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FINANCIAL NEWS RELEASE

Broadcom Inc. Announces Second Quarter Fiscal Year 2020 Financial Results and Quarterly Dividends
-- Revenue of $5,742 million; GAAP net income of $563 million; Adjusted EBITDA of $3,209 million
 
-- GAAP diluted EPS of $1.17; Non-GAAP diluted EPS of $5.14
 
-- $3,065 million of free cash flow from operations, defined as cash from operations of $3,213 million less capital expenditures of $148 million
 
-- Quarterly common stock dividend of $3.25 per share
 
-- Third quarter revenue guidance of $5.75 billion plus or minus $150 million
 
-- Third quarter Adjusted EBITDA guidance of $3,220 million plus or minus $75 million, or 56% of revenue at the midpoint of guidance(1)

SAN JOSE, Calif., June 4, 2020 /PRNewswire/ -- Broadcom Inc. (Nasdaq: AVGO), a global technology leader that designs, develops and supplies semiconductor and infrastructure software solutions, today reported financial results for its second quarter of fiscal year 2020, ended May 3, 2020, provided guidance for the third quarter of its fiscal year 2020 and announced its quarterly dividends.

"Second quarter results were in-line with our expectations, and saw limited impact from the effects of COVID-19," said Hock Tan, President and CEO of Broadcom Inc. "Looking ahead, our third quarter guidance for semiconductors reflects a surge in demand from cloud, telecom and enterprise customers, offset by supply chain constraints and an expected substantial reset in wireless. We remain focused on investing in our diverse set of mission critical semiconductor and software franchises, while carefully managing our expenses in this uncertain environment."

"We generated record quarterly free cash flow of over $3 billion and reinforced our balance sheet, ending the quarter with over $9 billion of cash," said Tom Krause, CFO of Broadcom Inc. "Given our strong free cash flow generation, healthy balance sheet and enhanced liquidity position, we remain committed to maintaining our dividend while we navigate these unprecedented times."

Second Quarter Fiscal Year 2020 Financial Highlights

       

 GAAP 

           

Non-GAAP

   

(Dollars in millions, except per share data)

 

Q2 20

 

Q2 19

 

Change

   

Q2 20

 

Q2 19

 

Change

Net revenue

 

$ 5,742

 

$ 5,517

 

+4%

   

$ 5,742

 

$      5,517

 

+4%

Net income

 

$    563

 

$    691

 

-$   128

   

$ 2,323

 

$      2,334

 

-$    11

Earnings per common share - diluted

 

$   1.17

 

$   1.64

 

-$  0.47

   

$   5.14

 

$        5.21

 

-$ 0.07

                           

(Dollars in millions)

 

Q2 20

 

Q2 19

 

Change

             

Cash flow from operations

 

$ 3,213

 

$ 2,667

 

+$   546

             

Adjusted EBITDA

 

$ 3,209

 

$ 3,114

 

+$     95

             

Free cash flow

 

$ 3,065

 

$ 2,542

 

+$   523

             

 

Net revenue by segment

                         

(Dollars in millions)

 

Q2 20

 

Q2 19

 

Change

Semiconductor solutions

 

$ 4,027

 

70%

 

$ 4,104

 

74%

 

-2%

Infrastructure software

 

1,715

 

30

 

1,413

 

26

 

+21%

Total net revenue

 

$ 5,742

 

100%

 

$ 5,517

 

100%

     

The Company's cash and cash equivalents at the end of the second fiscal quarter were $9,207 million, compared to $6,444 million at the end of the prior quarter.

During the second fiscal quarter, the Company generated $3,213 million in cash from operations and spent $148 million on capital expenditures.

On March 31, 2020, the Company paid a cash dividend of $3.25 per share of common stock, totaling $1,306 million and a cash dividend of $20.00 per share of mandatory convertible preferred stock, totaling $75 million.

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.

Third Quarter Fiscal Year 2020 Business Outlook

Based on current business trends and conditions, the outlook for the third quarter of fiscal year 2020, ending August 2, 2020, is expected to be as follows: 

  • Third quarter revenue guidance of $5.75 billion plus or minus $150 million; and
  • Third quarter Adjusted EBITDA of $3,220 million plus or minus $75 million, or 56% of revenue at the midpoint of guidance.

The guidance provided above is only an estimate of what the Company believes is realizable as of the date of this release. The Company is not readily able to provide a reconciliation of projected Adjusted EBITDA to projected net income without unreasonable effort. 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.

Quarterly Dividends

The Company's Board of Directors has approved a quarterly cash dividend on its common stock of $3.25 per share. The common stock dividend is payable on June 30, 2020 to common stockholders of record at the close of business (5:00 p.m. Eastern Time) on June 22, 2020.

The Company's Board of Directors has also approved a quarterly cash dividend on its 8.00% Mandatory Convertible Preferred Stock, Series A, of $20.00 per share. This dividend is payable on June 30, 2020 to preferred stockholders of record at the close of business (5:00 p.m. Eastern Time) on June 15, 2020.

Financial Results Conference Call

Broadcom Inc. will host a conference call to review its financial results for the second quarter of fiscal year 2020, ended May 3, 2020, and to discuss the business outlook, 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 7865139. 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: 7865139. A webcast of the conference call will also be available in the "Investors" section of Broadcom's website at www.broadcom.com.

Basis of Presentation

The Company's financial results include contributions from the Symantec enterprise security business' continuing operations starting in the first quarter of fiscal year 2020. 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 above, unless otherwise stated.

Non-GAAP Financial Measures

In addition to GAAP reporting, Broadcom provides investors with net revenue, net income, operating income, gross margin, operating expenses, cash flow and other data on a non-GAAP basis. This non-GAAP information excludes amortization of acquisition-related intangible assets, stock-based compensation expense, restructuring, impairment and disposal charges, acquisition-related costs, including integration costs, purchase accounting effect on inventory, litigation settlements, loss on debt extinguishment, gain from lapse of indemnification, gains (losses) on investments, income (loss) from discontinued operations and non-GAAP tax reconciling adjustments. Management does not believe that these items are reflective of the Company's underlying performance. 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 exclusion of these and other similar items from Broadcom's non-GAAP financial results should not be interpreted as implying that these items are non-recurring, infrequent or unusual. Free cash flow measures have limitations as they omit certain components of the overall cash flow statement and do not represent the residual cash flow available for discretionary expenditures. Investors should not consider presentation of free cash flow measures as implying that stockholders have any right to such cash. Broadcom's free cash flow may not be calculated in a manner comparable to similarly named measures used by other companies.

Broadcom believes this non-GAAP financial information provides additional insight into the Company's on-going performance. Therefore, Broadcom provides 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 Inc.

Broadcom Inc., (NASDAQ: AVGO), a Delaware corporation headquartered in San Jose, CA, is a global technology leader that designs, develops and supplies a broad range of semiconductor and infrastructure software solutions. Broadcom's category-leading product portfolio serves critical markets including data center, networking, enterprise software, broadband, wireless, storage and industrial. Our solutions include data center networking and storage, enterprise, mainframe and cyber security software focused on automation, monitoring and security, smartphone components, telecoms and factory automation. For more information, go to www.broadcom.com.

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 other statements identified by words such as "will", "expect", "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 risks associated with:  the COVID-19 pandemic, which has, and will likely continue to, negatively impact the global economy and disrupt normal business activity, and which may have an adverse effect on our results of operations; any loss of our significant customers and fluctuations in the timing and volume of significant customer demand; our dependence on contract manufacturing and outsourced supply chain; our dependency on a limited number of suppliers; global economic conditions and concerns; international political and economic conditions; any acquisitions we may make, such as delays, challenges and expenses associated with receiving governmental and regulatory approvals and satisfying other closing conditions, and with integrating acquired businesses with our existing businesses and our ability to achieve the benefits, growth prospects and synergies expected by such acquisitions, including our recent acquisition of Symantec Corporation's Enterprise Security business; government regulations and trade restrictions; our significant indebtedness and the need to generate sufficient cash flows to service and repay such debt; dependence on and risks associated with distributors and resellers of our products; dependence on senior management and our ability to attract and retain qualified personnel; involvement in legal or administrative proceedings; quarterly and annual fluctuations in operating results; our ability to accurately estimate customers' demand and adjust our manufacturing and supply chain accordingly; cyclicality in the semiconductor industry or in our target markets; our competitive performance and ability to continue achieving design wins with our customers, as well as the timing of any design wins; prolonged disruptions of our or our contract manufacturers' manufacturing facilities, warehouses or other significant operations; our ability to improve our manufacturing efficiency and quality; 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 protect our intellectual property and the unpredictability of any associated litigation expenses; compatibility of our software products with operating environments, platforms or third-party products; our ability to enter into satisfactory software license agreements; sales to our government clients; availability of third party software used in our products; use of open source code sources in our products; any expenses or reputational damage associated with resolving customer product warranty and indemnification claims; market acceptance of the end products into which our products are designed; our ability to sell to new types of customers and to keep pace with technological advances; our compliance with privacy and data security laws; our ability to protect against a breach of security systems; changes in accounting standards; fluctuations in foreign exchange rates; our provision for income taxes and overall cash tax costs, legislation that may impact our overall cash tax costs and our ability to maintain tax concessions in certain jurisdictions; and other events and trends on a national, regional and global scale, including those of a political, economic, business, competitive and regulatory nature. Many of the foregoing risks and uncertainties are, and will be, exacerbated by the COVID-19 pandemic and any worsening of the global business and economic environment as a result. 

Our filings with the 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. Actual results may vary from the estimates provided. We undertake no intent or obligation to publicly update or revise any of the estimates and other forward-looking statements made in this announcement, whether as a result of new information, future events or otherwise, except as required by law.

Contact:
Broadcom Inc.
Beatrice F. Russotto
Investor Relations
408-433-8000
investor.relations@broadcom.com

 

1 The Company is not readily able to provide a reconciliation of the projected non-GAAP financial information presented to the relevant projected GAAP measure without unreasonable effort.

 

BROADCOM INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - UNAUDITED

(IN MILLIONS, EXCEPT PER SHARE DATA)

                     
                     
   

Fiscal Quarter Ended

 

Two Fiscal Quarters Ended

   

May 3,

 

February 2,

 

May 5,

 

May 3,

 

May 5,

   

2020

 

2020

 

2019

 

2020

 

2019

                     

Net revenue

 

$        5,742

 

$        5,858

 

$        5,517

 

$        11,600

 

$        11,306

Cost of revenue:

                   

Cost of revenue

 

1,592

 

1,636

 

1,592

 

3,228

 

3,284

Amortization of acquisition-related intangible assets

 

954

 

950

 

826

 

1,904

 

1,659

Restructuring charges

 

7

 

8

 

10

 

15

 

66

Total cost of revenue

 

2,553

 

2,594

 

2,428

 

5,147

 

5,009

                     

Gross margin

 

3,189

 

3,264

 

3,089

 

6,453

 

6,297

                     

Research and development

 

1,269

 

1,289

 

1,151

 

2,558

 

2,284

Selling, general and administrative

 

501

 

601

 

419

 

1,102

 

890

Amortization of acquisition-related intangible assets

 

599

 

603

 

473

 

1,202

 

949

Restructuring, impairment and disposal charges

 

54

 

57

 

76

 

111

 

649

                     

Total operating expenses

 

2,423

 

2,550

 

2,119

 

4,973

 

4,772

                     

Operating income

 

766

 

714

 

970

 

1,480

 

1,525

Interest expense

 

(487)

 

(406)

 

(376)

 

(893)

 

(721)

Other income (expense), net

 

130

 

(4)

 

63

 

126

 

131

                     

Income from continuing operations before income taxes

 

409

 

304

 

657

 

713

 

935

Benefit from income taxes

 

(159)

 

(76)

 

(36)

 

(235)

 

(239)

                     

Income from continuing operations

 

568

 

380

 

693

 

948

 

1,174

Income (loss) from discontinued operations, net of income taxes

 

(5)

 

5

 

(2)

 

-

 

(12)

                     

Net income

 

563

 

385

 

691

 

948

 

1,162

Dividends on preferred stock (1)

 

(75)

 

(74)

 

-

 

(149)

 

-

                     

Net income attributable to common stock

 

$          488

 

$          311

 

$           691

 

$           799

 

$        1,162

                     
                     

Basic income per share attributable to common stock:

                   

Income per share from continuing operations

 

$         1.23

 

$         0.77

 

$          1.75

 

$          2.00

 

$          2.94

Income (loss) per share from discontinued operations

 

(0.01)

 

0.01

 

(0.01)

 

-

 

(0.03)

Net income per share

 

$         1.22

 

$         0.78

 

$          1.74

 

$          2.00

 

$          2.91

                     

Diluted income per share attributable to common stock (2):

                   

Income per share from continuing operations

 

$         1.18

 

$          0.73

 

$          1.64

 

$          1.91

 

$          2.80

Income (loss) per share from discontinued operations

 

(0.01)

 

0.01

 

-

 

-

 

(0.03)

Net income per share

 

$         1.17

 

$          0.74

 

$          1.64

 

$          1.91

 

$          2.77

                     

Weighted-average shares used in per share calculations:

                   

Basic

 

401

 

398

 

397

 

400

 

399

Diluted

 

417

 

420

 

422

 

419

 

420

                     

Stock-based compensation expense included in continuing operations:

                   

Cost of revenue

 

$            41

 

$             43

 

$            41

 

$            84

 

$            75

Research and development

 

373

 

391

 

371

 

764

 

682

Selling, general and administrative

 

103

 

111

 

132

 

214

 

252

                     

Total stock-based compensation expense

 

$          517

 

$           545

 

$          544

 

$       1,062

 

$       1,009

 

(1) For the fiscal quarter and two fiscal quarters ended May 3, 2020 and the fiscal quarter ended February 2, 2020, net income attributable to common stock excludes dividends on Mandatory Convertible Preferred Stock issued during the fiscal quarter ended November 3, 2019.

 

(2) For the fiscal quarter and two fiscal quarters ended May 3, 2020 and the fiscal quarter ended February 2, 2020, diluted income per share excluded the potentially dilutive effect of Mandatory Convertible Preferred Stock as the impact was antidilutive.

 

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.

 

BROADCOM INC.

CONDENSED CONSOLIDATED BALANCE SHEETS - UNAUDITED

(IN MILLIONS)

           
           
   

May 3,

 

November 3,

 
   

2020

 

2019

 
           

ASSETS

         
           

Current assets:

         

Cash and cash equivalents

 

$        9,207

 

$        5,055

 

Trade accounts receivable, net

 

3,211

 

3,259

 

Inventory

 

953

 

874

 

Other current assets

 

851

 

729

 
           

Total current assets

 

14,222

 

9,917

 
           

Long-term assets:

         

Property, plant and equipment, net

 

2,618

 

2,565

 

Goodwill

 

43,457

 

36,714

 

Intangible assets, net

 

19,909

 

17,554

 

Other long-term assets

 

1,342

 

743

 
           

Total assets

 

$      81,548

 

$      67,493

 
           
           
           

LIABILITIES AND EQUITY

         
           

Current liabilities:

         

Accounts payable

 

$        1,230

 

$           855

 

Employee compensation and benefits

 

494

 

641

 

Current portion of long-term debt

 

819

 

2,787

 

Other current liabilities

 

4,058

 

2,616

 
           

Total current liabilities

 

6,601

 

6,899

 
           

Long-term liabilities:

         

Long-term debt

 

45,044

 

30,011

 

Other long-term liabilities

 

5,933

 

5,613

 
           

Total liabilities

 

57,578

 

42,523

 
           
           

Preferred stock dividend obligation

 

28

 

29

 
           

Stockholders' equity:

         

Preferred stock

 

-

 

-

 

Common stock

 

-

 

-

 

Additional paid-in capital

 

24,073

 

25,081

 

Retained earnings

 

-

 

-

 

Accumulated other comprehensive loss

 

(131)

 

(140)

 
           

Total stockholders' equity

 

23,942

 

24,941

 
           

  Total liabilities and equity

 

$     81,548

 

$      67,493

 

 

BROADCOM INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - 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

Cash flows from operating activities:

                   

Net income

 

$          563

 

$          385

 

$          691

 

$          948

 

$        1,162

Adjustments to reconcile net income to net cash provided by
operating activities:

                   

Amortization of intangible and right-of-use assets

 

1,583

 

1,582

 

1,305

 

3,165

 

2,621

Depreciation

 

147

 

146

 

142

 

293

 

285

Stock-based compensation

 

517

 

545

 

544

 

1,062

 

1,009

Deferred taxes and other non-cash taxes

 

(175)

 

(72)

 

(94)

 

(247)

 

(473)

Loss on debt extinguishment

 

93

 

5

 

-

 

98

 

-

Non-cash restructuring, impairment and disposal charges

 

6

 

11

 

6

 

17

 

98

Non-cash interest expense

 

31

 

30

 

14

 

61

 

27

Other

 

(8)

 

19

 

(39)

 

11

 

(60)

Changes in assets and liabilities, net of acquisitions
and disposals:

                   

  Trade accounts receivable, net

 

440

 

(392)

 

193

 

48

 

261

  Inventory

 

(10)

 

40

 

40

 

30

 

90

  Accounts payable

 

233

 

117

 

30

 

350

 

(139)

  Employee compensation and benefits

 

61

 

(217)

 

(6)

 

(156)

 

(464)

  Other current assets and current liabilities

 

118

 

346

 

(37)

 

464

 

469

  Other long-term assets and long-term liabilities

 

(386)

 

(223)

 

(122)

 

(609)

 

(87)

                     

Net cash provided by operating activities

 

3,213

 

2,322

 

2,667

 

5,535

 

4,799

                     
                     

Cash flows from investing activities:

                   

Acquisitions of businesses, net of cash acquired

 

-

 

(10,870)

 

-

 

(10,870)

 

(16,027)

Proceeds from sales of businesses

 

168

 

-

 

-

 

168

 

957

Purchases of property, plant and equipment

 

(148)

 

(108)

 

(125)

 

(256)

 

(224)

Other

 

4

 

(9)

 

19

 

(5)

 

(5)

                     

Net cash provided by (used in) investing activities

 

24

 

(10,987)

 

(106)

 

(10,963)

 

(15,299)

                     
                     

Cash flows from financing activities:

                   

Proceeds from long-term borrowings

 

4,468

 

15,381

 

10,897

 

19,849

 

28,793

Repayment of debt

 

(4,452)

 

(4,537)

 

(12,000)

 

(8,989)

 

(12,000)

Other borrowings, net

 

1,025

 

718

 

1,044

 

1,743

 

1,575

Payments of dividends

 

(1,381)

 

(1,372)

 

(1,057)

 

(2,753)

 

(2,124)

Repurchases of common stock - repurchase program

 

-

 

-

 

(830)

 

-

 

(4,266)

Shares repurchased for tax withholdings on vesting of
equity awards

 

(219)

 

(169)

 

(500)

 

(388)

 

(577)

Issuance of common stock

 

91

 

37

 

121

 

128

 

183

Other

 

(6)

 

(4)

 

(1)

 

(10)

 

(48)

                     

Net cash provided by (used in) financing activities

 

(474)

 

10,054

 

(2,326)

 

9,580

 

11,536

                     
                     

Net change in cash and cash equivalents

 

2,763

 

1,389

 

235

 

4,152

 

1,036

Cash and cash equivalents at the beginning of period

 

6,444

 

5,055

 

5,093

 

5,055

 

4,292

Cash and cash equivalents at end of period

 

$        9,207

 

$        6,444

 

$        5,328

 

$        9,207

 

$        5,328

                     

Supplemental disclosure of cash flow information:

                   

Cash paid for interest

 

$           375

 

$           381

 

$           189

 

$           756

 

$           612

Cash paid for income taxes

 

$           124

 

$           131

 

$           425

 

$           255

 

$           520

 

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SOURCE Broadcom Inc.