For more details, please see ourCookie Policy.

Financial News Release

View printer-friendly version
Back
Broadcom Limited Announces Fourth Quarter and Fiscal Year 2016 Financial Results and Interim Dividend

SAN JOSE, Calif. and SINGAPORE, Dec. 08, 2016 (GLOBE NEWSWIRE) -- In a release issued under the same headline earlier today by Broadcom Limited (Nasdaq:AVGO), please note that four financial tables were omitted in error from the end of the release. The corrected release follows:

Broadcom Limited Announces Fourth Quarter and Fiscal Year 2016 Financial Results and Interim Dividend

  • Quarterly interim dividend doubled to $1.02 per share from the prior quarter
  • Quarterly GAAP gross margin of 52.5 percent; Quarterly non-GAAP gross margin from continuing operations of 60.8 percent
  • Quarterly GAAP diluted loss per share of $1.59; Quarterly non-GAAP diluted earnings per share from continuing operations of $3.47

Broadcom Limited (Nasdaq:AVGO), a leading semiconductor device supplier to the wired, wireless, enterprise storage, and industrial end markets, today reported financial results for the fourth fiscal quarter and fiscal year ended October 30, 2016, and provided guidance for the first quarter of its fiscal year 2017. 

Basis Of Presentation

Broadcom Limited is the successor to Avago Technologies Limited (“Avago”). Following Avago’s acquisition of Broadcom Corporation (“BRCM”) on February 1, 2016 (the “Acquisition”), Broadcom Limited became the ultimate parent company of Avago and BRCM. Financial results for the fiscal periods prior to the Acquisition relate solely to the Company’s predecessor, Avago. Unless the context otherwise requires, references in this press release to “Broadcom,” “the Company,” “we,” “our,” “us” and similar terms are to Broadcom Limited from and after the effective time of the Acquisition and, prior to that time, to its predecessor, Avago. The financial results from businesses that have been classified as discontinued operations in the Company’s financial statements are not included in the results presented below, unless otherwise stated.

Fourth Quarter Fiscal Year 2016 GAAP Results

Net revenue was $4,136 million, an increase of 9 percent from $3,792 million in the previous quarter and an increase of 125 percent from $1,840 million in the same quarter last year.

Gross margin was $2,171 million, or 52.5 percent of net revenue. This compares with gross margin of $1,782 million, or 47.0 percent of net revenue, in the prior quarter, and gross margin of $997 million, or 54.2 percent of net revenue, in the same quarter last year.

Operating expenses were $1,790 million. This compares with $2,046 million in the prior quarter and $483 million for the same quarter last year.

Operating income was $381 million, or 9 percent of net revenue. This compares with operating loss of $264 million, or 7 percent of net revenue, in the prior quarter, and operating income of $514 million, or 28 percent of net revenue, in the same quarter last year.

Net loss, which includes the impact of discontinued operations, was $668 million, or $1.59 per diluted share. This compares with net loss of $315 million, or $0.75 per diluted share, for the prior quarter, and net income of $429 million, or $1.49 per diluted share, in the same quarter last year. 

Net loss attributable to ordinary shares was $632 million. Net loss attributable to the noncontrolling interest (restricted exchangeable limited partnership units (“REUs”)) in the Company’s subsidiary, Broadcom Cayman L.P. (the “Partnership”), was $36 million.

  Fourth Quarter Fiscal Year 2016 GAAP Results               Change    
  (Dollars in millions, except per share data)    Q4 16   Q3 16   Q4 15   Q/Q   Y/Y    
  Net revenue   $   4,136     $   3,792     $   1,840       +9 %     +125 %    
  Gross margin     52.5 %     47.0 %     54.2 %   +550bps   -170bps    
  Operating expenses   $   1,790     $   2,046     $   483     -$ 256     +$ 1,307      
  Net income (loss)   $   (668 )   $   (315 )   $   429     -$ 353     -$ 1,097      
  Net loss attributable to noncontrolling interest   $   (36 )   $   (17 )   $   -      -$ 19     -$ 36      
  Net income (loss) attributable to ordinary shares   $   (632 )   $   (298 )   $   429     -$ 334     -$ 1,061      
  Earnings (loss) per share - diluted   $   (1.59 )   $   (0.75 )   $   1.49     -$ 0.84     -$ 3.08      

The Company’s cash balance at the end of the fourth fiscal quarter was $3,097 million, compared to $1,961 million at the end of the prior quarter.

During the fourth quarter, the Company generated $1,352 million in cash from operations and received $200 million in net cash proceeds from the completion of divestitures. In the fourth quarter, the Company spent $193 million on capital expenditures.

On September 30, 2016, the Company paid a cash dividend of $0.51 per ordinary share, totaling $202 million. On the same date, the Partnership, of which the Company is the General Partner, paid holders of REUs a corresponding distribution of $0.51 per REU, totaling $11 million.

Fourth Quarter Fiscal Year 2016 Non-GAAP Results From Continuing Operations

The differences between the Company’s GAAP and non-GAAP results are described generally under “Non-GAAP Financial Measures” below, and presented in detail in the financial reconciliation tables attached to this release.

Net revenue from continuing operations was $4,146 million, an increase of 9 percent from $3,802 million in the previous quarter, and an increase of 124 percent from $1,853 million in the same quarter last year.

Gross margin from continuing operations was $2,522 million, or 60.8 percent of net revenue. This compares with gross margin of $2,297 million, or 60.4 percent of net revenue, in the prior quarter, and gross margin of $1,149 million, or 62.0 percent of net revenue, in the same quarter last year. 

Operating income from continuing operations was $1,719 million, or 41 percent of net revenue. This compares with operating income from continuing operations of $1,489 million, or 39 percent of net revenue, in the prior quarter, and $811 million, or 44 percent of net revenue, in the same quarter last year.

Net income from continuing operations was $1,549 million, or $3.47 per diluted share. This compares with net income of $1,293 million, or $2.89 per diluted share last quarter, and net income of $737 million, or $2.51 per diluted share, in the same quarter last year.

  Fourth Quarter Fiscal Year 2016 Non-GAAP Results               Change    
  (Dollars in millions, except per share data)    Q4 16   Q3 16   Q4 15   Q/Q   Y/Y    
  Net revenue   $   4,146     $   3,802     $   1,853       +9 %     +124 %    
  Gross margin     60.8 %     60.4 %     62.0 %    +40bps     -120bps     
  Operating expenses   $   803     $   808     $   338     -$ 5     +$ 465      
  Net income   $   1,549     $   1,293     $   737     +$ 256     +$ 812      
  Earnings per share - diluted   $   3.47     $   2.89     $   2.51     +$ 0.58     +$ 0.96      

“Fiscal 2016 was clearly transformative for our company with the acquisition of Broadcom Corporation. We finished the year on a very strong note, delivering a record level of revenue with 9 percent sequential revenue growth in the fourth quarter,” said Hock Tan, President and CEO of Broadcom Limited. “Reflecting the operating leverage from our larger scale and improved profitability, we announced today a doubling of our dividend.”

Other Quarterly Data

  Q4 16   Q3 16   Q4 15   Growth Rates
Net revenue by segment:                               Q/Q   Y/Y  
Wired infrastructure $   2,074     50 % $   2,062     54 % $   378     20 %   1 %     449 %  
Wireless communications     1,346     32         1,008     27         680     37       34 %     98 %  
Enterprise storage     561     14         527     14         639     35       6 %     -12 %  
Industrial & other     155     4         195     5         143     8       -21 %     8 %  
Total net revenue $   4,136     100 %   $   3,792     100 %   $   1,840     100 %          
                                       
                                       
                                       
  Q4 16   Q3 16   Q4 15   Growth Rates
Non-GAAP net revenue by segment:                               Q/Q   Y/Y  
Wired infrastructure (1) $   2,077     50 % $   2,065     54 % $   378     20 %   1 %     449 %  
Wireless communications     1,346     32         1,008     27         680     37       34 %     98 %  
Enterprise storage     561     14         527     14         639     35       6 %     -12 %  
Industrial & other (1)     162     4         202     5         156     8       -20 %     4 %  
Total non-GAAP net revenue $   4,146     100 %   $   3,802     100 %   $   1,853     100 %          
                                       
(1) Non-GAAP data include the effect of acquisition-related purchase accounting adjustments relating to licensing revenue.      



  Key Statistics (Dollars in millions)      Q4 16   Q3 16   Q4 15
  Cash from operations   $   1,352     $   963     $   582  
  Depreciation   $   118     $   117     $   58  
  Amortization of acquisition-related intangible assets   $   580     $   939     $   192  
  Capital expenditures   $   193     $   232     $   106  
  Days sales outstanding ("DSO")       48         52         50  
  Inventory days on hand ("DOH")       74         66         67  
  Non-GAAP DSO       48         52         50  
  Non-GAAP Inventory DOH       78         74         68  

Fiscal Year 2016 Financial Results From Continuing Operations

Net revenue from continuing operations was $13,240 million, an increase of 94 percent from $6,824 million in the prior year. Gross margin was $5,940 million, or 44.9 percent of net revenue, versus $3,553 million, or 52.1 percent of net revenue, in fiscal year 2015. Operating loss was $409 million compared with operating income of $1,632 million in the prior year. Net loss, which includes the impact from discontinued operations, was $1,861 million, or $4.86 per diluted share. This compares with net income of $1,364 million, or $4.85 per diluted share, in fiscal year 2015. Net loss attributable to ordinary shares was $1,739 million in fiscal year 2016.  Net loss attributable to the noncontrolling interest REUs in the Partnership was $122 million.

  Fiscal Year 2016 GAAP Results           Change
  (Dollars in millions, except per share data)      2016       2015     Y/Y
  Net revenue   $   13,240     $   6,824       +94 %
  Gross margin     44.9 %     52.1 %   -720bps
  Operating expenses   $   6,349     $   1,921     +$ 4,428  
  Net income (loss)   $   (1,861 )   $   1,364     -$ 3,225  
  Net loss attributable to noncontrolling interest   $   (122 )   $   -      -$ 122  
  Net income (loss) attributable to ordinary shares   $   (1,739 )   $   1,364     -$ 3,103  
  Earnings (loss) per share - diluted   $   (4.86 )   $   4.85     -$ 9.71  

Non-GAAP net revenue from continuing operations was $13,292 million, an increase of 92 percent from $6,905 million in the prior year. Non-GAAP gross margin was $8,046 million, or 60.5 percent of net revenue, versus $4,184 million, or 60.6 percent of net revenue, in fiscal year 2015. Non-GAAP operating income from continuing operations was $5,320 million. This compares with $2,926 million in the prior year. Non-GAAP net income was $4,672 million, or $11.45 per diluted share. This compares with non-GAAP net income of $2,613 million, or $8.98 per diluted share, in fiscal year 2015.

  Fiscal Year 2016 Non-GAAP Results           Change
  (Dollars in millions, except per share data)      2016       2015     Y/Y
  Net revenue   $   13,292     $   6,905       +92 %
  Gross margin     60.5 %     60.6 %   -10bps
  Operating expenses   $   2,726     $   1,258     +$ 1,468  
  Net income   $   4,672     $   2,613     +$ 2,059  
  Earnings per share - diluted   $   11.45     $   8.98     +$ 2.47  

First Quarter Fiscal Year 2017 Business Outlook

Based on current business trends and conditions, the outlook for continuing operations for the first quarter of fiscal year 2017, ending January 29, 2017, is expected to be as follows:

               
      GAAP   Reconciling Items   Non-GAAP
  Net revenue   $4,065M +/- $75M   $10M   $4,075M +/- $75M
  Gross margin   47.0% +/- 1%   $588M   61.5% +/- 1%
  Operating expenses   $1,473M   $688M   $785M
  Interest expense and other   $101M    -    $101M
  Provision for income taxes   $113M   $40M   $73M
  Diluted share count   437M   9M   446M


  • Non-GAAP net revenue includes $10 million of licensing revenue not included in GAAP revenue, as a result of the effects of purchase accounting for acquisitions;

  • Non-GAAP gross margin includes the effects of $10 million of licensing revenue, and excludes the effects of $558 million of amortization of intangible assets, $14 million of share-based compensation expense, and $6 million of restructuring charges;

  • Non-GAAP operating expenses exclude $441 million of amortization of intangible assets, $196 million of share-based compensation expense, $30 million of acquisition-related costs, and $21 million of restructuring charges;

  • Non-GAAP tax provision excludes $40 million of tax provision representing the tax effects of the projected reconciling items noted above; and

  • Non-GAAP diluted share count excludes the impact of share-based compensation expense expected to be incurred in future periods and not yet recognized in the Company’s financial statements, which would otherwise be assumed to be used to repurchase shares under the GAAP treasury stock method.

Capital expenditures for the first fiscal quarter are expected to be approximately $330 million. For the first fiscal quarter, depreciation is expected to be $116 million and amortization is expected to be approximately $999 million. Cash taxes expected to be paid during fiscal year 2017 are approximately $400 million.

The guidance provided above is only an estimate of what the Company believes is realizable as of the date of this release. Among other things, this guidance is based on an initial estimate of purchase accounting adjustments and allocations, all of which are subject to revision. The guidance also excludes the impact of any additional mergers, acquisitions and divestiture activity that may occur during the quarter. Actual results will vary from the guidance and the variations may be material. The Company undertakes no intent or obligation to publicly update or revise any of these projections, whether as a result of new information, future events or otherwise, except as required by law.

Broadcom will be meeting with investors on January 4-6, 2017, at the 2017 International CES and presenting at the J.P. Morgan 15th Annual Tech Forum at the 2017 International CES on January 5, 2017 and the Citi 2017 Internet, Media and Telecommunication Conference in Las Vegas on January 5, 2017.

Interim Dividend

The Company’s Board of Directors has approved a quarterly, interim cash dividend of $1.02 per ordinary share. A corresponding distribution will also be paid by the Partnership, of which the Company is the General Partner, to holders of REUs, in the amount of $1.02 per REU.

The dividend and the distribution are both payable on December 30, 2016 to shareholders or unitholders of record, as applicable, at the close of business (5:00 p.m.) Eastern Time on December 16, 2016.

Financial Results Conference Call

Broadcom Limited will host a conference call to review its financial results for the fourth quarter and fiscal year 2016, ended October 30, 2016, and to provide guidance for the first quarter of fiscal year 2017, today at 2:00 p.m. Pacific Time. Those wishing to access the call should dial (866) 310-8712; International +1 (720) 634-2946. The passcode is 12782522. A replay of the call will be accessible for one week after the call. To access the replay dial (855) 859-2056; International +1 (404) 537-3406; and reference the passcode: 12782522. A webcast of the conference call will also be available in the “Investors” section of Broadcom’s website at www.broadcom.com

Non-GAAP Financial Measures

In addition to GAAP reporting, Broadcom provides investors with net revenue, net income, operating income, gross margin, operating expenses and other data on a non-GAAP basis. This non-GAAP information includes the effect, where applicable, of purchase accounting on revenues, and excludes amortization of intangible assets, share-based compensation expense, restructuring, impairment and disposal charges, acquisition-related costs, including integration costs, purchase accounting effect on inventory, gain (loss) on extinguishment of debt, income (loss) from discontinued operations and income tax effects of non-GAAP reconciling adjustments. Management does not believe that these items are reflective of the Company’s underlying performance. However, internally, these non-GAAP measures are significant measures used by management for purposes of evaluating the core operating performance of the Company, establishing internal budgets, calculating return on investment for development programs and growth initiatives, comparing performance with internal forecasts and targeted business models, strategic planning, evaluating and valuing potential acquisition candidates and how their operations compare to the Company’s operations, and benchmarking performance externally against the Company’s competitors. The presentation of these and other similar items in Broadcom’s non-GAAP financial results should not be interpreted as implying that these items are non-recurring, infrequent or unusual. Broadcom believes this non-GAAP financial information provides additional insight into the Company’s on-going performance and has therefore chosen to provide this information to investors for a more consistent basis of comparison and to help them evaluate the results of the Company’s on-going operations and enable more meaningful period to period comparisons. These non-GAAP measures are provided in addition to, and not as a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP. A reconciliation between GAAP and non-GAAP financial data is included in the supplemental financial data attached to this press release.

About Broadcom Limited

Broadcom Limited (NASDAQ:AVGO) is a leading designer, developer and global supplier of a broad range of digital and analog semiconductor connectivity solutions.  Broadcom Limited’s extensive product portfolio serves four primary end markets: wired infrastructure, wireless communications, enterprise storage and industrial & other. Applications for our products in these end markets include: data center networking, home connectivity, set-top box, broadband access, telecommunications equipment, smartphones and base stations, data center servers and storage, factory automation, power generation and alternative energy systems, and electronic displays.

Cautionary Note Regarding Forward-Looking Statements

This announcement contains forward-looking statements (including within the meaning of Section 21E of the United States Securities Exchange Act of 1934, as amended, and Section 27A of the United States Securities Act of 1933, as amended) concerning Broadcom.  These statements include, but are not limited to, statements that address our expected future business and financial performance and statements about (i) the expected benefits of acquisitions, (ii) our plans, objectives and intentions with respect to future operations and products, (iii) our competitive position and opportunities, (iv) the impact of acquisitions on the market for our products, (v) other statements identified by words such as “will”, “expect”, “intends”, “believe”, “anticipate”, “estimate”, “should”, “intend”, “plan”, “potential”, “predict” “project”, “aim”, and similar words, phrases or expressions. These forward-looking statements are based on current expectations and beliefs of the management of Broadcom, as well as assumptions made by, and information currently available to, such management, current market trends and market conditions and involve risks and uncertainties, many of which are outside the Company’s and management’s control, and which may cause actual results to differ materially from those contained in forward-looking statements.  Accordingly, you should not place undue reliance on such statements.

Particular uncertainties that could materially affect future results include any risks associated with our recent acquisition of Broadcom Corporation and other acquisitions we may make, such as delays, challenges and expenses associated with integrating acquired companies with our existing businesses and our ability to achieve the benefits, growth prospects and synergies expected from such acquisitions, including our pending acquisition of Brocade Communications Systems, Inc.; loss of our significant customers and fluctuations in the timing and volume of significant customer demand; our dependence on contract manufacturers and outsourced supply chain; our ability to accurately estimate customers’ demand and adjust our manufacturing and supply chain accordingly; our significant indebtedness, including the need to generate sufficient cash flows to service and repay such debt; our ability to improve our manufacturing efficiency and quality; increased dependence on a small number of markets; quarterly and annual fluctuations in operating results; cyclicality in the semiconductor industry or in our target markets; global economic conditions and concerns; our competitive performance and ability to continue achieving design wins with our customers, as well as the timing of those design wins; rates of growth in our target markets; prolonged disruptions of our or our contract manufacturers’ manufacturing facilities or other significant operations; 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 maintain tax concessions in certain jurisdictions; our ability to protect our intellectual property and the unpredictability of any associated litigation expenses; any expenses or reputational damage associated with resolving customer product and warranty and indemnification claims; dependence on and risks associated with distributors of our products; 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; 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 Securities and Exchange Commission (“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. We undertake no intent or obligation to publicly update or revise any of these forward looking statements, whether as a result of new information, future events or otherwise, except as required by law.

   
BROADCOM LIMITED  
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - UNAUDITED  
(IN MILLIONS, EXCEPT PER SHARE DATA)  
                 
                 
     Fiscal Quarter Ended     Fiscal Year Ended   
    October 30,   July 31,   November 1,   October 30,   November 1,  
      2016       2016       2015       2016       2015    
                               
Net revenue   $ 4,136     $ 3,792     $ 1,840     $ 13,240     $ 6,824    
Cost of products sold:                      
Cost of products sold     1,639       1,520       712       5,295       2,750    
Purchase accounting effect on inventory     86       271       -       1,185       30    
Amortization of acquisition-related intangible assets     224       211       129       763       484    
Restructuring charges     16       8       2       57       7    
Total cost of products sold     1,965       2,010       843       7,300       3,271    
Gross margin     2,171       1,782       997       5,940       3,553    
                       
Research and development     806       814       287       2,674       1,049    
Selling, general and administrative     224       230       118       806       486    
Amortization of acquisition-related intangible assets     356       728       63       1,873       249    
Restructuring, impairment and disposal charges     404       274       15       996       137    
Total operating expenses     1,790       2,046       483       6,349       1,921    
                       
Operating income (loss)     381       (264 )     514       (409 )     1,632    
Interest expense     (106 )     (139 )     (41 )     (585 )     (191 )  
Loss on debt extinguishment     (49 )     (21 )     -       (123 )     (10 )  
Other income, net     9       4       12       10       36    
Income (loss) from continuing operations before income taxes     235       (420 )     485       (1,107 )     1,467    
Provision for (benefit from) income taxes     841       (117 )     15       642       76    
Income (loss) from continuing operations     (606 )     (303 )     470       (1,749 )     1,391    
Loss from discontinued operations, net of income taxes     (62 )     (12 )     (41 )     (112 )     (27 )  
Net income (loss)     (668 )     (315 )     429       (1,861 )     1,364    
Net loss attributable to noncontrolling interest     (36 )     (17 )     -       (122 )     -    
Net income (loss) attributable to ordinary shares   $ (632 )   $ (298 )   $ 429     $ (1,739 )   $ 1,364    
                       
Basic income (loss) per share (1):                      
Income (loss) per share from continuing operations   $ (1.44 )   $ (0.72 )   $ 1.70     $ (4.46 )   $ 5.27    
Loss per share from discontinued operations, net of income taxes     (0.15 )     (0.03 )     (0.15 )     (0.29 )     (0.10 )  
Net income (loss) per share   $ (1.59 )   $ (0.75 )   $ 1.55     $ (4.75 )   $ 5.17    
                       
Diluted income (loss) per share (2):                      
Income (loss) per share from continuing operations   $ (1.44 )   $ (0.72 )   $ 1.64     $ (4.57 )   $ 4.95    
Loss per share from discontinued operations, net of income taxes     (0.15 )     (0.03 )     (0.15 )     (0.29 )     (0.10 )  
Net income (loss) per share   $ (1.59 )   $ (0.75 )   $ 1.49     $ (4.86 )   $ 4.85    
                       
Shares used in per share calculations:                      
Basic     398       396       276       366       264    
Diluted     421       419       287       383       281    
                       
Share-based compensation expense included in continuing operations:                      
Cost of products sold   $ 14     $ 15     $ 7     $ 48     $ 26    
Research and development     136       144       30       430       107    
Selling, general and administrative     58       54       26       186       99    
Total share-based compensation expense   $ 208     $ 213     $ 63     $ 664     $ 232    
                               
                 
(1) For the fiscal quarters ended October 30, 2016 and July 31, 2016 and the fiscal year ended October 30, 2016, basic loss per share numerators are reduced by the amount of net loss attributable to noncontrolling interest, which is approximately 5.4% of net loss for each of the fiscal quarters ended October 30, 2016 and July 31, 2016. Net loss attributable to noncontrolling interest for the fiscal year ended October 30, 2016 is an accumulation of net loss attributable to noncontrolling interest since February 1, 2016. The noncontrolling interest is related to the restricted exchangeable partnership units of Broadcom Cayman L.P. (“Partnership REUs”), of which Broadcom Limited is the General Partner.
 
(2) For the fiscal quarters ended October 30, 2016 and July 31, 2016 and the fiscal year ended October 30, 2016, diluted loss per share numerators and denominators include the impact of the noncontrolling interest, which assumes conversion of Partnership REUs to Broadcom ordinary shares. The diluted loss per share calculations include 23 million Partnership REUs for each of the fiscal quarters ended October 30, 2016 and July 31, 2016, respectively, and include 17 million Partnership REUs for the fiscal year ended October 30, 2016, representing an assumed conversion of 100% of the Partnership REUs under the “if converted” method.
                 

 

   
BROADCOM LIMITED  
FINANCIAL RECONCILIATION: GAAP TO NON-GAAP - UNAUDITED  
(IN MILLIONS, EXCEPT DAYS)  
                 
                 
     Fiscal Quarter Ended     Fiscal Year Ended   
    October 30,   July 31,   November 1,   October 30,   November 1,  
      2016       2016       2015       2016       2015    
                               
                 
Net revenue on GAAP basis   $ 4,136     $ 3,792     $ 1,840     $ 13,240     $ 6,824    
Acquisition-related purchase accounting revenue adjustment (1)     10       10       13       52       81    
Net revenue on non-GAAP basis   $ 4,146     $ 3,802     $ 1,853     $ 13,292     $ 6,905    
                       
Gross margin on GAAP basis   $ 2,171     $ 1,782     $ 997     $ 5,940     $ 3,553    
Acquisition-related purchase accounting revenue adjustment (1)     10       10       13       52       81    
Purchase accounting effect on inventory     86       271       -       1,185       30    
Amortization of acquisition-related intangible assets     224       211       129       763       484    
Share-based compensation expense     14       15       7       48       26    
Restructuring charges     16       8       2       57       7    
Acquisition-related costs     1       -       1       1       3    
Gross margin on non-GAAP basis   $ 2,522     $ 2,297     $ 1,149     $ 8,046     $ 4,184    
                       
Research and development on GAAP basis   $ 806     $ 814     $ 287     $ 2,674     $ 1,049    
Share-based compensation expense     136       144       30       430       107    
Acquisition-related costs     4       3       -       10       9    
Research and development on non-GAAP basis   $ 666     $ 667     $ 257     $ 2,234     $ 933    
                       
Selling, general and administrative expense on GAAP basis   $ 224     $ 230     $ 118     $ 806     $ 486    
Share-based compensation expense     58       54       26       186       99    
Acquisition-related costs     29       35       11       128       62    
Selling, general and administrative expense on non-GAAP basis   $ 137     $ 141     $ 81     $ 492     $ 325    
                       
Total operating expenses on GAAP basis   $ 1,790     $ 2,046     $ 483     $ 6,349     $ 1,921    
Amortization of acquisition-related intangible assets     356       728       63       1,873       249    
Share-based compensation expense     194       198       56       616       206    
Restructuring, impairment and disposal charges     404       274       15       996       137    
Acquisition-related costs     33       38       11       138       71    
Total operating expenses on non-GAAP basis   $ 803     $ 808     $ 338     $ 2,726     $ 1,258    
                       
Operating income (loss) on GAAP basis   $ 381     $ (264 )   $ 514     $ (409 )   $ 1,632    
Acquisition-related purchase accounting revenue adjustment (1)     10       10       13       52       81    
Purchase accounting effect on inventory     86       271       -       1,185       30    
Amortization of acquisition-related intangible assets     580       939       192       2,636       733    
Share-based compensation expense     208       213       63       664       232    
Restructuring, impairment and disposal charges     420       282       17       1,053       144    
Acquisition-related costs     34       38       12       139       74    
Operating income on non-GAAP basis   $ 1,719     $ 1,489     $ 811     $ 5,320     $ 2,926    
                       
Interest expense on GAAP basis   $ (106 )   $ (139 )   $ (41 )   $ (585 )   $ (191 )  
Acquisition-related costs     -       -       -       149       -    
Interest expense on non-GAAP basis   $ (106 )   $ (139 )   $ (41 )   $ (436 )   $ (191 )  
                       
Other income, net on GAAP basis   $ 9     $ 4     $ 12     $ 10     $ 36    
Other     -       -       (2 )     -       (2 )  
Other income, net on non-GAAP basis   $ 9     $ 4     $ 10     $ 10     $ 34    
                       
Income (loss) from continuing operations before income taxes on GAAP basis   $ 235     $ (420 )   $ 485     $ (1,107 )   $ 1,467    
Acquisition-related purchase accounting revenue adjustment (1)     10       10       13       52       81    
Purchase accounting effect on inventory     86       271       -       1,185       30    
Amortization of acquisition-related intangible assets     580       939       192       2,636       733    
Share-based compensation expense     208       213       63       664       232    
Restructuring, impairment and disposal charges     420       282       17       1,053       144    
Acquisition-related costs     34       38       12       288       74    
Loss on debt extinguishment     49       21       -       123       10    
Other     -       -       (2 )     -       (2 )  
Income before income taxes on non-GAAP basis   $ 1,622     $ 1,354     $ 780     $ 4,894     $ 2,769    
                       
Provision for (benefit from) income taxes on GAAP basis   $ 841     $ (117 )   $ 15     $ 642     $ 76    
Income tax effects of non-GAAP reconciling adjustments     (768 )     178       28       (420 )     80    
Provision for income taxes on non-GAAP basis   $ 73     $ 61     $ 43     $ 222     $ 156    
                       
Net income (loss) on GAAP basis   $ (668 )   $ (315 )   $ 429     $ (1,861 )   $ 1,364    
Acquisition-related purchase accounting revenue adjustment (1)     10       10       13       52       81    
Purchase accounting effect on inventory     86       271       -       1,185       30    
Amortization of acquisition-related intangible assets     580       939       192       2,636       733    
Share-based compensation expense     208       213       63       664       232    
Restructuring, impairment and disposal charges     420       282       17       1,053       144    
Acquisition-related costs     34       38       12       288       74    
Loss on debt extinguishment     49       21       -       123       10    
Other     -       -       (2 )     -       (2 )  
Income tax effects of non-GAAP reconciling adjustments     768       (178 )     (28 )     420       (80 )  
Discontinued operations, net of income taxes     62       12       41       112       27    
Net income on non-GAAP basis   $ 1,549     $ 1,293     $ 737     $ 4,672     $ 2,613    
                       
                       
Shares used in per share calculation - diluted on GAAP basis     421       419       287       383       281    
Non-GAAP adjustment     26       28       7       25       10    
Shares used in per share calculation - diluted on non-GAAP basis(2)     447       447       294       408       291    
                       
Inventory Days on Hand on GAAP basis     74       66       67      
Non-GAAP adjustment     4       8       1      
Inventory Days on Hand on non-GAAP basis(3)     78       74       68      
                 
                 
(1) Amounts represent licensing revenue not included in GAAP net revenue as a result of the effect of purchase accounting for acquisitions.  
(2) The number of shares used in the diluted per share calculations on a non-GAAP basis excludes the impact of share-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.
(3) Inventory days on hand on a non-GAAP basis excludes the impact of purchase accounting on inventory, amortization of intangible assets, share-based compensation expense, restructuring charges and acquisition-related costs.
                 

 

 
BROADCOM LIMITED
CONDENSED CONSOLIDATED BALANCE SHEETS - UNAUDITED
(IN MILLIONS)
           
           
    October 30,   November 1,  
      2016     2015 (1)  
           
ASSETS          
           
Current assets:          
Cash and cash equivalents   $ 3,097     $ 1,822    
Trade accounts receivable, net     2,181       1,019    
Inventory     1,400       524    
Other current assets     447       394    
   Total current assets     7,125       3,759    
           
Long-term assets:          
Property, plant and equipment, net     2,509       1,460    
Goodwill     24,732       1,674    
Intangible assets, net     15,068       3,277    
Other long-term assets     532       345    
   Total assets   $ 49,966     $ 10,515    
           
           
LIABILITIES AND SHAREHOLDERS' EQUITY          
           
Current liabilities:          
Accounts payable   $ 1,261     $ 617    
Employee compensation and benefits     517       250    
Current portion of long-term debt     454       46    
Other current liabilities     846       206    
   Total current liabilities     3,078       1,119    
           
Long-term liabilities:          
Long-term debt     13,188       3,826    
Pension and post-retirement benefit obligations     531       475    
Other long-term liabilities     11,293       381    
   Total liabilities     28,090       5,801    
           
Shareholders' equity:          
Ordinary shares     19,241       2,547    
Retained earnings (accumulated deficit)     (215 )     2,240    
Accumulated other comprehensive loss     (134 )     (73 )  
Total Broadcom Limited shareholders' equity     18,892       4,714    
Noncontrolling interest     2,984       -    
Total shareholders' equity     21,876       4,714    
   Total liabilities and shareholders' equity   $ 49,966     $ 10,515    
           
(1) Amounts as of November 1, 2015 have been derived from audited financial statements as of that date.
 
           

 

 
BROADCOM LIMITED
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - UNAUDITED
(IN MILLIONS)
                     
     Fiscal Quarter Ended    Fiscal Year Ended
    October 30,   July 31,   November 1,   October 30,   November 1,
      2016       2016       2015       2016       2015  
Cash flows from operating activities:                    
Net income (loss)   $ (668 )   $ (315 )   $ 429     $ (1,861 )   $ 1,364  
Adjustments to reconcile net income (loss) to net cash provided by operating activities:                        
Depreciation and amortization     700       1,058       250       3,042       962  
Share-based compensation     205       219       63       679       232  
Excess tax benefits from share-based compensation     (21 )     (10 )     (23 )     (89 )     (125 )
Non-cash restructuring, impairment and disposal charges     394       224       2       662       77  
Non-cash portion of debt extinguishment loss, net     49       21       -       100       10  
Deferred taxes     718       (181 )     (185 )     365       (220 )
Amortization of debt issuance costs and accretion of debt discount     9       10       4       36       22  
Other     4       (36 )     36       (6 )     32  
Changes in assets and liabilities, net of acquisitions and disposals:                    
Trade accounts receivable, net     -       (322 )     (209 )     (491 )     (187 )
Inventory     (92 )     168       (1 )     996       62  
Accounts payable     94       156       81       33       29  
Employee compensation and benefits     93       121       20       163       8  
Other current assets and current liabilities     (60 )     (124 )     37       (98 )     12  
Other long-term assets and long-term liabilities     (73 )     (26 )     78       (120 )     40  
Net cash provided by operating activities     1,352       963       582       3,411       2,318  
                     
Cash flows from investing activities:                    
Acquisitions of businesses, net of cash acquired     -       (20 )     -       (10,055 )     (394 )
Proceeds from sales of businesses     200       630       -       898       650  
Purchases of property, plant and equipment     (193 )     (232 )     (106 )     (723 )     (593 )
Proceeds from disposals of property, plant and equipment     -       5       47       5       110  
Purchases of investments     -       -       (5 )     (58 )     (14 )
Proceeds from sales and maturities of investments     15       57       -       104       -  
Other     4       (14 )     -       (11 )     -  
Net cash provided by (used in) investing activities     26       426       (64 )     (9,840 )     (241 )
                     
Cash flows from financing activities:                    
Proceeds from term loan borrowings     3,584       -       -       19,510       -  
Debt repayments     (3,697 )     (1,306 )     (12 )     (9,842 )     (1,639 )
Payments of assumed debt     -       -       -       (1,475 )     (178 )
Debt issuance costs     (15 )     -       -       (123 )     -  
Dividend payments     (213 )     (211 )     (116 )     (750 )     (408 )
Issuance of ordinary shares     78       38       55       295       241  
Excess tax benefits from share-based compensation     21       10       23       89       125  
Net cash provided by (used in) financing activities     (242 )     (1,469 )     (50 )     7,704       (1,859 )
                     
                     
Net change in cash and cash equivalents     1,136       (80 )     468       1,275       218  
Cash and cash equivalents at the beginning of period     1,961       2,041       1,354       1,822       1,604  
Cash and cash equivalents at end of period   $ 3,097     $ 1,961     $ 1,822     $ 3,097     $ 1,822  
                     


Broadcom Limited
Ashish Saran
Investor Relations
+1 408 433 8000
investor.relations@broadcom.com

Primary Logo