The following discussion and analysis of the financial condition and results of operations should be read in conjunction with the unaudited condensed consolidated financial statements and the related notes thereto included elsewhere in this Quarterly Report on Form 10-Q ("Form 10-Q") and the audited consolidated financial statements and notes thereto and management's discussion and analysis of financial condition and results of operations for the fiscal year endedOctober 31, 2021 ("fiscal year 2021") included in our Annual Report on Form 10-K for fiscal year 2021 ("2021 Annual Report on Form 10-K"). References to "Broadcom," "we," "our," and "us" are toBroadcom Inc. and its consolidated subsidiaries, unless otherwise specified or the context otherwise requires. This Form 10-Q may contain predictions, estimates and other forward-looking statements that involve a number of risks and uncertainties, which are made under the safe harbor provisions of Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). These forward-looking statements may include the potential impact of the COVID-19 pandemic; our pending acquisition of VMware, Inc.; projections of financial information; statements about historical results that may suggest trends for our business; statements of the plans, strategies and objectives of management for future operations; and statements of expectation or belief regarding future events (including any acquisitions we may make), technology developments, our products, product sales, expenses, liquidity, cash flow and growth rates, customer concentration and relationships, or enforceability of our intellectual property ("IP") rights. Such statements are based on current expectations, estimates, forecasts and projections of our industry performance and macroeconomic conditions, based on management's judgment, beliefs, current trends and market conditions, and involve risks and uncertainties that may cause actual results to differ materially from those contained in the forward-looking statements. We derive most of our forward-looking statements from our operating budgets and forecasts, which are based upon many detailed assumptions. While we believe that our assumptions are reasonable, we caution that it is very difficult to predict the impact of known factors, and it is impossible for us to anticipate all factors that could affect our actual results. Accordingly, we caution you not to place undue reliance on these statements. Important factors that could cause actual results to differ materially from our expectations are disclosed under "Risk Factors" in Part II, Item 1A of this Form 10-Q, and in other documents we file from time to time with theSecurities and Exchange Commission (the "SEC"). All of the forward-looking statements in this Form 10-Q are qualified in their entirety by reference to the factors listed above and those discussed under the heading "Risk Factors" below. We undertake no intent or obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise, except as otherwise required by law.
Overview
We are a global technology leader that designs, develops and supplies a broad range of semiconductor and infrastructure software solutions. We develop semiconductor devices with a focus on complex digital and mixed signal complementary metal oxide semiconductor based devices and analog III-V based products. We 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. We have two reportable segments: semiconductor solutions and infrastructure software. Our semiconductor solutions segment includes all of our product lines and IP licensing. Our infrastructure software segment includes our mainframe, distributed and cyber security solutions, and our FC SAN business.
Quarterly Highlights
Highlights during the fiscal quarter ended
•We generated
•We paid
•We repurchased
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Pending Acquisition of VMware, Inc.
OnMay 26, 2022 , we entered into an Agreement and Plan of Merger (the "VMware Merger Agreement") to acquire all of the outstanding shares of VMware, Inc. ("VMware") in a cash-and-stock transaction (the "VMware Merger") that values VMware at approximately$61 billion , based on the closing price of Broadcom common stock onMay 25, 2022 . In addition, we will assume approximately$8 billion of VMware long-term debt, net of$4 billion expected cash at close. Under the terms of the VMware Merger Agreement, each share of VMware common stock issued and outstanding immediately prior to the effective time of the VMware Merger will be indirectly converted into the right to receive, at the election of the holder of such share of VMware common stock, either$142.50 in cash, without interest, or 0.2520 shares of Broadcom common stock. The stockholder election will be subject to proration, such that the total number of shares of VMware common stock entitled to receive cash and the total number of shares of VMware common stock entitled to receive Broadcom common stock, will, in each case, be equal to 50% of the aggregate number of shares of VMware common stock issued and outstanding immediately prior to the effective time of the VMware Merger. We will assume all outstanding VMware restricted stock unit awards and performance stock unit awards held by continuing employees. The assumed awards will be converted into restricted stock unit awards for shares of Broadcom common stock. All outstanding in-the-money VMware stock options and restricted stock unit awards held by non-employee directors will be accelerated and converted into the right to receive cash and shares of Broadcom common stock, in equal parts. Effective upon the effective time of the VMware Merger, one member of the VMware Board of Directors, to be mutually agreed by us and VMware, will be added to our Board of Directors. In connection with the execution of the VMware Merger Agreement, we entered into a commitment letter onMay 26, 2022 , with certain financial institutions that committed to provide, subject to the terms and conditions of the commitment letter, a senior unsecured bridge facility in an aggregate principal amount of$32 billion . The VMware Merger, which is expected to be completed in our fiscal year endingOctober 29, 2023 , is subject to satisfaction or waiver of customary closing conditions, including (i) adoption of the VMware Merger Agreement by VMware stockholders, (ii) the expiration or termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvement Act of 1976 (the "HSR Act") and clearance under the antitrust laws of theEuropean Union and certain other jurisdictions, and (iii) the effectiveness of the registration statement on Form S-4 that we filed onJuly 15, 2022 , as may be amended from time to time, registering approximately 59 million shares of our common stock. We and VMware each have termination rights under the VMware Merger Agreement and, under specified circumstances, upon termination of the agreement, we and VMware would be required to pay the other a termination fee of$1.5 billion .
COVID-19 Update
In response to the ongoing COVID-19 pandemic and the various resulting government directives, we have taken extensive measures to protect the health and safety of our employees and contractors at our facilities. We modified our workplace practices globally, which resulted in some of our employees working remotely for an extended period of time and some of whom are still working remotely. While we have implemented personal safety measures at all of our facilities where our employees are working on site, we may need to modify our business practices and policies. We continue to monitor the implications of the COVID-19 pandemic on our business, as well as our customers' and suppliers' businesses. The demand environment for our semiconductor products was consistent with our expectations for the third quarter of our fiscal year endingOctober 30, 2022 ("fiscal year 2022"), with continued investments in technologies and solutions by enterprises, hyperscale customers and service providers. While we recently experienced robust demand in this area and record profitability driven by the supply imbalance, the macroeconomic environment remains uncertain and it may not be sustainable over the longer term. We continue to experience various constraints in our supply chain, including with respect to wafers and substrates. Although supply lead times have stabilized, we continue to have difficulties in obtaining some necessary components and inputs in a timely manner to meet demand.
We have also taken various actions to de-risk our business in light of the ongoing uncertainty and strengthen our balance sheet, including closely managing working capital and our debt instruments.
Overall, in light of the changing nature and continuing uncertainty around the COVID-19 pandemic, our ability to predict the impact of COVID-19 on our business in future periods remains limited. The effects of the pandemic on our business are unlikely to be fully realized, or reflected in our financial results, until future periods. 25
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Critical Accounting Estimates
The preparation of financial statements in accordance with generally accepted accounting principles inthe United States requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. We base our estimates and assumptions on current facts, historical experience and various other factors that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. Our actual financial results may differ materially and adversely from our estimates. Our critical accounting estimates are those that affect our historical financial statements materially and involve difficult, subjective or complex judgments by management. Those estimates include revenue recognition, business combinations, valuation of goodwill and long-lived assets, inventory valuation, income taxes, retirement and post-retirement benefit plan assumptions, stock-based compensation expense, and employee bonus programs. There were no significant changes in our critical accounting estimates during the three fiscal quarters endedJuly 31, 2022 compared to those previously disclosed in "Critical Accounting Estimates" in "Management's Discussion and Analysis of Financial Condition and Results of Operations" included in the 2021 Annual Report on Form 10-K. Results of Operations
The following tables set forth our results of operations for the periods presented:
Fiscal Quarter Ended July 31, August 1, July 31, August 1, 2022 2021 2022 2021 (In millions) (As a percentage of net revenue) Statements of Operations Data: Net revenue: Products$ 6,627 $ 5,064 78 % 75 % Subscriptions and services 1,837 1,714 22 25 Total net revenue 8,464 6,778 100 100 Cost of revenue: Cost of products sold 1,921 1,572 23 23 Cost of subscriptions and services 156 157 2 2 Amortization of acquisition-related intangible assets 705 851 8 13 Restructuring charges 1 1 - - Total cost of revenue 2,783 2,581 33 38 Gross margin 5,681 4,197 67 62 Research and development 1,255 1,205 15 18 Selling, general and administrative 323 346 4 5 Amortization of acquisition-related intangible assets 359 494 4 8 Restructuring, impairment and disposal charges 7 26 - - Total operating expenses 1,944 2,071 23 31 Operating income$ 3,737 $ 2,126 44 % 31 % 26
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Table of Contents Three Fiscal Quarters Ended July 31, August 1, July 31, August 1, 2022 2021 2022 2021 (In millions) (As a percentage of net revenue) Statements of Operations Data: Net revenue: Products$ 19,097 $ 15,128 79 % 75 % Subscriptions and services 5,176 4,915 21 25 Total net revenue 24,273 20,043 100 100 Cost of revenue: Cost of products sold 5,488 4,792 22 24 Cost of subscriptions and services 470 450 2 2 Amortization of acquisition-related intangible assets 2,142 2,578 9 13 Restructuring charges 4 17 - - Total cost of revenue 8,104 7,837 33 39 Gross margin 16,169 12,206 67 61 Research and development 3,722 3,654 16 18 Selling, general and administrative 1,012 1,010 4 5 Amortization of acquisition-related intangible assets 1,154 1,482 5 7 Restructuring, impairment and disposal charges 42 122 - 1 Total operating expenses 5,930 6,268 25 31 Operating income$ 10,239 $ 5,938 42 % 30 % Net Revenue A relatively small number of customers account for a significant portion of our net revenue. Direct sales to WT Microelectronics Co., Ltd., a distributor, accounted for 18% and 19% of our net revenue for the fiscal quarter and three fiscal quarters endedJuly 31, 2022 , respectively, and 16% and 17% of our net revenue for the fiscal quarter and three fiscal quarters endedAugust 1, 2021 , respectively. We believe aggregate sales to our top five end customers, through all channels, accounted for approximately 35% of our net revenue for each of the fiscal quarter and three fiscal quarters endedJuly 31, 2022 andAugust 1, 2021 . We believe aggregate sales to Apple Inc., through all channels, accounted for approximately 20% of our net revenue for each of the fiscal quarter and three fiscal quarters endedJuly 31, 2022 andAugust 1, 2021 . We expect to continue to experience significant customer concentration in future periods. The loss of, or significant decrease in demand from, any of our top five end customers could have a material adverse effect on our business, results of operations and financial condition. From time to time, some of our key semiconductor customers place large orders or delay orders, causing our quarterly net revenue to fluctuate significantly. This is particularly true of our wireless products as fluctuations may be magnified by the timing of launches, and seasonal variations in sales, of mobile devices. The ongoing COVID-19 pandemic and macroeconomic uncertainties may cause our net revenue to fluctuate significantly and impact our results of operations. 27
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The following tables set forth net revenue by segment for the periods presented: Fiscal Quarter Ended Three Fiscal Quarters Ended August 1, August 1, Net Revenue by Segment July 31, 2022 2021 $ Change % Change July 31, 2022 2021 $ Change % Change (In millions, except percentages) Semiconductor solutions$ 6,624 $ 5,021 $ 1,603 32 %$ 18,726 $ 14,749 $ 3,977 27 % Infrastructure software 1,840 1,757 83 5 % 5,547 5,294 253 5 % Total net revenue$ 8,464 $ 6,778 $ 1,686 25 %$ 24,273 $ 20,043 $ 4,230 21 % Fiscal Quarter Ended Three Fiscal Quarters Ended July 31, August 1, July 31, August 1, Net Revenue by Segment 2022 2021 2022 2021 (As a percentage of net revenue) Semiconductor solutions 78 % 74 % 77 % 74 % Infrastructure software 22 26 23 26 Total net revenue 100 % 100 % 100 % 100 % Net revenue from our semiconductor solutions segment increased in the fiscal quarter and three fiscal quarters endedJuly 31, 2022 compared to the prior year fiscal periods due to ongoing strong product demand, primarily for networking, server storage and broadband products, as well as higher demand for our wireless content in mobile devices. Net revenue from our infrastructure software segment increased in the fiscal quarter and three fiscal quarters endedJuly 31, 2022 compared to the prior year fiscal periods primarily due to higher demand for our mainframe solutions and FC SAN products.
Gross Margin
Gross margin was$5,681 million , or 67% of net revenue, for the fiscal quarter endedJuly 31, 2022 compared to$4,197 million , or 62% of net revenue, for the fiscal quarter endedAugust 1, 2021 , and$16,169 million , or 67% of net revenue, for the three fiscal quarters endedJuly 31, 2022 compared to$12,206 million , or 61% of net revenue, for the three fiscal quarters endedAugust 1, 2021 . The increases were primarily due to lower amortization of acquisition-related intangible assets mainly from our 2016 acquisition ofBroadcom Corporation and, to a lesser extent, favorable margin within our semiconductor solutions segment.
Research and Development Expense
Research and development expense increased$50 million , or 4%, and$68 million , or 2%, for the fiscal quarter and three fiscal quarters endedJuly 31, 2022 , respectively, compared to the prior year fiscal periods. The increases were primarily due to higher variable employee compensation expense and engineering project costs, partially offset by lower stock-based compensation expense reflecting the full vesting of certain equity awards and the effect of forfeitures.
Selling, General and Administrative Expense
Selling, general and administrative expense decreased$23 million , or 7%, for the fiscal quarter endedJuly 31, 2022 , compared to the prior year fiscal period, primarily due to lower stock-based compensation expense. Selling, general and administrative expense for the three fiscal quarters endedJuly 31, 2022 was relatively flat compared to the prior year fiscal period as higher variable employee compensation expense and sales initiatives were offset by lower acquisition-related costs and stock-based compensation expense.
Amortization of Acquisition-Related Intangible Assets
Amortization of acquisition-related intangible assets recognized in operating expenses decreased$135 million , or 27%, and$328 million , or 22%, for the fiscal quarter and three fiscal quarters endedJuly 31, 2022 , respectively, compared to the prior year fiscal periods. The decreases were primarily due to lower amortization of certain intangible assets from our acquisition of CA, Inc.
Restructuring, Impairment and Disposal Charges
Restructuring, impairment and disposal charges recognized in operating expenses decreased$19 million , or 73%, and$80 million , or 66%, for the fiscal quarter and three fiscal quarters endedJuly 31, 2022 , respectively, compared to the prior 28
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year fiscal periods. The decreases were primarily due to lower employee termination costs in the current year fiscal periods following the completion of key restructuring activities from acquisitions.
Stock-Based Compensation Expense
Total stock-based compensation expense was$373 million and$1,146 million for the fiscal quarter and three fiscal quarters endedJuly 31, 2022 , respectively, compared to$421 million and$1,290 million for the fiscal quarter and three fiscal quarters endedAugust 1, 2021 , respectively. The decreases primarily reflect the full vesting of certain equity awards and the effect of forfeitures. The following table sets forth the total unrecognized compensation cost related to unvested stock-based awards outstanding and expected to vest as ofJuly 31, 2022 , which we expect to recognize over the remaining weighted-average service period of 2.9 years. Fiscal Year: Unrecognized Compensation Cost, Net of Expected Forfeitures (In millions) 2022 (remainder) $ 375 2023 1,197 2024 822 2025 485 2026 114 Total $ 2,993 During the first quarter of fiscal year endedNovember 3, 2019 ("fiscal year 2019"), our Compensation Committee approved a broad-based program of multi-year equity grants of time- and market-based restricted stock units (the "Multi-Year Equity Awards") in lieu of our annual employee equity awards historically granted onMarch 15 of each year. Each Multi-Year Equity Award vests on the same basis as four annual grants madeMarch 15 of each year, beginning in fiscal year 2019, with successive four-year vesting periods. We recognize stock-based compensation expense related to the Multi-Year Equity Awards from the grant date through their respective vesting date, ranging from 4 years to 7 years. Segment Operating Results Fiscal Quarter Ended Three Fiscal Quarters Ended July 31, August 1, July 31, August 1, Operating Income by Segment 2022 2021
$ Change % Change 2022 2021 $ Change % Change (In millions, except percentages)
Semiconductor solutions$ 3,916 $ 2,720 $ 1,196 44 %$ 10,891 $ 7,828 $ 3,063 39 % Infrastructure software 1,283 1,226 57 5 % 3,903 3,700 203 5 % Unallocated expenses (1,462) (1,820) 358 (20) % (4,555) (5,590) 1,035 (19) % Total operating income$ 3,737 $ 2,126 $ 1,611 76 %$ 10,239 $ 5,938 $ 4,301 72 % Operating income from our semiconductor solutions segment increased in the fiscal quarter and three fiscal quarters endedJuly 31, 2022 compared to the prior year fiscal periods, primarily due to higher net revenue from networking, server storage, broadband, and wireless products, as well as higher gross margin. Operating income from our infrastructure software segment increased in the fiscal quarter and three fiscal quarters endedJuly 31, 2022 compared to the prior year fiscal periods, primarily due to higher demand for our mainframe solutions and FC SAN products. Unallocated expenses include amortization of acquisition-related intangible assets; stock-based compensation expense; restructuring, impairment and disposal charges; acquisition-related costs; and other costs that are not used in evaluating the results of, or in allocating resources to, our segments. Unallocated expenses decreased 20% and 19% for the fiscal quarter and three fiscal quarters endedJuly 31, 2022 , respectively, compared to the prior year fiscal periods primarily due to lower amortization of acquisition-related intangible assets. 29
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Non-Operating Income and Expenses
Interest expense. Interest expense was$406 million and$1,331 million for the fiscal quarter and three fiscal quarters endedJuly 31, 2022 , respectively, compared to$415 million and$1,451 million for the fiscal quarter and three fiscal quarters endedAugust 1, 2021 , respectively. The decrease in the fiscal quarter endedJuly 31, 2022 was primarily due to theSeptember 2021 debt transactions, resulting in overall lower interest rates in the current year fiscal period. The decrease in three fiscal quarters endedJuly 31, 2022 was primarily due to lower losses on extinguishment of debt. We expect to incur additional interest expense in future periods as a result of indebtedness associated with the pending VMware Merger. Other income (expense), net. Other income (expense), net, includes interest income, gains or losses on investments, foreign currency remeasurement and other miscellaneous items. Other income, net, was$6 million and other expense, net was$94 million for the fiscal quarter and three fiscal quarters endedJuly 31, 2022 , respectively, compared to other income, net of$15 million and$109 million for the fiscal quarter and three fiscal quarters endedAugust 1, 2021 , respectively. The changes were primarily due to changes in investment gains or losses. Provision for (benefit from) income taxes. The provision for income taxes was$263 million and$678 million for the fiscal quarter and three fiscal quarters endedJuly 31, 2022 , respectively, compared to the benefit from income taxes of$150 million and$151 million for the fiscal quarter and three fiscal quarters endedAugust 1, 2021 , respectively. The provision for income taxes in the current year fiscal periods was primarily driven by income before income taxes, offset by a shift in jurisdictional mix of income and expenses, and excess tax benefits from stock-based awards. The benefit from income taxes for the fiscal quarter endedAugust 1, 2021 was primarily due to excess tax benefits from stock-based awards, the recognition of gross unrecognized tax benefits as a result of lapses of statutes of limitations and audit settlements, and a shift in jurisdictional mix of income and expenses, offset in part by income tax expense on operations. The benefit from income taxes for the three fiscal quarters endedAugust 1, 2021 reflected excess tax benefits from stock-based awards and the recognition of gross unrecognized tax benefits as a result of lapses of statutes of limitations and audit settlements, offset in part by income tax expense on operations.
Liquidity and Capital Resources
The following section discusses our principal liquidity and capital resources as well as our principal liquidity requirements and uses of cash. Our cash and cash equivalents are maintained in highly liquid investments with remaining maturities of 90 days or less at the time of purchase. We believe our cash equivalents are liquid and accessible. Our primary sources of liquidity as ofJuly 31, 2022 consisted of: (i)$9,977 million in cash and cash equivalents, (ii) cash we expect to generate from operations and (iii) available capacity under our$7.5 billion unsecured revolving credit facility (the "Revolving Facility"). In addition, we may also generate cash from the sale of assets and debt or equity financing from time to time. Our short-term and long-term liquidity requirements primarily arise from: (i) business acquisitions and investments we may make from time to time, including the pending VMware Merger, (ii) working capital requirements, (iii) research and development and capital expenditure needs, (iv) cash dividend payments (if and when declared by our Board of Directors), (v) interest and principal payments related to our$41,227 million of outstanding indebtedness, (vi) share repurchases, and (vii) payment of income taxes. Our ability to fund these requirements will depend, in part, on our future cash flows, which are determined by our future operating performance and, therefore, subject to prevailing global macroeconomic conditions and financial, business and other factors, some of which are beyond our control. We expect capital expenditures to be consistent in fiscal year 2022 as compared to fiscal year 2021. Our debt and liquidity needs will increase as a result of the pending VMware Merger, and we intend to fund the cash portion of the consideration with$32 billion in new, fully committed debt financing. We believe that our cash and cash equivalents on hand, cash flows from operations, the Revolving Facility, as well as the committed debt funding related to the pending VMware Merger, will provide sufficient liquidity to operate our business and fund our current and assumed obligations for at least the next 12 months. For additional information regarding our cash requirement from contractual obligations and indebtedness, see Note 11. "Commitments and Contingencies" and Note 7. "Borrowings" in Part I, Item 1 of this Form 10-Q. From time to time, we engage in discussions with third parties regarding potential acquisitions of, or investments in, businesses, technologies and product lines. Any such transaction, or evaluation of potential transactions, could require significant use of our cash and cash equivalents, or require us to increase our borrowings to fund such transactions. If we do not have sufficient cash to fund our operations or finance growth opportunities, including acquisitions, or unanticipated capital expenditures, our business and financial condition could suffer. In such circumstances, we may also seek to obtain new debt or equity financing. However, we cannot assure you that such additional financing will be available on terms acceptable to us or at all. Our ability to service our senior unsecured notes and any other indebtedness we may incur will depend on our 30
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ability to generate cash in the future. We may also elect to sell additional debt or equity securities for reasons other than those specified above.
In addition, we may, at any time and from time to time, seek to retire or purchase our outstanding debt through cash tenders and/or exchanges for equity or debt, in open-market purchases, privately negotiated transactions or otherwise. Such tenders, exchanges or purchases, if any, will be upon such terms and at such prices as we may determine, and will depend on prevailing market conditions, our liquidity requirements, contractual restrictions and other factors. The amounts involved may be material.
Working Capital
Working capital decreased to
•Cash and cash equivalents decreased to$9,977 million atJuly 31, 2022 from$12,163 million atOctober 31, 2021 , primarily due to$7,000 million of common stock repurchases,$5,250 million of dividend payments,$2,352 million of debt payments, and$1,181 million of employee withholding tax payments related to net settled equity awards. These decreases were partially offset by$12,153 million in net cash provided by operating activities and$1,935 million in proceeds from long-term borrowings.
•Other current liabilities increased to
These decreases in working capital were offset in part by the following:
•Accounts receivable increased to
•Inventory increased to
•Accounts payable decreased to
Capital Returns
Three Fiscal Quarters Ended
July 31 ,August 1, 2022 2021 (In
millions, except per share data) Cash dividends declared and paid per share to common stockholders
$ 12.30 $ 10.80 Cash dividends declared and paid to common stockholders $
5,026
$ 60.00 $ 60.00 Cash dividends declared and paid to preferred stockholders $ 224$ 224 Stock repurchases$ 7,000 $ - InDecember 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 toDecember 31, 2022 . During the three fiscal quarters endedJuly 31, 2022 , we repurchased and retired approximately 12 million shares of our common stock at a weighted average price of$595.96 under this stock repurchase program. InMay 2022 , our Board of Directors authorized another stock repurchase program to repurchase up to an additional$10 billion of our common stock from time to time throughDecember 31, 2023 . Repurchases under our stock repurchase programs may be made 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 programs may be suspended or terminated at any time. During the three fiscal quarters endedJuly 31, 2022 andAugust 1, 2021 , we paid approximately$1,181 million and$1,033 million , respectively, in employee withholding taxes due upon the vesting of net settled equity awards. We withheld over 2 million shares of common stock from employees in connection with such net share settlements during each of the three fiscal quarters endedJuly 31, 2022 andAugust 1, 2021 . 31
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Table of Contents Cash Flows Three Fiscal Quarters Ended July 31, August 1, 2022 2021 (In millions) Net cash provided by operating activities$ 12,153 $ 10,223 Net cash used in investing activities (539)
(295)
Net cash used in financing activities (13,800)
(6,441)
Net change in cash and cash equivalents$ (2,186) $ 3,487 Operating Activities Cash provided by operating activities consisted of net income adjusted for certain non-cash and other items and changes in assets and liabilities. The$1,930 million increase in cash provided by operations during the three fiscal quarters endedJuly 31, 2022 compared to the prior year fiscal period was primarily due to$3,389 million higher net income and certain non-cash adjustments including deferred taxes and other non-cash taxes and (gain) loss on investments, offset by a decrease in amortization of intangible assets and stock-based compensation, as well as a$1,507 million decrease resulting from changes in operating assets and liabilities.
Investing Activities
Cash flows from investing activities primarily consisted of cash used for
acquisitions, capital expenditures, and proceeds and payments related to
investments. The
Financing Activities
Cash flows from financing activities primarily consisted of our stock repurchases, dividend payments, proceeds and payments related to long-term borrowings, and employee withholding tax payments related to net settled equity awards. The$7,359 million increase in cash used in financing activities during the three fiscal quarters endedJuly 31, 2022 compared to the prior year fiscal period was primarily due to$7,000 million in common stock repurchases, a$599 million increase in dividend payments and a$148 million increase in employee withholding tax payments related to net settled equity awards, offset in part by a$412 million change in net borrowing activities.
Accounting Changes and Recent Accounting Standards
For a description of accounting changes and recent accounting standards, including the expected dates of adoption and estimated effects, if any, in our condensed consolidated financial statements, see Note 1. "Overview, Basis of Presentation and Significant Accounting Policies" in Part I, Item 1 of this Form 10-Q.
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