Everything ®
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Broadcom Corporation 16215 Alton Parkway Irvine, California 92618-3616 949.450.8700 Corporation Broadcom 2004 Annual Report www.broadcom.com 2004 Annual 2004 Annual Report Connecting everything Connecting everything® ® Broadcom’s technologies and products are changing the way the Corporate Information world communicates – better, faster and more cost-effectively – BOARD OF DIRECTORS Scott A. McGregor (1) Alan E. Ross at work, at home and on the road. President and Chief Executive Officer Venture Capitalist Broadcom Corporation Robert E. Switz (5) Henry Samueli, Ph.D. (2) President and Chief Executive Officer Chairman of the Board and Chief Technical Officer ADC Telecommunications, Inc. Broadcom Corporation Werner F.Wolfen (6) George L. Farinsky (3) President Retired Financial Executive Capri Investments, LLC John Major (4) Founder and President MTSG (1) Chairman of the Equity Award Committee. (2) Member of the Equity Award Committee. (3) Chairman of the Audit Committee, Member of the Compensation Committee and the Nominating & Corporate Governance Committee. (4) Chairman of the Nominating & Corporate Governance Committee, Member of the Audit Committee and the Compensation Committee. (5) Member of the Audit Committee and the Compensation Committee. (6) Lead Independent Director,Chairman of the Compensation Committee, Member of the Audit Committee, the Equity Award Committee and the Nominating & Corporate Governance Committee. Broadcom’s Four Business Groups ELECTED OFFICERS Scott A. McGregor Daniel A. Marotta Broadband President and Chief Executive Officer Group Vice President Networking Broadband Communications Group Infrastructure Communications Henry Samueli, Ph.D. Chairman of the Board and Chief Technical Officer Andrew J. Pease Vice President of Worldwide Sales David A. Dull Vice President of Business Affairs, Robert A. Rango General Counsel and Secretary Group Vice President Mobile & Wireless Group Dianne Dyer-Bruggeman Vice President of Human Resources William J. Ruehle Vice President and Chief Financial Officer Edward H. Frank, Ph.D. Vice President of Research & Development Ford G. Tamer,Ph.D. Group Vice President Bruce E. Kiddoo Networking Infrastructure Group Enterprise Vice President and Corporate Controller Computing Jeffrey L.Thermond Neil Y.Kim Vice President and General Manager Vice President of Central Engineering Home & Wireless Networking Business Unit Thomas F.Lagatta Kenneth E.Venner Group Vice President Vice President and Chief Information Officer Enterprise Computing Group Mobile & Wireless Vahid Manian Vice President of Manufacturing Operations Company Profile Corporate Headquarters Annual Meeting of Shareholders Broadcom Corporation Thursday, April 28, 2005 Broadcom Corporation is a global leader in wired and wireless broadband communications semi- 16215 Alton Parkway Irvine, California Irvine, California 92618-3616 Investor Relations conductors. Our products enable the convergence of high-speed data, high definition video, voice Tel: 949.450.8700 For further information on Broadcom, additional and audio at home, in the office and on the go. Broadcom provides manufacturers of computing and Fax: 949.450.8710 copies of this Report, our SEC filings or other financial networking equipment, digital entertainment and broadband access products, and mobile devices Independent Registered information (available free of charge), please contact: Public Accounting Firm with the industry’s broadest portfolio of state-of-the-art system-on-a-chip and software solutions. Investor Relations Ernst & Young LLP Broadcom Corporation Orange County, California Our diverse product portfolio addresses every major broadband communications market and P. O. Box 57013 includes solutions for digital cable, satellite and Internet Protocol set-top boxes; high definition Transfer Agent and Registrar Irvine, California 92619-7013 television (HDTV); cable and digital subscriber line (DSL) modems and residential gateways; U.S. Stock Transfer Corporation Tel: 949.926.5663 1745 Gardena Avenue Fax: 949.450.8716 high-speed transmission and switching for local, metropolitan, wide area and storage networking; Glendale, California 91204-2991 You may also contact us by e-mail at Tel: 818.502.1404 or 800.835.8778 home and wireless networking; cellular and terrestrial wireless communications; Voice over Internet [email protected] or by visiting Fax: 818.502.0674 Protocol (VoIP) gateway and telephony systems; broadband network and security processors; and our website at www.broadcom.com. SystemI/O™ server solutions. These solutions support our core mission: Connecting everything®. Broadcom®,the pulse logo, Connecting everything®,the Connecting everything logo, 54g™, 125 High Speed Mode™, AirForce™, BroadRange™, NetXtreme®, NetXtreme II™, SecureEasySetup™, the SecureEasySetup logo and SystemI/O™ are among the trademarks of With annual revenue of more than $2 billion, Broadcom is one of the world’s largest fabless semi- Broadcom Corporation and/or its affiliates in the United States, certain other countries and/or the EU. Wi-Fi® is a trademark of the Wi-Fi Alliance. MIPS64® is a trademark of MIPS Technologies,Inc. Bluetooth® is a trademark of the Bluetooth SIG. NASDAQ National Market® is conductor companies.The company, founded in 1991, is headquartered in Irvine, California, with a trademark of The Nasdaq Stock Market, Inc. Any other trademarks or trade names mentioned are the property of their respective owners. offices and research facilities in North America, Asia and Europe. Broadcom Class A shares trade © 2005 Broadcom Corporation. All rights reserved. on the NASDAQ National Market® under the symbol BRCM. To Our Shareholders The year 2004 marked an important growth period for Broadcom.We grew revenue and net income to record levels. We were profitable for the full year, posting the first yearly profit since 1999, and generated strong cash flow, increasing our cash and marketable securities to more than $1 billion. With our continued focus on research and development, our superior engineering execution, the completion of several acquisitions, and an extremely productive group of employees, we closed out 2004 and entered 2005 well-positioned for a number of opportunities going forward. In 2004 we continued to realize the benefits of our diversifi- cation strategy, starting with Broadcom’s ability to offer the Henry Samueli Scott McGregor broadest portfolio of communications technologies and prod- ucts in the semiconductor industry, providing multiple avenues for growth. The breadth of that portfolio allowed us to tap expertise and leadership in one market to grow our presence in other related markets. For example, we built upon our cable set-top box foundation to successfully enter the direct broadcast satellite (DBS) market. We saw growth in our traditional markets, such as cable modems, DSL gateways and Gigabit Ethernet applications, and became a leader in newer markets such as the one for Wi-Fi® products, where we are now the industry’s leading silicon provider. We were also successful in increasing the silicon content within a number of end markets, and we helped create and grow entirely new mar- kets, such as the market for personal video recording (PVR) applications. We continue to examine opportunities to target adjacent markets where we do not currently participate as well as to expand opportunities in our current markets. The successes of 2004 are reflected in our numbers. We ended the year with $2.4 billion in net revenue, a 49 percent increase over the $1.6 billion reported for 2003, even though sales slipped in our last quarter. In accordance with GAAP,or generally accepted accounting principles, our net income was nearly $219 million compared to a net loss of about $960 million for 2003. Our cash and marketable securities position almost doubled, to $1.2 billion. We continued to outpace peer companies in our ability to grow revenue, and grow it efficiently, as our revenue per employee for the fiscal year surpassed $700,000, one of the highest productivity levels in the industry. As communications technologies continue to converge in new and exciting ways, Broadcom has grown to be a significant enabler of this evolution. We accomplish that by offering products in multiple markets as well as through constant innovation and an ability to anticipate and sometimes drive the direction of particular communications technologies and markets. Following are some of the highlights from 2004 and early 2005 demonstrating that leadership. Broadband Products We greatly expanded our position as a leading enabler of the delivery of digital entertainment and information into and throughout the home by continuing to support the major providers of digital cable and satellite set-top boxes and broadband modems with industry-leading functionality and software. Our acquisition of Sand Video, Inc. enabled Broadcom to introduce breakthrough technology that allowed manufacturers to economically bring to market next-generation high definition set-top boxes, DVD players and digital television entertainment systems with MPEG-4 AVC (Advanced Video Coding) technology by early 2005. Advanced video and audio compression technology is an important strategic initiative for Broadcom. This technology will expand our offerings in the broadband consumer market and create new opportunities for the company in the DVD player and Internet Protocol (IP) set-top box markets. Additionally, we introduced digital television (DTV) products targeted at television manufacturers who require