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EXHIBIT 99.1
NEWS RELEASE
INVESTOR RELATIONS CONTACT: FINANCIAL ANALYST CONTACT:
Esteban R. Torres William J. Ruehle
949-450-8700 949-450-8700
[email protected] [email protected]
MEDIA CONTACTS:
Bill Blanning or Eileen Algaze
Corporate Communications Dept.
949-450-8700
[email protected]
[email protected]
Broadcom Corporation Reports Record Second Quarter
Revenue and Profit
IRVINE, Calif. - July 18, 2000 - Broadcom Corporation (Nasdaq: BRCM) today
reported record financial results for the quarter ended June 30, 2000.
Revenue for the second quarter of 2000 was a record $245.2 million, an increase
of 105% over the $119.5 million reported in the second quarter of 1999. Net
income, before one-time charges for acquisition-related expenses of $1.8 million
pre-tax, was a record $57.4 million, or $.23 per share (diluted). This compares
with net income, before one-time charges for acquisition-related expenses and
settlement costs, of $20.1 million, or $.09 per share (diluted), for the same
quarter in 1999. Diluted earnings per share for the quarter were based on 253.9
million weighted average shares outstanding, compared to 233.4 million weighted
average shares outstanding in the second quarter of 1999.
Including the one-time charges, net income was a record $55.9 million, or $.22
per share (diluted), in the second quarter of 2000. This compares with net
income after one-time charges of $0.2 million, or less than $.01 per share
(diluted), in the same quarter in 1999.
All numbers shown reflect Broadcom's 2-for-1 stock split effective February 11,
2000.
During the quarter, Broadcom announced and completed the acquisition of Pivotal
Technologies Corporation, which is being accounted for as a pooling of interests
and is consolidated within the financial results for this reporting period and
all prior reporting periods. In addition, Broadcom announced the acquisition of
Innovent Systems, Inc., which is expected to close in the third fiscal quarter
and will be recorded using the purchase method of accounting.
A significant milestone was reached on June 30 with Broadcom's inclusion in the
S&P 500 Index. "This is a recognition both of our ongoing business philosophy
which emphasizes profits and revenue growth, and of the solid financial results
that we have historically delivered," said Dr. Henry T. Nicholas III, Broadcom's
President and CEO.
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Commenting on the quarter's results, Nicholas said, "We experienced strong
demand in all of the markets we serve, with better than expected growth in the
broadband transmission markets for digital set-top boxes and cable modems. We
also saw faster upgrading of networking from 100 megabits per second (Mbps) to
1,000 Mbps and a faster than expected proliferation of Internet Protocol
switching technology throughout the business enterprise. We continued our rapid
pace of new product introductions, with products being introduced during the
quarter that were the result of both internal development efforts as well as the
successful integration of acquired engineering development teams."
Broadcom continued to lead the industry with new products in both digital
set-top boxes and advanced home gateways. In May, the company began shipping an
integrated DOCSIS-compliant cable modem chipset that effectively turns TV
set-top boxes into advanced two-way communications devices, allowing
interactivity, simultaneous access to hundreds of digital television channels,
and broadband Internet access. Additionally, Broadcom shipped an advanced
set-top box home gateway reference design that delivers integrated broadband
services to and throughout the home, utilizing the company's broadband cable
transmission and broadband home networking technologies. This set-top box
gateway turns the existing telephone wiring within the home into a 10 Mbps
multimedia network, capable of concurrently delivering voice, video and data
services.
Broadcom also announced the world's first single-chip solution for cable set-top
boxes that can be used in cable systems worldwide, an important milestone in the
evolution of the set-top box market. This product merges four Broadcom chips
into one, dramatically reducing the overall system cost for next-generation
set-top boxes.
During the quarter, Broadcom delivered its second-generation Gigabit Ethernet
transceiver, further advancing its lead in this area. Broadcom still remains the
only company worldwide that is delivering Gigabit Ethernet copper solutions in
production quantities. The company also announced the first in a family of
high-performance Internet Protocol Security (IPSec) products, capable of 300
Mbps wire-speed encryption and security with future scalability up to one
gigabit per second.
Additionally, Broadcom entered the optical networking market during the second
quarter, announcing the world's first 10-Gigabit 4-channel CMOS transceiver. The
new chip is capable of simultaneously transmitting and receiving Ethernet data
at 10 gigabits per second over 50 kilometers of the existing single mode fiber -
up to 10 times the rate currently possible over the same media and distance.
The need for broadband connectivity to apartment buildings and multiple dwelling
units has driven better than expected demand for new multi-function gateway
systems combining Broadcom core competencies including cable modem, VDSL, 10/100
Ethernet and home networking silicon. In addition, this quarter several
customers including Dell and Diamond/S3 introduced into the market a new class
of customer device for delivering CD-quality audio and Internet radio throughout
the home. These new devices exclusively utilize Broadcom's broadband home
networking technology.
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Commenting on Broadcom's announced acquisitions during the quarter, Nicholas
said, "These acquisitions signal our intent to be a major competitor in ICs for
wireless markets worldwide. Pivotal brings us an immediate leadership position
in Digital Visual Interface (DVI) solutions for communications links for both
wired and wireless connections between a digital host, such as a PC, set-top box
or DVD player, and a display device, such as an HDTV, flat panel display or
digital CRT. Innovent brings its pioneering expertise in low-cost CMOS radio
frequency wireless technologies and its leadership in Bluetooth(TM) standard
local wireless data networking."
Broadcom's unaudited pro forma combined financial statements including the
effects of the Pivotal acquisition were reported on a Form 8-K filed with the
Securities and Exchange Commission on June 30, 2000. Restated historical
consolidated financial statements for 1999, reflecting the effects of the four
2000 acquisitions completed to date, were reported on a Form 8-K/A filed with
the SEC on July 10, 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 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 (VoIP), residential broadband gateways, direct broadcast satellite and
terrestrial digital broadcast, optical networking, digital subscriber line
(xDSL) and wireless communications. Broadcom is headquartered in Irvine, Calif.,
and may be contacted at 949-450-8700 or at www.broadcom.com.
SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF
1995:
This release may contain forward-looking statements 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 or
acquire, 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
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and end-users adopt Broadcom's technologies and products in the markets for
cable set-top boxes, cable modems, high-speed office networks, home networking,
VoIP, residential broadband gateways, direct broadcast satellite and terrestrial
digital broadcast, optical networking, xDSL and wireless communications; 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 the manufacturing yields of our third party
semiconductor foundries and other problems or delays in the fabrication,
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; 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 residual
"Year 2000" problems in computer-based systems 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, recent and forthcoming Quarterly Reports on Form
10-Q, recent Current Reports on Forms 8-K and 8-K/A, 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 and certain other countries. Bluetooth is a
trademark owned by Telefonaktiebolaget LM Ericsson AB and licensed to
participants in the Bluetooth Special Interest Group. All other trademarks
mentioned are the property of their respective owners.
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BROADCOM CORPORATION
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
-------------------------- --------------------------
2000 1999 2000 1999
-------- ---------- -------- ----------
<S> <C> <C> <C> <C>
Revenue $245,177 $ 119,452 $436,768 $219,666
Cost of revenue 102,520 48,077 181,597 89,083
-------- --------- -------- --------
Gross profit 142,657 71,375 255,171 130,583
Operating expense:
Research and development 51,945 30,216 97,558 54,880
Selling, general and administrative 23,623 15,090 42,761 28,904
Merger-related costs 1,844 11,122 4,745 11,122
Litigation settlement costs -- 17,036 -- 17,036
-------- --------- -------- --------
Income (loss) from operations 65,245 (2,089) 110,107 18,641
Interest and other income, net 4,625 2,006 8,050 3,713
-------- --------- -------- --------
Income (loss) before income taxes 69,870 (83) 118,157 22,354
Provision (benefit) for income taxes 13,973 (242) 23,631 7,466
-------- --------- -------- --------
Net income $ 55,897 $ 159 $ 94,526 $ 14,888
======== ========= ======== ========
Basic earnings per share $ .26 $ -- $ .44 $ .08
======== ========= ======== ========
Diluted earnings per share $ .22 $ -- $ .37 $ .06
======== ========= ======== ========
Weighted average shares (basic) 214,605 200,865 212,911 197,613
======== ========= ======== ========
Weighted average shares (diluted) 253,944 233,434 253,261 229,537
======== ========= ======== ========
</TABLE>
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
2000 1999
-------- ------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $280,880 $180,816
Short-term investments 98,982 90,059
Accounts receivable, net 117,075 92,124
Inventory 38,617 19,177
Deferred taxes 8,380 8,380
Other current assets 26,317 12,950
-------- --------
Total current assets 570,251 403,506
Property and equipment, net 62,786 51,151
Long-term investments -- 9,351
Deferred taxes 293,160 137,779
Other assets 15,309 7,966
-------- --------
Total assets $941,506 $609,753
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Trade accounts payable $ 62,400 $ 46,458
Accrued liabilities 33,164 41,561
Current portion of long-term debt 1,167 1,787
-------- --------
Total current liabilities 96,731 89,806
Long-term debt, less current portion 966 3,075
Shareholders' equity 843,809 516,872
-------- --------
Total liabilities and shareholders' equity $941,506 $609,753
======== ========
</TABLE>
