Broadcom Updates Fourth Quarter of 2014 Financial Guidance, Accelerates Capital Return and Enhances Corporate Governance

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Broadcom Corporation; BRCM Corporate

Dec 09, 2014, 04:02 ET

IRVINE, Calif., Dec. 9, 2014 /PRNewswire/ --

Raises fourth quarter of 2014 revenue guidance to the upper half of its guided range
Increases 2015 quarterly dividend to $0.14 cents per share or $0.56 on an annual basis; a 17% increase year-over-year
Announces $1 billion stock repurchase authorization in 2015
Enhances corporate governance measures

Broadcom Corporation (NASDAQ: BRCM), a global innovation leader in semiconductor solutions for wired and wireless communications, today announced updated financial guidance for the fourth quarter of 2014 and a range of shareholder-focused initiatives at its annual Analyst Day.

"Today's update highlights the strength in our core businesses and our commitment to delivering shareholder value," said Scott McGregor, Broadcom President and CEO. "A 17% year-over-year increase in our quarterly dividend demonstrates the confidence in our business strategy and the importance we are placing on capital return."

Updated Guidance

Following are revisions to the estimates for the fourth quarter of 2014 based on the company's current business outlook:

Total Net Revenue: Increased the guided range for revenue to approximately $2.075 — $2.150 billion.
Product Gross Margin: Maintained the guided range on both a GAAP and non-GAAP basis.
R&D and SG&A Expenses: Closer to down ~$50 million and down ~$40 million on a GAAP and non-GAAP basis, respectively.

2015 Dividend and Stock Repurchase Outlook

Dividend: Quarterly dividend to increase by $0.02 per share, to $0.14 per share or $0.56 on an annual basis, a 17% year-over-year increase, beginning with the dividend that will be declared in the first quarter of 2015.
Buyback: $1 billion share buyback authorization in 2015.

Corporate Governance Enhancements

Shift in compensation to more performance-based equity: Beginning with the 2015 performance cycle, the Compensation Committee of Broadcom's Board of Directors intends to award 50% (rather than the current 25%) of the targeted value of equity awards granted to the company's executive officers in the form of Performance Restricted Stock Units awards ("PRSUs").
Increasing the alignment between executive pay and stock price performance: PRSUs awarded under the company's 2013 Restricted Stock Units Incentive Award Program will be earned based on Broadcom's relative total shareholder return and relative earnings per share growth.
Annual say-on-pay vote: Upon the recommendation of the Compensation Committee, the Board of Directors resolved to conduct an annual (rather than a triennial) advisory vote on executive compensation, beginning with Broadcom's 2015 Annual Meeting of Shareholders.
No new agreements that include excise tax gross-up provisions: The Compensation Committee has adopted a policy whereby Broadcom will not enter into any new agreements with the executive officers named in the company's proxy statement for the Annual Meeting of Shareholders that include excise tax gross-up provisions with respect to payments contingent upon a change in control of the company.
Clawback policy: The Compensation Committee has adopted an Incentive Compensation Repayment Policy (commonly referred to as a "Clawback Policy").
New independent compensation consultant: The Compensation Committee has selected Compensia, Inc. as its independent compensation consultant. Neither Compensia nor its affiliates performs any services for Broadcom other than its compensation consulting services for the Compensation Committee.
Majority voting standard: Broadcom has adopted a majority voting standard for the election of directors.
No new evergreen provisions: Upon the recommendation of the Compensation Committee, the Board of Directors approved a resolution expressing its intention to not include an annual share increase feature (commonly referred to as an "Evergreen Provision") in any successor plan to the company's 2012 Stock Incentive Plan or any extension of the term of the 2012 Stock Incentive Plan.

For further information regarding Broadcom's updated guidance for the fourth quarter of 2014, see the "Updated Guidance for the Three Months Ending December 31, 2014" at the end of this release. Broadcom's fourth quarter business outlook was originally published in the company's third quarter 2014 earnings release. To access the webcast of the company's 2014 Analyst Day, including the associated slides, please go to the Investor Relations section of Broadcom's website at www.broadcom.com/investors.

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 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.

Cautions Regarding Forward-Looking Statements
All statements included or incorporated by reference in this release, 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 2014; our intention and ability to pay dividends; and the size of our share repurchase program in 2015. 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.
We face risks associated with our acquisition strategy.
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 are subject to order and shipment uncertainties.
Our business is subject to potential tax liabilities.
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.

Broadcom's Annual Report on Form 10-K for the year ended December 31, 2013, 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 Broadcom's business, results of operations and financial condition. The forward-looking statements used in this release 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

Updated Guidance for the Three Months Ending December 31, 2014

	Reported Three Months Ended September 30, 2014	Prior Guidance Three Months Ending December 31, 2014	Updated Guidance Three Months Ending December 31, 2014
Total net revenue	$2.260 billion	~$2.000 billion to $2.150 billion	~$2.075 - ~$2.150 billion
Product gross margin (GAAP)	52.3%	~53% +/-75 bps	~53% +/-75 bps
Product gross margin (Non-GAAP)	54.3%	~55% +/-75 bps	~55% +/-75 bps
Research & development and selling, general, and administrative expenses (GAAP)	$749 million	Down ~$50 - $70 million	Closer to down ~$50 million
Research & development and selling, general, and administrative expenses (Non-GAAP)	$646 million	Down ~$40 - $60 million	Closer to down ~$40 million

Broadcom has based the preceding guidance for the three months ending December 31, 2014 on expectations, assumptions and estimates that we believe are reasonable given our assessment of historical trends and other information reasonably available as of December 9, 2014. 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 we provide today. The non-GAAP guidance presented above is consistent with the presentation of non-GAAP results as reported in our October 21, 2014 press release covering Broadcom's third quarter 2014 results.

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, 2013, subsequent Quarterly Reports on Form 10-Q, recent Current Reports on Form 8-K, and Broadcom's 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

Corporate Communications

Investor Relations

Karen Kahn

Vice President, Corporate
Communications

415-297-5035

[email protected]

T. Peter Andrew

Vice President, Treasury

& Investor Relations

949-926-6932

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Sameer Desai