California | 000-23993 | 33-0480482 | ||
(State or Other Jurisdiction of Incorporation) |
(Commission File Number) | (IRS Employer Identification No.) |
Item 2.02. Results of Operations and Financial Condition | ||||||||
Item 9.01 Financial Statements and Exhibits | ||||||||
SIGNATURES | ||||||||
EX-99.1 |
| supplementing the financial results and forecasts reported to our board of directors; | ||
| evaluating Broadcoms operating performance; | ||
| managing and benchmarking performance internally across our businesses and externally against our peers; | ||
| determining a portion of bonus compensation for executive officers and certain other key employees; | ||
| establishing internal operating budgets; | ||
| calculating return on investment for development programs and growth initiatives; | ||
| comparing performance with internal forecasts and targeted business models; and | ||
| evaluating and valuing potential acquisition candidates. |
| Stock-based compensation. Stock-based compensation relates primarily to employee stock options and restricted stock units issued by Broadcom. Stock-based compensation expense is a non-cash expense (not |
reflected in ongoing operating results) that varies in amount from period to period and is affected by market forces that are difficult to predict and are not within the control of management, such as the price of our Class A common stock. Stock-based compensation is different from cash compensation in that the latter has a fixed and determinable cost. For example, the expense associated with an equity award is most often unrelated to the amount of compensation ultimately received by the employee. Further, the cost to the Company is based on a stock-based compensation valuation methodology and underlying assumptions that may vary over time and that does not reflect any cash expenditures by the Company. Finally, the expense recognized by the Company may be very different than the expense to other companies for awarding comparable equity awards, which makes it difficult to assess our operating performance relative to our competitors. Accordingly, management excludes this item from its internal operating forecasts and models. We take into account the dilutive impact of stock options and shares issued pursuant to our stock-based compensation plans at the aggregate company level, but regularly exclude stock-based compensation expense when analyzing individual line items on our financial statements or when making decisions that affect our various businesses. | |||
| Acquisition-related charges. Acquisition-related charges include the amortization of purchased intangible assets and the amortization of acquired inventory step-up as well as the impairment of goodwill and purchased intangible assets primarily consisting of developed technology and in-process research and development assets. These charges are not factored into managements evaluation of potential acquisitions, or of our performance after completion of acquisitions, because they do not affect our current cash position, are not related to our core operating performance and had we internally developed the technology acquired, the amortization of intangible assets would have been expensed in prior periods. In addition, the frequency and amount of such charges vary significantly based on the timing and magnitude of our acquisition transactions, the maturities of the businesses being acquired, and, depending on the nature of the consideration paid in connection with acquisitions, the then fair market value of Broadcoms Class A common stock. | ||
| Employer payroll tax expense. Employer payroll tax expense on certain stock option exercises varies greatly in amount from period-to-period and is significantly impacted by factors that are difficult to predict and are not within the control of management, such as the timing, number and magnitude of employee stock option exercises and the fair market value of Broadcoms Class A common stock at the time of exercise. | ||
| Other charges and gains. Other charges and gains consist of settlement costs (gains), restructuring costs (reversals), impairment of other long-lived assets, and charitable contributions to the Broadcom Foundation, all of which occur on a sporadic basis and vary greatly in amount. Management excludes these items when evaluating our operating performance because these amounts do not affect our core operations and because the frequency and variability in the nature of the charges can vary significantly from period to period. Excluding this data provides investors with a basis to compare our performance against the performance of other companies without this variability. |
| Non-GAAP income from operations does not include stock-based compensation expense related to equity awards granted to our workforce. Broadcoms stock incentive plans are important components of our employee incentive compensation arrangements and are reflected as expenses in our GAAP results . While we include the dilutive impact of such equity awards in weighted average shares outstanding, the expense associated with stock-based awards is excluded from non-GAAP income from operations. |
| Although amortization and impairment of purchased intangible assets does not directly affect our current cash position, such expense represents the declining value of the technology and other intangible assets that we have acquired. These assets are amortized over their respective expected economic lives or impaired, when appropriate. The expense associated with this decline in value is excluded from the non-GAAP income from operations presentation, and therefore non-GAAP income from operations does not reflect the costs of acquired intangible assets that supplement our research and development efforts. | ||
| Broadcom periodically acquires and assimilates other companies or businesses, and we expect to continue to experience acquisition-related charges in the future. These costs can directly impact the amount of our available funds or could be dilutive to our shareholders in the future. |
BROADCOM CORPORATION, a California corporation |
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February 1, 2011 |
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By: | /s/ Eric K. Brandt | |||
Eric K. Brandt | ||||
Executive Vice President and Chief Financial Officer |
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