Broadcom Inc. (AVGO)

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 Broadcom first assesses 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 the reporting units is less than its carrying amount. Broadcom's 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 Broadcom's financial performance; or (iv) a sustained decrease in Broadcom's market capitalization below the net book value. After assessing the totality of events and circumstances, if Broadcom determines that it is not more likely than not that the fair value of any of the reporting units is less than its carrying amount, no further assessment is performed. If Broadcom determines that it is more likely than not that the fair value of any of the reporting units is less than its carrying amount, Broadcom calculates 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, Broadcom calculates 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 Broadcom's cash flows. Purchased in-process research and development, or 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 an amortizable purchased intangible asset and amortized over their estimated useful lives. If an IPR&D project is abandoned, Broadcom recognizes the carrying value of the related intangible asset in the consolidated statements of operations in the period it is abandoned. On a quarterly basis, Broadcom monitors 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 Broadcom considers 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 the use of the acquired assets or the strategy for the 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.

Source: 10-K (filing date: 2017-12-21).

Broadcom Inc., Statement of Financial Position, Goodwill and Intangible Assets

USD $ in millions

		Oct 29, 2017		Oct 30, 2016		Nov 1, 2015		Nov 2, 2014		Nov 3, 2013		Oct 28, 2012
	Purchased technology
	Customer contracts and related relationships
	Trade names
	Other
	Intangible assets subject to amortization, gross carrying amount
	Accumulated amortization
	Intangible assets subject to amortization, net book value
	IPR&D
	Intangible assets
	Goodwill
	Goodwill and intangible assets

Based on: 10-K (filing date: 2017-12-21), 10-K (filing date: 2016-12-23), 10-K (filing date: 2015-12-17), 10-K (filing date: 2014-12-29), 10-K (filing date: 2013-12-20), 10-K (filing date: 2012-12-17).

Broadcom Inc., adjustments to financial data

USD $ in millions

		Oct 29, 2017	Oct 30, 2016	Nov 1, 2015	Nov 2, 2014	Nov 3, 2013	Oct 28, 2012
	Adjustment to Total Assets
	Total assets (as reported)
	Less: Goodwill
	Total assets (adjusted)
	Adjustment to Total Broadcom Inc. Stockholders’ Equity
	Total Broadcom Inc. stockholders’ equity (as reported)
	Less: Goodwill
	Total Broadcom Inc. stockholders’ equity (adjusted)

Based on: 10-K (filing date: 2017-12-21), 10-K (filing date: 2016-12-23), 10-K (filing date: 2015-12-17), 10-K (filing date: 2014-12-29), 10-K (filing date: 2013-12-20), 10-K (filing date: 2012-12-17).

Broadcom Inc., Financial Data: Reported vs. Adjusted

Broadcom Inc., adjusted ratios

		Oct 29, 2017	Oct 30, 2016	Nov 1, 2015	Nov 2, 2014	Nov 3, 2013	Oct 28, 2012
	Total Asset Turnover
	Reported total asset turnover
	Adjusted total asset turnover
	Financial Leverage
	Reported financial leverage
	Adjusted financial leverage
	Return on Equity (ROE)
	Reported ROE
	Adjusted ROE
	Return on Assets (ROA)
	Reported ROA
	Adjusted ROA

Based on: 10-K (filing date: 2017-12-21), 10-K (filing date: 2016-12-23), 10-K (filing date: 2015-12-17), 10-K (filing date: 2014-12-29), 10-K (filing date: 2013-12-20), 10-K (filing date: 2012-12-17).

Broadcom Inc., Ratios: Reported vs. Adjusted

		Oct 29, 2017	Oct 30, 2016	Nov 1, 2015	Nov 2, 2014	Nov 3, 2013	Oct 28, 2012
	As Reported
	Selected Financial Data (USD $ in millions)
	Net revenue
	Total assets
	Ratio
	Total asset turnover1
	Adjusted for Goodwill
	Selected Financial Data (USD $ in millions)
	Net revenue
	Adjusted total assets
	Ratio
	Adjusted total asset turnover2

Based on: 10-K (filing date: 2017-12-21), 10-K (filing date: 2016-12-23), 10-K (filing date: 2015-12-17), 10-K (filing date: 2014-12-29), 10-K (filing date: 2013-12-20), 10-K (filing date: 2012-12-17).

2017 Calculations

		Oct 29, 2017	Oct 30, 2016	Nov 1, 2015	Nov 2, 2014	Nov 3, 2013	Oct 28, 2012
	As Reported
	Selected Financial Data (USD $ in millions)
	Total assets
	Total Broadcom Inc. stockholders’ equity
	Ratio
	Financial leverage1
	Adjusted for Goodwill
	Selected Financial Data (USD $ in millions)
	Adjusted total assets
	Adjusted total Broadcom Inc. stockholders’ equity
	Ratio
	Adjusted financial leverage2

Based on: 10-K (filing date: 2017-12-21), 10-K (filing date: 2016-12-23), 10-K (filing date: 2015-12-17), 10-K (filing date: 2014-12-29), 10-K (filing date: 2013-12-20), 10-K (filing date: 2012-12-17).

2017 Calculations

		Oct 29, 2017	Oct 30, 2016	Nov 1, 2015	Nov 2, 2014	Nov 3, 2013	Oct 28, 2012
	As Reported
	Selected Financial Data (USD $ in millions)
	Net income (loss) attributable to ordinary shares
	Total Broadcom Inc. stockholders’ equity
	Ratio
	ROE1
	Adjusted for Goodwill
	Selected Financial Data (USD $ in millions)
	Net income (loss) attributable to ordinary shares
	Adjusted total Broadcom Inc. stockholders’ equity
	Ratio
	Adjusted ROE2

Based on: 10-K (filing date: 2017-12-21), 10-K (filing date: 2016-12-23), 10-K (filing date: 2015-12-17), 10-K (filing date: 2014-12-29), 10-K (filing date: 2013-12-20), 10-K (filing date: 2012-12-17).

2017 Calculations

		Oct 29, 2017	Oct 30, 2016	Nov 1, 2015	Nov 2, 2014	Nov 3, 2013	Oct 28, 2012
	As Reported
	Selected Financial Data (USD $ in millions)
	Net income (loss) attributable to ordinary shares
	Total assets
	Ratio
	ROA1
	Adjusted for Goodwill
	Selected Financial Data (USD $ in millions)
	Net income (loss) attributable to ordinary shares
	Adjusted total assets
	Ratio
	Adjusted ROA2

Based on: 10-K (filing date: 2017-12-21), 10-K (filing date: 2016-12-23), 10-K (filing date: 2015-12-17), 10-K (filing date: 2014-12-29), 10-K (filing date: 2013-12-20), 10-K (filing date: 2012-12-17).

2017 Calculations