Back to GetFilings.com

Table of Contents

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

Commission file number: 000-23993

Broadcom Corporation
(Exact name of registrant as specified in its charter)

16215 Alton Parkway
Irvine, California 92618-3616
(Address of principal executive offices and zip code)

(949) 450-8700
(Registrant’s telephone number, including area code)

     Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes [X]   No [   ]

     The number of shares of the registrant’s common stock, $0.0001 par value, outstanding as of July 31, 2002: 201,163,143 shares of Class A common stock and 72,803,302 shares of Class B common stock.

Table of Contents

Broadcom® and SystemI/O™ are trademarks of Broadcom Corporation and/or its affiliates in the United States and certain other countries. All other trademarks mentioned are the property of their respective owners.

©2002 Broadcom Corporation. All rights reserved.

Table of Contents

BROADCOM CORPORATION

QUARTERLY REPORT ON FORM 10-Q

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2002

TABLE OF CONTENTS

Table of Contents

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

BROADCOM CORPORATION

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)

See accompanying notes.

1

Table of Contents

BROADCOM CORPORATION

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)

See accompanying notes.

2

Table of Contents

BROADCOM CORPORATION

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)

See accompanying notes.

3

Table of Contents

BROADCOM CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2002

1.

Summary of Significant Accounting Policies

The Company

     Broadcom Corporation (the “Company”) uses proprietary technologies and advanced design methodologies to design, develop and supply complete system-on-a-chip solutions and related hardware and software applications for every major broadband communications market. The Company’s diverse product portfolio includes solutions for digital cable and satellite set-top boxes; cable and DSL modems and residential gateways; high-speed transmission and switching for local, metropolitan and wide area networking; home and wireless networking; cellular and terrestrial wireless communications; Voice over Internet Protocol (VoIP) gateway and telephony systems; broadband network processors; and SystemI/O™ server solutions.

Basis of Presentation

     The unaudited condensed consolidated financial statements include the accounts of the Company and its subsidiaries. All significant intercompany accounts and transactions have been eliminated.

     The condensed consolidated financial statements included herein are unaudited; however, they contain all normal recurring accruals and adjustments that, in the opinion of management, are necessary to present fairly the Company’s consolidated financial position at June 30, 2002, the consolidated results of operations for the three and six months ended June 30, 2002 and 2001, and the consolidated cash flows for the six months ended June 30, 2002 and 2001. The results of operations for the three and six months ended June 30, 2002 are not necessarily indicative of the results to be expected for the full fiscal year.

     The accompanying unaudited condensed consolidated financial statements do not include certain footnotes and financial presentations normally required under generally accepted accounting principles. Therefore, these financial statements should be read in conjunction with the Company’s audited consolidated financial statements and notes thereto for the year ended December 31, 2001, included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 19, 2002.

Use of Estimates

     The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Significant estimates made in preparing the financial statements include the allowances for doubtful accounts, sales returns and allowances, inventory reserves, strategic investments, goodwill and purchased intangible asset valuations, deferred income tax asset valuation allowances, warranty reserves, restructuring costs, litigation and other contingencies. To the extent there are material differences between estimates and the actual results, future results of operations will be affected.

Goodwill and Purchased Intangible Assets

     In acquisitions accounted for using the purchase method, goodwill is recorded as the difference, if any, between the aggregate consideration paid for an acquisition and the fair value of the net tangible and intangible assets acquired.

     In June 2001 the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards (“SFAS”) No. 142, Goodwill and Other Intangible Assets (“SFAS 142”). Under these new rules, goodwill and intangible assets deemed to have indefinite lives are no longer amortized but are subject to annual impairment tests. Other intangible assets will continue to be amortized over their estimated useful lives. Impairment losses that arise due to the initial application of this standard will be reported as a cumulative effect of a change in accounting principle. In conjunction with the adoption of SFAS 142, the Company completed an impairment review of its goodwill and intangible assets deemed to have indefinite lives as of the beginning of 2002 and found no impairment. The Company will perform the annual impairment review during the fourth quarter of each year, beginning in 2002, or more frequently if the Company believes indicators of impairment exist.

     As required by SFAS 142, the Company ceased amortizing goodwill of $2.254 billion beginning January 1, 2002. Included in goodwill is $12.1 million of assembled workforce previously classified as purchased intangible assets, which was reclassified to

4

Table of Contents

goodwill effective January 1, 2002. Any additional goodwill recorded as a result of future purchase transactions will not be amortized and will also be subject to the annual impairment tests set forth in SFAS 142.

     At June 30, 2002 the unamortized balance of purchased intangible assets that will be amortized to future cost of revenue was $50.7 million, of which $29.2 million is expected to be amortized in the remainder of 2002 and approximately $16.1 million and $5.4 million are expected to be amortized in 2003 and 2004, respectively. At June 30, 2002 the unamortized balance of purchased intangible assets that will be amortized to future operating expense was $13.7 million, of which $11.1 million is expected to be amortized in the remainder of 2002 and $2.6 million is expected to be amortized in 2003.

     The following table presents the impact on net loss and net loss per share had SFAS 142 been in effect for the three and six months ended June 30, 2001: