BROADCOM INC.

FINANCIAL RECONCILIATION: GAAP TO NON-GAAP - UNAUDITED

(IN MILLIONS)

 Fiscal Quarter Ended 

February 3,

November 4, 

February 4,

2019

2018

2018

Net revenue on GAAP basis

$              5,789

$              5,444

$              5,327

  Acquisition-related purchase accounting revenue adjustment ⁽¹⁾

-

4

4

Net revenue on non-GAAP basis

$              5,789

$              5,448

$              5,331

Gross margin on GAAP basis

$              3,208

$              2,935

$              2,628

  Acquisition-related purchase accounting revenue adjustment ⁽¹⁾

-

4

4

  Purchase accounting effect on inventory

-

-

70

  Amortization of acquisition-related intangible assets

833

762

715

  Stock-based compensation expense

34

23

20

  Restructuring charges

56

1

15

  Acquisition-related costs

2

-

2

Gross margin on non-GAAP basis

$              4,133

$              3,725

$              3,454

Research and development on GAAP basis

$              1,133

$                 948

$                 925

  Stock-based compensation expense

311

225

203

  Acquisition-related costs

2

1

3

Research and development on non-GAAP basis

$                 820

$                 722

$                 719

Selling, general and administrative expense on GAAP basis

$                 471

$                 237

$                 291

  Stock-based compensation expense

120

69

76

  Acquisition-related costs

90

27

51

Selling, general and administrative expense on non-GAAP basis

$                 261

$                 141

$                 164

Total operating expenses on GAAP basis

$              2,653

$              1,283

$              1,685

  Amortization of acquisition-related intangible assets

476

67

339

  Stock-based compensation expense

431

294

279

  Restructuring, impairment and disposal charges

573

17

130

  Litigation settlements

-

14

-

  Acquisition-related costs

92

28

54

Total operating expenses on non-GAAP basis

$              1,081

$                 863

$                 883

Operating income on GAAP basis

$                 555

$              1,652

$                 943

  Acquisition-related purchase accounting revenue adjustment ⁽¹⁾

-

4

4

  Purchase accounting effect on inventory

-

-

70

  Amortization of acquisition-related intangible assets

1,309

829

1,054

  Stock-based compensation expense

465

317

299

  Restructuring, impairment and disposal charges

629

18

145

  Litigation settlements

-

14

-

  Acquisition-related costs

94

28

56

Operating income on non-GAAP basis

$              3,052

$              2,862

$              2,571

Interest expense on GAAP basis

$                (345)

$                (148)

$                (183)

  Debt-related costs

-

-

32

Interest expense on non-GAAP basis

$                (345)

$                (148)

$                (151)

Other income, net on GAAP basis

$                   68

$                   24

$                   35

  Unrealized gains on investments

(27)

-

-

Other income, net on non-GAAP basis

$                   41

$                   24

$                   35

Income from continuing operations before income taxes on GAAP basis

$                 278

$              1,422

$                 795

  Acquisition-related purchase accounting revenue adjustment ⁽¹⁾

-

4

4

  Purchase accounting effect on inventory

-

-

70

  Amortization of acquisition-related intangible assets

1,309

829

1,054

  Stock-based compensation expense

465

317

299

  Restructuring, impairment and disposal charges

629

18

145

  Litigation settlements

-

14

-

  Acquisition-related costs

94

28

56

  Impairment on investment

-

106

-

  Debt-related costs

-

-

32

  Unrealized gains on investments

(27)

-

-

Income before income taxes on non-GAAP basis

$              2,748

$              2,738

$              2,455

Provision for (benefit from) income taxes on GAAP basis

$                (203)

$                 307

$             (5,786)

  Non-GAAP tax reconciling adjustments

505

5,896

Provision for income taxes on non-GAAP basis

$                 302

$                 192

$                 110

Net income on GAAP basis

$                 471

$              1,115

$              6,566

  Acquisition-related purchase accounting revenue adjustment ⁽¹⁾

-

4

4

  Purchase accounting effect on inventory

-

-

70

  Amortization of acquisition-related intangible assets

1,309

829

1,054

  Stock-based compensation expense

465

317

299

  Restructuring, impairment and disposal charges

629

18

145

  Litigation settlements

-

14

-

  Acquisition-related costs

94

28

56

  Impairment on investment

-

106

-

  Debt-related costs

-

-

32

  Unrealized gains on investments

(27)

-

-

  Non-GAAP tax reconciling adjustments

(505)

115

(5,896)

  Discontinued operations, net of income taxes

10

-

15

Net income on non-GAAP basis

$              2,446

$              2,546

$              2,345

Shares used in per share calculation - diluted on GAAP basis

419

423

426

  Non-GAAP adjustment ⁽²⁾

22

12

32

Shares used in per share calculation - diluted on non-GAAP basis

441

435

458

Net income on non-GAAP basis

$              2,446

$              2,546

$              2,345

  Interest expense on non-GAAP basis

345

148

151

  Provision for income taxes on non-GAAP basis

302

192

110

  Depreciation

143

132

126

Adjusted EBITDA

$              3,236

$              3,018

$              2,732

Net cash provided by operating activities

$              2,132

$              2,635

$              1,685

  Purchases of property, plant and equipment

(99)

(106)

(220)

Free cash flow

$              2,033

$              2,529

$              1,465

 Fiscal Quarter Ending 

May 5,

Expected fully diluted share count:

2019

  Shares used in per share calculation - diluted on GAAP basis

422

    Non-GAAP adjustment ⁽²⁾

28

  Shares used in per share calculation - diluted on non-GAAP basis

450

(1) Amounts represent licensing revenue not included in GAAP net revenue as a result of the effect of purchase accounting for acquisitions.

(2) Non-GAAP adjustment for 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. Non-GAAP adjustment also includes the impact of LP Units that are anti-dilutive on a GAAP basis for the fiscal quarter ended February 4, 2018.