Net revenue for the third quarter of 2001 was $213.6 million, an increase of 1% over the $210.9 million reported in the second quarter of 2001, and a decrease of 33% from the $319.2 million reported in the third quarter of 2000. Pro forma net loss for the third quarter of 2001 was $34.0 million, or $.13 per share (basic and diluted). This compares with pro forma net loss of $41.1 million, or $.16 per share (basic and diluted), in the second quarter of 2001, and pro forma net income of $78.7 million, or $.30 per share (diluted), for the third quarter of 2000. Loss per share for the quarter was based on 254.5 million weighted average shares outstanding (basic and diluted), compared to 252.4 million weighted average shares outstanding (basic and diluted) in the second quarter of 2001, and 264.8 million weighted average shares outstanding (diluted) in the third quarter of 2000.
Broadcom reports net income (loss) and diluted earnings (loss) per share on a pro forma basis, which excludes the effects of acquisition-related expenses, payroll taxes on certain stock option exercises, certain non-recurring charges, such as goodwill impairment and loss on minority equity investments, and related income tax effects. Including these charges and effects, substantially all of which were non-cash, net loss for the third quarter of 2001 was $1,619.2 million, or $6.36 per share (basic and diluted), compared with a net loss of $436.4 million, or $1.73 per share (basic and diluted), in the second quarter of 2001, and a net loss of $14.1 million, or $.06 per share (basic and diluted), in the third quarter of 2000.
Broadcom recognized several non-recurring charges for the third quarter of 2001, all of which are included in the pro forma adjustment. The company recorded restructuring charges of $16.0 million to cover the costs of reduction of facilities, employee severance and other costs associated with actions implemented in July to streamline operations. Approximately $13.3 million of these charges will result in cash payments. The company analyzed its minority investments in other companies and recorded a net reduction in the carrying value of these investments of $32.2 million. This reduction was a non-cash charge.
The company also determined that under current market conditions it was appropriate to take a one-time, non-cash charge of $1,182 million against goodwill. This charge is a result of lower market valuations of acquisitions and does not imply that the operations of these businesses will be discontinued. This will reduce the total value of the intangible asset balance sheet account of goodwill as of September 30, 2001 from $3,437 million to $2,255 million. In summary, for the third quarter of 2001 Broadcom took a total of $1,230 million in non-recurring charges, of which all but approximately $13 million were non-cash. Cash and marketable securities totaled $653 million at the end of the third quarter, compared with $665 million at the end of the second quarter.
For the nine months ended September 30, 2001, net revenue was $735.0 million, a decrease of 2.8% over the $755.9 million reported for the nine months ended September 30, 2000. Pro forma net loss for the nine months ended September 30, 2001 was $57.0 million, compared to pro forma net income of $184.7 million reported for the first nine months of 2000. Pro forma loss per share was $.23 (basic and diluted), based on 252.2 million weighted shares outstanding, versus pro forma earnings of $.72 per share (diluted) on 257.1 million weighted average shares outstanding for the same period in 2000. Including the charges and effects excluded in pro forma reporting, net loss for the nine months ended September 30, 2001 was $2,412.5 million, or $9.57 per share (basic and diluted).
Broadcom delivered solid third quarter results exceeding revenue and profit expectations despite challenging market conditions, said Dr. Henry T. Nicholas III, Broadcom’s President and CEO. We are now seeing an improved level of stability and visibility in the markets that we serve. As a result we have increased confidence that the steps we have taken and continue to take to scale and redistribute our investments are appropriate. We continue to place a strong emphasis on effective asset management as evidenced by our strong balance sheet and tight inventory management. Our participation in a diverse set of core markets, combined with entry into new markets, should position Broadcom well to benefit as the global technology markets improve.
SOURCE: COMPANY PRESS RELEASE
