• | Revenue of $5,063 million or 13 percent growth from the year ago period |
• | Non-GAAP diluted EPS of $4.98 or 21 percent growth from the year ago period; GAAP diluted EPS of $2.71 or 138 percent growth from the year ago period |
• | Free cash flow of $2,127 million or 42 percent of revenue |
• | Quarterly dividend of $1.75 per share |
• | Repurchased 24 million shares for $5,378 million; $6,275 million remaining under share repurchase authorization |
Third Quarter Fiscal Year 2018 GAAP Results | Change | |||||||||||||||
(Dollars in millions, except per share data) | Q3 18 | Q2 18 | Q3 17 | Q/Q | Y/Y | |||||||||||
Net revenue | $ | 5,063 | $ | 5,014 | $ | 4,463 | +1% | +13% | ||||||||
Gross margin | 51.7 | % | 50.9 | % | 48.2 | % | +80bps | +350bps | ||||||||
Operating expenses | $ | 1,280 | $ | 1,350 | $ | 1,501 | -$70 | -$221 | ||||||||
Net income | $ | 1,196 | $ | 3,733 | $ | 507 | -$2,537 | +$689 | ||||||||
Net income attributable to noncontrolling interest | $ | — | $ | 15 | $ | 26 | -$15 | -$26 | ||||||||
Net income attributable to common stock | $ | 1,196 | $ | 3,718 | $ | 481 | -$2,522 | +$715 | ||||||||
Earnings per share - diluted | $ | 2.71 | $ | 8.33 | $ | 1.14 | -$5.62 | +$1.57 |
Third Quarter Fiscal Year 2018 Non-GAAP Results | Change | |||||||||||||||
(Dollars in millions, except per share data) | Q3 18 | Q2 18 | Q3 17 | Q/Q | Y/Y | |||||||||||
Net revenue | $ | 5,066 | $ | 5,017 | $ | 4,467 | +1% | +13% | ||||||||
Gross margin | 67.3 | % | 66.6 | % | 63.3 | % | +70bps | +400bps | ||||||||
Operating expenses | $ | 874 | $ | 887 | $ | 768 | -$13 | +$106 | ||||||||
Net income | $ | 2,257 | $ | 2,243 | $ | 1,871 | +$14 | +$386 | ||||||||
Earnings per share - diluted | $ | 4.98 | $ | 4.88 | $ | 4.10 | +$0.10 | +$0.88 |
Net revenue by segment: | Growth Rates | ||||||||||||||||||||||||||
(Dollars in millions) | Q3 18 | Q2 18 | Q3 17 | Q/Q | Y/Y | ||||||||||||||||||||||
Wired infrastructure | $ | 2,297 | 45 | % | $ | 2,295 | 46 | % | $ | 2,208 | 50 | % | — | % | 4 | % | |||||||||||
Wireless communications | 1,288 | 25 | 1,294 | 26 | 1,283 | 29 | — | % | — | % | |||||||||||||||||
Enterprise storage | 1,253 | 25 | 1,162 | 23 | 735 | 16 | 8 | % | 70 | % | |||||||||||||||||
Industrial & other | 225 | 5 | 263 | 5 | 237 | 5 | -14 | % | -5 | % | |||||||||||||||||
Total net revenue | $ | 5,063 | 100 | % | $ | 5,014 | 100 | % | $ | 4,463 | 100 | % |
Non-GAAP net revenue by segment: | Growth Rates | ||||||||||||||||||||||||||
(Dollars in millions) | Q3 18 | Q2 18 | Q3 17 | Q/Q | Y/Y | ||||||||||||||||||||||
Wired infrastructure (1) | $ | 2,300 | 45 | % | $ | 2,298 | 46 | % | $ | 2,211 | 50 | % | — | % | 4 | % | |||||||||||
Wireless communications | 1,288 | 25 | 1,294 | 26 | 1,283 | 29 | — | % | — | % | |||||||||||||||||
Enterprise storage | 1,253 | 25 | 1,162 | 23 | 735 | 16 | 8 | % | 70 | % | |||||||||||||||||
Industrial & other (1) | 225 | 5 | 263 | 5 | 238 | 5 | -14 | % | -5 | % | |||||||||||||||||
Total Non-GAAP net revenue | $ | 5,066 | 100 | % | $ | 5,017 | 100 | % | $ | 4,467 | 100 | % |
(1) | Non-GAAP data include the effect of acquisition-related purchase accounting adjustments relating to licensing revenue. |
Key Statistics (Dollars in millions) | Q3 18 | Q2 18 | Q3 17 | |||||||||
Cash from operations | $ | 2,247 | $ | 2,313 | $ | 1,656 | ||||||
Depreciation | $ | 129 | $ | 128 | $ | 112 | ||||||
Amortization of acquisition-related intangible assets | $ | 830 | $ | 832 | $ | 1,096 | ||||||
Capital expenditures | $ | 120 | $ | 189 | $ | 255 | ||||||
Days sales outstanding (“DSO”) | 54 | 50 | 49 | |||||||||
Inventory days on hand (“DOH”) | 66 | 66 | 78 | |||||||||
Non-GAAP DSO | 54 | 50 | 49 | |||||||||
Non-GAAP Inventory DOH | 67 | 67 | 79 |
GAAP | Reconciling Items | Non-GAAP | ||||
Net revenue | $5,397M +/- $75M | $3M | $5,400M +/- $75M | |||
Gross margin | 52.3% +/- 1% | $793M | 67.0% +/- 1% | |||
Operating expenses | $1,259M | $385M | $874M | |||
Interest expense and other | $125M | — | $125M | |||
Provision for income taxes | 4% | 3% | 7% | |||
Diluted share count | 424M | 12M | 436M |
• | 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 $763 million of amortization of acquisition-related intangible assets, $25 million of stock-based compensation expense, $1 million of restructuring charges and $1 million of acquisition-related costs; |
• | Non-GAAP operating expenses exclude $298 million of stock-based compensation expense, $67 million of amortization of acquisition-related intangible assets, $15 million of acquisition-related costs, and $5 million of restructuring charges; |
• | Non-GAAP tax provision is 3% higher than GAAP due to the tax effects of the projected reconciling items noted above; |
• | Non-GAAP diluted share count excludes the impact of stock-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; and |
• | Diluted share count outlook does not include the impact from any stock repurchases after August 5, 2018. |
Fiscal Quarter Ended | Three Fiscal Quarters Ended | |||||||||||||||||||
August 5, 2018 | May 6, 2018 | July 30, 2017 | August 5, 2018 | July 30, 2017 | ||||||||||||||||
Net revenue | $ | 5,063 | $ | 5,014 | $ | 4,463 | $ | 15,404 | $ | 12,792 | ||||||||||
Cost of products sold: | ||||||||||||||||||||
Cost of products sold | 1,680 | 1,696 | 1,658 | 5,275 | 4,795 | |||||||||||||||
Purchase accounting effect on inventory | — | — | 1 | 70 | 2 | |||||||||||||||
Amortization of acquisition-related intangible assets | 762 | 765 | 655 | 2,242 | 1,853 | |||||||||||||||
Restructuring charges | 2 | 2 | — | 19 | 16 | |||||||||||||||
Total cost of products sold | 2,444 | 2,463 | 2,314 | 7,606 | 6,666 | |||||||||||||||
Gross margin | 2,619 | 2,551 | 2,149 | 7,798 | 6,126 | |||||||||||||||
Research and development | 959 | 936 | 827 | 2,820 | 2,464 | |||||||||||||||
Selling, general and administrative | 234 | 294 | 200 | 819 | 605 | |||||||||||||||
Amortization of acquisition-related intangible assets | 68 | 67 | 441 | 474 | 1,323 | |||||||||||||||
Restructuring, impairment and disposal charges | 19 | 53 | 33 | 202 | 106 | |||||||||||||||
Total operating expenses | 1,280 | 1,350 | 1,501 | 4,315 | 4,498 | |||||||||||||||
Operating income | 1,339 | 1,201 | 648 | 3,483 | 1,628 | |||||||||||||||
Interest expense | (149 | ) | (148 | ) | (112 | ) | (480 | ) | (335 | ) | ||||||||||
Loss on debt extinguishment | — | — | — | — | (159 | ) | ||||||||||||||
Other income, net | 39 | 46 | 12 | 120 | 46 | |||||||||||||||
Income from continuing operations before income taxes | 1,229 | 1,099 | 548 | 3,123 | 1,180 | |||||||||||||||
Provision for (benefit from) income taxes | 32 | (2,637 | ) | 39 | (8,391 | ) | (54 | ) | ||||||||||||
Income from continuing operations | 1,197 | 3,736 | 509 | 11,514 | 1,234 | |||||||||||||||
Loss from discontinued operations, net of income taxes | (1 | ) | (3 | ) | (2 | ) | (19 | ) | (11 | ) | ||||||||||
Net income | 1,196 | 3,733 | 507 | 11,495 | 1,223 | |||||||||||||||
Net income attributable to noncontrolling interest (1) | — | 15 | 26 | 351 | 63 | |||||||||||||||
Net income attributable to common stock | $ | 1,196 | $ | 3,718 | $ | 481 | $ | 11,144 | $ | 1,160 | ||||||||||
Basic income per share: | ||||||||||||||||||||
Income per share from continuing operations | $ | 2.78 | $ | 8.84 | $ | 1.19 | $ | 26.58 | $ | 2.91 | ||||||||||
Loss per share from discontinued operations | — | (0.01 | ) | (0.01 | ) | (0.05 | ) | (0.03 | ) | |||||||||||
Net income per share | $ | 2.78 | $ | 8.83 | $ | 1.18 | $ | 26.53 | $ | 2.88 | ||||||||||
Diluted income per share (2): | ||||||||||||||||||||
Income per share from continuing operations | $ | 2.71 | $ | 8.34 | $ | 1.14 | $ | 25.78 | $ | 2.79 | ||||||||||
Loss per share from discontinued operations | — | (0.01 | ) | — | (0.04 | ) | (0.02 | ) | ||||||||||||
Net income per share | $ | 2.71 | $ | 8.33 | $ | 1.14 | $ | 25.74 | $ | 2.77 | ||||||||||
Shares used in per share calculations: | ||||||||||||||||||||
Basic | 430 | 421 | 407 | 420 | 403 | |||||||||||||||
Diluted | 441 | 448 | 445 | 433 | 442 |
Fiscal Quarter Ended | Three Fiscal Quarters Ended | |||||||||||||||||||
August 5, 2018 | May 6, 2018 | July 30, 2017 | August 5, 2018 | July 30, 2017 | ||||||||||||||||
Stock-based compensation expense included in continuing operations: | ||||||||||||||||||||
Cost of products sold | $ | 22 | $ | 21 | $ | 18 | $ | 63 | $ | 47 | ||||||||||
Research and development | 222 | 205 | 174 | 630 | 465 | |||||||||||||||
Selling, general and administrative | 71 | 70 | 59 | 217 | 156 | |||||||||||||||
Total stock-based compensation expense | $ | 315 | $ | 296 | $ | 251 | $ | 910 | $ | 668 |
(1) | During the fiscal quarter ended May 6, 2018, in connection with the redomiciliation to the United States on April 4, 2018, or the Redomiciliation, all outstanding exchangeable limited partnership units, or LP Units, in Broadcom Cayman L.P. were exchanged for common stock of Broadcom on a one-for-one basis and the noncontrolling interest, or NCI, was dissolved. Net income attributable to NCI prior to the Redomiciliation represents approximately 5% of net income attributable to LP Units. |
(2) | Diluted income per share includes the impact of NCI, which assumes 100% conversion of LP Units to shares of Broadcom under the “if converted” method, resulting in approximately 14 million, 22 million and 23 million LP Units included in diluted shares for the fiscal quarter ended May 6, 2018, the fiscal quarter and three fiscal quarters ended July 30, 2017, respectively. For the fiscal quarter ended August 5, 2018, there were no LP Units due to the Redomiciliation. For the three fiscal quarters ended August 5, 2018, diluted shares excluded LP units as the impact was antidilutive. |
Fiscal Quarter Ended | Three Fiscal Quarters Ended | |||||||||||||||||||
August 5, 2018 | May 6, 2018 | July 30, 2017 | August 5, 2018 | July 30, 2017 | ||||||||||||||||
Net revenue on GAAP basis | $ | 5,063 | $ | 5,014 | $ | 4,463 | $ | 15,404 | $ | 12,792 | ||||||||||
Acquisition-related purchase accounting revenue adjustment (1) | 3 | 3 | 4 | 10 | 25 | |||||||||||||||
Net revenue on non-GAAP basis | $ | 5,066 | $ | 5,017 | $ | 4,467 | $ | 15,414 | $ | 12,817 | ||||||||||
Gross margin on GAAP basis | $ | 2,619 | $ | 2,551 | $ | 2,149 | $ | 7,798 | $ | 6,126 | ||||||||||
Acquisition-related purchase accounting revenue adjustment (1) | 3 | 3 | 4 | 10 | 25 | |||||||||||||||
Purchase accounting effect on inventory | — | — | 1 | 70 | 2 | |||||||||||||||
Amortization of acquisition-related intangible assets | 762 | 765 | 655 | 2,242 | 1,853 | |||||||||||||||
Stock-based compensation expense | 22 | 21 | 18 | 63 | 47 | |||||||||||||||
Restructuring charges | 2 | 2 | — | 19 | 16 | |||||||||||||||
Acquisition-related costs | 2 | — | — | 4 | — | |||||||||||||||
Gross margin on non-GAAP basis | $ | 3,410 | $ | 3,342 | $ | 2,827 | $ | 10,206 | $ | 8,069 | ||||||||||
Research and development on GAAP basis | $ | 959 | $ | 936 | $ | 827 | $ | 2,820 | $ | 2,464 | ||||||||||
Stock-based compensation expense | 222 | 205 | 174 | 630 | 465 | |||||||||||||||
Acquisition-related costs | — | — | 1 | 3 | 6 | |||||||||||||||
Research and development on non-GAAP basis | $ | 737 | $ | 731 | $ | 652 | $ | 2,187 | $ | 1,993 | ||||||||||
Selling, general and administrative expense on GAAP basis | $ | 234 | $ | 294 | $ | 200 | $ | 819 | $ | 605 | ||||||||||
Stock-based compensation expense | 71 | 70 | 59 | 217 | 156 | |||||||||||||||
Acquisition-related costs | 26 | 68 | 25 | 145 | 91 | |||||||||||||||
Selling, general and administrative expense on non-GAAP basis | $ | 137 | $ | 156 | $ | 116 | $ | 457 | $ | 358 | ||||||||||
Total operating expenses on GAAP basis | $ | 1,280 | $ | 1,350 | $ | 1,501 | $ | 4,315 | $ | 4,498 | ||||||||||
Amortization of acquisition-related intangible assets | 68 | 67 | 441 | 474 | 1,323 | |||||||||||||||
Stock-based compensation expense | 293 | 275 | 233 | 847 | 621 | |||||||||||||||
Restructuring, impairment and disposal charges | 19 | 53 | 33 | 202 | 106 | |||||||||||||||
Acquisition-related costs | 26 | 68 | 26 | 148 | 97 | |||||||||||||||
Total operating expenses on non-GAAP basis | $ | 874 | $ | 887 | $ | 768 | $ | 2,644 | $ | 2,351 | ||||||||||
Operating income on GAAP basis | $ | 1,339 | $ | 1,201 | $ | 648 | $ | 3,483 | $ | 1,628 | ||||||||||
Acquisition-related purchase accounting revenue adjustment (1) | 3 | 3 | 4 | 10 | 25 | |||||||||||||||
Purchase accounting effect on inventory | — | — | 1 | 70 | 2 | |||||||||||||||
Amortization of acquisition-related intangible assets | 830 | 832 | 1,096 | 2,716 | 3,176 | |||||||||||||||
Stock-based compensation expense | 315 | 296 | 251 | 910 | 668 | |||||||||||||||
Restructuring, impairment and disposal charges | 21 | 55 | 33 | 221 | 122 | |||||||||||||||
Acquisition-related costs | 28 | 68 | 26 | 152 | 97 | |||||||||||||||
Operating income on non-GAAP basis | $ | 2,536 | $ | 2,455 | $ | 2,059 | $ | 7,562 | $ | 5,718 | ||||||||||
Interest expense on GAAP basis | $ | (149 | ) | $ | (148 | ) | $ | (112 | ) | $ | (480 | ) | $ | (335 | ) | |||||
Debt-related costs | — | — | — | 32 | 1 | |||||||||||||||
Interest expense on non-GAAP basis | $ | (149 | ) | $ | (148 | ) | $ | (112 | ) | $ | (448 | ) | $ | (334 | ) |
Fiscal Quarter Ended | Three Fiscal Quarters Ended | |||||||||||||||||||
August 5, 2018 | May 6, 2018 | July 30, 2017 | August 5, 2018 | July 30, 2017 | ||||||||||||||||
Other income, net on GAAP basis | $ | 39 | $ | 46 | $ | 12 | $ | 120 | $ | 46 | ||||||||||
(Gains) losses on acquisition-related assets | 1 | (4 | ) | — | (3 | ) | (23 | ) | ||||||||||||
Other income, net on non-GAAP basis | $ | 40 | $ | 42 | $ | 12 | $ | 117 | $ | 23 | ||||||||||
Income from continuing operations before income taxes on GAAP basis | $ | 1,229 | $ | 1,099 | $ | 548 | $ | 3,123 | $ | 1,180 | ||||||||||
Acquisition-related purchase accounting revenue adjustment (1) | 3 | 3 | 4 | 10 | 25 | |||||||||||||||
Purchase accounting effect on inventory | — | — | 1 | 70 | 2 | |||||||||||||||
Amortization of acquisition-related intangible assets | 830 | 832 | 1,096 | 2,716 | 3,176 | |||||||||||||||
Stock-based compensation expense | 315 | 296 | 251 | 910 | 668 | |||||||||||||||
Restructuring, impairment and disposal charges | 21 | 55 | 33 | 221 | 122 | |||||||||||||||
Acquisition-related costs | 28 | 68 | 26 | 152 | 97 | |||||||||||||||
Debt-related costs | — | — | — | 32 | 1 | |||||||||||||||
Loss on debt extinguishment | — | — | — | — | 159 | |||||||||||||||
(Gains) losses on acquisition-related assets | 1 | (4 | ) | — | (3 | ) | (23 | ) | ||||||||||||
Income before income taxes on non-GAAP basis | $ | 2,427 | $ | 2,349 | $ | 1,959 | $ | 7,231 | $ | 5,407 | ||||||||||
Provision for (benefit from) income taxes on GAAP basis | $ | 32 | $ | (2,637 | ) | $ | 39 | $ | (8,391 | ) | $ | (54 | ) | |||||||
Non-GAAP tax reconciling adjustments | 138 | 2,743 | 49 | 8,777 | 297 | |||||||||||||||
Provision for income taxes on non-GAAP basis | $ | 170 | $ | 106 | $ | 88 | $ | 386 | $ | 243 | ||||||||||
Net income on GAAP basis | $ | 1,196 | $ | 3,733 | $ | 507 | $ | 11,495 | $ | 1,223 | ||||||||||
Acquisition-related purchase accounting revenue adjustment (1) | 3 | 3 | 4 | 10 | 25 | |||||||||||||||
Purchase accounting effect on inventory | — | — | 1 | 70 | 2 | |||||||||||||||
Amortization of acquisition-related intangible assets | 830 | 832 | 1,096 | 2,716 | 3,176 | |||||||||||||||
Stock-based compensation expense | 315 | 296 | 251 | 910 | 668 | |||||||||||||||
Restructuring, impairment and disposal charges | 21 | 55 | 33 | 221 | 122 | |||||||||||||||
Acquisition-related costs | 28 | 68 | 26 | 152 | 97 | |||||||||||||||
Debt-related costs | — | — | — | 32 | 1 | |||||||||||||||
Loss on debt extinguishment | — | — | — | — | 159 | |||||||||||||||
(Gains) losses on acquisition-related assets | 1 | (4 | ) | — | (3 | ) | (23 | ) | ||||||||||||
Non-GAAP tax reconciling adjustments | (138 | ) | (2,743 | ) | (49 | ) | (8,777 | ) | (297 | ) | ||||||||||
Discontinued operations, net of income taxes | 1 | 3 | 2 | 19 | 11 | |||||||||||||||
Net income on non-GAAP basis | $ | 2,257 | $ | 2,243 | $ | 1,871 | $ | 6,845 | $ | 5,164 | ||||||||||
Shares used in per share calculation - diluted on GAAP basis | 441 | 448 | 445 | 433 | 442 | |||||||||||||||
Non-GAAP adjustment (2) | 12 | 12 | 11 | 24 | 10 | |||||||||||||||
Shares used in per share calculation - diluted on non-GAAP basis | 453 | 460 | 456 | 457 | 452 | |||||||||||||||
Inventory days on hand on GAAP basis | 66 | 66 | 78 | |||||||||||||||||
Non-GAAP adjustment (3) | 1 | 1 | 1 | |||||||||||||||||
Inventory days on hand on non-GAAP basis | 67 | 67 | 79 |
Fiscal Quarter Ended | ||||||||||||
August 5, 2018 | May 6, 2018 | July 30, 2017 | ||||||||||
Net income on non-GAAP basis | $ | 2,257 | ||||||||||
Interest expense on non-GAAP basis | 149 | |||||||||||
Provision for income taxes on non-GAAP basis | 170 | |||||||||||
Depreciation | 129 | |||||||||||
Adjusted EBITDA | $ | 2,705 | ||||||||||
Net cash provided by operating activities | $ | 2,247 | $ | 2,313 | $ | 1,656 | ||||||
Purchases of property, plant and equipment | (120 | ) | (189 | ) | (255 | ) | ||||||
Free cash flow | $ | 2,127 | $ | 2,124 | $ | 1,401 |
(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 stock-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 LP Units that are anti-dilutive on a GAAP basis for the three fiscal quarters ended August 5, 2018. |
(3) | Non-GAAP adjustment for inventory days on hand represents the impact of purchase accounting on inventory, stock-based compensation expense, and acquisition-related costs. |
August 5, 2018 | October 29, 2017 | |||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 4,136 | $ | 11,204 | ||||
Trade accounts receivable, net | 3,010 | 2,448 | ||||||
Inventory | 1,216 | 1,447 | ||||||
Other current assets | 333 | 724 | ||||||
Total current assets | 8,695 | 15,823 | ||||||
Long-term assets: | ||||||||
Property, plant and equipment, net | 2,695 | 2,599 | ||||||
Goodwill | 26,920 | 24,706 | ||||||
Intangible assets, net | 11,598 | 10,832 | ||||||
Other long-term assets | 464 | 458 | ||||||
Total assets | $ | 50,372 | $ | 54,418 | ||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 785 | $ | 1,105 | ||||
Employee compensation and benefits | 622 | 626 | ||||||
Current portion of long-term debt | 117 | 117 | ||||||
Other current liabilities | 663 | 681 | ||||||
Total current liabilities | 2,187 | 2,529 | ||||||
Long-term liabilities: | ||||||||
Long-term debt | 17,487 | 17,431 | ||||||
Other long-term liabilities | 3,246 | 11,272 | ||||||
Total liabilities | 22,920 | 31,232 | ||||||
Stockholders’ equity: | ||||||||
Common stock and additional paid-in capital | 23,291 | 20,505 | ||||||
Retained earnings (accumulated deficit) | 4,267 | (129 | ) | |||||
Accumulated other comprehensive loss | (106 | ) | (91 | ) | ||||
Total Broadcom Inc. stockholders’ equity | 27,452 | 20,285 | ||||||
Noncontrolling interest | — | 2,901 | ||||||
Total stockholders’ equity | 27,452 | 23,186 | ||||||
Total liabilities and stockholders’ equity | $ | 50,372 | $ | 54,418 |
BROADCOM INC. | ||||||||||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS — UNAUDITED | ||||||||||||||||||||
(IN MILLIONS) | ||||||||||||||||||||
Fiscal Quarter Ended | Three Fiscal Quarters Ended | |||||||||||||||||||
August 5, 2018 | May 6, 2018 | July 30, 2017 | August 5, 2018 | July 30, 2017 | ||||||||||||||||
Cash flows from operating activities: | ||||||||||||||||||||
Net income | $ | 1,196 | $ | 3,733 | $ | 507 | $ | 11,495 | $ | 1,223 | ||||||||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||||||||||||
Amortization of intangible assets | 836 | 836 | 1,099 | 2,730 | 3,184 | |||||||||||||||
Depreciation | 129 | 128 | 112 | 383 | 334 | |||||||||||||||
Stock-based compensation | 315 | 296 | 251 | 910 | 669 | |||||||||||||||
Deferred taxes and other non-cash taxes | 22 | (2,702 | ) | 12 | (8,512 | ) | (99 | ) | ||||||||||||
Non-cash portion of debt extinguishment loss | — | — | — | — | 159 | |||||||||||||||
Non-cash restructuring, impairment and disposal charges | 3 | 5 | 14 | 13 | 54 | |||||||||||||||
Amortization of debt issuance costs and accretion of debt discount | 6 | 6 | 5 | 18 | 19 | |||||||||||||||
Other | 5 | 14 | 13 | 22 | (2 | ) | ||||||||||||||
Changes in assets and liabilities, net of acquisitions and disposals: | ||||||||||||||||||||
Trade accounts receivable, net | (262 | ) | (277 | ) | (344 | ) | (340 | ) | (236 | ) | ||||||||||
Inventory | 19 | 56 | (119 | ) | 325 | (23 | ) | |||||||||||||
Accounts payable | (41 | ) | 91 | 217 | (353 | ) | (34 | ) | ||||||||||||
Employee compensation and benefits | 205 | 84 | 82 | (87 | ) | 29 | ||||||||||||||
Contributions to defined benefit pension plans | (1 | ) | — | (5 | ) | (130 | ) | (16 | ) | |||||||||||
Other current assets and current liabilities | (148 | ) | 70 | (179 | ) | 206 | (570 | ) | ||||||||||||
Other long-term assets and long-term liabilities | (37 | ) | (27 | ) | (9 | ) | (435 | ) | (99 | ) | ||||||||||
Net cash provided by operating activities | 2,247 | 2,313 | 1,656 | 6,245 | 4,592 | |||||||||||||||
Cash flows from investing activities: | ||||||||||||||||||||
Acquisitions of businesses, net of cash acquired | (7 | ) | — | (3 | ) | (4,793 | ) | (40 | ) | |||||||||||
Proceeds from sales of businesses | — | — | — | 782 | 10 | |||||||||||||||
Purchases of property, plant and equipment | (120 | ) | (189 | ) | (255 | ) | (529 | ) | (836 | ) | ||||||||||
Proceeds from disposals of property, plant and equipment | — | 1 | 1 | 238 | 1 | |||||||||||||||
Purchases of investments | — | (5 | ) | — | (249 | ) | (200 | ) | ||||||||||||
Proceeds from sale of investment | — | 54 | — | 54 | — | |||||||||||||||
Other | (47 | ) | (16 | ) | (1 | ) | (59 | ) | (5 | ) | ||||||||||
Net cash used in investing activities | (174 | ) | (155 | ) | (258 | ) | (4,556 | ) | (1,070 | ) | ||||||||||
Cash flows from financing activities: | ||||||||||||||||||||
Proceeds from issuance of long-term debt | — | — | — | — | 13,446 | |||||||||||||||
Repayment of debt | — | — | — | (856 | ) | (13,668 | ) | |||||||||||||
Payment of debt issuance costs | — | — | — | — | (23 | ) | ||||||||||||||
Dividend and distribution payments | (754 | ) | (766 | ) | (438 | ) | (2,275 | ) | (1,306 | ) | ||||||||||
Repurchases of common stock | (5,378 | ) | (347 | ) | — | (5,725 | ) | — | ||||||||||||
Issuance of common stock, net of shares withheld for employee taxes | 6 | 78 | 41 | 118 | 191 | |||||||||||||||
Payment of capital lease obligations | — | (15 | ) | (6 | ) | (21 | ) | (10 | ) | |||||||||||
Other | 2 | 3 | — | 2 | — | |||||||||||||||
Net cash used in financing activities | (6,124 | ) | (1,047 | ) | (403 | ) | (8,757 | ) | (1,370 | ) | ||||||||||
Net change in cash and cash equivalents | (4,051 | ) | 1,111 | 995 | (7,068 | ) | 2,152 | |||||||||||||
Cash and cash equivalents at the beginning of period | 8,187 | 7,076 | 4,254 | 11,204 | 3,097 | |||||||||||||||
Cash and cash equivalents at end of period | $ | 4,136 | $ | 8,187 | $ | 5,249 | $ | 4,136 | $ | 5,249 | ||||||||||
Supplemental disclosure of cash flow information: | ||||||||||||||||||||
Cash paid for interest | $ | 312 | $ | 1 | $ | 206 | $ | 545 | $ | 309 | ||||||||||
Cash paid for income taxes | $ | 127 | $ | 87 | $ | 35 | $ | 323 | $ | 253 |