What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2020-12-18 compared with 2019-12-20 · 796 added, 879 removed, 1122 unchanged (60% of the section changed)

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Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of November 1, 2020, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO.

Change in Accounting Principle

As discussed in Note 2 to the consolidated financial statements, the Company changed the manner in which it accounts for leases in fiscal 2020.

Basis for Opinions

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We believe that our audits provide a reasonable basis for our opinions.

As described in Management’s Report on Internal Control Over Financial Reporting, management has excluded CA, Inc.

from its assessment of internal control over financial reporting as of November 3, 2019, because it was acquired by the Company in a purchase business combination during 2019.

We have also excluded CA, Inc.

from our audit of internal control over financial reporting.

is a wholly-owned subsidiary whose total assets and total revenues excluded from management’s assessment and our audit of internal control over financial reporting represent 3% and 15%, respectively, of the related consolidated financial statement amounts as of and for the year ended November 3, 2019.

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;

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.

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Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that (i) relate 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 matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Valuation of Developed Technology and Customer Contracts and Related Relationships Intangible Assets Acquired in the CA, Inc.

As described in Notes 2 and 4 to the consolidated financial statements, the Company completed the acquisition of CA, Inc.

during fiscal 2019 for net consideration of $16,094 million, of which $4,957 million of finite-lived developed technology and $4,190 million of finite-lived customer contracts and related relationships intangible assets were recorded.

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.

Valuation of Developed Technology and Customer Contracts and Related Relationships Intangible Assets Acquired - Symantec Corporation Enterprise Security Business

As described in Notes 2 and 4 to the consolidated financial statements, the Company completed the purchase of certain assets and assumption of certain liabilities of the Symantec Corporation Enterprise Security business on November 4, 2019 for $10.7 billion in cash, of which $2.9 billion of finite-lived developed technology and $2.4 billion of finite-lived customer contracts and related relationships intangible assets were recorded.

Management valued the developed technology using the multi-period excess earnings method under the income approach.

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In this 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.

As disclosed by management, significant estimates and assumptions in estimating the fair value of the developed technology and the customer contracts and related relationships include future expected cash flows from product sales, customer contracts and acquired technologies, revenue growth rate, customer ramp up period, technology obsolescence rates, and discount rates.

The principal considerations for our determination that performing procedures relating to the valuation of the developed technology and customer contracts and relationships intangible assets acquired in the CA, Inc.

acquisition is a critical audit matter are (i) there was a high degree of auditor judgment and subjectivity in applying our procedures relating to the fair value measurement of the developed technology and the customer contracts and related relationships due to the significant judgment by management when developing these estimates, (ii) significant audit effort was required in assessing the significant assumptions relating to the valuation of the developed technology and the customer contracts and related relationships, which include the revenue growth rate, the technology obsolescence rates, the customer ramp-up period, and the discount rates, 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 developed technology and the customer contracts and related relationships and controls over development of the assumptions related to the valuation of the developed technology and the customer contracts and related relationships including the revenue growth rate, the technology obsolescence rates, the customer ramp-up period, and the discount rates.

These procedures also included, among others, reading the purchase agreement and testing management’s process for determining the fair value of these intangible assets, including evaluating the appropriateness of the valuation methods, testing the completeness and accuracy of underlying data, and evaluating the reasonableness of the significant assumptions, which include the revenue growth rate, the technology obsolescence rates, the customer ramp-up period, and the discount rates.

Evaluating the reasonableness of the revenue growth rate, the technology obsolescence rates, and the customer ramp-up period involved considering the past performance of the acquiree, benchmarking of peer companies and, for the revenue growth rate, industry data.

Professionals with specialized skill and knowledge were used to assist us in evaluating the appropriateness of valuation methods and the reasonableness of the discount rates and the technology obsolescence rates.

Uncertain Tax Positions (“UTPs”)

As described in Notes 2 and 11 to the consolidated financial statements, the gross unrecognized tax benefits balance was $4,422 million as of November 3, 2019.

As management has disclosed, management evaluates the exposure associated with various tax filing positions and accrues an income tax liability when such positions do not meet the more-likely-than-not threshold for recognition.

A tax benefit from an UTP may be recognized when it is more likely than not that the position will be sustained upon examination, including resolution of any related appeals or litigation processes, based on the technical merits.

The principal considerations for our determination that performing procedures relating to the UTPs is a critical audit matter are (i) there was significant judgment by management when evaluating the technical merits of these tax positions, (ii) significant auditor judgment, subjectivity, and effort was required in understanding the relevant information and evaluating the technical merits of the tax positions, and (iii) the audit effort involved the use of professionals with specialized skill and knowledge.

Significant estimates and assumptions in estimating the fair value of the developed technology and the customer contracts and related relationships include future expected cash flows from product sales, customer contracts and acquired technologies, revenue growth rate, customer ramp-up period, technology obsolescence rates, and discount rates.

The principal considerations for our determination that performing procedures relating to the valuation of the developed technology and the customer contracts and related relationships intangible assets acquired in the Symantec Corporation Enterprise Security business acquisition is a critical audit matter are (i) a high degree of auditor judgment and subjectivity in performing procedures relating to the fair value measurement of the developed technology and the customer contracts and related relationships due to the significant judgment by management when developing these estimates, (ii) the significant audit effort in evaluating the significant assumptions relating to the valuation of the developed technology and the customer contracts and related relationships related to the revenue growth rate, the customer ramp-up period, the technology obsolescence rates, and the discount rates, 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 identification and recognition of the income tax liability for UTPs, including controls addressing completeness of the UTPs as well as controls over the measurement of the income tax liability.

These procedures also included, among others, (i) testing management’s process for identifying potential new UTPs and evaluating possible outcomes for each UTP selected for testing, and (ii) testing the calculation of the liability for UTPs by jurisdiction, including management’s assessment of the technical merits of tax positions and estimates of the amount of tax benefit expected to be sustained for each UTP selected for testing.

Professionals with specialized skill and knowledge were used to assist in the evaluation of the completeness and measurement of the Company’s UTPs, including the reasonableness of management’s assessment of whether certain tax positions are more-likely-than-not of being sustained and the amount of potential benefit to be realized, and the application of relevant tax laws.

These procedures included testing the effectiveness of controls relating to the acquisition accounting, including controls over management’s valuation of the developed technology and the customer contracts and related relationships and controls over development of the assumptions related to the revenue growth rate, the customer ramp-up period, the technology obsolescence rates, and the discount rates.

These procedures also included, among others, reading the purchase agreement and testing management’s process for determining the fair value of these intangible assets, including evaluating the appropriateness of the valuation methods, testing the completeness and accuracy of data used in the methods, and evaluating the reasonableness of the significant assumptions related to the revenue growth rate, the customer ramp-up period, the technology obsolescence rates, and the discount rates.

Evaluating the reasonableness of the revenue growth rate and the customer ramp-up period involved considering the past performance of the acquired business and industry data.

Evaluating the reasonableness of the technology obsolescence rates involved considering the past performance of the acquired business and benchmarking of peer companies.

Professionals with specialized skill and knowledge were used to assist in evaluating the appropriateness of valuation methods and the reasonableness of the customer ramp-up period, the technology obsolescence rates, and the discount rates.

/s/ PricewaterhouseCoopers LLP

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CONSOLIDATED BALANCE SHEETS

2020 November 3,

(In millions, except par value)

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Trade accounts receivable, net 2,297 3,259

Inventory 1,003 874

Other current assets 977 729

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Property, plant and equipment, net 2,509 2,565

Goodwill 43,447 36,714

Intangible assets, net 16,782 17,554

Other long-term assets 1,300 743

Total assets $ 75,933 $ 67,493

LIABILITIES AND EQUITY

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100 shares authorized;

8.00% Mandatory Convertible Preferred Stock, Series A, 4 and 0 shares issued and outstanding;

aggregate liquidation value of $3,738 and $0 as of November 3, 2019 and November 4, 2018, respectively

8.00 % Mandatory Convertible Preferred Stock, Series A, 4 shares issued and outstanding;

aggregate liquidation value of $ 3,738 as of November 1, 2020 and November 3, 2019

Common stock, $ 0.001 par value;

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Additional paid-in capital

23,982 25,081

Retained earnings — —

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Fiscal Year Ended

2020 November 3,

2019 November 4,

(In millions, except per share data)

Products $ 17,435 $ 18,117 $ 19,754

Subscriptions and services 6,453 4,480 1,094

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Total cost of revenue 10,372 10,114 10,115

Gross margin 13,516 12,483 10,733

Research and development 4,968 4,696 3,768

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Impairment on investment — — ( 106 )

Loss on extinguishment of debt

Other income, net 206 226 144

Income from continuing operations before income taxes 2,443 2,226 4,545

Provision for (benefit from) income taxes

Benefit from income taxes ( 518 ) ( 510 ) ( 8,084 )

Income from continuing operations 2,961 2,736 12,629

Loss from discontinued operations, net of income taxes

( 1 ) ( 12 ) ( 19 )

Net income 2,960 2,724 12,610

Dividends on preferred stock ( 297 ) ( 29 ) —

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Weighted-average shares used in per share calculations:

Basic 402 398 418

Diluted 421 419 431

The accompanying notes are an integral part of these consolidated financial statements.

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Fiscal Year Ended

2020 November 3,

2019 November 4,

(In millions)

Net income $ 2,960 $ 2,724 $ 12,610

Other comprehensive income (loss), net of tax:

Change in actuarial loss and prior service costs associated with defined benefit pension plans and post-retirement benefit plans

Other comprehensive income (loss)

24 ( 24 ) ( 8 )

Other comprehensive income (loss), net of tax 24 ( 24 ) ( 8 )

Comprehensive income 2,984 2,700 12,602

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Comprehensive income attributable to Broadcom Inc.

stockholders $ 2,984 $ 2,700 $ 12,251

The accompanying notes are an integral part of these consolidated financial statements.

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Fiscal Year Ended

2020 November 3,

2019 November 4,

(In millions)

Cash flows from operating activities:

Net income $ 2,960 $ 2,724 $ 12,610

Adjustments to reconcile net income to net cash provided by operating activities:

Amortization of intangible assets

Amortization of intangible and right-of-use assets 6,335 5,239 3,566

Depreciation 570 569 515

Stock-based compensation 1,976 2,185 1,227

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Impairment on investment — — 106

Non-cash portion of debt extinguishment loss

Loss on debt extinguishment 169 28 —

Non-cash restructuring, impairment and disposal charges 44 133 21

Non-cash interest expense 108 69 24

Other ( 52 ) ( 132 ) 37

Changes in assets and liabilities, net of acquisitions and disposals:

Trade accounts receivable, net 981 486 ( 652 )

Inventory ( 31 ) 250 417

Accounts payable ( 3 ) ( 42 ) ( 325 )

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Purchases of investments — ( 5 ) ( 249 )

Proceeds from sales and maturities of investments

Other ( 4 ) 3 ( 2 )

Net cash used in investing activities ( 11,109 ) ( 15,422 ) ( 4,674 )

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Repayment of debt ( 18,814 ) ( 16,800 ) ( 973 )

Other borrowings

Dividend and distribution payments on common stock and exchangeable limited partnership units

Other borrowings, net ( 1,285 ) 1,241 —

Payment of dividends and distributions ( 5,534 ) ( 4,235 ) ( 2,998 )

Repurchases of common stock - repurchase program — ( 5,435 ) ( 7,258 )

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Issuance of common stock 276 253 212

Other ( 69 ) ( 36 ) ( 45 )

Net cash provided by (used in) financing activities 1,611 6,488 ( 11,118 )

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CONSOLIDATED STATEMENTS OF EQUITY

Special Preference Preferred Stock

8.00% Mandatory Convertible Preferred Stock

Additional Paid-in Capital

Earnings/(Accumulated Deficit)

Special Preference Preferred Stock 8.00 % Mandatory Convertible Preferred Stock

Common Stock Additional Paid-in Capital Retained

Earnings/(Accumulated Deficit) Accumulated

Comprehensive

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Stockholders’

Noncontrolling Interest

Equity Noncontrolling Interest Total

Shares Amount Shares Par Value Shares Par Value

(In millions)

Balance as of October 29, 2017 22 $ — — $ — 409 $ — $ 20,505 $ ( 129 ) $ ( 91 ) $ 20,285 $ 2,901 $ 23,186

Other comprehensive income

Cumulative effect of accounting change

Dividends to common stockholders

Distribution by Broadcom Cayman L.P.

on exchangeable limited partnership units

Exchange of exchangeable limited partnership units for common stock and cancellation of preferred stock

Common stock issued

Stock-based compensation

Balance as of October 29, 2017

Net income — — — — — — — 12,259 — 12,259 351 12,610

Other comprehensive loss — — — — — — — — ( 8 ) ( 8 ) — ( 8 )

Cumulative effect of accounting change

— — — — — — — ( 237 ) ( 16 ) ( 253 ) ( 13 ) ( 266 )

Fair value of partially vested equity awards assumed in connection with the acquisition of Brocade Communications Systems, Inc.

— — — — — — 8 — — 8 — 8

Dividends to common stockholders

Distribution by Broadcom Cayman L.P.

— — — — — — — ( 2,921 ) — ( 2,921 ) — ( 2,921 )

Distributions by Broadcom Cayman L.P.

on exchangeable limited partnership units — — — — — — — — — — ( 77 ) ( 77 )

Exchange of exchangeable limited partnership units for common stock and redemption of preferred stock due to the Redomiciliation Transaction

( 22 ) — — — 22 — 3,162 — — 3,162 ( 3,162 ) —

Common stock issued

— — — — 9 — 212 — — 212 — 212

Stock-based compensation — — — — — — 1,227 — — 1,227 — 1,227

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Shares repurchased for tax withholdings on vesting of equity awards

— — — — — — ( 56 ) — — ( 56 ) — ( 56 )

Balance as of November 4, 2018 — — — — 408 — 23,285 3,487 ( 115 ) 26,657 — 26,657

Net income — — — — — — — 2,724 — 2,724 — 2,724

Other comprehensive loss

— — — — — — — — ( 24 ) ( 24 ) — ( 24 )

Cumulative effect of accounting change

— — — — — — — 8 ( 1 ) 7 — 7

Fair value of partially vested equity awards assumed in connection with the acquisition of CA, Inc.

— — — — — — 67 — — 67 — 67

Dividends to common stockholders

— — — — — — ( 880 ) ( 3,355 ) — ( 4,235 ) — ( 4,235 )

Dividends to preferred stockholders — — — — — — ( 29 ) — — ( 29 ) — ( 29 )

Common stock issued

— — — — 15 — 253 — — 253 — 253

Preferred stock issued, net — — 4 — — — 3,679 — — 3,679 — 3,679

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Shares repurchased for tax withholdings on vesting of equity awards

— — — — ( 4 ) — ( 983 ) — — ( 983 ) — ( 983 )

Balance as of November 3, 2019 — — 4 — 398 — 25,081 — ( 140 ) 24,941 — 24,941

Net income — — — — — — — 2,960 — 2,960 — 2,960

Other comprehensive income — — — — — — — — 24 24 — 24

Cumulative effect of accounting change

— — — — — — — ( 10 ) 8 ( 2 ) — ( 2 )

Fair value of partially vested equity awards assumed in connection with an acquisition — — — — — — 1 — — 1 — 1

Dividends to common stockholders

— — — — — — ( 2,582 ) ( 2,653 ) — ( 5,235 ) — ( 5,235 )

Dividends to preferred stockholders

— — — — — — — ( 297 ) — ( 297 ) — ( 297 )

Common stock issued

— — — — 12 — 276 — — 276 — 276

Stock-based compensation — — — — — — 1,976 — — 1,976 — 1,976

Shares repurchased for tax withholdings on vesting of equity awards

— — — — ( 3 ) — ( 770 ) — — ( 770 ) — ( 770 )

Balance as of November 1, 2020 — $ — 4 $ — 407 $ — $ 23,982 $ — $ ( 108 ) $ 23,874 $ — $ 23,874

The accompanying notes are an integral part of these consolidated financial statements.

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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 have a history of innovation and offer thousands of products that are used in end products such as enterprise and data center networking, 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.

We have a history of innovation in the semiconductor industry and offer thousands of products that are used in end products such as enterprise and data center networking, 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 enable customers to plan, develop, automate, manage and secure applications across mainframe, distributed, mobile and cloud platforms.

We offer a cyber security solutions portfolio, including endpoint, network, information and identity security solutions.

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.

Basis of Presentation

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The first quarter of our fiscal year 2020 ended on February 2, 2020, the second quarter ended on May 3, 2020 and the third quarter ended on August 2, 2020.

Our fiscal year ended November 3, 2019 (“fiscal year 2019”) was a 52-week fiscal year.

Our fiscal year ended November 4, 2018 (“fiscal year 2018”) was a 53-week fiscal year, with the first fiscal quarter containing 14 weeks.

Our fiscal year ended October 29, 2017 (“fiscal year 2017 ”) was a 52-week fiscal year.

On November 5, 2018 (the “CA Acquisition Date”), we acquired CA, Inc.

On November 4, 2019, we completed the purchase of certain assets and assumption of certain liabilities of the Symantec Corporation Enterprise Security business (the “Symantec Business”).

On November 5, 2018, we acquired CA, Inc.

On November 17, 2017, we acquired Brocade Communications Systems, Inc.

The accompanying consolidated financial statements include the results of operations of CA and Brocade commencing as of their respective acquisition dates.

The accompanying consolidated financial statements include the results of operations of Symantec Business, CA and Brocade commencing as of their respective acquisition dates.

“Acquisitions” for additional information.

Subsequent to our acquisition of CA (the “CA Merger”), we changed our organizational structure, resulting in three reportable segments:

semiconductor solutions, infrastructure software and intellectual property (“IP”) licensing.

Prior period segment results have been recast to conform to the current presentation.

See Note 12 .

Certain reclassifications have been made to the consolidated statement of cash flows for fiscal year 2019.

These reclassifications have no impact on previously reported operating, investing or financing cash flows.

During the first quarter of fiscal year 2020, we changed our organizational structure, resulting in two reportable segments:

semiconductor solutions and infrastructure software.

Reclassifications have also been made to segment operating income.

Segment results from prior years have been recast to conform to the current presentation.

“Segment Information” for additional information.

These reclassifications have no impact on previously reported consolidated operating income.

The accompanying consolidated financial statements include the accounts of Broadcom and its subsidiaries and have been prepared in accordance with generally accepted principles in the United States (“GAAP”).

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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 from those estimates, and such differences could affect the results of operations reported in future periods.

The inputs into certain of these estimates and assumptions include the consideration of the economic impact of the COVID-19 pandemic.

Actual results could differ materially from these estimates, and such differences could affect the results of operations reported in future periods.

As the impact of the COVID-19 pandemic continues to develop, many of these estimates could require increased judgment and carry a higher degree of variability and volatility, and may change materially in future periods.

Cash and cash equivalents.

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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 at November 3, 2019 and November 4, 2018 were $ 178 million and $ 161 million , respectively.

Allowances for sales returns and distributor credit allowances as of November 1, 2020 and November 3, 2019 were $ 174 million and $ 178 million, respectively.

Concentrations of credit risk and significant customers.

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Retirement benefits.

Post-retirement benefit plan assets and liabilities are estimates of benefits that we expect to pay to eligible retirees.

We consider various factors in determining the value of our post-retirement plan assets and liabilities, including the number of employees that we expect to receive benefits and other actuarial assumptions.

For defined benefit pension plans, we consider various factors in determining our respective pension liabilities and net periodic benefit costs, 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 retirement benefit plans differ from our current assumptions, the benefit obligations may be over- or under-valued.

Post-retirement benefit plan assets and liabilities are estimates of benefits that we expect to pay to eligible retirees.

We consider various factors in determining the value of our post-retirement benefit plan assets and liabilities, including the number of employees that we expect to receive benefits and other actuarial assumptions.

The key benefit plan assumptions are the discount rate and the expected rate of return on plan assets.

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For the non-U.S.

plans, we set assumptions specific to each country.

We have elected to measure post-retirement benefit plan and defined benefit pension plan assets and liabilities as of October 31, which is the month-end that is closest to our fiscal year-ends.

set assumptions specific to each country.

We have elected to measure defined benefit pension plan and post-retirement benefit plan assets and liabilities as of October 31, which is the month end that is closest to our fiscal year end.

Derivative instruments.

We are subject to foreign currency risks for transactions denominated in foreign currencies, primarily the Singapore Dollar, Israeli Shekel, Euro, Japanese Yen and Indian Rupee.

Therefore, we enter into foreign exchange forward contracts to manage financial exposures resulting from the changes in the exchange rates of these foreign currencies.

These contracts are designated at inception as hedges of the related foreign currency exposures, which include committed and forecasted revenue and expense transactions that are denominated in currencies other than the functional currency of the subsidiary which has the exposure.

We exclude time value from the measurement of effectiveness.

To achieve hedge accounting, contracts must reduce the foreign currency exchange rate risk otherwise inherent in the amount and duration of the hedged exposures and comply with established risk management policies;

our hedging contracts generally mature within three months .

We use derivative financial instruments, primarily foreign exchange forward contracts, to manage exposure to foreign exchange risk.

Our forward contracts generally mature within three months .

We do not use derivative financial instruments for speculative or trading purposes.

We designate our forward contracts as either cash flow or fair value hedges.

All derivatives are recognized on the consolidated balance sheets at their fair values based on Level 2 inputs as defined in the fair value hierarchy.

The accounting for gains and losses resulting from changes in fair value depends on the use of the derivative and whether it is designated and qualifies for hedge accounting.

For derivative instruments that are designated and qualify as fair value hedges, changes in value of the instruments are recognized in net income in the current period.

Such hedges are recognized in net income and are offset by the changes in fair value of the underlying assets or liabilities being hedged.

For derivative instruments that are designated and qualify as cash flow hedges, changes in the value of the effective portion of the derivative instrument are recognized in accumulated other comprehensive loss, a component of stockholders’ equity.

These amounts are then reclassified and recognized in net income when either the forecasted transaction affects earnings or it becomes probable the forecasted transaction will not occur.

Changes in the fair value of the ineffective portion of derivative instruments are recognized in net income in the current period, which have not been material to date.

Changes in the value of derivative instruments not designated as hedges are recognized in other income, net, in our consolidated statements of operations.

We did not have any outstanding foreign exchange forward contracts as of November 3, 2019 or November 4, 2018 .

Outstanding derivatives are recognized as either assets or liabilities at their fair values based on Level 2 inputs as defined in the fair value hierarchy.

The accounting for gains and losses resulting from changes in fair value depends on the use of the derivative and its hedging designation.

For derivative instruments designated as fair value hedges, the changes in fair value are recognized in other income, net in the periods of change, and are offset by the changes in fair value of the hedged items.

For derivative instruments designated as cash flow hedges, the changes in fair value of the effective portion are initially recognized in other comprehensive income (loss), net of tax in the period of change, and are subsequently reclassified and recognized in other income, net when either the hedged transactions affect earnings or it becomes probable that the hedged transactions will not occur.

The changes in the fair value of the ineffective portion of the derivative instruments are recognized in other income, net in the period of change, which have not been material to date.

For derivative instruments not designated as hedges, the changes in fair value are recognized in other income, net in the period of change.

We did not have any outstanding derivative instruments as of November 1, 2020 or November 3, 2019.

Property, plant and equipment.

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We use the straight-line method of depreciation for all property, plant and equipment.

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.

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.

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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 an active market with sufficient volume and frequency of transactions.

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.

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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 cost method investments, 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.

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.

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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 products requirements, which may fluctuate based on product mix.

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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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.

Our subscriptions and services revenue consists of sales and royalties from software arrangements, support services, professional services, transfer of intellectual property (“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.

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We believe that for the majority of software arrangements, customers derive significant benefit from the ongoing support we provide.

Our CA-related 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 a ratable revenue recognition of software revenue over the contractual period.

The majority 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.

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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 which we enter into with our customers:

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.

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We may modify contracts to offer customers additional products or services.

Each of the additional products and services are generally considered distinct from those products or services transferred to the customer before the modification.

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 on a combination of both based on the nature of modification.

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.

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Shipping and handling costs.

Our shipping and handling costs charged to customers are included in net revenue and the associated expense is included in total cost of revenue in the consolidated statements of operations for all periods presented.

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 cost.

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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.

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 in the period such determination is made.

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.

We account for uncertainty in income taxes in accordance with the applicable accounting guidance on income taxes.

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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.

Diluted shares outstanding include the dilutive effect of in-the-money stock options, unvested RSUs and ESPP rights (together referred to as “equity awards”), as well as convertible preferred stock and LP Units.

Diluted shares outstanding include the dilutive effect of unvested RSUs, in-the-money stock options, and ESPP rights (together referred to as “equity awards”), as well as convertible preferred stock and LP Units.

Potentially dilutive shares whose effect would have been antidilutive are excluded from the computation of diluted net income per share.

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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.

Reclassifications.

Certain reclassifications have been made to the prior period consolidated balance sheet, statements of operations, statements of cash flows and statements of equity.

These reclassifications have no impact on the previously reported total stockholders’ equity, net income or net cash activities.

Recently Adopted Accounting Guidance

In the first quarter of fiscal year 2019, we adopted the Financial Accounting Standards Board (“FASB”) guidance issued in March 2017 that requires an employer to present the service cost component of net periodic benefit cost in the same income statement line item as other employee compensation costs arising from services rendered during the period.

Other components of the net periodic benefit cost are presented separately from the service cost component.

We adopted the guidance using a permitted practical expedient that uses the amounts disclosed in the pension and other post-retirement benefit plans note for the prior comparative periods as the estimation basis for applying the retrospective presentation requirements.

The adoption did not have a material impact on the consolidated statements of operations presented herein.

In the first quarter of fiscal year 2019, we adopted the guidance issued in January 2016 that changes the accounting for equity investments, financial liabilities under the fair value option, and the presentation and disclosure requirements for financial instruments.

This guidance requires the remeasurement of equity investments not accounted for under the equity method to be measured at fair value and any changes in fair value recognized in net income.

The guidance allows for election of a measurement alternative for equity securities without readily determinable fair values to be measured at cost less impairment, adjusted for observable price changes.

We adopted this guidance using the modified retrospective method for our marketable equity securities and a prospective approach for non-marketable equity securities using the measurement alternative.

Upon adoption, we recognized an $ 8 million increase to retained earnings and a $ 1 million increase to accumulated other comprehensive loss.

During the fiscal year ended November 3, 2019, we also recognized $ 145 million of unrealized gains on equity securities within other income, net in our consolidated statements of operations.

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (“Topic 606”).

We adopted Topic 606 effective November 5, 2018 using the modified retrospective method.

Reporting periods prior to the adoption of the new revenue standard are presented in accordance with Accounting Standards Codification 605, Revenue Recognition (“Topic 605”), while reporting periods after adoption are presented in accordance with the new revenue standard.

The cumulative effect adjustment as of November 5, 2018 to retained earnings was not significant.

Recent Accounting Guidance Not Yet Adopted

In February 2016, the FASB issued guidance related to the accounting for leases, which among other things, requires a lessee to recognize lease assets and lease liabilities on the balance sheet for operating leases.

This guidance will be effective for the first quarter of our fiscal year ending November 1, 2020 (“fiscal year 2020”).

We will adopt this guidance using the optional transition method and will not restate comparative prior periods.

We are finalizing the implementation of related systems, policies, processes and internal controls to comply with this guidance.

Based on our lease portfolio as of November 3, 2019 , we expect the adoption of the new leasing guidance to result in recognition of operating right-of-use assets and corresponding liabilities on our consolidated balance sheet within a range of $ 500 million to $ 600 million , primarily related to real estate.

Recent Accounting Guidance

In February 2016, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) 2016-02, Leases (“Topic 842”), which requires a lessee to recognize lease assets and lease liabilities on the balance sheet for operating leases.

At the beginning of fiscal year 2020, we adopted Topic 842 using the optional adoption method, whereby no adjustment to the financial statements of comparative periods is required.

We elected practical expedients which allowed us to account for the lease and non-lease components as a single component.

In addition, we elected not to reassess whether any expired or existing contracts contain leases and the corresponding lease classification and initial direct costs.

The practical expedients were applied across our lease portfolios.

Upon adoption, we recorded net ROU assets of $ 545 million and lease liabilities of $ 591 million and there were no cumulative effect adjustments as of November 4, 2019.

The net ROU assets included the effect of reclassifying deferred rent and a portion of facilities-related restructuring reserves as an offset in accordance with the transition guidance.

The standard did not materially affect the consolidated statement of operations and the consolidated statement of cash flows.

“Leases” for further information.

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform .

This guidance provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships and other transactions, subject to meeting certain criteria, that reference the London Interbank Offered Rate (“LIBOR”) or another reference rate expected to be discontinued because of reference rate reform.

The amendments in this ASU were effective upon issuance and may be applied through December 31, 2022.

This guidance had no impact on our contracts, hedging relationships and other transactions as of November 1, 2020.

Revenue from Contracts with Customers

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“Segment Information”.

The following table presents revenue disaggregated by type of revenue and by region:

The following tables present revenue disaggregated by type of revenue and by region for the periods presented:

Fiscal Year Ended November 1, 2020

Europe, the Middle East and Africa

Americas Asia Pacific Europe, the Middle East and Africa Total

(In millions)

Products $ 1,775 $ 14,442 $ 1,218 $ 17,435

Subscriptions and services (a)

4,059 881 1,513 6,453

Total $ 5,834 $ 15,323 $ 2,731 $ 23,888

Fiscal Year Ended November 3, 2019

Americas Asia Pacific Europe, the Middle East and Africa Total

(In millions)

Products $ 2,023 $ 14,857 $ 1,237 $ 18,117

Subscriptions and services (a)

3,126 374 980 4,480

Total $ 5,149 $ 15,231 $ 2,217 $ 22,597

________________________________

(a) Subscriptions and services predominantly includes software licenses with termination for convenience clauses.

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 on the geographic shipment or delivery location specified by distributors, OEMs, contract manufacturers, channel partners, or software customers.

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 on the geographic shipment 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 for the periods indicated below were as follows:

Contract Assets

Contract Liabilities

Contract assets and contract liabilities balances were as follows:

Contract Assets Contract Liabilities

(In millions)

Opening balance November 5, 2018 (a)

Closing balance November 3, 2019

Opening balance November 3, 2019 $ 259 $ 1,808

Closing balance November 1, 2020 (a)

$ 158 $ 3,443

(a) We adopted Topic 606 immediately prior to the CA Merger.

Accordingly, the opening balance does not include contract assets or contract liabilities associated with CA.

________________________________

(a) Contract liabilities associated with the Symantec Business were included in the balance as of November 1, 2020.

Changes in our contract assets and contract liabilities primarily result from the timing difference between our performance and the customer’s payment.

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Contract liabilities include amounts billed or collected and advanced payments on contracts or arrangements which may include termination for convenience provisions.

The amount of revenue recognized during the fiscal year ended November 3, 2019 that was included in the contract liabilities balance as of November 5, 2018 was $ 200 million .

The amount of revenue recognized during fiscal year 2020 that was included in the contract liabilities balance as of November 3, 2019 was $ 1,450 million.

The amount of revenue recognized during fiscal year 2019 that was included in the contract liabilities balance as of November 5, 2018, the beginning of our fiscal year 2019, was $ 200 million.

Remaining Performance Obligations

Revenue allocated to remaining performance obligations represents the transaction price allocated to the performance obligations that are unsatisfied, or partially unsatisfied.

It includes unearned revenue and amounts that will be invoiced and recognized as revenue in future periods and does not include CA contracts where the customer is not committed.

The customer is not considered committed when termination for convenience without payment of a substantive penalty exists.

This has been extended to all CA customers, 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 and usage-based royalties promised in exchange for a license of intellectual property.

Because the substantial majority of our customer contracts allow our customers to terminate for convenience or have an original duration of one year or less, the total amount of the transaction price allocated to remaining performance obligations as of November 3, 2019 was not significant.

Since our customers generally do not exercise their termination for convenience rights and the majority of the contracts we execute for products, as well as subscriptions and services, have a duration of one year or less, our remaining performance obligations are not indicative of revenue for future periods.

Contract Costs

We have applied the practical expedient to expense commission costs as incurred for costs to obtain a contract when the amortization period would have been one year or less.

As a result, no commission costs are capitalized.

We recognize an asset for costs incurred to fulfill a contract that are not within the scope of other accounting literature.

We have not incurred any such costs and, as a result, no costs to fulfill a contract have been capitalized.

Topic 606 Adoption

We applied Topic 606 using the modified retrospective method for all contracts not completed as of the date of adoption.

For contracts that were modified before the effective date, we reflected the aggregate effect of all modifications when identifying the performance obligations and allocating the transaction price at transition, which did not have a material effect on the adjustment to retained earnings as of November 5, 2018.

We adopted Topic 606 immediately prior to the CA Merger.

Accordingly, the adoption adjustments presented below excluded CA.

As a result of applying the modified retrospective method, the following adjustments were made to selected consolidated balance sheet line items as of November 5, 2018:

Balance Sheet

Ending Balance as of November 4, 2018

Adjustments Due to Topic 606

Opening Balance as of November 5, 2018

It includes unearned revenue and amounts that will be invoiced and recognized as revenue in future periods and does not include contracts for subscriptions and 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.

The majority of our customer software contracts include termination for convenience clauses without a substantive penalty and are accordingly deemed to not be committed.

Because the substantial majority of our customer software contracts allow our customers to terminate for convenience without a substantive penalty or have an original duration of one year or less, the total amount of the transaction price allocated to remaining performance obligations as of November 1, 2020 was not material.

Since the majority of our software contracts are not deemed to be committed, although our customers generally do not exercise their termination for convenience rights, and the majority of the contracts we execute for products, as well as subscriptions and services, have a duration of one year or less, our remaining performance obligations are not indicative of revenue for future periods.

Acquisition of the Symantec Corporation Enterprise Security Business

On November 4, 2019 (the “Symantec Acquisition Date”), we completed the purchase of the Symantec Business, which was an established leader in cyber security, for $ 10.7 billion in cash (the “Symantec Asset Purchase”).

We acquired the Symantec Business to expand our footprint of mission critical infrastructure software with our existing customer base.

The Symantec Business includes a deep and broad mix of products, services and solutions, unifying cloud and on-premises security to provide advanced threat protection and information protection across endpoints, network, email and cloud applications.

We financed this acquisition with the net proceeds from borrowings under the November 2019 Term Loans, as defined in Note 10.

“Borrowings”.

The following table presents our allocation of the total purchase price:

(In millions)

Trade accounts receivable, net

Other current assets

Current assets $ 273

Goodwill 6,638

Intangible assets 5,411

Other long-term assets 92

Other current liabilities

Total assets acquired 12,414

Current liabilities ( 1,127 )

Other long-term liabilities ( 587 )

Impact of New Revenue Guidance on Net Revenue

The following table compares net revenue for the period presented to the pro forma amounts had the previous guidance been in effect.

No other amounts in the consolidated statements of operations for the fiscal year ended November 3, 2019 or in the consolidated balance sheet as of November 3, 2019 were significantly affected by the new revenue guidance.

Fiscal Year Ended November 3, 2019

Statement of Operations

Pro forma as if the previous accounting was in effect

Effect of Change

Total liabilities assumed ( 1,714 )

Fair value of net assets acquired $ 10,700

Goodwill is primarily attributable to the assembled workforce and anticipated synergies and economies of scale expected from the integration of the Symantec Business.

The synergies include certain cost savings, operating efficiencies, and other strategic benefits projected to be achieved as a result of the Symantec Asset Purchase.

Substantially all goodwill is deductible for tax purposes.

Current assets and current liabilities included amounts held-for-sale related to the acquired Symantec Cyber Security Services (“CSS”) business.

The CSS business was not aligned with our acquisition-date strategic objectives and was sold on April 30, 2020.

We do not have any material continuing involvement with this business and have presented its results in discontinued operations.

Our results of continuing operations for fiscal year 2020 included $ 1,610 million of net revenue attributable to the Symantec Business.

It was impracticable to determine the effect on net income attributable to the Symantec Business as we had integrated the Symantec Business into our ongoing operations during the year.

The results of operations of the Symantec Business were included in our infrastructure software segment.

Transaction costs related to the Symantec Asset Purchase of $ 110 million were included in selling, general and administrative expense for fiscal year 2020.

Intangible Assets

Fair Value Weighted-Average Amortization Periods

(In millions) (In years)

Developed technology $ 2,900 5

Customer contracts and related relationships 2,410 5

Trade name 90 6

Order backlog 11 3

Total identified finite-lived intangible assets $ 5,411

Developed technology relates to products used for cyber security solutions, including data loss prevention, endpoint protection, and web, email and cloud security solutions.

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 the Symantec Business.

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 “Symantec” 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.

Order backlog represents business under existing contractual obligations.

The fair value of backlog was determined using the multi-period excess earnings method under the income approach based on expected operating cash flows from future contractual revenue.

The economic useful life was determined based on the expected life of the backlog and the cash flows over the forecast period.

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 Symantec Acquisition Date.

Unaudited Pro Forma Information

The following unaudited pro forma financial information presents combined results of operations for the periods presented, as if we had completed the Symantec Asset Purchase as of the beginning of fiscal year 2019.

The unaudited pro forma information includes adjustments to amortization and depreciation for intangible assets and property, plant and equipment acquired, adjustments to interest expense for the additional indebtedness incurred to complete the acquisition, restructuring charges related to the acquisition and transaction costs.

For the fiscal year 2019, non-recurring pro forma adjustments directly attributable to the Symantec Asset Purchase included transaction costs of $ 136 million.

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 2019 or of the results of our future operations of the combined business.

(In millions)

Subscriptions and services

Total net revenue

Pro forma net revenue $ 23,264 $ 24,227

Pro forma net income attributable to common stock $ 2,368 $ 1,265

Other Acquisitions

During the fiscal year ended November 1, 2020, we also completed three other acquisitions qualifying as business combinations for total consideration of $ 201 million, of which $ 109 million was allocated to goodwill and $ 46 million was allocated to intangible assets.

Acquisition of CA, Inc.

On November 5, 2018 , we acquired CA, which was a leading provider of information technology management software and solutions.

On November 5, 2018 (the “CA Acquisition Date”), we completed our acquisition of CA (the “CA Merger”), which was a leading provider of information technology (“IT”) management software and solutions.

We acquired CA to enhance our infrastructure software capabilities.

We financed the CA Merger with the net proceeds from borrowings under the Original 2019 Term Loans, as defined in Note 9 .

“ Borrowings ,” as well as with cash on hand of the combined companies.

We financed the CA Merger with the net proceeds from $ 18 billion of term loans, as well as with cash on hand of the combined companies.

Purchase Consideration

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Current assets $ 1,665

Goodwill 9,796

Intangible assets 12,045

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Intangible Assets

Weighted-Average Amortization Periods

(In millions)

Fair Value Weighted-Average Amortization Periods

(In millions) (In years)

Developed technology $ 4,957 6

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Total identified finite-lived intangible assets 11,853

IPR&D 192 N/A

Total identified intangible assets $ 12,045

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The following table summarizes the details of IPR&D by category as of the CA Acquisition Date:

Percentage of Completion

Estimated Cost to Complete

Expected Completion Date

Description IPR&D Percentage of Completion Estimated Cost to Complete Expected Completion Date

(By Fiscal Year)

(Dollars in millions)

Mainframe $ 178 67 % $ 138 2019

Enterprise Solutions $ 14 63 % $ 12 2019

Discount rates of 12 % and 14 % were applied to the projected cash flows to reflect the risk related to these mainframe and enterprise solutions IPR&D projects, respectively.

As of November 3, 2019, these IPR&D projects are expected to be fully placed in service during the first half of fiscal year 2020.

During fiscal year 2020, these IPR&D projects were completed and placed in service.

Unaudited Pro Forma Information

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________________________________

* Pro forma net revenue was presented under Topic 606 for fiscal year 2019 and under Topic 605 for fiscal year 2018.

* Pro forma net revenue was presented under ASU 2014-09, Revenue from Contracts with Customers, for fiscal year 2019 and under Accounting Standards Codification 605, Revenue Recognition (“Topic 605”), for fiscal year 2018.

Acquisition of Brocade

On November 17, 2017 (the “Brocade Acquisition Date”), we acquired Brocade (the “Brocade Merger”).

Brocade was a supplier of networking hardware, software and services, including Fibre Channel Storage Area Network (“FC SAN”) solutions and Internet Protocol Networking (“IP Networking”) solutions.

We acquired Brocade to enhance our position as a provider of enterprise storage connectivity solutions, broaden our portfolio for enterprise storage, and to increase our ability to address the evolving needs of our original equipment manufacturer (“OEM”) customers.

Brocade was a supplier of networking hardware, software and services, including FC SAN products and Internet Protocol Networking (“IP Networking”) solutions.

We financed the Brocade Merger with a portion of the net proceeds from the issuance of the 2017 Senior Notes, as defined in Note 10.

“ Condensed Consolidating Financial Information ,” as well as with cash on hand.

“Borrowings” as well as with cash on hand.

Purchase Consideration

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Current assets $ 1,297

Goodwill 2,187

Intangible assets 3,396

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Intangible Assets

Weighted-Average Amortization Periods

(In millions)

Fair Value Weighted-Average Amortization Periods

(In millions) (In years)

Developed technology $ 2,925 10

2 unchanged sentences

Total identified finite-lived intangible assets 3,241

IPR&D 155 N/A

Total identified intangible assets $ 3,396

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The following table summarizes the details of IPR&D by category at the Brocade Acquisition Date:

Percentage of Completion

Estimated Cost to Complete

Expected Completion Date

Description IPR&D Percentage of Completion Estimated Cost to Complete Expected Completion Date

(By Fiscal Year)

(Dollars in millions)

Directors $ 64 72 % $ 45 2019

Switches $ 50 81 % $ 21 2018

Embedded $ 31 74 % $ 22 2019

Networking software $ 10 73 % $ 27 2018

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The discount rate represented a premium of 1 % over the weighted-average cost of capital to reflect the higher risk and uncertainty of the cash flows for IPR&D relative to the overall businesses.

As of November 3, 2019, these IPR&D projects were substantially complete and placed in service.

During fiscal year 2020, these IPR&D projects were completed and placed in service.

Unaudited Pro Forma Information

The following unaudited pro forma financial information presents combined results of operations for each of the periods presented, as if Brocade had been acquired as of the beginning of fiscal year 2017.

The following unaudited pro forma financial information presents combined results of operations for the period presented, as if Brocade had been acquired as of the beginning of fiscal year 2017.

The unaudited pro forma information includes adjustments to amortization and depreciation for intangible assets and property, plant and equipment acquired, adjustments to stock-based compensation expense, the purchase accounting effect on inventory acquired, restructuring charges related to the acquisition and transaction costs.

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________________________________

* Pro forma net revenue was presented under Topic 605 for fiscal years 2018 and 2017.

* Pro forma net revenue was presented under Topic 605 for fiscal year 2018.

Supplemental Financial Information

Cash Equivalents

Cash equivalents included $ 850 million and $ 1,406 million of time deposits as of November 3, 2019 and November 4, 2018 , respectively.

As of November 3, 2019 and November 4, 2018 , cash equivalents also included $ 649 million and $ 202 million , respectively, of money-market funds.

Cash equivalents included $ 2,471 million and $ 850 million of time deposits and $ 790 million and $ 649 million of money-market funds as of November 1, 2020 and November 3, 2019, respectively.

For time deposits, carrying value approximates fair value due to the short-term nature of the instruments.

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Accounts Receivable Factoring

We sell certain of our trade accounts receivable on a non-recourse basis to third-party financial institutions pursuant to factoring agreements.

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 agreements were $ 1,151 million and $ 362 million during fiscal years 2019 and 2018 , respectively.

Total trade accounts receivable sold under the factoring arrangements were $ 3,723 million, $ 1,151 million and $ 362 million during fiscal years 2020, 2019 and 2018, respectively.

Factoring fees for the sales of receivables were recorded in other income, net and were not material for any period presented.

2020 November 3,

(In millions)

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Property, Plant and Equipment, Net

2020 November 3,

(In millions)

Land $ 194 $ 189

Construction in progress 113 85

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Depreciation expense was $ 570 million, $ 569 million and $ 515 million for fiscal years 2020, 2019, and 2018, respectively.

As of November 3, 2019 and November 4, 2018 , we had $ 35 million and $ 22 million , respectively, of unpaid purchases of property, plant and equipment included in accounts payable and other current liabilities.

As of November 1, 2020 and November 3, 2019, $ 27 million and $ 35 million, respectively, of unpaid purchases of property, plant and equipment were included in accounts payable.

Amounts reported as unpaid purchases are presented as cash outflows from investing activities for purchases of property, plant and equipment in the consolidated statements of cash flows in the period in which they are paid.

Other Current Assets

2020 November 3,

(In millions)

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Other Current Liabilities

2020 November 3,

(In millions)

1 unchanged sentence

Tax liabilities 440 229

Interest payable

Accrued rebates

Other (miscellaneous) 771 886

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Other Long-Term Liabilities

2020 November 3,

(In millions)

Unrecognized tax benefits (a) (b)

Tax indemnification liability

Unrecognized tax benefits $ 3,185 $ 3,269

Contract liabilities 823 307

Other (miscellaneous) 1,418 2,037

Total other long-term liabilities $ 5,426 $ 5,613

________________________________

(a) Refer to Note 11 .

“ Income Taxes ” for additional information regarding these balances.

(b) Includes accrued interest and penalties.

Other Income, Net

2020 2019 2018

(In millions)

Gain (loss) on investment

Gain from lapse of indemnification $ 116 $ — $ —

Other income 56 18 27

Interest income 53 98 114

Gains on investments 31 145 3

Other expense ( 50 ) ( 35 ) —

Other income, net $ 206 $ 226 $ 144

Other income includes gains (losses) on foreign currency remeasurement and other miscellaneous items.

Other income includes gains on sales of businesses and other miscellaneous items.

We have entered into operating and finance leases for our facilities, data centers and certain equipment.

Operating lease expense was $ 106 million, $ 244 million and $ 233 million for fiscal years 2020, 2019 and 2018, respectively.

Finance lease expense was $ 14 million for fiscal year 2020.

Other information related to leases was as follows:

Fiscal Year Ended

(In millions)

Cash paid for operating leases included in operating cash flows $ 125

ROU assets obtained in exchange for operating lease liabilities $ 682

ROU assets obtained in exchange for finance lease liabilities $ 74

Weighted-average remaining lease term – operating leases (In years) 10

Weighted-average remaining lease term – finance leases (In years) 4

Weighted-average discount rate – operating leases 3.80 %

Weighted-average discount rate – finance leases 3.33 %

Supplemental balance sheet information related to leases was as follows:

Classification on the Consolidated Balance Sheet November 1,

(In millions)

ROU assets - operating leases Other long-term assets $ 589

ROU assets - finance leases Property, plant and equipment, net $ 62

Short-term lease liabilities - operating leases Other current liabilities $ 100

Long-term lease liabilities - operating leases Other long-term liabilities $ 527

Short-term lease liabilities - finance leases Current portion of long-term debt $ 20

Long-term lease liabilities - finance leases Long-term debt $ 48

The maturities of lease liabilities were as follows:

Operating Leases Finance Leases

(In millions)

2021 $ 120 $ 21

Thereafter 356 —

Total undiscounted liabilities 773 72

interest ( 146 ) ( 4 )

Present value of lease liabilities $ 627 $ 68

As of November 3, 2019, future minimum lease payments under non-cancelable lease liabilities prior to our adoption of Topic 842 were as follows:

(In millions)

Thereafter 390

Total minimum lease payments $ 800

Goodwill and Intangible Assets

Wired Infrastructure

Wireless Communications

Enterprise Storage

Industrial & Other

Semiconductor Solutions

Infrastructure Software

Wired Infrastructure Wireless Communications Enterprise Storage Industrial & Other Semiconductor Solutions Infrastructure Software IP Licensing Total

(In millions)

Balance as of October 29, 2017

Balance as of November 4, 2018 $ 17,705 $ 5,945 $ 3,112 $ 151 $ — $ — $ — $ 26,913

Reallocation due to change in segments ( 17,705 ) ( 5,945 ) ( 3,112 ) ( 151 ) 25,924 980 9 —

Acquisitions — — — — 5 9,796 — 9,801

Balance as of November 3, 2019 — — — — 25,929 10,776 9 36,714

During the first quarter of fiscal year 2019, we changed our organizational structure resulting in three reportable segments:

semiconductor solutions, infrastructure software and IP licensing.

As a result, we have reassigned the goodwill balance to reflect our new segment structure using a relative fair value allocation approach.

Under this approach, the fair value of each segment was determined using a combination of the income approach and the market approach, and was compared to the fair value of the total business immediately prior to the reorganization to arrive at the reassigned goodwill balance.

Reallocation due to change in segments — — — — 9 — ( 9 ) —

Acquisitions — — — — 35 6,712 — 6,747

Sale of business — — — — ( 14 ) — — ( 14 )

Balance as of November 1, 2020 $ — $ — $ — $ — $ 25,959 $ 17,488 $ — $ 43,447

In fiscal years 2020 and 2019, we reassigned goodwill balances among our reportable segments to reflect changes in our segment structure.

The fair value of each segment, generally determined using a combination of the income approach and the market approach, is compared to our total fair value immediately prior to the reorganization to reassign goodwill.

During the fourth quarter of fiscal years 2020, 2019, and 2018, we completed our annual impairment assessments and concluded that goodwill was not impaired in any of these years.

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Gross Carrying

Amount Accumulated

Amortization Net Book

(In millions)

3 unchanged sentences

Order backlog 2,579 ( 1,836 ) 743

Trade names 797 ( 322 ) 475

Other 252 ( 117 ) 135

Intangible assets subject to amortization 36,136 ( 19,379 ) 16,757

IPR&D 25 — 25

Total $ 36,161 $ ( 19,379 ) $ 16,782

As of November 3, 2019:

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Customer contracts and related relationships 5,978 ( 1,787 ) 4,191

Order backlog 2,569 ( 908 ) 1,661

Trade names 712 ( 247 ) 465

Other 241 ( 89 ) 152

Intangible assets subject to amortization 30,435 ( 13,144 ) 17,291

IPR&D 263 — 263

Total $ 30,698 $ ( 13,144 ) $ 17,554

Based on the amount of intangible assets subject to amortization at November 1, 2020, the expected amortization expense for each of the next five fiscal years and thereafter was as follows:

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(In millions)

Thereafter 718

Total $ 16,757

The weighted-average amortization periods remaining by intangible asset category were as follows:

Amortizable intangible assets:

2020 November 3,

Purchased technology 5 5

1 unchanged sentence

Order backlog 2 3

Trade names 9 10

Net Income Per Share

2020 2019 2018

(In millions, except per share data)

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Income from continuing operations attributable to common stock

Loss from discontinued operations, net of income taxes

Loss from discontinued operations, net of income taxes, attributable to noncontrolling interest

Loss from discontinued operations, net of income taxes, attributable to common stock

2,664 2,707 12,277

Loss from discontinued operations, net of income taxes, attributable to common stock (a)

( 1 ) ( 12 ) ( 18 )

Net income attributable to common stock $ 2,663 $ 2,695 $ 12,259

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Loss per share from discontinued operations

— ( 0.03 ) ( 0.04 )

Net income per share $ 6.62 $ 6.77 $ 29.33

2 unchanged sentences

Loss per share from discontinued operations

— ( 0.03 ) ( 0.04 )

Net income per share $ 6.33 $ 6.43 $ 28.44

Potentially dilutive shares excluded from the calculation of diluted income per share because their effect would have been antidilutive:

Preferred Stock (a)

Preferred Stock (b)

________________________________

(a) Represents common stock shares issuable upon the conversion of Mandatory Convertible Preferred Stock, as defined in Note 10 .

(a) Fiscal year 2018 excludes $ 1 million of loss from discontinued operations, net of income taxes, attributable to noncontrolling interest.

(b) Represents common stock shares issuable upon the conversion of Mandatory Convertible Preferred Stock, as defined in Note 11.

“Stockholders’ Equity.”

(b) Represents common stock shares issuable upon the exchange of LP Units prior to the effective time of the Mandatory Exchange (refer to Note 10 .

(c) Represents common stock shares issuable upon the exchange of LP Units prior to the effective time of the Mandatory Exchange (refer to Note 11.

“Stockholders’ Equity” for additional information).

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Pension and Post-Retirement Benefit Plans

Defined Benefit Plans.

defined benefit pension plans include a management plan and a represented plan.

Benefits under the management plan are provided under either an adjusted career-average-pay program or a cash-balance program.

Benefits under the represented plan are based on a dollar-per-month formula.

Benefit accruals under the management plan were frozen in 2009.

Defined Benefit Pension Plans.

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 represented plan.

We also have a 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 management plan.

Effective December 31, 2018, the represented plan was merged into the management plan.

The plan merger did not impact any of the respective plan provisions for either management or represented plan participants.

We also have pension plans covering certain non-U.S.

There are no active participants under the dollar-per-month program.

We also have defined benefit pension plans for certain employees in Austria, France, Germany, India, Israel, Italy, Japan and Taiwan.

Eligibility is generally determined based on the terms of our plans and local statutory requirements.

Post-Retirement Benefit Plans.

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employees who meet the retirement eligibility requirements as of their termination dates, may receive post-retirement medical benefits under our retiree medical account program.

Eligible employees receive a medical benefit spending account of $ 55,000 upon retirement to pay premiums for medical coverage through the maximum age of 75 as retiree.

Majority of the eligible employees receive a medical benefit spending account of $ 55,000 upon retirement to pay premiums for medical coverage through the maximum age of 75 as a retiree.

Our group life insurance plan offers post-retirement life insurance coverage for certain U.S.

Non-U.S Retirement Benefit Plans.

We have defined benefit plans for certain employees in Austria, France, Germany, India, Israel, Italy, Japan and Taiwan.

Eligibility is generally determined based on the terms of our plans and local statutory requirements.

Net Periodic Benefit (Income) Cost

Pension Benefits

Post-Retirement Benefits

Pension Benefits Post-Retirement Benefits

Fiscal Year Fiscal Year

2020 2019 2018 2020 2019 2018

(In millions)

Service cost $ 12 $ 10 $ 4 $ — $ — $ —

Interest cost 45 58 51 3 3 3

Expected return on plan assets ( 46 ) ( 59 ) ( 51 ) ( 3 ) ( 3 ) ( 4 )

( 3 ) 1 1 1 ( 1 ) —

Net periodic benefit (income) cost

$ 8 $ 10 $ 5 $ 1 $ ( 1 ) $ ( 1 )

Net actuarial (gain) loss $ ( 28 ) $ 13 $ 14 $ — $ 11 $ ( 3 )

The components of net periodic benefit (income) costs other than the service cost are included in other income, net in our consolidated statements of operations.

The components of net periodic benefit (income) cost other than the service cost are included in other income, net.

Funded Status

Pension Benefits

Post-Retirement Benefits

Pension Benefits Post-Retirement Benefits

2020 November 3,

2019 November 1,

2020 November 3,

(In millions)

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Benefit obligations — beginning of period 1,553 1,364 93 74

Service cost 12 10 — —

Interest cost 45 58 3 3

Actuarial (gain) loss

Actuarial loss 61 186 2 14

Benefit payments ( 96 ) ( 94 ) ( 3 ) ( 3 )

Plan amendment

Curtailments ( 6 ) — — —

Benefit obligations assumed in an acquisition 10 37 — 5

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Overfunded (underfunded) status of benefit obligations (a)

$ 5 $ ( 14 ) $ ( 7 ) $ ( 8 )

Actuarial losses and prior service costs recognized in accumulated other comprehensive loss, net of taxes

$ ( 94 ) $ ( 125 ) $ ( 14 ) $ ( 15 )

Substantially all amounts recognized in the consolidated balance sheets were recorded in other long-term assets and other long-term liabilities for all periods presented.

_________________________________

(a) Substantially all amounts recognized in the consolidated balance sheets were recorded in other long-term assets and other long-term liabilities for all periods presented.

Plans with benefit obligations in excess of plan assets:

Pension Benefits

Post-Retirement Benefits

Pension Benefits Post-Retirement Benefits

2020 November 3,

2019 November 1,

2020 November 3,

(In millions)

3 unchanged sentences

Plans with benefit obligations less than plan assets:

Pension Benefits

Post-Retirement Benefits

Pension Benefits Post-Retirement Benefits

2020 November 3,

2019 November 1,

2020 November 3,

(In millions)

2 unchanged sentences

Fair value of plan assets $ 1,582 $ 1,507 $ 88 $ 85

The fair value of pension plan assets at November 3, 2019 and November 4, 2018 included $ 151 million and $ 147 million , respectively, of assets for our non-U.S.

The fair value of pension plan assets as of November 1, 2020 and November 3, 2019 included $ 160 million and $ 151 million, respectively, of assets for our non-U.S.

pension plans.

The projected benefit obligations as of November 1, 2020 and November 3, 2019 included $ 206 million and $ 184 million, respectively, of obligations related to our non-U.S.

pension plans.

The accumulated benefit obligations as of November 1, 2020 and November 3, 2019 included $ 190 million and $ 171 million, respectively, of obligations related to our non-U.S.

pension plans.

Expected Future Benefit Payments

Fiscal Years:

Pension Benefits

Post-Retirement Benefits

Pension Benefits Post-Retirement Benefits

(In millions)

Defined Benefit Plan Investment Policy

Plan assets of the funded defined benefit pension plans are invested in funds held by third-party fund managers or are deposited into government-managed accounts in which we have no active involvement in and no control over investment strategy, other than establishing broad investment guidelines and parameters.

Our plan’s 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 discretion to structure portfolios and select the investment managers within those allocation parameters.

2021 $ 94 $ 8

2022 $ 93 $ 4

2023 $ 93 $ 4

2024 $ 93 $ 4

2025 $ 93 $ 4

2026-2030 $ 451 $ 23

Defined Benefit Pension Plan Investment Policy

Plan assets of the funded defined benefit pension plans 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 U.S.

plans reflects a risk/return profile that we believe is appropriate relative to the liability structure and return goals for the plans.

Substantially all of the plan assets are for the U.S.

qualified pension plan.

The target asset allocation for this 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 2019 and 2018 , 100 % of U.

plan assets were allocated to fixed income, in line with the target allocation.

For both fiscal years 2020 and 2019, 100 % of the U.

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.

Fair Value Measurement of Plan Assets

Fair Value Measurement of Defined Benefit Pension Plan Assets

November 1, 2020

Fair Value Measurements at Reporting Date Using

Level 1 Level 2 Level 3 Total

(In millions)

Cash equivalents

Equity securities:

Cash equivalents $ 42 (a) $ — $ — $ 42

Equity securities:

equity securities 26 (b) — — 26

Fixed-income securities:

Corporate bonds

Municipal bonds

Government bonds

Asset-backed securities

treasuries — 158 (c) — 158

Corporate bonds — 1,307 (c) — 1,307

Municipal bonds — 22 (c) — 22

Government bonds — 36 (c) — 36

Asset-backed securities — 2 (c) — 2

Total plan assets $ 68 $ 1,525 $ — $ 1,593

1 unchanged sentence

Fair Value Measurements at Reporting Date Using

Level 1 Level 2 Level 3 Total

(In millions)

Cash equivalents

Equity securities:

Cash equivalents $ 34 (a) $ — $ — $ 34

Equity securities:

equity securities 21 (b) — — 21

Fixed-income securities:

Corporate bonds

Municipal bonds

Government bonds

treasuries — 82 (c) — 82

Corporate bonds — 1,372 (c) — 1,372

Municipal bonds — 19 (c) — 19

Government bonds — 10 (c) — 10

Asset-backed securities — 1 (c) — 1

Total plan assets $ 55 $ 1,484 $ — $ 1,539

_________________________________

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.

These equity securities were valued based on quoted prices in active markets.

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 asset, such as interest rates, yield curves, prepayment speeds, collateral performance, broker/dealer quotes and indices that were observable at commonly quoted intervals.

(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.

Post-Retirement Benefit Plan Investment Policy

4 unchanged sentences

The investment manager invests the plan assets in index funds that it manages.

For both fiscal years 2019 and 2018 , 100 % of plan assets were allocated to commingled funds that invested in fixed income, in line with the target allocation.

The assumptions used to determine the benefit obligations and net periodic benefit (income) cost from our defined benefit and post-retirement benefit 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.

For both fiscal years 2020 and 2019, 100 % of plan assets were allocated to

commingled funds that invested in fixed income, in line with the target allocation.

The fair value of the commingled funds are measured using net asset value per share as a practical expedient.

The assumptions used to determine the benefit obligations and net periodic benefit (income) cost from our defined benefit pension plans and post-retirement benefit plans are presented in the tables below.

The expected long-term return on assets shown in the tables 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 (both historical and forecasted) in which we expect the pension and post-retirement funds to be invested.

Discount rates reflect the current rate at which defined benefit and post-retirement benefit obligations could be settled based on the measurement dates of the plans, which in each case is our fiscal year end.

Discount rates reflect the current rate at which defined benefit pension and post-retirement benefit 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 that are used for defined benefit pension plans reflects the different economic environments within various countries.

Assumptions for Benefit Obligations

Assumptions for Net Periodic Benefit (Income) Cost

as of Assumptions for Net Periodic Benefit (Income) Cost

2020 November 3,

2019 2020 2019 2018

Defined benefit pension plans:

Discount rate 0.61 %- 6.54 %

0.47 %- 7.00 %

0.50 %- 8.00 %

0.50 %- 7.00 %

Average increase in compensation levels

2.00 %- 10.00 %

1.80 %- 10.00 %

2.00 %- 11.00 %

Expected long-term return on assets

N/A N/A 1.50 %- 7.80 %

1.50 %- 7.75 %

1.50 %- 7.50 %

Assumptions for Benefit Obligations

Assumptions for Net Periodic Benefit (Income) Cost

Post-retirement benefits plans:

as of Assumptions for Net Periodic Benefit (Income) Cost

2020 November 3,

2019 2020 2019 2018

Post-retirement benefit plans:

Discount rate 2.10 %- 2.90 %

2.80 %- 3.20 %

4.12 %- 4.60 %

3.40 %- 3.80 %

Average increase in compensation levels

3.00 % 3.00 % 3.00 % 3.00 % 3.00 %

Expected long-term return on assets

N/A N/A 3.20 % 4.80 % 4.80 %

Assumed Health Care Cost Trend Rate Used to Measure the Expected Cost of Benefits as of

2020 November 3,

Health care cost trend rate assumed for next year 7.25 %

4.50 %- 7.40 %

Rate to which the health care cost trend rate is assumed to decline (ultimate health care cost trend rate)

3.50 %- 4.50 %

Year that the rate reaches the ultimate health care cost trend rate 2029 2031

2 unchanged sentences

Our eligible U.S.

employees participate in company-sponsored 401(k) plans.

Under these plans, we provide matching contributions to employees up to 6 % of their eligible earnings.

employees participate in a company-sponsored 401(k) plan.

Under the plan, we provide matching contributions to employees up to 6 % of their eligible earnings.

All matching contributions vest immediately.

During fiscal years 2019 , 2018 and 2017 , we made contributions of $ 89 million , $ 73 million and $ 61 million , respectively, to the 401(k) plans.

During fiscal years 2020, 2019 and 2018, we made contributions of $ 99 million, $ 89 million and $ 73 million, respectively, to the 401(k) plan.

In addition, other eligible employees outside of the U.S.

receive retirement benefits under various defined contribution retirement plans.

Effective Interest Rate

November 3, 2019

November 4, 2018

November 1, 2020 November 3, 2019

Effective Interest Rate Aggregate Principal Amount Effective Interest Rate Aggregate Principal Amount

(In millions)

2019 Senior Notes - fixed rate

June 2020 Senior Notes - fixed rate

3.459 % notes due September 2026

4.19 % $ 1,695 $ —

4.110 % notes due September 2028

5.02 % 2,222 —

May 2020 Senior Notes- fixed rate

2.250 % notes due November 2023

2.40 % 1,000 —

3.150 % notes due November 2025

3.29 % 2,250 —

4.150 % notes due November 2030

4.27 % 2,750 —

4.300 % notes due November 2032

4.39 % 2,000 —

April 2020 Senior Notes - fixed rate

4.700 % notes due April 2025

4.88 % 2,250 —

5.000 % notes due April 2030

5.18 % 2,250 —

November 2019 Term Loans - floating rate

LIBOR plus 1.125 % term loan due November 2022

1.54 % 1,819 —

LIBOR plus 1.250 % term loan due November 2024

1.56 % 4,069 —

May 2019 Term Loans - floating rate

LIBOR plus 1.250 % term loan due May 2024

LIBOR plus 1.375 % term loan due May 2026

April 2019 Senior Notes - fixed rate

3.125 % notes due April 2021

3.61 % 525 3.61 % 2,000

3.125 % notes due October 2022

3.53 % 693 3.53 % 1,500

3.625 % notes due October 2024

3.98 % 1,044 3.98 % 2,000

4.250 % notes due April 2026

4.54 % 2,500 4.54 % 2,500

4.750 % notes due April 2029

2019 Term Loans - floating rate

LIBOR plus 1.250% term loan due through May 2024

LIBOR plus 1.375% term loan due through May 2026

4.95 % 3,000 4.95 % 3,000

2017 Senior Notes - fixed rate

2.375 % notes due January 2020

— 2.62 % 2,750

2.200 % notes due January 2021

2.41 % 282 2.41 % 750

3.000 % notes due January 2022

3.21 % 842 3.21 % 3,500

2.650 % notes due January 2023

2.78 % 1,000 2.78 % 1,000

3.625 % notes due January 2024

3.74 % 1,352 3.74 % 2,500

3.125 % notes due January 2025

3.23 % 1,000 3.23 % 1,000

3.875 % notes due January 2027

4.02 % 4,800 4.02 % 4,800

3.500 % notes due January 2028

3.60 % 1,250 3.60 % 1,250

Assumed CA Senior Notes - fixed rate

1 unchanged sentence

3.600 % notes due August 2022

4.07 % 283 4.07 % 500

4.500 % notes due August 2023

4.10 % 250 4.10 % 250

4.700 % notes due March 2027

Commercial Paper

Commercial paper

Assumed Brocade Convertible Notes - fixed rate

5.15 % 350 5.15 % 350

November 1, 2020 November 3, 2019

Effective Interest Rate Aggregate Principal Amount Effective Interest Rate Aggregate Principal Amount

(In millions)

Other borrowings

Commercial paper — 2.55 % (a)

1.375 % convertible notes due January 2020

Assumed BRCM Senior Notes - fixed rate

2.500% - 4.500% notes due August 2022 - August 2034

2.500 %- 4.500 % senior notes due August 2022 - August 2034

2.59 %- 4.55 %

22 2.59 %- 4.55 %

Total principal amount outstanding 41,498 33,059

Unaccreted discount/premium and unamortized debt issuance costs

unamortized discount and issuance costs ( 504 ) ( 261 )

Total debt $ 40,994 $ 32,798

________________________________

(a) Represents the weighted average interest rate on outstanding commercial paper as of November 3, 2019 .

2019 Senior Notes

In April 2019, we issued $ 11 billion in aggregate principal amount of senior unsecured notes (“2019 Senior Notes”).

The 2019 Senior Notes are fully and unconditionally guaranteed, jointly and severally, on an unsecured, unsubordinated basis by Broadcom Corporation (“BRCM”) and Broadcom Technologies Inc.

Each series of our 2019 Senior Notes pays interest semi-annually in arrears on April 15 and October 15 of each year.

We may, at our option, redeem or purchase, in whole or in part, any of the 2019 Senior Notes at a price equal to 100 % of the principal amount of the applicable 2019 Senior Notes, plus a corresponding make-whole premium as set forth in the indenture governing the 2019 Senior Notes, plus accrued and unpaid interest, if any, to the date of repurchase.

The 2019 Senior Notes are recorded as long-term debt, net of discount.

The discount associated with the 2019 Senior Notes is amortized to interest expense over the respective terms of these borrowings.

2019 Term Loans

On November 5, 2018, in connection with the CA Merger, we entered into a credit agreement (the “Original 2019 Credit Agreement”), which provided for a $ 9 billion unsecured term A-3 facility and a $ 9 billion unsecured term A-5 facility, collectively referred to as the “Original 2019 Term Loans”.

Interest on our Original 2019 Term Loans was based on a floating rate and was payable monthly.

Our obligations under the Original 2019 Credit Agreement were guaranteed on an unsecured basis by BRCM, Broadcom Cayman Finance Limited (“Cayman Finance”) and BTI.

The Original 2019 Credit Agreement also provided for a five-year $ 5 billion unsecured revolving credit facility.

In April 2019, we used the net proceeds of $ 11 billion from the 2019 Senior Notes and net proceeds of $ 1 billion from Commercial Paper (defined below) to reduce the outstanding amount of our Original 2019 Term Loans from $ 18 billion to $ 6 billion .

As a result of repaying the Original 2019 Term Loans, we wrote off $ 26 million of debt issuance costs, which were included in interest expense in the consolidated statements of operations.

The remaining unamortized discount and debt issuance costs balance on the Original 2019 Term Loans will be amortized to interest expense over the respective terms of the 2019 Senior Notes and Commercial Paper.

In May 2019, we entered into a new credit agreement (the “2019 Credit Agreement”), which provides for a $ 2 billion unsecured term A-3 facility, a $ 2 billion unsecured term A-5 facility and a $ 2 billion unsecured term A-7 facility, collectively referred to as the “2019 Term Loans”.

The 2019 Credit Agreement has substantially the same terms and conditions as the Original 2019 Credit Agreement, except for the maturity dates of the facilities.

The 2019 Term Loans replaced the remaining $ 6 billion Original 2019 Term Loans, which were terminated in connection with, and as a condition to, entering into the 2019 Credit Agreement.

Our obligations under the 2019 Credit Agreement are guaranteed on an unsecured basis by BRCM, Cayman Finance and BTI.

In October 2019, we fully repaid our unsecured term A-3 facility of $ 2 billion and repaid $ 1.2 billion of each of our unsecured term A-5 and A-7 facilities under the 2019 Credit Agreement, using net proceeds from our Mandatory Convertible Preferred Stock offering as defined in Note 10 .

“ Stockholders’ Equity ,” as well as with cash on hand.

As a result, we wrote off $ 22 million of debt issuance costs and unamortized discounts, which were included in interest expense in the consolidated statements of operations.

Revolving Facility

The 2019 Credit Agreement also provided for a five-year $ 5 billion unsecured revolving credit facility (the “Revolving Facility”), of which $ 500 million was available for the issuance of multi-currency letters of credit.

The Revolving Facility replaced the revolving credit facility of the same amount under the Original 2019 Credit Agreement.

(a) Represents the weighted average interest rate on outstanding commercial paper.

As of November 1, 2020, $ 20 million of short-term and $ 48 million of long-term finance lease liabilities were included in the current portion of long-term debt and long-term debt, respectively.

June 2020 Senior Notes

On June 4, 2020, we completed the settlement of our private offers to exchange $ 3,742 million of certain series of our outstanding notes maturing between 2021 and 2024, for $ 1,695 million of new senior notes due 2026 and $ 2,222 million of new senior notes due 2028 (collectively, the “June 2020 Senior Notes”).

As a result of this exchange, we incurred premiums of $ 177 million.

The June 2020 Senior Notes are fully and unconditionally guaranteed, jointly and severally, on an unsecured, unsubordinated basis by Broadcom Corporation (“BRCM”) and Broadcom Technologies Inc.

We may redeem or purchase, in whole or in part, any of the June 2020 Senior Notes prior to their respective maturities, subject to a specified make-whole premium determined in accordance with the indenture governing the June 2020 Senior 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.

The June 2020 Senior Notes are recorded as long-term debt, net of discount and issuance costs, which are amortized to interest expense over the respective terms of these borrowings.

May 2020 Senior Notes

On May 8, 2020, we issued $ 8 billion of senior unsecured notes (the “May 2020 Senior Notes”).

The May 2020 Senior Notes are fully and unconditionally guaranteed, jointly and severally, on an unsecured, unsubordinated basis by BRCM and BTI.

We may redeem or purchase, in whole or in part, any of the May 2020 Senior Notes prior to their respective maturities, subject to a specified make-whole premium determined in accordance with the indenture governing the May 2020 Senior Notes, plus accrued and unpaid interest.

The May 2020 Senior Notes are recorded as long-term debt, net of discount and issuance costs, which are amortized to interest expense over the respective terms of these borrowings.

The net proceeds from this issuance, together with the remaining net proceeds from the issuance of the April 2020 Senior Notes, as defined below, were used to repay an aggregate of $ 5,424 million of term loans outstanding under the November 2019 Credit Agreement, as defined below, consisting of repayments of $ 2,712 million of each of our unsecured term A-3 and A-5 facilities and $ 3 billion of borrowings outstanding under the Revolving Facility, as defined below.

April 2020 Senior Notes

In April 2020, we issued $ 4.5 billion of senior unsecured notes (the “April 2020 Senior Notes”).

The April 2020 Senior Notes are fully and unconditionally guaranteed, jointly and severally, on an unsecured, unsubordinated basis by BRCM and BTI.

We may redeem or purchase, in whole or in part, any of the April 2020 Senior Notes prior to their respective maturities, subject to a specified make-whole premium determined in accordance with the indenture governing the April 2020 Senior Notes, plus accrued and unpaid interest.

The April 2020 Senior Notes are recorded as long-term debt, net of discount and issuance costs, which are amortized to interest expense over the respective terms of these borrowings.

Pursuant to a cash tender offer that we completed on April 23, 2020, we repurchased $ 2,361 million of our 3.000 % notes due January 2022, $ 1,274 million of our 3.125 % notes due April 2021 and $ 351 million of our 2.200 % notes due January 2021 with the net proceeds from the April 2020 Senior Notes.

As a result of these repurchases, we incurred premiums of $ 78 million and wrote off $ 15 million of unamortized discount and issuance costs, both of which were included in interest expense.

November 2019 Term Loans

On November 4, 2019, in connection with the Symantec Asset Purchase, we entered into a credit agreement (the “November 2019 Credit Agreement”), which provides for a $ 7,750 million unsecured term A-3 facility and a $ 7,750 million unsecured term A-5 facility (collectively, the “November 2019 Term Loans”).

Interest on our November 2019 Term Loans is based on a floating rate.

We used net proceeds from the November 2019 Term Loans to fund the $ 10.7 billion Symantec Asset Purchase and to repay $ 750 million principal amount of 5.375 % notes due December 2019 and $ 2,750 million principal amount of 2.375 % notes due January 2020, on their respective maturity dates.

Our obligations under the November 2019 Credit Agreement are guaranteed on an unsecured basis by BRCM and BTI.

During the fiscal year ended November 1, 2020, we repaid an aggregate of $ 9,612 million of our November 2019 Term Loans, consisting of repayments of $ 5,931 million and $ 3,681 million of our unsecured term A-3 and A-5 facilities, respectively, and wrote off $ 60 million of unamortized discount and issuance costs.

As a result of these repayments, all remaining principal payments are due more than one year after November 1, 2020 and were included in long-term debt.

May 2019 Term Loans

In May 2019, we entered into a credit agreement (the “May 2019 Credit Agreement”), which provided for a $ 2 billion unsecured term A-3 facility, a $ 2 billion unsecured term A-5 facility and a $ 2 billion unsecured term A-7 facility (collectively, the “May 2019 Term Loans”).

Interest on our May 2019 Term Loans is based on a floating rate.

Our obligations under the May 2019 Credit Agreement are guaranteed on an unsecured basis by BRCM, BTI and Broadcom Cayman Finance Limited (“Cayman Finance”), which subsequently merged into BTI during fiscal year 2019 with BTI remaining as the surviving entity.

During fiscal year 2019, we fully repaid our unsecured term A-3 facility of $ 2 billion and repaid $ 1.2 billion of each of our unsecured term A-5 and A-7 facilities under the May 2019 Credit Agreement.

As a result, we wrote off $ 22 million of discount and issuance costs, which is included in interest expense.

During fiscal year 2020, we repaid an aggregate of $ 1.6 billion of the May 2019 Term Loans, representing the outstanding balance of the May 2019 Term Loans.

The May 2019 Credit Agreement also provided for a five-year $ 5 billion unsecured revolving credit facility (the “Revolving Facility”), of which $ 500 million was 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 Facility for revolving loans.

Subject to the terms of the 2019 Credit Agreement, we are permitted to borrow, repay and reborrow revolving loans at any time prior to the earlier of (a) November 2023 or (b) the date of termination in whole of the revolving lenders’ commitments under the 2019 Credit Agreement in accordance with the terms thereof.

We had no borrowings outstanding under the Revolving Facility on November 3, 2019 .

Subject to the terms of the May 2019 Credit Agreement, we are permitted to borrow, repay and reborrow revolving loans at any time prior to the earlier of (a) May 2024 or (b) the date of termination in whole of the revolving lenders’ commitments under the May 2019 Credit Agreement in accordance with the terms thereof.

As of November 1, 2020 and November 3, 2019, we had no borrowings outstanding under the Revolving Facility.

April 2019 Senior Notes

In April 2019, we issued $ 11 billion of senior unsecured notes (“April 2019 Senior Notes”).

The April 2019 Senior Notes are fully and unconditionally guaranteed, jointly and severally, on an unsecured, unsubordinated basis by BRCM and BTI.

We may redeem or purchase, in whole or in part, any of the April 2019 Senior Notes prior to their respective maturities, subject to a make-whole premium determined in accordance with the indenture governing the April 2019 Senior Notes, plus accrued and unpaid interest.

The April 2019 Senior Notes are recorded as long-term debt, net of discount and issuance costs, which are amortized to interest expense over the respective terms of these borrowings.

Exchange Offer

In connection with the issuance of the June 2020 Senior Notes, May 2020 Senior Notes, April 2020 Senior Notes (collectively, the “2020 Senior Notes”) and the April 2019 Senior Notes, we entered into registration rights agreements, pursuant to which we were obligated to use commercially reasonable efforts to file with the SEC, and cause to be declared effective, a registration statement with respect to an offer to exchange (the “Exchange Offer”) each series of the 2020 Senior Notes and April 2019 Senior Notes for notes that are registered with the U.S.

Securities and Exchange Commission (the “SEC”) (the “Registered Notes”), with substantially identical terms.

On July 6, 2020, we launched the Exchange Offer, which completed on August 10, 2020.

Substantially all of our 2020 Senior Notes and April 2019 Senior Notes were tendered and exchanged for the corresponding Registered Notes in the Exchange Offer.

Commercial Paper

In February 2019, we established a commercial paper program pursuant to which we may issue unsecured commercial paper notes (“Commercial Paper”) in an aggregate principal amount of up to $ 2 billion outstanding at any time with maturities of up to 397 days from the date of issue.

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.

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Outstanding Commercial Paper borrowings reduce the amount that would otherwise be available to borrow for general corporate purposes under the Revolving Facility.

As of November 3, 2019 , we had $ 1 billion of Commercial Paper outstanding with maturities generally less than sixty days.

We intend to continuously replace our Commercial Paper upon maturity with newly issued commercial paper.

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The discount associated with the Commercial Paper is amortized to interest expense over its term.

As of November 1, 2020, we had no Commercial Paper outstanding.

We had $ 1 billion of Commercial Paper outstanding as of November 3, 2019 with maturities generally less than sixty days.

2017 Senior Notes

During fiscal year 2017, BRCM and Broadcom Cayman Finance Limited, or together with BRCM referred to as the “Subsidiary Issuers”, issued of $ 17,550 million senior unsecured notes (the “2017 Senior Notes”).

Our 2017 Senior Notes were fully and unconditionally guaranteed, jointly and severally, on an unsecured, unsubordinated basis by Broadcom-Singapore and the Partnership, subject to certain release conditions described in the indenture governing the 2017 Senior Notes (the “2017 Indentures”).

On April 9, 2018, Broadcom (“Parent Guarantor”) became a guarantor of the 2017 Senior Notes and entered into supplemental indentures with the Subsidiary Issuers and the trustee of the 2017 Senior Notes.

At that time, Broadcom-Singapore, a guarantor at the issuance of the 2017 Senior Notes, became an indirect wholly-owned subsidiary of Broadcom and a subsidiary guarantor (“Subsidiary Guarantor”), together with Parent Guarantor referred to as the “Guarantors”.

In addition, the Partnership was released from its guarantee of the 2017 Senior Notes under each of the 2017 Indentures in accordance with their terms.

Each series of 2017 Senior Notes pays interest semi-annually in cash in arrears on January 15 and July 15 of each year.

We may redeem all or a portion of our 2017 Senior Notes at any time prior to their maturity, subject to a specified make whole premium as set forth in the 2017 Indentures.

In the event of a change of control triggering event, holders of our 2017 Senior Notes will have the right to require us to purchase for cash, all or a portion of their 2017 Senior Notes at a redemption price of 101 % of the aggregate principal amount plus accrued and unpaid interest.

During fiscal year 2018, substantially all of the 2017 Senior Notes were tendered and exchanged for notes registered with the U.S.

Securities and Exchange Commission (“SEC”), with substantially identical terms.

During the fiscal year ended October 29, 2017, BRCM and Cayman Finance issued $ 17,550 million of senior unsecured notes (the “2017 Senior Notes”).

Our 2017 Senior Notes are fully and unconditionally guaranteed, jointly and severally, on an unsecured, unsubordinated basis by Broadcom and BTI.

We may redeem or purchase, in whole or in part, any of the 2017 Senior Notes prior to their respective maturities, subject to a make-whole premium determined in accordance with the indenture governing the 2017 Senior Notes, plus accrued and unpaid interest.

During fiscal year 2018, substantially all of the 2017 Senior Notes were tendered and exchanged for notes registered with the SEC, with substantially identical terms.

Assumed CA Senior Notes

In connection with the CA Merger, we assumed $ 2.25 billion in aggregate principal amount of CA’s outstanding senior unsecured notes (the “Assumed CA Senior Notes”).

In connection with our acquisition of CA, we assumed $ 2,250 million in aggregate principal amount of CA’s outstanding senior unsecured notes (the “Assumed CA Senior Notes”).

CA remains the sole obligor under the Assumed CA Senior Notes.

We may redeem all or a portion of the Assumed CA Senior Notes at any time, subject to a specified make-whole premium as set forth in the related indenture.

In the event of a change in control, each note holder will have the right to require us to repurchase all or any part of the holder’s notes in cash at a price equal to 101 % of the principal amount of such notes plus accrued and unpaid interest, if any, to the date of repurchase (subject to the right of holders of record on the relevant interest payment date to receive interest due).

Each series of the Assumed CA Senior Notes pays interest semi-annually.

In October 2019, we fully repaid our 3.600 % notes due August 2020 of $ 400 million .

As a result of this payoff, we wrote off $ 1 million of unamortized premium and incurred a make-whole premium of $ 5 million , which were included in interest expense in the consolidated statements of operations.

Assumed Brocade Debt

As a result of the Brocade Merger, we assumed $ 575 million in aggregate principal amount of Brocade’s 1.375 % convertible senior unsecured notes due 2020 , or the Assumed Brocade Convertible Notes.

The Brocade Merger was a “fundamental change” as well as a “make-whole fundamental change” as defined under the terms of the indenture governing the Assumed Brocade Convertible Notes.

Accordingly, the holders of the Assumed Brocade Convertible Notes received the right to require us to repurchase their notes for cash.

We may redeem all or a portion of the Assumed CA Senior Notes at any time, subject to a specified make-whole premium as set forth with the indenture governing the Assumed CA Senior Notes.

During fiscal year 2019, we fully repaid $ 400 million of our 3.600 % notes due August 2020.

Assumed Brocade Convertible Notes

As a result of our acquisition of Brocade, we assumed $ 575 million in aggregate principal amount of Brocade’s 1.375 % convertible senior unsecured notes (the “Assumed Brocade Convertible Notes”).

During fiscal year 2018, we repurchased $ 537 million in aggregate principal amount for $ 548 million at a conversion rate of $ 1,018 for each $1,000 of principal surrendered for conversion.

The remaining outstanding Assumed Brocade Convertible Notes are convertible into cash at a conversion rate of $ 812 for each $1,000 of principal.

We also assumed $ 300 million of Brocade’s 4.625 % senior unsecured notes due 2023 .

In January 2018, we redeemed all of these outstanding notes for a total payment of $ 308 million .

We fully repaid the remaining $ 37 million of the Assumed Brocade Convertible Notes during fiscal year 2020.

Fair Value of Debt

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The fair value of our senior notes was determined using quoted prices from less active markets.

The estimated fair value of our 2019 Term Loans approximated their carrying value due to their floating interest rates and consistency in our credit ratings.

The estimated fair value of our Commercial Paper approximated its carrying value due to the short-term nature of these borrowings.

The estimated fair value of our November 2019 Term Loans approximated the carrying value due to their floating interest rates and consistency in our credit ratings.

All of our debt obligations are categorized as Level 2 instruments.

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(In millions)

Thereafter 25,073

Total $ 41,498

As of November 1, 2020 and November 3, 2019, we accrued interest payable of $ 304 million and $ 214 million, respectively, and were in compliance with all debt covenants .

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Mandatory Convertible Preferred Stock Offering

On September 30, 2019, we completed an offering of approximately 4 million shares of 8.00 % Mandatory Convertible Preferred Stock, Series A, $ 0.001 par value per share (the “Mandatory Convertible Preferred Stock”), including certain additional shares sold pursuant to the underwriters' option, which generated net proceeds of approximately $ 3,679 million .

We used the net proceeds of this offering to repay a portion of the outstanding borrowings under our existing term loan facilities.

On September 30, 2019, we completed an offering of approximately 4 million shares of 8.00 % Mandatory Convertible Preferred Stock, Series A, $ 0.001 par value per share (“Mandatory Convertible Preferred Stock”), which generated net proceeds of approximately $ 3,679 million.

The holders of Mandatory Convertible Preferred Stock are 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;

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In the event of our voluntary or involuntary liquidation, dissolution or winding-up, no distribution of our assets may be made to holders of our common stock until we have paid to holders of our Mandatory Convertible Preferred Stock a liquidation preference equal to $ 1,000 per share plus accumulated and unpaid dividends.

Unless earlier converted, each outstanding share of Mandatory Convertible Preferred Stock will automatically convert on the mandatory conversion date, which is expected to be September 30, 2022, into between 3.0303 and 3.5422 shares of our common stock, depending on the applicable market value of our common stock upon conversion and subject to customary anti-dilution adjustments.

At any time prior to September 30, 2022, holders may elect to convert each share of Mandatory Convertible Preferred Stock into shares of our common stock at the minimum conversion rate of 3.0303 , subject to anti-dilution adjustments and certain exceptions.

The Mandatory Convertible Preferred Stock will not be redeemable at our election before the mandatory conversion date.

The holders of the Mandatory Convertible Preferred Stock will not have any voting rights, with limited exceptions.

During the fourth quarter of fiscal year 2019, we recognized $ 29 million of earned preferred stock dividends and presented it as temporary equity in our consolidated balance sheet as of November 3, 2019 .

On September 30, 2022, unless earlier converted, each outstanding share of Mandatory Convertible Preferred Stock will automatically convert into shares of our common stock at a rate between the then minimum and maximum conversion rates.

At any time prior to September 30, 2022, holders may elect to convert each share of Mandatory Convertible Preferred Stock into shares of our common stock at the then minimum conversion rate.

The conversion rates are subject to anti-dilution adjustments.

As of November 1, 2020, the minimum conversion rate was 3.0567 and the maximum conversion rate was 3.5729 .

We recognized $ 27 million and $ 29 million of accrued preferred stock dividends, which were presented as temporary equity in our consolidated balance sheets as of November 1, 2020 and November 3, 2019, respectively.

Redomiciliation Transaction

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Immediately prior to the Redomiciliation Transaction, the limited partners held a noncontrolling interest of approximately 5 % in the Partnership through their ownership of LP Units.

Accordingly, net income attributable to our common stock in our consolidated statements of operations excluded the noncontrolling interest’s proportionate share of our results prior to the Redomiciliation Transaction.

In addition, we presented the proportionate share of equity attributable to the noncontrolling interest as a separate component of total equity within our consolidated statements of equity for the periods prior to the Redomiciliation Transaction.

Dividends and Distributions

(In millions, except per share data)

Cash dividends and distributions declared and paid per share/unit

Cash dividends declared and paid to common stockholders

Cash distributions declared and paid to limited partners

Accordingly, net income attributable to our common stock in our consolidated statement of operations for fiscal year 2018 excluded the noncontrolling interest’s proportionate share of our results prior to the Redomiciliation Transaction.

Cash Dividends and Distributions Declared and Paid

2020 2019 2018

(In millions, except per share/unit data)

Dividends per share to common stockholders $ 13.00 $ 10.60 $ 7.00

Dividends to common stockholders $ 5,235 $ 4,235 $ 2,921

Dividends per share to preferred stockholders $ 80.00 $ — $ —

Dividends to preferred stockholders $ 299 $ — $ —

Distributions per unit to limited partners $ — $ — $ 3.50

Distributions to limited partners $ — $ — $ 77

Stock Repurchase Program

Pursuant to an $ 18 billion stock repurchase program authorized by our Board of Directors, we repurchased and retired approximately 21 million and 32 million shares of our common stock for $ 5,435 million and $ 7,258 million during fiscal years 2019 and 2018 , respectively.

Pursuant to an $ 18 billion stock repurchase program previously authorized by our Board of Directors, we repurchased and retired approximately 21 million and 32 million shares of our common stock for $ 5,435 million and $ 7,258 million during fiscal years 2019 and 2018, respectively.

This authorization ended on November 3, 2019.

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No participant may be granted stock options covering more than 4 million shares or more than an aggregate of 1 million shares of restricted stock and RSUs in any fiscal year.

Equity awards granted under the 2003 Plan following the LSI acquisition are expected to be on similar terms and consistent with similar grants made pursuant to the 2009 Plan.

Equity awards granted under the 2003 Plan following the LSI acquisition are on similar terms and consistent with similar grants made pursuant to the 2009 Plan.

As of November 1, 2020, 3 million shares remained available for issuance under the 2003 Plan.

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Under the 2012 Plan, we may grant to former employees of BRCM and other employees who were not employees of Broadcom at the time of the acquisition restricted stock awards, RSUs, stock options and stock appreciation rights with an exercise price that is no less than the fair market value on the date of grant.

No participant may be granted stock options, restricted stock or RSUs, covering more than an aggregate of 4 million shares in any fiscal year.

No participant may be granted stock options, restricted stock or

RSUs, covering more than an aggregate of 4 million shares in any fiscal year.

Equity awards granted under the 2012 Plan following the acquisition of BRCM are on similar terms and consistent with similar grants made pursuant to the 2009 Plan.

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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 ending 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 Employee Retirement Income Security Act of 1974.

Stock-Based Compensation Expense

2020 2019 2018

(In millions)

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Total stock-based compensation expense (a)

$ 1,976 $ 2,185 $ 1,227

Estimated income tax benefits for stock-based compensation $ 345 $ 400 $ 195

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_______________________________________________________

Does not include stock-based compensation related to discontinued operations recognized during fiscal year 2017, which was included in loss from discontinued operations, net of income taxes in our consolidated statements of operations.

(a) Fiscal year 2019 stock-based compensation expense does not include $ 75 million restructuring charges for accelerated vesting of assumed equity awards held by employees terminated in connection with the CA Merger.

We have assumed an annualized forfeiture rate for RSUs of 5 %.

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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 $ 890 million for fiscal year 2019 , including $ 133 million of Multi-Year Equity Awards granted to employees acquired in the CA Merger.

Stock-based compensation expense related to the Multi-Year Equity Awards was $ 902 million and $ 890 million for fiscal years 2020 and 2019, respectively.

In connection with the amendment to the vesting of certain time-based RSUs from an annual cycle to a quarterly cycle, we recognized approximately $ 140 million in incremental compensation cost during fiscal year 2019.

For fiscal year 2019 , stock-based compensation expense included $ 83 million related to equity awards assumed in connection with the CA Merger.

In addition to stock-based compensation expense presented above, in fiscal year 2019 , we recognized $ 75 million in restructuring charges for accelerated vesting of assumed equity awards held by employees terminated in connection with the CA Merger.

As of November 1, 2020, the total unrecognized compensation cost related to unvested stock-based awards was $ 4,021 million, which is expected to be recognized over the remaining weighted-average service period of 3.4 years.

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Market-Based Awards

2020 2019 2018

Risk-free interest rate 1.2 % 2.7 % 2.4 %

Dividend yield 4.7 % 4.4 % 2.6 %

Volatility 31.2 % 33.0 % 32.5 %

Expected term (in years) 4.0 4.0 4.0

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Number of RSUs

Weighted-Average

Outstanding Weighted-Average

(In millions, except per share data)

Balance as of October 29, 2017 18 $ 163.42

Balance as of October 29, 2017

Granted 7 $ 239.48

Vested ( 6 ) $ 155.78

Forfeited ( 1 ) $ 175.46

Balance as of November 4, 2018 18 $ 195.50

Assumed in CA Merger 1 $ 206.14

Granted 33 $ 183.64

Vested ( 10 ) $ 192.28

Forfeited ( 2 ) $ 182.80

Balance as of November 3, 2019 40 $ 188.52

Granted 3 $ 252.36

Vested ( 8 ) $ 210.84

Forfeited ( 3 ) $ 198.17

Balance as of November 1, 2020 32 $ 188.35

The aggregate fair value of time- and market-based RSUs that vested in fiscal years 2020, 2019 and 2018 was $ 2,254 million, $ 2,958 million and $ 1,516 million, respectively, which represents the market value of our common stock on the date that the RSUs vested.

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Number of Options

Outstanding Weighted-

Exercise Price

Life (In years)

Per Share Weighted-

Life (In years) Aggregate

(In millions, except years and per share data)

Balance as of October 29, 2017 10 $ 49.54

Balance as of October 29, 2017

Exercised ( 2 ) $ 47.41 $ 534

Cancelled — * $ 72.37

Balance as of November 4, 2018 8 $ 50.14

Exercised ( 4 ) $ 47.88 $ 761

Cancelled — * $ 49.00

Balance as of November 3, 2019 4 $ 51.83

Exercised ( 3 ) $ 49.05 $ 917

Balance as of November 1, 2020 1 $ 62.35 0.4 $ 266

Fully vested as of November 1, 2020 1 $ 62.39 0.4 $ 264

Fully vested and expected to vest as of November 1, 2020

1 $ 62.35 0.4 $ 266

________________________________

* Represents fewer than 0.5 million shares.

Components of Income from Continuing Operations Before Income Taxes

As a result of the Redomiciliation Transaction on April 4, 2018, the following references to domestic activities represent the U.S.

for fiscal years 2019 and 2018 and Singapore for fiscal year 2017.

The following table presents the components of income from continuing operations before income taxes for financial reporting purposes:

2020 2019 2018

(In millions)

Domestic income (loss)

Foreign income (loss)

Domestic loss $ ( 4,221 ) $ ( 4,116 ) $ ( 705 )

Foreign income 6,664 6,342 5,250

Income from continuing operations before income taxes $ 2,443 $ 2,226 $ 4,545

Components of Provision for (Benefit from) Income Taxes

The benefit from income taxes in fiscal year 2019 was primarily due to $ 232 million of excess tax benefits from stock-based awards that vested or were exercised during the period, $ 131 million from the recognition of gross unrecognized tax benefits as a result of audit settlements and lapses of statutes of limitations net of increases in balances related to tax positions taken during the current year, $ 80 million of benefit from deferred tax remeasurement in state and foreign jurisdictions, $ 66 million of benefit related to internal reorganizations, and $ 54 million of benefit from the partial release of our valuation allowance as a result of the CA Merger, partly offset by $ 113 million of expense from a change in estimate of our fiscal year 2018 benefit as a result of proposed U.S.

Treasury regulations issued in fiscal year 2019 related to the 2017 Tax Reform Act.

The 2017 Tax Reform Act made significant changes to the U.S.

Internal Revenue Code, including, but not limited to, a decrease in the U.S.

corporate tax rate from 35 % to 21 % effective for tax years beginning after December 31, 2017, the transition of U.S.

international taxation from a worldwide tax system to a participation exemption regime, and the transition tax on the mandatory deemed repatriation of accumulated non-U.S.

earnings of U.S.

controlled foreign corporations.

Several provisions of the 2017 Tax Reform Act became effective for us for the first time in fiscal year 2019, including a new minimum tax on certain foreign earnings, known as Global Intangible Low-taxed Income (“GILTI”), a new incentive for foreign-derived intangible income, changes to the limitation on the deductibility of certain executive compensation, and new limitations on the deductibility of interest expense.

We have elected to account for GILTI as a period cost rather than on a deferred basis.

On December 22, 2017, the SEC issued Staff Accounting Bulletin No.

This guidance allowed registrants a “measurement period,” not to exceed one year from the date of enactment, to complete their accounting for the tax effects of the 2017 Tax Reform Act.

We relied on this guidance to refine our estimates of the impact of the 2017 Tax Reform Act during the measurement period.

The measurement period ended during our fiscal quarter ended February 3, 2019, and no adjustments were recorded.

As a result, we consider our accounting for the tax effects of the 2017 Tax Reform Act to be complete based on our interpretation of the law and subsequently issued guidance.

However, it is expected that the U.S.

Treasury will continue to issue regulations and other guidance on the application of certain provisions of the 2017 Tax Reform Act that may impact our interpretation of the rules and our calculation of the tax impact of the transition tax on the mandatory deemed repatriation of accumulated non-U.S.

earnings of U.S.

controlled foreign corporations as of December 31, 2017 or other provisions of the 2017 Tax Reform Act.

In connection with the CA Merger in November 2018, we established $ 2,434 million of net deferred tax liabilities on the excess of the book basis over the tax basis of acquired identified intangible assets and investments in certain foreign subsidiaries that had not been indefinitely reinvested, partially offset by acquired tax attributes.

The benefit from income taxes in fiscal year 2018 was primarily due to income tax benefits recognized from the enactment of the 2017 Tax Reform Act and the Redomiciliation Transaction.

As a result of the 2017 Tax Reform Act, we recorded a total provisional benefit of $ 7,278 million in fiscal year 2018.

This provisional benefit included $ 7,212 million related to the Transition Tax, which was primarily due to a reduction of $ 10,457 million in our federal deferred income tax liabilities on accumulated non-U.S.

earnings, partially offset by $ 2,133 million of federal provisional long-term Transaction Tax payable and $ 1,112 million of unrecognized federal tax benefits related to the Transition Tax.

The provisional benefit also included $ 66 million related to the remeasurement of certain deferred tax assets and liabilities, which were based on the tax rates at which they were expected to be reversed in the future as a result of the 2017 Tax Reform Act.

The impact of the Redomiciliation Transaction and the related internal reorganizations included tax benefits of $ 1,162 million in fiscal year 2018 from the remeasurement of withholding taxes on undistributed earnings, partially offset by a $ 167 million tax provision on foreign earnings and profits subject to U.S.

The income tax provision for fiscal year 2017 was primarily due to profit before tax and a discrete expense of $ 76 million resulting from entity reorganizations partially offset by the recognition of $ 273 million of excess tax benefits from stock-based awards that vested or were exercised during fiscal year 2017 and, to a lesser extent, the recognition of previously unrecognized tax benefits primarily as a result of audit settlements.

We have obtained several tax incentives from the Singapore Economic Development Board, an agency of the Government of Singapore, which provide that qualifying income earned in Singapore is subject to tax incentives or reduced rates of Singapore income tax.

Each tax incentive was separate and distinct from the others, and may be granted, withheld, extended, modified, truncated, complied with or terminated independently without any effect on the other incentives.

Subject to our compliance with the conditions specified in these incentives and legislative developments, the Singapore tax incentive is presently expected to expire in November 2025.

Components of Benefit from Income Taxes

The benefit from income taxes in fiscal year 2020 was primarily due to jurisdictional mix of income and expense, the recognition of gross uncertain tax benefits as a result of lapses of statutes of limitations, the remeasurement of certain foreign deferred tax assets and liabilities, and excess tax benefits from stock-based awards.

The benefit from income taxes in fiscal year 2019 was primarily due to excess tax benefits from stock-based awards, the recognition of gross unrecognized tax benefits as a result of audit settlements and lapses of statutes of limitations net of increases in balances related to tax positions taken during the year, deferred tax remeasurement in state and foreign jurisdictions, internal reorganizations, and the partial release of our valuation allowance as a result of the CA Merger, partly offset by a change in estimate of our fiscal year 2018 provision resulting from regulations issued related to the U.S.

Tax Cuts and Jobs Act (“2017 Tax Reform Act”).

The benefit from income taxes in the fiscal year 2018 was primarily due to income tax benefits recognized from the enactment of the 2017 Tax Reform Act and as a result of our redomiciliation to the United States on April 4, 2018.

We have obtained several tax incentives from the Singapore Economic Development Board which provide that qualifying income earned in Singapore is subject to tax incentives or reduced rates of Singapore income tax.

Each tax incentive is separate and distinct from the others and may be granted, withheld, extended, modified, truncated, complied with, or terminated independently without any effect on the other incentives.

Subject to our compliance with the conditions specified in these incentives and legislative developments, the Singapore tax incentive is scheduled to expire in November 2025.

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.

If we cannot, or elect not to, comply with the conditions specified, we will lose the related tax benefits and we could be required to refund previously realized material tax benefits.

Before taking into consideration the effects of the 2017 Tax Reform Act and other indirect tax impact, the effect of these tax incentives and tax holiday was to increase the benefit from income taxes by approximately $ 923 million and $ 590 million and increase diluted net income per share by $ 2.20 and $ 1.37 for fiscal years 2019 and 2018 , respectively.

For fiscal year 2017 , the effect of these tax incentives and tax holiday was to reduce the overall provision for income taxes by approximately $ 237 million and reduce diluted net loss per share by $ 0.56 .

During fiscal year 2019, we reevaluated our indefinite reinvestment assertion with regards to certain accumulated foreign earnings and concluded that we intend to indefinitely reinvest $ 2,677 million of such earnings as a result of interpretive guidance issued by the IRS.

The amount of unrecognized deferred income tax liability indefinitely related to these earnings is estimated to be $ 281 million .

All other current and future earnings of all our foreign subsidiaries are not considered permanently reinvested.

As a result of the Redomiciliation Transaction on April 4, 2018, the following references to current tax expense (benefit from) federal and state represent the U.S.

for fiscal years 2019 and 2018 and Singapore for fiscal year 2017.

Significant components of the provision for (benefit from) income taxes are as follows:

If we cannot, or elect not to, comply with any such conditions specified, we will lose the related tax benefits and we could be required to refund previously realized material tax benefits.

Before taking into consideration the effects of the 2017 Tax Reform Act and other indirect tax impacts, the effect of these tax incentives and tax holiday was to increase the benefit from income taxes by approximately $833 million, $ 923 million and $ 590 million for fiscal years 2020, 2019 and 2018, respectively.

Significant components of benefit from income taxes are as follows:

2020 2019 2018

(In millions)

Current tax expense (benefit from):

Federal $ 7 $ ( 49 ) $ 255

State 51 ( 16 ) 38

Foreign 506 342 171

Deferred tax expense (benefit from):

Total provision for (benefit from) income taxes

Federal ( 627 ) ( 497 ) ( 8,666 )

State ( 161 ) ( 113 ) ( 103 )

Foreign ( 294 ) ( 177 ) 221

( 1,082 ) ( 787 ) ( 8,548 )

Total benefit from income taxes $ ( 518 ) $ ( 510 ) $ ( 8,084 )

Rate Reconciliation

2020 2019 2018

Statutory tax rate 21.0 % 21.0 % 21.0 %

State, net of federal benefit ( 3.6 ) ( 4.6 ) ( 1.1 )

2017 Tax reform

2017 Tax Reform Act — 5.1 ( 159.0 )

Redomiciliation transaction withholding tax remeasurement — — ( 25.6 )

Foreign income taxed at different rates ( 48.6 ) ( 52.5 ) ( 16.3 )

Deemed inclusion of foreign earnings 21.8 25.9 4.7

Deferred taxes on unremitted foreign earnings ( 1.1 ) 1.9 0.4

Excess tax benefits from stock-based compensation ( 6.0 ) ( 10.4 ) ( 4.0 )

Research and development credit ( 4.3 ) ( 7.6 ) ( 2.9 )

Deemed inclusion of foreign earnings

Tax holidays and concessions

Other, net ( 0.4 ) ( 1.7 ) 4.9

Effective tax rate on income before income taxes ( 21.2 ) % ( 22.9 ) % ( 177.9 ) %

Summary of Deferred Income Taxes

2020 November 3,

(In millions)

5 unchanged sentences

Gross deferred income tax assets 2,967 2,580

Less valuation allowance

valuation allowance ( 1,707 ) ( 1,563 )

Deferred income tax assets 1,260 1,017

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Foreign earnings not indefinitely reinvested 112 138

Other deferred income tax liabilities

Deferred income tax liabilities 1,589 2,498

Net deferred income tax assets (liabilities)

Net deferred income tax liabilities $ ( 329 ) $ ( 1,481 )

Deferred income taxes reflect the net effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and their basis for income tax purposes and the tax effects of net operating losses and tax credit carryforwards.

The increase in deferred income tax liabilities for depreciation and amortization is primarily due to the CA Merger.

The decrease in net deferred income tax liabilities was primarily a result of the amortization of acquisition-related intangible assets included in the consolidated statement of operations.

In connection with the Symantec Asset Purchase in November 2019, we established $ 28 million of net deferred tax assets primarily as a result of the difference in book basis and tax basis related to acquired assets.

We continue to indefinitely reinvest $ 2,677 million of certain accumulated foreign earnings.

The unrecognized deferred income tax liability related to these earnings is estimated to be $ 281 million.

All other current and future earnings of all our foreign subsidiaries are not considered permanently reinvested.

The following table presents net deferred income tax assets (liabilities) as reflected on the consolidated balance sheets:

2020 November 3,

(In millions)

1 unchanged sentence

Other long-term liabilities ( 569 ) ( 1,531 )

Net long-term income tax assets (liabilities)

The increase in the valuation allowance to $ 1,563 million in fiscal year 2019 from $ 1,347 million in fiscal year 2018 was primarily due to the CA Merger, foreign deferred tax assets arising from foreign credits, and losses not expected to be realized.

Net long-term income tax liabilities $ ( 329 ) $ ( 1,481 )

The increase in the valuation allowance to $ 1,707 million in fiscal year 2020 from $ 1,563 million in fiscal year 2019 was primarily due to federal and state deferred tax assets arising from credits and net operating loss carryforwards not expected to be realized.

As of November 1, 2020, we had U.S.

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state net operating loss carryforwards of $ 2,951 million and other foreign net operating loss carryforwards of $ 1,126 million.

federal and state net operating loss carryforwards begin to expire in fiscal year 2020.

federal and state net operating loss carryforwards begin to expire in our fiscal year ending October 31, 2021 (“fiscal year 2021”).

The other foreign net operating losses expire in various fiscal years beginning 2021.

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Tax Reform Act of 1986 limits the use of net operating loss and tax credit carryforwards in the case of an “ownership change” of a corporation or separate return loss year limitations.

Any ownership changes, as defined, may restrict utilization of carryforwards.

Any ownership changes, as defined, may restrict the utilization of carryforwards.

As of November 1, 2020, we had approximately $ 67 million of federal net operating loss carryforwards in the U.S.

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Gross unrecognized tax benefits increased by $ 392 million during fiscal year 2019, resulting in gross unrecognized tax benefits of $ 4,422 million as of November 3, 2019.

The increase in gross unrecognized tax benefits was primarily due to the recognition of unrecognized tax positions of $ 1,112 million related to the Transition Tax, offset by a reduction of our federal deferred income tax liabilities on accumulated non-U.S.

The increase in gross unrecognized tax benefits was also due to the Redomiciliation Transaction, and to a lesser extent, the Brocade Merger.

Gross unrecognized tax benefits increased by $ 273 million during fiscal year 2017 , resulting in gross unrecognized tax benefits of $ 2,256 million as of October 29, 2017 .

The increase in gross unrecognized tax benefits was primarily a result of restructuring activities in fiscal year 2017 .

During fiscal year 2017 , we recognized $ 121 million of previously unrecognized tax benefits as a result of the audit settlement with taxing authorities, and $ 12 million as a result of the expiration of the statute of limitations for certain audit periods.

We recognize interest and penalties related to unrecognized tax benefits within provision for income taxes in the accompanying consolidated statements of operations.

Accrued interest and penalties were included within other long-term liabilities on the consolidated balance sheets.

Gross unrecognized tax benefits increased by $ 1,774 million during fiscal year 2018, resulting in gross unrecognized tax benefits of $ 4,030 million as of November 4, 2018.

The increase in gross unrecognized tax benefits was primarily due to the recognition of unrecognized tax positions of $ 1,112 million related to the transition tax on the mandatory deemed repatriation of accumulated non-U.S.

earnings of U.S.

controlled foreign corporations, offset by a reduction of our federal deferred income tax liabilities on accumulated non-U.S.

The increase in gross unrecognized tax benefits was also as a result of our redomiciliation to the United States on April 4, 2018, and to a lesser extent, the Brocade Merger.

We recognize interest and penalties related to unrecognized tax benefits within the benefit from income taxes.

Accrued interest and penalties were included within other long-term liabilities.

During fiscal years 2020 and 2018, we recognized interest and penalties of $ 37 million and $ 59 million, respectively, within the benefit from income taxes.

There was no amount recognized during fiscal year 2019.

As of November 1, 2020 and November 3, 2019, the combined amount of cumulative accrued interest and penalties was approximately $ 340 million and $ 303 million, respectively.

The increase in cumulative accrued interest and penalties was primarily a result of the CA Merger.

The following table reconciles the beginning and ending balance of gross unrecognized tax benefits:

2020 2019 2018

(In millions)

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Increases in balances related to tax positions taken during current period

Decreases in balances related to settlement with taxing authorities

379 460 1,726

Decreases in balances related to settlements with taxing authorities ( 42 ) ( 229 ) ( 4 )

Ending balance $ 4,748 $ 4,422 $ 4,030

A portion of our unrecognized tax benefits will affect our effective tax rate if they are recognized upon favorable resolution of the uncertain tax positions.

As of November 3, 2019 and November 4, 2018 , approximately $ 4,725 million and $ 4,220 million of the unrecognized tax benefits including accrued interest and penalties would affect our effective tax rate, respectively.

Decreases in balances related to tax positions taken during prior periods and settlement with taxing authorities related to the settlement of income tax audits in various jurisdictions during fiscal year 2019.

As of November 1, 2020 and November 3, 2019, approximately $ 5,088 million and $ 4,725 million of the unrecognized tax benefits and accrued interest and penalties would affect our effective tax rate, respectively.

We are subject to U.S.

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Reportable Segments

As a result of the CA Merger, which closed on November 5, 2018, we updated our organizational structure resulting in three reportable segments:

semiconductor solutions, infrastructure software and IP licensing.

During the first quarter of fiscal year 2020, we updated our organizational structure resulting in two reportable segments:

semiconductor solutions and infrastructure software.

Each segment represents a component for which separate financial information is available that is utilized on a regular basis by the CODM in determining how to allocate resources and evaluate performance.

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We provide semiconductor solutions for managing the movement of data in data center, telecom, enterprise and embedded networking applications.

We provide a broad variety of RF semiconductor devices, wireless connectivity solutions and custom touch controllers for mobile applications.

We provide a broad variety of radio frequency semiconductor devices, wireless connectivity solutions and custom touch controllers 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 mainframe, enterprise and storage area networking solutions, which enables customers to leverage the benefits of agility, automation, insights, resiliency and security in managing business processes and technology investments, and to reduce the cost and complexity of managing business information within a shared data storage environment.

IP licensing .

We license a portion of our broad IP portfolio.

Our CODM assesses the performance of each segment and allocates resources to those segments based on net revenue and operating results and does not evaluate our segments using discrete asset information.

Operating results by segment include items that are directly attributable to each segment and also include shared expenses such as global operations, including manufacturing support, logistics and quality control, in addition to expenses associated with selling, general and administrative activities for the business, which are allocated primarily based on revenue, while facilities expenses are allocated primarily based on site-specific headcount.

We also offer a cyber security solutions portfolio, including data loss prevention, endpoint protection, and web, email and cloud security solutions.

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 global operations, including manufacturing support, logistics and quality control, expenses associated with selling, general and administrative activities, facilities and information technology expenses.

Shared expenses are primarily allocated based on revenue and headcount.

During the fourth quarter of our fiscal year 2020, we refined our allocation methodology for certain selling, general and administrative expenses to more closely align these costs with the segment benefiting from the shared expenses.

Prior period segment results have been recast to conform to the current presentation.

Unallocated Expenses

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However, the CODM does not evaluate depreciation expense by operating segment and, therefore, it is not separately presented.

There was no inter-segment revenue.

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.

2020 2019 2018

(In millions)

2 unchanged sentences

Total net revenue $ 23,888 $ 22,597 $ 20,848

Operating income (loss):

Operating income:

Semiconductor solutions $ 8,576 $ 8,538 $ 9,253

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Net revenue from China (including Hong Kong) for fiscal years 2020, 2019 and 2018 was $ 7,808 million, $ 8,056 million and $ 10,305 million, respectively.

Net revenue from Singapore for fiscal year 2019 was $ 2,507 million (amounts were below 10% for fiscal years 2018 and 2017).

Net revenue from Singapore for fiscal year 2019 was $ 2,507 million (amounts were less than 10% for fiscal years 2020 and 2018).

Net revenue from other foreign countries for fiscal years 2020, 2019 and 2018 was $ 11,302 million, $ 7,799 million and $ 7,846 million, respectively.

2 unchanged sentences

Long-lived assets include property, plant and equipment and are based on the physical location of the assets.

2020 November 3,

(In millions)

1 unchanged sentence

United States $ 1,659 $ 1,763

Taiwan 285 258

Other 565 544

Total long-lived assets $ 2,509 $ 2,565

Significant Customer Information

We sell our products through our direct sales force and a select network of distributors globally.

One customer accounted for 24 % of our net accounts receivable balance at November 3, 2019 compared with two customers which accounted for 20 % and 14 % of our net accounts receivable balance at November 4, 2018 .

During fiscal year 2019, one customer accounted for 17 % of our net revenue.

We sell our products through our direct sales force and a select network of distributors and channel partners globally.

No customer accounted for 10% or more of our net accounts receivable balance at November 1, 2020 compared with one customer which accounted for 24 % of our net accounts receivable balance at November 3, 2019.

During fiscal years 2020 and 2019, one customer accounted for 13 % and 17 % of our net revenue, respectively.

Revenue from this customer was included in our semiconductor solutions segment.

During fiscal year 2018, no direct customers represented more than 10% of our net revenue.

During fiscal year 2017, one customer represented 14 % of our net revenue.

The majority of the revenue from this customer was included in our semiconductor solutions segment.

During fiscal year 2018, no customer accounted for 10% or more of our net revenue.

Commitments and Contingencies

The following table summarizes contractual obligations and commitments as of November 1, 2020:

Purchase Commitments Other Contractual Commitments

(In millions)

Debt principal, interest and fees

Purchase commitments

Other contractual commitments

Operating lease obligations

Debt Principal, Interest and Fees.

Represents principal, estimated interest and fees on borrowings.

For borrowings subject to a floating interest rate, the estimated interest was based on the rate in effect during the last month of the fiscal year ended November 3, 2019 .

2021 $ 894 $ 248

Thereafter — 239

Total $ 966 $ 1,137

Purchase Commitments.

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Purchase obligations exclude agreements that are cancelable without penalty.

Cancellation for outstanding

purchase orders for capital expenditures in connection with internal fabrication facility expansion and construction of our new

campuses is generally allowed but requires payment of all costs incurred through the date of cancellation and, therefore,

cancelable purchase orders for these capital expenditures are included in the table above.

Cancellation for outstanding purchase orders for capital expenditures in connection with construction of our new campuses is generally allowed but requires payment of all costs incurred through the date of cancellation and, therefore, cancelable purchase orders for these capital expenditures are included in the table above.

Other Contractual Commitments.

Represents amounts payable pursuant to agreements related to information technology, human resources, and other service agreements.

Operating Lease Obligations.

Represents real property and equipment leased from third parties under non-cancelable operating leases.

Rent expense was $ 244 million , $ 233 million and $ 253 million for fiscal years 2019 , 2018 and 2017 , respectively.

Due to the inherent uncertainty with respect to the timing of future cash outflows associated with our unrecognized tax benefits at November 3, 2019 , we are unable to reliably estimate the timing of cash settlement with the respective taxing authority.

Therefore, $ 3,269 million of unrecognized tax benefits and accrued interest classified within other long-term liabilities on our consolidated balance sheet as of November 3, 2019 have been excluded from the contractual obligations table above.

Represents amounts payable pursuant to agreements related to IT, human resources, 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 1, 2020, we are unable to reliably estimate the timing of cash settlement with the respective taxing authorities.

Therefore, $ 3,185 million of unrecognized tax benefits and accrued interest classified within other long-term liabilities as of November 1, 2020 have been excluded from the contractual obligations table above.

Standby Letters of Credit

3 unchanged sentences

Contingencies

From time to time, we are involved in litigation that we believe is of the type common to companies engaged in our line of business, including commercial disputes, employment issues and disputes involving claims by third parties that our activities infringe their patent, copyright, trademark or other IP rights.

Legal proceedings are often complex, may require the expenditure of significant funds and other resources, and the outcome of litigation is inherently uncertain, with material adverse outcomes possible.

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 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 outcome of such proceedings is 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.

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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 California Institute of Technology

California Institute of Technology ("Caltech") filed a complaint against Broadcom and Apple Inc.

on May 26, 2016 in the United States District Court for the Central District of California (the “U.S.

Central District Court”), and an amended complaint adding Cypress Semiconductor Corporation as a defendant on August 15, 2016.

The amended complaint alleged that chips that support certain error correction codes as specified in IEEE Standards 802.11n and 802.11ac willfully infringed four patents related to error correction coding:

and 8,284,833 (“’833 patent”).

Prior to trial, Caltech dismissed its claims against Cypress and withdrew its infringement allegations as to ‘833 patent.

The complaint sought a preliminary and permanent injunction, damages, pre- and post-judgment interest, as well as attorneys’ fees, costs, and expenses.

The trial was held in January 2020, and on January 29, 2020, the jury issued its verdict finding infringement and awarding Caltech past damages of $ 270.2 million from Broadcom and $ 837.8 million from Apple, for which Apple is seeking indemnification from Broadcom.

On August 3, 2020, the U.S.

Central District Court issued its judgment, awarding Caltech past damages in the amounts awarded by the jury, as well as pre- and post-judgment interest.

Additionally, the U.S.

Central District Court awarded Caltech an unspecified amount of ongoing royalties to be determined after the anticipated appeals process is resolved.

Neither the jury nor the U.S.

Central District Court found willful infringement, which if it had, could have resulted in enhanced damages up to three times the amount awarded.

Broadcom and Apple have appealed to the United States Court of Appeals for the Federal Circuit.

We believe that the evidence and the law do not support the U.S.

Central District Court’s findings of infringement or the award of damages, including ongoing royalties, and do not believe a material loss is probable at this time.

We believe that there are strong grounds for appeal, and we intend to vigorously challenge the U.S.

Central District Court’s judgment and rulings.

As a result, we have not recorded a reserve with respect to this litigation, in accordance with the applicable accounting standards.

We believe the low end of the possible range of loss is zero, but we cannot reasonably estimate the ultimate outcome, as a number of factors (including the appeal by Broadcom and Apple) could significantly change the assessment of damages.

Lawsuits Relating to the Acquisition of Emulex Corporation

3 unchanged sentences

8:15-cv-554-CJC-JCG.

The complaint names as defendants Emulex Corporation (“Emulex”), its directors, AT Wireless and Emerald Merger Sub, and purported to assert claims under Sections 14(d), 14(e) and 20(a) of the Exchange Act.

The complaint names as defendants Emulex Corporation (“Emulex”), its directors, Avago Technologies Wireless (U.S.A.) Manufacturing (“AT Wireless”) and Emerald Merger Sub, and purported to assert claims under Sections 14(d), 14(e) and 20(a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

The complaint alleged, among other things, that the board of directors of Emulex failed to provide material information and/or omitted material information from the Solicitation/Recommendation Statement on Schedule 14D-9 filed with the SEC on April 7, 2015 by Emulex, together with the exhibits and annexes thereto.

17 unchanged sentences

On October 11, 2018, Defendants-Appellees filed a Petition for a Writ of Certiorari to the United States Supreme Court (the “U.S.

Supreme Court”).

On January 4, 2019, the U.S.

Supreme Court granted certiorari.

Supreme Court”), which was granted on January 4, 2019.

On April 23, 2019, the U.S.

Supreme Court dismissed the writ of certiorari as having been improvidently granted.

On May 28, 2019, the Ninth Circuit Court remanded the case back to the U.S.

On May 28, 2019, the Ninth Circuit

Court remanded the case back to the U.S.

Central District Court.

On October 6, 2019, Plaintiffs voluntarily dismissed AT Wireless from this action.

On October 7, 2019, the remaining defendants, Emulex and its directors, filed motions to dismiss the complaint, which are set to be heard on February 4, 2020.

We believe these claims are all without merit and intend to vigorously defend these actions.

On October 6, 2019, Plaintiff voluntarily dismissed AT Wireless from this action and the remaining defendants, Emulex and its directors, filed motions to dismiss the complaint on October 7, 2019.

On February 26, 2020, the U.S.

Central District Court dismissed Plaintiff’s complaint with prejudice.

Other Matters

5 unchanged sentences

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 intellectual property dispute.

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 or regulatory investigations, as potential losses for such matters are not considered probable and ranges of losses are not reasonably estimable.

9 unchanged sentences

Restructuring Charges

The following is a summary of significant restructuring expense recognized in continuing operations, primarily in operating expenses:

The following is a summary of significant restructuring expense recognized primarily in operating expenses:

• During fiscal year 2020, we initiated cost reduction activities associated with the Symantec Asset Purchase.

As a result, we recognized $ 174 million of restructuring expense primarily related to employee termination costs.

We have substantially completed the restructuring activities related to the Symantec Asset Purchase.

• During fiscal year 2019, we initiated cost reduction activities associated with the CA Merger.

As a result, we recognized $ 740 million of restructuring expense primarily related to employee termination and lease and other exit costs during fiscal year 2019.

We expect these restructuring activities to be substantially completed by the end of fiscal year 2020.

During fiscal year 2018, we initiated cost reduction activities associated with the Brocade Merger.

As a result, we recognized $ 2 million and $ 176 million of restructuring expense in fiscal years 2019 and 2018 , respectively.

These charges primarily related to employee termination costs.

We have substantially completed the restructuring activities related to the acquisition of Brocade.

In connection with cost reduction activities associated with the acquisition of BRCM, we recognized $ 4 million , $ 50 million and $ 124 million of restructuring expense in fiscal years 2019 , 2018 and 2017 , respectively.

These restructuring expenses primarily related to lease and other exit costs for fiscal years 2019 and 2018 and employee termination costs for fiscal year 2017 .

We have substantially completed the restructuring activities related to the acquisition of BRCM.

Employee Termination Costs

Lease and Other Exit Costs

As a result, we recognized $ 28 million and $ 740 million of restructuring expense primarily related to employee termination and lease and other exit costs during fiscal year 2020 and fiscal year 2019, respectively.

We have substantially completed the restructuring activities related to the CA Merger.

The following table summarizes the significant activities within, and components of, the restructuring liabilities:

Employee Termination Costs Lease and Other Exit Costs Total

(In millions)

1 unchanged sentence

Restructuring charges (a)

Balance as of October 29, 2017

Restructuring charges (a)

Utilization ( 165 ) ( 86 ) ( 251 )

Balance as of November 4, 2018 16 6 22

1 unchanged sentence

Restructuring charges 586 160 746

Balance as of November 3, 2019 (b)

Utilization ( 562 ) ( 165 ) ( 727 )

Balance as of November 3, 2019 69 39 108

Restructuring charges (a)

Utilization ( 221 ) ( 50 ) ( 271 )

Effect of adoption of Topic 842 (b)

— ( 36 ) ( 36 )

Included $ 2 million and $ 5 million of restructuring charges related to discontinued operations recognized during fiscal years 2018 and 2017 , respectively, which was included in loss from discontinued operations in our consolidated statements of operations.

The majority of the employee termination costs balance is expected to be paid within the first half of fiscal year 2020.

The majority of the leases and other exit costs balance is expected to be paid through the fiscal year ending November 2, 2025.

Impairment and Disposal Charges

During fiscal year 2019, impairment and disposal charges of $ 67 million primarily related to property, plant and equipment.

During fiscal year 2018, impairment and disposal charges of $ 13 million primarily related to leasehold improvements.

During fiscal year 2017, impairment and disposal charges of $ 56 million related to property, plant and equipment and IPR&D projects acquired in the BRCM acquisition.

Condensed Consolidating Financial Information

As of November 4, 2018 , the 2017 Senior Notes were fully and unconditionally guaranteed, jointly and severally, on an unsecured, unsubordinated basis by Broadcom and Broadcom-Singapore.

Substantially all of the 2017 Senior Notes have been registered with the SEC.

During fiscal year 2019, we liquidated Broadcom-Singapore and de-registered the Partnership.

BTI, a 100 % -owned subsidiary of Broadcom, became a guarantor of the 2017 Senior Notes and entered into supplemental indentures with BRCM, Cayman Finance and the trustee of the 2017 Senior Notes.

As a result, Broadcom-Singapore was released from its guarantee of the 2017 Senior Notes as Subsidiary Guarantor under each of their respective indentures in accordance with their terms.

On May 15, 2019, Cayman Finance was merged into BTI, with BTI remaining as the surviving entity.

In connection with this merger, BTI remains a guarantor and became a co-issuer of the 2017 Senior Notes.

Accordingly, we updated the guarantor structure, which resulted in the following revised column headings:

Parent Guarantor (Broadcom)

Subsidiary Issuers (BTI and BRCM)

Non-Guarantor Subsidiaries (our other subsidiaries)

We have applied the impacts of the change in guarantors and issuers retrospectively to all periods presented.

The following tables set forth the condensed consolidating financial information for the Parent Guarantor, the Subsidiary Issuers, and the Non-Guarantor Subsidiaries for the periods presented.

Investments in subsidiaries are accounted for under the equity method;

accordingly, entries necessary to consolidate the Parent Guarantor, the Subsidiary Issuers and the Non-Guarantor Subsidiaries are reflected in the Eliminations column.

In the opinion of management, separate complete financial statements of the Subsidiary Issuers would not provide additional material information that would be useful in assessing their financial composition.

Condensed Consolidating Balance Sheets

November 3, 2019

Parent Guarantor

Subsidiary Issuers

Non-Guarantor Subsidiaries

Consolidated Totals

(In millions)

Current assets:

Cash and cash equivalents

Trade accounts receivable, net

Intercompany receivable

Intercompany loan receivable

Other current assets

Total current assets

Long-term assets:

Property, plant and equipment, net

Intangible assets, net

Investment in subsidiaries

Intercompany loan receivable, long-term

Other long-term assets

LIABILITIES AND EQUITY

Current liabilities:

Accounts payable

Employee compensation and benefits

Current portion of long-term debt

Intercompany payable

Intercompany loan payable

Other current liabilities

Total current liabilities

Long-term liabilities:

Long-term debt

Deferred tax liabilities

Intercompany loan payable, long-term

Unrecognized tax benefits

Other long-term liabilities

Total liabilities

Preferred stock dividend obligation

Total stockholders’ equity

Total liabilities and equity

Balance as of November 1, 2020 (c)

$ 34 $ — $ 34

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

Condensed Consolidating Balance Sheets

November 4, 2018

Parent Guarantor

Subsidiary Issuers

Non-Guarantor Subsidiaries

Consolidated Totals

(In millions)

Current assets:

Cash and cash equivalents

Trade accounts receivable, net

Intercompany receivable

Intercompany loan receivable

Other current assets

Total current assets

Long-term assets:

Property, plant and equipment, net

Intangible assets, net

Investment in subsidiaries

Intercompany loan receivable, long-term

Other long-term assets

LIABILITIES AND EQUITY

Current liabilities:

Accounts payable

Employee compensation and benefits

Intercompany payable

Intercompany loan payable

Other current liabilities

Total current liabilities

Long-term liabilities:

Long-term debt

Deferred tax liabilities

Intercompany loan payable, long-term

Unrecognized tax benefits

Other long-term liabilities

Total liabilities

Total stockholders’ equity

Total liabilities and equity

_________________________________

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

Condensed Consolidating Statements of Operations and

Comprehensive Income

Fiscal Year Ended

November 3, 2019

Parent Guarantor

Subsidiary Issuers

Non-Guarantor Subsidiaries

Consolidated Totals

(In millions)

Subscriptions and services

Intercompany revenue

Total net revenue

Cost of revenue:

Cost of products sold

Cost of subscriptions and services

Intercompany cost of products sold

Amortization of acquisition-related intangible assets

Restructuring charges

Total cost of revenue

Research and development

Intercompany operating expense

Selling, general and administrative

Amortization of acquisition-related intangible assets

Restructuring, impairment and disposal charges

Total operating expenses

Operating income (loss)

Interest expense

Intercompany interest expense

Other income, net

Intercompany interest income

Intercompany other income (expense), net

Income (loss) from continuing operations before income taxes and earnings in subsidiaries

Provision for (benefit from) income taxes

Income (loss) from continuing operations before earnings in subsidiaries

Earnings in subsidiaries

Income from continuing operations and earnings in subsidiaries

Loss from discontinued operations, net of income taxes

Other comprehensive loss, net of tax:

Change in actuarial loss and prior service costs associated with defined benefit pension plans and post-retirement benefit plans

Other comprehensive loss

Comprehensive income

Condensed Consolidating Statements of Operations and

Comprehensive Income

Fiscal Year Ended

November 4, 2018

Parent Guarantor

Subsidiary Issuers

Non-Guarantor Subsidiaries

Consolidated Totals

(In millions)

Subscriptions and services

Intercompany revenue

Total net revenue

Cost of revenue:

Cost of products sold

Cost of subscriptions and services

Intercompany cost of products sold

Purchase accounting effect on inventory

Amortization of acquisition-related intangible assets

Restructuring charges

Total cost of revenue

Research and development

Intercompany operating expense

Selling, general and administrative

Amortization of acquisition-related intangible assets

Restructuring, impairment and disposal charges

Litigation settlements

Total operating expenses

Operating income (loss)

Interest expense

Intercompany interest expense

Impairment on investment

Other income, net

Intercompany interest income

Intercompany other income (expense), net

Income from continuing operations before income taxes and earnings in subsidiaries

Provision for (benefit from) income taxes

Income (loss) from continuing operations before earnings in subsidiaries

Earnings in subsidiaries

Income from continuing operations and earnings in subsidiaries

Loss from discontinued operations, net of income taxes

Net income attributable to noncontrolling interest

Net income attributable to common stock

Other comprehensive loss, net of tax:

Change in actuarial loss and prior service costs associated with defined benefit pension plans and post-retirement benefit plans

Other comprehensive loss

Comprehensive income

Comprehensive income attributable to noncontrolling interest

Comprehensive income attributable to Broadcom Inc.

Condensed Consolidating Statements of Operations and

Comprehensive Income

Fiscal Year Ended

October 29, 2017

Parent Guarantor

Subsidiary Issuers

Non-Guarantor Subsidiaries

Consolidated Totals

(In millions)

Subscriptions and services

Intercompany revenue

Total net revenue

Cost of revenue:

Cost of products sold

Cost of subscriptions and services

Intercompany cost of products sold

Purchase accounting effect on inventory

Amortization of acquisition-related intangible assets

Restructuring charges

Total cost of revenue

Research and development

Intercompany operating expense

Selling, general and administrative

Amortization of acquisition-related intangible assets

Restructuring, impairment and disposal charges

Litigation settlements

Total operating expenses

Operating income

Interest expense

Intercompany interest expense

Loss on extinguishment of debt

Other income, net

Intercompany interest income

Intercompany other income (expense), net

Income from continuing operations before income taxes and earnings in subsidiaries

Provision for (benefit from) income taxes

Income from continuing operations before earnings in subsidiaries

Earnings in subsidiaries

Income from continuing operations and earnings in subsidiaries

Income (loss) from discontinued operations, net of income taxes

Net income attributable to noncontrolling interest

Net income attributable to common stock

Other comprehensive income, net of tax:

Change in actuarial loss and prior service costs associated with defined benefit pension plans and post-retirement benefit plans

Other comprehensive income

Comprehensive income

Comprehensive income attributable to noncontrolling interest

Comprehensive income attributable to Broadcom Inc.

Condensed Consolidating Statements of Cash Flows

Fiscal Year Ended

November 3, 2019

Parent Guarantor

Subsidiary Issuers

Non-Guarantor Subsidiaries

Consolidated Totals

(In millions)

Cash flows from operating activities:

Adjustments to reconcile net income to net cash provided by (used in) operating activities

Net cash provided by (used in) operating activities

Cash flows from investing activities:

Net change in intercompany loans

Acquisitions of businesses, net of cash acquired

Proceeds from sales of businesses

Purchases of property, plant and equipment

Proceeds from disposals of property, plant and equipment

Purchases of investments

Proceeds from sales of investments

Net cash used in investing activities

Cash flows from financing activities:

Net intercompany borrowings

Proceeds from long-term borrowings

Repayment of debt

Other borrowings

Dividend and distribution payments on common stock and exchangeable limited partnership units

Repurchases of common stock - repurchase program

Shares repurchased for tax withholdings on vesting of equity awards

Issuance of preferred stock, net

Issuance of common stock

Net cash provided by (used in) financing activities

Net change in cash and cash equivalents

Cash and cash equivalents at beginning of period

Cash and cash equivalents at end of period

Condensed Consolidating Statements of Cash Flows

Fiscal Year Ended

November 4, 2018

Parent Guarantor

Subsidiary Issuers

Non-Guarantor Subsidiaries

Consolidated Totals

(In millions)

Cash flows from operating activities:

Adjustments to reconcile net income to net cash provided by (used in) operating activities

Net cash provided by (used in) operating activities

Cash flows from investing activities:

Intercompany contributions paid

Distributions received from subsidiaries

Net change in intercompany loans

Acquisitions of businesses, net of cash acquired

Proceeds from sales of businesses

Purchases of property, plant and equipment

Proceeds from disposals of property, plant and equipment

Purchases of investments

Proceeds from sales of investments

Net cash used in investing activities

Cash flows from financing activities:

Intercompany contributions received

Net intercompany borrowings

Repayment of debt

Dividend and distribution payments on common stock and exchangeable limited partnership units

Repurchases of common stock - repurchase program

Shares repurchased for tax withholdings on vesting of equity awards

Issuance of common stock

Net cash provided by (used in) financing activities

Net change in cash and cash equivalents

Cash and cash equivalents at the beginning of period

Cash and cash equivalents at end of period

Condensed Consolidating Statements of Cash Flows

Fiscal Year Ended

October 29, 2017

Parent Guarantor

Subsidiary Issuers

Non-Guarantor Subsidiaries

Consolidated Totals

(in millions)

Cash flows from operating activities:

Adjustments to reconcile net income to net cash provided by operating activities

Net cash provided by operating activities

Cash flows from investing activities:

Intercompany contributions paid

Distributions received from subsidiaries

Net change in intercompany loans

Acquisitions of businesses, net of cash acquired

Proceeds from sales of businesses

Purchases of property, plant and equipment

Proceeds from disposals of property, plant and equipment

Purchases of investments

Proceeds from maturities of investments

Net cash provided by (used in) investing activities

Cash flows from financing activities:

Intercompany contributions received

Net intercompany borrowings

Proceeds from long-term borrowings

Repayment of debt

Dividend and distribution payments on common stock and exchangeable limited partnership units

Issuance of common stock

Net cash provided by (used in) financing activities

Net change in cash and cash equivalents

Cash and cash equivalents at beginning of period

Cash and cash equivalents at end of period

(a) Included $ 19 million and $ 2 million of restructuring expense related to discontinued operations recognized during fiscal years 2020 and 2018, respectively, which was included in loss from discontinued operations.

(b) Upon adoption of Topic 842, certain restructuring lease liabilities were required to be recognized as a reduction to the corresponding ROU assets.

(c) The majority of the employee termination costs balance is expected to be paid within the first half of fiscal year 2021.

Impairment and Disposal Charges

During fiscal years 2020 and 2018, impairment and disposal charges of $ 19 million and $ 13 million, respectively, primarily related to leasehold improvements.

During fiscal year 2019, impairment and disposal charges of $ 67 million primarily related to property, plant and equipment.

Subsequent Events

Acquisition of Symantec Corporation’s Enterprise Security Business

On November 4, 2019, we completed the purchase and assumption of certain assets and certain liabilities, respectively, of Symantec Corporation’s Enterprise Security business for approximately $ 10.7 billion in cash (the “Symantec Asset Purchase”).

We expect to account for the Symantec Asset Purchase as a business combination and are currently evaluating the purchase price allocation.

It is not practicable to disclose the preliminary purchase price allocation or unaudited pro forma combined financial information for this transaction, given the short period of time between the acquisition date and the issuance of these consolidated financial statements.

2020 Term Loans

In connection with the Symantec Asset Purchase, we entered into a credit agreement (the “2020 Credit Agreement”), which provides for a $ 7,750 million unsecured term A-3 facility due November 2022 and a $ 7,750 million unsecured term A-5 facility due November 2024, collectively referred to as the “2020 Term Loans”.

The 2020 Credit Agreement has substantially the same representations and warranties, covenants and events of default as the 2019 Credit Agreement.

On November 4, 2019, we used $ 12 billion of the net proceeds from the 2020 Term Loans to fund the Symantec Asset Purchase and related working capital needs.

On December 2, 2019, we refinanced our 5.375 % notes due December 2019 using $ 750 million of net proceeds from the 2020 Term Loans.

The remaining net proceeds from the 2020 Term Loans of $ 2,750 million are available to refinance our 2.375 % notes due January 2020.

Principal payments of 2.50% of the original aggregate principal amount borrowed on our 2020 Term Loans are due quarterly beginning in March 2020 with the remaining principal due upon the respective maturity dates of our 2020 Term Loans.

Interest on our 2020 Term Loans is based on a floating rate and is payable monthly.

Our obligations under the 2020 Credit Agreement are guaranteed on an unsecured basis by our subsidiaries, BRCM and BTI.

Preferred Stock Cash Dividends Declared

6 unchanged sentences

Total net revenue $ 6,467 $ 5,821 $ 5,742 $ 5,858 $ 5,776 $ 5,515 $ 5,517 $ 5,789

Gross margin 3,747 3,316 3,189 3,264 3,152 3,034 3,089 3,208

Operating income 1,526 1,008 766 714 1,054 865 970 555

Income from continuing operations 1,324 689 568 380 847 715 693 481

Loss from discontinued operations, net of income taxes

Income (loss) from discontinued operations, net of income taxes — ( 1 ) ( 5 ) 5 — — ( 2 ) ( 10 )

Net income 1,324 688 563 385 847 715 691 471

Dividends on preferred stock (9)

Net income attributable to noncontrolling interest

( 74 ) ( 74 ) ( 75 ) ( 74 ) ( 29 ) — — —

Net income attributable to common stock $ 1,250 $ 614 $ 488 $ 311 $ 818 $ 715 $ 691 $ 471

1 unchanged sentence

Income per share from continuing operations $ 2.93 $ 1.46 $ 1.18 $ 0.73 $ 1.97 $ 1.71 $ 1.64 $ 1.15

Loss per share from discontinued operations

Income (loss) per share from discontinued operations — ( 0.01 ) ( 0.01 ) 0.01 — — — ( 0.03 )

Net income per share $ 2.93 $ 1.45 $ 1.17 $ 0.74 $ 1.97 $ 1.71 $ 1.64 $ 1.12

Dividends declared and paid per share

Dividends declared and paid per share-full year

Dividends declared and paid per share to common stockholders $ 3.25 $ 3.25 $ 3.25 $ 3.25 $ 2.65 $ 2.65 $ 2.65 $ 2.65

Dividends declared and paid per share to common stockholders -full year $ 13.00 $ 10.60

_________________________________

Includes amortization of acquisition-related intangible assets of $ 1,301 million .

Includes amortization of acquisition-related intangible assets of $ 1,303 million .

Includes amortization of acquisition-related intangible assets of $ 1,299 million .

Includes the results of CA beginning with the fiscal quarter ended February 3, 2019 in connection with the completion of the CA Merger on November 5, 2018.

Also includes amortization of acquisition-related intangible assets of $ 1,309 million and restructuring, impairment and disposal charges of $ 629 million .

Includes amortization of acquisition-related intangible assets of $ 829 million and impairment on investment of $ 106 million .

Includes amortization of acquisition-related intangible assets of $ 830 million .

Includes amortization of acquisition-related intangible assets of $ 832 million .

Includes the results of Brocade beginning with the fiscal quarter ended February 4, 2018 in connection with the completion of the Brocade Merger on November 17, 2017.

Also includes amortization of acquisition-related intangible assets of $ 1,054 million , a purchase accounting effect on inventory charge of $ 70 million and restructuring, impairment and disposal charges of $ 145 million .

At the beginning of fiscal year 2019, we adopted Topic 606.

Periods prior to fiscal year 2019 are presented in accordance with Accounting Standards Codification 605, Revenue Recognition.

Refer to Note 3 .

“ Revenue from Contracts with Customers ” included in Part II, Item 8.

for additional information on our adoption of Topic 606.

(1) Included amortization of acquisition-related intangible assets of $ 1,561 million.

(2) Included amortization of acquisition-related intangible assets of $ 1,553 million.

(3) Included amortization of acquisition-related intangible assets of $ 1,553 million.

(4) Included the results of Symantec Business beginning with the fiscal quarter ended February 2, 2020 in connection with the Symantec Asset Purchase on November 4, 2019.

Also included amortization of acquisition-related intangible assets of $ 1,553 million.

(5) Included amortization of acquisition-related intangible assets of $ 1,301 million.

(6) Included amortization of acquisition-related intangible assets of $ 1,303 million.

(7) Included amortization of acquisition-related intangible assets of $ 1,299 million.

(8) Included amortization of acquisition-related intangible assets of $ 1,309 million and restructuring, impairment and disposal charges of $ 629 million.

(9) Beginning with the fiscal quarter ended November 3, 2019, net income attributable to common stock excluded dividends on Mandatory Convertible Preferred Stock issued during the fiscal quarter ended November 3, 2019.

(10) The sum of quarterly per share information may not equal annual earnings per share as quarterly earnings per share were computed independently for each period presented.

Schedule II — Valuation and Qualifying Accounts

of Period Additions to

Allowances Charges

Write-offs Balance at

(In millions)

3 unchanged sentences

Fiscal year ended November 3, 2019 $ 151 $ 705 $ ( 703 ) $ 153

Fiscal year ended October 29, 2017

Fiscal year ended November 4, 2018 $ 177 $ 882 $ ( 908 ) $ 151

Other accounts receivable allowances (2)

1 unchanged sentence

Fiscal year ended November 3, 2019 $ 12 $ 99 $ ( 73 ) $ 38

Fiscal year ended October 29, 2017

Fiscal year ended November 4, 2018 $ 31 $ 116 $ ( 135 ) $ 12

Income tax valuation allowances:

1 unchanged sentence

Fiscal year ended November 3, 2019 $ 1,347 $ 284 $ ( 68 ) $ 1,563

Fiscal year ended October 29, 2017

Fiscal year ended November 4, 2018 $ 1,447 $ 314 $ ( 414 ) $ 1,347

_______________________________________

4 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data