AVGO filing — read by section

Item 8. Financial Statements and Supplementary Data

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA 
 
 BROADCOM INC. 
 INDEX TO CONSOLIDATED FINANCIAL STATEMENTS 
 Page 
 Report of Independent Registered Public Accounting Firm 
 50 
 
 Consolidated Balance Sheets 
 51 
 
 Consolidated Statements of Operations 
 52 
 
 Consolidated Statements of Comprehensive Income 
 53 
 
 Consolidated Statements of Cash Flows 
 54 
 
 Consolidated Statements of Stockholders' Equity 
 55 
 
 Notes to Consolidated Financial Statements 
 56 
 
 Schedule II — Valuation and Qualifying Accounts 
 95 
 

 
 
 49 

 
 Table of Contents 

 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM 
 
 
 To the Board of Directors and Stockholders of Broadcom Inc. 
 Opinions on the Financial Statements and Internal Control over Financial Reporting 
 
 
 We have audited the accompanying consolidated balance sheets of Broadcom Inc. and its subsidiaries (the “Company”) as of October 31, 2021 and November 1, 2020, and the related consolidated statements of operations, of comprehensive income, of stockholders’ equity and of cash flows for each of the three years in the period ended October 31, 2021, including the related notes and financial statement schedule listed in the index appearing under Item 15(a)(2) (collectively referred to as the “consolidated financial statements”). We also have audited the Company's internal control over financial reporting as of October 31, 2021, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). 
 
 
 In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of October 31, 2021 and November 1, 2020, and the results of its operations and its cash flows for each of the three years in the period ended October 31, 2021 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of October 31, 2021, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO. 
 
 
 Change in Accounting Principle 
 
 
 As discussed in Note 6 to the consolidated financial statements, the Company changed the manner in which it accounts for leases in fiscal 2020. 
 
 
 Basis for Opinions 
 
 
 The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in Management’s Report on Internal Control Over Financial Reporting appearing under Item 9A. Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company's internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. 
 
 
 We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects. 
 
 
 Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions. 
 
 
 Definition and Limitations of Internal Control over Financial Reporting 
 
 
 A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and 
 expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. 
 
 
 Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. 
 
 
 Critical Audit Matters 
 
 
 The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. 
 
 
 Uncertain Tax Positions (UTPs) 
 
 
 As described in Notes 2 and 12 to the consolidated financial statements, the gross unrecognized tax benefits balance was $5,030 million as of October 31, 2021. 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) the significant judgment by management when evaluating the technical merits of these tax positions, (ii) a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating the technical merits of the tax positions, 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 the completeness of the UTPs and the measurement of the income tax liability. These procedures also included, among others, (i) testing management’s process for identifying potential new UTPs, (ii) for a selection of UTPs, evaluating possible outcomes, and (iii) for a selection of UTPs, testing the calculation of the income tax liability 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. Professionals with specialized skill and knowledge were used to assist in (i) the evaluation of the completeness of management’s identification of the UTPs and (ii) for a selection of UTPs, the evaluation of the reasonableness of management’s assessment of whether the tax positions are more-likely-than-not of being sustained, the amount of potential benefit to be realized, and the application of relevant tax laws. 
 
 
 
 
 
 
 /s/ PricewaterhouseCoopers LLP 
 
 
 San Jose, California 
 December 17, 2021 
 We have served as the Company’s auditor since 2006. 
 
 
 
 
 50 

 
 Table of Contents 

 BROADCOM INC. 
 CONSOLIDATED BALANCE SHEETS 
 October 31,
2021 November 1,
2020 
 
 (In millions, except par value) 
 ASSETS 
 Current assets: 
 Cash and cash equivalents $ 12,163 $ 7,618 
 
 Trade accounts receivable, net 2,071 2,297 
 Inventory 1,297 1,003 
 
 Other current assets 1,055 977 
 Total current assets 16,586 11,895 
 Long-term assets: 
 Property, plant and equipment, net 2,348 2,509 
 Goodwill 43,450 43,447 
 Intangible assets, net 11,374 16,782 
 Other long-term assets 1,812 1,300 
 Total assets $ 75,570 $ 75,933 
 LIABILITIES AND EQUITY 
 Current liabilities: 
 Accounts payable $ 1,086 $ 836 
 Employee compensation and benefits 1,066 877 
 Current portion of long-term debt 290 827 
 Other current liabilities 3,839 3,831 
 Total current liabilities 6,281 6,371 
 Long-term liabilities: 
 Long-term debt 39,440 40,235 
 
 Other long-term liabilities 4,860 5,426 
 Total liabilities 50,581 52,032 
 Commitments and contingencies (Note 14) 
 
 Preferred stock dividend obligation 27 27 
 Stockholders’ equity: 
 Preferred stock, $ 0.001 par value; 100 shares authorized; 8.00 % Mandatory Convertible Preferred Stock, Series A, 4 shares issued and outstanding; aggregate liquidation value of $ 3,737 and $ 3,738 as of October 31, 2021 and November 1, 2020, respectively 
 — — 
 Common stock, $ 0.001 par value; 2,900 shares authorized; 413 and 407 shares issued and outstanding as of October 31, 2021 and November 1, 2020, respectively 
 — — 
 
 Additional paid-in capital 
 24,330 23,982 
 Retained earnings 748 — 
 Accumulated other comprehensive loss ( 116 ) ( 108 ) 
 Total stockholders’ equity 24,962 23,874 
 Total liabilities and equity $ 75,570 $ 75,933 

 The accompanying notes are an integral part of these consolidated financial statements. 
 51 

 
 Table of Contents 

 BROADCOM INC. 
 CONSOLIDATED STATEMENTS OF OPERATIONS 
 Fiscal Year Ended 
 October 31,
2021 November 1,
2020 November 3,
2019 
 
 (In millions, except per share data) 
 Net revenue: 
 Products $ 20,886 $ 17,435 $ 18,117 
 Subscriptions and services 6,564 6,453 4,480 
 Total net revenue 27,450 23,888 22,597 
 Cost of revenue: 
 Cost of products sold 6,555 5,892 6,208 
 Cost of subscriptions and services 607 626 515 
 
 Amortization of acquisition-related intangible assets 3,427 3,819 3,314 
 Restructuring charges 17 35 77 
 Total cost of revenue 10,606 10,372 10,114 
 Gross margin 16,844 13,516 12,483 
 Research and development 4,854 4,968 4,696 
 Selling, general and administrative 1,347 1,935 1,709 
 Amortization of acquisition-related intangible assets 1,976 2,401 1,898 
 Restructuring, impairment and disposal charges 148 198 736 
 
 Total operating expenses 8,325 9,502 9,039 
 Operating income 8,519 4,014 3,444 
 Interest expense ( 1,885 ) ( 1,777 ) ( 1,444 ) 
 
 
 Other income, net 131 206 226 
 Income from continuing operations before income taxes 6,765 2,443 2,226 
 Provision for (benefit from) income taxes 29 ( 518 ) ( 510 ) 
 Income from continuing operations 6,736 2,961 2,736 
 Loss from discontinued operations, net of income taxes 
 — ( 1 ) ( 12 ) 
 Net income 6,736 2,960 2,724 
 Dividends on preferred stock ( 299 ) ( 297 ) ( 29 ) 
 
 Net income attributable to common stock $ 6,437 $ 2,663 $ 2,695 
 
 Basic income per share attributable to common stock: 
 Income per share from continuing operations $ 15.70 $ 6.62 $ 6.80 
 Loss per share from discontinued operations — — ( 0.03 ) 
 Net income per share $ 15.70 $ 6.62 $ 6.77 
 
 Diluted income per share attributable to common stock: 
 Income per share from continuing operations $ 15.00 $ 6.33 $ 6.46 
 Loss per share from discontinued operations — — ( 0.03 ) 
 Net income per share $ 15.00 $ 6.33 $ 6.43 
 
 Weighted-average shares used in per share calculations: 
 Basic 410 402 398 
 Diluted 429 421 419 

 The accompanying notes are an integral part of these consolidated financial statements. 
 52 

 
 Table of Contents 

 BROADCOM INC. 
 CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME 
 
 Fiscal Year Ended 
 October 31,
2021 November 1,
2020 November 3,
2019 
 
 (In millions) 
 Net income $ 6,736 $ 2,960 $ 2,724 
 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 
 ( 8 ) 24 ( 24 ) 
 Other comprehensive income (loss), net of tax ( 8 ) 24 ( 24 ) 
 Comprehensive income $ 6,728 $ 2,984 $ 2,700 
 
 

 The accompanying notes are an integral part of these consolidated financial statements. 
 
 
 53 

 
 Table of Contents 

 BROADCOM INC. 
 CONSOLIDATED STATEMENTS OF CASH FLOWS 
 Fiscal Year Ended 
 October 31,
2021 November 1,
2020 November 3,
2019 
 
 (In millions) 
 Cash flows from operating activities: 
 Net income $ 6,736 $ 2,960 $ 2,724 
 Adjustments to reconcile net income to net cash provided by operating activities: 
 Amortization of intangible and right-of-use assets 5,502 6,335 5,239 
 Depreciation 539 570 569 
 Stock-based compensation 1,704 1,976 2,185 
 
 Deferred taxes and other non-cash taxes ( 809 ) ( 1,142 ) ( 934 ) 
 
 Loss on debt extinguishment 198 169 28 
 Non-cash restructuring, impairment and disposal charges 38 44 133 
 Non-cash interest expense 96 108 69 
 Other ( 113 ) ( 52 ) ( 132 ) 
 Changes in assets and liabilities, net of acquisitions and disposals: 
 Trade accounts receivable, net 210 981 486 
 Inventory ( 294 ) ( 31 ) 250 
 Accounts payable 243 ( 3 ) ( 42 ) 
 Employee compensation and benefits 186 217 ( 294 ) 
 
 Other current assets and current liabilities ( 177 ) 331 ( 283 ) 
 Other long-term assets and long-term liabilities ( 295 ) ( 402 ) ( 301 ) 
 Net cash provided by operating activities 13,764 12,061 9,697 
 Cash flows from investing activities: 
 Acquisitions of businesses, net of cash acquired ( 8 ) ( 10,872 ) ( 16,033 ) 
 Proceeds from sales of businesses 45 218 957 
 Purchases of property, plant and equipment ( 443 ) ( 463 ) ( 432 ) 
 Proceeds from disposals of property, plant and equipment 4 12 88 
 
 Proceeds from sales of investments 169 — — 
 Other ( 12 ) ( 4 ) ( 2 ) 
 Net cash used in investing activities ( 245 ) ( 11,109 ) ( 15,422 ) 
 Cash flows from financing activities: 
 Proceeds from long-term borrowings 9,904 27,802 28,793 
 Payments on debt obligations ( 11,495 ) ( 18,814 ) ( 16,800 ) 
 Other borrowings, net — ( 1,285 ) 1,241 
 Payment of dividends ( 6,212 ) ( 5,534 ) ( 4,235 ) 
 Repurchases of common stock - repurchase program — — ( 5,435 ) 
 Shares repurchased for tax withholdings on vesting of equity awards ( 1,299 ) ( 765 ) ( 972 ) 
 Issuance of preferred stock, net — — 3,679 
 Issuance of common stock 170 276 253 
 
 
 Other ( 42 ) ( 69 ) ( 36 ) 
 Net cash provided by (used in) financing activities ( 8,974 ) 1,611 6,488 
 Net change in cash and cash equivalents 4,545 2,563 763 
 Cash and cash equivalents at beginning of period 7,618 5,055 4,292 
 Cash and cash equivalents at end of period $ 12,163 $ 7,618 $ 5,055 
 Supplemental disclosure of cash flow information: 
 Cash paid for interest $ 1,565 $ 1,408 $ 1,287 
 Cash paid for income taxes $ 775 $ 501 $ 741 

 The accompanying notes are an integral part of these consolidated financial statements. 
 54 

 
 Table of Contents 

 BROADCOM INC. 
 CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY 
 
 8.00 % Mandatory Convertible Preferred Stock 
 Common Stock Additional Paid-in Capital Retained 
Earnings Accumulated 
Other 
Comprehensive 
Loss Total 
Stockholders’ 
Equity 
 Shares Par Value Shares Par Value 
 
 (In millions) 
 Balance as of November 4, 2018 — $ — 408 $ — $ 23,285 $ 3,487 $ ( 115 ) $ 26,657 
 Net income — — — — — 2,724 — 2,724 
 Other comprehensive loss — — — — — — ( 24 ) ( 24 ) 
 Cumulative effect of accounting change 
 — — — — — 8 ( 1 ) 7 
 Fair value of partially vested equity awards assumed in connection with the acquisition of CA, Inc. 
 — — — — 67 — — 67 
 Dividends to common stockholders 
 — — — — ( 880 ) ( 3,355 ) — ( 4,235 ) 
 Dividends to preferred stockholders — — — — ( 29 ) — — ( 29 ) 
 Common stock issued 
 — — 15 — 253 — — 253 
 Preferred stock issued, net 4 — — — 3,679 — — 3,679 
 Stock-based compensation — — — — 2,260 — — 2,260 
 Repurchases of common stock — — ( 21 ) — ( 2,571 ) ( 2,864 ) — ( 5,435 ) 
 Shares repurchased for tax withholdings on vesting of equity awards 
 — — ( 4 ) — ( 983 ) — — ( 983 ) 
 Balance as of November 3, 2019 4 — 398 — 25,081 — ( 140 ) 24,941 
 Net income — — — — — 2,960 — 2,960 
 Other comprehensive income — — — — — — 24 24 
 Cumulative effect of accounting change 
 — — — — — ( 10 ) 8 ( 2 ) 
 Fair value of partially vested equity awards assumed in connection with an acquisition — — — — 1 — — 1 
 Dividends to common stockholders 
 — — — — ( 2,582 ) ( 2,653 ) — ( 5,235 ) 
 Dividends to preferred stockholders — — — — — ( 297 ) — ( 297 ) 
 Common stock issued 
 — — 12 — 276 — — 276 
 Stock-based compensation — — — — 1,976 — — 1,976 
 Shares repurchased for tax withholdings on vesting of equity awards 
 — — ( 3 ) — ( 770 ) — — ( 770 ) 
 Balance as of November 1, 2020 4 — 407 — 23,982 — ( 108 ) 23,874 
 Net income — — — — — 6,736 — 6,736 
 Other comprehensive loss — — — — — — ( 8 ) ( 8 ) 
 
 
 Dividends to common stockholders 
 — — — — ( 224 ) ( 5,689 ) — ( 5,913 ) 
 Dividends to preferred stockholders 
 — — — — — ( 299 ) — ( 299 ) 
 Common stock issued 
 — — 9 — 170 — — 170 
 Stock-based compensation — — — — 1,704 — — 1,704 
 Shares repurchased for tax withholdings on vesting of equity awards 
 — — ( 3 ) — ( 1,302 ) — — ( 1,302 ) 
 Balance as of October 31, 2021 4 $ — 413 $ — $ 24,330 $ 748 $ ( 116 ) $ 24,962 

 The accompanying notes are an integral part of these consolidated financial statements. 
 55 

 
 Table of Contents 

 BROADCOM INC. 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
 
 1. Overview and Basis of Presentation 
 Overview 
 Broadcom Inc. (“Broadcom”), a Delaware corporation, is a global technology leader that designs, develops and supplies a broad range of semiconductor and infrastructure software solutions. We develop semiconductor devices with a focus on complex digital and mixed signal complementary metal oxide semiconductor based devices and analog III-V based products. We 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. Our portfolio of industry-leading infrastructure and security software is designed to modernize, optimize, and secure the most complex hybrid environments, enabling scalability, agility, automation, insights, resiliency and security. We also offer mission critical fibre channel storage area networking (“FC SAN”) products and related software in the form of modules, switches and subsystems incorporating multiple semiconductor products. Unless stated otherwise or the context otherwise requires, references to “Broadcom,” “we,” “our,” and “us” mean Broadcom and its consolidated subsidiaries. 
 Basis of Presentation 
 We operate on a 52- or 53-week fiscal year ending on the Sunday closest to October 31 in a 52-week year and the first Sunday in November in a 53-week year. Our fiscal year ended October 31, 2021 (“fiscal year 2021”) was a 52-week fiscal year. The first quarter of our fiscal year 2021 ended on January 31, 2021, the second quarter ended on May 2, 2021 and the third quarter ended on August 1, 2021. Our fiscal year ended November 1, 2020 (“fiscal year 2020”) and fiscal year ended November 3, 2019 (“fiscal year 2019”) were both 52-week fiscal years. 
 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. (“CA”). The accompanying consolidated financial statements include the results of operations of the Symantec Business and CA commencing as of their respective acquisition dates. See Note 4. “Acquisitions” for additional information. 
 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. Fiscal year 2019 segment results have been recast to conform to the current presentation. See Note 13. “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 accounting principles in the United States (“GAAP”). All intercompany balances and transactions have been eliminated in consolidation. 
 
 2. Summary of Significant Accounting Policies 
 Foreign currency remeasurement. We operate in a U.S. dollar functional currency environment. Foreign currency assets and liabilities for monetary accounts are remeasured into U.S. dollars at current exchange rates. Non-monetary items such as inventory and property, plant and equipment, are measured and recorded at historical exchange rates. The effects of foreign currency remeasurement were not material for any period presented. 
 Use of estimates. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. 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. We consider all highly liquid investment securities with original maturities of three months or less at the date of purchase to be cash equivalents. We determine the appropriate classification of our cash and cash equivalents at the time of purchase. 
 56 

 Table of Contents 

 Trade accounts receivable, net. Trade accounts receivable are recognized at the invoiced amount and do not bear interest. Accounts receivable are reduced by an allowance for doubtful accounts, which is our best estimate of the expected credit losses in our existing accounts receivable. We determine the allowance based on historical experience, current economic conditions and certain forward-looking information, among other factors. Allowances for doubtful accounts were not material as of October 31, 2021 or November 1, 2020. Accounts receivable are also recognized net of sales returns and distributor credit allowances. These amounts are recognized when it is both probable and estimable that discounts will be granted or products will be returned. Allowances for sales returns and distributor credit allowances as of October 31, 2021 and November 1, 2020 were $ 129 million and $ 174 million, respectively. 
 Concentrations of credit risk and significant customers. Our cash, cash equivalents and accounts receivable are potentially subject to concentration of credit risk. Cash and cash equivalents may be redeemable upon demand and are maintained with financial institutions that management believes are of high credit quality and therefore bear minimal credit risk. We seek to mitigate our credit risks by spreading such risks across multiple counterparties and monitoring the risk profile of these counterparties. Our accounts receivable are derived from revenue earned from customers located both within and outside the U.S. We mitigate collection risks from our customers by performing regular credit evaluations of our customers’ financial conditions, and require collateral, such as letters of credit and bank guarantees, in certain circumstances. 
 Concentration of other risks. We operate in markets that are highly competitive and rapidly changing. Significant technological changes, shifting customer needs, the emergence of competitive products with new capabilities, general economic conditions worldwide, the ability to safeguard patents and other intellectual property (“IP”) in a rapidly evolving market and reliance on assembly and test subcontractors, third-party wafer fabricators and independent distributors and other factors could affect our financial results. 
 Inventory. We value our inventory at the lower of actual cost or net realizable value of the inventory, with cost being determined under the first-in, first-out method. We record a provision for excess and obsolete inventory based primarily on our forecast of product demand and production requirements. The excess and obsolete balance determined by this analysis becomes the basis for our excess and obsolete inventory charge and the written-down value of the inventory becomes its new cost basis. 
 Retirement benefits. For defined benefit pension plans, we consider various factors in determining our respective benefit obligations and net periodic benefit (income) cost, including the number of employees that we expect to receive benefits, their salary levels and years of service, the expected return on plan assets, the discount rate, the timing of the payment of benefits, and other actuarial assumptions. If the actual results and events of the retirement benefit plans differ from our current assumptions, the benefit obligations may be over- or under-valued. 
 Post-retirement benefit plan assets and obligations 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 obligations, 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. The U.S. discount rates are based on the results of matching expected plan benefit payments with cash flows from a hypothetical yield curve constructed with high-quality corporate bond yields. The U.S. expected rate of return on plan assets is set equal to the discount rate due to the implementation of our fully-matched, liability-driven investment strategy. For the non-U.S. plans, we 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 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. 
 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 the same line item as the hedged item when either the hedged transactions affect earnings or it becomes probable that the hedged transactions will not occur. 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 October 31, 2021 or November 1, 2020. 
 57 

 Table of Contents 

 Property, plant and equipment. Property, plant and equipment are stated at cost less accumulated depreciation and amortization. Additions, improvements and major renewals are capitalized, and maintenance, repairs and minor renewals are expensed as incurred. Assets are held in construction in progress until placed in service, upon which date, we begin to depreciate these assets. When assets are retired or disposed of, the assets and related accumulated depreciation and amortization are removed from our property, plant and equipment balances and the resulting gain or loss is reflected in the consolidated statements of operations. Buildings and leasehold improvements are generally depreciated over 15 to 40 years, or over the lease period, whichever is shorter, and machinery and equipment are generally depreciated over 3 to 10 years. We use the straight-line method of depreciation for all property, plant and equipment. 
 Leases. We determine if an arrangement is a lease, or contains a lease, at the inception of the arrangement and evaluate whether the lease is an operating lease or a finance lease at the commencement date. We recognize right-of-use (“ROU”) assets and lease liabilities for operating and finance leases with terms greater than 12 months, and account for the lease and non-lease components as a single component. ROU assets represent our right to use an asset for the lease term, while lease liabilities represent our obligation to make lease payments. Operating and finance lease ROU assets and liabilities are recognized based on the present value of lease payments over the lease term at the lease commencement date. We use the implicit interest rate or, if not readily determinable, our incremental borrowing rate as of the lease commencement date to determine the present value of lease payments. The incremental borrowing rate is based on our unsecured borrowing rate, adjusted for the effects of collateral. Operating and finance lease ROU assets are recognized net of any lease prepayments and incentives. Lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. Operating lease expense is recognized on a straight-line basis over the lease term. Finance lease expense is recognized based on the effective-interest method over the lease term. 
 Fair value measurement. Fair value is defined as the price that would be received upon sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. A three level hierarchy is applied to prioritize the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). 
 The three levels of the fair value hierarchy under the guidance for fair value measurements are described below: 
 Level 1 — Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date. Our Level 1 assets include cash equivalents, banker's acceptances, trading securities investments and investment funds. We measure trading securities investments and investment funds at quoted market prices as they are traded in active markets with sufficient volume and frequency of transactions. 
 Level 2 — Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. If the asset or liability has a specified contractual term, a Level 2 input must be observable for substantially the full term of the asset or liability. 
 Level 3 — Level 3 inputs are unobservable inputs for the asset or liability in which there is little, if any, market activity for the asset or liability at the measurement date. Level 3 assets and liabilities include investment in equity securities without readily determinable fair values, goodwill, intangible assets, and property, plant and equipment, which are measured at fair value using a discounted cash flow approach when they are impaired. Quantitative information for Level 3 assets and liabilities reviewed at each reporting period includes indicators of significant deterioration in the earnings performance, credit rating, asset quality, business prospects of the investee, and financial indicators of the investee's ability to continue as a going concern. 
 58 

 Table of Contents 

 Business combinations. We account for business combinations under the acquisition method of accounting, which requires us to recognize separately from goodwill the assets acquired and the liabilities assumed at their acquisition date fair values. While we use our best estimates and assumptions to accurately value assets acquired and liabilities assumed at the acquisition date as well as contingent consideration, where applicable, our estimates are inherently uncertain and subject to refinement. As a result, during the measurement period, which may be up to one year from the acquisition date, we record adjustments to the assets acquired and liabilities assumed with the corresponding offset to goodwill. Upon the conclusion of the measurement period or final determination of the values of assets acquired or liabilities assumed, whichever comes first, any subsequent adjustments are recognized in our consolidated statements of operations. Accounting for business combinations requires our management to make significant estimates and assumptions, especially at the acquisition date including our estimates for intangible assets, contractual obligations assumed, restructuring liabilities, pre-acquisition contingencies, and contingent consideration, where applicable. Although we believe the assumptions and estimates we have made in the past have been reasonable and appropriate, they are based, in part, on historical experience and information obtained from the management of the acquired companies and are inherently uncertain. Critical estimates in valuing certain acquired intangible assets under the income approach include growth in future expected cash flows from product sales, customer contracts and acquired technologies, revenue growth rate, customer ramp-up period, technology obsolescence rates, expected costs to develop in-process research and development (“IPR&D”) into commercially viable products, estimated cash flows from the projects when completed and discount rates. Unanticipated events and circumstances may occur that may affect the accuracy or validity of such assumptions, estimates or actual results. 
 Goodwill. Goodwill represents the excess of purchase price and related costs over the value assigned to the net tangible and identifiable intangible assets of businesses acquired. Goodwill is not amortized but is reviewed annually (or more frequently if impairment indicators arise) for impairment. To review for impairment we first assess qualitative factors to determine whether events or circumstances lead to a determination that it is more likely than not that the fair value of any of our reporting units is less than its carrying amount. Our qualitative assessment of the recoverability of goodwill, whether performed annually or based on specific events or circumstances, considers various macroeconomic, industry-specific and company-specific factors. Those factors include: (i) severe adverse industry or economic trends; (ii) significant company-specific actions, including exiting an activity in conjunction with restructuring of operations; (iii) current, historical or projected deterioration of our financial performance; or (iv) a sustained decrease in our market capitalization below our net book value. After assessing the totality of events and circumstances, if we determine that it is not more likely than not that the fair value of any of our reporting units is less than its carrying amount, no further assessment is performed. If we determine that it is more likely than not that the fair value of any of our reporting units is less than its carrying amount, we calculate the fair value of that reporting unit and compare the fair value to the reporting unit’s net book value. If the fair value of the reporting unit is greater than its net book value, there is no impairment. Otherwise, we calculate the implied fair value of goodwill by deducting the fair value of all tangible and intangible assets, excluding goodwill, of the reporting unit from the fair value of the reporting unit. The implied fair value of goodwill is compared to the carrying value of goodwill. If the implied fair value of goodwill is less than the carrying value of goodwill, an impairment loss is recognized equal to the difference. Determining the fair value of a reporting unit involves the use of significant estimates and assumptions. 
 Long-lived assets. Purchased finite-lived intangible assets are carried at cost less accumulated amortization. Amortization is recognized over the periods during which the intangible assets are expected to contribute to our cash flows. Purchased IPR&D projects are capitalized at fair value as an indefinite-lived intangible asset and assessed for impairment thereafter. Upon completion of each underlying project, IPR&D assets are reclassified as amortizable purchased intangible assets and amortized over their estimated useful lives. If an IPR&D project is abandoned, we recognize the carrying value of the related intangible asset in our consolidated statements of operations in the period it is abandoned. On a quarterly basis, we monitor factors and changes in circumstances that could indicate carrying amounts of long-lived assets, including purchased intangible assets and property, plant and equipment, may not be recoverable. Factors we consider important which could trigger an impairment review include (i) significant under-performance relative to historical or projected future operating results, (ii) significant changes in the manner of our use of the acquired assets or the strategy for our overall business, and (iii) significant negative industry or economic trends. An impairment loss must be measured if the sum of the expected future cash flows (undiscounted and before interest) from the use and eventual disposition of the asset (or asset group) is less than the net book value of the asset (or asset group). The amount of the impairment loss will generally be measured as the difference between the net book value of the asset (or asset group) and the estimated fair value. 
 Warranty. We accrue for the estimated costs of product warranties at the time revenue is recognized. Product warranty costs are estimated based upon our historical experience and specific identification of the product requirements, which may fluctuate based on product mix. Additionally, we accrue for warranty costs associated with occasional or unanticipated product quality issues if a loss is probable and can be reasonably estimated. 
 59 

 Table of Contents 

 Revenue recognition. We account for a contract with a customer when both parties have approved the contract and are committed to perform their respective obligations, each party’s rights can be identified, payment terms can be identified, the contract has commercial substance, and it is probable we will collect substantially all of the consideration we are entitled to. Revenue is recognized when, or as, performance obligations are satisfied by transferring control of a promised product or service to a customer. 
 Nature of Products and Services 
 Our products and services can be broadly categorized as sales of products and subscriptions and services. The following is a description of the principal activities from which we generate revenue. 
 Products. We recognize revenue from sales to direct customers and distributors when control transfers to the customer. Rebates and incentives offered to distributors, which are earned when sales to end customers are completed, are estimated at the point of revenue recognition. We have elected to exclude from the transaction price any taxes collected from a customer and to account for shipping and handling activities performed after a customer obtains control of the product as activities to fulfill the promise to transfer the product. From time to time, certain customers agree to pay us secure supply fees in exchange for prioritized fulfillment of product orders. Such fees are included in the transaction price of the product orders and are recognized as revenue in the period that control over the products is transferred to the customer. 
 Subscriptions and services. Our subscriptions and services revenue consists of sales and royalties from software arrangements, support services, professional services, transfer of IP, and non-recurring engineering (“NRE”) arrangements. 
 Revenue from software arrangements primarily consists of fees, which may be paid either at contract inception or in installments over the contract term, that provide customers with a right to use the software, access general support and maintenance, and utilize our professional services. 
 Our software licenses have standalone functionality from which customers derive benefit, and the customer obtains control of the software when it is delivered or made available for download. We believe that for the majority of software arrangements, customers derive significant benefit from the ongoing support we provide. 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. Support services represent stand-ready obligations for which revenue is recognized ratably over the term of the arrangement. 
 Professional services consist of implementation, consulting, customer education and customer training services. The obligation to provide professional services is generally satisfied over time, with the customer simultaneously receiving and consuming the benefits as we satisfy our performance obligations. 
 Rights to our IP are either sold or licensed to a customer. IP revenue recognition is dependent on the nature and terms of each agreement. We recognize IP revenue upon delivery of the IP if there are no substantive future obligations to perform under the arrangement. Sales-based or usage-based royalties from the license of IP are recognized at the later of the period the sales or usages occur or the satisfaction of the performance obligation to which some or all of the sales-based or usage-based royalties have been allocated. 
 There are two main categories of NRE contracts that we enter into with our customers: (a) NRE contracts in which we develop a custom chip and (b) NRE contracts in which we accelerate our development of a new chip upon the customer’s request. The majority of our NRE contract revenues meet the over time criteria. As such, revenue is recognized over the development period with the measure of progress using the input method based on costs incurred to total cost (“cost-to-cost”) as the services are provided. For NRE contracts that do not meet the over time criteria, revenue is recognized at a point in time when the NRE services are complete. 
 Material rights. Contracts with customers may also include material rights that are also performance obligations. These include the right to renew or receive products or services at a discounted price in the future. Revenue allocated to material rights is recognized when the customer exercises the right or the right expires. 
 Arrangements with Multiple Performance Obligations 
 Our contracts may contain more than one of the products and services listed above, each of which is separately accounted for as a distinct performance obligation. 
 60 

 Table of Contents 

 Allocation of consideration. We allocate total contract consideration to each distinct performance obligation in a bundled arrangement on a relative standalone selling price basis. The standalone selling price reflects the price we would charge for a specific product or service if it were sold separately in similar circumstances and to similar customers. 
 Standalone selling price. When available, we use directly observable transactions to determine the standalone selling prices for performance obligations. Our estimates of standalone selling price for each performance obligation require judgment that considers multiple factors, including, but not limited to, historical discounting trends for products and services and pricing practices through different sales channels, gross margin objectives, internal costs, competitor pricing strategies, technology lifecycles and market conditions. 
 We separately determine the standalone selling prices by product or service type. Additionally, we segment the standalone selling prices for products where the pricing strategies differ, and where there are differences in customers and circumstances that warrant segmentation. 
 We also estimate the standalone selling price of our material rights. Lastly, we estimate the value of the customer’s option to purchase or receive additional products or services at a discounted price by estimating the incremental discount the customer would obtain when exercising the option and the likelihood that the option would be exercised. 
 Other Policies and Judgments 
 Contract modifications. We may modify contracts to offer customers additional products or services. Each of the additional products and services is generally considered distinct from those products or services transferred to the customer before the modification. We evaluate whether the contract price for the additional products and services reflects the standalone selling price as adjusted for facts and circumstances applicable to that contract. In these cases, we account for the additional products or services as a separate contract. In other cases where the pricing in the modification does not reflect the standalone selling price as adjusted for facts and circumstances applicable to that contract, we account for the additional products or services as part of the existing contract on a prospective basis, on a cumulative catch-up basis, or a combination of both based on the nature of the modification. In instances where the pricing in the modification offers the customer a credit for a prior arrangement, we adjust our variable consideration reserves for returns and other concessions. 
 Right of return. Certain contracts contain a right of return that allows the customer to cancel all or a portion of the product or service and receive a credit. We estimate returns based on historical returns data which is constrained to an amount for which a material revenue reversal is not probable. We do not recognize revenue for products or services that are expected to be returned. 
 Practical expedient elected. We do not disclose the value of unsatisfied performance obligations for (i) contracts with an original expected length of one year or less and (ii) contracts for which we recognize revenue at the amount to which we have the right to invoice for services performed. For contracts that were modified before the beginning of the earliest reporting period presented, we have not retrospectively restated the contract for those modifications. We have disclosed the aggregate effect of all modifications when identifying the satisfied and unsatisfied performance obligations for purposes of determining the transaction price and allocating the transaction price at transition. 
 Research and development. Research and development expense consists primarily of personnel costs for our engineers and third parties engaged in the design and development of our products, software and technologies, including salary, bonus and stock-based compensation expense, project material costs, services and depreciation. Such costs are charged to research and development expense as they are incurred. 
 Stock-based compensation expense. We recognize compensation expense for time-based restricted stock units (“RSUs”) using the straight-line amortization method based on the fair value of RSUs on the date of grant. The fair value of RSUs is the closing market price of Broadcom common stock on the date of grant, reduced by the present value of dividends expected to be paid on Broadcom common stock prior to vesting. We recognize compensation expense for time-based stock options and employee stock purchase plan rights under the Broadcom Inc. Employee Stock Purchase Plan, as amended (“ESPP”) based on the estimated grant-date fair value determined using the Black-Scholes valuation model with a straight-line amortization method. 
 Certain equity awards include both service and market conditions. The fair value of market-based awards is estimated on the date of grant using the Monte Carlo simulation technique. Compensation expense for market-based awards is amortized based upon a graded vesting method over the service period. 
 We estimate forfeitures expected to occur and recognize stock-based compensation expense for such awards expected to vest. Changes in the estimated forfeiture rates can have a significant effect on stock-based compensation expense since the effect of adjusting the rate is recognized in the period the forfeiture estimate is changed. 
 61 

 Table of Contents 

 Shipping and handling costs. Our shipping and handling costs charged to customers are included in net revenue and the associated expense is included in cost of revenue for all periods presented. 
 Litigation and settlement cost. We are involved in legal actions and other matters arising in our recent business acquisitions and in the normal course of business. We recognize an estimated loss contingency when the outcome is probable prior to issuance of the consolidated financial statements and we are able to reasonably estimate the amount or range of any possible loss. 
 Income taxes. We account for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the consolidated financial statements. Under this method, deferred tax assets and liabilities are determined based on the differences between the consolidated financial statements and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date. 
 We recognize net deferred tax assets to the extent we believe these assets will more likely than not be realized. In making such determination, we consider all available positive and negative evidence, including scheduled reversals of deferred tax liabilities, projected future taxable income, tax planning strategies and recent financial operations. If we determine that we are able to realize our deferred income tax assets in the future in excess of their net carrying values, we adjust the valuation allowance and reduce the provision for income taxes or increase the benefit from income taxes. Likewise, if we determine that we are not able to realize all or part of our net deferred tax assets, we increase the provision for income taxes or decrease the benefit from income taxes in the period such determination is made. 
 We account for uncertainty in income taxes in accordance with the applicable accounting guidance on income taxes. This guidance provides that a tax benefit from an uncertain tax position may be recognized when it is more likely than not that the position will be sustained upon examination, including resolutions of any related appeals or litigation processes, based on the technical merits. 
 Net income per share. Basic net income per share is computed by dividing net income attributable to common stock by the weighted-average number of shares of common stock outstanding during the period. Diluted net income per share is computed by dividing net income attributable to common stock by the weighted-average number of shares of common stock and potentially dilutive shares of common stock outstanding during the period. 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. Potentially dilutive shares whose effect would have been antidilutive are excluded from the computation of diluted net income per share. 
 The dilutive effect of equity awards is calculated based on the average stock price for each fiscal period, using the treasury stock method. Under the treasury stock method, the amount the employee must pay for exercising stock options and purchasing shares under the ESPP and the amount of compensation cost for future service that we have not yet recognized are collectively assumed to be used to repurchase shares. The dilutive effect of convertible preferred stock is calculated using the if-converted method. The if-converted method assumes that these securities were converted at the beginning of the reporting period to the extent that the effect is dilutive. 
 Recent Accounting Guidance Not Yet Adopted 
 In October 2021, the Financial Accounting Standards Boards issued Accounting Standards Update (“ASU”) 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers . The new guidance requires contract assets and contract liabilities acquired in a business combination to be recognized and measured by the acquirer on the acquisition date in accordance with Accounting Standards Codification 606, Revenue from Contracts with Customers , as if it had originated the contracts. This approach differs from the current requirement to measure contract assets and contract liabilities acquired in a business combination at fair value. The new guidance will be effective for the first quarter of our fiscal year ending October 29, 2023, with early adoption permitted. The adoption impact of the new standard will depend on the magnitude of future acquisitions. The standard will not impact acquired contract assets or liabilities from business combinations occurring prior to the adoption date. 
 
 3. Revenue from Contracts with Customers 
 Disaggregation 
 We have considered (1) information that is regularly reviewed by our Chief Executive Officer, who has been identified as the chief operating decision maker (the “CODM”) as defined by the authoritative guidance on segment reporting, in evaluating financial performance and (2) disclosures presented outside of our financial statements in our earnings releases and used in investor presentations to disaggregate revenues. The principal category we use to disaggregate revenues is the 
 62 

 Table of Contents 

 nature of our products and subscriptions and services, as presented in our consolidated statements of operations. In addition, revenues by reportable segment are presented in Note 13. “Segment Information”. 
 The following tables present revenue disaggregated by type of revenue and by region for the periods presented: 
 
 Fiscal Year 2021 
 Americas Asia Pacific Europe, the Middle East and Africa Total 
 
 (In millions) 
 Products $ 1,809 $ 17,258 $ 1,819 $ 20,886 
 Subscriptions and services (a) 
 4,290 720 1,554 6,564 
 Total $ 6,099 $ 17,978 $ 3,373 $ 27,450 

 
 Fiscal Year 2020 
 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 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 primarily on the geographic shipment location or delivery location specified by our distributors, original equipment manufacturer (“OEM”) customers, contract manufacturers, channel partners, or software customers. 
 63 

 Table of Contents 

 Contract Balances 
 Contract assets and contract liabilities balances were as follows: 
 Contract Assets Contract Liabilities 
 
 (In millions) 
 Balance as of November 1, 2020 
 $ 158 $ 3,443 
 
 Balance as of October 31, 2021 
 $ 126 $ 3,185 

 
 Changes in our contract assets and contract liabilities primarily result from the timing difference between our performance and the customer’s payment. We fulfill our obligations under a contract with a customer by transferring products and services in exchange for consideration from the customer. We recognize a contract asset when we transfer products or services to a customer and the right to consideration is conditional on something other than the passage of time. Accounts receivable are recorded when the customer has been billed or the right to consideration is unconditional. We recognize contract liabilities when we have received consideration or an amount of consideration is due from the customer and we have a future obligation to transfer products or services. 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 fiscal year 2021 that was included in the contract liabilities balance as of November 1, 2020 was $ 2,617 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. 
 Remaining Performance Obligations 
 Revenue allocated to remaining performance obligations represents the transaction price allocated to unsatisfied or partially unsatisfied performance obligations. Remaining performance obligations include unearned revenue and amounts that will be invoiced and recognized as revenue in future periods, but do not include contracts for software, subscriptions or services where the customer is not committed. The customer is not considered committed when termination for convenience without payment of a substantive penalty exists, either contractually or through customary business practice. The majority of our customer software contracts include termination for convenience clauses without a substantive penalty and are not considered committed. Additionally, as a practical expedient, we have not included contracts that have an original duration of one year or less, nor have we included contracts with sales-based or usage-based royalties promised in exchange for a license of IP. 
 Certain multi-year customer contracts in our semiconductor solutions segment contain firmly committed amounts and the remaining performance obligations under these contracts as of October 31, 2021 were approximately $ 13.6 billion. We expect approximately 31 % of this amount to be recognized as revenue over the next 12 months. Although the majority of our software contracts are not deemed to be committed, our customers generally do not exercise their termination for convenience rights. In addition, the majority of our contracts for products, subscriptions and services have a duration of one year or less. Accordingly, our remaining performance obligations disclosed above are not indicative of revenue for future periods . 
 64 

 
 Table of Contents 

 4. Acquisitions 
 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. 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: 
 
 Fair Value 
 (In millions) 
 Current assets $ 273 
 Goodwill 6,638 
 Intangible assets 5,411 
 Other long-term assets 92 
 Total assets acquired 12,414 
 Current liabilities ( 1,127 ) 
 Other long-term liabilities ( 587 ) 
 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 resulting from the acquisition of the Symantec Business. 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 acquisition of the Symantec Business 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. 
 65 

 Table of Contents 

 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 acquisition of the Symantec Business 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 acquisition of the Symantec Business 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. 
 
 Fiscal Year 
 2020 2019 
 
 (In millions) 
 Pro forma net revenue $ 23,264 $ 24,227 
 Pro forma net income attributable to common stock $ 2,368 $ 1,265 

 
 Other Acquisitions 
 During fiscal year 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 (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 $ 18 billion of term loans, as well as with cash on hand of the combined companies. 
 66 

 Table of Contents 

 Purchase Consideration 
 
 (In millions) 
 Cash paid for outstanding CA common stock $ 18,402 
 Cash paid by Broadcom to retire CA’s term loan 274 
 Cash paid for vested CA equity awards 101 
 Fair value of partially vested assumed equity awards 67 
 Total purchase consideration 18,844 
 Less: cash acquired ( 2,750 ) 
 Total purchase consideration, net of cash acquired $ 16,094 

 
 All vested in-the-money CA stock options, after giving effect to any acceleration, and all outstanding deferred stock units were cashed out upon the completion of the CA Merger. We assumed all unvested CA equity awards held by continuing employees. The portion of the fair value of partially vested equity awards associated with prior service of CA employees represents a component of the total consideration as presented above and was valued based on our share price as of the CA Acquisition Date. 
 The following table presents our allocation of the total purchase price, net of cash acquired: 
 
 Fair Value 
 (In millions) 
 
 
 
 Current assets $ 1,665 
 
 Goodwill 9,796 
 Intangible assets 12,045 
 Other long-term assets 240 
 Total assets acquired 23,746 
 
 
 
 
 Current liabilities ( 1,966 ) 
 Long-term debt ( 2,255 ) 
 Other long-term liabilities ( 3,431 ) 
 Total liabilities assumed ( 7,652 ) 
 Fair value of net assets acquired $ 16,094 

 Goodwill is primarily attributable to the assembled workforce and anticipated synergies and economies of scale expected from the integration of the CA business. The synergies include certain cost savings, operating efficiencies, and other strategic benefits projected to be achieved as a result of the CA Merger. Goodwill is not deductible for tax purposes. 
 Current assets included assets held-for-sale related to CA’s Veracode business, which was not aligned with our strategic objectives. On December 31, 2018, we sold this business to Thoma Bravo, LLC for cash consideration of $ 950 million, before working capital adjustments. We do not have any material continuing involvement with this business and have presented its results in discontinued operations. Current assets also included $ 80 million of real properties held-for-sale. During fiscal year 2019, we sold a portion of these real properties for $ 62 million and recognized a loss of $ 8 million. 
 Our results of continuing operations for fiscal year 2019 included $ 3,377 million of net revenue attributable to CA. It was impracticable to determine the effect on net income attributable to CA as we had integrated a substantial portion of CA into our ongoing operations during the year. The results of operations of CA were included in our infrastructure software segment. Transaction costs related to the CA Merger of $ 73 million were included in selling, general and administrative expense for fiscal year 2019. 
 67 

 Table of Contents 

 Intangible Assets 
 
 Fair Value Weighted-Average Amortization Periods 
 (In millions) (In years) 
 Developed technology $ 4,957 6 
 Customer contracts and related relationships 4,190 6 
 Order backlog 2,569 3 
 Trade name and other 137 5 
 Total identified finite-lived intangible assets 11,853 
 IPR&D 192 N/A 
 Total identified intangible assets $ 12,045 
 
 

 
 Developed technology relates to products used for mission critical business tools for processes and applications, as well as products used for cloud-based planning, development, management and security tools. 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 CA. 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. 
 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. 
 Trade name relates to the “CA” 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. 
 The fair value of IPR&D was determined using the multi-period excess earnings method under the income approach. This method reflects the present value of the projected cash flows that are expected to be generated by the IPR&D, less charges representing the contribution of other assets to those cash flows. 
 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 CA Acquisition Date. 
 The following table summarizes the details of IPR&D by category as of the CA Acquisition 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. 
 During fiscal year 2020, these IPR&D projects were completed and placed in service. 
 68 

 Table of Contents 

 Unaudited Pro Forma Information 
 The following unaudited pro forma financial information presents combined results of operations for fiscal year 2019, as if CA had been acquired as of the beginning of our fiscal year ended November 4, 2018 (“fiscal year 2018”). 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, interest expense for the additional indebtedness incurred to complete the acquisition, restructuring charges related to the acquisition and transaction costs. 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 2018 or of the results of our future operations of the combined business. 
 
 Fiscal Year 
 2019 
 
 (In millions) 
 Pro forma net revenue $ 21,697 
 Pro forma net income attributable to common stock $ 2,535 

 
 
 5. Supplemental Financial Information 
 Cash Equivalents 
 Cash equivalents included $ 4,668 million and $ 2,471 million of time deposits and $ 1,607 million and $ 790 million of money-market funds as of October 31, 2021 and November 1, 2020, respectively. For time deposits, carrying value approximates fair value due to the short-term nature of the instruments. The fair value of money-market funds, which was consistent with their carrying value, was determined using unadjusted prices in active, accessible markets for identical assets, and as such, they were classified as Level 1 assets in the fair value hierarchy. 
 Accounts Receivable Factoring 
 We sell certain of our trade accounts receivable on a non-recourse basis to third-party financial institutions pursuant to factoring arrangements. We account for these transactions as sales of receivables and present cash proceeds as cash provided by operating activities in the consolidated statements of cash flows . Total trade accounts receivable sold under the factoring arrangements were $ 4,027 million, $ 3,723 million and $ 1,151 million during fiscal years 2021, 2020 and 2019, respectively. Factoring fees for the sales of receivables were recorded in other income, net and were not material for any of the periods presented. 
 Inventory 
 
 October 31,
2021 November 1,
2020 
 
 (In millions) 
 Finished goods $ 423 $ 323 
 Work-in-process 680 558 
 Raw materials 194 122 
 Total inventory $ 1,297 $ 1,003 

 
 Property, Plant and Equipment, Net 
 
 October 31,
2021 November 1,
2020 
 
 (In millions) 
 Land $ 195 $ 194 
 Construction in progress 38 113 
 Buildings and leasehold improvements 1,150 1,133 
 Machinery and equipment 4,161 3,891 
 Total property, plant and equipment 5,544 5,331 
 Accumulated depreciation and amortization ( 3,196 ) ( 2,822 ) 
 Total property, plant and equipment, net $ 2,348 $ 2,509 

 
 69 

 Table of Contents 

 Depreciation expense was $ 539 million, $ 570 million and $ 569 million for fiscal years 2021, 2020, and 2019, respectively. 
 Other Current Assets 
 
 October 31,
2021 November 1,
2020 
 
 (In millions) 
 Prepaid expenses $ 539 $ 387 
 Other (miscellaneous) 516 590 
 Total other current assets $ 1,055 $ 977 

 
 Other Current Liabilities 
 
 October 31,
2021 November 1,
2020 
 
 (In millions) 
 Contract liabilities $ 2,619 $ 2,620 
 Tax liabilities 541 440 
 Other (miscellaneous) 679 771 
 Total other current liabilities $ 3,839 $ 3,831 

 
 Other Long-Term Liabilities 
 
 October 31,
2021 November 1,
2020 
 
 (In millions) 
 Unrecognized tax benefits, interest and penalties $ 3,407 $ 3,185 
 Contract liabilities 566 823 
 Other (miscellaneous) 887 1,418 
 Total other long-term liabilities $ 4,860 $ 5,426 

 
 Other Income, Net 
 
 Fiscal Year 
 2021 2020 2019 
 
 (In millions) 
 Gains on investments $ 99 $ 31 $ 145 
 Other income 26 56 18 
 Interest income 16 53 98 
 Other expense ( 10 ) ( 50 ) ( 35 ) 
 Gain from lapse of indemnification — 116 — 
 Other income, net $ 131 $ 206 $ 226 

 
 Other income includes dividends, gains on sales of businesses and other miscellaneous items. 
 
 6. Leases 
 At the beginning of fiscal year 2020, we adopted ASU 2016-02, Leases (“Topic 842”) using the optional adoption method, whereby no adjustment to the financial statements of comparative periods was required. We have operating and finance leases for our facilities, data centers and certain equipment. Operating lease expense was $ 102 million, $ 106 million and $ 244 million for fiscal years 2021, 2020 and 2019, respectively. Finance lease expense was $ 16 million and $ 14 million for fiscal years 2021 and 2020, respectively. 
 70 

 Table of Contents 

 Other information related to leases was as follows: 
 
 Fiscal Year 
 2021 2020 
 (In millions) 
 Cash paid for operating leases included in operating cash flows $ 140 $ 125 
 
 ROU assets obtained in exchange for operating lease liabilities $ 92 $ 682 
 ROU assets obtained in exchange for finance lease liabilities $ 15 $ 74 
 
 October 31,
2021 November 1,
2020 
 Weighted-average remaining lease term – operating leases (In years) 10 10 
 Weighted-average remaining lease term – finance leases (In years) 3 4 
 Weighted-average discount rate – operating leases 3.78 % 3.80 % 
 Weighted-average discount rate – finance leases 3.11 % 3.33 % 

 Supplemental balance sheet information related to leases was as follows: 
 
 Classification on the Consolidated Balance Sheets October 31,
2021 November 1,
2020 
 (In millions) 
 ROU assets - operating leases Other long-term assets $ 588 $ 589 
 ROU assets - finance leases Property, plant and equipment, net $ 55 $ 62 
 
 Short-term lease liabilities - operating leases Other current liabilities $ 83 $ 100 
 Long-term lease liabilities - operating leases Other long-term liabilities $ 460 $ 527 
 Short-term lease liabilities - finance leases Current portion of long-term debt $ 26 $ 20 
 Long-term lease liabilities - finance leases Long-term debt $ 39 $ 48 
 

 Future minimum lease payments under non-cancelable leases as of October 31, 2021 were as follows: 
 
 October 31,
2021 
 Operating Leases Finance Leases 
 
 (In millions) 
 2022 $ 101 $ 28 
 2023 86 18 
 2024 67 18 
 2025 57 2 
 2026 46 2 
 Thereafter 311 — 
 Total undiscounted liabilities 668 68 
 Less: interest ( 125 ) ( 3 ) 
 Present value of lease liabilities $ 543 $ 65 

 
 
 71 

 
 Table of Contents 

 7. Goodwill and Intangible Assets 
 Goodwill 
 Semiconductor Solutions Infrastructure Software IP Licensing Total 
 
 (In millions) 
 Balance as of November 3, 2019 $ 25,929 $ 10,776 $ 9 $ 36,714 
 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 
 Acquisition — 10 — 10 
 Sale of business — ( 7 ) — ( 7 ) 
 Balance as of October 31, 2021 $ 25,959 $ 17,491 $ — $ 43,450 

 
 In fiscal year 2020, we reassigned goodwill balances among our reportable segments to reflect changes in our segment structure. 
 During the fourth quarter of fiscal years 2021, 2020 and 2019, we completed our annual impairment assessments and concluded that goodwill was not impaired in any of these years. 
 Intangible Assets 
 
 Gross Carrying
Amount Accumulated
Amortization Net Book 
Value 
 
 (In millions) 
 As of October 31, 2021: 
 Purchased technology $ 23,932 $ ( 17,148 ) $ 6,784 
 Customer contracts and related relationships 8,356 ( 4,533 ) 3,823 
 Order backlog 2,579 ( 2,352 ) 227 
 Trade names 787 ( 386 ) 401 
 Other 239 ( 127 ) 112 
 Intangible assets subject to amortization 35,893 ( 24,546 ) 11,347 
 IPR&D 27 — 27 
 Total $ 35,920 $ ( 24,546 ) $ 11,374 
 
 As of November 1, 2020: 
 Purchased technology $ 24,119 $ ( 13,925 ) $ 10,194 
 Customer contracts and related relationships 8,389 ( 3,179 ) 5,210 
 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 

 
 72 

 Table of Contents 

 Based on the amount of intangible assets subject to amortization at October 31, 2021, the expected amortization expense for each of the next five fiscal years and thereafter was as follows: 
 
 Fiscal Year: Expected Amortization Expense 
 
 (In millions) 
 2022 $ 4,365 
 2023 3,237 
 2024 2,367 
 2025 659 
 2026 323 
 Thereafter 396 
 Total $ 11,347 

 
 The weighted-average amortization periods remaining by intangible asset category were as follows: 
 
 Amortizable intangible assets: October 31,
2021 November 1,
2020 
 
 (In years) 
 Purchased technology 4 5 
 Customer contracts and related relationships 3 4 
 Order backlog 2 2 
 Trade names 8 9 
 Other 9 10 

 73 

 
 Table of Contents 

 8. Net Income Per Share 
 
 Fiscal Year 
 2021 2020 2019 
 
 (In millions, except per share data) 
 Numerator: 
 Income from continuing operations $ 6,736 $ 2,961 $ 2,736 
 Dividends on preferred stock ( 299 ) ( 297 ) ( 29 ) 
 
 Income from continuing operations attributable to common stock 
 6,437 2,664 2,707 
 
 
 
 Loss from discontinued operations, net of income taxes, attributable to common stock — ( 1 ) ( 12 ) 
 Net income attributable to common stock $ 6,437 $ 2,663 $ 2,695 
 
 
 
 
 

 
 
 
 Denominator: 
 Weighted-average shares outstanding - basic 410 402 398 
 Dilutive effect of equity awards 19 19 21 
 Weighted-average shares outstanding - diluted 429 421 419 
 
 Basic income per share attributable to common stock: 
 Income per share from continuing operations $ 15.70 $ 6.62 $ 6.80 
 Loss per share from discontinued operations 
 — — ( 0.03 ) 
 Net income per share $ 15.70 $ 6.62 $ 6.77 
 
 Diluted income per share attributable to common stock: 
 Income per share from continuing operations $ 15.00 $ 6.33 $ 6.46 
 Loss per share from discontinued operations 
 — — ( 0.03 ) 
 Net income per share $ 15.00 $ 6.33 $ 6.43 
 
 
 
 

 For fiscal years 2021, 2020 and 2019, diluted net income per share excluded the potentially dilutive effect of 12 million, 12 million and 1 million shares of common stock, respectively, issuable upon the conversion of Mandatory Convertible Preferred Stock, as defined in Note 11. “Stockholders’ Equity,” as their effect was antidilutive. 
 
 9. Retirement Plans and Post-Retirement Benefits 
 Pension and Post-Retirement Benefit Plans 
 Defined Benefit Pension Plans. The U.S. defined benefit pension plans primarily consist of a qualified pension plan. Benefits of the qualified pension plan are provided under an adjusted career-average-pay program, a cash-balance program or a dollar-per-month program. Benefit accruals under this plan were frozen in 2009. Participants in the adjusted career-average-pay program no longer earn service accruals. Participants in the cash-balance program no longer earn service accruals, but continue to earn 4 % interest per year on their cash-balance accounts. There are no active participants under the dollar-per-month program. We also have a non-qualified supplemental pension plan in the United States that principally provides benefits based on compensation in excess of amounts that can be considered under the qualified pension plan. 
 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. Certain of our U.S. employees who meet the retirement eligibility requirements as of their termination dates, may receive post-retirement medical benefits under our retiree medical account program. The 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. employees. 
 74 

 Table of Contents 

 Net Periodic Benefit (Income) Cost 
 
 Pension Benefits Post-Retirement Benefits 
 Fiscal Year Fiscal Year 
 2021 2020 2019 2021 2020 2019 
 
 (In millions) 
 Service cost $ 11 $ 12 $ 10 $ — $ — $ — 
 Interest cost 39 45 58 3 3 3 
 Expected return on plan assets ( 40 ) ( 46 ) ( 59 ) ( 3 ) ( 3 ) ( 3 ) 
 Other 
 1 ( 3 ) 1 1 1 ( 1 ) 
 Net periodic benefit (income) cost 
 $ 11 $ 8 $ 10 $ 1 $ 1 $ ( 1 ) 
 
 Net actuarial (gain) loss $ 8 $ ( 28 ) $ 13 $ 3 $ — $ 11 

 
 The components of net periodic benefit (income) cost other than the service cost are included in other income, net. Service cost is recognized in operating expenses. 
 Funded Status 
 
 Pension Benefits Post-Retirement Benefits 
 October 31,
2021 November 1,
2020 October 31,
2021 November 1,
2020 
 
 (In millions) 
 Change in plan assets: 
 Fair value of plan assets — beginning of period $ 1,593 $ 1,539 $ 88 $ 85 
 Actual return on plan assets 20 129 ( 2 ) 5 
 Employer contributions 9 13 1 1 
 Payments from plan assets ( 102 ) ( 96 ) ( 3 ) ( 3 ) 
 
 
 Foreign currency impact 1 8 — — 
 Fair value of plan assets — end of period 1,521 1,593 84 88 
 Change in benefit obligations: 
 Benefit obligations — beginning of period 1,588 1,553 95 93 
 Service cost 11 12 — — 
 Interest cost 39 45 3 3 
 Actuarial (gain) loss ( 11 ) 61 ( 2 ) 2 
 Benefit payments ( 102 ) ( 96 ) ( 3 ) ( 3 ) 
 Curtailments ( 1 ) ( 6 ) — — 
 
 
 Benefit obligations assumed in an acquisition — 10 — — 
 Foreign currency impact 2 9 — — 
 Benefit obligations — end of period 1,526 1,588 93 95 
 
 Overfunded (underfunded) status of benefit obligations (a) 
 $ ( 5 ) $ 5 $ ( 9 ) $ ( 7 ) 
 
 Actuarial losses and prior service costs recognized in accumulated other comprehensive loss, net of taxes 
 $ ( 100 ) $ ( 94 ) $ ( 16 ) $ ( 14 ) 

 _______________________________ 
 (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. 
 75 

 Table of Contents 

 Plans with benefit obligations in excess of plan assets: 
 
 Pension Benefits Post-Retirement Benefits 
 October 31,
2021 November 1,
2020 October 31,
2021 November 1,
2020 
 
 (In millions) 
 Projected benefit obligations $ 83 $ 82 $ — $ — 
 Accumulated benefit obligations $ 65 $ 68 $ 13 $ 15 
 Fair value of plan assets $ 13 $ 11 $ — $ — 

 Plans with benefit obligations less than plan assets: 
 
 Pension Benefits Post-Retirement Benefits 
 October 31,
2021 November 1,
2020 October 31,
2021 November 1,
2020 
 
 (In millions) 
 Projected benefit obligations $ 1,443 $ 1,506 $ — $ — 
 Accumulated benefit obligations $ 1,442 $ 1,505 $ 80 $ 80 
 Fair value of plan assets $ 1,508 $ 1,582 $ 84 $ 88 

 The fair value of pension plan assets as of October 31, 2021 and November 1, 2020 included $ 174 million and $ 160 million, respectively, of assets for our non-U.S. pension plans. 
 The projected benefit obligations as of October 31, 2021 and November 1, 2020 included $ 217 million and $ 206 million, respectively, of obligations related to our non-U.S. pension plans. The accumulated benefit obligations as of October 31, 2021 and November 1, 2020 included $ 199 million and $ 190 million, respectively, of obligations related to our non-U.S. pension plans. 
 Expected Future Benefit Payments 
 
 Fiscal Years: Pension Benefits Post-Retirement Benefits 
 
 (In millions) 
 2022 $ 94 $ 8 
 2023 $ 94 $ 4 
 2024 $ 94 $ 4 
 2025 $ 94 $ 4 
 2026 $ 93 $ 4 
 2027-2031 $ 447 $ 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. 
 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 2021 and 2020, 100 % of the U.S. qualified pension plan assets were allocated to fixed income, in line with the target allocation. The fixed income allocation is primarily directed toward long-term core bond investments, with smaller allocations to Treasury Inflation-Protected Securities and high-yield bonds. 
 76 

 Table of Contents 

 Fair Value Measurement of Defined Benefit Pension Plan Assets 
 
 October 31, 2021 
 Fair Value Measurements at Reporting Date Using 
 Level 1 Level 2 Total 
 
 (In millions) 
 Cash equivalents $ 24 (a) 
 $ — $ 24 
 Equity securities: 
 
 Non-U.S. equity securities 28 (b) 
 — 28 
 Fixed-income securities: 
 U.S. treasuries — 186 (c) 
 186 
 Corporate bonds — 1,222 (c) 
 1,222 
 
 Municipal bonds — 24 (c) 
 24 
 Government bonds — 34 (c) 
 34 
 Asset-backed securities — 3 (c) 
 3 
 Total plan assets $ 52 $ 1,469 $ 1,521 
 
 
 
 

 
 November 1, 2020 
 Fair Value Measurements at Reporting Date Using 
 Level 1 Level 2 Total 
 
 (In millions) 
 Cash equivalents $ 42 (a) 
 $ — $ 42 
 Equity securities: 
 
 Non-U.S. equity securities 26 (b) 
 — 26 
 Fixed-income securities: 
 U.S. 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 

 ______________________________ 
 (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 
 Our overall investment strategy for the group life insurance plan is to allocate assets in a manner that seeks to both maximize the safety of promised benefits and minimize the cost of funding those benefits. The target asset allocation for plan assets 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. We set the overall portfolio allocation and use an investment manager that directs the investment of funds consistent with that allocation. The investment manager invests the plan assets in index funds that it manages. For both fiscal years 2021 and 2020, 100 % of plan assets were allocated to 
 77 

 Table of Contents 

 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. 
 Assumptions 
 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 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
as of Assumptions for Net Periodic Benefit (Income) Cost
Fiscal Year 
 October 31,
2021 November 1,
2020 2021 2020 2019 
 Defined benefit pension plans: 
 Discount rate 0.75 %- 6.50 % 
 0.61 %- 6.54 % 
 0.61 %- 6.54 % 
 0.47 %- 7.00 % 
 0.50 %- 8.00 % 
 
 Average increase in compensation levels 
 2.00 %- 10.00 % 
 2.00 %- 10.00 % 
 2.00 %- 10.00 % 
 2.00 %- 10.00 % 
 1.80 %- 10.00 % 
 
 Expected long-term return on assets 
 N/A N/A 1.00 %- 8.00 % 
 1.50 %- 7.80 % 
 1.50 %- 7.75 % 
 

 
 Assumptions for Benefit Obligations
as of Assumptions for Net Periodic Benefit (Income) Cost
Fiscal Year 
 October 31,
2021 November 1,
2020 2021 2020 2019 
 Post-retirement benefit plans: 
 Discount rate 2.30 %- 2.90 % 
 2.10 %- 2.90 % 
 2.10 %- 2.90 % 
 2.80 %- 3.20 % 
 4.12 %- 4.60 % 
 
 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 2.90 % 3.20 % 4.80 % 

 
 Assumed Health Care Cost Trend Rate Used to Measure the Expected Cost of Benefits as of 
 October 31,
2021 November 1,
2020 
 
 Health care cost trend rate assumed for next year 6.75 % 
 7.25 % 
 
 Rate to which the health care cost trend rate is assumed to decline (ultimate health care cost trend rate) 
 4.50 % 
 4.50 % 
 
 Year that the rate reaches the ultimate health care cost trend rate 2029 2029 

 
 Defined Contribution Plans 
 Our eligible U.S. employees participate in a company-sponsored 401(k) plan. Under the plan, we match employees contributions dollar for dollar up to 6 % of their eligible earnings. All matching contributions vest immediately. During fiscal years 2021, 2020 and 2019, we made contributions of $ 94 million, $ 99 million and $ 89 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. 
 78 

 
 Table of Contents 

 10. Borrowings 
 
 Effective Interest Rate October 31,
2021 November 1,
2020 
 
 (In millions, except percentages) 
 September 2021 Senior Notes - fixed rate 
 3.137 % notes due November 2035 
 4.23 % $ 3,250 $ — 
 3.187 % notes due November 2036 
 4.79 % 2,750 — 
 6,000 — 
 March 2021 Senior Notes - fixed rate 
 3.419 % notes due April 2033 
 4.66 % 2,250 — 
 3.469 % notes due April 2034 
 4.63 % 3,250 — 
 5,500 — 
 January 2021 Senior Notes - fixed rate 
 1.950 % notes due February 2028 
 2.10 % 750 — 
 2.450 % notes due February 2031 
 2.56 % 2,750 — 
 2.600 % notes due February 2033 
 2.70 % 1,750 — 
 3.500 % notes due February 2041 
 3.60 % 3,000 — 
 3.750 % notes due February 2051 
 3.84 % 1,750 — 
 10,000 — 
 June 2020 Senior Notes - fixed rate 
 3.459 % notes due September 2026 
 4.19 % 752 1,695 
 4.110 % notes due September 2028 
 5.02 % 1,965 2,222 
 2,717 3,917 
 May 2020 Senior Notes - fixed rate 
 2.250 % notes due November 2023 
 2.40 % 105 1,000 
 3.150 % notes due November 2025 
 3.29 % 900 2,250 
 4.150 % notes due November 2030 
 4.27 % 2,679 2,750 
 4.300 % notes due November 2032 
 4.39 % 2,000 2,000 
 5,684 8,000 
 April 2020 Senior Notes - fixed rate 
 4.700 % notes due April 2025 
 4.88 % 1,020 2,250 
 5.000 % notes due April 2030 
 5.18 % 1,086 2,250 
 2,106 4,500 
 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 
 — 5,888 
 April 2019 Senior Notes - fixed rate 
 3.125 % notes due April 2021 
 3.61 % — 525 
 3.125 % notes due October 2022 
 3.53 % — 693 
 3.625 % notes due October 2024 
 3.98 % 622 1,044 
 4.250 % notes due April 2026 
 4.54 % 944 2,500 
 4.750 % notes due April 2029 
 4.95 % 1,958 3,000 
 3,524 7,762 
 2017 Senior Notes - fixed rate 
 2.200 % notes due January 2021 
 2.41 % — 282 
 3.000 % notes due January 2022 
 3.21 % 255 842 

 
 79 

 Table of Contents 

 
 Effective Interest Rate October 31,
2021 November 1,
2020 
 
 (In millions, except percentages) 
 2.650 % notes due January 2023 
 2.78 % 260 1,000 
 3.625 % notes due January 2024 
 3.74 % 829 1,352 
 3.125 % notes due January 2025 
 3.23 % 495 1,000 
 3.875 % notes due January 2027 
 4.02 % 2,922 4,800 
 3.500 % notes due January 2028 
 3.60 % 777 1,250 
 5,538 10,526 
 Assumed CA Senior Notes - fixed rate 
 3.600 % notes due August 2022 
 4.07 % — 283 
 4.500 % notes due August 2023 
 4.10 % 143 250 
 4.700 % notes due March 2027 
 5.15 % 265 350 
 408 883 
 Other borrowings 
 2.500 % - 4.500 % senior notes due August 2022 - August 2034 
 2.59 % - 4.55 % 
 22 22 
 Total principal amount outstanding 41,499 41,498 
 Less: Unamortized discount and issuance costs ( 1,834 ) ( 504 ) 
 Total debt $ 39,665 $ 40,994 

 
 As of October 31, 2021 and November 1, 2020, short-term finance lease liabilities of $ 26 million and $ 20 million, respectively, were included in the current portion of long-term debt and long-term finance lease liabilities of $ 39 million and $ 48 million, respectively, were included in long-term debt. 
 September 2021 Senior Notes 
 In September 2021, we completed our private offers to exchange $ 6.0 billion of certain of our outstanding notes maturing between 2025 and 2030 (the “September 2021 Exchange Offer”) for $ 3,250 million of 3.137 % new senior unsecured notes due November 2035 and $ 2,750 million of 3.187 % new senior unsecured notes due November 2036 (collectively, the “September 2021 Senior Notes”). As a result of the September 2021 Exchange Offer, we paid premiums of $ 762 million, which were included in unamortized discount and issuance costs. We may redeem or purchase, in whole or in part, any of the September 2021 Senior Notes prior to their respective maturities, subject to a specified make-whole premium determined in accordance with the indenture governing the September 2021 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. As of October 31, 2021, the September 2021 Senior Notes were recorded as long-term debt, net of discount and issuance costs, which are amortized to interest expense over the respective terms of these borrowings. 
 March 2021 Senior Notes 
 In March 2021, we completed our private offers to exchange $ 5.5 billion of certain of our outstanding notes maturing between 2024 and 2027 (the “March 2021 Exchange Offer”) for $ 2,250 million of 3.419 % new senior unsecured notes due April 2033 and $ 3,250 million of 3.469 % new senior unsecured notes due April 2034 (collectively, the “March 2021 Senior Notes”). As a result of the March 2021 Exchange Offer, we paid premiums of $ 581 million, which were included in unamortized discount and issuance costs. We may redeem or purchase, in whole or in part, any of the March 2021 Senior Notes prior to their respective maturities, subject to a specified make-whole premium determined in accordance with the indenture governing the March 2021 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. As of October 31, 2021, the March 2021 Senior Notes were recorded as long-term debt, net of discount and issuance costs, which are amortized to interest expense over the respective terms of these borrowings. 
 80 

 Table of Contents 

 In connection with the March 2021 Exchange Offer, Broadcom Corporation (“BRCM”) and Broadcom Technologies Inc. (“BTI”) were automatically and unconditionally released from their guarantees in accordance with the respective indentures governing the January 2021 Senior Notes, June 2020 Senior Notes, May 2020 Senior Notes, April 2020 Senior Notes, and April 2019 Senior Notes, as defined below respectively. 
 January 2021 Senior Notes 
 In January 2021, we issued $ 10 billion of senior unsecured notes (the “January 2021 Senior Notes”). We may redeem or purchase, in whole or in part, any of the January 2021 Senior Notes prior to their respective maturities, subject to a specified make-whole premium determined in accordance with the indenture governing the January 2021 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. As of October 31, 2021, the January 2021 Senior Notes were recorded as long-term debt, net of discount and issuance costs, which are amortized to interest expense over the respective terms of these borrowings. 
 Using the net proceeds from the January 2021 Senior Notes, we repaid the outstanding balance of $ 5,888 million of our unsecured term A-3 facility and unsecured term A-5 facility under the credit agreement entered into on November 4, 2019 (the “November 2019 Credit Agreement”), repurchased $ 3,830 million of certain of our outstanding notes maturing between 2021 and 2023 through a cash tender offer and redemption, and repaid $ 282 million of our 2.200 % notes upon maturity in January 2021. As a result of these repayments and repurchases, we incurred premiums of $ 151 million and wrote off $ 47 million of unamortized discount and issuance costs, both of which were included in interest expense. 
 January 2021 Credit Agreement 
 In January 2021, we entered into a credit agreement (the “January 2021 Credit Agreement”), which provides for a five-year $ 7.5 billion unsecured revolving credit facility (the “Revolving Facility”), of which $ 500 million is available for the issuance of multi-currency letters of credit. The issuance of letters of credit and certain other instruments would reduce the aggregate amount otherwise available under the Revolving Facility for revolving loans. Subject to the terms of the January 2021 Credit Agreement, we are permitted to borrow, repay and reborrow revolving loans at any time prior to the earlier of (a) January 19, 2026 and (b) the date of termination in whole of the revolving lenders’ commitments under the January 2021 Credit Agreement. In connection with the January 2021 Credit Agreement, we terminated the credit agreement entered into on May 7, 2019 (the “May 2019 Credit Agreement”), which provided for a five-year $ 5 billion unsecured revolving credit facility, and the November 2019 Credit Agreement. As of October 31, 2021, we had no borrowings outstanding under the Revolving Facility. 
 June 2020 Senior Notes 
 In June 2020, we completed 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 paid premiums of $ 177 million, which were included in unamortized discount and issuance costs. 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 
 In May 2020, we issued $ 8 billion of senior unsecured notes (the “May 2020 Senior Notes”). 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. 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 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, 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 unsecured revolving credit facility provided by the May 2019 Credit Agreement. 
 81 

 Table of Contents 

 April 2020 Senior Notes 
 In April 2020, we issued $ 4.5 billion of senior unsecured notes (the “April 2020 Senior Notes”). 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. 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 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 in April 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 acquisition of the Symantec Business, we entered into 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”). We used net proceeds from the November 2019 Term Loans to fund the $ 10.7 billion Symantec Business acquisition 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. During fiscal year 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. During fiscal year 2021, we repaid the remaining outstanding balance of the November 2019 Term Loans using the proceeds from the January 2021 Senior Notes. 
 April 2019 Senior Notes 
 In April 2019, we issued $ 11 billion of senior unsecured notes (the “April 2019 Senior Notes”). 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. 
 Registered Exchange Offer 
 In connection with the issuance of the June 2020 Senior Notes, the May 2020 Senior Notes, the 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 Securities and Exchange Commission (the “SEC”), and cause to be declared effective, a registration statement with respect to an offer to exchange (the “Registered Exchange Offer”) each series of the 2020 Senior Notes and the April 2019 Senior Notes for notes that are registered with the SEC (the “Registered Notes”), with substantially identical terms. We completed the Registered Exchange Offer 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 Registered 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 principal amount of up to $ 2 billion outstanding at any time with maturities of up to 397 days from the date of issue. Commercial Paper is sold under customary terms in the commercial paper market and may be issued at a discount from par or, alternatively, may be sold at par and bear interest at rates dictated by market conditions at the time of their issuance. The discount associated with the Commercial Paper is amortized to interest expense over its term. Outstanding Commercial Paper reduces the amount that would otherwise be available to borrow for general corporate purposes under the Revolving Facility. As our commercial paper program is supported by the Revolving Facility, we have the ability and intent to continuously refinance Commercial Paper. As of October 31, 2021 and November 1, 2020, we had no Commercial Paper outstanding. 
 2017 Senior Notes 
 During the fiscal year ended October 29, 2017, Broadcom Cayman Finance Limited, which subsequently merged into BTI during fiscal year 2019 with BTI remaining as the surviving entity, and BRCM 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 
 82 

 Table of Contents 

 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. 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. 
 During the fiscal year ended November 4, 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 our acquisition of CA during fiscal year 2019, we assumed $ 2.25 billion 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 with the indenture governing the Assumed CA Senior Notes. 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. 
 Fair Value of Debt 
 As of October 31, 2021, the estimated aggregate fair value of our debt was $ 43,392 million. The fair value of our senior notes was determined using quoted prices from less active markets. All of our debt obligations are categorized as Level 2 instruments. 
 Future Principal Payments of Debt 
 The future scheduled principal payments of debt as of October 31, 2021 were as follows: 
 
 Fiscal Year: Future Scheduled Principal Payments 
 (In millions) 
 2022 $ 264 
 2023 403 
 2024 1,563 
 2025 1,515 
 2026 2,596 
 Thereafter 35,158 
 Total $ 41,499 

 As of October 31, 2021 and November 1, 2020, we accrued interest payable of $ 282 million and $ 304 million, respectively, and were in compliance with all debt covenants. 
 
 11. Stockholders’ Equity 
 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 (“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; provided, however, that any undeclared and unpaid dividends will continue to accumulate. 
 Subject to limited exceptions, no dividends may be declared or paid on shares of our common stock, unless all accumulated dividends have been paid or set aside for payment on all outstanding shares of our Mandatory Convertible Preferred Stock for all past completed dividend periods. 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. 
 83 

 Table of Contents 

 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 October 31, 2021, the minimum conversion rate was 3.0822 and the maximum conversion rate was 3.6025 . 
 We recognized $ 27 million of accrued preferred stock dividends at each of October 31, 2021 and November 1, 2020, which were presented as temporary equity in our consolidated balance sheets. 
 Cash Dividends Declared and Paid 
 
 Fiscal Year 
 2021 2020 2019 
 
 (In millions, except per share data) 
 Dividends per share to common stockholders $ 14.40 $ 13.00 $ 10.60 
 Dividends to common stockholders $ 5,913 $ 5,235 $ 4,235 
 Dividends per share to preferred stockholders $ 80.00 $ 80.00 $ — 
 Dividends to preferred stockholders $ 299 $ 299 $ — 

 
 Stock Repurchase Program 
 Pursuant to an $ 18 billion stock repurchase program previously authorized by our Board of Directors, we repurchased and retired approximately 21 million shares of our common stock for $ 5,435 million during fiscal year 2019. This authorization ended on November 3, 2019. 
 In December 2021, our Board of Directors authorized a stock repurchase program to repurchase up to $ 10 billion of our common stock from time to time on or prior to December 31, 2022. Repurchases under our stock repurchase program may be effected through a variety of methods, including open market or privately negotiated purchases. The timing and amount of shares repurchased will depend on the stock price, business and market conditions, corporate and regulatory requirements, alternative investment opportunities, acquisition opportunities, and other factors. We are not obligated to repurchase any specific amount of shares of common stock, and the stock repurchase program may be suspended or terminated at any time. 
 Equity Incentive Award Plan 
 2012 Plan 
 In connection with the acquisition of BRCM, we assumed the BRCM 2012 Stock Incentive Plan (the “Original 2012 Plan”) and outstanding unvested RSUs originally granted by BRCM under the Original 2012 Plan that were held by continuing employees. During the second quarter of fiscal year 2021, our stockholders approved the amendment and restatement of the Original 2012 Plan, now called Broadcom Inc. 2012 Stock Incentive Plan (the “Amended 2012 Plan”). Under the Amended 2012 Plan, we may grant to employees stock options and stock appreciation rights with an exercise price that is no less than the fair market value on the date of grant, restricted stock awards and RSUs. No participant may be granted such awards for more than an aggregate of 4 million shares in any fiscal year. Equity awards granted under the Amended 2012 Plan generally vest over four years . The Amended 2012 Plan reduced the number of shares available for new equity award grants to 20 million shares and removed the annual share replenishment provision provided under the Original 2012 Plan. We will make no further equity award grants under our LSI Corporation 2003 Equity Incentive Plan, which we assumed in connection with the acquisition of LSI Corporation. As of October 31, 2021, 21 million shares remained available for issuance under the Amended 2012 Plan. 
 We may grant market-based RSUs with both a service condition and a market condition as part of our equity compensation programs. The market-based RSUs generally vest over four years , subject to satisfaction of market conditions. During fiscal years 2021, 2020 and 2019, we granted market-based RSUs under which grantees may receive the number of shares ranging from 0 % to 300 % of the original grant at vesting based upon the total stockholder return (“TSR”) on our common stock on an absolute basis and as compared to the TSR of an index group of companies. 
 84 

 Table of Contents 

 Amendment to the RSU Vesting Schedule 
 During fiscal year 2019, the Compensation Committee of our Board of Directors approved an amendment to the vesting of time-based RSUs (other than those assumed in an acquisition), held by approximately 16,500 employees below the vice president level, from an annual vesting cycle to a quarterly vesting cycle. 
 Employee Stock Purchase Plan 
 The ESPP provides eligible employees with the opportunity to acquire an ownership interest in us through periodic payroll deductions, based on a 6 -month look-back period, at a price equal to the lesser of 85 % of the fair market value of our common stock at either the beginning or the end of the relevant offering period. The ESPP is structured as a qualified employee stock purchase plan under Section 423 of the Internal Revenue Code of 1986. However, the ESPP is not intended to be a qualified pension, profit sharing or stock bonus plan under Section 401(a) of the Internal Revenue Code of 1986 and is not subject to the provisions of the Employee Retirement Income Security Act of 1974. 
 Stock-Based Compensation Expense 
 
 Fiscal Year 
 2021 2020 2019 
 
 (In millions) 
 Cost of products sold $ 78 $ 109 $ 120 
 Cost of subscriptions and services 65 50 43 
 Research and development 1,199 1,419 1,532 
 Selling, general and administrative 362 398 490 
 Total stock-based compensation expense (a) 
 $ 1,704 $ 1,976 $ 2,185 
 
 Estimated income tax benefits for stock-based compensation $ 283 $ 345 $ 400 
 Excess income tax benefits for stock-based awards exercised or released $ 310 $ 147 $ 232 

 ________________________________ _ 
 (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 %. We will recognize additional expense if actual forfeitures are lower than we estimated, and will recognize a benefit if actual forfeitures are higher than we estimated. 
 During the first quarter of fiscal year 2019, the Compensation Committee of our Board of Directors approved a broad-based program of multi-year equity grants of time- and market-based RSUs (the “Multi-Year Equity Awards”) in lieu of our annual employee equity awards historically granted on March 15 of each year. Each Multi-Year Equity Award vests on the same basis as four annual grants made March 15 of each year, beginning in fiscal year 2019, with successive four-year vesting periods. Stock-based compensation expense related to the Multi-Year Equity Awards was $ 816 million, $ 902 million and $ 890 million for fiscal years 2021, 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. 
 As of October 31, 2021, the total unrecognized compensation cost related to unvested stock-based awards was $ 2,967 million, which is expected to be recognized over the remaining weighted-average service period of 2.9 years. 
 The following table summarizes the weighted-average assumptions utilized to calculate the fair value of market-based awards granted in the periods presented: 
 
 
 Fiscal Year 
 2021 2020 2019 
 Risk-free interest rate 0.3 % 1.2 % 2.7 % 
 Dividend yield 3.0 % 4.7 % 4.4 % 
 Volatility 39.0 % 31.2 % 33.0 % 
 Expected term (in years) 3.4 4.0 4.0 

 The risk-free interest rate was derived from the average U.S. Treasury Strips rate, which approximated the rate in effect appropriate for the term at the time of grant. 
 85 

 Table of Contents 

 The dividend yield was based on the historical and expected dividend payouts as of the respective award grant dates. 
 The volatility was based on our own historical stock price volatility over the period commensurate with the expected life of the awards and the implied volatility of a 180-day call option on our own common stock measured at a specific date. 
 The expected term was commensurate with the awards’ contractual terms. 
 Restricted Stock Unit Awards 
 A summary of time- and market-based RSU activity is as follows: 
 
 Number of RSUs
Outstanding Weighted-Average
Grant Date
Fair Value
Per Share 
 
 (In millions, except per share data) 
 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 
 Granted 2 $ 408.69 
 Vested ( 8 ) $ 214.15 
 Forfeited ( 3 ) $ 189.84 
 Balance as of October 31, 2021 23 $ 200.38 

 The aggregate fair value of time- and market-based RSUs that vested in fiscal years 2021, 2020 and 2019 was $ 3,715 million, $ 2,254 million and $ 2,958 million, respectively, which represented the market value of our common stock on the date that the RSUs vested. The number of RSUs vested included shares of common stock that we withheld for settlement of employees’ tax obligations due upon the vesting of RSUs. 
 Stock Option Awards 
 As of October 31, 2021, our stock options outstanding were not material. The aggregate intrinsic value of stock options exercised in fiscal years 2021, 2020 and 2019 was $ 339 million, $ 917 million and $ 761 million, respectively. 
 
 12. Income Taxes 
 Components of Income from Continuing Operations Before Income Taxes 
 The following table presents the components of income from continuing operations before income taxes for financial reporting purposes: 
 
 Fiscal Year 
 2021 2020 2019 
 
 (In millions) 
 Domestic loss $ ( 3,103 ) $ ( 4,221 ) $ ( 4,116 ) 
 Foreign income 9,868 6,664 6,342 
 Income from continuing operations before income taxes $ 6,765 $ 2,443 $ 2,226 

 Components of Provision for (Benefit from) Income Taxes 
 The provision for income taxes in fiscal year 2021 was primarily due to higher income from continuing operations, offset in part by excess tax benefits from stock-based awards, a benefit from foreign derived intangible income, and the recognition of gross unrecognized tax benefits as a result of lapses of statutes of limitations and audit settlements. 
 86 

 Table of Contents 

 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 the 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”). 
 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 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 decrease the provision for income taxes by approximately $ 1,156 million for fiscal year 2021 and increase the benefit from income taxes by approximately $ 833 million and $ 923 million for fiscal years 2020 and 2019, respectively. 
 Significant components of provision for (benefit from) income taxes are as follows: 
 
 Fiscal Year 
 2021 2020 2019 
 
 (In millions) 
 Current tax expense (benefit from): 
 Federal $ 446 $ 7 $ ( 49 ) 
 State 46 51 ( 16 ) 
 Foreign 534 506 342 
 1,026 564 277 
 Deferred tax expense (benefit from): 
 Federal ( 876 ) ( 627 ) ( 497 ) 
 State ( 114 ) ( 161 ) ( 113 ) 
 Foreign ( 7 ) ( 294 ) ( 177 ) 
 ( 997 ) ( 1,082 ) ( 787 ) 
 Total provision for (benefit from) income taxes $ 29 $ ( 518 ) $ ( 510 ) 

 87 

 Table of Contents 

 Rate Reconciliation 
 
 Fiscal Year 
 2021 2020 2019 
 Statutory tax rate 21.0 % 21.0 % 21.0 % 
 State, net of federal benefit ( 0.8 ) ( 3.6 ) ( 4.6 ) 
 Foreign income taxed at different rates ( 22.8 ) ( 48.6 ) ( 52.5 ) 
 Deemed inclusion of foreign earnings 12.7 23.3 25.9 
 Foreign-derived intangible income deduction ( 3.1 ) ( 1.5 ) — 
 Deferred taxes on unremitted foreign earnings ( 0.7 ) ( 1.1 ) 1.9 
 Excess tax benefits from stock-based compensation ( 4.6 ) ( 6.0 ) ( 10.4 ) 
 Research and development credit ( 2.3 ) ( 4.3 ) ( 7.6 ) 
 Other, net 1.0 ( 0.4 ) ( 1.7 ) 
 2017 Tax Reform Act — — 5.1 
 Effective tax rate on income before income taxes 0.4 % ( 21.2 ) % ( 22.9 ) % 

 
 Summary of Deferred Income Taxes 
 
 October 31,
2021 November 1,
2020 
 
 (In millions) 
 Deferred income tax assets: 
 Net operating loss, credit and other carryforwards $ 1,774 $ 1,773 
 Deferred revenue 1,332 529 
 Employee stock awards 192 273 
 Other deferred income tax assets 446 449 
 Gross deferred income tax assets 3,744 3,024 
 Less: valuation allowance ( 1,782 ) ( 1,707 ) 
 Deferred income tax assets 1,962 1,317 
 Deferred income tax liabilities: 
 Depreciation and amortization 847 1,477 
 Unamortized discount and issuance costs 374 57 
 Foreign earnings not indefinitely reinvested 73 112 
 Deferred income tax liabilities 1,294 1,646 
 
 Net deferred income tax assets (liabilities) $ 668 $ ( 329 ) 

 
 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 net deferred income tax assets was primarily a result of an increase in deferred revenue and amortization of acquisition-related intangible assets, offset in part by unamortized discount and issuance costs included in the consolidated statement of operations. 
 In connection with the acquisition of the Symantec Business 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. 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. 
 We continue to indefinitely reinvest $ 2,291 million of certain accumulated foreign earnings. The unrecognized deferred income tax liability related to these earnings is estimated to be $ 241 million. All other current and future earnings of all our foreign subsidiaries are not considered permanently reinvested. 
 88 

 Table of Contents 

 The increase in the valuation allowance to $ 1,782 million in fiscal year 2021 from $ 1,707 million in fiscal year 2020 was primarily due to state and foreign deferred tax assets arising from credits and net operating loss carryforwards not expected to be realized. 
 As of October 31, 2021, we had U.S. federal net operating loss carryforwards of $ 51 million, U.S. state net operating loss carryforwards of $ 2,610 million and foreign net operating loss carryforwards of $ 782 million, all of which expire in various years beginning fiscal year 2022. We also had $ 83 million, $ 1,896 million and $ 43 million of U.S. federal, state, and foreign research and development tax credits, respectively. U.S. federal, state and foreign research and development credits, if not utilized, begin to expire in fiscal years 2022, 2022 and 2023, respectively. 
 Utilization of our net operating loss and tax credit carryforwards may be subject to substantial annual limitations due to the ownership change limitations provided by the Internal Revenue Code and similar state provisions. Such annual limitations could result in the expiration of the net operating loss and tax credit carryforwards before their utilization. The events that may cause ownership changes include, but are not limited to, a cumulative stock ownership change of greater than 50% over a three year period. 
 Uncertain Tax Positions 
 Gross unrecognized tax benefits increased by $ 282 million during fiscal year 2021, resulting in gross unrecognized tax benefits of $ 5,030 million as of October 31, 2021. Gross unrecognized tax benefits increased by $ 326 million during fiscal year 2020, resulting in gross unrecognized tax benefits of $ 4,748 million as of November 1, 2020. 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. 
 We recognize interest and penalties related to unrecognized tax benefits within the provision for (benefit from) income taxes. Accrued interest and penalties were included within other long-term liabilities. During fiscal years 2021 and 2020, we recognized interest and penalties of $ 46 million and $ 37 million, respectively, within the provision for (benefit from) income taxes. There was no amount recognized during fiscal year 2019. As of October 31, 2021 and November 1, 2020, the combined amount of cumulative accrued interest and penalties was approximately $ 386 million and $ 340 million, respectively. 
 The following table reconciles the beginning and ending balance of gross unrecognized tax benefits: 
 
 Fiscal Year 
 2021 2020 2019 
 
 (In millions) 
 Beginning balance $ 4,748 $ 4,422 $ 4,030 
 Lapses of statutes of limitations ( 58 ) ( 95 ) ( 36 ) 
 Increases in balances related to tax positions taken during prior periods (including those related to acquisitions made during the year) 
 41 98 467 
 Decreases in balances related to tax positions taken during prior periods — ( 14 ) ( 270 ) 
 Increases in balances related to tax positions taken during current period 
 337 379 460 
 Decreases in balances related to settlements with taxing authorities ( 38 ) ( 42 ) ( 229 ) 
 Ending balance $ 5,030 $ 4,748 $ 4,422 

 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 October 31, 2021 and November 1, 2020, approximately $ 5,416 million and $ 5,088 million of the unrecognized tax benefits and accrued interest and penalties would affect our effective tax rate, respectively. 
 We are subject to U.S. income tax examination for fiscal years 2015 and later. Certain of our acquired companies are subject to tax examinations in major jurisdictions outside of the U.S. for fiscal years 2008 and later. It is possible that our existing unrecognized tax benefits may change up to $ 289 million as a result of lapses of the statute of limitations for certain audit periods and/or audit examinations expected to be completed within the next 12 months. 
 
 13. Segment Information 
 Reportable Segments 
 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 
 89 

 Table of Contents 

 evaluate performance. The reportable segments are determined based on several factors including, but not limited to, customer base, homogeneity of products, technology, delivery channels and similar economic characteristics. 
 Semiconductor solutions . We provide semiconductor solutions for managing the movement of data in data center, telecom, enterprise and embedded networking 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 software solutions that enables customers to plan, develop, automate, manage and secure applications across mainframe, distributed, mobile and cloud platforms. Our portfolio of industry-leading infrastructure and security software is designed to modernize, optimize, and secure the most complex hybrid environments, enabling scalability, agility, automation, insights, resiliency and security. We also offer mission critical FC SAN products and related software. 
 Our CODM assesses the performance of each segment and allocates resources to each segment based on net revenue and operating results and does not evaluate each segment using discrete asset information. Operating results by segment include items that are directly attributable to each segment and also include shared expenses such as global operations, including manufacturing support, logistics and quality control, expenses associated with selling, general and administrative activities, facilities and IT 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 
 Unallocated expenses include amortization of acquisition-related intangible assets, stock-based compensation expense, restructuring, impairment and disposal charges, acquisition-related costs, charges related to inventory step-up to fair value, and other costs, which are not used in evaluating the results of, or in allocating resources to, our segments. Acquisition-related costs include transaction costs and any costs directly related to the acquisition and integration of acquired businesses. 
 Depreciation expense directly attributable to each reportable segment is included in operating results for each segment. However, the CODM does not evaluate depreciation expense by operating segment and, therefore, it is not separately presented. There was no inter-segment revenue for any of the periods presented. The accounting policies of the segments are the same as those described in the summary of significant accounting policies. 
 
 Fiscal Year 
 2021 2020 2019 
 
 (In millions) 
 Net revenue: 
 Semiconductor solutions $ 20,383 $ 17,267 $ 17,441 
 Infrastructure software 7,067 6,621 5,156 
 Total net revenue $ 27,450 $ 23,888 $ 22,597 
 
 Operating income: 
 Semiconductor solutions $ 10,976 $ 8,576 $ 8,538 
 Infrastructure software 4,936 4,363 3,391 
 Unallocated expenses ( 7,393 ) ( 8,925 ) ( 8,485 ) 
 Total operating income $ 8,519 $ 4,014 $ 3,444 

 
 Geographic Information 
 Net revenue by country is based primarily on the geographic shipment or delivery location as specified by the distributors, OEMs, contract manufacturers, channel partners, or software customers who purchased our products or services. For the majority of our products, title and control transfer to our customers in Penang, Malaysia. The products are then transported to the customer specific locations. Net revenue from the United States for fiscal years 2021, 2020 and 2019 was $ 5,285 million, $ 4,778 million and $ 4,235 million, respectively. Net revenue from China (including Hong Kong) for fiscal 
 90 

 Table of Contents 

 years 2021, 2020 and 2019 was $ 9,752 million, $ 7,808 million and $ 8,056 million, respectively. Net revenue from Singapore for fiscal years 2021 and 2019 was $ 2,754 million and $ 2,507 million, respectively (the amount was less than 10% for fiscal year 2020). Net revenue from other foreign countries for fiscal years 2021, 2020 and 2019 was $ 9,659 million, $ 11,302 million and $ 7,799 million, respectively. These geographic delivery locations are not necessarily indicative of the geographic location of our end customers or the country in which our end customers sell devices containing our products. For example, we believe a substantial portion of our products shipped or delivered to China (including Hong Kong) is included in devices sold by our end customers in the United States and Europe. 
 Long-lived assets include property, plant and equipment and are based on the physical location of the assets. 
 
 October 31,
2021 November 1,
2020 
 
 (In millions) 
 Long-lived assets: 
 United States $ 1,540 $ 1,659 
 Taiwan 313 285 
 Other 495 565 
 Total long-lived assets $ 2,348 $ 2,509 

 
 Significant Customer Information 
 We sell our products through our direct sales force and a select network of distributors and channel partners globally. No customer accounted for more than 10% of our net accounts receivable balance as of October 31, 2021 or November 1, 2020. During fiscal years 2021, 2020 and 2019, one customer accounted for 18 %, 13 % and 17 % of our net revenue, respectively. Revenue from this customer was included in our semiconductor solutions segment. 
 
 14. Commitments and Contingencies 
 Commitments 
 The following table summarizes contractual obligations and commitments as of October 31, 2021: 
 
 Fiscal Year: Purchase Commitments Other Contractual Commitments 
 (In millions) 
 2022 $ 1,286 $ 738 
 2023 82 178 
 2024 — 119 
 2025 — 25 
 2026 — 48 
 Thereafter — 1 
 Total $ 1,368 $ 1,109 

 Purchase Commitments. Represents unconditional purchase obligations that include agreements to purchase goods or services, primarily inventory, that are enforceable and legally binding on us and that specify all significant terms, including fixed or minimum quantities to be purchased, fixed, minimum or variable price provisions, and the approximate timing of the transaction. Purchase obligations exclude agreements that are cancelable without penalty. 
 Other Contractual Commitments. 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 October 31, 2021, we are unable to reliably estimate the timing of cash settlement with the respective taxing authorities. Therefore, $ 3,407 million of unrecognized tax benefits and accrued interest and penalties classified within other long-term liabilities on our consolidated balance sheet as of October 31, 2021 have been excluded from the table above. 
 Contingencies 
 From time to time, we are involved in litigation that we believe is of the type common to companies engaged in our lines of business, including commercial disputes, employment issues, tax disputes and disputes involving claims by third parties that our activities infringe their patent, copyright, trademark or other IP rights, as well as regulatory investigations or 
 91 

 Table of Contents 

 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. Claims that our products or processes infringe or misappropriate any third-party IP rights (including claims arising through our contractual indemnification of our customers) often involve highly complex, technical issues, the outcome of which is inherently uncertain. Moreover, from time to time, we pursue litigation to assert our IP rights. Regardless of the merit or resolution of any such litigation, complex IP litigation is generally costly and diverts the efforts and attention of our management and technical personnel. 
 Lawsuits Relating to 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: U.S. Patent Nos. 7,116,710; 7,421,032; 7,916,781; 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 (the “Federal Circuit Court”) and oral arguments were heard on September 1, 2021. We are unable to predict the date on which the Federal Circuit Court will issue its decision. 
 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. 
 Other Matters 
 In addition to the matters discussed above, we are currently engaged in a number of legal actions in the ordinary course of our business. 
 Contingency Assessment 
 We do not believe, based on currently available facts and circumstances, that the final outcome of any pending legal proceedings or ongoing regulatory investigations, taken individually or as a whole, will have a material adverse effect on our consolidated financial statements. However, lawsuits may involve complex questions of fact and law and may require the expenditure of significant funds and other resources to defend. The results of litigation or regulatory investigations are inherently uncertain, and material adverse outcomes are possible. From time to time, we may enter into confidential discussions regarding the potential settlement of such lawsuits. Any settlement of pending litigation could require us to incur substantial costs and other ongoing expenses, such as future royalty payments in the case of an IP dispute. 
 During the periods presented, no material amounts have been accrued or disclosed in the accompanying consolidated financial statements with respect to loss contingencies associated with any other legal proceedings or regulatory investigations, as potential losses for such matters are not considered probable and ranges of losses are not reasonably estimable. These matters are subject to many uncertainties and the ultimate outcomes are not predictable. There can be no assurances that the actual amounts required to satisfy any liabilities arising from the matters described above will not have a material adverse effect on our consolidated financial statements. 
 92 

 Table of Contents 

 Other Indemnifications 
 As is customary in our industry and as provided for in local law in the U.S. and other jurisdictions, many of our standard contracts provide remedies to our customers and others with whom we enter into contracts, such as defense, settlement, or payment of judgment for IP claims related to the use of our products. From time to time, we indemnify customers, as well as our suppliers, contractors, lessors, lessees, companies that purchase our businesses or assets and others with whom we enter into contracts, against combinations of loss, expense, or liability arising from various triggering events related to the sale and the use of our products, the use of their goods and services, the use of facilities and state of our owned facilities, the state of the assets and businesses that we sell and other matters covered by such contracts, usually up to a specified maximum amount. In addition, from time to time we also provide protection to these parties against claims related to undiscovered liabilities, additional product liabilities or environmental obligations. In our experience, claims made under such indemnifications are rare and the associated estimated fair value of the liability is not material. 
 
 15. Restructuring, Impairment and Disposal Charges 
 Restructuring Charges 
 The following is a summary of significant restructuring expense recognized primarily in operating expenses: 
 • During fiscal year 2021, we initiated cost reduction activities associated with plans to align our workforce with strategic business activities and to improve efficiencies in our operations. As a result, we recognized $ 149 million of restructuring expense primarily related to employee termination costs during fiscal year 2021. We have substantially completed these restructuring activities. 
 • Restructuring expense during fiscal year 2020 was primarily related to employee termination and other cost reduction activities related to the acquisition of the Symantec Business of $ 174 million and the CA Merger of $ 28 million. We have substantially completed the restructuring activities related to the acquisition of the Symantec Business and the CA Merger. 
 The following table summarizes the significant activities within, and components of, the restructuring liabilities: 
 
 Employee Termination Costs Other Exit Costs (a) 
 Total 
 
 (In millions) 
 Balance as of November 4, 2018 $ 16 $ 6 $ 22 
 Liabilities assumed from CA 29 38 67 
 Restructuring charges 586 160 746 
 Utilization ( 562 ) ( 165 ) ( 727 ) 
 Balance as of November 3, 2019 69 39 108 
 Restructuring charges (b) 
 186 47 233 
 Utilization ( 221 ) ( 50 ) ( 271 ) 
 Effect of adoption of Topic 842 (c) 
 — ( 36 ) ( 36 ) 
 Balance as of November 1, 2020 34 — 34 
 Restructuring charges 100 13 113 
 Utilization ( 130 ) ( 13 ) ( 143 ) 
 Balance as of October 31, 2021 (d) 
 $ 4 $ — $ 4 
 

 ______________________________ 
 (a) Included $ 30 million and $ 134 million of restructuring expense related to the write-down of certain lease-related ROU assets and other lease-related charges during fiscal years 2020 and 2019, respectively. 
 (b) Included $ 19 million of restructuring expense related to discontinued operations recognized during fiscal year 2020, which was included in loss from discontinued operations. 
 (c) Upon adoption of Topic 842, certain restructuring lease liabilities were required to be recognized as a reduction to the corresponding ROU assets . 
 (d) The majority of the employee termination costs balance is expected to be paid within the next six months. 
 93 

 Table of Contents 

 Restructuring, impairment and disposal charges in our consolidated statement of operations for the fiscal year ended October 31, 2021 included $ 36 million for the write-down of certain lease-related ROU assets and other lease-related charges. As of October 31, 2021, short-term and long-term lease liabilities included $ 52 million of liabilities related to restructuring activities. 
 Impairment and Disposal Charges 
 During fiscal years 2021 and 2020, impairment and disposal charges of $ 16 million and $ 19 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. 
 
 16. Subsequent Events 
 Preferred Stock Cash Dividends Declared 
 On December 7, 2021 , our Board of Directors declared a quarterly cash dividend of $ 20.00 per share on our Mandatory Convertible Preferred Stock, payable on December 31, 2021 to stockholders of record on December 15, 2021 . 
 Common Stock Cash Dividends Declared 
 On December 7, 2021 , our Board of Directors declared a quarterly cash dividend of $ 4.10 per share on our common stock, payable on December 31, 2021 to stockholders of record on December 22, 2021 . 
 
 
 
 
 94 

 
 Table of Contents 

 Schedule II — Valuation and Qualifying Accounts 
 
 Balance at
Beginning
of Period Additions to 
Allowances Charges
Utilized/
Write-offs Balance at
End of
Period 
 
 (In millions) 
 Accounts receivable allowances: 
 Distributor credit allowances (1) 
 
 Fiscal year ended October 31, 2021 
 $ 149 $ 756 $ ( 777 ) $ 128 
 Fiscal year ended November 1, 2020 
 $ 153 $ 696 $ ( 700 ) $ 149 
 Fiscal year ended November 3, 2019 
 $ 151 $ 705 $ ( 703 ) $ 153 
 
 Other accounts receivable allowances (2) 
 
 Fiscal year ended October 31, 2021 
 $ 28 $ 14 $ ( 40 ) $ 2 
 Fiscal year ended November 1, 2020 
 $ 38 $ 84 $ ( 94 ) $ 28 
 Fiscal year ended November 3, 2019 
 $ 12 $ 99 $ ( 73 ) $ 38 
 
 Income tax valuation allowances: 
 Fiscal year ended October 31, 2021 
 $ 1,707 $ 121 $ ( 46 ) $ 1,782 
 Fiscal year ended November 1, 2020 
 $ 1,563 $ 149 $ ( 5 ) $ 1,707 
 Fiscal year ended November 3, 2019 
 $ 1,347 $ 284 $ ( 68 ) $ 1,563 

 ________________________________ 
 (1) Distributor credit allowances relate to price adjustments and other allowances. 
 (2) Other accounts receivable allowances primarily include sales returns and allowance for doubtful accounts. 
 
 ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE 
 Not applicable.
Text extracted from the filing as submitted to EDGAR. Formatting, tables and exhibits are simplified for reading; the original document is authoritative for anything you rely on.
Broadcom Inc. 10-K

Item 8. Financial Statements and Supplementary Data
