Particular uncertainties that could materially affect future results include risks associated with: our acquisition of CA, including (1) potential difficulties in employee retention, (2) unexpected costs, charges or expenses, and (3) our ability to successfully integrate CA's business and achieve the anticipated benefits of the transaction; any loss of our significant customers and fluctuations in the timing and volume of significant customer demand; our dependence on contract manufacturing and outsourced supply chain; any other acquisitions we may make, including integrating acquired companies with our existing businesses and our ability to achieve the benefits, growth prospects and synergies expected by such acquisitions; our ability to accurately estimate customers' demand and adjust our manufacturing and supply chain accordingly; our significant indebtedness and the need to generate sufficient cash flows to service and repay such debt; our dependency on a limited number of suppliers; dependence on and risks associated with distributors of our products; dependence on senior management and our ability to attract and retain qualified personnel; global economic conditions and concerns; quarterly and annual fluctuations in operating results; the amount and frequency of our stock repurchases; cyclicality in the semiconductor industry or in our target markets; our competitive performance and ability to continue achieving design wins with our customers, as well as the timing of any design wins; prolonged disruptions of our or our contract manufacturers' manufacturing facilities or other significant operations; our ability to improve our manufacturing efficiency and quality; our dependence on outsourced service providers for certain key business services and their ability to execute to our requirements; our ability to maintain or improve gross margin; our ability to protect our intellectual property and the unpredictability of any associated litigation expenses; compatibility of our software products with operating environments, platforms or third-party products; our ability to enter into satisfactory software license agreements; sales to our government clients; availability of third party software used in our products; use of open source code sources in our products; any expenses or reputational damage associated with resolving customer product warranty and indemnification claims; our ability to sell to new types of customers and to keep pace with technological advances; market acceptance of the end products into which our products are designed; our ability to protect against a breach of security systems; changes in accounting standards; fluctuations in foreign exchange rates; our provision for income taxes and overall cash tax costs, legislation that may impact our overall cash tax costs and our ability to maintain tax concessions in certain jurisdictions; and other events and trends on a national, regional and global scale, including those of a political, economic, business, competitive and regulatory nature.
Our filings with the SEC, which you may obtain for free at the SEC's website at http://www.sec.gov, discuss some of the important risk factors that may affect our business, results of operations and financial condition. Actual results may vary from the estimates provided. We undertake no intent or obligation to publicly update or revise any of the estimates and other forward-looking statements made in this announcement, whether as a result of new information, future events or otherwise, except as required by law.
Contact:
Broadcom Inc.
Beatrice F. Russotto
Investor Relations
408-433-8000
investor.relations@broadcom.com
BROADCOM INC. | |||||||
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - UNAUDITED | |||||||
(IN MILLIONS, EXCEPT PER SHARE DATA) | |||||||
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| Fiscal Quarter Ended |
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| February 3, |
| November 4, |
| February 4, |
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| 2019 |
| 2018 |
| 2018 |
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Net revenue |
| $ 5,789 |
| $ 5,444 |
| $ 5,327 |
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Cost of revenue: |
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Cost of revenue |
| 1,692 |
| 1,746 |
| 1,899 |
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Purchase accounting effect on inventory |
| - |
| - |
| 70 |
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Amortization of acquisition-related intangible assets |
| 833 |
| 762 |
| 715 |
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Restructuring charges |
| 56 |
| 1 |
| 15 |
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Total cost of revenue |
| 2,581 |
| 2,509 |
| 2,699 |
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| Gross margin |
| 3,208 |
| 2,935 |
| 2,628 |
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| Research and development |
| 1,133 |
| 948 |
| 925 |
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| Selling, general and administrative |
| 471 |
| 237 |
| 291 |
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| Amortization of acquisition-related intangible assets |
| 476 |
| 67 |
| 339 |
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| Restructuring, impairment and disposal charges |
| 573 |
| 17 |
| 130 |
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| Litigation settlements |
| - |
| 14 |
| - |
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| Total operating expenses |
| 2,653 |
| 1,283 |
| 1,685 |
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| Operating income |
| 555 |
| 1,652 |
| 943 |
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| Interest expense |
| (345) |
| (148) |
| (183) |
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| Impairment on investment |
| - |
| (106) |
| - |
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| Other income, net |
| 68 |
| 24 |
| 35 |
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| Income from continuing operations before income taxes |
| 278 |
| 1,422 |
| 795 |
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| Provision for (benefit from) income taxes |
| (203) |
| 307 |
| (5,786) |
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| Income from continuing operations |
| 481 |
| 1,115 |
| 6,581 |
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| Loss from discontinued operations, net of income taxes |
| (10) |
| - |
| (15) |
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| Net income |
| 471 |
| 1,115 |
| 6,566 |
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| Net income attributable to noncontrolling interest (1) |
| - |
| - |
| 336 |
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| Net income attributable to common stock |
| $ 471 |
| $ 1,115 |
| $ 6,230 |
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| Basic income per share: |
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| Income per share from continuing operations |
| $ 1.20 |
| $ 2.71 |
| $ 15.23 |
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| Income (loss) per share from discontinued operations |
| (0.03) |
| - |
| (0.03) |
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| Net income per share |
| $ 1.17 |
| $ 2.71 |
| $ 15.20 |
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| Diluted income per share (2) : |
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| Income per share from continuing operations |
| $ 1.15 |
| $ 2.64 |
| $ 14.66 |
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| Income (loss) per share from discontinued operations |
| (0.03) |
| - |
| (0.04) |
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| Net income per share |
| $ 1.12 |
| $ 2.64 |
| $ 14.62 |
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| Shares used in per share calculations: |
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| Basic |
| 401 |
| 412 |
| 410 |
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| Diluted |
| 419 |
| 423 |
| 426 |
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| Stock-based compensation expense included in continuing operations: |
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| Cost of revenue |
| $ 34 |
| $ 23 |
| $ 20 |
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| Research and development |
| 311 |
| 225 |
| 203 |
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| Selling, general and administrative |
| 120 |
| 69 |
| 76 |
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| Total stock-based compensation expense |
| $ 465 |
| $ 317 |
| $ 299 |
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| (1) In connection with the redomiciliation to the United States on April 4, 2018, or the Redomiciliation, all outstanding exchangeable limited partnership units, or LP Units, in Broadcom Cayman L.P. were exchanged for common stock of Broadcom on a one-for-one basis and the noncontrolling interest, or NCI, was eliminated. Net income attributable to NCI prior to the Redomiciliation represents approximately 5% of net income attributable to LP Units. | |||||||
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| (2) For the fiscal quarter ended February 4, 2018, diluted income per share excluded the potentially dilutive effect of the exchange of LP Units as their effect was antidilutive. There were no LP Units outstanding during the fiscal quarters ended February 3, 2019 or November 4, 2018 due to the Redomiciliation.
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