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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
Form 10-K
(MARK ONE)
☑
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended November 3, 2024
OR
☐
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Broadcom Inc.
Delaware
3421 Hillview Ave
001-38449
35-2617337
(State or Other Jurisdiction of
Incorporation or Organization)
Palo Alto,
CA
94304
(Commission File Number)
(I.R.S. Employer
Identification No.)
(650) 427-6000
(Exact Name of Registrant as Specified in Its Charter
Address of Principal Executive Offices, Including Zip Code
Registrant’s Telephone Number, Including Area Code)
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class
Trading Symbol(s)
Name of Each Exchange on Which Registered
Common Stock, $0.001 par value
AVGO
The NASDAQ Global Select Market
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☑ No ☐
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☑
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past
90 days. Yes ☑ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T
(§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging
growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the
Exchange Act.
Large accelerated filer
☑
Accelerated filer
☐
Non-accelerated filer
☐
Smaller reporting company
☐
Emerging growth company
☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised
financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over
financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☑
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect
the correction of an error to previously issued financial statements. ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of
the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☑
The aggregate market value of voting and non-voting common equity held by non-affiliates as of May 3, 2024, based upon the closing sale price of such shares on The
Nasdaq Global Select Market on such date was approximately $583.1 billion.
As of November 29, 2024, there were 4,687,356,156 shares of our common stock outstanding.
Documents Incorporated by Reference
Portions of the registrant’s definitive proxy statement for its 2025 annual meeting of stockholders are incorporated by reference into Part III of this Annual Report on
Form 10-K where indicated. The registrant’s definitive proxy statement will be filed with the U.S. Securities and Exchange Commission within 120 days after the end of the
fiscal year to which this report relates.
Table of Contents
BROADCOM INC.
2024 ANNUAL REPORT ON FORM 10-K
TABLE OF CONTENTS
Page
PART I.
ITEM 1.
BUSINESS
3
ITEM 1A.
RISK FACTORS
16
ITEM 1B.
UNRESOLVED STAFF COMMENTS
31
ITEM 1C.
CYBERSECURITY
32
ITEM 2.
PROPERTIES
32
ITEM 3.
LEGAL PROCEEDINGS
33
ITEM 4.
MINE SAFETY DISCLOSURES
33
PART II.
ITEM 5.
MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY
SECURITIES
34
ITEM 6.
[RESERVED]
35
ITEM 7.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
36
ITEM 7A.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
47
ITEM 8.
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
49
ITEM 9.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
92
ITEM 9A.
CONTROLS AND PROCEDURES
92
ITEM 9B.
OTHER INFORMATION
93
ITEM 9C.
DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
93
PART III.
ITEM 10.
DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
94
ITEM 11.
EXECUTIVE COMPENSATION
94
ITEM 12.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
94
ITEM 13.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
94
ITEM 14.
PRINCIPAL ACCOUNTANT FEES AND SERVICES
94
PART IV.
ITEM 15.
EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
95
ITEM 16.
FORM 10-K SUMMARY
101
SIGNATURES
102
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PART I
The following discussion should be read in conjunction with the consolidated financial statements and notes thereto included elsewhere in this Annual
Report on Form 10-K. This Annual Report on Form 10-K contains forward-looking statements within the meaning of the federal securities laws and particularly
in Item 1: “Business,” Item 1A: “Risk Factors,” Item 3: “Legal Proceedings” and Item 7: “Management’s Discussion and Analysis of Financial Condition and
Results of Operations” of this Annual Report on Form 10-K. These statements are indicated by words or phrases such as “anticipate,” “expect,” “estimate,”
“seek,” “plan,” “believe,” “could,” “intend,” “will,” and similar words or phrases. Forward-looking statements provide current expectations of future events
based on certain assumptions and include any statement that does not directly relate to any historical or current fact. These forward-looking statements may
include our projected financial results or expectations regarding acquisitions, developments in technology, products and seasonality of our business. Such
statements are based on current expectations, estimates, forecasts and projections of our industry performance and macroeconomic conditions, based on
management’s judgment, beliefs, current trends and market conditions, and involve risks and uncertainties that may cause actual results to differ materially
from those contained in the forward-looking statements. We derive most of our forward-looking statements from our operating budgets and forecasts, which
are based upon many detailed assumptions. While we believe that our assumptions are reasonable, we caution that it is very difficult to predict the impact of
known factors, and it is impossible for us to anticipate all factors that could affect our actual results. Accordingly, we caution you not to place undue reliance
on these statements. Material factors that could cause actual results to differ materially from our expectations include, but are not limited to, those disclosed
under “Risk Factors” in Part I, Item 1A of this Annual Report on Form 10-K. We undertake no intent or obligation to publicly update or revise any forward-
looking statements for any reason, except as required by law.
Unless stated otherwise or the context otherwise requires, references to “Broadcom,” “we,” “our,” and “us” mean Broadcom Inc. and its consolidated
subsidiaries. We operate on a 52- or 53-week fiscal year ending on the Sunday closest to October 31. The fiscal year ended November 3, 2024 was a 53-week
year. We refer to our fiscal years by the calendar year in which they end.
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ITEM 1.
BUSINESS
Overview
We are a global technology leader that designs, develops and supplies a broad range of semiconductor and infrastructure software solutions. Our over
60-year history of innovation dates back to our diverse origins from AT&T/Bell Labs, Lucent and Hewlett-Packard Company, and evolved with LSI Corporation,
Broadcom Corporation, Brocade Communications Systems LLC, CA, Inc., Symantec Enterprise Security, and VMware, Inc. (“VMware”). Over the years, we have
assembled a large team of semiconductor and software design engineers around the world. We maintain design, product and software development
engineering resources at locations in the U.S., Asia, Europe and Israel, providing us with engineering expertise worldwide. We combine global scale,
engineering depth, broad product portfolio diversity, superior execution and operational focus to deliver category-leading semiconductor and infrastructure
software solutions.
We develop semiconductor devices with a focus on complex digital and mixed signal complementary metal oxide semiconductor (“CMOS”) based
devices and analog III-V based products. We offer thousands of products that are used in end products such as enterprise and data center networking,
including artificial intelligence (“AI”) networking and connectivity, home connectivity, set-top boxes (“STB”), broadband access, telecommunication
equipment, smartphones and base stations, data center servers and storage systems, factory automation, power generation and alternative energy systems,
and electronic displays. We differentiate ourselves through our high-performance design and integration capabilities and focus on developing semiconductor
products for target markets where we believe we can earn attractive margins.
Our infrastructure software solutions help enterprises simplify their information technology (“IT”) environments so they can increase business velocity
and flexibility, and enable customers to plan, develop, deliver, automate, manage, and secure applications across mainframe, distributed, edge, mobile, and
private and hybrid cloud platforms. Many of the largest companies in the world, including most of the Fortune 500, and many government agencies rely on
our software solutions to help manage and secure their on-premises and hybrid cloud environments, private cloud infrastructure and AI data centers. Our
portfolio of industry-leading infrastructure and security software is designed to modernize, optimize, and secure the most complex private and hybrid cloud
environments, enabling scalability, agility, automation, insights, resiliency and security, making it easy for customers to run their mission-critical workloads.
We also offer mission-critical fibre channel storage area networking (“FC SAN”) products and related software in the form of modules, switches and
subsystems incorporating multiple semiconductor products.
On November 22, 2023, we acquired VMware in a cash-and-stock transaction (the “VMware Merger”), in which VMware stockholders received, in
aggregate, approximately $30.8 billion in cash and 544 million shares of Broadcom common stock (on a split adjusted basis) with a fair value of $53.4 billion.
We funded the cash portion of the VMware Merger consideration with net proceeds from the issuance of $30.4 billion in term loans under a credit
agreement that we entered into on August 15, 2023, as well as cash on hand. Following the VMware Merger, we sold VMware’s end-user computing business
to KKR & Co. Inc. for cash consideration of $3.5 billion, after working capital adjustments. With the VMware Merger, we have bolstered our infrastructure
software solutions and are able to offer our customers a greater capacity to address complex IT infrastructure issues.
Business Strategy
Our strategy is focused on technology leadership and category-leading semiconductor and infrastructure software solutions delivering a comprehensive
suite of innovative infrastructure technology products to the world’s leading business and government customers. We seek to achieve this through strategic
acquisitions of businesses and technologies, as well as extensive internal research and development, to ensure our products retain their technology market
leadership. This strategy results in a robust business model designed to drive diversified and sustainable operating and financial results.
Products and Markets
Semiconductor Solutions
Semiconductors are made by imprinting a network of electronic components onto a semiconductor wafer. These devices are designed to perform
various functions such as processing, amplifying and selectively filtering electronic signals, controlling electronic system functions and processing, and
transmitting and storing data. Our digital and mixed signal products are based on silicon wafers with CMOS transistors offering fast switching speeds and low
power consumption, which are both critical design factors for the markets we serve. We also offer analog products, which are based on III-V semiconductor
materials that have higher electrical conductivity than silicon, and thus tend to have better performance characteristics in radio frequency (“RF”), and
optoelectronic applications. III-V refers to elements from the 3rd and 5th groups in the periodic table of chemical elements. Examples of these materials used
in our products are gallium arsenide (“GaAs”) and indium phosphide (“InP”).
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Our product portfolio ranges from discrete devices to complex sub-systems that include multiple device types and may also incorporate firmware for
interfacing between analog and digital systems. In some cases, our products include mechanical hardware that interfaces with optoelectronic or capacitive
sensors. We focus on markets that require high quality, leading technology and integrated performance characteristics of our products. The table below
presents our key semiconductor product families and their major end markets and applications.
Major End Markets
Major Applications
Key Product Offerings
Networking
• Data Center, Service Provider, and Enterprise
Networking
• Ethernet switching and routing silicon
• Custom silicon solutions
• Optical and copper PHYs
• Fiber optic transmitter and receiver components
Wireless
• Mobile Device Connectivity
• RF front end modules and filters
• Wi-Fi, Bluetooth, GPS/GNSS SoCs
• Custom touch controllers
• Inductive charging ASICs
Storage
• Servers and Storage Systems
• SAS and RAID controllers and adapters
• PCIe switches
• Fibre channel host bus adapters
• Ethernet NIC
• HDD and SSD
• Read channel based SoCs; Custom flash controllers
• Preamplifiers
Broadband
• STB and Broadband Access
• STB SoCs
• DSL/PON gateways
• DOCSIS cable modem and networking infrastructure
• DSLAM/PON optical line termination
• Wi-Fi access point SoCs
Industrial
• Factory Automation, Renewable Energy and
Automotive Electronics
• Optocouplers
• Industrial fiber optics
• Industrial and medical sensors
• Motion control encoders and subsystems
• Light emitting diodes
• Ethernet PHYs, switch ICs and camera microcontrollers
Data Center, Service Provider, and Enterprise Networking Solutions. We provide semiconductor solutions for managing the movement of data in data
center, service provider, and enterprise networking applications. Our products offer an enhanced, open, standards-based Ethernet network interface card
(“NIC”) and switching solution to resolve connectivity bottlenecks in data centers, particularly in AI data centers where compute bandwidth and cluster sizes
grow rapidly.
•
Ethernet Switching & Routing: Ethernet is a ubiquitous interconnection technology that enables high-performance and cost-effective networking
infrastructure. We offer a broad set of Ethernet switching and routing products that are optimized for AI data center, service provider and enterprise
networks. In the data center market, our high capacity, low latency, switching silicon supports advanced protocols around virtualization and multi-
pathing. Our Ethernet switching fabric technologies provide the ability to build highly scalable flat networks supporting tens of thousands of servers.
Our service provider switch portfolio enables carrier networks to support prioritized delivery of data traffic in the wireless backhaul, access, aggregation
and core of their networks. For enterprise networks, we offer product families with secure, encrypted switching capabilities and support lower power
modes that comply with industry standards around energy efficient Ethernet.
•
Custom Silicon Solutions: We provide advanced technology and intellectual property (“IP”) platforms for customers to design and develop
application specific integrated circuits (“ASICs”) targeting AI and high-performance computing, networking and storage applications. Our custom silicon
provides the platform to integrate embedded logic, memory, serializer/deserializer (“SerDes”) technology, IP cores and processor cores. ASICs are
custom products built to individual customers specifications.
•
Physical Layer Devices: These devices, also referred to as PHYs, are transceivers that enable the reception and transmission of Ethernet data packets
over a physical medium such as copper wire or optical fibers. Our high
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performance Ethernet transceivers are built upon a proprietary digital signal processing communication architecture optimized for high-speed network
connections and support the latest standards and advanced features, such as energy efficient Ethernet, data encryption and time synchronization. We
also offer a range of automotive Ethernet products, including PHYs, switches and camera microcontrollers, to meet growing consumer demand for in-
vehicle connectivity and smart vision.
•
Fiber Optic Components: We supply a wide array of optical components to the Ethernet networking, storage, and access, metro- and long-haul
telecommunication markets. Our optical components enable the high speed reception and transmission of data through optical fibers.
Mobile Device Connectivity Solutions. We provide a broad variety of RF semiconductor devices, wireless connectivity solutions, custom touch
controllers and inductive charging solutions for the wireless market.
•
RF Semiconductor Devices: Our RF semiconductor devices selectively filter, as well as amplify and route, RF signals. Filters enable modern wireless
communication systems to support a large number of subscribers simultaneously by ensuring that the multiple transmissions and receptions of voice
and data streams do not interfere with each other. We were among the first to deliver commercial film bulk acoustic resonator (“FBAR”) filters that offer
technological advantages over competing filter technologies, to allow mobile handsets to function more efficiently in today's congested RF spectrum.
FBAR technology has a significant market share within the cellular handset market. Our RF products include multi-chip module front-end modules that
integrate transmit/receive switching and filtering functions for multiple frequency bands, filter modules and discrete filters, all using our proprietary
FBAR technology.
Our expertise in FBAR technology, amplifier design, and module integration enables us to offer industry-leading performance in cellular RF transceiver
applications.
•
Connectivity Solutions: Our connectivity solutions include discrete and integrated Wi-Fi and Bluetooth solutions, and global positioning
system/global navigation satellite system (“GPS/GNSS”) receivers, designed for use in mobile devices including smartphones, tablets and wearable
products.
Wi-Fi allows devices on a local area network to communicate wirelessly, adding the convenience of mobility to the utility of high-speed data networks.
We offer a family of high performance, low power Wi-Fi chipsets. Bluetooth is a low power technology that enables direct connectivity between devices.
We offer Bluetooth silicon and software solutions that enable manufacturers to easily and cost-effectively add Bluetooth functionality. These solutions
include combination chips that offer integrated Wi-Fi and Bluetooth functionality, which provides significant performance advantages over discrete
solutions.
We also offer a family of GPS, assisted-GPS and GNSS semiconductor products, software and data services. These products are part of a broader location
platform that leverages a broad range of communications technologies, including Wi-Fi, Bluetooth and GPS, to provide more accurate location and
navigation capabilities.
•
Custom Touch Controllers: Our touch controllers process signals from touch screens in mobile handsets and tablets.
•
Inductive Charging ASICs: Our custom inductive charging ASIC devices offer high efficiency and are highly integrated solutions for mobile and
wearable devices.
Servers and Storage System Solutions. We provide semiconductor solutions for enabling secure movement of digital data to and from host machines,
such as servers, personal computers and storage systems, to the underlying storage devices, such as hard disk drives (“HDD”) and solid-state drives (“SSD”).
•
SAS, RAID & PCIe Products: We provide serial attached small computer system interface (SAS) and redundant array of independent disks (RAID)
controller and adapter solutions to server and storage system original equipment manufacturers (“OEMs”). These solutions enable secure and high-
speed data transmission between a host computer, such as a server, and storage peripheral devices, such as HDD, SSD and optical disk drives and disk
and tape-based storage systems. Some of these solutions are delivered as stand-alone semiconductors, typically as a controller. Other solutions are
delivered as circuit boards, known as adapter products, which incorporate our semiconductors onto a circuit board with other features. RAID technology
is a critical part of our server storage connectivity solutions as it provides protection against the loss of critical data resulting from HDD failures.
We also provide interconnect semiconductors that support the peripheral component interconnect express (“PCIe”) communication standards. PCIe is
the primary interconnection mechanism inside computing systems today.
•
Fibre Channel Products: We provide fibre channel host bus adapters, which connect host computers such as servers to FC SANs.
•
Ethernet NIC Controllers: Our Ethernet NIC controllers are designed for high-performance virtualization, intelligent flow processing, secure data
center connectivity, and machine learning.
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•
HDD & SSD Solutions: We provide read channel-based system-on-chip (“SoC”) and preamplifiers to HDD OEMs. These are the critical chips required
to read, write and protect data. An HDD SoC is an integrated circuit (“IC”) that combines the functionality of a read channel, serial interface, memory
and a hard disk controller in a small, high-performance, low-power and cost-effective package. Read channels convert analog signals that are generated
by reading the stored data on the physical media into digital signals.
In addition, we sell preamplifiers, which are complex, high speed, mixed signal devices that enable writing and reading data to and from the HDD heads.
The preamplifier interfaces with the SoC to provide the electronics data path in a HDD.
We also provide custom flash controllers to SSD OEMs. An SSD stores data in flash memory instead of on a hard disk, providing high speed access to the
data. Flash controllers manage the underlying flash memory in SSDs, performing critical functions such as reading and writing data to and from the flash
memory and performing error correction, wear leveling and bad block management.
Broadband Solutions. We provide semiconductor solutions for enabling STBs and broadband access applications.
•
Set-Top Box: We offer complete SoC platform solutions for cable, satellite, Internet Protocol television, over-the-top and terrestrial STBs. Our
products enable global service providers to introduce new and enhanced technologies and services in STBs, including transcoding, digital video
recording functionality, higher definition video processing, increased networking capabilities, and more tuners to enable faster channel change and
more simultaneous recordings. We are also enabling service providers in deploying High Efficiency Video Coding (“HEVC”), a video compression format
that is a successor to the H.264/MPEG-4 format. HEVC enables ultra-high definition (“Ultra HD”) services by effectively doubling the capacity of existing
networks to deploy new or existing content. Our families of STB solutions support the complete range of resolutions, from standard definition to high
definition to Ultra HD.
•
Broadband Access: We offer complete SoC platform solutions for digital subscriber line (“DSL”), cable, passive optical networking (“PON”) and
wireless local area network for both consumer premise equipment (“CPE”) and central office (“CO”) deployments. Our CPE devices are used in
broadband modems, residential gateways and Wi-Fi access points and routers. Our CO devices, including DSL Access Multiplexer (“DSLAM”), cable
modem termination systems and PON optical line termination medium access controllers, are empowering modern operator broadband infrastructure.
Our products enable global service providers to continue deploying next generation broadband access technologies across multiple standards, including
G.fast, Data Over Cable Service Interface Specifications (“DOCSIS”), PON and Wi-Fi to provide more bandwidth and faster speeds to consumers.
Factory Automation, Renewable Energy and Automotive Electronic Solutions. We provide a broad variety of products for the general industrial and
automotive markets, including optocouplers, industrial fiber optics, industrial and medical sensors, motion encoders, light emitting diode devices, and
Ethernet ICs. Our industrial products are used in a diverse set of applications, spanning industrial automation, power generation and distribution systems,
medical systems and equipment, defense and aerospace, and vehicle subsystems including those used in electric vehicle powertrain, infotainment and
advanced driver assistance systems.
Infrastructure Software
Our infrastructure software solutions offer customers greater choice and flexibility to build, run, manage, connect and protect applications and data at
scale across data center and private and hybrid cloud environments.
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The table below presents our software portfolios and their key offerings.
Software Portfolio
Portfolio Description
Key Portfolio Offerings
Private Cloud
• Cloud infrastructure that is ubiquitous, flexible, and integrated across on-
premises, edge, public and partner clouds
• VMware Cloud Foundation
• VMware Cloud Foundation Edge
• VMware vSphere Foundation
• Private AI
• Live Recovery
• Telco Cloud Platform
Tanzu
• Comprehensive solutions for application development operations and
optimization
• Tanzu Platform
• Tanzu Data Solutions
• Tanzu CloudHealth
• Tanzu Labs
VeloCloud
• Comprehensive software-defined network solutions that enable
enterprise edge connectivity and performance over Internet, fixed
wireless access and satellite while simplifying deployments and reducing
costs
• SD-WAN and SASE
• VeloRAIN
• Fixed Wireless Access
Application Networking and Security
• Comprehensive software-defined solutions featuring lateral security that
protects VCF application traffic from malware and ransomware, and
application load balancing with the only plug-and-play app delivery and
security solution for VCF private cloud
• Lateral Security Firewall
• Advanced Threat Protection
• Advanced Load Balancing
Mainframe Software
• DevOps, AIOps, Security, Workload Automation, Data Management,
Foundational Software Solutions, and Beyond Code programs
• Operational Analytics & Management
• Workload Automation
• Database & Data Management
• Application Development & Testing
• Identity & Access Management
• Compliance & Data Protection
• Security Insights
• Beyond Code programs
Distributed Software
• Solutions that optimize the planning, development and delivery of
business critical services
• ValueOps
• DevOps
• AIOps
Enterprise Security
• Comprehensive cybersecurity and compliance solutions that secure
against threats and compliance risks by protecting users and data on any
app, device, or network
• Endpoint Security
• Network Security
• Information Security
• Application Security
• Identity Security
FC SAN Management
• Solutions that transform current storage networks with autonomous SAN
capabilities
• Fibre Channel Switch
Payment Security
• Arcot payment authentication network powered by 3-D Secure
• Payment Security Suite
Private Cloud Software Portfolio. Our private cloud infrastructure software delivers public cloud scale and agility with private cloud security, resilience
and performance, and low overall total cost of ownership. Our VMware software supports customers’ digital innovation with faster infrastructure
modernization, a unified cloud experience and better platform security and cyber resiliency. The full portfolio is available directly from Broadcom, resellers
and distributors, hyperscale cloud providers, value-added OEMs and VMware cloud service provider partners. VMware Cloud Foundation (“VCF”) provides
license portability, which enables customers to purchase subscriptions of VCF software and move their VCF environments between on-premises data centers
and supported cloud endpoints. Advanced services for Private AI provide customers with the benefits of AI without having to compromise control of data,
privacy, and compliance by bringing the AI model to customers’ data.
•
VCF: VCF delivers integrated, enterprise-class compute, networking, storage, management, and security across any environment. VCF includes native
Kubernetes to support both virtual machines and containerized workloads on a single platform, enables advanced AI and machine learning workloads at
enterprise scale and offers integrated data services capabilities. Our solutions enhance our customers’ ability to continuously optimize performance and
costs, protect the
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business from threats and enable the business to focus on outcomes instead of operations through advanced observability and insights.
•
VMware Cloud Foundation Edge: The edge compute stack designed to deliver frictionless management of edge apps and infrastructure across many
sites with limited resources. It efficiently manages infrastructure and applications at dispersed sites.
•
vSphere Foundation IT Infrastructure Optimization: vSphere Foundation supports modern IT requirements by boosting operational efficiency,
elevating security and supercharging workload performance, all in support of accelerating innovation.
•
Private AI: This solution enables organizations to use generative AI technologies while addressing privacy and compliance needs of the organization.
•
Live Recovery: This solution helps organizations combat the evolving threat landscape through solutions and technologies that enable organizational
resilience through rapid recovery of applications, data and critical business services.
•
Telco Cloud Platform: This solution supports network operations for telecom operators and communications service providers to modernize their
infrastructure and allows them to create monetizable services. The modernization of the telecom infrastructure is critical to enabling operational agility,
onboarding and delivering services much faster across domains and simplifying operations with automation.
Tanzu Software Portfolio. Our application development, operations and optimization solutions help leading enterprises deliver highly performant
applications and best-in-class user experiences.
•
Tanzu Platform: This cloud native application platform accelerates software delivery, providing platform engineering teams with enhanced
governance and operational efficiency while reducing toil and complexity for development teams. Tanzu Platform includes access to content including
enterprise-ready curated distributions of open source software technologies used for storing and processing data. It also includes Tanzu AI Solutions, a
set of capabilities that help application teams deliver generative AI-powered, intelligent applications quickly, safely, and at scale. Tanzu Platform also
offers teams full-stack visibility from applications to infrastructure and efficient modern application lifecycle management across public and private
clouds with Cloud Foundry and/or with any conformant Kubernetes.
•
Tanzu Data: A suite of data services that provides advanced analytical data warehouse capabilities and real-time transactions and processing at
massive scale with an in-memory data grid with vector database capabilities for AI use cases.
•
Tanzu CloudHealth: This solution simplifies financial management, streamlines operations, and improves organizational collaboration across the
multi-cloud environment.
•
Tanzu Labs: This service provides hands-on cloud native consulting services to help customers move software to production while strengthening
platform engineering skills.
VeloCloud Portfolio. VeloCloud provides networking solutions to connect, secure and optimize workloads across distributed locations. By combining our
VeloRAIN (Robust AI Networking) architecture with seamless connectivity and outcome-based quality of service, VeloCloud provides users and devices with
compute and connectivity to optimize performance, security and reliability across fixed or mobile environments, while simplifying operations.
•
SD-WAN and SASE: Our SD-WAN (software-defined wide area network) solution, whether a part of our SASE (secure access service edge)
architecture offering or standalone, provides a platform for enterprises to distribute modern applications and advanced AI systems while delivering
security and ubiquity of access for distributed applications. Our SD-WAN or SASE solutions bring software-defined networking, security and AIOps
together to support ubiquitous access across fiber, cellular and satellite for optimal performance and availability for modern applications.
•
VeloRAIN: Our architecture uses AI or machine learning to improve the performance and security of distributed workloads.
•
Fixed Wireless Access: This solution provides enterprises with reliable 5G connectivity to businesses and enterprise branches at the edge while
optimizing the network through intelligence and network programmability.
Application Networking and Security Software Portfolio. Our application networking and security software delivers zero-trust lateral security and load
balancing solutions enabling global digital organizations to combat malware and ransomware. These software-defined solutions provide distributed and scale-
out architectures, deep visibility, plug-and-play operations and self-service consumption. Customers can deploy our solutions at speed and operate them at
scale across all their private cloud applications, which can reduce the total cost of ownership.
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•
Lateral Security Firewall: This solution enables access control for applications, protects against lateral movement of threats and provides security
policy recommendations based on the workloads, and enables isolation of sensitive applications for enhanced regulatory compliance.
•
Advanced Threat Prevention: This solution integrates multiple threat detection and prevention technologies to deliver comprehensive protection
from malware and ransomware attacks, including utilizing behavior-based techniques and advanced correlations to identify lateral threat movement
and ransomware threat campaigns.
•
Advanced Load Balancing: This solution simplifies and accelerates application deployments and enhances application availability and resiliency to
deliver load balancing at the speed of applications, allowing customers to leverage built-in automation to deploy load balancing as code as part of
DevOps workflows for rapid infrastructure roll out.
Mainframe Software Portfolio. Our mainframe software provides market-leading DevOps, AIOps, Cybersecurity, Workload Automation, Data
Management, and Foundational Software solutions which enable customers to embrace open tools and technologies, innovate with their mainframe as part
of their hybrid environment, and extend the value of their mainframe investments. Our commitment to partnering with our customers goes beyond products
and technology. Through our unique Beyond Code programs we address challenges such as skills development, staffing, change management and cost-saving
initiatives that drive greater overall business success with the platform.
•
Operational Analytics & Management: These solutions combine big data, machine learning and AI with mainframe expertise to deliver meaningful
and actionable insights to augment and automate day-to-day operations and deliver exceptional customer experiences.
•
Workload Automation: These solutions reduce manual effort by enabling customers to proactively optimize resources and orchestrate automation
across enterprise applications and systems.
•
Databases & Data Management: These high-performance databases and management tools store, organize, and manage mainframe data to ensure
optimal performance, efficient administration, and reliability of critical systems. Customers can also manage their mainframe data storage using modern
mainframe solutions that securely store data on any device that customers choose, including the cloud. These software-only solutions are designed to
save on costs and maintain confidence in data security.
•
Application Development & Testing: These solutions enable customers to accelerate software delivery while increasing code quality through the use
of our agile processes and tools, and DevOps solutions. Our open-first strategy helps customers modernize their mainframe environment through the
use of open source and open application programming technologies across people, process, tooling and applications, resulting in greater synergy and
alignment with their corporate IT environment.
•
Identity & Access Management: These solutions manage mainframe access and elevate it with modern practices such as multi-factor authentication
and privileged user management, and support all external security managers.
•
Compliance & Data Protection: These solutions protect crucial mainframe data to ensure compliance, identify risk, proactively respond to potential
threats, and reduce those risks to lighten the load on security management with automated identification and authorization cleanup.
•
Security Insights Platform: This solution helps ensure a trusted environment for customers and their employees by quickly interpreting and
assessing mainframe security posture, identifying risks and developing remediation steps on an ongoing and ad hoc basis. This data is available for use
with in-house tools for security information and event management.
•
Beyond Code Programs: These value-added offerings help ensure our customers get the most out of their mainframe investments. These offerings
unlock additional value for organizations in areas such as educating and upskilling the workforce, providing expert guidance and support for change
events, and uncovering opportunities to improve efficiency and save costs.
Distributed Software Portfolio. Our distributed software solutions enable global enterprises to optimize the planning, development and delivery of
software, powering their business-critical digital services. Our solutions are designed to enable customers to innovate, improve customer experience, and
drive profitability by aligning business, development, and operational teams. Our products, organized in the domains of ValueOps, DevOps, and AIOps, deliver
end-to-end visibility across all stages of the digital lifecycle and help our customers realize better business outcomes and better experiences for their
customers.
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•
ValueOps: This solution delivers value stream management capabilities that enable customers to schedule, track, and manage work throughout its
lifecycle from investment planning to execution. It aligns business and development teams across the enterprise, increasing transparency, reducing
inefficiencies, and improving time to value.
•
DevOps: This solution offers capabilities that empower users of our agile processes and tools to track development progress and deploy releases
confidently with assurance of feature completeness, high-quality and reduced risk. Key stakeholders have a single view of key insights into release
progress, health, quality, defect trends, and metrics that drive focus, gauge readiness, and help to ensure successful, quality releases.
•
AIOps: This solution combines application, infrastructure and network monitoring and correlation with intelligent remediation capabilities to help
customers create more resilient production environments and improve customer experience.
Enterprise Security Portfolio. Our Enterprise Security solutions help organizations and governments secure against threats and compliance risks by
protecting their users and data on any app, device, or network. Our integrated cyber defense approach simplifies cybersecurity with comprehensive solutions
designed to secure critical business assets across on-premises and cloud infrastructures. Enterprise Security solutions utilize rich threat intelligence from a
global network of security engineers, threat analyst and researchers, as well as advanced AI and machine learning engines, enabling customers to protect
data, connect authorized users with trusted applications, and detect and respond to the most advanced targeted attacks.
•
Endpoint Security: Endpoints are the critical last line of defense against cyber attackers. Our Symantec and Carbon Black endpoint security solutions
prevent, detect and respond to emerging threats across all devices and operating systems including laptops, desktops, tablets, mobile phones, servers
and cloud workloads through an AI driven security console and single agent.
•
Network Security: Email and web access are the lifeblood and essential communication means for every modern organization. We have a full array
of network security solutions, as well as a shared set of advanced threat protection technologies to stop inbound and outbound threats targeting end
users, information and key infrastructure.
•
Information Security: Information protection and compliance is critical to managing risk. We offer integrated information security solutions, based
on an efficient, single-policy that can be applied across the entire environment, to help organizations identify and protect risky users, applications and
their most sensitive data everywhere across endpoints, on-premises networks, cloud services and private applications.
•
Application Security: Applications are increasingly targeted by cyber attackers. Our solutions secure critical systems, prevent unwanted changes, and
ensure continuous compliance with regulatory mandates. Carbon Black solutions employ a positive security model that secures often overlooked use
cases such as end-of-life operating systems, critical systems, fixed function devices, and air-gapped systems.
•
Identity Security: User identities are under attack by cyber criminals hoping to exploit their access and privileges and do harm. Our solution
mitigates these attacks by positively identifying legitimate users, enforcing granular access control policies, and streamlining access governance to
prevent unauthorized access to sensitive resources and data.
FC SAN Management. We also offer mission-critical FC SAN products designed to help customers reduce the cost and complexity of managing business
information within a shared data storage environment, enabling high levels of availability of mission-critical applications in the form of modules, switches and
subsystems incorporating multiple semiconductor products. We deliver reliable and simplified management of these FC SAN products through our software-
based management tools designed to maximize uptime, dramatically simplify storage area networking deployment and management, and provide high levels
of visibility and insight into the storage network. Our Brocade Fibre Channel switch products provide interconnection, bandwidth and high-speed switching
between servers and storage devices which are in a FC SAN.
Payment Security Portfolio. Our payment security suite is a software as a service (“SaaS”)-based payment authentication service to help banks and
merchants protect against fraud and ensure a hassle-free online shopping experience for their customers.
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Research and Development
We are committed to continuous investment in product development and enhancement, with a focus on rapidly introducing new, proprietary products
and releases. Many of our products have grown out of our own research and development efforts, and have given us competitive advantages in certain target
markets due to performance differentiation. However, we opportunistically seek to enhance our capabilities through the acquisition of engineers with
complementary research and development skills and complementary technologies and businesses. We focus our research and development efforts on the
development of mission-critical, innovative, sustainable and higher value product platforms and those that improve the quality and stability in our broadly
deployed products. We leverage our design capabilities in markets where we believe our innovation and reputation will allow us to earn attractive margins by
developing high value-add products.
We plan to continue investing in product development, both organically and through acquisitions, to drive growth in our business. We also invest in
process development and improvements to product features and functions, as well as fabrication capabilities to optimize processes for devices that are
manufactured internally. Our field application engineers, design engineers, and product and software development engineers are located in many places
around the world, and in many cases, near our top customers. This enhances our customer reach and our visibility into new product opportunities and, in the
case of our semiconductor customers, enables us to support our customers in each stage of their product development cycle, from the early stages of
production design to volume manufacturing and future growth. By collaborating with our customers, we have opportunities to develop high value-added,
customized products for them that leverage our existing technologies. We anticipate that we will continue to make significant research and development
investments in order to maintain our competitive position, and to ensure a continuous flow of innovative and sustainable product platforms.
Customers, Sales and Distribution
We sell our products through our direct sales force and a select network of distributors and channel partners globally. Distributors and OEMs, or their
contract manufacturers, typically account for the substantial majority of our semiconductor sales. A relatively small number of customers account for a
significant portion of our net revenue. Sales to distributors accounted for 48% and 57% of our net revenue for fiscal years 2024 and 2023, respectively. We
believe aggregate sales to our top five end customers, through all channels, accounted for approximately 40% and 35% of our net revenue for fiscal years
2024 and 2023, respectively. We expect to continue to experience significant customer concentration in future periods. The loss of, or significant decrease in
demand from, any of our top five end customers could have a material adverse effect on our business, results of operations and financial condition.
Many of our semiconductor customers design products in North America or Europe that are then manufactured in Asia. To serve customers around the
world, we have strategically developed relationships with large global electronic component distributors, complemented by a number of regional distributors
with customer relationships based on their respective product ranges. We also sell our products to a wide variety of OEMs or their contract manufacturers.
We have established strong relationships with leading OEM customers across multiple target markets. Our direct sales force focuses on supporting our large
OEM customers, and has specialized product and service knowledge that enables us to sell specific offerings at key levels throughout a customer’s
organization. Certain customers require us to contract with them directly and with specified intermediaries, such as contract manufacturers. Many of our
major customer relationships have been in place for many years and are often the result of years of collaborative product development. This has enabled us
to build our extensive IP portfolio and develop critical expertise regarding our customers’ requirements, including substantial system-level knowledge. This
collaboration has provided us with key insights into our customers' businesses and has enabled us to be more efficient and productive and to better serve our
target markets and customers. Many of our customers and their contract manufacturers often require time critical delivery of our products to multiple
locations around the world. With sales offices located in various countries, our primary warehouse in Malaysia, and dedicated regional customer support call
centers, where we address customer issues and handle logistics and other order fulfillment requirements, we believe we are well-positioned to support our
customers throughout the design, technology transfer and manufacturing stages across all geographies.
Our software customers generally consist of large enterprises that have computing environments from multiple vendors and are in most major
industries worldwide, including banks, insurance companies, other financial services providers, government agencies, global IT service providers,
telecommunication providers, transportation companies, manufacturers, technology companies, retailers, educational organizations and health care
institutions. Our private cloud infrastructure suite of solutions are available directly from Broadcom, resellers and distributors, hyperscale cloud providers,
value-added OEMs and VMware cloud service provider partners. VCF provides license portability, which enables customers to purchase subscriptions of VCF
software and move their VCF environments between on-premises data centers and supported cloud endpoints. We remain focused on strengthening
relationships and increasing penetration within our existing core, mainframe, VMware, and Symantec endpoint customers and expanding the adoption of our
enterprise software offerings with these customers. We believe our enterprise-wide license model will continue to offer our customers reduced complexity,
more flexibility and an easier renewal process that will help drive revenue growth.
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Manufacturing
We focus on maintaining an efficient global supply chain and a variable, low-cost operating model. Accordingly, we outsource a majority of our
manufacturing operations, utilizing third-party foundry and assembly and test capabilities, as well as some of our corporate infrastructure functions. The
majority of our front-end wafer manufacturing operations is outsourced to external foundries, including Taiwan Semiconductor Manufacturing Company
Limited (“TSMC”). We use third-party contract manufacturers for a significant majority of our assembly and test operations, including TSMC, Advanced
Semiconductor Engineering, Inc., Foxconn Technology Group, Amkor Technology, Inc. and Siliconware Precision Industries Co., Ltd. We use our internal
fabrication facilities for products utilizing our innovative and proprietary processes, such as our FBAR filters for wireless communications and our vertical-
cavity surface emitting laser and side emitting lasers based on GaAs and InP lasers for fiber optic communications, while outsourcing commodity processes
such as standard CMOS. By doing so, we can protect our IP and accelerate time to market for our products. The majority of our internal III-V semiconductor
wafer fabrication is done in the U.S. and Singapore.
We purchase materials from hundreds of suppliers on a global basis. These purchases are generally on a purchase order basis and some parts are not
readily available from alternate suppliers due to their unique design or the length of time and cost necessary for re-design or qualification. To address the
potential disruption in our supply chain, we may use a number of techniques, including redesigning products for alternative components, making incremental
or “lifetime” purchases, or qualifying more than one source of supply. Our long-term relationships with our suppliers allow us to proactively manage our
technology development and product discontinuance plans, and to monitor our suppliers' financial health.
We also have a long history of operating in Asia where we manufacture and source the majority of our products and materials. We store the majority of
our product inventory in our warehouse in Malaysia and our presence in Asia places us in close proximity to many of our customers’ manufacturing facilities.
Competition
The markets in which we participate are highly competitive. Our competitors range from large international companies offering a wide range of
products to smaller companies specializing in narrow markets. The competitive landscape is changing as a result of a trend toward consolidation within many
industries, as some of our competitors have merged with or been acquired by other competitors, while others have begun collaborating with each other. We
expect this consolidation trend to continue. We expect competition in the markets in which we participate to continue to increase as existing competitors
improve or expand their product offerings and as new companies enter the market. Additionally, our ability to compete effectively depends on a number of
factors, including: quality, technical performance, price, product features, product system compatibility, system-level design capability, engineering expertise,
responsiveness to customers, new product innovation, product availability, delivery timing and reliability, and customer sales and technical support.
In semiconductor solutions, we compete with integrated device manufacturers, fabless semiconductor companies and the internal resources of large
integrated OEMs, such as Advanced Micro Devices, Inc., Amlogic Inc., Analog Devices, Inc., Cisco Systems, Inc., Coherent Corp., Hamamatsu Photonics K.K.,
Heidenhain Corporation, iC-Haus GmbH, Intel Corporation, Lumentum Holdings Inc., MACOM Technology Solutions Holdings, Inc., Marvell Technology, Inc.,
MaxLinear, Inc., MediaTek Inc., Microchip Technology Incorporated, Mitsubishi Electric Corporation, Murata Manufacturing Co., Ltd., NVIDIA Corporation, NXP
Semiconductors N.V., ON Semiconductor Corporation, OSRAM Licht AG, Qorvo, Inc., Qualcomm Inc., Realtek Semiconductor Corp., Renesas Electronics
Corporation, Skyworks Solutions, Inc., STMicroelectronics N.V., Sumitomo Corporation, Synaptics Incorporated, Texas Instruments, Inc., TDK-EPC Corporation,
Toshiba Corporation, and Wolfspeed, Inc. (f/k/a Cree, Inc.).
In infrastructure software, we compete with large enterprise software vendors who continue to expand their product and service offerings and
consolidate offerings into broad product lines, and smaller, niche players focused on specific markets, such as Atlassian Corporation, Plc, BeyondTrust
Corporation, BMC Software Inc., Cisco Systems, Inc., CrowdStrike Holdings, Inc., CyberArk Software, Ltd., Dino-Software Corporation, Fortinet, Inc., Hewlett
Packard Enterprise Company, International Business Machines Corporation, Microsoft Corporation, New Relic, Inc., OpenText Corporation, Oracle Corporation,
Palo Alto Networks, Inc., Proofpoint, Inc., Rocket Software, Inc., SailPoint Technologies Holdings, Inc., Salesforce.com, Inc., ServiceNow, Inc., SolarWinds
Corporation, Versa Networks, Inc., and Zscaler, Inc.
Intellectual Property
Our success depends in part upon our ability to protect our IP. To accomplish this, we rely on a combination of IP rights, including patents, copyrights,
trademarks, service marks, trade secrets and similar IP, as well as customary contractual protections with our customers, suppliers, employees and
consultants, and through security measures to protect our trade secrets. We believe our current product expertise, key engineering talent and IP portfolio
provide us with a strong platform from which to develop application specific products in key target markets.
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As of November 3, 2024, we had 20,870 U.S. and other patents and 2,650 U.S. and other pending patent applications. The expiration dates of our
patents range from 2024 to 2043, with a small number of patents expiring in the near future, none of which are expected to be material to our IP portfolio.
We are not substantially dependent on any single patent or group of related patents.
We focus our patent application program to a greater extent on those inventions and improvements that we believe are likely to be incorporated into
our products, as contrasted with more basic research. However, we do not know how many of our pending patent applications will result in the issuance of
patents or the extent to which the examination process could require us to narrow our claims.
We and our predecessors have also entered into a variety of IP licensing and cross-licensing arrangements that have both benefited our business and
enabled some of our competitors. A portion of our revenue comes from IP licensing royalty payments and from litigation settlements relating to such IP. We
also license third-party technologies that are incorporated into some elements of our design activities, products and manufacturing processes. Historically,
licenses of the third-party technologies used by us have generally been available to us on acceptable terms.
The industries in which we compete are characterized by the existence of a large number of patents, copyrights, trademarks and trade secrets and by
the vigorous pursuit, protection and enforcement of IP rights, including by patent holding companies that do not make or sell products. Some of our customer
agreements require us to indemnify our customers for third-party IP infringement claims arising from our products. Claims of this sort could harm our
relationships with our customers and might deter future customers from doing business with us. With respect to any IP rights claims against us or our
customers or distributors, we may be required to defend ourselves or our customers or distributors in litigation, cease manufacturing the infringing products,
pay damages, expend resources to develop non-infringing technology, seek a license which may not be available on commercially reasonable terms or at all,
or relinquish patents or other IP rights.
In addition, the proprietary portions of our source code for our infrastructure software products are protected both as a trade secret and as copyrighted
works. Except with respect to software components that are subject to open source licenses, our customers do not generally have access to the source code
for our products. Rather, on-premises customers typically access only the executable code for our products, and SaaS customers access only the functionality
of our SaaS offerings. Under certain contingent circumstances, some of our customers are beneficiaries of a source code escrow arrangement that would
enable them to obtain a limited right to access and use our source code if specific conditions are met.
Employees
Our continued success depends on our ability to attract, motivate and retain our workforce in a highly competitive labor market. Specifically, as the
source of our technological and product innovations, our engineering and technical personnel are a critical asset.
We measure our employees’ engagement by our voluntary attrition rate and employee feedback. Our global voluntary attrition rates in fiscal year 2024
were approximately 2.9% (excluding employees who joined Broadcom as a result of the VMware Merger) and approximately 6.2% (including employees who
joined Broadcom as a result of the VMware Merger), which are both below the technology industry benchmark (AON, 2024 Salary Increase and Turnover
Study — Second Edition, September 2024).
We also track the portion of our workforce in research and development roles. As of November 3, 2024, we had approximately 37,000 employees
worldwide, with approximately 55% in research and development roles. By geography, approximately 48% of our employees are located in North America,
36% in Asia, and 16% in Europe, the Middle East and Africa.
Governmental Regulation
We are subject to numerous regulations and laws in the United States and abroad involving matters central to our business. Many of these laws and
regulations are evolving and their applicability and scope, as interpreted by the courts, remain uncertain.
We are subject to regulation by the U.S. Occupational Safety and Health Administration and similar health and safety laws in other jurisdictions. We
believe that our properties and operations at our facilities comply in all material respects with applicable environmental laws and worker health and safety
laws. However, the risk of environmental liabilities cannot be completely eliminated and there can be no assurance that the application of environmental,
health and safety laws to our business will not require us to incur significant expenditures.
In addition, our business is subject to various import/export regulations, such as the U.S. Export Administration Regulations, and applicable executive
orders, and rules of industrial standards bodies, like the International Organization for Standardization, as well as regulation by other agencies, such as the
U.S. Federal Trade Commission (“FTC”). These laws,
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regulations and orders are complex, may change frequently and with limited notice, have generally and may continue to become more stringent over time.
We may incur significant expenditures in future periods as a result.
Our semiconductor manufacturing operations and research and development involve the use of hazardous substances and are regulated under
international, federal, state and local laws governing health, safety and the environment. These regulations include limitations on discharge of pollutants to
air, water, and soil; remediation requirements; product chemical content limitations; manufacturing chemical use and handling restrictions; pollution control
requirements; waste minimization considerations; and treatment, transport, storage and disposal of solid and hazardous wastes. We are also regulated under
a number of international, federal, state and local laws regarding recycling, product packaging and product content requirements, including legislation
enacted in the U.S., European Union and China, among a growing number of jurisdictions, which have placed greater restrictions on the use of lead, among
other restricted substances, in electronic products, which affects materials composition and semiconductor packaging.
Seasonality
Historically, our net revenue has typically been higher in the second half of the fiscal year than in the first half, primarily due to seasonality in our
wireless communications products. These products have historically experienced seasonality due to launches of new mobile devices manufactured by our
OEM customers. However, from time to time, typical seasonality and industry cyclicality are overshadowed by other factors such as wider macroeconomic
effects, the timing of customer deployments, significant product transitions and launches by large OEMs, particularly with our AI and wireless
communications products. We have a diversified business portfolio and we believe that our overall revenue is less susceptible to seasonal variations as a
result of this diversification.
Available Information
Our website is www.broadcom.com. At the “Investor Center” page on this website, we promptly make available free of charge the reports we file or
furnish pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (the “Exchange Act”) with the Securities and Exchange Commission (the
“SEC”), as well as our proxy statements. Such periodic reports, proxy statements and other information are also available at the SEC’s website at www.sec.gov.
The information posted on our website is not incorporated into this Annual Report on Form 10-K.
Information About Our Executive Officers
The following table provides information regarding our executive officers as of December 20, 2024:
Name and Title
Age
Position and Offices
Hock E. Tan
73
President, Chief Executive Officer and Director
Kirsten M. Spears
60
Chief Financial Officer and Chief Accounting Officer
Mark D. Brazeal
56
Chief Legal and Corporate Affairs Officer
Charlie B. Kawwas, Ph.D.
54
President, Semiconductor Solutions Group
Hock E. Tan has served as our President and Chief Executive Officer since March 2006. He was President and Chief Executive Officer at Integrated Circuit
Systems, Inc. (“ICS”), a publicly traded timing solutions IC company, from 1999 until its acquisition by Integrated Device Technology, Inc. in 2005. He also
served in a number of executive positions at ICS, including Chief Operating Officer from 1996 to 1999 and Senior Vice President and Chief Financial Officer
from 1995 to 1999. He was Vice President of Finance at Commodore International, Ltd. from 1992 to 1994, and held senior management positions at PepsiCo,
Inc. and General Motors Corporation. He was also managing director of Pacven Investment, Ltd., a venture capital fund in Singapore, from 1988 to 1992, and
was managing director of Hume Industries Ltd. in Malaysia from 1983 to 1988.
Kirsten M. Spears has served as our Chief Financial Officer and Chief Accounting Officer since December 2020. She served as our Principal Accounting
Officer from March 2016 to December 2020 and Vice President and Corporate Controller from May 2014 to December 2020. She was Vice President and
Corporate Controller at LSI Corporation from 2007 until its acquisition by us in 2014. She held several management positions in accounting and reporting at
LSI from 1997 to 2007. She also worked for PriceWaterhouseCoopers prior to joining LSI.
Mark D. Brazeal has served as our Chief Legal and Corporate Affairs Officer since December 2021. He served as our Chief Legal Officer from March 2017
to December 2021. He was Chief Legal Officer and Senior Vice President, IP Licensing for SanDisk Corporation from 2014 until its acquisition by Western
Digital Corporation in 2016. He held several senior legal positions at Broadcom Corporation from 2000 to 2014, including Senior Vice President and Senior
Deputy General Counsel in charge of all commercial, operational, IP licensing and litigation matters. He was also an attorney in the transactional and IP groups
at the law firms of Wilson Sonsini Goodrich & Rosati, Yuasa & Hara and Howrey & Simon prior to joining Broadcom Corporation.
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Charlie B. Kawwas has served as our President, Semiconductor Solutions Group since July 2022. He served as our Chief Operating Officer from
December 2020 to July 2022, Senior Vice President and Chief Sales Officer from June 2015 to December 2020 and Senior Vice President, Worldwide Sales
from May 2014 to June 2015. He was head of worldwide sales at LSI Corporation from 2010 until its acquisition by us in 2014. He held several executive
leadership positions at LSI from 2007 to 2010, including Vice President of Sales and Marketing for the networking division and Vice President of Marketing for
the networking and storage products group. He was also the leader of Product Line Management for the Optical Ethernet and Multi-service Edge portfolio at
Nortel Networks Corporation prior to joining LSI.
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ITEM 1A. RISK FACTORS
Our business, operations and financial results are subject to various risks and uncertainties, including those described below, that could adversely affect
our business, financial condition, results of operations, cash flows, and the trading price of our common stock. The following material factors, among others,
could cause our actual results to differ materially from historical results and those expressed in forward-looking statements made by us or on our behalf in
filings with the SEC, press releases, communications with investors and oral statements. Additional risks, trends and uncertainties not presently known to us
or that we currently believe are immaterial may also harm our business, financial condition, results of operations, cash flows, our reputation or the trading
price of our common stock.
Risk Factors Summary
The following is a summary of the material risks that could adversely affect our business, operations and financial results.
Risks Related to Our Business
•
Adverse global economic conditions could have a negative effect on us.
•
Our business is subject to various governmental regulations and trade restrictions.
•
Global political and economic conditions and other factors related to our international operations could adversely affect us.
•
Failure to realize the benefits expected from the VMware Merger could adversely affect our business and the value of our common stock.
•
We have pursued, and may in the future pursue mergers, acquisitions, investments, joint ventures and dispositions, which could adversely affect our
results of operations.
•
We are subject to risks associated with our distributors and other channel partners.
•
We are dependent on senior management and if we are unable to attract and retain qualified personnel, we may not be able to execute our business
strategy effectively.
•
Cyber security threats or other security breaches, or any other impairment of the confidentiality, integrity or availability of our IT systems, or those
of one or more of our corporate infrastructure vendors, could have a material adverse effect on our business.
•
A significant reduction in demand or loss of one or more of our significant customers may adversely affect our business.
•
We operate in the highly cyclical semiconductor industry.
•
We make investments in research and development and the slow or unsuccessful return of our investments in research and development could
adversely affect us.
•
Winning business in the semiconductor solutions industry is subject to a lengthy process that often requires us to incur significant expense, from
which we may ultimately generate no revenue.
•
Dependence on contract manufacturing and suppliers of critical components within our supply chain may adversely affect our ability to bring
products to market.
•
We purchase a significant amount of the materials used in our products from a limited number of suppliers.
•
Failure to adjust our manufacturing and supply chain to accurately meet customer demand could adversely affect our results of operations.
•
A prolonged disruption of our or our suppliers’ manufacturing facilities, research and development facilities, warehouses or other significant
operations could have a material adverse effect on us.
•
We may be unable to maintain appropriate manufacturing capacity or product yields at our own manufacturing facilities.
•
We may be involved in legal proceedings that could materially adversely affect our business.
•
Failure of our software products to manage and secure IT infrastructures and environments could have a material adverse effect on our business.
•
The growth of our software business depends on customer acceptance of our newer products and services.
•
Incompatibility of our software products with operating environments, platforms, or third-party products may adversely affect demand for our
products and services.
•
Failure to enter into software license agreements on a satisfactory basis could adversely affect us.
•
Our use of open source software in certain products and services could materially adversely affect our business, financial condition and results of
operations.
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•
Our sales to government customers subject us to uncertainties and additional governmental regulations.
•
Failure to effectively manage our products and services lifecycles could harm our business.
•
Our operating results are subject to substantial quarterly and annual fluctuations.
•
Competition in our industries could prevent us from growing our revenue.
•
Our ability to maintain or improve gross margin.
•
If we are unable to protect the significant amount of IP we utilize in our business, our business could be adversely affected.
•
We are subject to warranty claims, product recalls and product liability.
•
The complexity of our products could result in unforeseen delays or expense or undetected defects or bugs.
•
We are subject to privacy and data security laws and contractual commitments, and our actual or perceived failure to comply with such laws and
commitments could harm our business.
•
We must comply with a variety of technical standards, domestic and international laws and regulations in the manufacture and distribution of our
semiconductors.
•
Environmental, social and governance matters may adversely affect our relationships with customers and investors.
Risks Relating to Our Taxes
•
Our income taxes and overall cash tax costs are affected by a number of factors that could have a material, adverse effect on our financial results.
•
If our tax incentives or tax holiday arrangements change or cease to be in effect or applicable, our corporate income taxes could significantly
increase.
•
We have potential tax liabilities as a result of VMware’s former controlling ownership by Dell, which could have an adverse effect on our financial
condition and operating results.
Risks Relating to Our Indebtedness
•
Our substantial indebtedness could adversely affect our financial health and our ability to execute our business strategy.
Risks Relating to Owning Our Common Stock
•
Our stock price may be volatile and your investment could lose value.
•
There can be no assurance that we will continue to declare cash dividends.
For a more complete discussion of the material risks facing our business, see below.
Risks Related to Our Business
Adverse global economic conditions could have a negative effect on our business, results of operations and financial condition and liquidity.
A general slowdown in the global economy or in a particular region or industry, other unfavorable changes in economic conditions, such as inflation,
higher interest rates, tightening of the credit markets, recession or slowing growth, or an increase in trade tensions with U.S. trading partners could negatively
impact our business, financial condition and liquidity. Adverse global economic conditions have from time to time caused or exacerbated significant
slowdowns in the industries and markets in which we operate, which have adversely affected our business and results of operations. Macroeconomic
weakness and uncertainty also make it more difficult for us to accurately forecast operating results, and may make it more difficult to raise or refinance debt.
An escalation of trade tensions between the U.S. and China has resulted in trade restrictions, increased protectionism and increased tariffs that harm our
ability to participate in Chinese markets or compete effectively with Chinese companies. Sustained uncertainty about, or worsening of, current global
economic conditions and further escalation of trade tensions between the U.S. and its trading partners, especially China, and the decoupling of the U.S. and
China economies, could result in a global economic slowdown and long-term changes to global trade. Such events may also (i) cause our customers and
consumers to reduce, delay or forgo technology spending, (ii) result in customers sourcing products from other suppliers not subject to such restrictions or
tariffs, (iii) lead to the insolvency or consolidation of key suppliers and customers, and (iv) intensify pricing pressures. Any or all of these factors could
negatively affect demand for our products and our business, financial condition and results of operations.
Our business is subject to various governmental regulations. Compliance with these regulations may cause us to incur significant expense and failure to
maintain compliance with applicable regulations could adversely affect our business.
Our business is subject to various domestic and international laws and other legal requirements, including anti-competition and import/export
regulations, such as the U.S. Export Administration Regulations, and applicable executive
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orders. These laws, regulations and orders are complex, may change frequently and with limited notice, and generally become more stringent over time. We
may be required to incur significant expense to comply with, or to remedy violations of, these regulations. In addition, if our customers fail to comply with
these regulations, we may be required to suspend sales to these customers, which could damage our reputation and negatively impact our results of
operations. The U.S. government may continue to add companies to its restricted entity list and/or technologies to its list of prohibited exports to specific
countries, which have had and may in the future have an adverse effect on our revenue and our ability to sell our products. These restrictive governmental
actions and any similar measures that may be imposed on U.S. companies by other governments, especially in light of ongoing trade tensions with China, will
likely limit or prevent us from doing business with certain of our customers or suppliers and harm our ability to compete effectively or otherwise negatively
affect our ability to sell our products. Furthermore, government authorities may take retaliatory actions, impose conditions for the supply of products or
require the license or other transfer of IP, which could have a material adverse effect on our business.
Our products and operations are also subject to regulation by U.S. and non-U.S. regulatory agencies, such as the U.S. Federal Trade Commission. We have
previously been, and may in the future be, involved or required to participate in regulatory investigations or inquiries, such as the ongoing investigation by the
Korean Fair Trade Commission into certain of our contracting and business practices, which have previously and may in the future evolve into legal or other
administrative proceedings. Growing public concern over concentration of economic power in corporations is leading to increased anti-competition
legislation, regulation, administrative rule making and enforcement activity. Involvement in regulatory investigations or inquiries can be costly, lengthy,
complex and time consuming, diverting the attention and energies of our management and technical personnel. If any pending or future governmental
investigations result in an unfavorable resolution, we could be required to cease the manufacture and sale of the subject products or technology, pay fines or
disgorge profits or other payments, and/or cease certain conduct and/or modify our contracting or business practices, which could have a material adverse
effect on our business, financial condition and results of operations.
Global political and economic conditions and other factors related to our international operations could adversely affect our business, financial condition
and results of operations.
A majority of our products are produced, sourced and sold internationally and our international revenue represents a significant percentage of our
overall revenue. Multiple factors relating to our international operations and to particular countries in which we operate could have a material adverse effect
on our business, financial condition and results of operations. These factors include:
•
changes in political, regulatory, legal or economic conditions, geopolitical turmoil (including China-Taiwan relations), including terrorism, war or
political or military coups, state-sponsored or politically motivated cyber-attacks, or civil disturbances or political instability (foreign and domestic);
•
restrictive governmental actions, such as restrictions on the transfer or repatriation of funds and foreign investments, data privacy regulations,
climate change regulations and trade protection measures, including increasing protectionism, import/export restrictions (including with regards to
advanced technologies), import/export duties and quotas, trade sanctions and customs duties and tariffs, all of which have increased and may
further increase;
•
changes in global tax regulations;
•
difficulty in obtaining product distribution and support, and transportation delays;
•
potential inability to localize software products;
•
difficulty in enforcing contracts, collecting accounts receivables and maintaining appropriate financial controls;
•
difficulty in conducting due diligence with respect to business partners;
•
public health or safety concerns, medical epidemics or pandemics, and other natural- or man-made disasters; and
•
nationalization of businesses and expropriation of assets.
A significant legal risk associated with conducting business internationally is compliance with the various and differing laws and regulations of the many
countries in which we do business. Although our policies prohibit us, our employees and our agents from engaging in unethical business practices, there can
be no assurance that all of our employees, distributors or other agents will refrain from acting in violation of our related anti-corruption or other policies and
procedures. Any such violation could have a material adverse effect on our business.
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Failure to realize the benefits expected from the VMware Merger could adversely affect our business and the value of our common stock.
As part of our integration of the VMware business, we are focusing on VMware’s core business of creating private cloud environments on-premises
among large enterprises globally and divesting non-core assets. If VMware customers do not accept our business strategy, including our transition from a
perpetual to a subscription licensing model and our simplified product portfolio, the investments we have made or may make to implement our strategy may
be of no or limited value, we may lose significant customers, our financial results may be adversely affected and our stock price may suffer.
Although we expect significant benefits to result from the VMware Merger, if we do not successfully manage the challenges inherent in integrating an
acquired business, we may not realize these benefits, and our revenue, expenses, operating results, financial condition and stock price could be materially
adversely affected. Achieving these benefits will depend, in part, on our ability to integrate VMware's business successfully and efficiently and VMware
customers accepting our business strategy, including our transition from a perpetual to a subscription licensing model and our simplified product portfolio.
The successful integration of the VMware business has required, and will continue to require, significant management attention, and may divert the attention
of management from other business and operational issues.
We have pursued, and may in the future pursue, mergers, acquisitions, investments, joint ventures and dispositions, which could adversely affect our
results of operations.
Our growth strategy includes acquiring or investing in businesses that offer complementary products, services and technologies, or enhancing our market
coverage or technological capabilities. Any acquisitions we may undertake, including the VMware Merger, and their integration involve risks and uncertainties,
which could impede the execution of our business strategy, such as:
•
U.S. and non-U.S. regulatory approval may take longer than anticipated, not be forthcoming or contain burdensome conditions;
•
unexpected delays, challenges and related expenses, and disruption of our business;
•
diversion of management’s attention from daily operations and the pursuit of other opportunities;
•
incurring significant restructuring charges and amortization expense, assuming liabilities and ongoing or new lawsuits, potential impairment of
acquired goodwill and other intangible assets, and increasing our expenses and working capital requirements;
•
the potential for deficiencies in internal controls of the acquired business, as well as implementing our own management information systems,
operating systems and internal controls for the acquired operations;
•
our due diligence process may fail to identify significant issues with the acquired business’ products, financial disclosures, accounting practices, legal,
tax and other contingencies, compliance with local laws and regulations (and interpretations thereof) in the U.S. and multiple international
jurisdictions;
•
difficulties integrating the acquired business or company and in managing and retaining acquired employees, vendors and customers; and
•
inaccuracies in our original estimates and assumptions used to assess a transaction, which may result in us not realizing the expected financial or
strategic benefits of any such transaction.
From time to time, we seek to divest or wind down portions of our business or exit minority investments, any of which could materially affect our cash
flows and results of operations. Such dispositions involve risks and uncertainties, including disruption to other parts of our business, potential loss of
employees or customers, or exposure to unanticipated liabilities or ongoing obligations following any such dispositions. In addition, dispositions may include
the transfer of technology and/or the licensing of certain IP rights to third-party purchasers that limits our ability to utilize such IP rights or assert these rights
against third parties. Such events could have a material adverse impact on our business and operations.
We are subject to risks associated with our distributors and other channel partners, including product inventory levels and product sell-through.
We sell our products through a direct sales force and a select network of distributors and other channel partners globally. Sales to distributors accounted
for 48% of our net revenue in fiscal year 2024 and are subject to a number of risks, including:
•
fluctuations in demand based on our distributors’ product inventory levels, and the timing of delivery to and demand of end customers;
•
our distributors and other channel partners are generally not subject to minimum sales requirements or any obligation to market our products to
their customers and may market and distribute competing products; and
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•
our distributors’ and other channel partners’ agreements are generally nonexclusive and may be terminated at any time without cause.
Our dependence on channel partners has increased following the VMware Merger. Failure to maintain good relationships with our distributors and
channel partners could adversely impact our business. In addition, we sell our semiconductor products through an increasingly limited number of distributors,
which exposes us to additional customer concentration and related credit risks.
From time to time, we enlist our distributors and channel partners to lead go-to-market and customer relationships for certain products, such as our
Accelerate Program and Catalyst Initiative for certain infrastructure software products, with certain sole distribution relationships by region. To the extent
these distributors and channel partners fail to maintain good relationships with our customers or we are unable to continue enlisting our distributors and
channel partners to lead go-to-market and customer relationships, our business, operating results and cash flow may be adversely impacted.
We do not always have a direct relationship with the end customers of our products. As a result, our semiconductor products may be used in applications
for which they were not necessarily designed or tested, and the misuse or failure of our semiconductor products could result in significant liabilities to us,
damage our reputation and harm our business, operating results and cash flow.
Our business would be adversely affected by the departure of existing members of our senior management team.
Our success depends, in large part, on the continued contributions of our senior management team, in particular the services of Hock E. Tan, our
President and Chief Executive Officer. Effective succession planning is also important for our long-term success. Failure to ensure effective transfers of
knowledge and smooth transitions involving senior management could hinder our strategic planning and execution. None of our senior management is bound
by written employment contracts. In addition, we do not currently maintain key person life insurance covering our senior management. The loss of any of our
senior management could harm our ability to implement our business strategy and respond to the rapidly changing market conditions in which we operate.
If we are unable to attract and retain qualified personnel, especially our engineering and technical personnel, we may not be able to execute our business
strategy effectively.
Our future success depends on our ability to attract, retain and motivate qualified personnel. As the source of our technological and product innovations,
our engineering and technical personnel, such as our AI-related product engineers and cybersecurity experts, are a significant asset. Competition for these
employees is significant in many areas of the world in which we operate, particularly in Silicon Valley and Southeast Asia where qualified engineers are in high
demand. In addition, current or future immigration laws may make it more difficult to hire or retain qualified engineers, further limiting the pool of available
talent. We believe equity awards provide a powerful long-term retention incentive and have historically granted these awards to the substantial majority of
our employees. If we are unable to continue our current equity granting philosophy or our stock underperforms, this could impair our efforts to attract and
retain necessary personnel. Any inability to retain, attract or motivate such personnel and provide competitive employment benefits could have a material
adverse effect on our business, financial condition and results of operations.
Cyber security threats or other security breaches, or any other impairment of the confidentiality, integrity or availability of our IT systems, or those of one
or more of our corporate infrastructure vendors, could have a material adverse effect on our business.
Our business depends on a wide variety of complex IT systems and services, including cloud-based and other critical corporate services relating to,
among other things, product research and development, financial reporting, product orders and fulfillment, HR, benefit plan administration, IT network
management, and electronic communication and collaboration services. These systems and services are both internally managed and outsourced, and in
many cases we rely upon third-party data centers. Any failure of these internal or third-party systems and services to operate effectively could disrupt our
operations and could have a material adverse effect on our business, financial condition and results of operations. Our operations are dependent upon our
ability to protect our IT infrastructure against damage from business continuity events that could have a significant disruptive effect. Although these systems
are designed to protect and secure our customers’, suppliers’ and employees’ confidential information, as well as our own proprietary information, we are,
out of necessity, dependent on our vendors to adequately address cybersecurity threats to their own systems. In addition, software products we use and
technologies produced by us have occasionally had in the past and may have in the future, vulnerabilities that, if left unmitigated, could reduce the overall
level of security of the systems on which the software is installed.
Cyber-attacks are increasing in number and sophistication, are well-financed, in some cases supported by state actors, and are designed to not only
attack, but also to evade detection. Since the techniques used to obtain unauthorized access to systems, or to otherwise sabotage them, change frequently
and are often not recognized until launched against a target, we
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may be unable to anticipate these techniques or to implement adequate preventative measures. The emergence and maturation of AI capabilities may also
lead to new and/or more sophisticated methods of attack, including fraud that relies upon “deep fake” impersonation technology or other forms of
generative automation that may scale up the efficiency or effectiveness of cyber threat activity.
As a critical vendor in the digital supply chain for both governmental entities and critical infrastructure operators, we and our products may be targeted
by those seeking to threaten the confidentiality, integrity and availability of systems supporting essential public services. Geopolitical instability may increase
the likelihood that we will experience direct or collateral consequences from cyber conflicts between nation-states or other politically motivated actors
targeting critical technology infrastructure.
Accidental or willful security breaches or other unauthorized access to our information systems or the systems of our service providers and business
partners, or the existence of computer viruses or malware (such as ransomware) in our or their data or software have in the past exposed, and could in the
future expose, us to a risk of information loss, business disruption, and misappropriation of proprietary and confidential information, including information
relating to our products or customers and the personal information of our employees or third parties. Such an event could disrupt our business and result in,
among other things, unfavorable publicity, damage to our reputation, loss of our trade secrets and other competitive information, litigation by affected
parties and possible financial obligations for liabilities and damages related to the theft or misuse of such information, significant remediation costs,
disruption of key business operations and significant diversion of our resources, as well as fines and other sanctions resulting from any regulatory non-
compliance, any of which could have a material adverse effect on our business, profitability and financial condition. While we may be entitled to damages if
our vendors fail to perform under their agreements with us, any award may be insufficient to cover the actual costs incurred by us and, as a result of a
vendor’s failure to perform, we may be unable to collect any damages.
Despite our internal controls and investment in security measures, we have, from time to time, been subject to disruptive cyber-attacks and
unauthorized network intrusions and malware on our own IT networks or those of our service providers or business partners. Although no such cybersecurity
incidents have been material to us, we continue to devote resources to protect our systems and data from unauthorized access or misuse, and we may be
required to expend greater resources in the future. Businesses we acquire have previously increased, and may continue to increase, the scope and complexity
of our IT networks, and this has, from time to time, increased our risk exposure to cyber-attacks when there are difficulties integrating diverse legacy systems
that support operations for the acquired businesses.
In addition, certain aspects of effective cybersecurity are dependent upon our employees, contractors and other trusted partners reliably safeguarding
secrets (e.g., application credentials) and adhering to our security policies and access control mechanisms. We have in the past experienced, and expect in the
future to experience, security incidents arising from a failure to properly handle such secrets or adhere to such policies and, although no such events have
had a material adverse effect on our business, there can be no assurance that an insider threat will not result in a material cyber incident. Our logging,
alerting and cyber incident detection mechanisms may not cover every system potentially targeted by threat actors, may not have the capability to detect
certain types of unauthorized activities, and may not capture and surface information sufficient to enable us to timely detect and take responsive action to
insider or external threats.
U.S. and non-U.S. regulators, as well as customers and service providers, have also increased their focus on cybersecurity vulnerabilities and risks.
Compliance with laws, regulations, and contractual provisions concerning privacy, cybersecurity, secure technology development, data governance, data
protection, confidentiality and IP could result in significant expense, and any failure to comply could result in proceedings against us by regulatory authorities
or other third parties and may also increase our overall compliance burden. See also “Failure of our software products to manage and security IT
infrastructures and environments could have a material adverse effect on our business.”
The majority of our sales have historically come from a small number of customers and a reduction in demand or loss of one or more of our significant
customers may adversely affect our business.
We have historically depended on a small number of end customers, OEMs, their respective contract manufacturers (“CMs”) and certain distributors for a
majority of our business and revenue. For fiscal year 2024, sales to distributors accounted for 48% of our net revenue. We believe aggregate sales, through all
channels, to our top five end customers accounted for approximately 40% of our net revenue for fiscal year 2024. This customer concentration increases the
risk of quarterly fluctuations in our operating results and our sensitivity to any material adverse developments experienced by these customers.
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Our semiconductor customers are not generally required to purchase specific quantities of products. Even when customers agree to source an agreed
portion of their product needs from us, such arrangements often include pricing schedules or methodologies that apply regardless of the volume of products
purchased, and those customers may not purchase the amount of product we expect. As a result, we may not generate the amount of revenue or achieve the
level of profitability we expect under such arrangements. Moreover, our top customers’ purchasing power has, in some cases, given them the ability to make
greater demands on us with regard to pricing and contractual terms in general. Some customers may even reduce the amount of products or decline to
purchase due to their internal development of the products. The loss of, or any substantial reduction in sales to, any of our top customers, including our
hyperscale customers, could have a material adverse effect on our business, financial condition, results of operations and cash flows.
We operate in the highly cyclical semiconductor industry.
The semiconductor industry is highly cyclical and is characterized by rapid price erosion, wide fluctuations in product supply and demand, constant and
rapid technological change, evolving technical standards, evolving markets such as AI, frequent new product introductions, and short product life cycles. From
time to time, these factors, together with changes in general economic conditions, cause significant upturns and downturns in the industry and in our
business. The market for AI-related products has resulted in a significant upturn in certain segments of the industry resulting in record revenue, which may
not be sustainable. Previously the industry experienced a significant upturn due to a supply imbalance that resulted in record profitability and increases in
average selling prices, which was followed by a down-cycle resulting in diminished demand for end-user products, high inventory levels and periods of
inventory adjustment, and elimination of expedite fees. Historically, such down-cycles have also been characterized by under-utilization of manufacturing
capacity, changes in revenue mix and accelerated erosion of average selling prices, which can lead to reduced profitability and a decline in our stock price. The
Creating Helpful Incentives to Produce Semiconductors for America Act could also result in an increase in supply leading to excess inventory and a decrease in
average selling prices. We expect our business to continue to be subject to cyclical downturns even when overall economic conditions are relatively stable. If
we cannot offset industry or market downturns, our net revenue may decline and our financial condition and results of operations may suffer.
We make investments in research and development and the slow or unsuccessful return of our investments could materially adversely affect our business,
financial condition and results of operations.
The industries in which we compete are characterized by rapid technological change, new technological trends such as AI and cloud computing, changes
in customer requirements, frequent new product introductions and enhancements, short product cycles, evolving industry standards and new delivery
methods. In addition, to compete successfully in the semiconductor industry, we must continue to develop and respond to technological advancements and
requirements, such as low-power consumption, higher bandwidth and increase in the number of clusters. Failure to successfully develop increasingly
advanced technologies, including ASICs such as custom AI accelerators or XPUs and other AI-related products, could impair our competitive position. In order
to remain competitive, we have made, and expect to continue to make, significant investments in research and development. If we fail to timely develop new
and enhanced products and technologies, if we focus on technologies that do not become widely adopted, or if new competitive technologies that we do not
support become widely accepted, demand for our products such as our custom AI accelerators or XPUs and other AI-related products may be reduced.
Increased investments in research and development, or slow or unsuccessful research and development efforts, would have a negative impact on our
financial results.
Winning business in the semiconductor solutions industry is subject to a lengthy process that often requires us to incur significant expense, from which
we may ultimately generate no revenue.
Our semiconductor business is dependent on us winning competitive bid selection processes, known as “design wins.” These selection processes are
typically lengthy and can require us to dedicate significant development expenditures and scarce engineering resources in pursuit of a single customer
opportunity. Failure to obtain a particular design win may prevent us from obtaining design wins in subsequent generations of a particular product. This can
result in lost revenue and can weaken our position in future selection processes.
Winning a product design does not guarantee sales to a customer. Customers could delay or cancel plans, fail to qualify our products, reduce or
discontinue use of our products or fail to successfully market and sell their products, which could reduce demand for our products and cause us to hold
excess inventory, materially adversely affecting our business, financial condition and results of operations. In addition, the timing of design wins is
unpredictable and implementing production for a major design win or multiple design wins at the same time, such as our design wins for our custom AI
accelerators or XPUs and other AI-related products, may strain our resources and those of our CMs. In such event, we may be forced to dedicate significant
additional resources such as product engineering and incur additional costs and expenses, which we expect to continue for our AI-related products. These
risks are exacerbated by the fact that many of our products, such as our AI-related products, are dependent on our continued success in the development and
quality of our products and product engineering.
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Dependence on contract manufacturing and suppliers of critical components within our supply chain may adversely affect our ability to bring products to
market, damage our reputation and adversely affect our results of operations.
We operate a primarily outsourced manufacturing business model that principally utilizes CMs, such as third-party wafer foundries. Our semiconductor
products require wafer manufacturers with state-of-the-art fabrication equipment and techniques, and most of our products are designed to be
manufactured in a specific process, typically at one particular fab or foundry, either our own or with a particular CM. Qualifying and establishing reliable
production at acceptable yields with a new CM, if at all, is a lengthy and often expensive process.
We depend on our CMs to allocate sufficient manufacturing capacity to meet our needs, to produce products of acceptable quality at acceptable yields,
and to deliver those products to us on a timely basis. We do not generally have long-term capacity commitments with our CMs and substantially all of our
manufacturing services are on a purchase order basis with no minimum quantities. Further, our CMs may fail to timely develop or successfully implement
new, advanced manufacturing processes, including transitions to smaller geometry process technologies. From time to time, our CMs may also cease to, or
become unable to, manufacture a component for us.
TSMC, one of our CMs, manufactured approximately 95% of the wafers manufactured by our CMs during fiscal year 2024. We believe our wafer
requirements represent a meaningful portion of TSMC’s total production capacity. However, TSMC also fabricates wafers for other companies, including some
of our competitors, and could choose or be required to prioritize capacity for other customers or reduce or eliminate deliveries to us on short notice. In
addition, TSMC has, and may in the future, raise their prices to us.
If any of the foregoing circumstances occur, we may be unable to meet our customer demand, or to the same extent as our competitors, fail to meet our
contractual obligations or forgo revenue opportunities. This could damage our relationships with our customers, result in litigation for alleged failure to meet
our obligations, or result in payment of significant damages, and our net revenue could decline, adversely affecting our business, financial condition, results of
operations and gross margin.
We purchase a significant amount of the materials, including components, used in our products from a limited number of suppliers.
Our manufacturing processes and those of our CMs rely on many materials, including silicon, GaAs and InP wafers, copper lead frames, precious and rare
earth metals, mold compound, ceramic packages and various chemicals and gases. During fiscal year 2024, we purchased approximately two-thirds of our
manufacturing materials from five materials suppliers, some of which are single source suppliers. The lead time needed to identify and qualify a new supplier
is typically lengthy and there is often no readily available alternative source. We do not generally have long-term contracts with our materials suppliers and
substantially all of our purchases are on a purchase order basis. Suppliers may extend lead times, limit supplies, place products on allocation or increase
prices, any of which could disrupt supply or increase demand in the industry. Additionally, the supply of these materials may be negatively impacted by
increased trade tensions between the U.S. and its trading partners, particularly China. Any such supply constraints could result in loss of revenue
opportunities and adversely impact our business, financial condition and results of operations.
A prolonged disruption of our or our suppliers’ manufacturing facilities, research and development facilities, warehouses or other significant operations
could have a material adverse effect on our business, financial condition and results of operations.
Although we operate a primarily outsourced manufacturing business model, we also rely on our own manufacturing facilities, in particular in Fort Collins,
Colorado, Singapore, and Breinigsville, Pennsylvania. Our Fort Collins and Breinigsville facilities are the sole sources for the FBAR components used in many of
our wireless devices and for the InP-based wafers used in our fibre optics products, respectively. Many of our facilities, and those of our CMs and suppliers,
are concentrated in the same geographic regions of California and the Pacific Rim, which have above average seismic activity and severe weather activity, and
increases the risk of natural disasters impacting multiple suppliers. In addition, a significant majority of our research and development personnel are located
in the Czech Republic, India, Israel, and the U.S., and our primary warehouse is in Malaysia.
A prolonged disruption at or shut-down of one or more of our manufacturing facilities or warehouses or those of our CMs or suppliers, due to natural- or
man-made disasters or other events outside of our control, such as climate change, water shortages, political unrest, military conflicts, geopolitical turmoil,
trade tensions, government orders, labor shortages, medical epidemics, economic instability, equipment failure or for any other reason, would limit our
capacity to meet customer demands and delay new product development until a replacement facility and equipment, if necessary, were found. To date, such
events have not had a material adverse effect on our business. However, such an event could disrupt our operations, forgo revenue opportunities, potentially
lose market share, result in us being unable to timely satisfy customer demand, expose us to claims by our customers, result in significant expense to repair or
replace our affected facilities, and, in some
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instances, could significantly curtail our research and development efforts in a particular product area or target market, any of which could materially and
adversely affect our business. This disruption could also prevent our customers from resuming their own manufacturing following such an event, they may
cancel or scale back their orders from us and this may in turn adversely affect our results of operations. Such events could also result in increased fixed costs
relative to the revenue we generate and adversely affect our results of operations.
Failure to adjust our manufacturing and supply chain to accurately meet customer demand could adversely affect our results of operations.
We make significant decisions, including determining the levels of business that we will seek and accept, production schedules, levels of reliance on
contract manufacturing and outsourcing, internal fabrication utilization and other resource requirements, based on customer requirements or estimates
thereof, which may not be accurate. Many factors could impact our estimates of customers’ demands, including changes in product development cycles,
competing technologies and product releases, new or unexpected end-user products, such as demand for AI-related products, and changes in business and
economic conditions. If we are unable to timely respond to changes in customer demand, this could damage our customer relationships, harm our
reputation, prevent us from taking advantage of opportunities and adversely impact our business, financial condition and results of operations.
We may be unable to maintain appropriate manufacturing capacity or product yields at our own manufacturing facilities, which could adversely affect
our relationships with our customers, and our business, financial condition and results of operations.
We must maintain appropriate capacity and product yields at our own manufacturing facilities to meet anticipated customer demand. From time to time,
this requires us to invest in expansion or improvements of those facilities, which may not be sufficient or in time, to meet customer demand and we may have
to put customers on product allocation, forgo sales or lose customers as a result. Conversely, if we overestimate customer demand, we would experience
excess capacity and fixed costs at these facilities will not be fully absorbed, which could adversely affect our results of operations. Similarly, reduced product
yields, due to design or manufacturing issues or otherwise, may involve significant time and cost to remedy and cause delays in our ability to supply product
to our customers, all of which could cause us to forgo sales, incur liabilities or lose customers, and harm our results of operations.
We may be involved in legal proceedings, including IP, securities litigation, and employee-related claims, which could, among other things, divert efforts
of management and result in significant expense and loss of our IP rights.
We are often involved in legal proceedings, including cases involving our IP rights and those of others, commercial matters, acquisition-related lawsuits,
securities class action lawsuits, employee-related claims and other actions. Litigation or settlement of such actions, regardless of their merit, have been, and
can continue to be, costly, lengthy, complex and time consuming, diverting the attention and energies of our management and technical personnel.
The industries in which we operate are characterized by companies holding large numbers of patents, copyrights, trademarks and trade secrets and
vigorously pursuing, protecting and enforcing IP rights, including actions by patent-holding companies that do not make or sell products. From time to time,
third parties assert against us and our customers and distributors their IP rights to technologies that are important to our business. We may be required to
indemnify our customers or purchasers for third-party IP infringement claims, including costs to defend those claims, and payment of damages in the case of
adverse rulings. However, our CMs and suppliers may or may not be required to indemnify us should we or our customers be subject to such third-party
claims. Claims of this sort could also harm our relationships with our customers and might deter future customers from doing business with us. If any pending
or future proceedings result in an adverse outcome, we could be required to:
•
cease the manufacture, use or sale of the infringing products, processes or technology and/or make changes to our processes or products;
•
pay substantial damages for past, present and future use of the infringing technology, including up to treble damages if willful infringement is found;
•
expend significant resources to develop non-infringing technology;
•
license technology from the third party claiming infringement, which license may not be available on commercially reasonable terms, or at all;
•
enter into cross-licenses with our competitors, which could weaken our overall IP portfolio and our ability to compete in particular product
categories;
•
pay substantial damages to our direct or end customers to discontinue use or replace infringing technology with non-infringing technology; or
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•
relinquish IP rights associated with one or more of our patent claims.
Any of the foregoing results could have a material adverse effect on our business, financial condition and results of operations.
Failure of our software products to manage and secure IT infrastructures and environments could have a material adverse effect on our business.
Certain aspects of our software products are intended to manage and secure IT infrastructures and environments, and as a result, we expect these
products to be ongoing targets of cyber-attacks. Open source code or other third-party software used in these products could also be targeted and may make
our products vulnerable to additional security risks not posed by purely proprietary products. Our products are complex and, when deployed, may contain
errors, defects or security vulnerabilities, some of which may not be discovered before the product has been released, installed and used by customers. The
complexity and breadth of our technical and production environments, which involve globally dispersed development and engineering teams, increases the
risk that errors, defects or vulnerabilities will be introduced and may delay our ability to detect, mitigate or remediate such incidents.
In the past, elements of our proprietary source code have been exposed in an unauthorized manner. It is possible that such exposure of source code
could reveal unknown security vulnerabilities in our products that could be exploited by malicious actors. Our products are also subject to known and
unknown security vulnerabilities resulting from integration with third-party products or services.
Although we continually seek to improve our countermeasures to prevent such incidents, we may be unable to anticipate every scenario and it is possible
that certain cyber threats or vulnerabilities will be undetected or unmitigated in time to prevent an attack or an accidental incident on us and our customers.
Additionally, efforts by malicious cyber actors or others could cause interruptions, delays or cessation of our product licensing, or modification of our
software, which could cause us to lose existing or potential customers.
A successful cyber-attack involving our products could cause customers and potential customers to believe our services are ineffective or unreliable and
result in, among other things, the loss of customers, unfavorable publicity, damage to our reputation, difficulty in marketing our products, and allegations by
our customers that we have not performed our contractual obligations, and give rise to significant costs, including costs related to developing solutions or
indemnification obligations under our agreements. Any such event could adversely impact our revenue and results of operations. See also “Cyber security
threats or other security breaches, or any other impairment of the confidentiality, integrity or availability of our IT systems, or those of one or more of our
corporate infrastructure vendors, could have a material adverse effect on our business.”
The growth of our software business depends on demand for our data center virtualization products, as well as customer acceptance of our products,
services and business strategy.
Many of our software products and services are based on data center virtualization and related hybrid-cloud technologies used to manage distributed
computing architectures, which form the foundation for hybrid-cloud computing. Enabling businesses to modernize applications and efficiently implement
their hybrid-cloud services presents new and difficult technological, operational and compliance challenges. If businesses build new or shift existing compute
workloads off-premises to public cloud providers, this could limit the market for on-premises deployments of our data center virtualization products. Current
and future customers may not perceive benefits associated with adopting our hybrid-cloud and enterprise-grade private cloud platform or our simplified
product portfolios. If demand is significantly less than anticipated or we fail to realize the expected returns on our business strategy, our business, financial
condition, results of operations and cash flows may be adversely affected.
If our software products do not remain compatible with ever-changing operating environments, platforms, or third-party products, demand for our
products and services could decrease, which could materially adversely affect our business.
We may be required to make substantial modification of our products to maintain compatibility with operating systems, systems software and computer
hardware used by our customers or to provide our customers with desired features or capabilities. We must also continually address the challenges of
dynamic and accelerating market trends and competitive developments, such as the emergence of advanced persistent threats in the security space, to
compete effectively. There can be no assurance that we will be able to adapt our products in response to these developments.
Further, our software solutions interact with a variety of software and hardware developed by third parties, as well as cloud providers. If we lose access
to third-party code and specifications for the development of code or cloud providers fail to support our products or otherwise limit the functionality,
compatibility or certification of our products or otherwise impose unfavorable terms and conditions, this could negatively impact our ability to develop
compatible software. This could result in higher research and development costs for the enhancement and modification of our existing products or
development of
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new products. Any additional restrictions could materially adversely affect our business, financial condition and operating results and cash flow.
Failure to enter into software license agreements on a satisfactory basis could materially adversely affect our business.
Many of our existing software customers have multi-year enterprise software license agreements, some of which involve substantial aggregate fee
amounts. These customers often do not have a contractual obligation to purchase additional solutions and often have termination for convenience clauses
without payment of a substantive penalty. The failure or inability to renew customer agreements of similar scope, on terms that are commercially attractive
to us, could materially adversely affect our business, financial condition and operating results and cash flow, or software license agreements without
termination for convenience clauses could cause our operating results to fluctuate.
Our use of open source software in certain products and services could materially adversely affect our business, financial condition, operating results and
cash flow.
Many of our products and services incorporate open source software, the use of which may subject us to certain conditions, including the obligation to
offer such products for no cost or to make the proprietary source code of those products publicly available. Open source licenses are generally “as-is” and do
not provide warranties, support or assurance of title or controls on origin, which may expose us to potential liability if the software fails to work or has
security vulnerabilities.
Although we monitor our use of open source software to avoid subjecting our products to unintended conditions and security vulnerabilities, we may
receive third-party claims regarding our compliance with the conditions of such open source licenses and we may be required to take steps to remedy an
alleged infringement or noncompliance, including modifying or releasing our product code or paying damages.
Our sales to government customers subject us to uncertainties and governmental regulations, which could have a material adverse effect on our
business.
Our contracts signed with the U.S. federal, state and local government and non-U.S. government agencies are generally subject to annual fiscal funding
approval and may be renegotiated or terminated at the discretion of the government. Termination, renegotiation or the lack of funding approval for a
contract could adversely affect our sales, revenue and reputation. Additionally, our government contracts and our arrangements with channel partners who
may sell directly to government customers are generally subject to requirements that may generally not be present in commercial contracts and/or may be
complex, as well as audits and investigations. Failure to meet contractual requirements could result in various civil and criminal actions and penalties, and
administrative sanctions, including termination of contracts, refund of a portion of fees received, forfeiture of profits, suspension of payments, fines and
suspensions or debarment from doing business with the government, which could materially adversely affect our business, financial condition, operating
results and cash flow.
Failure to effectively manage our products and services lifecycles could harm our business.
As part of the natural lifecycle of our products and services, customers are informed when products or services will be reaching their end of life or end of
availability and will no longer be supported or receive updates and security patches. If these products or services remain subject to a service contract, the
customer may transition to alternative products or services. Failure to effectively manage our products and services lifecycles could lead to customer
dissatisfaction and contractual liabilities, which could adversely affect our business and operating results.
Our operating results are subject to substantial quarterly and annual fluctuations.
Our operating results have fluctuated in the past and are likely to fluctuate in the future. These fluctuations may occur on a quarterly and annual basis
and are due to a number of factors, many of which are beyond our control. In addition to many of the risks described elsewhere in this “Risk Factors” section,
these factors include, among others:
•
the timing of launches by our customers of new products in which our products are included and changes in end-user demand for our customers’
products;
•
fluctuations in the levels of component or product inventories held by our customers, which may lead to increased requests to delay shipment of our
semiconductor products;
•
the shift to cloud-based IT solutions and services, such as hyperscale computing, which may adversely affect the timing and volume of sales of our
semiconductor products for use in traditional enterprise data centers;
•
the timing and extent of our software license and subscription revenue, and other non-product revenue;
•
the timing of new software contracts and renewals, including the timing of software contracts that do not have termination for convenience clauses;
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•
the timing of any terminations of software contracts that require us to refund to customers any pre-paid amounts under the contract;
•
the timing of contracts with distributors and channel partners to lead go-to-market and customer relationships for certain products;
•
our ability to timely develop, introduce and market new products and technologies;
•
new product announcements and introductions by us or our competitors;
•
seasonality or other fluctuations in demand in our markets;
•
timing and amount of research and development and related new product expenditures, and the timing of receipt of any research and development
grant monies; and
•
timing of any regulatory changes, particularly with respect to trade sanctions and customs duties and tariffs, and tax reform, or changes in the
interpretation or enforcement of existing requirements.
The foregoing factors are often difficult to predict, and these, as well as other factors, could materially adversely affect our quarterly or annual operating
results. In addition, a significant amount of our operating expenses are relatively fixed in nature. Any failure to adjust spending quickly enough to compensate
for a revenue shortfall could magnify the adverse impact of such revenue shortfall on our results of operations. As a result, we believe that quarter-to-quarter
comparisons of our revenue and operating results may not be meaningful or reliable indicators of our future performance. If our operating results in one or
more future quarters fail to meet the expectations of securities analysts or investors, a significant decline in the trading price of our common stock may occur,
which may happen immediately or over time.
Competition in our industries could prevent us from growing our revenue.
The industries in which we operate are highly competitive and characterized by rapid technological changes, evolving industry standards, changes in
customer requirements, often aggressive pricing practices and, in some cases, new delivery methods. We expect competition in these industries to continue
to increase as existing competitors improve or expand their product offerings or as new competitors enter our markets. In addition, the trend toward
consolidation is changing the competitive landscape. We expect this trend to continue, which may result in combined competitors having greater resources
than us.
Some of our competitors have longer operating histories, greater name recognition or presence in key markets, a larger installed customer base, larger
technical staff, a more comprehensive IP portfolio or better patent protection, more established relationships with vendors or suppliers, or greater
manufacturing, distribution, financial, research and development, technical and marketing resources than us. We face competition from companies that
receive financial and other support from their home country government, customers who develop competing products, public cloud providers, numerous
smaller companies that specialize in specific aspects of the highly fragmented software industry, open source authors who provide software and IP for free,
and competitors who offer their products through try-and-buy or freemium models.
The actions of our competitors, in the areas of pricing and product bundling in particular, could have a substantial adverse impact on us. Further,
competitors may leverage their superior market position, as well as IP or other proprietary information, including interface, interoperability or technical
information, in new and emerging technologies and platforms that may inhibit our ability to compete effectively. If we are unable to compete successfully, we
may lose market share for our products or incur significant reduction in our gross margins, either of which could have a material adverse effect on our
business and results of operations.
Our gross margin is dependent on a number of factors, including our product mix, price erosion, acquisitions we may make, level of capacity utilization
and commodity prices.
Our gross margin is highly dependent on product mix, which is susceptible to seasonal and other fluctuations in our markets. A shift in sales mix away
from our higher margin products, as well as the timing and amount of our software licensing and non-product revenue, could adversely affect our future gross
margin percentages. In addition, increased competition and the existence of product alternatives, more complex engineering requirements, lower demand,
industry oversupply or reductions in our technological lead compared to our competitors, and other factors have in the past and may in the future lead to
further price erosion, lower revenue and lower margin. Conversely, periods of robust demand that create a supply imbalance can lead to higher gross margins
that may not be sustainable over the longer term.
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We utilize a significant amount of IP in our business. If we are unable or fail to protect our IP, our business could be adversely affected.
Our success depends in part upon protecting our IP. To accomplish this, we rely on a combination of IP rights, including patents, copyrights, trademarks
and trade secrets, as well as customary contractual protections with our customers, suppliers, employees and consultants. We spend significant resources to
monitor and protect our IP rights, including the unauthorized use of our products and usage rates of the software seat licenses and subscriptions that we sell.
Even with significant expenditures, we may not be able to protect the IP rights that are valuable to our business or have sufficient IP rights to protect our
products or our business. Further, effective IP protection may be unavailable or more limited in other jurisdictions, relative to those protections available in
the U.S., and may not be applied for or may be abandoned in one or more relevant jurisdictions. In addition, when patents expire, we lose the protection and
competitive advantages they provided to us.
We also generate revenue from licensing royalty payments and from technology claim settlements relating to certain of our IP. Licensing of our IP rights,
particularly exclusive licenses, may limit our ability to assert those IP rights against third parties, including the licensee of those rights. In addition, from time
to time, we acquire companies with IP that is subject to licensing obligations to other third parties. These licensing obligations have extended, and may in the
future extend, to our own IP, limiting our ability to assert our IP rights.
From time to time, we pursue litigation to assert our IP rights, including, in some cases, against our customers and suppliers. Claims of this sort could also
harm our relationships with our customers and might deter future customers from doing business with us. Conversely, third parties have and may in the
future pursue IP litigation against us, including as a result of our IP licensing business. Any inability to adequately protect our IP could limit the value of our
technology, result in the loss of opportunities to sell or license our technology to others or limit our collection of royalty payments, any of which could
negatively impact our business, financial condition and results of operations.
In addition, from time to time, we obtain or renew IP licenses. Our inability to obtain or renew these licenses on acceptable terms, or at all, could have a
material adverse effect on our business and results of operations.
We are subject to warranty claims, product recalls and product liability.
From time to time, we may be subject to warranty or product liability claims that may lead to significant expense. Our customer contracts typically
contain warranty and indemnification provisions, and in certain cases may also contain liquidated damages provisions. The potential liabilities associated with
such provisions are significant, and in some cases, including in agreements with some of our largest customers, are potentially unlimited. Any such liabilities
may greatly exceed any revenue we receive from the relevant products. Costs, payments or damages incurred or paid by us in connection with warranty and
product liability claims and product recalls could materially adversely affect our financial condition and results of operations. We may also be exposed to such
claims as a result of any acquisition we may undertake in the future. Product liability insurance is subject to significant deductibles and there is no guarantee
that such insurance will be available or adequate to protect against all such claims, or we may elect to self-insure with respect to certain matters. Although we
maintain reserves for reasonably estimable liabilities and purchase product liability insurance, our reserves may be inadequate to cover the uninsured portion
of such claims.
The complexity of our products could result in unforeseen delays or expense or undetected defects or bugs, which could adversely affect the market
acceptance of new products, damage our reputation with current or prospective customers, and materially and adversely affect our operating costs.
Highly complex products, such as those we offer, may contain defects and bugs when they are first introduced or as new versions, software
documentation or enhancements are released, or their release may be delayed due to unforeseen difficulties during product development. If any of our
products or third-party components used in our products, contain defects or bugs, or have reliability, quality or compatibility problems, we may not be able to
successfully design workarounds. Furthermore, if any of these problems are not discovered until after we have commenced commercial production or
deployment, we may be required to incur additional development costs and product recall, repair or replacement costs. Significant technical challenges also
arise with our software products because our customers license and deploy our products across a variety of computer platforms and integrate them with a
number of third-party software applications and databases. As a result, if there is system-wide failure or an actual or perceived breach of information
integrity, security or availability occurs in one of our end-user customer’s system, it can be difficult to determine which product is at fault and we could
ultimately be harmed by the failure of another supplier’s product. Consequently, our reputation may be damaged and customers may be reluctant to buy our
products and we may have to invest significant capital and other resources, which could materially and adversely affect our ability to retain existing customers
and attract new customers. As a result, our financial results could be materially adversely affected.
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We collect, use, store, or otherwise process personal information, which subjects us to privacy and data security laws and contractual commitments, and
our actual or perceived failure to comply with such laws and commitments could harm our business.
We collect, use and store (collectively referred to as “process” in this paragraph) a high volume, variety and velocity of certain personal information in
connection with the operation of our business. This creates various levels of privacy risks across different parts of our business, depending on the type of
personal information, the jurisdiction in question and the purpose of their processing. The personal information we process is subject to an increasing
number of federal, state, local, and foreign laws and regulations regarding privacy and data security, as well as contractual commitments. Privacy legislation
and other data protection regulations, enforcement and policy activity in this area are expanding rapidly in many jurisdictions and creating a complex
regulatory compliance environment. Sectoral legislation, certification requirements and technical standards applying to certain categories of our customers,
such as those in the financial services or public sector, have exacerbated this trend. The cost of complying with and implementing these privacy-related and
data governance measures could increase depending on any additional burdensome security, business processes, or business record or data localization
requirements. Concerns about government interference, sovereignty and expanding privacy, cybersecurity and data governance legislation could adversely
affect our customers and our products and services, particularly in cloud computing, AI and our own data management practices. The theft, loss or misuse of
personal data collected, used, stored or transferred by us to run our business could result in significantly increased business and security costs or costs related
to defending legal claims. Any inadvertent failure or perceived failure by us to comply with privacy, data governance or cybersecurity obligations may result in
governmental enforcement actions, litigation, substantial fines and damages, and could cause our customers to lose trust in us, which could have an adverse
effect on our reputation and business.
Environmental, social and governance (“ESG”) matters may adversely affect our relationships with customers and investors and increase compliance
costs.
There is an increasing focus from lawmakers, regulators, investors, customers, employees and other stakeholders concerning ESG matters, including
environment, climate, water, diversity and inclusion, human rights and governance transparency. A number of our customers have adopted, or may adopt,
procurement policies that include ESG provisions or requirements that their suppliers should comply with, or they may seek to include such provisions or
requirements in their procurement terms and conditions. An increasing number of investors are also requiring companies to disclose ESG-related policies,
practices and metrics. In addition, various jurisdictions have adopted, or are developing, complex and lengthy ESG-related laws or regulations that may be
difficult to comply with and will increase our direct compliance costs, as well as indirect costs passed on to us from our customers and suppliers. Further,
there is an increasing number of state-level anti-ESG initiatives in the United States that may conflict with other regulatory requirements or our various
stakeholders’ expectations. If we fail to materially comply with or meet the evolving legal and regulatory requirements or expectations of our various
stakeholders, we may be subject to enforcement actions, required to pay fines, face decreased customer demand or lose investors, which could harm our
reputation, revenue and results of operations. Our actual or perceived failure to achieve our publicly disclosed ESG-related initiatives could negatively impact
our reputation, subject us to litigation or enforcement actions, or otherwise harm our business.
In addition, an increasing number of OEMs are seeking to source products that do not contain conflict minerals. This could adversely affect the sourcing,
availability and pricing of minerals used in the manufacture of semiconductor devices, including our products. As a result, we may face difficulties in satisfying
our customers’ demands, which may harm our sales and operating results.
We must comply with technical standards and a variety of domestic and international laws and regulations in the manufacture and distribution of our
semiconductors, the costs of which could have a material adverse effect on our business, financial condition and results of operations.
The manufacture and distribution of our semiconductors must comply with technical standards and a variety of domestic and international laws and
regulations, including those related to the materials composition of our semiconductor products, and the use, disposal, clean-up of and human exposure to
hazardous materials. This could increase the complexity and costs of our product design and procurement operations, require us to stop distributing our
products commercially until they comply with such new standards, lead our customers to suspend imports of their products into that country, require us to
re-engineer our products and disrupt cross-border manufacturing relationships. In addition, we may be required to modify our manufacturing process or
equipment, or be restricted in our ability to expand our facilities. Any failure by us to comply with such requirements could result in litigation against us and
the payment of significant fines and damages by us in the event of a significant adverse judgment. Any such event could have a material adverse effect on our
business, financial condition and results of operations. Complying with any cleanup or remediation obligations for which we are or become responsible could
also be costly and have a material adverse effect on our business, financial condition and results of operations.
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Risks Related to Our Taxes
Our income taxes and overall cash tax costs are affected by a number of factors that could have a material, adverse effect on our financial results.
Our income taxes are subject to volatility and could be adversely affected by numerous factors, including reorganization or restructuring of our business,
tax structure, business combinations, jurisdictional mix of our income and assets, and changes in tax legislation or accounting policies or related
interpretations.
As a result of U.S. tax reforms, our global income is subject to tax in the U.S. and we expect an increase in our effective tax rate and our cash tax costs. In
addition, many countries are implementing anti-base-erosion legislation and guidance aimed at standardizing and modernizing global corporate tax policy,
including changes to cross-border tax, transfer pricing documentation rules, and nexus-based tax incentive practices. Many countries have implemented or
are in the process of implementing a global minimum tax, which may materially increase our effective tax rate and cash tax costs. For example, Singapore
recently adopted the global minimum tax, which will be effective for our fiscal year 2026. Substantial changes in domestic or international corporate tax
policies, regulations or guidance, enforcement activities or legislative investigations and inquiries may materially adversely affect our business and impact our
provision for income taxes, net income, cash flow and our results of operations generally.
Significant judgment is required in determining our worldwide income taxes, and our calculations of income taxes payable currently and on a deferred
basis are based on our interpretations of applicable tax laws. Although we believe our tax estimates are reasonable, there is no assurance that the final
determination of our income tax liability will not be materially different than what is reflected in our income tax provisions and accruals. In addition, we are
subject to, and are under, tax audits in various jurisdictions. Although we believe our tax positions are reasonable, the final determination of tax audits could
be materially different from our income tax provisions and accruals, which could have a material adverse effect on our results of operations and cash flows in
the period or periods for which that determination is made.
As a result of the VMware Merger, we are subject to tax audits in various jurisdictions for the Dell Technologies, Inc. (“Dell”) consolidated group, of which
VMware was a member beginning in Dell’s fiscal year 2017 until November 2021. While VMware is no longer a member of the Dell consolidated group, it is
still subject to audit for the periods in which it was member of the Dell consolidated group. While we believe VMware’s positions are reasonable, the final
determination of tax audits could be materially different from our income tax provisions and accruals. Further, pursuant to a tax agreement between VMware
and Dell, in the event VMware becomes subject to audits as a member of Dell’s consolidated group, Dell has authority to control the audit and represent Dell
and our interests, which could limit our ability to affect the outcome of such audits.
If our tax incentives or tax holiday arrangements change or cease to be in effect or applicable, our corporate income taxes could significantly increase.
Our operations benefit from the various tax incentives extended to us in various jurisdictions to encourage investment or employment. Each tax incentive
and tax holiday is subject to our compliance with various conditions and may, in some instances, be amended or terminated prior to their scheduled
termination date by the relevant governmental authority. If we cannot, or elect not to, comply with the conditions related to our tax incentive or tax holiday,
we could be required to refund previously realized material tax benefits. If such tax incentive or tax holiday is modified or terminated prior to its expiration
absent a new incentive applying, we could suffer material adverse tax and other financial consequences, which would increase our expenses, reduce our
profitability and adversely affect our cash flows. In addition, we may be required, or elect, to modify our operational structure and tax strategy in order to
keep an incentive, which could result in a decrease in the benefits of the incentive. Adoption of global minimum tax provisions in a country in which we have
an existing tax incentive could have a material adverse impact on our tax incentives. Our tax incentives and tax holiday, before taking into consideration U.S.
foreign tax credits, decreased the provision for income taxes by approximately $2,261 million in the aggregate and increased diluted net income per share by
$0.47 for fiscal year 2024.
Our interpretations and conclusions regarding the tax incentives are not binding on any taxing authority, and if our assumptions and interpretations are
incorrect, the benefits of the tax incentives may be adversely affected.
We have potential tax liabilities as a result of VMware’s former controlling ownership by Dell, which could have an adverse effect on our financial
condition and operating results.
If the VMware spin-off from Dell in November 2021 is determined to not be tax-free for any reason, we could be liable for all or a portion of the tax
liability, which could have a material adverse effect on our financial condition and operating results. Further, if the VMware Merger results in the spin-off
failing to qualify as a tax-free transaction under Section 355 of the Internal Revenue Code, Dell, its affiliates and, potentially, its stockholders would incur
significant tax liabilities and we may be required to indemnify Dell and its affiliates for any such tax liabilities, which could be material.
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Risks Related to Our Indebtedness
Our substantial indebtedness could adversely affect our financial health and our ability to execute our business strategy.
As of November 3, 2024, the aggregate indebtedness was $69,847 million. Our substantial indebtedness and the instruments governing our indebtedness
could have important consequences including:
•
increasing our vulnerability to adverse general economic and industry conditions;
•
exposing us to interest rate risk as our 2023 Term Loans bear floating interest rates;
•
limiting our flexibility in planning for, or reacting to, changes in the economy and the industries in which we operate;
•
placing us at a competitive disadvantage compared to our competitors with less indebtedness;
•
making it more difficult to borrow additional funds in the future to fund growth, acquisitions, working capital, capital expenditures and other
purposes; and
•
potentially requiring us to dedicate a substantial portion of our cash flow from operations to payments on our indebtedness, thereby reducing the
availability of our cash flow to fund our other business needs.
We receive debt ratings from the major credit rating agencies in the U.S., and any downgrade in our credit rating or the ratings of our indebtedness, or
adverse conditions in the debt capital markets, could materially adversely affect our business, financial condition and results of operations.
Risks Related to Owning Our Common Stock
Our stock price has been, and may in the future be, volatile and your investment could lose value.
The trading price of our common stock has, at times, fluctuated significantly and could be subject to wide fluctuations in response to any of the risk
factors listed in this “Risk Factors” section, and others, including:
•
issuance of new or updated research or other reports by securities analysts;
•
anticipated or actual demand for AI-related products, including ASICs such as custom AI accelerators or XPUs;
•
broad market, industry and competitor-related fluctuations;
•
unsubstantiated news reports or other inaccurate publicity regarding us or our business;
•
fluctuations in the valuation and results of operations of our significant customers as well as companies perceived by investors to be comparable to
us;
•
announcements of proposed acquisitions by us or our competitors;
•
announcements of, or expectations of, additional debt or equity financing transactions;
•
hedging or arbitrage trading activity involving our common stock; and
•
significant sales of our common stock by one or more of our largest investors.
These fluctuations are often unrelated or disproportionate to our operating performance. Broad market and industry fluctuations, as well as general
economic, political and market conditions such as recessions, interest rate changes or currency fluctuations, may negatively impact the market price of our
common stock. You may not realize any return on your investment in us and may lose some or all of your investment. In the past, companies that have
experienced volatility in the market price of their stock have been subject to securities class action litigation. We may be the target of this type of litigation in
the future. In addition, we have been, and in the future we may be, subject to lawsuits stemming from our acquisitions. Securities litigation against us,
including the lawsuits related to such acquisitions, could result in substantial costs and divert our management’s attention from other business concerns,
which could seriously harm our business.
There can be no assurance that we will continue to declare cash dividends.
Our Board of Directors has adopted a dividend policy pursuant to which we currently pay a cash dividend on our common stock on a quarterly basis. The
declaration and payment of any dividend is subject to the approval of our Board of Directors and our dividend may be discontinued or reduced at any time.
Because we are a holding company, our ability to pay cash dividends is also limited by restrictions or limitations on our ability to obtain sufficient funds
through dividends from subsidiaries. There can be no assurance that we will declare cash dividends in the future in any particular amounts, or at all. A
reduction in our cash dividend payments could have a negative effect on our stock price.
ITEM 1B.
UNRESOLVED STAFF COMMENTS
None.
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ITEM 1C.
CYBERSECURITY
Risk Management and Strategy
Our cybersecurity risk management program is intended to protect the confidentiality, integrity and availability of our critical systems and information.
Our program includes processes for identifying, assessing and managing material risks from cybersecurity threats that are guided by the National Institute of
Standards & Technology’s Cyber Security Framework, the ISO 27001 international standard for information security and other applicable industry
benchmarks.
Our cybersecurity risk management program is integrated into our overall enterprise risk management system and processes, and includes:
•
a team of professionals within our Global Technology Organization team who are responsible for identifying and mitigating cybersecurity risks and
managing our security controls and response activities;
•
risk assessment processes designed to identify cybersecurity risks to our critical systems, information, products, services and our broader enterprise
IT environment;
•
an annual tabletop exercise to simulate a response to a cybersecurity incident; and
•
mandatory training annually and upon hiring for all employees on data privacy and cybersecurity topics.
When appropriate, we utilize independent, external service providers to assess, test or otherwise assist with certain aspects of our cybersecurity risk
management program and related processes, including for penetration testing, threat monitoring and incident response. We also employ a vendor risk
assessment process to mitigate risks presented by certain third-party service providers, and we require such providers to manage their cybersecurity risks in
conformance to industry standards, notify us of relevant cybersecurity events and satisfy additional contractual requirements.
As of the date of this Annual Report on Form 10-K, we are not aware of any risks from cybersecurity threats, including as a result of any previous
cybersecurity incidents, that have materially affected or are reasonably likely to materially affect us, including our business strategy, results of operations, or
financial condition. See Item 1A. Risk Factors, “Cyber security threats or other security breaches, or any other impairment of the confidentiality, integrity or
availability of our IT systems, or those of one or more of our corporate infrastructure vendors, could have a material adverse effect on our business” in this
Annual Report on Form 10-K for additional information about our cybersecurity-related risks.
Cybersecurity Governance
Our Board of Directors is actively involved in overseeing our cybersecurity risk management and shares oversight responsibility and processes with the
Audit Committee of the Board of Directors (the “Audit Committee”).
Our management, including our Chief Information Officer (“CIO”), in consultation with our Chief Information Security Officer (“CISO”), reviews with the
Audit Committee at least quarterly our cybersecurity security policies, practices and protective measures, threat intelligence, cybersecurity incidents and
related risks. At least quarterly, our CIO also provides the Audit Committee with an update on our enterprise security program that includes procedures and
policies for testing vulnerabilities, responding to cybersecurity threats, and training and evaluating our employees. The Audit Committee and management
also update our Board of Directors at least quarterly on our cybersecurity performance and risk profile and the effectiveness of our cybersecurity processes.
Our management, including our CIO and CISO, are responsible for assessing and managing material risks from cybersecurity threats. Our CIO oversees
our Global Technology Organization that has primary responsibility for our overall cybersecurity risk management program. Our CIO, who reports to our Chief
Executive Officer, has over 20 years of experience managing global IT operations, including strategy, applications, infrastructure, information security, support
and execution. Our CISO, who reports to the CIO, has approximately 30 years of cybersecurity experience assessing and managing cybersecurity programs.
Our management is informed about and monitors the prevention, detection, mitigation, and remediation of cybersecurity risks and incidents through
various means, which may include, among other things, threat intelligence and other information obtained from governmental, public or private sources,
including external consultants engaged by us, and alerts and reports produced by security tools deployed in our IT environment.
ITEM 2.
PROPERTIES
We are headquartered in Palo Alto, California and our primary warehouse is located in Malaysia. We conduct our administration, manufacturing,
research and development, sales and marketing in both owned and leased facilities. We believe that our owned and leased facilities are adequate for our
present operations. We do not identify or allocate assets by operating segment.
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As of November 3, 2024, our owned and leased facilities in excess of 100,000 square feet consisted of:
(In square feet)
United States
Other Countries
Total
Owned facilities
2,919,706
928,888
3,848,594
Leased facilities
849,322
2,354,773
3,204,095
Total facilities
3,769,028
3,283,661
7,052,689
_______________
(a) Includes 318,000 square feet and 153,000 square feet of property owned in Malaysia subject to a 60-year land lease with the state authority expiring in
May 2051 and March 2077, respectively, subject to renewal at our option. Also includes 561,000 square feet of property in Palo Alto, California subject to a
40-year land lease with the Stanford University Board of Trustees expiring in May 2046 that does not have a renewal option.
(b) Building leases expire on varying dates through February 2046 and generally include renewals at our option.
ITEM 3. LEGAL PROCEEDINGS
The information set forth under Note 14. “Commitments and Contingencies” included in Part II, Item 8 of this Annual Report on Form 10-K, is
incorporated herein by reference. For an additional discussion of certain risks associated with legal proceedings, see “Risk Factors” above.
ITEM 4. MINE SAFETY DISCLOSURES
None.
(a)
(b)
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Table of Contents
PART II
ITEM 5.
MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
Market Information
Broadcom common stock is listed on The Nasdaq Global Select Market under the symbol “AVGO”.
Holders
As of November 29, 2024, there were 1,735 holders of record of our common stock. A substantially greater number of stockholders are “street name”
or beneficial holders, whose shares are held of record by banks, brokers and other financial institutions.
Issuer Purchases of Equity Securities
During the fiscal quarter ended November 3, 2024, we paid approximately $1,204 million in employee withholding taxes due upon the vesting of net
settled equity awards. We withheld approximately 8 million shares of common stock from employees in connection with such net share settlement at an
average price of $160.31 per share. These shares may be deemed to be “issuer purchases” of shares.
In December 2021, our Board of Directors authorized a stock repurchase program to repurchase up to $10 billion of our common stock from time to
time through December 31, 2022, which was subsequently extended to December 31, 2023. In May 2022, our Board of Directors authorized another stock
repurchase program to repurchase up to an additional $10 billion of our common stock from time to time through December 31, 2023. All $20 billion of the
authorized amount under these stock repurchase programs was utilized prior to expiration on December 31, 2023.
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Table of Contents
Stock Performance Graph
The following graph shows a comparison of cumulative total return for our common stock, the Standard & Poor’s 500 Stock Index (the “S&P 500 Index”)
and the NASDAQ 100 Index for the five fiscal years ended November 3, 2024. The total return graph and table assume that $100 was invested on November
1, 2019 (the last trading day of our fiscal year 2019) in each of Broadcom Inc. common stock, the S&P 500 Index and the NASDAQ 100 Index and assume that
all dividends are reinvested. Indexes are calculated on a month-end basis.
The comparisons in the graph below are based on historical data and are not indicative of, or intended to forecast, the possible future performance of
our common stock.
Comparison of Five Year Cumulative Total Return
Among Broadcom Inc., the S&P 500 Index and the NASDAQ 100 Index
November 3, 2019
November 1, 2020
October 31, 2021
October 30,
2022
October 29,
2023
November 3, 2024
Broadcom Inc.
$
100.00
$
123.53
$
193.73
$
177.51
$
323.12
$
661.00
S&P 500 Index
$
100.00
$
108.65
$
155.28
$
133.58
$
143.35
$
202.39
NASDAQ 100 Index
$
100.00
$
136.71
$
197.45
$
144.98
$
179.61
$
255.89
The graph and the table above shall not be deemed “filed” with the SEC for the purposes of Section 18 of the Exchange Act or otherwise subject to the
liabilities of that section, nor shall it be deemed incorporated by reference in any filing made by us with the SEC, regardless of any general incorporation
language in such filing.
ITEM 6.
[RESERVED]
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Table of Contents
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
This Management’s Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with our consolidated
financial statements and notes thereto, which appear elsewhere in this Annual Report on Form 10-K. This discussion may contain forward-looking statements
based upon current expectations that involve risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking
statements as a result of various factors, including those set forth under the caption “Risk Factors” or in other parts of this Annual Report on Form 10-K.
The following section generally discusses our financial condition and results of operations for our fiscal year ended November 3, 2024 (“fiscal year
2024”) compared to our fiscal year ended October 29, 2023 (“fiscal year 2023”). A discussion regarding our financial condition and results of operations for
fiscal year 2023 compared to our fiscal year ended October 30, 2022 can be found in Part II, Item 7 of our Annual Report on Form 10-K for fiscal year 2023,
filed with the Securities and Exchange Commission (the “SEC”) on December 14, 2023.
Overview
We are a global technology leader that designs, develops and supplies a broad range of semiconductor and infrastructure software solutions. We
develop semiconductor devices with a focus on complex digital and mixed signal complementary metal oxide semiconductor based devices and analog III-V
based products. We offer thousands of products that are used in end products such as enterprise and data center networking, including artificial intelligence
(“AI”) networking and connectivity, home connectivity, set-top boxes, broadband access, telecommunication equipment, smartphones and base stations, data
center servers and storage systems, factory automation, power generation and alternative energy systems, and electronic displays. Our infrastructure
software solutions help enterprises simplify their information technology environments so they can increase business velocity and flexibility, and enable
customers to plan, develop, deliver, automate, manage and secure applications across mainframe, distributed, edge, mobile, and private and hybrid cloud
platforms. Our portfolio of infrastructure and security software is designed to modernize, optimize, and secure the most complex private and hybrid cloud
environments, enabling scalability, agility, automation, insights, resiliency and security making it easy for customers to run their mission-critical workloads.
We also offer mission-critical fibre channel storage area networking (“FC SAN”) products and related software in the form of modules, switches and
subsystems incorporating multiple semiconductor products.
We have two reportable segments: semiconductor solutions and infrastructure software. Our semiconductor solutions segment includes all of our
product lines and intellectual property (“IP”) licensing. Our infrastructure software segment includes our private and hybrid cloud, application development
and delivery, software-defined edge, application networking and security, mainframe, distributed and cybersecurity solutions, and our FC SAN business.
Our fiscal year 2024 was a 53-week fiscal year compared to our fiscal year 2023, which was a 52-week fiscal year. The additional week in the first quarter
of fiscal year 2024 resulted in higher net revenue, gross margin dollars, research and development expense, and selling general and administrative expense
for fiscal year 2024, compared to the corresponding prior year fiscal period.
Our strategy is focused on technology leadership and category-leading semiconductor and infrastructure software solutions delivering a comprehensive
suite of innovative infrastructure technology products to the world’s leading business and government customers. We seek to achieve this through strategic
acquisitions of businesses and technologies, as well as extensive internal research and development, to ensure our products retain their technology market
leadership. This strategy results in a robust business model designed to drive diversified and sustainable operating and financial results.
The demand for our products has been affected in the past, and is likely to continue to be affected in the future, by various factors, including the
following:
•
gain or loss of significant customers;
•
general economic and market conditions in the industries and markets in which we compete;
•
anticipated or actual demand for AI-related products;
•
our distributors’ product inventory and end customer demand;
•
the rate at which our present and future customers and end-users adopt our products and technologies in our target markets, including our AI
related products, and the rate at which our customers' products that include our technology are accepted in their markets;
•
the shift to cloud-based information technology solutions and services, such as hyperscale computing, which may adversely affect the timing and
volume of sales of our products for use in traditional enterprise data centers; and
•
the timing, rescheduling or cancellation of expected customer orders.
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Table of Contents
Fiscal Year Highlights
Highlights during fiscal year 2024 include the following:
•
On November 22, 2023, we completed the acquisition of VMware, Inc. (“VMware”), for approximately $30.8 billion in cash and 544 million shares of
Broadcom common stock (on a split adjusted basis) with a fair value of $53.4 billion.
•
We generated $19,962 million of cash from operations.
•
We paid $9,814 million in cash dividends.
•
We repurchased $7,176 million of common stock.
•
We completed a ten-for-one forward stock split of our common stock. All share, equity award and per share amounts have been retroactively
adjusted to reflect the stock split.
Acquisitions and Divestitures
Acquisition of VMware and Divestiture of EUC
On November 22, 2023, we acquired VMware in a cash-and-stock transaction (the “VMware Merger”). The VMware stockholders received
approximately $30,788 million in cash and 544 million shares of Broadcom common stock with a fair value of $53,398 million. In addition, we assumed all
outstanding VMware restricted stock unit (“RSU”) awards and performance stock unit awards held by continuing employees. The assumed awards were
converted into RSU awards for shares of Broadcom common stock. All outstanding RSU awards held by non-employee directors and in-the-money VMware
stock options were accelerated and converted into the right to receive cash and shares of Broadcom common stock, in equal parts.
We funded the cash portion of the VMware Merger with the net proceeds from the issuance of the 2023 Term Loans, as defined and discussed in Note
10. “Borrowings” included in Part II, Item 8 of this Annual Report on Form 10-K, as well as cash on hand. We assumed $8,250 million of VMware’s outstanding
senior unsecured notes.
On July 1, 2024, we sold VMware’s end-user computing (“EUC”) business to KKR & Co. Inc. for cash consideration of $3.5 billion, after working capital
adjustments.
Acquisition of Seagate’s SoC Operations
On April 23, 2024, we acquired certain assets related to the design, development, and manufacture of System-on-Chip (“SoC”) operations of Seagate
Technology Holdings plc for $600 million.
Net Revenue
A majority of our net revenue is derived from sales of a broad range of semiconductor devices that are incorporated into electronic products, as well as
from modules, switches and subsystems. Net revenue is also generated from the sale of software solutions that enable our customers to plan, develop,
deliver, automate, manage, and secure applications across mainframe, distributed, edge, mobile, and private and hybrid cloud platforms.
Our overall net revenue, as well as the percentage of total net revenue generated by sales in our semiconductor solutions and infrastructure software
segments, have varied from quarter to quarter, due largely to fluctuations in end-market demand, including the effects of seasonality, which are discussed in
detail in Part I, Item 1. Business under “Seasonality” of this Annual Report on Form 10-K.
Distributors and original equipment manufacturers (“OEMs”), or their contract manufacturers, typically account for the substantial majority of our
semiconductor sales. To serve customers around the world, we have strategically developed relationships with large global electronic component distributors,
complemented by a number of regional distributors with customer relationships based on their respective product ranges. We have established strong
relationships with leading OEM customers across multiple target markets. Our direct sales force focuses on supporting our large OEM customers and has
specialized product and service knowledge that enables us to sell specific offerings at key levels throughout a customer’s organization. Certain customers
require us to contract with them directly and with specified intermediaries, such as contract manufacturers. Many of our major customer relationships have
been in place for many years and are often the result of years of collaborative product development. This has enabled us to build our extensive IP portfolio
and develop critical expertise regarding our customers’ requirements, including substantial system-level knowledge. This collaboration has provided us with
key insights into our customers' businesses and has enabled us to be more efficient and productive and to better serve our target markets and customers. We
recognize revenue upon the delivery of our products to the distributors, which can cause our quarterly net revenue to fluctuate significantly. Such revenue is
reduced for estimated returns and distributor allowances.
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Our software customers generally consist of large enterprises that have computing environments from multiple vendors and are highly complex. Our
private cloud infrastructure suite of solutions are available directly from Broadcom, resellers and distributors, hyperscale cloud providers, value-added OEMs
and VMware cloud service provider partners. VMware Cloud Foundation (“VCF”) provides license portability, which enables customers to purchase
subscriptions of VCF software and move their VCF environments between on-premises data centers and supported cloud endpoints. We remain focused on
strengthening relationships and increasing penetration within our existing core, mainframe, VMware, and Symantec endpoint customers and expanding the
adoption of our enterprise software offerings with these customers. We believe our enterprise-wide license model will continue to offer our customers
reduced complexity, more flexibility and an easier renewal process that will help drive revenue growth.
Costs and Expenses
Cost of products sold. Cost of products sold consists primarily of the costs for semiconductor wafers and other materials, as well as the costs of
assembling and testing those products and materials. Such costs include personnel and overhead related to our manufacturing operations, which include
stock-based compensation expense, related occupancy, computer services, equipment costs, manufacturing quality, order fulfillment, warranty adjustments,
and inventory adjustments including write-downs for inventory obsolescence.
Although we outsource a significant portion of our manufacturing activities, we do have some proprietary semiconductor fabrication facilities. If we are
unable to utilize our owned fabrication facilities at a desired level, the fixed costs associated with these facilities will not be fully absorbed, resulting in higher
average unit costs and lower gross margins.
Cost of subscriptions and services. Cost of subscriptions and services consists of personnel, project costs associated with professional services or support
of our subscriptions and services revenue, and allocated facilities costs and other corporate expenses. Personnel costs include stock-based compensation
expense.
Total cost of revenue also includes amortization of acquisition-related intangible assets and restructuring charges.
Research and development. Research and development expense consists primarily of personnel costs for our engineers engaged in the design and
development of our products and technologies, including stock-based compensation expense. These expenses also include project material costs, third-party
fees paid to consultants, prototype development expense, allocated facilities costs and other corporate expenses and computer services costs related to
supporting computer tools used in the engineering and design process.
Selling, general and administrative. Selling expense consists primarily of compensation and associated costs for sales and marketing personnel,
including stock-based compensation expense, sales commissions paid to our independent sales representatives, advertising costs, trade shows, corporate
marketing, promotion, travel related to our sales and marketing operations, related occupancy and equipment costs, and other marketing costs. General and
administrative expense consists primarily of compensation and associated costs for executive management, finance, human resources and other
administrative personnel, including stock-based compensation expense, outside professional fees, allocated facilities costs, acquisition-related costs, which
include direct transaction costs and integration costs, and other corporate expenses.
Amortization of acquisition-related intangible assets. In connection with our acquisitions, we recognize intangible assets that are amortized over their
estimated useful lives. We also recognize goodwill, which is not amortized, and in-process research and development (“IPR&D”), which is initially capitalized
as an indefinite-lived intangible asset, in connection with our acquisitions. Upon completion of each underlying project, IPR&D assets are reclassified as
amortizable purchased intangible assets and amortized over their estimated useful lives.
Restructuring and other charges. Restructuring and other charges consist primarily of non-recurring charges related to compensation costs associated
with employee exit programs, IP litigation, alignment of our global manufacturing operations, rationalization of product development program costs, facility
and lease abandonments, fixed asset impairment, IPR&D impairment, and other exit costs, including curtailment of service or supply agreements.
Interest expense. Interest expense includes coupon interest, commitment fees, accretion of original issue discount, amortization of debt premiums and
debt issuance costs, and expenses related to debt modifications or extinguishments.
Other income (expense), net. Other income (expense), net includes interest income, gains and losses on investments, foreign currency remeasurement,
and other miscellaneous items.
Provision for income taxes. We benefit from the tax incentives extended to us in various jurisdictions to encourage investment or employment. Our tax
incentives from the Singapore Economic Development Board provide that any qualifying income earned in Singapore is subject to tax incentives or reduced
rates of Singapore income tax, subject to our compliance with the conditions specified in these incentives and legislative developments. These Singapore tax
incentives are scheduled
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to expire in November 2030. The corporate income tax rate in Singapore that would otherwise apply to us would be 17%. We also have a tax holiday from our
qualifying income earned in Malaysia, which is scheduled to expire in 2028.
Each tax incentive and tax holiday is subject to our compliance with various operating and other conditions. If we cannot, or elect not to, comply with
any such operating conditions specified, we could, in some instances, be required to refund previously realized material tax benefits, or if such tax incentive or
tax holiday is terminated prior to its expiration absent a new incentive applying, we will lose the related tax benefits earlier than scheduled. We may elect to
modify our operational structure and tax strategy, which may not be as beneficial to us as the benefits provided under the present tax concession
arrangements. Before taking into consideration the effects of the U.S. Tax Cuts and Jobs Act and other indirect tax impacts, the effect of these tax incentives
and tax holiday decreased the provision for income taxes by approximately $2,261 million and $2,104 million for fiscal years 2024 and 2023, respectively.
Our interpretations and conclusions regarding the tax incentives are not binding on any taxing authority, and if our assumptions about tax and other
laws are incorrect, the benefits of the tax incentives may be adversely affected.
Critical Accounting Estimates
The preparation of financial statements in accordance with generally accepted accounting principles in the United States (“GAAP”) requires us to make
estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenue and expenses during the reporting period. We base our estimates and assumptions on current
facts, historical experience and various other factors that we believe to be reasonable under the circumstances, the results of which form the basis for making
judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. Our
actual financial results may differ materially and adversely from our estimates. Our critical accounting policies are those that affect our financial statements
materially and involve difficult, subjective or complex judgments by management. Those policies include revenue recognition, business combinations,
valuation of goodwill and long-lived assets, and income taxes. See Note 2. “Summary of Significant Accounting Policies” included in Part II, Item 8 of this
Annual Report on Form 10-K for further information on our critical accounting policies and estimates.
Revenue recognition. We account for a contract with a customer when both parties have approved the contract and are committed to perform their
respective obligations, each party’s rights can be identified, payment terms can be identified, the contract has commercial substance, and it is probable we
will collect substantially all of the consideration we are entitled to. Revenue is recognized when, or as, performance obligations are satisfied by transferring
control of a promised product or service to a customer. Our products and services can be broadly categorized as sales of products and subscriptions and
services.
We recognize products revenue from sales to direct customers and distributors when control transfers to the customer. An allowance for distributor
credits covering price adjustments is made based on our estimate of historical experience rates as well as considering economic conditions and contractual
terms. To date, actual distributor claims activity has been materially consistent with the provisions we have made based on our historical estimates. However,
because of the inherent nature of estimates, there is always a risk that there could be significant differences between actual amounts and our estimates.
Different judgments or estimates could result in variances that might be significant to reported operating results. We also record reductions of revenue for
rebates in the same period that the related revenue is recorded. We accrue 100% of potential rebates at the time of sale. We reverse the accrual of unclaimed
rebate amounts as specific rebate programs contractually end and when we believe unclaimed rebates are no longer subject to payment and will not be paid.
Thus, the reversal of unclaimed rebates may have a positive impact on our net revenue and net income in subsequent periods.
Business combinations. Accounting for business combinations requires our management to make significant estimates and assumptions, especially at
the acquisition date, for intangible assets, contractual obligations assumed, restructuring liabilities, pre-acquisition contingencies, and contingent
consideration, where applicable. Although we believe the assumptions and estimates we have made in the past have been reasonable and appropriate, they
are based, in part, on historical experience and information obtained from the management of the acquired companies and are inherently uncertain. Critical
estimates in valuing certain acquired intangible assets include, the present value of projected cash flows regarding the projected revenues, projected
expenses which include cost of revenue, research and development and selling, general and administrative expenses, technology obsolescence rate,
contributory asset charges, discount rate and income tax rate for developed technology; the projected revenues, customer retention rate, customer ramp up
period, discount rate and income tax rate for the customer contracts and related relationships; the projected revenues, technology obsolescence rate,
expected costs to develop IPR&D into commercially viable products, discount rate and income tax rate for the IPR&D; and the projected revenues, brand asset
phase-out pattern, brand asset royalty rate, discount rate and the income tax rate for the trade name. Unanticipated events and circumstances may occur
which could affect the accuracy or validity of such assumptions, estimates or actual results.
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Valuation of goodwill and long-lived assets. We perform an annual impairment review of our goodwill during the fourth fiscal quarter of each year, and
more frequently if we believe indicators of impairment exist. The process of evaluating the potential impairment of goodwill is highly subjective and requires
significant judgment. To review for impairment, we first assess qualitative factors to determine whether events or circumstances lead to a determination that
it is more likely than not that the fair value of any of our reporting units is less than its carrying amount. Our qualitative assessment of the recoverability of
goodwill, whether performed annually or based on specific events or circumstances, considers various macroeconomic, industry-specific and company-
specific factors. These factors include: (i) severe adverse industry or economic trends; (ii) significant company-specific actions, including exiting an activity in
conjunction with restructuring of operations; (iii) current, historical or projected deterioration of our financial performance; or (iv) a sustained decrease in our
market capitalization below our net book value. After assessing the totality of events and circumstances, if we determine that it is not more likely than not
that the fair value of any of our reporting units is less than its carrying amount, no further assessment is performed. If we determine that it is more likely than
not that the fair value of any of our reporting units is less than its carrying amount, we calculate the fair value of that reporting unit and compare the fair
value to the reporting unit’s net book value.
Determining the fair value of a reporting unit involves the use of significant estimates and assumptions. Our goodwill impairment test uses both the
income approach and the market approach to estimate a reporting unit's fair value. The income approach is based on the discounted cash flow method that
uses the reporting unit estimates for forecasted future financial performance, including revenues, operating expenses, and taxes, as well as working capital
and capital asset requirements. These estimates are developed as part of our long-term planning process based on assumed market segment growth rates
and our assumed market segment share, estimated costs based on historical data and various internal estimates. Projected cash flows are then discounted to
a present value employing a discount rate that properly accounts for the estimated market weighted-average cost of capital, as well as any risk unique to the
subject cash flows. The market approach is based on weighting the financial multiples of comparable companies and applying a control premium. A reporting
unit's carrying value represents the assignment of various assets and liabilities, excluding certain corporate assets and liabilities, such as cash and debt.
We assess the impairment of long-lived assets, including purchased IPR&D, property, plant and equipment, right-of-use assets, and intangible assets,
whenever events or changes in circumstances indicate that the carrying value of such assets may not be recoverable. Factors we consider important which
could trigger an impairment review include: (i) significant under-performance relative to historical or projected future operating results, (ii) significant
changes in the manner of our use of the acquired assets or the strategy for our overall business, or (iii) significant negative industry or economic trends. The
process of evaluating the potential impairment of long-lived assets under the accounting guidance on property, plant and equipment, and intangible assets is
also highly subjective and requires significant judgment. In order to estimate the fair value of long-lived assets, we typically make various assumptions about
the future prospects of our business or the part of our business to which the long-lived assets relate. We also consider market factors specific to the business
and estimate future cash flows to be generated by the business, which requires significant judgment as it is based on assumptions about market demand for
our products over a number of future years. Based on these assumptions and estimates, we determine whether we need to take an impairment charge to
reduce the value of the long-lived assets stated on our consolidated balance sheets to reflect their estimated fair value. Assumptions and estimates about
future values and remaining useful lives are complex and often subjective. They can be affected by a variety of factors, including external factors, such as the
real estate market, industry and economic trends, and internal factors, such as changes in our business strategy and our internal forecasts. Although we
believe the assumptions and estimates we have made in the past have been reasonable and appropriate, changes in assumptions and estimates could
materially impact our reported financial results.
Income taxes. Significant management judgment is required in developing our provision for or benefit from income taxes, including the determination
of deferred tax assets and liabilities and any valuation allowances that might be required against the deferred tax assets. We have considered projected future
taxable income and ongoing prudent and feasible tax planning strategies in assessing the need for valuation allowances. An adjustment to the valuation
allowance will either increase or decrease our provision for or benefit from income taxes in the period such determination is made. In evaluating the
exposure associated with various tax filing positions, we accrue an income tax liability when such positions do not meet the more-likely-than-not threshold
for recognition.
The calculation of our tax liabilities involves dealing with uncertainties in the application of complex tax laws and regulations in a multitude of
jurisdictions. We recognize potential liabilities for anticipated tax audit issues in the U.S. and other tax jurisdictions based on our estimate of whether, and the
extent to which, additional taxes, interest, and penalties will be due. If our estimate of income tax liabilities proves to be less than the actual amount
ultimately assessed, a further charge to tax expense would be required. If the payment of these amounts ultimately proves to be unnecessary, the reversal of
the accrued liabilities would result in tax benefits being recognized in the period when we determine the liabilities no longer exist.
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Fiscal Year Presentation
We operate on a 52- or 53-week fiscal year ending on the Sunday closest to October 31. Our fiscal year 2024 was a 53-week fiscal year. Fiscal years 2023
and 2022 each consisted of 52 weeks.
The financial statements included in Part II, Item 8 of this Annual Report on Form 10-K are presented in accordance with GAAP and expressed in
U.S. dollars.
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Results of Operations
Fiscal Year 2024 Compared to Fiscal Year 2023
The following table sets forth our results of operations for the periods presented:
Fiscal Year Ended
November 3,
2024
October 29,
2023
November 3,
2024
October 29,
2023
(In millions)
(As a percentage of net revenue)
Statements of Operations Data:
Net revenue:
Products
$
30,359
$
27,891
59 %
78 %
Subscriptions and services
21,215
7,928
41
22
Total net revenue
51,574
35,819
100
100
Cost of revenue:
Cost of products sold
9,797
8,636
19
24
Cost of subscriptions and services
2,991
636
6
2
Amortization of acquisition-related intangible assets
6,023
1,853
12
5
Restructuring charges
254
4
—
—
Total cost of revenue
19,065
11,129
37
31
Gross margin
32,509
24,690
63
69
Research and development
9,310
5,253
18
15
Selling, general and administrative
4,959
1,592
10
4
Amortization of acquisition-related intangible assets
3,244
1,394
6
4
Restructuring and other charges
1,533
244
3
1
Total operating expenses
19,046
8,483
37
24
Operating income
$
13,463
$
16,207
26 %
45 %
Net Revenue
A relatively small number of customers account for a significant portion of our net revenue. Direct sales to one customer, which is a distributor,
accounted for 28% and 21% of our net revenue for fiscal years 2024 and 2023, respectively.
We believe aggregate sales to our top five end customers, through all channels, accounted for approximately 40% and 35% of our net revenue for fiscal
years 2024 and 2023, respectively. We expect to continue to experience significant customer concentration in future periods. The loss of, or significant
decrease in demand from, any of our top five end customers could have a material adverse effect on our business, results of operations and financial
condition.
From time to time, some of our key semiconductor customers place large orders or delay orders, causing our quarterly net revenue to fluctuate
significantly. This is particularly true of our products used in AI and wireless applications as fluctuations may be magnified by the timing of customer
deployments and product launches, and seasonal variations in sales. In addition, the macroeconomic environment remains uncertain and may cause our net
revenue to fluctuate significantly and impact our results of operations.
Although we recognize revenue for the majority of our products when title and control transfer in Penang, Malaysia, we disclose net revenue by country
based primarily on the geographic shipment or delivery location specified by our distributors, OEMs, contract manufacturers, channel partners, or software
customers. In fiscal years 2024 and 2023, 20% and 32%, respectively, of our net revenue came from shipments or deliveries to China (including Hong Kong).
However, the end customers for either our products or for the end products into which our products are incorporated, are frequently located in countries
other than China (including Hong Kong). As a result, we believe that a substantially smaller percentage of our net revenue is ultimately dependent on sales of
either our product or our customers’ product incorporating our product, to end customers located in China (including Hong Kong).
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The following tables set forth net revenue by segment for the periods presented:
Fiscal Year Ended
Net Revenue by Segment
November 3,
2024
October 29,
2023
$ Change
% Change
(In millions, except percentages)
Semiconductor solutions
$
30,096
$
28,182
$
1,914
7 %
Infrastructure software
21,478
7,637
13,841
181 %
Total net revenue
$
51,574
$
35,819
$
15,755
44 %
Fiscal Year Ended
Net Revenue by Segment
November 3, 2024
October 29, 2023
(As a percentage of net revenue)
Semiconductor solutions
58 %
79 %
Infrastructure software
42
21
Total net revenue
100 %
100 %
Net revenue from our semiconductor solutions segment increased due to strong product demand for our networking products, primarily AI networking
products, partially offset by lower demand for our broadband and server storage products. Net revenue from our infrastructure software segment increased
primarily due to contributions from VMware.
Gross Margin
Gross margin was $32,509 million for fiscal year 2024 compared to $24,690 million for fiscal year 2023. The increase was primarily due to contributions
from VMware, partially offset by higher amortization of acquisition-related intangible assets from the VMware Merger.
As a percentage of net revenue, gross margin was 63% and 69% of net revenue for the fiscal years 2024 and 2023, respectively. The decrease was
primarily due to higher amortization of acquisition-related intangible assets from the VMware Merger. In addition, gross margin contributions from our
infrastructure software segment were partially offset by less favorable margin within the semiconductor solutions segment driven by product mix.
Research and Development Expense
Research and development expense increased $4,057 million, or 77%, in fiscal year 2024, compared to the prior fiscal year. The increase was primarily
due to higher compensation, including higher stock-based compensation, as a result of an increase in headcount from the VMware Merger. The increase in
stock-based compensation expense was also due to annual employee equity awards granted at higher grant-date fair values.
Selling, General and Administrative Expense
Selling, general and administrative expense increased $3,367 million, or 211%, in fiscal year 2024, compared to the prior fiscal year. The increase was
primarily due to higher compensation, including higher stock-based compensation, as a result of an increase in headcount from the VMware Merger. The
increase in stock-based compensation expense was also due to annual employee equity awards granted at higher grant-date fair values.
Amortization of Acquisition-Related Intangible Assets
Amortization of acquisition-related intangible assets recognized in operating expenses increased $1,850 million, or 133%, in fiscal year 2024, compared
to the prior fiscal year primarily due to higher amortization of customer-related intangible assets from the VMware Merger.
Restructuring and Other Charges
Restructuring and other charges recognized in operating expenses were $1,533 million and $244 million in fiscal years 2024 and 2023, respectively. The
fiscal year 2024 charges primarily included employee termination costs from cost reduction activities related to the VMware Merger. The fiscal year 2023
charges primarily included non-recurring charges related to IP litigation.
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Stock-Based Compensation Expense
Total stock-based compensation expense was $5,670 million and $2,171 million for fiscal years 2024 and 2023, respectively. The increase was primarily
due to equity awards assumed and granted in connection with the VMware Merger and annual employee equity awards granted at higher grant-date fair
values.
The following table sets forth the total unrecognized compensation cost related to unvested stock-based awards outstanding and expected to vest as of
November 3, 2024. The remaining weighted-average service period was 3.0 years.
Fiscal Year:
Unrecognized Compensation
Cost, Net of Expected
Forfeitures
(In millions)
2025
$
4,429
2026
3,607
2027
2,643
2028
580
Total
$
11,259
During the first quarter of fiscal year ended November 3, 2019 (“fiscal year 2019”), our Compensation Committee approved a broad-based program of
multi-year equity grants of time- and market-based RSUs (the “Multi-Year Equity Awards”) in lieu of our annual employee equity awards historically granted
on March 15 of each year. Each Multi-Year Equity Award vests on the same basis as four annual grants made on March 15 of each year, beginning in fiscal year
2019, with successive four-year vesting periods. We recognize stock-based compensation expense related to the Multi-Year Equity Awards from the grant date
through their respective vesting date, ranging from 4 years to 7 years.
Segment Operating Results
Fiscal Year Ended
Operating Income by Segment
November 3, 2024
October 29, 2023
$ Change
% Change
(In millions, except percentages)
Semiconductor solutions
$
16,759
$
16,486
$
273
2 %
Infrastructure software
13,977
5,639
8,338
148 %
Unallocated expenses
(17,273)
(5,918)
(11,355)
192 %
Total operating income
$
13,463
$
16,207
$
(2,744)
(17)%
Operating income from our semiconductor solutions segment increased mainly driven by revenue growth from networking products, primarily AI
networking products, partially offset by lower net revenue from our broadband and server storage products. Operating income from our infrastructure
software segment increased primarily due to contributions from VMware.
Unallocated expenses include amortization of acquisition-related intangible assets; stock-based compensation expense; restructuring and other charges;
acquisition-related costs; and other costs that are not used in evaluating the results of, or in allocating resources to, our segments. Unallocated expenses
increased 192% in fiscal year 2024, compared to the prior fiscal year, primarily due to higher amortization of acquisition-related intangible assets, stock-based
compensation expense and restructuring and other charges. These increases were primarily due to the VMware Merger. The increase in stock-based
compensation expense was also due to annual employee equity awards granted at higher grant-date fair values.
Non-Operating Income and Expenses
Interest expense. Interest expense was $3,953 million and $1,622 million for fiscal years 2024 and 2023, respectively. The increase was primarily due to
interest on debt incurred for the VMware Merger.
Other income (expense), net. Other income (expense), net includes interest income, gains and losses on investments, foreign currency remeasurement
and other miscellaneous items. Other income, net, was $406 million and $512 million for fiscal years 2024 and 2023, respectively. The decrease was primarily
due to lower interest income as a result of a lower invested balance.
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Provision for income taxes. The provision for income taxes was $3,748 million and $1,015 million for fiscal years 2024 and 2023, respectively. The
increase was primarily due to the impact of a non-recurring intra-group transfer of certain IP rights to the United States as a result of supply chain
realignment and the resulting shift in the jurisdictional mix of income.
Liquidity and Capital Resources
The following section discusses our principal liquidity and capital resources as well as our primary liquidity requirements and uses of cash. Our cash and
cash equivalents are maintained in highly liquid investments with remaining maturities of 90 days or less at the time of purchase. We believe our cash
equivalents are liquid and accessible.
Our primary sources of liquidity as of November 3, 2024 consisted of: (i) $9,348 million in cash and cash equivalents, (ii) cash we expect to generate
from operations and (iii) available capacity under our $7.5 billion unsecured revolving credit facility. In addition, we may also generate cash from the sale of
assets and debt or equity financings from time to time.
Our short-term and long-term liquidity requirements primarily arise from: (i) business acquisitions and investments we may make from time to time, (ii)
working capital requirements, (iii) research and development and capital expenditure needs, (iv) cash dividend payments (if and when declared by our Board
of Directors), (v) interest and principal payments related to our $69,847 million of outstanding indebtedness, and (vi) payment of income taxes. Our ability to
fund these requirements will depend, in part, on our future cash flows, which are determined by our future operating performance and, therefore, subject to
prevailing global macroeconomic conditions and financial, business and other factors, some of which are beyond our control. We expect capital expenditures
to be higher in the fiscal year ending November 2, 2025 as compared to fiscal year 2024. Our debt and liquidity needs increased in fiscal year 2024 as a result
of completing the VMware Merger. We funded the cash portion of the consideration with net proceeds from the issuance of $30,390 million in term loans
(the “2023 Term Loans”), as well as cash on hand. We also assumed $8,250 million of VMware’s outstanding senior unsecured notes. During fiscal year 2024,
we made repayments of $16,795 million on our 2023 Term Loans.
We believe that our cash and cash equivalents on hand, cash flows from operations and our revolving credit facility will provide sufficient liquidity to
operate our business and fund our current and assumed obligations for at least the next 12 months. For additional information regarding our cash
requirement from contractual obligations, indebtedness and lease obligations, see Note 14. “Commitments and Contingencies”, Note 10. “Borrowings” and
Note 6. “Leases” in Part II, Item 8 of this Annual Report on Form 10-K.
From time to time, we engage in discussions with third parties regarding potential acquisitions of, or investments in, businesses, technologies and
product lines. Any such transaction, or evaluation of potential transactions, could require significant use of our cash and cash equivalents, or require us to
increase our borrowings to fund such transactions. If we do not have sufficient cash to fund our operations or finance growth opportunities, including
acquisitions, or unanticipated capital expenditures, our business and financial condition could suffer. In such circumstances, we may seek to obtain new debt
or equity financing. However, we cannot assure you that such additional financing will be available on terms acceptable to us or at all. Our ability to service
our senior unsecured notes, the 2023 Term Loans and any other indebtedness we may incur will depend on our ability to generate cash in the future. We may
also elect to sell additional debt or equity securities for reasons other than those specified above.
In addition, we may, at any time and from time to time, seek to retire or purchase our outstanding debt through cash tenders and/or exchanges for
equity or debt, in open-market purchases, privately negotiated transactions or otherwise. Such tenders, exchanges or purchases, if any, will be upon such
terms and at such prices as we may determine, and will depend on prevailing market conditions, our liquidity requirements, contractual restrictions and other
factors. We may also make additional prepayments of the 2023 Term Loans. The amounts involved may be material.
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Working Capital
On November 22, 2023, we completed the VMware Merger. The following table presents the changes in selected balance sheet captions other than
assets acquired and liabilities assumed from the VMware Merger during fiscal year 2024.
Balances at
October 29,
2023
Balances Acquired and
Assumed from VMware
(a)
Balances at
November 3,
2024
Non-VMware
Acquisition
Change
(In millions)
Trade accounts receivable, net
$
3,154
$
3,571
$
4,416
$
(2,309)
Other current assets
$
1,606
$
1,108
$
4,071
$
1,357
Accounts payable
$
1,210
$
359
$
1,662
$
93
Employee compensation and benefits
$
935
$
848
$
1,971
$
188
Current portion of long-term debt
$
1,608
$
1,264
$
1,271
$
(1,601)
Other current liabilities
$
3,652
$
11,217
$
11,793
$
(3,076)
_____________________________
(a) Excludes VMware’s EUC assets and liabilities held for sale.
• Trade accounts receivable, net decreased primarily due to strong collections and additional receivables sold through factoring arrangements.
•
Other current assets increased from higher contract assets due to the timing of software revenue recognition.
•
Current portion of long-term debt decreased primarily due to $2,813 million of repayments, offset in part by $1,245 million becoming due within the
next twelve months.
•
Other current liabilities decreased primarily from lower contract liabilities as software revenue was recognized from previous software contracts.
Capital Returns
Fiscal Year Ended
Cash Dividends Declared and Paid
November 3, 2024
October 29, 2023
(In millions, except per share data)
Dividends per share to common stockholders
$
2.105
$
1.840
Dividends to common stockholders
$
9,814
$
7,645
In December 2021, our Board of Directors authorized a stock repurchase program to repurchase up to $10 billion of our common stock from time to
time through December 31, 2022, which was subsequently extended to December 31, 2023. In May 2022, our Board of Directors authorized another stock
repurchase program to repurchase up to an additional $10 billion of our common stock from time to time through December 31, 2023. During fiscal years
2024 and 2023, we repurchased and retired approximately 67 million and 91 million shares of our common stock for $7,176 million and $5,824 million,
respectively. All $20 billion of the authorized amount under these stock repurchase programs was utilized prior to expiration on December 31, 2023.
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During fiscal years 2024 and 2023, we paid approximately $5,216 million and $1,861 million, respectively, in employee withholding taxes due upon the
vesting of net settled equity awards. We withheld approximately 38 million and 26 million shares of common stock from employees in connection with such
net share settlements during fiscal years 2024 and 2023, respectively.
Cash Flows
Fiscal Year Ended
November 3, 2024
October 29, 2023
(In millions)
Net cash provided by operating activities
$
19,962
$
18,085
Net cash used in investing activities
(23,070)
(689)
Net cash used in financing activities
(1,733)
(15,623)
Net change in cash and cash equivalents
$
(4,841)
$
1,773
Operating Activities
Cash flows from operating activities consisted of net income adjusted for certain non-cash and other items and changes in assets and liabilities. The
$1,877 million increase in cash provided by operations during fiscal year 2024 compared to fiscal year 2023 was primarily due to contributions from VMware.
The $8,187 million decrease in net income was largely driven by $13,058 million higher non-cash adjustments including amortization of intangible assets,
stock-based compensation, and deferred taxes and other non-cash taxes related to the VMware Merger.
Investing Activities
Cash flows from investing activities primarily consisted of cash used for acquisitions, proceeds from the sale of a business, capital expenditures, and
proceeds and payments related to investments. The $22,381 million increase in cash used in investing activities for fiscal year 2024 compared to fiscal year
2023 was primarily due to a $25,925 million increase in cash used for acquisitions due to the VMware Merger and the acquisition of Seagate’s SoC operations,
net of cash acquired, offset in part by $3,485 million proceeds from the sale of the EUC business.
Financing Activities
Cash flows from financing activities primarily consisted of proceeds and payments related to our long-term borrowings, dividend payments, stock
repurchases, and employee withholding tax payments related to net settled equity awards. The $13,890 million increase in cash flows from financing activities
for fiscal year 2024 compared to fiscal year 2023 was primarily due to $39,954 million of net proceeds from the 2023 Term Loans and the issuance of senior
notes, offset in part by a $19,205 million increase in payments on debt obligations, a $3,355 million increase in employee withholding tax payments related to
net settled equity awards, a $2,169 million increase in dividend payments, and a $1,352 million increase in stock repurchases.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Foreign Currency Exchange Risk
From time to time, we use foreign exchange forward contracts to hedge a portion of our exposures to changes in currency exchange rates, which result
from our global operating and financing activities. We do not use derivative financial instruments for trading or speculative purposes. A hypothetical 10%
change in currency exchange rates would not have a material impact on our consolidated financial statements.
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Interest Rate Risk
Changes in interest rates affect the fair value of our outstanding fixed rate senior notes. As of November 3, 2024 and October 29, 2023, we had $56.3
billion and $40.8 billion in principal amount of fixed rate senior notes outstanding, and the estimated aggregate fair value of these senior notes was $51.4
billion and $33.2 billion, respectively. As of November 3, 2024 and October 29, 2023, a hypothetical 50 basis point increase or decrease in market interest
rates would change the fair value of our fixed rate senior notes by approximately $1.7 billion and $1.4 billion, respectively. However, this hypothetical change
in interest rates would not impact the interest expense on our fixed rate senior notes outstanding. To hedge variability of cash flows due to changes in the
benchmark interest rate of anticipated future debt issuances, we have entered, and in the future may enter, into treasury rate lock contracts.
As of November 3, 2024, we had $13.6 billion of outstanding 2023 Term Loans, which are subject to floating interest rates. A hypothetical 100 basis
point change in the interest rate would increase or decrease the interest expense on the 2023 Term Loans for the next 12 months by approximately $137
million. The carrying value of the 2023 Term Loans approximates their fair value as the underlying interest rates are tied to the Secured Overnight Financing
Rate. We had no floating rate debt outstanding as of October 29, 2023.
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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
BROADCOM INC.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Page
Report of Independent Registered Public Accounting Firm (PCAOB ID 238)
50
Consolidated Balance Sheets
51
Consolidated Statements of Operations
52
Consolidated Statements of Comprehensive Income
53
Consolidated Statements of Cash Flows
54
Consolidated Statements of Stockholders' Equity
55
Notes to Consolidated Financial Statements
56
Schedule II — Valuation and Qualifying Accounts
92
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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders of Broadcom Inc.
Opinions on the Financial Statements and Internal Control over Financial Reporting
We have audited the accompanying consolidated balance sheets of Broadcom Inc. and its subsidiaries (the “Company”) as of November 3, 2024 and
October 29, 2023, and the related consolidated statements of operations, of comprehensive income, of stockholders’ equity and of cash flows for each of the
three years in the period ended November 3, 2024, including the related notes and financial statement schedule listed in the index appearing under Item
15(a)(2) (collectively referred to as the “consolidated financial statements”). We also have audited the Company's internal control over financial reporting as
of November 3, 2024, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of
the Treadway Commission (COSO).
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of
November 3, 2024 and October 29, 2023, and the results of its operations and its cash flows for each of the three years in the period ended November 3,
2024 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all
material respects, effective internal control over financial reporting as of November 3, 2024, based on criteria established in Internal Control - Integrated
Framework (2013) issued by the COSO.
Basis for Opinions
The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and
for its assessment of the effectiveness of internal control over financial reporting, included in Management’s Report on Internal Control over Financial
Reporting appearing under Item 9A. Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company's
internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board
(United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the
applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable
assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective
internal control over financial reporting was maintained in all material respects.
Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial
statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis,
evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used
and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal
control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness
exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing
such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and
the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over
financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect
the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being
made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or
timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of
compliance with the policies or procedures may deteriorate.
Critical Audit Matters
The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was
communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated
financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter
in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below,
providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Acquisition of VMware — Valuation of VMware Cloud Foundation (“VCF”) Developed Technology, Certain Customer Contracts and Related Relationships,
VCF In-process Research and Development, and VMware Trade Name Intangible Assets
As described in Notes 2 and 4 of the consolidated financial statements, on November 22, 2023, the Company completed the acquisition of VMware LLC for
total consideration of $86,290 million. The Company acquired $45,572 million of intangible assets in connection with the acquisition. Of these acquired
intangible assets, $24,156 million related to developed technology valued using the multi-period excess earnings method under the income approach, of
which a significant portion related to VCF; $15,239 million related to customer contracts and related relationships valued using the with-and-without method
under the income approach, of which a significant portion related to certain customer contracts and relationships; $4,730 million related to in-process
research and development valued using the multi-period excess earnings method under the income approach, of which $4,705 million related to VCF; and
$1,205 million related to trade names valued using the relief-from-royalty method, of which a significant portion related to the VMware trade name. The
present value of projected cash flows included significant judgment and assumptions regarding (a) the projected revenues, projected expenses, technology
obsolescence rate, contributory asset charges, and the discount rate for the VCF developed technology, (b) the projected revenues, customer retention rate,
customer ramp up period, and the discount rate for the certain customer contracts and related relationships, (c) the projected revenues, technology
obsolescence rate and the discount rate for the VCF in-process research and development, and (d) the projected revenues, brand asset phase-out pattern,
brand asset royalty rate, and the discount rate for the VMware trade name.
The principal considerations for our determination that performing procedures relating to the valuation of the VCF developed technology, certain customer
contracts and related relationships, VCF in-process research and development, and the VMware trade name intangible assets acquired in the VMware
acquisition is a critical audit matter are (i) the significant judgment by management when developing the fair value estimates; (ii) a high degree of auditor
judgment, subjectivity, and effort in performing procedures and evaluating management’s significant assumptions related to (a) the projected revenues,
projected expenses, technology obsolescence rate, contributory asset charges, and discount rate for the VCF developed technology, (b) certain projected
revenues, customer retention rate, customer ramp up period, and discount rate for the certain customer contracts and related relationships, (c) the projected
revenues, technology obsolescence rate and discount rate for the VCF in-process research and development, and (d) certain projected revenues, brand asset
phase-out pattern, brand asset royalty rate, and discount rate for the VMware trade name (collectively referred to as “the aforementioned significant
assumptions”); and (iii) the audit effort involved the use of professionals with specialized skill and knowledge.
Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated
financial statements. These procedures included testing the effectiveness of controls relating to the acquisition accounting, including controls over
management’s valuation of the acquired developed technology, customer contracts and related relationships, in-process research and development, and the
trade names. These procedures also included, among others, (i) reading the purchase agreement; (ii) testing management’s process for developing the fair
value estimate of the acquired VCF developed technology, certain customer contracts and related relationships, VCF in-process research and development,
and the VMware trade name; (iii) evaluating the appropriateness of the multi-period excess earnings, with-and-without, and relief-from-royalty methods used
by management; (iv) testing the completeness and accuracy of underlying data used in the multi-period excess earnings, with-and-without, and relief-from-
royalty methods; and (v) evaluating the reasonableness of the aforementioned significant assumptions used by management. Evaluating management’s
assumptions related to (a) the projected revenues and projected expenses for the VCF developed technology, (b) certain projected revenues, customer
retention rate, and customer ramp up period for the certain customer contracts and related relationships, (c) projected revenues for the VCF in-process
research and development, and (d) certain projected revenues for the VMware trade name involved considering (i) the current and past performance of
VMware; (ii) the consistency with external market and industry data; and (iii) whether the assumptions were consistent with evidence obtained in other areas
of the audit. Professionals with specialized skill and knowledge were used to assist in (i) evaluating the appropriateness of multi-period excess earnings, with-
and-without, and relief-from-royalty methods and (ii) the reasonableness of (a) the technology obsolescence rate, contributory asset charge, and discount
rate for the VCF developed technology, (b) the discount rate for the certain customer contracts and related relationships, (c) the technology obsolescence rate
and discount rate for the VCF in-process research and development, and (d) brand asset phase-out pattern, brand asset royalty rate, and discount rate for the
VMware trade name.
/s/ PricewaterhouseCoopers LLP
San Jose, California
December 20, 2024
We have served as the Company’s auditor since 2006.
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BROADCOM INC.
CONSOLIDATED BALANCE SHEETS
November 3,
2024
October 29,
2023
(In millions, except par value)
ASSETS
Current assets:
Cash and cash equivalents
$
9,348
$
14,189
Trade accounts receivable, net
4,416
3,154
Inventory
1,760
1,898
Other current assets
4,071
1,606
Total current assets
19,595
20,847
Long-term assets:
Property, plant and equipment, net
2,521
2,154
Goodwill
97,873
43,653
Intangible assets, net
40,583
3,867
Other long-term assets
5,073
2,340
Total assets
$
165,645
$
72,861
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable
$
1,662
$
1,210
Employee compensation and benefits
1,971
935
Current portion of long-term debt
1,271
1,608
Other current liabilities
11,793
3,652
Total current liabilities
16,697
7,405
Long-term liabilities:
Long-term debt
66,295
37,621
Other long-term liabilities
14,975
3,847
Total liabilities
97,967
48,873
Commitments and contingencies (Note 14)
Stockholders’ equity:
Preferred stock, $0.001 par value; 100 shares authorized; none issued and outstanding
—
—
Common stock, $0.001 par value; 29,000 shares authorized; 4,686 and 4,139 shares issued and outstanding as of
November 3, 2024 and October 29, 2023, respectively
5
4
Additional paid-in capital
67,466
21,095
Retained earnings
—
2,682
Accumulated other comprehensive income
207
207
Total stockholders’ equity
67,678
23,988
Total liabilities and equity
$
165,645
$
72,861
The accompanying notes are an integral part of these consolidated financial statements.
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BROADCOM INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
Fiscal Year Ended
November 3,
2024
October 29,
2023
October 30,
2022
(In millions, except per share data)
Net revenue:
Products
$
30,359
$
27,891
$
26,277
Subscriptions and services
21,215
7,928
6,926
Total net revenue
51,574
35,819
33,203
Cost of revenue:
Cost of products sold
9,797
8,636
7,629
Cost of subscriptions and services
2,991
636
627
Amortization of acquisition-related intangible assets
6,023
1,853
2,847
Restructuring charges
254
4
5
Total cost of revenue
19,065
11,129
11,108
Gross margin
32,509
24,690
22,095
Research and development
9,310
5,253
4,919
Selling, general and administrative
4,959
1,592
1,382
Amortization of acquisition-related intangible assets
3,244
1,394
1,512
Restructuring and other charges
1,533
244
57
Total operating expenses
19,046
8,483
7,870
Operating income
13,463
16,207
14,225
Interest expense
(3,953)
(1,622)
(1,737)
Other income (expense), net
406
512
(54)
Income from continuing operations before income taxes
9,916
15,097
12,434
Provision for income taxes
3,748
1,015
939
Income from continuing operations
6,168
14,082
11,495
Loss from discontinued operations, net of income taxes
(273)
—
—
Net income
5,895
14,082
11,495
Dividends on preferred stock
—
—
(272)
Net income attributable to common stock
$
5,895
$
14,082
$
11,223
Basic income per share attributable to common stock:
Income per share from continuing operations
$
1.33
$
3.39
$
2.74
Loss per share from discontinued operations
(0.06)
—
—
Net income per share
$
1.27
$
3.39
$
2.74
Diluted income per share attributable to common stock:
Income per share from continuing operations
$
1.29
$
3.30
$
2.65
Loss per share from discontinued operations
(0.06)
—
—
Net income per share
$
1.23
$
3.30
$
2.65
Weighted-average shares used in per share calculations:
Basic
4,624
4,149
4,089
Diluted
4,778
4,272
4,232
The accompanying notes are an integral part of these consolidated financial statements.
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BROADCOM INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Fiscal Year Ended
November 3,
2024
October 29,
2023
October 30,
2022
(In millions)
Net income
$
5,895
$
14,082
$
11,495
Other comprehensive income, net of tax:
Change in unrealized gain on derivative instruments
(1)
290
37
Change in actuarial loss and prior service costs associated with defined benefit plans
1
(29)
25
Other comprehensive income, net of tax
—
261
62
Comprehensive income
$
5,895
$
14,343
$
11,557
The accompanying notes are an integral part of these consolidated financial statements.
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BROADCOM INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Fiscal Year Ended
November 3,
2024
October 29,
2023
October 30,
2022
(In millions)
Cash flows from operating activities:
Net income
$
5,895
$
14,082
$
11,495
Adjustments to reconcile net income to net cash provided by operating activities:
Amortization of intangible and right-of-use assets
9,417
3,333
4,455
Depreciation
593
502
529
Stock-based compensation
5,741
2,171
1,533
Deferred taxes and other non-cash taxes
1,965
(501)
(34)
Loss on debt extinguishment
157
—
100
Non-cash interest expense
427
132
129
Other
404
9
183
Changes in assets and liabilities, net of acquisitions and disposals:
Trade accounts receivable, net
2,327
(187)
(870)
Inventory
150
27
(627)
Accounts payable
121
209
(79)
Employee compensation and benefits
78
(279)
136
Other current assets and current liabilities
(5,323)
(628)
222
Other long-term assets and long-term liabilities
(1,990)
(785)
(436)
Net cash provided by operating activities
19,962
18,085
16,736
Cash flows from investing activities:
Acquisitions of businesses, net of cash acquired
(25,978)
(53)
(246)
Proceeds from sale of business
3,485
—
—
Purchases of property, plant and equipment
(548)
(452)
(424)
Purchases of investments
(175)
(346)
(200)
Sales of investments
156
228
200
Other
(10)
(66)
3
Net cash used in investing activities
(23,070)
(689)
(667)
Cash flows from financing activities:
Proceeds from long-term borrowings
39,954
—
1,935
Payments on debt obligations
(19,608)
(403)
(2,361)
Payments of dividends
(9,814)
(7,645)
(7,032)
Repurchases of common stock - repurchase program
(7,176)
(5,824)
(7,000)
Shares repurchased for tax withholdings on vesting of equity awards
(5,216)
(1,861)
(1,455)
Issuance of common stock
190
122
114
Other
(63)
(12)
(17)
Net cash used in financing activities
(1,733)
(15,623)
(15,816)
Net change in cash and cash equivalents
(4,841)
1,773
253
Cash and cash equivalents at beginning of period
14,189
12,416
12,163
Cash and cash equivalents at end of period
$
9,348
$
14,189
$
12,416
Supplemental disclosure of cash flow information:
Cash paid for interest
$
3,250
$
1,503
$
1,386
Cash paid for income taxes
$
3,155
$
1,782
$
908
The accompanying notes are an integral part of these consolidated financial statements.
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BROADCOM INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
8.00% Mandatory
Convertible Preferred
Stock
Common Stock
Additional
Paid-in
Capital
Retained
Earnings
Accumulated
Other
Comprehensive
Income (Loss)
Total
Stockholders’
Equity
Shares
Par Value
Shares
Par Value
(In millions)
Balance as of October 31, 2021
4
$
—
4,129
$
4
$
24,326
$
748
$
(116)
$
24,962
Net income
—
—
—
—
—
11,495
—
11,495
Other comprehensive income
—
—
—
—
—
—
62
62
Fair value of partially vested equity awards
assumed in connection with an acquisition
—
—
—
—
4
—
—
4
Dividends to common stockholders
—
—
—
—
(50)
(6,683)
—
(6,733)
Dividends to preferred stockholders
—
—
—
—
—
(272)
—
(272)
Common stock issued
—
—
77
—
114
—
—
114
Stock-based compensation
—
—
—
—
1,533
—
—
1,533
Repurchases of common stock
—
—
(117)
—
(3,316)
(3,684)
—
(7,000)
Common stock issued in connection with
Mandatory Convertible Preferred Stock
conversion
(4)
—
116
—
—
—
—
—
Shares repurchased for tax withholdings on
vesting of equity awards
—
—
(26)
—
(1,456)
—
—
(1,456)
Balance as of October 30, 2022
—
—
4,179
4
21,155
1,604
(54)
22,709
Net income
—
—
—
—
—
14,082
—
14,082
Other comprehensive income
—
—
—
—
—
—
261
261
Dividends to common stockholders
—
—
—
—
—
(7,645)
—
(7,645)
Common stock issued
—
—
77
—
122
—
—
122
Stock-based compensation
—
—
—
—
2,171
—
—
2,171
Repurchases of common stock
—
—
(91)
—
(481)
(5,359)
—
(5,840)
Shares repurchased for tax withholdings on
vesting of equity awards
—
—
(26)
—
(1,872)
—
—
(1,872)
Balance as of October 29, 2023
—
—
4,139
4
21,095
2,682
207
23,988
Net income
—
—
—
—
—
5,895
—
5,895
Issuance of common stock upon the
acquisition of VMware, Inc.
—
—
544
1
53,420
—
—
53,421
Fair value of partially vested equity awards
assumed in connection with the acquisition
of VMware, Inc.
—
—
—
—
750
—
—
750
Dividends to common stockholders
—
—
—
—
(2,809)
(7,005)
—
(9,814)
Common stock issued
—
—
108
—
190
—
—
190
Stock-based compensation
—
—
—
—
5,747
—
—
5,747
Repurchases of common stock
—
—
(67)
—
(5,604)
(1,572)
—
(7,176)
Shares repurchased for tax withholdings on
vesting of equity awards
—
—
(38)
—
(5,323)
—
—
(5,323)
Balance as of November 3, 2024
—
$
—
4,686
$
5
$
67,466
$
—
$
207
$
67,678
The accompanying notes are an integral part of these consolidated financial statements.
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BROADCOM INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Overview and Basis of Presentation
Overview
Broadcom Inc. (“Broadcom”), a Delaware corporation, is a global technology leader that designs, develops and supplies a broad range of semiconductor
and infrastructure software solutions. We develop semiconductor devices with a focus on complex digital and mixed signal complementary metal oxide
semiconductor based devices and analog III-V based products. We offer thousands of products that are used in end products such as enterprise and data
center networking, including artificial intelligence (“AI”) networking and connectivity, home connectivity, set-top boxes, broadband access,
telecommunication equipment, smartphones and base stations, data center servers and storage systems, factory automation, power generation and
alternative energy systems, and electronic displays. Our infrastructure software solutions help enterprises simplify their information technology (“IT”)
environments so they can increase business velocity and flexibility, and enable customers to plan, develop, deliver, automate, manage and secure applications
across mainframe, distributed, edge, mobile, and private and hybrid cloud platforms. Our portfolio of infrastructure and security software is designed to
modernize, optimize, and secure the most complex private and hybrid cloud environments, enabling scalability, agility, automation, insights, resiliency and
security making it easy for customers to run their mission-critical workloads. We also offer mission-critical fibre channel storage area networking (“FC SAN”)
products and related software in the form of modules, switches and subsystems incorporating multiple semiconductor products. Unless stated otherwise or
the context otherwise requires, references to “Broadcom,” “we,” “our,” and “us” mean Broadcom and its consolidated subsidiaries. We have two reportable
segments: semiconductor solutions and infrastructure software. See Note 13. “Segment Information” for additional information.
On November 22, 2023, we completed the acquisition of VMware, Inc. (“VMware”) in a cash-and-stock transaction (the “VMware Merger”). The
VMware stockholders received approximately $30,788 million in cash and 544 million shares of Broadcom common stock (on a split adjusted basis) with a fair
value of $53,398 million. VMware was a leading provider of multi-cloud services for all applications, enabling digital innovation with enterprise control. We
acquired VMware to enhance our infrastructure software capabilities. The accompanying consolidated financial statements include the results of operations
of VMware commencing on November 22, 2023. See Note 4. “Acquisitions” for additional information.
Basis of Presentation
We operate on a 52- or 53-week fiscal year ending on the Sunday closest to October 31. Our fiscal year ended November 3, 2024 (“fiscal year 2024”)
was a 53-week fiscal year, with the first fiscal quarter containing 14 weeks. Our fiscal year ended October 29, 2023 (“fiscal year 2023”) and fiscal year ended
October 30, 2022 (“fiscal year 2022”) were both 52-week fiscal years.
The accompanying consolidated financial statements include the accounts of Broadcom and its subsidiaries and have been prepared in accordance with
generally accepted accounting principles in the United States (“GAAP”). All intercompany balances and transactions have been eliminated in consolidation.
On July 12, 2024, we completed a ten-for-one forward stock split of our common stock through the filing of an amendment (“Amendment”) to our
Amended and Restated Certificate of Incorporation. The Amendment proportionately increased the number of shares of our authorized common stock
without changing the par value of $0.001 per share. All share, equity award and per share amounts and related stockholders’ equity balances presented in
the accompanying consolidated financial statements and notes thereto have been retroactively adjusted, where applicable, to reflect the stock split.
2. Summary of Significant Accounting Policies
Foreign currency remeasurement. We operate in a U.S. dollar functional currency environment. Foreign currency assets and liabilities for monetary
accounts are remeasured into U.S. dollars at current exchange rates. Non-monetary items such as inventory and property, plant and equipment, are
measured and recorded at historical exchange rates. The effects of foreign currency remeasurement were not material for any period presented.
Use of estimates. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Actual results could differ materially from these estimates, and such differences could affect
the results of operations reported in future periods.
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Cash and cash equivalents. We consider all highly liquid investment securities with original maturities of three months or less at the date of purchase to
be cash equivalents. We determine the appropriate classification of our cash and cash equivalents at the time of purchase.
Trade accounts receivable, net. Trade accounts receivable are recognized at the invoiced amount and do not bear interest. Accounts receivable are
reduced by an allowance for doubtful accounts, which is our best estimate of the expected credit losses in our existing accounts receivable. We determine the
allowance based on historical experience and current economic conditions, among other factors. Allowances for doubtful accounts were not material as of
November 3, 2024 or October 29, 2023. Accounts receivable are also recognized net of sales returns and distributor credit allowances. These amounts are
recognized when it is both probable and estimable that discounts will be granted or products will be returned. Allowances for sales returns and distributor
credit allowances as of November 3, 2024 and October 29, 2023 were $101 million and $137 million, respectively.
Concentrations of credit risk and significant customers. Our cash, cash equivalents and accounts receivable are potentially subject to concentration of
credit risk. Cash and cash equivalents may be redeemable upon demand and are maintained with financial institutions that management believes are of high
credit quality and therefore bear minimal credit risk. We seek to mitigate our credit risks by spreading such risks across multiple counterparties and
monitoring the risk profile of these counterparties. Our accounts receivable are derived from revenue earned from customers located both within and outside
the U.S. We mitigate collection risks from our customers by performing regular credit evaluations of our customers’ financial conditions, and require
collateral, such as letters of credit and bank guarantees, in certain circumstances.
Concentration of other risks. We operate in markets that are highly competitive and rapidly changing. Significant technological changes, shifting
customer needs, the emergence of competitive products with new capabilities, general economic conditions worldwide, the ability to safeguard patents and
other intellectual property (“IP”) in a rapidly evolving market and reliance on third-party wafer fabricators, assembly and test subcontractors and independent
distributors and other factors could affect our financial results.
Inventory. We value our inventory at the lower of actual cost or net realizable value of the inventory, with cost being determined under the first-in, first-
out method. We record a provision for excess and obsolete inventory based primarily on our forecast of product demand and production requirements. The
excess and obsolete balance determined by this analysis becomes the basis for our excess and obsolete inventory charge and the written-down value of the
inventory becomes its new cost basis.
Retirement benefit plans. For defined benefit pension plans, we consider various factors in determining our respective benefit obligations and net
periodic benefit cost, including the number of employees that we expect to receive benefits, their salary levels and years of service, the expected return on
plan assets, the discount rate, the timing of the payment of benefits, and other actuarial assumptions. If the actual results and events of the benefit plans
differ from our current assumptions, the benefit obligations may be over- or under-valued.
The key assumptions are the discount rate and the expected rate of return on plan assets. The U.S. discount rates are based on a hypothetical yield
curve constructed using high-quality corporate bonds selected to yield cash flows that match the expected timing and amount of the benefit payments. The
U.S. expected rate of return on plan assets is set equal to the discount rate due to the implementation of our fully-matched, liability-driven investment
strategy. We evaluate these assumptions at least annually. For the non-U.S. plans, we set assumptions specific to each country. We have elected to measure
defined benefit pension plan assets and liabilities as of October 31, which is the month end that is closest to our fiscal year end.
Derivative instruments. We use derivative financial instruments to manage exposure to foreign exchange risk and interest rate risk. We do not use
derivative financial instruments for speculative or trading purposes.
Outstanding derivatives are recognized as assets or liabilities at their fair values based on Level 2 inputs, as defined in the fair value hierarchy. For
derivative instruments designated as cash flow hedges, the changes in fair value are initially recognized in other comprehensive income, net of tax in the
period of change, and are subsequently reclassified and recognized in the same line item as the hedged item when either the hedged transactions affect
earnings or it becomes probable that the hedged transactions will not occur.
We use foreign exchange forward contracts to manage exposure to foreign exchange risk. These forward contracts are not designated as hedging
instruments, and the changes in fair value are recognized in other income (expense), net in the period of change. We did not have any material foreign
exchange forward contracts outstanding as of November 3, 2024 or October 29, 2023. The gains and losses recorded in other income (expense), net for
derivative instruments not designated as hedges were not material.
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During fiscal years 2023 and 2022, we entered into treasury rate lock contracts that mature in approximately one year to hedge variability of cash flows
due to changes in the benchmark interest rate of anticipated future debt issuances. These treasury rate locks were designated and accounted for as cash flow
hedging instruments. In August 2023, we early settled all treasury rate lock contracts, which had a $5.5 billion notional amount, for a cumulative gain of
$371 million. The cumulative gain was recorded net of tax of $44 million as a component of accumulated other comprehensive income as of October 29,
2023. The cash receipts from the settlement were included in cash flows from operating activities in the consolidated statement of cash flows during fiscal
year 2023. In fiscal year 2024, upon the issuance of our $1.75 billion 4.800% senior notes due October 2034 as discussed in Note 10. “Borrowings”,
$75 million out of the $371 million pre-tax cumulative gain in accumulated other comprehensive income will be amortized to interest expense through
October 15, 2034 using the effective interest method. The remaining cumulative gain will be amortized to interest expense associated with future debt
referencing the hedged treasury rates.
Property, plant and equipment. Property, plant and equipment are stated at cost less accumulated depreciation and amortization. Additions,
improvements and major renewals are capitalized, and maintenance, repairs and minor renewals are expensed as incurred. Assets are held in construction in
progress until placed in service, upon which date, we begin to depreciate these assets. When assets are retired or disposed of, the assets and related
accumulated depreciation and amortization are removed from our property, plant and equipment balances and the resulting gain or loss is reflected in the
consolidated statements of operations. Buildings and leasehold improvements are generally depreciated over 15 to 40 years, or over the lease period,
whichever is shorter, and machinery and equipment are generally depreciated over 3 to 10 years. We use the straight-line method of depreciation for all
property, plant and equipment.
Leases. We determine if an arrangement is a lease, or contains a lease, at the inception of the arrangement and evaluate whether the lease is an
operating lease or a finance lease at the commencement date. We recognize right-of-use (“ROU”) assets and lease liabilities for operating and finance leases
with terms greater than 12 months, and account for the lease and non-lease components as a single component. ROU assets represent our right to use an
asset for the lease term, while lease liabilities represent our obligation to make lease payments. Operating and finance lease ROU assets and liabilities are
recognized based on the present value of lease payments over the lease term at the lease commencement date. We use the implicit interest rate or, if not
readily determinable, our incremental borrowing rate as of the lease commencement date to determine the present value of lease payments. The
incremental borrowing rate is based on our unsecured borrowing rate, adjusted for the effects of collateral. Operating and finance lease ROU assets are
recognized net of any lease prepayments and incentives. Lease terms may include options to extend or terminate the lease when it is reasonably certain that
we will exercise that option. Operating lease expense is recognized on a straight-line basis over the lease term. Finance lease expense is recognized based on
the effective interest method over the lease term.
Fair value measurement. Fair value is defined as the price that would be received upon sale of an asset or paid to transfer a liability in an orderly
transaction between market participants at the measurement date. A three-level hierarchy is applied to prioritize the inputs to valuation techniques used to
measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1
measurements) and the lowest priority to unobservable inputs (Level 3 measurements).
The three levels of the fair value hierarchy under the guidance on fair value measurements are described below:
Level 1 — Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the reporting entity has the ability to
access at the measurement date. Our Level 1 assets include cash equivalents, banker's acceptances, trading securities investments and investment funds. We
measure trading securities investments and investment funds at quoted market prices as they are traded in active markets with sufficient volume and
frequency of transactions.
Level 2 — Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or
indirectly. If the asset or liability has a specified contractual term, a Level 2 input must be observable for substantially the full term of the asset or liability.
Level 3 — Level 3 inputs are unobservable inputs for the asset or liability in which there is little, if any, market activity for the asset or liability at the
measurement date. Level 3 assets and liabilities include investment in equity securities without readily determinable fair values, goodwill, intangible assets,
and property, plant and equipment, which are measured at fair value using a discounted cash flow approach when they are impaired. Quantitative
information for Level 3 assets and liabilities reviewed at each reporting period includes indicators of significant deterioration in the earnings performance,
credit rating, asset quality, business prospects of the investee, and financial indicators of the investee's ability to continue as a going concern.
Business combinations. We account for business combinations under the acquisition method of accounting, which requires us to recognize separately
from goodwill the assets acquired and the liabilities assumed at their acquisition date fair
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values, except for revenue contracts acquired, which are recognized in accordance with our revenue recognition policy. While we use our best estimates and
assumptions to accurately value assets acquired and liabilities assumed at the acquisition date as well as contingent consideration, where applicable, our
estimates are inherently uncertain and subject to refinement. As a result, during the measurement period, which may be up to one year from the acquisition
date, we record adjustments to the assets acquired and liabilities assumed with the corresponding offset to goodwill. Upon the conclusion of the
measurement period or final determination of the values of assets acquired or liabilities assumed, whichever comes first, any subsequent adjustments are
recognized in our consolidated statements of operations. Accounting for business combinations requires our management to make significant estimates and
assumptions, especially at the acquisition date, for intangible assets, contractual obligations assumed, restructuring liabilities, pre-acquisition contingencies,
and contingent consideration, where applicable. Although we believe the assumptions and estimates we have made in the past have been reasonable and
appropriate, they are based, in part, on historical experience and information obtained from the management of the acquired companies and are inherently
uncertain. Critical estimates in valuing certain acquired intangible assets include the present value of projected cash flows regarding the projected revenues,
projected expenses which include cost of revenue, research and development and selling, general and administrative expenses, technology obsolescence
rate, contributory asset charges, discount rate and income tax rate for developed technology; the projected revenues, customer retention rate, customer
ramp up period, discount rate and income tax rate for the customer contracts and related relationships; the projected revenues, technology obsolescence
rate, expected costs to develop in-process research and development (“IPR&D”) into commercially viable products, discount rate and income tax rate for the
IPR&D; and the projected revenues, brand asset phase-out pattern, brand asset royalty rate, discount rate and the income tax rate for the trade name.
Unanticipated events and circumstances may occur which could affect the accuracy or validity of such assumptions, estimates or actual results.
Goodwill. Goodwill represents the excess of purchase price and related costs over the value assigned to the net tangible and identifiable intangible
assets of businesses acquired. Goodwill is not amortized but is reviewed annually (or more frequently if impairment indicators arise) for impairment. To
review for impairment, we first assess qualitative factors to determine whether events or circumstances lead to a determination that it is more likely than not
that the fair value of any of our reporting units is less than its carrying amount. Our qualitative assessment of the recoverability of goodwill, whether
performed annually or based on specific events or circumstances, considers various macroeconomic, industry-specific and company-specific factors. Those
factors include: (i) severe adverse industry or economic trends; (ii) significant company-specific actions, including exiting an activity in conjunction with
restructuring of operations; (iii) current, historical or projected deterioration of our financial performance; or (iv) a sustained decrease in our market
capitalization below our net book value. After assessing the totality of events and circumstances, if we determine that it is not more likely than not that the
fair value of any of our reporting units is less than its carrying amount, no further assessment is performed. If we determine that it is more likely than not that
the fair value of any of our reporting units is less than its carrying amount, we calculate the fair value of that reporting unit and compare the fair value to the
reporting unit’s net book value. If the fair value of the reporting unit is greater than its net book value, there is no impairment. Otherwise, we calculate the
implied fair value of goodwill by deducting the fair value of all tangible and intangible assets, excluding goodwill, of the reporting unit from the fair value of
the reporting unit. The implied fair value of goodwill is compared to the carrying value of goodwill. If the implied fair value of goodwill is less than the carrying
value of goodwill, an impairment loss is recognized equal to the difference. Determining the fair value of a reporting unit involves the use of significant
estimates and assumptions.
Long-lived assets. Purchased finite-lived intangible assets are carried at cost less accumulated amortization. Amortization is recognized over the periods
during which the intangible assets are expected to contribute to our cash flows. Purchased IPR&D projects are capitalized at fair value as an indefinite-lived
intangible asset and assessed for impairment thereafter. Upon completion of each underlying project, IPR&D assets are reclassified as amortizable purchased
intangible assets and amortized over their estimated useful lives. If an IPR&D project is abandoned, we recognize the carrying value of the related intangible
asset in our consolidated statements of operations in the period it is abandoned. On a quarterly basis, we monitor factors and changes in circumstances that
could indicate carrying amounts of long-lived assets, including purchased intangible assets, ROU assets, and property, plant and equipment, may not be
recoverable. Factors we consider important which could trigger an impairment review include: (i) significant under-performance relative to historical or
projected future operating results, (ii) significant changes in the manner of our use of the acquired assets or the strategy for our overall business, and
(iii) significant negative industry or economic trends. An impairment loss must be measured if the sum of the expected future cash flows (undiscounted and
before interest) from the use and eventual disposition of the asset (or asset group) is less than the net book value of the asset (or asset group). The amount of
the impairment loss will generally be measured as the difference between the net book value of the asset (or asset group) and the estimated fair value.
Warranty. We accrue for the estimated costs of product warranties at the time revenue is recognized. Product warranty costs are estimated based upon
our historical experience and specific identification of the product requirements, which may fluctuate based on product mix. Additionally, we accrue for
warranty costs associated with occasional or unanticipated product quality issues if a loss is probable and can be reasonably estimated.
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Revenue recognition. We account for a contract with a customer when both parties have approved the contract and are committed to perform their
respective obligations, each party’s rights can be identified, payment terms can be identified, the contract has commercial substance, and it is probable we
will collect substantially all of the consideration we are entitled to. Revenue is recognized when, or as, performance obligations are satisfied by transferring
control of a promised product or service to a customer.
Payment terms and conditions vary by contract type, and terms between invoicing and when payment is due are short-term in duration. The timing of
revenue recognition and required payments can differ and payment terms are generally structured to provide the customer with predictable and dependable
ways to procure our products, not to provide or receive financing from the customer.
Nature of Products and Services
Our products and services can be broadly categorized as sales of products and subscriptions and services. The following is a description of the principal
activities from which we generate revenue.
Products. We recognize revenue from sales to direct customers and distributors when control transfers to the customer. Rebates and incentives offered
to distributors, which are earned when sales to end customers are completed, are estimated at the point of revenue recognition. We have elected to exclude
from the transaction price any taxes collected from a customer and to account for shipping and handling activities performed after a customer obtains control
of the product as activities to fulfill the promise to transfer the product. From time to time, certain customers agree to pay us secure supply fees in exchange
for prioritized fulfillment of product orders. Such fees are included in the transaction price of the product orders and are recognized as revenue in the period
that control over the products is transferred to the customer.
Subscriptions and services. Our subscriptions and services revenue consists of sales and royalties from software arrangements, support services,
professional services, transfer of IP, and non-recurring engineering (“NRE”) arrangements.
Revenue from software arrangements primarily consists of fees, which may be paid either at contract inception or in installments over the contract
term, that provide customers with a right to use the software, access general support and maintenance, and utilize our professional services.
Our software licenses have standalone functionality from which customers derive benefit, and the customer obtains control of the software when it is
delivered or made available for download. We believe that for the majority of software arrangements, customers derive significant benefit from the ongoing
support we provide. Certain of our subscriptions and services arrangements permit our customers to unilaterally terminate or cancel these arrangements at
any time at the customer’s convenience, referred to as termination for convenience provisions, without substantive termination penalty and receive a pro-
rata refund of any prepaid fees. Accordingly, we account for arrangements with these termination for convenience provisions as a series of daily contracts,
resulting in ratable revenue recognition of software revenue over the contractual period.
Support services consist primarily of telephone support and the provision of unspecified updates and upgrades on a when-and-if-available basis.
Support services represent stand-ready obligations for which revenue is recognized ratably over the term of the arrangement.
Professional services consist of implementation, consulting, customer education and customer training services. The obligation to provide professional
services is generally satisfied over time, with the customer simultaneously receiving and consuming the benefits as we satisfy our performance obligations.
Rights to our IP are either sold or licensed to a customer. IP revenue recognition is dependent on the nature and terms of each agreement. We
recognize IP revenue upon delivery of the IP if there are no substantive future obligations to perform under the arrangement. Sales-based or usage-based
royalties from the license of IP are recognized at the later of the period the sales or usages occur or the satisfaction of the performance obligation to which
some or all of the sales-based or usage-based royalties have been allocated.
There are two main categories of NRE contracts that we enter into with our customers: (a) NRE contracts in which we develop a custom chip and (b)
NRE contracts in which we accelerate our development of a new chip upon the customer’s request. The majority of our NRE contract revenues meet the over
time criteria. As such, revenue is recognized over the development period with the measure of progress using the input method based on costs incurred to
total cost as the services are provided. For NRE contracts that do not meet the over time criteria, revenue is recognized at a point in time when the NRE
services are complete.
Material rights. Contracts with customers may also include material rights that are also performance obligations. These include the right to renew or
receive products or services at a discounted price in the future. Revenue allocated to material rights is recognized when the customer exercises the right or
the right expires.
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Arrangements with Multiple Performance Obligations
Our contracts may contain more than one of the products and services listed above, each of which is separately accounted for as a distinct performance
obligation.
Allocation of consideration. We allocate total contract consideration to each distinct performance obligation in a bundled arrangement on a relative
standalone selling price basis. The standalone selling price reflects the price we would charge for a specific product or service if it were sold separately in
similar circumstances and to similar customers.
Standalone selling price. When available, we use directly observable transactions to determine the standalone selling prices for performance
obligations. When directly observable transactions are not available, our estimates of standalone selling price for each performance obligation require
judgment that considers multiple factors, including, but not limited to, reasonably available data points such as costs incurred to provide the good or service,
market conditions, entity-specific factors such as pricing strategies and objectives, and information about the customer.
We separately determine the standalone selling prices by product or service type. Additionally, we segment the standalone selling prices for products
where the pricing strategies differ, and where there are differences in customers and circumstances that warrant segmentation.
We also estimate the standalone selling price of our material rights. We estimate the value of the customer’s option to purchase or receive additional
products or services at a discounted price by estimating the incremental discount the customer would obtain when exercising the option and the likelihood
that the option would be exercised.
Other Policies and Judgments
Contract modifications. We may modify contracts to offer customers additional products or services. Each of the additional products and services is
generally considered distinct from those products or services transferred to the customer before the modification. We evaluate whether the contract price for
the additional products and services reflects the standalone selling price as adjusted for facts and circumstances applicable to that contract. In these cases,
we account for the additional products or services as a separate contract. In other cases where the pricing in the modification does not reflect the standalone
selling price as adjusted for facts and circumstances applicable to that contract, we account for the additional products or services as part of the existing
contract on a prospective basis, on a cumulative catch-up basis, or a combination of both based on the nature of the modification. In instances where the
pricing in the modification offers the customer a credit for a prior arrangement, we adjust our variable consideration reserves for returns and other
concessions.
Right of return. Certain contracts contain a right of return that allows the customer to cancel all or a portion of the product or service and receive a
credit. We estimate returns based on historical returns data which is constrained to an amount for which a material revenue reversal is not probable. We do
not recognize revenue for products or services that are expected to be returned.
Practical expedient elected. We do not disclose the value of unsatisfied performance obligations for (i) contracts with an original expected length of one
year or less and (ii) contracts for which we recognize revenue at the amount to which we have the right to invoice for services performed. For contracts that
were modified before the beginning of the earliest reporting period presented, we have not retrospectively restated the contract for those modifications. We
have disclosed the aggregate effect of all modifications when identifying the satisfied and unsatisfied performance obligations for purposes of determining
the transaction price and allocating the transaction price at transition.
Research and development. Research and development expense consists primarily of personnel costs for our engineers and third parties engaged in the
design and development of our products, software and technologies, including salary, bonus and stock-based compensation expense, project material costs,
services and depreciation. Such costs are charged to research and development expense as they are incurred.
Stock-based compensation expense. We recognize compensation expense for time-based restricted stock units (“RSUs”) using the straight-line
amortization method based on the fair value of RSUs on the date of grant. The fair value of RSUs is the closing market price of Broadcom common stock on
the date of grant, reduced by the present value of dividends expected to be paid on Broadcom common stock prior to vesting. We recognize compensation
expense for time-based stock options and employee stock purchase plan rights under the Broadcom Inc. Employee Stock Purchase Plan, as amended (“ESPP”)
based on the estimated grant-date fair value determined using the Black-Scholes valuation model with a straight-line amortization method.
Certain equity awards include both service and market conditions. The fair value of market-based awards is estimated on the date of grant using the
Monte Carlo simulation technique. Compensation expense for market-based awards is amortized based upon a graded vesting method over the service
period.
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We estimate forfeitures expected to occur and recognize stock-based compensation expense for such awards expected to vest. We will recognize
additional expense if actual forfeitures are lower than we estimated, and will recognize a benefit if actual forfeitures are higher than we estimated. Changes in
the estimated forfeiture rates can have a significant effect on stock-based compensation expense since the effect of adjusting the rate is recognized in the
period the forfeiture estimate is changed.
Shipping and handling costs. Our shipping and handling costs charged to customers are included in net revenue and the associated expense is included
in cost of revenue for all periods presented.
Litigation and settlement costs. We are involved in legal actions and other matters arising in our recent business acquisitions and in the normal course of
business. We recognize an estimated loss contingency when the outcome is probable prior to issuance of the consolidated financial statements and we are
able to reasonably estimate the amount or range of any possible loss.
Income taxes. We account for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for
the expected future tax consequences of events that have been included in the consolidated financial statements. Under this method, deferred tax assets and
liabilities are determined based on the differences between the consolidated financial statements and tax basis of assets and liabilities using enacted tax rates
in effect for the year in which the differences are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in
income in the period that includes the enactment date.
We recognize net deferred tax assets to the extent we believe these assets will more likely than not be realized. In making such determination, we
consider all available positive and negative evidence, including scheduled reversals of deferred tax liabilities, projected future taxable income, tax planning
strategies and recent financial operations. If we determine that we are able to realize our deferred income tax assets in the future in excess of their net
carrying values, we adjust the valuation allowance and reduce the provision for income taxes or increase the benefit from income taxes. Likewise, if we
determine that we are not able to realize all or part of our net deferred tax assets, we increase the provision for income taxes or decrease the benefit from
income taxes in the period such determination is made.
The U.S. Tax Cuts and Jobs Act enacted on December 22, 2017 (the “2017 Tax Act”) introduced significant changes to U.S. income tax law. The Global
Intangible Low-Taxed Income (“GILTI”) provisions of the 2017 Tax Act require Broadcom to include in its U.S. income tax return foreign subsidiary earnings in
excess of an allowable return on the foreign subsidiary’s tangible assets. We have elected to record the impacts of GILTI during the period incurred.
We account for uncertainty in income taxes in accordance with the applicable accounting guidance on income taxes. This guidance provides that a tax
benefit from an uncertain tax position may be recognized when it is more likely than not that the position will be sustained upon examination, including
resolutions of any related appeals or litigation processes, based on the technical merits.
Net income per share. Basic net income per share is computed by dividing net income attributable to common stock by the weighted-average number of
shares of common stock outstanding during the period. Diluted net income per share is computed by dividing net income attributable to common stock by
the weighted-average number of shares of common stock and potentially dilutive shares of common stock outstanding during the period. Potentially dilutive
shares outstanding include the dilutive effect of unvested RSUs and ESPP rights (together referred to as “equity awards”), as well as convertible preferred
stock. Potentially dilutive shares whose effect would have been antidilutive are excluded from the computation of diluted net income per share.
The dilutive effect of equity awards is calculated based on the average stock price for each fiscal period, using the treasury stock method. Under the
treasury stock method, the amount the employee must pay for purchasing shares under the ESPP and the amount of compensation expense for future
service that we have not yet recognized are collectively assumed to be used to repurchase shares. The dilutive effect of convertible preferred stock is
calculated using the if-converted method. The if-converted method assumes that these securities were converted at the beginning of the reporting period to
the extent that the effect is dilutive.
3. Revenue from Contracts with Customers
Disaggregation
We have considered (1) information that is regularly reviewed by our Chief Executive Officer, who has been identified as the chief operating decision
maker (the “CODM”) as defined by the authoritative guidance on segment reporting, in evaluating financial performance and (2) disclosures presented
outside of our financial statements in our earnings releases and used in investor presentations to disaggregate revenues. The principal category we use to
disaggregate revenues is the nature of our products and subscriptions and services, as presented in our consolidated statements of operations. In addition,
revenues by reportable segment are presented in Note 13. “Segment Information.”
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The following tables present revenue disaggregated by type of revenue and by region for the periods presented:
Fiscal Year 2024
Americas
Asia Pacific
Europe, the Middle East
and Africa
Total
(In millions)
Products
$
2,244
$
26,219
$
1,896
$
30,359
Subscriptions and services
12,726
2,203
6,286
21,215
Total
$
14,970
$
28,422
$
8,182
$
51,574
Fiscal Year 2023
Americas
Asia Pacific
Europe, the Middle East
and Africa
Total
(In millions)
Products
$
2,601
$
23,263
$
2,027
$
27,891
Subscriptions and services
5,678
657
1,593
7,928
Total
$
8,279
$
23,920
$
3,620
$
35,819
Fiscal Year 2022
Americas
Asia Pacific
Europe, the Middle East
and Africa
Total
(In millions)
Products
$
2,371
$
21,761
$
2,145
$
26,277
Subscriptions and services
4,573
744
1,609
6,926
Total
$
6,944
$
22,505
$
3,754
$
33,203
Although we recognize revenue for the majority of our products when title and control transfer in Penang, Malaysia, we disclose net revenue by region
based primarily on the geographic shipment location or delivery location specified by our distributors, original equipment manufacturer (“OEM”) customers,
contract manufacturers, channel partners, or software customers.
Contract Balances
Contract assets and contract liabilities balances were as follows:
November 3,
2024
October 29,
2023
(In millions)
Contract Assets
$
4,402
$
955
Contract Liabilities
$
14,495
$
2,786
Changes in our contract assets and contract liabilities primarily result from the timing difference between our performance and the customer’s
payment. Contract assets and contract liabilities as of November 3, 2024 included the impact of VMware balances acquired on November 22, 2023. We fulfill
our obligations under a contract with a customer by transferring products and services in exchange for consideration from the customer. We recognize a
contract asset when we transfer products or services to a customer and the right to consideration is conditional on something other than the passage of time.
Accounts receivable are recorded when the customer has been billed or the right to consideration is unconditional. We recognize contract liabilities when we
have received consideration or an amount of consideration is due from the customer and we have a future obligation to transfer products or services. As of
November 3, 2024, approximately 55% of contract liabilities related to contracts subject to termination for convenience provisions. The amount of revenue
recognized during fiscal year 2024 that was included in the contract liabilities balance as of October 29, 2023 was $2,440 million. The amount of revenue
recognized during fiscal year 2023 that was included in the contract liabilities balance as of October 30, 2022 was $2,915 million.
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Remaining Performance Obligations
Revenue allocated to remaining performance obligations represents the transaction price allocated to unsatisfied or partially unsatisfied performance
obligations. Remaining performance obligations include unearned revenue and amounts that will be invoiced and recognized as revenue in future periods,
but do not include contracts for software, subscriptions or services where the customer is not committed. The customer is not considered committed when
termination for convenience without payment of a substantive penalty exists, either contractually or through customary business practice. Additionally, as a
practical expedient, we have not included contracts that have an original duration of one year or less, nor have we included contracts with sales-based or
usage-based royalties promised in exchange for a license of IP.
Certain multi-year customer contracts in our semiconductor solutions and infrastructure software segments contain firmly committed amounts and the
remaining performance obligations under these contracts as of November 3, 2024 were approximately $20.5 billion. We expect approximately 43% of this
amount to be recognized as revenue over the next 12 months. For contracts with termination for convenience rights, our customers generally do not exercise
those rights. In addition, the majority of our revenue is from contracts with a duration of one year or less. Accordingly, our remaining performance obligations
disclosed above are not indicative of revenue for future periods.
4. Acquisitions
Acquisition of VMware, Inc.
On November 22, 2023, we completed the VMware Merger. Pursuant to the Agreement and Plan of Merger, each share of VMware common stock
issued and outstanding immediately prior to the VMware Merger was indirectly converted into the right to receive, at the election of the holder of such share
of VMware common stock, either $142.50 in cash or 2.52 shares of Broadcom common stock (on a split adjusted basis). The stockholder election was
prorated, such that the total number of shares of VMware common stock entitled to receive cash and the total number of shares of VMware common stock
entitled to receive Broadcom common stock, in each case, was equal to 50% of the aggregate number of shares of VMware common stock issued and
outstanding immediately prior to the VMware Merger. Based on the VMware stockholders’ elections, the VMware stockholders received approximately
$30,788 million in cash and 544 million shares of Broadcom common stock with a fair value of $53,398 million.
We funded the cash portion of the VMware Merger with the net proceeds from the issuance of the 2023 Term Loans, as defined and discussed in Note
10. “Borrowings”, as well as cash on hand. We assumed $8,250 million of VMware’s outstanding senior unsecured notes.
Purchase Consideration
(In millions)
Fair value of Broadcom common stock issued for outstanding VMware common stock
$
53,398
Cash paid for outstanding VMware common stock
30,788
Cash paid by Broadcom to retire VMware’s term loan
1,257
Fair value of partially vested assumed VMware equity awards
805
Fair value of Broadcom common stock issued for accelerated VMware equity awards
23
Cash paid for accelerated VMware equity awards
13
Effective settlement of pre-existing relationships
6
Total purchase consideration
86,290
Less: cash acquired
6,642
Total purchase consideration, net of cash acquired
$
79,648
We assumed all outstanding VMware RSU awards and performance stock unit (“PSU”) awards held by continuing employees. The assumed awards were
converted into RSU awards for shares of Broadcom common stock. All outstanding in-the-money VMware stock options and RSU awards held by non-
employee directors were accelerated and converted into the right to receive cash and shares of Broadcom common stock, in equal parts.
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The following table presents our allocation of the total purchase price, net of cash acquired:
Fair Value
(In millions)
Trade accounts receivable
$
3,571
Inventory
15
Assets held-for-sale
5,206
Other current assets
757
Property, plant and equipment
531
Goodwill
54,206
Intangible assets
45,572
Other long-term assets
1,064
Total assets acquired
110,922
Accounts payable
(359)
Employee compensation and benefits
(848)
Current portion of long-term debt
(1,264)
Liabilities held-for-sale
(1,901)
Other current liabilities
(11,041)
Long-term debt
(6,254)
Other long-term liabilities
(9,607)
Total liabilities assumed
(31,274)
Fair value of net assets acquired
$
79,648
Goodwill is primarily attributable to the assembled workforce and anticipated synergies and economies of scale expected from the integration of the
VMware business. The synergies include certain cost savings, operating efficiencies and other strategic benefits projected to be achieved as a result of the
VMware Merger. Goodwill is not deductible for tax purposes.
Assets and liabilities held-for-sale primarily included the end-user computing (“EUC”) business and certain other assets and liabilities, which were not
aligned with our strategic objectives. On July 1, 2024, we sold the EUC business to KKR & Co. Inc. for cash consideration of $3.5 billion, after working capital
adjustments. We do not have any material continuing involvement with this business and have presented its results in discontinued operations.
Our results of continuing operations included $12,384 million of net revenue attributable to VMware for fiscal year 2024. It is impracticable to
determine the effect on net income attributable to VMware as we immediately integrated VMware into our ongoing operations. Transaction costs related to
the VMware Merger of $255 million were primarily included in selling, general and administrative expense for fiscal year 2024.
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Intangible Assets
Fair Value
Weighted-Average Amortization
Periods
(In millions)
(In years)
Developed technology
$
24,156
8
Customer contracts and related relationships
15,239
8
Trade name
1,205
14
Off-market component of customer contracts
242
2
Total identified finite-lived intangible assets
40,842
IPR&D
4,730
N/A
Total identified intangible assets
$
45,572
Developed technology relates to products used for VMware cloud foundation, application management, security, application networking and security,
and software-defined edge. We valued the developed technology using the multi-period excess earnings method under the income approach. This method
reflects the present value of the projected cash flows that are expected to be generated by the developed technology less charges representing the
contribution of other assets to those cash flows. The economic useful life was determined based on the technology cycle related to each developed
technology, as well as the cash flows over the forecast period.
Customer contracts and related relationships represent the fair value of future projected revenue that will be derived from sales of products to existing
customers of VMware. Customer contracts and related relationships were valued using the with-and-without-method under the income approach. In the
with-and-without method, the fair value was measured by the difference between the present values of the cash flows with and without the existing
customers in place over the period of time necessary to reacquire the customers. The economic useful life was determined by evaluating many factors,
including the useful life of other intangible assets, the length of time remaining on the acquired contracts and the historical customer turnover rates.
Trade name relates to the “VMware” trade name. The fair value was determined by applying the relief-from-royalty method under the income
approach. This method is based on the application of a royalty rate to forecasted revenue under the trade name. The economic useful life was determined
based on the expected life of the trade name and the cash flows anticipated over the forecast period.
Off-market component of customer contracts relate to rebates and marketing development funds provided to customers prior to the VMware Merger.
We valued these contracts based on their remaining unamortized balances, which approximate their fair value. The economic useful life was determined
based on the remaining terms of customer contracts.
The fair value of IPR&D was determined using the multi-period excess earnings method under the income approach. This method reflects the present
value of the projected cash flows that are expected to be generated by the IPR&D, less charges representing the contribution of other assets to those cash
flows.
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The following table presents the details of IPR&D by category as of the date of the VMware Merger:
Description
IPR&D
Percentage of
Completion
Estimated Cost to
Complete
Expected Release
Date
(By Fiscal Year)
(Dollars in millions)
VMware cloud foundation July 2024 releases
$
790
67 % $
38
2024
(a)
VMware cloud foundation March 2025 releases
$
2,900
58 % $
185
2025
(b)
VMware cloud foundation July 2025 releases
$
750
43 % $
65
2025
(c)
VMware cloud foundation networking and security virtualization
$
265
21 % $
59
2024
(a)
Application networking and security
$
25
21 % $
47
2024
(a)
____________________________
(a) Released during fiscal year 2024.
(b) $1,380 million of the $2,900 million was released during fiscal year 2024. The remaining balance is expected to be released during the second half of the
fiscal year ending November 2, 2025 (“fiscal year 2025”).
(c) Expected to be released during the first half of the fiscal year ending November 1, 2026.
VMware cloud foundation is a private cloud platform that integrates compute, storage, networking, and management into a single solution and provides
license portability. It enables customers to modernize infrastructure and accelerate developer productivity with greater resilience and security.
We believe the amounts of purchased intangible assets recorded above represent the fair values of, and approximate the amounts a market participant
would pay for, these intangible assets as of the date of the VMware Merger.
Unaudited Pro Forma Information
The following unaudited pro forma financial information presents combined results of operations for each of the periods presented, as if VMware had
been acquired as of the beginning of fiscal year 2023. The unaudited pro forma information includes adjustments to amortization for intangible assets
acquired, stock-based compensation expense, interest expense for acquisition financing, amortization of deferred assets and liabilities, and depreciation for
property and equipment acquired. The unaudited pro forma information presented below is for informational purposes only and is not necessarily indicative
of our consolidated results of operations of the combined business had the acquisition actually occurred at the beginning of fiscal year 2023 or of the results
of our future operations of the combined business.
Fiscal Year
2024
2023
(In millions)
Pro forma net revenue
$
52,188
$
48,227
Pro forma net income
$
6,473
$
8,215
Acquisition of Seagate’s SoC Operations
On April 23, 2024, we acquired certain assets related to the design, development, and manufacture of System-on-Chip (“SoC”) operations of Seagate
Technology Holdings plc for $600 million. We acquired these assets to strengthen our portfolio of SoC products.
The following table presents our allocation of the total purchase price. Goodwill is allocated to the semiconductor solutions segment and is deductible
for tax purposes.
Fair Value
(In millions)
Intangible assets
$
570
Goodwill
14
Other assets
16
Total assets acquired
$
600
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Intangible Assets
Fair Value
Weighted-Average Amortization
Periods
(In millions)
(In years)
Customer contracts and related relationships
$
410
11
Developed technology
90
11
Total identified finite-lived intangible assets
500
IPR&D
70
N/A
Total identified intangible assets
$
570
Customer contracts and related relationships represent the fair value of future projected revenue that will be derived from sales of SoC controller
products for hard disk drive applications. Customer contracts and related relationships were valued using the multi-period excess earnings method under the
income approach. This method reflects the present value of the projected cash flows that are expected to be generated by the customer contracts and related
relationships less charges representing the contribution of other assets to those cash flows. The economic useful life was determined based on the useful
lives of other intangible assets and the length of time remaining on the acquired contracts.
Developed technology relates to SoC controller products for hard disk drive applications. We valued the developed technology using the relief-from-
royalty method under the income approach. This method is based on the application of a royalty rate to forecasted revenue under the developed technology.
The economic useful life was determined based on the technology cycle related to each developed technology, as well as the cash flows over the forecast
period.
The fair value of IPR&D was determined using the relief-from-royalty method under the income approach. This method is based on the application of a
royalty rate to forecasted revenue from the IPR&D.
5. Supplemental Financial Information
Cash Equivalents
Cash equivalents included $1,716 million and $1,470 million of time deposits and $1,171 million and $1,650 million of money-market funds as of
November 3, 2024 and October 29, 2023, respectively. For time deposits, carrying value approximates fair value due to the short-term nature of the
instruments. The fair value of money-market funds, which was consistent with their carrying value, was determined using unadjusted prices in active,
accessible markets for identical assets, and as such, they were classified as Level 1 assets in the fair value hierarchy.
Accounts Receivable Factoring
We sell certain of our trade accounts receivable on a non-recourse basis to third-party financial institutions pursuant to factoring arrangements. We
account for these transactions as sales of receivables and present cash proceeds as cash provided by operating activities in the consolidated statements of
cash flows. Total trade accounts receivable sold under the factoring arrangements were $5,900 million, $3,975 million and $3,700 million during fiscal years
2024, 2023 and 2022, respectively. Factoring fees for the sales of receivables were recorded in other income (expense), net and were not material for any of
the
periods presented.
Inventory
November 3,
2024
October 29,
2023
(In millions)
Finished goods
$
504
$
676
Work-in-process
970
901
Raw materials
286
321
Total inventory
$
1,760
$
1,898
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Property, Plant and Equipment, Net
November 3,
2024
October 29,
2023
(In millions)
Land
$
204
$
195
Construction in progress
57
63
Buildings and leasehold improvements
1,518
1,181
Machinery and equipment
5,246
4,739
Total property, plant and equipment
7,025
6,178
Accumulated depreciation and amortization
(4,504)
(4,024)
Total property, plant and equipment, net
$
2,521
$
2,154
Depreciation expense was $593 million, $502 million and $529 million for fiscal years 2024, 2023 and 2022, respectively.
Other Current Assets
November 3,
2024
October 29,
2023
(In millions)
Current portion of contract assets
$
1,916
$
499
Prepaid expenses
1,391
743
Other
764
364
Total other current assets
$
4,071
$
1,606
Other Current Liabilities
November 3,
2024
October 29,
2023
(In millions)
Contract liabilities
$
9,395
$
2,487
Tax liabilities
720
473
Interest payable
535
380
Other
1,143
312
Total other current liabilities
$
11,793
$
3,652
Other Long-Term Liabilities
November 3,
2024
October 29,
2023
(In millions)
Contract liabilities
$
5,100
$
299
Deferred tax liabilities
4,703
99
Unrecognized tax benefits, interest and penalties
3,669
2,792
Other
1,503
657
Total other long-term liabilities
$
14,975
$
3,847
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Other Income (Expense), Net
Fiscal Year
2024
2023
2022
(In millions)
Interest income
$
461
$
535
$
100
Other income
21
15
30
Gain (loss) on investments
(12)
11
(169)
Other expense
(64)
(49)
(15)
Other income (expense), net
$
406
$
512
$
(54)
Other income and other expense include foreign exchange gains and losses, factoring fees for the sales of receivables, and other miscellaneous items.
Discontinued Operations
During fiscal year 2024, we sold the EUC business for $3.5 billion, after working capital adjustments. In connection with the sale, we agreed to provide
transitional services to the buyer on a short-term basis. We do not have any material continuing involvement with this business and have presented its results
in discontinued operations.
The following table summarizes the selected financial information of discontinued operations:
Fiscal Year
2024
(In millions)
Net revenue
$
858
Loss from discontinued operations before income taxes
$
(12)
Provision for income taxes
(261)
Loss from discontinued operations, net of income taxes
$
(273)
6. Leases
We have operating and finance leases for our facilities, land, data centers and certain equipment. Operating lease expense was $187 million, $91 million
and $98 million for fiscal years 2024, 2023 and 2022, respectively. Finance lease expense was $27 million, $16 million and $18 million for fiscal years 2024,
2023 and 2022, respectively.
Other lease information, which included the impact of VMware leases acquired on November 22, 2023, was as follows.
Fiscal Year
2024
2023
2022
(In millions)
Cash paid for operating leases included in operating cash flows
$
223
$
90
$
103
ROU assets obtained in exchange for operating lease liabilities
$
1,165
$
28
$
16
ROU assets obtained in exchange for finance lease liabilities
$
49
$
—
$
1
November 3,
2024
October 29,
2023
Weighted-average remaining lease term – operating leases (In years)
11
10
Weighted-average remaining lease term – finance leases (In years)
2
2
Weighted-average discount rate – operating leases
5.31 %
3.90 %
Weighted-average discount rate – finance leases
3.13 %
3.09 %
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Supplemental balance sheet information related to leases, which included the VMware leases acquired on November 22, 2023, was as follows:
Classification on the Consolidated Balance Sheets
November 3,
2024
October 29,
2023
(In millions)
ROU assets - operating leases
Other long-term assets
$
1,325 $
463
ROU assets - finance leases
Property, plant and equipment, net
$
15 $
22
Short-term lease liabilities - operating leases
Other current liabilities
$
207 $
60
Long-term lease liabilities - operating leases
Other long-term liabilities
$
1,143 $
359
Short-term lease liabilities - finance leases
Current portion of long-term debt
$
26 $
45
Long-term lease liabilities - finance leases
Long-term debt
$
13 $
4
Future minimum lease payments under non-cancelable leases as of November 3, 2024 were as follows:
November 3,
2024
Operating Leases
Finance Leases
(In millions)
2025
$
268
$
26
2026
194
8
2027
171
3
2028
144
2
2029
124
2
Thereafter
894
—
Total undiscounted liabilities
1,795
41
Less: interest
(445)
(2)
Present value of lease liabilities
$
1,350
$
39
7. Goodwill and Intangible Assets
Goodwill
Semiconductor
Solutions
Infrastructure Software
Total
(In millions)
Balance as of October 30, 2022
$
25,967
$
17,647
$
43,614
Acquisitions
34
5
39
Balance as of October 29, 2023
26,001
17,652
43,653
Acquisition of VMware
—
54,206
54,206
Acquisition of Seagate's SoC operations
14
—
14
Balance as of November 3, 2024
$
26,015
$
71,858
$
97,873
We completed three acquisitions in fiscal year 2023, all of which qualified as business combinations. The consideration for these acquisitions was
primarily allocated to goodwill and intangible assets.
During the fourth quarter of fiscal years 2024, 2023 and 2022, we completed our annual impairment assessments and concluded that goodwill was not
impaired in any of these years.
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Intangible Assets
Gross Carrying
Amount
Accumulated
Amortization
Net Book
Value
(In millions)
As of November 3, 2024:
Purchased technology
$
35,467
$
(12,551)
$
22,916
Customer contracts and related relationships
16,186
(2,271)
13,915
Trade names
1,720
(369)
1,351
Other
166
(105)
61
Intangible assets subject to amortization
53,539
(15,296)
38,243
IPR&D
2,340
—
2,340
Total
$
55,879
$
(15,296)
$
40,583
As of October 29, 2023:
Purchased technology
$
12,938
$
(10,723)
$
2,215
Customer contracts and related relationships
7,059
(5,753)
1,306
Trade names
649
(388)
261
Other
177
(102)
75
Intangible assets subject to amortization
20,823
(16,966)
3,857
IPR&D
10
—
10
Total
$
20,833
$
(16,966)
$
3,867
Based on the amount of intangible assets subject to amortization at November 3, 2024, the expected amortization expense for each of the next five
fiscal years and thereafter was as follows:
Fiscal Year:
Expected Amortization
Expense
(In millions)
2025
$
8,055
2026
7,571
2027
6,533
2028
5,443
2029
4,356
Thereafter
6,285
Total
$
38,243
The weighted-average remaining amortization periods by intangible asset category were as follows:
Amortizable intangible assets:
November 3,
2024
(In years)
Purchased technology
7
Customer contracts and related relationships
7
Trade names
12
Other
7
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8. Net Income Per Share
Fiscal Year
2024
2023
2022
(In millions, except per share data)
Numerator:
Income from continuing operations
$
6,168
$
14,082
$
11,495
Dividends on preferred stock
—
—
(272)
Income from continuing operations attributable to common stock
6,168
14,082
11,223
Loss from discontinued operations, net of income taxes, attributable to common stock
(273)
—
—
Net income attributable to common stock
$
5,895
$
14,082
$
11,223
Denominator:
Weighted-average shares outstanding - basic
4,624
4,149
4,089
Dilutive effect of equity awards
154
123
143
Weighted-average shares outstanding - diluted
4,778
4,272
4,232
Basic income per share attributable to common stock:
Income per share from continuing operations
$
1.33
$
3.39
$
2.74
Loss per share from discontinued operations
(0.06)
—
—
Net income per share
$
1.27
$
3.39
$
2.74
Diluted income per share attributable to common stock:
Income per share from continuing operations
$
1.29
$
3.30
$
2.65
Loss per share from discontinued operations
(0.06)
—
—
Net income per share
$
1.23
$
3.30
$
2.65
For fiscal year 2022, diluted net income per share excluded the potentially dilutive effect of 104 million shares of common stock issuable upon the
conversion of 8.00% Mandatory Convertible Preferred Stock, Series A, $0.001 par value per share (“Mandatory Convertible Preferred Stock”) as their effect
was antidilutive. All shares of our Mandatory Convertible Preferred Stock were converted into shares of our common stock before the end of fiscal year 2022.
9. Retirement Plans
Defined Benefit Pension Plans
The U.S. defined benefit pension plans primarily consist of a qualified pension plan. Benefits of the qualified pension plan are provided under an
adjusted career-average-pay program, a cash-balance program or a dollar-per-month program. Benefit accruals under this plan were frozen in 2009.
Participants in the adjusted career-average-pay program no longer earn service accruals. Participants in the cash-balance program no longer earn service
accruals, but continue to earn 4% interest per year on their cash-balance accounts. There are no active participants under the dollar-per-month program. We
also have a frozen non-qualified supplemental pension plan in the United States that principally provides benefits based on compensation in excess of
amounts that can be considered under the qualified pension plan.
For certain non-U.S. countries, we also have defined benefit pension plans for eligible employees. Eligibility is generally determined based on the terms
of our plans and local statutory requirements.
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Net Periodic Benefit Cost
Fiscal Year
2024
2023
2022
(In millions)
Service cost
$
17
$
8
$
8
Interest cost
63
60
39
Expected return on plan assets
(60)
(59)
(39)
Other
(2)
—
1
Net periodic benefit cost
$
18
$
9
$
9
Net actuarial (gain) loss
$
(3)
$
20
$
(17)
The components of net periodic benefit cost other than the service cost are included in other income (expense), net. Service cost is recognized in
operating expenses.
Benefit Obligations and Plan Assets
Pension Benefits
November 3,
2024
October 29,
2023
(In millions)
Change in plan assets:
Fair value of plan assets — beginning of period
$
1,105
$
1,160
Actual return on plan assets
123
19
Employer contributions
21
15
Plan participants’ contributions
1
1
Benefit payments
(108)
(94)
Plan assets acquired in VMware acquisition
18
—
Foreign currency impact
(2)
4
Fair value of plan assets — end of period
1,158
1,105
Change in benefit obligations:
Benefit obligations — beginning of period
1,101
1,143
Service cost
17
8
Interest cost
63
60
Actuarial (gain) loss
65
(22)
Plan participants’ contributions
1
1
Benefit payments
(108)
(94)
Curtailments
(13)
—
Benefit obligations assumed in VMware acquisition
72
—
Foreign currency impact
(4)
5
Benefit obligations — end of period
1,194
1,101
Overfunded (underfunded) status of benefit obligations
$
(36)
$
4
Actuarial losses and prior service costs recognized in accumulated other comprehensive loss, net of taxes
$
(106)
$
(108)
_______________________________
(a) Substantially all amounts recognized on the consolidated balance sheets were recorded in other long-term assets and other long-term liabilities for all
periods presented.
(a)
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Plans with benefit obligations less than plan assets:
November 3,
2024
October 29,
2023
(In millions)
Projected benefit obligations
$
1,064
$
1,022
Accumulated benefit obligations
$
1,063
$
1,022
Fair value of plan assets
$
1,118
$
1,079
Plans with benefit obligations in excess of plan assets:
November 3,
2024
October 29,
2023
(In millions)
Projected benefit obligations
$
130
$
79
Accumulated benefit obligations
$
99
$
64
Fair value of plan assets
$
40
$
26
The fair value of pension plan assets as of November 3, 2024 and October 29, 2023 included $229 million and $204 million, respectively, of assets for
our non-U.S. pension plans.
The projected benefit obligations as of November 3, 2024 and October 29, 2023 included $260 million and $202 million, respectively, of obligations
related to our non-U.S. pension plans. The accumulated benefit obligations as of November 3, 2024 and October 29, 2023 included $229 million and $188
million, respectively, of obligations related to our non-U.S. pension plans.
Expected Future Benefit Payments
Fiscal Years:
Expected Benefit
Payments
(In millions)
2025
$
99
2026
$
98
2027
$
97
2028
$
95
2029
$
95
2030-2034
$
440
Investment Policy
Plan assets of the U.S. qualified pension plan, which represent substantially all of the plan assets, are generally invested in funds held by third-party
fund managers. Our benefit plan investment committee has set the investment strategy to fully match the liability. We direct the overall portfolio allocation
and use a third-party investment consultant that has the discretion to structure portfolios and select the investment managers within those allocation
parameters. Multiple investment managers are utilized, including both active and passive management approaches. The plan assets are invested using the
liability-driven investment strategy intended to minimize market and interest rate risks, and those assets are periodically rebalanced toward asset allocation
targets.
The target asset allocation for the U.S. qualified pension plan reflects a risk/return profile that we believe is appropriate relative to the liability structure
and return goals for the plan. We periodically review the allocation of plan assets relative to alternative allocation models to evaluate the need for
adjustments based on forecasted liabilities and plan liquidity needs. For both fiscal years 2024 and 2023, 100% of the U.S. qualified pension plan assets were
allocated to fixed income, in line with the target allocation. The fixed income allocation is primarily directed toward long-term core bond investments, with
smaller allocations to Treasury Inflation-Protected Securities and high-yield bonds.
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Fair Value Measurement of Plan Assets
November 3, 2024
Fair Value Measurements at Reporting Date
Using
Level 1
Level 2
Total
(In millions)
Cash equivalents
17
$
—
$
17
Equity securities:
Non-U.S. equity securities
83
—
83
Fixed-income securities:
U.S. treasuries
—
184
184
Corporate bonds
—
715
715
Municipal bonds
—
22
22
Government bonds
—
14
14
Asset-backed securities
—
1
1
Plan assets measured by fair value hierarchy
$
100
$
936
1,036
Plan assets measured at net asset value
122
Total plan assets
$
1,158
October 29, 2023
Fair Value Measurements at Reporting Date Using
Level 1
Level 2
Total
(In millions)
Cash equivalents
$
16
$
—
$
16
Equity securities:
Non-U.S. equity securities
62
—
62
Fixed-income securities:
U.S. treasuries
—
144
144
Corporate bonds
—
837
837
Municipal bonds
—
23
23
Government bonds
—
21
21
Asset-backed securities
—
2
2
Total plan assets
$
78
$
1,027
$
1,105
______________________________
(a) Cash equivalents primarily included short-term investment funds which consisted of short-term money market instruments that were valued based on
quoted prices in active markets.
(b) These equity securities were valued based on quoted prices in active markets.
(c) These amounts consisted of investments that were traded less frequently than Level 1 securities and were valued using inputs that included quoted
prices for similar assets in active markets and inputs other than quoted prices that were observable for the assets, such as interest rates, yield curves,
prepayment speeds, collateral performance, broker/dealer quotes and indices that were observable at commonly quoted intervals.
(d) Plan assets measured at fair value using net asset value as a practical expedient were excluded from the fair value hierarchy.
(a)
(b)
(c)
(c)
(c)
(c)
(c)
(d)
(a)
(b)
(c)
(c)
(c)
(c)
(c)
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Assumptions
The assumptions used to determine the benefit obligations and net periodic benefit cost for our defined benefit pension plans are presented in the
table below. The expected long-term return on assets shown in the table below represents an estimate of long-term returns on investment portfolios
primarily consisting of combinations of debt, equity and other investments, depending on the plan. The long-term rates of return are then weighted based on
the asset classes in which the pension funds are invested. Discount rates reflect the current rate at which defined benefit pension obligations could be settled
based on the measurement dates of the plans, which is October 31, the month end closest to our fiscal year end. The range of assumptions reflects the
different economic environments within various countries.
Assumptions for Benefit Obligations
as of
Assumptions for Net Periodic Benefit Cost
Fiscal Year
November 3,
2024
October 29,
2023
2024
2023
2022
Discount rate
1.75%-6.75%
1.75%-7.00%
1.75%-7.10%
1.25%-7.25%
0.75%-6.50%
Average increase in compensation levels
2.00%-8.80%
2.00%-10.00%
2.00%-8.80%
2.00%-10.00%
2.00%-10.00%
Expected long-term return on assets
N/A
N/A
2.50%-7.25%
2.50%-7.00%
1.50%-7.25%
Defined Contribution Plans
Our eligible U.S. employees participate in a company-sponsored 401(k) plan. Under the plan, we match employee contributions dollar for dollar up to
6% of their eligible earnings. All matching contributions vest immediately. During fiscal years 2024, 2023 and 2022, we made contributions of $210 million,
$100 million and $96 million, respectively, to the 401(k) plan. The increase in fiscal year 2024 was due to the VMware Merger.
In addition, other eligible employees outside of the U.S. receive retirement benefits under various defined contribution retirement plans.
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10. Borrowings
Effective Interest Rate
November 3,
2024
October 29,
2023
(Dollars in millions)
October 2024 Senior Notes - fixed rate
4.150% notes due February 2028
4.36 % $
875
$
—
4.350% notes due February 2030
4.51 %
1,500
—
4.550% notes due February 2032
4.70 %
875
—
4.800% notes due October 2034
4.38 %
1,750
—
5,000
—
July 2024 Senior Notes - fixed rate
5.050% notes due July 2027
5.27 %
1,250
—
5.050% notes due July 2029
5.23 %
2,250
—
5.150% notes due November 2031
5.30 %
1,500
—
5,000
—
2023 Term Loans - floating rate
SOFR plus 1.125% term loan due November 2026
6.23 %
5,595
—
SOFR plus 1.375% term loan due November 2028
6.31 %
8,000
—
13,595
—
April 2022 Senior Notes - fixed rate
4.000% notes due April 2029
4.17 %
750
750
4.150% notes due April 2032
4.30 %
1,200
1,200
4.926% notes due May 2037
5.33 %
2,500
2,500
4,450
4,450
September 2021 Senior Notes - fixed rate
3.137% notes due November 2035
4.23 %
3,250
3,250
3.187% notes due November 2036
4.79 %
2,750
2,750
6,000
6,000
March 2021 Senior Notes - fixed rate
3.419% notes due April 2033
4.66 %
2,250
2,250
3.469% notes due April 2034
4.63 %
3,250
3,250
5,500
5,500
January 2021 Senior Notes - fixed rate
1.950% notes due February 2028
2.10 %
750
750
2.450% notes due February 2031
2.56 %
2,750
2,750
2.600% notes due February 2033
2.70 %
1,750
1,750
3.500% notes due February 2041
3.60 %
3,000
3,000
3.750% notes due February 2051
3.84 %
1,750
1,750
10,000
10,000
June 2020 Senior Notes - fixed rate
3.459% notes due September 2026
4.19 %
752
752
4.110% notes due September 2028
5.02 %
1,118
1,118
1,870
1,870
May 2020 Senior Notes - fixed rate
2.250% notes due November 2023
2.40 %
—
105
3.150% notes due November 2025
3.29 %
900
900
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Effective Interest Rate
November 3,
2024
October 29,
2023
(Dollars in millions)
4.150% notes due November 2030
4.27 %
1,856
1,856
4.300% notes due November 2032
4.39 %
2,000
2,000
4,756
4,861
April 2020 Senior Notes - fixed rate
5.000% notes due April 2030
5.18 %
606
606
April 2019 Senior Notes - fixed rate
3.625% notes due October 2024
3.98 %
—
622
4.750% notes due April 2029
4.95 %
1,655
1,655
1,655
2,277
2017 Senior Notes - fixed rate
3.625% notes due January 2024
3.74 %
—
829
3.125% notes due January 2025
3.23 %
495
495
3.875% notes due January 2027
4.02 %
2,922
2,922
3.500% notes due January 2028
3.60 %
777
777
4,194
5,023
Assumed VMware Senior Notes - fixed rate
4.500% notes due May 2025
5.81 %
750
—
1.400% notes due August 2026
5.60 %
1,500
—
4.650% notes due May 2027
5.60 %
500
—
3.900% notes due August 2027
5.50 %
1,250
—
1.800% notes due August 2028
5.44 %
750
—
4.700% notes due May 2030
5.75 %
750
—
2.200% notes due August 2031
5.74 %
1,500
—
7,000
—
Assumed CA Senior Notes - fixed rate
4.700% notes due March 2027
5.15 %
215
215
Other senior notes - fixed rate
3.500% notes due August 2024
3.55 %
—
7
4.500% notes due August 2034
4.55 %
6
6
6
13
Total principal amount outstanding
$
69,847
$
40,815
Current portion of principal amount outstanding
$
1,245
$
1,563
Short-term finance lease liabilities
26
45
Total current portion of long-term debt
$
1,271
$
1,608
Non-current portion of principal amount outstanding
$
68,602
$
39,252
Long-term finance lease liabilities
13
4
Unamortized discount and issuance costs
(2,320)
(1,635)
Total long-term debt
$
66,295
$
37,621
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The senior notes and term loans are recorded net of discount and issuance costs, which are amortized to interest expense over the respective terms of
such instruments. The effective interest rates are calculated based on contractual interest, discount and issuance costs and, if applicable, reclassification of
the cumulative gain from derivatives. See Note 2. "Summary of Significant Accounting Policies" for additional information for derivative instruments.
Senior Notes
We issued senior unsecured notes for an aggregate principal amount of $5,000 million in October 2024 and $5,000 million in July 2024.
In connection with the VMware Merger, we assumed $8,250 million of VMware’s outstanding senior unsecured notes. We repaid $1,250 million of
1.000% notes upon maturity in August 2024.
We may redeem or purchase, in whole or in part, any of our senior notes prior to their respective maturities, subject to a specified make-whole
premium determined in accordance with the indentures governing the respective notes, plus accrued and unpaid interest. In the event of a change in control,
note holders will have the right to require us to repurchase their notes at a price equal to 101% of the principal amount of such notes, plus accrued and
unpaid interest.
2023 Term Loans
On August 15, 2023, we entered into a credit agreement (the “2023 Credit Agreement”), which provided us with the ability to borrow term loans in
connection with the VMware Merger. Upon completion of the VMware Merger, we entered an $11,195 million unsecured term A-2 facility (the "Term A-2
Loan”), an $11,195 million unsecured term A-3 facility (the “Term A-3 Loan”), and an $8,000 million unsecured term A-5 facility (the “Term A-5 Loan”,
collectively, the “2023 Term Loans”).
During fiscal year 2024, we repaid $11,195 million of our Term A-2 Loan using the net proceeds from the senior notes issued in July 2024 and the sale of
the EUC business, as well as cash on hand. We also repaid $5,600 million of our Term A-3 Loan using the net proceeds from the senior notes issued in October
2024 and cash on hand. As a result of these repayments, we wrote off unamortized discount and issuance costs of $157 million, which were included in
interest expense in the consolidated statement of operations.
The 2023 Term Loans bear interest, payable monthly or every three months at our election, at floating interest rates tied to the Secured Overnight
Financing Rate (“SOFR”). The Term A-3 Loan and Term A-5 Loan will mature and be payable on the third or fifth anniversary, respectively, of the date of the
VMware Merger. Subject to the terms of the 2023 Credit Agreement, we are permitted to voluntarily make prepayments of the term loans without penalty.
Our obligations under the 2023 Credit Agreement are unsecured and are not guaranteed by any of our subsidiaries.
2021 Credit Agreement
In January 2021, we entered into a credit agreement (the “2021 Credit Agreement”), which provides for a five-year $7.5 billion unsecured revolving
credit facility, of which $500 million is available for the issuance of multi-currency letters of credit. The issuance of letters of credit and certain other
instruments would reduce the aggregate amount otherwise available under the revolving credit facility for revolving loans. Subject to the terms of the 2021
Credit Agreement, we are permitted to borrow, repay and reborrow revolving loans at any time prior to the earlier of (a) January 19, 2026 and (b) the date of
termination in whole of the revolving lenders’ commitments under the 2021 Credit Agreement. We had no borrowings outstanding under the revolving credit
facility at either November 3, 2024 or October 29, 2023.
Commercial Paper
We have a commercial paper program pursuant to which we may issue unsecured commercial paper notes (“Commercial Paper”) in principal amount of up
to $2 billion outstanding at any time with maturities of up to 397 days from the date of issue. Commercial Paper is sold under customary terms in the
commercial paper market and may be issued at a discount from par or, alternatively, may be sold at par and bear interest at rates dictated by market
conditions at the time of their issuance. The discount associated with the Commercial Paper is amortized to interest expense over its term. Outstanding
Commercial Paper reduces the amount that would otherwise be available to borrow for general corporate purposes under our revolving credit facility. We
had no Commercial Paper outstanding at either November 3, 2024 or October 29, 2023.
Fair Value of Debt
As of November 3, 2024, the estimated aggregate fair value of our debt was $65,022 million. The fair value of our senior notes was determined using
quoted prices from less active markets. The carrying value of the 2023 Term Loans approximates their fair value as the 2023 Term Loans are carried at a
market observable interest rate that resets periodically. All of our debt obligations are categorized as Level 2 instruments.
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Future Principal Payments of Debt
The future scheduled principal payments of debt as of November 3, 2024 were as follows:
Fiscal Year:
Future Scheduled Principal
Payments
(In millions)
2025
$
1,245
2026
3,152
2027
11,732
2028
4,270
2029
12,655
Thereafter
36,793
Total
$
69,847
As of November 3, 2024 and October 29, 2023, we were in compliance with all debt covenants.
11. Stockholders’ Equity
Stock Split
On July 12, 2024, we completed a ten-for-one forward stock split of our common stock, proportionately increasing the number of shares of our
authorized common stock from 2.9 billion to 29 billion without changing the par value of $0.001 per share. All share, equity award and per share amounts
and related stockholders’ equity balances presented herein have been retroactively adjusted, where applicable, to reflect the stock split.
Cash Dividends Declared and Paid
Fiscal Year
2024
2023
2022
(In millions, except per share data)
Dividends per share to common stockholders
$
2.105
$
1.840
$
1.640
Dividends to common stockholders
$
9,814
$
7,645
$
6,733
Dividends per share to preferred stockholders
$
—
$
—
$
80.00
Dividends to preferred stockholders
$
—
$
—
$
299
On September 30, 2019, we completed an offering of approximately 4 million shares of Mandatory Convertible Preferred Stock, which generated net
proceeds of approximately $3,679 million and would automatically convert into shares of our common stock on September 30, 2022.
The holders of Mandatory Convertible Preferred Stock were entitled to receive, when, as and if declared by our Board of Directors, or an authorized
committee thereof, out of funds legally available for payment, cumulative dividends at the annual rate of 8.00% of the liquidation preference of $1,000 per
share (equivalent to $80 annually per share), payable in cash or, subject to certain limitations, by delivery of shares of our common stock or any combination
of cash and shares of our common stock, at our election.
During fiscal year 2022, outstanding shares of our Mandatory Convertible Preferred Stock converted into an aggregate of approximately 116 million
shares of our common stock at conversion rates ranging between 30.894 and 31.149 common shares per share of Mandatory Convertible Preferred Stock. We
paid cash in lieu of fractional shares of common stock upon conversion.
Stock Repurchase Programs
In December 2021, our Board of Directors authorized a stock repurchase program to repurchase up to $10 billion of our common stock from time to
time through December 31, 2022, which was subsequently extended to December 31, 2023. In May 2022, our Board of Directors authorized another stock
repurchase program to repurchase up to an additional $10 billion of our common stock from time to time through December 31, 2023. During fiscal years
2024, 2023 and 2022, we repurchased and retired approximately 67 million, 91 million and 117 million shares of our common stock for $7,176 million,
$5,824 million and $7,000 million, respectively. All $20 billion of the authorized amount under these stock repurchase programs was utilized prior to
expiration on December 31, 2023.
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Equity Incentive Award Plans
2012 Plan
In connection with the acquisition of Broadcom Corporation, we assumed its 2012 stock incentive plan and outstanding unvested RSUs that were held
by its employees. During the second quarter of fiscal year 2021, our stockholders approved the amendment and restatement of the Broadcom Corporation
2012 stock incentive plan, now called the Broadcom Inc. 2012 Stock Incentive Plan (the “2012 Plan”). Under the 2012 Plan, we may grant stock options and
stock appreciation rights with an exercise price that is no less than the fair market value on the date of grant, restricted stock awards, and RSUs to employees.
No participant may be granted such awards for more than an aggregate of 40 million shares in any fiscal year. Equity awards granted generally vest over four
years. The 2012 Plan reduced the number of shares available for new equity award grants to 200 million shares and removed the annual share replenishment
provision provided under the Broadcom Corporation 2012 stock incentive plan. During the second quarter of fiscal year 2023, our stockholders approved the
amendment and restatement of the 2012 Plan to increase the number of shares of common stock authorized for issuance by 250 million shares. Awards
cancelled or forfeited and shares withheld to satisfy tax withholding obligations become available for future issuance. As of November 3, 2024, 364 million
shares remained available for issuance under the 2012 Plan.
We may grant market-based RSUs with both a service condition and a market condition as part of our equity compensation programs. The market-based
RSUs generally vest over four years, subject to satisfaction of market conditions. During fiscal years 2024, 2023 and 2022, we granted market-based RSUs
under which grantees may receive the number of shares ranging from 0% to 300% of the original grant on a stock split adjusted basis at vesting based upon
the total stockholder return (“TSR”) on our common stock on an absolute basis and as compared to the TSR of an index group of companies. During fiscal year
2023, we also granted market-based RSUs vesting over five years, subject to satisfaction of stock price performance milestones.
2007 Plan
In connection with the VMware Merger, we assumed the VMware, Inc. Amended and Restated 2007 Equity and Incentive Plan (the “2007 Plan”) and
outstanding unvested RSU awards and PSU awards originally granted by VMware under the 2007 Plan that were held by continuing employees. These
assumed awards were converted into approximately 46 million Broadcom RSU awards and will vest in accordance with their original terms, generally over
four years. Under the 2007 Plan, we may grant stock options and stock appreciation rights with an exercise price that is no less than the fair market value on
the date of grant, restricted stock, RSUs, and other stock-based or cash-based awards to employees. Equity awards granted under the 2007 Plan following the
VMware Merger are expected to be on similar terms and consistent with similar grants made pursuant to the 2012 Plan. Awards cancelled or forfeited and
shares withheld to satisfy tax withholding obligations become available for future issuance. As of November 3, 2024, 62 million shares remained available for
issuance under the 2007 Plan.
Employee Stock Purchase Plan
The ESPP provides eligible employees with the opportunity to acquire an ownership interest in us through periodic payroll deductions, based on a 6-
month look-back period, at a price equal to the lesser of 85% of the fair market value of our common stock at either the beginning or the end of the relevant
offering period. The ESPP is structured as a qualified employee stock purchase plan under Section 423 of the Internal Revenue Code of 1986. However, the
ESPP is not intended to be a qualified pension, profit sharing or stock bonus plan under Section 401(a) of the Internal Revenue Code of 1986 and is not
subject to the provisions of the Employee Retirement Income Security Act of 1974.
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Stock-Based Compensation Expense
Fiscal Year
2024
2023
2022
(In millions)
Cost of products sold
$
119
$
88
$
65
Cost of subscriptions and services
545
122
82
Research and development
3,460
1,513
1,048
Selling, general and administrative
1,546
448
338
Total stock-based compensation expense
$
5,670
$
2,171
$
1,533
Estimated income tax benefits for stock-based compensation
$
991
$
367
$
255
Excess income tax benefits for stock-based awards exercised or released
$
1,296
$
507
$
375
_____________________________
(a) Does not include stock-based compensation expense related to discontinued operations recognized during fiscal year 2024, which was included in loss
from discontinued operations, net of income taxes in our consolidated statement of operations.
Fiscal year 2024 stock-based compensation expense included $1,613 million related to equity awards assumed in connection with the VMware Merger.
During the first quarter of fiscal year 2019, the Compensation Committee of our Board of Directors approved a broad-based program of multi-year
equity grants of time- and market-based RSUs (the “Multi-Year Equity Awards”) in lieu of our annual employee equity awards historically granted on March 15
of each year. Each Multi-Year Equity Award vests on the same basis as four annual grants made March 15 of each year, beginning in fiscal year 2019, with
successive four-year vesting periods. Stock-based compensation expense related to the Multi-Year Equity Awards was $356 million, $596 million and $794
million for fiscal years 2024, 2023 and 2022, respectively.
As of November 3, 2024, the total unrecognized compensation cost related to unvested stock-based awards was $11,259 million, which is expected to
be recognized over the remaining weighted-average service period of 3.0 years.
The following table summarizes the weighted-average assumptions utilized to calculate the fair value of market-based awards granted in the periods
presented:
Fiscal Year
2024
2023
2022
Risk-free interest rate
4.2 %
4.0 %
1.4 %
Dividend yield
1.7 %
3.3 %
2.7 %
Volatility
32.0 %
32.8 %
37.1 %
Expected term (in years)
3.6
4.8
3.4
The risk-free interest rate was derived from the average U.S. Treasury Strips rate, which approximated the rate in effect appropriate for the term at the
time of grant.
The dividend yield was based on the historical and expected dividend payouts as of the respective award grant dates.
The volatility was based on our own historical stock price volatility over the period commensurate with the expected life of the awards and the implied
volatility of a 180-day call option on our own common stock measured at a specific date.
The expected term was commensurate with the awards’ contractual terms.
(a)
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Restricted Stock Unit Awards
A summary of time- and market-based RSU activity was as follows:
Number of RSUs
Outstanding
Weighted-Average
Grant Date
Fair Value
Per Share
(In millions, except per share data)
Balance as of October 31, 2021
234
$
20.04
Granted
27
$
52.77
Vested
(74)
$
22.55
Forfeited
(12)
$
24.28
Balance as of October 30, 2022
175
$
23.85
Granted
124
$
51.98
Vested
(74)
$
26.25
Forfeited
(7)
$
30.79
Balance as of October 29, 2023
218
$
38.92
Assumed in VMware Merger
46
$
96.85
Granted
81
$
115.58
Vested
(107)
$
54.34
Forfeited
(25)
$
88.62
Balance as of November 3, 2024
213
$
66.44
The aggregate fair value of time- and market-based RSUs that vested in fiscal years 2024, 2023 and 2022 was $14,914 million, $5,423 million and $4,207
million, respectively, which represented the market value of our common stock on the date that the RSUs vested. The number of RSUs vested included shares
of common stock that we withheld for settlement of employees’ tax obligations due upon the vesting of RSUs.
12. Income Taxes
The components of income before income taxes by U.S. and foreign jurisdictions were as follows:
Fiscal Year
2024
2023
2022
(In millions)
Domestic loss
$
(4,851)
$
(63)
$
(2,020)
Foreign income
14,767
15,160
14,454
Income from continuing operations before income taxes
$
9,916
$
15,097
$
12,434
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The components of the provision for income taxes were as follows:
Fiscal Year
2024
2023
2022
(In millions)
Current tax provision:
Federal
$
1,030
$
952
$
174
State
52
23
48
Foreign
701
541
762
Total
1,783
1,516
984
Deferred tax provision (benefit):
Federal
1,855
(499)
68
State
(70)
(31)
(15)
Foreign
180
29
(98)
Total
1,965
(501)
(45)
Total provision for income taxes
$
3,748
$
1,015
$
939
The following is a reconciliation of our effective tax rate to the statutory federal tax rate:
Fiscal Year
2024
2023
2022
Statutory tax rate
21.0 %
21.0 %
21.0 %
State, net of federal benefit
(0.1)
—
0.2
Foreign income taxed at different rates
(22.4)
(17.3)
(19.1)
Deemed inclusion of foreign earnings
16.3
9.9
8.0
Impact of non-recurring intra-group transfer of certain IP rights
39.6
—
—
Uncertain tax benefits
1.8
(1.9)
1.6
Excess tax benefits from stock-based compensation
(13.1)
(3.4)
(3.0)
Research and development credit
(6.0)
(1.8)
(1.4)
Other, net
0.7
0.2
0.2
Effective tax rate on income before income taxes
37.8 %
6.7 %
7.5 %
The increase in provision for income taxes in fiscal year 2024 compared to fiscal year 2023 was primarily due to the impact of a non-recurring intra-
group transfer of certain IP rights to the United States as a result of supply chain realignment and the resulting shift in jurisdictional mix of income, partially
offset by an increase in excess tax benefits from stock-based awards. The increase in provision for income taxes in fiscal year 2023 compared to fiscal year
2022 was primarily due to higher income before income taxes, partially offset by an increase in the recognition of uncertain tax benefits as a result of lapses
of statutes of limitations.
We derive the effective tax rate benefit attributed to foreign income taxed at different rates primarily from our operations in Singapore and Malaysia.
Our tax incentives from the Singapore Economic Development Board provide that any qualifying income earned in Singapore is subject to tax incentives or
reduced rates of Singapore income tax, subject to our compliance with the conditions specified in these incentives and legislative developments. These
Singapore tax incentives are scheduled to expire in November 2030. We have also obtained a tax holiday on our qualifying income in Malaysia, which is
scheduled to expire in fiscal year 2028. The tax holiday that we negotiated in Malaysia is also subject to our compliance with various operating and other
conditions. Before taking into consideration the effects of the U.S. Tax Cuts and Jobs Act and other indirect tax impacts, the effect of these tax incentives and
tax holiday was to decrease the provision for income taxes by approximately $2,261 million, $2,104 million and $1,821 million for fiscal years 2024, 2023 and
2022, respectively.
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Significant components of our deferred tax assets and liabilities consisted of the following:
November 3,
2024
October 29,
2023
(In millions)
Deferred income tax assets:
Net operating loss, credit and other carryforwards
$
2,905
$
1,809
Capitalized research and development
2,459
275
Deferred revenue
776
208
Employee stock awards
291
190
Depreciation and amortization
81
223
Other deferred income tax assets
672
329
Gross deferred income tax assets
7,184
3,034
Less: valuation allowance
(2,218)
(1,789)
Deferred income tax assets
4,966
1,245
Deferred income tax liabilities:
Depreciation and amortization
8,772
97
Unamortized debt discount and issuance costs
420
302
Foreign earnings not indefinitely reinvested
105
86
Other deferred income tax liabilities
210
62
Deferred income tax liabilities
9,507
547
Net deferred income tax assets (liabilities)
$
(4,541)
$
698
As a result of the acquisition of VMware, we established $3,642 million of net deferred tax liabilities on the excess of book basis over the tax basis of
acquired assets. Our net deferred tax liabilities also increased during the year due to the non-recurring intra-group transfer of certain IP rights to the United
States. The valuation allowance disclosed in the table above relates to substantially all U.S. state and foreign net operating loss carryforwards and research
and development tax credits that may not be realized.
We continue to indefinitely reinvest $1,785 million of certain accumulated foreign earnings. The unrecognized deferred income tax liability related to
these earnings is estimated to be $187 million. All other current and future earnings of all our foreign subsidiaries are not considered permanently reinvested.
As of November 3, 2024, we had tax effected U.S. state net operating loss carryforwards of $126 million and foreign net operating loss carryforwards of
$92 million, all of which expire in various years beginning in fiscal year 2025. We had $2,176 million of state research and development tax credits which
begin to expire in fiscal year 2025.
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Uncertain Tax Positions
The following table reconciles the beginning and ending balance of gross unrecognized tax benefits:
Fiscal Year
2024
2023
2022
(In millions)
Beginning balance
$
4,655
$
5,117
$
5,030
Lapses of statutes of limitations
(39)
(634)
(50)
Increases in balances related to tax positions taken during prior periods (including those
related to acquisitions made during the year)
844
26
—
Decreases in balances related to tax positions taken during prior periods
(9)
(13)
(113)
Increases in balances related to tax positions taken during current period
447
170
288
Decreases in balances related to settlements with taxing authorities
(55)
(11)
(38)
Ending balance
$
5,843
$
4,655
$
5,117
We recognize interest and penalties related to unrecognized tax benefits within the provision for income taxes. Accrued interest and penalties were
included within other long-term liabilities. During fiscal years 2024, 2023 and 2022, we recognized interest and penalties of $144 million, $22 million and
$25 million respectively, within the provision for income taxes. As of November 3, 2024 and October 29, 2023, the total accrued interest and penalties was
approximately $701 million and $389 million, respectively. The increase in total accrued interest and penalties was primarily the result of the VMware
acquisition in addition to the current year accrual.
As of November 3, 2024 and October 29, 2023, approximately $6,544 million and $5,044 million, respectively, of the unrecognized tax benefits and
accrued interest and penalties would, if recognized, benefit our effective income tax rate. We are subject to U.S. income tax examination for fiscal years 2018
and later. Certain of our acquired companies are subject to tax examinations in major jurisdictions outside of the U.S. for fiscal years 2005 and later. It is
possible that our existing unrecognized tax benefits may change up to $3,580 million as a result of lapses of the statute of limitations for certain audit periods
and/or audit examinations expected to be completed within the next 12 months.
13. Segment Information
Reportable Segments
We have two reportable segments: semiconductor solutions and infrastructure software. Each segment has separate financial information that is
utilized on a regular basis by the CODM in determining how to allocate resources and evaluate performance. The reportable segments are determined based
on several factors including, but not limited to, customer base, homogeneity of products, technology, delivery channels and similar economic characteristics.
Semiconductor solutions. We provide semiconductor solutions for managing the movement of data in data center, service provider, and enterprise
networking applications, including AI networking and connectivity. We provide a broad variety of radio frequency semiconductor devices, wireless
connectivity solutions, custom touch controllers, and inductive charging solutions for mobile applications. We also provide semiconductor solutions for
enabling the set-top box and broadband access markets and for enabling secure movement of digital data to and from host machines, such as servers,
personal computers and storage systems, to the underlying storage devices, such as hard disk drives and solid state drives. We also provide a broad variety of
products for the general industrial and automotive markets. Our semiconductor solutions segment also includes our IP licensing.
Infrastructure software. We provide a portfolio of software solutions that help enterprises simplify their IT environments so they can increase business
velocity and flexibility, and enable customers to plan, develop, deliver, automate, manage and secure applications across mainframe, distributed, edge,
mobile, and private and hybrid cloud platforms. Our portfolio of infrastructure and security software is designed to modernize, optimize, and secure the most
complex private and hybrid cloud environments, enabling scalability, agility, automation, insights, resiliency and security making it easy for customers to run
their mission-critical workloads. We also offer mission-critical FC SAN products and related software.
Our CODM assesses the performance of each segment and allocates resources to each segment based on net revenue and operating results and does
not evaluate each segment using discrete asset information. Operating results by segment include items that are directly attributable to each segment and
also include shared expenses such as marketing, general and administrative activities, facilities and IT expenses. Shared expenses are primarily allocated
based on revenue and headcount.
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Unallocated Expenses
Unallocated expenses include amortization of acquisition-related intangible assets, stock-based compensation expense, restructuring and other charges,
acquisition-related costs, and other costs, which are not used in evaluating the results of, or in allocating resources to, our segments. Acquisition-related costs
include transaction costs and any costs directly related to the acquisition and integration of acquired businesses.
Depreciation expense directly attributable to each reportable segment is included in the operating results of each segment. However, the CODM does
not evaluate depreciation expense by operating segment and, therefore, it is not separately presented. There was no inter-segment revenue for any of the
periods presented. The accounting policies of the segments are the same as those described in the summary of significant accounting policies.
Fiscal Year
2024
2023
2022
(In millions)
Net revenue:
Semiconductor solutions
$
30,096
$
28,182
$
25,818
Infrastructure software
21,478
7,637
7,385
Total net revenue
$
51,574
$
35,819
$
33,203
Operating income:
Semiconductor solutions
$
16,759
$
16,486
$
15,075
Infrastructure software
13,977
5,639
5,219
Unallocated expenses
(17,273)
(5,918)
(6,069)
Total operating income
$
13,463
$
16,207
$
14,225
Geographic Information
Net revenue by country is based primarily on the geographic shipment or delivery location as specified by the distributors, OEMs, contract
manufacturers, channel partners, or software customers who purchased our products or services. For the majority of our products, title and control transfer
to our customers in Penang, Malaysia. The products are then transported to the customer specific locations. Net revenue from the United States for fiscal
years 2024, 2023 and 2022 was $12,887 million, $6,975 million and $5,915 million, respectively. Net revenue from China (including Hong Kong) for fiscal years
2024, 2023 and 2022 was $10,483 million, $11,533 million and $11,637 million, respectively. Net revenue from Singapore for fiscal years 2024, 2023 and 2022
was $9,559 million, $4,479 million and $4,003 million, respectively. Net revenue from other foreign countries for fiscal years 2024, 2023 and 2022 was
$18,645 million, $12,832 million and $11,648 million, respectively. These geographic delivery locations are not necessarily indicative of the geographic
location of our end customers or the country in which our end customers sell devices containing our products. For example, we believe a substantial portion
of our products shipped or delivered to China (including Hong Kong) is included in devices sold by our end customers in the United States and Europe.
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Long-lived assets include property, plant and equipment and are based on the physical location of the assets.
November 3,
2024
October 29,
2023
(In millions)
Long-lived assets:
United States
$
1,685
$
1,371
Taiwan
365
341
Other
471
442
Total long-lived assets
$
2,521
$
2,154
Significant Customer Information
We sell our products through our direct sales force and a select network of distributors and channel partners globally. One customer accounted for 18%
and 21% of our net accounts receivable balance as of November 3, 2024 and October 29, 2023, respectively. During fiscal years 2024, 2023 and 2022, one
customer accounted for 28%, 21% and 20% of our net revenue, respectively. Revenue from this customer was included in our semiconductor solutions
segment.
14. Commitments and Contingencies
Commitments
The following table summarizes contractual obligations and commitments as of November 3, 2024:
Fiscal Year:
Purchase Commitments
Other Contractual
Commitments
(In millions)
2025
$
272
$
486
2026
283
404
2027
7
352
2028
7
293
2029
—
240
Thereafter
—
997
Total
$
569
$
2,772
Purchase Commitments. Represent unconditional purchase obligations to purchase goods or services, primarily inventory, that are enforceable and
legally binding on us and specify all significant terms, including fixed or minimum quantities to be purchased, price provisions, and the approximate timing of
the transaction. Purchase obligations exclude agreements that are cancelable without penalty and unconditional purchase obligations with a remaining term
of one year or less.
Other Contractual Commitments. Represent amounts payable pursuant to agreements related to IT and other service agreements.
Due to the inherent uncertainty with respect to the timing of future cash outflows associated with our unrecognized tax benefits at November 3, 2024,
we are unable to reliably estimate the timing of cash settlement with the respective taxing authorities. Therefore, $3,669 million of unrecognized tax benefits
and accrued interest and penalties as of November 3, 2024 have been excluded from the table above.
Contingencies
From time to time, we are involved in litigation that we believe is of the type common to companies engaged in our lines of business, including
commercial disputes, employment issues, tax disputes and disputes involving claims by third parties that our activities infringe their patent, copyright,
trademark or other IP rights, as well as regulatory investigations or inquiries. Legal proceedings and regulatory investigations or inquiries are often complex,
may require the expenditure of significant funds and other resources, and the outcomes of such proceedings are inherently uncertain, with material adverse
outcomes possible. IP property claims generally involve the demand by a third-party that we cease the manufacture, use or sale of the allegedly infringing
products, processes or technologies and/or pay substantial damages or royalties for past, present and future use of the allegedly infringing IP. Claims that our
products or processes infringe or misappropriate any third-party IP rights (including claims arising through our contractual indemnification of our customers)
often involve highly
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complex, technical issues, the outcome of which is inherently uncertain. Moreover, from time to time, we pursue litigation to assert our IP rights. Regardless
of the merit or resolution of any such litigation, complex IP litigation is generally costly and diverts the efforts and attention of our management and technical
personnel.
Lawsuits Relating to VMware Backlog
On March 31, 2020, a securities class action lawsuit was filed against VMware and certain former officers of VMware in the United States District Court
for the Northern District of California (the “California Court”). On September 18, 2020, the plaintiffs filed a consolidated amended complaint alleging that
VMware’s statements about backlog and the related internal controls during the period from August 2018 through February 2020 were materially misleading.
The defendants filed a motion to dismiss, which was granted with leave to amend on September 10, 2021. On October 8, 2021, the plaintiffs filed their
Second Amended Consolidated Complaint based on the same alleged disclosure deficiencies. The defendants’ motion to dismiss the Second Amended
Consolidated Complaint was filed on November 5, 2021. On April 2, 2023, the California Court denied the defendants’ motion to dismiss finding that the
plaintiffs had adequately stated claims under Sections 10 and 20A of the Securities Exchange Act of 1934. The parties have agreed to settlement terms
pending approval by the California Court.
Other Matters
We are currently engaged in a number of legal actions in the ordinary course of our business.
Contingency Assessment
We do not believe, based on currently available facts and circumstances, that the final outcome of any pending legal proceedings, ongoing regulatory
investigations or tax disputes, taken individually or as a whole, will have a material adverse effect on our consolidated financial statements. However, lawsuits
may involve complex questions of fact and law and may require the expenditure of significant funds and other resources to defend. The results of litigation,
regulatory investigations or tax disputes are inherently uncertain, and material adverse outcomes are possible. From time to time, we may enter into
confidential discussions regarding the potential settlement of such lawsuits. Any settlement of pending litigation could require us to incur substantial costs
and other ongoing expenses, such as future royalty payments in the case of an IP dispute.
During the periods presented, no material amounts have been accrued or disclosed in the accompanying consolidated financial statements with respect
to loss contingencies associated with any other legal proceedings, regulatory investigations or tax disputes as potential losses for such matters are not
considered probable and ranges of losses are not reasonably estimable. These matters are subject to many uncertainties and the ultimate outcomes are not
predictable. There can be no assurances that the actual amounts required to satisfy any liabilities arising from the matters described above will not have a
material adverse effect on our consolidated financial statements.
Other Indemnifications
As is customary in our industry and as provided for in local law in the U.S. and other jurisdictions, many of our standard contracts provide remedies to
our customers and others with whom we enter into contracts, such as defense, settlement, or payment of judgment for IP claims related to the use of our
products. From time to time, we indemnify customers, as well as our suppliers, contractors, lessors, lessees, companies that purchase our businesses or
assets and others with whom we enter into contracts, against combinations of loss, expense, or liability arising from various triggering events related to the
sale and the use of our products, the use of their goods and services, the use of facilities and state of our owned facilities, the state of the assets and
businesses that we sell and other matters covered by such contracts, usually up to a specified maximum amount. In addition, from time to time we also
provide protection to these parties against claims related to undiscovered liabilities, additional product liabilities or environmental obligations. In our
experience, claims made under such indemnifications are rare and the associated estimated fair value of the liability is not material.
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15. Restructuring and Other Charges
Restructuring Charges
The following table summarizes the significant activities within, and components of, the restructuring liabilities:
Employee Termination
Costs
Lease and Impairment
Costs
Total
(In millions)
Balance as of October 31, 2021
$
4
$
—
$
4
Restructuring charges
24
38
62
Utilization
(24)
(38)
(62)
Balance as of October 30, 2022
4
—
4
Restructuring charges
20
24
44
Utilization
(22)
(24)
(46)
Balance as of October 29, 2023
2
—
2
Restructuring charges
1,510
277
1,787
Utilization
(1,393)
(277)
(1,670)
Balance as of November 3, 2024
$
119
$
—
$
119
In connection with the VMware Merger, we initiated restructuring activities to integrate the acquired business, align our workforce and improve
efficiencies in our operations. Restructuring charges in fiscal year 2024 primarily related to employee termination costs. We also incurred $277 million of
impairment charges primarily related to lease assets and property, plant and equipment. We expect these restructuring activities to be substantially
completed by the end of fiscal year 2025. These charges were recognized primarily in operating expenses.
During fiscal year 2023, we incurred $24 million of impairment charges primarily related to lease assets and property, plant and equipment. During fiscal
year 2022, we incurred $38 million of impairment charges related to lease assets.
As of November 3, 2024 and October 29, 2023, short-term and long-term lease liabilities included $192 million and $44 million of obligations related to
restructured leases, respectively.
Other Charges
Restructuring and other charges in our consolidated statement of operations for fiscal year 2023 included $204 million of non-recurring charges related
to IP litigation.
16. Subsequent Events
Cash Dividends Declared
On December 10, 2024, our Board of Directors declared a quarterly cash dividend of $0.59 per share on our common stock, payable on December 31,
2024 to stockholders of record on December 23, 2024.
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Schedule II — Valuation and Qualifying Accounts
Balance at
Beginning
of Period
Additions to
Allowances
Charges
Utilized/
Write-offs
Balance at
End of
Period
(In millions)
Accounts receivable allowances:
Distributor credit allowances
Fiscal year ended November 3, 2024
$
133
$
351
$
(390)
$
94
Fiscal year ended October 29, 2023
$
125
$
502
$
(494)
$
133
Fiscal year ended October 30, 2022
$
128
$
484
$
(487)
$
125
Other accounts receivable allowances
Fiscal year ended November 3, 2024
$
4
$
17
$
(10)
$
11
Fiscal year ended October 29, 2023
$
1
$
5
$
(2)
$
4
Fiscal year ended October 30, 2022
$
2
$
10
$
(11)
$
1
Income tax valuation allowances:
Fiscal year ended November 3, 2024
$
1,789
$
3,151
$
(2,722)
$
2,218
Fiscal year ended October 29, 2023
$
1,777
$
117
$
(105)
$
1,789
Fiscal year ended October 30, 2022
$
1,782
$
118
$
(123)
$
1,777
________________________________
(a) Distributor credit allowances relate to price adjustments and other allowances.
(b) Other accounts receivable allowances primarily include sales returns and allowance for doubtful accounts.
ITEM 9.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
Not applicable.
ITEM 9A.
CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), evaluated the effectiveness of our
disclosure controls and procedures as of November 3, 2024. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e)
under the Exchange Act, means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a
company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in
the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information
required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to our management,
including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure. Management
recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives
and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based on the evaluation of
our disclosure controls and procedures as of November 3, 2024, our CEO and CFO concluded that, as of such date, our disclosure controls and procedures
were effective at the reasonable assurance level.
(a)
(b)
92
Table of Contents
Management’s Report on Internal Control Over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial
reporting is defined in Rules 13a-15(f) and 15d-15(f) promulgated under the Exchange Act as a process designed by, or under the supervision of, our principal
executive and principal financial officers and effected by the Board of Directors, management and other personnel, to provide reasonable assurance regarding
the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP and includes those policies
and procedures that:
•
pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets;
•
provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP,
and that receipts and expenditures of us are being made only in accordance with authorizations of management and directors; and
•
provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could
have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of
compliance with the policies or procedures may deteriorate.
Our management assessed the effectiveness of our internal control over financial reporting as of November 3, 2024. In making this assessment, our
management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control-Integrated Framework
(2013). Based on this assessment, our management concluded that, as of November 3, 2024, our internal control over financial reporting is effective based on
those criteria.
The effectiveness of our internal control over financial reporting as of November 3, 2024 has been audited by PricewaterhouseCoopers LLP, an
independent registered public accounting firm, as stated in their report which is included in Part II, Item 8. of this Annual Report on Form 10-K.
Changes in Internal Control over Financial Reporting
No change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) occurred during the
fourth quarter ended November 3, 2024 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
ITEM 9B.
OTHER INFORMATION
Insider Trading Arrangements
On September 23, 2024, Diane M. Bryant, a member of our Board of Directors, adopted a trading plan intended to satisfy Rule 10b5-1(c) under the
Exchange Act (the “Trading Plan”). The Trading Plan provides for the potential sale of up to 15,000 shares of Broadcom common stock so long as the market
price of Broadcom common stock satisfies certain threshold prices specified in the Trading Plan. The Trading Plan will expire on September 12, 2025, subject
to early termination for certain specified events set forth in the Trading Plan.
ITEM 9C.
DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
Not applicable.
93
Table of Contents
PART III
ITEM 10.
DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Broadcom has adopted an insider trading compliance policy that governs the purchase, sale, and/or other transactions of our securities by our directors,
officers and employees and Broadcom itself. A copy of our insider trading compliance policy is filed as Exhibit 19.1 to this Annual Report on Form 10-K.
The remaining information required by Item 10 is incorporated herein by reference from sections entitled “Board of Directors,” “Corporate Governance”
and “Proposal 1 — Election of Directors” in our definitive Proxy Statement for our 2025 Annual Meeting of Stockholders. Our executive officers are listed at
the end of Item 1 of this Annual Report on Form 10-K.
ITEM 11.
EXECUTIVE COMPENSATION
The information required by Item 11 is incorporated herein by reference from sections entitled “Board of Directors — Director Compensation,” “Board
of Directors — Board Committees — Compensation Committee — Compensation Committee Interlocks and Insider Participation,” “Compensation Discussion
and Analysis,” “Compensation Committee Report,” “Executive Compensation,” and “CEO Pay Ratio” in our definitive Proxy Statement for our 2025 Annual
Meeting of Stockholders.
ITEM 12.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
The information required by Item 12 is incorporated herein by reference from sections entitled “Stockholder Information — Security Ownership of
Certain Beneficial Owners, Directors and Executive Officers” and “Equity Compensation Plan Information” in our definitive Proxy Statement for our 2025
Annual Meeting of Stockholders.
ITEM 13.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
The information required by Item 13 is incorporated herein by reference from sections entitled “Board of Directors” and “Certain Relationships and
Related Party Transactions” in our definitive Proxy Statement for our 2025 Annual Meeting of Stockholders.
ITEM 14.
PRINCIPAL ACCOUNTANT FEES AND SERVICES
The information required by Item 14 is incorporated herein by reference from the section entitled “Proposal 2 — Ratification of Appointment of
Independent Registered Public Accounting Firm” in our definitive Proxy Statement for our 2025 Annual Meeting of Stockholders.
94
Table of Contents
PART IV
ITEM 15.
EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) The following are filed as part of this Annual Report on Form 10-K:
1. Financial Statements
The following consolidated financial statements are included in Item 8 of this Annual Report on Form 10-K:
Page
Reports of Independent Registered Public Accounting Firm
50
Consolidated Balance Sheets
51
Consolidated Statements of Operations
52
Consolidated Statements of Comprehensive Income
53
Consolidated Statements of Cash Flows
54
Consolidated Statements of Stockholders’ Equity
55
Notes to Consolidated Financial Statements
56
2. Financial Statement Schedules
The financial statement schedule of the Registrant and its subsidiaries for fiscal years 2024, 2023 and 2022 required by Item 15(a) (Schedule II, Valuation
and Qualifying Accounts) is included in Item 8 of this Annual Report on Form 10-K:
Page
Schedule II - Valuation and Qualifying Accounts
92
Schedules not filed have been omitted because they are not applicable, are not required or the information required to be set forth therein is included
in the financial statements or notes thereto.
3. Exhibits
The documents set forth below are filed herewith or incorporated by reference to the location indicated.
Incorporated by Reference
Exhibit
Number
Description
Form
File No.
Exhibit
Filing Date
Filed
Herewith
2.1
Agreement and Plan of Merger, dated as of May 26, 2022, by
and among Broadcom Inc., VMware, Inc., Verona Holdco, Inc.,
Verona Merger Sub, Inc., Barcelona Merger Sub 2, Inc. and
Barcelona Merger Sub 3, LLC.
8-K
001-38449
2.1
05-26-2022
3.1
Amended and Restated Certificate of Incorporation (including
all amendments thereto).
10-Q
001-38449
3.1
09-11-2024
3.2
Amended and Restated Bylaws.
8-K12B
001-38449
3.2
04-04-2018
4.1
Form of Common Stock Certificate.
10-Q
001-38449
4.1
06-14-2018
4.2
Description of Common Stock.
X
4.3
Indenture, dated as of January 19, 2017, by and among
the Broadcom Corporation and Broadcom Cayman Finance
Limited (the “Co-Issuers”), the guarantors and Wilmington
Trust, National Association, as trustee.
8-K
001-37690
4.1
01-20-2017
4.4
First Supplemental Indenture to the January 2017 Indenture,
dated as of April 9, 2018.
8-K
001-38449
4.1
04-09-2018
4.5
Second Supplemental Indenture to the January 2017
Indenture, dated as of January 25, 2019.
8-K
001-38449
4.1
01-25-2019
95
Table of Contents
Incorporated by Reference
Exhibit
Number
Description
Form
File No.
Exhibit
Filing Date
Filed
Herewith
4.6
Form of 3.625% Senior Notes due 2024 (included in Exhibit
4.3).
8-K
001-37690
4.1
01-20-2017
4.7
Form of 3.875% Senior Notes due 2027 (included in Exhibit
4.3).
8-K
001-37690
4.1
01-20-2017
4.8
Indenture, dated as of October 17, 2017, by and among
the Co-Issuers, the guarantors and Wilmington Trust, National
Association, as trustee.
8-K
001-37690
4.1
10-17-2017
4.9
Supplemental Indenture to the October 2017 Indenture,
dated as of April 9, 2018.
8-K
001-38449
4.2
04-09-2018
4.10
Second Supplemental Indenture to the October 2017
Indenture, dated as of January 25, 2019.
8-K
001-38449
4.2
01-25-2019
4.11
Form of 2.650% Senior Notes due 2023 (included in Exhibit
4.8).
8-K
001-37690
4.1
10-17-2017
4.12
Form of 3.125% Senior Notes due 2025 (included in Exhibit
4.8).
8-K
001-37690
4.1
10-17-2017
4.13
Form of 3.500% Senior Notes due 2028 (included in Exhibit
4.8).
8-K
001-37690
4.1
10-17-2017
4.14
Indenture, dated as of April 5, 2019, by and among the
Company as Issuer, Broadcom Technologies Inc., Broadcom
Corporation and Broadcom Cayman Finance Limited, and
Wilmington Trust, National Association, as trustee.
8-K
001-38449
4.1
04-05-2019
4.15
Form of 3.625% Senior Notes due 2024 (included in Exhibit
4.14).
8-K
001-38449
4.1
04-05-2019
4.16
Form of 4.750% Senior Notes due 2029 (included in Exhibit
4.14).
8-K
001-38449
4.1
04-05-2019
4.17
Indenture, dated as of April 9, 2020, by and among the
Company, as Issuer, Broadcom Technologies Inc. and
Broadcom Corporation (the “2020 Guarantors”), and
Wilmington Trust, National Association, as trustee.
8-K
001-38449
4.1
04-09-2020
4.18
Form of 5.000% Senior Notes due 2030 (included in Exhibit
4.17).
8-K
001-38449
4.1
04-09-2020
4.19
Indenture, dated as of May 8, 2020, by and among the
Company as Issuer, the 2020 Guarantors, and Wilmington
Trust, National Association, as trustee.
8-K
001-38449
4.1
05-08-2020
4.20
Form of 2.250% Senior Notes due 2023 (included in Exhibit
4.19).
8-K
001-38449
4.1
05-08-2020
4.21
Form of 3.150% Senior Notes due 2025 (included in Exhibit
4.19).
8-K
001-38449
4.1
05-08-2020
4.22
Form of 4.150% Senior Notes due 2030 (included in Exhibit
4.19).
8-K
001-38449
4.1
05-08-2020
4.23
Form of 4.300% Senior Notes due 2032 (included in Exhibit
4.19).
8-K
001-38449
4.1
05-08-2020
4.24
Indenture, dated as of May 21, 2020, by and among the
Company, the 2020 Guarantors and Wilmington Trust,
National Association, as trustee.
8-K
001-38449
4.1
05-21-2020
4.25
Form of 3.459% Senior Notes due 2026 (included in Exhibit
4.24).
8-K
001-38449
4.1
05-21-2020
96
Table of Contents
Incorporated by Reference
Exhibit
Number
Description
Form
File No.
Exhibit
Filing Date
Filed
Herewith
4.26
Form of 4.110% Senior Notes due 2028 (included in Exhibit
4.24).
8-K
001-38449
4.1
05-21-2020
4.27
Indenture, dated as of January 19, 2021, by and among the
Company, the 2020 Guarantors and Wilmington Trust,
National Association, as Trustee.
8-K
001-38449
4.1
01-19-2021
4.28
Form of 1.950% Senior Notes due 2028 (included in Exhibit
4.27).
8-K
001-38449
4.1
01-19-2021
4.29
Form of 2.450% Senior Notes due 2031 (included in Exhibit
4.27).
8-K
001-38449
4.1
01-19-2021
4.30
Form of 2.600% Senior Notes due 2033 (included in Exhibit
4.27).
8-K
001-38449
4.1
01-19-2021
4.31
Form of 3.500% Senior Notes due 2041 (included in Exhibit
4.27).
8-K
001-38449
4.1
01-19-2021
4.32
Form of 3.750% Senior Notes due 2051 (included in Exhibit
4.27).
8-K
001-38449
4.1
01-19-2021
4.33
Registration Rights Agreement, dated as of January 19, 2021,
by and among the Company, the 2020 Guarantors and
Morgan Stanley & Co. LLC, BNP Paribas Securities Corp., RBC
Capital Markets, LLC, SMBC Nikko Securities America, Inc.,
and Truist Securities, Inc., as representatives of the several
initial purchasers of the January 2021 Senior Notes.
8-K
001-38449
4.7
01-19-2021
4.34
Indenture, dated as of March 31, 2021, by and between the
Company and Wilmington Trust, National Association, as
Trustee.
8-K
001-38449
4.1
03-31-2021
4.35
Form of 3.419% Senior Notes due 2033 (included in Exhibit
4.34).
8-K
001-38449
4.1
03-31-2021
4.36
Form of 3.469% Senior Notes due 2034 (included in Exhibit
4.34).
8-K
001-38449
4.1
03-31-2021
4.37
Registration Rights Agreement, dated as of March 31, 2021,
by and among the Company and BofA Securities, Inc. and
HSBC Securities (USA) Inc., as dealer-managers in connection
with the March 2021 Exchange Offer.
8-K
001-38449
4.4
03-31-2021
4.38
Indenture, dated as of September 30, 2021, by and between
the Company and Wilmington Trust, National Association, as
Trustee.
8-K
001-38449
4.1
09-30-2021
4.39
Form of 3.137% Senior Notes due 2035 (included in Exhibit
4.38).
8-K
001-38449
4.1
09-30-2021
4.40
Form of 3.187% Senior Notes due 2036 (included in Exhibit
4.38).
8-K
001-38449
4.1
09-30-2021
4.41
Registration Rights Agreement, dated as of September 30,
2021, by and among the Company and BNP Paribas Securities
Corp., J.P. Morgan Securities LLC and TD Securities (USA) LLC,
as dealer-mangers in connection with the September 2021
exchange offer.
8-K
001-38449
4.4
09-30-2021
4.42
Indenture, dated April 14, 2022, between the Company and
Wilmington Trust, National Association, as trustee.
8-K
001-38449
4.1
04-15-2022
4.43
Form of 4.00% Senior Notes due 2029 (included in Exhibit
4.42).
8-K
001-38449
4.1
04-15-2022
97
Table of Contents
Incorporated by Reference
Exhibit
Number
Description
Form
File No.
Exhibit
Filing Date
Filed
Herewith
4.44
Form of 4.15% Senior Notes due 2032 (included in Exhibit
4.42).
8-K
001-38449
4.1
04-15-2022
4.45
Registration Rights Agreement, dated as of April 14, 2022,
between the Company and BofA Securities, Inc., HSBC
Securities (USA) Inc., and RBC Capital Markets, LLC, as
representatives of the several initial purchasers of the April
2022 Senior Notes.
8-K
001-38449
4.4
04-15-2022
4.46
Indenture, dated April 18, 2022, between the Company and
Wilmington Trust, National Association, as trustee.
8-K
001-38449
4.1
04-18-2022
4.47
Form of 4.926% Senior Notes due 2037 (included in Exhibit
4.46).
8-K
001-38449
4.1
04-18-2022
4.48
Registration Rights Agreement, dated April 18, 2022, between
the Company and Barclays Capital Inc., BBVA Securities Inc.,
BNP Paribas Securities Corp. and J.P. Morgan Securities LLC, as
dealer-managers in connection with the April 2022 Exchange
Offer.
8-K
001-38449
4.3
04-18-2022
4.49
Indenture, dated July 12, 2024, between the Company and
Wilmington Trust, National Association, as trustee.
8-K
001-38449
4.1
07-12-2024
4.50
Supplemental Indenture No. 1, dated July 12, 2024, between
the Company and Wilmington Trust, National Association, as
trustee.
8-K
001-38449
4.2
07-12-2024
4.51
Form of 5.050% Senior Notes due 2027 (included in Exhibit
4.50).
8-K
001-38449
4.2
07-12-2024
4.52
Form of 5.050% Senior Notes due 2029 (included in Exhibit
4.50).
8-K
001-38449
4.2
07-12-2024
4.53
Form of 5.150% Senior Notes due 2031 (included in Exhibit
4.50).
8-K
001-38449
4.2
07-12-2024
4.54
Supplemental Indenture No. 2, dated October 2, 2024,
between the Company and Wilmington Trust, National
Association, as trustee.
8-K
001-38449
4.2
10-02-2024
4.55
Form of 4.150% Senior Notes due 2028 (included in Exhibit
4.54).
8-K
001-38449
4.2
10-02-2024
4.56
Form of 4.350% Senior Notes due 2030 (included in Exhibit
4.54).
8-K
001-38449
4.2
10-02-2024
4.57
Form of 4.550% Senior Notes due 2032 (included in Exhibit
4.54).
8-K
001-38449
4.2
10-02-2024
4.58
Form of 4.800% Senior Notes due 2034 (included in Exhibit
4.54).
8-K
001-38449
4.2
10-02-2024
10.1
Form of Indemnification and Advancement Agreement
(effective April 4, 2018).
8-K12B
001-38449
10.1
04-04-2018
10.2
Credit Agreement, dated as of January 19, 2021, among the
Company, the lenders and other parties party thereto, and
Bank of America, N.A., as Administrative Agent.
8-K
001-38449
10.1
01-19-2021
10.3
Amendment No. 1, dated April 18, 2023, among Broadcom
Inc., the lenders and other parties thereto, and Bank of
America, N.A., as Administrative Agent, to the Credit
Agreement, dated as of January 19, 2021.
10-Q
001-38449
10.1
06-07-2023
98
Table of Contents
Incorporated by Reference
Exhibit
Number
Description
Form
File No.
Exhibit
Filing Date
Filed
Herewith
10.4
Credit Agreement, dated as of August 15, 2023, among
Broadcom, the lenders and other parties party thereto, and
Bank of America, N.A., as Administrative Agent.
8-K
001-38449
10.1
08-16-2023
10.5
First Amendment to Credit Agreement, dated as of December
1, 2023, amending the Credit Agreement, dated as of August
15, 2023, among Broadcom, the lenders and other parties
thereto, and Bank of America, N.A., as Administrative Agent.
10-Q
001-38449
10.5
03-14-2024
10.6
Lease Agreement dated August 10, 2017 between Five Point
Office Venture I, LLC and Broadcom Corporation.
10-K
001-37690
10.29
12-21-2017
10.7
First Amendment to Lease Agreement by and between Five
Point Office Venture 1, LLC and Broadcom Corporation.
10-K
001-38449
10.18
12-18-2020
10.8 *
Settlement and Patent License and Non-Assert Agreement by
and between Qualcomm Incorporated and Broadcom
Corporation.
8-K/A
000-23993
10.1
07-23-2009
10.9 +
Avago Technologies Limited 2009 Equity Incentive Award
Plan.
S-1/A
333-153127
10.18
07-27-2009
10.10 +
Broadcom Inc. Employee Stock Purchase Plan (as amended
and restated on April 1, 2019).
Schedule
14A
001-38449
Appendix B-1
02-19-2019
10.11 +
LSI Corporation 2003 Equity Incentive Plan, as amended.
S-8
333-195741
4.1
05-06-2014
10.12 +
Amendment to the LSI Corporation 2003 Equity Incentive
Plan (effective February 1, 2016).
10-K
001-37690
10.45
12-23-2016
10.13 +
Amendment to the LSI Corporation 2003 Equity Incentive
Plan (effective April 4, 2018).
8-K12B
001-38449
10.10
04-04-2018
10.14 +
Broadcom Inc. 2012 Stock Incentive Plan (as amended and
restated on April 5, 2021).
10-Q
001-38449
10.1
06-11-2021
10.15 +
VMware, Inc. Amended and Restated 2007 Equity and
Incentive Plan.
S-8
333-275702
99.1
11-22-2023
10.16 +
Form of Annual Bonus Plan for Executive Employees.
10-K
001-37690
10.53
12-23-2016
10.17 +
Form of Agreement for Multi-Year Equity Award of Restricted
Stock Unit Award under the Avago Technologies Limited 2009
Equity Incentive Award Plan (effective December 5, 2017).
8-K
001-38449
10.1
12-06-2018
10.18 +
Form of Agreement for Multi-Year Equity Award of
Performance Stock Units under the Avago Technologies
Limited 2009 Equity Incentive Award Plan (effective March
13, 2018).
8-K
001-38449
10.2
12-06-2018
10.19 +
Form of Restricted Stock Unit Award Agreement under LSI
Corporation 2003 Equity Incentive Plan, as amended
(effective December 8, 2020).
10-K
001-38449
10.51
12-18-2020
10.20 +
Form of Performance Stock Unit Agreement (Relative TSR)
under LSI Corporation 2003 Equity Incentive Plan, as
amended (effective December 8, 2020).
10-K
001-38449
10.52
12-18-2020
10.21 +
Form of Restricted Stock Unit Award Agreement under
Broadcom Corporation 2012 Stock Incentive Plan (effective
December 5, 2017).
10-K
001-37690
10.61
12-21-2017
99
Table of Contents
Incorporated by Reference
Exhibit
Number
Description
Form
File No.
Exhibit
Filing Date
Filed
Herewith
10.22 +
Form of Restricted Stock Unit Award Agreement under
Broadcom Inc. 2012 Stock Incentive Plan (effective April 5,
2021).
10-Q
001-38449
10.3
06-11-2021
10.23 +
Form of Performance Share Unit Agreement (Relative TSR)
under Broadcom Corporation 2012 Stock Incentive Plan
(effective March 15, 2018).
10-Q
001-37690
10.5
03-15-2018
10.24 +
Form of Performance Stock Unit Award Agreement under the
Broadcom Inc. 2012 Stock Incentive Plan (effective April 5,
2021).
10-Q
001-38449
10.4
06-11-2021
10.25 +
Form of Performance Stock Unit Award Agreement (Price
Contingency) under Broadcom Inc. 2012 Stock Incentive Plan.
8-K
001-38449
10.1
11-02-2022
10.26 +
Performance Stock Unit Award Agreement, dated April 5,
2021, between Broadcom Inc. and Hock E. Tan.
10-Q
001-38449
10.2
06-11-2021
10.27 +
Broadcom Inc. 2023 Inducement Plan.
S-8
333-276053
99.1
12-14-2023
10.28 +
Form of Restricted Stock Unit Agreement under Broadcom
Inc. 2023 Inducement Plan.
S-8
333-276053
99.2
12-14-2023
10.29 +
Form of Performance Stock Unit Agreement under Broadcom
Inc. 2023 Inducement Plan.
S-8
333-276053
99.3
12-14-2023
10.30 +
Policy on Acceleration of Executive Staff Equity Awards in the
Event of Permanent Disability (as amended June 2, 2021).
8-K
001-38449
10.1
06-03-2021
10.31 +
Policy on Acceleration of Equity Awards in the Event of Death
(as amended January 1, 2023).
10-Q
001-38449
10.2
09-06-2023
10.32 +
Amended and Restated Severance Benefits Agreement, dated
December 10, 2020, between Broadcom Inc. and Hock E. Tan.
8-K
001-38449
10.1
12-10-2020
10.33 +
Amended and Restated Severance Benefits Agreement, dated
December 10, 2020, between Broadcom Inc. and Charlie B.
Kawwas.
8-K
001-38449
10.2
12-10-2020
10.34 +
Severance Benefits Agreement, dated September 26, 2017,
between Broadcom Limited and Mark Brazeal.
10-Q
001-38449
10.18
06-16-2018
10.35 +
Severance Benefits Agreement, dated December 10, 2020,
between Broadcom Inc. and Kirsten M. Spears.
8-K
001-38449
10.5
12-10-2020
19.1
Broadcom Inc. Insider Trading Compliance Policy
X
21.1
List of Subsidiaries.
X
23.1
Consent of PricewaterhouseCoopers LLP, independent
registered public accounting firm.
X
24.1
Power of Attorney (see signature page to this Form 10-K).
X
31.1
Certification of Principal Executive Officer of Broadcom Inc.
Pursuant to Rule 13a-14 of the Securities Exchange Act of
1934, as Adopted Pursuant to Section 302 of the Sarbanes-
Oxley Act of 2002.
X
31.2
Certification of Principal Financial Officer of Broadcom Inc.
Pursuant to Rule 13a-14 of the Securities Exchange Act of
1934, as Adopted Pursuant to Section 302 of the Sarbanes-
Oxley Act of 2002.
X
100
Table of Contents
Incorporated by Reference
Exhibit
Number
Description
Form
File No.
Exhibit
Filing Date
Filed
Herewith
32.1
Certification of Principal Executive Officer of Broadcom Inc.
Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.
X
32.2
Certification of Principal Financial Officer of Broadcom Inc.
Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.
X
97.1
Clawback Policy.
10-K
001-38449
97.1
12-14-2023
101.INS
Inline XBRL Instance Document - the instance document does
not appear in the Interactive Data File because its XBRL tags
are embedded within the Inline XBRL document.
X
101.SCH
Inline XBRL Schema Document.
X
101.CAL
Inline XBRL Calculation Linkbase Document.
X
101.DEF
Inline XBRL Definition Linkbase Document.
X
101.LAB
Inline XBRL Labels Linkbase Document.
X
101.PRE
Inline XBRL Presentation Linkbase Document.
X
104
Cover Page Interactive Data File - the cover page interactive
data file does not appear in the Interactive Data File because
its XBRL tags are embedded within the Inline XBRL document.
X
Notes:
+
Indicates a management contract or compensatory plan or arrangement.
*
Certain information omitted pursuant to a request for confidential treatment filed with the SEC.
ITEM 16.
FORM 10-K SUMMARY
None.
101
Table of Contents
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
BROADCOM INC.
By:
/s/ Hock E. Tan
Name:
Hock E. Tan
Title:
President and Chief Executive Officer
Date: December 20, 2024
POWER OF ATTORNEY
Each person whose individual signature appears below hereby authorizes and appoints Hock E. Tan, Kirsten M. Spears and Mark D. Brazeal, and each of
them, with full power of substitution and resubstitution and full power to act without the other, as his or her true and lawful attorney-in-fact and agent to act
in his or her name, place and stead and to execute in the name and on behalf of each person, individually and in each capacity stated below, and to file any
and all amendments to this Annual Report on Form 10-K, and to file the same, with all exhibits thereto, and other documents in connection therewith, with
the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each
and every act and thing, ratifying and confirming all that said attorneys-in-fact and agents or any of them or their or his substitute or substitutes may lawfully
do or cause to be done by virtue thereof.
102
Table of Contents
Pursuant to the requirements of the Securities Exchange Act of 1934, this Annual Report on Form 10-K has been signed by the following persons on
behalf of the Registrant in the capacities indicated and on the dates indicated.
Signature
Title
Date
/s/ Hock E. Tan
President, Chief Executive
Officer and Director
(Principal Executive Officer)
December 20, 2024
Hock E. Tan
/s/ Kirsten M. Spears
Chief Financial Officer
(Principal Financial Officer and Principal Accounting Officer)
December 20, 2024
Kirsten M. Spears
/s/ Henry Samueli
Chairman of the Board of Directors
December 20, 2024
Henry Samueli
/s/ Eddy W. Hartenstein
Lead Independent Director
December 20, 2024
Eddy W. Hartenstein
/s/ Diane M. Bryant
Director
December 20, 2024
Diane M. Bryant
/s/ Gayla J. Delly
Director
December 20, 2024
Gayla J. Delly
/s/ Kenneth Y. Hao
Director
December 20, 2024
Kenneth Y. Hao
/s/ Check Kian Low
Director
December 20, 2024
Check Kian Low
/s/ Justine F. Page
Director
December 20, 2024
Justine F. Page
/s/ Harry L. You
Director
December 20, 2024
Harry L. You
103
Exhibit 4.2
DESCRIPTION OF BROADCOM INC. COMMON STOCK
The following description of Broadcom Inc.’s common stock is a summary. This summary does not purport to be complete and is subject to, and
qualified in its entirety by, the General Corporation Law of the State of Delaware (“DGCL”), as well as our amended and restated certificate of
incorporation, as may be amended from time to time (“Certificate of Incorporation”) and amended and restated bylaws, as may be amended from time to
time (“Bylaws”), both of which have been publicly filed with the SEC. We encourage you to read that law and those documents carefully. “Broadcom,”
“Company,” “we,” “our” or “us” refer to Broadcom Inc. excluding our subsidiaries, unless expressly stated or the context otherwise requires.
Common Stock
General
The certificate of incorporation authorizes 29,000,000,000 shares of common stock, $0.001 par value per share.
Voting Rights
Each holder of our common stock is entitled to one vote for each share on all matters submitted to a vote of the stockholders, including the election
of directors. The holders of our common stock do not have cumulative voting rights in the election of directors. Accordingly, in an uncontested election,
holders of a majority of the voting shares are able to elect all of the directors.
Dividends
Subject to preferences that may be applicable to any then outstanding preferred stock, holders of our common stock are entitled to receive dividends,
if any, as may be declared from time to time by our board of directors out of legally available funds. Dividends may be paid in cash, in property or in shares
of common stock. Declaration and payment of any dividend are subject to the discretion of our board of directors. The time and amount of dividends is
dependent upon our financial condition, operations, cash requirements and availability, debt repayment obligations, capital expenditure needs, restrictions
in our debt instruments, industry trends, the provisions of the DGCL affecting the payment of distributions to stockholders and any other factors our board
of directors may consider relevant.
Liquidation
In the event of our liquidation, dissolution or winding up, holders of our common stock are entitled to share ratably in the net assets legally available
for distribution to stockholders after the payment of all debts and other liabilities and the satisfaction of any liquidation preference granted to the holders of
any then outstanding shares of preferred stock.
Rights and Preferences
Holders of our common stock have no preemptive, conversion, subscription or other rights, and there are no redemption or sinking fund provisions
applicable to our common stock. The rights, preferences and privileges of the holders of our common stock are subject to and may be adversely affected by
the rights of the holders of shares of any series of preferred stock that we may designate in the future.
Fully Paid and Non-Assessable
All outstanding shares of our common stock are fully paid and non-assessable.
Annual Stockholder Meetings
Our Certificate of Incorporation and Bylaws provide that annual stockholder meetings will be held at a date, place (if any) and time, as exclusively
selected by our board of directors. To the extent permitted under applicable law, we may but are not obligated to conduct meetings by remote
communications, including by webcast.
Anti-Takeover Effects of Provisions
Some provisions of the DGCL and our Certificate of Incorporation and Bylaws could make the following transactions difficult: acquisition of our
Company by means of a tender offer, proxy contest or otherwise; or removal of our incumbent officers and directors. It is possible that these provisions
could make it more difficult to accomplish or could deter transactions that stockholders may otherwise consider to be in their best interest or in our best
interests, including transactions that might result in a premium over the market price for shares of our common stock.
These provisions, summarized below, are expected to discourage coercive takeover practices and inadequate takeover bids. These provisions are also
designed to encourage persons seeking to acquire control of our Company to first negotiate with our board of directors. We believe that the benefits of
protection to our potential ability to negotiate with the proponent of an unfriendly or unsolicited proposal to acquire or restructure our Company outweigh
the disadvantages of discouraging these proposals because negotiation of these proposals could result in an improvement of their terms.
Delaware Anti-Takeover Statute
Section 203 of the DGCL prohibits persons deemed “interested stockholders” from engaging in a “business combination” with a publicly-held
Delaware corporation for three years following the date these persons become interested stockholders unless the business combination is, or the transaction
in which the person became an interested stockholder was, approved in a prescribed manner or another prescribed exception applies. Generally, an
“interested stockholder” is a person who, together with affiliates and associates, owns, or within three years prior to the determination of interested
stockholder status did own, 15% or more of a corporation’s voting stock and a “business combination” includes a merger, asset or stock sale, or other
transaction resulting in a financial benefit to the interested stockholder. The existence of this provision may have an anti-takeover effect with respect to
transactions not approved in advance by the board of directors, such as discouraging takeover attempts that might result in a premium over the market price
of our common stock.
Undesignated Preferred Stock
The ability to authorize undesignated preferred stock will make it possible for our board of directors to issue preferred stock with voting or other
rights or preferences that could impede the success of any attempt to change control of our Company. These and other provisions may have the effect of
deterring hostile takeovers or delaying changes in control or management of our Company.
Special Stockholder Meetings
Our Bylaws provide that a special meeting of stockholders may be called only by our board of directors or by two or more common stockholders
holding at least 10% of the total number of our issued and outstanding shares.
Requirements for Advance Notification of Stockholder Nominations and Proposals
Our Bylaws establish advance notice procedures with respect to stockholder proposals and the nomination of candidates for election as directors,
other than nominations made by or at the direction of the board of directors or a committee of the board of directors.
Proxy Access Nominations
Our Bylaws provide that we must include in our proxy statement for an annual meeting of stockholders the name, together with certain other required
information, of any person nominated for the election of directors in compliance with specified provisions in our Bylaws by a single stockholder that
satisfies (or by a group of no more than 20 stockholders that satisfy) various notice and other requirements specified in our Bylaws. Among other
requirements, such stockholder or group of stockholders would need to provide evidence verifying that the stockholder or group owns, and has owned
continuously for the preceding three years, at least 3% of the outstanding shares of our common stock. Our Bylaw provision establishes a maximum
number of nominees submitted by stockholders that we would be required to include in our proxy statement for an annual meeting.
No Stockholder Action by Written Consent
Our Certificate of Incorporation and Bylaws do not provide for the right of stockholders to act by written consent without a meeting.
Composition of the Board of Directors; Election and Removal of Directors; Filling Vacancies
Our board of directors may consist of not less than one nor more than 13 directors. In any uncontested elections of directors, a director nominee for
the board of directors will be elected by the affirmative vote of a majority of the votes cast with respect to such director by the shares represented and
entitled to vote at a meeting of the stockholders for the election of directors at which a quorum is present, voting together as a single class. An incumbent
director who is nominated for an uncontested election and fails to receive a majority of the votes present and voting for such director’s reelection would be
required to tender his or her resignation to the board of directors. The Nominating, Environmental, Social and Governance Committee of the board of
directors (or any future committee the equivalent thereof) will make a recommendation to the board of directors on whether to accept or reject the
resignation, or whether other action should be taken. The board of directors will act on the recommendation of such committee and will publicly disclose
its decision within 90 days from the date of the certification of the election results. In a contested election, a plurality voting standard will apply to director
elections. Our directors are elected until the expiration of the term for which they are elected and until their respective successors are duly elected and
qualified.
Our directors may be removed only by the affirmative vote of at least a majority of the holders of our then outstanding common stock. Furthermore,
any vacancy on the board of directors, however occurring, including a vacancy resulting from an increase in the size of the board, may be filled only by a
majority vote of the board of directors then in office, even if less than a quorum, or by the sole remaining director. This system of electing and removing
directors and filling vacancies may tend to discourage a third party from making a tender offer or otherwise attempting to obtain control of our Company,
because it generally makes it more difficult for stockholders to replace a majority of the directors.
Choice of Forum
Our Certificate of Incorporation and Bylaws provide that, unless we consent in writing to the selection of an alternative forum, the Court of Chancery
of the State of Delaware will be the exclusive forum for: any derivative action or proceeding brought on our behalf; any action asserting a breach of
fiduciary duty; any action asserting a claim against us arising pursuant to the DGCL or our Certificate of Incorporation or Bylaws; or any action asserting a
claim against us that is governed by the internal affairs doctrine. Although our Certificate of Incorporation contains the choice of forum provision described
above, it is possible that a court could find that such a provision is inapplicable for a particular claim or action or that such provision is unenforceable.
Amendment of the Certificate of Incorporation and Bylaws
The amendment of any of the provisions in our Certificate of Incorporation would require approval by a stockholder vote by the holders of at least a
majority of the voting power of the then outstanding voting stock. Our Bylaws may be amended by the board of directors or by the holders of at least a
majority of the voting power of the then outstanding voting stock.
The provisions of the DGCL, our Certificate of Incorporation and Bylaws could have the effect of discouraging others from attempting hostile
takeovers and, as a consequence, they may also inhibit temporary fluctuations in the market price of our common stock that often result from actual or
rumored hostile takeover attempts. These provisions may also have the effect of preventing changes in our management. It is possible that these provisions
could make it more difficult to accomplish transactions that stockholders may otherwise deem to be in their best interests.
Limitations of Liability and Indemnification Matters
Our Certificate of Incorporation contains provisions that limit the liability of our directors and officers for monetary damages to the fullest extent
permitted by the DGCL. Consequently, our directors and officers are not personally liable to the Company or its stockholders for monetary damages for
any breach of fiduciary duties, except liability for:
•
any breach of the director’s or officer’s duty of loyalty to us or our stockholders;
•
any act or omission not in good faith or that involves intentional misconduct or a knowing violation of law;
•
unlawful payments of dividends or unlawful stock repurchases or redemptions as provided in Section 174 of the DGCL, in the case of a
director;
•
any transaction from which the director or officer derived an improper personal benefit; or
•
in any action by or in the right of us, in the case of an officer.
Each of our Certificate of Incorporation and Bylaws provide that we are required to indemnify our directors and officers, in each case to the fullest
extent permitted by the DGCL. Our Bylaws also obligate us to advance expenses incurred by a director or officer in advance of the final disposition of any
action or proceeding, and permit us to secure insurance on behalf of any officer, director, employee or other agent for any liability arising out of his or her
actions in that capacity regardless of whether we would otherwise be permitted to indemnify him or her under the DGCL. We have entered into agreements
to indemnify the directors, executive officers and other employees as determined by our board of directors. With specified exceptions, these agreements
provide for indemnification for related expenses including, among other things, attorneys’ fees, judgments, fines and settlement amounts incurred by any of
these individuals in any action or proceeding to the fullest extent permitted by applicable law. We believe that these bylaw provisions and indemnification
agreements are necessary to attract and retain qualified persons as directors and officers. We also maintain directors’ and officers’ liability insurance.
The limitation of liability and indemnification provisions in our Certificate of Incorporation and Bylaws may discourage stockholders from bringing
a lawsuit against our directors and officers for breach of their fiduciary duty. They may also reduce the likelihood of derivative litigation against our
directors and officers, even though an action, if successful, might benefit us and our stockholders. Furthermore, a stockholder’s investment may be
adversely affected to the extent that we pay the costs of settlement and damage.
Uncertificated Shares
Holders of shares of our common stock do not have the right to require Broadcom to issue certificates for their shares. We only issue uncertificated
shares of our common stock.
Stock Exchange Listing
Shares of our common stock are listed on Nasdaq under the symbol “AVGO.”
No Sinking Fund
The shares of our common stock do not have sinking fund provisions.
Transfer Agent and Registrar
The transfer agent and registrar for our common stock is Computershare Trust Company, N.A. The transfer agent and registrar’s address is 250
Royall Street, Canton, Massachusetts 02021.
Exhibit 19.1
BROADCOM INC.
INSIDER TRADING COMPLIANCE POLICY
I. POLICY
This Insider Trading Compliance Policy (this “Policy”) applies to Broadcom Inc. and each of its subsidiaries (collectively, “Broadcom”)
and all of its employees, officers, board members and contractors (“Insiders”).
This Policy also applies to:
(i) Family members who reside or live with you,
(ii) Family members who do not live with you, but whose transactions in securities are controlled, directed or influenced by you,
(iii) Trusts of which you are a trustee or whose investment decisions are controlled, directed or influenced by you, and
(iv) Other entities controlled by you, including any corporations, partnerships, trusts or foundations (collectively, “Related
Persons”).
For purposes of this Policy, transactions by Related Persons are treated as if they are your transactions.
The existence of a personal financial emergency does not exempt you from complying with this Policy.
A. Insider Trading Prohibition
The Securities Exchange Act of 1934, as amended (the “Exchange Act”), prohibits “insider trading.”
“Insider trading” is the purchase, sale, transfer or exchange (“Trade” or “Trading”) of any security (such as stock) when you are in
possession of material non‐public information (“MNPI”) relating to that security.
This Policy prohibits you from Trading Broadcom securities when you are in possession of MNPI related to Broadcom.
Similarly, you may not transact in any security of a Broadcom Business Associate (defined below) if you, in the course of working for
Broadcom, learn of MNPI relating to that Broadcom Business Associate.
“Broadcom Business Associate” is an entity that you have information about due to your employment at or work for Broadcom, such
as a customer, supplier or a company involved in a potential transaction with Broadcom.
The following would not be considered “Trades” or “Trading” under this Policy:
(i) Acceptance of equity awards granted by Broadcom,
(ii) Any exercise of stock options that does not involve the sale of Broadcom stock (such as an “exercise and hold” but not a
“cashless” exercise of stock options),
(iii) Any mandatory sale of Broadcom stock by Broadcom upon the vesting of restricted stock units to satisfy tax withholding
requirements per the terms of your restricted stock unit grant agreement,
(iv) Purchase of Broadcom stock pursuant to the Broadcom Employee Stock Purchase Plan,
(v) Bona fide gifts of Broadcom stock when the donor does not have MNPI and is not subject to the Trading Window Closure
Period (defined below), and
(vi) Transactions of Broadcom securities made pursuant to an approved Trading Plan (defined below).
Broadcom Insider Trading Compliance Policy Updated: December 2024
1
The U.S. Securities and Exchange Commission (“SEC”), U.S. Department of Justice, and other domestic and foreign regulatory
agencies investigate and pursue insider trading violations vigorously. The size of the transaction or the amount of profit received
does not have to be significant to result in prosecution by such government authorities.
Violations of insider trading laws or this Policy may result in referral to government authorities for criminal prosecution and
disciplinary action, including termination of employment or business relationship with Broadcom.
B. What is Material Non‐Public Information (MNPI)?
For purposes of this Policy, information is considered “material” if there is a reasonable likelihood that an investor would consider
the information important in making a decision to buy, sell or hold a security or if the information is likely to have a significant effect
on the market price of the security, whether over the short‐term or long‐term. Information that is “material” can be positive or
negative information, or information that forecasts whether an event may or may not occur.
Information is “non‐public” if it is not available to the general public and has not been previously disclosed. For information to be
considered public, it must be widely disseminated in a manner that makes the information generally available to the public.
Information may be widely disseminated through media outlets, a conference call open to the general public or documents available
on the SEC’s website. Widespread discussion of rumors does not make the information “public.” See Broadcom’s Code of Ethics and
Business Conduct to learn more about protecting Broadcom’s confidential information.
Examples of “MNPI” include:
•
Corporate financial and operating results or forecasts
•
Significant change in the financial condition of the business
•
Possible significant merger or acquisition or disposition of assets
•
Significant cyber intrusion, data breach or other IT system failure
•
Loss or addition of a significant customer, contract or design win
•
Significant new litigation/investigation or significant development in existing litigation/investigation
•
New product announcement or development of a significant nature
•
Change in dividends or dividend policy
•
Significant change in corporate strategy
•
Significant change in senior management
C. Other Prohibited Actions or Transactions
No Insider, regardless of position held at Broadcom, may engage in any of the following activities (collectively, “Prohibited
Activities”):
(i) Trading in Broadcom Derivative Securities
Trading in derivative securities may create an appearance that the Insider is Trading on MNPI. You and your Related Persons may not
purchase or sell derivative securities of Broadcom stock, such as publicly‐traded options to purchase or sell such securities called
“puts” or “calls.”
(ii) Hedging Broadcom Securities
Establishing a short position or hedging may create a misalignment of the interests of the Insider and the interests of Broadcom. You
and your Related Persons may not hedge Broadcom stock (including short sales, forward sale contracts, collars, equity swaps and
certain exchange funds).
Broadcom Insider Trading Compliance Policy Updated: December 2024
2
(iii)Margining or Pledging Broadcom Securities
When Broadcom securities are held in a margin account or pledged as collateral for a loan, a default on a loan may cause the lender
to sell your Broadcom securities. You and your Related Persons may not hold Broadcom securities in margin accounts or pledge
Broadcom securities as collateral.
Pledging of Broadcom securities as collateral for loans by executive officers ("Executive Officers") and members of the board of
directors of Broadcom Inc. (“Board”) are not permitted without prior approval by the Board and the Nominating, Environmental,
Social and Governance (“NESG”) Committee of the Board which may be granted only in very limited circumstances.
(iv)Tipping
You may not communicate or “tip” MNPI about Broadcom or any Broadcom Business Associate to another Insider or to anyone
outside Broadcom, except those who have a legitimate need to know the information in order to perform their duties at or for
Broadcom.
II. TRADING WINDOW CLOSURE FOR CERTAIN INSIDERS
A. Covered Persons
The following Insiders are subject to trading window closures (“Covered Persons”):
•
All members of the Board,
•
All Executive Officers,
•
Certain employees and contractors of Broadcom who have or are likely to have access to MNPI in the normal course of their
duties, and
•
Related Persons of the individuals listed above.
Broadcom’s Legal Team will notify you via email if you are a Covered Person prior to the closure of the Trading Window (as defined
below).
Broadcom’s Compliance Officer may extend or shorten the Trading Window as he or she deems appropriate.
If you have or are aware of MNPI about Broadcom, you may not Trade in Broadcom securities even if you are not deemed a
Covered Person.
B. Quarterly Trading Window Closure Period
A Covered Person may Trade Broadcom securities only during a certain period of days (“Trading Window”), provided that such
Covered Person does not have MNPI and, if applicable, has received clearance for the Trade in accordance with this Policy.
For Covered Persons, the Trading Window opens on the third full trading day after Broadcom releases its financial earnings and
closes at the end of regular trading of Broadcom stock on the Friday prior to the last three weeks of each fiscal quarter.
C. Special Trading Window Closure Period
The Compliance Officer may also suspend Trading in Broadcom securities for some or all Insiders, from time to time, as he or she
deems appropriate (a “Special Trading Window Closure Period” and together with a quarterly closed Trading Window, a “Trading
Window Closure Period”), and need not provide any reason for such suspension.
You will be notified via email by the Legal Team if you are subject to a Special Trading Window Closure Period.
The imposition of a Special Trading Window Closure Period is itself confidential information, and the fact that it has been imposed
may not be disclosed to others.
Broadcom Insider Trading Compliance Policy Updated: December 2024
3
D. Post‐Employment or Service Transactions
If a Covered Person’s employment or service terminates during a Trading Window Closure Period, the Covered Person will continue
to be subject to the Trading Window Closure Period until the Trading Window Closure Period ends, unless notified by the Legal Team.
III. PRE‐CLEARANCE PROCESS FOR “RESTRICTED PERSONS”
Certain Covered Persons are required to pre‐clear with the Compliance Officer all Trades in Broadcom securities, including providing
any gift or donation of Broadcom securities (“Restricted Person”), unless such Trades are part of an approved Trading Plan (defined
below).
The Legal Team will notify you via email each quarter if you are a Restricted Person.
A. Pre‐Clearance of Trades by Restricted Persons
All Trades in Broadcom securities by Restricted Persons and their Related Persons must be pre‐cleared by the Compliance Officer.
Pre‐clearance requests by the Compliance Officer are submitted to the Chief Financial Officer for approval.
B. Pre‐Clearance Process
Approval of the pre‐clearance request is in the sole discretion of the Compliance Officer, or in the case of the Compliance Officer, the
Chief Financial Officer. If pre‐clearance approval is provided, it only covers transactions that occur four (4) calendar days after the
date of approval.
IV. 10B5‐1 TRADING PLAN
A. Adopting a 10b5‐1 Trading Plan
Employees, Executive Officers and directors of Broadcom may enter into a SEC Rule 10b5‐1 trading plan (a “Trading Plan”) that is
pre‐approved by the Compliance Officer.
If a Trading Plan is approved and established in good faith pursuant to SEC Rule 10b5‐1 and this Policy, an Insider can buy, sell or gift
Broadcom stock under such Trading Plan while in possession of MNPI about Broadcom or during a Trading Window Closure Period.
All Trading Plans, including modifications, must be entered into when you are not in possession of MNPI and only during an open
Trading Window period.
You may only have one (1) Trading Plan in operation, subject to limited exceptions. In addition, you may not have more than one (1)
Trading Plan that covers a single trade within a 12‐month period.
B. Additional 10b5‐1 Trading Plan Requirements
Each Trading Plan must meet all of the following additional requirements:
(i) Must be pre‐approved by the Compliance Officer,
(ii) For employees and Executive Officers of Broadcom, must be executed with Broadcom’s designated broker for Broadcom’s
equity plans,
(iii) Must be entered into in good faith at a time you are not aware of any Broadcom MNPI and contain a representation
certifying as to the same,
(iv) Must be entered into only during an open Trading Window,
(v) Must permit termination or suspension of the transactions by Broadcom at any time when Broadcom believes that such
transactions may not lawfully occur,
Broadcom Insider Trading Compliance Policy Updated: December 2024
4
(vi) Must not commence until the later of: ninety (90) days after adopting the Trading Plan or two (2) business days following the
filing of the Form 10‐Q or Form 10‐K covering the financial reporting period in which the Trading Plan was adopted, but in
any event not to exceed 120 days (“Cooling‐Off Period”), and
(vii)Must otherwise comply with SEC Rule 10b5‐1.
C. 10b5‐1 Trading Plan Pre‐Approval Process
Employees and Executive Officers of Broadcom are required to work with Broadcom’s designed broker for its equity plans on the
preparation of a Trading Plan.
The Trading Plan must be submitted for review by the Legal Team or the Compliance Officer at least one (1) week prior to the
proposed date of adoption.
D. 10b5‐1 Trading Plan Modification or Termination
A modification to a Trading Plan is deemed to be a termination of the old Trading Plan and an adoption of a new Trading Plan. As a
result, the new Trading Plan will be subject to all of the requirements, limitations and prohibitions relating to transactions involving
Broadcom securities that are contained in this Policy, including the Cooling‐Off Period. However, modifications that do not change
the price, amount of securities or timing of the transactions will not trigger a new Cooling‐Off Period.
A Trading Plan may be terminated pursuant to terms in the Trading Plan.
E. Transactions Outside of a 10b5‐1 Trading Plan
Transactions outside of a Trading Plan are allowed as long as the Trading Plan continues to be followed, the shares subject to the
Trading Plan are not sold outside the Trading Plan, and such transactions are during an open Trading Window period.
F. Disclosure of a 10b5‐1 Trading Plan per SEC Regulation
For Trading Plans entered into by Executive Officers or Board members, disclosure of the adoption, modification or termination of
Trading Plans will be made in the Form 10‐Q or Form 10‐K covering the quarter in which the Trading Plan was adopted, modified or
terminated pursuant to SEC regulations.
A Trading Plan does not exempt Executive Officers or Board members from complying with insider reporting requirements or short‐
swing profit rules or liability under Section 16 of the Exchange Act.
V. QUESTIONS
The Compliance Officer is responsible for the interpretation and enforcement of this Policy and will periodically review this Policy
with the NESG Committee.
If you have questions about this Policy, contact Broadcom’s Compliance Officer at compliance.officer@broadcom.com.
VI. AMENDMENTS
This Policy may be amended as needed. In the event of any conflict or inconsistency between this Policy and any other materials
distributed by Broadcom, this Policy shall govern. If a law conflicts with this Policy, you must comply with the law.
Broadcom Insider Trading Compliance Policy Updated: December 2024
5
Appendix A
BROADCOM TRANSACTIONS
The Board may approve repurchase programs for Broadcom securities at its discretion, including through open market transactions,
privately negotiated transactions or the use of plans designed to comply with Rule 10b5‐1 and 10b‐18 of the Exchange Act. However,
no Broadcom entity shall, directly or indirectly, buy Broadcom securities while being aware of MNPI relating to Broadcom, other than
pursuant to a Trading Plan or as otherwise provided for herein.
The Compliance Officer must pre‐approve any repurchases of Broadcom securities by Broadcom (excluding repurchases pursuant to
an approved Trading Plan). Any such pre‐approval shall, absent notice to the contrary, be valid for the following five (5) business
days. The Compliance Officer may, at any time in his or her discretion, prohibit Broadcom from trading in any Broadcom securities.
The prohibitions outlined in this Appendix A shall not apply to repurchases otherwise approved by the Board that do not involve a
market transaction, including repurchases related to tax withholding or the redemption by Broadcom or the obligation to purchase
Broadcom securities pursuant to a put right or other similar pre‐existing contract right or obligation of Broadcom (e.g., a redemption
right in the underlying instrument).
A. Trading Window Period for Broadcom
Except as set forth in this Appendix A, Broadcom may repurchase Broadcom securities only during an open Trading Window and in
compliance with the other requirements of SEC Rule 10b‐18 and this Policy. The Compliance Officer may at any time implement a
Special Trading Window Closure Period for Broadcom by notice to the Chief Financial Officer. Whether or not a Special Trading
Window Closure Period exists for Broadcom is confidential information and shall not be disclosed to any third party other than
advisors of Broadcom with a reason to know such information and who are subject to a duty of confidentiality.
B. Rule 10b5‐1 Trading Plan
Broadcom may enter into a Trading Plan to buy Broadcom stock. Trading Plans may be implemented only (i) during an open Trading
Window, (ii) when Broadcom is not aware of any MNPI about Broadcom, and (iii) after receiving pre‐ clearance from the Compliance
Officer. A Trading Plan of a Broadcom entity may not be revoked or modified without the prior approval of the Compliance Officer.
No Trading Plan may be for a stated duration of less than 45 days, subject to any earlier revocation or amendment in accordance
with this Policy.
Broadcom Insider Trading Compliance Policy Updated: December 2024
A-1
EXHIBIT 21.1
List of Significant Subsidiaries
As of November 3, 2024
Name of Subsidiary
Country of Incorporation
Avago Technologies International Sales Pte. Limited
Singapore
Avago Technologies U.S. Inc.
Delaware (U.S.A.)
Broadcom Corporation
California (U.S.A.)
Broadcom Singapore Pte Ltd
Singapore
Broadcom Technologies, Inc.
Delaware (U.S.A.)
CA, Inc.
Delaware (U.S.A.)
CA Europe Sárl
Switzerland
VMware International Unlimited Company
Ireland
VMware LLC
Delaware (U.S.A.)
VMware Global, Inc.
Delaware (U.S.A.)
VMware Management Inc.
Delaware (U.S.A.)
Exhibit 23.1
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We hereby consent to the incorporation by reference in the Registration Statements on Form S-8 (Nos. 333-276053, 333-275702, 333-235753, 333-235663,
333-228175, 333-209331-01, 333-215291-01, and 333-221654-01) and Form S-3 (No. 333-280715) of Broadcom Inc. of our report dated December 20,
2024 relating to the financial statements and financial statement schedule and the effectiveness of internal control over financial reporting, which appears in
this Form 10-K.
/s/ PricewaterhouseCoopers LLP
San Jose, California
December 20, 2024
1
EXHIBIT 31.1
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
PURSUANT TO SECTION 302 OF
THE SARBANES-OXLEY ACT OF 2002
I, Hock E. Tan, certify that:
1.
I have reviewed this Annual Report on Form 10-K of Broadcom Inc.;
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this
report;
3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the
financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-
15(f)) for the registrant and have:
a.
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our
supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by
others within those entities, particularly during the period in which this report is being prepared;
b.
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our
supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for
external purposes in accordance with generally accepted accounting principles;
c.
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d.
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most
recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably
likely to materially affect, the registrant’s internal control over financial reporting; and
5.
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the
registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a.
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b.
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal
control over financial reporting.
Date: December 20, 2024
/s/ Hock E. Tan
Hock E. Tan
Chief Executive Officer
(Principal Executive Officer)
EXHIBIT 31.2
CERTIFICATION OF CHIEF FINANCIAL OFFICER
PURSUANT TO SECTION 302 OF
THE SARBANES-OXLEY ACT OF 2002
I, Kirsten M. Spears, certify that:
1.
I have reviewed this Annual Report on Form 10-K of Broadcom Inc.;
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this
report;
3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the
financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-
15(f)) for the registrant and have:
a.
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our
supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by
others within those entities, particularly during the period in which this report is being prepared;
b.
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our
supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for
external purposes in accordance with generally accepted accounting principles;
c.
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d.
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most
recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably
likely to materially affect, the registrant’s internal control over financial reporting; and
5.
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the
registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a.
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b.
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal
control over financial reporting.
Date: December 20, 2024
/s/ Kirsten M. Spears
Kirsten M. Spears
Chief Financial Officer
(Principal Financial Officer)
EXHIBIT 32.1
CERTIFICATION OF THE CHIEF EXECUTIVE OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED
PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Annual Report on Form 10-K of Broadcom Inc. (the “Company”) for the fiscal year ended November 3, 2024 as filed with the
Securities and Exchange Commission on the date hereof (the “Report”), the undersigned, Hock E. Tan, Chief Executive Officer of the Company, hereby
certifies, pursuant to 18 U.S.C. Section 1350, that:
(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
Date: December 20, 2024
/s/ Hock E. Tan
Hock E. Tan
Chief Executive Officer
(Principal Executive Officer)
The foregoing certification is being furnished solely pursuant to 18 U.S.C. § 1350 and is not being filed as part of the Report or as a separate disclosure
document.
EXHIBIT 32.2
CERTIFICATION OF THE CHIEF FINANCIAL OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED
PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Annual Report on Form 10-K of Broadcom Inc. (the “Company”) for the fiscal year ended November 3, 2024 as filed with the
Securities and Exchange Commission on the date hereof (the “Report”), the undersigned, Kirsten M. Spears, Chief Financial Officer of the Company,
hereby certifies, pursuant to 18 U.S.C. Section 1350, that:
(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
Date: December 20, 2024
/s/ Kirsten M. Spears
Kirsten M. Spears
Chief Financial Officer
(Principal Financial Officer)
The foregoing certification is being furnished solely pursuant to 18 U.S.C. § 1350 and is not being filed as part of the Report or as a separate disclosure
document.