Broadcom Reports Fourth Quarter and Full Year 2010 Results

IRVINE, Calif., Feb. 1, 2011 /PRNewswire/ --

Q4 Summary

• Total Revenue: $1.95 billion (up 45% year over year)
• Gross Margin: 50.9% (Product Gross Margin: 49.4%)
• Operating Margin: 13.8%
• Net Income: $266 million
• Diluted GAAP Earnings per Share: $0.47 (includes $0.11 of non-recurring settlement and asset impairment charges)
• Cash Flow from Operations: $452 million

Full Year 2010 Summary

• Total Revenue: $6.82 billion (up 52% year over year)
• Gross Margin: 51.8% (Product Gross Margin: 50.2%)
• Operating Margin: 15.9%
• Net Income: $1.08 billion
• Diluted GAAP Earnings per Share:  $1.99 (includes $0.13 of non-recurring settlement and asset impairment charges)
• Cash Flow from Operations: $1.37 billion

Broadcom Corporation (Nasdaq: BRCM) today reported unaudited financial results for its fourth quarter and year ended December 31, 2010.

Net revenue for the fourth quarter of 2010 was a record $1.95 billion. This represents an increase in net revenue of 7.7% compared with the $1.81 billion reported for the third quarter of 2010 and an increase of 44.9% compared with the $1.34 billion reported for the fourth quarter of 2009. Net income computed in accordance with U.S. generally accepted accounting principles (GAAP) for the fourth quarter of 2010 was $266 million, or $.47 per share (diluted), compared with GAAP net income of $327 million, or $.60 per share (diluted), for the third quarter of 2010, and GAAP net income of $59 million, or $.11 per share (diluted), for the fourth quarter of 2009.

Net revenue for the year ended December 31, 2010 was $6.82 billion. This represents an increase in net revenue of 51.8% from the $4.49 billion reported for the year ended December 31, 2009. Net income computed in accordance with GAAP for the year ended December 31, 2010 was $1.08 billion, or $1.99 per share (diluted), compared with GAAP net income of $65 million, or $.13 per share (diluted), for the year ended December 31, 2009.

For a discussion of certain selected transactions and their related accounting impact for all periods presented, see the "Unaudited Supplementary Financial Data" schedule below.

"I am very pleased with our record performance in 2010, as Broadcom gained significant market share and delivered record revenue, earnings per share, and cash flow from operations," said Scott A. McGregor, Broadcom's President and Chief Executive Officer. "Our achievements highlight the incredible capabilities of our employees to create innovative solutions in the wired and wireless communications markets."

"Our record results, powerful balance sheet and strong operating cash flow enable us to increase our dividend by 12.5% and accelerate share repurchases, reflecting our continued commitment to returning capital to our shareholders. Looking ahead, we will focus on continuing to grow revenue faster than our peers and to gain share in our core markets, while maintaining financial discipline."

Conference Call Information

As previously announced, Broadcom will conduct a conference call with analysts and investors to discuss its fourth quarter and year-end 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 (SEC) 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 10:00 p.m. Pacific Time on Tuesday, February 22, 2011.

The financial results included in this release are unaudited. The audited financial statements of the company for the year ended December 31, 2010 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 is a major technology innovator and global leader in semiconductors for wired and wireless communications.  Broadcom® products enable the delivery of voice, video, data and multimedia to and throughout the home, the office and the mobile environment.  We provide the industry's broadest portfolio of state-of-the-art system-on-a-chip and software solutions to manufacturers of computing and networking equipment, digital entertainment and broadband access products, and mobile devices.  These solutions support our core mission: Connecting everything®.

Broadcom, one of the world's largest fabless communications semiconductor companies, with 2010 revenue of $6.82 billion, holds more than 4,800 U.S. and 2,000 foreign patents, and has more than 7,800 additional pending patent applications, and one of the broadest intellectual property portfolios addressing both wired and wireless transmission of voice, video, data and multimedia.

A FORTUNE 500® company, Broadcom is headquartered in Irvine, Calif., and has offices and research facilities in North America, Asia and Europe.  Broadcom may be contacted at +1.949.926.5000 or at www.broadcom.com.

Note Regarding Use of Non-GAAP Financial Measures

Broadcom reports income from operations in accordance with GAAP and supplementally on a non-GAAP basis, referred to in this release as "non-GAAP income from operations." Broadcom's presentation of non-GAAP income from operations excludes certain charges related to acquisitions, stock-based compensation expense, employer payroll tax expense on certain stock option exercises, settlement costs, impairment of goodwill or other long-lived assets, restructuring costs (reversals) and charitable contributions to the Broadcom Foundation. Stock-based compensation expense primarily includes the impact of stock options and restricted stock units issued by Broadcom. Reconciliations of GAAP income from operations to non-GAAP income from operations for the three months ended and years ended December 31, 2010 and 2009 appear in the financial statements portion of this release.

Broadcom believes that the presentation of non-GAAP income from operations 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 non-GAAP income from operations 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 analyses 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. 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, gross product margin and operating expense targets for the first quarter of 2011, references to opportunities within the wired and wireless communication markets to grow revenue and gain share in core markets and statements about our intention to pay quarterly cash dividends and return capital to shareholders. 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:

• We face intense competition.
• We depend on a few significant customers for a substantial portion of our revenue.
• Our quarterly operating results may fluctuate significantly.
• We may fail to adjust our operations in response to changes in demand.
• We face risks associated with our acquisition strategy.
• Our operating results may be adversely impacted by worldwide economic uncertainties and specific conditions in the markets we address.
• We may be required to defend against alleged infringement of intellectual property rights.
• Our stock price is highly volatile.
• We may not be able to protect or enforce our intellectual property rights.
• Our business is subject to potential tax liabilities.
• We manufacture and sell complex products and may be unable to successfully develop and introduce new products.
• We are subject to order and shipment uncertainties.
• We are exposed to risks associated with our international operations.
• We depend on third-party subcontractors to fabricate, assemble and test our products.
• Government regulation may adversely affect our business.
• We may be unable to attract, retain or motivate key personnel.
• Our co-founders and their affiliates may control the outcome of matters that require the approval of our shareholders.
• There can be no assurance that we will continue to declare cash dividends.
• Our articles of incorporation and bylaws contain anti-takeover provisions.

Our Annual Report on Form 10-K, subsequent Quarterly Reports on Form 10-Q, recent Current Reports on Form 8-K, and other Securities and Exchange Commission filings 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 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, except as required by law.

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.

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:

Non-GAAP Adjustments

The above non-GAAP adjustments are based upon our unaudited consolidated statements of operations for the periods shown. These adjustments are not in accordance with, or an alternative for GAAP. 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.

Non-GAAP Financial Statements

The above non-GAAP statements are based upon our unaudited consolidated statements of operations for the periods shown, giving effect to the adjustments shown in the attached reconciliation. This presentation is not in accordance with, or an alternative for GAAP. 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.

Broadcom has based the preceding guidance for the three months ending March 31, 2011 on expectations, assumptions and estimates that we believe are reasonable given our assessment of historical trends and other information reasonably available as of February 1, 2011. 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 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, 2010, subsequent Quarterly Reports on Form 10-Q, recent Current Reports on Form 8-K, and our other Securities and Exchange Commission filings. We undertake no obligation to publicly update or revise any forward-looking statements, including the guidance set forth herein, except as required by law.

SOURCE Broadcom Corporation; BRCM Corporate