BROADCOM INC.

FINANCIAL RECONCILIATION: GAAP TO NON-GAAP - UNAUDITED

(IN MILLIONS)

Fiscal Quarter Ended

Fiscal Year Ended

October 31,

August 1,

November 1,

October 31,

November 1,

2021

2021

2020

2021

2020

Gross margin on GAAP basis

$

4,638

$

4,197

$

3,747

$

16,844

$

13,516

Purchase accounting effect on inventory

-

-

-

-

11

Amortization of acquisition-related intangible assets

849

851

962

3,427

3,819

Stock-based compensation expense

37

36

38

143

159

Restructuring charges

-

1

5

17

35

Acquisition-related costs

3

3

6

12

12

Gross margin on non-GAAP basis

$

5,527

$

5,088

$

4,758

$

20,443

$

17,552

Research and development on GAAP basis

$

1,200

$

1,205

$

1,182

$

4,854

$

4,968

Stock-based compensation expense

279

285

318

1,199

1,419

Acquisition-related costs

-

1

1

3

14

Research and development on non-GAAP basis

$

921

$

919

$

863

$

3,652

$

3,535

Selling, general and administrative expense on GAAP basis

$

337

$

346

$

405

$

1,347

$

1,935

Stock-based compensation expense

98

100

93

362

398

Acquisition-related costs

17

22

60

105

396

Litigation settlements

-

1

-

1

63

Selling, general and administrative expense on non-GAAP basis

$

222

$

223

$

252

$

879

$

1,078

Total operating expenses on GAAP basis

$

2,057

$

2,071

$

2,221

$

8,325

$

9,502

Amortization of acquisition-related intangible assets

494

494

599

1,976

2,401

Stock-based compensation expense

377

385

411

1,561

1,817

Restructuring, impairment and disposal charges

26

26

35

148

198

Litigation settlements

-

1

-

1

63

Acquisition-related costs

17

23

61

108

410

Total operating expenses on non-GAAP basis

$

1,143

$

1,142

$

1,115

$

4,531

$

4,613

Operating income on GAAP basis

$

2,581

$

2,126

$

1,526

$

8,519

$

4,014

Purchase accounting effect on inventory

-

-

-

-

11

Amortization of acquisition-related intangible assets

1,343

1,345

1,561

5,403

6,220

Stock-based compensation expense

414

421

449

1,704

1,976

Restructuring, impairment and disposal charges

26

27

40

165

233

Litigation settlements

-

1

-

1

63

Acquisition-related costs

20

26

67

120

422

Operating income on non-GAAP basis

$

4,384

$

3,946

$

3,643

$

15,912

$

12,939

Interest expense on GAAP basis

$

(434)

$

(415)

$

(420)

$

(1,885)

$

(1,777)

Loss on debt extinguishment

23

-

16

245

169

Interest expense on non-GAAP basis

$

(411)

$

(415)

$

(404)

$

(1,640)

$

(1,608)

Other income, net on GAAP basis

$

22

$

15

$

31

$

131

$

206

Gain from lapse of indemnification

-

-

-

-

(116)

(Gains) losses on investments

(9)

4

(10)

(99)

(31)

Gain from sale of business

(8)

-

-

(8)

(23)

Acquisition-related gain

-

-

(4)

(3)

(11)

Other income, net on non-GAAP basis

$

5

$

19

$

17

$

21

$

25

Provision for (benefit from) income taxes on GAAP basis

$

180

$

(150)

$

(187)

$

29

$

(518)

Non-GAAP tax reconciling adjustments

297

576

578

1,686

1,881

Provision for income taxes on non-GAAP basis

$

477

$

426

$

391

$

1,715

$

1,363

Net income on GAAP basis

$

1,989

$

1,876

$

1,324

$

6,736

$

2,960

Purchase accounting effect on inventory

-

-

-

-

11

Amortization of acquisition-related intangible assets

1,343

1,345

1,561

5,403

6,220

Stock-based compensation expense

414

421

449

1,704

1,976

Restructuring, impairment and disposal charges

26

27

40

165

233

Litigation settlements

-

1

-

1

63

Acquisition-related costs

20

26

63

117

411

Loss on debt extinguishment

23

-

16

245

169

Gain from lapse of indemnification

-

-

-

-

(116)

(Gains) losses on investments

(9)

4

(10)

(99)

(31)

Gain from sale of business

(8)

-

-

(8)

(23)

Non-GAAP tax reconciling adjustments

(297)

(576)

(578)

(1,686)

(1,881)

Loss from discontinued operations, net of income taxes

-

-

-

-

1

Net income on non-GAAP basis

$

3,501

$

3,124

$

2,865

$

12,578

$

9,993

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

430

429

426

429

421

Non-GAAP adjustment ⁽¹⁾

18

20

25

20

30

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

448

449

451

449

451

Net income on non-GAAP basis

$

3,501

$

3,124

$

2,865

$

12,578

$

9,993

Interest expense on non-GAAP basis

411

415

404

1,640

1,608

Provision for income taxes on non-GAAP basis

477

426

391

1,715

1,363

Depreciation

134

134

139

539

570

Amortization of purchased intangibles and right-of-use assets

24

24

28

99

109

Adjusted EBITDA

$

4,547

$

4,123

$

3,827

$

16,571

$

13,643

Net cash provided by operating activities

$

3,541

$

3,541

$

3,348

$

13,764

$

12,061

Purchases of property, plant and equipment

(88)

(115)

(102)

(443)

(463)

Free cash flow

$

3,453

$

3,426

$

3,246

$

13,321

$

11,598

 Fiscal Quarter
Ending 

January 30,

Expected average diluted share count ⁽²⁾ : 

2022

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

430

Non-GAAP adjustment ⁽¹⁾

18

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

448

(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. In addition, the non-GAAP adjustment includes the impact of Mandatory Convertible Preferred Stock that is antidilutive on a GAAP basis. For the fiscal quarter ending January 30, 2022, the non-GAAP adjustment includes the impact of Mandatory Convertible Preferred Stock that is expected to be antidilutive on a GAAP basis.

(2) Excludes the effects of potential share repurchases.