BROADCOM INC.

FINANCIAL RECONCILIATION: GAAP TO NON-GAAP - UNAUDITED

(IN MILLIONS)

 Fiscal Quarter Ended 

February 2,

November 3,

February 3,

2020

2019

2019

Gross margin on GAAP basis

$                    3,264

$              3,152

$              3,208

Purchase accounting effect on inventory

11

-

-

Amortization of acquisition-related intangible assets

950

827

833

Stock-based compensation expense

43

41

34

Restructuring charges

8

9

56

Acquisition-related costs

1

6

2

Gross margin on non-GAAP basis

$                    4,277

$              4,035

$              4,133

Research and development on GAAP basis

$                    1,289

$              1,177

$              1,133

Stock-based compensation expense

391

394

311

Acquisition-related costs

7

1

2

Research and development on non-GAAP basis

$                       891

$                 782

$                 820

Selling, general and administrative expense on GAAP basis

$                       601

$                 409

$                 471

Stock-based compensation expense

111

109

120

Acquisition-related costs

175

65

90

Litigation settlements

13

-

-

Selling, general and administrative expense on non-GAAP basis

$                       302

$                 235

$                 261

Total operating expenses on GAAP basis

$                    2,550

$              2,098

$              2,653

Amortization of acquisition-related intangible assets

603

474

476

Stock-based compensation expense

502

503

431

Restructuring, impairment and disposal charges

57

38

573

Litigation settlements

13

-

-

Acquisition-related costs

182

66

92

Total operating expenses on non-GAAP basis

$                    1,193

$              1,017

$              1,081

Operating income on GAAP basis

$                       714

$              1,054

$                 555

Purchase accounting effect on inventory

11

-

-

Amortization of acquisition-related intangible assets

1,553

1,301

1,309

Stock-based compensation expense

545

544

465

Restructuring, impairment and disposal charges

65

47

629

Litigation settlements

13

-

-

Acquisition-related costs

183

72

94

Operating income on non-GAAP basis

$                    3,084

$              3,018

$              3,052

Interest expense on GAAP basis

$                     (406)

$                (361)

$                (345)

Debt-related costs

5

26

-

Interest expense on non-GAAP basis

$                     (401)

$                (335)

$                (345)

Other income (expense), net on GAAP basis

$                         (4)

$                   54

$                   68

(Gains) losses on investments

18

(50)

(27)

Acquisition-related - non-operating contract fair value adjustment amortization

(4)

-

-

Other income, net on non-GAAP basis

$                         10

$                     4

$                   41

Income from continuing operations before income taxes on GAAP basis

$                       304

$                 747

$                 278

Purchase accounting effect on inventory

11

-

-

Amortization of acquisition-related intangible assets

1,553

1,301

1,309

Stock-based compensation expense

545

544

465

Restructuring, impairment and disposal charges

65

47

629

Litigation settlements

13

-

-

Acquisition-related costs, net

179

72

94

Debt-related costs

5

26

-

(Gains) losses on investments

18

(50)

(27)

Income before income taxes on non-GAAP basis

$                    2,693

$              2,687

$              2,748

Benefit from income taxes on GAAP basis

$                       (76)

$                (100)

$                (203)

Non-GAAP tax reconciling adjustments

399

396

505

Provision for income taxes on non-GAAP basis

$                       323

$                 296

$                 302

Net income on GAAP basis

$                       385

$                 847

$                 471

Purchase accounting effect on inventory

11

-

-

Amortization of acquisition-related intangible assets

1,553

1,301

1,309

Stock-based compensation expense

545

544

465

Restructuring, impairment and disposal charges

65

47

629

Litigation settlements

13

-

-

Acquisition-related costs, net

179

72

94

Debt-related costs

5

26

-

(Gains) losses on investments

18

(50)

(27)

Non-GAAP tax reconciling adjustments

(399)

(396)

(505)

Discontinued operations, net of income taxes

(5)

-

10

Net income on non-GAAP basis

$                    2,370

$              2,391

$              2,446

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

420

416

419

Non-GAAP adjustment ⁽¹⁾

31

28

22

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

451

444

441

Net income on non-GAAP basis

$                    2,370

$              2,391

$              2,446

Interest expense on non-GAAP basis

401

335

345

Provision for income taxes on non-GAAP basis

323

296

302

Depreciation

146

143

143

Amortization on non-GAAP basis

25

-

-

Adjusted EBITDA

$                    3,265

$              3,165

$              3,236

Net cash provided by operating activities

$                    2,322

$              2,479

$              2,132

Purchases of property, plant and equipment

(108)

(96)

(99)

Free cash flow

$                    2,214

$              2,383

$              2,033

(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 quarters ended February 2, 2020 and November 3, 2019, non-GAAP adjustment included the impact of
Mandatory Convertible Preferred Stock that was antidilutive on a GAAP basis.