Financial News

Broadcom Limited Announces First Quarter Fiscal Year 2017 Financial Results and Interim Dividend

  • Quarterly GAAP gross margin of 48.3 percent; Quarterly non-GAAP gross margin from continuing operations of 62.4 percent
  • Quarterly GAAP diluted earnings per share of $0.57; Quarterly non-GAAP diluted earnings per share from continuing operations of $3.63
  • Quarterly interim dividend of $1.02 per share

SAN JOSE, Calif. and SINGAPORE, March 01, 2017 (GLOBE NEWSWIRE) -- Broadcom Limited (Nasdaq:AVGO), a leading semiconductor device supplier to the wired, wireless, enterprise storage, and industrial end markets, today reported financial results for its first quarter of fiscal year 2017, ended January 29, 2017, provided guidance for the second quarter of its fiscal year 2017 and announced a quarterly interim dividend. 

Basis of Presentation

Broadcom Limited is the successor to Avago Technologies Limited (“Avago”). Following Avago’s acquisition of Broadcom Corporation (“BRCM”) on February 1, 2016 (the “Acquisition”), Broadcom Limited became the ultimate parent company of Avago and BRCM. Financial results for the fiscal periods prior to the Acquisition relate solely to the Company’s predecessor, Avago. Unless the context otherwise requires, references in this press release to “Broadcom,” “the Company,” “we,” “our,” “us” and similar terms are to Broadcom Limited from and after the effective time of the Acquisition and, prior to that time, to its predecessor, Avago. The financial results from businesses that have been classified as discontinued operations in the Company’s financial statements are not included in the results presented below, unless otherwise stated.

First Quarter Fiscal Year 2017 GAAP Results

Net revenue was $4,139 million, slightly higher than the $4,136 million in the previous quarter and an increase of 134 percent from $1,771 million in the same quarter last year.

Gross margin was $2,001 million, or 48.3 percent of net revenue. This compares with gross margin of $2,171 million, or 52.5 percent of net revenue, in the prior quarter, and gross margin of $941 million, or 53.1 percent of net revenue, in the same quarter last year.

Operating expenses were $1,495 million. This compares with $1,790 million in the prior quarter and $466 million in the same quarter last year.

Operating income was $506 million, or 12.2 percent of net revenue. This compares with operating income of $381 million, or 9.2 percent of net revenue, in the prior quarter, and operating income of $475 million, or 26.8 percent of net revenue, in the same quarter last year.

Net income, which includes the impact of discontinued operations, was $252 million, or $0.57 per diluted share. This compares with net loss of $668 million, or $1.59 per diluted share, in the prior quarter, and net income of $377 million, or $1.30 per diluted share, in the same quarter last year. 

Net income attributable to ordinary shares was $239 million. Net income attributable to the noncontrolling interest (restricted exchangeable limited partnership units (“REUs”)) in the Company’s subsidiary, Broadcom Cayman L.P. (the “Partnership”), was $13 million.

                     
First Quarter Fiscal Year 2017 GAAP Results               Change
(Dollars in millions, except per share data)   Q1 17   Q4 16   Q1 16   Q/Q   Y/Y
Net revenue   $ 4,139     $ 4,136     $ 1,771       0 %     +134 %
Gross margin     48.3 %     52.5 %     53.1 %   -420bps   -480bps
Operating expenses   $ 1,495     $ 1,790     $ 466     -$ 295     +$ 1,029  
Net income (loss)   $ 252     $ (668 )   $ 377     +$ 920     -$ 125  
Net income (loss) attributable to noncontrolling interest   $ 13     $ (36 )   $ -     +$ 49     +$ 13  
Net income (loss) attributable to ordinary shares   $ 239     $ (632 )   $ 377     +$ 871     -$ 138  
Earnings (loss) per share - diluted   $ 0.57     $ (1.59 )   $ 1.30     +$ 2.16     -$ 0.73  
                     

The Company’s cash balance at the end of the first fiscal quarter was $3,536 million, compared to $3,097 million at the end of the prior quarter.

During the first quarter, the Company generated $1,353 million in cash from operations and spent $325 million on capital expenditures.

On December 30, 2016, the Company paid a cash dividend of $1.02 per ordinary share, totaling $408 million. On the same date, the Partnership, of which the Company is the General Partner, paid holders of REUs a corresponding distribution of $1.02 per REU, totaling $23 million.

First Quarter Fiscal Year 2017 Non-GAAP Results From Continuing Operations

The differences between the Company’s GAAP and non-GAAP results are described generally under “Non-GAAP Financial Measures” below, and presented in detail in the financial reconciliation tables attached to this release.

Net revenue from continuing operations was $4,149 million, slightly higher than the $4,146 million in the previous quarter, and an increase of 133 percent from $1,782 million in the same quarter last year.

Gross margin from continuing operations was $2,590 million, or 62.4 percent of net revenue. This compares with gross margin of $2,522 million, or 60.8 percent of net revenue, in the prior quarter, and gross margin of $1,089 million, or 61.1 percent of net revenue, in the same quarter last year. 

Operating income from continuing operations was $1,806 million, or 43.5 percent of net revenue. This compares with operating income from continuing operations of $1,719 million, or 41.5 percent of net revenue, in the prior quarter, and $783 million, or 43.9 percent of net revenue, in the same quarter last year.

Net income from continuing operations was $1,627 million, or $3.63 per diluted share. This compares with net income of $1,549 million, or $3.47 per diluted share last quarter, and net income of $710 million, or $2.41 per diluted share, in the same quarter last year.

                 
First Quarter Fiscal Year 2017 Non-GAAP Results               Change
(Dollars in millions, except per share data)   Q1 17   Q4 16   Q1 16   Q/Q   Y/Y
Net revenue   $ 4,149     $ 4,146     $ 1,782       0 %     +133 %
Gross margin     62.4 %     60.8 %     61.1 %   +160bps   +130bps
Operating expenses   $ 784     $ 803     $ 306     -$ 19     +$ 478  
Net income   $ 1,627     $ 1,549     $ 710     +$ 78     +$ 917  
Earnings per share - diluted   $ 3.63     $ 3.47     $ 2.41     +$ 0.16     +$ 1.22  
                     

“We had a very good start to our fiscal year 2017 delivering first quarter revenue and gross margin at the top end of guidance,” said Hock Tan, President and CEO of Broadcom Limited. “We expect healthy demand for our products to continue and we are guiding second fiscal quarter revenue to grow organically by 15% on a year over year basis.”

Other Quarterly Data

                                     
  Q1 17   Q4 16   Q1 16   Growth Rates
Net revenue by segment:                               Q/Q   Y/Y
Wired infrastructure $ 2,084   50 % $ 2,074   50 % $ 386   22 % 0 %   440 %
Wireless communications   1,175   29       1,346   32       578   33     -13 %   103 %
Enterprise storage   707   17       561   14       678   38     26 %   4 %
Industrial & other   173   4       155   4       129   7     12 %   34 %
Total net revenue $ 4,139   100 %   $ 4,136   100 %   $ 1,771   100 %        
                                     
                                     
                                     
  Q1 17   Q4 16   Q1 16   Growth Rates
Non-GAAP net revenue by segment:                               Q/Q   Y/Y
Wired infrastructure (1) $ 2,087   50 % $ 2,077   50 % $ 386   22 % 0 %   441 %
Wireless communications   1,175   28       1,346   32       578   32     -13 %   103 %
Enterprise storage   707   17       561   14       678   38     26 %   4 %
Industrial & other (1)   180   5       162   4       140   8     11 %   29 %
Total non-GAAP net revenue $ 4,149   100 %   $ 4,146   100 %   $ 1,782   100 %        
                                     
(1) Non-GAAP data include the effect of acquisition-related purchase accounting adjustments relating to licensing revenue.
                                     


Key Statistics (Dollars in millions)   Q1 17   Q4 16   Q1 16
Cash from operations   $ 1,353     $ 1,352     $ 474  
Depreciation   $ 112     $ 118     $ 60  
Amortization of acquisition-related intangible assets   $ 999     $ 580     $ 184  
Capital expenditures   $ 325     $ 193     $ 140  
Days sales outstanding ("DSO")     43       48       55  
Inventory days on hand ("DOH")     77       74       64  
Non-GAAP DSO     43       48       54  
Non-GAAP Inventory DOH     78       78       64  
                         

Second Quarter Fiscal Year 2017 Business Outlook

Based on current business trends and conditions, the outlook for continuing operations for the second quarter of fiscal year 2017, ending April 30, 2017, is expected to be as follows:

             
    GAAP   Reconciling Items   Non-GAAP
Net revenue   $4,090M +/- $75M   $10M   $4,100M +/- $75M
Gross margin   46.0% +/- 1%   $668M   62.0% +/- 1%
Operating expenses   $1,465M   $676M   $789M
Interest expense and other   $106M   -   $106M
Provision for income taxes   $70M   $4M   $74M
Diluted share count   442M   10M   452M
             
  • Non-GAAP net revenue includes $10 million of licensing revenue not included in GAAP revenue, as a result of the effects of purchase accounting for acquisitions;

  • Non-GAAP gross margin includes the effects of $10 million of licensing revenue, and excludes the effects of $638 million of amortization of acquisition-related intangible assets, $16 million of share-based compensation expense, and $4 million of restructuring charges;

  • Non-GAAP operating expenses exclude $440 million of amortization of acquisition-related intangible assets, $207 million of share-based compensation expense, $23 million of acquisition-related costs, and $6 million of restructuring charges;

  • Non-GAAP tax provision is $4 million higher than GAAP due to the tax effects of the projected reconciling items noted above; and

  • Non-GAAP diluted share count excludes the impact of share-based compensation expense expected to be incurred in future periods and not yet recognized in the Company’s financial statements, which would otherwise be assumed to be used to repurchase shares under the GAAP treasury stock method.

Capital expenditures for the second fiscal quarter are expected to be approximately $290 million. For the second fiscal quarter, depreciation is expected to be $112 million and amortization of acquisition-related intangible assets is expected to be approximately $1,078 million.

The guidance provided above is only an estimate of what the Company believes is realizable as of the date of this release. The guidance also excludes the impact of any additional mergers, acquisitions and divestiture activity that may occur during the quarter. Actual results will vary from the guidance and the variations may be material. The Company undertakes no intent or obligation to publicly update or revise any of these projections, whether as a result of new information, future events or otherwise, except as required by law.

Interim Dividend

The Company’s Board of Directors has approved a quarterly, interim cash dividend of $1.02 per ordinary share. A corresponding distribution will also be paid by the Partnership, of which the Company is the General Partner, to holders of REUs, in the amount of $1.02 per REU.

The dividend and the distribution are both payable on March 31, 2017 to shareholders or unitholders of record, as applicable, at the close of business (5:00 p.m.) Eastern Time on March 20, 2017.

Financial Results Conference Call

Broadcom Limited will host a conference call to review its financial results for the first quarter fiscal year 2017, ended January 29, 2017, and to provide guidance for the second quarter of fiscal year 2017, today at 2:00 p.m. Pacific Time. Those wishing to access the call should dial (866) 310-8712; International +1 (720) 634-2946. The passcode is 67467526. A replay of the call will be accessible for one week after the call. To access the replay dial (855) 859-2056; International +1 (404) 537-3406; and reference the passcode: 12782522. A webcast of the conference call will also be available in the “Investors” section of Broadcom’s website at www.broadcom.com

Non-GAAP Financial Measures

In addition to GAAP reporting, Broadcom provides investors with net revenue, net income, operating income, gross margin, operating expenses and other data on a non-GAAP basis. This non-GAAP information includes the effect, where applicable, of purchase accounting on revenues, and excludes amortization of acquisition-related intangible assets, share-based compensation expense, restructuring, impairment and disposal charges, acquisition-related costs, including integration costs, purchase accounting effect on inventory, debt-related costs, gain (loss) on extinguishment of debt, gain (loss) on disposition of assets, income (loss) from discontinued operations and income tax effects of non-GAAP reconciling adjustments. Management does not believe that these items are reflective of the Company’s underlying performance. However, internally, these non-GAAP measures are significant measures used by management for purposes of evaluating the core operating performance of the Company, establishing internal budgets, calculating return on investment for development programs and growth initiatives, comparing performance with internal forecasts and targeted business models, strategic planning, evaluating and valuing potential acquisition candidates and how their operations compare to the Company’s operations, and benchmarking performance externally against the Company’s competitors. The presentation of these and other similar items in Broadcom’s non-GAAP financial results should not be interpreted as implying that these items are non-recurring, infrequent or unusual. Broadcom believes this non-GAAP financial information provides additional insight into the Company’s on-going performance and has therefore chosen to provide this information to investors for a more consistent basis of comparison and to help them evaluate the results of the Company’s on-going operations and enable more meaningful period to period comparisons. These non-GAAP measures are provided in addition to, and not as a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP. A reconciliation between GAAP and non-GAAP financial data is included in the supplemental financial data attached to this press release.

About Broadcom Limited

Broadcom Limited (NASDAQ:AVGO) is a leading designer, developer and global supplier of a broad range of digital and analog semiconductor connectivity solutions. Broadcom Limited’s extensive product portfolio serves four primary end markets: wired infrastructure, wireless communications, enterprise storage and industrial & other. Applications for our products in these end markets include: data center networking, home connectivity, set-top box, broadband access, telecommunications equipment, smartphones and base stations, data center servers and storage, factory automation, power generation and alternative energy systems, and electronic displays.

Cautionary Note Regarding Forward-Looking Statements

This announcement contains forward-looking statements (including within the meaning of Section 21E of the United States Securities Exchange Act of 1934, as amended, and Section 27A of the United States Securities Act of 1933, as amended) concerning Broadcom. These statements include, but are not limited to, statements that address our expected future business and financial performance and statements about (i) the expected benefits of acquisitions, (ii) our plans, objectives and intentions with respect to future operations and products, (iii) our competitive position and opportunities, (iv) the impact of acquisitions on the market for our products, (v) other statements identified by words such as “will”, “expect”, “intends”, “believe”, “anticipate”, “estimate”, “should”, “intend”, “plan”, “potential”, “predict” “project”, “aim”, and similar words, phrases or expressions. These forward-looking statements are based on current expectations and beliefs of the management of Broadcom, as well as assumptions made by, and information currently available to, such management, current market trends and market conditions and involve risks and uncertainties, many of which are outside the Company’s and management’s control, and which may cause actual results to differ materially from those contained in forward-looking statements. Accordingly, you should not place undue reliance on such statements.

Particular uncertainties that could materially affect future results include any risks associated with loss of our significant customers and fluctuations in the timing and volume of significant customer demand; our dependence on contract manufacturers and outsourced supply chain; any acquisitions we may make, such as delays, challenges and expenses associated with integrating acquired companies with our existing businesses and our ability to achieve the benefits, growth prospects and synergies expected from such acquisitions, including our recent acquisition of Broadcom Corporation and our pending acquisition of Brocade Communications Systems, Inc.; our ability to accurately estimate customers’ demand and adjust our manufacturing and supply chain accordingly; our significant indebtedness, including the need to generate sufficient cash flows to service and repay such debt; our ability to improve our manufacturing efficiency and quality; increased dependence on a small number of markets; quarterly and annual fluctuations in operating results; cyclicality in the semiconductor industry or in our target markets; global economic conditions and concerns; our competitive performance and ability to continue achieving design wins with our customers, as well as the timing of those design wins; rates of growth in our target markets; prolonged disruptions of our or our contract manufacturers’ manufacturing facilities or other significant operations; our dependence on outsourced service providers for certain key business services and their ability to execute to our requirements; our ability to maintain or improve gross margin; our ability to maintain tax concessions in certain jurisdictions; our ability to protect our intellectual property and the unpredictability of any associated litigation expenses; any expenses or reputational damage associated with resolving customer product and warranty and indemnification claims; dependence on and risks associated with distributors of our products; our ability to sell to new types of customers and to keep pace with technological advances; market acceptance of the end products into which our products are designed; and other events and trends on a national, regional and global scale, including those of a political, economic, business, competitive and regulatory nature.

Our filings with the Securities and Exchange Commission (“SEC”), which you may obtain for free at the SEC’s website at http://www.sec.gov, discuss some of the important risk factors that may affect our business, results of operations and financial condition. We undertake no intent or obligation to publicly update or revise any of these forward looking statements, whether as a result of new information, future events or otherwise, except as required by law.

 
BROADCOM LIMITED
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - UNAUDITED
(IN MILLIONS, EXCEPT PER SHARE DATA)
             
             
     Fiscal Quarter Ended 
    January 29,   October 30,   January 31,
     2017     2016     2016 
             
Net revenue   $ 4,139     $ 4,136     $ 1,771  
Cost of products sold:            
Cost of products sold     1,573       1,639       699  
Purchase accounting effect on inventory     -       86       -  
Amortization of acquisition-related intangible assets     559       224       130  
Restructuring charges     6       16       1  
Total cost of products sold     2,138       1,965       830  
Gross margin     2,001       2,171       941  
Research and development     808       806       267  
Selling, general and administrative     201       224       114  
Amortization of acquisition-related intangible assets     440       356       54  
Restructuring, impairment and disposal charges     46       404       31  
Total operating expenses     1,495       1,790       466  
Operating income     506       381       475  
Interest expense     (111 )     (106 )     (84 )
Loss on debt extinguishment     (159 )     (49 )     -  
Other income, net     31       9       3  
Income from continuing operations before income taxes     267       235       394  
Provision for income taxes     10       841       17  
Income (loss) from continuing operations     257       (606 )     377  
Loss from discontinued operations, net of income taxes     (5 )     (62 )     -  
Net income (loss)     252       (668 )     377  
Net income (loss) attributable to noncontrolling interest     13       (36 )     -  
Net income (loss) attributable to ordinary shares   $ 239     $ (632 )   $ 377  
             
Basic income (loss) per share (1):            
Income (loss) per share from continuing operations   $ 0.61     $ (1.44 )   $ 1.36  
Loss per share from discontinued operations, net of income taxes     (0.01 )     (0.15 )     -  
Net income (loss) per share   $ 0.60     $ (1.59 )   $ 1.36  
             
Diluted income (loss) per share (2):            
Income (loss) per share from continuing operations   $ 0.58     $ (1.44 )   $ 1.30  
Loss per share from discontinued operations, net of income taxes     (0.01 )     (0.15 )     -  
Net income (loss) per share   $ 0.57     $ (1.59 )   $ 1.30  
             
Shares used in per share calculations:            
Basic     399       398       277  
Diluted     439       421       289  
             
Share-based compensation expense included in continuing operations:            
Cost of products sold   $ 14     $ 14     $ 6  
Research and development     141       136       28  
Selling, general and administrative     46       58       23  
Total share-based compensation expense   $ 201     $ 208     $ 57  
             
             
(1) For the fiscal quarters ended January 29, 2017 and October 30, 2016, basic income (loss) per share numerators are reduced by the amount of net income (loss) attributable to noncontrolling interest, which is approximately 5.4% of net income (loss) for each of the fiscal quarters ended January 29, 2017 and October 30, 2016. The noncontrolling interest is related to the restricted exchangeable partnership units of Broadcom Cayman L.P. (“Partnership REUs”), of which Broadcom Limited is the General Partner.
(2) For the fiscal quarters ended January 29, 2017 and October 30, 2016, diluted income (loss) per share numerators and denominators include the impact of the noncontrolling interest, which assumes conversion of Partnership REUs to Broadcom ordinary shares. The diluted income (loss) per share calculations include 23 million Partnership REUs for each of the fiscal quarters ended January 29, 2017 and October 30, 2016, representing an assumed conversion of 100% of the Partnership REUs under the “if converted” method.
 

 

BROADCOM LIMITED
FINANCIAL RECONCILIATION: GAAP TO NON-GAAP - UNAUDITED
(IN MILLIONS, EXCEPT DAYS)
             
             
     Fiscal Quarter Ended 
    January 29,   October 30,   January 31,
     2017     2016     2016 
             
             
Net revenue on GAAP basis   $ 4,139     $ 4,136     $ 1,771  
Acquisition-related purchase accounting revenue adjustment (1)     10       10       11  
Net revenue on non-GAAP basis   $ 4,149     $ 4,146     $ 1,782  
             
Gross margin on GAAP basis   $ 2,001     $ 2,171     $ 941  
Acquisition-related purchase accounting revenue adjustment (1)     10       10       11  
Purchase accounting effect on inventory     -       86       -  
Amortization of acquisition-related intangible assets     559       224       130  
Share-based compensation expense     14       14       6  
Restructuring charges     6       16       1  
Acquisition-related costs     -       1       -  
Gross margin on non-GAAP basis   $ 2,590     $ 2,522     $ 1,089  
             
Research and development on GAAP basis   $ 808     $ 806     $ 267  
Share-based compensation expense     141       136       28  
Acquisition-related costs     3       4       1  
Research and development on non-GAAP basis   $ 664     $ 666     $ 238  
             
Selling, general and administrative expense on GAAP basis   $ 201     $ 224     $ 114  
Share-based compensation expense     46       58       23  
Acquisition-related costs     35       29       23  
Selling, general and administrative expense on non-GAAP basis   $ 120     $ 137     $ 68  
             
Total operating expenses on GAAP basis   $ 1,495     $ 1,790     $ 466  
Amortization of acquisition-related intangible assets     440       356       54  
Share-based compensation expense     187       194       51  
Restructuring, impairment and disposal charges     46       404       31  
Acquisition-related costs     38       33       24  
Total operating expenses on non-GAAP basis   $ 784     $ 803     $ 306  
             
Operating income on GAAP basis   $ 506     $ 381     $ 475  
Acquisition-related purchase accounting revenue adjustment (1)     10       10       11  
Purchase accounting effect on inventory     -       86       -  
Amortization of acquisition-related intangible assets     999       580       184  
Share-based compensation expense     201       208       57  
Restructuring, impairment and disposal charges     52       420       32  
Acquisition-related costs     38       34       24  
Operating income on non-GAAP basis   $ 1,806     $ 1,719     $ 783  
             
Interest expense on GAAP basis   $ (111 )   $ (106 )   $ (84 )
Debt-related costs     1       -       43  
Interest expense on non-GAAP basis   $ (110 )   $ (106 )   $ (41 )
             
Other income, net on GAAP basis   $ 31     $ 9     $ 3  
Gain on disposition of assets     (23 )     -       -  
Other income, net on non-GAAP basis   $ 8     $ 9     $ 3  
             
Income from continuing operations before income taxes on GAAP basis   $ 267     $ 235     $ 394  
Acquisition-related purchase accounting revenue adjustment (1)     10       10       11  
Purchase accounting effect on inventory     -       86       -  
Amortization of acquisition-related intangible assets     999       580       184  
Share-based compensation expense     201       208       57  
Restructuring, impairment and disposal charges     52       420       32  
Acquisition-related costs     38       34       24  
Debt-related costs     1       -       43  
Loss on debt extinguishment     159       49       -  
Gain on disposition of assets     (23 )     -       -  
Income before income taxes on non-GAAP basis   $ 1,704     $ 1,622     $ 745  
             
Provision for income taxes on GAAP basis   $ 10     $ 841     $ 17  
Income tax effects of non-GAAP reconciling adjustments     67       (768 )     18  
Provision for income taxes on non-GAAP basis   $ 77     $ 73     $ 35  
             
Net income (loss) on GAAP basis   $ 252     $ (668 )   $ 377  
Acquisition-related purchase accounting revenue adjustment (1)     10       10       11  
Purchase accounting effect on inventory     -       86       -  
Amortization of acquisition-related intangible assets     999       580       184  
Share-based compensation expense     201       208       57  
Restructuring, impairment and disposal charges     52       420       32  
Acquisition-related costs     38       34       24  
Debt-related costs     1       -       43  
Loss on debt extinguishment     159       49       -  
Gain on disposition of assets     (23 )     -       -  
Income tax effects of non-GAAP reconciling adjustments     (67 )     768       (18 )
Discontinued operations, net of income taxes     5       62       -  
Net income on non-GAAP basis   $ 1,627     $ 1,549     $ 710  
             
             
Shares used in per share calculation - diluted on GAAP basis     439       421       289  
Non-GAAP adjustment(2)     9       26       6  
Shares used in per share calculation - diluted on non-GAAP basis     448       447       295  
             
Days sales outstanding on GAAP basis     43       48       55  
Non-GAAP adjustment(3)     -       -       (1 )
Days sales outstanding on non-GAAP basis     43       48       54  
             
Inventory days on hand on GAAP basis     77       74       64  
Non-GAAP adjustment(4)     1       4       -  
Inventory days on hand on non-GAAP basis     78       78       64  
             
             
(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, share-based compensation expense and acquisition-related costs.
 

 

BROADCOM LIMITED
CONDENSED CONSOLIDATED BALANCE SHEETS - UNAUDITED
(IN MILLIONS)
         
         
    January 29,   October 30,
      2017     2016 (1)
         
ASSETS        
         
Current assets:        
Cash and cash equivalents   $ 3,536     $ 3,097  
Trade accounts receivable, net     1,947       2,181  
Inventory     1,336       1,400  
Other current assets     531       447  
Total current assets     7,350       7,125  
         
Long-term assets:        
Property, plant and equipment, net     2,646       2,509  
Goodwill     24,700       24,732  
Intangible assets, net     14,067       15,068  
Other long-term assets     854       532  
Total assets   $ 49,617     $ 49,966  
         
         
LIABILITIES AND SHAREHOLDERS' EQUITY        
         
Current liabilities:        
Accounts payable   $ 1,047     $ 1,261  
Employee compensation and benefits     336       517  
Current portion of long-term debt     -       454  
Other current liabilities     739       846  
Total current liabilities     2,122       3,078  
         
Long-term liabilities:        
Long-term debt     13,562       13,188  
Pension and post-retirement benefit obligations     518       531  
Other long-term liabilities     11,405       11,293  
Total liabilities     27,607       28,090  
         
Shareholders' equity:        
Ordinary shares     19,504       19,241  
Accumulated deficit     (337 )     (215 )
Accumulated other comprehensive loss     (134 )     (134 )
Total Broadcom Limited shareholders' equity     19,033       18,892  
Noncontrolling interest     2,977       2,984  
Total shareholders' equity     22,010       21,876  
Total liabilities and shareholders' equity   $ 49,617     $ 49,966  
         
(1) Amounts as of October 30, 2016 have been derived from audited financial statements as of that date.
         

 

BROADCOM LIMITED
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - UNAUDITED
(IN MILLIONS)
             
     Fiscal Quarter Ended 
    January 29,   October 30,   January 31,
     2017     2016     2016 
Cash flows from operating activities:            
Net income (loss)   $ 252     $ (668 )   $ 377  
Adjustments to reconcile net income (loss) to net cash provided by operating activities:                
Depreciation and amortization     1,114       700       244  
Share-based compensation     202       205       57  
Excess tax benefits from share-based compensation     -       (21 )     (23 )
Non-cash portion of debt extinguishment loss     159       49       -  
Deferred taxes and other non-cash tax expense     (25 )     718       (8 )
Gain on disposition of assets     (23 )     -       -  
Non-cash restructuring, impairment and disposal charges     17       394       22  
Amortization of debt issuance costs and accretion of debt discount     8       9       4  
Other     5       4       4  
Changes in assets and liabilities, net of acquisitions and disposals:            
Trade accounts receivable, net     234       -       (41 )
Inventory     65       (92 )     34  
Accounts payable     (137 )     94       (68 )
Employee compensation and benefits     (181 )     93       (149 )
Other current assets and current liabilities     (237 )     (60 )     16  
Other long-term assets and long-term liabilities     (100 )     (73 )     5  
Net cash provided by operating activities     1,353       1,352       474  
             
Cash flows from investing activities:            
Purchases of property, plant and equipment     (325 )     (193 )     (140 )
Proceeds from sales of businesses     10       200       68  
Other     (4 )     19       (13 )
Net cash provided by (used in) investing activities     (319 )     26       (85 )
             
Cash flows from financing activities:            
Proceeds from issuance of long-term debt     13,550       3,584       -  
Debt repayments     (13,668 )     (3,697 )     (11 )
Debt issuance costs     (107 )     (15 )     (4 )
Dividend and distribution payments     (431 )     (213 )     (122 )
Issuance of ordinary shares     61       78       72  
Excess tax benefits from share-based compensation     -       21       23  
Net cash used in financing activities     (595 )     (242 )     (42 )
             
             
Net change in cash and cash equivalents     439       1,136       347  
Cash and cash equivalents at the beginning of period     3,097       1,961       1,822  
Cash and cash equivalents at end of period   $ 3,536     $ 3,097     $ 2,169  
             
Supplemental disclosure of cash flow information:            
Cash paid for interest   $ 102     $ 105     $ 80  
Net cash paid (refunds received) for income taxes   $ 97     $ 99     $ (7 )
                         


Contacts:
Broadcom Limited
Ashish Saran
Investor Relations
+1 408 433 8000
investor.relations@broadcom.com

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