaap reconciling items non-gaap up 2% to 5% up 2% to 5% reconciling items include $14 million of amortization of acquisition-related intangibles and $1 million of share-based compensation expense at the gross margin line and $6 million of amortization of acquisition-related intangibles, $10 million of share-based compensation and $3 million of restructuring charges at the operating expenses line. 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 from mergers and acquisitions 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 citigroup investor conference in new york on september 8, 2011 and at the deutsche bank technology conference in las vegas on september 13, 2011. both of these presentations will be webcast and available for replay on the “investors” section of avago’s website at www.avagotech.com. financial results conference call avago technologies limited will host a conference call to review its financial results for the third quarter of fiscal year 2011, and to provide guidance for the fourth quarter of fiscal year 2011, today at 2:00 p.m. pacific time. those wishing to access the call should dial 800-510-9691; international 617-614-3453. the passcode is 79271201. a replay of the call will be available through august 30, 2011. to access the replay dial 888-286-8010; international 617-801-6888 and reference the passcode: 66835073. a webcast of the conference call will also be available in the “investors” section of avago’s website. non-gaap financial measures in addition to gaap reporting, avago provides investors with net income or loss, 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 and debt extinguishment losses. 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 over 6,500 products in four primary target markets: wireless communications, wired infrastructure, industrial and automotive electronics and consumer and computing peripherals. 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; cyclicality in the semiconductor industry or in our target markets; quarterly and annual fluctuations in operating results; our competitive performance and ability to continue achieving design wins with our customers; our increased dependence on outsourced service providers for certain key business services and their ability to execute to our requirements; our dependence on contract manufacturing and outsourced supply chain; loss of our significant customers; our ability to generate cash sufficient to fund our research and development, capital expenditures and other business needs; 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; any expenses associated with resolving customer product and warranty and indemnification claims; costs associated with and our ability to achieve the growth prospects and synergies expected from our acquisitions; delays and challenges associated with integrating acquired companies with our existing businesses; our ability to improve our cost structure through our manufacturing outsourcing program; 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 june 9, 2011 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. 2011 (1)
