Avago Technologies Limited Announces Fourth Quarter and Fiscal

Avago Technologies Limited Announces Fourth Quarter and Fiscal Year 2015 Financial Results

AVAGO TECHNOLOGIES LIMITED
FINANCIAL RECONCILIATION: GAAP TO NON-GAAP - UNAUDITED
(IN MILLIONS, EXCEPT DAYS)


	Fiscal Quarter Ended									Fiscal Year Ended
	November 1,			August 2,			November 2,			November 1,			November 2,
		2015			2015			2014			2015			2014


Net revenue on GAAP basis	$	1,840		$	1,735		$	1,590		$	6,824		$	4,269
Acquisition-related purchase accounting revenue adjustment		13			15			20			81			38
Net revenue on non-GAAP basis	$	1,853		$	1,750		$	1,610		$	6,905		$	4,307


Gross margin on GAAP basis	$	997		$	884		$	788		$	3,553		$	1,877
Acquisition-related purchase accounting revenue adjustment		13			15			20			81			38
Purchase accounting effect on inventory		-			26			10			30			210
Amortization of intangible assets		129			129			108			484			249
Share-based compensation expense		7			7			6			26			18
Restructuring charges		2			2			6			7			22
Acquisition-related costs		1			-			1			3			7
Gross margin on non-GAAP basis	$	1,149		$	1,063		$	939		$	4,184		$	2,421


Research and development on GAAP basis	$	287		$	276		$	234		$	1,049		$	695
Share-based compensation expense		30			31			19			107			57
Acquisition-related costs		-			-			1			9			6
Research and development on non-GAAP basis	$	257		$	245		$	214		$	933		$	632


Selling, general and administrative expense on GAAP basis	$	118		$	143		$	129		$	486		$	407
Share-based compensation expense		26			25			24			99			78
Acquisition-related costs		11			33			16			62			61
Selling, general and administrative expense on non-GAAP basis	$	81		$	85		$	89		$	325		$	268


Total operating expenses on GAAP basis	$	483		$	585		$	487		$	1,921		$	1,439
Amortization of intangible assets		63			68			91			249			197
Share-based compensation expense		56			56			43			206			135
Restructuring and asset impairment charges		15			98			33			137			140
Acquisition-related costs		11			33			17			71			67
Total operating expenses on non-GAAP basis	$	338		$	330		$	303		$	1,258		$	900


Operating income on GAAP basis	$	514		$	299		$	301		$	1,632		$	438
Acquisition-related purchase accounting revenue adjustment		13			15			20			81			38
Purchase accounting effect on inventory		-			26			10			30			210
Amortization of intangible assets		192			197			199			733			446
Share-based compensation expense		63			63			49			232			153
Restructuring and asset impairment charges		17			100			39			144			162
Acquisition-related costs		12			33			18			74			74
Operating income on non-GAAP basis	$	811		$	733		$	636		$	2,926		$	1,521

Other income, net on GAAP basis	$	12		$	11		$	16		$	26		$	14
Write-off of debt issuance costs		-			-			-			13			-
Other		(2	)		(3	)		-			(5	)		-
Other income, net on non-GAAP basis	$	10		$	8		$	16		$	34		$	14

Income from continuing operations before income taxes on GAAP basis	$	485		$	267		$	263		$	1,467		$	342
Acquisition-related purchase accounting revenue adjustment		13			15			20			81			38
Purchase accounting effect on inventory		-			26			10			30			210
Amortization of intangible assets		192			197			199			733			446
Share-based compensation expense		63			63			49			232			153
Restructuring and asset impairment charges		17			100			39			144			162
Acquisition-related costs		12			33			18			74			74
Write-off of debt issuance costs		-			-			-			13			-
Other		(2	)		(3	)		-			(5	)		-
Income before income taxes on non-GAAP basis	$	780		$	698		$	598		$	2,769		$	1,425


Provision for income taxes on GAAP basis	$	15		$	23		$	126		$	76		$	33
Income tax effects of non-GAAP reconciling adjustments		28			15			(84	)		80			49
Provision for income taxes on non-GAAP basis	$	43		$	38		$	42		$	156		$	82

Net income on GAAP basis	$	429		$	240		$	135		$	1,364		$	263
Acquisition-related purchase accounting revenue adjustment		13			15			20			81			38
Purchase accounting effect on inventory		-			26			10			30			210
Amortization of intangible assets		192			197			199			733			446
Share-based compensation expense		63			63			49			232			153
Restructuring and asset impairment charges		17			100			39			144			162
Acquisition-related costs		12			33			18			74			74
Write-off of debt issuance costs		-			-			-			13			-
Other		(2	)		(3	)		-			(5	)		-
Income tax effects of non-GAAP reconciling adjustments		(28	)		(15	)		84			(80	)		(49	)
Discontinued operations, net of income taxes		41			4			2			27			46
Net income on non-GAAP basis	$	737		$	660		$	556		$	2,613		$	1,343


Shares used in per share calculation - diluted on GAAP basis		287			287			272			281			267
Non-GAAP adjustment		7			7			8			10			7
Shares used in per share calculation - diluted on non-GAAP basis ⁽¹⁾		294			294			280			291			274

Days sales outstanding on GAAP basis		50			43			45
Non-GAAP adjustment		-			(1	)		(3	)
Days sales outstanding on non-GAAP basis ⁽²⁾		50			42			42

Inventory Days on Hand on GAAP basis		67			64			69
Non-GAAP adjustment		1			3			1
Inventory Days on Hand on non-GAAP basis ⁽³⁾		68			67			70


(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.
(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.

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