BROADCOM CORPORATION 
By 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
Results GAAP Non-GAAP
---- --------
Total net
revenue $2.08 billion
Diluted EPS $.43 $.76
($.04 better than First Call ($.03 better than First Call
consensus) 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:
-- Our quarterly operating results may fluctuate significantly.
-- We depend on a few significant customers for a substantial portion of
our revenue.
-- We face intense competition.
-- Our operating results may be adversely impacted by worldwide economic
uncertainties and specific conditions in the markets we address.
-- We may fail to adjust our operations in response to changes in demand.
-- Our stock price is highly volatile.
-- We 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.
-- We are subject to order and shipment uncertainties.
-- We manufacture and sell complex products and may be unable to
successfully develop and introduce new products.
-- We depend on third parties to fabricate, assemble and test our products.
-- We face risks associated with our acquisition strategy.
-- We are exposed to risks associated with our international operations.
-- There can be no assurance that we will continue to declare cash
dividends.
-- We may be unable to attract, retain or motivate key personnel.
-- Government regulation may adversely affect our business.
-- Our business is subject to potential tax liabilities.
-- Our systems are subject to security breaches and other cybersecurity
incidents.
-- Our articles of incorporation and bylaws contain anti-takeover
provisions.
-- Our 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 assets 31 7 113 30
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
assets 81 19 311 84
Impairments of long-lived assets 5 - 90 92
Non-cash settlement gains (7) - (8) (14)
Loss (gain) on strategic investments and
other 1 (1) (10) (1)
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 activities 593 482 1,931 1,838
--- --- ----- -----
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 investments 14 (2) 27 (2)
Purchases of marketable securities (697) (235) (2,551) (2,768)
Proceeds from sales and maturities of
marketable securities 362 1,087 1,554 4,143
--- ----- -----
Net cash provided by (used in) investing
activities (376) 828 (4,796) 863
---- --- ------ ---
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
consideration and debt - - (57) -
Proceeds from issuance of common stock 102 90 311 348
Minimum tax withholding paid on behalf of
employees for restricted stock units (29) (32) (153) (155)
--- ---- ----
Net cash provided by (used in) financing
activities (16) 503 336 (177)
--- --- --- ----
Increase (decrease) in cash and cash
equivalents 201 1,813 (2,529) 2,524
Cash and cash equivalents at beginning of
period 1,416 2,333 4,146 1,622
----- ----- -----
Cash and cash equivalents at end of period $1,617 $4,146 $1,617 $4,146
====== ====== ====== ======
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
securities 757 735 383
Long-term
marketable
securities 1,348 1,039 676
-----
Total cash,
cash
equivalents
and marketable
securities $3,722 $3,190 $5,205
====== ====== ======
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 30, December 31, December 31,
------------
2012 2012 2011 2012 2011
---- ---- ---- ---- ----
Product revenue $2,028 $2,078 $1,763 $7,793 $7,159
GAAP cost of product revenue 1,025 1,063 894 4,027 3,626
GAAP product gross profit $1,003 $1,015 $869 $3,766 $3,533
====== ====== ==== ====== ======
GAAP product gross margin 49.5% 48.8% 49.3% 48.3% 49.4%
GAAP cost of product revenue $1,025 $1,063 $894 $4,027 $3,626
Adjustments:
Stock-based compensation
and related payroll taxes (6) (6) (5) (27) (23)
Amortization of purchased
intangible assets and step-
up of acquired inventory (50) (62) (17) (270) (78)
Non-GAAP cost of product
revenue $969 $995 $872 $3,730 $3,525
==== ==== ==== ====== ======
Product revenue $2,028 $2,078 $1,763 $7,793 $7,159
Non-GAAP cost of product
revenue 969 995 872 3,730 3,525
Non-GAAP product gross
profit $1,059 $1,083 $891 $4,063 $3,634
====== ====== ==== ====== ======
Non-GAAP product gross
margin 52.2% 52.1% 50.5% 52.1% 50.8%
GAAP research and
development and selling,
general and administrative
expense $762 $774 $636 $3,014 $2,665
Adjustments:
Stock-based compensation
and related payroll taxes (124) (126) (109) (526) (498)
Non-recurring legal fees - - - - (25)
Change in contingent earn-
out liability - - 1 - 1
--- --- --- --- ---
Total GAAP to Non-GAAP
adjustments (124) (126) (108) (526) (522)
---- ---- ---- ---- ----
Non-GAAP research and
development and selling,
general and administrative
expense $638 $648 $528 $2,488 $2,143
==== ==== ==== ====== ======
BROADCOM CORPORATION
Unaudited Schedule of Selected GAAP to Non-GAAP Adjustments
(In millions)
Three Months Ended Year Ended
------------------
December 31, September 30, December 31, December 31,
------------
2012 2012 2011 2012 2011
---- ---- ---- ---- ----
GAAP net income $251 $220 $254 $719 $927
Adjustments:
Stock-based compensation
and related payroll taxes 130 132 114 553 521
Amortization of purchased
intangible assets and step-
up of acquired inventory 81 94 24 383 108
Impairment of long-lived
assets 5 48 - 90 92
Settlement costs (gains) (7) (2) 5 79 (18)
Charitable contributions - - - - 25
Restructuring costs, net 1 2 (1) 7 16
Non-recurring legal fees - - - - 25
Change in contingent earn-
out liability - - (1) - (1)
Other income, net - (6) (1) (9) (1)
Certain income tax expense
(benefit) 1 (12) - (62) -
---
Total GAAP to Non-GAAP
adjustments 211 256 140 1,041 767
--- --- --- ----- ---
Non-GAAP net income $462 $476 $394 $1,760 $1,694
==== ==== ==== ====== ======
Shares used in calculation -
diluted (GAAP) 581 579 561 576 563
Non-GAAP adjustment * 24 26 20 26 23
Shares used in calculation -
diluted (Non-GAAP) 605 605 581 602 586
=== === === === ===
GAAP diluted net income per
share $0.43 $0.38 $0.45 $1.25 $1.65
Non-GAAP diluted net income
per share $0.76 $0.79 $0.68 $2.92 $2.89
===== ===== ===== ===== =====
*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, Up ~$35 million to ~$50
general, and administrative million from Q4'12
expenses (GAAP)
----------------------------------- -----------------------
Research & development and selling, Up ~$25 million to ~$40
general, and administrative million from Q4'12
expenses (Non-GAAP)
----------------------------------- -----------------------
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
