OREANDA-NEWS. June 03, 2016.  Broadcom Limited (Nasdaq:AVGO), a leading semiconductor device supplier to the wired, wireless, enterprise storage, and industrial end markets, today reported financial results for the second quarter of its fiscal year 2016, ended May 1, 2016, and provided guidance for the third quarter of its fiscal year 2016. 

Recent Developments

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.

Second Quarter Fiscal Year 2016 GAAP Results

Net revenue was \\$3,541 million, an increase of 100 percent from \\$1,771 million in the previous quarter and an increase of 119 percent from \\$1,614 million in the same quarter last year.

Gross margin was \\$1,046 million, or 30 percent of net revenue. This compares with gross margin of \\$941 million, or 53 percent of net revenue in the prior quarter, and gross margin of \\$846 million, or 52 percent of net revenue in the same quarter last year.

Operating expenses were \\$2,047 million. This compares with \\$466 million in the prior quarter and \\$428 million for the same quarter last year.

Operating loss was \\$1,001 million, or 28 percent of net revenue. This compares with operating income of \\$475 million, or 27 percent of net revenue, in the prior quarter, and \\$418 million, or 26 percent of net revenue, in the same quarter last year.

Net loss, which includes the impact of discontinued operations, was \\$1,255 million, or \\$3.02 per diluted share. This compares with net income of \\$377 million, or \\$1.30 per diluted share, for the prior quarter, and \\$344 million, or \\$1.21 per diluted share in the same quarter last year. 

Net loss attributable to ordinary shares was \\$1,186 million. Net loss attributable to noncontrolling interest (restricted exchangeable limited partnership units (“REUs”) in the Company’s subsidiary, Broadcom Cayman L.P. (the “Partnership”) was \\$69 million.

             
 Second Quarter Fiscal Year 2016 GAAP Results       Change 
 (Dollars in millions, except per share data)  Q2 16 Q1 16 Q2 15 Q/Q Y/Y 
 Net revenue \\$  3,541  \\$  1,771  \\$  1,614   +100%  +119% 
 Gross margin  30%  53%  52%  -23ppt   -22ppt  
 Operating expenses \\$  2,047  \\$  466  \\$  428  +\\$1,581  +\\$1,619  
 Net income (loss) \\$  (1,255) \\$  377  \\$  344  -\\$1,632  -\\$1,599  
 Net loss attributable to noncontrolling interest \\$  (69) \\$  -   \\$  -   -\\$69  -\\$69  
 Net income (loss) attributable to ordinary shares   \\$  (1,186) \\$  377  \\$  344  -\\$1,563  -\\$1,530  
 Earnings (loss) per share - diluted \\$  (3.02) \\$  1.30  \\$  1.21  -\\$4.32  -\\$4.23  
             

The Company’s cash balance at the end of the second fiscal quarter was \\$2,041 million, compared to \\$2,169 million at the end of the prior quarter.

The Company generated \\$622 million in cash from operations and spent \\$158 million on capital expenditures in the second fiscal quarter of 2016. During the quarter, the Company repaid \\$565 million of its outstanding term loans. 

On March 31, 2016, the Company paid a cash dividend of \\$0.49 per ordinary share, totaling \\$193 million. On the same date, the Partnership, of which the Company is the General Partner, paid holders of REUs a corresponding distribution of \\$0.49 per REU, totaling \\$11 million.

Second Quarter Fiscal Year 2016 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 \\$3,562 million, an increase of 100 percent from \\$1,782 million in the previous quarter, and an increase of 117 percent from \\$1,645 million in the same quarter last year.

Gross margin from continuing operations was \\$2,138 million, or 60 percent of net revenue. This compares with gross margin of \\$1,089 million, or 61 percent of net revenue, in the prior quarter, and gross margin of \\$998 million, or 61 percent of net revenue, in the same quarter last year. 

Operating income from continuing operations was \\$1,329 million, or 37 percent of net revenue. This compares with operating income from continuing operations of \\$783 million, or 44 percent of net revenue, in the prior quarter, and \\$701 million, or 43 percent of net revenue, in the same quarter last year.

Net income from continuing operations was \\$1,120 million, or \\$2.53 per diluted share. This compares with net income of \\$710 million, or \\$2.41 per diluted share last quarter, and net income of \\$620 million, or \\$2.13 per diluted share, in the same quarter last year.

              
 Second Quarter Fiscal Year 2016 Non-GAAP Results         Change  
 (Dollars in millions, except per share data)  Q2 16 Q1 16 Q2 15 Q/Q Y/Y  
 Net revenue \\$  3,562  \\$  1,782  \\$  1,645   +100%  +117%  
 Gross margin  60%  61%  61%  -1ppt   -1ppt   
 Operating expenses \\$  809  \\$  306  \\$  297  +\\$503  +\\$512   
 Net income \\$  1,120  \\$  710  \\$  620  +\\$410  +\\$500   
 Earnings per share - diluted \\$  2.53  \\$  2.41  \\$  2.13  +\\$0.12  +\\$0.40   
              

“We delivered solid second quarter revenue, while exceeding EPS expectations for our first quarter operating as a combined company. Our increased scale and diversity is already proving very resilient, with strong product cycles in our now largest segment, wired, offsetting weaker demand in our enterprise storage and wireless segments,” said Hock Tan, President and CEO of Broadcom Limited. “We are expecting a robust third quarter, led by strong growth in wireless revenue, and continued strength in wired networking, and remain confident in our ability to leverage earnings growth as we work towards full integration and achievement of our operating model.”

Other Quarterly Data

                      
 Q2 16 Q1 16 Q2 15  Growth Rates
Net revenue by segment:                 Q/Q Y/Y 
Wired infrastructure\\$  2,060  58% \\$  386  22%  \\$  382    23%   434%  439% 
Wireless communications   792  22     578  33      576    36    37%  38% 
Enterprise storage   525  15     678  38      467    29    -23%  12% 
Industrial & other   164  5     129  7      189    12    27%  -13% 
Total net revenue\\$  3,541  100% \\$  1,771  100%  \\$  1,614  100%      
                      
                      
                      
 Q2 16 Q1 16 Q2 15  Growth Rates
Non-GAAP net revenue by segment:                   Q/Q Y/Y 
Wired infrastructure (1)\\$  2,063  58% \\$  386  22%  \\$  382    23%   434%  440% 
Wireless communications   792  22     578  32      576    35    37%  38% 
Enterprise storage   525  15     678  38      467    28    -23%  12% 
Industrial & other (1)   182  5     140  8      220    14    30%  -17% 
Total non-GAAP net revenue\\$  3,562  100% \\$  1,782  100%  \\$  1,645  100%      
                      
(1) Non-GAAP data include the effect of acquisition-related purchase accounting revenue adjustment. 
                      
        
 Key Statistics (Dollars in millions)    Q2 16 Q1 16 Q2 15
 Cash from operations \\$  622  \\$  474  \\$  663 
 Depreciation \\$  107  \\$  60  \\$  58 
 Amortization \\$  933  \\$  184  \\$  172 
 Capital expenditures \\$  158  \\$  140  \\$  177 
 Days sales outstanding ("DSO")    48     55     43 
 Inventory days on hand ("DOH")        59     64     68 
 Non-GAAP DSO    47     54     42 
 Non-GAAP Inventory DOH    72     64     69 
              

Third Quarter Fiscal Year 2016 Business Outlook

Based on current business trends and conditions, the outlook for continuing operations for the third quarter of fiscal year 2016, ending July 31, 2016 is expected to be as follows:   

        
   GAAP  Reconciling Items  Non-GAAP
 Net revenue  \\$3,740M +/- \\$75M  \\$10M  \\$3,750M +/- \\$75M 
 Gross margin 43.75% +/- 1% \\$599M 60.00% +/- 1%
 Operating expenses \\$1,812M \\$1,003M \\$809M
 Interest and other \\$161M \\$20M \\$141M
 Provision for (benefit from) income taxes (\\$88)M (\\$147)M \\$59M
 Diluted share count 419M 30M 449M
        
  • 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 \\$356 million of inventory step-up charges to record BRCM inventory at fair value, as part of the purchase accounting for the Acquisition, \\$210 million of amortization of intangible assets, \\$15 million of share-based compensation expense, and \\$8 million of restructuring charges;
  • Non-GAAP operating expenses exclude \\$732 million of amortization of intangible assets, \\$206 million of share-based compensation expense, \\$36 million of restructuring charges, and \\$29 million of acquisition-related costs;
  • Non-GAAP interest and other excludes \\$20 million of losses on extinguishment of long-term debt;
  • Non-GAAP tax provision excludes \\$147 million tax benefit representing the tax effects of the 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 financial statements, which would otherwise be assumed to be used to repurchase shares under the GAAP treasury stock method.                                                                            

Capital expenditures for the third fiscal quarter are expected to be approximately \\$230 million. For the third fiscal quarter, depreciation is expected to be \\$106 million and amortization is expected to be approximately \\$942 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 \\$0.50 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 \\$0.50 per REU.

The dividend and the distribution are both payable on June 30, 2016 to shareholders or unitholders of record, as applicable, at the close of business (5:00 p.m.) Eastern Time on June 17, 2016.

Financial Results Conference Call

Broadcom Limited will host a conference call to review its financial results for the second quarter of its fiscal year 2016, ended May 1, 2016, and to provide guidance for the third quarter of fiscal year 2016, 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 6177961. 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: 6177961. 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 intangible assets, share-based compensation expense, restructuring, impairment and disposal charges, acquisition-related costs, including integration costs, purchase accounting effect on inventory, write-off of debt issuance costs, gain (loss) on extinguishment of debt, income (loss) from and gain (loss) on 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 analog and digital 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, broadband access, telecommunications equipment, smartphones and base stations, data center servers and storage, factory automation, power generation and alternative energy systems, and 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 the Acquisition, (ii) our plans, objectives and intentions with respect to future operations and products, (iii) our competitive position and opportunities, (iv) the impact of the transaction 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 our recent acquisition of BRCM, and other acquisitions we may make, including delays, challenges and expenses associated with integrating BRCM and other acquired companies with our existing businesses and our ability to achieve the benefits, growth prospects and synergies expected from BRCM and other acquisitions we may make; loss of our significant customers and fluctuations in the timing and volume of significant customer demand; our ability to accurately estimate customers’ demand and adjust our manufacturing and supply chain accordingly; the significant indebtedness incurred by us in February 2016 in connection with the Acquisition, 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; our ability to timely increase our internal manufacturing capacity to meet customer demand; 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; our dependence on contract manufacturing and outsourced supply chain and our ability to improve our cost structure through our manufacturing outsourcing program; 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   Two Fiscal Quarters Ended 
  May 1, January 31, May 3, May 1, May 3, 
   2016   2016   2015   2016   2015 
         
Net revenue \\$  3,541  \\$  1,771  \\$  1,614  \\$  5,312  \\$  3,249 
Cost of products sold:          
Cost of products sold    1,437     699     654     2,136     1,344 
Purchase accounting effect on inventory    828     -     -     828     4 
Amortization of intangible assets    198     130     113     328     226 
Restructuring charges    32     1     1     33     3 
Total cost of products sold   2,495    830    768    3,325    1,577 
Gross margin  1,046    941    846    1,987    1,672 
Research and development   787    267    251    1,054     486 
Selling, general and administrative    238     114     108     352     225 
Amortization of intangible assets    735     54     59     789     118 
Restructuring, impairment and disposal charges    287     31     10     318     24 
Total operating expenses   2,047    466    428    2,513    853 
Operating income (loss)    (1,001)    475     418     (526)    819 
Interest expense    (256)    (84)    (53)    (340)    (107)
Loss on extinguishment of debt    (53)    -     (13)    (53)    (13)
Other income (expense), net    (6)    3     12     (3)    16 
Income (loss) from continuing operations before income taxes    (1,316)    394     364     (922)    715 
Provision for (benefit from) income taxes    (99)    17     25     (82)    38 
Income (loss) from continuing operations    (1,217)    377     339     (840)    677 
Income (loss) from discontinued operations, net of income taxes    (38)    -     5     (38)    18 
Net income (loss)    (1,255)    377     344     (878)    695 
Net loss attributable to noncontrolling interest    (69)    -     -     (69)    - 
Net income (loss) attributable to ordinary shares \\$  (1,186) \\$  377  \\$  344  \\$  (809) \\$  695 
           
Basic income (loss) per share (1):          
Income (loss) per share from continuing operations \\$  (2.93) \\$  1.36  \\$  1.31  \\$  (2.31) \\$  2.63 
Income (loss) per share from discontinued operations, net of income taxes    (0.09)    -     0.02     (0.10)    0.07 
Net income (loss) per share \\$  (3.02) \\$  1.36  \\$  1.33  \\$  (2.41) \\$  2.70 
           
Diluted income (loss) per share (2):          
Income (loss) per share from continuing operations \\$  (2.93) \\$  1.30  \\$  1.19  \\$  (2.43) \\$  2.41 
Income (loss) per share from discontinued operations, net of income taxes    (0.09)    -     0.02     (0.11)    0.06 
Net income (loss) per share \\$  (3.02) \\$  1.30  \\$  1.21  \\$  (2.54) \\$  2.47 
           
Shares used in per share calculations:          
Basic    392     277     258     335     257 
Diluted    415     289     284     346     281 
           
Share-based compensation expense included in continuing operations:          
Cost of products sold \\$  13  \\$  6  \\$  6  \\$  19  \\$  12 
Research and development    122     28     27     150     46 
Selling, general and administrative    51     23     24     74     48 
Total share-based compensation expense \\$  186  \\$  57  \\$  57  \\$  243  \\$  106 
               
         
(1) For the fiscal quarter and two fiscal quarters ended May 1, 2016, basic loss per share numerators are reduced by the amount of net loss attributable to noncontrolling interest, which is 5.5% of net loss incurred subsequent to January 31, 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 quarter and two fiscal quarters ended May 1, 2016, diluted 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 loss per share calculations include 23 million and 11 million Partnership REUs for the fiscal quarter and two fiscal quarters ended May 1, 2016, respectively, 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   Two Fiscal Quarters Ended  
  May 1, January 31, May 3, May 1, May 3,  
   2016   2016   2015   2016   2015  
                
         
Net revenue on GAAP basis \\$  3,541  \\$  1,771  \\$  1,614  \\$  5,312  \\$  3,249  
Acquisition-related purchase accounting revenue adjustment (1)    21     11     31     32     53  
Net revenue on non-GAAP basis \\$ 3,562  \\$ 1,782  \\$ 1,645  \\$ 5,344  \\$ 3,302  
            
Gross margin on GAAP basis \\$ 1,046  \\$ 941  \\$ 846  \\$ 1,987  \\$ 1,672  
Acquisition-related purchase accounting revenue adjustment (1)    21     11     31     32     53  
Purchase accounting effect on inventory    828     -     -     828     4  
Amortization of intangible assets    198     130     113     328     226  
Share-based compensation expense    13     6     6     19     12  
Restructuring charges    32     1     1     33     3  
Acquisition-related costs    -     -     1     -     2  
Gross margin on non-GAAP basis \\$ 2,138  \\$ 1,089  \\$ 998  \\$ 3,227  \\$ 1,972  
            
Research and development on GAAP basis \\$ 787  \\$ 267  \\$ 251  \\$ 1,054  \\$ 486  
Share-based compensation expense    122     28     27     150     46  
Acquisition-related costs    2     1     3     3     9  
Research and development on non-GAAP basis \\$  663  \\$  238  \\$  221  \\$  901  \\$  431  
            
Selling, general and administrative expense on GAAP basis \\$  238  \\$  114  \\$  108  \\$  352  \\$  225  
Share-based compensation expense    51     23     24     74     48  
Acquisition-related costs    41     23     8     64     18  
Selling, general and administrative expense on non-GAAP basis \\$  146  \\$  68  \\$  76  \\$  214  \\$  159  
            
Total operating expenses on GAAP basis \\$ 2,047  \\$ 466  \\$ 428  \\$ 2,513  \\$ 853  
Amortization of intangible assets    735     54     59     789     118  
Share-based compensation expense    173     51     51     224     94  
Restructuring, impairment and disposal charges    287     31     10     318     24  
Acquisition-related costs    43     24     11     67     27  
Total operating expenses on non-GAAP basis \\$ 809  \\$ 306  \\$ 297  \\$ 1,115  \\$ 590  
            
Operating income (loss) on GAAP basis \\$  (1,001) \\$  475  \\$  418  \\$  (526) \\$  819  
Acquisition-related purchase accounting revenue adjustment (1)    21     11     31     32     53  
Purchase accounting effect on inventory    828     -     -     828     4  
Amortization of intangible assets   933    184    172    1,117    344  
Share-based compensation expense    186     57     57     243     106  
Restructuring, impairment and disposal charges    319     32     11     351     27  
Acquisition-related costs    43     24     12     67     29  
Operating income on non-GAAP basis \\$ 1,329  \\$ 783  \\$ 701  \\$ 2,112  \\$ 1,382  
            
Interest expense on GAAP basis \\$  (256) \\$  (84) \\$  (53) \\$  (340) \\$  (107) 
Acquisition-related costs    106     43     -     149     -  
Interest expense on non-GAAP basis \\$  (150) \\$  (41) \\$  (53) \\$  (191) \\$  (107) 
            
Income (loss) from continuing operations before income taxes on GAAP basis \\$  (1,316) \\$  394  \\$  364  \\$  (922) \\$  715  
Acquisition-related purchase accounting revenue adjustment (1)    21     11     31     32     53  
Purchase accounting effect on inventory    828     -     -     828     4  
Amortization of intangible assets   933    184    172    1,117    344  
Share-based compensation expense    186     57     57     243     106  
Restructuring, impairment and disposal charges    319     32     11     351     27  
Acquisition-related costs    149     67     12     216     29  
Loss on extinguishment of debt    53     -     13     53     13  
Income before income taxes on non-GAAP basis \\$ 1,173  \\$ 745  \\$ 660  \\$ 1,918  \\$ 1,291  
            
Provision for (benefit from) income taxes on GAAP basis \\$  (99) \\$  17  \\$  25  \\$  (82) \\$  38  
Income tax effects of non-GAAP reconciling adjustments    152     18     15     170     37  
Provision for income taxes on non-GAAP basis \\$  53  \\$  35  \\$  40  \\$  88  \\$  75  
            
Net income (loss) on GAAP basis \\$  (1,255) \\$  377  \\$  344  \\$  (878) \\$  695  
Acquisition-related purchase accounting revenue adjustment (1)    21     11     31     32     53  
Purchase accounting effect on inventory    828     -     -     828     4  
Amortization of intangible assets   933    184    172    1,117    344  
Share-based compensation expense    186     57     57     243     106  
Restructuring, impairment and disposal charges    319     32     11     351     27  
Acquisition-related costs    149     67     12     216     29  
Loss on extinguishment of debt    53     -     13     53     13  
Income tax effects of non-GAAP reconciling adjustments    (152)    (18)    (15)    (170)    (37) 
Discontinued operations, net of income taxes    38     -     (5)    38     (18) 
Net income on non-GAAP basis \\$ 1,120  \\$ 710  \\$ 620  \\$ 1,830  \\$ 1,216  
            
            
Shares used in per share calculation - diluted on GAAP basis    415     289     284     346     281  
Non-GAAP adjustment    27     6     7     22     7  
Shares used in per share calculation - diluted on non-GAAP basis(2)    442     295     291     368     288  
            
Days sales outstanding on GAAP basis    48     55     43      
Non-GAAP adjustment    (1)    (1)    (1)  
Days sales outstanding on non-GAAP basis(3)    47     54     42   
         
Inventory Days on Hand on GAAP basis    59     64     68   
Non-GAAP adjustment    13     -     1   
Inventory Days on Hand on non-GAAP basis(4)    72     64     69   
         
         
(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, acquisition-related costs, and cost of products sold attributable to discontinued operations. 
         
 
BROADCOM LIMITED
CONDENSED CONSOLIDATED BALANCE SHEETS - UNAUDITED
(IN MILLIONS)
      
      
  May 1, November 1, 
   2016  2015 (1) 
      
ASSETS     
      
Current assets:     
Cash and cash equivalents \\$  2,041  \\$  1,822  
Trade accounts receivable, net    1,857     1,019  
Inventory    1,467     524  
Assets held-for-sale    842     22  
Other current assets    480     372  
Total current assets    6,687     3,759  
Property, plant and equipment, net    2,486     1,460  
Goodwill    24,776     1,674  
Intangible assets, net    16,944     3,277  
Other long-term assets    514     345  
Total assets \\$  51,407  \\$  10,515  
      
      
LIABILITIES AND SHAREHOLDERS' EQUITY     
      
Current liabilities:     
Accounts payable \\$  985  \\$  617  
Employee compensation and benefits    303     250  
Current portion of long-term debt    344     46  
Other current liabilities    1,019     206  
Total current liabilities    2,651     1,119  
      
Long-term liabilities:     
Long-term debt    14,664     3,826  
Pension and post-retirement benefit obligations    475     475  
Other long-term liabilities    10,855     381  
Total liabilities    28,645     5,801  
      
Shareholders' equity:     
Ordinary shares    18,659     2,547  
Retained earnings    1,116     2,240  
Accumulated other comprehensive loss    (73)    (73) 
Total Broadcom Limited shareholders' equity    19,702     4,714  
Noncontrolling interest    3,060     -  
Total shareholders' equity    22,762     4,714  
  Total liabilities and shareholders' equity \\$  51,407  \\$  10,515  
      
(1) Amounts as of November 1, 2015 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  Two Fiscal Quarters Ended
  May 1, January 31, May 3, May 1, May 3,
   2016   2016   2015   2016   2015 
Cash flows from operating activities:          
Net income (loss) \\$  (1,255) \\$  377  \\$  344  \\$  (878) \\$  695 
Adjustments to reconcile net income (loss) to net cash provided by operating activities:              
Depreciation and amortization    1,040     244     230     1,284     456 
Share-based compensation    198     57     57     255     106 
Excess tax from share-based compensation    (35)    (23)    (50)    (58)    (70)
Non-cash portion of debt extinguishment loss    30     -     13     30     13 
Non-cash restructuring, impairment and disposal charges    22     22     -     44     5 
Gain on sale of business    -     -     -     -     (14)
Deferred taxes    (164)    (8)    4     (172)    (2)
Amortization of debt issuance costs and accretion of debt discount    13     4     7     17     14 
Other    22     4     -     26     6 
Changes in assets and liabilities, net of acquisitions and disposals:          
Trade accounts receivable, net    (128)    (41)    (40)    (169)    24 
Inventory    886     34     10     920     43 
Accounts payable    (149)    (68)    55     (217)    (23)
Employee compensation and benefits    98     (149)    49     (51)    (41)
Other current assets and current liabilities    70     16     27     86     (18)
Other long-term assets and long-term liabilities    (26)    5     (43)    (21)    (50)
Net cash provided by operating activities    622     474     663     1,096     1,144 
           
Cash flows from investing activities:          
Acquisitions of businesses, net of cash acquired    (10,023)    (12)    -     (10,035)    - 
Proceeds from sales of businesses    -     68     -     68     650 
Purchases of property, plant and equipment    (158)    (140)    (177)    (298)    (339)
Proceeds from disposals of property, plant and equipment    -     -     37     -     63 
Purchases of investments    (58)    (1)    (9)    (59)    (9)
Proceeds from sales and maturities of investments    32     -     -     32     - 
Net cash provided by (used in) investing activities    (10,207)    (85)    (149)    (10,292)    365 
           
           
Cash flows from financing activities:          
Proceeds from term loan borrowings    15,926     -     -     15,926     - 
Debt repayments    (4,828)    (11)    (605)    (4,839)    (617)
Payment of assumed debt    (1,475)    -     -     (1,475)    - 
Debt issuance costs    (104)    (4)    -     (108)    - 
Dividend payments    (204)    (122)    (99)    (326)    (188)
Issuance of ordinary shares    107     72     79     179     130 
Excess tax from share-based compensation    35     23     50     58     70 
Net cash provided by (used in) financing activities    9,457     (42)    (575)    9,415     (605)
           
           
Net change in cash and cash equivalents    (128)    347     (61)    219     904 
Cash and cash equivalents at the beginning of period    2,169     1,822     2,569     1,822     1,604 
Cash and cash equivalents at end of period \\$  2,041  \\$  2,169  \\$  2,508  \\$  2,041  \\$  2,508