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