Broadcom Reports Fourth Quarter and Full Year 2012 Results

Jan 29, 2013, 16:05 ET from Broadcom Corporation from ,BRCM Corporate

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 consensus)


($.03 better than First 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:

  • 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, 2012

December 31, 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, 2012

September 30, 2012

December 31, 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, general, and administrative expenses (GAAP)

Up ~$35 million to ~$50 million from Q4'12

Research & development and selling, general, and administrative expenses (Non-GAAP)

Up ~$25 million to ~$40 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



RELATED LINKS

http://www.broadcom.com