Broadcom Reports Third Quarter 2013 Results

® 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 (loss), (vi) weighted average shares outstanding (diluted) and (vii) diluted net income (loss) 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 equity awards. 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 equity awards. In addition to the exclusions noted above, our non-GAAP net income and diluted net income per share also exclude impairment of long-lived assets, settlement costs (gains), restructuring costs (reversals), charitable contributions, 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 September 30, 2013, June 30, 2013 and September 30, 2012, respectively, and nine months ended September 30, 2013 and 2012 appear in the financial statements portion of this release under the heading "Unaudited Schedule of Selected GAAP to Non-GAAP Adjustments." Certain amounts previously reported as licensing revenue have been reclassified to product revenue to conform to the current period presentation. 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 SEC.

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 fourth quarter of 2013 (on both a GAAP and non-GAAP basis), references to LTE revenue in early 2014, and the success of our strategic initiatives. 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 manufacture and sell complex products and may be unable to successfully develop and introduce new products.
We face risks associated with our acquisition strategy.
We may fail to appropriately adjust our operations in response to changes in our strategy or market demand.
We are exposed to risks associated with our international operations.
Our operating results may be adversely impacted by worldwide economic uncertainties and specific conditions in the markets we address.
Our business is subject to potential tax liabilities.
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 may be unable to attract, retain or motivate key personnel.
We are subject to order and shipment uncertainties.
We depend on third parties to fabricate, assemble and test our products.
Our systems are subject to security breaches and other cybersecurity incidents.
Government regulation may adversely affect our business.
Our articles of incorporation and bylaws contain anti-takeover provisions.
There can be no assurance that we will continue to declare cash dividends.
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 SEC 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.



BROADCOM CORPORATION
Unaudited GAAP Condensed Consolidated Statements of Operations
(In millions, except per share amounts)

	Three Months Ended						Nine Months Ended
	September 30,		June 30,		September 30,		September 30,
	2013		2013		2012		2013		2012
Net revenue:
Product revenue	$	2,146	$	2,047	$	2,085	$	6,155	$	5,783
Income from Qualcomm Agreement	—		43		43		86		143
Total net revenue	2,146		2,090		2,128		6,241		5,926
Costs and expenses:
Cost of product revenue	1,044		1,030		1,063		3,062		3,002
Research and development	609		619		600		1,843		1,728
Selling, general and administrative	181		174		174		534		524
Amortization of purchased intangible assets	14		14		32		43		82
Impairments of long-lived assets	—		501		48		511		85
Restructuring costs	12		—		2		12		6
Settlement costs (gains)	(75)		—		(2)		(75)		86
Charitable contribution	25		—		—		25		—
Total operating costs and expenses	1,810		2,338		1,917		5,955		5,513
Income (loss) from operations	336		(248)		211		286		413
Interest expense, net	(7)		(9)		(8)		(24)		(21)
Other income (expense), net	(4)		3		8		2		14
Income (loss) before income taxes	325		(254)		211		264		406
Provision for (benefit of) income taxes	9		(3)		(9)		8		(62)
Net income (loss)	$	316	$	(251)	$	220	$	256	$	468
Net income (loss) per share (basic)	$	0.55	$	(0.43)	$	0.39	$	0.45	$	0.84
Net income (loss) per share (diluted)	$	0.55	$	(0.43)	$	0.38	$	0.44	$	0.82
Weighted average shares (basic)	571		578		561		573		555
Weighted average shares (diluted)	578		578		579		585		574

Dividends per share	$	0.11	$	0.11	$	0.10	$	0.33	$	0.30

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						Nine Months Ended
	September 30,		June 30,		September 30,		September 30,
	2013		2013		2012		2013		2012
Cost of product revenue	$	6	$	6	$	6	$	19	$	21
Research and development	86		95		89		280		278
Selling, general and administrative	33		35		33		102		116



BROADCOM CORPORATION
Unaudited Condensed Consolidated Statements of Cash Flows
(In millions)

	Three Months Ended						Nine Months Ended
	September 30,		June 30,		September 30,		September 30,
	2013		2013		2012		2013		2012
Operating activities
Net income (loss)	$	316	$	(251)	$	220	$	256	$	468
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization	44		39		38		122		95
Stock-based compensation expense	125		136		128		401		415
Acquisition-related items:
Amortization of purchased intangible assets	56		58		87		172		230
Impairments of long-lived assets	—		501		48		511		85
Gain on strategic investments and other	(1)		(1)		(9)		(2)		(12)
Changes in operating assets and liabilities, net of acquisitions:
Accounts receivable	(91)		(10)		(42)		(112)		(140)
Inventory	69		(87)		(28)		(14)		(35)
Prepaid expenses and other assets	30		7		2		3		(8)
Accounts payable	(112)		(17)		(26)		(20)		125
Deferred revenue and income	(2)		(7)		53		(11)		39
Accrued settlement costs	3		(38)		—		(38)		51
Other accrued and long-term liabilities	235		4		150		126		25
Net cash provided by operating activities	672		334		621		1,394		1,338
Investing activities
Net purchases of property and equipment	(64)		(67)		(65)		(172)		(189)
Net cash paid for acquired companies	—		—		(10)		—		(3,582)
Sales of strategic investments	—		—		10		—		13
Purchases of marketable securities	(678)		(917)		(1,140)		(2,214)		(1,854)
Proceeds from sales and maturities of marketable securities	391		566		187		1,496		1,192
Net cash used in investing activities	(351)		(418)		(1,018)		(890)		(4,420)
Financing activities
Issuance of long-term debt, net	—		—		492		—		492
Repurchases of Class A common stock	(378)		(110)		(1)		(595)		(1)
Dividends paid	(63)		(64)		(56)		(190)		(167)
Payment of assumed contingent consideration and debt	—		—		(4)		—		(57)
Proceeds from issuance of common stock	25		199		53		292		209
Minimum tax withholding paid on behalf of employees for restricted stock units	(26)		(38)		(33)		(104)		(124)
Net cash provided by (used in) financing activities	(442)		(13)		451		(597)		352
Income (decrease) in cash and cash equivalents	(121)		(97)		54		(93)		(2,730)
Cash and cash equivalents at beginning of period	1,645		1,742		1,362		1,617		4,146
Cash and cash equivalents at end of period	$	1,524	$	1,645	$	1,416	$	1,524	$	1,416



BROADCOM CORPORATION
Unaudited Condensed Consolidated Balance Sheets
(In millions)

			September 30, 2013		December 31, 2012
ASSETS

Current assets:
Cash and cash equivalents			$	1,524	$	1,617
Short-term marketable securities			880		757
Accounts receivable, net			852		740
Inventory			541		527
Prepaid expenses and other current assets			130		140
Total current assets			3,927		3,781
Property and equipment, net			535		485
Long-term marketable securities			1,940		1,348
Goodwill			3,743		3,726
Purchased intangible assets, net			1,112		1,786
Other assets			88		82
Total assets			$	11,345	$	11,208

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:
Current portion of long-term debt			$	300	$	300
Accounts payable			520		549
Wages and related benefits			219		241
Deferred revenue and income			22		22
Accrued liabilities			740		570
Total current liabilities			1,801		1,682
Long-term debt			1,394		1,393
Other long-term liabilities			233		294
Commitments and contingencies
Shareholders' equity			7,917		7,839
Total liabilities and shareholders' equity			$	11,345	$	11,208


UNAUDITED SUPPLEMENTAL FINANCIAL INFORMATION
(In millions)
	September 30, 2013		June 30, 2013		December 31, 2012
Cash and cash equivalents	$	1,524	$	1,645	$	1,617
Short-term marketable securities	880		836		757
Long-term marketable securities	1,940		1,696		1,348
Total cash, cash equivalents and marketable securities	$	4,344	$	4,177	$	3,722
Increase from prior period end	$	167
Increase from prior year end	$	622



BROADCOM CORPORATION
Unaudited Schedule of Selected GAAP to Non-GAAP Adjustments
(In millions)

	Three Months Ended									Nine Months Ended
	September 30,			June 30,			September 30,			September 30,
	2013			2013			2012			2013			2012

Product revenue	$	2,146		$	2,047		$	2,085		$	6,155		$	5,783
GAAP cost of product revenue	1,044			1,030			1,063			3,062			3,002
GAAP product gross profit	$	1,102		$	1,017		$	1,022		$	3,093		$	2,781
GAAP product gross margin	51.4		%	49.7		%	49.0		%	50.3		%	48.1		%


GAAP cost of product revenue	$	1,044		$	1,030		$	1,063		$	3,062		$	3,002
Adjustments:
Stock-based compensation and related payroll taxes	(6)			(6)			(6)			(19)			(21)
Amortization of purchased intangible assets and step-up of acquired inventory	(42)			(44)			(62)			(130)			(220)
Non-GAAP cost of product revenue	$	996		$	980		$	995		$	2,913		$	2,761



Product revenue	$	2,146		$	2,047		$	2,085		$	6,155		$	5,783
Non-GAAP cost of product revenue	996			980			995			2,913			2,761
Non-GAAP product gross profit	$	1,150		$	1,067		$	1,090		$	3,242		$	3,022
Non-GAAP product gross margin	53.6		%	52.1		%	52.3		%	52.7		%	52.3		%


GAAP research and development and selling, general and administrative expense	$	790		$	793		$	774		$	2,377		$	2,252
Adjustments:
Stock-based compensation and related payroll taxes	(120)			(131)			(126)			(386)			(402)
Non-GAAP research and development and selling, general and administrative expense	$	670		$	662		$	648		$	1,991		$	1,850



BROADCOM CORPORATION
Unaudited Schedule of Selected GAAP to Non-GAAP Adjustments
(In millions)

	Three Months Ended						Nine Months Ended
	September 30,		June 30,		September 30,		September 30,
	2013		2013		2012		2013		2012

GAAP net income (loss)	$	316	$	(251)	$	220	$	256	$	468
Adjustments:
Stock-based compensation and related payroll taxes	126		137		132		405		423
Amortization of purchased intangible assets and step-up of acquired inventory	56		58		94		173		302
Impairment of long-lived assets	—		501		48		511		85
Settlement costs (gains)	(75)		—		(2)		(75)		86
Charitable contributions	25		—		—		25		—
Restructuring costs	12		—		2		12		6
Other income, net	—		(1)		(6)		(1)		(9)
Certain income tax benefit	—		(8)		(12)		(10)		(63)
Total GAAP to Non-GAAP adjustments	144		687		256		1,040		830
Non-GAAP net income	$	460	$	436	$	476	$	1,296	$	1,298


Shares used in calculation - diluted (GAAP)	578		578		579		585		574
Non-GAAP adjustment *	27		44		26		29		27
Shares used in calculation - diluted (Non-GAAP)	605		622		605		614		601

GAAP diluted net income (loss) per share	$	0.55	$	(0.43)	$	0.38	$	0.44	$	0.82
Non-GAAP diluted net income per share	$	0.76	$	0.70	$	0.79	$	2.11	$	2.16

*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. In the three months ended June 30, 2013 the amount also includes dilutive securities that were excluded from GAAP diluted loss per share as they had an anti-dilutive impact as a result of the net loss position.

BROADCOM CORPORATION
Guidance for the Three Months Ending December 31, 2013

	Three Months Ending
	December 31, 2013
Total net revenue	~$1.975 billion plus or minus 3%
Product gross margin (GAAP and Non-GAAP)	Down ~50 to 100 basis points from Q3'13
Research & development and selling, general, and administrative expenses (GAAP)	Up ~$40 million to $60 million from Q3'13
Research & development and selling, general, and administrative expenses (Non-GAAP)	Up ~$40 million to $60 million from Q3'13

Broadcom has based the preceding guidance for the three months ending December 31, 2013 on expectations, assumptions and estimates that we believe are reasonable given our assessment of historical trends and other information reasonably available as of October 22, 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 SEC 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

SOURCE Broadcom Corporation; BRCM Corporate

Contact:

Broadcom Corporation BRCM Corporate
Web: http://www.broadcom.com

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