Three Months Ended

Year Ended

December 31,

September 30,

December 31,

December 31,

2013

2013

2012

2013

2012

Cost of product revenue

$

6

$

6

$

6

$

25

$

27

Research and development

83

86

90

363

368

Selling, general and administrative

28

33

32

130

148

BROADCOM CORPORATION

Unaudited Condensed Consolidated Statements of Cash Flows

(In millions)

Three Months Ended

Year Ended

December 31,

September 30,

December 31,

December 31,

2013

2013

2012

2013

2012

Operating activities

Net income

$

168

$

316

$

251

$

424

$

719

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization

51

44

39

173

134

Stock-based compensation expense

117

125

128

518

543

Acquisition-related items:

Amortization of purchased intangible assets

56

56

81

228

311

Impairments of long-lived assets

—

—

5

511

90

Non-cash settlement gains

—

—

(7)

(2)

(7)

Loss (gain) on strategic investments and other

—

(1)

1

—

(11)

Changes in operating assets and liabilities, net of acquisitions:

Accounts receivable

57

(91)

124

(55)

(16)

Inventory

16

69

30

2

(5)

Prepaid expenses and other assets

(28)

30

—

(25)

(8)

Accounts payable

44

(112)

(53)

24

72

Deferred revenue and income

(4)

(2)

6

(15)

45

Accrued settlement costs

3

3

3

(35)

54

Other accrued and long-term liabilities

(89)

235

(15)

37

10

Net cash provided by operating activities

391

672

593

1,785

1,931

Investing activities

Net purchases of property and equipment

(56)

(64)

(55)

(228)

(244)

Net cash paid for acquired companies

(142)

—

—

(142)

(3,582)

Sales (purchases) of strategic investments

(15)

—

14

(15)

27

Purchases of marketable securities

(468)

(678)

(697)

(2,682)

(2,551)

Proceeds from sales and maturities of marketable securities

575

391

362

2,071

1,554

Net cash used in investing activities

(106)

(351)

(376)

(996)

(4,796)

Financing activities

Issuance of long-term debt, net

—

—

—

—

492

Payments of long-term debt

(300)

—

—

(300)

—

Repurchases of Class A common stock

(2)

(378)

(32)

(597)

(33)

Dividends paid

(64)

(63)

(57)

(254)

(224)

Payment of assumed contingent consideration and debt

—

—

—

—

(57)

Proceeds from issuance of common stock

240

25

102

532

311

Minimum tax withholding paid on behalf of employees for restricted stock units

(26)

(26)

(29)

(130)

(153)

Net cash provided by (used in) financing activities

(152)

(442)

(16)

(749)

336

Increase (decrease) in cash and cash equivalents

133

(121)

201

40

(2,529)

Cash and cash equivalents at beginning of period

1,524

1,645

1,416

1,617

4,146

Cash and cash equivalents at end of period

$

1,657

$

1,524

$

1,617

$

1,657

$

1,617

BROADCOM CORPORATION

Unaudited Condensed Consolidated Balance Sheets

(In millions)

December 31,

2013

December 31,

2012

ASSETS

Current assets:

Cash and cash equivalents

$

1,657

$

1,617

Short-term marketable securities

775

757

Accounts receivable, net

795

740

Inventory

525

527

Prepaid expenses and other current assets

163

140

Total current assets

3,915

3,781

Property and equipment, net

593

485

Long-term marketable securities

1,939

1,348

Goodwill

3,793

3,726

Purchased intangible assets, net

1,144

1,786

Other assets

111

82

Total assets

$

11,495

$

11,208

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:

Current portion of long-term debt

$

—

$

300

Accounts payable

585

549

Wages and related benefits

243

241

Deferred revenue and income

21

22

Accrued liabilities

647

570

Total current liabilities

1,496

1,682

Long-term debt

1,394

1,393

Other long-term liabilities

234

294

Commitments and contingencies

Shareholders' equity

8,371

7,839

Total liabilities and shareholders' equity

$

11,495

$

11,208

UNAUDITED SUPPLEMENTAL FINANCIAL INFORMATION

(In millions)

December 31,

2013

September 30,

2013

December 31,

2012

Cash and cash equivalents

$

1,657

$

1,524

$

1,617

Short-term marketable securities

775

880

757

Long-term marketable securities

1,939

1,940

1,348

Total cash, cash equivalents and marketable securities

$

4,371

$

4,344

$

3,722

Increase from prior period end

$

27

Increase from prior year end

$

649

BROADCOM CORPORATION

Unaudited Schedule of Selected GAAP to Non-GAAP Adjustments

(In millions)

Three Months Ended

Year Ended

December 31,

September 30,

December 31,

December 31,

2013

2013

2012

2013

2012

Product revenue

$

2,064

$

2,146

$

2,037

$

8,219

$

7,820

GAAP cost of product revenue

1,026

1,044

1,025

4,088

4,027

GAAP product gross profit

$

1,038

$

1,102

$

1,012

$

4,131

$

3,793

GAAP product gross margin

50.3

%

51.4

%

49.7

%

50.3

%

48.5

%

GAAP cost of product revenue

$

1,026

$

1,044

$

1,025

$

4,088

$

4,027

Adjustments:

Stock-based compensation and related payroll taxes

(6)

(6)

(6)

(25)

(27)

Amortization of purchased intangible assets and step-up of acquired inventory

(42)

(42)

(50)

(172)

(270)

Non-GAAP cost of product revenue

$

978

$

996

$

969

$

3,891

$

3,730

Product revenue

$

2,064

$

2,146

$

2,037

$

8,219

$

7,820

Non-GAAP cost of product revenue

978

996

969

3,891

3,730

Non-GAAP product gross profit

$

1,086

$

1,150

$

1,068

$

4,328

$

4,090

Non-GAAP product gross margin

52.6

%

53.6

%

52.4

%

52.7

%

52.3

%

GAAP research and development and selling, general and administrative expense

$

815

$

790

$

762

$

3,192

$

3,014

Adjustments:

Stock-based compensation and related payroll taxes

(113)

(120)

(124)

(499)

(526)

Non-GAAP research and development and selling, general and administrative expense

$

702

$

670

$

638

$

2,693

$

2,488

BROADCOM CORPORATION

Unaudited Schedule of Selected GAAP to Non-GAAP Adjustments

(In millions)

Three Months Ended

Year Ended

December 31,

September 30,

December 31,

December 31,

2013

2013

2012

2013

2012

GAAP net income

$

168

$

316

$

251

$

424

$

719

Adjustments:

Stock-based compensation and related payroll taxes

119

126

130

524

553

Amortization of purchased intangible assets and step-up of acquired inventory

56

56

81

229

383

Impairment of long-lived assets

—

—

5

511

90

Settlement costs (gains)

6

(75)

(7)

(69)

79

Charitable contributions

—

25

—

25

—

Restructuring costs

17

12

1

29

7

Other income, net

—

—

—

(1)

(9)

Certain income tax expense (benefits)

—

—

1

(10)

(62)

Total GAAP to Non-GAAP adjustments

198

144

211

1,238

1,041

Non-GAAP net income

$

366

$

460

$

462

$

1,662

$

1,760

Shares used in calculation - diluted (GAAP)

581

578

581

584

576

Non-GAAP adjustment *

25

27

24

28

26

Shares used in calculation - diluted (Non-GAAP)

606

605

605

612

602

GAAP diluted net income per share

$

0.29

$

0.55

$

0.43

$

0.73

$

1.25

Non-GAAP diluted net income per share

$

0.60

$

0.76

$

0.76

$

2.72

$

2.92

*Represents 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.