Reportable Segments, Significant Customer and Geographical Information

3 Months Ended

Mar. 31, 2014

Segment Reporting [Abstract]

Business Enterprise Segments, Significant Customer and Geographical Information

Reportable Segments, Significant Customer and Geographical Information

Reportable Segments

Broadcom has three reportable segments consistent with our target markets. Our three reportable segments are: Broadband Communications (Home), Mobile and Wireless (Hand), and Infrastructure and Networking (Infrastructure). Our Chief Executive Officer, who is our chief operating decision maker, or CODM, regularly reviews financial information at the reportable segment level.

Our net revenue is generated principally from sales of integrated circuit products. While we derive some revenue from other sources, that revenue is not material as it represents less than 1% of our total net revenue. Such revenue is classified under product revenue for reporting purposes. We group our net revenue consistent with our three target markets which comprise our reportable segments, as discussed above.

With respect to the sales of integrated circuit products, we have approximately 550 products that are grouped into approximately 70 product lines. We have concluded that these products constitute a group of similar products within each reportable segment in each of the following respects:

• the integrated circuits marketed by each of our reportable segments are sold to one type of customer: manufacturers of wired and wireless communications equipment, which incorporate our integrated circuits into their electronic products;

• the integrated circuits sold by each of our reportable segments use the same standard CMOS manufacturing processes; and

• all of our integrated circuits are sold through a centralized sales force and common wholesale distributors.

We also report an “All Other” category, which included income from the Qualcomm Agreement in prior periods, since it was principally the result of corporate efforts, and also includes operating expenses that we do not allocate to our reportable segments as these expenses are not included in the segment operating performance measures evaluated by our CODM. Operating costs and expenses that are not allocated include stock-based compensation, amortization of purchased intangible assets, amortization of acquired inventory valuation step-up, impairment of goodwill and other long-lived assets, net settlement costs (gains), net restructuring costs, charitable contributions, non-recurring legal fees, change in contingent earnout liability, gain (loss) on sale of assets, employer payroll tax on certain stock option exercises, and other miscellaneous expenses related to corporate allocations that were either over or under the original projections at the beginning of the year. We include stock-based compensation and acquisition-related items in the “All Other” category as decisions regarding equity compensation are made at the corporate level and our CODM reviews reportable segment performance exclusive of these charges. Our CODM does not review information regarding total assets, interest income or income taxes on a segment basis. The accounting policies for segment reporting are the same as for Broadcom as a whole.

The following tables present details of our reportable segments and the “All Other” category:

	Reportable Segments
	Broadband Communications		Mobile and Wireless			Infrastructure and Networking		All Other			Consolidated
	(In millions)
Three Months Ended March 31, 2014
Net revenue	$	559	$	846		$	579	$	—		$	1,984
Operating income (loss)	136		(32		)	204		(138		)	170
Three Months Ended March 31, 2013
Net revenue	$	537	$	995		$	430	$	43		$	2,005
Operating income (loss)	124		123			98		(147		)	198

Included In All Other Category:	Three Months Ended
	March 31,
	2014			2013
	(In millions)
Net revenue	$	—		$	43
Stock-based compensation	$	120		$	140
Amortization of purchased intangible assets	59			58
Amortization of acquired inventory valuation step-up	—			1
Impairments of long-lived assets	25			10
Settlement costs (gains)	2			—
Restructuring costs, net	5			—
Other gains, net	(52		)	—
Employer payroll tax on certain stock option exercises	1			2
Miscellaneous corporate allocation variances	(22		)	(21		)
Total other operating costs and expenses	$	138		$	190
Total operating loss for the “All Other” category	$	(138	)	$	(147	)

Significant Customer and Geographical Information

Sales to our significant customers, including sales to their manufacturing subcontractors, as a percentage of net revenue

were as follows:

	Three Months Ended
	March 31,
	2014		2013
Two largest customers	30.2	%	36.8	%
Five largest customers as a group	45.5		51.7

The geographical distribution of our shipments, as a percentage of product revenue, was as follows:

	Three Months Ended
	March 31,
	2014		2013
China (exclusive of Hong Kong)	22.6	%	21.6	%
Hong Kong	27.4		24.7
Singapore, Taiwan, Thailand and Japan	34.9		40.0
United States	4.3		3.5
Europe	2.1		1.7
Other	8.7		8.5
	100.0	%	100.0	%