BROADCOM INC. | ||||||||||
FINANCIAL RECONCILIATION: GAAP TO NON-GAAP - UNAUDITED | ||||||||||
(IN MILLIONS) | ||||||||||
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| Fiscal Quarter Ended |
| Two Fiscal Quarters Ended | ||||||
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| May 5, |
| February 3, |
| May 6, |
| May 5, |
| May 6, |
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| 2019 |
| 2019 |
| 2018 |
| 2019 |
| 2018 |
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Net revenue on GAAP basis |
| $ 5,517 |
| $ 5,789 |
| $ 5,014 |
| $ 11,306 |
| $ 10,341 |
Acquisition-related purchase accounting revenue adjustment (1) |
| - |
| - |
| 3 |
| - |
| 7 |
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Net revenue on non-GAAP basis |
| $ 5,517 |
| $ 5,789 |
| $ 5,017 |
| $ 11,306 |
| $ 10,348 |
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Gross margin on GAAP basis |
| $ 3,089 |
| $ 3,208 |
| $ 2,551 |
| $ 6,297 |
| $ 5,179 |
Acquisition-related purchase accounting revenue adjustment (1) |
| - |
| - |
| 3 |
| - |
| 7 |
Purchase accounting effect on inventory |
| - |
| - |
| - |
| - |
| 70 |
Amortization of acquisition-related intangible assets |
| 826 |
| 833 |
| 765 |
| 1,659 |
| 1,480 |
Stock-based compensation expense |
| 41 |
| 34 |
| 21 |
| 75 |
| 41 |
Restructuring charges |
| 10 |
| 56 |
| 2 |
| 66 |
| 17 |
Acquisition-related costs |
| 5 |
| 2 |
| - |
| 7 |
| 2 |
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Gross margin on non-GAAP basis |
| $ 3,971 |
| $ 4,133 |
| $ 3,342 |
| $ 8,104 |
| $ 6,796 |
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Research and development on GAAP basis |
| $ 1,151 |
| $ 1,133 |
| $ 936 |
| $ 2,284 |
| $ 1,861 |
Stock-based compensation expense |
| 371 |
| 311 |
| 205 |
| 682 |
| 408 |
Acquisition-related costs |
| 1 |
| 2 |
| - |
| 3 |
| 3 |
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Research and development on non-GAAP basis |
| $ 779 |
| $ 820 |
| $ 731 |
| $ 1,599 |
| $ 1,450 |
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Selling, general and administrative expense on GAAP basis |
| $ 419 |
| $ 471 |
| $ 294 |
| $ 890 |
| $ 585 |
Stock-based compensation expense |
| 132 |
| 120 |
| 70 |
| 252 |
| 146 |
Acquisition-related costs |
| 44 |
| 90 |
| 68 |
| 134 |
| 119 |
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Selling, general and administrative expense on non-GAAP basis |
| $ 243 |
| $ 261 |
| $ 156 |
| $ 504 |
| $ 320 |
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Total operating expenses on GAAP basis |
| $ 2,119 |
| $ 2,653 |
| $ 1,350 |
| $ 4,772 |
| $ 3,035 |
Amortization of acquisition-related intangible assets |
| 473 |
| 476 |
| 67 |
| 949 |
| 406 |
Stock-based compensation expense |
| 503 |
| 431 |
| 275 |
| 934 |
| 554 |
Restructuring, impairment and disposal charges |
| 76 |
| 573 |
| 53 |
| 649 |
| 183 |
Acquisition-related costs |
| 45 |
| 92 |
| 68 |
| 137 |
| 122 |
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Total operating expenses on non-GAAP basis |
| $ 1,022 |
| $ 1,081 |
| $ 887 |
| $ 2,103 |
| $ 1,770 |
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Operating income on GAAP basis |
| $ 970 |
| $ 555 |
| $ 1,201 |
| $ 1,525 |
| $ 2,144 |
Acquisition-related purchase accounting revenue adjustment (1) |
| - |
| - |
| 3 |
| - |
| 7 |
Purchase accounting effect on inventory |
| - |
| - |
| - |
| - |
| 70 |
Amortization of acquisition-related intangible assets |
| 1,299 |
| 1,309 |
| 832 |
| 2,608 |
| 1,886 |
Stock-based compensation expense |
| 544 |
| 465 |
| 296 |
| 1,009 |
| 595 |
Restructuring, impairment and disposal charges |
| 86 |
| 629 |
| 55 |
| 715 |
| 200 |
Acquisition-related costs |
| 50 |
| 94 |
| 68 |
| 144 |
| 124 |
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Operating income on non-GAAP basis |
| $ 2,949 |
| $ 3,052 |
| $ 2,455 |
| $ 6,001 |
| $ 5,026 |
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Interest expense on GAAP basis |
| $ (376) |
| $ (345) |
| $ (148) |
| $ (721) |
| $ (331) |
Debt-related costs |
| 26 |
| - |
| - |
| 26 |
| 32 |
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Interest expense on non-GAAP basis |
| $ (350) |
| $ (345) |
| $ (148) |
| $ (695) |
| $ (299) |
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Other income, net on GAAP basis |
| $ 63 |
| $ 68 |
| $ 46 |
| $ 131 |
| $ 81 |
Gains on investments |
| (40) |
| (27) |
| (4) |
| (67) |
| (4) |
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Other income, net on non-GAAP basis |
| $ 23 |
| $ 41 |
| $ 42 |
| $ 64 |
| $ 77 |
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Income from continuing operations before income taxes on GAAP basis | $ 657 |
| $ 278 |
| $ 1,099 |
| $ 935 |
| $ 1,894 | |
Acquisition-related purchase accounting revenue adjustment (1) |
| - |
| - |
| 3 |
| - |
| 7 |
Purchase accounting effect on inventory |
| - |
| - |
| - |
| - |
| 70 |
Amortization of acquisition-related intangible assets |
| 1,299 |
| 1,309 |
| 832 |
| 2,608 |
| 1,886 |
Stock-based compensation expense |
| 544 |
| 465 |
| 296 |
| 1,009 |
| 595 |
Restructuring, impairment and disposal charges |
| 86 |
| 629 |
| 55 |
| 715 |
| 200 |
Acquisition-related costs |
| 50 |
| 94 |
| 68 |
| 144 |
| 124 |
Debt-related costs |
| 26 |
| - |
| - |
| 26 |
| 32 |
Gains on investments |
| (40) |
| (27) |
| (4) |
| (67) |
| (4) |
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Income before income taxes on non-GAAP basis |
| $ 2,622 |
| $ 2,748 |
| $ 2,349 |
| $ 5,370 |
| $ 4,804 |
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Benefit from income taxes on GAAP basis |
| $ (36) |
| $ (203) |
| $ (2,637) |
| $ (239) |
| $ (8,423) |
Non-GAAP tax reconciling adjustments |
| 324 |
| 505 |
| 2,743 |
| 829 |
| 8,639 |
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Provision for income taxes on non-GAAP basis |
| $ 288 |
| $ 302 |
| $ 106 |
| $ 590 |
| $ 216 |
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Net income on GAAP basis |
| $ 691 |
| $ 471 |
| $ 3,733 |
| $ 1,162 |
| $ 10,299 |
Acquisition-related purchase accounting revenue adjustment (1) |
| - |
| - |
| 3 |
| - |
| 7 |
Purchase accounting effect on inventory |
| - |
| - |
| - |
| - |
| 70 |
Amortization of acquisition-related intangible assets |
| 1,299 |
| 1,309 |
| 832 |
| 2,608 |
| 1,886 |
Stock-based compensation expense |
| 544 |
| 465 |
| 296 |
| 1,009 |
| 595 |
Restructuring, impairment and disposal charges |
| 86 |
| 629 |
| 55 |
| 715 |
| 200 |
Acquisition-related costs |
| 50 |
| 94 |
| 68 |
| 144 |
| 124 |
Debt-related costs |
| 26 |
| - |
| - |
| 26 |
| 32 |
Gains on investments |
| (40) |
| (27) |
| (4) |
| (67) |
| (4) |
Non-GAAP tax reconciling adjustments |
| (324) |
| (505) |
| (2,743) |
| (829) |
| (8,639) |
Discontinued operations, net of income taxes |
| 2 |
| 10 |
| 3 |
| 12 |
| 18 |
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Net income on non-GAAP basis |
| $ 2,334 |
| $ 2,446 |
| $ 2,243 |
| $ 4,780 |
| $ 4,588 |
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Shares used in per share calculation - diluted on GAAP basis |
| 422 |
| 419 |
| 448 |
| 420 |
| 448 |
Non-GAAP adjustment (2) |
| 26 |
| 22 |
| 12 |
| 25 |
| 11 |
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Shares used in per share calculation - diluted on non-GAAP basis | 448 |
| 441 |
| 460 |
| 445 |
| 459 | |
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Net income on non-GAAP basis |
| $ 2,334 |
| $ 2,446 |
| $ 2,243 |
| $ 4,780 |
| $ 4,588 |
Interest expense on non-GAAP basis |
| 350 |
| 345 |
| 148 |
| 695 |
| 299 |
Provision for income taxes on non-GAAP basis |
| 288 |
| 302 |
| 106 |
| 590 |
| 216 |
Depreciation |
| 142 |
| 143 |
| 128 |
| 285 |
| 254 |
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Adjusted EBITDA |
| $ 3,114 |
| $ 3,236 |
| $ 2,625 |
| $ 6,350 |
| $ 5,357 |
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Net cash provided by operating activities |
| $ 2,667 |
| $ 2,132 |
| $ 2,313 |
| $ 4,799 |
| $ 3,998 |
Purchases of property, plant and equipment |
| (125) |
| (99) |
| (189) |
| (224) |
| (409) |
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Free cash flow |
| $ 2,542 |
| $ 2,033 |
| $ 2,124 |
| $ 4,575 |
| $ 3,589 |
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| Fiscal Quarter Ending |
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| August 4, |
| November 3, |
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Expected fully diluted share count: |
| 2019 |
| 2019 |
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Shares used in per share calculation - diluted on GAAP basis |
| 419 |
| 420 |
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Non-GAAP adjustment (2) |
| 25 |
| 23 |
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Shares used in per share calculation - diluted on non-GAAP basis | 444 |
| 443 |
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(1) Amounts represent licensing revenue not included in GAAP net revenue as a result of the effect of purchase accounting for acquisitions. | ||||||||||
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(2) Non-GAAP adjustment for number of shares used in the diluted per share calculations excludes the impact of stock-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. |