SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): May 1, 2012
BROADCOM CORPORATION
(Exact Name of Registrant as Specified in Charter)
California | 000-23993 | 33-0480482 | ||
(State or Other Jurisdiction of Incorporation) |
(Commission File Number) |
(IRS Employer Identification No.) |
5300 California Avenue, Irvine, CA 92617
(Address of Principal Executive Offices)(Zip Code)
Registrants telephone number, including area code: (949) 926-5000
Not Applicable
(Former Name or Former Address, if Changed since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 2.02. Results of Operations and Financial Condition.
The information in Item 2.02 of this Current Report, including Exhibit 99.1, is being furnished and shall not be deemed filed for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that Section. The information in this Current Report shall not be incorporated by reference into any registration statement or other document filed pursuant to the Securities Act of 1933, as amended, regardless of any general incorporation language contained in such filing.
On May 1, 2012 Broadcom Corporation (the Company or Broadcom) issued a press release announcing unaudited financial results for the three months ended March 31, 2012. A copy of the press release is furnished herewith as Exhibit 99.1 and is incorporated by reference herein.
Discussion of Non-GAAP Financial Measures
Broadcom reports the following measures in accordance with U.S. Generally Accepted Accounting Principles, or 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, referred to collectively as non-GAAP financial measures. These non-GAAP financial measures exclude stock-based compensation expense, as well as charges related to acquisitions, employer payroll taxes and non-recurring, infrequent or unusual charges and gains that are driven primarily by discrete events that management does not consider to be directly related to the Companys core operating performance. Non-GAAP net income per share is calculated by dividing non-GAAP net income by non-GAAP weighted average shares outstanding (diluted). For this purpose, the calculation of GAAP weighted average shares outstanding (diluted) is adjusted to exclude 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 believes that the presentation of these non-GAAP financial measures provides important supplemental information to management and investors regarding financial and business trends relating to the Companys financial condition and results of operations. Broadcoms 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 the Companys industry, many of which use similar non-GAAP financial measures to supplement their GAAP results. Broadcoms management has historically used these non-GAAP financial measures when evaluating operating performance, because Broadcom believes that the inclusion or exclusion of the items described below provides insight into its core operating results, its ability to generate cash and underlying business trends affecting 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 the Companys ongoing core operations. Externally, Broadcom believes that these non-GAAP financial measures, when used in conjunction with the Companys GAAP financial information, is useful to investors in their assessment of Broadcoms operating performance and the valuation of the Company.
Internally, these non-GAAP financial measures are significant measures used by management for purposes of:
| supplementing the financial results and forecasts reported to the Companys board of directors; |
| evaluating Broadcoms operating performance; |
| managing and benchmarking performance internally across Broadcoms businesses and externally against peers; |
| determining a portion of bonus compensation for executive officers and certain other key employees; |
| establishing internal operating budgets; |
| calculating return on investment for development programs and growth initiatives; |
| comparing performance with internal forecasts and targeted business models; and |
| evaluating and valuing potential acquisition candidates. |
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These Non-GAAP financial measures are adjusted for one or more of the following items:
| Stock-based compensation. Stock-based compensation relates primarily to employee stock options and restricted stock units issued by Broadcom. Stock-based compensation expense is a non-cash expense (not reflected in ongoing operating results) that varies in amount from period to period and is affected by market forces that are difficult to predict and are not within the control of management, such as the price of Broadcoms Class A common stock. Stock-based compensation is different from cash compensation in that the latter has a fixed and determinable cost. For example, the expense associated with an equity award is most often unrelated to the amount of compensation ultimately received by the employee. Further, the cost to the Company is based on a stock-based compensation valuation methodology and underlying assumptions that may vary over time and that does not reflect any cash expenditures by the Company. Finally, the expense recognized by the Company may be very different than the expense to other companies for awarding comparable equity awards, which makes it difficult to assess the Companys operating performance relative to its competitors. Accordingly, management excludes this item from its internal operating forecasts and models. Broadcom takes into account the dilutive impact of stock options and shares issued pursuant to its stock-based compensation plans at the aggregate company level, but regularly excludes stock-based compensation expense when analyzing individual line items on the Companys financial statements or when making decisions that affect Broadcoms various businesses. |
| Acquisition-related charges. Acquisition-related charges include the amortization of purchased intangible assets and the amortization of acquired inventory valuation step-up (as well as the impairment of goodwill and purchased intangible assets primarily consisting of developed technology and in-process research and development assets). These charges are not factored into managements evaluation of potential acquisitions, or of the Companys performance after completion of acquisitions, because they do not affect the Companys current cash position, are not related to core operating performance and had Broadcom internally developed the technology acquired, the amortization of intangible assets would have been expensed in prior periods. In addition, the frequency and amount of such charges vary significantly based on the timing and magnitude of the Companys acquisition transactions, the maturities of the businesses being acquired, and depending on the nature of the consideration paid in connection with acquisitions, the then fair market value of Broadcoms Class A common stock. |
| Changes in contingent earn-out liability. An estimated fair value of contingent earn-out consideration is recorded at the close of an acquisition. As changes to the estimated fair value occur, which may be for a variety of reasons, including but not limited to, changes in expected earn-out milestone achievements, we are required to record the changes in the estimated liability through our operating results until the liability is fixed. We evaluate contingent earn-out consideration as part of the total purchase consideration of the business and do not consider changes in the total purchase consideration recorded in our operating results to meaningfully reflect our core operating performance in the current period. |
| Employer payroll tax expense. Employer payroll tax expense on certain stock option exercises varies greatly in amount from period-to-period and is significantly impacted by factors that are difficult to predict and are not within the control of management, such as the timing, number and magnitude of employee stock option exercises and the fair market value of Broadcoms Class A common stock at the time of exercise. |
| Other charges and gains. Other charges and gains consist of settlement costs (gains), charitable contributions, non-recurring legal fees, restructuring costs (reversals), gains (losses) on strategic investments, and impairment of other long-lived assets, all of which occur on a sporadic basis and vary greatly in amount. Management excludes these items when evaluating the Companys operating performance because these amounts do not affect core operations and because the frequency and variability in the nature of the charges can vary significantly from period to period. Excluding this data provides investors with a basis to compare the Companys performance against the performance of other companies without this variability. |
| Income tax expense (benefit). Represents the reversal of a portion of our valuation allowance that was directly related to the establishment of a deferred tax liability associated with the step-up of NetLogic acquired identifiable intangible assets allocated to jurisdictions in which the statutory tax rate is above zero. |
Additionally, the calculation of non-GAAP net income per share uses non-GAAP weighted average shares outstanding (diluted). The treasury stock method used to calculate GAAP weighted average shares outstanding (diluted) requires amounts related to compensation costs attributable to future services and not yet recognized in the financial statements to be treated as proceeds that are assumed to be used to repurchase shares. As a result, this reduces the total number of weighted average shares for purposes of calculating GAAP weighted average shares outstanding (diluted). Since Broadcom does not include the effects of these compensation costs in its non-GAAP net income, management believes these amounts should not be applied to the repurchase of shares in calculating non-GAAP net income per share, and, accordingly, adds such shares back into weighted average shares outstanding for purposes of calculating non-GAAP net income per share.
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Non-GAAP financial measures are not calculated in accordance with GAAP, and should be considered supplemental to, and not as a substitute for, or superior to, financial measures calculated in accordance with GAAP. In addition, these non-GAAP measures are not based on any comprehensive set of accounting rules or principles. Non-GAAP financial measures have limitations in that they do not reflect all of the costs associated with the operations of Broadcoms business as determined in accordance with GAAP. As a result, you should not consider these measures in isolation or as a substitute for analysis of Broadcoms results as reported under GAAP. Broadcom expects to continue to incur expenses similar to the non-GAAP adjustments described above, and exclusion of these items from Broadcoms non-GAAP financial measures should not be construed as an inference that these costs are unusual, infrequent or non-recurring. Some of the limitations in relying on non-GAAP financial measures are:
| Non-GAAP financial measures do not include stock-based compensation expense related to equity awards granted to the Companys workforce. Broadcoms stock incentive plans are important components of its employee incentive compensation arrangements and are reflected as expenses in Broadcoms GAAP results. While the Company includes the dilutive impact of such equity awards in weighted average shares outstanding, the expense associated with stock-based awards is excluded from these non-GAAP financial measures. |
| Although amortization and impairment of purchased intangible assets do not directly affect the Companys current cash position, such expense represents the declining value of the technology and other intangible assets that were acquired. These assets are amortized over their respective expected economic lives or impaired, when appropriate. The expense associated with this decline in value is excluded from these non-GAAP financial measures, and therefore these non-GAAP financial measures do not reflect the costs of acquired intangible assets that supplement the Companys research and development efforts. |
| Broadcom periodically acquires and assimilates other companies or businesses, and expects to continue to experience acquisition-related charges in the future. Broadcom also periodically enters into settlement agreements in connection with various litigation matters. These costs can directly impact the amount of available funds or could be dilutive to shareholders in the future. |
Item 9.01 Financial Statements and Exhibits.
(d) | Exhibits. |
99.1 Press Release dated May 1, 2012 of the Registrant.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
BROADCOM CORPORATION, a California corporation | ||||||
May 1, 2012 | By: | /s/ Eric K. Brandt | ||||
Eric K. Brandt | ||||||
Executive Vice President and Chief Financial Officer |
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Exhibit 99.1
Broadcom Reports First Quarter 2012 Results
IRVINE, Calif. May 1, 2012
First Quarter 2012
Net Revenue: $1.827 billion
GAAP Diluted EPS: $.15; Non-GAAP Diluted EPS $.65
Q1 GAAP Results
| Total Revenue: $1.827 billion (up 0.6% year-over-year) |
| Product Gross Margin: 48.1% |
| Diluted EPS: $.15 (includes $.12 of net non-recurring charges) |
| Cash Flow from Operations: $368 million |
Q1 Non-GAAP Results
| Product Gross Margin: 52.0% |
| Diluted EPS: $.65 |
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, 2012.
Broadcom performed well in the first quarter, with revenue near the high end of the guided range and better-than-expected underlying profitability, said Scott McGregor, Broadcoms President and Chief Executive Officer. We closed the NetLogic Microsystems transaction to expand our footprint in network infrastructure, extended our lead in 5G WiFi by beginning commercial shipments, and rounded out our PON portfolio with the acquisition of BroadLight to enable complete solutions for the fastest growing segment in broadband access.
Net revenue for the first quarter of 2012 was $1.827 billion. This represents an increase of 0.4% compared with the $1.820 billion reported for the fourth quarter of 2011 and an increase of 0.6% compared with the $1.816 billion reported for the first quarter of 2011. Net income computed in accordance with U.S. generally accepted accounting principles (GAAP) for the first quarter of 2012 was $88 million, or $.15 per share (diluted), compared with GAAP net income of $254 million, or $.45 per share (diluted), for the fourth quarter of 2011 and GAAP net income of $228 million, or $.40 per share (diluted), for the first quarter of 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 Broadcoms 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, 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 first quarter of 2012 was $387 million, or $.65 per share (diluted), compared with non-GAAP net income of $394 million, or $.68 per share (diluted), for the fourth quarter of 2011 and non-GAAP net income of $407 million, or $.68 per share diluted, for the first quarter of 2011.
Conference Call Information
As previously announced, Broadcom will conduct a conference call with analysts and investors to discuss its first quarter 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 Friday, June 1, 2012.
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The financial results included in this release are unaudited.
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 industrys 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. Broadcoms 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 (EPS) also exclude settlement costs, charitable contributions, restructuring costs (reversals), impairment of long-lived assets, and 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. 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, 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. Broadcoms 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. Broadcoms 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 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 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, managements 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,
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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 second quarter of 2012 (on both a GAAP and non-GAAP basis), and references to our anticipated growth compared to the overall semiconductor industry. 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. |
| We face risks associated with our acquisition strategy. |
| We may fail to adjust our operations in response to changes in demand. |
| Our operating results may be adversely impacted by worldwide economic uncertainties and specific conditions in the markets we address. |
| 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 are exposed to risks associated with our international operations. |
| We depend on third parties to fabricate, assemble and test our products. |
| 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 control 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 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, |
||||||||
2012 | 2011 | |||||||
Net revenue: |
||||||||
Product revenue |
$ | 1,770 | $ | 1,752 | ||||
Income from Qualcomm Agreement |
52 | 52 | ||||||
Licensing revenue |
5 | 12 | ||||||
|
|
|
|
|||||
Total net revenue |
1,827 | 1,816 | ||||||
Costs and expenses: |
||||||||
Cost of product revenue |
918 | 894 | ||||||
Research and development |
546 | 498 | ||||||
Selling, general and administrative |
179 | 179 | ||||||
Amortization of purchased intangible assets |
17 | 7 | ||||||
Settlement costs (gains), net |
86 | (5 | ) | |||||
Impairments of long-lived assets |
28 | 9 | ||||||
Restructuring costs |
3 | | ||||||
|
|
|
|
|||||
Total operating costs and expenses |
1,777 | 1,582 | ||||||
|
|
|
|
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Income from operations |
50 | 234 | ||||||
Interest expense, net |
(6 | ) | | |||||
Other expense, net |
(1 | ) | (1 | ) | ||||
|
|
|
|
|||||
Income before income taxes |
43 | 233 | ||||||
Provision (benefit) for income taxes |
(45 | ) | 5 | |||||
|
|
|
|
|||||
Net income |
$ | 88 | $ | 228 | ||||
|
|
|
|
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Net income per share (basic) |
$ | 0.16 | $ | 0.42 | ||||
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|
|
|
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Net income per share (diluted) |
$ | 0.15 | $ | 0.40 | ||||
|
|
|
|
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Weighted average shares (basic) |
548 | 539 | ||||||
|
|
|
|
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Weighted average shares (diluted) |
570 | 575 | ||||||
|
|
|
|
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Dividends per share |
$ | 0.10 | $ | 0.09 | ||||
|
|
|
|
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, |
||||||||
2012 | 2011 | |||||||
Cost of product revenue |
$ | 9 | $ | 7 | ||||
Research and development |
94 | 102 | ||||||
Selling, general and administrative |
47 | 36 |
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BROADCOM CORPORATION
Unaudited Condensed Consolidated Statements of Cash Flows
(In millions)
Three Months Ended March 31, |
||||||||
2012 | 2011 | |||||||
Operating activities |
||||||||
Net income |
$ | 88 | $ | 228 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: |
||||||||
Depreciation and amortization |
28 | 23 | ||||||
Stock-based compensation expense: |
||||||||
Stock options and other awards |
27 | 41 | ||||||
Restricted stock units |
123 | 104 | ||||||
Acquisition-related items: |
||||||||
Amortization of purchased intangible assets |
54 | 22 | ||||||
Impairment of long-lived assets |
28 | 9 | ||||||
Changes in operating assets and liabilities: |
||||||||
Accounts receivable |
(51 | ) | 59 | |||||
Inventory |
38 | 48 | ||||||
Prepaid expenses and other assets |
(11 | ) | (28 | ) | ||||
Accounts payable |
52 | (70 | ) | |||||
Deferred revenue and income |
(9 | ) | (9 | ) | ||||
Accrued settlement costs |
87 | | ||||||
Other accrued and long-term liabilities |
(86 | ) | (94 | ) | ||||
|
|
|
|
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Net cash provided by operating activities |
368 | 333 | ||||||
|
|
|
|
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Investing activities |
||||||||
Net purchases of property and equipment |
(74 | ) | (45 | ) | ||||
Net cash paid for acquired company |
(3,393 | ) | | |||||
Purchases of marketable securities |
(334 | ) | (654 | ) | ||||
Proceeds from sales and maturities of marketable securities |
706 | 795 | ||||||
|
|
|
|
|||||
Net cash provided by (used in) investing activities |
(3,095 | ) | 96 | |||||
|
|
|
|
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Financing activities |
||||||||
Repurchases of Class A common stock |
| (421 | ) | |||||
Dividends paid |
(55 | ) | (48 | ) | ||||
Payment of assumed contingent consideration |
(53 | ) | | |||||
Proceeds from issuance of common stock |
62 | 112 | ||||||
Minimum tax withholding paid on behalf of employees for restricted stock units |
(48 | ) | (57 | ) | ||||
|
|
|
|
|||||
Net cash used in financing activities |
(94 | ) | (414 | ) | ||||
|
|
|
|
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Increase (decrease) in cash and cash equivalents |
(2,821 | ) | 15 | |||||
Cash and cash equivalents at beginning of period |
4,146 | 1,622 | ||||||
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|
|
|
|||||
Cash and cash equivalents at end of period |
$ | 1,325 | $ | 1,637 | ||||
|
|
|
|
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March 31, 2012 |
December 31,2011 |
|||||||
(In millions) | ||||||||
Unaudited Supplemental Financial Information |
||||||||
Cash and cash equivalents |
$ | 1,325 | $ | 4,146 | ||||
Short-term marketable securities |
350 | 383 | ||||||
Long-term marketable securities |
388 | 676 | ||||||
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|
|
|||||
Total cash, cash equivalents and marketable securities |
$ | 2,063 | $ | 5,205 | ||||
|
|
|
|
|||||
Decrease from prior period end |
$ | (3,142 | ) | |||||
|
|
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BROADCOM CORPORATION
Unaudited Condensed Consolidated Balance Sheets
(In millions)
March 31, 2012 |
December 31, 2011 |
|||||||
ASSETS |
||||||||
Current assets: |
||||||||
Cash and cash equivalents |
$ | 1,325 | $ | 4,146 | ||||
Short-term marketable securities |
350 | 383 | ||||||
Accounts receivable, net |
763 | 678 | ||||||
Inventory |
475 | 421 | ||||||
Prepaid expenses and other current assets |
141 | 124 | ||||||
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|
|
|
|||||
Total current assets |
3,054 | 5,752 | ||||||
Property and equipment, net |
418 | 368 | ||||||
Long-term marketable securities |
388 | 676 | ||||||
Goodwill |
3,606 | 1,787 | ||||||
Purchased intangible assets, net |
2,023 | 400 | ||||||
Other assets |
84 | 57 | ||||||
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|
|
|
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Total assets |
$ | 9,573 | $ | 9,040 | ||||
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LIABILITIES AND SHAREHOLDERS EQUITY |
||||||||
Current liabilities: |
||||||||
Accounts payable |
$ | 518 | $ | 442 | ||||
Wages and related benefits |
146 | 175 | ||||||
Deferred revenue and income |
13 | 21 | ||||||
Accrued liabilities |
511 | 461 | ||||||
|
|
|
|
|||||
Total current liabilities |
1,188 | 1,099 | ||||||
Long-term debt |
1,196 | 1,196 | ||||||
Other long-term liabilities |
308 | 224 | ||||||
Commitments and contingencies |
||||||||
Shareholders equity |
6,881 | 6,521 | ||||||
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|
|
|
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Total liabilities and shareholders equity |
$ | 9,573 | $ | 9,040 | ||||
|
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|
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BROADCOM CORPORATION
Unaudited Schedule of Selected GAAP to Non-GAAP Adjustments
(In millions)
Three Months Ended March 31, |
||||||||
2012 | 2011 | |||||||
Product revenue |
$ | 1,770 | $ | 1,752 | ||||
GAAP cost of product revenue |
918 | 894 | ||||||
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|
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|
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GAAP product gross profit |
$ | 852 | $ | 858 | ||||
|
|
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GAAP product gross margin |
48.1 | % | 49.0 | % | ||||
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GAAP cost of product revenue |
$ | 918 | $ | 894 | ||||
Stock-based compensation and related payroll taxes |
(9 | ) | (7 | ) | ||||
Amortization of purchased intangible assets and step-up of acquired inventory |
(59 | ) | (20 | ) | ||||
|
|
|
|
|||||
Non-GAAP cost of product revenue |
$ | 850 | $ | 867 | ||||
|
|
|
|
|||||
Product revenue |
$ | 1,770 | $ | 1,752 | ||||
Non-GAAP cost of product revenue |
850 | 867 | ||||||
|
|
|
|
|||||
Non-GAAP product gross profit |
$ | 920 | $ | 885 | ||||
|
|
|
|
|||||
Non-GAAP product gross margin |
52.0 | % | 50.5 | % | ||||
|
|
|
|
|||||
GAAP research and development and selling, general and administrative expense |
$ | 725 | $ | 677 | ||||
Stock-based compensation and related payroll taxes |
(143 | ) | (141 | ) | ||||
|
|
|
|
|||||
Total GAAP to Non-GAAP adjustments |
(143 | ) | (141 | ) | ||||
|
|
|
|
|||||
Non-GAAP research and development and selling, general and administrative expense |
$ | 582 | $ | 536 | ||||
|
|
|
|
|||||
GAAP net income |
$ | 88 | $ | 228 | ||||
Stock-based compensation and related payroll taxes |
152 | 148 | ||||||
Amortization of purchased intangible assets and step-up of acquired inventory |
76 | 27 | ||||||
Settlement costs (gains), net |
86 | (5 | ) | |||||
Impairment of long-lived assets |
28 | 9 | ||||||
Restructuring costs, net |
3 | | ||||||
Income tax benefit associated with the establishment of certain deferred tax liabilities in purchase accounting |
(46 | ) | | |||||
|
|
|
|
|||||
Total GAAP to Non-GAAP adjustments |
299 | 179 | ||||||
|
|
|
|
|||||
Non-GAAP net income |
$ | 387 | $ | 407 | ||||
|
|
|
|
|||||
Shares used in calculationdiluted (GAAP) |
570 | 575 | ||||||
Non-GAAP adjustment |
24 | 23 | ||||||
|
|
|
|
|||||
Shares used in calculationdiluted (Non-GAAP)* |
594 | 598 | ||||||
|
|
|
|
|||||
GAAP diluted net income per share |
$ | 0.15 | $ | 0.40 | ||||
|
|
|
|
|||||
Non-GAAP diluted net income per share |
$ | 0.65 | $ | 0.68 | ||||
|
|
|
|
* | 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. |
-more-
BROADCOM CORPORATION
Guidance for the Three Months Ending June 30, 2012
Three Months Ending June 30, 2012 | ||
Total net revenue |
~$1.9 billion to ~$2.0 billion | |
Product gross margin (GAAP) |
Down from Q112 (due to acquisition-related charges) | |
Product gross margin (Non-GAAP) |
Roughly flat from Q112 | |
Research & development and selling, general, and administrative expenses (GAAP) |
Up ~$30 million to ~$45 million from Q112 | |
Research & development and selling, general, and administrative expenses (Non-GAAP) |
Up ~$35 million to ~$50 million from Q112 |
Broadcom has based the preceding guidance for the three months ending June 30, 2012 on expectations, assumptions and estimates that we believe are reasonable given our assessment of historical trends and other information reasonably available as of May 1, 2012. 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. 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 Donnelle Koselka Director, Corporate Communications 949-926-3248 dkoselka@broadcom.com |
Broadcom Investor Relations Contact Chris Zegarelli Director, Investor Relations 949-926-7567 czegarel@broadcom.com |
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