Document and Entity Information
Document and Entity Information Document - shares | 9 Months Ended | |
Aug. 02, 2015 | Aug. 28, 2015 | |
Entity Information [Line Items] | ||
Entity Registrant Name | Avago Technologies LTD | |
Entity Central Index Key | 1,441,634 | |
Current Fiscal Year End Date | --11-01 | |
Entity Filer Category | Large Accelerated Filer | |
Document Type | 10-Q | |
Document Period End Date | Aug. 2, 2015 | |
Document Fiscal Year Focus | 2,015 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false | |
Entity Common Stock, Shares Outstanding | 275,361,245 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - Unaudited - USD ($) $ in Millions | Aug. 02, 2015 | Nov. 02, 2014 |
Current assets: | ||
Cash and cash equivalents | $ 1,354 | $ 1,604 |
Trade accounts receivable, net | 809 | 782 |
Inventory | 507 | 519 |
Other current assets | 390 | 302 |
Assets held-for-sale | 109 | 628 |
Total current assets | 3,169 | 3,835 |
Property, plant and equipment, net | 1,392 | 1,158 |
Goodwill | 1,729 | 1,596 |
Intangible assets, net | 3,469 | 3,617 |
Other long-term assets | 229 | 285 |
Total assets | 9,988 | 10,491 |
Current liabilities: | ||
Accounts payable | 501 | 515 |
Employee compensation and benefits | 230 | 219 |
Other current liabilities | 175 | 236 |
Current portion of long-term debt | 46 | 46 |
Total current liabilities | 952 | 1,016 |
Long-term liabilities: | ||
Convertible notes payable to related party | 0 | 920 |
Long-term debt | 3,915 | 4,543 |
Pension and post-retirement benefit obligations | 467 | 506 |
Other long-term liabilities | 373 | 263 |
Total liabilities | $ 5,707 | $ 7,248 |
Commitments and contingencies (Note 11) | ||
Shareholders’ equity: | ||
Ordinary shares, no par value; 274,908,309 shares and 254,330,630 shares issued and outstanding on August 2, 2015 and November 2, 2014, respectively | $ 2,403 | $ 2,009 |
Retained earnings | 1,927 | 1,284 |
Accumulated other comprehensive loss | (49) | (50) |
Total shareholders’ equity | 4,281 | 3,243 |
Total liabilities and shareholders’ equity | $ 9,988 | $ 10,491 |
Condensed Consolidated Balance3
Condensed Consolidated Balance Sheets - Unaudited - (Parenthetical) - shares | Aug. 02, 2015 | Nov. 02, 2014 |
Ordinary Shares, Shares, Issued | 274,908,309 | 254,330,630 |
Ordinary Shares, Shares, Outstanding | 274,908,309 | 254,330,630 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations - Unaudited - USD ($) shares in Millions, $ in Millions | 3 Months Ended | 9 Months Ended | ||
Aug. 02, 2015 | Aug. 03, 2014 | Aug. 02, 2015 | Aug. 03, 2014 | |
Net revenue | $ 1,735 | $ 1,269 | $ 4,984 | $ 2,679 |
Cost of products sold: | ||||
Cost of products sold | 720 | 760 | 2,068 | 1,433 |
Amortization of intangible assets | 129 | 105 | 355 | 141 |
Restructuring charges | 2 | 11 | 5 | 16 |
Total cost of products sold | 851 | 876 | 2,428 | 1,590 |
Gross margin | 884 | 393 | 2,556 | 1,089 |
Research and development | 276 | 240 | 762 | 461 |
Selling, general and administrative | 143 | 137 | 368 | 278 |
Amortization of intangible assets | 68 | 91 | 186 | 106 |
Restructuring and asset impairment charges | 98 | 87 | 122 | 107 |
Total operating expenses | 585 | 555 | 1,438 | 952 |
Operating income (loss) | 299 | (162) | 1,118 | 137 |
Interest expense | (43) | (55) | (150) | (56) |
Other income (expense), net | 11 | (2) | 14 | (2) |
Income (loss) from continuing operations before income taxes | 267 | (219) | 982 | 79 |
Provision for (benefit from) income taxes | 23 | (99) | 61 | (93) |
Income (loss) from continuing operations | 244 | (120) | 921 | 172 |
Income (loss) from discontinued operations (including a gain on disposal of $14 million for the three fiscal quarters ended August 2, 2015), net of income taxes | (4) | (44) | 14 | (44) |
Net income (loss) | $ 240 | $ (164) | $ 935 | $ 128 |
Basic income (loss) per share: | ||||
Income per share from continuing operations (in dollars per share) | $ 0.92 | $ (0.48) | $ 3.54 | $ 0.69 |
Income per share from discontinued operations (in dollars per share) | (0.01) | (0.17) | 0.06 | (0.18) |
Net income per share (in dollars per share) | 0.91 | (0.65) | 3.60 | 0.51 |
Diluted income (loss) per share: | ||||
Income per share from continuing operations (in dollars per share) | 0.85 | (0.48) | 3.25 | 0.65 |
Income per share from discontinued operations (in dollars per share) | (0.01) | (0.17) | 0.05 | (0.17) |
Net income per share (in dollars per share) | $ 0.84 | $ (0.65) | $ 3.30 | $ 0.48 |
Weighted-average shares: | ||||
Basic (in shares) | 265 | 252 | 260 | 251 |
Diluted (in shares) | 287 | 252 | 283 | 265 |
Cash dividends declared and paid per share | $ 0.40 | $ 0.29 | $ 1.13 | $ 0.81 |
Condensed Consolidated Stateme5
Condensed Consolidated Statements of Operations - Unaudited (Parentheticals) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Aug. 02, 2015 | Aug. 03, 2014 | Aug. 02, 2015 | Aug. 03, 2014 | |
Discontinued Operation, Gain (Loss) from Disposal of Discontinued Operation, before Income Tax | $ 0 | $ 0 | $ 14 | $ 0 |
Condensed Consolidated Stateme6
Condensed Consolidated Statements of Comprehensive Income - Unaudited - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Aug. 02, 2015 | Aug. 03, 2014 | Aug. 02, 2015 | Aug. 03, 2014 | |
Statement of Comprehensive Income [Abstract] | ||||
Net income | $ 240 | $ (164) | $ 935 | $ 128 |
Unrealized gains and amendment on retirement-related benefit plans | 0 | 0 | 0 | 2 |
Reclassification to net income (loss) | 0 | 0 | 1 | (3) |
Other comprehensive income (loss) | 0 | 0 | 1 | (1) |
Comprehensive income (loss) | $ 240 | $ (164) | $ 936 | $ 127 |
Condensed Consolidated Stateme7
Condensed Consolidated Statements of Cash Flows - Unaudited - USD ($) $ in Millions | 9 Months Ended | |
Aug. 02, 2015 | Aug. 03, 2014 | |
Cash flows from operating activities: | ||
Net income | $ 935 | $ 128 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 712 | 375 |
Amortization of debt issuance costs and accretion of debt discount | 18 | 7 |
Share-based compensation | 169 | 109 |
Tax benefits from share-based compensation | 105 | 0 |
Excess tax benefits from share-based compensation | (102) | 0 |
Non-cash portion of restructuring and asset impairment charges | 75 | 0 |
Gain on sale of business | (14) | 0 |
Deferred taxes | (35) | (20) |
Other | 20 | 7 |
Changes in assets and liabilities, net of acquisitions and disposals: | ||
Trade accounts receivable, net | 22 | 110 |
Inventory | 63 | 199 |
Accounts payable | (52) | (39) |
Employee compensation and benefits | (12) | 18 |
Other current assets and current liabilities | (130) | 31 |
Other long-term assets and long-term liabilities | (38) | (131) |
Net cash provided by operating activities | 1,736 | 794 |
Cash flows from investing activities: | ||
Proceeds from sale of business | 650 | 0 |
Payments to Acquire Businesses, Net of Cash Acquired | 394 | 5,644 |
Purchases of property, plant and equipment | (487) | (220) |
Proceeds from disposal of property, plant and equipment | 63 | 0 |
Proceeds from sale of investments | 0 | 14 |
Purchases of investments | 9 | 0 |
Net cash used in investing activities | (177) | (5,850) |
Cash flows from financing activities: | ||
Debt repayments | (1,627) | 0 |
Payment of assumed debt | 178 | 0 |
Proceeds from term loan borrowings | 0 | 4,600 |
Proceeds from issuance of convertible senior notes | 0 | 1,000 |
Debt issuance costs | 0 | (124) |
Dividend payments to shareholders | (292) | (203) |
Issuance of ordinary shares | 186 | 86 |
Repurchases of ordinary shares | 0 | (12) |
Excess tax benefits from share-based compensation | 102 | 0 |
Proceeds from government grants | 0 | 2 |
Payment of capital lease obligations | 0 | 1 |
Net cash (used in) provided by financing activities | (1,809) | 5,348 |
Net change in cash and cash equivalents | (250) | 292 |
Cash and cash equivalents at the beginning of period | 1,604 | 985 |
Cash and cash equivalents at end of period | $ 1,354 | $ 1,277 |
Overview, Basis of Presentation
Overview, Basis of Presentation and Significant Accounting Policies | 9 Months Ended |
Aug. 02, 2015 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Overview, Basis of Presentation and Significant Accounting Policies | Overview, Basis of Presentation and Significant Accounting Policies Overview Avago Technologies Limited, or the Company, was organized under the laws of the Republic of Singapore in August 2005. We are a designer, developer and global supplier of a broad range of semiconductor devices with a focus on analog III-V based products and complex digital and mixed signal complementary metal oxide semiconductor based devices. We have a history of innovation and offer thousands of products that are used in end products such as smartphones, hard disk drives, computer servers, consumer appliances, data networking and telecommunications equipment, enterprise storage and servers, and factory automation and industrial equipment. We have four reportable segments: wireless communications, enterprise storage, wired infrastructure and industrial & other, which align with our target markets. We operate on a 52- or 53-week fiscal year ending on the Sunday closest to October 31. Our fiscal year ending November 1, 2015, or fiscal year 2015, is a 52-week fiscal year. The first quarter of our fiscal year 2015 ended on February 1, 2015, the second quarter ended on May 3, 2015 and the third quarter ended on August 2, 2015. Our fiscal year ended November 2, 2014, or fiscal year 2014, was also a 52-week fiscal year. References herein to "the Company", "we", "our", "us" and "Avago" are to Avago Technologies Limited and its consolidated subsidiaries, unless otherwise specified or the context otherwise requires. Basis of Presentation On November 18, 2014, we completed the sale of the LSI Corporation, or LSI, Axxia Networking Business and related assets, or the Axxia Business, for $650 million to Intel Corporation, or Intel. Refer to Note 13. "Discontinued Operations" for more information. On May 5, 2015, we completed our acquisition of Emulex Corporation, or Emulex, a leader in network connectivity, monitoring and management, for an aggregate purchase price of $587 million , consisting of $582 million of cash paid to Emulex stockholders and $5 million for the fair value of partially vested assumed equity awards. The unaudited condensed consolidated financial statements include the results of operations of Emulex since May 5, 2015. Upon the acquisition of Emulex, we determined that we would sell Emulex's network visibility products business, which is not core to our business, referred to as Endace, to allow us to concentrate on other higher-growth opportunities. We classified Endace as held-for-sale as of August 2, 2015 and presented the results of this business since May 5, 2015 in income (loss) from discontinued operations in our unaudited condensed consolidated financial statements. The accompanying unaudited condensed consolidated financial statements include the accounts of Avago Technologies Limited and its wholly-owned subsidiaries and have been prepared by us in accordance with accounting principles generally accepted in the United States, or GAAP, for interim financial information. This financial information reflects all adjustments which are, in the opinion of our management, of a normal recurring nature and necessary for a fair statement of the results for the periods presented. The November 2, 2014 condensed consolidated balance sheet data were derived from our audited consolidated financial statements included in our Annual Report on Form 10-K for fiscal year 2014, or 2014 Annual Report on Form 10-K, as filed with the Securities and Exchange Commission, or SEC, but do not include all disclosures required by GAAP. Intercompany transactions and balances have been eliminated in consolidation. The operating results for the fiscal quarter and three fiscal quarters ended August 2, 2015 are not necessarily indicative of the results that may be expected for fiscal year 2015 , or for any other future period. Significant Accounting Policies Use of estimates. The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in our consolidated financial statements and accompanying notes. Actual results could differ materially from those estimates. Concentrations of credit risk and significant customers. Our cash, cash equivalents and accounts receivable are potentially subject to concentration of credit risk. Cash and cash equivalents may be redeemable upon demand and are maintained with several financial institutions that management believes are of high credit quality and therefore bear minimal credit risk. We seek to mitigate our credit risks by spreading such risks across multiple counterparties and monitoring the risk profile of these counterparties. Our accounts receivable are derived from revenue earned from customers located around the world. We mitigate collection risks from our customers by performing regular credit evaluations of our customers' financial condition, and require collateral, such as letters of credit and bank guarantees, in certain circumstances. We sell our products primarily through our direct sales force and distributors, and to a small extent, through manufacturers' representatives. One direct customer accounted for 21% and 30% of our net accounts receivable balance at August 2, 2015 and November 2, 2014 , respectively. During the fiscal quarter and three fiscal quarters ended August 2, 2015 , one direct customer represented 21% and 23% of our net revenue, respectively. During the fiscal quarter and three fiscal quarters ended August 3, 2014 , one direct customer represented 15% and 17% of our net revenue, respectively. The majority of the revenues from this customer was included in our wireless communications segment. Warranty. We accrue for the estimated costs of product warranties at the time revenue is recognized. Product warranty costs are estimated based upon our historical experience and specific identification of product requirements, which may fluctuate based on product mix. Additionally, we accrue for warranty costs associated with occasional or unanticipated product quality issues if a loss is probable and can be reasonably estimated. The changes in accrued warranty were not material for the fiscal quarter or three fiscal quarters ended August 2, 2015 . Net income (loss) per share . Basic net income (loss) per share is computed using the weighted-average number of ordinary shares outstanding during the period. Diluted net income (loss) per share is computed using the weighted-average number of ordinary shares and potentially dilutive share equivalents outstanding during the period. Diluted shares outstanding include the dilutive effect of in-the-money options, restricted share units, or RSUs, employee share purchase rights under the Avago Technologies Limited Employee Share Purchase Plan, or ESPP, (together referred to as equity awards) and the 2.0% Convertible Senior Notes due 2021 issued by Avago Technologies Limited, or the Convertible Notes. The dilutive effect of equity awards is calculated based on the average share price for each fiscal period, using the treasury stock method. Under the treasury stock method, the amount the employee must pay for exercising share options and to purchase shares under the ESPP, the amount of compensation cost for future service that we have not yet recognized, and the amount of tax benefits that would be recognized when equity awards become deductible for income tax purposes are collectively assumed to be used to repurchase ordinary shares. During the fiscal quarter ended August 2, 2015, the Convertible Notes were converted in full and the resulting conversion obligation settled by a combination of $1 billion in cash and the issuance of 13.8 million of our ordinary shares. The resulting incremental ordinary shares attributable to the conversion of the Convertible Notes are a component of diluted shares for the period prior to settlement and a component of basic weighted-average shares outstanding for the remainder of the period. There were no material antidilutive equity awards for the fiscal quarter or three fiscal quarters ended August 2, 2015 . Diluted net income (loss) per share for the fiscal quarter and three fiscal quarters ended August 3, 2014 excluded the potentially dilutive effect of weighted-average outstanding equity awards (options, RSUs and ESPP rights) to purchase 2 million and 1 million ordinary shares, respectively, as their effect was antidilutive. In the fiscal quarter ended August 3, 2014 , we reported a net loss and excluded 8 million shares related to options, 7 million of incremental ordinary shares attributable to the conversion of the Convertible Notes and 1 million RSUs from the diluted loss per share computation. The following is a reconciliation of the numerators and denominators of the basic and diluted net income (loss) per share computations for the periods presented (in millions, except per share data): Fiscal Quarter Ended Three Fiscal Quarters Ended August 2, August 3, August 2, August 3, Net income (loss) (Numerator): Income (loss) from continuing operations $ 244 $ (120 ) $ 921 $ 172 Income (loss) from discontinued operations (4 ) (44 ) 14 (44 ) Net income (loss) $ 240 $ (164 ) $ 935 $ 128 Shares (Denominator): Basic weighted-average ordinary shares outstanding 265 252 260 251 Add incremental shares for: Dilutive effect of share options, RSUs and ESPP rights 13 — 12 7 Dilutive effect of Convertible Notes 9 — 11 7 Shares used in diluted computation 287 252 283 265 Basic income (loss) per share: Income (loss) per share from continuing operations $ 0.92 $ (0.48 ) $ 3.54 $ 0.69 Income (loss) per share from discontinued operations $ (0.01 ) $ (0.17 ) $ 0.06 $ (0.18 ) Net income (loss) per share $ 0.91 $ (0.65 ) $ 3.60 $ 0.51 Diluted income (loss) per share: Income (loss) per share from continuing operations $ 0.85 $ (0.48 ) $ 3.25 $ 0.65 Income (loss) per share from discontinued operations $ (0.01 ) $ (0.17 ) $ 0.05 $ (0.17 ) Net income (loss) per share $ 0.84 $ (0.65 ) $ 3.30 $ 0.48 Supplemental cash flow disclosures. At August 2, 2015 and November 2, 2014 , we had $43 million and $45 million , respectively, of unpaid purchases of property, plant, and equipment included in accounts payable and other current liabilities. Amounts reported as unpaid purchases will be recorded as cash outflows from investing activities for purchases of property, plant, and equipment in the unaudited condensed consolidated statements of cash flows in the period in which they are paid. Recently Adopted Accounting Guidance In April 2014, the Financial Accounting Standards Board, or FASB, issued authoritative guidance that raises the threshold for a disposal transaction to qualify as a discontinued operation and requires additional disclosures about discontinued operations and disposals of individually significant components that do not qualify as discontinued operations, with early adoption permitted. We adopted this guidance early during the third fiscal quarter ended August 2, 2015 . The impact on presentation of our results of operations and disclosures of discontinued operations and disposals of individually significant components are reflected in our consolidated financial statements presented herein. In November 2014, the FASB issued authoritative guidance that provides guidance on whether and at what threshold an acquired business or not-for-profit organization can apply pushdown accounting. This guidance provides an option to apply pushdown accounting in the separate financial statements of an acquired entity upon the occurrence of an event in which an acquirer obtains control of the acquired entity. The guidance was effective on November 18, 2014. After the effective date, an acquired entity can make an election to apply the guidance to future change-in-control events or to its most recent change-in-control event. However, if the financial statements for the period in which the most recent change-in-control event occurred already have been issued or made available to be issued, the application of this guidance would be a change in accounting principle. The adoption of this guidance did not impact our consolidated financial statements. In July 2013, the FASB issued an amendment to the accounting guidance related to the financial statement presentation of an unrecognized tax benefit when a net operating loss carryforward, a similar tax loss or a tax credit carryforward exists. The guidance requires an unrecognized tax benefit to be presented as a decrease in a deferred tax asset where a net operating loss, a similar tax loss or a tax credit carryforward exists and certain criteria are met. This guidance was effective for the first quarter of our fiscal year 2015. The adoption of this guidance did not have a significant impact on our consolidated balance sheets. Recent Accounting Guidance Not Yet Adopted In August 2015, the FASB issued an amendment to the accounting guidance related to the financial statement presentation and subsequent measurement of debt issuance costs associated with line-of-credit arrangements. Given the absence of authoritative guidance related to debt issuance costs related to line-of-credit arrangements within an update issued in April 2015, deferral and presentation of debt issuance costs as an asset and subsequently amortizing the deferred debt issuance costs ratably over the term of the line of credit arrangement is permitted. We are currently evaluating the impact that this guidance will have on our consolidated financial statements. In August 2015, the FASB deferred the effective date of the authoritative guidance that outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and will supersede most current revenue recognition guidance. The guidance will be effective for the first quarter of our fiscal year 2019. Early adoption is permitted, but not before the first quarter of our fiscal year 2018. The new guidance is required to be applied retrospectively to each prior reporting period presented or retrospectively with the cumulative effect of initially applying it recognized at the date of initial application. We have not yet selected a transition method and are currently evaluating the impact of this guidance on our consolidated financial statements. In July 2015, the FASB issued an amendment to the accounting guidance related to the measurement of inventory. The amendment revises inventory to be measured at lower of cost and net realizable value from lower of cost or market. Subsequent measurement is unchanged for inventory measured using last-in, first-out (LIFO) or the retail inventory method. This guidance will be effective prospectively for the first quarter of our fiscal year 2018, with early application permitted. We are currently evaluating the impact that this guidance will have on our consolidated financial statements. In May 2015, the FASB issued an amendment to permit a reporting entity, as a practical expedient, to measure the fair value of certain investments using the net asset value per share of the investment. Currently, investments valued using the practical expedient are categorized within the fair value hierarchy on the basis of whether the investment is redeemable with the investee at net asset value on the measurement date, never redeemable with the investee at net asset value, or redeemable with the investee at net asset value at a future date. The amendment removes the requirement to categorize investments for which fair values are measured using the net asset value per share practical expedient. It also limits disclosures to investments for which the entity has elected to measure the fair value using the practical expedient. The new guidance will be effective retrospectively to each prior reporting period presented for the first quarter of fiscal year 2017, with early application permitted. We are currently evaluating the impact this guidance will have on our consolidated financial statements including disclosures. In April 2015, the FASB issued an amendment to the accounting guidance related to the financial statement presentation of debt issuance costs. The new guidance is required to be applied retrospectively to each prior reporting period presented. The guidance requires debt issuance costs to be presented on the balance sheet as a direct reduction to the carrying amount of debt, consistent with debt discounts or premiums. This guidance will be effective for the first quarter of our fiscal year 2017, with early application permitted. The adoption of this guidance will not have a material effect on our consolidated balance sheet presentation. In April 2015, the FASB issued an amendment to the accounting guidance that provides a practical expedient to companies whose fiscal year end does not coincide with a calendar month-end. The practical expedient permits the entity to measure defined benefit plan assets and obligations using the calendar month-end that is closest to the entity’s fiscal year-end and apply the practical expedient consistently from year to year. This guidance will be effective prospectively for the first quarter of our fiscal year 2017, with early application permitted. The adoption of this guidance will not have a material effect on our financial condition and results of operations. In February 2015, the FASB issued an amendment to the accounting guidance related to the criteria for consolidation of certain legal entities. The guidance will be effective for the first quarter of our fiscal year 2018, with early adoption permitted. The guidance requires either retrospective application to each prior period presented or retrospective application with a cumulative adjustment to retained earnings as of the adoption date. We are currently evaluating the impact that this guidance will have on our financial condition and results of operations. In June 2014, the FASB issued authoritative guidance that resolves the diverse accounting treatment for share-based payment awards that require a specific performance target to be achieved in order for employees to become eligible to vest in the awards. The guidance applies to entities that grant their employees share-based awards that include a performance target that could be achieved after the requisite service period. The guidance explicitly requires that a performance target of this nature be treated as a performance condition and should not be reflected in estimating the grant-date fair value of the award. This guidance will be effective for the first quarter of our fiscal year 2016. We are currently evaluating the impact that this guidance will have on our financial condition and results of operations. |
Acquisitions
Acquisitions | 9 Months Ended |
Aug. 02, 2015 | |
Business Combinations [Abstract] | |
Acquisitions | Acquisitions Emulex Acquisition On May 5, 2015, we acquired Emulex, a leader in network connectivity, monitoring and management. We acquired Emulex to broaden our portfolios to better serve the enterprise storage end market. Total consideration consisted of the following (in millions): Cash paid to Emulex stockholders $ 582 Fair value of partially vested assumed equity awards 5 Total purchase price 587 Less: cash acquired 188 Total purchase price, net of cash acquired $ 399 We allocated the purchase price to tangible and identifiable intangible assets acquired and liabilities assumed based on their estimated fair values. The fair value of identifiable intangible assets acquired was based on estimates and assumptions made by management at the time of acquisition. As additional information becomes available, such as finalization of the estimated fair values of tax accounts, we may revise our preliminary purchase price allocation during the remainder of the measurement period (which will not exceed 12 months from the acquisition date). Any such revisions or changes may be material. Our preliminary allocation of the purchase price, net of cash acquired, is as follows (in millions): Fair Value Trade accounts receivable $ 50 Inventory 61 Assets held-for-sale 83 Other current assets 7 Property, plant and equipment 28 Goodwill 138 Intangible assets 388 Other long-term assets 13 Accounts payable (36 ) Employee compensation and benefits (20 ) Other current liabilities (15 ) Long-term debt (178 ) Other long-term liabilities (120 ) Fair value of net assets acquired $ 399 Our results of continuing operations for the fiscal quarter and three fiscal quarters ended August 2, 2015 include $89 million of net revenue related to the Emulex acquisition. It is impracticable to determine the effect on net income resulting from the Emulex acquisition for the fiscal quarter ended August 2, 2015 , as we immediately integrated Emulex into our ongoing operations. Acquisition costs of $6 million incurred in connection with this acquisition are included in selling, general and administrative expenses in the unaudited condensed consolidated statements of operations for the fiscal quarter and three fiscal quarters ended August 2, 2015. Goodwill reflected the value of the skilled assembled workforce, sales growth from future new product offerings and services, and the anticipated unique synergies that would result from this acquisition. Goodwill is not deductible for tax purposes. Refer to Note 3. "Supplemental Financial Information" for discussion on assets held-for-sale. Intangible Assets Identified intangible assets acquired consisted of the following: Fair Value (in millions) Estimated Useful Lives (in years) Developed technology $ 227 4 Customer relationships 131 9 Trade names 10 5 Customer order backlog 5 0.25 Total identified finite-lived intangible assets 373 In-process research and development 15 Total identified intangible assets $ 388 Developed technology represents technologies in Fibre Channel and Ethernet product categories that had attained technological feasibility. In-process research and development, or IPR&D, represents the acquired research and development projects that had not yet reached technological feasibility. The fair value of the developed technology and IPR&D intangible assets were estimated using the discounted cash flow method under the income approach. Under this method, the after-tax direct cash flows expected to be generated by the technologies were discounted over their remaining useful lives, net of contributions of other assets to those cash flows. The discount rates used were commensurate with the inherent risks associated with each type of asset and the level and timing of cash flows appropriately reflect market participant assumptions. Some of the significant assumptions inherent in the development of the identifiable intangible asset valuations, from the perspective of a market participant, include the estimated net cash flows by year by project or product, the appropriate discount rate to reflect the risk inherent in each future cash flow stream, and the assessment of each asset's life cycle. The following table summarizes the details of the IPR&D projects as of August 2, 2015 ($ in millions): Description IPR&D Discount Rate Percentage of Completion at Acquisition Estimated Cost to Complete Expected Release Date (by fiscal year) Fibre Channel product $ 7 24 % 33 % $ 26 2016 Ethernet product $ 8 26 % 48 % $ 7 2015 Customer relationships represent the existing relationships in the network connectivity product lines in the original equipment manufacturer, or OEM, Government and distributor channels. The customer relationships were fair valued using the incremental cash flow method under the income approach. Under this method, the fair value was calculated based on the present value of the incremental cash flows anticipated from existing customer relationships in place at the acquisition date versus having no such relationships and needing to replace those relationships. The main assumptions utilized in the incremental cash flow method were projected revenues from existing customer relationships, percentage of revenue lost due to the absence of existing customer relationships and a discount rate. Trade names were fair valued using the relief-from-royalty method under the income approach. Under this method, the fair value was calculated based on the after-tax cost savings resulting from owning the trade names rather than paying licensing royalty fees. The main assumptions utilized in the relief-from-royalty method were projected revenues, market-based royalty rate and a discount rate. Customer order backlog represents firm orders for products or services that were in place as of the acquisition date and was valued on a direct cash flow basis. We believe the amount of purchased intangible assets recorded as developed technology, customer relationships, trade names, backlog and IPR&D represent the fair value of and approximate the amount a market participant would pay for these intangible assets as of the acquisition date. Unaudited Pro Forma Information The following unaudited pro forma financial information presents combined results of operations for each of the periods presented, as if Emulex had been acquired as of the beginning of fiscal year 2014. The pro forma information includes adjustments primarily for amortization of intangible assets acquired, depreciation of property, plant and equipment acquired, the purchase accounting effect on inventory acquired, share-based compensation expense related to assumed equity awards and restructuring charges in connection with the acquisition. The pro forma data is for informational purposes only and is not necessarily indicative of the consolidated results of operations of the combined business had the acquisition actually occurred at the beginning of fiscal year 2014 or of the results of future operations of the combined business. Consequently, actual results differ from the unaudited pro forma information presented below (in millions, except for per share amounts): Fiscal Quarter Ended Three Fiscal Quarters Ended August 2, 2015 August 3, 2014 August 2, 2015 August 3, 2014 Pro forma net revenue $ 1,735 $ 1,362 $ 5,178 $ 2,988 Pro forma income (loss) from continuing operations $ 317 $ (142 ) $ 929 $ 38 Pro forma income (loss) per share from continuing operations - basic $ 1.20 $ (0.56 ) $ 3.57 $ 0.15 Pro forma income (loss) per share from continuing operations - diluted $ 1.10 $ (0.56 ) $ 3.28 $ 0.14 Pending Acquisition of Broadcom Corporation On May 28, 2015, we entered into an Agreement and Plan of Merger, or the Broadcom Agreement, by and among Broadcom Corporation, or Broadcom, Pavonia Limited, a limited company incorporated under the laws of the Republic of Singapore, or Holdco, Safari Cayman L.P., an exempted limited partnership formed under the laws of the Cayman Islands and a direct wholly-owned subsidiary of Holdco, or the Partnership, Avago Technologies Cayman Holdings Ltd., an exempted company incorporated under the laws of the Cayman Islands and a direct wholly-owned subsidiary of the Partnership, or Intermediate Holdco, Avago Technologies Cayman Finance Limited, an exempted company incorporated under the laws of the Cayman Islands and a direct wholly-owned subsidiary of Intermediate Holdco, or Finance Holdco, Buffalo CS Merger Sub, Inc., a California corporation and wholly-owned subsidiary of Finance Holdco, and Buffalo UT Merger Sub, Inc., a California corporation and wholly-owned subsidiary of Finance Holdco, which provides for a proposed business combination transaction between us and Broadcom, or the Broadcom Transaction. As a result of the Broadcom Transaction, at closing, each share of Broadcom common stock will be converted into the right to receive, at the election of each holder of such Broadcom common stock and subject to pro-ration in accordance with the Broadcom Agreement, cash or equity interests in either Holdco or the Partnership. Upon the terms and subject to the conditions set forth in the Broadcom Agreement, Broadcom shareholders will have the ability to elect to receive, with respect to each issued and outstanding share of Broadcom common stock: (a) $54.50 per share in cash; (b) 0.4378 freely-tradable ordinary shares in Holdco; or (c) 0.4378 exchangeable limited partnership units in the Partnership, or restricted exchangeable units, that are designed to be the economic equivalent of 0.4378 ordinary shares of Holdco, which cannot be transferred, sold or hedged for a period of one to two years after closing and which will be subject to related anti-hedging prohibitions. The foregoing exchange ratios are fixed. The shareholder election will be subject to a pro-ration mechanism, which is anticipated to result in payment, in the aggregate, of approximately $17 billion in cash consideration and the economic equivalent of approximately 140 million of our ordinary shares (assuming no more than 50% of outstanding shares of Broadcom common stock elect restricted exchangeable units), resulting in Broadcom shareholders owning approximately 33% of the combined company. Based on the closing share price of our ordinary shares as of May 27, 2015, the implied value of the total transaction consideration for Broadcom was $37 billion . As a result of the Broadcom Transaction, at closing, all our issued ordinary shares as of immediately prior to the effective time of the Broadcom Transaction will be exchanged on a one -to-one basis for new ordinary shares of Holdco. We intend to finance the $17 billion of cash consideration with cash on hand from both companies and $9 billion in new, fully-committed debt financing from a consortium of banks. We also intend to refinance substantially all of our and Broadcom's existing debt with committed debt financing, presently aggregating approximately $6 billion . At the closing of the Broadcom Transaction, each unvested Broadcom option and RSU will be assumed by Holdco, on the same terms and conditions as were applicable to such Broadcom option or RSU (including with respect to vesting), and converted to an equivalent equity award to receive Holdco ordinary shares appropriately adjusted to take into account the Broadcom Transaction consideration. All vested, in-the-money Broadcom stock options and RSUs, after giving effect to any acceleration or vesting that occurs as a result of the Broadcom Transaction, will be cashed out. Any vested out-of-the-money Broadcom option will be cancelled for no consideration. At the closing of the Broadcom Transaction, each outstanding Avago option and RSU will be assumed by Holdco, on the same terms and conditions as were applicable to such Avago option or RSU (including with respect to vesting and, in case of Avago options, exercise price), and converted to an equivalent equity award to receive the same number of Holdco ordinary shares as were subject to, and on the same terms as, the underlying Avago option or RSU. The Broadcom Transaction has been unanimously approved by the boards of directors of both companies, as well as a special committee of the independent directors of Broadcom. Consummation of the Broadcom Transaction is subject to the satisfaction or waiver of the conditions set forth in the Broadcom Agreement, including approval of the Broadcom Transaction by our shareholders and Broadcom shareholders, the expiration or termination of the waiting period under the United States Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, or the HSR Act, and the receipt of regulatory clearance under certain foreign anti-trust laws, as well as other customary closing conditions. On August 11, 2015, we announced that the waiting period under the HSR Act had expired. Avago and Broadcom may each terminate the Broadcom Agreement under certain circumstances, and in connection with the termination of the Broadcom Agreement under specified circumstances, Avago or Broadcom may be required to pay the other party a termination fee of $1 billion . Additionally, in the event that either Avago or Broadcom terminates the Broadcom Agreement as a result of the failure by either party’s shareholders to approve the Broadcom Transaction, Broadcom or Avago, as the case may be, must pay the other party a fee of approximately $333 million . Avago and Broadcom have each made customary covenants in the Broadcom Agreement, including, without limitation, covenants not to solicit alternative transactions or, subject to certain exceptions, not to enter into discussions concerning, or provide confidential information in connection with, an alternative transaction. We currently expect the Broadcom Transaction to close by the end of the first calendar quarter of 2016. |
Supplemental Financial Informat
Supplemental Financial Information | 9 Months Ended |
Aug. 02, 2015 | |
Balance Sheet Related Disclosures [Abstract] | |
Supplemental Financial Information | Inventory Inventory consists of the following (in millions): August 2, November 2, Finished goods $ 157 $ 185 Work-in-process 257 250 Raw materials 93 84 Total inventory $ 507 $ 519 Assets held-for-sale The following tables summarize components of assets held-for-sale (in millions): August 2, 2015 Real property $ 49 Endace 34 Fiber optics subsystems assets 26 Total assets held-for-sale $ 109 November 2, 2014 Axxia Business: Inventory $ 14 Property, plant and equipment, net 22 Goodwill 91 Intangible assets, net 475 Total Axxia Business 602 Real property 26 Total assets held of sale $ 628 As of August 2, 2015 , the real property primarily represented the former Emulex headquarters that we classified as held-for-sale upon the completion of the Emulex acquisition. The carrying value of Endace as of August 2, 2015 represents the fair value determined in the preliminary purchase price allocation of Emulex acquisition, adjusted for operating activities since the acquisition date. During the fiscal quarter ended August 2, 2015 , we realigned certain product groups within our wired infrastructure segment and on August 24, 2015, we agreed to sell certain fiber optics subsystems assets to a third party. The transaction is subject to customary closing conditions, including the receipt of certain government approvals. During the three fiscal quarters ended August 2, 2015 , the Company completed the sales of the Axxia Business and former PLX Technology, Inc., or PLX, headquarters, both of which were classified as assets held-for-sale as of November 2, 2014. |
Goodwill and Intangible Assets
Goodwill and Intangible Assets | 9 Months Ended |
Aug. 02, 2015 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Intangible Assets | 4. Goodwill and Intangible Assets Goodwill The following table summarizes changes in goodwill by segment (in millions): Wireless Communications Wired Infrastructure Enterprise Storage Industrial & Other Total Balance as of November 2, 2014 $ 261 $ 292 $ 907 $ 136 $ 1,596 Emulex acquisition — — 138 — 138 Reclassification to assets held-for-sale — (5 ) — — (5 ) Balance as of August 2, 2015 $ 261 $ 287 $ 1,045 $ 136 $ 1,729 Intangible Assets Intangible assets consist of the following (in millions): Gross Carrying Amount Accumulated Amortization Net Book Value As of August 2, 2015: Purchased technology $ 2,878 $ (1,036 ) $ 1,842 Customer and distributor relationships 1,702 (409 ) 1,293 Other (1) 298 (129 ) 169 Intangible assets subject to amortization 4,878 (1,574 ) 3,304 In-process research and development 165 — 165 Total $ 5,043 $ (1,574 ) $ 3,469 As of November 2, 2014: Purchased technology $ 2,651 $ (682 ) $ 1,969 Customer and distributor relationships 1,570 (264 ) 1,306 Other (1) 275 (87 ) 188 Intangible assets subject to amortization 4,496 (1,033 ) 3,463 In-process research and development 154 — 154 Total $ 4,650 $ (1,033 ) $ 3,617 _________________________________ (1) Primarily represents trademarks and customer order backlog. During the third quarter of fiscal year 2015, we recorded $373 million of intangible assets subject to amortization with a weighted-average amortization period of six years in connection with the Emulex acquisition. Amortization expense of intangible assets for the periods presented is as follows (in millions): Fiscal Quarter Ended Three Fiscal Quarters Ended August 2, August 3, August 2, August 3, Cost of products sold $ 129 $ 105 $ 355 $ 141 Operating expenses 68 91 186 106 Total amortization of intangible assets $ 197 $ 196 $ 541 $ 247 Based on the amount of intangible assets subject to amortization at August 2, 2015 , the expected amortization expense for each of the next five fiscal years and thereafter is as follows (in millions): Fiscal Year 2015 (remainder) $ 191 2016 715 2017 625 2018 494 2019 416 2020 338 Thereafter 525 $ 3,304 The weighted-average remaining amortization period for each intangible asset category at August 2, 2015 is as follows (in years): Amortizable intangible assets: Purchased technology 7 Customer and distributor relationships 7 Other 6 |
Retirement Plans and Post-Retir
Retirement Plans and Post-Retirement Benefits | 9 Months Ended |
Aug. 02, 2015 | |
Compensation and Retirement Disclosure [Abstract] | |
Retirement Plans and Post-Retirement Benefits | Retirement Plans and Post-Retirement Benefits Defined Benefit Plans As a result of our acquisition of LSI on May 6, 2014, we assumed LSI's defined benefit pension plans, covering certain U.S. and non-U.S. employees, under which we are obligated to make future contributions to fund benefits to participants. The U.S. defined benefit pension plans include a management plan and a represented plan. Benefits under the management plan are provided under either an adjusted career-average-pay program or a cash-balance program. Benefits under the represented plan are based on a dollar-per-month formula. Benefit accruals under the management plan were frozen in 2009. Participants in the adjusted career-average-pay program no longer earn service accruals. Participants in the cash-balance program no longer earn service accruals, but continue to earn 4% interest per year on their cash-balance accounts. There are no active participants under the represented plan. We also assumed a non-qualified supplemental pension plan in the U.S. in the LSI acquisition, which principally provides benefits based on compensation in excess of amounts that can be considered under the management plan. We also assumed pension plans covering certain non-U.S. employees in that transaction. Net Periodic Benefit Cost (Income) The following table summarizes the components of the net periodic benefit income for the periods presented (in millions): Pension Benefits Fiscal Quarter Ended Three Fiscal Quarters Ended August 2, August 3, August 2, August 3, Service cost $ 1 $ — $ 2 $ 2 Interest cost 16 16 47 16 Expected return on plan assets (20 ) (18 ) (59 ) (19 ) Net actuarial loss and prior service cost — — 1 1 Total net periodic benefit cost income $ (3 ) $ (2 ) $ (9 ) $ — During the fiscal quarter and three fiscal quarters ended August 2, 2015 , we contributed $10 million and $26 million , respectively, to our defined benefit pension plans. We expect to contribute an additional $36 million to our defined benefit pension plans during the remainder of fiscal year 2015. |
Borrowings
Borrowings | 9 Months Ended |
Aug. 02, 2015 | |
Debt Disclosure [Abstract] | |
Borrowings | Borrowings Term Loans and Revolving Credit Facility In connection with our acquisition of LSI on May 6, 2014, certain of our subsidiaries entered into a credit agreement with the lenders named therein, or the 2014 Credit Agreement. The 2014 Credit Agreement provides for term loans of $4.6 billion , or Term Loans, and for our senior secured, revolving credit facility in an aggregate principal amount of up to $500 million , or the 2014 Revolving Credit Facility. Additionally, it provides for swingline loans of up to $75 million and the issuance of letters of credit of up to $100 million , both of which reduce the amount that may be borrowed under the 2014 Revolving Credit Facility. The Term Loans have a term of seven years and as of August 2, 2015 , had an effective interest rate of 4.15% . In March 2015, we made a $593 million principal prepayment on the Term Loans and, as a result, we wrote off $13 million of debt issuance costs, which was reported as a component of other income (expense), net in the unaudited condensed consolidated statements of operations. As of August 2, 2015 and November 2, 2014 , the outstanding principal balance of Term Loans was $3,961 million and $4,589 million , respectively. We were in compliance with the covenants described in the 2014 Credit Agreement as of August 2, 2015 . The 2014 Revolving Credit Facility has a term of five years. As of August 2, 2015 and November 2, 2014 , there were no borrowings outstanding under the 2014 Revolving Credit Facility and letters of credit outstanding were not material. Unamortized debt issuance costs associated with the Term Loans and 2014 Revolving Credit Facility as of August 2, 2015 and November 2, 2014 , were $90 million and $115 million , respectively, and are included in other current assets and other long-term assets on the unaudited condensed consolidated balance sheets. Amortization of debt issuance costs related to the Term Loans and 2014 Revolving Credit Facility was $4 million and $12 million for the fiscal quarter and three fiscal quarters ended August 2, 2015 , respectively, and $4 million for the fiscal quarter and three fiscal quarters ended August 3, 2014 , and was reported as a component of interest expense in the unaudited condensed consolidated statements of operations. Convertible Senior Notes In connection with our acquisition of LSI on May 6, 2014, the Company completed the private placement of $1 billion in aggregate principal amount of its Convertible Notes to two entities affiliated with Silver Lake Partners, or the Purchasers. The Convertible Notes were the Company’s unsecured senior obligations. Interest was payable on the Convertible Notes, semi-annually in arrears, at a rate of 2.0% per year, and the Convertible Notes were scheduled to mature on August 15, 2021. Subject to any limitations set forth in the indenture related to the Convertible Notes, upon conversion, the Convertible Notes could be settled in our ordinary shares, in cash or in a combination of cash and ordinary shares, at the Company’s option. On June 1, 2015, the Purchasers submitted to the Company conversion notices exercising their right to convert all of the outstanding Convertible Notes. The Company satisfied its resulting conversion obligation of $2.8 billion , by paying an aggregate of approximately $1 billion in cash, representing the principal amount of the Convertible Notes, and delivering an aggregate of 13.8 million of the Company's ordinary shares, in each case pursuant to the terms of the indenture related to the Convertible Notes. The Company recognized an immaterial gain related to the conversion of the Convertible Notes. The carrying value of the components of the Convertible Notes as of November 2, 2014 was as follows (in millions): November 2, Convertible notes liability component: Principal balance $ 1,000 Less: debt discount 80 Net carrying amount $ 920 Equity component carrying amount $ 85 The estimated fair value of the Convertible Notes as of November 2, 2014 , was $871 million , which was determined based on inputs that are observable in the market under Level 2 of the fair value hierarchy. The following table sets forth interest expense recognized related to Convertible Notes for the periods presented (in millions): Fiscal Quarter Ended Three Fiscal Quarters Ended August 2, August 3, August 2, August 3, Contractual coupon interest $ 2 $ 5 $ 12 $ 5 Accretion of debt discount 3.32% — 3 6 3 Total $ 2 $ 8 $ 18 $ 8 As a result of the acquisition of Emulex, all of the $175 million aggregate principal amount of Emulex's 1.75% Convertible Senior Notes due November 15, 2018, or Emulex Notes, became convertible at an increased conversion rate until June 30, 2015, under the make-whole fundamental change provision of the Emulex Notes. As a result of the acquisition, upon conversion, holders of the Emulex Notes were only entitled to receive cash payments based on the $8.00 per share consideration price. All of the outstanding Emulex Notes were converted at this increased conversion rate resulting in aggregate cash payments of approximately $178 million . Principal Payments of Long-term Debt At August 2, 2015 , future scheduled principal payments for our outstanding Term Loans, including the current portion, are summarized as follows (in millions): Fiscal Year 2015 (remainder) $ 12 2016 46 2017 46 2018 46 2019 46 2020 46 Thereafter 3,719 Total $ 3,961 |
Shareholders' Equity
Shareholders' Equity | 9 Months Ended |
Aug. 02, 2015 | |
Equity [Abstract] | |
Shareholders' Equity | Shareholders’ Equity Share Repurchase Program No shares were repurchased during the three fiscal quarters ended August 2, 2015 under the 2015 or 2014 share repurchase mandate. The 2014 share repurchase mandate expired on April 8, 2015. At our 2015 annual general meeting of shareholders on April 8, 2015, shareholders approved our 2015 share purchase mandate, pursuant to which we are authorized, upon the approval of the Board, to repurchase up to approximately 26 million of our ordinary shares in open market transactions or pursuant to equal access schemes, up to the date on which our 2016 annual general meeting of shareholders is held or required by law to be held, or the 2015 share purchase mandate. As of the date of this Quarterly Report on Form 10-Q, the Board had not approved any repurchases of our ordinary shares pursuant to the 2015 share purchase mandate. Dividends We paid cash dividends of $0.40 and $0.29 per ordinary share, or $104 million and $73 million , during the fiscal quarters ended August 2, 2015 and August 3, 2014 , respectively. We paid aggregate cash dividends of $292 million and $203 million during the three fiscal quarters ended August 2, 2015 and August 3, 2014 , respectively. Share-Based Compensation Expense The following table summarizes share-based compensation expense reported in continuing operations related to share-based awards granted to employees and directors for the periods presented (in millions): Fiscal Quarter Ended Three Fiscal Quarters Ended August 2, August 3, August 2, August 3, Cost of products sold $ 7 $ 6 $ 19 $ 12 Research and development 31 20 77 38 Selling, general and administrative 25 24 73 54 Total share-based compensation expense $ 63 $ 50 $ 169 $ 104 The fair values of our time-based options and ESPP purchase rights were estimated using the Black-Scholes option pricing model. Certain equity awards granted in the fiscal quarters and three fiscal quarters ended August 2, 2015 and August 3, 2014 , respectively, included both service and market conditions. The fair value of market-based awards was estimated using Monte Carlo simulation techniques. The fair value of RSUs was estimated using the closing market price of our ordinary shares on the date of grant, reduced by the present value of dividends expected to be paid on our ordinary shares prior to vesting. In connection with the Emulex acquisition, the Company assumed certain stock options and RSUs originally granted by Emulex. Share-based compensation expense in the third quarter of fiscal year 2015 included $2 million related to assumed Emulex stock options and RSUs. The weighted-average assumptions utilized for our time-based options, ESPP purchase rights and market-based awards granted for the periods presented are shown in the tables below. Time-Based Options Fiscal Quarter Ended Three Fiscal Quarters Ended August 2, August 3, August 2, August 3, Risk-free interest rate 0.3 % 0.5% - 1.4% 1.2 % 0.5% - 1.3% Dividend yield 1.3 % 1.6 % 1.4 % 1.7 % Volatility 37.0 % 35.0 % 35.0 % 35.0 % Expected term (in years) 1.1 1.9 - 4.3 3.8 1.9 - 4.3 ESPP Purchase Rights Fiscal Quarter Ended Three Fiscal Quarters Ended August 2, August 3, August 2, August 3, Risk-free interest rate 0.2 % 0.1 % 0.1 % 0.1 % Dividend yield 1.2 % 1.7 % 1.3 % 1.9 % Volatility 37.0 % 31.0 % 34.0 % 33.0 % Expected term (in years) 0.5 0.5 0.5 0.5 Market-Based Awards Fiscal Quarter Ended Three Fiscal Quarters Ended August 2, August 3, August 2, August 3, Risk-free interest rate 1.4 % 2.2 % 1.4 % 2.3 % Dividend yield 1.1 % 1.6 % 1.2 % 1.8 % Volatility 35.0 % 45.0 % 36.0 % 45.0 % Expected term (in years) 4.0 7.0 4.4 7.0 The dividend yields for the fiscal quarters and three fiscal quarters ended August 2, 2015 and August 3, 2014 were based on the dividend yield as of the respective award grant dates. For the fiscal quarters and three fiscal quarters ended August 2, 2015 and August 3, 2014, expected volatility for time-based and market-based options were based on our own historical share price volatility or combining historical volatility of guideline publicly-traded companies and our own historical share price volatility over the period commensurate with the expected life of the awards and the implied volatility from our own traded ordinary shares with a term of 180 days measured at a specific date. The risk-free interest rate was derived from the average U.S. Treasury Strips rate during the period, which approximated the rate in effect at the time of grant. For the fiscal quarters and three fiscal quarters ended August 2, 2015 and August 3, 2014 , the expected term for time-based options was based on a weighted-average combining the average life of options that have already been exercised or cancelled with the expected life of all unexercised options. The expected life for unexercised options was calculated assuming that the options will be exercised at the midpoint of the vesting date (if unvested) or the valuation date (if vested) and the full contractual term. The expected term of market-based options valued using Monte Carlo simulation techniques was based upon the vesting dates forecasted by the simulation and then assuming that options which vest, and for which the market condition has been satisfied, are exercised at the midpoint between the forecasted vesting date and their expiration. The expected term of market-based RSUs valued using Monte Carlo simulation techniques was commensurate with the awards' contractual terms. The total unrecognized compensation cost of time and market-based options granted but not yet vested as of August 2, 2015 was $161 million , which is expected to be recognized over the remaining weighted-average service period of 2.5 years. Total unrecognized compensation cost related to the ESPP purchase rights as of August 2, 2015 was $1 million and is expected to be recognized over the remaining portion of the current offering period under the ESPP, which ends on September 14, 2015. Total unrecognized compensation cost related to unvested RSUs and unvested market-based RSUs as of August 2, 2015 was $407 million , which is expected to be recognized over the remaining weighted-average service period of 3.3 years. Equity Incentive Award Plans A summary of option award activity related to our equity incentive plans is as follows (in millions, except years and per share amounts): Option Awards Outstanding Number Outstanding Weighted- Average Exercise Price Per Share Weighted- Average Remaining Contractual Life (in years) Aggregate Intrinsic Value Balance as of November 2, 2014 29 $ 44.97 Granted 1 $ 95.97 Exercised (5 ) $ 33.56 Cancelled (2 ) $ 65.76 Balance as of August 2, 2015 23 $ 47.48 4.83 $ 1,764 Vested as of August 2, 2015 10 $ 36.73 4.20 $ 851 Fully vested and expected to vest as of August 2, 2015 22 $ 47.07 4.81 $ 1,712 The total intrinsic values of options exercised during the fiscal quarters ended August 2, 2015 and August 3, 2014 were $136 million and $52 million , respectively. Total intrinsic values of options exercised during the three fiscal quarters ended August 2, 2015 and August 3, 2014 were $470 million and $121 million , respectively. A summary of RSU activity related to our equity incentive plans is as follows (in millions, except years and per share amounts): RSU Awards Outstanding Number Outstanding Weighted- Average Grant Date Fair Market Value Weighted- Average Remaining Contractual Life (in years) Balance as of November 2, 2014 4 $ 48.82 Granted 3 $ 119.34 Vested (1 ) $ 56.44 Forfeited (1 ) $ 74.49 Balance as of August 2, 2015 5 $ 94.84 1.90 Employee Share Purchase Plan No shares were issued under the ESPP during the fiscal quarters ended August 2, 2015 or August 3, 2014 . A total of 0.1 million shares were issued under the ESPP during each of the three fiscal quarters ended August 2, 2015 and August 3, 2014 . |
Income Taxes
Income Taxes | 9 Months Ended |
Aug. 02, 2015 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes For the fiscal quarter and three fiscal quarters ended August 2, 2015 , we recorded an income tax provision of $23 million and $61 million , respectively, compared to an income tax benefit of $99 million and $93 million for the fiscal quarter and three fiscal quarters ended August 3, 2014 , respectively. The income tax benefits recorded for all periods in 2014 were largely due to the reversal of net deferred tax liabilities resulting from the amortization of acquired intangible assets and the recognition of previously unrecognized tax benefits as a result of lapses in statutes of limitations. In addition, the increase in income tax provision was due to the increase in profit before tax. In connection with our acquisition of Emulex during the third quarter of fiscal year 2015, net deferred tax liabilities were established on the acquired identifiable intangible assets, and on the excess of the financial reporting basis over the tax basis of acquired investments in certain foreign subsidiaries that have not been indefinitely reinvested. Upon finalization of our combined company legal structure, additional adjustments to our net deferred taxes may be required. The income tax provision for the fiscal quarter and three fiscal quarters ended August 2, 2015 included a benefit from the net recognition of previously unrecognized tax benefits as a result of the expiration of the statute of limitations for certain audit periods of $2 million and $11 million , respectively, compared to zero and $14 million for the fiscal quarter and three fiscal quarters ended August 3, 2014 , respectively. The income tax provision for the three fiscal quarters ended August 2, 2015 also included a discrete benefit of $15 million from the retroactive reinstatement of the U.S. Federal Research and Development tax credit from January 1, 2014 to December 31, 2014, with the enactment of the Tax Increase Prevention Act of 2014. Unrecognized Tax Benefits During the three fiscal quarters ended August 2, 2015 , gross unrecognized tax benefits increased by $138 million , net of $12 million of decreases from lapses of statutes of limitations as compared to the corresponding prior year fiscal period. The balance of gross unrecognized benefits was $625 million as of August 2, 2015 . The increase in the gross unrecognized tax benefits is primarily a result of our acquisition of Emulex. Uncertain tax positions assumed in connection with our acquisitions are initially estimated as of the acquisition date. We continue to reevaluate these items with any adjustments to our preliminary estimates being recorded to goodwill, provided that we are within the measurement period, and we continue to collect information in order to determine their estimated value. Accrued interest and penalties are included in other long-term liabilities on our unaudited condensed consolidated balance sheets. As of August 2, 2015 and November 2, 2014 , the combined amount of cumulative accrued interest and penalties was approximately $48 million and $23 million , respectively. The increase in cumulative accrued interest and penalties as of August 2, 2015 is primarily a result of our acquisition of Emulex. Certain of our unrecognized tax benefits will affect our effective tax rate if they are ultimately recognized upon favorable resolution of the related uncertain tax positions. As of August 2, 2015 and November 2, 2014 , approximately $606 million and $469 million , respectively, of the unrecognized tax benefits (including accrued interest and penalties) would affect our effective tax rate if recognized. We are subject to Singapore income tax examinations for the years ended October 31, 2010 and later, and in major jurisdictions outside Singapore for fiscal years 2007 and later. Emulex is currently under examination by the Internal Revenue Service, or IRS, for its fiscal years 2007 through 2013. Absent any resolution of the Emulex IRS audit discussed above, we believe it is possible that we may recognize up to $5 million of all other existing unrecognized tax benefits within the next 12 months as a result of lapses of the statute of limitations for certain audit periods. |
Segment Information
Segment Information | 9 Months Ended |
Aug. 02, 2015 | |
Segment Reporting [Abstract] | |
Segment Information | Segment Information Reportable Segments During the fourth quarter of fiscal year 2014, we changed our organizational structure resulting in four reportable segments: wireless communications, enterprise storage, wired infrastructure and industrial & other. These segments align with our principal target markets. The segments represent components of the Company for which separate financial information is available that is utilized on a regular basis by the Chief Executive Officer, who has been identified as the Chief Operating Decision Maker, or CODM, as defined by authoritative guidance on segment reporting, in determining how to allocate resources and evaluate performance. The segments are determined based on several factors, including client base, homogeneity of products, technology, delivery channels and similar economic characteristics. The amounts for the fiscal quarter and three fiscal quarters ended August 3, 2014 have been revised to conform to the current year’s presentation. Wireless Communications. We support the wireless communications industry with a broad variety of radio frequency, or RF, semiconductor devices that amplify, as well as selectively filter, RF signals. In addition to RF devices, we provide a variety of optoelectronic sensors for mobile handset applications. Enterprise Storage. This segment consists of LSI's storage products, PLX's Peripheral Component Interconnect Express, or PCIe, switches and bridges and Emulex's network and storage connectivity products. LSI's storage products enable secure movement of digital data to and from host machines, such as servers, personal computers and storage systems, to the underlying storage devices, such as hard disk drives, or HDDs, and solid state drives, or SSDs. We provide read channel-based system-on-a-chip, or SoCs, and preamplifiers to HDD OEMs. We also provide custom flash controllers to SSD OEMs, and serial attached SCSI and redundant array of independent disks controller and adapter solutions to server and storage system OEMs. PLX's PCIe devices are interconnect semiconductors supporting the PCIe communication standards and are the primary interconnection mechanism inside computing systems. Emulex's network and connectivity products include Fibre Channel Host Bus Adapters, which connect host computers such as servers to Fibre Channel Storage Area Networks, or FC SANs. FC SANs are networks dedicated to storage traffic and enable high speed and secure connections between multiple host computers to one or more storage arrays. Wired Infrastructure. In the storage and Ethernet networking markets, we supply transceivers that receive and transmit information along optical fibers. We also supply optical laser and receiver components to the access, metro and long-haul telecommunication markets. For enterprise networking and server input/output applications, we supply high speed serializer/deserializer products integrated into application specific integrated circuits. Industrial & Other. We provide a broad variety of products for the general industrial and automotive markets. We offer optical isolators, which provide electrical insulation and signal isolation. For industrial motors and robotic motion control, we supply optical encoders, as well as integrated circuits, for the controller and decoder functions. For electronic signs and signals, we supply light-emitting diode assemblies that offer high brightness and stable light output over thousands of hours, enabling us to support traffic signals, large commercial signs and other displays. For industrial networking, we provide faster optical transceivers using plastic optical fiber that enable quick and interoperable networking and factory automation. Our CODM assesses the performance of each segment and allocates resources to those segments based on net revenue and operating income and does not evaluate operating segments using discrete asset information. Operating income by segment includes items that are directly attributable to each segment. Operating income by segment also includes shared expenses, such as global operations, including manufacturing support, logistics and quality control, which are allocated primarily based on headcount, expenses associated with our globally integrated support organizations, such as sales and corporate marketing functions, as well as finance, information technology, human resources, legal and related corporate infrastructure costs, along with certain benefit related expenses, which are allocated primarily based on a percentage of revenue, and facilities allocated based on square footage. Unallocated Expenses Unallocated expenses include amortization of intangible assets, share-based compensation expense, restructuring charges and acquisition-related costs, including charges related to inventory step-up to fair value, which are not used in evaluating the results of, or in allocating resources to, our segments. Acquisition-related costs include transaction costs and any costs directly related to the acquisition and integration of acquired businesses. Depreciation expense directly attributable to each reportable segment is included in operating income for each segment. However, the CODM does not evaluate depreciation expense by operating segment and, therefore, it is not separately presented. There was no inter-segment revenue for the fiscal quarter or three fiscal quarters ended August 2, 2015 or August 3, 2014 . The accounting policies of the segments are the same as those described in the summary of significant accounting policies. The following tables present our net revenue and operating income by reportable segment for the periods presented (in millions): Fiscal Quarter Ended Three Fiscal Quarters Ended August 2, August 3, August 2, August 3, Net revenue: Wireless communications $ 616 $ 364 $ 1,856 $ 1,061 Enterprise storage 588 404 1,541 404 Wired infrastructure 372 352 1,101 799 Industrial & other 159 149 486 415 Operating income: Wireless communications $ 285 $ 134 $ 871 $ 365 Enterprise storage 225 130 588 130 Wired infrastructure 130 89 345 191 Industrial & other 78 57 243 181 Unallocated expenses (419 ) (572 ) (929 ) (730 ) |
Related Party Transactions
Related Party Transactions | 9 Months Ended |
Aug. 02, 2015 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | Related Party Transactions 2.0% Convertible Senior Notes due 2021 The Purchasers of the Convertible Notes are two entities affiliated with Silver Lake Partners, of which Kenneth Hao, one of our directors, is a Managing Partner and Managing Director. During the fiscal quarter ended August 2, 2015 , the Purchasers submitted to the Company conversion notices exercising their right to convert all of the Convertible Notes that they hold. See Note 6. "Borrowings" for more information on the conversion of the Convertible Notes. In connection with the issuance of the Convertible Notes, the Company and Purchasers also entered into a registration rights agreement pursuant to which the Purchaser have certain registration rights with respect to the Convertible Notes and our ordinary shares issued upon conversion of the Convertible Notes. Silicon Manufacturing Partners Pte. Ltd. As a result of the acquisition of LSI, we acquired a 51% equity interest in Silicon Manufacturing Partners Pte. Ltd., or SMP, a joint venture with GLOBALFOUNDRIES. We have a take-or-pay agreement with SMP under which we have agreed to purchase 51% of the managed wafer capacity from SMP’s integrated circuit, or IC, manufacturing facility and GLOBALFOUNDRIES has agreed to purchase the remaining managed wafer capacity. SMP determines its managed wafer capacity each year based on forecasts provided by us and GLOBALFOUNDRIES. If we fail to purchase our required commitments, we will be required to pay SMP for the fixed costs associated with the unpurchased wafers. GLOBALFOUNDRIES is similarly obligated with respect to the wafers allotted to it. The agreement may be terminated by either party upon two years written notice. The agreement may also be terminated for material breach, bankruptcy or insolvency. Other During the fiscal quarter and three fiscal quarters ended August 2, 2015 and August 3, 2014 , in the ordinary course of business, the Company purchased from, or sold (directly or indirectly) to, several entities for which one of the Company's directors also serves or served as a director, or is otherwise affiliated with, including Alibaba Group Holding Limited, Avaya Inc., Blackline Systems, Inc., Dell Inc., Hillstone Networks, Inc., KLA-Tencor Corporation, Kulicke & Soffa Industries, Inc., Smart Modular Technologies, Smart Storage Systems, Tintri, Inc. and QLogic Corporation. Aggregate transactions for the periods presented and balances with our related parties are as follows (in millions): Fiscal Quarter Ended Three Fiscal Quarters Ended August 2, August 3, August 2, August 3, Total net revenue $ 49 $ 36 $ 140 $ 36 Total costs and expenses including inventory purchases (1) $ 19 $ 21 $ 66 $ 21 August 2, November 2, Total receivables $ 10 $ 14 Total payables (1) $ 6 $ 8 Carrying value of the Convertible Notes and accrued interest $ — $ 930 _________________________________ (1) We purchased $17 million and $47 million of inventory from SMP for the fiscal quarter and three fiscal quarters ended August 2, 2015 , respectively, and $16 million for the fiscal quarter and three fiscal quarters ended August 3, 2014 . As of August 2, 2015 and November 2, 2014 , the amount payable to SMP was $6 million and $8 million , respectively. |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Aug. 02, 2015 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Commitments The following table summarizes contractual obligations and commitments as of August 2, 2015 , that have materially changed from the end of fiscal year 2014 (in millions): Total 2015 (remainder) 2016 2017 2018 2019 2020 Thereafter Debt principal, interest and fees $ 4,826 $ 49 $ 198 $ 196 $ 194 $ 191 $ 189 $ 3,809 Purchase commitments $ 363 $ 359 $ 4 $ — $ — $ — $ — $ — Operating lease obligations $ 154 $ 9 $ 26 $ 20 $ 17 $ 13 $ 8 $ 61 Debt Principal, Interest and Fees. Represents principal, interest and commitment fees payable on borrowings and credit facilities under the 2014 Credit Agreement. Purchase Commitments. Represents unconditional purchase obligations that include agreements to purchase goods or services, primarily inventory, that are enforceable and legally binding on us and that specify all significant terms, including fixed or minimum quantities to be purchased, fixed, minimum or variable price provisions, and the approximate timing of the transaction. Purchase obligations exclude agreements that are cancelable without penalty. We also make capital expenditures with a variety of vendors in connection with the expansion of our Fort Collins, Colorado, internal fabrication facility. These purchases are typically conducted on a purchase order basis and the amount shown in the table includes $90 million of cancelable and non-cancelable outstanding purchase obligations under such purchase orders as of August 2, 2015 . Under our take-or-pay agreement with SMP, we have agreed to purchase 51% of the managed wafer capacity from SMP’s IC manufacturing facility. If we fail to purchase our required commitments, we will be required to pay SMP for the fixed costs associated with the unpurchased wafers. Operating Lease Obligations. Represents real property and equipment leased from third parties under non-cancelable operating leases. There were no other substantial changes to our contractual commitments during the first three quarters of fiscal year 2015 from those disclosed in our 2014 Annual Report on Form 10-K. Contingencies From time to time, we are involved in litigation that we believe is of the type common to companies engaged in our line of business, including commercial disputes, employment issues and disputes involving claims by third parties that our activities infringe their patent, copyright, trademark or other intellectual property rights. Legal proceedings are often complex, may require the expenditure of significant funds and other resources, and the outcome of litigation is inherently uncertain, with material adverse outcomes possible. Intellectual property claims generally involve the demand by a third-party that we cease the manufacture, use or sale of the allegedly infringing products, processes or technologies and/or pay substantial damages or royalties for past, present and future use of the allegedly infringing intellectual property. Claims that our products or processes infringe or misappropriate any third-party intellectual property rights (including claims arising through our contractual indemnification of our customers) often involve highly complex, technical issues, the outcome of which is inherently uncertain. Moreover, from time to time we pursue litigation to assert our intellectual property rights. Regardless of the merit or resolution of any such litigation, complex intellectual property litigation is generally costly and diverts the efforts and attention of our management and technical personnel. Lawsuits Relating to the Acquisition of Broadcom Since the announcement of our pending acquisition of Broadcom, eleven putative class action complaints have been filed by and purportedly on behalf of alleged Broadcom shareholders. Two putative class action complaints were filed in the United States District Court for the Central District of California, captioned: Wytas, et al. v. McGregor, et al., Case No. 8:15-cv-00979, filed on June 18, 2015; and Yassian, et al. v. McGregor, et al., Case No. 8:15-cv-01303, filed on August 15, 2015. One putative class action complaint was filed in the Superior Court of the State of California, County of Santa Clara, captioned Jew v. Broadcom Corp., et al., Case No. 1-15-CV-281353, filed June 2, 2015. Eight putative class action complaints were filed in the Superior Court of the State of California, County of Orange, captioned: Xu v. Broadcom Corp., et al., Case No. 30-2015-00790689-CU-SL-CXC, filed June 1, 2015; Freed v. Broadcom Corp., et al., Case No. 30-2015-00790699-CU-SL-CXC, filed June 1, 2015; N.J. Building Laborers Statewide Pension Fund v. Samueli, et al., Case No. 30-2015-00791484-CU-SL-CXC, filed June 4, 2015; Yiu v. Broadcom Corp., et al., Case No. 30-2015-00791490-CU-SL-CXC, filed June 4, 2015; Yiu, et al. v. Broadcom Corp., et al., Case No. 30-2015-00791762-CU-BT-CXC, filed June 5, 2015; Yassian, et al. v. McGregor, et al., Case No. 30-2015-00793360-CU-SL-CXC, filed June 15, 2015; Seafarers’ Pension Plan v. Samueli, et al., Case No. 30-2015-00794492-CU-SL-CXC, filed June 19, 2015; and Engel v. Broadcom Corp., et al., Case No. 30-2015-00797343-CU-SL-CXC, filed on July 2, 2015 (together with Jew v. Broadcom Corp., et al., the “State Actions”). The complaints name as defendants, among other parties, Broadcom, members of Broadcom’s Board of Directors and Avago, and they allege breaches of fiduciary duties and aiding and abetting of those alleged breaches. Additionally, Yassian, et al. v. McGregor, et al., which, as noted above, is pending in the United States District Court for the Central District of California, alleges violations of Sections 14(a) and 20(a) of the Securities Exchange Act of 1934 and SEC Rule 14-a9. The complaints seek, among other things, injunctive relief to prevent the Broadcom Transaction from closing. On June 22, 2015, the Superior Court of the State of California, County of Orange dismissed the Yiu, et al. v. Broadcom Corp. et al., complaint at plaintiffs’ request. On August 14, 2015, the Superior Court of the State of California, County of Orange, issued an order coordinating and consolidating the State Actions and designating Xu v. Broadcom Corp., et al. as the lead case. Avago and Broadcom believe these claims are all entirely without merit and intend to vigorously defend these actions. Lawsuits Relating to the Acquisition of Emulex On March 3, 2015, two putative shareholder class action complaints were filed in the Court of Chancery of the State of Delaware against Emulex Corporation, or Emulex, its directors, Avago Technologies Wireless (U.S.A.) Manufacturing Inc., or AT Wireless, and Emerald Merger Sub, Inc., or Merger Sub, captioned as follows: James Tullman v. Emulex Corporation, et al., Case No. 10743-VCL (Del. Ch.); Moshe Silver ACF/Yehudit Silver U/NY/UTMA v. Emulex Corporation, et al., Case No. 10744-VCL (Del. Ch.). On March 11, 2015, a third complaint was filed in the Delaware Court of Chancery, captioned Hoai Vu v. Emulex Corporation, et al., Case No. 10776-VCL (Del. Ch.). The complaints allege, among other things, that Emulex’s directors breached their fiduciary duties by approving the Agreement and Plan of Merger, dated February 25, 2015, by and among AT Wireless, Merger Sub and Emulex, or the Merger Agreement, and that AT Wireless and Merger Sub aided and abetted these alleged breaches of fiduciary duty. The complaints seek, among other things, either to enjoin the proposed transaction or to rescind it should it be consummated, as well as damages, including attorneys’ and experts’ fees. The Delaware Court of Chancery has entered an order consolidating the three Delaware actions under the caption In re Emulex Corporation Stockholder Litigation, Consolidated C.A. No. 10743-VCL. On June 5, 2015, the Court of Chancery dismissed the consolidated action without prejudice. On April 8, 2015, a class action complaint was filed in the United States District Court for the Central District of California, entitled Gary Varjabedian, et al. v. Emulex Corporation, et al., No. 8:15-cv-554-CJC-JCG. The complaint names as defendants Emulex, its directors, AT Wireless and Merger Sub, and purports to assert claims under Sections 14(d), 14(e) and 20(a) of the Exchange Act. The complaint alleges that the Board of Directors of Emulex failed to provide material information and/or omitted material information from the Solicitation/Recommendation Statement on Schedule 14D-9 filed with the SEC on April 7, 2015 by Emulex, together with the exhibits and annexes thereto. The complaint seeks to enjoin the tender offer to purchase all of the outstanding shares of Emulex common stock, as well as certain other equitable relief and attorneys’ fees and costs. On July 28, 2015, the Court issued an order granting plaintiff’s motion for appointment as lead plaintiff and approving lead counsel for the putative class. Lawsuits Relating to the Acquisition of PLX In June and July 2014, four lawsuits were filed in the Superior Court for the State of California, County of Santa Clara challenging our acquisition of PLX. On July 22, 2014, the court consolidated these California actions under the caption In re PLX Technology, Inc. S’holder Litig., Lead Case No. 1-14-CV-267079 (Cal. Super. Ct., Santa Clara) and appointed lead counsel. That same day, the court also stayed the consolidated action, pending resolution of related actions filed in the Delaware Court of Chancery, described below. Also in June and July 2014, five similar lawsuits were filed in the Delaware Court of Chancery. On July 21, 2014, the court consolidated these Delaware actions under the caption In re PLX Technology, Inc. Stockholders Litigation, Consol. C.A. No. 9880-VCL (Del. Ch.), appointed lead plaintiffs and lead counsel, and designated an operative complaint for the consolidated action. On July 31, 2014, counsel for lead plaintiffs in Delaware informed the court that they would not seek a preliminary injunction, but intend to seek damages and pursue monetary remedies through post-closing litigation. Our acquisition of PLX closed on August 12, 2014. On October 31, 2014, lead plaintiffs filed a consolidated amended complaint. This complaint alleges, among other things, that PLX’s directors breached their fiduciary duties to PLX’s stockholders by seeking to sell PLX for an inadequate price, pursuant to an unfair process, and by agreeing to preclusive deal protections in the merger agreement. Plaintiffs also allege that Potomac Capital Partners II, L.P., Deutsche Bank Securities, Avago Technologies Wireless (U.S.A.) Manufacturing, Inc. and the acquisition subsidiary aided and abetted the alleged fiduciary breaches. Plaintiffs also allege that PLX’s 14D-9 recommendation statement contained false and misleading statements and/or omitted material information necessary to inform the shareholder vote. The complaint seeks, among other things, monetary damages and attorneys’ fees and costs. On September 3, 2015, the Court granted motions to dismiss filed by Avago Technologies Wireless (U.S.A.) Manufacturing, Inc., the acquisition subsidiary and two PLX directors, and denied motions to dismiss filed by a several PLX directors, Potomac Capital Partners II, L.P. and Deutsche Bank Securities. The Delaware class litigation is on-going. Lawsuits Relating to the Acquisition of LSI Fifteen purported class action complaints were filed by alleged former stockholders of LSI against us. Eight of those lawsuits were filed in the Delaware Court of Chancery, and the other seven lawsuits were filed in the Superior Court of the State of California, County of Santa Clara on behalf of the same putative class as the Delaware actions, or the California Actions. On January 17, 2014, the Delaware Court of Chancery entered an order consolidating the Delaware actions into a single action, or the Delaware Action. These actions generally alleged that we aided and abetted breaches of fiduciary duty by the members of LSI's board of directors in connection with the merger because the merger was not in the best interest of LSI, the merger consideration was unfair and certain other terms of the merger agreement were unfair. Among other remedies, the lawsuits sought to rescind the merger or obtain unspecified money damages, costs and attorneys' fees. On March 7, 2014, the parties to the Delaware Action reached an agreement in principle to settle the Delaware Action on a class wide basis, and negotiated a stipulation of settlement that was presented to the Delaware Court of Chancery on March 10, 2014. On March 12, 2014, the parties to the California Actions entered into a stipulation staying the California Actions pending resolution of the Delaware Action. On May 16, 2014, the plaintiffs in the Delaware Action filed a motion for final approval of the proposed settlement and award of attorneys’ fees and expenses with the Delaware Court of Chancery. On June 10, 2014, the Delaware court approved the settlement, including the payment of $2 million to counsel for the stockholders, entered final judgment and dismissed the case, or the Order and Final Judgment. On July 10, 2014, a class member of the Delaware Action filed a notice of appeal from the Order and Final Judgment. On February 5, 2015, the appeal was dismissed with prejudice. Other Matters In addition to the matters discussed above, we are currently engaged in a number of legal actions in the ordinary course of our business. We do not believe, based on currently available facts and circumstances, that the final outcome of any pending legal proceedings, taken individually or as a whole, will have a material adverse effect on the our financial condition, results of operations or cash flows. However, lawsuits may involve complex questions of fact and law and may require the expenditure of significant funds and other resources to defend. The results of litigation are inherently uncertain, and material adverse outcomes are possible. From time to time, we may enter into confidential discussions regarding the potential settlement of such lawsuits. Any settlement of pending litigation could require us to incur substantial costs and other ongoing expenses, such as future royalty payments in the case of an intellectual property dispute. During the periods presented we have not recorded any accrual for loss contingencies associated with any legal proceedings, nor determined that an unfavorable outcome is probable. As a result, no amounts have been accrued or disclosed in the accompanying unaudited condensed consolidated financial statements with respect to these legal proceedings, as potential losses for such matters are not considered probable and ranges of losses are not reasonably estimable. These matters are subject to many uncertainties and the ultimate outcomes are not predictable. There can be no assurances that the actual amounts required to satisfy any liabilities arising from the matters described above will not have a material adverse effect on our results of operations, financial position or cash flows. Other Indemnifications As is customary in our industry and as provided for in local law in the United States and other jurisdictions, many of our standard contracts provide remedies to our customers and others with whom we enter into contracts, such as defense, settlement, or payment of judgment for intellectual property claims related to the use of our products. From time to time, we indemnify customers, as well as our suppliers, contractors, lessors, lessees, companies that purchase our businesses or assets and others with whom we enter into contracts, against combinations of loss, expense, or liability arising from various triggering events related to the sale and the use of our products, the use of their goods and services, the use of facilities and state of our owned facilities, the state of the assets and businesses that we sell and other matters covered by such contracts, usually up to a specified maximum amount. In addition, from time to time we also provide protection to these parties against claims related to undiscovered liabilities, additional product liability or environmental obligations. In our experience, claims made under such indemnifications are rare and the associated estimated fair value of the liability is not material. |
Restructuring Charges
Restructuring Charges | 9 Months Ended |
Aug. 02, 2015 | |
Restructuring and Related Activities [Abstract] | |
Restructuring Charges | Restructuring and Asset Impairment Charges Restructuring charges During fiscal years 2014 and 2015, we initiated a series of restructuring activities intended to realign our operations to improve overall efficiency and effectiveness. The following is a summary of significant restructuring expenses recognized in continuing operations for the periods specified below: • In connection with the acquisition of Emulex, we incurred $29 million related to employee termination costs in our enterprise storage segment, primarily in operating expenses during the fiscal quarter and three fiscal quarters ended August 2, 2015 . • We implemented planned cost reduction and restructuring activities, primarily in our enterprise storage segment, in connection with the acquisition of LSI. As a result, we recognized $3 million and $25 million of employee termination costs, primarily in operating expenses during the fiscal quarter and three fiscal quarters ended August 2, 2015 , respectively. We recognized $82 million and $10 million of employee termination costs in operating expenses and cost of products sold, respectively, for the fiscal quarter ended August 3, 2014 and $88 million and $10 million of employee termination costs in operating expenses and cost of products sold, respectively, for the three fiscal quarters ended August 3, 2014 . • We closed a fabrication facility in Italy related to our wired infrastructure segment. As a result, we recognized $5 million in cost of products sold and $8 million in operating expenses during the three fiscal quarters ended August 3, 2014 related to employee termination costs. Asset Impairment Charges As discussed in Note 3, during the fiscal quarter ended August 2, 2015 , we realigned certain product groups within our wired infrastructure segment and on August 24, 2015, agreed to sell certain fiber optics subsystem assets to a third party. As a result, we recognized a $65 million loss in asset impairment charges to write down these assets to fair value less costs to sell in the fiscal quarter ended August 2, 2015. The following table summarizes the significant activities within, and components of, the restructuring liabilities related to continuing and discontinued operations during the three fiscal quarters ended August 2, 2015 (in millions): Employee Termination Costs Leases and Other Exit Costs Total Balance as of November 2, 2014 $ 34 $ 6 $ 40 Cost of product sold 5 — 5 Operating expenses (a) 51 13 64 Utilization (71 ) (14 ) (85 ) Balance as of August 2, 2015 (b) $ 19 $ 5 $ 24 _________________________________ (a) In connection with the sale of the Axxia Business, we recognized $7 million of lease and other exit costs, which are included in income (loss) from discontinued operations in the unaudited condensed consolidated statements of operations. In addition, we recognized $7 million of non-cash expenses primarily related to accelerated share-based compensation. (b) The majority of the employee termination costs balance is expected to be paid by the first quarter of fiscal year 2016 . The leases and other exit costs balance is expected to be paid during the remaining terms of the leases, which extend through fiscal year 2019 . |
Discontinued Operations
Discontinued Operations | 9 Months Ended |
Aug. 02, 2015 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Discontinued Operations | Discontinued Operations Upon our acquisition of Emulex on May 5, 2015, we classified Endace as held-for-sale and presented the results of this business since May 5, 2015 in income (loss) from discontinued operations in our unaudited condensed consolidated statements of operations. Following our acquisition of LSI, on November 18, 2014, we completed the sale of the Axxia Business to Intel for $650 million in cash. Axxia Business was part of our wired infrastructure segment. As part of this transaction, we provided transitional services to Intel to provide short-term assistance to the buyer in assuming the operations of the purchased business. We have determined that we do not have any material continuing involvement with the discontinued operations. The following table summarizes the selected financial information of discontinued operations included in our unaudited condensed consolidated statements of operations for the periods presented (in millions): Fiscal Quarter Ended Three Fiscal Quarters Ended August 2, 2015 August 3, 2014 August 2, 2015 August 3, 2014 Net revenue $ 6 $ 104 $ 59 $ 104 Income (loss) from discontinued operations before gain on disposal and income taxes $ (4 ) $ (68 ) $ 13 $ (68 ) Gain on disposal of discontinued operations — — 14 — Provision for (benefit from) income taxes — (24 ) 13 (24 ) Income (loss) from discontinued operations, net of income taxes $ (4 ) $ (44 ) $ 14 $ (44 ) |
Subsequent Events
Subsequent Events | 9 Months Ended |
Aug. 02, 2015 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events Cash Dividends Declared On September 2, 2015 , the Board declared a quarterly cash dividend of $0.42 per ordinary share, payable on September 30, 2015 to shareholders of record at the close of business (Eastern time) on September 18, 2015 . |
Overview, Basis of Presentati22
Overview, Basis of Presentation and Significant Accounting Policies (Policies) | 9 Months Ended |
Aug. 02, 2015 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Fiscal periods | We operate on a 52- or 53-week fiscal year ending on the Sunday closest to October 31. Our fiscal year ending November 1, 2015, or fiscal year 2015, is a 52-week fiscal year. The first quarter of our fiscal year 2015 ended on February 1, 2015, the second quarter ended on May 3, 2015 and the third quarter ended on August 2, 2015. Our fiscal year ended November 2, 2014, or fiscal year 2014, was also a 52-week fiscal year. |
Basis of presentation | The accompanying unaudited condensed consolidated financial statements include the accounts of Avago Technologies Limited and its wholly-owned subsidiaries and have been prepared by us in accordance with accounting principles generally accepted in the United States, or GAAP, for interim financial information. This financial information reflects all adjustments which are, in the opinion of our management, of a normal recurring nature and necessary for a fair statement of the results for the periods presented. The November 2, 2014 condensed consolidated balance sheet data were derived from our audited consolidated financial statements included in our Annual Report on Form 10-K for fiscal year 2014, or 2014 Annual Report on Form 10-K, as filed with the Securities and Exchange Commission, or SEC, but do not include all disclosures required by GAAP. Intercompany transactions and balances have been eliminated in consolidation. The operating results for the fiscal quarter and three fiscal quarters ended August 2, 2015 are not necessarily indicative of the results that may be expected for fiscal year 2015 , or for any other future period. |
Use of estimates | Use of estimates. The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in our consolidated financial statements and accompanying notes. Actual results could differ materially from those estimates. |
Concentration of credit risk and significant customers | Concentrations of credit risk and significant customers. Our cash, cash equivalents and accounts receivable are potentially subject to concentration of credit risk. Cash and cash equivalents may be redeemable upon demand and are maintained with several financial institutions that management believes are of high credit quality and therefore bear minimal credit risk. We seek to mitigate our credit risks by spreading such risks across multiple counterparties and monitoring the risk profile of these counterparties. Our accounts receivable are derived from revenue earned from customers located around the world. We mitigate collection risks from our customers by performing regular credit evaluations of our customers' financial condition, and require collateral, such as letters of credit and bank guarantees, in certain circumstances. |
Warranty | Warranty. We accrue for the estimated costs of product warranties at the time revenue is recognized. Product warranty costs are estimated based upon our historical experience and specific identification of product requirements, which may fluctuate based on product mix. Additionally, we accrue for warranty costs associated with occasional or unanticipated product quality issues if a loss is probable and can be reasonably estimated. |
Net income per share | Net income (loss) per share . Basic net income (loss) per share is computed using the weighted-average number of ordinary shares outstanding during the period. Diluted net income (loss) per share is computed using the weighted-average number of ordinary shares and potentially dilutive share equivalents outstanding during the period. Diluted shares outstanding include the dilutive effect of in-the-money options, restricted share units, or RSUs, employee share purchase rights under the Avago Technologies Limited Employee Share Purchase Plan, or ESPP, (together referred to as equity awards) and the 2.0% Convertible Senior Notes due 2021 issued by Avago Technologies Limited, or the Convertible Notes. The dilutive effect of equity awards is calculated based on the average share price for each fiscal period, using the treasury stock method. Under the treasury stock method, the amount the employee must pay for exercising share options and to purchase shares under the ESPP, the amount of compensation cost for future service that we have not yet recognized, and the amount of tax benefits that would be recognized when equity awards become deductible for income tax purposes are collectively assumed to be used to repurchase ordinary shares. During the fiscal quarter ended August 2, 2015, the Convertible Notes were converted in full and the resulting conversion obligation settled by a combination of $1 billion in cash and the issuance of 13.8 million of our ordinary shares. The resulting incremental ordinary shares attributable to the conversion of the Convertible Notes are a component of diluted shares for the period prior to settlement and a component of basic weighted-average shares outstanding for the remainder of the period. |
Supplemental cash flow disclosures | Supplemental cash flow disclosures. At August 2, 2015 and November 2, 2014 , we had $43 million and $45 million , respectively, of unpaid purchases of property, plant, and equipment included in accounts payable and other current liabilities. Amounts reported as unpaid purchases will be recorded as cash outflows from investing activities for purchases of property, plant, and equipment in the unaudited condensed consolidated statements of cash flows in the period in which they are paid. |
Recent accounting guidance | Recently Adopted Accounting Guidance In April 2014, the Financial Accounting Standards Board, or FASB, issued authoritative guidance that raises the threshold for a disposal transaction to qualify as a discontinued operation and requires additional disclosures about discontinued operations and disposals of individually significant components that do not qualify as discontinued operations, with early adoption permitted. We adopted this guidance early during the third fiscal quarter ended August 2, 2015 . The impact on presentation of our results of operations and disclosures of discontinued operations and disposals of individually significant components are reflected in our consolidated financial statements presented herein. In November 2014, the FASB issued authoritative guidance that provides guidance on whether and at what threshold an acquired business or not-for-profit organization can apply pushdown accounting. This guidance provides an option to apply pushdown accounting in the separate financial statements of an acquired entity upon the occurrence of an event in which an acquirer obtains control of the acquired entity. The guidance was effective on November 18, 2014. After the effective date, an acquired entity can make an election to apply the guidance to future change-in-control events or to its most recent change-in-control event. However, if the financial statements for the period in which the most recent change-in-control event occurred already have been issued or made available to be issued, the application of this guidance would be a change in accounting principle. The adoption of this guidance did not impact our consolidated financial statements. In July 2013, the FASB issued an amendment to the accounting guidance related to the financial statement presentation of an unrecognized tax benefit when a net operating loss carryforward, a similar tax loss or a tax credit carryforward exists. The guidance requires an unrecognized tax benefit to be presented as a decrease in a deferred tax asset where a net operating loss, a similar tax loss or a tax credit carryforward exists and certain criteria are met. This guidance was effective for the first quarter of our fiscal year 2015. The adoption of this guidance did not have a significant impact on our consolidated balance sheets. Recent Accounting Guidance Not Yet Adopted In August 2015, the FASB issued an amendment to the accounting guidance related to the financial statement presentation and subsequent measurement of debt issuance costs associated with line-of-credit arrangements. Given the absence of authoritative guidance related to debt issuance costs related to line-of-credit arrangements within an update issued in April 2015, deferral and presentation of debt issuance costs as an asset and subsequently amortizing the deferred debt issuance costs ratably over the term of the line of credit arrangement is permitted. We are currently evaluating the impact that this guidance will have on our consolidated financial statements. In August 2015, the FASB deferred the effective date of the authoritative guidance that outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and will supersede most current revenue recognition guidance. The guidance will be effective for the first quarter of our fiscal year 2019. Early adoption is permitted, but not before the first quarter of our fiscal year 2018. The new guidance is required to be applied retrospectively to each prior reporting period presented or retrospectively with the cumulative effect of initially applying it recognized at the date of initial application. We have not yet selected a transition method and are currently evaluating the impact of this guidance on our consolidated financial statements. In July 2015, the FASB issued an amendment to the accounting guidance related to the measurement of inventory. The amendment revises inventory to be measured at lower of cost and net realizable value from lower of cost or market. Subsequent measurement is unchanged for inventory measured using last-in, first-out (LIFO) or the retail inventory method. This guidance will be effective prospectively for the first quarter of our fiscal year 2018, with early application permitted. We are currently evaluating the impact that this guidance will have on our consolidated financial statements. In May 2015, the FASB issued an amendment to permit a reporting entity, as a practical expedient, to measure the fair value of certain investments using the net asset value per share of the investment. Currently, investments valued using the practical expedient are categorized within the fair value hierarchy on the basis of whether the investment is redeemable with the investee at net asset value on the measurement date, never redeemable with the investee at net asset value, or redeemable with the investee at net asset value at a future date. The amendment removes the requirement to categorize investments for which fair values are measured using the net asset value per share practical expedient. It also limits disclosures to investments for which the entity has elected to measure the fair value using the practical expedient. The new guidance will be effective retrospectively to each prior reporting period presented for the first quarter of fiscal year 2017, with early application permitted. We are currently evaluating the impact this guidance will have on our consolidated financial statements including disclosures. In April 2015, the FASB issued an amendment to the accounting guidance related to the financial statement presentation of debt issuance costs. The new guidance is required to be applied retrospectively to each prior reporting period presented. The guidance requires debt issuance costs to be presented on the balance sheet as a direct reduction to the carrying amount of debt, consistent with debt discounts or premiums. This guidance will be effective for the first quarter of our fiscal year 2017, with early application permitted. The adoption of this guidance will not have a material effect on our consolidated balance sheet presentation. In April 2015, the FASB issued an amendment to the accounting guidance that provides a practical expedient to companies whose fiscal year end does not coincide with a calendar month-end. The practical expedient permits the entity to measure defined benefit plan assets and obligations using the calendar month-end that is closest to the entity’s fiscal year-end and apply the practical expedient consistently from year to year. This guidance will be effective prospectively for the first quarter of our fiscal year 2017, with early application permitted. The adoption of this guidance will not have a material effect on our financial condition and results of operations. In February 2015, the FASB issued an amendment to the accounting guidance related to the criteria for consolidation of certain legal entities. The guidance will be effective for the first quarter of our fiscal year 2018, with early adoption permitted. The guidance requires either retrospective application to each prior period presented or retrospective application with a cumulative adjustment to retained earnings as of the adoption date. We are currently evaluating the impact that this guidance will have on our financial condition and results of operations. In June 2014, the FASB issued authoritative guidance that resolves the diverse accounting treatment for share-based payment awards that require a specific performance target to be achieved in order for employees to become eligible to vest in the awards. The guidance applies to entities that grant their employees share-based awards that include a performance target that could be achieved after the requisite service period. The guidance explicitly requires that a performance target of this nature be treated as a performance condition and should not be reflected in estimating the grant-date fair value of the award. This guidance will be effective for the first quarter of our fiscal year 2016. We are currently evaluating the impact that this guidance will have on our financial condition and results of operations. |
Overview, Basis of Presentati23
Overview, Basis of Presentation and Significant Accounting Policies (Tables) | 9 Months Ended |
Aug. 02, 2015 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Reconciliation of the Denominators of the Basic and Diluted Net Income per Share | The following is a reconciliation of the numerators and denominators of the basic and diluted net income (loss) per share computations for the periods presented (in millions, except per share data): Fiscal Quarter Ended Three Fiscal Quarters Ended August 2, August 3, August 2, August 3, Net income (loss) (Numerator): Income (loss) from continuing operations $ 244 $ (120 ) $ 921 $ 172 Income (loss) from discontinued operations (4 ) (44 ) 14 (44 ) Net income (loss) $ 240 $ (164 ) $ 935 $ 128 Shares (Denominator): Basic weighted-average ordinary shares outstanding 265 252 260 251 Add incremental shares for: Dilutive effect of share options, RSUs and ESPP rights 13 — 12 7 Dilutive effect of Convertible Notes 9 — 11 7 Shares used in diluted computation 287 252 283 265 Basic income (loss) per share: Income (loss) per share from continuing operations $ 0.92 $ (0.48 ) $ 3.54 $ 0.69 Income (loss) per share from discontinued operations $ (0.01 ) $ (0.17 ) $ 0.06 $ (0.18 ) Net income (loss) per share $ 0.91 $ (0.65 ) $ 3.60 $ 0.51 Diluted income (loss) per share: Income (loss) per share from continuing operations $ 0.85 $ (0.48 ) $ 3.25 $ 0.65 Income (loss) per share from discontinued operations $ (0.01 ) $ (0.17 ) $ 0.05 $ (0.17 ) Net income (loss) per share $ 0.84 $ (0.65 ) $ 3.30 $ 0.48 |
Acquisitions (Tables)
Acquisitions (Tables) - Emulex Corporation | 9 Months Ended |
Aug. 02, 2015 | |
Business Acquisition [Line Items] | |
Schedule of business combination, consideration [Table Text Block] | Total consideration consisted of the following (in millions): Cash paid to Emulex stockholders $ 582 Fair value of partially vested assumed equity awards 5 Total purchase price 587 Less: cash acquired 188 Total purchase price, net of cash acquired $ 399 |
Preliminary allocation of the purchase price, net of cash acquired | Our preliminary allocation of the purchase price, net of cash acquired, is as follows (in millions): Fair Value Trade accounts receivable $ 50 Inventory 61 Assets held-for-sale 83 Other current assets 7 Property, plant and equipment 28 Goodwill 138 Intangible assets 388 Other long-term assets 13 Accounts payable (36 ) Employee compensation and benefits (20 ) Other current liabilities (15 ) Long-term debt (178 ) Other long-term liabilities (120 ) Fair value of net assets acquired $ 399 |
Schedule of identified intangible assets acquired | Identified intangible assets acquired consisted of the following: Fair Value (in millions) Estimated Useful Lives (in years) Developed technology $ 227 4 Customer relationships 131 9 Trade names 10 5 Customer order backlog 5 0.25 Total identified finite-lived intangible assets 373 In-process research and development 15 Total identified intangible assets $ 388 |
Summary of the details of the IPR&D projects | The following table summarizes the details of the IPR&D projects as of August 2, 2015 ($ in millions): Description IPR&D Discount Rate Percentage of Completion at Acquisition Estimated Cost to Complete Expected Release Date (by fiscal year) Fibre Channel product $ 7 24 % 33 % $ 26 2016 Ethernet product $ 8 26 % 48 % $ 7 2015 |
Unaudited pro forma information | Consequently, actual results differ from the unaudited pro forma information presented below (in millions, except for per share amounts): Fiscal Quarter Ended Three Fiscal Quarters Ended August 2, 2015 August 3, 2014 August 2, 2015 August 3, 2014 Pro forma net revenue $ 1,735 $ 1,362 $ 5,178 $ 2,988 Pro forma income (loss) from continuing operations $ 317 $ (142 ) $ 929 $ 38 Pro forma income (loss) per share from continuing operations - basic $ 1.20 $ (0.56 ) $ 3.57 $ 0.15 Pro forma income (loss) per share from continuing operations - diluted $ 1.10 $ (0.56 ) $ 3.28 $ 0.14 |
Supplemental Financial Inform25
Supplemental Financial Information (Tables) | 9 Months Ended |
Aug. 02, 2015 | |
Balance Sheet Related Disclosures [Abstract] | |
Summary of inventory | Inventory consists of the following (in millions): August 2, November 2, Finished goods $ 157 $ 185 Work-in-process 257 250 Raw materials 93 84 Total inventory $ 507 $ 519 |
Summary of components of assets held-for-sale | The following tables summarize components of assets held-for-sale (in millions): August 2, 2015 Real property $ 49 Endace 34 Fiber optics subsystems assets 26 Total assets held-for-sale $ 109 November 2, 2014 Axxia Business: Inventory $ 14 Property, plant and equipment, net 22 Goodwill 91 Intangible assets, net 475 Total Axxia Business 602 Real property 26 Total assets held of sale $ 628 |
Goodwill and Intangible Assets
Goodwill and Intangible Assets (Tables) | 9 Months Ended |
Aug. 02, 2015 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Goodwill [Table Text Block] | The following table summarizes changes in goodwill by segment (in millions): Wireless Communications Wired Infrastructure Enterprise Storage Industrial & Other Total Balance as of November 2, 2014 $ 261 $ 292 $ 907 $ 136 $ 1,596 Emulex acquisition — — 138 — 138 Reclassification to assets held-for-sale — (5 ) — — (5 ) Balance as of August 2, 2015 $ 261 $ 287 $ 1,045 $ 136 $ 1,729 |
Schedule of Finite- and Indefinite-lived Intangible Assets | Intangible assets consist of the following (in millions): Gross Carrying Amount Accumulated Amortization Net Book Value As of August 2, 2015: Purchased technology $ 2,878 $ (1,036 ) $ 1,842 Customer and distributor relationships 1,702 (409 ) 1,293 Other (1) 298 (129 ) 169 Intangible assets subject to amortization 4,878 (1,574 ) 3,304 In-process research and development 165 — 165 Total $ 5,043 $ (1,574 ) $ 3,469 As of November 2, 2014: Purchased technology $ 2,651 $ (682 ) $ 1,969 Customer and distributor relationships 1,570 (264 ) 1,306 Other (1) 275 (87 ) 188 Intangible assets subject to amortization 4,496 (1,033 ) 3,463 In-process research and development 154 — 154 Total $ 4,650 $ (1,033 ) $ 3,617 _________________________________ (1) Primarily represents trademarks and customer order backlog. |
Finite-lived Intangible Assets Amortization Expense | Amortization expense of intangible assets for the periods presented is as follows (in millions): Fiscal Quarter Ended Three Fiscal Quarters Ended August 2, August 3, August 2, August 3, Cost of products sold $ 129 $ 105 $ 355 $ 141 Operating expenses 68 91 186 106 Total amortization of intangible assets $ 197 $ 196 $ 541 $ 247 |
Finite-lived Intangible Assets Remaining | Based on the amount of intangible assets subject to amortization at August 2, 2015 , the expected amortization expense for each of the next five fiscal years and thereafter is as follows (in millions): Fiscal Year 2015 (remainder) $ 191 2016 715 2017 625 2018 494 2019 416 2020 338 Thereafter 525 $ 3,304 |
Finite-lived Intangible Assets Remaining Weighted Average Amortization Period | The weighted-average remaining amortization period for each intangible asset category at August 2, 2015 is as follows (in years): Amortizable intangible assets: Purchased technology 7 Customer and distributor relationships 7 Other 6 |
Retirement Plans and Post-Ret27
Retirement Plans and Post-Retirement Benefits (Tables) | 9 Months Ended |
Aug. 02, 2015 | |
Compensation and Retirement Disclosure [Abstract] | |
Schedule of Net Periodic Benefit Cost | The following table summarizes the components of the net periodic benefit income for the periods presented (in millions): Pension Benefits Fiscal Quarter Ended Three Fiscal Quarters Ended August 2, August 3, August 2, August 3, Service cost $ 1 $ — $ 2 $ 2 Interest cost 16 16 47 16 Expected return on plan assets (20 ) (18 ) (59 ) (19 ) Net actuarial loss and prior service cost — — 1 1 Total net periodic benefit cost income $ (3 ) $ (2 ) $ (9 ) $ — |
Borrowings Borrowings (Tables)
Borrowings Borrowings (Tables) | 9 Months Ended |
Aug. 02, 2015 | |
Debt Disclosure [Abstract] | |
Convertible Senior Notes Interest Expense [Table Text Block] | The following table sets forth interest expense recognized related to Convertible Notes for the periods presented (in millions): Fiscal Quarter Ended Three Fiscal Quarters Ended August 2, August 3, August 2, August 3, Contractual coupon interest $ 2 $ 5 $ 12 $ 5 Accretion of debt discount 3.32% — 3 6 3 Total $ 2 $ 8 $ 18 $ 8 |
Carrying Value of Components of Convertible Notes | (in millions): November 2, Convertible notes liability component: Principal balance $ 1,000 Less: debt discount 80 Net carrying amount $ 920 Equity component carrying amount $ 85 |
Schedule of Future Principal Payments on Debt | At August 2, 2015 , future scheduled principal payments for our outstanding Term Loans, including the current portion, are summarized as follows (in millions): Fiscal Year 2015 (remainder) $ 12 2016 46 2017 46 2018 46 2019 46 2020 46 Thereafter 3,719 Total $ 3,961 |
Shareholders' Equity (Tables)
Shareholders' Equity (Tables) | 9 Months Ended |
Aug. 02, 2015 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Schedule of Nonvested Restricted Stock Units Activity [Table Text Block] | A summary of RSU activity related to our equity incentive plans is as follows (in millions, except years and per share amounts): RSU Awards Outstanding Number Outstanding Weighted- Average Grant Date Fair Market Value Weighted- Average Remaining Contractual Life (in years) Balance as of November 2, 2014 4 $ 48.82 Granted 3 $ 119.34 Vested (1 ) $ 56.44 Forfeited (1 ) $ 74.49 Balance as of August 2, 2015 5 $ 94.84 1.90 |
Summary of Share-based Compensation Expense Related to Share-based Awards Granted to Employees, Directors and Non-employees | The following table summarizes share-based compensation expense reported in continuing operations related to share-based awards granted to employees and directors for the periods presented (in millions): Fiscal Quarter Ended Three Fiscal Quarters Ended August 2, August 3, August 2, August 3, Cost of products sold $ 7 $ 6 $ 19 $ 12 Research and development 31 20 77 38 Selling, general and administrative 25 24 73 54 Total share-based compensation expense $ 63 $ 50 $ 169 $ 104 |
Weighted-average Assumptions of Employee Share Purchase Plan | ESPP Purchase Rights Fiscal Quarter Ended Three Fiscal Quarters Ended August 2, August 3, August 2, August 3, Risk-free interest rate 0.2 % 0.1 % 0.1 % 0.1 % Dividend yield 1.2 % 1.7 % 1.3 % 1.9 % Volatility 37.0 % 31.0 % 34.0 % 33.0 % Expected term (in years) 0.5 0.5 0.5 0.5 |
Summary of Share-based Payment Award Activity | A summary of option award activity related to our equity incentive plans is as follows (in millions, except years and per share amounts): Option Awards Outstanding Number Outstanding Weighted- Average Exercise Price Per Share Weighted- Average Remaining Contractual Life (in years) Aggregate Intrinsic Value Balance as of November 2, 2014 29 $ 44.97 Granted 1 $ 95.97 Exercised (5 ) $ 33.56 Cancelled (2 ) $ 65.76 Balance as of August 2, 2015 23 $ 47.48 4.83 $ 1,764 Vested as of August 2, 2015 10 $ 36.73 4.20 $ 851 Fully vested and expected to vest as of August 2, 2015 22 $ 47.07 4.81 $ 1,712 |
Market Based Options and RSUs | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Weighted-average Assumptions of Stock Options | Market-Based Awards Fiscal Quarter Ended Three Fiscal Quarters Ended August 2, August 3, August 2, August 3, Risk-free interest rate 1.4 % 2.2 % 1.4 % 2.3 % Dividend yield 1.1 % 1.6 % 1.2 % 1.8 % Volatility 35.0 % 45.0 % 36.0 % 45.0 % Expected term (in years) 4.0 7.0 4.4 7.0 |
Time-Based Options | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Weighted-average Assumptions of Stock Options | The fair values of our time-based options and ESPP purchase rights were estimated using the Black-Scholes option pricing model. Certain equity awards granted in the fiscal quarters and three fiscal quarters ended August 2, 2015 and August 3, 2014 , respectively, included both service and market conditions. The fair value of market-based awards was estimated using Monte Carlo simulation techniques. The fair value of RSUs was estimated using the closing market price of our ordinary shares on the date of grant, reduced by the present value of dividends expected to be paid on our ordinary shares prior to vesting. In connection with the Emulex acquisition, the Company assumed certain stock options and RSUs originally granted by Emulex. Share-based compensation expense in the third quarter of fiscal year 2015 included $2 million related to assumed Emulex stock options and RSUs. The weighted-average assumptions utilized for our time-based options, ESPP purchase rights and market-based awards granted for the periods presented are shown in the tables below. Time-Based Options Fiscal Quarter Ended Three Fiscal Quarters Ended August 2, August 3, August 2, August 3, Risk-free interest rate 0.3 % 0.5% - 1.4% 1.2 % 0.5% - 1.3% Dividend yield 1.3 % 1.6 % 1.4 % 1.7 % Volatility 37.0 % 35.0 % 35.0 % 35.0 % Expected term (in years) 1.1 1.9 - 4.3 3.8 1.9 - 4.3 |
Segment Information (Tables)
Segment Information (Tables) | 9 Months Ended |
Aug. 02, 2015 | |
Segment Reporting [Abstract] | |
Schedule of Segment Reporting | The following tables present our net revenue and operating income by reportable segment for the periods presented (in millions): Fiscal Quarter Ended Three Fiscal Quarters Ended August 2, August 3, August 2, August 3, Net revenue: Wireless communications $ 616 $ 364 $ 1,856 $ 1,061 Enterprise storage 588 404 1,541 404 Wired infrastructure 372 352 1,101 799 Industrial & other 159 149 486 415 Operating income: Wireless communications $ 285 $ 134 $ 871 $ 365 Enterprise storage 225 130 588 130 Wired infrastructure 130 89 345 191 Industrial & other 78 57 243 181 Unallocated expenses (419 ) (572 ) (929 ) (730 ) |
Related Party Transactions (Tab
Related Party Transactions (Tables) | 9 Months Ended |
Aug. 02, 2015 | |
Related Party Transactions [Abstract] | |
Transactions and Balances with Related Parties | Aggregate transactions for the periods presented and balances with our related parties are as follows (in millions): Fiscal Quarter Ended Three Fiscal Quarters Ended August 2, August 3, August 2, August 3, Total net revenue $ 49 $ 36 $ 140 $ 36 Total costs and expenses including inventory purchases (1) $ 19 $ 21 $ 66 $ 21 August 2, November 2, Total receivables $ 10 $ 14 Total payables (1) $ 6 $ 8 Carrying value of the Convertible Notes and accrued interest $ — $ 930 _________________________________ (1) We purchased $17 million and $47 million of inventory from SMP for the fiscal quarter and three fiscal quarters ended August 2, 2015 , respectively, and $16 million for the fiscal quarter and three fiscal quarters ended August 3, 2014 . As of August 2, 2015 and November 2, 2014 , the amount payable to SMP was $6 million and $8 million , respectively. |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 9 Months Ended |
Aug. 02, 2015 | |
Commitments and Contingencies Disclosure [Abstract] | |
Summary of Contractual Obligations and Commitments | The following table summarizes contractual obligations and commitments as of August 2, 2015 , that have materially changed from the end of fiscal year 2014 (in millions): Total 2015 (remainder) 2016 2017 2018 2019 2020 Thereafter Debt principal, interest and fees $ 4,826 $ 49 $ 198 $ 196 $ 194 $ 191 $ 189 $ 3,809 Purchase commitments $ 363 $ 359 $ 4 $ — $ — $ — $ — $ — Operating lease obligations $ 154 $ 9 $ 26 $ 20 $ 17 $ 13 $ 8 $ 61 |
Restructuring Charges (Tables)
Restructuring Charges (Tables) | 9 Months Ended |
Aug. 02, 2015 | |
Restructuring and Related Activities [Abstract] | |
Schedule of Restructuring Reserve by Type of Cost | The following table summarizes the significant activities within, and components of, the restructuring liabilities related to continuing and discontinued operations during the three fiscal quarters ended August 2, 2015 (in millions): Employee Termination Costs Leases and Other Exit Costs Total Balance as of November 2, 2014 $ 34 $ 6 $ 40 Cost of product sold 5 — 5 Operating expenses (a) 51 13 64 Utilization (71 ) (14 ) (85 ) Balance as of August 2, 2015 (b) $ 19 $ 5 $ 24 _________________________________ (a) In connection with the sale of the Axxia Business, we recognized $7 million of lease and other exit costs, which are included in income (loss) from discontinued operations in the unaudited condensed consolidated statements of operations. In addition, we recognized $7 million of non-cash expenses primarily related to accelerated share-based compensation. (b) The majority of the employee termination costs balance is expected to be paid by the first quarter of fiscal year 2016 . The leases and other exit costs balance is expected to be paid during the remaining terms of the leases, which extend through fiscal year 2019 . |
Discontinued Operations (Tables
Discontinued Operations (Tables) | 9 Months Ended |
Aug. 02, 2015 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Summary of Financial Information for Discontinued Operations | The following table summarizes the selected financial information of discontinued operations included in our unaudited condensed consolidated statements of operations for the periods presented (in millions): Fiscal Quarter Ended Three Fiscal Quarters Ended August 2, 2015 August 3, 2014 August 2, 2015 August 3, 2014 Net revenue $ 6 $ 104 $ 59 $ 104 Income (loss) from discontinued operations before gain on disposal and income taxes $ (4 ) $ (68 ) $ 13 $ (68 ) Gain on disposal of discontinued operations — — 14 — Provision for (benefit from) income taxes — (24 ) 13 (24 ) Income (loss) from discontinued operations, net of income taxes $ (4 ) $ (44 ) $ 14 $ (44 ) |
Overview, Basis of Presentati35
Overview, Basis of Presentation and Significant Accounting Policies (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions | 3 Months Ended | 9 Months Ended | ||
Aug. 02, 2015 | Aug. 03, 2014 | Aug. 02, 2015 | Aug. 03, 2014 | |
Net income (Numerator): | ||||
Income (loss) from continuing operations | $ 244 | $ (120) | $ 921 | $ 172 |
Income (loss) from discontinued operations | (4) | (44) | 14 | (44) |
Net income | $ 240 | $ (164) | $ 935 | $ 128 |
Shares (Denominator): | ||||
Basic weighted-average ordinary shares outstanding (in shares) | 265 | 252 | 260 | 251 |
Add: Incremental shares for: | ||||
Dilutive effect of share options, RSUs and ESPP rights (in shares) | 13 | 0 | 12 | 7 |
Dilutive effect of Convertible Notes (in shares) | 9 | 0 | 11 | 7 |
Shares used in diluted computation (in shares) | 287 | 252 | 283 | 265 |
Basic income (loss) per share: | ||||
Income per share from continuing operations (in dollars per share) | $ 0.92 | $ (0.48) | $ 3.54 | $ 0.69 |
Income per share from discontinued operations (in dollars per share) | (0.01) | (0.17) | 0.06 | (0.18) |
Net income per share (in dollars per share) | 0.91 | (0.65) | 3.60 | 0.51 |
Diluted income (loss) per share: | ||||
Income per share from continuing operations (in dollars per share) | 0.85 | (0.48) | 3.25 | 0.65 |
Income per share from discontinued operations (in dollars per share) | (0.01) | (0.17) | 0.05 | (0.17) |
Net income per share (in dollars per share) | $ 0.84 | $ (0.65) | $ 3.30 | $ 0.48 |
Overview, Basis of Presentati36
Overview, Basis of Presentation and Significant Accounting Policies (Textuals) (Details) shares in Millions, $ in Millions | May. 05, 2015USD ($) | Aug. 02, 2015USD ($)Customershares | Aug. 03, 2014Customershares | Aug. 02, 2015Customersegment | Aug. 03, 2014Customershares | Nov. 02, 2014USD ($)Customer | Nov. 18, 2014USD ($) | May. 06, 2014USD ($) |
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | shares | 2 | 1 | ||||||
Number of reportable segments | segment | 4 | |||||||
Unpaid purchases of property, plant, and equipment | $ 43 | $ 45 | ||||||
Fiscal period end | 52- or 53-week | |||||||
Axxia Business | ||||||||
Sales price | $ 650 | |||||||
Customer Concentration Risk | Accounts Receivable | ||||||||
Number of customers accounting for 10% or more | Customer | 1 | 1 | ||||||
Customer Concentration Risk | Accounts Receivable | Major Customer One | ||||||||
Concentration risk, percentage | 21.00% | 30.00% | ||||||
Customer Concentration Risk | Sales | ||||||||
Number of customers accounting for 10% or more | Customer | 1 | 1 | 1 | 1 | ||||
Customer Concentration Risk | Sales | Major Customer One | ||||||||
Concentration risk, percentage | 21.00% | 15.00% | 23.00% | 17.00% | ||||
Convertible Senior Notes | ||||||||
Repayments of Convertible Debt | $ 1,000 | |||||||
Debt Conversion, Converted Instrument, Shares Issued | shares | 13.8 | |||||||
Convertible Senior Notes | Senior Notes | ||||||||
Interest rate | 2.00% | |||||||
2014 Credit Agreement | Term Loan | ||||||||
Term Loan Facility | $ 4,600 | |||||||
Emulex Corporation | ||||||||
Business Combination, Consideration Transferred | $ 587 | |||||||
Cash payment to acquire business | 582 | |||||||
Business Combination, Fair Value Of Partially Vested Equity | $ 5 | $ 5 | ||||||
Emulex Corporation | Convertible Senior Notes | ||||||||
Interest rate | 1.75% | |||||||
Employee Stock Option [Member] | ||||||||
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | shares | 8 | |||||||
Convertible Senior Notes Due 2021 [Member] | ||||||||
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | shares | 7 | |||||||
Restricted Stock Units (RSUs) | ||||||||
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | shares | 1 |
Acquisitions - Emulex Acquisiti
Acquisitions - Emulex Acquisition (Details) - USD ($) $ / shares in Units, $ in Millions | May. 05, 2015 | Aug. 02, 2015 | Aug. 03, 2014 | Aug. 02, 2015 | Aug. 03, 2014 | Nov. 02, 2014 |
Payments to Acquire Businesses, Net of Cash Acquired [Abstract] | ||||||
Total purchase price, net of cash acquired | $ 394 | $ 5,644 | ||||
Business Combination, Recognized Identifiable Assets Acquired, Goodwill, and Liabilities Assumed, Net [Abstract] | ||||||
Goodwill | $ 1,729 | 1,729 | $ 1,596 | |||
Emulex Corporation | ||||||
Payments to Acquire Businesses, Net of Cash Acquired [Abstract] | ||||||
Cash paid to Emulex stockholders | $ 582 | |||||
Fair value of partially vested assumed equity awards | 5 | 5 | ||||
Total purchase price | 587 | |||||
Less: cash acquired | 188 | |||||
Total purchase price, net of cash acquired | 399 | |||||
Business Combination, Recognized Identifiable Assets Acquired, Goodwill, and Liabilities Assumed, Net [Abstract] | ||||||
Trade accounts receivable | 50 | |||||
Inventory | 61 | |||||
Assets held-for-sale | 83 | |||||
Other current assets | 7 | |||||
Property, plant and equipment | 28 | |||||
Goodwill | 138 | |||||
Intangible assets | 388 | |||||
Other long-term assets | 13 | |||||
Accounts payable | (36) | |||||
Employee compensation and benefits | (20) | |||||
Other current liabilities | (15) | |||||
Long-term debt | (178) | |||||
Other long-term liabilities | (120) | |||||
Fair value of net assets acquired | $ 399 | |||||
Business Acquisition, Pro Forma Information [Abstract] | ||||||
Pro forma net revenue | 1,735 | $ 1,362 | 5,178 | 2,988 | ||
Business Acquisitions Pro Forma Income Loss From Continuing Operations | $ 317 | $ (142) | $ 929 | $ 38 | ||
Business Acquisition Pro Forma Income Loss From Continuing Operations Per Share Basic | $ 1.20 | $ (0.56) | $ 3.57 | $ 0.15 | ||
Business Acquisition Pro Forma Income Loss From Continuing Operations Per Share Diluted | $ 1.10 | $ (0.56) | $ 3.28 | $ 0.14 |
Supplemental Financial Inform38
Supplemental Financial Information (Details 1) - USD ($) $ in Millions | Aug. 02, 2015 | Nov. 02, 2014 |
Balance Sheet Related Disclosures [Abstract] | ||
Finished goods | $ 157 | $ 185 |
Work-in-process | 257 | 250 |
Raw materials | 93 | 84 |
Total inventory | $ 507 | $ 519 |
Acquisitions - Emulex Intangibl
Acquisitions - Emulex Intangible Assets (Details) - USD ($) $ in Millions | May. 05, 2015 | Aug. 02, 2015 | Aug. 02, 2015 |
Business Acquisition [Line Items] | |||
Estimated Useful Lives | 6 years | ||
Total identified finite-lived intangible assets | $ 373 | ||
Technology-Based Intangible Assets [Member] | |||
Business Acquisition [Line Items] | |||
Estimated Useful Lives | 7 years | ||
Emulex Corporation | |||
Business Acquisition [Line Items] | |||
Total identified finite-lived intangible assets | $ 373 | ||
Total identified intangible assets | 388 | ||
Emulex Corporation | In-process research and development | |||
Business Acquisition [Line Items] | |||
Identified indefinite-lived intangible assets | 15 | ||
Emulex Corporation | In-process research and development | Fibre Channel product | |||
Business Acquisition [Line Items] | |||
Identified indefinite-lived intangible assets | $ 7 | ||
Discount Rate | 24.00% | ||
Percentage of Completion at Acquisition | 33.00% | ||
Estimated Cost to Complete | $ 26 | ||
Emulex Corporation | In-process research and development | Ethernet product | |||
Business Acquisition [Line Items] | |||
Identified indefinite-lived intangible assets | $ 8 | ||
Discount Rate | 26.00% | ||
Percentage of Completion at Acquisition | 48.00% | ||
Estimated Cost to Complete | $ 7 | ||
Emulex Corporation | Technology-Based Intangible Assets [Member] | |||
Business Acquisition [Line Items] | |||
Total identified finite-lived intangible assets | $ 227 | ||
Emulex Corporation | Developed technology | |||
Business Acquisition [Line Items] | |||
Estimated Useful Lives | 4 years | ||
Emulex Corporation | Customer relationships | |||
Business Acquisition [Line Items] | |||
Estimated Useful Lives | 9 years | ||
Total identified finite-lived intangible assets | $ 131 | ||
Emulex Corporation | Trade names | |||
Business Acquisition [Line Items] | |||
Estimated Useful Lives | 5 years | ||
Total identified finite-lived intangible assets | $ 10 | ||
Emulex Corporation | Customer order backlog | |||
Business Acquisition [Line Items] | |||
Estimated Useful Lives | 3 months | ||
Total identified finite-lived intangible assets | $ 5 |
Supplemental Financial Inform40
Supplemental Financial Information (Details 2) - USD ($) $ in Millions | Aug. 02, 2015 | Nov. 02, 2014 |
Long Lived Assets Held-for-sale [Line Items] | ||
Assets held-for-sale | $ 109 | $ 628 |
Axxia Business | ||
Axxia Business: | ||
Inventory | 14 | |
Property, plant and equipment, net | 22 | |
Goodwill | 91 | |
Intangible assets, net | 475 | |
Axxia Business | ||
Long Lived Assets Held-for-sale [Line Items] | ||
Assets held-for-sale | 602 | |
Real property | ||
Long Lived Assets Held-for-sale [Line Items] | ||
Assets held-for-sale | 49 | $ 26 |
Endace [Member] | ||
Long Lived Assets Held-for-sale [Line Items] | ||
Assets held-for-sale | 34 | |
Fiber optics subsystems assets | ||
Long Lived Assets Held-for-sale [Line Items] | ||
Assets held-for-sale | $ 26 |
Acquisitions (Textuals) (Detail
Acquisitions (Textuals) (Details) $ / shares in Units, $ in Millions | May. 28, 2015USD ($)$ / sharesshares | May. 05, 2015USD ($)$ / shares | Aug. 02, 2015USD ($) | Aug. 03, 2014USD ($) | Aug. 02, 2015USD ($) | Aug. 03, 2014USD ($) |
Business Acquisition [Line Items] | ||||||
Net revenue | $ 1,735 | $ 1,269 | $ 4,984 | $ 2,679 | ||
Emulex Corporation | ||||||
Business Acquisition [Line Items] | ||||||
Net revenue | 89 | 89 | ||||
Acquisition costs | $ 6 | $ 6 | ||||
Share price (in dollars per share) | $ / shares | $ 8 | |||||
Cash payment to acquire business | $ 582 | |||||
Broadcom | ||||||
Business Acquisition [Line Items] | ||||||
Share price (in dollars per share) | $ / shares | $ 54.50 | |||||
Cash payment to acquire business | $ 17,000 | |||||
Number of ordinary shares, economic equivalent | shares | 140,000,000 | |||||
Percentage of restricted equity security consideration | 50.00% | |||||
Percentage of voting interests acquired | 33.00% | |||||
Implied value of total transaction consideration | $ 37,000 | |||||
Future exchange ratio of share | 1 | |||||
Bank term loan | $ 9,000 | |||||
Debt refinance | 6,000 | |||||
Termination fee, specified circumstances | 1,000 | |||||
Termination fee, non-approval | $ 333 | |||||
Ordinary Shares | Broadcom | ||||||
Business Acquisition [Line Items] | ||||||
Number of freely-tradable ordinary shares | shares | 0.4378 | |||||
Restricted Stock | Broadcom | ||||||
Business Acquisition [Line Items] | ||||||
Number of freely-tradable ordinary shares | shares | 0.4378 | |||||
Minimum | Broadcom | ||||||
Business Acquisition [Line Items] | ||||||
Non-transferable or saleable period | ||||||
Maximum | Broadcom | ||||||
Business Acquisition [Line Items] | ||||||
Non-transferable or saleable period |
Goodwill and Intangible Asset42
Goodwill and Intangible Assets Goodwill and Intangible Assets (Details) - USD ($) $ in Millions | 9 Months Ended | |
Aug. 02, 2015 | Nov. 02, 2014 | |
Goodwill [Line Items] | ||
Goodwill | $ 1,729 | $ 1,596 |
Goodwill, Acquired During Period | 138 | |
Goodwill, Transfers | 5 | |
Wireless communications | ||
Goodwill [Line Items] | ||
Goodwill | 261 | 261 |
Goodwill, Acquired During Period | 0 | |
Goodwill, Transfers | 0 | |
Enterprise storage | ||
Goodwill [Line Items] | ||
Goodwill | 287 | 292 |
Goodwill, Acquired During Period | 0 | |
Goodwill, Transfers | 5 | |
Wired infrastructure | ||
Goodwill [Line Items] | ||
Goodwill | 1,045 | 907 |
Goodwill, Acquired During Period | 138 | |
Goodwill, Transfers | 0 | |
Industrial & other | ||
Goodwill [Line Items] | ||
Goodwill | 136 | $ 136 |
Goodwill, Acquired During Period | 0 | |
Goodwill, Transfers | $ 0 |
Goodwill and Intangible Asset43
Goodwill and Intangible Assets (Details 1) - USD ($) $ in Millions | Aug. 02, 2015 | Nov. 02, 2014 | |
Schedule of Finite-lived and Indefinite-lived Intangible Assets [Line Items] | |||
Gross Carrying Amount | $ 4,878 | $ 4,496 | |
Accumulated Amortization | (1,574) | (1,033) | |
Net Book Value | 3,304 | 3,463 | |
Intangible assets, gross | 5,043 | 4,650 | |
Intangible assets, net book value | 3,469 | 3,617 | |
In-process research and development | |||
Schedule of Finite-lived and Indefinite-lived Intangible Assets [Line Items] | |||
Intangible assets not subject to amortization | 165 | 154 | |
Purchased technology | |||
Schedule of Finite-lived and Indefinite-lived Intangible Assets [Line Items] | |||
Gross Carrying Amount | 2,878 | 2,651 | |
Accumulated Amortization | (1,036) | (682) | |
Net Book Value | 1,842 | 1,969 | |
Customer and distributor relationships | |||
Schedule of Finite-lived and Indefinite-lived Intangible Assets [Line Items] | |||
Gross Carrying Amount | 1,702 | 1,570 | |
Accumulated Amortization | (409) | (264) | |
Net Book Value | 1,293 | 1,306 | |
Other | |||
Schedule of Finite-lived and Indefinite-lived Intangible Assets [Line Items] | |||
Gross Carrying Amount | [1] | 298 | 275 |
Accumulated Amortization | [1] | (129) | (87) |
Net Book Value | [1] | $ 169 | $ 188 |
[1] | Primarily represents trademarks and customer order backlog. |
Goodwill and Intangible Asset44
Goodwill and Intangible Assets (Details 2) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Aug. 02, 2015 | Aug. 03, 2014 | Aug. 02, 2015 | Aug. 03, 2014 | |
Amortization of purchased intangible assets | ||||
Cost of products sold | $ 129 | $ 105 | $ 355 | $ 141 |
Operating expenses | 68 | 91 | 186 | 106 |
Total amortization of intangible assets | $ 197 | $ 196 | $ 541 | $ 247 |
Goodwill and Intangible Asset45
Goodwill and Intangible Assets (Details 3) - USD ($) $ in Millions | Aug. 02, 2015 | Nov. 02, 2014 |
Finite-lived intangible assets future amortization expense | ||
2015 (remainder) | $ 191 | |
2,016 | 715 | |
2,017 | 625 | |
2,018 | 494 | |
2,019 | 416 | |
2,020 | 338 | |
Thereafter | 525 | |
Net Book Value | $ 3,304 | $ 3,463 |
Goodwill and Intangible Asset46
Goodwill and Intangible Assets (Details 4) - Aug. 02, 2015 - USD ($) $ in Millions | Total | Total |
Acquired Finite-lived Intangible Assets [Line Items] | ||
Total identified finite-lived intangible assets | $ 373 | |
Weighted-average remaining amortization period | 6 years | |
Purchased technology | ||
Acquired Finite-lived Intangible Assets [Line Items] | ||
Weighted-average remaining amortization period | 7 years | |
Customer and distributor relationships | ||
Acquired Finite-lived Intangible Assets [Line Items] | ||
Weighted-average remaining amortization period | 7 years | |
Other | ||
Acquired Finite-lived Intangible Assets [Line Items] | ||
Weighted-average remaining amortization period | 6 years |
Retirement Plans and Post-Ret47
Retirement Plans and Post-Retirement Benefits (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Aug. 02, 2015 | Aug. 03, 2014 | Aug. 02, 2015 | Aug. 03, 2014 | |
Defined Benefit Plan Disclosure [Line Items] | ||||
Interest per year on cash balance accounts | 4.00% | |||
Employer contributions to pension plans | $ 10 | $ 26 | ||
Expected employer contributions in fiscal year 2015 | 36 | |||
Defined Contribution Pension | ||||
Defined Benefit Plan, Net Periodic Benefit Cost [Abstract] | ||||
Service cost | 1 | $ 0 | 2 | $ 2 |
Interest cost | 16 | 16 | 47 | 16 |
Expected return on plan assets | (20) | (18) | (59) | (19) |
Net actuarial loss and prior service cost | 0 | 0 | 1 | 1 |
Total net periodic benefit cost income | $ (3) | $ (2) | $ (9) | $ 0 |
Borrowings (Term Loans and Revo
Borrowings (Term Loans and Revolving Credit Facility) (Details) - USD ($) | May. 06, 2014 | Aug. 02, 2015 | Aug. 03, 2014 | Aug. 02, 2015 | Aug. 03, 2014 | Nov. 02, 2014 |
Debt Instrument [Line Items] | ||||||
Amortization of debt issuance costs and accretion of debt discount | $ 4,000,000 | |||||
2014 Credit Agreement | ||||||
Debt Instrument [Line Items] | ||||||
Amortization of debt issuance costs and accretion of debt discount | $ 4,000,000 | $ 4,000,000 | $ 12,000,000 | |||
Term Loan and Line of Credit | 2014 Credit Agreement | ||||||
Debt Instrument [Line Items] | ||||||
Write off of Deferred Debt Issuance Cost | 13,000,000 | |||||
Debt issuance cost | $ 90,000,000 | $ 90,000,000 | $ 115,000,000 | |||
Description of debt instruments | In connection with our acquisition of LSI on May 6, 2014, certain of our subsidiaries entered into a credit agreement with the lenders named therein, or the 2014 Credit Agreement. The 2014 Credit Agreement provides for term loans of $4.6 billion, or Term Loans, and for our senior secured, revolving credit facility in an aggregate principal amount of up to $500 million, or the 2014 Revolving Credit Facility. Additionally, it provides for swingline loans of up to $75 million and the issuance of letters of credit of up to $100 million, both of which reduce the amount that may be borrowed under the 2014 Revolving Credit Facility. The Term Loans have a term of seven years and as of August 2, 2015, had an effective interest rate of 4.15%. In March 2015, we made a $593 million principal prepayment on the Term Loans and, as a result, we wrote off $13 million of debt issuance costs, which was reported as a component of other income (expense), net in the unaudited condensed consolidated statements of operations. As of August 2, 2015 and November 2, 2014, the outstanding principal balance of Term Loans was $4.0 billion and $4.6 billion, respectively. We were in compliance with the covenants described in the 2014 Credit Agreement as of August 2, 2015. The 2014 Revolving Credit Facility has a term of five years. As of August 2, 2015 and November 2, 2014, there were no borrowings outstanding under the 2014 Revolving Credit Facility and letters of credit outstanding were not material. | |||||
Term Loan | ||||||
Debt Instrument [Line Items] | ||||||
Repayments of Debt | $ 593,000,000 | |||||
Term Loan | 2014 Credit Agreement | ||||||
Debt Instrument [Line Items] | ||||||
Term Loan Facility | $ 4,600,000,000 | |||||
Term | 7 years | |||||
Interest rate, effective percentage | 4.15% | 4.15% | ||||
Term loan outstanding amount | $ 3,961,000,000 | $ 3,961,000,000 | 4,589,000,000 | |||
Revolving Credit Facility | Line of Credit | ||||||
Debt Instrument [Line Items] | ||||||
2014 Revolving Credit Facility, Outstanding Amount | $ 0 | |||||
Revolving Credit Facility | Line of Credit | 2014 Credit Agreement | ||||||
Debt Instrument [Line Items] | ||||||
Maximum borrowing capacity | $ 500,000,000 | |||||
Term | 5 years | |||||
2014 Revolving Credit Facility, Outstanding Amount | $ 0 | $ 0 | ||||
Bridge Loan | Line of Credit | 2014 Credit Agreement | ||||||
Debt Instrument [Line Items] | ||||||
Maximum borrowing capacity | $ 75,000,000 | |||||
Letter of Credit | Line of Credit | 2014 Credit Agreement | ||||||
Debt Instrument [Line Items] | ||||||
Maximum borrowing capacity | $ 100,000,000 |
Borrowings (Convertible Notes)
Borrowings (Convertible Notes) (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions | May. 06, 2014 | Aug. 02, 2015 | Aug. 03, 2014 | Aug. 02, 2015 | Aug. 03, 2014 | May. 05, 2015 | Nov. 02, 2014 |
Debt Instrument [Line Items] | |||||||
Proceeds from issuance of convertible senior notes | $ 0 | $ 1,000 | |||||
Convertible Senior Notes | |||||||
Debt Instrument [Line Items] | |||||||
Debt Conversion, Converted Instrument, Amount | $ 2,800 | ||||||
Repayments of Convertible Debt | $ 1,000 | ||||||
Debt Conversion, Converted Instrument, Shares Issued | 13.8 | ||||||
Senior Notes | Convertible Senior Notes | |||||||
Debt Instrument [Line Items] | |||||||
Proceeds from issuance of convertible senior notes | $ 1,000 | ||||||
Interest rate | 2.00% | ||||||
Carrying amount of equity component | $ 85 | ||||||
Contractual coupon interest | $ 2 | $ 5 | 12 | 5 | |||
Accretion of debt discount @ 3.32% | 0 | 3 | 6 | 3 | |||
Interest Expense, Debt | 2 | $ 8 | $ 18 | $ 8 | |||
Terms of conversion feature | In connection with our acquisition of LSI on May 6, 2014, the Company completed the private placement of $1 billion in aggregate principal amount of its Convertible Notes to two entities affiliated with Silver Lake Partners, or the Purchasers. The Convertible Notes were the Company’s unsecured senior obligations. Interest was payable on the Convertible Notes, semi-annually in arrears, at a rate of 2.0% per year, and the Convertible Notes were scheduled to mature on August 15, 2021. Subject to any limitations set forth in the indenture related to the Convertible Notes, upon conversion, the Convertible Notes could be settled in our ordinary shares, in cash or in a combination of cash and ordinary shares, at the Company’s option. | ||||||
Long-term debt, fair value | 871 | ||||||
Carrying Amount of Convertible Debt: | |||||||
Principal balance | 1,000 | ||||||
Less: debt discount | 80 | ||||||
Net carrying amount | $ 920 | ||||||
Debt Instrument, Interest Rate During Period | 3.32% | ||||||
Emulex Corporation | |||||||
Debt Instrument [Line Items] | |||||||
Business Acquisition, Share Price | $ 8 | ||||||
Emulex Corporation | Convertible Senior Notes | |||||||
Debt Instrument [Line Items] | |||||||
Debt Conversion, Converted Instrument, Amount | $ 178 | ||||||
Interest rate | 1.75% | ||||||
Carrying Amount of Convertible Debt: | |||||||
Principal balance | $ 175 |
Borrowings (Future Principal Pa
Borrowings (Future Principal Payments) (Details) $ in Millions | Aug. 02, 2015USD ($) |
Debt Disclosure [Abstract] | |
2015 (remainder) | $ 12 |
2,016 | 46 |
2,017 | 46 |
2,018 | 46 |
2,019 | 46 |
2,020 | 46 |
Thereafter | 3,719 |
Total | $ 3,961 |
Shareholders' Equity (Share Rep
Shareholders' Equity (Share Repurchase Program and Dividends) (Details) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | 9 Months Ended | ||
Aug. 02, 2015 | Aug. 03, 2014 | Aug. 02, 2015 | Aug. 03, 2014 | |
Equity, Class of Treasury Stock [Line Items] | ||||
Stock Repurchase Program, Number of Maximum Shares Authorized to be Repurchased with Additional Board Approval | 26,000,000 | 26,000,000 | ||
Cash dividend paid, per share | $ 0.40 | $ 0.29 | ||
Dividend payments to shareholders | $ 104 | $ 73 | $ 292 | $ 203 |
2014 Share Repurchase Program | ||||
Equity, Class of Treasury Stock [Line Items] | ||||
Stock repurchased, shares | 0 | 0 |
Shareholders' Equity (Share-bas
Shareholders' Equity (Share-based Compensation Expense) (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Aug. 02, 2015 | Aug. 03, 2014 | Aug. 02, 2015 | Aug. 03, 2014 | |
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||||
Allocated Share-based Compensation Expense | $ 63 | $ 50 | $ 169 | $ 104 |
Cost of products sold | ||||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||||
Allocated Share-based Compensation Expense | 7 | 6 | 19 | 12 |
Research and development | ||||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||||
Allocated Share-based Compensation Expense | 31 | 20 | 77 | 38 |
Selling, general and administrative | ||||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||||
Allocated Share-based Compensation Expense | $ 25 | $ 24 | $ 73 | $ 54 |
Shareholders' Equity (Weighted-
Shareholders' Equity (Weighted-average Assumptions) (Details) | 3 Months Ended | 9 Months Ended | ||
Aug. 02, 2015 | Aug. 03, 2014 | Aug. 02, 2015 | Aug. 03, 2014 | |
Weighted average assumptions of share-based payment awards | ||||
Expected life of options and implied volatility description | For the fiscal quarters and three fiscal quarters ended August 2, 2015 and August 3, 2014, expected volatility for time-based and market-based options were based on our own historical share price volatility or combining historical volatility of guideline publicly-traded companies and our own historical share price volatility over the period commensurate with the expected life of the awards and the implied volatility from our own traded ordinary shares with a term of 180 days measured at a specific date. | |||
Time-Based Options | ||||
Weighted average assumptions of share-based payment awards | ||||
Risk-free interest rate | 0.30% | 1.20% | ||
Dividend yield | 1.30% | 1.60% | 1.40% | 1.70% |
Volatility | 37.00% | 35.00% | 35.00% | 35.00% |
Expected term (in years) | 1 year 1 month | 3 years 10 months | ||
Employee Stock Purchase Plan | ||||
Weighted average assumptions of share-based payment awards | ||||
Risk-free interest rate | 0.20% | 0.10% | 0.10% | 0.10% |
Dividend yield | 1.20% | 1.70% | 1.30% | 1.90% |
Volatility | 37.00% | 31.00% | 34.00% | 33.00% |
Expected term (in years) | 6 months | 6 months | 6 months | 6 months |
Market Based Options and RSUs | ||||
Weighted average assumptions of share-based payment awards | ||||
Risk-free interest rate | 1.40% | 2.20% | 1.40% | 2.30% |
Dividend yield | 1.10% | 1.60% | 1.20% | 1.80% |
Volatility | 35.00% | 45.00% | 36.00% | 45.00% |
Expected term (in years) | 4 years | 7 years | 4 years 5 months 8 days | 7 years |
Minimum | Time-Based Options | ||||
Weighted average assumptions of share-based payment awards | ||||
Risk-free interest rate | 0.50% | 0.50% | ||
Expected term (in years) | 1 year 10 months 24 days | 1 year 10 months 24 days | ||
Maximum | Time-Based Options | ||||
Weighted average assumptions of share-based payment awards | ||||
Risk-free interest rate | 1.40% | 1.30% | ||
Expected term (in years) | 4 years 3 months 18 days | 4 years 3 months 18 days |
Shareholders' Equity (Share-b54
Shareholders' Equity (Share-based Compensation Expense Textuals) (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Aug. 02, 2015 | Aug. 03, 2014 | Aug. 02, 2015 | Aug. 03, 2014 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Allocated Share-based Compensation Expense | $ 63 | $ 50 | $ 169 | $ 104 |
Employee Stock Option [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Total unrecognized compensation cost, time and market based options | 161 | $ 161 | ||
Period for recognition | 2 years 5 months 25 days | |||
Restricted Stock Units (RSUs) | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Total unrecognized compensation cost, RSUs and market based RSUs | 407 | $ 407 | ||
Period for recognition | 3 years 4 months 2 days | |||
ESPP Program [Member] | Employee Stock Purchase Plan | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Total unrecognized compensation cost, ESPP | 1 | $ 1 | ||
Emulex Corporation | Stock Compensation Plan [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Allocated Share-based Compensation Expense | $ 2 |
Shareholders' Equity (Equity In
Shareholders' Equity (Equity Incentive Award Plans) (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions | 3 Months Ended | 9 Months Ended | ||
Aug. 02, 2015 | Aug. 03, 2014 | Aug. 02, 2015 | Aug. 03, 2014 | |
Option Awards Outstanding: | ||||
Beginning balance | 29 | |||
Granted | 1 | |||
Exercised | (5) | |||
Cancelled | (2) | |||
Ending balance | 23 | 23 | ||
Option Awards Outstanding, Weighted-average Exercise Price: | ||||
Beginning balance (in dollars per share) | $ 44.97 | |||
Granted (in dollars per share) | 95.97 | |||
Exercised (in dollars per share) | 33.56 | |||
Cancelled (in dollars per share) | 65.76 | |||
Ending balance (in dollars per share) | $ 47.48 | $ 47.48 | ||
Additional Option Disclosures: | ||||
Outstanding, weighted-average remaining contractual life | 4 years 9 months 29 days | |||
Outstanding, aggregate intrinsic value | $ 1,764 | $ 1,764 | ||
Vested, number outstanding | 10 | 10 | ||
Vested, weighted-average exercise price per share (in dollars per share) | $ 36.73 | $ 36.73 | ||
Vested, weighted-average remaining contractual life | 4 years 2 months 13 days | |||
Vested, aggregate intrinsic value | $ 851 | $ 851 | ||
Vested and expected to vest, number outstanding | 22 | 22 | ||
Vested and expected to vest, weighted-average exercise price per share (in dollars per share) | $ 47.07 | $ 47.07 | ||
Vested and expected to vest, weighted-average remaining contractual life | 4 years 9 months 21 days | |||
Vested and expected to vest, aggregate intrinsic value | $ 1,712 | $ 1,712 | ||
Total intrinsic value of options exercised | $ 136 | $ 52 | $ 470 | $ 121 |
Restricted Stock Units (RSUs) | ||||
RSU Awards Outstanding: | ||||
Beginning Balance | 4 | |||
Granted | 3 | |||
Vested | (1) | |||
Forfeited | (1) | |||
Ending Balance | 5 | 5 | ||
RSU Awards Outstanding, Weighted Average Grant Date Fair Value | ||||
Beginning Balance (in dollars per share) | $ 48.82 | |||
Granted (in dollars per share) | 119.34 | |||
Exercised (in dollars per share) | 56.44 | |||
Forfeited (in dollars per share) | 74.49 | |||
Ending Balance (in dollars per share) | $ 94.84 | $ 94.84 | ||
Additional RSU Disclosures: | ||||
RSUs Weighted Average Remaining Contractual Terms | 1 year 10 months 25 days |
Shareholders' Equity (Employee
Shareholders' Equity (Employee Share Purchase Plan) (Details) - shares | 3 Months Ended | 9 Months Ended | ||
Aug. 02, 2015 | Aug. 03, 2014 | Aug. 02, 2015 | Aug. 03, 2014 | |
Equity [Abstract] | ||||
Shares issued under the ESPP | 0 | 0 | 100,000 | 100,000 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |||
Aug. 02, 2015 | Aug. 03, 2014 | Aug. 02, 2015 | Aug. 03, 2014 | Nov. 02, 2014 | |
Income Tax Contingency [Line Items] | |||||
Provision for (benefit from) income taxes | $ 23 | $ (99) | $ 61 | $ (93) | |
Unrecognized tax benefits, reduction resulting from lapse of applicable statute of limitations | 2 | $ 0 | 11 | $ 14 | |
Tax benefit, reinstatement of research and development tax credits | 15 | ||||
Unrecognized Tax Benefits, Period Increase (Decrease) | 138 | ||||
Unrecognized tax benefits, gross reduction resulting from lapse of applicable statute of limitations | 12 | ||||
Unrecognized Tax Benefits | 625 | 625 | |||
Unrecognized Tax Benefits, Income Tax Penalties and Interest Accrued | 48 | 48 | $ 23 | ||
Unrecognized Tax Benefits that Would Impact Effective Tax Rate | 606 | 606 | $ 469 | ||
Maximum | |||||
Income Tax Contingency [Line Items] | |||||
Unrecognized tax benefits that may be recognized | $ 5 | $ 5 |
Segment Information (Details)
Segment Information (Details) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Aug. 02, 2015USD ($) | Aug. 03, 2014USD ($) | Aug. 02, 2015USD ($)segment | Aug. 03, 2014USD ($) | |
Segment Reporting Information [Line Items] | ||||
Number of reportable segments | segment | 4 | |||
Net revenue | $ 1,735 | $ 1,269 | $ 4,984 | $ 2,679 |
Operating Income (Loss) | 299 | (162) | 1,118 | 137 |
Wireless communications | ||||
Segment Reporting Information [Line Items] | ||||
Net revenue | 616 | 364 | 1,856 | 1,061 |
Operating Income (Loss) | 285 | 134 | 871 | 365 |
Enterprise storage | ||||
Segment Reporting Information [Line Items] | ||||
Net revenue | 372 | 352 | 1,101 | 799 |
Operating Income (Loss) | 130 | 89 | 345 | 191 |
Wired infrastructure | ||||
Segment Reporting Information [Line Items] | ||||
Net revenue | 588 | 404 | 1,541 | 404 |
Operating Income (Loss) | 225 | 130 | 588 | 130 |
Industrial & other | ||||
Segment Reporting Information [Line Items] | ||||
Net revenue | 159 | 149 | 486 | 415 |
Operating Income (Loss) | 78 | 57 | 243 | 181 |
Unallocated expenses | ||||
Segment Reporting Information [Line Items] | ||||
Operating Income (Loss) | $ (419) | $ (572) | $ (929) | $ (730) |
Related Party Transactions (Det
Related Party Transactions (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |||||
Aug. 02, 2015 | Aug. 03, 2014 | Aug. 02, 2015 | Aug. 03, 2014 | Nov. 02, 2014 | May. 06, 2014 | ||
Related Party Transaction [Line Items] | |||||||
Total net revenue | $ 49 | $ 36 | $ 140 | $ 36 | |||
Costs and purchases with Related Parties | [1] | 19 | 21 | 66 | 21 | ||
Total receivables | 10 | 10 | $ 14 | ||||
Total payables | [1] | 6 | 6 | 8 | |||
Silicon Manufacturing Partners Pte. Ltd | |||||||
Related Party Transaction [Line Items] | |||||||
Total payables | 6 | 6 | 8 | ||||
Purchases from related party | $ 17 | $ 16 | $ 47 | $ 16 | |||
Silicon Manufacturing Partners Pte. Ltd | |||||||
Related Party Transaction [Line Items] | |||||||
Ownership percentage | 51.00% | ||||||
Inventories | Silicon Manufacturing Partners Pte. Ltd | |||||||
Related Party Transaction [Line Items] | |||||||
Long-term Purchase Commitment, Percentage of Inventory | 51.00% | 51.00% | |||||
Advance notice of termination, required period | 2 years | ||||||
Convertible Senior Notes | Director | |||||||
Related Party Transaction [Line Items] | |||||||
Carrying value of the Convertible Notes and accrued interest | $ 0 | $ 0 | $ 930 | ||||
[1] | We purchased $17 million and $47 million of inventory from SMP for the fiscal quarter and three fiscal quarters ended August 2, 2015, respectively, and $16 million for the fiscal quarter and three fiscal quarters ended August 3, 2014. As of August 2, 2015 and November 2, 2014, the amount payable to SMP was $6 million and $8 million, respectively. |
Commitments and Contingencies60
Commitments and Contingencies (Details) $ in Millions | Aug. 02, 2015USD ($) |
Debt principal, interest and fees | |
Debt principal, interest and fees | $ 4,826 |
Debt Principal, Interest and Fees, 2015 (remainder) | 49 |
Debt Principal, Interest and Fees, due in 2016 | 198 |
Debt Principal, Interest and Fees, due in 2017 | 196 |
Debt Principal, Interest and Fees, due in 2018 | 194 |
Debt Principal, Interest and Fees, due in 2019 | 191 |
Debt Principal, Interest and Fees, due in 2020 | 189 |
Debt Principal, Interest and Fees, Thereafter | 3,809 |
Purchase commitments | |
Purchase Commitments, Total | 363 |
Purchase Commitments, 2015 (remainder) | 359 |
Purchase Commitments, 2016 | 4 |
Purchase Commitments, 2017 | 0 |
Purchase Commitments, 2018 | 0 |
Purchase Commitments, 2019 | 0 |
Purchase Commitments, 2020 | 0 |
Purchase Commitments, Thereafter | 0 |
Operating lease obligations | |
Operating lease obligations | 154 |
Operating Lease Obligations, 2015 (remainder) | 9 |
Operating Lease Obligations, due in 2016 | 26 |
Operating Lease Obligations, due in 2017 | 20 |
Operating Lease Obligations, due in 2018 | 17 |
Operating Lease Obligations, due in 2019 | 13 |
Operating Lease Obligations, due in 2020 | 8 |
Operating Lease Obligations, Thereafter | $ 61 |
Commitments and Contingencies61
Commitments and Contingencies (Textuals) (Details) $ in Millions | Jun. 10, 2014USD ($) | Aug. 02, 2015USD ($)lawsuit | May. 06, 2014 |
Unrecorded Unconditional Purchase Obligation [Line Items] | |||
Litigation settlement, amount | $ | $ 2 | ||
Fort Collins Internal Fab Facility | |||
Unrecorded Unconditional Purchase Obligation [Line Items] | |||
Purchase obligation | $ | $ 90 | ||
Silicon Manufacturing Partners Pte. Ltd | |||
Unrecorded Unconditional Purchase Obligation [Line Items] | |||
Ownership percentage | 51.00% | ||
Broadcom Shareholders [Member] | Pending Litigation | |||
Unrecorded Unconditional Purchase Obligation [Line Items] | |||
Lawsuits filed | 11 | ||
Emulex Shareholders [Member] | Pending Litigation | |||
Unrecorded Unconditional Purchase Obligation [Line Items] | |||
Lawsuits filed | 2 | ||
Emulex Shareholders Consolidated [Member] | Pending Litigation | |||
Unrecorded Unconditional Purchase Obligation [Line Items] | |||
Lawsuits filed | 3 | ||
In re PLX Technology, Inc. S'holder Litig. | Pending Litigation | |||
Unrecorded Unconditional Purchase Obligation [Line Items] | |||
Lawsuits filed | 4 | ||
In re PLX Technology, Inc. Stockholders Litigation, Consol. | Pending Litigation | |||
Unrecorded Unconditional Purchase Obligation [Line Items] | |||
Lawsuits filed | 5 | ||
Stockholders of LSI vs. Company | Settled Litigation | |||
Unrecorded Unconditional Purchase Obligation [Line Items] | |||
Lawsuits filed | 15 | ||
Central District of California [Member] | Broadcom Shareholders [Member] | Pending Litigation | |||
Unrecorded Unconditional Purchase Obligation [Line Items] | |||
Lawsuits filed | 2 | ||
County of Santa Clara, California [Member] | Broadcom Shareholders [Member] | Pending Litigation | |||
Unrecorded Unconditional Purchase Obligation [Line Items] | |||
Lawsuits filed | 1 | ||
County of Orange, California [Member] | Broadcom Shareholders [Member] | Pending Litigation | |||
Unrecorded Unconditional Purchase Obligation [Line Items] | |||
Lawsuits filed | 8 | ||
DELAWARE | Stockholders of LSI vs. Company | Settled Litigation | |||
Unrecorded Unconditional Purchase Obligation [Line Items] | |||
Lawsuits filed | 8 | ||
CALIFORNIA | Stockholders of LSI vs. Company | Settled Litigation | |||
Unrecorded Unconditional Purchase Obligation [Line Items] | |||
Lawsuits filed | 7 | ||
Inventories | Silicon Manufacturing Partners Pte. Ltd | |||
Unrecorded Unconditional Purchase Obligation [Line Items] | |||
Long-term Purchase Commitment, Percentage of Inventory | 51.00% |
Restructuring Charges (Details)
Restructuring Charges (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |||
Aug. 02, 2015 | Aug. 03, 2014 | Aug. 02, 2015 | Aug. 03, 2014 | ||
Restructuring Cost and Reserve [Line Items] | |||||
Impairment of Long-Lived Assets to be Disposed of | $ 65 | ||||
Operating Expenses | 585 | $ 555 | $ 1,438 | $ 952 | |
Restructuring Reserve [Roll Forward] | |||||
Balance as of November 2, 2014 | 40 | ||||
Utilization of restructuring reserve | (85) | ||||
Balance as of August 2, 2015 | [1] | 24 | 24 | ||
Cost of Products Sold | |||||
Restructuring Reserve [Roll Forward] | |||||
Restructuring charges | 5 | ||||
Operating Expenses | |||||
Restructuring Reserve [Roll Forward] | |||||
Restructuring charges | [2] | $ 64 | |||
Employee Termination Costs | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Expected completion date | Jan. 31, 2016 | ||||
Restructuring Reserve [Roll Forward] | |||||
Balance as of November 2, 2014 | $ 34 | ||||
Utilization of restructuring reserve | (71) | ||||
Balance as of August 2, 2015 | [1] | 19 | 19 | ||
Employee Termination Costs | Cost of Products Sold | |||||
Restructuring Reserve [Roll Forward] | |||||
Restructuring charges | 5 | ||||
Employee Termination Costs | Operating Expenses | |||||
Restructuring Reserve [Roll Forward] | |||||
Restructuring charges | [2] | 51 | |||
Leases and Other Exit Costs | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Other Noncash Expense | $ 7 | ||||
Expected completion date | Oct. 30, 2019 | ||||
Restructuring Reserve [Roll Forward] | |||||
Balance as of November 2, 2014 | $ 6 | ||||
Utilization of restructuring reserve | (14) | ||||
Balance as of August 2, 2015 | [1] | 5 | 5 | ||
Leases and Other Exit Costs | Cost of Products Sold | |||||
Restructuring Reserve [Roll Forward] | |||||
Restructuring charges | 0 | ||||
Leases and Other Exit Costs | Operating Expenses | |||||
Restructuring Reserve [Roll Forward] | |||||
Restructuring charges | [2] | 13 | |||
Emulex Corporation | Employee Termination Costs | Operating Expenses | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Employee termination costs | 29 | 29 | |||
LSI Acquisition Project | Employee Termination Costs | Cost of Products Sold | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Employee termination costs | 10 | 10 | |||
LSI Acquisition Project | Employee Termination Costs | Operating Expenses | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Employee termination costs | $ 3 | $ 82 | 25 | 88 | |
Fabrication Plant Closure, Italy | Employee Termination Costs | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Operating Expenses | 8 | ||||
Fabrication Plant Closure, Italy | Employee Termination Costs | Cost of Products Sold | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Employee termination costs | $ 5 | ||||
Axxia Business | Leases and Other Exit Costs | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Restructuring and other related costs | $ 7 | ||||
[1] | The majority of the employee termination costs balance is expected to be paid by the first quarter of fiscal year 2016. The leases and other exit costs balance is expected to be paid during the remaining terms of the leases, which extend through fiscal year 2019 | ||||
[2] | In connection with the sale of the Axxia Business, we recognized $7 million of lease and other exit costs, which are included in income (loss) from discontinued operations in the unaudited condensed consolidated statements of operations. In addition, we recognized $7 million of non-cash expenses primarily related to accelerated share-based compensation. |
Discontinued Operations (Detail
Discontinued Operations (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Aug. 02, 2015 | Aug. 03, 2014 | Aug. 02, 2015 | Aug. 03, 2014 | |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||
Net revenue | $ 6 | $ 104 | $ 59 | $ 104 |
Discontinued Operation, Income (Loss) from Discontinued Operation During Phase-out Period, before Income Tax | (4) | (68) | 13 | (68) |
Discontinued Operation, Gain (Loss) from Disposal of Discontinued Operation, before Income Tax | 0 | 0 | 14 | 0 |
Discontinued Operation, Tax Effect of Income (Loss) from Discontinued Operation During Phase-out Period | 0 | (24) | 13 | (24) |
Income (loss) from discontinued operations (including a gain on disposal of $14 million for the three fiscal quarters ended August 2, 2015), net of income taxes | $ (4) | $ (44) | $ 14 | $ (44) |
Discontinued Operations (Textua
Discontinued Operations (Textuals) (Details) $ in Millions | Nov. 18, 2014USD ($) |
Axxia Business | |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |
Sales price | $ 650 |
Subsequent Events (Details)
Subsequent Events (Details) - Subsequent Event - $ / shares | Sep. 30, 2015 | Sep. 18, 2015 | Sep. 02, 2015 |
Subsequent Event [Line Items] | |||
Common stock dividend declared date | Sep. 2, 2015 | ||
Interim cash dividend per share | $ 0.42 | ||
Dividends payable, date to be paid | Sep. 30, 2015 | ||
Common stock dividend record date | Sep. 18, 2015 |