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8-K - FORM 8-K - BROADCOM CORP | a59915e8vk.htm |
Exhibit 99.1
NEWS RELEASE
Broadcom Business Press Contact
|
Broadcom Investor Relations Contact | |
Karen Kahn
|
Chris Zegarelli | |
Vice President, Corporate Communications
|
Director, Investor Relations | |
949-926-3139
|
aaaa 949-926-7567 | |
kkahn@broadcom.com
|
czegarel@broadcom.com |
Broadcom Reports Second Quarter 2011 Results
Net Revenue $1.8 billion Up 12% Year over Year
GAAP Diluted EPS $.31; Non-GAAP Diluted EPS $.72
GAAP Diluted EPS $.31; Non-GAAP Diluted EPS $.72
Q2 GAAP Results
| Total Revenue: $1.8 billion (up 12% year over year) | ||
| Product Gross Margin: 49.6% | ||
| Diluted EPS: $0.31 (includes $0.14 of net non-recurring charges) | ||
| Cash Flow from Operations: $489 million |
Q2 Non-GAAP Results
| Product Gross Margin: 51.1% | ||
| Diluted EPS: $0.72 |
IRVINE, Calif. July 25, 2011 Broadcom Corporation (Nasdaq: BRCM) today reported unaudited
financial results for its second quarter ended June 30, 2011.
Broadcom delivered solid profitability in Q2 within our non-GAAP target model, with
better-than-expected gross margins and record cash flow from operations, said Scott A. McGregor,
Broadcoms President and Chief Executive Officer. Looking forward, we see strong demand for our
communications solutions, reinforcing that innovation is driving customer demand. We expect solid
growth in revenue and profitability in Q3.
Net revenue for the second quarter of 2011 was $1.8 billion. This represents an increase of 12%
compared with the $1.6 billion reported for the second quarter of 2010. Net income computed in
accordance with U.S. generally accepted accounting principles (GAAP) for the second quarter of 2011
was $175 million, or $.31 per share (diluted),
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Broadcom Reports Second Quarter 2011 Results
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compared with GAAP net income of $278 million, or $.52 per share (diluted), for the second quarter
of 2010.
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 and six months ended
June 30, 2011 and 2010, 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 second quarter of 2011 was $418 million, or $.72 per share (diluted),
compared with non-GAAP net income of $418 million, or $.74 per share (diluted), for the second
quarter of 2010.
Conference Call Information
As previously announced, Broadcom will conduct a conference call with analysts and investors to
discuss its second quarter financial results and current financial prospects today at 1:30 p.m.
Pacific Time (4:30 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 10:00 p.m. Pacific Time on Monday, August 15, 2011.
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
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Broadcom Reports Second Quarter 2011 Results
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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) net income and (v)
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. 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, non-recurring
legal fees and 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 and six months ended June 30, 2011 and 2010
appear in the financial statements portion of this release under the heading Unaudited Schedule of
Selected GAAP to Non-GAAP Adjustments.
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,
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Broadcom Reports Second Quarter 2011 Results
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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, 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
third quarter of 2011, and
references to demand for our communications solutions. 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 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. |
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Broadcom Reports Second Quarter 2011 Results
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| 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. | ||
| Our business is subject to potential tax liabilities. | ||
| 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. | ||
| We may be unable to attract, retain or motivate key personnel. | ||
| Government regulation may adversely affect our business. | ||
| There can be no assurance that we will continue to declare cash dividends. | ||
| 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, 2010, 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.
BroadcomÒ, the pulse logo, Connecting everythingÒ, 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 Reports Second Quarter 2011 Results
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BROADCOM CORPORATION
Unaudited GAAP Condensed Consolidated Statements of Income
(In millions, except per share amounts)
Unaudited GAAP Condensed Consolidated Statements of Income
(In millions, except per share amounts)
Three Months Ended | Six Months Ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
Net revenue: |
||||||||||||||||
Product revenue |
$ | 1,742 | $ | 1,547 | $ | 3,494 | $ | 2,951 | ||||||||
Income from Qualcomm Agreement |
51 | 51 | 103 | 103 | ||||||||||||
Licensing revenue |
3 | 7 | 15 | 13 | ||||||||||||
Total net revenue |
1,796 | 1,605 | 3,612 | 3,067 | ||||||||||||
Costs and expenses: |
||||||||||||||||
Cost of product revenue |
877 | 762 | 1,772 | 1,457 | ||||||||||||
Research and development |
504 | 421 | 1,002 | 842 | ||||||||||||
Selling, general and administrative |
183 | 144 | 361 | 277 | ||||||||||||
Amortization of purchased intangible assets |
8 | 5 | 15 | 8 | ||||||||||||
Impairments of long-lived assets |
74 | | 83 | | ||||||||||||
Settlement costs (gains), net |
(45 | ) | 1 | (50 | ) | 4 | ||||||||||
Charitable contribution |
25 | | 25 | | ||||||||||||
Total operating costs and expenses |
1,626 | 1,333 | 3,208 | 2,588 | ||||||||||||
Income from operations |
170 | 272 | 404 | 479 | ||||||||||||
Interest income, net |
| 2 | | 5 | ||||||||||||
Other income, net |
2 | 2 | | 5 | ||||||||||||
Income before income taxes |
172 | 276 | 404 | 489 | ||||||||||||
Provision (benefit) for income taxes |
(3 | ) | (2 | ) | 1 | 1 | ||||||||||
Net income |
$ | 175 | $ | 278 | $ | 403 | $ | 488 | ||||||||
Net income per share (basic) |
$ | 0.33 | $ | 0.56 | $ | 0.75 | $ | 0.98 | ||||||||
Net income per share (diluted) |
$ | 0.31 | $ | 0.52 | $ | 0.71 | $ | 0.92 | ||||||||
Weighted average shares (basic) |
535 | 501 | 537 | 498 | ||||||||||||
Weighted average shares (diluted) |
558 | 538 | 567 | 533 | ||||||||||||
Dividends per share |
$ | 0.09 | $ | 0.08 | $ | 0.18 | $ | 0.16 | ||||||||
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 | Six Months Ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
Cost of product revenue |
$ | 6 | $ | 5 | $ | 13 | $ | 12 | ||||||||
Research and development |
97 | 84 | 199 | 173 | ||||||||||||
Selling, general and administrative |
33 | 30 | 69 | 61 |
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BROADCOM CORPORATION
Unaudited Condensed Consolidated Statements of Cash Flows
(In millions)
Unaudited Condensed Consolidated Statements of Cash Flows
(In millions)
Three Months Ended | Six Months Ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
Operating activities |
||||||||||||||||
Net income |
$ | 175 | $ | 278 | $ | 403 | $ | 488 | ||||||||
Adjustments to reconcile net income to net cash
provided by operating activities: |
||||||||||||||||
Depreciation and amortization |
28 | 18 | 51 | 38 | ||||||||||||
Stock-based compensation expense: |
||||||||||||||||
Stock options and other awards |
34 | 29 | 74 | 64 | ||||||||||||
Restricted stock units |
102 | 90 | 207 | 182 | ||||||||||||
Acquisition-related items: |
||||||||||||||||
Amortization of purchased intangible assets |
22 | 14 | 44 | 24 | ||||||||||||
Impairment of long-lived assets |
74 | | 83 | | ||||||||||||
Non-cash settlement gain |
(14 | ) | | (14 | ) | | ||||||||||
Changes in operating assets and liabilities: |
||||||||||||||||
Accounts receivable |
93 | (81 | ) | 152 | (175 | ) | ||||||||||
Inventory |
34 | (86 | ) | 82 | (120 | ) | ||||||||||
Prepaid expenses and other assets |
(4 | ) | 10 | (32 | ) | 23 | ||||||||||
Accounts payable |
(71 | ) | 58 | (141 | ) | 102 | ||||||||||
Deferred revenue and income |
(10 | ) | (9 | ) | (19 | ) | (19 | ) | ||||||||
Accrued settlement costs |
3 | (162 | ) | 3 | (163 | ) | ||||||||||
Other accrued and long-term liabilities |
23 | 37 | (71 | ) | 20 | |||||||||||
Net cash provided by operating activities |
489 | 196 | 822 | 464 | ||||||||||||
Investing activities |
||||||||||||||||
Net purchases of property and equipment |
(52 | ) | (29 | ) | (97 | ) | (47 | ) | ||||||||
Net cash paid for acquired companies |
(344 | ) | | (344 | ) | (102 | ) | |||||||||
Purchases of strategic investments |
| (3 | ) | | (8 | ) | ||||||||||
Purchases of marketable securities |
(770 | ) | (418 | ) | (1,424 | ) | (483 | ) | ||||||||
Proceeds from sales and maturities of marketable
securities |
1,065 | 181 | 1,860 | 370 | ||||||||||||
Net cash used in investing activities |
(101 | ) | (269 | ) | (5 | ) | (270 | ) | ||||||||
Financing activities |
||||||||||||||||
Repurchases of Class A common stock |
(249 | ) | (121 | ) | (670 | ) | (275 | ) | ||||||||
Dividends paid |
(49 | ) | (40 | ) | (97 | ) | (80 | ) | ||||||||
Payment of assumed debt |
| | | (15 | ) | |||||||||||
Proceeds from issuance of common stock |
104 | 164 | 216 | 246 | ||||||||||||
Minimum tax withholding paid on behalf of employees
for restricted stock units |
(34 | ) | (34 | ) | (91 | ) | (63 | ) | ||||||||
Net cash used in financing activities |
(228 | ) | (31 | ) | (642 | ) | (187 | ) | ||||||||
Increase (decrease) in cash and cash equivalents |
160 | (104 | ) | 175 | 7 | |||||||||||
Cash and cash equivalents at beginning of period |
1,637 | 1,508 | 1,622 | 1,397 | ||||||||||||
Cash and cash equivalents at end of period |
$ | 1,797 | $ | 1,404 | $ | 1,797 | $ | 1,404 | ||||||||
UNAUDITED SUPPLEMENTAL FINANCIAL INFORMATION
June 30, | December 31, | |||||||
2011 | 2010 | |||||||
(In millions) | ||||||||
Cash and cash equivalents |
$ | 1,797 | $ | 1,622 | ||||
Short-term marketable securities |
829 | 1,035 | ||||||
Long-term marketable securities |
1,174 | 1,401 | ||||||
Total cash, cash equivalents and marketable securities |
$ | 3,800 | $ | 4,058 | ||||
Decrease from prior year end |
$ | (258 | ) | |||||
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BROADCOM CORPORATION
Unaudited Condensed Consolidated Balance Sheets
(In millions)
Unaudited Condensed Consolidated Balance Sheets
(In millions)
June 30, | December 31, | |||||||
2011 | 2010 | |||||||
ASSETS |
||||||||
Current assets: |
||||||||
Cash and cash equivalents |
$ | 1,797 | $ | 1,622 | ||||
Short-term marketable securities |
829 | 1,035 | ||||||
Accounts receivable, net |
680 | 820 | ||||||
Inventory |
546 | 598 | ||||||
Prepaid expenses and other current assets |
125 | 109 | ||||||
Total current assets |
3,977 | 4,184 | ||||||
Property and equipment, net |
319 | 266 | ||||||
Long-term marketable securities |
1,174 | 1,401 | ||||||
Goodwill |
1,820 | 1,677 | ||||||
Purchased intangible assets, net |
488 | 366 | ||||||
Other assets |
57 | 50 | ||||||
Total assets |
$ | 7,835 | $ | 7,944 | ||||
LIABILITIES AND SHAREHOLDERS EQUITY |
||||||||
Current liabilities: |
||||||||
Accounts payable |
$ | 471 | $ | 604 | ||||
Wages and related benefits |
129 | 208 | ||||||
Deferred revenue and income |
37 | 55 | ||||||
Accrued liabilities |
417 | 404 | ||||||
Total current liabilities |
1,054 | 1,271 | ||||||
Long-term debt |
697 | 697 | ||||||
Other long-term liabilities |
207 | 150 | ||||||
Commitments and contingencies |
||||||||
Shareholders equity |
5,877 | 5,826 | ||||||
Total liabilities and shareholders equity |
$ | 7,835 | $ | 7,944 | ||||
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BROADCOM CORPORATION
Unaudited Schedule of Selected GAAP to Non-GAAP Adjustments
(In millions)
Unaudited Schedule of Selected GAAP to Non-GAAP Adjustments
(In millions)
Three Months Ended | Six Months Ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
Product revenue |
$ | 1,742 | $ | 1,547 | $ | 3,494 | $ | 2,951 | ||||||||
GAAP cost of product revenue |
877 | 762 | 1,772 | 1,457 | ||||||||||||
GAAP product gross profit |
$ | 865 | $ | 785 | $ | 1,722 | $ | 1,494 | ||||||||
GAAP product gross margin |
49.6 | % | 50.8 | % | 49.3 | % | 50.6 | % | ||||||||
Cost of product revenue: |
||||||||||||||||
GAAP cost of product revenue |
$ | 877 | $ | 762 | $ | 1,772 | $ | 1,457 | ||||||||
Stock-based compensation & related payroll taxes |
(6 | ) | (5 | ) | (13 | ) | (12 | ) | ||||||||
Amortization of purchased intangible assets &
acquired inventory |
(19 | ) | (12 | ) | (39 | ) | (23 | ) | ||||||||
Non-GAAP cost of product revenue |
$ | 852 | $ | 745 | $ | 1,720 | $ | 1,422 | ||||||||
Product revenue |
$ | 1,742 | $ | 1,547 | $ | 3,494 | $ | 2,951 | ||||||||
Non-GAAP cost of product revenue |
852 | 745 | 1,720 | 1,422 | ||||||||||||
Non-GAAP product gross profit |
$ | 890 | $ | 802 | $ | 1,774 | $ | 1,529 | ||||||||
Non-GAAP product gross margin |
51.1 | % | 51.8 | % | 50.8 | % | 51.8 | % |
Three Months Ended | Six Months Ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
GAAP net income |
$ | 175 | $ | 278 | $ | 403 | $ | 488 | ||||||||
Adjustments: |
||||||||||||||||
Stock-based
compensation and related payroll taxes |
137 | 122 | 285 | 250 | ||||||||||||
Amortization
of purchased intangible assets & acquired inventory |
27 | 17 | 54 | 31 | ||||||||||||
Impairment of long-lived assets |
74 | | 83 | | ||||||||||||
Settlement costs (gains), net |
(45 | ) | 1 | (50 | ) | 4 | ||||||||||
Charitable contributions |
25 | | 25 | | ||||||||||||
Non-recurring legal fees |
25 | | 25 | | ||||||||||||
Total GAAP to Non-GAAP adjustments |
243 | 140 | 422 | 285 | ||||||||||||
Non-GAAP net income |
$ | 418 | $ | 418 | $ | 825 | $ | 773 | ||||||||
Shares used in calculation diluted (GAAP) |
558 | 538 | 567 | 533 | ||||||||||||
Non-GAAP adjustment |
26 | 27 | 24 | 27 | ||||||||||||
Shares used in calculation diluted (Non-GAAP)* |
584 | 565 | 591 | 560 | ||||||||||||
GAAP diluted net income per share |
$ | 0.31 | $ | 0.52 | $ | 0.71 | $ | 0.92 | ||||||||
Non-GAAP diluted net income per share |
$ | 0.72 | $ | 0.74 | $ | 1.40 | $ | 1.38 | ||||||||
* | 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 September 30, 2011
Guidance for the Three Months Ending September 30, 2011
Three Months Ending | ||
September 30, 2011 | ||
Total Net Revenue (in billions)
|
$1.9 $2 billion | |
Product Gross Margin (GAAP)
|
Flat to up slightly | |
Research & development and
selling, general, and
administrative expenses (GAAP)
|
Flat to down $10 million from Q211 GAAP results |
Broadcom has based the preceding guidance for the three months ending September 30, 2011 on
expectations, assumptions and estimates that we believe are reasonable given our assessment of
historical trends and other information reasonably available as of July 25, 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, to reflect future events or circumstances.
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