R
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
£
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
Singapore
(State or Other Jurisdiction of
Incorporation or Organization)
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98-0682363
(I.R.S. Employer
Identification No.)
|
1 Yishun Avenue 7
Singapore 768923
|
N/A
|
(Address of Principal Executive Offices)
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(Zip Code)
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Large accelerated filer
R
|
Accelerated filer
£
|
Non-accelerated filer
£
|
Smaller reporting company
£
|
|
|
(Do not check if a smaller reporting company)
|
|
|
Page
|
|
February 2,
2014 |
|
November 3,
2013 (1)
|
||||
ASSETS
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
1,112
|
|
|
$
|
985
|
|
Trade accounts receivable, net
|
323
|
|
|
418
|
|
||
Inventory
|
286
|
|
|
285
|
|
||
Other current assets
|
138
|
|
|
130
|
|
||
Total current assets
|
1,859
|
|
|
1,818
|
|
||
Property, plant and equipment, net
|
684
|
|
|
661
|
|
||
Goodwill
|
392
|
|
|
391
|
|
||
Intangible assets, net
|
467
|
|
|
492
|
|
||
Other long-term assets
|
70
|
|
|
53
|
|
||
Total assets
|
$
|
3,472
|
|
|
$
|
3,415
|
|
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Accounts payable
|
$
|
257
|
|
|
$
|
278
|
|
Employee compensation and benefits
|
59
|
|
|
98
|
|
||
Capital lease obligations — current
|
1
|
|
|
1
|
|
||
Other current liabilities
|
47
|
|
|
46
|
|
||
Total current liabilities
|
364
|
|
|
423
|
|
||
Long-term liabilities:
|
|
|
|
||||
Capital lease obligations — non-current
|
1
|
|
|
1
|
|
||
Other long-term liabilities
|
115
|
|
|
105
|
|
||
Total liabilities
|
480
|
|
|
529
|
|
||
Commitments and contingencies (Note 12)
|
|
|
|
||||
Shareholders’ equity:
|
|
|
|
||||
Ordinary shares, no par value; 249,672,096 shares and 249,100,178 shares issued and outstanding on February 2, 2014 and November 3, 2013, respectively
|
1,622
|
|
|
1,587
|
|
||
Retained earnings
|
1,377
|
|
|
1,305
|
|
||
Accumulated other comprehensive loss
|
(7
|
)
|
|
(6
|
)
|
||
Total shareholders’ equity
|
2,992
|
|
|
2,886
|
|
||
Total liabilities and shareholders’ equity
|
$
|
3,472
|
|
|
$
|
3,415
|
|
|
Fiscal Quarter Ended
|
||||||
|
February 2,
2014 |
|
February 3,
2013 |
||||
Net revenue
|
$
|
709
|
|
|
$
|
576
|
|
Cost of products sold:
|
|
|
|
||||
Cost of products sold
|
347
|
|
|
286
|
|
||
Amortization of intangible assets
|
18
|
|
|
14
|
|
||
Restructuring charges
|
5
|
|
|
—
|
|
||
Total cost of products sold
|
370
|
|
|
300
|
|
||
Gross margin
|
339
|
|
|
276
|
|
||
Research and development
|
107
|
|
|
93
|
|
||
Selling, general and administrative
|
74
|
|
|
53
|
|
||
Amortization of intangible assets
|
7
|
|
|
5
|
|
||
Restructuring charges
|
12
|
|
|
1
|
|
||
Total operating expenses
|
200
|
|
|
152
|
|
||
Income from operations
|
139
|
|
|
124
|
|
||
Other income, net
|
—
|
|
|
2
|
|
||
Income before income taxes
|
139
|
|
|
126
|
|
||
Provision for income taxes
|
5
|
|
|
1
|
|
||
Net income
|
$
|
134
|
|
|
$
|
125
|
|
|
|
|
|
||||
Net income per share:
|
|
|
|
||||
Basic
|
$
|
0.54
|
|
|
$
|
0.51
|
|
Diluted
|
$
|
0.53
|
|
|
$
|
0.50
|
|
|
|
|
|
||||
Weighted average shares:
|
|
|
|
||||
Basic
|
249
|
|
|
246
|
|
||
Diluted
|
255
|
|
|
251
|
|
||
|
|
|
|
||||
Cash dividends declared and paid per share
|
$
|
0.25
|
|
|
$
|
0.17
|
|
|
Fiscal Quarter Ended
|
||||||
|
February 2,
2014 |
|
February 3,
2013 |
||||
Net income
|
$
|
134
|
|
|
$
|
125
|
|
Other comprehensive income (loss), net of tax:
|
|
|
|
||||
Unrealized gains of post-retirement plan and defined benefit pension plans, net of tax
|
—
|
|
|
2
|
|
||
Impact of post-retirement benefit plan curtailment and settlement gain
|
(2
|
)
|
|
—
|
|
||
Impact of post-retirement benefit plan amendment
|
1
|
|
|
—
|
|
||
Other comprehensive income (loss)
|
(1
|
)
|
|
2
|
|
||
Total comprehensive income
|
$
|
133
|
|
|
$
|
127
|
|
|
Fiscal Quarter Ended
|
||||||
|
February 2,
2014 |
|
February 3,
2013 |
||||
Cash flows from operating activities:
|
|
|
|
||||
Net income
|
$
|
134
|
|
|
$
|
125
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
||||
Depreciation and amortization
|
57
|
|
|
41
|
|
||
Share-based compensation
|
24
|
|
|
17
|
|
||
Tax benefits from share-based compensation
|
4
|
|
|
—
|
|
||
Excess tax benefits from share-based compensation
|
(3
|
)
|
|
—
|
|
||
Gain from post-retirement medical plan curtailment and settlement
|
(3
|
)
|
|
—
|
|
||
Unrealized (gain)/loss on trading securities
|
—
|
|
|
(2
|
)
|
||
Changes in assets and liabilities, net of acquisitions:
|
|
|
|
||||
Trade accounts receivable, net
|
95
|
|
|
75
|
|
||
Inventory
|
(1
|
)
|
|
(14
|
)
|
||
Accounts payable
|
(24
|
)
|
|
(34
|
)
|
||
Employee compensation and benefits
|
(39
|
)
|
|
(13
|
)
|
||
Deferred tax assets and liabilities
|
(3
|
)
|
|
1
|
|
||
Other current assets and current liabilities
|
(13
|
)
|
|
(12
|
)
|
||
Other long-term assets and long-term liabilities
|
1
|
|
|
1
|
|
||
Net cash provided by operating activities
|
229
|
|
|
185
|
|
||
Cash flows from investing activities:
|
|
|
|
||||
Purchase of property, plant and equipment
|
(52
|
)
|
|
(67
|
)
|
||
Purchases of investments
|
—
|
|
|
(9
|
)
|
||
Net cash used in investing activities
|
(52
|
)
|
|
(76
|
)
|
||
Cash flows from financing activities:
|
|
|
|
||||
Proceeds from government grants
|
2
|
|
|
3
|
|
||
Issuance of ordinary shares, net of issuance costs
|
19
|
|
|
10
|
|
||
Repurchases of ordinary shares
|
(12
|
)
|
|
(13
|
)
|
||
Excess tax benefits from share-based compensation
|
3
|
|
|
—
|
|
||
Dividend payments to shareholders
|
(62
|
)
|
|
(42
|
)
|
||
Net cash used in financing activities
|
(50
|
)
|
|
(42
|
)
|
||
Net increase in cash and cash equivalents
|
127
|
|
|
67
|
|
||
Cash and cash equivalents at the beginning of period
|
985
|
|
|
1,084
|
|
||
Cash and cash equivalents at end of period
|
$
|
1,112
|
|
|
$
|
1,151
|
|
|
Fiscal Quarter Ended
|
||||||
|
February 2,
2014 |
|
February 3,
2013 |
||||
Net income (Numerator):
|
|
|
|
||||
Net income
|
$
|
134
|
|
|
$
|
125
|
|
Shares (Denominator):
|
|
|
|
||||
Basic weighted-average ordinary shares outstanding
|
249
|
|
|
246
|
|
||
Add incremental shares for:
|
|
|
|
||||
Dilutive effect of share options, RSUs and ESPP rights
|
6
|
|
|
5
|
|
||
Shares used in diluted computation
|
255
|
|
|
251
|
|
||
Net income per share:
|
|
|
|
||||
Basic
|
$
|
0.54
|
|
|
$
|
0.51
|
|
Diluted
|
$
|
0.53
|
|
|
$
|
0.50
|
|
|
February 2,
2014 |
|
November 3,
2013 |
||||
Finished goods
|
$
|
56
|
|
|
$
|
53
|
|
Work-in-process
|
146
|
|
|
154
|
|
||
Raw materials
|
84
|
|
|
78
|
|
||
Total inventory
|
$
|
286
|
|
|
$
|
285
|
|
|
Estimated Fair Value
|
||
Trade accounts receivable
|
$
|
51
|
|
Inventory
|
35
|
|
|
Other current assets
|
2
|
|
|
Property, plant and equipment
|
44
|
|
|
Goodwill
|
190
|
|
|
Intangible assets
|
141
|
|
|
Total assets acquired
|
463
|
|
|
Accounts payable
|
(25
|
)
|
|
Employee compensation and benefits
|
(5
|
)
|
|
Other current liabilities
|
(2
|
)
|
|
Long-term deferred tax liabilities (included in Other long-term liabilities)
|
(54
|
)
|
|
Total liabilities assumed
|
(86
|
)
|
|
Purchase price allocation
|
$
|
377
|
|
|
Estimated Fair Value
|
Estimated Useful
|
||
|
(in millions)
|
Lives (in years)
|
||
Purchased intangible assets
|
|
|
||
Purchased technology - base product
|
$
|
98
|
|
8
|
Purchased technology - packaging
|
3
|
|
5
|
|
Customer relationships
|
32
|
|
7
|
|
Other - customer backlog
|
4
|
|
1
|
|
Total identified intangible finite lived assets
|
137
|
|
|
|
In process research and development indefinite lived assets
|
4
|
|
|
|
Total identified intangible assets
|
$
|
141
|
|
|
|
Fiscal Year Ended
|
||||||
|
November 3, 2013
|
|
October 28, 2012
|
||||
Pro forma net revenue
|
$
|
2,663
|
|
|
$
|
2,578
|
|
Pro forma net income
|
$
|
547
|
|
|
$
|
551
|
|
Pro forma net income per share-basic
|
$
|
2.21
|
|
|
$
|
2.25
|
|
Pro forma net income per share-diluted
|
$
|
2.17
|
|
|
$
|
2.20
|
|
|
Gross Carrying
Amount
|
|
Accumulated
Amortization
|
|
Net Book Value
|
||||||
As of February 2, 2014:
|
|
|
|
|
|
||||||
Purchased technology
|
$
|
843
|
|
|
$
|
(480
|
)
|
|
$
|
363
|
|
Customer and distributor relationships
|
289
|
|
|
(192
|
)
|
|
97
|
|
|||
Other
|
8
|
|
|
(5
|
)
|
|
3
|
|
|||
Intangible assets subject to amortization
|
1,140
|
|
|
(677
|
)
|
|
463
|
|
|||
In-process research and development
|
4
|
|
|
—
|
|
|
4
|
|
|||
Total
|
$
|
1,144
|
|
|
$
|
(677
|
)
|
|
$
|
467
|
|
|
|
|
|
|
|
||||||
As of November 3, 2013:
|
|
|
|
|
|
||||||
Purchased technology
|
$
|
843
|
|
|
$
|
(462
|
)
|
|
$
|
381
|
|
Customer and distributor relationships
|
289
|
|
|
(186
|
)
|
|
103
|
|
|||
Other
|
8
|
|
|
(4
|
)
|
|
4
|
|
|||
Intangible assets subject to amortization
|
1,140
|
|
|
(652
|
)
|
|
488
|
|
|||
In-process research and development
|
4
|
|
|
—
|
|
|
4
|
|
|||
Total
|
$
|
1,144
|
|
|
$
|
(652
|
)
|
|
$
|
492
|
|
|
Fiscal Quarter Ended
|
||||||
|
February 2,
2014 |
|
February 3,
2013 |
||||
Cost of products sold
|
$
|
18
|
|
|
$
|
14
|
|
Operating expenses
|
7
|
|
|
5
|
|
||
Total amortization expense
|
$
|
25
|
|
|
$
|
19
|
|
Fiscal Year
|
Amount
|
||
2014 (remainder)
|
$
|
74
|
|
2015
|
95
|
|
|
2016
|
78
|
|
|
2017
|
68
|
|
|
2018
|
33
|
|
|
2019
|
29
|
|
|
Thereafter
|
86
|
|
|
|
$
|
463
|
|
Amortizable intangible assets:
|
|
Purchased technology
|
7
|
Customer and distributor relationships
|
6
|
Other
|
9
|
|
Fair Values as of February 2, 2014
|
||||||||||||||
|
Portion of Carrying
Value Measured at Fair
Value
|
|
Fair Value
Measurement Using
Quoted Prices
In Active Market
For Identical
Assets
(Level 1)
|
|
Fair Value Measurement Using Significant Other Inputs (Level 2)
|
|
Fair Value Measurement
Using Unobservable Inputs
(Level 3)
|
||||||||
Assets:
|
|
|
|
|
|
|
|
||||||||
Trading securities (1)
|
$
|
14
|
|
|
$
|
14
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Investment funds — deferred compensation plan assets (1)
|
11
|
|
|
11
|
|
|
—
|
|
|
—
|
|
||||
Bank acceptances (1)
|
1
|
|
|
1
|
|
|
—
|
|
|
—
|
|
||||
Total assets measured at fair value
|
$
|
26
|
|
|
$
|
26
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Liabilities:
|
|
|
|
|
|
|
|
||||||||
Deferred compensation plan liabilities (2)
|
$
|
11
|
|
|
$
|
—
|
|
|
$
|
11
|
|
|
$
|
—
|
|
(1)
|
Included in other current assets in our unaudited condensed consolidated balance sheet
|
(2)
|
Included in other current liabilities in our unaudited condensed consolidated balance sheet
|
|
Fiscal Quarter Ended
|
||||||
|
February 2,
2014 |
|
February 3,
2013 |
||||
Cost of products sold
|
$
|
3
|
|
|
$
|
2
|
|
Research and development
|
8
|
|
|
7
|
|
||
Selling, general and administrative
|
13
|
|
|
9
|
|
||
Total share-based compensation expense
|
$
|
24
|
|
|
$
|
18
|
|
|
Time-based Options
|
||||
|
Fiscal Quarter Ended
|
||||
|
February 2,
2014 |
|
February 3,
2013 |
||
Risk-free interest rate
|
1.2
|
%
|
|
0.7
|
%
|
Dividend yield
|
2.0
|
%
|
|
1.9
|
%
|
Volatility
|
35.0
|
%
|
|
52.0
|
%
|
Expected term (in years)
|
4.2
|
|
|
5.0
|
|
|
ESPP Rights
|
||||
|
Fiscal Quarter
Ended
|
||||
|
February 2,
2014 |
|
February 3,
2013 |
||
Risk-free interest rate
|
—
|
%
|
|
0.1
|
%
|
Dividend yield
|
2.3
|
%
|
|
1.8
|
%
|
Volatility
|
37.0
|
%
|
|
45.0
|
%
|
Expected term (in years)
|
0.5
|
|
|
0.5
|
|
|
Market-based Options
|
|
|
Fiscal Quarter Ended
|
|
|
February 2,
2014 |
|
Risk-free interest rate
|
2.4
|
%
|
Dividend yield
|
1.9
|
%
|
Volatility
|
46
|
%
|
|
|
|
Option Awards Outstanding
|
||||||||||||
|
Shares
Available
for Grant
|
|
Number
Outstanding
|
|
Weighted-
Average
Exercise Price
Per Share
|
|
Weighted-
Average
Remaining
Contractual
Life (in years)
|
|
Aggregate
Intrinsic
Value
|
||||||
Balance as of November 3, 2013
|
10
|
|
|
22
|
|
|
$
|
29.81
|
|
|
|
|
|
||
Annual increase in shares available for issuance, per equity incentive plan terms
|
6
|
|
|
|
|
|
|
|
|
|
|||||
Granted
|
(1
|
)
|
|
1
|
|
|
50.08
|
|
|
|
|
|
|||
Exercised
|
—
|
|
|
—
|
|
|
23.46
|
|
|
|
|
|
|||
Cancelled
|
—
|
|
|
—
|
|
|
34.59
|
|
|
|
|
|
|||
Balance as of February 2, 2014
|
15
|
|
|
23
|
|
|
31.21
|
|
|
5.57
|
|
$
|
531
|
|
|
Fully vested as of February 2, 2014
|
|
|
7
|
|
|
21.02
|
|
|
4.94
|
|
229
|
|
|||
Fully vested and expected to vest as of
|
|
|
|
|
|
|
|
|
|
||||||
February 2, 2014
|
|
|
22
|
|
|
30.82
|
|
|
5.53
|
|
512
|
|
|
|
RSU Awards Outstanding
|
|||||||
|
|
Number
Outstanding
|
|
Weighted-
Average
Grant Date
Fair Market Value
|
|
Weighted-
Average
Remaining
Contractual
Life (in years)
|
|||
Balance as of November 3, 2013
|
|
2
|
|
|
$
|
34.38
|
|
|
|
Granted
|
|
—
|
|
|
46.60
|
|
|
|
|
Vested
|
|
—
|
|
|
34.86
|
|
|
|
|
Forfeited
|
|
—
|
|
|
38.37
|
|
|
|
|
Balance as of February 2, 2014
|
|
2
|
|
|
35.27
|
|
|
2.80
|
|
|
Option Awards Outstanding
|
|
Option Awards Exercisable
|
||||||||||||
Exercise Prices
|
|
Number Outstanding
|
|
Weighted-
Average Remaining Contractual Life (in years) |
|
Weighted-Average
Exercise Price Per Share |
|
Number Exercisable
|
|
Weighted-Average
Exercise Price Per Share |
||||||
$0.00-$10.00
|
|
1
|
|
|
4.27
|
|
$
|
8.44
|
|
|
1
|
|
|
$
|
8.01
|
|
$10.01-$20.00
|
|
2
|
|
|
4.82
|
|
13.39
|
|
|
2
|
|
|
13.31
|
|
||
$20.01-$30.00
|
|
2
|
|
|
6.40
|
|
21.02
|
|
|
1
|
|
|
20.87
|
|
||
$30.01-$40.00
|
|
16
|
|
|
5.57
|
|
35.44
|
|
|
3
|
|
|
33.95
|
|
||
$40.01-$50.00
|
|
1
|
|
|
6.72
|
|
45.55
|
|
|
—
|
|
|
—
|
|
||
$50.01-$53.78
|
|
1
|
|
|
6.92
|
|
52.77
|
|
|
—
|
|
|
—
|
|
||
Total
|
|
23
|
|
|
5.57
|
|
31.21
|
|
|
7
|
|
|
21.02
|
|
|
Fiscal Quarter Ended
|
||||||
|
February 2,
2014 |
|
February 3,
2013 |
||||
Total net revenue (1) (2)
|
$
|
—
|
|
*
|
$
|
6
|
|
Total costs and expenses (2)
|
—
|
|
*
|
1
|
|
|
February 2,
2014 |
|
November 3,
2013 |
|
||||
Total receivables
|
$
|
—
|
|
*
|
$
|
—
|
|
*
|
Total payables
|
—
|
|
*
|
—
|
|
*
|
|
Total
|
|
2014 (remainder)
|
|
2015
|
|
2016
|
|
2017
|
|
2018
|
|
2019
|
|
Thereafter
|
||||||||||||||||
Purchase Commitments
|
$
|
143
|
|
|
$
|
143
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Other Contractual Commitments
|
$
|
49
|
|
|
$
|
14
|
|
|
$
|
16
|
|
|
$
|
12
|
|
|
$
|
5
|
|
|
$
|
2
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Employee Termination Cost
|
|
Asset Abandonment Costs
|
|
Total
|
||||||
Balance as of November 3, 2013
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Research and development
|
9
|
|
|
1
|
|
|
10
|
|
|||
Cost of product sold
|
5
|
|
|
—
|
|
|
5
|
|
|||
Operating expenses
|
2
|
|
|
—
|
|
|
2
|
|
|||
Less: Non-cash portion
|
—
|
|
|
1
|
|
|
1
|
|
|||
Less: Cash payments
|
2
|
|
|
—
|
|
|
2
|
|
|||
Accrued balance as of February 2, 2014 - included in Other current liabilities
|
$
|
14
|
|
|
$
|
—
|
|
|
$
|
14
|
|
|
Prior Service Credits (Cost)
|
|
Actuarial Gains (Losses)
|
|
Total
|
||||||
Balance as of November 3, 2013
|
$
|
(1
|
)
|
|
$
|
(5
|
)
|
|
$
|
(6
|
)
|
Other comprehensive income (loss) before reclassifications
|
1
|
|
|
—
|
|
|
1
|
|
|||
Amounts reclassified out of accumulated other comprehensive loss
|
(1
|
)
|
|
(2
|
)
|
|
(3
|
)
|
|||
Tax effects
|
—
|
|
|
1
|
|
|
1
|
|
|||
Other comprehensive loss
|
—
|
|
|
(1
|
)
|
|
(1
|
)
|
|||
Balance as of February 2, 2014
|
$
|
(1
|
)
|
|
$
|
(6
|
)
|
|
$
|
(7
|
)
|
Comprehensive Income Components
|
|
February 2,
2014 |
|
February 3,
2013 |
|
Classified to:
|
||||
Post-retirement benefit amendment, curtailment and settlement gain, net
|
|
$
|
1
|
|
|
$
|
—
|
|
|
Cost of products sold
|
Post-retirement benefit amendment, curtailment and settlement gain, net
|
|
1
|
|
|
—
|
|
|
Research and development
|
||
Post-retirement benefit amendment, curtailment and settlement gain, net
|
|
1
|
|
|
—
|
|
|
Selling, general and administrative
|
||
Total amounts reclassified out of accumulated other comprehensive income (loss)
|
|
$
|
3
|
|
|
$
|
—
|
|
|
|
|
Fiscal Quarter Ended
|
||||||||||||
|
February 2,
2014 |
|
February 3,
2013 |
|
February 2,
2014 |
|
February 3,
2013 |
||||||
|
(In millions)
|
|
(As a percentage of net revenue)
|
||||||||||
Statements of Operations Data:
|
|
|
|
|
|
|
|
||||||
Net revenue
|
$
|
709
|
|
|
$
|
576
|
|
|
100
|
%
|
|
100
|
%
|
Cost of products sold:
|
|
|
|
|
|
|
|
||||||
Cost of products sold
|
347
|
|
|
286
|
|
|
49
|
|
|
50
|
|
||
Amortization of intangible assets
|
18
|
|
|
14
|
|
|
2
|
|
|
2
|
|
||
Restructuring charges
|
5
|
|
|
—
|
|
|
1
|
|
|
—
|
|
||
Total cost of products sold
|
370
|
|
|
300
|
|
|
52
|
|
|
52
|
|
||
Gross margin
|
339
|
|
|
276
|
|
|
48
|
|
|
48
|
|
||
Research and development
|
107
|
|
|
93
|
|
|
15
|
|
|
16
|
|
||
Selling, general and administrative
|
74
|
|
|
53
|
|
|
10
|
|
|
9
|
|
||
Amortization of intangible assets
|
7
|
|
|
5
|
|
|
1
|
|
|
1
|
|
||
Restructuring charges
|
12
|
|
|
1
|
|
|
2
|
|
|
—
|
|
||
Total operating expenses
|
200
|
|
|
152
|
|
|
28
|
|
|
26
|
|
||
Income from operations
|
139
|
|
|
124
|
|
|
20
|
|
|
22
|
|
||
Other income, net
|
—
|
|
|
2
|
|
|
—
|
|
|
—
|
|
||
Income before income taxes
|
139
|
|
|
126
|
|
|
20
|
|
|
22
|
|
||
Provision for income taxes
|
5
|
|
|
1
|
|
|
1
|
|
|
—
|
|
||
Net income
|
$
|
134
|
|
|
$
|
125
|
|
|
19
|
%
|
|
22
|
%
|
|
|
Fiscal Quarter Ended
|
|
|
|
|||||
% of net revenue
|
|
February 2,
2014 |
|
February 3,
2013 |
|
Change
|
|
|||
Wireless communications
|
|
49
|
%
|
|
53
|
%
|
|
(4
|
)%
|
|
Wired infrastructure
|
|
32
|
|
|
25
|
|
|
7
|
|
|
Industrial & other
|
|
19
|
|
|
22
|
|
|
(3
|
)
|
|
Total net revenue
|
|
100
|
%
|
|
100
|
%
|
|
|
|
|
|
Fiscal Quarter Ended
|
|
|
|
||||||||
Net revenue (in millions)
|
|
February 2,
2014 |
|
February 3,
2013 |
|
Change
|
|
||||||
Wireless communications
|
|
$
|
349
|
|
|
$
|
308
|
|
|
$
|
41
|
|
|
Wired infrastructure
|
|
228
|
|
|
143
|
|
|
85
|
|
|
|||
Industrial & other
|
|
132
|
|
|
125
|
|
|
7
|
|
|
|||
Total net revenue
|
|
$
|
709
|
|
|
$
|
576
|
|
|
$
|
133
|
|
|
|
Fiscal Quarter Ended
|
||||||
|
February 2,
2014 |
|
February 3,
2013 |
||||
Net cash provided by operating activities
|
$
|
229
|
|
|
$
|
185
|
|
Net cash used in investing activities
|
(52
|
)
|
|
(76
|
)
|
||
Net cash used in financing activities
|
(50
|
)
|
|
(42
|
)
|
||
Net increase in cash and cash equivalents
|
$
|
127
|
|
|
$
|
67
|
|
•
|
the timing of launches by our customers of new products, such as cell phones, in which our products are included and changes in end-user demand for the products manufactured and sold by our customers;
|
•
|
the timing of receipt, reduction or cancellation of significant orders by customers;
|
•
|
fluctuations in the levels of component inventories held by our customers;
|
•
|
customer concentration and the gain or loss of significant customers;
|
•
|
market acceptance of our products and our customers' products;
|
•
|
changes in our product mix or customer mix and their effect on our gross margin;
|
•
|
our ability to develop, introduce and market new products and technologies on a timely basis;
|
•
|
the timing and extent of our non-product revenue, such as product development revenues and royalty and other payments from intellectual property sales and licensing arrangements;
|
•
|
our ability to successfully and timely integrate, and realize the benefits of, our pending acquisition of LSI Corporation, or LSI, and any other significant acquisitions we may make;
|
•
|
new product announcements and introductions by us or our competitors;
|
•
|
timing and amount of research and development and related new product expenditures, and the timing of receipt of any research and development grant monies;
|
•
|
seasonality or cyclical fluctuations in our markets;
|
•
|
currency fluctuations;
|
•
|
utilization of our internal manufacturing facilities;
|
•
|
fluctuations in manufacturing yields;
|
•
|
significant warranty claims, including those not covered by our suppliers or our insurers;
|
•
|
availability and cost of raw materials from our suppliers;
|
•
|
intellectual property disputes and associated litigation expenses;
|
•
|
loss of key personnel or the shortage of available skilled workers;
|
•
|
the effects of competitive pricing pressures, including decreases in average selling prices of our products;
|
•
|
the timing of acquisitions of, or making and exiting investments in, other entities, businesses or technologies; and
|
•
|
changes in our tax incentive arrangements or structure, which may adversely affect our net tax expense in any quarter in which such an event occurs.
|
•
|
we could be required to pay a termination fee of $400 million to LSI in certain circumstances described in the merger agreement;
|
•
|
we would have incurred significant costs in connection with the acquisition that we would be unable to recover;
|
•
|
we may be subject to additional legal proceedings related to the acquisition;
|
•
|
the failure to consummate the acquisition may result in negative publicity and a negative impression of us in the investment community; and
|
•
|
any disruptions to our business resulting from the announcement and pendency of the acquisition, including any adverse changes in our relationships with our customers, vendors and employees, may continue or intensify in the event the merger is not consummated.
|
•
|
preserving customer, supplier and other important relationships of both LSI and Avago;
|
•
|
improving LSI's operating margins;
|
•
|
coordinating and integrating operations in India, a country in which Avago has not previously operated, and in China;
|
•
|
integrating financial forecasting and controls, procedures and reporting cycles;
|
•
|
combining and integrating IT systems; and
|
•
|
integrating employees and related HR systems and benefits, maintaining employee morale and retaining key employees.
|
•
|
inability of our manufacturers to develop manufacturing methods appropriate for our products, manufacturers' lack of sufficient capacity, or their unwillingness to devote adequate capacity, to produce our products and unanticipated changes to their manufacturing processes;
|
•
|
inaccuracies in the forecasts of our product needs from our manufacturers;
|
•
|
product and manufacturing costs that are higher than anticipated;
|
•
|
reduced control over product reliability and delivery schedules;
|
•
|
more complicated supply chains; and
|
•
|
time, expense and uncertainty in identifying and qualifying additional or replacement manufacturers.
|
•
|
cease the manufacture, use or sale of the infringing products, processes or technology;
|
•
|
pay substantial damages for past, present and future use of the infringing technology;
|
•
|
expend significant resources to develop non-infringing technology;
|
•
|
license technology from the third-party claiming infringement, which license may not be available on commercially reasonable terms, or at all;
|
•
|
enter into cross-licenses with our competitors, which could weaken our overall intellectual property portfolio and our ability to compete in particular product categories;
|
•
|
indemnify customers or distributors;
|
•
|
pay substantial damages to our customers or end users to discontinue use or replace infringing technology with non-infringing technology; or
|
•
|
relinquish intellectual property rights associated with one or more of our patent claims, if such claims are held invalid or otherwise unenforceable.
|
•
|
intellectual property rights that we presently employ in our business will not lapse or be invalidated, circumvented, challenged, or, in the case of third-party intellectual property rights, licensed or sub-licensed to us, be licensed to others;
|
•
|
our intellectual property rights will provide competitive advantages to us;
|
•
|
rights previously granted by third parties to intellectual property rights licensed or assigned to us, including portfolio cross-licenses, will not hamper our ability to assert our intellectual property rights against potential competitors or hinder the settlement of currently pending or future disputes;
|
•
|
any of our pending or future patent, trademark or copyright applications will be issued or have the coverage originally sought; or
|
•
|
our intellectual property rights will be enforced in certain jurisdictions where competition may be intense or where legal protection may be weak.
|
•
|
changes in political, regulatory, legal or economic conditions;
|
•
|
restrictive governmental actions, such as restrictions on the transfer or repatriation of funds and foreign investments and trade protection measures, including export duties and quotas and customs duties and tariffs;
|
•
|
disruptions of capital and trading markets;
|
•
|
changes in import or export licensing requirements;
|
•
|
transportation delays;
|
•
|
civil disturbances or political instability;
|
•
|
geopolitical turmoil, including terrorism, war or political or military coups;
|
•
|
changes in labor standards;
|
•
|
limitations on our ability under local laws to protect our intellectual property;
|
•
|
nationalization of businesses and expropriation of assets;
|
•
|
changes in tax laws;
|
•
|
currency fluctuations, which may result in our products becoming too expensive for foreign customers or foreign-sourced materials and services becoming more expensive for us; and
|
•
|
difficulty in obtaining distribution and support.
|
•
|
changes in environmental or health and safety laws or regulations;
|
•
|
the manner in which environmental or health and safety laws or regulations will be enforced, administered or interpreted;
|
•
|
our ability to enforce and collect under indemnity agreements and insurance policies relating to environmental liabilities; or
|
•
|
the cost of compliance with future environmental or health and safety laws or regulations or the costs associated with any future environmental claims, including the cost of clean-up of currently unknown environmental conditions, particularly at sites that we may acquire from time to time.
|
•
|
actual or anticipated fluctuations in our financial condition and operating results;
|
•
|
issuance of new or updated research or reports by securities analysts;
|
•
|
fluctuations in the valuation and results of operations of our significant customers as well as companies perceived by investors to be comparable to us;
|
•
|
announcements of proposed acquisitions by us or our competitors, including the announcement of our pending acquisition of LSI, following which our share price increased;
|
•
|
announcements of, or expectations of additional debt or equity financing efforts;
|
•
|
share price and volume fluctuations attributable to inconsistent trading volume levels of our shares; and
|
•
|
changes in our dividend or share repurchase policies.
|
Period
|
|
Total Number of Shares Purchased
|
|
Average Price Paid per Share
|
|
Total Number of Shares
Purchased as Part of Publicly Announced Plans or Programs (1) |
|
Maximum Shares Available Under Repurchase Programs
|
|||||
|
|
|
|
|
|
(in millions)
|
|||||||
November 4, 2013 - December 1, 2013
|
|
269,807
|
|
|
$
|
43.50
|
|
|
269,807
|
|
|
17.8
|
|
December 2, 2013 - December 29, 2013
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
17.8
|
|
December 30, 2013 - February 2, 2014
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
17.8
|
|
Total
|
|
269,807
|
|
|
$
|
43.50
|
|
|
269,807
|
|
|
|
(1)
|
All share repurchases during the fiscal quarter ended
February 2, 2014
were made in open market transactions, pursuant to our publicly announced 2013 share repurchase program. All repurchases were made in accordance with Rule 10b-8 under the Exchange Act.
|
|
|
|
|
Incorporated by Reference Herein
|
|
|
|||
Exhibit Number
|
|
Description
|
|
Form
|
|
Filing Date
|
|
Filed Herewith
|
|
2.1*
|
|
|
Agreement and Plan of Merger, dated December 15, 2013, by and among LSI Corporation, Avago Technologies Limited, Avago Technologies Wireless (U.S.A.) Manufacturing, Inc. and Leopold Merger Sub, Inc.
|
|
Avago Technologies Limited Current Report on Form 8-K/A (Commission File No. 001-34428).
|
|
December 16, 2013
|
|
|
|
|
|
|
|
|
|
|
|
|
3.1
|
|
|
Memorandum and Articles of Association
|
|
Avago Technologies Limited Current Report on Form 8-K (Commission File No. 001-34428).
|
|
August 14, 2009
|
|
|
|
|
|
|
|
|
|
|
|
|
10.1+
|
|
|
Fiscal Year 2014 Avago Performance Bonus Plan for Executive Employees
|
|
Avago Technologies Limited Current Report on Form 8-K (Commission File No. 001-34428).
|
|
December 12, 2013
|
|
|
10.2
|
|
|
Note Purchase Agreement, dated as of December 15, 2013, by and among Avago Technologies Limited, Silver Lake Partners IV, L.P. and Deutsche Bank AG, Singapore Branch, as lead manager
|
|
Avago Technologies Limited Current Report on Form 8-K/A (Commission File No. 001-34428).
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December 16, 2013
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10.3
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Form of Indenture related to 2.0% Convertible Senior Notes
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Avago Technologies Limited Current Report on Form 8-K/A (Commission File No. 001-34428).
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December 16, 2013
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10.5
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Form of Registration Rights Agreement related to 2.0% Convertible Senior Notes
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Avago Technologies Limited Current Report on Form 8-K/A (Commission File No. 001-34428).
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December 16, 2013
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10.6+
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Severance Benefit Agreement, dated January 23, 2014, between Avago Technologies Limited and Hock E. Tan
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X
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10.7+
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Severance Benefit Agreement, dated January 24, 2014, between Avago Technologies Limited and Anthony E. Maslowski
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X
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10.8+
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Severance Benefit Agreement, dated January 30, 2014, between Avago Technologies Limited and Bryan T. Ingram
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X
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Incorporated by Reference Herein
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Exhibit Number
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Description
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Form
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Filing Date
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Filed Herewith
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10.9+
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Severance Benefit Agreement, dated February 15, 2014, between Avago Technologies Limited and Boon Chye Ooi
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X
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10.10+
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Severance Benefit Agreement, dated January 24, 2014, between Avago Technologies Limited and Patricia H. McCall
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X
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31.1
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Certification of Principal Executive Officer Pursuant to Rule 13a-14 of the Securities Exchange Act of 1934, As Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
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X
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31.2
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Certification of Principal Financial Officer Pursuant to Rule 13a-14 of the Securities Exchange Act of 1934, As Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
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X
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32.1
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Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
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X
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32.2
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Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
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X
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101.INS†
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XBRL Instance Document
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X
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101.SCH†
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XBRL Schema Document
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X
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101.CAL†
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XBRL Calculation Linkbase Document
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X
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101.DEF†
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XBRL Definition Linkbase Document
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X
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101.LAB†
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XBRL Labels Linkbase Document
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X
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101.PRE†
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XBRL Presentation Linkbase Document
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X
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+
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Indicates a management contract or compensatory plan or arrangement.
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*
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Pursuant to Item 601(b)(2) of Regulation S-K promulgated by the SEC, certain exhibits and schedules to the Agreement and Plan of Merger have been omitted. Avago hereby agrees to furnish supplementally to the SEC, upon its request, any or all of such omitted exhibits or schedules.
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†
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Attached as Exhibit 101 to this report are the following formatted in XBRL (Extensible Business Reporting Language): (i) Unaudited Condensed Consolidated Balance Sheets at February 2, 2014 and November 3, 2013, (ii) Unaudited Condensed Consolidated Statements of Operations for the fiscal quarters ended February 2, 2014 and February 3, 2013, (iii) Unaudited Condensed Consolidated Statements of Comprehensive Income for the fiscal quarters ended February 2, 2014 and February 3, 2013, (iv) Unaudited Condensed Consolidated Statements of Cash Flows for the fiscal quarters ended February 2, 2014 and February 3, 2013 and (v) Notes to Unaudited Condensed Consolidated Financial Statements.
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AVAGO TECHNOLOGIES LIMITED
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By:
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/s/ Anthony E. Maslowski
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Anthony E. Maslowski
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Chief Financial Officer
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1.
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I have reviewed this Quarterly Report on Form 10-Q of Avago Technologies Limited;
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2.
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Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
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3.
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Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
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4.
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The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
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a.
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Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
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b.
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Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
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c.
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Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
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d.
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Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
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5.
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The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
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a.
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All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
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b.
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Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
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/s/ Hock E. Tan
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Hock E. Tan
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Chief Executive Officer
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1.
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I have reviewed this Quarterly Report on Form 10-Q of Avago Technologies Limited;
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2.
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Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
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3.
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Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
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4.
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The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
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a.
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Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
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b.
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Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
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c.
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Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
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d.
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Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
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5.
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The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
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a.
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All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
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b.
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Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
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/s/ Anthony E. Maslowski
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Anthony E. Maslowski
|
|
Chief Financial Officer
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(1)
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
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(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
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Date:
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March 13, 2014
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/s/ Hock E. Tan
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Hock E. Tan
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Chief Executive Officer
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(1)
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
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(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
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Date:
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March 13, 2014
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/s/ Anthony E. Maslowski
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Anthony E. Maslowski
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Chief Financial Officer
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