Broadcom Reports Fourth Quarter and Full Year 2012 Results

          Broadcom Reports Fourth Quarter and Full Year 2012 Results

PR Newswire

IRVINE, Calif., Jan. 29, 2013

IRVINE, Calif., Jan. 29, 2013 /PRNewswire/ --

— Record 2012 Net Revenue: $8.01 billion —

— Record 2012 Cash Flow from Operations: $1.93 billion —

— Raises Quarterly Cash Dividend by 10 Percent to $.11 Per Share —

Fourth Quarter 2012  GAAP                              Non-GAAP
Results
Total net revenue    $2.08 billion
Diluted EPS          $.43                              $.76
                     ($.04 better than First Call      ($.03 better than First
                     consensus)                        Call consensus)

Broadcom Corporation (NASDAQ: BRCM), a global innovation leader in
semiconductor solutions for wired and wireless communications, today reported
unaudited financial results for its fourth quarter and year ended December 31,
2012.

"Broadcom delivered record revenue in each of our three business groups and
record cash flow from operations in 2012, reflecting our continued market
share growth and strong economics." said Scott McGregor, Broadcom's President
and Chief Executive Officer. "Based upon these results, Broadcom's Board of
Directors today announced a ten percent increase in our dividend, consistent
with our commitment to enhancing shareholder value."

Net revenue for the fourth quarter of 2012 was $2.08 billion. This represents
a decrease of 2.3% compared with the $2.13 billion reported for the third
quarter of 2012 and an increase of 14.3% compared with the $1.82 billion
reported for the fourth quarter of 2011. Net income computed in accordance
with U.S. generally accepted accounting principles (GAAP) for the fourth
quarter of 2012 was $251 million, or $.43 per share (diluted), compared with
GAAP net income of $220 million, or $.38 per share (diluted), for the third
quarter of 2012 and GAAP net income of $254 million, or $.45 per share
(diluted), for the fourth quarter of 2011.

Net revenue for the year ended December 31, 2012 was $8.01 billion. This
represents an increase in net revenue of 8.4% from the $7.39 billion reported
for the year ended December 31, 2011. Net income computed in accordance with
GAAP for the year ended December 31, 2012 was $719 million, or $1.25 per share
(diluted), compared with GAAP net income of $927 million, or $1.65 per share
(diluted), for the year ended December 31, 2011.

In addition to GAAP results, Broadcom reports adjusted net income and adjusted
net income per share, referred to respectively as "non-GAAP net income" and
"non-GAAP diluted net income per share." A discussion of Broadcom's use of
these and other non-GAAP financial measures is set forth below.
Reconciliations of GAAP to non-GAAP financial measures for the three months
ended December 31, 2012 and 2011, three months ended September 30, 2012, and
years ended December 31, 2012 and 2011, respectively, appear in the financial
statements portion of this release under the heading "Unaudited Schedule of
Selected GAAP to Non-GAAP Adjustments."

Non-GAAP net income for the fourth quarter of 2012 was $462 million, or $.76
per share (diluted), compared with non-GAAP net income of $476 million, or
$.79 per share (diluted), for the third quarter of 2012 and non-GAAP net
income of $394 million, or $.68 per share diluted, for the fourth quarter of
2011. Non-GAAP net income for the year ended December 31, 2012 was $1.76
billion, or $2.92 per share (diluted), compared with non-GAAP net income of
$1.69 billion, or $2.89 per share (diluted), for the year ended December 31,
2011.

Conference Call Information

As previously announced, Broadcom will conduct a conference call with analysts
and investors to discuss its fourth quarter and 2012 financial results and
current financial prospects today at 1:45 p.m. Pacific Time (4:45 p.m. Eastern
Time). The company will broadcast the conference call via webcast over the
Internet. To listen to the webcast, or to view the financial and other
statistical information required by Securities and Exchange Commission
Regulation G, please visit the Investors section of the Broadcom website at
www.broadcom.com/investors. The webcast will be recorded and available for
replay until 11:59 p.m. Pacific Time on Thursday, February 28, 2013.

The financial results included in this release are unaudited. The audited
financial statements of the company for the year ended December 31, 2012 will
be included in Broadcom's Annual Report on Form 10-K, to be filed with the SEC
as soon as practicable.

About Broadcom

Broadcom Corporation (NASDAQ: BRCM), a FORTUNE 500^® company, is a global
leader and innovator in semiconductor solutions for wired and wireless
communications. Broadcom^® products seamlessly deliver voice, video, data and
multimedia connectivity in the home, office and mobile environments. With the
industry's broadest portfolio of state-of-the-art system-on-a-chip and
embedded software solutions, Broadcom is changing the world by Connecting
everything^®. For more information, go to www.broadcom.com.

Note Regarding Use of Non-GAAP Financial Measures

Broadcom reports the following measures in accordance with GAAP and on a
non-GAAP basis: (i) cost of product revenue, (ii) product gross profit, (iii)
product gross margin, (iv) research and development and selling, general and
administrative expense, (v) net income, (vi) weighted average shares
outstanding (diluted) and (vii) diluted net income per share (EPS). Broadcom's
presentation of non-GAAP cost of product revenue, non-GAAP product gross
profit, and non-GAAP product gross margin excludes certain charges related to
acquisitions, stock-based compensation expense and employer payroll tax
expense on certain stock option exercises. Acquisition-related charges include
the amortization of purchased intangible assets and the amortization of
acquired inventory valuation step-up. Our non-GAAP research and development
and selling, general and administrative expense excludes stock-based
compensation expense and employer payroll tax expense on certain stock option
exercises, non-recurring legal fees, and changes in contingent earn-out
liabilities. In addition to the exclusions noted above, our non-GAAP net
income and diluted net income per share also exclude settlement costs (gains),
charitable contributions, restructuring costs (reversals), impairment of
long-lived assets, gains on strategic investments, tax benefits resulting from
reductions in our U.S. valuation allowance on certain deferred tax assets due
to the recording of net deferred tax liabilities for identifiable intangible
assets under purchase accounting, and tax benefits resulting from the
reduction of certain foreign deferred tax liabilities due to the impairment of
long-lived assets. Stock-based compensation expense primarily includes the
impact of stock options and restricted stock units issued by Broadcom.
Reconciliations of our GAAP to non-GAAP financial measures for the three
months ended December 31, 2012 and 2011, three months ended September 30,
2012, and years ended December 31, 2012 and 2011 appear in the financial
statements portion of this release under the heading "Unaudited Schedule of
Selected GAAP to Non-GAAP Adjustments." Some totals or amounts may not add or
conform to prior period presentations due to rounding.

Broadcom believes that the presentation of these non-GAAP measures provides
important supplemental information to management and investors regarding
financial and business trends relating to our financial condition and results
of operations. Broadcom's management believes that the use of these non-GAAP
financial measures provides consistency and comparability among and between
results from prior periods or forecasts and future prospects, and also
facilitates comparisons with other companies in our industry, many of which
use similar non-GAAP financial measures to supplement their GAAP results.
Broadcom's management has historically used these non-GAAP financial measures
when evaluating operating performance, because we believe that the inclusion
or exclusion of the items described above provides insight into our core
operating results, our ability to generate cash and underlying business trends
affecting our performance. Broadcom has chosen to provide this information to
investors to enable them to perform additional analysis of past, present and
future operating performance and as a supplemental means to evaluate our
ongoing core operations. The non-GAAP financial information presented herein
should be considered supplemental to, and not as a substitute for, or superior
to, financial measures calculated in accordance with GAAP.

For additional information on the items excluded by Broadcom from one or more
of its non-GAAP financial measures, refer to the Form 8-K regarding this
release furnished today to the Securities and Exchange Commission.

Cautions Regarding Forward-Looking Statements:

All statements included or incorporated by reference in this release and the
related conference call for analysts and investors, other than statements or
characterizations of historical fact, are forward-looking statements within
the meaning of the federal securities laws, including the Private Securities
Litigation Reform Act of 1995. These forward-looking statements are based on
our current expectations, estimates and projections about our business and
industry, management's beliefs, and certain assumptions made by us, all of
which are subject to change. Forward-looking statements can often be
identified by words such as "anticipates," "expects," "intends," "plans,"
"predicts," "believes," "seeks," "estimates," "may," "will," "should,"
"would," "could," "potential," "continue," "ongoing," similar expressions, and
variations or negatives of these words. Examples of such forward-looking
statements include, but are not limited to, guidance provided on future
revenue, product gross margin and operating expenses for the first quarter of
2013 (on both a GAAP and non-GAAP basis), and references to our continued
dividend program. These forward-looking statements are not guarantees of
future results and are subject to risks, uncertainties and assumptions that
could cause our actual results to differ materially and adversely from those
expressed in any forward-looking statement.

These risks and uncertainties include, but are not limited to the following:

  oOur quarterly operating results may fluctuate significantly.
  oWe depend on a few significant customers for a substantial portion of our
    revenue.
  oWe face intense competition.
  oOur operating results may be adversely impacted by worldwide economic
    uncertainties and specific conditions in the markets we address.
  oWe may fail to adjust our operations in response to changes in demand.
  oOur stock price is highly volatile.
  oWe may be required to defend against alleged infringement of intellectual
    property rights of others and/or may be unable to adequately protect or
    enforce our own intellectual property rights.
  oWe are subject to order and shipment uncertainties.
  oWe manufacture and sell complex products and may be unable to successfully
    develop and introduce new products.
  oWe depend on third parties to fabricate, assemble and test our products.
  oWe face risks associated with our acquisition strategy.
  oWe are exposed to risks associated with our international operations.
  oThere can be no assurance that we will continue to declare cash dividends.
  oWe may be unable to attract, retain or motivate key personnel.
  oGovernment regulation may adversely affect our business.
  oOur business is subject to potential tax liabilities.
  oOur systems are subject to security breaches and other cybersecurity
    incidents.
  oOur articles of incorporation and bylaws contain anti-takeover provisions.
  oOur co-founders and their affiliates may strongly influence the outcome of
    matters that require the approval of our shareholders.

Our Annual Report on Form 10-K for the year ended December 31, 2011,
subsequent Quarterly Reports on Form 10-Q, recent Current Reports on Form 8-K,
and other Securities and Exchange Commission filings, including our Annual
Report on Form 10-K for the year ended December 31, 2012 when it is filed,
discuss the foregoing risks as well as other important risk factors that could
contribute to such differences or otherwise affect our business, results of
operations and financial condition. The forward-looking statements used in
this release and the related conference call for analysts and investors speak
only as of the date they are made. We undertake no obligation to revise or
update publicly any forward-looking statement to reflect future events or
circumstances.

Broadcom^®, the pulse logo, Connecting everything^®, and the Connecting
everything logo are among the trademarks of Broadcom Corporation and/or its
affiliates in the United States, certain other countries and/or the EU. Any
other trademarks or trade names mentioned are the property of their respective
owners.

BROADCOM CORPORATION
Unaudited GAAP Condensed Consolidated Statements of Income
(In millions, except per share amounts)
                                        Three Months Ended  Year Ended
                                        December 31,        December 31,
                                        2012      2011      2012      2011
Net revenue:
Product revenue                         $ 2,028   $ 1,763   $ 7,793   $ 7,159
Income from Qualcomm Agreement          43        52        186       207
Licensing revenue                       9         5         27        23
Total net revenue                       2,080     1,820     8,006     7,389
Costs and expenses:
Cost of product revenue                 1,025     894       4,027     3,626
Research and development                590       479       2,318     1,983
Selling, general and administrative     172       157       696       682
Amortization of purchased intangible    31        7         113       30
assets
Impairments of long-lived assets        5         —         90        92
Restructuring costs (reversals), net    1         (1)       7         16
Settlement costs (gains), net           (7)       5         79        (18)
Charitable contribution                 —         —         —         25
Total operating costs and expenses      1,817     1,541     7,330     6,436
Income from operations                  263       279       676       953
Interest expense, net                   (9)       (4)       (30)      (5)
Other income (expense), net             (4)       1         10        8
Income before income taxes              250       276       656       956
Provision for (benefit of) income taxes (1)       22        (63)      29
Net income                              $ 251     $ 254     $ 719     $ 927
Net income per share (basic)            $ 0.44    $ 0.47    $ 1.29    $ 1.72
Net income per share (diluted)          $ 0.43    $ 0.45    $ 1.25    $ 1.65
Weighted average shares (basic)         566       543       558       539
Weighted average shares (diluted)       581       561       576       563
Dividends per share                     $ 0.10    $ 0.09    $ 0.40    $ 0.36

The following table presents details of total stock-based compensation expense
included in each functional line item in the unaudited condensed consolidated
statements of income above:

                                    Three Months Ended  Year Ended
                                    December 31,        December 31,
                                    2012       2011     2012   2011
Cost of product revenue             $   6      $  5     $ 27   $ 24
Research and development            90         79       368    363
Selling, general and administrative 32         27       148    126



BROADCOM CORPORATION
Unaudited Condensed Consolidated Statements of Cash Flows
(In millions)
                                        Three Months Ended  Year Ended
                                        December 31,        December 31,
                                        2012      2011      2012      2011
Operating activities
Net income                              $ 251     $ 254     $ 719     $ 927
Adjustments to reconcile net income to
net cash provided by operating
activities:
Depreciation and amortization           39        29        134       108
Stock-based compensation expense:
Stock options and other awards          22        19        80        119
Restricted stock units                  106       92        463       394
Acquisition-related items:
Amortization of purchased intangible    81        19        311       84
assets
Impairments of long-lived assets        5         —         90        92
Non-cash settlement gains               (7)       —         (8)       (14)
Loss (gain) on strategic investments    1         (1)       (10)      (1)
and other
Changes in operating assets and
liabilities, net of acquisitions:
Accounts receivable                     124       139       (16)      154
Inventory                               30        70        (5)       207
Prepaid expenses and other assets       —         5         (8)       (28)
Accounts payable                        (53)      (102)     72        (201)
Deferred revenue and income             6         (5)       45        (33)
Accrued settlement costs                3         (10)      54        21
Other accrued and long-term liabilities (15)      (27)      10        9
Net cash provided by operating          593       482       1,931     1,838
activities
Investing activities
Net purchases of property and equipment (55)      (22)      (244)     (163)
Net cash paid for acquired companies    —         —         (3,582)   (347)
Sales (purchases) of strategic          14        (2)       27        (2)
investments
Purchases of marketable securities      (697)     (235)     (2,551)   (2,768)
Proceeds from sales and maturities of   362       1,087     1,554     4,143
marketable securities
Net cash provided by (used in)          (376)     828       (4,796)   863
investing activities
Financing activities
Issuance of long-term debt, net         —         494       492       494
Repurchases of Class A common stock     (32)      —         (33)      (670)
Dividends paid                          (57)      (49)      (224)     (194)
Payment of assumed contingent           —         —         (57)      —
consideration and debt
Proceeds from issuance of common stock  102       90        311       348
Minimum tax withholding paid on behalf  (29)      (32)      (153)     (155)
of employees for restricted stock units
Net cash provided by (used in)          (16)      503       336       (177)
financing activities
Increase (decrease) in cash and cash    201       1,813     (2,529)   2,524
equivalents
Cash and cash equivalents at beginning  1,416     2,333     4,146     1,622
of period
Cash and cash equivalents at end of     $ 1,617   $ 4,146   $ 1,617   $ 4,146
period



BROADCOM CORPORATION
Unaudited Condensed Consolidated Balance Sheets
(In millions)
                                           December 31,  December 31,
                                           2012          2011
ASSETS
Current assets:
Cash and cash equivalents                  $  1,617      $   4,146
Short-term marketable securities           757           383
Accounts receivable, net                   740           678
Inventory                                  527           421
Prepaid expenses and other current assets  140           124
Total current assets                       3,781         5,752
Property and equipment, net                485           368
Long-term marketable securities            1,348         676
Goodwill                                   3,726         1,787
Purchased intangible assets, net           1,786         400
Other assets                               82            57
Total assets                               $  11,208     $   9,040
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt          $  300        $   —
Accounts payable                           549           442
Wages and related benefits                 241           175
Deferred revenue and income                22            21
Accrued liabilities                        570           461
Total current liabilities                  1,682         1,099
Long-term debt                             1,393         1,196
Other long-term liabilities                294           224
Commitments and contingencies
Shareholders' equity                       7,839         6,521
Total liabilities and shareholders' equity $  11,208     $   9,040



UNAUDITED SUPPLEMENTAL FINANCIAL INFORMATION
(In millions)
                                December 31,  September 30, 2012  December 31,
                                2012                              2011
Cash and cash equivalents       $  1,617      $     1,416         $   4,146
Short-term marketable           757           735                 383
securities
Long-term marketable securities 1,348         1,039               676
Total cash, cash equivalents    $  3,722      $     3,190         $   5,205
and marketable securities
Increase from prior period end  532
Decrease from prior year end    $  (1,483)



BROADCOM CORPORATION
Unaudited Schedule of Selected GAAP to Non-GAAP Adjustments
(In millions)
                      Three Months Ended                  Year Ended
                      December 31,  September  December   December 31,
                                    30,        31,
                      2012          2012       2011       2012       2011
Product revenue       $  2,028      $ 2,078    $ 1,763    $ 7,793    $ 7,159
GAAP cost of product  1,025         1,063      894        4,027      3,626
revenue
GAAP product gross    $  1,003      $ 1,015    $ 869      $ 3,766    $ 3,533
profit
GAAP product gross    49.5      %   48.8    %  49.3    %  48.3    %  49.4    %
margin
GAAP cost of product  $  1,025      $ 1,063    $ 894      $ 4,027    $ 3,626
revenue
Adjustments:
Stock-based
compensation and      (6)           (6)        (5)        (27)       (23)
related payroll taxes
Amortization of
purchased intangible  (50)          (62)       (17)       (270)      (78)
assets and step-up of
acquired inventory
Non-GAAP cost of      $  969        $ 995      $ 872      $ 3,730    $ 3,525
product revenue
Product revenue       $  2,028      $ 2,078    $ 1,763    $ 7,793    $ 7,159
Non-GAAP cost of      969           995        872        3,730      3,525
product revenue
Non-GAAP product      $  1,059      $ 1,083    $ 891      $ 4,063    $ 3,634
gross profit
Non-GAAP product      52.2      %   52.1    %  50.5    %  52.1    %  50.8    %
gross margin
GAAP research and
development and
selling, general and  $  762        $ 774      $ 636      $ 3,014    $ 2,665
administrative
expense
Adjustments:
Stock-based
compensation and      (124)         (126)      (109)      (526)      (498)
related payroll taxes
Non-recurring legal   —             —          —          —          (25)
fees
Change in contingent  —             —          1          —          1
earn-out liability
Total GAAP to         (124)         (126)      (108)      (526)      (522)
Non-GAAP adjustments
Non-GAAP research and
development and
selling, general and  $  638        $ 648      $ 528      $ 2,488    $ 2,143
administrative
expense



BROADCOM CORPORATION
Unaudited Schedule of Selected GAAP to Non-GAAP Adjustments
(In millions)
                     Three Months Ended                     Year Ended
                     December 31,  September 30,  December  December 31,
                                                  31,
                     2012          2012           2011      2012      2011
GAAP net income      $   251       $   220        $  254    $ 719     $ 927
Adjustments:
Stock-based
compensation and     130           132            114       553       521
related payroll
taxes
Amortization of
purchased intangible
assets and step-up   81            94             24        383       108
of acquired
inventory
Impairment of        5             48             —         90        92
long-lived assets
Settlement costs     (7)           (2)            5         79        (18)
(gains)
Charitable           —             —              —         —         25
contributions
Restructuring costs, 1             2              (1)       7         16
net
Non-recurring legal  —             —              —         —         25
fees
Change in contingent —             —              (1)       —         (1)
earn-out liability
Other income, net    —             (6)            (1)       (9)       (1)
Certain income tax   1             (12)           —         (62)      —
expense (benefit)
Total GAAP to        211           256            140       1,041     767
Non-GAAP adjustments
Non-GAAP net income  $   462       $   476        $  394    $ 1,760   $ 1,694
Shares used in
calculation -        581           579            561       576       563
diluted (GAAP)
Non-GAAP adjustment  24            26             20        26        23
*
Shares used in
calculation -        605           605            581       602       586
diluted (Non-GAAP)
GAAP diluted net     $   0.43      $   0.38       $  0.45   $ 1.25    $ 1.65
income per share
Non-GAAP diluted net $   0.76      $   0.79       $  0.68   $ 2.92    $ 2.89
income per share



*Represents the benefits of compensation costs attributable to future services
and not yet recognized in the financial statements that are treated as
proceeds assumed to be used to repurchase shares under the GAAP treasury stock
method.



BROADCOM CORPORATION
Guidance for the Three Months Ending March 31, 2013
                                                  Three Months Ending
                                                  March 31, 2013
Total net revenue                                 ~$1.90 billion plus or minus
                                                  4%
Product gross margin (GAAP)                       Flat to down 50 basis points
                                                  from Q4'12
Product gross margin (Non-GAAP)                   Flat to down 50 basis points
                                                  from Q4'12
Research & development and selling, general, and  Up ~$35 million to ~$50
administrative expenses (GAAP)                    million from Q4'12
Research & development and selling, general, and  Up ~$25 million to ~$40
administrative expenses (Non-GAAP)                million from Q4'12

Broadcom has based the preceding guidance for the three months ending March
31, 2013 on expectations, assumptions and estimates that we believe are
reasonable given our assessment of historical trends and other information
reasonably available as of January 29, 2013. Our guidance consists of
predictions only, however, and is subject to a wide range of known and unknown
business risks and uncertainties, many of which are beyond our control. The
forecasts and projections contained in the table above should not be regarded
as representations by Broadcom that the estimated results will be achieved.
Projections and estimates are necessarily speculative in nature and actual
results may vary materially from the guidance we provide today. The non-GAAP
guidance presented above is consistent with the presentation of non-GAAP
results included elsewhere herein.

The guidance set forth in the above table should be read together with the
information under the caption, "Cautions Regarding Forward-Looking Statements"
above, our Annual Report on Form 10-K for the year ended December 31, 2011,
subsequent Quarterly Reports on Form 10-Q, recent Current Reports on Form 8-K,
and our other Securities and Exchange Commission filings, including our Annual
Report on Form 10-K for the year ended December 31, 2012 when it is filed. We
undertake no obligation to publicly update or revise any forward-looking
statements, including the guidance set forth herein, to reflect future events
or circumstances.

Broadcom Business Press Contact          Broadcom Investor Relations Contact
Karen Kahn                               Chris Zegarelli
Vice President, Corporate Communications Senior Director, Investor Relations
415-297-5035                             949-926-7567
kkahn@broadcom.com                       czegarel@broadcom.com



SOURCE Broadcom Corporation; BRCM Corporate

Website: http://www.broadcom.com
 
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