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