Broadcom Reports First Quarter 2013 Results

IRVINE, Calif. – April 23, 2013 –

— Net Revenue: $2.01 billion —

— Cash Flow from Operations: $388 million —

First Quarter 2013 Results	GAAP	Non-GAAP
Total net revenue	$2.01 billion
Diluted EPS	$.33	$.65
	($.11 better than First Call consensus)	($.09 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 first quarter ended March 31, 2013.

“Broadcom delivered nearly 10% year-over-year revenue growth in the March quarter, and earnings well above First Call consensus.  This better-than-expected result was driven by wireless baseband and connectivity chips,” said Scott McGregor, Broadcom's President and Chief Executive Officer. “Looking forward, we see broad-based sequential growth driven by our industry-leading portfolio of wired and wireless communications platforms.”

Net revenue for the first quarter of 2013 was $2.01 billion. This represents a decrease of 3.6% compared with the $2.08 billion reported for the fourth quarter of 2012 and an increase of 9.7% compared with the $1.83 billion reported for the first quarter of 2012. Net income computed in accordance with U.S. generally accepted accounting principles (GAAP) for the first quarter of 2013 was $191 million, or $.33 per share (diluted), compared with GAAP net income of $251 million, or $.43 per share (diluted), for the fourth quarter of 2012 and GAAP net income of $88 million, or $.15 per share (diluted), for the first quarter of 2012.

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 March 31, 2013, December 31, 2012 and March 31, 2012 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 first quarter of 2013 was $400 million, or $.65 per share (diluted), compared with non-GAAP net income of $462 million, or $.76 per share (diluted), for the fourth quarter of 2012 and non-GAAP net income of $387 million, or $.65 per share diluted, for the first quarter of 2012.

Conference Call Information

As previously announced, Broadcom will conduct a conference call with analysts and investors to discuss its first quarter 2013 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 11:59 p.m. Pacific Time on Thursday, May 23, 2013.

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

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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. In addition to the exclusions noted above, our non-GAAP net income and diluted net income per share also exclude settlement costs (gains), 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 March 31, 2013 , December 31, 2012 and March 31, 2012 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.

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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 second quarter of 2013 (on both a GAAP and non-GAAP basis), and references to our continued growth. 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.

• 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.

• Our stock price is highly volatile.

• 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.

• Our systems are subject to security breaches and other cybersecurity incidents.

• 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 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, 2012, 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 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.

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BROADCOM CORPORATION
Unaudited GAAP Condensed Consolidated Statements of Income
(In millions, except per share amounts)
	Three Months Ended
	March 31, 2013			December 31, 2012			March 31, 2012
Net revenue:
Product revenue	$	1,954		$	2,028		$	1,770
Income from Qualcomm Agreement	43			43			52
Licensing revenue	8			9			5
Total net revenue	2,005			2,080			1,827
Costs and expenses:
Cost of product revenue	988			1,025			918
Research and development	615			590			546
Selling, general and administrative	179			172			179
Amortization of purchased intangible assets	15			31			17
Impairments of long-lived assets	10			5			28
Restructuring costs, net	—			1			3
Settlement costs (gains)	—			(7		)	86
Total operating costs and expenses	1,807			1,817			1,777
Income from operations	198			263			50
Interest expense, net	(8		)	(9		)	(6		)
Other income (expense), net	3			(4		)	(1		)
Income before income taxes	193			250			43
Provision for (benefit of) income taxes	2			(1		)	(45		)
Net income	$	191		$	251		$	88
Net income per share (basic)	$	0.34		$	0.44		$	0.16
Net income per share (diluted)	$	0.33		$	0.43		$	0.15
Weighted average shares (basic)	570			566			548
Weighted average shares (diluted)	585			581			570
Dividends per share	$	0.11		$	0.10		$	0.10

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
	March 31, 2013		December 31, 2012		March 31, 2012
Cost of product revenue	$	7	$	6	$	9
Research and development	99		90		94
Selling, general and administrative	34		32		47

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BROADCOM CORPORATION
Unaudited Condensed Consolidated Statements of Cash Flows
(In millions)
	Three Months Ended
	March 31,
	2013			2012
Operating activities
Net income	$	191		$	88
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	39			28
Stock-based compensation expense	140			150
Acquisition-related items:
Amortization of purchased intangible assets	58			54
Impairments of long-lived assets	10			28
Changes in operating assets and liabilities, net of acquisitions:
Accounts receivable	(11		)	(51		)
Inventory	4			38
Prepaid expenses and other assets	(34		)	(11		)
Accounts payable	109			52
Deferred revenue and income	(2		)	(9		)
Accrued settlement costs	(3		)	87
Other accrued and long-term liabilities	(113		)	(86		)
Net cash provided by operating activities	388			368
Investing activities
Net purchases of property and equipment	(41		)	(74		)
Net cash paid for acquired companies	—			(3,393		)
Purchases of marketable securities	(619		)	(334		)
Proceeds from sales and maturities of marketable securities	539			706
Net cash used in investing activities	(121		)	(3,095		)
Financing activities
Repurchases of Class A common stock	(107		)	—
Dividends paid	(63		)	(55		)
Payment of assumed contingent consideration	—			(53		)
Proceeds from issuance of common stock	68			62
Minimum tax withholding paid on behalf of employees for restricted stock units	(40		)	(48		)
Net cash used in financing activities	(142		)	(94		)
Increase (decrease) in cash and cash equivalents	125			(2,821		)
Cash and cash equivalents at beginning of period	1,617			4,146
Cash and cash equivalents at end of period	$	1,742		$	1,325

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BROADCOM CORPORATION
Unaudited Condensed Consolidated Balance Sheets
(In millions)
	March 31, 2013		December 31, 2012
ASSETS
Current assets:
Cash and cash equivalents	$	1,742	$	1,617
Short-term marketable securities	727		757
Accounts receivable, net	751		740
Inventory	523		527
Prepaid expenses and other current assets	154		140
Total current assets	3,897		3,781
Property and equipment, net	493		485
Long-term marketable securities	1,457		1,348
Goodwill	3,729		3,726
Purchased intangible assets, net	1,722		1,786
Other assets	102		82
Total assets	$	11,400	$	11,208
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Current portion of long-term debt	$	300	$	300
Accounts payable	661		549
Wages and related benefits	170		241
Deferred revenue and income	23		22
Accrued liabilities	521		570
Total current liabilities	1,675		1,682
Long-term debt	1,394		1,393
Other long-term liabilities	299		294
Commitments and contingencies
Shareholders' equity	8,032		7,839
Total liabilities and shareholders’ equity	$	11,400	$	11,208

UNAUDITED SUPPLEMENTAL FINANCIAL INFORMATION
(In millions)
	March 31, 2013		December 31, 2012
Cash and cash equivalents	$	1,742	$	1,617
Short-term marketable securities	727		757
Long-term marketable securities	1,457		1,348
Total cash, cash equivalents and marketable securities	$	3,926	$	3,722
Increase from prior period end	$	204

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BROADCOM CORPORATION
Unaudited Schedule of Selected GAAP to Non-GAAP Adjustments
(In millions)
	Three Months Ended
	March 31, 2013			December 31, 2012			March 31, 2012
Product revenue	$	1,954		$	2,028		$	1,770
GAAP cost of product revenue	988			1,025			918
GAAP product gross profit	$	966		$	1,003		$	852
GAAP product gross margin	49.4		%	49.5		%	48.1		%
GAAP cost of product revenue	$	988		$	1,025		$	918
Adjustments:
Stock-based compensation and related payroll taxes	(7		)	(6		)	(9		)
Amortization of purchased intangible assets and step-up of acquired inventory	(44		)	(50		)	(59		)
Non-GAAP cost of product revenue	$	937		$	969		$	850
Product revenue	$	1,954		$	2,028		$	1,770
Non-GAAP cost of product revenue	937			969			850
Non-GAAP product gross profit	$	1,017		$	1,059		$	920
Non-GAAP product gross margin	52.0		%	52.2		%	52.0		%
GAAP research and development and selling, general and administrative expense	$	794		$	762		$	725
Adjustments:
Stock-based compensation and related payroll taxes	(135		)	(124		)	(143		)
Non-GAAP research and development and selling, general and administrative expense	$	659		$	638		$	582

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BROADCOM CORPORATION
Unaudited Schedule of Selected GAAP to Non-GAAP Adjustments
(In millions)
	Three Months Ended
	March 31, 2013			December 31, 2012			March 31, 2012
GAAP net income	$	191		$	251		$	88
Adjustments:
Stock-based compensation and related payroll taxes	142			130			152
Amortization of purchased intangible assets and step-up of acquired inventory	59			81			76
Impairment of long-lived assets	10			5			28
Settlement costs (gains)	—			(7		)	86
Restructuring costs, net	—			1			3
Certain income tax expense (benefit)	(2		)	1			(46		)
Total GAAP to Non-GAAP adjustments	209			211			299
Non-GAAP net income	$	400		$	462		$	387
Shares used in calculation - diluted (GAAP)	585			581			570
Non-GAAP adjustment *	29			24			24
Shares used in calculation - diluted (Non-GAAP)	614			605			594
GAAP diluted net income per share	$	0.33		$	0.43		$	0.15
Non-GAAP diluted net income per share	$	0.65		$	0.76		$	0.65

*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.

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BROADCOM CORPORATION

Guidance for the Three Months Ending June 30, 2013

	Three Months Ending
	June 30, 2013
Total net revenue	~$2.10 billion plus or minus 4%
Product gross margin (GAAP and Non-GAAP)	Down roughly half a point from Q1'13
Research & development and selling, general, and administrative expenses (GAAP and Non-GAAP)	Flat to up ~$20 million from Q1’13

Broadcom has based the preceding guidance for the three months ending June 30, 2013 on expectations, assumptions and estimates that we believe are reasonable given our assessment of historical trends and other information reasonably available as of April 23, 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, 2012, 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, 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

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