BROADCOM INC.

FINANCIAL RECONCILIATION: GAAP TO NON-GAAP - UNAUDITED

(IN MILLIONS)

 Fiscal Quarter Ended 

 Two Fiscal Quarters Ended 

May 5,

February 3,

May 6,

May 5,

May 6,

2019

2019

2018

2019

2018

Net revenue on GAAP basis

$            5,517

$            5,789

$            5,014

$          11,306

$          10,341

Acquisition-related purchase accounting revenue adjustment ⁽¹⁾

-

-

3

-

7

Net revenue on non-GAAP basis

$            5,517

$            5,789

$            5,017

$          11,306

$          10,348

Gross margin on GAAP basis

$            3,089

$            3,208

$            2,551

$            6,297

$            5,179

Acquisition-related purchase accounting revenue adjustment ⁽¹⁾

-

-

3

-

7

Purchase accounting effect on inventory

-

-

-

-

70

Amortization of acquisition-related intangible assets

826

833

765

1,659

1,480

Stock-based compensation expense

41

34

21

75

41

Restructuring charges

10

56

2

66

17

Acquisition-related costs

5

2

-

7

2

Gross margin on non-GAAP basis

$            3,971

$            4,133

$            3,342

$            8,104

$            6,796

Research and development on GAAP basis

$            1,151

$            1,133

$               936

$            2,284

$            1,861

Stock-based compensation expense

371

311

205

682

408

Acquisition-related costs

1

2

-

3

3

Research and development on non-GAAP basis

$               779

$               820

$               731

$            1,599

$            1,450

Selling, general and administrative expense on GAAP basis

$               419

$               471

$               294

$               890

$               585

Stock-based compensation expense

132

120

70

252

146

Acquisition-related costs

44

90

68

134

119

Selling, general and administrative expense on non-GAAP basis

$               243

$               261

$               156

$               504

$               320

Total operating expenses on GAAP basis

$            2,119

$            2,653

$            1,350

$            4,772

$            3,035

Amortization of acquisition-related intangible assets

473

476

67

949

406

Stock-based compensation expense

503

431

275

934

554

Restructuring, impairment and disposal charges

76

573

53

649

183

Acquisition-related costs

45

92

68

137

122

Total operating expenses on non-GAAP basis

$            1,022

$            1,081

$               887

$            2,103

$            1,770

Operating income on GAAP basis

$               970

$               555

$            1,201

$            1,525

$            2,144

Acquisition-related purchase accounting revenue adjustment ⁽¹⁾

-

-

3

-

7

Purchase accounting effect on inventory

-

-

-

-

70

Amortization of acquisition-related intangible assets

1,299

1,309

832

2,608

1,886

Stock-based compensation expense

544

465

296

1,009

595

Restructuring, impairment and disposal charges

86

629

55

715

200

Acquisition-related costs

50

94

68

144

124

Operating income on non-GAAP basis

$            2,949

$            3,052

$            2,455

$            6,001

$            5,026

Interest expense on GAAP basis

$             (376)

$             (345)

$             (148)

$             (721)

$             (331)

Debt-related costs

26

-

-

26

32

Interest expense on non-GAAP basis

$             (350)

$             (345)

$             (148)

$             (695)

$             (299)

Other income, net on GAAP basis

$                 63

$                 68

$                 46

$               131

$                 81

Gains on investments

(40)

(27)

(4)

(67)

(4)

Other income, net on non-GAAP basis

$                 23

$                 41

$                 42

$                 64

$                 77

Income from continuing operations before income taxes on GAAP basis

$               657

$               278

$            1,099

$               935

$            1,894

Acquisition-related purchase accounting revenue adjustment ⁽¹⁾

-

-

3

-

7

Purchase accounting effect on inventory

-

-

-

-

70

Amortization of acquisition-related intangible assets

1,299

1,309

832

2,608

1,886

Stock-based compensation expense

544

465

296

1,009

595

Restructuring, impairment and disposal charges

86

629

55

715

200

Acquisition-related costs

50

94

68

144

124

Debt-related costs

26

-

-

26

32

Gains on investments

(40)

(27)

(4)

(67)

(4)

Income before income taxes on non-GAAP basis

$            2,622

$            2,748

$            2,349

$            5,370

$            4,804

Benefit from income taxes on GAAP basis

$               (36)

$             (203)

$          (2,637)

$             (239)

$          (8,423)

Non-GAAP tax reconciling adjustments

324

505

2,743

829

8,639

Provision for income taxes on non-GAAP basis

$               288

$               302

$               106

$               590

$               216

Net income on GAAP basis

$               691

$               471

$            3,733

$            1,162

$          10,299

Acquisition-related purchase accounting revenue adjustment ⁽¹⁾

-

-

3

-

7

Purchase accounting effect on inventory

-

-

-

-

70

Amortization of acquisition-related intangible assets

1,299

1,309

832

2,608

1,886

Stock-based compensation expense

544

465

296

1,009

595

Restructuring, impairment and disposal charges

86

629

55

715

200

Acquisition-related costs

50

94

68

144

124

Debt-related costs

26

-

-

26

32

Gains on investments

(40)

(27)

(4)

(67)

(4)

Non-GAAP tax reconciling adjustments

(324)

(505)

(2,743)

(829)

(8,639)

Discontinued operations, net of income taxes

2

10

3

12

18

Net income on non-GAAP basis

$            2,334

$            2,446

$            2,243

$            4,780

$            4,588

Shares used in per share calculation - diluted on GAAP basis

422

419

448

420

448

Non-GAAP adjustment ⁽²⁾

26

22

12

25

11

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

448

441

460

445

459

Net income on non-GAAP basis

$            2,334

$            2,446

$            2,243

$            4,780

$            4,588

Interest expense on non-GAAP basis

350

345

148

695

299

Provision for income taxes on non-GAAP basis

288

302

106

590

216

Depreciation

142

143

128

285

254

Adjusted EBITDA

$            3,114

$            3,236

$            2,625

$            6,350

$            5,357

Net cash provided by operating activities

$            2,667

$            2,132

$            2,313

$            4,799

$            3,998

Purchases of property, plant and equipment

(125)

(99)

(189)

(224)

(409)

Free cash flow

$            2,542

$            2,033

$            2,124

$            4,575

$            3,589

 Fiscal Quarter Ending 

August 4,

November 3,

Expected fully diluted share count:

2019

2019

Shares used in per share calculation - diluted on GAAP basis

419

420

Non-GAAP adjustment ⁽²⁾

25

23

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

444

443

(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.