Broadcom Reports Record Revenue and Profit for Both Fourth
1/23/1 16:13 (New York)
Quarter and Full Year 2000
Business Editors & High-Tech Writers
IRVINE, Calif.--(BUSINESS WIRE)--Jan. 23, 2001--Broadcom
Corporation (Nasdaq:BRCM), the leading provider of integrated circuits
enabling broadband communications, today reported record financial
results for the fourth fiscal quarter and year ended December 31,
2000.
Revenue for the fourth quarter was a record $376.1 million, an
increase of 132% over the $162.0 million reported in the fourth
quarter of 1999 and an increase of 18% over the $319.2 million
reported in the third quarter of 2000. Pro forma net income was a
record $86.7 million, or $.32 per share (diluted). This compares with
pro forma net income of $32.0 million, or $.13 per share (diluted),
for the same quarter in 1999, and pro forma net income of $78.7
million, or $.30 per share (diluted), in the third quarter of 2000.
Diluted earnings per share for the quarter were based on 274.1 million
weighted average shares outstanding, compared to 245.2 million
weighted average shares outstanding in the fourth quarter of 1999 and
to 264.8 million weighted average shares outstanding in the third
quarter of 2000.
Broadcom reports net income and diluted earnings per share on a
pro forma basis, which excludes the effects of acquisition-related
expenses and payroll taxes on certain stock option exercises.
Including these charges, substantially all of which were non-cash, net
loss for the fourth quarter was $768.6 million, or $3.28 per share,
compared with net income of $33.0 million, or $.13 per share
(diluted), in the same quarter in 1999, and with a net loss of $19.4
million, or $.09 per share, in the third quarter of 2000.
For the full year 2000, revenue was a record $1.1 billion, an
increase of 117% over the $521.2 million reported for 1999. Pro forma
net income for 2000 was a record $271.4 million, an increase of 172%
over the $99.8 million for 1999. Pro forma diluted earnings per share
were $1.04, based on 261.4 million weighted average shares
outstanding, versus $.42 per share on 235.7 million weighted average
shares in 1999. Including the charges excluded in pro forma reporting,
net loss for the year 2000 was $693.4 million, or $3.15 per share.
During the fourth quarter, Broadcom announced four significant
acquisitions -- Element 14, Inc. (DSL products), Allayer
Communications (10 Gigabit per second switching products), VisionTech,
Ltd. (MPEG-2 compression products) and SiByte, Inc. (network processor
products). All four transactions have been completed. Additionally,
two other key acquisitions announced during the third quarter --
NewPort Communications, Inc. (optical networking products) and Silicon
Spice Inc. (carrier access products) -- closed in the fourth quarter.
All of these acquisitions were accounted for under the purchase method
of accounting.
Earlier this month, Broadcom announced and closed its acquisition
of ServerWorks Corporation, a leading supplier of high performance
System I/O(TM) solutions for server and storage platforms, network
appliances and workstations.
"Our fourth quarter and full year financial results demonstrated
the strength of our traditional product lines as well as the solid
growth we are experiencing in new and emerging markets, many of which
we are responsible for creating," said Dr. Henry T. Nicholas III,
Broadcom's President and CEO. "During the year, Broadcom reached the
$1 billion revenue level, a significant milestone that made us the
fastest growing U.S. semiconductor company to date, a testament to
both the company's ability to execute well in multiple broadband
markets and the tremendous growth of those markets."
During the fourth quarter, Motorola's Broadband Communications
Sector entered into two-year purchase and development agreements that
guarantee Broadcom a share of Motorola's set-top box, cable modem, and
residential voice gateway silicon business. This both extends and
broadens the previous three-year-old partnership, which covered only
set-top box technologies. As part of the extended agreement, Broadcom
will develop single-chip solutions for next generation interactive
digital set-top terminals, cable modems and Voice over Internet
Protocol (VoIP) gateways.
During the quarter, Broadcom also introduced a family of advanced
interactive TV video decoder chips for next generation set-top
terminals, such as Motorola's DCT-5000 interactive set-top product.
These decoder chips are compatible with the existing Standard
Definition Television (SDTV) standards as well as all formats for the
new High Definition Television (HDTV) standard.
In another strategic alliance, Broadcom and Gateway Computer
announced a partnership designed to make it easy for consumers to
connect to the Internet and to every digital device in their home or
home office at broadband speed using existing telephone lines. As part
of that endeavor and Gateway's Connected Home initiative, Gateway
began shipping its consumer PCs with Broadcom's Home Phoneline
Networking Alliance (HomePNA) 2.0 chipsets as standard equipment.
Broadcom's HomePNA 2.0 chipsets are also standard equipment on all
Gateway Internet appliances, including the Gateway Connected Music
Player and the Gateway Connected Touchpad, which won the "Best
Consumer Product" award at Comdex 2000.
3Com entered into a two year purchase, development, marketing and
cross license agreement with Broadcom for Gigabit Ethernet
LAN-On-Motherboard (LOM) and Gigabit Ethernet adapter card
technologies. In this agreement Broadcom is guaranteed a very
significant share of 3Com's desktop, server, workstation and mobile
computing Gigabit Ethernet business. As part of this agreement,
Broadcom and 3Com's 10/100/1000 Base-T Ethernet solutions will benefit
from network compatibility with the world's largest installed base of
legacy 10/100 Base-T Ethernet adapter cards and LOM solutions. 3Com's
10/100 Base-T Ethernet cards represent over 50% of the active
worldwide installed base of desktop Ethernet solutions. This agreement
also provided for the use of 3Com's brand, the most widely recognized
one in desktop Ethernet connectivity, as part of an alliance
3Com/Broadcom brand to drive Gigabit technology to the enterprise
desktop.
In extending its leadership in the Gigabit Ethernet market,
Broadcom has shipped 1.5 million Gigabit Ethernet ports to date and
remains the only company shipping in significant volumes.
In other alliances, Broadcom and Check Point Software
Technologies, Ltd., unveiled plans to jointly develop and deliver the
next generation of high performance multi-gigabit security products,
and Broadcom and Net2Phone, Inc. announced collaboration on VoIP
products allowing cable operators to offer customers economical voice
IP services over broadband connections.
In product announcements, Broadcom began sampling a family of high
performance Bluetooth(TM) radio and baseband chips, including the
world's first Bluetooth radio chip manufactured in a standard digital
CMOS process. That chip became the world's first such transceiver
developed in a CMOS process to be qualified by the Bluetooth
Qualification Board, the body overseeing compatibility among Bluetooth
devices.
The company also introduced the industry's most comprehensive
residential gateway reference design for cable, enabling new classes
of consumer services and applications, from basic phone service to new
household information appliances. In its networking business, Broadcom
demonstrated the enterprise market's first Gigabit Ethernet controller
chip with support for the PCI-X standard. The Broadcom(R) BCM5700, the
company's first Gigabit Ethernet Media Access Controller (MAC), sets a
new standard for performance and on-chip integration.
"Our announcements during the quarter reflected industry trends
including increased integration of products and technologies and the
convergence of voice, video and data onto single networks," Nicholas
said. "Broadcom will continue to play a leadership role in driving
these and other industry trends, providing cutting-edge products for
today's markets while developing and producing next generation
solutions."
Broadcom's restated historical consolidated financial statements
for 1999, reflecting the effects of the four pooling-of-interest
acquisitions completed in 2000, were reported on a Form 8-K/A filed
with the Securities and Exchange Commission on July 10, 2000.
Broadcom's unaudited pro forma combined financial statements including
the effects of the Altima Communications, NewPort Communications and
Silicon Spice acquisitions were reported on a Form 8-K/A filed with
the SEC on November 13, 2000.
Broadcom will conduct a conference call with analysts and
investors to discuss its fourth quarter and year 2000 financial
results and current financial prospects today at 4:45 p.m. EST (1:45
p.m. PST). We will broadcast the conference over the Internet. To
listen to the call, please visit the Investor Information section of
the Broadcom web site at www.broadcom.com or go to
www.streetfusion.com. A recording of the call will be available for
replay at www.streetfusion.com until February 6, 2001.
About Broadcom
Broadcom Corporation is the leading provider of highly integrated
silicon solutions that enable broadband digital transmission of voice,
video and data. Using proprietary technologies and advanced design
methodologies, the company designs, develops and supplies
system-on-a-chip solutions for broadband communications markets.
Broadcom products enable cable set-top boxes, cable modems, high-speed
local, metropolitan and wide area and optical networks, home
networking, Voice over Internet Protocol (VoIP), carrier access,
residential broadband gateways, direct broadcast satellite and
terrestrial digital broadcast, digital subscriber lines (xDSL),
wireless communications, SystemI/O server solutions and network
processing. 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 and our earnings conference call 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; general economic conditions and specific conditions in the
markets we address; 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
and end-users adopt Broadcom's technologies and products in the
markets for cable set-top boxes, cable modems, high-speed local,
metropolitan and wide area and optical networks, home networking,
Voice over Internet Protocol (VoIP), carrier access, residential
broadband gateways, direct broadcast satellite and terrestrial digital
broadcast, digital subscriber lines (xDSL), wireless communications,
SystemI/O server solutions and network processing; delays in the
adoption and acceptance of industry standards in the foregoing
markets; 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; 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; problems or delays that we may face in shifting
our products to smaller geometry process technologies and in achieving
higher levels of design integration; the effectiveness of our product
cost reduction efforts; the effects of new and emerging technologies;
the risks and uncertainties associated with our international
operations; 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; and other factors.
Our forthcoming Annual Report on Form 10-K, recent 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), SystemI/O, and the pulse logo are trademarks of
Broadcom Corporation and/or its affiliates 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 (SIG) in the United States and
certain other countries. All other trademarks mentioned are the
property of their respective owners.
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BROADCOM CORPORATION
Unaudited Pro Forma Consolidated Statements of Operations
(In thousands, except per share amounts)
Three Months Ended Twelve Months Ended
December 31, December 31,
2000 1999 2000 1999
Revenue $ 376,144 $ 161,998 $1,132,067 $ 521,225
Cost of revenue 159,863 66,414 476,359 211,576
Gross profit 216,281 95,584 655,708 309,649
Operating expense:
Research and
development 85,851 33,639 239,841 116,199
Selling, general and
administrative 30,699 17,647 98,244 59,822
Income from operations 99,731 44,298 317,623 133,628
Interest and other
income, net 8,622 2,779 21,606 8,648
Income before income
taxes 108,353 47,077 339,229 142,276
Provision for income
taxes 21,671 15,049 67,846 42,510
Pro forma net income $ 86,682 $ 32,028 $ 271,383 $ 99,766
Pro forma basic
earnings per share $ .37 $ .15 $ 1.23 $ .49
Pro forma diluted
earnings per share $ .32 $ .13 $ 1.04 $ .42
Weighted average
shares (basic) 234,073 207,688 220,101 201,667
Weighted average shares
(diluted) 274,103 245,199 261,359 235,651
Pro Forma Only
The above pro forma statements are based upon our unaudited
consolidated statements of operations for the periods shown, with
certain adjustments. The pro forma statement for the three months
ended December 31, 2000 has been adjusted to eliminate $667.4 million
of in-process research and development expense; $2.1 million of
payroll tax expense on certain stock option exercises; $89.2 million
of stock-based compensation expense related to mergers and
acquisitions ("M&A"); and $160.9 million of amortization of goodwill
and purchased intangibles related to M&A; and reflects a pro forma
effective tax rate of 20%.
The pro forma statement for the three months ended December 31,
1999 has been adjusted to eliminate $2.1 million of payroll tax
expense on certain stock option exercises and $.9 million of
stock-based compensation expense; and reflects a pro forma effective
tax rate of 32.0%.
The pro forma statement for the twelve months ended December 31,
2000 has been adjusted to eliminate $713.1 million of in-process
research and development expense; $16.9 million of payroll tax expense
on certain stock option exercises; $119.9 million of stock-based
compensation expense related to M&A; $185.8 million of amortization of
goodwill and purchased intangibles related to M&A; and $4.7 million of
merger-related expense; and reflects a pro forma effective tax rate of
20%.
The pro forma statement for the twelve months ended December 31,
1999 has been adjusted to eliminate $5.0 million of payroll tax
expense on certain stock option exercises; $3.7 million of stock-based
compensation expense; $15.2 million of merger-related expense; and
$17.0 million of litigation settlement costs; and reflects a pro forma
effective tax rate of 29.9%.
All historical financial information has been restated to give
retroactive effect to acquisitions accounted for using the
pooling-of-interests method.
BROADCOM CORPORATION
Unaudited Consolidated Statements of Operations
(In thousands, except per share amounts)
Three Months Ended Twelve Months Ended
December 31, December 31,
2000 1999 2000 1999
Revenue $ 376,144 $ 161,998 $1,132,067 $ 521,225
Cost of revenue (1)(2) 159,945 66,526 477,375 211,842
Gross profit 216,199 95,472 654,692 309,383
Operating expense:
Research and
development (1)(2) 87,326 35,005 250,676 119,300
Selling, general and
administrative (1)(2) 31,208 18,264 103,305 61,475
Stock-based
compensation (3) 89,230 893 119,885 3,709
Amortization of
goodwill (3) 157,982 -- 182,302 --
Amortization of
purchased intangible
assets (3) 2,905 -- 3,521 --
In-process research and
development (3) 667,390 -- 713,050 --
Merger-related costs -- -- 4,745 15,210
Litigation settlement costs -- -- -- 17,036
Income (loss) from
operations (819,842) 41,310 (722,792) 92,653
Interest and other
income, net 8,622 2,779 21,606 8,648
Income (loss) before
income taxes (811,220) 44,089 (701,186) 101,301
Provision (benefit) for
income taxes (42,659) 11,100 (7,787) 28,830
Net income (loss) $ (768,561)$ 32,989 $ (693,399)$ 72,471
Basic earnings (loss)
per share $ (3.28)$ .16 $ (3.15)$ .36
Diluted earnings (loss)
per share $ (3.28)$ .13 $ (3.15)$ .31
Weighted average shares
(basic) 234,073 207,688 220,101 201,667
Weighted average shares
(diluted) 234,073 245,199 220,101 235,651
Notes:
All historical financial information has been restated to give
retroactive effect to acquisitions accounted for using the
pooling-of-interests method.
(1) Excludes stock-based compensation expense as follows:
Cost of revenue $ 3,888 $ 37 $ 4,578 $ 149
Research and development 62,513 554 85,302 2,433
Selling, general and
administrative 22,829 302 30,005 1,127
$ 89,230 $ 893 $ 119,885 $ 3,709
Excludes amortization of purchased intangible assets as follows:
Cost of revenue $ 1,851 $ -- $ 2,266 $ --
Research and development 951 -- 1,152 --
Selling, general and
administrative 103 -- 103 --
$ 2,905 $ -- $ 3,521 $ --
(2) Includes employer payroll tax expense on certain stock option
exercises as follows:
Cost of revenue $ 82 $ 112 $ 1,016 $ 266
Research and
development 1,475 1,366 10,835 3,101
Selling, general and
administrative 509 617 5,061 1,653
$ 2,066 $ 2,095 $ 16,912 $ 5,020
(3) Represents non-cash acquisition-related expenses charged to
operations
BROADCOM CORPORATION
Unaudited Condensed Consolidated Balance Sheets
(In thousands)
December 31, December 31,
2000 1999
ASSETS
Current assets:
Cash and cash equivalents $ 523,904 $ 180,816
Short-term investments 77,682 90,059
Accounts receivable, net 172,314 92,124
Inventory 52,137 19,177
Deferred taxes 10,397 8,380
Other current assets 39,220 12,950
Total current assets 875,654 403,506
Property and equipment, net 132,870 51,151
Long-term investments 1,984 9,351
Deferred taxes 355,771 137,779
Goodwill and purchased intangible assets, net 4,245,670 --
Other assets 54,913 7,966
Total assets $ 5,666,862 $ 609,753
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Trade accounts payable $ 78,163 $ 46,458
Wages and related benefits 34,720 15,430
Accrued liabilities 66,030 26,131
Note payable 21,051 --
Other current liabilities 2,598 4,862
Total current liabilities 202,562 92,881
Shareholders' equity 5,464,300 516,872
Total liabilities and shareholders'
equity $ 5,666,862 $ 609,753
All historical financial information has been restated to give
retroactive effect to acquisitions accounted for using the
pooling-of-interests method.
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--30--KA/np* EZ/np
CONTACT: Broadcom Corp., Irvine
William J. Ruehle (financial analyst), 949/450-8700
billr@broadcom.com
or
Bill Blanning or Eileen Algaze (media), 949/450-8700
blanning@broadcom.com or ealgaze@broadcom.com
KEYWORD: CALIFORNIA
INDUSTRY KEYWORD: COMPUTERS/ELECTRONICS TELECOMMUNICATIONS
EARNINGS
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