Broadcom Inc. Announces Second Quarter Fiscal Year 2020 Financial Results and Quarterly Dividends

 

BROADCOM INC.

FINANCIAL RECONCILIATION: GAAP TO NON-GAAP - UNAUDITED

(IN MILLIONS)

























Fiscal Quarter Ended


Two Fiscal Quarters Ended



May 3,


February 2,


May 5,


May 3,


May 5,



2020


2020


2019


2020


2019























Gross margin on GAAP basis


$         3,189


$        3,264


$        3,089


$        6,453


$         6,297

Purchase accounting effect on inventory


-


11


-


11


-

Amortization of acquisition-related intangible assets


954


950


826


1,904


1,659

Stock-based compensation expense


41


43


41


84


75

Restructuring charges


7


8


10


15


66

 Acquisition-related costs


5


1


5


6


7












Gross margin on non-GAAP basis


$         4,196


$        4,277


$        3,971


$        8,473


$        8,104























Research and development on GAAP basis


$         1,269


$        1,289


$        1,151


$        2,558


$        2,284

Stock-based compensation expense


373


391


371


764


682

Acquisition-related costs


5


7


1


12


3












Research and development on non-GAAP basis


$           891


$           891


$           779


$        1,782


$        1,599























Selling, general and administrative expense on GAAP basis


$           501


$           601


$           419


$        1,102


$           890

Stock-based compensation expense


103


111


132


214


252

Acquisition-related costs


95


175


44


270


134

Litigation settlements


29


13


-


42


-












Selling, general and administrative expense on
non-GAAP basis


$           274


$           302


$           243


$           576


$           504























Total operating expenses on GAAP basis


$        2,423


$        2,550


$        2,119


$        4,973


$        4,772

Amortization of acquisition-related intangible assets


599


603


473


1,202


949

Stock-based compensation expense


476


502


503


978


934

Restructuring, impairment and disposal charges


54


57


76


111


649

Litigation settlements


29


13


-


42


-

Acquisition-related costs


100


182


45


282


137












Total operating expenses on non-GAAP basis


$        1,165


$        1,193


$        1,022


$        2,358


$        2,103























Operating income on GAAP basis


$           766


$           714


$           970


$        1,480


$        1,525

Purchase accounting effect on inventory


-


11


-


11


-

Amortization of acquisition-related intangible assets


1,553


1,553


1,299


3,106


2,608

Stock-based compensation expense


517


545


544


1,062


1,009

Restructuring, impairment and disposal charges


61


65


86


126


715

Litigation settlements


29


13


-


42


-

Acquisition-related costs


105


183


50


288


144












Operating income on non-GAAP basis


$        3,031


$        3,084


$        2,949


$       6,115


$        6,001























Interest expense on GAAP basis


$         (487)


$          (406)


$         (376)


$         (893)


$         (721)

Loss on debt extinguishment


93


5


26


98


26












Interest expense on non-GAAP basis


$         (394)


$          (401)


$         (350)


$         (795)


$         (695)























Other income (expense), net on GAAP basis


$          130


$              (4)


$             63


$           126


$           131

Gain from lapse of indemnification


(116)


-


-


(116)


-

(Gains) losses on investments


(8)


18


(40)


10


(67)

Acquisition-related gain


(3)


(4)


-


(7)


-












Other income, net on non-GAAP basis


$              3


$             10


$             23


$             13


$             64























Income from continuing operations before income taxes
on GAAP basis


$          409


$           304


$           657


$           713


$           935

Purchase accounting effect on inventory


-


11


-


11


-

Amortization of acquisition-related intangible assets


1,553


1,553


1,299


3,106


2,608

Stock-based compensation expense


517


545


544


1,062


1,009

Restructuring, impairment and disposal charges


61


65


86


126


715

Litigation settlements


29


13


-


42


-

Acquisition-related costs


102


179


50


281


144

Loss on debt extinguishment


93


5


26


98


26

Gain from lapse of indemnification


(116)


-


-


(116)


-

(Gains) losses on investments


(8)


18


(40)


10


(67)












Income before income taxes on non-GAAP basis


$      2,640


$       2,693


$        2,622


$        5,333


$        5,370























Benefit from income taxes on GAAP basis


$        (159)


$           (76)


$            (36)


$         (235)


$         (239)

Non-GAAP tax reconciling adjustments


476


399


324


875


829












Provision for income taxes on non-GAAP basis


$         317


$          323


$           288


$           640


$          590























Net income on GAAP basis


$         563


$          385


$           691


$           948


$       1,162

Purchase accounting effect on inventory


-


11


-


11


-

Amortization of acquisition-related intangible assets


1,553


1,553


1,299


3,106


2,608

Stock-based compensation expense


517


545


544


1,062


1,009

Restructuring, impairment and disposal charges


61


65


86


126


715

Litigation settlements


29


13


-


42


-

Acquisition-related costs


102


179


50


281


144

Loss on debt extinguishment


93


5


26


98


26

Gain from lapse of indemnification


(116)


-


-


(116)


-

(Gains) losses on investments


(8)


18


(40)


10


(67)

Non-GAAP tax reconciling adjustments


(476)


(399)


(324)


(875)


(829)

Discontinued operations, net of income taxes


5


(5)


2


-


12












Net income on non-GAAP basis


$      2,323


$       2,370


$        2,334


$       4,693


$       4,780























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


417


420


422


419


420

Non-GAAP adjustment (1)


35


31


26


33


25












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


452


451


448


452


445























Net income on non-GAAP basis


$      2,323


$       2,370


$        2,334


$        4,693


$       4,780

Interest expense on non-GAAP basis


394


401


350


795


695

Provision for income taxes on non-GAAP basis


317


323


288


640


590

Depreciation


147


146


142


293


285

Amortization on non-GAAP basis


28


25


-


53


-












Adjusted EBITDA


$      3,209


$       3,265


$        3,114


$        6,474


$       6,350























Net cash provided by operating activities


$      3,213


$       2,322


$        2,667


$        5,535


$       4,799

Purchases of property, plant and equipment


(148)


(108)


(125)


(256)


(224)












Free cash flow


$      3,065


$       2,214


$        2,542


$        5,279


$       4,575

























 Fiscal Quarter
Ending 











August 2,









Expected average diluted share count:


2020




















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


419









Non-GAAP adjustment (1)


33




















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


452










(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. For the fiscal quarter and two fiscal quarters ended May 3, 2020 and the fiscal quarter ended February 2, 2020, the non-GAAP adjustment included the impact of Mandatory Convertible Preferred Stock that was antidilutive on a GAAP basis. For the fiscal quarter ending August 2, 2020, the non-GAAP adjustment includes the impact of Mandatory Convertible Preferred Stock that is expected to be antidilutive on a GAAP basis.


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