Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

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 ended October 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 to Broadcom 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 the Securities 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 May 1, 2022 include the following:

• We generated $4,243 million of cash from operations.

• We paid $1,750 million in cash dividends.

• We repurchased $2,776 million of common stock.

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Pending Acquisition of VMware, Inc.

On May 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 on May 25, 2022. In addition, we will assume $8 billion of VMware net debt.

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 on May 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 ending October 29, 2023, is subject to satisfaction or waiver of customary closing conditions, including adoption of the VMware Merger Agreement by VMware stockholders, 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 the European Union and certain other jurisdictions, and the effectiveness of a registration statement on Form S-4 to be filed by us. 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 (or, in certain circumstances, VMware’s termination fee would be $750 million).

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 second quarter of our fiscal year ending October 30, 2022 (“fiscal year 2022”), with continued investments by enterprises, hyperclouds and service providers in technologies and solutions to support remote or hybrid tele-work and learning arising from COVID-19, as well as the transition to office re-openings. While we continue to see 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 due to the pandemic, including with respect to wafers and substrates. While supply lead times have stabilized, we continue to have difficulties in obtaining some necessary components and inputs in a timely manner to meet increased demand. To date, the impact of COVID-19 on the demand environment for our software products has been limited.

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.

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Critical Accounting Estimates

The preparation of financial statements in accordance with generally accepted accounting principles in the 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 two fiscal quarters ended May 1, 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

Fiscal Quarter and Two Fiscal Quarters Ended May 1, 2022 Compared to Fiscal Quarter and Two Fiscal Quarters Ended May 2, 2021

The following tables set forth our results of operations for the periods presented:

						Fiscal Quarter Ended
						May 1, 2022						May 2, 2021						May 1, 2022						May 2, 2021
						(In millions)												(As a percentage of net revenue)
Statements of Operations Data:
Net revenue:
Products						$	6,417					$	4,983					79		%				75		%
Subscriptions and services						1,686						1,627						21						25
Total net revenue						8,103						6,610						100						100
Cost of revenue:
Cost of products sold						1,798						1,548						22						24
Cost of subscriptions and services						158						151						2						2
Amortization of acquisition-related intangible assets						707						853						9						13
Restructuring charges						1						1						—						—
Total cost of revenue						2,664						2,553						33						39
Gross margin						5,439						4,057						67						61
Research and development						1,261						1,238						16						19
Selling, general and administrative						368						325						4						5
Amortization of acquisition-related intangible assets						398						494						5						7
Restructuring, impairment and disposal charges						18						25						—						—
Total operating expenses						2,045						2,082						25						31
Operating income						$	3,394					$	1,975					42		%				30		%

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						Two Fiscal Quarters Ended
						May 1, 2022						May 2, 2021						May 1, 2022						May 2, 2021
						(In millions)												(As a percentage of net revenue)
Statements of Operations Data:
Net revenue:
Products						$	12,470					$	10,064					79		%				76		%
Subscriptions and services						3,339						3,201						21						24
Total net revenue						15,809						13,265						100						100
Cost of revenue:
Cost of products sold						3,567						3,220						23						25
Cost of subscriptions and services						314						293						2						2
Amortization of acquisition-related intangible assets						1,437						1,727						9						13
Restructuring charges						3						16						—						—
Total cost of revenue						5,321						5,256						34						40
Gross margin						10,488						8,009						66						60
Research and development						2,467						2,449						16						18
Selling, general and administrative						689						664						4						5
Amortization of acquisition-related intangible assets						795						988						5						7
Restructuring, impairment and disposal charges						35						96						—						1
Total operating expenses						3,986						4,197						25						31
Operating income						$	6,502					$	3,812					41		%				29		%

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 17% and 20% of our net revenue for the fiscal quarter and two fiscal quarters ended May 1, 2022, respectively, and 17% and 18% of our net revenue for the fiscal quarter and two fiscal quarters ended May 2, 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 two fiscal quarters ended May 1, 2022 and May 2, 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 two fiscal quarters ended May 1, 2022 and May 2, 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 handsets. The ongoing COVID-19 pandemic and related uncertainties and supply imbalance have caused and may continue to cause our net revenue to fluctuate significantly and impact our results of operations, as discussed above.

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The following tables set forth net revenue by segment for the periods presented:

						Fiscal Quarter Ended																								Two Fiscal Quarters Ended
Net Revenue by Segment						May 1, 2022						May 2, 2021						$ Change						% Change						May 1, 2022						May 2, 2021						$ Change						% Change
						(In millions, except percentages)
Semiconductor solutions						$	6,229					$	4,820					$	1,409					29		%				$	12,102					$	9,728					$	2,374					24		%
Infrastructure software						1,874						1,790						84						5		%				3,707						3,537						170						5		%
Total net revenue						$	8,103					$	6,610					$	1,493					23		%				$	15,809					$	13,265					$	2,544					19		%

						Fiscal Quarter Ended												Two Fiscal Quarters Ended
Net Revenue by Segment						May 1, 2022						May 2, 2021						May 1, 2022						May 2, 2021
						(As a percentage of net revenue)
Semiconductor solutions						77		%				73		%				77		%				73		%
Infrastructure software						23						27						23						27
Total net revenue						100		%				100		%				100		%				100		%

Net revenue from our semiconductor solutions segment increased in the fiscal quarter and two fiscal quarters ended May 1, 2022 compared to the prior year fiscal periods due to on-going strong product demand, primarily for networking, server storage and broadband products. Net revenue from our infrastructure software segment increased in the fiscal quarter and two fiscal quarters ended May 1, 2022 compared to the prior year fiscal periods primarily due to higher demand for our mainframe solutions.

Gross Margin

Gross margin was $5,439 million, or 67% of net revenue, for the fiscal quarter ended May 1, 2022 compared to $4,057 million, or 61% of net revenue, for the fiscal quarter ended May 2, 2021, and $10,488 million, or 66% of net revenue, for the two fiscal quarters ended May 1, 2022 compared to $8,009 million, or 60% of net revenue, for the two fiscal quarters ended May 2, 2021.

The increases were primarily due to lower amortization of acquisition-related intangible assets and improved profitability within our semiconductor solutions segment.

Research and Development Expense

Research and development expense increased $23 million, or 2%, and $18 million, or 1%, for the fiscal quarter and two fiscal quarters ended May 1, 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.

Selling, General and Administrative Expense

Selling, general and administrative expense increased $43 million, or 13%, and $25 million, or 4%, for the fiscal quarter and two fiscal quarters ended May 1, 2022, respectively, compared to the prior year fiscal periods. The increases were primarily due to higher variable employee compensation expense and sales initiatives.

Amortization of Acquisition-Related Intangible Assets

Amortization of acquisition-related intangible assets recognized in operating expenses decreased $96 million, or 19%, and $193 million, or 20%, for the fiscal quarter and two fiscal quarters ended May 1, 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 $7 million, or 28%, and $61 million, or 64%, for the fiscal quarter and two fiscal quarters ended May 1, 2022, respectively, compared to the prior year fiscal periods. The decreases were primarily due to lower employee termination costs and lease and other exit costs in the current year fiscal periods following the completion of key restructuring activities from acquisitions.

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Stock-Based Compensation Expense

Total stock-based compensation expense was $386 million and $773 million for the fiscal quarter and two fiscal quarters ended May 1, 2022, respectively, compared to $425 million and $869 million for the fiscal quarter and two fiscal quarters ended May 2, 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 of May 1, 2022, which we expect to recognize over the remaining weighted-average service period of 3.0 years.

Fiscal Year:						Unrecognized Compensation Cost, Net of Expected Forfeitures
						(In millions)
2022 (remainder)						$	750
2023						1,186
2024						804
2025						467
2026						102
Total						$	3,309

During the first quarter of fiscal year ended November 3, 2019 (“fiscal year 2019”), our Compensation Committee approved a broad-based program of multi-year equity grants of time- and market-based restricted stock units (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. 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																								Two Fiscal Quarters Ended
Operating Income by Segment						May 1, 2022						May 2, 2021						$ Change						% Change						May 1, 2022						May 2, 2021						$ Change						% Change
						(In millions, except percentages)
Semiconductor solutions						$	3,626					$	2,547					$	1,079					42		%				$	6,975					$	5,108					$	1,867					37		%
Infrastructure software						1,313						1,255						58						5		%				2,620						2,474						146						6		%
Unallocated expenses						(1,545)						(1,827)						282						(15)		%				(3,093)						(3,770)						677						(18)		%
Total operating income						$	3,394					$	1,975					$	1,419					72		%				$	6,502					$	3,812					$	2,690					71		%

Operating income from our semiconductor solutions segment increased in the fiscal quarter and two fiscal quarters ended May 1, 2022 compared to the prior year fiscal periods, primarily due to higher net revenue due to on-going strong product demand, primarily for networking, server storage and broadband products, and improved profitability. Operating income from our infrastructure software segment increased in the fiscal quarter and two fiscal quarters ended May 1, 2022 compared to the prior year fiscal periods, primarily due to higher demand for our mainframe solutions.

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 15% and 18% for the fiscal quarter and two fiscal quarters ended May 1, 2022, respectively, compared to the prior year fiscal periods primarily due to lower amortization of acquisition-related intangible assets.

Non-Operating Income and Expenses

Interest expense. Interest expense was $518 million and $925 million for the fiscal quarter and two fiscal quarters ended May 1, 2022, respectively, compared to $466 million and $1,036 million for the fiscal quarter and two fiscal quarters ended May 2, 2021, respectively. The increase in the fiscal quarter ended May 1, 2022 was primarily due to higher losses on extinguishment of debt related to debt transactions. The decrease in two fiscal quarters ended May 1, 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 term loan indebtedness associated with future acquisitions, including the pending VMware Merger.

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Other income (expense), net. Other income (expense), net, includes interest income, gains or losses on investments, foreign currency remeasurement and other miscellaneous items. Other expense, net, was $86 million and $100 million for the fiscal quarter and two fiscal quarters ended May 1, 2022, respectively, compared to other expense, net of $23 million and other income, net of $94 million for the fiscal quarter and two fiscal quarters ended May 2, 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 $200 million and $415 million for the fiscal quarter and two fiscal quarters ended May 1, 2022, respectively, compared to the benefit from income taxes of $7 million and $1 million for the fiscal quarter and two fiscal quarters ended May 2, 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 in the prior year fiscal periods was due to 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, substantially offset by income tax expense arising from 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 of May 1, 2022 consisted of: (i) $9,005 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 a slight increase in capital expenditures in fiscal year 2022 as compared to fiscal year 2021. Our debt and liquidity needs will also increase as a result of the pending VMware Merger. 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 10. “Commitments and Contingencies” and Note 6. “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 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 $7,900 million at May 1, 2022 from $10,305 million at October 31, 2021. The decrease was primarily attributable to the following:

• Cash and cash equivalents decreased to $9,005 million at May 1, 2022 from $12,163 million at October 31, 2021,

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primarily due to $5,500 million of common stock repurchases, $3,514 million of dividend payments, $2,352 million of debt payments, and $889 million of employee withholding tax payments related to net settled equity awards. These decreases were partially offset by $7,729 million in net cash provided by operating activities and $1,935 million in proceeds from long-term borrowings.

• Other current liabilities increased to $4,788 million at May 1, 2022 from $3,839 million at October 31, 2021, primarily due to increases in contract liabilities and interest payable.

These decreases in working capital were offset in part by the following:

• Accounts receivable increased to $3,083 million at May 1, 2022 from $2,071 million at October 31, 2021, primarily due to revenue linearity and less receivables sold through factoring arrangements.

• Inventory increased to $1,668 million at May 1, 2022 from $1,297 million at October 31, 2021, primarily to support customer demand and due to higher material costs.

• Employee compensation and benefits decreased to $751 million at May 1, 2022 from $1,066 million at October 31, 2021, primarily due to the timing of employee bonus plan payments.

Capital Returns

						Two Fiscal Quarters Ended
						May 1, 2022						May 2, 2021
						(In millions, except per share data)
Cash dividends declared and paid per share to common stockholders						$	8.20					$	7.20
Cash dividends declared and paid to common stockholders						$	3,365					$	2,945
Cash dividends declared and paid per share to preferred stockholders						$	40.00					$	40.00
Cash dividends declared and paid to preferred stockholders						$	149					$	150
Stock repurchases						$	5,500					$	—

Pursuant to a $10 billion stock repurchase program authorized by our Board of Directors in December 2021, we repurchased and retired approximately 9 million shares of our common stock at a weighted average price of $602.53 during the two fiscal quarters ended May 1, 2022.

In May 2022, our Board of Directors authorized another stock repurchase program to repurchase up to an additional $10 billion of our common stock from time to time through December 31, 2023. 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 two fiscal quarters ended May 1, 2022 and May 2, 2021, we paid approximately $889 million and $686 million, respectively, in employee withholding taxes due upon the vesting of net settled equity awards. We withheld approximately 2 million shares of common stock from employees in connection with such net share settlements during each of the two fiscal quarters ended May 1, 2022 and May 2, 2021.

Cash Flows

						Two Fiscal Quarters Ended
						May 1, 2022						May 2, 2021
						(In millions)
Net cash provided by operating activities						$	7,729					$	6,682
Net cash used in investing activities						(619)						(248)
Net cash used in financing activities						(10,268)						(4,534)
Net change in cash and cash equivalents						$	(3,158)					$	1,900

Operating Activities

Cash provided by operating activities consisted of net income adjusted for certain non-cash and other items and changes

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in assets and liabilities. The $1,047 million increase in cash provided by operations during the two fiscal quarters ended May 1, 2022 compared to the prior year fiscal period was due to $2,191 million higher net income, offset by a $62 million decrease in amortization of intangible assets and stock-based compensation and other adjustments, as well as a $1,082 million decrease resulting from changes in operating assets and liabilities.

Investing Activities

Cash flows from investing activities primarily consisted of cash used for acquisitions, investments and capital expenditures. The $371 million increase in cash used in investing activities during the two fiscal quarters ended May 1, 2022 compared to the prior year fiscal period was primarily due to a $226 million increase in cash paid for acquisitions as well as $200 million investment purchases.

Financing Activities

Cash flows from financing activities primarily consisted of proceeds and payments related to our stock repurchases, dividend payments, long-term borrowings and employee withholding tax payments related to net settled equity awards. The $5,734 million increase in cash used in financing activities during the two fiscal quarters ended May 1, 2022 compared to the prior year fiscal period was primarily due to $5,500 million in common stock repurchases, a $419 million increase in dividend payments and a $203 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.