Avago Finance Announces Second Quarter Fiscal Year 2009

Avago Finance Announces Second Quarter Fiscal Year 2009 Financial Results

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									Two quarters ended
	May 3,			February 1,			May 4,			May 3,			May 4,
	2009			2009			2008			2009			2008

Net revenue	$	325		$	368		$	411		$	693		$	813
Costs and expenses:
Cost of products sold:
Cost of products sold		210			204			237			414			467
Amortization of intangible assets		14			15			14			29			28
Restructuring charges		3			6			1			9			2
Total cost of products sold		227			225			252			452			497
Research and development		59			62			62			121			128
Selling, general and administrative		42			40			48			82			98
Amortization of intangible assets		5			6			7			11			14
Restructuring charges		3			5			1			8			3
Total costs and expenses		336			338			370			674			740

Income (loss) from operations		(11	)		30			41			19			73
Interest expense		(20	)		(18	)		(20	)		(38	)		(45	)
Gain (loss) on extinguishment of debt		-			1			-			1			(10	)
Other income (expense), net		(2	)		(2	)		1			(4	)		2
Income (loss) from continuing operations before income taxes		(33	)		11			22			(22	)		20
Provision for (benefit from) income taxes		(2	)		5			4			3			7
Income (loss) from continuing operations		(31	)		6			18			(25	)		13
Income (loss) from and gain (loss) on discontinued operations, net of income taxes		-			-			(1	)		-			8
Net income (loss)	$	(31	)	$	6		$	17		$	(25	)	$	21

AVAGO TECHNOLOGIES FINANCE PTE. LTD.
FINANCIAL SUMMARY (NON-GAAP) - UNAUDITED
(IN MILLIONS, except percentages)


	Quarter ended									Two quarters ended
	May 3,			February 1,			May 4,			May 3,			May 4,
	2009			2009			2008			2009			2008

Net revenue	$	325		$	368		$	411		$	693		$	813
Gross margin		115			164			174			279			346
% of net revenue		35	%		45	%		42	%		40	%		43	%
Research and development	$	58		$	61		$	62		$	119		$	127
Selling, general and administrative	$	39		$	41		$	46		$	80		$	90

Total operating expenses	$	97		$	102		$	108		$	199		$	217
% of net revenue		30	%		28	%		26	%		29	%		27	%
Income from operations	$	18		$	62		$	66		$	80		$	129
Interest expense	$	(20	)	$	(18	)	$	(20	)	$	(38	)	$	(45	)

Net income (loss)	$	(2	)	$	37		$	43		$	35		$	79



The financial summary excludes amortization of acquisition-related intangibles, share-based compensation, restructuring charges, gain (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								Two quarters ended
	May 3,			February 1,			May 4,		May 3,			May 4,
	2009			2009			2008		2009			2008

Net income (loss) on GAAP basis	$	(31	)	$	6		$	17	$	(25	)	$	21

Amortization of acquisition-related intangibles
Cost of products sold		14			15			14		29			28
Operating expenses		5			6			7		11			14
		19			21			21		40			42
Share-based compensation expense
Cost of products sold		-			-			-		-			-
Operating expenses		4			-			2		4			9
		4			-			2		4			9
Restructuring charges
Cost of products sold		3			6			1		9			2
Operating expenses		3			5			1		8			3
		6			11			2		17			5

(Gain) loss on extinguishment of debt		-			(1	)		-		(1	)		10

(Income) loss from and (gain) loss on discontinued operations		-			-			1		-			(8	)
Net income (loss) on Non-GAAP basis	$	(2	)	$	37		$	43	$	35		$	79


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 (loss), which is adjusted to reflect the GAAP results excluding amortization of acquisition-related intangibles, share-based compensation, restructuring charges, (gain) 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.

AVAGO TECHNOLOGIES FINANCE PTE. LTD.
RECONCILIATION OF NET INCOME (LOSS) TO EBITDA AND ADJUSTED EBITDA - UNAUDITED
(IN MILLIONS)


	Quarter ended								Two quarters ended
	May 3,			February 1,			May 4,		May 3,			May 4,
	2009			2009			2008		2009			2008

Net income (loss)	$	(31	)	$	6		$	17	$	(25	)	$	21
Interest expense		20			18			20		38			45
Provision for (benefit from) income taxes		(2	)		5			4		3			7
Depreciation and amortization expense		39			41			38		80			77
EBITDA		26			70			79		96			150

Restructuring and other unusual charges		10			12			3		22			7
Purchase accounting adjustments		-			-			-		-			1
Share-based compensation		4			-			2		4			9
(Gain) loss on extinguishment of debt		-			(1	)		-		(1	)		10
(Income) loss from and (gain) loss on discontinued operations		-			-			1		-			(8	)
Adjusted EBITDA	$	40		$	81		$	85	$	121		$	169

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, as that term is defined under GAAP, and should not be considered as an alternative to net income (loss) 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)


	May 3,			November 2,			May 4,
	2009			2008 (1)			2008

ASSETS

Current assets:
Cash and cash equivalents	$	241		$	213		$	83
Trade accounts receivable, net		185			184			213
Inventory		151			188			166
Other current assets		38			34			32
Total current assets		615			619			494
Property, plant and equipment, net		276			299			289
Goodwill		171			169			156
Intangible assets, net		685			721			752
Other long-term assets		56			61			50
Total assets	$	1,803		$	1,869		$	1,741


LIABILITIES AND SHAREHOLDER'S EQUITY

Current liabilities:
Accounts payable	$	167		$	174		$	154
Employee compensation and benefits		40			74			54
Accrued interest		30			32			31
Capital lease obligations - current		2			2			2
Other current liabilities		44			48			26
Total current liabilities		283			330			267

Long-term liabilities:
Long-term debt		700			703			705
Capital lease obligations - non-current		4			5			5
Other long-term liabilities		61			55			60
Total liabilities		1,048			1,093			1,037

Shareholder's equity:
Ordinary shares, no par value		1,083			1,080			1,074
Accumulated deficit		(337	)		(312	)		(374	)
Accumulated other comprehensive income		9			8			4
Total shareholder's equity		755			776			704
Total liabilities and shareholder's equity	$	1,803		$	1,869		$	1,741


(1) Amounts as of November 2, 2008 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
	May 3,			February 1,			May 4,
	2009			2009			2008
Cash flows from operating activities:
Net income (loss)	$	(31	)	$	6		$	17

Adjustments to reconcile net income (loss) to net cash (used in) provided by operating activities:

Depreciation and amortization		39			41			38
Amortization of debt issuance costs		1			1			1
Non-cash portion of restructuring charges		1			-
Impairment of investment		2			-			-
Gain on extinguishment of debt		-			(1	)		-
Share-based compensation		4			-			2
Changes in assets and liabilities, net of acquisitions and dispositions:
Trade accounts receivable		1			-			22
Inventory		28			10			(13	)
Accounts payable		1			(5	)		(47	)
Employee compensation and benefits		(3	)		(31	)		14
Other current assets and current liabilities		14			(24	)		7
Other long-term assets and long-term liabilities		8			(1	)		2
Net cash (used in) provided by operating activities		65			(4	)		43

Cash flows from investing activities:
Purchase of property, plant and equipment		(13	)		(12	)		(13	)
Acquisitions and investment, net of cash acquired		(7	)		-			(8	)
Proceeds from sale of discontinued operations		2			-			-
Net cash used in investing activities		(18	)		(12	)		(21	)

Cash flows from financing activities:
Debt repayments		-			(2	)		-
Cash settlement of equity awards		(1	)		-			-
Net cash used in financing activities		(1	)		(2	)		-

Net increase (decrease) in cash and cash equivalents		46			(18	)		22
Cash and cash equivalents at the beginning of period		195			213			61
Cash and cash equivalents at end of period	$	241		$	195		$	83

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