IRVINE, Calif., April 21, 2015 /PRNewswire/ --
First Quarter
2015 Results
|
GAAP
|
|
Non-GAAP
|
Net
revenue
|
$2.06
billion
|
|
|
Net income per
share
|
$.34
|
|
$.64
|
|
(including $.23
of
impairment
charges)
|
|
($.04 better
than
First Call
consensus)
|
Broadcom Corporation (NASDAQ: BRCM), a global innovation leader
in semiconductor solutions for wired and wireless communications,
today reported unaudited financial results for its first quarter
ended March 31, 2015.
"Broadcom delivered better-than-expected results in the March
quarter driven by strength in the high-end smartphone and broadband
access markets," said Scott
McGregor, Broadcom's President and Chief Executive Officer.
"Looking to the June quarter, we see operating performance
continuing to strengthen on tight operating expense discipline and
strong margins, consistent with our objective of driving profitable
growth."
Net revenue for the first quarter of 2015 was $2.06 billion. This represents a decrease of 4.0%
compared with the $2.14 billion
reported for the fourth quarter of 2014 and an increase of 3.7%
compared with the $1.98 billion
reported for the first quarter of 2014. Net income computed in
accordance with U.S. generally accepted accounting principles
(GAAP) for the first quarter of 2015 was $209 million, or $0.34 per share (diluted), compared with GAAP net
income of $390 million, or
$0.64 per share (diluted), for the
fourth quarter of 2014 and GAAP net income of $165 million, or $0.28 per share (diluted), for the first quarter
of 2014.
GAAP net income for the first quarter of 2015 included
impairment charges for long-lived assets of $143 million, or $0.23 per share. GAAP net income for the fourth
quarter of 2014 included charges for restructuring and the
impairment of long-lived assets, primarily related to Broadcom's
decision to exit from its cellular baseband business, of
$30 million, or $0.05 per share. GAAP net income for the first
quarter of 2014 included impairment charges for long-lived assets
of $25 million, or $0.04 per share, and a net gain on sale of assets
$52 million, or $0.09 per share.
In addition to GAAP results, Broadcom reports adjusted net
income and adjusted net income per share, referred to respectively
as "non-GAAP net income" and "non-GAAP diluted net income per
share." A discussion of Broadcom's use of these and other non-GAAP
financial measures is set forth below. Reconciliations of GAAP to
non-GAAP financial measures for the three months ended March 31, 2015, December
31, 2014 and March 31, 2014
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 2015 was
$390 million, or $0.64 per share (diluted), compared with non-GAAP
net income of $463 million, or
$0.76 per share (diluted), for the
fourth quarter of 2014 and non-GAAP net income of $197 million, or $0.33 per share (diluted), for the first quarter
of 2014.
Conference Call Information
As previously announced,
Broadcom will conduct a conference call with analysts and investors
to discuss its first quarter 2015 financial results and current
financial prospects today at 1:45 p.m.
Pacific Time (4:45 p.m. Eastern
Time). The conference call will be broadcast 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 relating to the
conference call, please visit the Investors section of the Broadcom
website at www.broadcom.com/investors. The webcast will be recorded
and available for replay until 11:59 p.m.
Pacific Time on Thursday, May 21,
2015.
The financial results included in this release are unaudited.
The audited financial statements of the company for the year ended
December 31, 2014 are included in
Broadcom's Annual Report on Form 10-K, filed with the SEC on
January 29, 2015.
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 one
of the industry's broadest portfolio of state-of-the-art
system-on-a-chip 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 revenue,
(ii) gross profit, (iii) gross margin, (iv) net income (loss), and
(v) diluted net income (loss) per share (EPS). Broadcom's non-GAAP
cost of revenue, non-GAAP gross profit, and non-GAAP gross margin
excludes certain charges related to acquisitions and certain
inventory charges relating to its decision to exit the cellular
baseband business. Acquisition-related charges include the
amortization of purchased intangible assets and the amortization of
acquired inventory valuation step-up. In addition to the exclusions
noted above, Broadcom's 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, gain on sale of assets, gains (losses) on strategic
investments, other charges (gains), tax benefits resulting from
reductions in 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.
Reconciliations of GAAP to non-GAAP financial measures for the
three months ended March 31, 2015,
December 31, 2014 and March 31, 2014, respectively, 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
its 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 its 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 they believe that the inclusion or exclusion
of the items described above provides insight into core operating
results, the 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
analysis of past, present and future operating performance and as a
supplemental means to evaluate 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
Broadcom's current expectations, estimates and projections about
its business and industry, management's beliefs, and certain
assumptions made by Broadcom, all of which are subject to change.
Forward-looking statements can often be identified by words such as
"anticipates," "expects," "intends," "plans," "predicts,"
"believes," "seeks," "estimates," "may," "will," "should," "would,"
"could," "potential," "continue," "ongoing," similar expressions,
and variations or negatives of these words. Examples of such
forward-looking statements include, but are not limited to,
guidance provided on future revenue, product gross margin and
operating expenses for the second quarter of 2015 (on both a GAAP
and non-GAAP basis). These forward-looking statements are not
guarantees of future results and are subject to risks,
uncertainties and assumptions that could cause Broadcom's 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:
- Broadcom's quarterly operating results may fluctuate
significantly.
- Broadcom depends on a few significant customers for a
substantial portion of its revenue.
- Broadcom may fail to appropriately adjust its operations
in response to changes in its strategy or market
demand.
- Broadcom faces intense competition.
- Broadcom manufactures and sells complex products and may
be unable to successfully develop and introduce new
products.
- Broadcom is exposed to risks associated with its
international operations.
- Broadcom's operating results may be adversely impacted by
worldwide economic uncertainties and specific conditions in the
markets it addresses.
- Broadcom may be unable to attract, retain or motivate key
personnel.
- Broadcom's stock price is highly volatile.
- Broadcom's business is subject to potential tax
liabilities.
- Broadcom may be required to defend against alleged
infringement of intellectual property rights of others and/or may
be unable to adequately protect or enforce its own intellectual
property rights.
- Broadcom faces risks associated with its acquisition
strategy.
- Broadcom is subject to order and shipment
uncertainties.
- Broadcom depends on third parties to fabricate, assemble
and test its products.
- Broadcom's systems are subject to security breaches and
other cybersecurity incidents.
- Government regulation may adversely affect Broadcom's
business.
- Broadcom's future ability to return capital to
shareholders in the form of dividends or share repurchases may be
impacted by the availability of U.S. cash.
- Broadcom's articles of incorporation and bylaws contain
anti-takeover provisions.
- Broadcom's co-founders and their affiliates may strongly
influence the outcome of matters that require the approval of
Broadcom's shareholders.
Broadcom's Annual Report on Form 10-K for the year ended
December 31, 2014, 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 Broadcom's 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. Broadcom undertakes 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 Income
|
(In millions,
except per share amounts)
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
March
31,
|
|
December
31,
|
|
March
31,
|
|
2015
|
|
2014
|
|
2014
|
Net
revenue
|
$
|
2,058
|
|
|
$
|
2,143
|
|
|
$
|
1,984
|
|
Cost of
revenue
|
972
|
|
|
1,012
|
|
|
1,004
|
|
Gross
profit
|
1,086
|
|
|
1,131
|
|
|
980
|
|
Operating
expenses:
|
|
|
|
|
|
Research and
development
|
539
|
|
|
530
|
|
|
636
|
|
Selling, general and
administrative
|
177
|
|
|
173
|
|
|
185
|
|
Amortization of
purchased intangible assets
|
1
|
|
|
3
|
|
|
9
|
|
Impairments of
long-lived assets
|
143
|
|
|
14
|
|
|
25
|
|
Restructuring costs,
net
|
7
|
|
|
16
|
|
|
5
|
|
Settlement costs
(gains)
|
—
|
|
|
(4)
|
|
|
2
|
|
Other gains,
net
|
(4)
|
|
|
—
|
|
|
(52)
|
|
Total operating
expenses
|
863
|
|
|
732
|
|
|
810
|
|
Income from
operations
|
223
|
|
|
399
|
|
|
170
|
|
Interest expense,
net
|
(5)
|
|
|
(9)
|
|
|
(5)
|
|
Other income,
net
|
—
|
|
|
5
|
|
|
3
|
|
Income before income
taxes
|
218
|
|
|
395
|
|
|
168
|
|
Provision for income
taxes
|
9
|
|
|
5
|
|
|
3
|
|
Net income
|
$
|
209
|
|
|
$
|
390
|
|
|
$
|
165
|
|
Net income per share
(basic)
|
$
|
0.35
|
|
|
$
|
0.65
|
|
|
$
|
0.28
|
|
Net income per share
(diluted)
|
$
|
0.34
|
|
|
$
|
0.64
|
|
|
$
|
0.28
|
|
Weighted average
shares (basic)
|
600
|
|
|
596
|
|
|
584
|
|
Weighted average
shares (diluted)
|
613
|
|
|
610
|
|
|
590
|
|
Dividends per
share
|
$
|
0.14
|
|
|
$
|
0.12
|
|
|
$
|
0.12
|
|
BROADCOM
CORPORATION
|
Unaudited
Condensed Consolidated Statements of Cash Flows
|
(In
millions)
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
March
31,
|
|
December
31,
|
|
March
31,
|
|
2015
|
|
2014
|
|
2014
|
Operating
activities
|
|
|
|
|
|
Net income
|
$
|
209
|
|
|
$
|
390
|
|
|
$
|
165
|
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
|
|
Depreciation and
amortization
|
39
|
|
|
37
|
|
|
52
|
|
Stock-based
compensation expense
|
90
|
|
|
97
|
|
|
120
|
|
Acquisition-related
items:
|
|
|
|
|
|
Amortization of
purchased intangible assets
|
37
|
|
|
45
|
|
|
59
|
|
Impairments of
long-lived assets
|
143
|
|
|
14
|
|
|
25
|
|
Loss (gain) on sale
of assets and other
|
3
|
|
|
3
|
|
|
(49)
|
|
Changes in operating
assets and liabilities, net of acquisitions:
|
|
|
|
|
|
Accounts receivable,
net
|
(12)
|
|
|
134
|
|
|
61
|
|
Inventory
|
(99)
|
|
|
93
|
|
|
(5)
|
|
Prepaid expenses and
other assets
|
(65)
|
|
|
7
|
|
|
4
|
|
Accounts
payable
|
(58)
|
|
|
(176)
|
|
|
(8)
|
|
Deferred
revenue
|
(6)
|
|
|
(11)
|
|
|
115
|
|
Other accrued and
long-term liabilities
|
(306)
|
|
|
—
|
|
|
67
|
|
Net cash provided by
(used in) operating activities *
|
(25)
|
|
|
633
|
|
|
606
|
|
Investing
activities
|
|
|
|
|
|
Net purchases of
property and equipment
|
(156)
|
|
|
(48)
|
|
|
(78)
|
|
Net cash paid for
acquired companies
|
—
|
|
|
(5)
|
|
|
—
|
|
Proceeds from sale
(purchases) of certain assets and other
|
(15)
|
|
|
2
|
|
|
90
|
|
Purchases of
marketable securities
|
(937)
|
|
|
(2,003)
|
|
|
(477)
|
|
Proceeds from sales
and maturities of marketable securities
|
579
|
|
|
1,724
|
|
|
503
|
|
Net cash provided by
(used in) investing activities
|
(529)
|
|
|
(330)
|
|
|
38
|
|
Financing
activities
|
|
|
|
|
|
Repurchases of Class
A common stock
|
(335)
|
|
|
(104)
|
|
|
—
|
|
Dividends
paid
|
(84)
|
|
|
(72)
|
|
|
(70)
|
|
Proceeds from
issuance of common stock
|
148
|
|
|
198
|
|
|
54
|
|
Minimum tax
withholding paid on behalf of employees for restricted stock
units
|
(43)
|
|
|
(34)
|
|
|
(31)
|
|
Net cash used in
financing activities
|
(314)
|
|
|
(12)
|
|
|
(47)
|
|
Increase (decrease)
in cash and cash equivalents
|
(868)
|
|
|
291
|
|
|
597
|
|
Cash and cash
equivalents at beginning of period
|
2,545
|
|
|
2,254
|
|
|
1,657
|
|
Cash and cash
equivalents at end of period
|
$
|
1,677
|
|
|
$
|
2,545
|
|
|
$
|
2,254
|
|
|
* Net cash used in
operating activities reflects additional build of inventory and
early payments of certain liabilities to ensure business continuity
during the Company's transition to a new enterprise resource
planning system in April 2015. For further discussion, please see
the Company's quarterly report on Form 10-Q for the three months
ended March 31, 2015, when it is filed.
|
BROADCOM
CORPORATION
|
Unaudited
Condensed Consolidated Balance Sheets
|
(In
millions)
|
|
|
|
|
|
March 31,
2015
|
|
December 31,
2014
|
ASSETS
|
|
|
|
|
Current
assets:
|
|
|
|
Cash and cash
equivalents
|
$
|
1,677
|
|
|
$
|
2,545
|
|
Short-term marketable
securities
|
1,274
|
|
|
1,061
|
|
Accounts receivable,
net
|
821
|
|
|
804
|
|
Inventory
|
630
|
|
|
531
|
|
Prepaid expenses and
other current assets
|
154
|
|
|
131
|
|
Total current
assets
|
4,556
|
|
|
5,072
|
|
Property and
equipment, net
|
620
|
|
|
516
|
|
Long-term marketable
securities
|
2,533
|
|
|
2,383
|
|
Goodwill
|
3,695
|
|
|
3,710
|
|
Purchased intangible
assets, net
|
490
|
|
|
664
|
|
Other
assets
|
168
|
|
|
126
|
|
Total
assets
|
$
|
12,062
|
|
|
$
|
12,471
|
|
|
|
|
|
LIABILITIES AND
SHAREHOLDERS' EQUITY
|
|
|
|
|
Current
liabilities:
|
|
|
|
Accounts
payable
|
$
|
431
|
|
|
$
|
503
|
|
Wages and related
benefits
|
172
|
|
|
220
|
|
Deferred revenue and
income
|
37
|
|
|
36
|
|
Accrued
liabilities
|
565
|
|
|
791
|
|
Total current
liabilities
|
1,205
|
|
|
1,550
|
|
Long-term
debt
|
1,593
|
|
|
1,593
|
|
Other long-term
liabilities
|
262
|
|
|
277
|
|
Commitments and
contingencies
|
|
|
|
Shareholders'
equity
|
9,002
|
|
|
9,051
|
|
Total liabilities and
shareholders' equity
|
$
|
12,062
|
|
|
$
|
12,471
|
|
|
|
|
|
|
|
|
|
UNAUDITED
SUPPLEMENTAL FINANCIAL INFORMATION
|
(In
millions)
|
|
March 31,
2015
|
|
December 31,
2014
|
Cash and cash
equivalents
|
$
|
1,677
|
|
|
$
|
2,545
|
|
Short-term marketable
securities
|
1,274
|
|
|
1,061
|
|
Long-term marketable
securities
|
2,533
|
|
|
2,383
|
|
Total cash, cash
equivalents and marketable securities
|
$
|
5,484
|
|
|
$
|
5,989
|
|
Decrease from prior
year end
|
$
|
(505)
|
|
|
|
BROADCOM
CORPORATION
|
Unaudited Schedule
of Selected GAAP to Non-GAAP Adjustments
|
(In
millions)
|
|
|
|
Three Months
Ended
|
|
March
31,
|
|
December
31,
|
|
March
31,
|
|
2015
|
|
2014
|
|
2014
|
|
|
|
|
|
|
Net
revenue
|
$
|
2,058
|
|
|
$
|
2,143
|
|
|
$
|
1,984
|
|
GAAP cost of
revenue
|
972
|
|
|
1,012
|
|
|
1,004
|
|
GAAP gross
profit
|
$
|
1,086
|
|
|
$
|
1,131
|
|
|
$
|
980
|
|
GAAP gross
margin
|
52.8%
|
|
|
52.8%
|
|
|
49.4%
|
|
|
|
|
|
|
|
GAAP cost of
revenue
|
$
|
972
|
|
|
$
|
1,012
|
|
|
$
|
1,004
|
|
Adjustments:
|
|
|
|
|
|
Amortization of
purchased intangible assets
|
(36)
|
|
|
(42)
|
|
|
(50)
|
|
Inventory charges
related to the exit of the cellular baseband business
|
2
|
|
|
—
|
|
|
—
|
|
Non-GAAP cost of
revenue
|
$
|
938
|
|
|
$
|
970
|
|
|
$
|
954
|
|
|
|
|
|
|
|
Net
revenue
|
$
|
2,058
|
|
|
$
|
2,143
|
|
|
$
|
1,984
|
|
Non-GAAP cost of
revenue
|
938
|
|
|
970
|
|
|
954
|
|
Non-GAAP gross
profit
|
$
|
1,120
|
|
|
$
|
1,173
|
|
|
$
|
1,030
|
|
Non-GAAP gross
margin
|
54.4%
|
|
|
54.7%
|
|
|
51.9%
|
|
|
|
|
|
|
|
|
|
|
GAAP net
income
|
$
|
209
|
|
|
$
|
390
|
|
|
$
|
165
|
|
Adjustments:
|
|
|
|
|
|
Amortization of
purchased intangible assets
|
37
|
|
|
45
|
|
|
59
|
|
Inventory charges
related to the exit of the cellular baseband business
|
(2)
|
|
|
—
|
|
|
—
|
|
Impairment of
long-lived assets
|
143
|
|
|
14
|
|
|
25
|
|
Settlement costs
(gains)
|
—
|
|
|
(4)
|
|
|
2
|
|
Other gains,
net
|
(4)
|
|
|
—
|
|
|
(52)
|
|
Restructuring costs,
net
|
7
|
|
|
16
|
|
|
5
|
|
Other expense
(income), net
|
—
|
|
|
3
|
|
|
(2)
|
|
Certain income tax
benefit
|
—
|
|
|
(1)
|
|
|
(5)
|
|
Total GAAP to
Non-GAAP adjustments
|
181
|
|
|
73
|
|
|
32
|
|
Non-GAAP net
income
|
$
|
390
|
|
|
$
|
463
|
|
|
$
|
197
|
|
|
|
|
|
|
|
Shares used in
calculation - diluted (GAAP and Non-GAAP)
|
613
|
|
|
610
|
|
|
590
|
|
|
|
|
|
|
|
GAAP diluted net
income per share
|
$
|
0.34
|
|
|
$
|
0.64
|
|
|
$
|
0.28
|
|
Non-GAAP diluted net
income per share
|
$
|
0.64
|
|
|
$
|
0.76
|
|
|
$
|
0.33
|
|
BROADCOM
CORPORATION
|
Guidance for the
Three Months Ending June 30, 2015
|
|
|
|
Three Months
Ending
|
|
June 30,
2015
|
Net
revenue
|
~$2.10 billion +/-
$75 million
|
|
|
Gross margin
(GAAP)
|
54.5% +/- 75 basis
points
|
Gross margin
(Non-GAAP)
|
56.0% +/- 75 basis
points
|
|
|
Research &
development, and selling, general & administrative
expenses
|
Down ~$15 million +/-
$10 million from Q1'15
|
Broadcom has based the preceding guidance for the three months
ending June 30, 2015 on expectations,
assumptions and estimates that it believes are reasonable given its
assessment of historical trends and other information reasonably
available as of April 21, 2015.
Broadcom's 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 Broadcom's 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 provided 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, Broadcom's Annual
Report on Form 10-K for the year ended December 31, 2014, subsequent Quarterly Reports
on Form 10-Q, recent Current Reports on Form 8-K, and Broadcom's
other SEC filings. Broadcom undertakes no obligation to publicly
update or revise any forward-looking statements, including the
guidance set forth herein, to reflect future events or
circumstances.
Corporate
Communications
|
Investor
Relations
|
|
Karen Kahn
|
T. Peter
Andrew
|
Sameer
Desai
|
Vice President,
Corporate Communications
|
Vice President,
Treasury and Investor Relations
|
Director, Investor
Relations
|
415-297-5035
|
949-926-6932
|
949-926-4425
|
kkahn@broadcom.com
|
andrewtp@broadcom.com
|
sameerd@broadcom.com
|
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/broadcom-reports-first-quarter-2015-results-300069597.html
SOURCE Broadcom Corporation; BRCM Corporate