Broadcom Corporation Reports Record First Quarter Revenue and Profit.Business Editors IRVINE, Calif.--(BUSINESS WIRE)--April 18, 2000 Broadcom Corporation (Nasdaq: BRCM BRCM Broadcom Corporation (stock abbreviation, AMEX) BRCM Master Chief Boilermaker (USN rating) ) today reported record financial results for the quarter ended March 31, 2000. Revenue for the first quarter of 2000 was a record $191.3 million, an increase of 91% over the $100.0 million reported in the first quarter of 1999. Net income, after one-time acquisition-related expenses, was a record $41.8 million, compared with net income of $15.7 million in the first quarter of 1999, an increase of 167%. Diluted earnings per share diluted earnings per share An earnings measure calculated by dividing net income less preferred stock dividends for a period by the average number of shares of common stock that would be outstanding if all convertible securities were converted into shares of for the first quarter of 2000 were $.18, before one-time charges for acquisition expenses of $2.9 million pre-tax, or $.01 per share. Including these one-time charges, diluted earnings per share for the quarter were $.17, based on 250.7 million weighted average shares outstanding. This compares with diluted earnings of $.07 per share on 224.3 million weighted average shares outstanding for the same period in 1999. All numbers shown reflect Broadcom's 2-for-1 stock split effective February 11, 2000. During the quarter Broadcom completed the acquisitions of BlueSteel Networks, Inc., Digital Furnace Corporation and Stellar Semiconductor, Inc. Each acquisition was accounted for as a pooling of interests Pooling of Interests An accounting method, used in mergers and acquisitions, where the balance sheet items of the two companies are simply added together. Notes: The opposite of pooling of interests is the purchase acquisition method. , and the financial results of the three companies are consolidated with Broadcom's for this reporting period and all prior reporting periods. "We completed the first quarter of our fiscal year with stronger than expected demand for our existing networking, cable modem cable modem Modem used to convert analog data signals to digital form and vise versa, for transmission or receipt over cable television lines, especially for connecting to the Internet. and digital set-top box The cable TV box that sits on "top" of the TV "set," although it is often located several feet away in an equipment rack. The set-top box descrambles the premium channels and provides a tuner for the higher cable numbers that very old TVs did not support. products, while seeing momentum build for our products in emerging markets, particularly those for home networking and VDSL See DSL. VDSL - Very high bit-rate Digital Subscriber Line (Very High-Speed Digital Subscriber Line See DSL. (communications, protocol) Digital Subscriber Line - (DSL, or Digital Subscriber Loop, xDSL - see below) A family of digital telecommunications protocols designed to allow high speed data communication over the existing copper telephone lines between end-users and )," said Dr. Henry T. Nicholas III Henry T. Nicholas III is the former Chairman and co-founder of Broadcom. Recognized as one of Forbes Magazine's Richest People with an estimated net worth of 2.3bn in 2007,[1] Nicholas has given lavishly to charities in Orange County,[2] where he lives. , Broadcom's President and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. . "The quarter demonstrated that we are solidly on strategic course, realizing very healthy revenues and profits from our suite of core products, while aggressively preparing for and pursuing new areas of growth." "Our networking business experienced a sharp acceleration of shipments of its Gigabit Ethernet-over-copper chip, a clear sign of pent-up demand in business settings to upgrade existing networks to deliver data at gigabit speeds," Nicholas said. "Additionally, by the end of the quarter we had shipped more than 100 million Fast Ethernet An earlier name for 100Mbps Ethernet. See 100Base-T. (networking) Fast Ethernet - A version of Ethernet developed in the 1990s(?) which can carry 100 Mbps compared with standard Ethernet's 10 Mbps. It requires upgraded network cards and hubs. ports, making Broadcom the most proven supplier to all leading networking system vendors worldwide." "During the quarter, we made three key acquisitions, providing us with expanded capabilities in our core networking, cable modem and set-top box businesses," Nicholas said. "In January, we announced the acquisition of BlueSteel Networks, providing us with Gigabit-speed network encryption The reversible transformation of data from the original (the plaintext) to a difficult-to-interpret format (the ciphertext) as a mechanism for protecting its confidentiality, integrity and sometimes its authenticity. Encryption uses an encryption algorithm and one or more encryption keys. technology designed to help our customers deliver secure e-commerce and virtual private networks (VPNs). In late February, we completed our acquisition of Digital Furnace, a developer of communications algorithms and software that significantly increase the upstream capacity of broadband cable for integrated voice, video and data applications. Our acquisition in early March of Stellar Semiconductor, a leading developer of 3D graphics technology, expanded our portfolio of graphics and digital video technologies and enhanced our ability to provide cost-effective, high-performance system solutions for set-top boxes, digital TVs and Internet appliances Also called "information appliance," "smart appliance," and "Web appliance," it is a device specialized for accessing the Web and/or e-mail. Designed for ease of use, it plugs into a telephone jack or LAN connection for Internet hookup. ." Nicholas added, "Broadcom has made a total of eight strategic acquisitions since early 1999. We are extremely pleased at the high level of success we've had in integrating employees, technologies and products within Broadcom, and the pace at which acquisition-related products are entering the marketplace." During the quarter, Broadcom announced an agreement with Next Level Communications Inc. to jointly develop low-cost VDSL set-top box technology. The goal of this cooperative effort is to provide an industry-leading 52 megabit per second A megabit per second (abbreviated as Mbit/s, Mbps, or mbps) is a unit of data transfer rate equal to 1,000,000 bits per second. Because there are 8 bits in a byte, a transfer speed of 8 megabits per second (8 Mbps) is equivalent to 1,000,000 bytes (Mbps) solution to deliver broadband voice, video and data services into and throughout the home or small office using existing phones lines. Additionally, Broadcom reached a major milestone by shipping its 250,000th VDSL transceiver (TRANSmitter reCEIVER) An electronic device or circuit that transmits and receives analog or digital signals. It comes in many forms; for example, a transponder on a satellite, a network adapter in the computer or the circuits in a cellphone. chip. Customers including US West are deploying VDSL services based on products using this chipset A group of chips designed to work as a unit to perform a function. For example, a modem chipset contains all the primary circuits for transmitting and receiving. A PC chipset provides the electronic interfaces between all subsystems (see PC chipset for illustration). to give consumers advanced integrated broadband services See broadband and broadband service provider. . This quarter Cable Television Laboratories (CableLabs(R)) completed its work to develop a set of certification tests for the inclusion into cable modems of a home networking interface based upon the established HPNA See HomePNA. 2.0 standard. CableLabs also completed the certification of the first cable modem providing the HPNA 2.0 home networking interface. This interface was implemented using Broadcom silicon. This important event marked the cable industry's commitment to HPNA 2.0 as one of the principal means of distributing broadband multimedia content throughout the home and small business. Broadcom's unaudited pro forma As a matter of form or for the sake of form. Used to describe accounting, financial, and other statements or conclusions based upon assumed or anticipated facts. The phrase pro forma combined financial statements Combined financial statement A financial statement that merges the assets, liabilities, net worth, and operating figures of two or more affiliated companies. A combined statement is distinguished from a consolidated financial statement of a company and subsidiaries, which must including the effects of the BlueSteel, Digital Furnace and Stellar Semiconductor acquisitions were reported on a Form 8-K Form 8-K The form required by the SEC when a publicly held company incurs any event that might affect its financial situation or the share value of its stock. Form 8-K See 8-K. filed with the Securities and Exchange Commission on March 24, 2000. About Broadcom Broadcom Corporation is the leading provider of highly integrated silicon solutions that enable broadband digital transmission of voice, video and data to and throughout the home and within the business enterprise. Using proprietary technologies and advanced design methodologies, the company designs, develops and supplies integrated circuits Integrated circuits Miniature electronic circuits produced within and upon a single semiconductor crystal, usually silicon. Integrated circuits range in complexity from simple logic circuits and amplifiers, about 1/20 in. (1. for a number of the most significant broadband communications markets, including the markets for cable set-top boxes, cable modems, high-speed office networks, home networking, Voice over Internet Protocol See Internet and TCP/IP. (networking) Internet Protocol - (IP) The network layer for the TCP/IP protocol suite widely used on Ethernet networks, defined in STD 5, RFC 791. IP is a connectionless, best-effort packet switching protocol. (VoIP), residential broadband gateways, direct broadcast satellite and terrestrial digital broadcast, and digital subscriber line (xDSL). Broadcom is headquartered in Irvine, Calif., and may be contacted at 949-450-8700 or at www.broadcom.com. Safe Harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. Statement under the Private Securities Litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called litigation. Reform Act of 1995: This release may contain forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. based on our current expectations, estimates and projections about our industry, management's beliefs, and certain assumptions made by us. Words such as "anticipates," "expects," "intends," "plans," "believes," "seeks," "estimates," "may," "will" and variations of these words or similar expressions are intended to identify forward-looking statements. In addition, any statements that refer to expectations, projections or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. These statements are not guarantees of future performance and are subject to certain 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. Important factors that may cause such a difference for Broadcom include, but are not limited to, the volume of our product sales and pricing concessions on volume sales; the timing, rescheduling or cancellation of significant customer orders; the loss of a key customer; the qualification, availability and pricing of competing products and technologies and the resulting effects on sales and pricing of our products; silicon wafer pricing and the availability of foundry and assembly capacity and raw materials; our ability to specify, develop, complete, introduce, market and transition to volume production new products and technologies in a timely manner; the timing of customer-industry qualification and certification of our products and the risks of non-qualification or non-certification; the rate at which our present and future customers and end-users adopt Broadcom's technologies and products in the high-speed office network, cable set-top box, cable modem, home networking, direct broadcast satellite and terrestrial digital broadcast, and digital subscriber line markets; delays in the adoption and acceptance of industry standards in the foregoing markets; the effects of new and emerging technologies; the risks inherent in our acquisitions of technologies and businesses, including the timing and successful completion of technology and product development through volume production, integration issues, costs and unanticipated expenditures, changing relationships with customers, suppliers and strategic partners, potential contractual, intellectual property or employment issues, accounting treatment and charges, and the risks that the acquisition cannot be completed successfully or that anticipated benefits are not realized; the effectiveness of our product cost reduction efforts; intellectual property disputes and customer indemnification claims; fluctuations in our manufacturing yields and other problems or delays in the fabrication fabrication (fab´rikā´sh  n),n the construction or making of a restoration. , assembly, testing or delivery of our products; the risks of producing products with new suppliers and at new fabrication and assembly facilities; the risks and uncertainties associated with our international operations Internal Operations (I.O., IO or I/O) is a fictional American Intelligence Agency in Wildstorm comics. It was originally called International Operations. I.O. first appeared in WildC.A.T.S. volume 1 #1 (August, 1992) and was created by Brandon Choi and Jim Lee. ; ; problems or delays that we may face in shifting our products to smaller geometry process technologies and in achieving higher levels of design integration; our ability to retain and hire key executives, technical personnel and other employees in the numbers, with the capabilities, and at the compensation levels needed to implement our business and product plans; changes in our product or customer mix; the quality of our products and any remediation costs; the effects of natural disasters and other events beyond our control; the level of orders received that can be shipped in a fiscal quarter; potential business disruptions, claims, expenses and other difficulties resulting from "Year 2000" problems in computer-based systems Computer-based systems Complex systems in which computers play a major role. While complex physical systems and sophisticated software systems can help people to lead healthier and more enjoyable lives, reliance on these systems can also result in loss of used by us, our suppliers or our customers; general economic conditions and specific conditions in the markets we address; and other factors. Our Annual Report on Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. , forthcoming Quarterly Report on Form 10-Q Form 10-Q See 10-Q. , recent Current Reports on Form 8-K, and other Securities and Exchange Commission filings discuss some of the important risk factors that may affect our business, results of operations and financial condition. We undertake no obligation to revise or update publicly any forward-looking statements for any reason. Broadcom(R) and the pulse logo are trademarks of Broadcom Corporation and/or its subsidiaries in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. and certain other countries. CableLabs(R) is a trademark of Cable Television Laboratories, Inc. All other trademarks mentioned are the property of their respective owners.
BROADCOM CORPORATION
Unaudited Consolidated Statements of Operations
(In thousands, except per share amounts)
Three Months Ended
March 31,
2000 1999
Revenue $ 191,347 $ 99,980
Cost of revenue 78,992 40,815
Gross profit 112,355 59,165
Operating expense:
Research and development 42,285 23,420
Selling, general and administrative 18,333 13,462
Merger related costs 2,901 --
Income from operations 48,836 22,283
Interest and other income, net 3,418 1,721
Income before income taxes 52,254 24,004
Provision for income taxes 10,451 8,335
Net income $ 41,803 $ 15,669
Basic earnings per share $ .20 $ .08
Diluted earnings per share $ .17 $ .07
Weighted average shares (basic) 209,389 193,044
Weighted average shares (diluted) 250,661 224,323
Unaudited Condensed Consolidated Balance Sheets
(In thousands)
March 31, December 31,
2000 1999
ASSETS
Current assets:
Cash and cash equivalents $ 235,214 $ 179,447
Short-term investments 90,902 86,215
Accounts receivable, net 91,516 91,457
Inventory 30,991 19,177
Deferred taxes 8,380 8,380
Other current assets 22,037 12,440
Total current assets 479,040 397,116
Property and equipment, net 51,074 48,288
Long-term investments -- 9,351
Deferred taxes 207,433 134,277
Other assets 11,490 7,695
Total assets $ 749,037 $ 596,727
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Trade accounts payable $ 55,856 $ 45,728
Accrued liabilities 35,113 41,396
Current portion of long-term debt 471 1,578
Total current liabilities 91,440 88,702
Long-term debt, less current portion 395 548
Shareholders' equity 657,202 507,477
Total liabilities and
shareholders' equity $ 749,037 $ 596,727
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