Current Report

Table of Contents

 
 
UNITED STATES
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): October 22, 2009
BROADCOM CORPORATION
(Exact Name of Registrant as Specified in Charter)
         
California   000-23993   33-0480482
(State or Other Jurisdiction of   (Commission File   (IRS Employer
Incorporation)   Number)   Identification No.)
     
5300 California Avenue, Irvine, California   92617
(Address of Principal Executive Offices)   (Zip Code)
Registrant’s telephone number, including area code: 949.926.5000
Not Applicable
(Former Name or Former Address, if Changed since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
o   Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
o   Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
o   Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240. 14d-2(b))
 
o   Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
 
 

 

 

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  EX-99.1

 

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Item 2.02 Results of Operations and Financial Condition
The information in this Current Report, including the accompanying exhibit, is being furnished and shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that Section. The information in this Current Report shall not be incorporated by reference into any registration statement or other document filed pursuant to the Securities Act of 1933, as amended, regardless of any general incorporation language contained in such filing.
On October 22, 2009 Broadcom Corporation issued a press release announcing unaudited financial results for the third quarter ended September 30, 2009. A copy of the press release is furnished herewith as Exhibit 99.1 and is incorporated by reference herein.
Item 9.01 Exhibits
(d) Exhibits
99.1 Press Release dated October 22, 2009 of the Registrant.

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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
  		 
October 22, 2009  By:   /s/ Eric K. Brandt    
    Eric K. Brandt   
    Senior Vice President and Chief Financial Officer   
 

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EXHIBIT INDEX
     
Exhibit No.   Description
99.1   Press Release dated October 22, 2009 of the Registrant.

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Exhibit 99.1
NEWS RELEASE
     
Broadcom Trade Press Contact
  Broadcom Investor Relations Contact
Bill Blanning
  T. Peter Andrew
Vice President, Global Media Relations
  Vice President, Corporate Communications
949-926-5555
  949-926-5663
blanning@broadcom.com
  andrewtp@broadcom.com
Broadcom Reports Third Quarter 2009 Results
Conference Call to be Webcast Today at 1:45 p.m. Pacific Time
IRVINE, Calif. —October 22, 2009 — Broadcom Corporation (Nasdaq: BRCM) today reported unaudited financial results for its third quarter ended September 30, 2009.
Net revenue for the third quarter of 2009 was $1.254 billion. This represents an increase in net revenue of 20.6% compared with the $1.040 billion reported for the second quarter of 2009 and a decrease of 3.4% compared with the $1.298 billion reported for the third quarter of 2008. Net income computed in accordance with U.S. generally accepted accounting principles (GAAP) for the third quarter of 2009 was $84.6 million, or $.16 per share (diluted), compared with GAAP net income of $13.4 million, or $.03 per share (diluted), for the second quarter of 2009, and GAAP net income of $164.9 million, or $.31 per share (diluted), for the third quarter of 2008.
Net revenue for the nine months ended September 30, 2009 was $3.148 billion. This represents a decrease in net revenue of 10.9% from the $3.532 billion reported for the nine months ended September 30, 2008. Net income computed in accordance with GAAP for the nine months ended September 30, 2009 was $6.1 million, or $.01 per share (diluted), compared with GAAP net income of $374.0 million, or $.70 per share (diluted), for the nine months ended September 30, 2008.
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Broadcom Reports Third Quarter 2009 Results
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For a discussion of non-recurring transactions and their related accounting impact for all periods presented, see the “Unaudited Supplementary Financial Data” schedule below.
“Broadcom executed well in the third quarter, generating revenue growth of over 20% sequentially for the second quarter in row,” said Scott A. McGregor, Broadcom’s President and Chief Executive Officer. “This strong revenue growth is well above the semiconductor industry growth rate, and was driven by a combination of our target markets continuing to recover, new product ramps and the breadth of Broadcom’s product line.”
“In addition, Broadcom was successful in generating strong sequential gross and operating margin leverage and cash flow from operations in the quarter. The third quarter spending included an unforecasted increase in performance-based compensation, which grew significantly due to Broadcom’s strong operating performance, showing our continued focus on generating positive financial leverage.”
Conference Call Information
As previously announced, Broadcom will conduct a conference call with analysts and investors to discuss its third quarter 2009 financial results and current financial prospects today at 1:45 p.m. Pacific Time (4:45 p.m. Eastern Time). The company will broadcast the conference call via webcast over the Internet. To listen to the webcast, or to view the financial or other statistical information required by Securities and Exchange Commission (SEC) Regulation G, please visit the Investors section of the Broadcom website at www.broadcom.com/investors . The webcast will be recorded and available for replay until 5:00 p.m. Pacific Time, December 2, 2009.
About Broadcom
Broadcom Corporation is a major technology innovator and global leader in semiconductors for wired and wireless communications. Broadcom ® products enable the delivery of voice, video, data and multimedia to and throughout the home, the office and the mobile environment. We provide the industry’s broadest portfolio of state-of-the-art
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Broadcom Reports Third Quarter 2009 Results
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system-on-a-chip and software solutions to manufacturers of computing and networking equipment, digital entertainment and broadband access products, and mobile devices. These solutions support our core mission: Connecting everything ® .
Broadcom, one of the world’s largest fabless semiconductor companies, with 2008 revenue of $4.66 billion, holds more than 3,650 U.S. and 1,450 foreign patents, and has more than 7,750 additional pending patent applications, and one of the broadest intellectual property portfolios addressing both wired and wireless transmission of voice, video, data and multimedia.
A FORTUNE 500 ® company, Broadcom is headquartered in Irvine, Calif., and has offices and research facilities in North America, Asia and Europe. Broadcom may be contacted at +1.949.926.5000 or at www.broadcom.com .
Cautions regarding Forward Looking Statements:
All statements included or incorporated by reference in this release and the related conference call for analysts and investors, other than statements or characterizations of historical fact, are forward-looking statements. These forward-looking statements are based on our current expectations, estimates and projections about our business and industry, management’s beliefs, and certain assumptions made by us, all of which are subject to change. Forward-looking statements can often be identified by words such as “anticipates,” “expects,” “intends,” “plans,” “predicts,” “believes,” “seeks,” “estimates,” “may,” “will,” “should,” “would,” “could,” “potential,” “continue,” “ongoing,” similar expressions, and variations or negatives of these words. Examples of such forward-looking statements include, but are not limited to, guidance provided on future revenue, gross product margin and operating expense targets for the fourth quarter of 2009. These forward-looking statements are not guarantees of future results and are subject to risks, uncertainties and assumptions that could cause our actual results to differ materially and adversely from those expressed in any forward-looking statement.
These risks and uncertainties include, but are not limited to:
  •   general economic and political conditions and specific conditions in the markets we address, including the continuing volatility in the technology sector and semiconductor industry, the recent global economic recession, trends in the broadband communications markets in various geographic regions, including seasonality in sales of consumer electronic products into which our products are incorporated, and possible disruption in commercial activities related to terrorist
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Broadcom Reports Third Quarter 2009 Results
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      activity or armed conflict;
 
  •   the timing, rescheduling or cancellation of significant customer orders and our ability, as well as the ability of our customers, to manage inventory;
 
  •   our ability to adjust our operations in response to changes in demand for our existing products and services or demand for new products requested by our customers;
 
  •   the effectiveness of our expense and product cost control and reduction efforts;
 
  •   our ability to specify, develop or acquire, complete, introduce, market and transition to volume production new products and technologies in a cost-effective and timely manner;
 
  •   risks and uncertainties resulting from Broadcom’s equity award review, including pending and potential new claims and proceedings related to such matters, such as shareholder litigation and any action by the SEC, U.S. Attorney’s Office or other governmental agency that has resulted in, and could result in further, civil or criminal sanctions against the company and/or certain of our current or former officers, directors or employees, or other actions taken or required as a result of the review, and the extent to which we are able to receive reimbursement of our expenses related to such litigation and actions through our directors’ and officers’ liability insurance carriers. In the event that the company’s coverage under these policies is reduced or denied or if the proposed partial settlement of the federal derivative litigation does not receive final court approval, our financial exposure would be increased;
 
  •   the risks inherent in acquisitions of technologies and businesses, including the timing and successful completion of technology and product development through volume production, integration issues, potential contractual, intellectual property or employment issues, the risk that anticipated benefits of an acquisition may not be realized, and accounting treatment and charges;
 
  •   changes in current or future laws or the imposition of new laws or regulations, including new or changed tax regulations, or changes in the interpretation or enforcement of those laws or regulations;
 
  •   our dependence on a few significant customers for a substantial portion of our revenue;
 
  •   intellectual property disputes and customer indemnification claims and other types of litigation risk;
 
  •   the quality of our products and any potential remediation costs;
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Broadcom Reports Third Quarter 2009 Results
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  •   our ability to retain, recruit and hire key executives, technical personnel and other employees in the positions and numbers, with the experience and capabilities, and at the compensation levels needed to implement our business and product plans;
 
  •   the availability and pricing of third party semiconductor foundry, assembly and test capacity and raw materials;
 
  •   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 rate at which our present and future customers and end-users adopt Broadcom’s technologies and products in our target markets;
 
  •   competitive pressures and other factors such as the qualification, availability and pricing of competing products and technologies and the resulting effects on sales and pricing of our products;
 
  •   changes in our product or customer mix;
 
  •   the risks and uncertainties associated with our international operations;
 
  •   our ability to timely and accurately predict market requirements and evolving industry standards and to identify opportunities in new markets;
 
  •   the volume of our product sales and pricing concessions on volume sales;
 
  •   problems, costs or delays that we may face in shifting our products to smaller geometry process technologies and in achieving higher levels of design integration;
 
  •   the risks of producing products with new suppliers and at new fabrication and assembly and test facilities;
 
  •   delays in the adoption and acceptance of industry standards in our target markets;
 
  •   the timing of customer-industry qualification and certification of our products and the risks of non-qualification or non-certification; and
 
  •   the level of orders received that can be shipped in a fiscal quarter.
Our Annual Report on Form 10-K, subsequent Quarterly Reports on Form 10-Q, recent Current Reports on Form 8-K, and other Securities and Exchange Commission filings discuss the foregoing risks as well as other important risk factors that could contribute to such differences or otherwise affect our business, results of operations and financial condition. The forward-looking statements in this release and the related conference call for analysts and investors speak only as of the date they are made. We undertake no
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obligation to revise or update publicly any forward-looking statement, except as required by law.
Broadcom Ò , the pulse logo, Connecting everything Ò , and the Connecting everything logo are among the trademarks of Broadcom Corporation and/or its affiliates in the United States, certain other countries and/or the EU. Any other trademarks or trade names mentioned are the property of their respective owners.
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Broadcom Reports Third Quarter 2009 Results
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BROADCOM CORPORATION
Unaudited Condensed Consolidated Statements of Income
(In thousands, except per share amounts)
                                 
    Three Months Ended     Nine Months Ended  
    September 30,     September 30,  
    2009     2008     2009     2008  
Product revenue
  $ 1,194,745     $ 1,254,083     $ 2,989,292     $ 3,409,051  
Licensing revenue
    59,452       44,392       158,285       122,565  
 
                       
Total net revenue
    1,254,197       1,298,475       3,147,577       3,531,616  
Operating costs and expenses:
                               
Cost of product revenue
    615,349       619,459       1,580,300       1,655,218  
Research and development
    391,170       379,279       1,138,664       1,115,002  
Selling, general and administrative
    142,480       141,941       394,938       395,904  
Amortization of purchased intangible assets
    4,159       183       12,457       550  
In-process research and development
    —       —       —       10,900  
Impairment of long-lived assets
    7,634       250       18,895       2,150  
Restructuring costs (reversals)
    4,772       —       12,330       (1,000 )
Settlement costs (gains)
    —       —       (57,256 )     15,810  
Charitable contribution
    —       —       50,000       —  
 
                       
Total operating costs and expenses
    1,165,564       1,141,112       3,150,328       3,194,534  
 
                       
Income (loss) from operations
    88,633       157,363       (2,751 )     337,082  
Interest income, net
    2,978       12,451       11,362       44,983  
Other income (expense), net
    (178 )     (3,720 )     2,487       (2,987 )
 
                       
Income before income taxes
    91,433       166,094       11,098       379,078  
Provision for income taxes
    6,837       1,188       5,041       5,069  
 
                       
Net income
  $ 84,596     $ 164,906     $ 6,057     $ 374,009  
 
                       
Net income per share (basic)
  $ .17     $ .32     $ .01     $ .72  
 
                       
Net income per share (diluted)
  $ .16     $ .31     $ .01     $ .70  
 
                       
Weighted average shares (basic)
    495,491       509,041       493,599       517,418  
 
                       
Weighted average shares (diluted)
    521,443       523,759       508,559       531,187  
 
                       
      The following table presents details of total stock-based compensation expense included in each functional line item in the unaudited condensed consolidated statements of income above:
                                 
    Three Months Ended   Nine Months Ended
    September 30,   September 30,
    2009   2008   2009   2008
Cost of product revenue
  $ 6,579     $ 6,652     $ 18,584     $ 18,354  
Research and development
    90,829       93,334       266,698       262,043  
Selling, general and administrative
    31,290       33,328       89,817       93,661  
     Certain prior period amounts in the unaudited condensed consolidated statements of income have been reclassified to conform with the current period presentation of product and licensing revenue.
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Broadcom Reports Third Quarter 2009 Results
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BROADCOM CORPORATION
Unaudited Condensed Consolidated Statements of Cash Flows
(In thousands)
                                 
    Three Months Ended     Nine Months Ended  
    September 30,     September 30,  
    2009     2008     2009     2008  
Operating activities
                               
Net income
  $ 84,596     $ 164,906     $ 6,057     $ 374,009  
Adjustments to reconcile net income to net cash provided by operating activities:
                               
Depreciation and amortization
    11,273       19,351       47,314       55,770  
Stock-based compensation expense:
                               
Stock options and other awards
    40,904       53,684       126,461       168,891  
Restricted stock units
    87,794       79,630       248,638       205,167  
Acquisition-related items:
                               
Amortization of purchased intangible assets
    8,035       4,118       24,558       12,354  
In-process research and development
    —       —       —       10,900  
Impairment of long-lived assets
    7,634       250       18,895       2,150  
Loss on strategic investment, net
    —       2,506       —       4,266  
Non-cash restructuring costs
    808       —       3,471       —  
Loss (gain) on sale of marketable securities
    —       1,781       (1,046 )     1,781  
Changes in operating assets and liabilities:
                               
Accounts receivable
    (97,541 )     (21,183 )     (169,276 )     (131,998 )
Inventory
    (27,918 )     (66,259 )     58,890       (91,292 )
Prepaid expenses and other assets
    27,758       (20,387 )     19,972       (1,629 )
Accounts payable
    32,764       23,503       112,525       147,332  
Deferred revenue
    (19,944 )     1,618       80,822       (8,962 )
Other accrued and long-term liabilities
    80,301       42,712       77,684       24,719  
 
                       
Net cash provided by operating activities
    236,464       286,230       654,965       773,458  
 
                       
Investing activities
                               
Net purchases of property and equipment
    (22,480 )     (16,084 )     (48,774 )     (65,151 )
Net cash received from (paid for) acquired companies
    (1,297 )     (57 )     842       (29,795 )
Purchases of strategic investments
    (2,000 )     —       (2,000 )     (355 )
Purchases of marketable securities
    (546,922 )     (771,993 )     (1,057,972 )     (1,110,514 )
Proceeds from sales and maturities of marketable securities
    315,532       291,424       737,377       512,022  
 
                       
Net cash used in investing activities
    (257,167 )     (496,710 )     (370,527 )     (693,793 )
 
                       
Financing activities
                               
Repurchases of Class A common stock
    (168,083 )     (23,912 )     (206,517 )     (859,775 )
Proceeds from issuance of common stock
    53,535       23,968       137,229       114,582  
Minimum tax withholding paid on behalf of employees for restricted stock units
    (26,046 )     (19,433 )     (60,574 )     (45,186 )
 
                       
Net cash used in financing activities
    (140,594 )     (19,377 )     (129,862 )     (790,379 )
 
                       
Increase (decrease) in cash and cash equivalents
    (161,297 )     (229,857 )     154,576       (710,714 )
Cash and cash equivalents at beginning of period
    1,506,518       1,705,715       1,190,645       2,186,572  
 
                       
Cash and cash equivalents at end of period
  $ 1,345,221     $ 1,475,858     $ 1,345,221     $ 1,475,858  
 
                       
UNAUDITED SUPPLEMENTAL FINANCIAL INFORMATION
                         
    September 30,     June 30,     December 31,  
    2009     2009     2008  
            (In thousands)          
Cash and cash equivalents
  $ 1,345,221     $ 1,506,518     $ 1,190,645  
Short-term marketable securities
    561,287       700,585       707,477  
Long-term marketable securities
    470,643       92,699       —  
 
                 
Total cash, cash equivalents and marketable securities
  $ 2,377,151     $ 2,299,802     $ 1,898,122  
 
                 
Increase from prior period end
  $ 77,349                  
 
                     
Increase from prior year end
  $ 479,029                  
 
                     
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Broadcom Reports Third Quarter 2009 Results
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BROADCOM CORPORATION
Unaudited Condensed Consolidated Balance Sheets
(In thousands)
                 
    September 30,     December 31,  
    2009     2008  
ASSETS
               
Current assets:
               
Cash and cash equivalents
  $ 1,345,221     $ 1,190,645  
Short-term marketable securities
    561,287       707,477  
Accounts receivable, net
    541,587       372,311  
Inventory
    307,216       366,106  
Prepaid expenses and other current assets
    95,296       114,674  
 
           
Total current assets
    2,850,607       2,751,213  
Property and equipment, net
    228,621       234,691  
Long-term marketable securities
    470,643       —  
Goodwill
    1,277,951       1,279,243  
Purchased intangible assets, net
    21,324       61,958  
Other assets
    67,019       66,160  
 
           
Total assets
  $ 4,916,165     $ 4,393,265  
 
           
LIABILITIES AND SHAREHOLDERS’ EQUITY
               
Current liabilities:
               
Accounts payable
  $ 423,199     $ 310,487  
Wages and related benefits
    182,394       157,758  
Deferred revenue
    96,421       12,338  
Accrued liabilities
    301,371       236,520  
 
           
Total current liabilities
    1,003,385       717,103  
Long-term deferred revenue
    637       3,898  
Other long-term liabilities
    62,688       65,197  
Commitments and contingencies
 
Shareholders’ equity
    3,849,455       3,607,067  
 
           
Total liabilities and shareholders’ equity
  $ 4,916,165     $ 4,393,265  
 
           
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Broadcom Reports Third Quarter 2009 Results
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BROADCOM CORPORATION
Unaudited Supplementary Financial Data
(In thousands)
     The following table presents details of supplementary financial data included in each functional line item in the unaudited condensed consolidated statements of income:
                                 
    Three Months Ended   Nine Months Ended
    September 30,   September 30,
    2009   2008   2009   2008
Cost of product revenue:
                               
Stock-based compensation
  $ 6,579     $ 6,652     $ 18,584     $ 18,354  
Amortization of purchased intangible assets
    3,876       3,935       12,101       11,804  
 
                               
Research and development:
                               
Stock-based compensation
    90,829       93,334       266,698       262,043  
 
                               
Selling, general and administrative:
                               
Stock-based compensation
    31,290       33,328       89,817       93,661  
 
                               
Other operating expense:
                               
Amortization of purchased intangible assets
    4,159       183       12,457       550  
In-process research and development (1)
    —       —       —       10,900  
Impairment of long-lived assets (2)
    7,634       250       18,895       2,150  
Restructuring costs (reversals) (3)
    4,772       —       12,330       (1,000 )
Settlement costs (gains) (4)
    —       —       (57,256 )     15,810  
Charitable contribution (5)
    —       —       50,000       —  
 
                               
Other:
                               
Employer payroll tax expense on certain stock option exercises
    1,625       1,532       3,566       3,631  
Loss on strategic investments, net
    —       2,506       —       4,266  
Non-operating gains
    27       (193 )     13       (193 )
 
(1)   Recorded in connection with the company’s acquisition of Sunext Design, Inc. in the nine months ended September 30, 2008.
 
(2)   Long-lived asset impairment charges of $11.3 million and $7.6 million related to the company’s acquisition of the digital television business of AMD, Inc. were recorded in the three months ended June 30, 2009 and September 30, 2009, respectively.
 
(3)   Recorded in connection with the company’s restructuring plans announced or implemented in the nine months ended September 30, 2009, as well as a restructuring cost reversal of a prior restructuring plan in the nine months ended September 30, 2008.
 
(4)   Recorded a $65.3 million gain on settlement in connection with the QUALCOMM litigation, offset in part by estimated additional settlement costs of $6.9 million related to certain employment tax items and an additional $1.2 million related to patent infringement claims in the nine months ended September 30, 2009. Recorded settlement costs of $15.8 million, of which $12.0 million related to Broadcom’s settlement with the Securities and Exchange Commission and $3.8 million related to a patent infringement claims settled in the nine months ended September 30, 2008.
 
(5)   Recorded in connection with an accrued $50.0 million charitable contribution to the recently established Broadcom Foundation in the nine months ended September 30, 2009.
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BROADCOM CORPORATION
Unaudited Supplementary Financial Data
(In thousands)
                         
    Three Months Ended  
    September 30, 2009     September 30, 2008     June 30, 2009  
Product revenue
  $ 1,194,745     $ 1,254,083     $ 966,317  
Licensing revenue
    59,452       44,392       73,627  
 
                 
Total net revenue
  $ 1,254,197     $ 1,298,475     $ 1,039,944  
 
                 
Cost of product revenue
  $ 615,349     $ 619,459     $ 518,674  
 
                 
Product gross margin (1)
    48.5 %     50.6 %     46.3 %
 
                 
Total gross margin
    50.9 %     52.3 %     50.1 %
 
                 
 
(1)   Product gross margin in the three months ended September 30, 2008 has been adjusted from 50.9% to 50.6% to conform with the current period presentation of product and licensing revenue.
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BROADCOM CORPORATION
Guidance for the Three Months Ending December 31, 2009
         
    Three Months
    Ending December 31, 2009
Total net revenue
  Flat from Q3
 
Product gross margin
  Increase by around 20 – 50 basis points from Q3
 
Research and development and selling, general and administrative expenses
(including stock-based compensation)
  Up ~$20 million from Q3
Broadcom has based the preceding guidance for the three months ending December 31, 2009 on expectations, assumptions and estimates that we believe are reasonable given our assessment of historical trends and other information reasonably available as of October 22, 2009. Our guidance consists of predictions only, however, and is subject to a wide range of known and unknown business risks and uncertainties, many of which are beyond our control. The forecasts and projections contained in the table above should not be regarded as representations by Broadcom that the estimated results will be achieved. Projections and estimates are necessarily speculative in nature and actual results may vary materially from the guidance we provide today.
The guidance set forth in the table above should be read together with the information under the caption, “Cautions regarding Forward Looking Statements” above, our Annual Report on Form 10-K for the year ended December 31, 2008, subsequent Quarterly Reports on Form 10-Q, recent Current Reports on Form 8-K, and our other Securities and Exchange Commission filings. We undertake no obligation to publicly update or revise any forward-looking statements, including the guidance set forth herein.
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