Press Releases

Unedited news and product information from vendors.

Broadcom Reports Fourth Quarter and Full Year 2010 Results
Feb 01, 2011 (03:02 PM EST)


Record Quarterly Net Revenue -- Up 45% from Prior Year

Conference Call to be Webcast Today at 1:45 p.m. Pacific Time

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.

BROADCOM CORPORATION

Unaudited GAAP Condensed Consolidated Statements of Income

(In thousands, except per share amounts)






Three Months Ended

December 31,

Years Ended

December 31,


2010

2009

2010

2009

Net revenue:





Product revenue                                   

$    1,889,139

$  1,283,434

$  6,589,270

$  4,272,726

Income from Qualcomm Agreement                     

51,674

51,674

206,696

170,611

Licensing revenue                                 

4,742

7,638

22,353

46,986

Total net revenue                                

1,945,555

1,342,746

6,818,319

4,490,323

Costs and expenses:





Cost of product revenue                           

955,711

630,259

3,284,213

2,210,559

Research and development                        

472,260

396,254

1,762,323

1,534,918

Selling, general and administrative                   

168,728

84,424

590,572

479,362

Amortization of purchased intangible assets           

14,678

2,091

27,570

14,548

Impairment of other long-lived assets                 

17,260

19,045

18,895

Settlement costs, net                             

48,809

175,724

52,625

118,468

Restructuring costs (reversals), net                 

(4,829)

111

7,501

Charitable contribution                             

50,000

Total operating costs and expenses               

1,677,446

1,283,923

5,736,459

4,434,251

Income from operations                             

268,109

58,823

1,081,860

56,072

Interest income, net                                 

990

2,539

9,032

13,901

Other income (expense), net                         

2,749

(269)

6,428

2,218

Income before income taxes                         

271,848

61,093

1,097,320

72,191

Provision for income taxes                           

5,659

1,889

15,520

6,930

Net income                                       

$     266,189

$  59,204

$  1,081,800

$  65,261

Net income per share (basic)                         

$  .50

$  .12

$  2.13

$  0.13

Net income per share (diluted)                        

$  .47

$  .11

$  1.99

$  0.13

Weighted average shares (basic)                     

528,272

495,356

508,444

494,038

Weighted average shares (diluted)                     

568,730

524,903

544,612

512,645






Dividends per share                                

$  0.08

$  —

$  0.32

$  —



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

December 31,

Years Ended

December 31,


2010

2009

2010

2009

Cost of product revenue                               

$    5,652

$    5,961

$  22,502

$  24,545

Research and development                             

88,756

85,186

341,733

351,884

Selling, general and administrative                       

30,142

30,101

118,789

119,918



BROADCOM CORPORATION

Unaudited Condensed Consolidated Statements of Cash Flows

(In thousands)




Three Months Ended

December 31,

Years Ended

December 31,


2010

2009

2010

2009

Operating activities





Net income                                        

$  266,189

$  59,204

$  1,081,800

$  65,261

Adjustments to reconcile net income to net cash provided by operating activities:





Depreciation and amortization                     

20,762

27,121

78,732

74,435

Stock-based compensation expense:





Stock options and other awards                 

34,210

33,329

121,341

159,790

Restricted stock units                         

90,340

87,919

361,683

336,557

Acquisition-related items:





Amortization of purchased intangible assets       

22,520

6,186

58,594

30,744

Impairment of long-lived assets                 

17,260

19,045

18,895

Non-cash restructuring (reversals)                   

(4,665)

(313)

(1,944)

Gain on sale of marketable securities                 

(1,046)

Gain on sale of strategic investments, net

(2,490)

(2,490)

Changes in operating assets and liabilities:             





Accounts receivable                         

(2,618)

37,620

(286,681)

(131,656)

Inventory                                   

(43,014)

(46,877)

(208,095)

12,013

Prepaid expenses and other assets             

(8,282)

(11,258)

26,821

8,714

Accounts payable                           

16,816

10,460

145,808

122,985

Deferred revenue and income                  

(3,858)

(9,062)

(31,841)

71,760

Accrued settlement costs                     

44,074

163,600

(122,306)

170,500

Other accrued and long-term liabilities            

(404)

(21,649)

128,728

49,885

Net cash provided by operating activities       

451,505

331,928

1,370,826

986,893

Investing activities





Net purchases of property and equipment               

(26,894)

(17,796)

(108,924)

(66,570)

Net cash paid for acquired companies                  

(449,081)

(166,100)

(599,479)

(165,258)

Sales (purchases) of strategic investments              

4,490

(3,510)

(2,000)

Purchases of marketable securities                     

(1,516,979)

(80,709)

(2,933,715)

(1,138,681)

Proceeds from sales and maturities of marketable securities 

745,135

133,775

1,467,595

871,152

Net cash used in investing activities           

(1,243,329)

(130,830)

(2,178,033)

(501,357)

Financing activities





Proceeds from issuance of long-term debt, net           

691,393

691,393

Repurchases of Class A common stock                 

(4,872)

(215,352)

(280,336)

(421,869)

Dividends paid                                     

(42,752)

(163,432)

Payment of debt assumed in acquisitions                

(14,560)

Proceeds from issuance of common stock               

564,643

89,980

936,326

227,209

Minimum tax withholding paid on behalf of employees for restricted stock units

(40,105)

(23,854)

(136,854)

(84,428)

Net cash provided by (used in) financing activities

1,168,307

(149,226)

1,032,537

(279,088)

Increase in cash and cash equivalents                 

376,483

51,872

225,330

206,448

Cash and cash equivalents at beginning of period         

1,245,940

1,345,221

1,397,093

1,190,645

Cash and cash equivalents at end of period             

$  1,622,423

$  1,397,093

$  1,622,423

$  1,397,093



UNAUDITED SUPPLEMENTAL FINANCIAL INFORMATION



December 31,
2010

September 30,
2010

December 31,
2009


(In thousands)

Cash and cash equivalents

$  1,622,423

$  1,245,940

$  1,397,093

Short-term marketable securities

1,035,252

1,148,139

532,281

Long-term marketable securities

1,400,706

520,276

438,616

Total cash, cash equivalents and marketable securities

$  4,058,381

$  2,914,355

$  2,367,990

Increase from prior period end

$  1,144,026



Increase from prior year end

$  1,690,391





BROADCOM CORPORATION

Unaudited Condensed Consolidated Balance Sheets

(In thousands)




December  31,

2010

December 31,

2009

ASSETS



Current assets:                                                



Cash and cash equivalents                                     

$  1,622,423

$  1,397,093

Short-term marketable securities                                

1,035,252

532,281

Accounts receivable, net                                      

819,629

508,627

Inventory                                                   

597,955

362,428

Prepaid expenses and other current assets                       

108,248

113,903

Total current assets                                       

4,183,507

2,914,332

Property and equipment, net                                      

266,297

229,317

Long-term marketable securities                                   

1,400,706

438,616

Goodwill                                                     

1,677,097

1,329,614

Purchased intangible assets, net                                  

365,840

150,927

Other assets                                                  

50,863

64,436

Total assets                                              

$  7,944,310

$  5,127,242

LIABILITIES AND SHAREHOLDERS' EQUITY



Current liabilities:                                               



Accounts payable                                           

$  604,383

$  437,353

Wages and related benefits                                    

207,607

190,315

Deferred revenue and income                                  

55,116

87,388

Accrued liabilities                                            

404,090

433,294

Total current liabilities                                       

1,271,196

1,148,350

Long-term debt                                                

696,978

Long-term deferred revenue                                     

1,039

608

Other long-term liabilities                                         

149,008

86,438

Commitments and contingencies

Shareholders' equity                                            

5,826,089

3,891,846

Total liabilities and shareholders' equity                         

$  7,944,310

$  5,127,242



BROADCOM CORPORATION

Unaudited Reconciliation of Non-GAAP Adjustments

(In thousands)


The following represents a reconciliation (unaudited) of GAAP income from operations to non-GAAP income from operations.






Three Months Ended

December 31,

Years Ended

December 31,


2010

2009

2010

2009

GAAP income from operations                             

$  268,109

$  58,823

$  1,081,860

$  56,072

Cost of Product Revenue:





Stock-based compensation                         

5,652

5,961

22,502

24,545

Amortization of purchased intangible assets            

7,842

4,095

31,024

16,196

Amortization of acquired inventory valuation step-up

2,715

1,546

9,644

9,225

Employer payroll tax expense on certain stock option exercises

391

72

733

235

Research and development:





Stock-based compensation                         

88,756

85,186

341,733

351,884

Employer payroll tax expense on certain stock option exercises

4,414

933

8,804

3,692

Selling, general and administrative:





Stock-based compensation                         

30,142

30,101

118,789

119,918

Employer payroll tax expense on certain stock option exercises

1,611

294

3,004

939

Other operating costs and expenses:

Amortization of purchased intangible assets               

14,678

2,091

27,570

14,548

Impairment of other long-lived assets(1)                 

17,260

19,045

18,895

Restructuring costs (reversals), net(2)                   

(4,829)

111

7,501

Settlement costs, net(3)                               

48,809

175,724

52,625

118,468

Charitable contribution(4)                             

50,000

Non-GAAP income from operations                         

$  490,379

$  359,997

$  1,717,444

$  792,118



(1)

In 2010 we recorded impairment charges of $17 million related to a technology license that was acquired in 2008 in connection with our Sunext Design, Inc. In 2009 we recorded long-lived asset impairment charges of $19 million related to the company's acquisition of the digital television business of Advanced Micro Devices, Inc.

(2)

Recorded in connection with the company's restructuring plans implemented in 2009 (including a reversal of restructuring costs of $4 million as part of a contractual obligation due from AMD to reimburse us for certain restructuring actions taken during a stipulated post acquisition period).

(3)

Recorded settlement costs of $53 million in 2010, which primarily related to licensing and settlement agreements and certain employment tax items. Recorded settlement costs of $118 million in 2009, of which $161 million related to the agreement in principle to settle the securities class action litigation, a $12 million payment to the Israeli government associated with a post-acquisition technology transfer fee related to our acquisition of Dune Networks, and $11 million in estimated settlements associated with certain employment tax items, other employment matters and a patent infringement claim. These amounts were partially offset by a $65 million gain on settlement in connection with the Qualcomm litigation in 2009.  

(4)

Recorded in connection with an accrued $50 million charitable contribution to the Broadcom Foundation in 2009.



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.

BROADCOM CORPORATION

Unaudited Non-GAAP Condensed Consolidated Statements of Income from Operations

(In thousands)




Three Months Ended

December 31,

Years Ended

December 31,


2010

2009

2010

2009

Net revenue:





Product revenue                                   

$  1,889,139

$  1,283,434

$  6,589,270

$  4,272,726

Income from Qualcomm Agreement                     

51,674

51,674

206,696

170,611

Licensing revenue                                 

4,742

7,638

22,353

46,986

Total net revenue                                

1,945,555

1,342,746

6,818,319

4,490,323

Non-GAAP costs and expenses:





Cost of product revenue                           

939,111

618,585

3,220,310

2,160,358

Research and development                        

379,090

310,135

1,411,786

1,179,342

Selling, general and administrative                   

136,975

54,029

468,779

358,505

Total Non-GAAP operating costs and expenses     

1,455,176

982,749

5,100,875

3,698,205

Non-GAAP income from operations                    

$  490,379

$  359,997

$  1,717,444

$  792,118



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 CORPORATION

Unaudited Supplementary Financial Data

(In thousands)



Three Months Ended


December 31, 2010

December 31, 2009

September 30, 2010

Product revenue

$  1,889,139

$  1,283,434

$  1,748,692

Income from Qualcomm Agreement

51,674

51,674

51,674

Licensing revenue

4,742

7,638

5,651

Total net revenue

$  1,945,555

$  1,342,746

$  1,806,017

Cost of product revenue

$  955,711

$  630,259

$  871,951

Product gross margin

49.4%

50.9%

50.1%

Total gross margin

50.9%

53.1%

51.7%




Three Months Ended


December 31, 2010

December 31, 2009

GAAP income from operations                            

$  268,109

$  58,823

   Adjustments                                         

222,270

301,174

Non-GAAP income from operations                         

$  490,379

$  359,997



BROADCOM CORPORATION

Guidance for the Three Months Ending March 31, 2011





Three Months Ending
March 31, 2011

Commentary

Total Net Revenue (in millions)

$1,750 million to $1,850 million


Product Gross Margin (GAAP)

Flat, net of increased step-up and amortization costs of roughly 60bp


Research &  development and selling, general, and administrative expenses (GAAP) (in millions)

Up $45 million to $55 million from Q4'10

Driven by annual employee merit, fringe step-up, stock-based compensation and increased legal expenses

Share Count (GAAP Diluted)

~585-590 million shares




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.

Broadcom Business Press Contact
Bob Marsocci
Vice President, Corporate Communications
949-926-5458
bmarsocci@broadcom.com

Broadcom Investor Relations Contact
Chris Zegarelli
Director, Investor Relations
949-926-7567
czegarel@broadcom.com



SOURCE Broadcom Corporation; BRCM Corporate