Broadcom Limited Announces Third Quarter Fiscal Year 2016 Financial Results and Interim Dividend

 

BROADCOM LIMITED 
FINANCIAL RECONCILIATION: GAAP TO NON-GAAP - UNAUDITED 
(IN MILLIONS, EXCEPT DAYS) 
                
                
     Fiscal Quarter Ended    Three Fiscal Quarters Ended 
   July 31,  May 1,  August 2,  July 31,  August 2, 
    2016    2016    2015    2016    2015  
                
Net revenue on GAAP basis $3,792  $3,541  $1,735  $9,104  $4,984  
Acquisition-related purchase accounting revenue adjustment (1)  10   21   15   42   68  
Net revenue on non-GAAP basis $3,802  $3,562  $1,750  $9,146  $5,052  
                      
Gross margin on GAAP basis $1,782  $1,046  $884  $3,769  $2,556  
Acquisition-related purchase accounting revenue adjustment (1)  10   21     15       42       68    
Purchase accounting effect on inventory     271       828       26       1,099       30    
Amortization of intangible assets     211       198       129       539       355    
Share-based compensation expense     15       13       7       34       19    
Restructuring charges     8       32       2       41       5    
Acquisition-related costs     -       -       -       -       2    
Gross margin on non-GAAP basis   $ 2,297     $ 2,138     $ 1,063     $ 5,524     $ 3,035    
                                           
Research and development on GAAP basis   $ 814     $ 787     $ 276     $ 1,868     $ 762    
Share-based compensation expense     144       122       31       294       77    
Acquisition-related costs     3       2       -       6       9    
Research and development on non-GAAP basis   $ 667     $ 663     $ 245     $ 1,568     $ 676    
                                           
Selling, general and administrative expense on GAAP basis   $ 230     $ 238     $ 143     $ 582     $ 368    
Share-based compensation expense     54       51       25       128       73    
Acquisition-related costs     35       41       33       99       51    
Selling, general and administrative expense on non-GAAP basis   $ 141     $ 146     $ 85     $ 355     $ 244    
                                           
Total operating expenses on GAAP basis   $ 2,046     $ 2,047     $ 585     $ 4,559     $ 1,438    
Amortization of intangible assets     728       735       68       1,517       186    
Share-based compensation expense     198       173       56       422       150    
Restructuring, impairment and disposal charges     274       287       98       592       122    
Acquisition-related costs     38       43       33       105       60    
Total operating expenses on non-GAAP basis   $ 808     $ 809     $ 330     $ 1,923     $ 920    
                                           
Operating income (loss) on GAAP basis   $ (264 )   $ (1,001 )   $ 299     $ (790 )   $ 1,118    
Acquisition-related purchase accounting revenue adjustment (1)     10       21       15       42       68    
Purchase accounting effect on inventory     271       828       26       1,099       30    
Amortization of intangible assets     939       933       197       2,056       541    
Share-based compensation expense     213       186       63       456       169    
Restructuring, impairment and disposal charges     282       319       100       633       127    
Acquisition-related costs     38       43       33       105       62    
Operating income on non-GAAP basis   $ 1,489     $ 1,329     $ 733     $ 3,601     $ 2,115    
                                           
Interest expense on GAAP basis   $ (139 )   $ (256 )   $ (43 )   $ (479 )   $ (150 )  
Acquisition-related costs     -       106       -       149       -    
Interest expense on non-GAAP basis   $ (139 )   $ (150 )   $ (43 )   $ (330 )   $ (150 )  
                                           
Income (loss) from continuing operations before income taxes on GAAP basis   $ (420 )   $ (1,316 )   $ 267     $ (1,342 )   $ 982    
Acquisition-related purchase accounting revenue adjustment (1)     10       21       15       42       68    
Purchase accounting effect on inventory     271       828       26       1,099       30    
Amortization of intangible assets     939       933       197       2,056       541    
Share-based compensation expense     213       186       63       456       169    
Restructuring, impairment and disposal charges     282       319       100       633       127    
Acquisition-related costs     38       149       33       254       62    
(Gain) loss on debt extinguishment     21       53       (3 )     74       10    
Income before income taxes on non-GAAP basis   $ 1,354     $ 1,173     $ 698     $ 3,272     $ 1,989    
                                           
Provision for (benefit from) income taxes on GAAP basis   $ (117 )   $ (99 )   $ 23     $ (199 )   $ 61    
Income tax effects of non-GAAP reconciling adjustments     178       152       15       348       52    
Provision for income taxes on non-GAAP basis   $ 61     $ 53     $ 38     $ 149     $ 113    
                                           
Net income (loss) on GAAP basis   $ (315 )   $ (1,255 )   $ 240     $ (1,193 )   $ 935    
Acquisition-related purchase accounting revenue adjustment (1)     10       21       15       42       68    
Purchase accounting effect on inventory     271       828       26       1,099       30    
Amortization of intangible assets     939       933       197       2,056       541    
Share-based compensation expense     213       186       63       456       169    
Restructuring, impairment and disposal charges     282       319       100       633       127    
Acquisition-related costs     38       149       33       254       62    
(Gain) loss on debt extinguishment     21       53       (3 )     74       10    
Income tax effects of non-GAAP reconciling adjustments     (178 )     (152 )     (15 )     (348 )     (52 )  
Discontinued operations, net of income taxes     12       38       4       50       (14 )  
Net income on non-GAAP basis   $ 1,293     $ 1,120     $ 660     $ 3,123     $ 1,876    
                                           
Shares used in per share calculation - diluted on GAAP basis     419       415       287       370       283    
Non-GAAP adjustment     28       27       7       24       7    
Shares used in per share calculation - diluted on non-GAAP basis (2)     447       442       294       394       290    
                                           
Days sales outstanding on GAAP basis     52       48       43                    
Non-GAAP adjustment     -       (1 )     (1 )                  
Days sales outstanding on non-GAAP basis (3)     52       47       42                    
                                           
Inventory Days on Hand on GAAP basis     66       59       64                    
Non-GAAP adjustment     8       13       3                    
Inventory Days on Hand on non-GAAP basis (4)     74       72       67                    
                                           
(1) Amounts represent licensing revenue not included in GAAP net revenue as a result of the effect of purchase accounting for acquisitions.
 
(2) The number of shares used in the diluted per share calculations on a non-GAAP basis excludes the impact of share-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.
 
(3) Days sales outstanding on a non-GAAP basis includes the impact of the acquisition-related purchase accounting revenue adjustment and excludes the impact of accounts receivable related to discontinued operations.
 
(4) Inventory days on hand on a non-GAAP basis excludes the impact of purchase accounting on inventory, amortization of intangible assets, share-based compensation expense, restructuring charges and acquisition-related costs.
 
                 

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