Non-GAAP net income for the fourth quarter of 2014 was $463 million, or $0.76 per share (diluted), compared with non-GAAP net income of $461 million, or $0.76 per share (diluted), for the third quarter of 2014 and non-GAAP net income of $247 million, or $0.43 per share (diluted), for the fourth quarter of 2013. Non-GAAP net income for the year ended December 31, 2014 was $1.41 billion, or $2.35 per share (diluted), compared with non-GAAP net income of $1.14 billion, or $1.95 per share (diluted), for the year ended December 31, 2013.
Conference Call Information
As previously announced, Broadcom will conduct a conference call with analysts and investors to discuss its fourth quarter and full year 2014 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 11:59 p.m. Pacific Time on Sunday, February 22, 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 as soon as practicable.
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 December 31, 2014, September 30, 2014 and December 31, 2013, respectively, and the year ended December 31, 2014 and 2013 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.
Additionally, as noted above, for the periods reported herein only, Broadcom has included non-GAAP net income and non-GAAP diluted net income per share excluding stock-based compensation. In future releases reporting its financial results, Broadcom will now provide those metrics calculated with the inclusion of stock-based compensation, as Broadcom now sets financial targets for its reportable segments that include stock-based compensation expense.
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 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 first 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 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 may fail to appropriately adjust our operations in response to changes in our strategy or market demand.
- We face intense competition.
- 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.
- Our operating results may be adversely impacted by worldwide economic uncertainties and specific conditions in the markets we address.
- We may be unable to attract, retain or motivate key personnel.
- Our stock price is highly volatile.
- Our business is subject to potential tax liabilities.
- 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 face risks associated with our acquisition strategy.
- 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 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.
- Our articles of incorporation and bylaws contain anti-takeover provisions.
- Our co-founders and their affiliates may strongly influence the outcome of matters that require the approval of our shareholders.