AVGO
$243.78
Broadcom
$3.22
1.34%
Earnings Details
1st Quarter January 2018
Thursday, March 15, 2018 4:02:00 PM
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Summary

Broadcom Beats

Broadcom (AVGO) reported 1st Quarter January 2018 earnings of $5.34 per share on revenue of $5.3 billion. The consensus earnings estimate was $5.04 per share on revenue of $5.3 billion. The Earnings Whisper number was $5.14 per share. Revenue grew 28.7% on a year-over-year basis.

The company said it continues to expect second quarter revenue of $4.925 billion to $5.075 billion. The current consensus revenue estimate is $5.03 billion for the quarter ending April 30, 2018.

Avago Technologies Ltd is engaged in manufacturing semiconductor products such as optoelectronics, radio-frequency and microwave components, and application-specific integrated circuits.

Results
Reported Earnings
$5.34
Earnings Whisper
$5.14
Consensus Estimate
$5.04
Reported Revenue
$5.33 Bil
Revenue Estimate
$5.32 Bil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

Broadcom Limited Announces First Quarter Fiscal Year 2018 Financial Results and Interim Dividend

  • Quarterly GAAP gross margin of 49.3 percent; Quarterly non-GAAP gross margin from continuing operations of 64.8 percent
  • Quarterly GAAP diluted earnings per share of $14.62; Quarterly non-GAAP diluted earnings per share from continuing operations of $5.12
  • Quarterly interim dividend of $1.75 per share

SAN JOSE, Calif., March 15, 2018 (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 2018, ended February 4, 2018, provided guidance for the second quarter of its fiscal year 2018, and announced a quarterly interim dividend.

Basis of Presentation

The Company’s financial results include contributions from Brocade Communication Systems' continuing operations starting in the first fiscal quarter of 2018. 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.

Due to the Company’s 52/53 week reporting cycle, fiscal year 2018 includes an extra week in the first quarter, compared to fiscal year 2017.

First Quarter Fiscal Year 2018 GAAP Results

Net revenue was $5,327 million, an increase of 10 percent from $4,844 million in the previous quarter and an increase of 29 percent from $4,139 million in the same quarter last year.

Gross margin was $2,628 million, or 49.3 percent of net revenue. This compares with gross margin of $2,383 million, or 49.2 percent of net revenue, in the prior quarter, and gross margin of $2,001 million, or 48.3 percent of net revenue, in the same quarter last year.

Operating expenses were $1,685 million. This compares with $1,628 million in the prior quarter and $1,495 million for the same quarter last year.

Operating income was $943 million, or 17.7 percent of net revenue. This compares with operating income of $755 million, or 15.6 percent of net revenue, in the prior quarter, and operating income of $506 million, or 12.2 percent of net revenue, in the same quarter last year.

Net income, which includes the impact of discontinued operations, was $6,566 million, or $14.62 per diluted share. This compares with net income of $561 million, or $1.25 per diluted share, for the prior quarter, and net income of $252 million, or $0.57 per diluted share, in the same quarter last year. First quarter fiscal year 2018 net income reflects the significant impact of provisional income tax benefits realized from the enactment of the U.S. Tax Cuts and Jobs Act.

Net income attributable to ordinary shares was $6,230 million. Net income attributable to the noncontrolling interest (exchangeable limited partnership units (“LP Units”)) in the Company’s subsidiary, Broadcom Cayman L.P. (the “Partnership”), was $336 million.

First Quarter Fiscal Year 2018 GAAP Results       Change
(Dollars in millions, except per share data)   Q1 18 Q4 17 Q1 17 Q/Q Y/Y
Net revenue $  5,327   $  4,844   $  4,139   +10%  +29% 
Gross margin  49.3%   49.2%   48.3%  +10bps  +100bps 
Operating expenses $  1,685   $  1,628   $  1,495   +$57  +$190 
Net income $  6,566   $  561   $  252   +$6,005  +$6,314 
Net income attributable to noncontrolling interest $  336   $  29   $  13   +$307  +$323 
Net income attributable to ordinary shares $  6,230   $  532   $  239   +$5,698  +$5,991 
Earnings per share - diluted $  14.62   $  1.25   $  0.57   +$13.37  +$14.05 

The Company’s cash and cash equivalents at the end of the first fiscal quarter was $7,076 million, compared to $11,204 million at the end of the prior quarter.

During the first quarter, the Company generated $1,685 million in cash from operations and received $782 million from the sale of businesses, and $237 million from the sale of real property. In the first quarter, the Company spent $5,642 million on acquisitions of businesses including payment of assumed debt, $244 million on the purchase of investments and $220 million on capital expenditures.

On December 29, 2017, the Company paid a cash dividend of $1.75 per ordinary share, totaling $717 million. On the same date, the Partnership, of which the Company is the General Partner, paid holders of LP Units a corresponding distribution of $1.75 per LP Unit, totaling $38 million.

First Quarter Fiscal Year 2018 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 $5,331 million, an increase of 10 percent from $4,848 million in the previous quarter, and an increase of 28 percent from $4,149 million in the same quarter last year.

Gross margin from continuing operations was $3,454 million, or 64.8 percent of net revenue. This compares with gross margin of $3,068 million, or 63.3 percent of net revenue, in the prior quarter, and gross margin of $2,590 million, or 62.4 percent of net revenue, in the same quarter last year. 

Operating income from continuing operations was $2,571 million, or 48.2 percent of net revenue. This compares with operating income from continuing operations of $2,293 million, or 47.3 percent of net revenue, in the prior quarter, and $1,806 million, or 43.5 percent of net revenue, in the same quarter last year.

Net income from continuing operations was $2,345 million, or $5.12 per diluted share. This compares with net income of $2,091 million, or $4.59 per diluted share last quarter, and net income of $1,627 million, or $3.63 per diluted share, in the same quarter last year.

First Quarter Fiscal Year 2018 Non-GAAP Results       Change
(Dollars in millions, except per share data)   Q1 18 Q4 17 Q1 17 Q/Q Y/Y
Net revenue $  5,331   $  4,848   $  4,149   +10%  +28% 
Gross margin  64.8%   63.3%   62.4%  +150bps  +240bps 
Operating expenses $  883   $  775   $  784   +$108  +$99 
Net income $  2,345   $  2,091   $  1,627   +$254  +$718 
Earnings per share - diluted $  5.12   $  4.59   $  3.63   +$0.53  +$1.49 

“We had a very good start to our fiscal year 2018 delivering first quarter revenue and earnings towards the upper end of guidance,” said Hock Tan, President and CEO of Broadcom Limited. “In the second quarter, we expect to sustain topline momentum with strong data center demand for our networking and enterprise storage products, and a seasonal recovery in broadband access, to offset a sharp seasonal decline in wireless. Importantly, we expect gross margin to expand and drive free cash flow above our long term target of 40 percent of revenue.” 

 
Other Quarterly Data
(Dollars in millions, except percentages)
 Q1 18 Q4 17 Q1 17 Growth Rates
Net revenue by segment:               Q/Q Y/Y 
Wired infrastructure$  1,875  35%$  2,146  45% $  2,084  50%-13% -10% 
Wireless communications   2,210  41     1,796  37     1,175  29  23% 88% 
Enterprise storage   991  19     645  13     707  17  54% 40% 
Industrial & other   251  5     257  5     173  4  -2% 45% 
Total net revenue$  5,327  100% $  4,844  100% $  4,139  100%     
                    
                    
(Dollars in millions, except percentages) 
 Q1 18 Q4 17 Q1 17 Growth Rates
Non-GAAP net revenue by segment:               Q/Q Y/Y 
Wired infrastructure (1)$  1,879  35%$  2,150  45% $  2,087  50%-13% -10% 
Wireless communications   2,210  41     1,796  37     1,175  28  23% 88% 
Enterprise storage   991  19     645  13     707  17  54% 40% 
Industrial & other (1)   251  5     257  5     180  5  -2% 39% 
Total non-GAAP net revenue$  5,331  100% $  4,848  100% $  4,149  100%     
                    
(1) Non-GAAP data include the effect of acquisition-related purchase accounting adjustments relating to licensing revenue.   
    


Key Statistics (Dollars in millions)    Q1 18 Q4 17 Q1 17
Cash from operations $1,685  $1,959  $1,353
Depreciation $126  $117  $112
Amortization of acquisition-related intangible assets $1,054  $1,099  $999
Capital expenditures $220  $233  $325
Days sales outstanding ("DSO")  45   46   43
Inventory days on hand ("DOH")  64   73   77
Non-GAAP DSO  45   46   43
Non-GAAP Inventory DOH  67   74   78

Second Quarter Fiscal Year 2018 Business Outlook

Based on current business trends and conditions, the outlook for continuing operations for the second quarter of fiscal year 2018, ending May 6, 2018, is expected to be as follows:   

  GAAP Reconciling Items Non-GAAP
Net revenue $4,997M +/-$75M  $3M  $5,000M +/-$75M
Gross margin 50.0% +/-1%  $795M  66.0% +/-1%
Operating expenses $1,375M  $485M  $890M
Interest expense and other $114M - $114M
Provision for income taxes  $56M   $47M  $103M
Diluted share count 427M 34M 461M

 

  • Non-GAAP net revenue includes $3 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 $3 million of licensing revenue, and excludes the effects of $765 million of amortization of intangible assets, $25 million of share-based compensation expense, $1 million of restructuring charges, and $1 million of acquisition-related costs;

  • Non-GAAP operating expenses exclude $280 million of share-based compensation expense, $90 million of acquisition-related costs, $70 million of amortization of intangible assets, and $45 million of restructuring charges;

  • Non-GAAP tax provision is $47 million higher than GAAP due to the tax effects of the projected reconciling items noted above; and

  • Non-GAAP diluted share count includes the impact of the LP Units on an if-converted basis, which were not included in projected GAAP diluted share count because their effect is expected to be antidilutive, and 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 $190 million. For the second fiscal quarter, depreciation is expected to be $130 million and amortization is expected to be approximately $840 million.

The guidance provided above is only an estimate of what the Company believes is realizable as of the date of this release. Among other things, this guidance is based on an initial estimate of purchase accounting adjustments and allocations, all of which are subject to revision. 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 $1.75 per ordinary share. A corresponding distribution will also be paid by the Partnership, of which the Company is the General Partner, to holders of LP Units, in the amount of $1.75 per LP Unit.

The dividend and the distribution are both payable on March 29, 2018 to shareholders or unitholders of record, as applicable, at the close of business (5:00 p.m.) Eastern Time on March 22, 2018.

Financial Results Conference Call

Broadcom Limited will host a conference call to review its financial results for the first quarter of fiscal year 2018, ended February 4, 2018, and to provide guidance for the second quarter of fiscal year 2018, 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 7796628. 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: 7796628. 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 revenue, 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, litigation settlements, debt-related costs, gain (loss) on extinguishment of debt, gain (loss) on disposition of assets, income (loss) from discontinued operations and non-GAAP tax 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 other statements identified by words such as “will”, “expect”, “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 risks associated with any 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; our dependency on a limited number of suppliers; any acquisitions we may make, such as delays, challenges and expenses associated with receiving governmental and regulatory approvals and satisfying other closing conditions, and with integrating acquired companies with our existing businesses and our ability to achieve the benefits, growth prospects and synergies expected from such acquisitions; 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; increased dependence on a small number of markets and the rate of growth in these markets; dependence on and risks associated with distributors of our products; dependence on senior management; quarterly and annual fluctuations in operating results; global economic conditions and concerns; cyclicality in the semiconductor industry or in our target markets; our proposed redomiciliation of our ultimate parent company to the United States; our competitive performance and ability to continue achieving design wins with our customers, as well as the timing of those design wins; prolonged disruptions of our or our contract manufacturers’ manufacturing facilities or other significant operations; our ability to improve our manufacturing efficiency and quality; 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 overall cash tax costs, legislation that may impact our effective tax rate and 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; 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.

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

BROADCOM LIMITED
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - UNAUDITED
(IN MILLIONS, EXCEPT PER SHARE DATA)
        
   Fiscal Quarter Ended  
  February 4, October 29, January 29, 
   2018   2017   2017  
        
Net revenue $  5,327   $  4,844   $  4,139   
Cost of products sold:       
Cost of products sold  1,899    1,798    1,573   
Purchase accounting effect on inventory    70      2      -   
Amortization of acquisition-related intangible assets    715      658      559   
Restructuring charges    15      3      6   
Total cost of products sold    2,699      2,461      2,138   
Gross margin    2,628      2,383      2,001   
              
Research and development    925      828      808   
Selling, general and administrative    291      194      201   
Amortization of acquisition-related intangible assets    339      441      440   
Restructuring, impairment and disposal charges    130      55      46   
Litigation settlement    -      110      -   
Total operating expenses  1,685    1,628    1,495   
        
Operating income    943      755      506   
Interest expense    (183)    (119)    (111) 
Loss on debt extinguishment    -      (7)    (159) 
Other income, net    35      16      31   
Income from continuing operations before income taxes    795      645      267   
Provision for (benefit from) income taxes    (5,786)    89      10   
Income from continuing operations    6,581      556      257   
Income (loss) from discontinued operations, net of income taxes    (15)    5      (5) 
Net income    6,566      561      252   
Net income attributable to noncontrolling interest    336      29      13   
Net income attributable to ordinary shares $6,230   $ 532   $239   
        
Basic income per share:       
Income per share from continuing operations $  15.23   $  1.29   $  0.61   
Income (loss) per share from discontinued operations    (0.03)    0.01      (0.01) 
Net income per share $  15.20   $  1.30   $  0.60   
        
Diluted income per share (1):       
Income per share from continuing operations $  14.66   $  1.24   $  0.58   
Income (loss) per share from discontinued operations    (0.04)    0.01      (0.01) 
Net income per share $  14.62   $  1.25   $  0.57   
        
Shares used in per share calculations:       
Basic    410      408      399   
Diluted    426      424      439   
        
Share-based compensation expense included in continuing operations:       
Cost of products sold $  20   $  17   $  14   
Research and development    203      171      141   
Selling, general and administrative    76      64      46   
Total share-based compensation expense $  299   $  252   $  201   
              
        
(1) For the fiscal quarter ended January 29, 2017, the diluted income (loss) per share numerators and denominators include the impact of the noncontrolling interest, which assumes conversion of the exchangeable limited partnership units, or LP Units, to Broadcom ordinary shares. The diluted income per share calculations include approximately 23 million LP Units for the fiscal quarter ended January 29, 2017, representing an assumed conversion of 100% of the LP Units under the “if converted” method. 
        


BROADCOM LIMITED
FINANCIAL RECONCILIATION: GAAP TO NON-GAAP - UNAUDITED
(IN MILLIONS, EXCEPT DAYS)
        
   Fiscal Quarter Ended  
  February 4, October 29, January 29, 
   2018   2017   2017  
        
        
Net revenue on GAAP basis $  5,327   $  4,844   $  4,139   
Acquisition-related purchase accounting revenue adjustment (1)    4      4      10   
Net revenue on non-GAAP basis $  5,331   $  4,848   $  4,149   
              
Gross margin on GAAP basis $  2,628   $  2,383   $  2,001   
Acquisition-related purchase accounting revenue adjustment (1)    4      4      10   
Purchase accounting effect on inventory    70      2      -   
Amortization of acquisition-related intangible assets    715      658      559   
Share-based compensation expense    20      17      14   
Restructuring charges    15      3      6   
Acquisition-related costs    2      1      -   
Gross margin on non-GAAP basis $  3,454   $  3,068   $  2,590   
              
Research and development on GAAP basis $  925   $  828   $  808   
Share-based compensation expense    203      171      141   
Acquisition-related costs    3      -      3   
Research and development on non-GAAP basis $  719   $  657   $  664   
              
Selling, general and administrative expense on GAAP basis $  291   $  194   $  201   
Share-based compensation expense    76      64      46   
Acquisition-related costs    51      12      35   
Selling, general and administrative expense on non-GAAP basis $  164   $  118   $  120   
              
Total operating expenses on GAAP basis $  1,685   $  1,628   $  1,495   
Amortization of acquisition-related intangible assets    339      441      440   
Share-based compensation expense    279      235      187   
Restructuring, impairment and disposal charges    130      55      46   
Litigation settlement    -      110      -   
Acquisition-related costs    54      12      38   
Total operating expenses on non-GAAP basis $  883   $  775   $  784   
              
Operating income on GAAP basis $  943   $  755   $  506   
Acquisition-related purchase accounting revenue adjustment (1)    4      4      10   
Purchase accounting effect on inventory    70      2      -   
Amortization of acquisition-related intangible assets    1,054      1,099      999   
Share-based compensation expense    299      252      201   
Restructuring, impairment and disposal charges    145      58      52   
Litigation settlement    -      110      -   
Acquisition-related costs    56      13      38   
Operating income on non-GAAP basis $  2,571   $  2,293   $  1,806   
              
Interest expense on GAAP basis $  (183) $  (119) $  (111) 
Debt-related costs    32      -      1   
Interest expense on non-GAAP basis $  (151) $  (119) $  (110) 
              
Other income, net on GAAP basis $  35   $  16   $  31   
Gain on disposition of assets    -      -      (23) 
Other income, net on non-GAAP basis $  35   $  16   $  8   
              
Income from continuing operations before income taxes on GAAP basis $  795   $  645   $  267   
Acquisition-related purchase accounting revenue adjustment (1)    4      4      10   
Purchase accounting effect on inventory    70      2      -   
Amortization of acquisition-related intangible assets    1,054      1,099      999   
Share-based compensation expense    299      252      201   
Restructuring, impairment and disposal charges    145      58      52   
Litigation settlement    -      110      -   
Acquisition-related costs    56      13      38   
Debt-related costs    32      -      1   
Loss on debt extinguishment    -      7      159   
Gain on disposition of assets    -      -      (23) 
Income before income taxes on non-GAAP basis $  2,455   $  2,190   $  1,704   
              
Provision for (benefit from) income taxes on GAAP basis $  (5,786) $  89   $  10   
Non-GAAP tax reconciling adjustments    5,896      10      67   
Provision for income taxes on non-GAAP basis $  110   $  99   $  77   
              
Net income on GAAP basis $  6,566   $  561   $  252   
Acquisition-related purchase accounting revenue adjustment (1)    4      4      10   
Purchase accounting effect on inventory    70      2      -   
Amortization of acquisition-related intangible assets    1,054      1,099      999   
Share-based compensation expense    299      252      201   
Restructuring, impairment and disposal charges    145      58      52   
Litigation settlement    -      110      -   
Acquisition-related costs    56      13      38   
Debt-related costs    32      -      1   
Loss on debt extinguishment    -      7      159   
Gain on disposition of assets    -      -      (23) 
Non-GAAP tax reconciling adjustments    (5,896)    (10)    (67) 
Discontinued operations, net of income taxes    15      (5)    5   
Net income on non-GAAP basis $  2,345   $  2,091   $  1,627   
        
        
Shares used in per share calculation - diluted on GAAP basis    426      424      439   
Non-GAAP adjustment (2)    32      32      9   
Shares used in per share calculation - diluted on non-GAAP basis    458      456      448   
              
Inventory days on hand on GAAP basis    64      73      77   
Non-GAAP adjustment(3)    3      1      1   
Inventory days on hand on non-GAAP basis    67      74      78   
        
        
(1) Amounts represent licensing revenue not included in GAAP net revenue as a result of the effect of purchase accounting for acquisitions.
(2) Non-GAAP adjustment for number of shares used in the diluted per share calculations 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. Non-GAAP adjustment also includes the impact of the LP Units that are anti-dilutive on a GAAP basis for all periods presented except the first quarter of fiscal year 2017.
(3) Non-GAAP adjustment for inventory days on hand represents the impact of purchase accounting on inventory, share-based compensation expense, and acquisition-related costs.
        


BROADCOM LIMITED
CONDENSED CONSOLIDATED BALANCE SHEETS - UNAUDITED
(IN MILLIONS)
      
      
  February 4, October 29, 
   2018   2017  
      
ASSETS     
      
Current assets:     
Cash and cash equivalents $  7,076   $  11,204   
Trade accounts receivable, net    2,459      2,448   
Inventory    1,291      1,447   
Other current assets    394      724   
Total current assets    11,220      15,823   
      
Long-term assets:     
Property, plant and equipment, net    2,747      2,599   
Goodwill    26,899      24,706   
Intangible assets, net    13,171      10,832   
Other long-term assets    507      458   
Total assets $  54,544   $  54,418   
      
      
LIABILITIES AND SHAREHOLDERS' EQUITY     
      
Current liabilities:     
Accounts payable $  816   $  1,105   
Employee compensation and benefits    333      626   
Current portion of long-term debt    117      117   
Other current liabilities    704      681   
Total current liabilities    1,970      2,529   
      
Long-term liabilities:     
Long-term debt    17,475      17,431   
Other long-term liabilities    6,018      11,272   
Total liabilities    25,463      31,232   
      
Shareholders' equity:     
Ordinary shares    20,851      20,505   
Retained earnings (accumulated deficit)    5,132      (129) 
Accumulated other comprehensive loss    (82)    (91) 
Total Broadcom Limited shareholders' equity    25,901      20,285   
Noncontrolling interest    3,180      2,901   
Total shareholders' equity    29,081      23,186   
Total liabilities and shareholders' equity $  54,544   $  54,418   
      


BROADCOM LIMITED
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - UNAUDITED
(IN MILLIONS)
        
   Fiscal Quarter Ended  
  February 4, October 29, January 29, 
   2018   2017   2017  
Cash flows from operating activities:       
Net income $  6,566   $  561   $  252   
Adjustments to reconcile net income to net cash provided by operating activities:      
Depreciation and amortization    1,184      1,219      1,114   
Share-based compensation    299      252      202   
Deferred taxes and other non-cash taxes    (5,832)    (74)    (25) 
Non-cash portion of debt extinguishment loss    -      7      159   
Non-cash restructuring, impairment and disposal charges    5      17      17   
Amortization of debt issuance costs and accretion of debt discount    6      5      8   
Other    3      9      (18) 
Changes in assets and liabilities, net of acquisitions and disposals:       
  Trade accounts receivable, net    199      (31)    234   
  Inventory    250      (16)    65   
  Accounts payable    (403)    (63)    (137) 
  Employee compensation and benefits    (376)    80      (181) 
  Contributions to defined benefit pension plans    (129)    (345)    (6) 
  Other current assets and current liabilities    284      80      (237) 
  Other long-term assets and long-term liabilities    (371)    258      (94) 
Net cash provided by operating activities    1,685      1,959      1,353   
        
Cash flows from investing activities:       
Acquisitions of businesses, net of cash acquired    (4,786)    -      -   
Proceeds from sales of businesses    782      -      10   
Purchases of property, plant and equipment    (220)    (233)    (325) 
Proceeds from disposals of property, plant and equipment    237      440      -   
Purchases of investments    (244)    (7)    -   
Proceeds from sales and maturities of investments    -      200      -   
Other    4      (4)    (4) 
Net cash provided by (used in) investing activities    (4,227)    396      (319) 
        
Cash flows from financing activities:       
Proceeds from issuance of long-term debt    -      3,980      13,446   
Repayment of debt    (856)    -      (13,668) 
Payment of debt issuance costs    -      (1)    (3) 
Dividend and distribution payments    (755)    (439)    (431) 
Issuance of ordinary shares    34      66      61   
Payment of capital lease obligations    (6)    (6)    -   
Other    (3)    -      -   
Net cash provided by (used in) financing activities    (1,586)    3,600      (595) 
        
        
Net change in cash and cash equivalents    (4,128)    5,955      439   
Cash and cash equivalents at the beginning of period    11,204      5,249      3,097   
Cash and cash equivalents at end of period $  7,076   $  11,204   $  3,536   
        
Supplemental disclosure of cash flow information:       
Cash paid for interest $  232   $  1   $  102   
Cash paid for income taxes $  109   $  96   $  97   
        

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Source: Broadcom Limited