Capital expenditures are expected to be in the range of $15 million to $20 million. Depreciation and amortization are both expected to be approximately $20 million in the second quarter.
In February 2010, the Malaysian government granted us a tax holiday on our qualifying Malaysian income, which is effective for a 10-year period beginning in our fiscal year 2009. However, as a result of receiving this tax incentive, we will be unable to use, and will need to write down in the second quarter of fiscal year 2010, deferred tax assets of $6 million that we previously recorded for this jurisdiction.
The guidance provided above is only an estimate of what the Company believes is realizable as of the date of this release. Actual results will vary from the guidance and the variations may be material. We undertake 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 Morgan Stanley’s Technology Conference in San Francisco on March 1, 2010 and at Jefferies’ Technology Conference in New York on March 10, 2010. Both of these presentations will be webcast and available for replay on the Investors section of Avago’s website.
Financial Results Conference Call
Avago Technologies Limited will host a conference call to review its financial results for the first quarter fiscal year 2010, and to provide guidance for the second quarter of fiscal year 2010, today at 2:00 p.m. Pacific Time. Those wishing to access the call should dial 800-638-4817; International 617-614-3943. The passcode is 51632434. A replay of the call will be available through March 3, 2010. To access the replay dial 888-286-8010; International 617-801-6888 and reference the passcode: 54035168. A webcast of the conference call will be available in the Investors section of Avago’s website at www.avagotech.com.
Non-GAAP Financial Measures
In addition to GAAP reporting, Avago reports net income or loss, as well as gross margin and operating expenses, on a non-GAAP basis. This non-GAAP earnings information excludes amortization of acquisition-related intangibles, share-based compensation expense, asset impairment charges, restructuring charges, acquired in-process research and development, debt extinguishment (gains) losses, selling shareholder expenses, and the results of discontinued operations. In addition, Avago also discloses Adjusted EBITDA as measured by the indenture governing our outstanding debt securities. Avago believes this non-GAAP earnings 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 emphasize the results of on-going operations. These historical non-GAAP measures are in addition to, and not a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP. A reconciliation between GAAP and non-GAAP net income (loss) and a derivation of Adjusted EBITDA in accordance with the indenture governing its outstanding debt securities are included in the financial tables 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 approximately 7,000 products in four primary target markets: wireless communications, wired infrastructure, industrial and automotive electronics and consumer and computing peripherals.
Safe Harbor Statement
This announcement and supporting materials may contain forward-looking
statements which address our expected future business and financial
performance. All statements other than statements of historical fact
could be deemed forward-looking, including, but not limited to, any
projections of financial information; any statements about historical
results that may suggest trends for our business; any statements of the
plans, strategies and objectives of management for future operations;
any statements of expectation or belief regarding future events,
technology developments, or enforceability of our intellectual property
rights; and any statements of assumptions underlying any of the
foregoing. 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 cyclicality in the
semiconductor industry or in our target markets; the current significant
economic downturn; the recent financial crisis and its impact on our
business, results of operations, and financial condition; our ability to
generate cash sufficient to service our debt and to fund our research
and development, capital expenditures and other business needs; 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;
quarterly and annual fluctuations in operating results; loss of our
significant customers; our ability to maintain tax concessions in
certain jurisdictions; our ability to protect our intellectual property;
our competitive performance and ability to continue achieving design
wins with our customers; any expenses associated with resolving customer
product and warranty claims; 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 Registration
Statement on Form S-1 filed with the Securities and Exchange Commission
(the “SEC”) on January 15, 2010, as amended, and other Avago filings
with the 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.
