Broadcom Corporation Reports Second Quarter Revenue and Profit
July 21, 1999 04:18 PM
IRVINE, Calif.--(BUSINESS WIRE)--July 21, 1999--Broadcom Corporation BRCM today reported financial results for the quarter ended June 30, 1999.
Revenue for the second quarter of 1999 was $116.3 million, an increase of 157% over the $45.2 million reported in the second quarter of 1998. Pro forma net income, excluding one-time charges associated with acquisitions and litigation settlements, was $21.2 million, compared with pro forma net income of $4.9 million in the second quarter of 1998, an increase of 331%.
Pro forma diluted earnings per share for the second quarter of 1999, excluding the one-time charges, were $.19, based on 111.6 million weighted average shares outstanding. This compares with pro forma diluted earnings of $.05 per share on 101.2 million weighted average shares outstanding for the same period in 1998. All figures have been adjusted to reflect three pooling of interest acquisition transactions completed on May 31, 1999; weighted average shares and per share amounts have also been adjusted to reflect a 2-for-1 stock split, in the form of a 100% stock dividend, effective February 17, 1999.
On May 31, 1999, Broadcom completed the acquisition of three companies, Maverick Networks, Epigram, Inc. and Armedia, Inc. One-time charges before tax associated with these transactions were $11.1 million, or $.06 per share after tax. During the quarter, Broadcom also settled two significant litigation matters. The settlement fees and associated attorneys fees, expenses and court costs resulted in a separate aggregate one-time pre-tax charge of $17.0 million, or $.10 per share after tax.
Reported net income for the second quarter, including the above-mentioned acquisition and settlement costs, was $2.8 million, or $.03 per share, compared with $4.9 million, or $.05 per share, for the second quarter of 1998.
"This was an important quarter for Broadcom as we continued to demonstrate strong financial performance and sales strength in all of our markets, while making a number of key strategic moves in acquisitions and product offerings," said Dr. Henry T. Nicholas III, Broadcom's president and CEO. "With these moves, we have enhanced our world-wide leadership position as an Internet-enabler and broadband technology provider."
"In the product arena, we demonstrated the world's first Gigabit Ethernet transceiver, the Broadcom(R) BCM5400, a product based on technology developed at Broadcom that enables makers of business networking equipment to deliver data at gigabit speeds over existing unshielded twisted-pair copper wiring," Nicholas said. "This was a significant milestone for the networking industry. We have shipped samples of our BCM5400 chip to more than two dozen potential customers."
"During the quarter, we completed three acquisitions that will be the cornerstones of several new strategic product thrusts for Broadcom," Nicholas said. "Maverick Networks is enabling us to provide the technology necessary for the integration of voice, video and other delay-sensitive traffic into existing enterprise data networks. We acquired Epigram, the leader in home networking technology, as part of our larger strategy to provide end-to-end broadband connectivity to and throughout the home, where our products will enable many devices to connect and operate simultaneously using existing standard phone wiring. Armedia, based in Bangalore, India, and Broadcom's first international acquisition, allows us to grow our research and development capabilities in digital video."
"Also during the quarter, announcements by Cable Television Laboratories, Inc. (CableLabs(R)) regarding its ongoing certifications of cable modems reflected well on Broadcom and its leadership position in the cable modem industry. Nine of the ten suppliers whose modems have been certified this year by CableLabs for interoperability rely on Broadcom cable modem chips. Additionally, all of the three cable plant head-end equipment suppliers that have received CableLabs qualification for their equipment use Broadcom technology."
Nicholas added, "Broadcom has been an active supporter of this industry-standard, open specification development. We believe the availability of interoperable cable modems from multiple vendors at retail prices will drive the demand for additional broadband Internet services, including telephony and video conferencing, over cable networks worldwide."
About Broadcom
Broadcom Corporation is a leading provider of highly integrated silicon solutions that enable broadband digital transmission of voice, data and video content 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 some of the most significant broadband communications markets, including the markets for cable set-top boxes, cable modems, high-speed office networks, home networking, 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 Statement of Broadcom Corporation 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," "may," "will" and similar expressions are intended to identify 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 product sales and pricing concessions on volume sales; the timing, rescheduling or cancellation of significant customer orders; the loss of a significant customer; the qualification, availability and pricing of competing products and technologies and the resulting effects on sales and pricing of our products; 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 qualification and industry interoperability certification of new products and the risks of non-qualification or non-certification; the rate at which our present and future customers and end-users adopt new and emerging technologies in the high-speed networking, cable set-top box, cable modem, home networking, direct broadcast satellite and terrestrial digital broadcast, and digital subscriber line markets; the rate of adoption and acceptance of new industry standards in the foregoing markets; the risks inherent in acquisitions of technologies and businesses, including the timing and successful completion of technology and product development through production readiness, integration issues, costs and unanticipated expenditures, changing relationships with customers, suppliers and strategic partners, potential contractual, intellectual property or employment issues, and the risks that the acquisition cannot be completed successfully or that anticipated benefits are not realized; wafer pricing and the availability of foundry capacity and raw materials; fluctuations in our manufacturing yields and other problems or delays in the fabrication, assembly, testing or delivery of our products; risks and uncertainties associated with international operations; intellectual property disputes; 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; potential business disruptions, claims, expenses and other difficulties resulting from "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 recent Annual Report on Form 10-K, recent and forthcoming Quarterly Reports on Form 10-Q 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. Broadcom undertakes 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. CableLabs(R) is a trademark of Cable Television Laboratories, Inc. All other trademarks are the property of their respective owners.
BROADCOM CORPORATION
Unaudited Consolidated Statements of Operations
(In thousands, except per share amounts)
Three Months Ended Six Months Ended
June 30, June 30,
1999 1998 1999 1998
Revenue $ 116,250 $ 45,168 $ 212,570 $ 80,712
Cost of revenue 47,079 20,384 87,195 34,216
Gross profit 69,171 24,784 125,375 46,496
Operating expense:
Research and development 26,119 10,736 48,047 18,435
Selling, general and
administrative 12,436 6,308 24,111 11,136
Total operating expense 38,555 17,044 72,158 29,571
Merger related costs 11,122 -- 11,122 --
Litigation settlement costs 17,036 -- 17,036 --
Income from operations 2,458 7,740 25,059 16,925
Interest and other income,
net 1,923 1,139 3,582 1,432
Income before income taxes 4,381 8,879 28,641 18,357
Provision for income taxes 1,533 3,976 10,024 8,000
Net income $ 2,848 $ 4,903 $ 18,617 $ 10,357
Basic earnings per share $ .03 $ .06 $ .20 $ .14
Diluted earnings per
share $ .03 $ .05 $ .17 $ .11
Weighted average shares
(basic) 95,538 86,274 94,141 73,511
Weighted average shares
(diluted) 111,639 101,213 109,944 94,363
Unaudited Condensed Consolidated Balance Sheets
(In thousands)
June 30, December 31,
1999 1998
ASSETS
Current assets:
Cash and cash equivalents $ 98,379 $ 69,569
Short-term investments 64,286 34,344
Accounts receivable, net 48,000 36,918
Inventory 7,341 7,307
Deferred taxes 6,181 6,181
Other current assets 10,472 10,179
Total current assets 234,659 164,498
Property and equipment, net 37,797 31,219
Long-term investments 28,106 42,826
Deferred taxes 30,677 6,721
Other assets 4,912 6,521
Total assets $ 336,151 $ 251,785
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Trade accounts payable $ 24,585 $ 22,185
Accrued liabilities 26,066 8,035
Current portion of long-term debt 331 1,998
Total current liabilities 50,982 32,218
Long-term debt, less current portion 894 4,009
Shareholders' equity 284,275 215,558
Total liabilities and
shareholders' equity $ 336,151 $ 251,785
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