Broadcom Reports Third Quarter 2005 Results

The above pro forma non-GAAP adjustments are based upon our unaudited consolidated statements of operations for the periods shown. These adjustments are not in accordance with, or an alternative for, U.S. generally accepted accounting principles (GAAP). The pro forma non-GAAP financial information presented herein should be considered supplemental to, and not as a substitute for, or superior to, financial measures calculated in accordance with GAAP. However, Broadcom believes that pro forma non-GAAP reporting, giving effect to the adjustments shown in the above reconciliation, provides meaningful information and therefore uses it to supplement its GAAP reporting in evaluating operations, managing and benchmarking performance, and determining a portion of bonus compensation. Both GAAP and pro forma non-GAAP net income per share include the dilutive effects of shares issued or issuable under Broadcom's stock-based compensation programs in the computation of weighted average shares outstanding. Broadcom has chosen to provide this supplemental information to investors, analysts and other interested parties to enable them to perform additional analyses of operating results and to illustrate the results of operations giving effect to the pro forma non-GAAP adjustments shown in the above reconciliation.



                             BROADCOM CORPORATION
      Unaudited Pro Forma Non-GAAP Consolidated Statements of Operations
                   (In thousands, except per share amounts)

                                  Three Months Ended     Nine Months Ended
                                     September 30,        September 30,
                                     2005      2004       2005       2004
     Net revenue                  $694,977  $646,515  $1,850,183 $1,861,220
     Cost of revenue               323,736   318,205     866,923    912,241
     Gross profit                  371,241   328,310     983,260    948,979
     Operating expense:
       Research and development    157,781   123,652     439,558    365,536
       Selling, general and
        administrative              64,252    53,658     176,010    160,221
     Income from operations        149,208   151,000     367,692    423,222
     Interest income, net           14,317     4,365      32,953      8,982
     Other income (expense), net       958      (258)      1,560     (1,265)
     Income before income taxes    164,483   155,107     402,205    430,939
     Provision for income taxes     16,448    31,022      50,419     86,188
     Pro forma non-GAAP net
      income                      $148,035  $124,085    $351,786   $344,751
     Pro forma non-GAAP net
      income per share (basic)        $.43      $.38       $1.05      $1.09
     Pro forma non-GAAP net
      income per share (diluted)      $.39      $.36        $.96       $.99
     Weighted average shares
      (basic)                      341,849   322,541     336,074   316,084
     Weighted average shares
      (diluted)                    383,675   347,389     368,321   347,449


    Pro Forma Non-GAAP Statements

The above pro forma non-GAAP statements are based upon our unaudited consolidated statements of operations for the periods shown, giving effect to the adjustments shown in the attached reconciliation. This presentation is not in accordance with, or an alternative for, U.S. generally accepted accounting principles (GAAP). The pro forma non-GAAP financial information presented herein should be considered supplemental to, and not as a substitute for, or superior to, financial measures calculated in accordance with GAAP. However, Broadcom believes that pro forma non-GAAP reporting, giving effect to the adjustments shown in the attached reconciliation, provides meaningful information and therefore uses it to supplement its GAAP reporting in evaluating operations, managing and benchmarking performance, and determining a portion of bonus compensation. Both GAAP and pro forma non-GAAP net income per share include the dilutive effects of shares issued or issuable under Broadcom's stock-based compensation programs in the computation of weighted average shares outstanding. Broadcom has chosen to provide this supplemental information to investors, analysts and other interested parties to enable them to perform additional analyses of operating results and to illustrate the results of operations giving effect to the pro forma non-GAAP adjustments shown in the attached reconciliation.



                             BROADCOM CORPORATION
        Unaudited GAAP Condensed Consolidated Statements of Cash Flows
                                (In thousands)

                               Three Months Ended        Nine Months Ended
                                  September 30,            September 30,
                                2005         2004        2005       2004
     Operating activities
     Net income              $132,656      $43,901    $216,899    $147,604
     Adjustments to
      reconcile net income
      to net cash provided
      by operating activities:
      Depreciation and
       amortization              12,644              19,714            40,422            60,625
            Stock-based
              compensation:
                Restricted  stock
                  units  issued  by
                  Broadcom                              9,875                      76            23,434                    76
                Stock  options  and
                  restricted  stock
                  assumed  in
                  acquisitions  and
                  other  equity
                  compensation
                  instruments  issued
                  by  Broadcom                        6,709              12,419            18,992            63,340
          Additional  acquisition-
            related  items:
              Amortization  of
                purchased  intangible
                assets                                    3,814                5,078            11,300            11,355
              In-process  research
                and  development                35,000              37,262            41,652            63,766
              Impairment  of
                intangible  assets                    --                      --                    --            18,000
          Tax  benefit  realized
            from  stock  plans                          --              24,457                    --            57,100
          Gain  on  strategic
            investments,  net                  (1,151)            (5,231)          (1,151)          (5,231)
          Change  in  operating
            assets  and  liabilities:
                Accounts  receivable      (31,606)              5,984          (69,454)        (50,034)
                Inventory                          (29,257)            31,982          (33,985)        (71,548)
                Prepaid  expenses
                  and  other  assets          (28,749)              7,420          (39,371)          (6,934)
                Accounts  payable              58,944            (60,037)          99,063          (12,336)
                Accrued  settlement
                  liabilities                  (110,426)            33,200          (10,574)          26,433
                Other  accrued
                  liabilities                      24,306                3,746            15,723            47,270
                    Net  cash  provided
                      by  operating
                      activities                    82,759            159,971          312,950          349,486

          Investing  activities
          Purchase  of  property
            and  equipment,  net            (11,755)          (11,472)        (25,185)        (30,871)
          Net  cash  paid  for
            acquisitions                        (54,121)            (4,914)        (78,149)        (74,846)
          Proceeds  from  sale  of
            strategic
            investments,  net                    1,867                8,181              1,762              3,015
          Net  purchases  of
            marketable  securities      (36,782)        (111,732)      (153,258)      (241,758)
                Net  cash  used  in
                  investing
                  activities                    (100,791)        (119,937)      (254,830)      (344,460)

          Financing  activities
          Payment  on  assumed
            debt  and  other
            obligations                                    --              (1,246)          (2,482)          (2,203)
          Net  proceeds  from
            issuance  of  common
            stock                                      217,237              21,703          316,783          218,021
          Repurchases  of
            Class  A  common  stock        (77,652)                    --          (95,892)                  --
                Net  cash  provided
                  by  financing
                  activities                      139,585              20,457          218,409          215,818
          Increase  in  cash  and
            cash  equivalents                121,553              60,491          276,529          220,844
          Cash  and  cash
            equivalents  at
            beginning  of  period      1,013,568            719,022          858,592          558,669
          Cash  and  cash
            equivalents  at
            end  of  period                $1,135,121          $779,513    $1,135,121        $779,513



                                  UNAUDITED  SUPPLEMENTAL  FINANCIAL  INFORMATION

                                                                    September  30,        June  30,          December  31,
                                                                            2005                      2005                      2004
                                                                                                (In  thousands)
              Cash  and  cash  equivalents      $1,135,121          $1,013,568            $858,592
              Short-term  marketable
                securities                                        424,320                390,590              324,041
              Long-term  marketable
                securities                                        145,897                142,845                92,918
              Total  cash,  cash  equivalents
                and  marketable  securities    $1,705,338          $1,547,003        $1,275,551

              Increase  from  prior
                quarter  end                                    $158,335
              Increase  from  prior  year  end    $429,787



                                                          BROADCOM  CORPORATION
                          Unaudited  GAAP  Condensed  Consolidated  Balance  Sheets
                                                                (In  thousands)

                                                                                                September  30,        December  31,
                                                                                                          2005                        2004
          ASSETS
          Current  assets:
              Cash  and  cash  equivalents                                    $1,135,121              $858,592
              Short-term  marketable  securities                            424,320                324,041
              Accounts  receivable,  net                                            275,397                205,135
              Inventory                                                                          163,322                128,294
              Prepaid  expenses  and  other  current  assets          109,715                  68,380
                  Total  current  assets                                            2,107,875            1,584,442
              Property  and  equipment,  net                                        92,603                107,160
              Long-term  marketable  securities                              145,897                  92,918
              Goodwill                                                                        1,131,941            1,062,188
              Purchased  intangible  assets,  net                              11,146                  17,074
              Other  assets                                                                      21,065                  22,057
                  Total  assets                                                          $3,510,527          $2,885,839

          LIABILITIES  AND  SHAREHOLDERS'  EQUITY
          Current  liabilities:
              Accounts  payable                                                          $278,216              $171,248
              Wages  and  related  benefits                                          74,850                  42,697
              Deferred  revenue                                                                1,742                    3,648
              Accrued  liabilities                                                      296,108                279,507
                  Total  current  liabilities                                      650,916                497,100
          Long-term  liabilities                                                        13,046                  22,753
          Commitments  and  contingencies
          Shareholders'  equity                                                    2,846,565            2,365,986
                  Total  liabilities  and
                    shareholders'  equity                                        $3,510,527          $2,885,839

 


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