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FINANCIAL NEWS RELEASE

Broadcom Inc. Announces Third Quarter Fiscal Year 2020 Financial Results and Quarterly Dividends
- Revenue of $5,821 million; GAAP net income of $688 million; Adjusted EBITDA of $3,342 million
 
- GAAP diluted EPS of $1.45; Non-GAAP diluted EPS of $5.40
 
- $3,073 million of free cash flow from operations, defined as cash from operations of $3,178 million less capital expenditures of $105 million
 
- Quarterly common stock dividend of $3.25 per share
 
- Fourth quarter revenue guidance of $6.4 billion plus or minus $150 million
 
- Fourth quarter Adjusted EBITDA guidance of $3,744 million plus or minus $75 million, or 58.5% of revenue at the midpoint of guidance¹

SAN JOSE, Calif., Sept. 3, 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 third quarter of fiscal year 2020, ended August 2, 2020, provided guidance for the fourth quarter of its fiscal year 2020 and announced its quarterly dividends.

"We delivered third quarter revenue results in-line with our expectations, driven by healthy demand from cloud and telecom customers, which more than offset the expected reset in wireless," said Hock Tan, President and CEO of Broadcom Inc. "Our outlook for the fourth quarter reflects a strong anticipated ramp in wireless, as well as the continuing surge in demand for networking from cloud and telecom customers, more than offsetting expected softness in enterprise."

"We generated record free cash flow of over $3 billion, which represented 33 percent growth on a year on year basis, and reduced total debt by $1.9 billion in the quarter," said Tom Krause, CFO of Broadcom Inc. "Looking ahead, our cash flow outlook remains robust and we plan to pay down an additional $3 billion in debt in the fourth quarter."

Third Quarter Fiscal Year 2020 Financial Highlights

   

 GAAP 

 

Non-GAAP

(Dollars in millions, except per share data)

 

Q3 20

 

Q3 19

 

Change

 

Q3 20

 

Q3 19

 

Change

Net revenue

 

$

5,821

 

$

5,515

 

+6%

 

$

5,821

 

$

5,515

 

+6%

Net income

 

$

688

 

$

715

 

-$      27

 

$

2,435

 

$

2,281

 

+$    154

Earnings per common share - diluted

 

$

1.45

 

$

1.71

 

-$   0.26

 

$

5.40

 

$

5.16

 

+$   0.24

                                 


 

(Dollars in millions)

               

Q3 20

 

Q3 19

 

Change

Cash flow from operations

                 

$

3,178

 

$

2,419

 

+$  759

Adjusted EBITDA

                 

$

3,342

 

$

3,064

 

+$  278

Free cash flow

                 

$

3,073

 

$

2,307

 

+$  766

 

Net revenue by segment

                                                 

(Dollars in millions)

                     

Q3 20

 

Q3 19

 

Change

Semiconductor solutions

                     

$

4,219

 

72%

 

$

4,375

 

79%

 

-4%

Infrastructure software

                       

1,602

 

28

   

1,140

 

21

 

+41%

Total net revenue

                     

$

5,821

 

100%

 

$

5,515

 

100%

     

The Company's cash and cash equivalents at the end of the third fiscal quarter were $8,857 million, compared to $9,207 million at the end of the prior quarter.

During the third fiscal quarter, the Company generated $3,178 million in cash from operations and spent $105 million on capital expenditures.

On June 30, 2020, the Company paid a cash dividend of $3.25 per share of common stock, totaling $1,312 million and a cash dividend of $20.00 per share of mandatory convertible preferred stock, totaling $74 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.

Fourth Quarter Fiscal Year 2020 Business Outlook

Based on current business trends and conditions, the outlook for the fourth quarter of fiscal year 2020, ending November 1, 2020, is expected to be as follows: 

  • Fourth quarter revenue guidance of $6.4 billion plus or minus $150 million; and
  • Fourth quarter Adjusted EBITDA of $3,744 million plus or minus $75 million, or 58.5% 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.

Broadcom Inc. will be presenting to investors at Deutsche Bank's Virtual Technology Conference on September 15, 2020.

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 September 30, 2020 to common stockholders of record at the close of business (5:00 p.m. Eastern Time) on September 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 September 30, 2020 to preferred stockholders of record at the close of business (5:00 p.m. Eastern Time) on September 15, 2020.

Financial Results Conference Call

Broadcom Inc. will host a conference call to review its financial results for the third quarter of fiscal year 2020, ended August 2, 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 8878889. 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: 8878889. 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, gain from sale of business, 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; government regulations, trade restrictions and trade tensions; 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; 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; 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

 

1The 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

 

Three Fiscal Quarters Ended

   

August 2,

 

May 3,

 

 

August 4,

 

August 2,

 

August 4,

   

2020

 

2020

 

2019

 

2020

 

2019

                               

Net revenue

 

$

5,821

 

$

5,742

 

$

5,515

 

$

17,421

 

$

16,821

Cost of revenue:

                             

  Cost of revenue

   

1,537

   

1,592

   

1,651

   

4,765

   

4,935

  Amortization of acquisition-related intangible assets

   

953

   

954

   

828

   

2,857

   

2,487

  Restructuring charges

   

15

   

7

   

2

   

30

   

68

 Total cost of revenue

   

2,505

   

2,553

   

2,481

   

7,652

   

7,490

Gross margin

   

3,316

   

3,189

   

3,034

   

9,769

   

9,331

Research and development

   

1,228

   

1,269

   

1,235

   

3,786

   

3,519

Selling, general and administrative

   

428

   

501

   

410

   

1,530

   

1,300

Amortization of acquisition-related intangible assets

   

600

   

599

   

475

   

1,802

   

1,424

Restructuring, impairment and disposal charges

   

52

   

54

   

49

   

163

   

698

 Total operating expenses

   

2,308

   

2,423

   

2,169

   

7,281

   

6,941

Operating income

   

1,008

   

766

   

865

   

2,488

   

2,390

Interest expense

   

(464)

   

(487)

   

(362)

   

(1,357)

   

(1,083)

Other income, net

   

49

   

130

   

41

   

175

   

172

Income from continuing operations before income taxes

   

593

   

409

   

544

   

1,306

   

1,479

Benefit from income taxes

   

(96)

   

(159)

   

(171)

   

(331)

   

(410)

Income from continuing operations

   

689

   

568

   

715

   

1,637

   

1,889

Loss from discontinued operations, net of income taxes

   

(1)

   

(5)

   

-

   

(1)

   

(12)

Net income

   

688

   

563

   

715

   

1,636

   

1,877

Dividends on preferred stock (1)

   

(74)

   

(75)

   

-

   

(223)

   

-

Net income attributable to common stock

 

$

614

 

$

488

 

$

715

 

$

1,413

 

$

1,877

                               

Basic income per share attributable to common stock:

                             

  Income per share from continuing operations

 

$

1.53

 

$

1.23

 

$

1.80

 

$

3.53

 

$

4.73

  Loss per share from discontinued operations

   

(0.01)

   

(0.01)

   

-

   

(0.01)

   

(0.03)

  Net income per share

 

$

1.52

 

$

1.22

 

$

1.80

 

$

3.52

 

$

4.70

                               

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

                             

  Income per share from continuing operations

 

$

1.46

 

$

1.18

 

$

1.71

 

$

3.37

 

$

4.50

  Loss per share from discontinued operations

   

(0.01)

   

(0.01)

   

-

   

(0.01)

   

(0.03)

  Net income per share

 

$

1.45

 

$

1.17

 

$

1.71

 

$

3.36

 

$

4.47

                               

Weighted-average shares used in per share calculations:

                             

  Basic

   

403

   

401

   

398

   

401

   

399

  Diluted

   

422

   

417

   

418

   

420

   

420

                               

Stock-based compensation expense included in continuing operations:

                             

  Cost of revenue

 

$

37

 

$

41

 

$

47

 

$

121

 

$

122

  Research and development

   

337

   

373

   

456

   

1,101

   

1,138

  Selling, general and administrative

   

91

   

103

   

129

   

305

   

381

 Total stock-based compensation expense

 

$

465

 

$

517

 

$

632

 

$

1,527

 

$

1,641

 

(1) For the fiscal quarter and three fiscal quarters ended August 2, 2020 and the fiscal quarter ended May 3, 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 three fiscal quarters ended August 2, 2020 and the fiscal quarter ended May 3, 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

 

 

Three Fiscal Quarters Ended

   

August 2,

 

May 3,

 

August 4,

 

August 2,

 

August 4,

   

2020

 

2020

 

2019

 

2020

 

2019

                               
                               

Gross margin on GAAP basis

 

$

3,316

 

$

3,189

 

$

3,034

 

$

9,769

 

$

9,331

  Purchase accounting effect on inventory

   

-

   

-

   

-

   

11

   

-

  Amortization of acquisition-related intangible assets

   

953

   

954

   

828

   

2,857

   

2,487

  Stock-based compensation expense

   

37

   

41

   

47

   

121

   

122

  Restructuring charges

   

15

   

7

   

2

   

30

   

68

  Acquisition-related costs

   

-

   

5

   

5

   

6

   

12

Gross margin on non-GAAP basis

 

$

4,321

 

$

4,196

 

$

3,916

 

$

12,794

 

$

12,020

                               

Research and development on GAAP basis

 

$

1,228

 

$

1,269

 

$

1,235

 

$

3,786

 

$

3,519

  Stock-based compensation expense

   

337

   

373

   

456

   

1,101

   

1,138

  Acquisition-related costs

   

1

   

5

   

1

   

13

   

4

Research and development on non-GAAP basis

 

$

890

 

$

891

 

$

778

 

$

2,672

 

$

2,377

                               

Selling, general and administrative expense on GAAP basis

 

$

428

 

$

501

 

$

410

 

$

1,530

 

$

1,300

  Stock-based compensation expense

   

91

   

103

   

129

   

305

   

381

  Acquisition-related costs

   

66

   

95

   

53

   

336

   

187

  Litigation settlements

   

21

   

29

   

-

   

63

   

-

Selling, general and administrative expense on non-GAAP basis

 

$

250

 

$

274

 

$

228

 

$

826

 

$

732

                               

Total operating expenses on GAAP basis

 

$

2,308

 

$

2,423

 

$

2,169

 

$

7,281

 

$

6,941

  Amortization of acquisition-related intangible assets

   

600

   

599

   

475

   

1,802

   

1,424

  Stock-based compensation expense

   

428

   

476

   

585

   

1,406

   

1,519

  Restructuring, impairment and disposal charges

   

52

   

54

   

49

   

163

   

698

  Litigation settlements

   

21

   

29

   

-

   

63

   

-

  Acquisition-related costs

   

67

   

100

   

54

   

349

   

191

Total operating expenses on non-GAAP basis

 

$

1,140

 

$

1,165

 

$

1,006

 

$

3,498

 

$

3,109

                               

Operating income on GAAP basis

 

$

1,008

 

$

766

 

$

865

 

$

2,488

 

$

2,390

  Purchase accounting effect on inventory

   

-

   

-

   

-

   

11

   

-

  Amortization of acquisition-related intangible assets

   

1,553

   

1,553

   

1,303

   

4,659

   

3,911

  Stock-based compensation expense

   

465

   

517

   

632

   

1,527

   

1,641

  Restructuring, impairment and disposal charges

   

67

   

61

   

51

   

193

   

766

  Litigation settlements

   

21

   

29

   

-

   

63

   

-

  Acquisition-related costs

   

67

   

105

   

59

   

355

   

203

Operating income on non-GAAP basis

 

$

3,181

 

$

3,031

 

$

2,910

 

$

9,296

 

$

8,911

                               

Interest expense on GAAP basis

 

$

(464)

 

$

(487)

 

$

(362)

 

$

(1,357)

 

$

(1,083)

  Loss on debt extinguishment

   

55

   

93

   

2

   

153

   

28

Interest expense on non-GAAP basis

 

$

(409)

 

$

(394)

 

$

(360)

 

$

(1,204)

 

$

(1,055)

                               

Other income, net on GAAP basis

 

$

49

 

$

130

 

$

41

 

$

175

 

$

172

   Gain from lapse of indemnification

   

-

   

(116)

   

-

   

(116)

   

-

   Gains on investments

   

(31)

   

(8)

   

(28)

   

(21)

   

(95)

   Gain from sale of business

   

(23)

   

-

   

-

   

(23)

   

-

   Acquisition-related gain

   

-

   

(3)

   

-

   

(7)

   

-

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

 

$

(5)

 

$

3

 

$

13

 

$

8

 

$

77

                               

Income from continuing operations before income taxes on GAAP basis

 

$

593

 

$

409

 

$

544

 

$

1,306

 

$

1,479

  Purchase accounting effect on inventory

   

-

   

-

   

-

   

11

   

-

  Amortization of acquisition-related intangible assets

   

1,553

   

1,553

   

1,303

   

4,659

   

3,911

  Stock-based compensation expense

   

465

   

517

   

632

   

1,527

   

1,641

  Restructuring, impairment and disposal charges

   

67

   

61

   

51

   

193

   

766

  Litigation settlements

   

21

   

29

   

-

   

63

   

-

  Acquisition-related costs

   

67

   

102

   

59

   

348

   

203

  Loss on debt extinguishment

   

55

   

93

   

2

   

153

   

28

  Gain from lapse of indemnification

   

-

   

(116)

   

-

   

(116)

   

-

  Gains on investments

   

(31)

   

(8)

   

(28)

   

(21)

   

(95)

  Gain from sale of business

   

(23)

   

-

   

-

   

(23)

   

-

Income before income taxes on non-GAAP basis

 

$

2,767

 

$

2,640

 

$

2,563

 

$

8,100

 

$

7,933

                               

Benefit from income taxes on GAAP basis

 

$

(96)

 

$

(159)

 

$

(171)

 

$

(331)

 

$

(410)

  Non-GAAP tax reconciling adjustments

   

428

   

476

   

453

   

1,303

   

1,282

Provision for income taxes on non-GAAP basis

 

$

332

 

$

317

 

$

282

 

$

972

 

$

872

                               

Net income on GAAP basis

 

$

688

 

$

563

 

$

715

 

$

1,636

 

$

1,877

  Purchase accounting effect on inventory

   

-

   

-

   

-

   

11

   

-

  Amortization of acquisition-related intangible assets

   

1,553

   

1,553

   

1,303

   

4,659

   

3,911

  Stock-based compensation expense

   

465

   

517

   

632

   

1,527

   

1,641

  Restructuring, impairment and disposal charges

   

67

   

61

   

51

   

193

   

766

  Litigation settlements

   

21

   

29

   

-

   

63

   

-

  Acquisition-related costs

   

67

   

102

   

59

   

348

   

203

  Loss on debt extinguishment

   

55

   

93

   

2

   

153

   

28

  Gain from lapse of indemnification

   

-

   

(116)

   

-

   

(116)

   

-

  Gains on investments

   

(31)

   

(8)

   

(28)

   

(21)

   

(95)

  Gain from sale of business

   

(23)

   

-

   

-

   

(23)

   

-

  Non-GAAP tax reconciling adjustments

   

(428)

   

(476)

   

(453)

   

(1,303)

   

(1,282)

  Discontinued operations, net of income taxes

   

1

   

5

   

-

   

1

   

12

Net income on non-GAAP basis

 

$

2,435

 

$

2,323

 

$

2,281

 

$

7,128

 

$

7,061

                               
                               

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

   

422

   

417

   

418

   

420

   

420

  Non-GAAP adjustment (1)

   

29

   

35

   

24

   

32

   

24

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

   

451

   

452

   

442

   

452

   

444

                               

Net income on non-GAAP basis

 

$

2,435

 

$

2,323

 

$

2,281

 

$

7,128

 

$

7,061

  Interest expense on non-GAAP basis

   

409

   

394

   

360

   

1,204

   

1,055

  Provision for income taxes on non-GAAP basis

   

332

   

317

   

282

   

972

   

872

  Depreciation

   

138

   

147

   

141

   

431

   

426

  Amortization of purchased intangibles and right-of-use assets

   

28

   

28

   

-

   

81

   

-

Adjusted EBITDA

 

$

3,342

 

$

3,209

 

$

3,064

 

$

9,816

 

$

9,414

                               

Net cash provided by operating activities

 

$

3,178

 

$

3,213

 

$

2,419

 

$

8,713

 

$

7,218

  Purchases of property, plant and equipment

   

(105)

   

(148)

   

(112)

   

(361)

   

(336)

Free cash flow

 

$

3,073

 

$

3,065

 

$

2,307

 

$

8,352

 

$

6,882

 

   

 Fiscal Quarter Ending 

   

November 1,

Expected average diluted share count:

 

2020

       

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

 

424

 Non-GAAP adjustment (1)

 

27

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

 

451

 

(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 three fiscal quarters ended August 2, 2020 and the fiscal quarter ended May 3, 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 November 1, 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)

               
 
   

August 2,

 

November 3,

 
   

2020

 

2019

 
               

ASSETS

             
               

Current assets:

             

  Cash and cash equivalents

 

$

8,857

 

$

5,055

 

  Trade accounts receivable, net

   

2,684

   

3,259

 

  Inventory

   

1,081

   

874

 

  Other current assets

   

1,059

   

729

 

  Total current assets

   

13,681

   

9,917

 
               

Long-term assets:

             

  Property, plant and equipment, net

   

2,567

   

2,565

 

 Goodwill

   

43,447

   

36,714

 

  Intangible assets, net

   

18,357

   

17,554

 

  Other long-term assets

   

1,246

   

743

 

  Total assets

 

$

79,298

 

$

67,493

 
               
               

LIABILITIES AND EQUITY

             
               

Current liabilities:

             

  Accounts payable

 

$

1,092

 

$

855

 

  Employee compensation and benefits

   

732

   

641

 

  Current portion of long-term debt

   

822

   

2,787

 

  Other current liabilities

   

4,056

   

2,616

 

  Total current liabilities

   

6,702

   

6,899

 
               

Long-term liabilities:

             

  Long-term debt

   

43,201

   

30,011

 

  Other long-term liabilities

   

5,810

   

5,613

 

  Total liabilities

   

55,713

   

42,523

 
               

Preferred stock dividend obligation

   

28

   

29

 
               

Stockholders' equity:

             

  Preferred stock

   

-

   

-

 

  Common stock

   

-

   

-

 

  Additional paid-in capital

   

23,688

   

25,081

 

  Retained earnings

   

-

   

-

 

  Accumulated other comprehensive loss

   

(131)

   

(140)

 

  Total stockholders' equity

   

23,557

   

24,941

 

    Total liabilities and equity

 

$

79,298

 

$

67,493

 

 

BROADCOM INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - UNAUDITED

(IN MILLIONS)

                               
   

Fiscal Quarter Ended

 

 

Three Fiscal Quarters Ended

   

August 2,

 

May 3,

 

August 4,

 

August 2,

 

August 4,

   

2020

 

2020

 

2019

 

2020

 

2019

Cash flows from operating activities:

                             

Net income

 

$

688

 

$

563

 

$

715

 

$

1,636

 

$

1,877

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

                             

  Amortization of intangible and right-of-use assets

   

1,581

   

1,583

   

1,309

   

4,746

   

3,930

  Depreciation

   

138

   

147

   

141

   

431

   

426

  Stock-based compensation

   

465

   

517

   

632

   

1,527

   

1,641

  Deferred taxes and other non-cash taxes

   

(436)

   

(175)

   

(235)

   

(683)

   

(708)

  Loss on debt extinguishment

   

55

   

93

   

2

   

153

   

2

  Non-cash restructuring, impairment and disposal charges

   

15

   

6

   

15

   

32

   

113

  Non-cash interest expense

   

22

   

31

   

23

   

83

   

50

  Other

   

(54)

   

(8)

   

(23)

   

(43)

   

(83)

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

                             

    Trade accounts receivable, net

   

542

   

440

   

(60)

   

590

   

201

    Inventory

   

(128)

   

(10)

   

(57)

   

(98)

   

33

    Accounts payable

   

(123)

   

233

   

244

   

227

   

105

    Employee compensation and benefits

   

231

   

61

   

104

   

75

   

(360)

    Other current assets and current liabilities

   

(2)

   

118

   

(354)

   

462

   

115

    Other long-term assets and long-term liabilities

   

184

   

(386)

   

(37)

   

(425)

   

(124)

Net cash provided by operating activities

   

3,178

   

3,213

   

2,419

   

8,713

   

7,218

                               

Cash flows from investing activities:

                             

  Acquisitions of businesses, net of cash acquired

   

(2)

   

-

   

(6)

   

(10,872)

   

(16,033)

  Proceeds from sales of businesses

   

50

   

168

   

-

   

218

   

957

  Purchases of property, plant and equipment

   

(105)

   

(148)

   

(112)

   

(361)

   

(336)

  Proceeds from disposals of property, plant and equipment

   

10

   

-

   

82

   

10

   

82

  Other

   

1

   

4

   

1

   

(4)

   

(4)

Net cash provided by (used in) investing activities

   

(46)

   

24

   

(35)

   

(11,009)

   

(15,334)

                               

Cash flows from financing activities:

                             

  Proceeds from long-term borrowings

   

7,953

   

4,468

   

-

   

27,802

   

28,793

  Repayment of debt

   

(6,825)

   

(4,452)

   

-

   

(15,814)

   

(12,000)

  Other borrowings, net

   

(3,028)

   

1,025

   

(230)

   

(1,285)

   

1,345

  Payment of dividends

   

(1,386)

   

(1,381)

   

(1,057)

   

(4,139)

   

(3,181)

  Repurchases of common stock - repurchase program

   

-

   

-

   

(736)

   

-

   

(5,002)

  Shares repurchased for tax withholdings on vesting of equity awards

   

(192)

   

(219)

   

(241)

   

(580)

   

(818)

  Issuance of common stock

   

46

   

91

   

11

   

174

   

194

  Other

   

(50)

   

(6)

   

3

   

(60)

   

(45)

Net cash provided by (used in) financing activities

   

(3,482)

   

(474)

   

(2,250)

   

6,098

   

9,286

                               

Net change in cash and cash equivalents

   

(350)

   

2,763

   

134

   

3,802

   

1,170

Cash and cash equivalents at the beginning of period

   

9,207

   

6,444

   

5,328

   

5,055

   

4,292

Cash and cash equivalents at end of period

 

$

8,857

 

$

9,207

 

$

5,462

 

$

8,857

 

$

5,462

                               

Supplemental disclosure of cash flow information:

                             

Cash paid for interest

 

$

269

 

$

375

 

$

368

 

$

1,025

 

$

980

Cash paid for income taxes

 

$

44

 

$

124

 

$

98

 

$

299

 

$

618

 

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SOURCE Broadcom Inc.