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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): March 24, 2000
BROADCOM CORPORATION
(Exact Name of Registrant as Specified in Charter)
California 000-23993 33-0480482
- ------------------ -------------------------- -------------------------
(State or Other (Commission File Number) (IRS Employer
Jurisdiction of Identification No.)
Incorporation)
16215 Alton Parkway, Irvine, California 92618
---------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (949) 450-8700
Not Applicable
--------------
(Former Name or Former Address, if Changed since Last Report)
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ITEM 5. OTHER EVENTS
On March 1, 2000 Broadcom Corporation ("Broadcom") completed the
acquisitions of Digital Furnace Corporation ("Digital Furnace"), BlueSteel
Networks, Inc. ("BlueSteel") and Stellar Semiconductor, Inc. ("Stellar").
Although individually and in aggregate the acquisitions were not significant to
Broadcom as defined in Rule 1-02(w) of Regulation S-X, Broadcom is providing pro
forma combined financial information giving effect to the acquisitions.
The following unaudited condensed pro forma combined financial
statements (the "Pro Forma Statements") are based on the consolidated financial
statements of Broadcom and its subsidiaries (included on a Current Report on
Form 8-K/A filed November 24, 1999 and the Annual Report on Form 10-K to be
filed on or about March 30, 2000) as adjusted to give effect to the business
combinations between Broadcom and Digital Furnace, between Broadcom and
BlueSteel and between Broadcom and Stellar, accounted for in each case using the
pooling-of-interests method of accounting. Additionally, the Pro Forma
Statements reflect adjustments made to (i) conform the accounting policies of
the combining companies and (ii) eliminate intercompany transactions. No
adjustments have been made to give effect to expenses related to the business
combinations, which expenses Broadcom expects to record in the quarter ending
March 31, 2000. The Pro Forma Statements give effect to the business
combinations as if they had occurred prior to the beginning of each period
presented.
All share numbers and per share amounts included in the Pro Forma
Statements have been retroactively adjusted to reflect Broadcom's 2-for-1 stock
splits, each in the form of a 100% stock dividend, effective February 11, 2000
and February 17, 1999, respectively, as well as an earlier 3-for-2 stock split
effective March 9, 1998.
The Pro Forma Statements are unaudited; however, they contain all normal
recurring accruals and adjustments that, in the opinion of management, are
necessary to present fairly the combined financial position and results of
operations of Broadcom and subsidiaries and Digital Furnace, BlueSteel and
Stellar for each of the eight quarters through December 31, 1999, and the
combined results of operations for the years ended December 31, 1999, 1998 and
1997. It should be understood that accounting measurements at interim dates
inherently involve greater reliance on estimates than at year-end. The Pro Forma
Statements are presented for informational purposes only, do not purport to
constitute complete financial statements, and are not necessarily indicative of
future operating results. The Pro Forma Statements also do not include footnotes
and certain financial presentations normally required for complete financial
statements under generally accepted accounting principles. Therefore, the Pro
Forma Statements should be read in conjunction with Broadcom's audited financial
statements and notes thereto for the years ended December 31, 1998 and December
31, 1999, and the related Management's Discussion and Analysis of Financial
Condition and Results of Operations, included on the Current Report on Form
8-K/A filed November 24, 1999 and the Annual Report on Form 10-K to be filed on
or about March 30, 2000, respectively.
The information contained in this Form 8-K is not a complete description
of our business or the risks associated with an investment in our common stock.
We urge you to carefully review and consider the various disclosures, including
but not limited to the section entitled "Risk Factors," made by us in our
Current Report on Form 8-K/A filed November 24, 1999 and in our other reports
filed with the SEC, including our Annual Report on Form 10-K for the year ended
December 31, 1999, to be filed on or about March 30, 2000, and our subsequent
reports on
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Forms 10-Q and 8-K, that discuss our business in greater detail and advise
interested parties of certain risks, uncertainties and other factors that may
affect our business, results of operations or financial condition.
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Unaudited Condensed Pro Forma Combined Statements of Operations
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
Three Months Ended
--------------------------------------------------
Mar. 31, June 30, Sept. 30, Dec. 31,
1999 1999 1999 1999
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Revenue $ 99,980 $119,027 $138,395 $160,887
Cost of revenue 40,815 47,729 55,518 65,775
-------- -------- -------- --------
Gross profit 59,165 71,298 82,877 95,112
Operating expense:
Research and development 23,420 28,288 29,879 33,441
Selling, general and administrative 13,462 14,536 14,637 17,654
Merger related costs -- 11,122 4,088 --
Litigation settlement costs -- 17,036 -- --
-------- -------- -------- --------
Income from operations 22,283 316 34,273 44,017
Interest and other income, net 1,721 2,012 2,162 2,740
-------- -------- -------- --------
Income before income taxes 24,004 2,328 36,435 46,757
Provision for income taxes 8,335 722 10,894 12,167
-------- -------- -------- --------
Net income $ 15,669 $ 1,606 $ 25,541 $ 34,590
======== ======== ======== ========
Basic earnings per share $ .08 $ .01 $ .13 $ .17
======== ======== ======== ========
Diluted earnings per share $ .07 $ .01 $ .11 $ .14
======== ======== ======== ========
Weighted average shares (basic) 193,044 199,520 202,217 205,952
======== ======== ======== ========
Weighted average shares (diluted) 224,323 232,083 236,689 243,284
======== ======== ======== ========
</TABLE>
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Unaudited Condensed Pro Forma Combined Statements of Operations
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
Three Months Ended
--------------------------------------------------
Mar. 31, June 30, Sept. 30, Dec. 31,
1998 1998 1998 1998
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Revenue $ 37,190 $ 49,244 $ 55,474 $ 74,618
Cost of revenue 14,083 21,427 24,898 30,995
-------- -------- -------- --------
Gross profit 23,107 27,817 30,576 43,623
Operating expense:
Research and development 9,239 11,935 14,910 18,870
Selling, general and administrative 6,036 7,162 8,528 12,248
-------- -------- -------- --------
Income from operations 7,832 8,720 7,138 12,505
Interest and other income, net 323 1,312 1,266 1,278
-------- -------- -------- --------
Income before income taxes 8,155 10,032 8,404 13,783
Provision for income taxes 3,627 4,545 3,869 6,623
-------- -------- -------- --------
Net income $ 4,528 $ 5,487 $ 4,535 $ 7,160
======== ======== ======== ========
Basic earnings per share $ .04 $ .03 $ .02 $ .04
======== ======== ======== ========
Diluted earnings per share $ .03 $ .03 $ .02 $ .03
======== ======== ======== ========
Weighted average shares (basic) 127,259 179,403 182,503 188,384
======== ======== ======== ========
Weighted average shares (diluted) 180,788 209,566 212,351 218,022
======== ======== ======== ========
</TABLE>
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Unaudited Condensed Pro Forma Combined Statements of Operations
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
Years Ended December 31,
-------------------------------------
1999 1998 1997
-------- -------- ---------
<S> <C> <C> <C>
Revenue $518,289 $216,526 $ 42,341
Cost of revenue 209,837 91,403 15,563
-------- -------- ---------
Gross profit 308,452 125,123 26,778
Operating expense:
Research and development 115,028 54,954 22,822
Selling, general and administrative 60,289 33,974 11,886
Merger related costs 15,210 -- --
Litigation settlement costs 17,036 -- --
-------- -------- ---------
Income (loss) from operations 100,889 36,195 (7,930)
Interest and other income, net 8,635 4,179 107
-------- -------- ---------
Income (loss) before income taxes 109,524 40,374 (7,823)
Provision (benefit) for income taxes 32,118 18,664 (852)
-------- -------- ---------
Net income (loss) $ 77,406 $ 21,710 $ (6,971)
======== ======== =========
Basic earnings (loss) per share $ .39 $ .13 $ (.06)
======== ======== =========
Diluted earnings (loss) per share $ .33 $ .11 $ (.06)
======== ======== =========
Weighted average shares (basic) 200,183 169,387 116,508
======== ======== =========
Weighted average shares (diluted) 234,095 205,182 116,508
======== ======== =========
</TABLE>
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Unaudited Condensed Pro Forma Combined Balance Sheets
(In thousands)
<TABLE>
<CAPTION>
Mar. 31, June 30, Sept. 30, Dec. 31,
1999 1999 1999 1999
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents $ 92,641 $ 109,032 $ 153,794 $ 179,447
Short-term investments 50,389 64,286 78,348 86,215
Accounts receivable, net 46,372 50,654 64,460 91,457
Inventory 15,326 7,393 12,257 19,177
Deferred taxes 6,184 6,546 7,183 8,380
Prepaid expenses and other current assets 8,155 11,437 13,222 12,440
--------- --------- --------- ---------
Total current assets 219,067 249,348 329,264 397,116
Property and equipment, net 37,050 39,122 43,963 48,288
Long-term investments 42,124 28,106 20,072 9,351
Deferred taxes 9,952 33,044 65,882 134,277
Other assets 7,523 5,456 8,811 7,695
--------- --------- --------- ---------
Total assets $ 315,716 $ 355,076 $ 467,992 $ 596,727
========= ========= ========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Trade accounts payable $ 31,405 $ 25,580 $ 55,553 $ 45,728
Wages and related benefits 7,031 9,528 12,056 15,273
Accrued liabilities 9,889 19,119 23,384 26,123
Current portion of long-term debt 5,244 3,514 915 1,578
--------- --------- --------- ---------
Total current liabilities 53,569 57,741 91,908 88,702
Long-term debt, less current portion 4,149 985 865 548
Shareholders' equity:
Common stock 239,480 276,680 334,038 434,261
Notes receivable from employees (2,541) (2,243) (2,073) (1,675)
Deferred compensation (7,914) (7,654) (7,443) (10,396)
Retained earnings 28,973 29,567 50,697 85,287
--------- --------- --------- ---------
Total shareholders' equity 257,998 296,350 375,219 507,477
--------- --------- --------- ---------
Total liabilities and shareholders' equity $ 315,716 $ 355,076 $ 467,992 $ 596,727
========= ========= ========= =========
</TABLE>
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Unaudited Condensed Pro Forma Combined Balance Sheets
(In thousands)
<TABLE>
<CAPTION>
Mar. 31, June 30, Sept. 30, Dec. 31,
1998 1998 1998 1998
--------- --------- ---------- ---------
<S> <C> <C> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents $ 39,604 $ 87,411 $ 52,172 $ 74,670
Short-term investments 796 3,729 16,684 34,344
Accounts receivable, net 17,504 27,870 26,023 42,279
Inventory 7,593 11,478 5,884 7,325
Deferred taxes 1,226 1,093 1,093 6,184
Prepaid expenses and other current assets 1,252 2,155 5,993 10,030
-------- --------- --------- ---------
Total current assets 67,975 133,736 107,849 174,832
Property and equipment, net 15,377 19,181 27,770 32,128
Long-term investments -- 25,094 43,152 42,826
Deferred taxes 1,319 1,904 2,720 9,338
Other assets 2,643 2,058 3,306 6,814
-------- --------- --------- ---------
Total assets $ 87,314 $ 181,973 $ 184,797 $ 265,938
======== ========= ========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Trade accounts payable $ 19,486 $ 16,705 $ 15,362 $ 22,410
Wages and related benefits 1,484 2,060 3,159 3,201
Accrued liabilities 7,018 3,506 7,169 8,217
Current portion of long-term debt 2,629 3,648 7,105 7,252
-------- --------- --------- ---------
Total current liabilities 30,617 25,919 32,795 41,080
Long-term debt, less current portion 2,240 1,031 4,931 4,100
Shareholders' equity:
Common stock 65,748 159,905 147,690 217,085
Notes receivable from employees (3,513) (3,571) (3,123) (2,743)
Deferred compensation (7,074) (5,956) (5,664) (7,900)
Retained earnings (704) 4,645 8,168 14,316
-------- --------- --------- ---------
Total shareholders' equity 54,457 155,023 147,071 220,758
-------- --------- --------- ---------
Total liabilities and shareholders' equity $ 87,314 $ 181,973 $ 184,797 $ 265,938
======== ========= ========= =========
</TABLE>
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
BROADCOM CORPORATION,
a California corporation
March 24, 2000 By: /s/ WILLIAM J. RUEHLE
-------------------------------
William J. Ruehle
Vice President and
Chief Financial Officer
