Broadcom Limited Announces Third Quarter Fiscal Year 2016

Broadcom Limited Announces Third Quarter Fiscal Year 2016 Financial Results and Interim Dividend

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


	Fiscal Quarter Ended									Three Fiscal Quarters Ended
	July 31,			May 1,			August 2,			July 31,			August 2,
		2016			2016			2015			2016			2015

Net revenue on GAAP basis	$	3,792		$	3,541		$	1,735		$	9,104		$	4,984
Acquisition-related purchase accounting revenue adjustment ⁽¹⁾		10			21			15			42			68
Net revenue on non-GAAP basis	$	3,802		$	3,562		$	1,750		$	9,146		$	5,052

Gross margin on GAAP basis	$	1,782		$	1,046		$	884		$	3,769		$	2,556
Acquisition-related purchase accounting revenue adjustment ⁽¹⁾		10			21			15			42			68
Purchase accounting effect on inventory		271			828			26			1,099			30
Amortization of intangible assets		211			198			129			539			355
Share-based compensation expense		15			13			7			34			19
Restructuring charges		8			32			2			41			5
Acquisition-related costs		-			-			-			-			2
Gross margin on non-GAAP basis	$	2,297		$	2,138		$	1,063		$	5,524		$	3,035

Research and development on GAAP basis	$	814		$	787		$	276		$	1,868		$	762
Share-based compensation expense		144			122			31			294			77
Acquisition-related costs		3			2			-			6			9
Research and development on non-GAAP basis	$	667		$	663		$	245		$	1,568		$	676

Selling, general and administrative expense on GAAP basis	$	230		$	238		$	143		$	582		$	368
Share-based compensation expense		54			51			25			128			73
Acquisition-related costs		35			41			33			99			51
Selling, general and administrative expense on non-GAAP basis	$	141		$	146		$	85		$	355		$	244

Total operating expenses on GAAP basis	$	2,046		$	2,047		$	585		$	4,559		$	1,438
Amortization of intangible assets		728			735			68			1,517			186
Share-based compensation expense		198			173			56			422			150
Restructuring, impairment and disposal charges		274			287			98			592			122
Acquisition-related costs		38			43			33			105			60
Total operating expenses on non-GAAP basis	$	808		$	809		$	330		$	1,923		$	920

Operating income (loss) on GAAP basis	$	(264	)	$	(1,001	)	$	299		$	(790	)	$	1,118
Acquisition-related purchase accounting revenue adjustment ⁽¹⁾		10			21			15			42			68
Purchase accounting effect on inventory		271			828			26			1,099			30
Amortization of intangible assets		939			933			197			2,056			541
Share-based compensation expense		213			186			63			456			169
Restructuring, impairment and disposal charges		282			319			100			633			127
Acquisition-related costs		38			43			33			105			62
Operating income on non-GAAP basis	$	1,489		$	1,329		$	733		$	3,601		$	2,115

Interest expense on GAAP basis	$	(139	)	$	(256	)	$	(43	)	$	(479	)	$	(150	)
Acquisition-related costs		-			106			-			149			-
Interest expense on non-GAAP basis	$	(139	)	$	(150	)	$	(43	)	$	(330	)	$	(150	)

Income (loss) from continuing operations before income taxes on GAAP basis	$	(420	)	$	(1,316	)	$	267		$	(1,342	)	$	982
Acquisition-related purchase accounting revenue adjustment ⁽¹⁾		10			21			15			42			68
Purchase accounting effect on inventory		271			828			26			1,099			30
Amortization of intangible assets		939			933			197			2,056			541
Share-based compensation expense		213			186			63			456			169
Restructuring, impairment and disposal charges		282			319			100			633			127
Acquisition-related costs		38			149			33			254			62
(Gain) loss on debt extinguishment		21			53			(3	)		74			10
Income before income taxes on non-GAAP basis	$	1,354		$	1,173		$	698		$	3,272		$	1,989

Provision for (benefit from) income taxes on GAAP basis	$	(117	)	$	(99	)	$	23		$	(199	)	$	61
Income tax effects of non-GAAP reconciling adjustments		178			152			15			348			52
Provision for income taxes on non-GAAP basis	$	61		$	53		$	38		$	149		$	113

Net income (loss) on GAAP basis	$	(315	)	$	(1,255	)	$	240		$	(1,193	)	$	935
Acquisition-related purchase accounting revenue adjustment ⁽¹⁾		10			21			15			42			68
Purchase accounting effect on inventory		271			828			26			1,099			30
Amortization of intangible assets		939			933			197			2,056			541
Share-based compensation expense		213			186			63			456			169
Restructuring, impairment and disposal charges		282			319			100			633			127
Acquisition-related costs		38			149			33			254			62
(Gain) loss on debt extinguishment		21			53			(3	)		74			10
Income tax effects of non-GAAP reconciling adjustments		(178	)		(152	)		(15	)		(348	)		(52	)
Discontinued operations, net of income taxes		12			38			4			50			(14	)
Net income on non-GAAP basis	$	1,293		$	1,120		$	660		$	3,123		$	1,876

Shares used in per share calculation - diluted on GAAP basis		419			415			287			370			283
Non-GAAP adjustment		28			27			7			24			7
Shares used in per share calculation - diluted on non-GAAP basis ⁽²⁾		447			442			294			394			290

Days sales outstanding on GAAP basis		52			48			43
Non-GAAP adjustment		-			(1	)		(1	)
Days sales outstanding on non-GAAP basis ⁽³⁾		52			47			42

Inventory Days on Hand on GAAP basis		66			59			64
Non-GAAP adjustment		8			13			3
Inventory Days on Hand on non-GAAP basis ⁽⁴⁾		74			72			67

(1) Amounts represent licensing revenue not included in GAAP net revenue as a result of the effect of purchase accounting for acquisitions.
(2) The number of shares used in the diluted per share calculations on a non-GAAP basis excludes the impact of share-based compensation expense expected to be incurred in future periods and not yet recognized in the financial statements, which would otherwise be assumed to be used to repurchase shares under the GAAP treasury stock method.
(3) Days sales outstanding on a non-GAAP basis includes the impact of the acquisition-related purchase accounting revenue adjustment and excludes the impact of accounts receivable related to discontinued operations.
(4) Inventory days on hand on a non-GAAP basis excludes the impact of purchase accounting on inventory, amortization of intangible assets, share-based compensation expense, restructuring charges and acquisition-related costs.

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