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Broadcom Q4 2009 Earnings Results Summary

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www.broadcom.com
Broadcom Proprietary & Confidential. © 2010 Broadcom Corporation. All rights reserved.
Broadcom Q4 2009
Earnings Results Summary
February 3, 2010
1Broadcom Proprietary & Confidential. © 2010 Broadcom Corporation. All rights reserved.
Caution Regarding Forward-Looking
Statements:
All statements included or incorporated by reference in these slides, other than statements or characterizations
of historical fact, are forward-looking statements. These forward-looking statements include, among others,
guidance provided on future revenue, gross margin and operating expense targets for the first quarter of 2010.
It should be clearly understood that these forward-looking statements, and our assumptions about the factors
that influence them, are based on the limited information available to us at this date. Such information is subject
to change, and we may not inform you when changes occur. We undertake no obligation to revise or update
publicly any forward-looking statement, except as required by law.
Forward-looking statements are not guarantees of future results and are subject to risks, uncertainties and
assumptions that are difficult to predict. Therefore, our actual results could differ materially and adversely
from those described herein as a result of various factors. We refer you to our Form 10-K, subsequent 10-Qs
and other filings with the SEC, which discuss some of the important risk factors that could contribute to such
differences or otherwise affect our business, results of operations and financial condition.
For additional financial and statistical information, including the information disclosed in accordance with
SEC Regulation G, please see the Investors section of our website.
© 2010 Broadcom Corporation. All rights reserved.
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.
2Broadcom Proprietary & Confidential. © 2010 Broadcom Corporation. All rights reserved.
Q4 2009 Results Versus Guidance*
$52$52$52-Income from Qualcomm Agreement
(in millions) Q4 2008A Q3 2009A Q4 2009 Guidance Q4 2009A Commentary
Product revenue $1,076 $1,195 $1,261 $1,283 Upside in enterprise and broadband
Licensing revenue $51 $7 $8 $8
Total Revenue $1,127 $1,254 ~$1,320 $1,343 Up 7.1% from Q3 2009
Cost of Product Revenue $558 $615 $630
Stock-based compensation $7 $7 $6
Amortization of purchased intangibles $4 $4 $4
Product Gross Margin** 48.2% 48.5%
Increase by around 100 basis
points or more from Q3
50.9%
Driven by mix, cost reduction, and favorable
release of E&O
Total Gross Margin 50.5% 50.9% 53.1%
Salaries and benefits $186 $196 $196
Stock-based compensation $96 $91 $85
Development and design cost $47 $54 $63 Tapeouts inline
Other*** $54 $50 $52
Research and development (R&D) $383 $391 $396
Salaries and benefits $49 $53 $50 Employee costs down Q/Q
Stock-based compensation $33 $31 $30
Legal, accounting, and other
external fees
$48 $43 ($7)
Higher than expected, excluding net D&O
recovery of $63 million, due to trial costs
Other*** $17 $15 $11
Selling, general and administrative (SG&A) $147 $142 $84
Total R&D and SG&A expenses* $530 $534 Increase of $20 million from Q3 $481
Under run to guidance by $10 million excluding
D&O recovery
Additional Metric Commentary
Inventory Turns - GAAP 6.1X 8.0x ~7.0x 7.0x
•Periods have been reclassified to conform with the current period presentation of disclosing product revenue, income from the Qualcomm Agreement, and licensing revenue. Product revenue includes
sales of semiconductor devices and to a lesser extent software licenses and royalties, development, support and maintenance agreements, data services and cancellation fees.
** Excludes licensing revenue of intellectual property. *** “Other” includes but is not limited to the following: depreciation and amortization, facilities expense and travel.
3Broadcom Proprietary & Confidential. © 2010 Broadcom Corporation. All rights reserved.
Stock-Based Compensation Expense
(in millions)
Q4 2008A Q3 2009A Q4 2009A
Cost of product revenue $7 $7 $6
Research and development $96 $91 $85
Selling, general and administrative $33 $31 $30
Total $135 $129 $121
% of Net Revenue
Cost of product revenue 0.6% 0.5% 0.4%
Research and development 8.5% 7.2% 6.3%
Selling, general and administrative 2.9% 2.5% 2.2%
Total 12.0% 10.3% 9.0%
4Broadcom Proprietary & Confidential. © 2010 Broadcom Corporation. All rights reserved.
Revenue, Gross Profit and Share Reconciliation
(25)(29)(33)GAAP adjustment
525521498
GAAP Weighted Average Shares Outstanding
(Diluted)
550550531
Non-GAAP weighted average shares outstanding
(diluted)*
Q4 2009AQ3 2009AQ4 2008AShares (in millions)
$52$52-Income from Qualcomm Agreement
Revenue (in millions) Q4 2008A Q3 2009A Q4 2009A
Product revenue $1,076 $1,195 $1,283
Licensing revenue $51 $7 $8
Total Revenue $1,127 $1,254 $1,343
Gross Profit (in millions) % of Revenue % of Revenue % of Revenue
Product gross profit (excluding licensing revenue,
stock-based compensation and amortization) $529 49.2% $590 49.4% $663 51.7%
- Stock-based compensation and amortization ($11) ($10) ($10)
Product gross profit $518 48.2% $579 48.5% $653 50.9%
+ Licensing revenue and related income $50 $59 $59
Total Gross Profit $569 50.5% $639 50.9% $712 53.1%
* Please note — the calculation of non-GAAP weighted average shares outstanding (diluted) excludes 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.
5Broadcom Proprietary & Confidential. © 2010 Broadcom Corporation. All rights reserved.
Q1 2010 Guidance
$52$52-Income from Qualcomm
Agreement
Flat to up from
Q4 2009
$449$317Broadband Communication
(in millions) Q1 2009A Q4 2009A Q1 2010 Guidance Commentary
Product revenue $828 $1283 ~ $1,283 to $1,350
Licensing revenue $25 $8 $8
Total Revenue $853 $1,343 ~ $1,343 to $1,410 Flat to up 5% sequentially
Product gross margin* 46.1% 50.9% Down 100 bps from
Q4 2009
Flat sequentially excluding E&O and acquisition effects
Total R&D and SG&A
expenses* $498 $481
Up ~ $10 mil. from Q4
2009
Up ~$10 mil. from $544 million in Q4 2009
(excluding $63 mil. legal recovery). Legal spending to decline
~$15 mil. and tapeouts flat quarter-to-quarter.
Reportable Segments
Mobile & Wireless $299 $502 Flat to up from
Q4 2009
Enterprise Networking $218 $340 Flat to up from
Q4 2009
All Other $19 $52 Flat from Q4 2009
* Includes stock-based compensation included in cost of revenue, research and development, and selling, general and administrative expenses. Please see slide 3 for
breakout.
6Broadcom Proprietary & Confidential. © 2010 Broadcom Corporation. All rights reserved.
Segment Details
Broadband Mobile & Enterprise All
($ in thousands) Communications Wireless Networking Other Consolidated
Year ended December 31, 2009
Netrevenue 1,525,193$ 1,719,998$ 1,055,553$ 189,579$ 4,490,323$
Operating income (loss) 172,702 116,882 286,303 (519,815) 56,072
Year ended December 31, 2008
Netrevenue 1,722,671$ 1,528,178$ 1,258,044$ 149,232$ 4,658,125$
Operating income (loss) 381,421 33,974 390,293 (633,558) 172,130
Year ended December 31, 2007
Netrevenue 1,412,293$ 1,192,634$ 1,139,668$ 31,800$ 3,776,395$
Operating income (loss) 312,672 4,955 267,946 (500,598) 84,975
Year Ended December 31,
Included in the "All Other" category: 2009 2,008 2,007
Netrevenue 189,579$ 149,232$ 31,800$
Stock-based compensation 496,347$ 509,374$ 519,652$
Amortization ofpurchased intangibles 30,744 19,249 14,512
Impairmentofgoodwill and other long-lived assets 18,895 171,593 1,500
Settlementcosts, net 118,468 15,810 -
Restructuring costs (reversal) 7,501 (1,000) -
In-process research and development - 42,400 15,470
Charitable contribution 50,000 - -
Employer payroll tax on certain stock option exercises 4,866 3,966 10,895
Miscellaneous corporate allocation variances (17,427) 21,398 (29,631)
Total other operating costs and expenses 709,394$ 782,790$ 532,398$
Total operating loss for the "All Other" category (519,815)$ (633,558)$ (500,598)$
Reportable Segments
Broadcom Corporation
Unaudited GAAP Consolidated Statements of Operations
(In thousands, except per share amounts)
Q1'07 Q2'07 Q3'07 Q4'07 Q1'08 Q2'08 Q3'08 Q4'08 Q1'09 Q2'09 Q3'09 Q4'09
Net revenue:
Product revenue 900,548$ 896,736$ 949,023$ 993,005$ 993,003$ 1,161,965$ 1,254,083$ 1,076,188$ 828,230$ 966,317$ 1,194,745$ 1,283,434$
Income from Qualcomm Agreement - - - - - - - - - 67,263 51,674 51,674
Licensing revenue 933 1,184 936 34,030 39,207 38,966 44,392 50,321 25,206 6,364 7,778 7,638
Total net revenue 901,481 897,920 949,959 1,027,035 1,032,210 1,200,931 1,298,475 1,126,509 853,436 1,039,944 1,254,197 1,342,746
Operating costs and expenses:
Cost of product revenue (1) 440,949 437,037 465,970 488,222 481,163 554,596 619,459 557,797 446,277 518,674 615,349 630,259
Research and development (2) 300,810 332,130 352,283 363,285 355,688 380,035 379,279 382,666 372,724 374,770 391,170 396,254
Selling, general and administrative (3) 128,647 119,859 124,907 119,324 111,946 142,017 141,941 147,213 125,048 127,410 142,480 84,424
Amortization of purchased intangible assets (4) 329 200 314 184 183 184 183 2,842 4,159 4,139 4,159 2,091
Impairment of goodwill and other long-lived assets 1,500 - - - - 1,900 250 169,443 - 11,261 7,634 -
Restructuring costs (reversals) (4) - - - - - (1,000) - - 7,111 447 4,772 (4,829)
Settlement costs (gains) (4) - - - - 15,810 - - - 1,150 (58,406) - 175,724
In-process research and development (4) 300 10,200 4,970 - 10,900 - - 31,500 - - - -
Charitable contribution - - - - - - - - - 50,000 - -
Total operating costs and expenses 872,535 899,426 948,444 971,015 975,690 1,077,732 1,141,112 1,291,461 956,469 1,028,295 1,165,564 1,283,923
Income (loss) from operations 28,946 (1,506) 1,515 56,020 56,520 123,199 157,363 (164,952) (103,033) 11,649 88,633 58,823
Interest income, net 37,008 32,904 31,443 29,714 20,104 12,428 12,451 7,218 4,398 3,986 2,978 2,539
Other income (expense), net (5) (1,409) 642 (1,670) 5,849 924 (191) (3,720) 971 1,646 1,019 (178) (269)
Income (loss) before income taxes 64,545 32,040 31,288 91,583 77,548 135,436 166,094 (156,763) (96,989) 16,654 91,433 61,093
Provision (benefit) for income taxes (6) 3,554 (2,216) 3,528 1,248 3,234 647 1,188 2,452 (5,049) 3,253 6,837 1,889
Net income (loss) 60,991$ 34,256$ 27,760$ 90,335$ 74,314$ 134,789$ 164,906$ (159,215)$ (91,940)$ 13,401$ 84,596$ 59,204$
Basic net income (loss) per share 0.11$ 0.06$ 0.05$ 0.17$ 0.14$ 0.26$ 0.32$ (0.32)$ (0.19)$ 0.03$ 0.17$ 0.12$
Diluted net income (loss) per share 0.10$ 0.06$ 0.05$ 0.16$ 0.14$ 0.25$ 0.31$ (0.32)$ (0.19)$ 0.03$ 0.16$ 0.11$
Weighted average shares - basic 547,860 540,851 539,931 541,006 530,338 512,875 509,041 498,338 490,195 495,110 495,491 495,356
Weighted average shares - diluted 585,740 575,115 577,583 572,289 539,827 529,977 523,759 498,338 490,195 507,993 521,443 524,903
The following table presents details of total stock-based compensation expenseincluded in each functional line item in the unaudited condensed consolidated statements of income above:
Cost of product revenue 5,814$ 6,861$ 7,214$ 6,581$ 5,465$ 6,237$ 6,652$ 6,643$ 5,877$ 6,128$ 6,579$ 5,961$
Research and development 78,431 90,832 94,619 89,767 78,706 90,003 93,334 95,975 89,262 86,607 90,829 85,186
Selling, general and administrative 32,626 36,607 37,023 33,277 29,065 31,268 33,328 32,698 28,634 29,893 31,290 30,101
Broadcom Proprietary and Confidential 7
Broadcom Corporation
Unaudited GAAP Condensed Consolidated Statements of Cash Flows
(In thousands)
Q1'07 Q2'07 Q3'07 Q4'07 Q1'08 Q2'08 Q3'08 Q4'08 Q1'09 Q2'09 Q3'09 Q4'09
Operating activities
Net income (loss) 60,991$ 34,256$ 27,760$ 90,335$ 74,314$ 134,789$ 164,906$ (159,215)$ (91,940)$ 13,401$ 84,596$ 59,204$
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization 14,006 16,806 14,945 18,325 17,992 18,427 19,351 22,466 21,749 14,292 11,273 27,121
Stock-based compensation expense:
Stock options and other awards 79,145 86,053 84,128 74,935 58,029 57,178 53,684 55,353 46,744 38,813 40,904 33,329
Restricted stock units 37,726 48,247 54,728 54,690 55,207 70,330 79,630 79,963 77,029 83,815 87,794 87,919
Acquisition-related items:
Amortization of purchased intangible assets 3,379 2,766 4,249 4,118 4,118 4,118 4,118 6,895 8,272 8,251 8,035 6,186
Impairment of intangible assets 1,500 - - - - 1,900 250 169,443 - 11,261 7,634 -
In-process research and development 300 10,200 4,970 - 10,900 - - 31,500 - - - -
Loss on strategic investments, net 2,637 11 2,121 (2,960) - 1,760 2,506 - - - - -
Non-cash restructuring charges, net - - - - - (1,000) - - 2,663 (750) 808 (4,665)
Loss (gain) on sale of marketable securities - - - - - - 1,781 - (1,046) - - -
Change in operating assets and liabilities:
Accounts receivable 22,459 (19,280) (11,509) 26,730 6,581 (117,396) (21,183) 128,704 17,446 (89,181) (97,541) 37,620
Inventory 2,383 9,087 (20,399) (18,153) 9,911 (34,944) (66,259) (20,881) 101,260 (14,452) (27,918) (46,877)
Prepaid expenses and other assets (16,290) (356) (24,964) (18,081) (6,296) 25,054 (20,387) (9,644) (1,467) (6,319) 27,758 (11,258)
Accounts payable 21,475 (10,873) 44,547 (41,451) 46,014 77,815 23,503 (146,716) (76,616) 156,377 32,764 10,460
Deferred revenue and income 620 381 9,487 11,611 (9,059) (1,521) 1,618 1,226 379 100,387 (19,944) (9,062)
Accrued settlement costs (2,000) - - - 10,000 (12,000) - - - 6,900 - 163,600
Other accrued and long-term liabilities 17,032 (17,740) 21,020 9,214 (37,900) 22,907 42,712 (12,937) (13,763) 4,996 80,301 (21,649)
Net cash provided by operating activities 245,363 159,558 211,083 209,313 239,811 247,417 286,230 146,157 90,710 327,791 236,464 331,928
Investing activities
Net purchase of property and equipment (63,964) (43,415) (15,939) (27,109) (25,662) (23,405) (16,084) (17,657) (12,457) (13,837) (22,480) (17,796)
Net cash received from (paid for) acquired companies and other purchased intangibl (47,677) (30,275) (141,372) - (19,795) (9,943) (57) (140,746) 2,139 - (1,297) (166,100)
Sales (purchases) of strategic investments (3,500) 306 - 3,506 (355) - - - - - (2,000) -
Purchases of marketable securities (269,639) (189,245) (112,780) (95,720) (135,937) (202,584) (771,993) (5,190) (109,706) (401,344) (546,922) (80,709)
Proceeds from sales and maturities of marketable securities 378,154 285,978 156,960 270,136 148,183 72,415 291,424 112,004 134,112 287,733 315,532 133,775
Net cash provided by (used in) investing activities (6,626) 23,349 (113,131) 150,813 (33,566) (163,517) (496,710) (51,589) 14,088 (127,448) (257,167) (130,830)
Financing activities
Repurchases of Class A common stock (425,062) (216,226) (170,534) (328,391) (391,732) (444,131) (23,912) (424,177) - (38,434) (168,083) (215,352)
Proceeds from issuance of common stock 80,825 61,625 81,912 134,267 12,314 78,300 23,968 57,271 4,805 78,889 53,535 89,980
Minimum tax withholding paid on behalf of employees for restricted stock units (23,991) (12,588) (16,453) (16,644) (12,130) (13,623) (19,433) (12,875) (16,076) (18,452) (26,046) (23,854)
Net cash provided by (used in) financing activities (368,228) (167,189) (105,075) (210,768) (391,548) (379,454) (19,377) (379,781) (11,271) 22,003 (140,594) (149,226)
Increase (decrease) in cash and cash equivalents (129,491) 15,718 (7,123) 149,358 (185,303) (295,554) (229,857) (285,213) 93,527 222,346 (161,297) 51,872
Cash and cash equivalents at beginning of period 2,158,110 2,028,619 2,044,337 2,037,214 2,186,572 2,001,269 1,705,715 1,475,858 1,190,645 1,284,172 1,506,518 1,345,221
Cash and cash equivalents at end of period 2,028,619$ 2,044,337$ 2,037,214$ 2,186,572$ 2,001,269$ 1,705,715$ 1,475,858$ 1,190,645$ 1,284,172$ 1,506,518$ 1,345,221$ 1,397,093$
Unaudited Supplemental Financial Information
Cash and cash equivalents 2,028,619$ 2,044,337$ 2,037,214$ 2,186,572$ 2,001,269$ 1,705,715$ 1,475,858$ 1,190,645$ 1,284,172$ 1,506,518$ 1,345,221$ 1,397,093$
Short-term marketable securities 460,677 370,336 308,932 141,728 90,033 228,418 770,872 707,477 677,638 700,585 561,287 532,281
Long-term marketable securities 73,589 66,116 84,107 75,352 114,456 105,513 40,905 - - 92,699 470,643 438,616
Total cash, cash equivalents and marketable securities 2,562,885$ 2,480,789$ 2,430,253$ 2,403,652$ 2,205,758$ 2,039,646$ 2,287,635$ 1,898,122$ 1,961,810$ 2,299,802$ 2,377,151$ 2,367,990$
Increase (decrease) from prior quarter end (238,713)$ (82,096)$ (50,536)$ (26,601)$ (197,894)$ (166,112)$ 247,989$ (389,513)$ 63,688$ 337,992$ 77,349$ (9,161)$
GAAP net cash provided by operating activities 245,363$ 159,558$ 211,083$ 209,313$ 239,811$ 247,417$ 286,230$ 146,157$ 90,710$ 327,791$ 236,464$ 331,928$
Purchase of property and equipment, net (63,964) (43,415) (15,939) (27,109) (25,662) (23,405) (16,084) (17,657) (12,457) (13,837) (22,480) (17,796)
Free cash flow 181,399$ 116,143$ 195,144$ 182,204$ 214,149$ 224,012$ 270,146$ 128,500$ 78,253$ 313,954$ 213,984$ 314,132$
Broadcom Proprietary and Confidential 8
Broadcom Corporation
Unaudited GAAP Condensed Consolidated Balance Sheets and Other Metrics
(In thousands, except metric amounts)
Q1'07 Q2'07 Q3'07 Q4'07 Q1'08 Q2'08 Q3'08 Q4'08 Q1'09 Q2'09 Q3'09 Q4'09
ASSETS
Current assets:
Cash and cash equivalents 2,028,619$ 2,044,337$ 2,037,214$ 2,186,572$ 2,001,269$ 1,705,715$ 1,475,858$ 1,190,645$ 1,284,172$ 1,506,518$ 1,345,221$ 1,397,093$
Short-term marketable securities 460,677 370,336 308,932 141,728 90,033 228,418 770,872 707,477 677,638 700,585 561,287 532,281
Accounts receivable, net 363,001 382,285 395,732 369,004 362,436 479,832 501,015 372,311 354,865 444,046 541,587 508,627
Inventory 200,411 191,324 213,160 231,313 221,402 256,346 322,605 366,106 264,846 279,298 307,216 362,428
Prepaid expenses and other current assets 101,605 103,969 127,940 125,663 125,413 89,815 105,481 114,674 113,414 108,078 95,296 113,903
Total current assets 3,154,313 3,092,251 3,082,978 3,054,280 2,800,553 2,760,126 3,175,831 2,751,213 2,694,935 3,038,525 2,850,607 2,914,332
Property and equipment, net 221,833 228,271 226,079 241,803 250,526 252,890 252,999 234,691 228,495 224,238 228,621 229,317
Long-term marketable securities 73,589 66,116 84,107 75,352 114,456 105,513 40,905 - - 92,699 470,643 438,616
Goodwill 1,215,070 1,236,488 1,365,764 1,376,721 1,376,936 1,386,642 1,386,394 1,279,243 1,277,104 1,277,104 1,277,951 1,329,614
Purchased intangible assets, net 42,150 39,384 50,725 46,607 42,489 38,371 34,253 61,958 53,686 34,174 21,324 150,927
Other assets 26,672 25,860 31,387 43,430 49,571 56,812 58,293 66,160 69,066 81,581 67,019 64,436
Total assets 4,733,627$ 4,688,370$ 4,841,040$ 4,838,193$ 4,634,531$ 4,600,354$ 4,948,675$ 4,393,265$ 4,323,286$ 4,748,321$ 4,916,165$ 5,127,242$
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable 334,868$ 303,067$ 349,759$ 313,621$ 360,571$ 435,082$ 459,593$ 310,487$ 232,047$ 389,630$ 423,199$ 437,353$
Wages and related benefits 125,433 117,446 155,385 144,525 134,301 121,461 163,480 151,551 152,700 129,547 182,394 190,315
Deferred revenue and income 2,493 2,874 6,371 15,864 7,907 7,514 10,246 12,338 13,779 115,387 96,421 87,388
Accrued liabilities 294,415 262,622 245,641 256,554 242,665 262,432 240,667 242,727 230,965 277,979 301,371 433,294
Total current liabilities 757,209 686,009 757,156 730,564 745,444 826,489 873,986 717,103 629,491 912,543 1,003,385 1,148,350
Commitments and contingencies
Long-term deferred revenue - - 5,990 8,108 7,006 5,878 4,764 3,898 2,836 1,615 637 608
Other long-term liabilities 35,324 31,669 33,094 63,373 63,568 64,217 65,879 65,197 62,153 60,851 62,688 86,438
Shareholders' equity 3,941,094 3,970,692 4,044,800 4,036,148 3,818,513 3,703,770 4,004,046 3,607,067 3,628,806 3,773,312 3,849,455 3,891,846
Total liabilities and shareholders' equity 4,733,627$ 4,688,370$ 4,841,040$ 4,838,193$ 4,634,531$ 4,600,354$ 4,948,675$ 4,393,265$ 4,323,286$ 4,748,321$ 4,916,165$ 5,127,242$
GAAP inventory turns 8.8 9.1 8.7 8.4 8.7 8.7 7.7 6.1 6.7 7.4 8.0 7.0
GAAP days in inventory 41.4 39.8 41.6 43.1 41.9 42.1 47.4 59.7 54.0 49.0 45.4 52.3
Broadcom Proprietary and Confidential 9
Broadcom Corporation
Unaudited Supplementary Financial Data
(In thousands)
Q1'07 Q2'07 Q3'07 Q4'07 Q1'08 Q2'08 Q3'08 Q4'08 Q1'09 Q2'09 Q3'09 Q4'09
Cost of product revenue:
Stock-based compensation 5,814$ 6,861$ 7,214$ 6,581$ 5,465$ 6,237$ 6,652$ 6,643$ 5,877$ 6,128$ 6,579$ 5,961$
Amortization of purchased intangible assets 3,050 2,566 3,935 3,934 3,935 3,934 3,935 4,053 4,113 4,112 3,876 4,095
Stock-based compensation:
Research and development 78,431 90,832 94,619 89,767 78,706 90,003 93,334 95,975 89,262 86,607 90,829 85,186
Selling, general and administrative 32,626 36,607 37,023 33,277 29,065 31,268 33,328 32,698 28,634 29,893 31,290 30,101
Other operating expenses:
Amortization of purchased intangible assets 329 200 314 184 183 184 183 2,842 4,159 4,139 4,159 2,091
Impairment of goodwill and long-lived assets 1,500 - - - - 1,900 250 169,443 - 11,261 7,634 -
Restructuring costs (reversals) - - - - - (1,000) - - 7,111 447 4,772 (4,829)
Settlement costs (gains) - - - - 15,810 - - - 1,150 (58,406) - 175,724
In-process research and development 300 10,200 4,970 - 10,900 - - 31,500 - - - -
Charitable contribution - - - - - - - - - 50,000 - -
Other:
Employer payroll tax expense on certain stock option exercises 1,886 934 1,484 3,182 930 1,169 1,532 335 733 1,208 1,625 1,300
Charges related to equity award review 3,434 (25) - - - - - - - - - -
Loss (gain) on strategic investments, net 2,637 11 2,121 (2,960) - 1,760 2,506 - - - - -
Non-operating loss (gain) (3) (126) (146) (2,444) - - (193) (10) (7) (7) 27 -
Broadcom Proprietary and Confidential 10
Broadcom Corporation
Unaudited Supplementary Financial Data
(In thousands)
Q1'07 Q2'07 Q3'07 Q4'07 Q1'08 Q2'08 Q3'08 Q4'08 Q1'09 Q2'09 Q3'09 Q4'09
Net revenue:
Broadband Communications 349,295$ 347,995$ 361,171$ 353,832$ 365,441$ 457,924$ 458,323$ 440,983$ 317,254$ 363,843$ 394,863$ 449,233$
Mobile & Wireless 274,238 266,192 302,892 349,312 323,442 378,873 456,381 369,482 298,862 398,485 520,614 502,037
Enterprise Networking 277,948 283,733 285,896 292,091 307,741 328,536 345,723 276,044 218,351 210,353 287,047 339,802
All Other - - - 31,800 35,586 35,598 38,048 40,000 18,969 67,263 51,673 51,674
901,481$ 897,920$ 949,959$ 1,027,035$ 1,032,210$ 1,200,931$ 1,298,475$ 1,126,509$ 853,436$ 1,039,944$ 1,254,197$ 1,342,746$
% of revenue:
Broadband Communications 38.7% 38.8% 38.0% 34.5% 35.4% 38.1% 35.3% 39.1% 37.2% 35.0% 31.5% 33.5%
Mobile & Wireless 30.4 29.6 31.9 34.0 31.3 31.5 35.1 32.8 35.0 38.3 41.5 37.4
Enterprise Networking 30.9 31.6 30.1 28.4 29.9 27.4 26.7 24.5 25.6 20.2 22.9 25.3
All Other - - - 3.1 3.4 3.0 2.9 3.6 2.2 6.5 4.1 3.8
100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
Cost of product revenue:
Product cost 432,085$ 427,610$ 454,821$ 477,707$ 471,763$ 544,425$ 608,872$ 547,101$ 436,287$ 508,434$ 604,894$ 620,203$
Stock-based compensation 5,814 6,861 7,214 6,581 5,465 6,237 6,652 6,643 5,877 6,128 6,579 5,961
Amortization of purchased intangibles 3,050 2,566 3,935 3,934 3,935 3,934 3,935 4,053 4,113 4,112 3,876 4,095
Cost of product revenue 440,949$ 437,037$ 465,970$ 488,222$ 481,163$ 554,596$ 619,459$ 557,797$ 446,277$ 518,674$ 615,349$ 630,259$
Product gross margin 51.0% 51.3% 50.9% 50.8% 51.5% 52.3% 50.6% 48.2% 46.1% 46.3% 48.5% 50.9%
Total gross margin 51.1% 51.3% 50.9% 52.5% 53.4% 53.8% 52.3% 50.5% 47.7% 50.1% 50.9% 53.1%
Research and development: (2)
Salaries and benefits 134,246$ 146,460$ 152,849$ 165,145$ 166,693$ 183,744$ 183,219$ 186,266$ 189,667$ 188,497$ 196,036$ 195,912$
Stock-based compensation 78,431 90,832 94,619 89,767 78,706 90,003 93,334 95,975 89,262 86,607 90,829 85,186
Development and design costs 43,690 49,680 57,765 58,890 60,463 54,444 50,278 46,743 45,617 48,331 54,237 63,309
Other (1) 44,443 45,158 47,050 49,483 49,826 51,844 52,448 53,682 48,178 51,335 50,068 51,847
300,810$ 332,130$ 352,283$ 363,285$ 355,688$ 380,035$ 379,279$ 382,666$ 372,724$ 374,770$ 391,170$ 396,254$
Selling, general and administrative: (2)
Salaries and benefits 41,989$ 40,113$ 43,463$ 46,450$ 47,497$ 50,306$ 51,195$ 49,413$ 45,994$ 45,161$ 53,180$ 50,001$
Stock-based compensation 32,626 36,607 37,023 33,277 29,065 31,268 33,328 32,698 28,634 29,893 31,290 30,101
Legal and accounting fees (recovery) 34,295 22,886 23,578 19,276 15,995 40,170 37,495 47,709 34,354 39,772 42,728 (6,649)
Other (1) 19,737 20,253 20,843 20,321 19,389 20,273 19,923 17,393 16,066 12,584 15,282 10,971
128,647$ 119,859$ 124,907$ 119,324$ 111,946$ 142,017$ 141,941$ 147,213$ 125,048$ 127,410$ 142,480$ 84,424$
Shares:
GAAP weighted average shares outstanding (diluted) 585,740 575,115 577,583 572,289 539,827 529,977 523,759 498,338 490,195 507,993 521,443 524,903
Non-GAAP adjustment 18,614 21,715 22,320 20,283 16,726 25,620 28,693 32,489 32,202 30,543 28,509 25,048
Non-GAAP weighted average shares outstanding (diluted) 604,354 596,830 599,903 592,573 556,553 555,597 552,452 530,827 522,397 538,536 549,952 549,951
(1) Other includes but is not limited to the following: depreciation and amortization, facilities expense and travel.
(2) Certain amounts have been reclassified to conform to the current period's presentation
Broadcom Proprietary and Confidential 11