BROADCOM INC.

FINANCIAL RECONCILIATION: GAAP TO NON-GAAP - UNAUDITED

(IN MILLIONS)

Fiscal Quarter Ended

Two Fiscal Quarters Ended

May 2,

January 31,

May 3,

May 2,

May 3,

2021

2021

2020

2021

2020

Gross margin on GAAP basis

$

4,057

$            3,952

$              3,189

$               8,009

$             6,453

Purchase accounting effect on inventory

-

-

-

-

11

Amortization of acquisition-related intangible assets

853

874

954

1,727

1,904

Stock-based compensation expense

38

32

41

70

84

Restructuring charges

1

15

7

16

15

Acquisition-related costs

3

3

5

6

6

Gross margin on non-GAAP basis

$

4,952

$

4,876

$

4,196

$

9,828

$

8,473

Research and development on GAAP basis

$

1,238

$

1,211

$

1,269

$

2,449

$

2,558

Stock-based compensation expense

307

328

373

635

764

Acquisition-related costs

1

1

5

2

12

Research and development on non-GAAP basis

$

930

$

882

$

891

$

1,812

$

1,782

Selling, general and administrative expense on GAAP basis

$

325

$

339

$

501

$

664

$

1,102

Stock-based compensation expense

80

84

103

164

214

Acquisition-related costs

25

41

95

66

270

Litigation settlements

-

-

29

-

42

Selling, general and administrative expense on non-GAAP basis

$

220

$

214

$

274

$

434

$

576

Total operating expenses on GAAP basis

$

2,082

$

2,115

$

2,423

$

4,197

$

4,973

Amortization of acquisition-related intangible assets

494

494

599

988

1,202

Stock-based compensation expense

387

412

476

799

978

Restructuring, impairment and disposal charges

25

71

54

96

111

Litigation settlements

-

-

29

-

42

Acquisition-related costs

26

42

100

68

282

Total operating expenses on non-GAAP basis

$

1,150

$

1,096

$

1,165

$

2,246

$

2,358

Operating income on GAAP basis

$

1,975

$

1,837

$

766

$

3,812

$

1,480

Purchase accounting effect on inventory

-

-

-

-

11

Amortization of acquisition-related intangible assets

1,347

1,368

1,553

2,715

3,106

Stock-based compensation expense

425

444

517

869

1,062

Restructuring, impairment and disposal charges

26

86

61

112

126

Litigation settlements

-

-

29

-

42

Acquisition-related costs

29

45

105

74

288

Operating income on non-GAAP basis

$

3,802

$

3,780

$

3,031

$

7,582

$

6,115

Interest expense on GAAP basis

$

(466)

$

(570)

$

(487)

$

(1,036)

$

(893)

Loss on debt extinguishment

50

172

93

222

98

Interest expense on non-GAAP basis

$

(416)

$

(398)

$

(394)

$

(814)

$

(795)

Other income (expense), net on GAAP basis

$

(23)

$

117

$

130

$

94

$

126

Gain from lapse of indemnification

-

-

(116)

-

(116)

(Gains) losses on investments

25

(119)

(8)

(94)

10

Acquisition-related gain

(1)

(2)

(3)

(3)

(7)

Other income (expense), net on non-GAAP basis

$

1

$

(4)

$

3

$

(3)

$

13

Provision for (benefit from) income taxes on GAAP basis

$

(7)

$

6

$

(159)

$

(1)

$

(235)

Non-GAAP tax reconciling adjustments

414

399

476

813

875

Provision for income taxes on non-GAAP basis

$

407

$

405

$

317

$

812

$

640

Net income on GAAP basis

$

1,493

$

1,378

$

563

$

2,871

$

948

Purchase accounting effect on inventory

-

-

-

-

11

Amortization of acquisition-related intangible assets

1,347

1,368

1,553

2,715

3,106

Stock-based compensation expense

425

444

517

869

1,062

Restructuring, impairment and disposal charges

26

86

61

112

126

Litigation settlements

-

-

29

-

42

Acquisition-related costs

28

43

102

71

281

Loss on debt extinguishment

50

172

93

222

98

Gain from lapse of indemnification

-

-

(116)

-

(116)

(Gains) losses on investments

25

(119)

(8)

(94)

10

Non-GAAP tax reconciling adjustments

(414)

(399)

(476)

(813)

(875)

Loss from discontinued operations, net of income taxes

-

-

5

-

-

Net income on non-GAAP basis

$

2,980

$

2,973

$

2,323

$

5,953

$

4,693

Weighted-average shares used in per share calculations - diluted on GAAP basis

429

428

417

429

419

Non-GAAP adjustment ⁽¹⁾

21

22

35

21

33

Weighted-average shares used in per share calculations - diluted on non-GAAP basis

450

450

452

450

452

Net income on non-GAAP basis

$

2,980

$

2,973

$

2,323

$

5,953

$

4,693

Interest expense on non-GAAP basis

416

398

394

814

795

Provision for income taxes on non-GAAP basis

407

405

317

812

640

Depreciation

133

138

147

271

293

Amortization of purchased intangibles and right-of-use assets

24

27

28

51

53

Adjusted EBITDA

$

3,960

$

3,941

$

3,209

$

7,901

$

6,474

Net cash provided by operating activities

$

3,569

$

3,113

$

3,213

$

6,682

$

5,535

Purchases of property, plant and equipment

(126)

(114)

(148)

(240)

(256)

Free cash flow

$

3,443

$

2,999

$

3,065

$

6,442

$

5,279

 Fiscal Quarter
Ending 

August 1,

Expected average diluted share count:

2021

Weighted-average shares used in per share calculation - diluted on GAAP basis

429

Non-GAAP adjustment ⁽¹⁾

20

Weighted-average shares used in per share calculation - diluted on non-GAAP basis

449

(1) Non-GAAP adjustment for the 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. The non-GAAP adjustment also includes the impact of Mandatory Convertible Preferred Stock that is antidilutive on a GAAP basis. For the fiscal quarter ending August 1, 2021, the non-GAAP adjustment includes the impact of Mandatory Convertible Preferred Stock that is expected to be antidilutive on a GAAP basis.