Condensed Consolidating Financial Information

3 Months Ended

Feb. 02, 2020

Condensed Financial Information Disclosure [Abstract]

Condensed Consolidating Financial Information

Broadcom and BTI, a 100%-owned subsidiary of Broadcom, fully and unconditionally guarantee, jointly and severally, on an unsecured, unsubordinated basis, the senior unsecured notes issued by BRCM and Broadcom Cayman Finance Limited (“Cayman Finance”) in fiscal year 2017 (the “2017 Senior Notes”). Substantially all of the 2017 Senior Notes have been registered with the SEC. During fiscal year 2019, Cayman Finance was merged into BTI, with BTI remaining as the surviving entity. In connection with this merger, BTI remains a guarantor and became co-issuer of the 2017 Senior Notes.

We have applied the impacts of the change in guarantors and issuers retrospectively to all periods presented, which resulted in the following column headings in the proceeding tables:


•	Parent Guarantor (Broadcom)


•	Subsidiary Issuers (BTI and BRCM)


•	Non-Guarantor Subsidiaries (our other subsidiaries)

The following tables set forth the condensed consolidating financial information for the Parent Guarantor, the Subsidiary Issuers, and the Non-Guarantor Subsidiaries for the periods presented. Investments in subsidiaries are accounted for under the equity method; accordingly, entries necessary to consolidate the Parent Guarantor, the Subsidiary Issuers and the Non-Guarantor Subsidiaries are reflected in the Eliminations column. In the opinion of management, separate complete financial statements of the Subsidiary Issuers would not provide additional material information that would be useful in assessing their financial composition.



	Condensed Consolidating Balance Sheets
	February 2, 2020
	Parent Guarantor				Subsidiary Issuers				Non-Guarantor Subsidiaries		Eliminations			Consolidated Totals

	(In millions)
ASSETS
Current assets:
Cash and cash equivalents	$	576			$	758			$	5,110	$	—		$	6,444
Trade accounts receivable, net	—				—				3,651		—			3,651
Inventory	—				—				944		—			944
Intercompany receivable	3,667				835				145		(4,647		)	—
Intercompany loan receivable	—				9,996				8,228		(18,224		)	—
Other current assets	170				44				856		—			1,070
Total current assets	4,413				11,633				18,934		(22,871		)	12,109
Long-term assets:
Property, plant and equipment, net	—				771				1,845		—			2,616
Goodwill	—				1,360				42,112		—			43,472
Intangible assets, net	—				74				21,391		—			21,465
Investment in subsidiaries	52,576				47,524				—		(100,100		)	—
Intercompany loan receivable, long-term	8,248				—				932		(9,180		)	—
Other long-term assets	23				389				932		—			1,344
Total assets	$	65,260			$	61,751			$	86,146	$	(132,151	)	$	81,006
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable	$	23			$	56			$	906	$	—		$	985
Employee compensation and benefits	—				90				345		—			435
Current portion of long-term debt	1,550				750				11		—			2,311
Intercompany payable	168				2,784				1,695		(4,647		)	—
Intercompany loan payable	11,848				5,271				1,105		(18,224		)	—
Other current liabilities	150				75				3,783		—			4,008
Total current liabilities	13,739				9,026				7,845		(22,871		)	7,739
Long-term liabilities:
Long-term debt	27,287				13,987				1,133		—			42,407
Deferred tax liabilities	(151		)	^(a)	(292		)	^(a)	1,762		—			1,319
Intercompany loan payable, long-term	—				932				8,248		(9,180		)	—
Unrecognized tax benefits	(11		)	^(b)	2,472				836		—			3,297
Other long-term liabilities	—				382				1,466		—			1,848
Total liabilities	40,864				26,507				21,290		(32,051		)	56,610
Preferred stock dividend obligation	28				—				—		—			28
Total stockholders’ equity	24,368				35,244				64,856		(100,100		)	24,368
Total liabilities and equity	$	65,260			$	61,751			$	86,146	$	(132,151	)	$	81,006

________________________________

(a) Amount represents net deferred tax assets that are offset by net deferred tax liabilities on a consolidated basis.

(b) Amount represents net unrecognized tax benefit assets that are offset by net unrecognized tax benefit liabilities on a consolidated basis.



	Condensed Consolidating Balance Sheets
	November 3, 2019
	Parent Guarantor				Subsidiary Issuers				Non-Guarantor Subsidiaries		Eliminations			Consolidated Totals

	(In millions)
ASSETS
Current assets:
Cash and cash equivalents	$	374			$	613			$	4,068	$	—		$	5,055
Trade accounts receivable, net	—				—				3,259		—			3,259
Inventory	—				—				874		—			874
Intercompany receivable	59				439				35		(533		)	—
Intercompany loan receivable	—				10,576				9,188		(19,764		)	—
Other current assets	58				37				634		—			729
Total current assets	491				11,665				18,058		(20,297		)	9,917
Long-term assets:
Property, plant and equipment, net	—				759				1,806		—			2,565
Goodwill	—				1,360				35,354		—			36,714
Intangible assets, net	—				76				17,478		—			17,554
Investment in subsidiaries	51,558				45,981				—		(97,539		)	—
Intercompany loan receivable, long-term	—				—				932		(932		)	—
Other long-term assets	25				95				623		—			743
Total assets	$	52,074			$	59,936			$	74,251	$	(118,768	)	$	67,493
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable	$	24			$	38			$	793	$	—		$	855
Employee compensation and benefits	—				179				462		—			641
Current portion of long-term debt	—				2,750				37		—			2,787
Intercompany payable	32				4				497		(533		)	—
Intercompany loan payable	13,709				4,935				1,120		(19,764		)	—
Other current liabilities	25				186				2,405		—			2,616
Total current liabilities	13,790				8,092				5,314		(20,297		)	6,899
Long-term liabilities:
Long-term debt	13,440				14,731				1,840		—			30,011
Deferred tax liabilities	(126		)	^(a)	(295		)	^(a)	1,952		—			1,531
Intercompany loan payable, long-term	—				932				—		(932		)	—
Unrecognized tax benefits	—				2,422				847		—			3,269
Other long-term liabilities	—				107				706		—			813
Total liabilities	27,104				25,989				10,659		(21,229		)	42,523
Preferred stock dividend obligation	29				—				—		—			29
Total stockholders’ equity	24,941				33,947				63,592		(97,539		)	24,941
Total liabilities and equity	$	52,074			$	59,936			$	74,251	$	(118,768	)	$	67,493

________________________________

(a) Amount represents net deferred tax assets that are offset by net deferred tax liabilities on a consolidated basis.



	Condensed Consolidating Statements of Operations and Comprehensive Income
	Fiscal Quarter Ended
	February 2, 2020
	Parent Guarantor			Subsidiary Issuers			Non-Guarantor Subsidiaries			Eliminations			Consolidated Totals

	(In millions)
Net revenue:
Products	$	—		$	—		$	4,204		$	—		$	4,204
Subscriptions and services	—			—			1,654			—			1,654
Intercompany revenue	—			405			—			(405		)	—
Total net revenue	—			405			5,858			(405		)	5,858
Cost of revenue:
Cost of products sold	—			33			1,426			—			1,459
Cost of subscriptions and services	—			5			172			—			177
Intercompany cost of products sold	—			—			32			(32		)	—
Amortization of acquisition-related intangible assets	—			—			950			—			950
Restructuring charges	—			—			8			—			8
Total cost of revenue	—			38			2,588			(32		)	2,594
Gross margin	—			367			3,270			(373		)	3,264
Research and development	—			482			807			—			1,289
Intercompany operating expense	—			—			373			(373		)	—
Selling, general and administrative	140			76			385			—			601
Amortization of acquisition-related intangible assets	—			—			603			—			603
Restructuring, impairment and disposal charges	—			5			52			—			57
Total operating expenses	140			563			2,220			(373		)	2,550
Operating income (loss)	(140		)	(196		)	1,050			—			714
Interest expense	(247		)	(145		)	(14		)	—			(406		)
Intercompany interest expense	(66		)	(34		)	(43		)	143			—
Other income (expense), net	3			4			(11		)	—			(4		)
Intercompany interest income	33			64			46			(143		)	—
Intercompany other income (expense), net	166			—			(166		)	—			—
Income (loss) from continuing operations before income taxes and earnings in subsidiaries	(251		)	(307		)	862			—			304
Provision for (benefit from) income taxes	(28		)	81			(129		)	—			(76		)
Income (loss) from continuing operations before earnings in subsidiaries	(223		)	(388		)	991			—			380
Earnings in subsidiaries	608			1,325			—			(1,933		)	—
Income from continuing operations and earnings in subsidiaries	385			937			991			(1,933		)	380
Income from discontinued operations, net of income taxes	—			—			5			—			5
Net income	$	385		$	937		$	996		$	(1,933	)	$	385

Comprehensive income	$	385		$	937		$	996		$	(1,933	)	$	385



	Condensed Consolidating Statements of Operations and Comprehensive Income
	Fiscal Quarter Ended
	February 3, 2019
	Parent Guarantor			Subsidiary Issuers			Non-Guarantor Subsidiaries			Eliminations			Consolidated Totals

	(In millions)
Net revenue:
Products	$	—		$	—		$	4,639		$	—		$	4,639
Subscriptions and services	—			—			1,150			—			1,150
Intercompany revenue	—			397			—			(397		)	—
Total net revenue	—			397			5,789			(397		)	5,789
Cost of revenue:
Cost of products sold	—			31			1,523			—			1,554
Cost of subscriptions and services	—			3			135			—			138
Intercompany cost of products sold	—			—			23			(23		)	—
Amortization of acquisition-related intangible assets	—			—			833			—			833
Restructuring charges	—			(7		)	63			—			56
Total cost of revenue	—			27			2,577			(23		)	2,581
Gross margin	—			370			3,212			(374		)	3,208
Research and development	—			447			686			—			1,133
Intercompany operating expense	—			—			374			(374		)	—
Selling, general and administrative	52			81			338			—			471
Amortization of acquisition-related intangible assets	—			—			476			—			476
Restructuring, impairment and disposal charges	—			8			565			—			573
Total operating expenses	52			536			2,439			(374		)	2,653
Operating income (loss)	(52		)	(166		)	773			—			555
Interest expense	(175		)	(148		)	(22		)	—			(345		)
Intercompany interest expense	(86		)	(41		)	(8		)	135			—
Other income (expense), net	(1		)	9			60			—			68
Intercompany interest income	—			79			56			(135		)	—
Intercompany other income (expense), net	77			—			(77		)	—			—
Income (loss) from continuing operations before income taxes and earnings in subsidiaries	(237		)	(267		)	782			—			278
Benefit from income taxes	(24		)	(153		)	(26		)	—			(203		)
Income (loss) from continuing operations before earnings in subsidiaries	(213		)	(114		)	808			—			481
Earnings in subsidiaries	684			1,569			—			(2,253		)	—
Income from continuing operations and earnings in subsidiaries	471			1,455			808			(2,253		)	481
Loss from discontinued operations, net of income taxes	—			—			(10		)	—			(10		)
Net income	$	471		$	1,455		$	798		$	(2,253	)	$	471

Comprehensive income	$	471		$	1,455		$	798		$	(2,253	)	$	471



	Condensed Consolidating Statements of Cash Flows
	Fiscal Quarter Ended
	February 2, 2020
	Parent Guarantor			Subsidiary Issuers			Non-Guarantor Subsidiaries			Eliminations			Consolidated Totals

	(In millions)
Cash flows from operating activities:
Net income	$	385		$	937		$	996		$	(1,933	)	$	385
Adjustments to reconcile net income to net cash provided by (used in) operating activities	(4,106		)	1,166			2,944			1,933			1,937
Net cash provided by (used in) operating activities	(3,721		)	2,103			3,940			—			2,322
Cash flows from investing activities:
Net change in intercompany loans	(8,248		)	580			959			6,709			—
Acquisitions of businesses, net of cash acquired	—			—			(10,870		)	—			(10,870		)
Purchases of property, plant and equipment	—			(40		)	(69		)	1			(108		)
Proceeds from disposals of property, plant and equipment	—			1			—			(1		)	—
Other	—			(4		)	(5		)	—			(9		)
Net cash provided by (used in) investing activities	(8,248		)	537			(9,985		)	6,709			(10,987		)
Cash flows from financing activities:
Net intercompany borrowings	(1,861		)	337			8,233			(6,709		)	—
Proceeds from long-term borrowings	15,381			—			—			—			15,381
Repayment of debt	(1,000		)	(2,750		)	(787		)	—			(4,537		)
Other borrowings, net	991			—			(273		)	—			718
Payment of dividends	(1,372		)	—			—			—			(1,372		)
Shares repurchased for tax withholdings on vesting of equity awards	—			(82		)	(87		)	—			(169		)
Issuance of common stock	37			—			—			—			37
Other	(5		)	—			1			—			(4		)
Net cash provided by (used in) financing activities	12,171			(2,495		)	7,087			(6,709		)	10,054
Net change in cash and cash equivalents	202			145			1,042			—			1,389
Cash and cash equivalents at beginning of period	374			613			4,068			—			5,055
Cash and cash equivalents at end of period	$	576		$	758		$	5,110		$	—		$	6,444



	Condensed Consolidating Statements of Cash Flows
	Fiscal Quarter Ended
	February 3, 2019
	Parent Guarantor			Subsidiary Issuers			Non-Guarantor Subsidiaries			Eliminations			Consolidated Totals

	(In millions)
Cash flows from operating activities:
Net income	$	471		$	1,455		$	798		$	(2,253	)	$	471
Adjustments to reconcile net income to net cash provided by (used in) operating activities	(561		)	(2,451		)	2,420			2,253			1,661
Net cash provided by (used in) operating activities	(90		)	(996		)	3,218			—			2,132
Cash flows from investing activities:
Net change in intercompany loans	800			(592		)	(3,087		)	2,879			—
Acquisitions of businesses, net of cash acquired	(17,865		)	—			1,838			—			(16,027		)
Proceeds from sale of business	—			—			957			—			957
Purchases of property, plant and equipment	—			(36		)	(71		)	8			(99		)
Proceeds from disposals of property, plant and equipment	—			8			—			(8		)	—
Other	—			—			(24		)	—			(24		)
Net cash used in investing activities	(17,065		)	(620		)	(387		)	2,879			(15,193		)
Cash flows from financing activities:
Net intercompany borrowings	3,746			(110		)	(757		)	(2,879		)	—
Proceeds from long-term borrowings	17,896			—			—			—			17,896
Other borrowings, net	—			—			531			—			531
Payment of dividends	(1,067		)	—			—			—			(1,067		)
Repurchases of common stock - repurchase program	(3,436		)	—			—			—			(3,436		)
Shares repurchased for tax withholdings on vesting of equity awards	—			(11		)	(66		)	—			(77		)
Issuance of common stock	62			—			—			—			62
Other	(46		)	—			(1		)	—			(47		)
Net cash provided by (used in) financing activities	17,155			(121		)	(293		)	(2,879		)	13,862
Net change in cash and cash equivalents	—			(1,737		)	2,538			—			801
Cash and cash equivalents at beginning of period	—			2,461			1,831			—			4,292
Cash and cash equivalents at end of period	$	—		$	724		$	4,369		$	—		$	5,093