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BROADCOM CORP FORM 10-K. (Annual Report) Filed 01/30/14 for the Period Ending 12/31/13

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BROADCOM CORP FORM 10-K (Annual Report) Filed 01/30/14 for the Period Ending 12/31/13 Address 5300 CALIFORNIA AVENUE IRVINE, CA Telephone CIK Symbol BRCM SIC Code 3674
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BROADCOM CORP FORM 10-K (Annual Report) Filed 01/30/14 for the Period Ending 12/31/13 Address 5300 CALIFORNIA AVENUE IRVINE, CA Telephone CIK Symbol BRCM SIC Code Semiconductors and Related Devices Industry Semiconductors Sector Technology Fiscal Year 12/31 Copyright 2014, EDGAR Online, Inc. All Rights Reserved. Distribution and use of this document restricted under EDGAR Online, Inc. Terms of Use. UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C Form 10-K (Mark One) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2013 or TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number: Broadcom Corporation (Exact Name of Registrant as Specified in Its Charter) California (State or Other Jurisdiction of Incorporation or Organization) Title of Class Class A Common Stock, $ par value 5300 California Avenue Irvine, California (Address of Principal Executive Offices) (Zip Code) (Registrant s telephone number, including area code): (949) Securities registered pursuant to Section 12(b) of the Act: (I.R.S. Employer Identification No.) Name of Exchange on Which Registered The Nasdaq Stock Market LLC (Nasdaq Global Select Market) Securities registered pursuant to Section 12(g) of the Act: None Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes No Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes No Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes No Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T ( of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes No Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K ( of this chapter) is not contained herein, and will not be contained, to the best of registrant s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of large accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act. (Check one): Large accelerated filer Accelerated filer Non-accelerated filer Smaller reporting company (Do not check if a smaller reporting company) Indicate by check mark whether the registrant is a shell company (as defined in Exchange Act Rule 12b-2). Yes No The aggregate market value of the registrant s common stock held by non-affiliates of the registrant on was $17.83 billion (based on the closing sales price of the registrant s common stock on the Nasdaq Global Select Market on June 30, 2013). As of December 31, 2013 there were 531 million shares of Class A common stock and 50 million shares of Class B common stock outstanding. DOCUMENTS INCORPORATED BY REFERENCE Part III incorporates by reference certain information from the registrant s definitive proxy statement for the 2014 Annual Meeting of Shareholders to be filed on or before April 30, 2014 Broadcom, the pulse logo, BroadR-Reach, XLP and XGS 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. All rights reserved. This Annual Report on Form 10-K is printed on recycled paper. BROADCOM CORPORATION ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED DECEMBER 31, 2013 TABLE OF CONTENTS Page PART I Item 1. Business 1 Item 1A. Risk Factors 12 Item 1B. Unresolved Staff Comments 21 Item 2. Properties 21 Item 3. Legal Proceedings 21 Item 4. Mine Safety Disclosure 21 PART II Item 5. Market for Registrant s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 22 Item 6. Selected Financial Data 24 Item 7. Management s Discussion and Analysis of Financial Condition and Results of Operations 26 Item 7A. Quantitative and Qualitative Disclosures about Market Risk 47 Item 8. Financial Statements and Supplementary Data 48 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 48 Item 9A. Controls and Procedures 48 Item 9B. Other Information 49 PART III Item 10. Directors, Executive Officers and Corporate Governance 50 Item 11. Executive Compensation 50 Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 50 Item 13. Certain Relationships and Related Transactions, and Director Independence 50 Item 14. Principal Accounting Fees and Services 50 PART IV Item 15. Exhibits, Financial Statement Schedules 51 Cautionary Statement All statements included or incorporated by reference in this Annual Report on Form 10-K, 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 Examples of forward-looking statements include, but are not limited to, statements concerning projected total net revenue, costs and expenses and product and total gross margin; our accounting estimates, assumptions and judgments; the demand for our products; our dependence on a few key customers and/or design wins for a substantial portion of our revenue; our commitment to research and development efforts; the characteristics of our patents; the accuracy of our estimates and forecasts; estimates related to the amount and/or timing of the expensing of unearned stock-based compensation expense and stock-based compensation as a percentage of revenue; manufacturing, assembly and test capacity; the effect that economic conditions, seasonality and volume fluctuations in the demand for our customers consumer-oriented products will have on our quarterly operating results; our ability to adjust operations in response to changes in demand for existing products and services or the demand for new products requested by our customers; the competitive nature of and anticipated growth in our markets; the expected benefits of the Renesas transaction; our expected annual cost savings related to our restructuring plan; our ability to consummate acquisitions and integrate their operations successfully; our ability to migrate to smaller process geometries; our success in pending intellectual property litigation matters; our potential needs for additional capital; inventory and accounts receivable levels; our ability to obtain future tax incentives; our ability to permanently reinvest our foreign earnings; the effect of potential changes in U.S. or foreign tax laws and regulations or the interpretation thereof; the level of accrued rebates; and our intention to continue to pay dividends. These forward-looking statements are based on our current expectations, estimates and projections about our industry and business, 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. These statements are not guarantees of future performance and are subject to risks, uncertainties and assumptions that are difficult to predict. Therefore, our actual results could differ materially and adversely from those expressed in any forward-looking statements as a result of various factors, some of which are listed under the section entitled Risk Factors in Part I, Item 1A of this Report. These forward-looking statements speak only as of the date of this Report. We undertake no obligation to revise or update publicly any forward-looking statement to reflect future events or circumstances. Item 1. Business Overview PART I Broadcom Corporation (including our subsidiaries, referred to collectively in this Annual Report as Broadcom, we, our and us ) is a global leader and innovator in semiconductor solutions for wired and wireless communications. Broadcom was incorporated in California in August Our Class A common stock trades on the Nasdaq Global Select Market under the symbol BRCM. Our principal executive offices are located at 5300 California Avenue, Irvine, California , and our telephone number at that location is Our Internet address is The inclusion of our Internet address in this Report does not include or incorporate by reference into this Report any information on our website. Our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, amendments to those reports and other U.S. Securities and Exchange Commission (SEC) filings are available free of charge through the investor relations section of our website as soon as reasonably practicable after such reports are electronically filed with, or furnished to, the SEC. The SEC also maintains a web site, which contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC. Communications technologies continue to evolve rapidly due to growth in the number of connected devices, continual increased demand for faster speeds across wired and wireless networks, the emergence of new 1 communications standards, and the introduction of new technologies and features. Success in this field is influenced by the strength of a supplier s intellectual property, or IP, portfolio and the ability to integrate that IP into complex, single-chip solutions. We have one of the strongest IP portfolios among global fabless semiconductor suppliers, as ranked by the Institute of Electrical and Electronics Engineers (IEEE). Our strategy centers on designing highly-complex and highly-integrated semiconductor solutions that leverage our leading IP portfolio and target a broad range of wired and wireless communications markets. We provide the industry s broadest portfolio of highly-integrated system-on-achip solutions, or SoC s, that seamlessly deliver voice, video, data and multimedia connectively in the home, office and mobile environments. This focus on integration enables Broadcom to provide products that deliver leading performance, consume relatively low power and take up a minimal amount of space within our customers products. Our strong and growing IP portfolio and solid track record in designing highlyintegrated SoC s enables us to quickly and efficiently respond to a rapidly evolving marketplace for communication solutions. Reportable Segments Our solutions are used globally by leading manufacturers and are embedded in an array of communications products that are structured around three core platforms: Broadband Communications (Solutions for the Home), Mobile and Wireless (Solutions for the Hand) and Infrastructure and Networking (Solutions for Infrastructure). Our diverse product portfolio includes: Solutions for the Home - Highly-integrated and complete platform solutions for set-top boxes and broadband access. Solutions for the Hand - Platforms primarily for mobile devices that include low-power, high-performance and highly integrated wireless connectivity solutions, cellular SoCs and other technologies. Solutions for Infrastructure - Highly-integrated platforms for Infrastructure deployments that include Ethernet switches and PHYs, automotive Ethernet, communication processors and wireless infrastructure solutions, and Ethernet controllers. Net revenue for these reportable segments is presented below. All Other is comprised of income from our April 2009 agreement with Qualcomm Incorporated, or the Qualcomm Agreement (see detailed discussion in Overview section in Item 7. Management s Discussion and Analysis of Financial Condition and Results of Operations). Percentage of Net Revenue Net Revenue: $8.31 billion Net Revenue: $8.01 billion Net Revenue: $7.39 billion 2 Broadband Communications Reportable Segment (Solutions for the Home) Set-Top Boxes Global service providers are increasingly introducing new and enhanced technologies and services in set-top boxes, or STBs, including increased transcoding, digital video recording functionality, higher definition, increased networking capabilities, and more tuners to enable faster channel change and more simultaneous recordings. Service providers are also looking to deploy High Efficiency Video Coding, or HEVC, a video compression format that is a successor to the H.264/MPEG-4 format. HEVC enables Ultra HD services because it effectively doubles the capacity of existing networks to deploy new or existing content. With Ultra HD TV prices falling rapidly, content owners are increasingly exploring creating and transmitting their own Ultra HD content. We offer complete platform solutions for cable, satellite, IP and terrestrial STBs that enable service providers to deploy a broad array of features and services for consumers. More specifically, for STBs, our solutions include cable, satellite, IP and terrestrial set-top box SoC s, digital television adaptors and over-the-top platform solutions. Our family of set-top box solutions, across IP, Satellite and Cable, support the complete range of resolutions, from standard definition, to high definition, to most recently Ultra HD. We also provide MoCA and Powerline networking SoCs. Broadband Access Global service providers continue to deploy next generation broadband access technologies across multiple standards, including DSL, cable and fiber, to deliver more bandwidth and faster speeds to consumers. Over the coming years, we see global service providers moving toward DOCSIS 3.1 for cable modem technologies, G.Fast for DSL, and deploying more fiber-based solutions to increase speeds and bandwidth for customers. We offer complete platform solutions for DSL, cable and fiber for both central office deployments and consumer premise equipment (CPE). For CPE deployments, we see increased movement toward residential gateways, which are frequently powered by our platform solutions. For the central office, our solutions include cable modem termination systems for cable deployments, optical line termination for Fiber deployments, and DSLAM s for DSL deployments. Wireless Infrastructure Service providers are also increasingly looking to deploy femtocell and small cell solutions to add capacity and coverage to their cellular network topology. Femtocells are deployed primarily in residences to enhance cellular coverage in the home. Small cells are low-powered radio access nodes that operate in licensed and unlicensed spectrum with a range of 10 meters to 2 kilometers. Service providers are planning to deploy small cells primarily for data offloading to increase efficiency in use of spectrum. We offer complete 3G/4G platform solutions for femtocells and small and residential cells. Mobile and Wireless Reportable Segment (Solutions for the Hand) Wireless Connectivity Our wireless connectivity solutions include integrated and discrete Wi-Fi, Bluetooth and near field communication, or NFC, solutions. Devices incorporating our connectivity solutions include: smartphones; tablets; laptops, and related peripherals; wireless home routers and gateways; printers; handheld media devices; home gaming systems; smart TVs and connected STBs; and a range of wearable and connected devices, including watches and glasses, smoke alarms and thermostats. Wi-Fi Wireless local area networking, also known as Wi-Fi, allows devices on a local area network to communicate 3 wirelessly. It adds the convenience of mobility to the utility of high-speed data networks. Wi-Fi has been embedded into a wide range of devices including smartphones, tablets, home gateways and routers, personal computers, digital cameras, printers, gaming devices, STBs, and HDTVs. We offer a family of high performance, low power Wi-Fi chipsets that support all current standards, including a/b/g, n and ac ac, the latest generation of Wi-Fi technology, enables up to gigabit+ speeds and improved range while delivering data in a more power-efficient manner. We also support Wi-Fi Direct, WiFi Display and Miracast across our product portfolio, allowing direct communication between devices (or, peer-to-peer data transfers) without requiring an access point. Bluetooth The Bluetooth short-range wireless networking standard is a low power technology that enables direct connectivity between devices. We offer a complete family of Bluetooth silicon and software solutions for mobile phones, PCs, HDTVs, peripherals, gaming, wearables, the internet of things (IoT) and many other applications. Our family of Bluetooth solutions enables manufacturers to easily and cost-effectively add Bluetooth functionality to virtually any device. We continue to drive the evolution of Bluetooth with support of the Bluetooth Low Energy (BLE) standard, or Bluetooth Smart, an emerging standard for supporting low power applications such as health and fitness, medical devices, and wearable devices, including watches, glasses, wristbands, smoke alarms, pet monitoring solutions and many other implementations. Near Field Communications (NFC) NFC, an ultra short-range wireless standard that enables simple pairing between devices, has been adopted for contactless payment systems and can also be implemented to facilitate simple pairing between a variety of devices, including smartphones, tablets, TVs, remote controls, wireless mice, and Bluetooth headsets. We have developed a family of low-power NFC solutions that enable cost-effective deployments of NFC in consumer devices. Wireless Connectivity Combo Chips Our customers constantly demand connectivity solutions at a lower cost, with higher performance, longer battery life and a smaller footprint. We have created a family of connectivity combo chips that integrate multiple wireless technologies into a single chip. For example, we offer combo solutions that integrate a complete Bluetooth system (with BLE), a complete Wi-Fi system, NFC, and a high performance FM stereo radio receiver. Cellular SoCs We offer a broad portfolio of cellular SoC s that support 2G, 3G and 4G cellular standards. More specifically, we support GSM/GPRS, WCDMA, HSDPA, HSUPA, HSPA+, and LTE. Our cellular SoC s also incorporate additional functionality outside of the core cellular modem. For instance, we integrate an application processing subsystem, as well as provide dedicated support for graphics and video and an image processing subsystem. Our product offerings currently include single-core, dual-core and quad-core 3G SoC s and a dual-core LTE SoC. As part of our broader and complete cellular platform, we provide cellular RF and a family of power management devices that intelligently manage power consumption to improve battery life. Our complete cellular platform also includes our complete range of technologies, including Wi-Fi, Bluetooth, GPS, NFC, and connectivity combo chips described in more detail above. Other Technologies (incorporated primarily into handheld devices) Location (GPS) Location-based technologies in general, and Gl
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