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Broadcom Corporation 2006 Annual Report Connecting Everything®

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Broadcom Corporation 2006 Annual Report Connecting Everything® Broadcom Corporation 2006 Annual Report Broadcom Corporation 2006 Annual Report Connecting everything Connecting everything® ® Broadcom Corporation 5300 California Avenue Irvine, California 92617-3038 949.926.5000 www.broadcom.com Corporate Information BOARD OF DIRECTORS Scott A. McGregor (1) John Major (6) President and Chief Executive Officer Founder and President Broadcom Corporation MTSG Henry Samueli, Ph.D. (2) Alan E. Ross Chairman of the Board and Chief Technical Officer Venture Capitalist Broadcom Corporation Robert E. Switz (7) George L. Farinsky (3) President and Chief Executive Officer Retired Financial Executive ADC Telecommunications, Inc. Maureen E. Grzelakowski (4) Werner F. Wolfen (8) Broadcom’s innovative products and technologies Senior Advisor President Investor Growth Capital, Inc. Capri Investments, LLC enable people to connect — locally and globally — Nancy H. Handel (5) Senior Vice President and Chief Financial Officer for business, for fun, at home and on the move. Applied Materials, Inc. (retired) (1) Chair of the Equity Award Committee; (2) Member of the Equity Award Committee; (3) Chair of the Audit Committee; (4) Member of the Compensation Committee and the Nominating & Corporate Governance Committee; (5) Member of the Audit Committee; (6) Chair of the Compensation Committee, Member of the Audit Committee, the Equity Award Committee, and the Nominating & Corporate Governance Committee; (7) Chair of the Nominating & Corporate Governance Committee, Member of the Audit Committee; (8) Lead Independent Director, Member of the Audit Committee and the Compensation Committee. ELECTED OFFICERS BROADCOM’S THREE MAJOR TARGET MARKETS Scott A. McGregor Neil Y. Kim President and Chief Executive Officer Senior Vice President, Central Engineering Henry Samueli, Ph.D. Thomas F. Lagatta Chairman of the Board and Chief Technical Officer Senior Vice President, Worldwide Sales Yossi Cohen Vahid Manian Senior Vice President & General Manager, Senior Vice President, Global Manufacturing Operations Mobile Platforms Group Daniel A. Marotta David A. Dull Senior Vice President & General Manager, Senior Vice President, Business Affairs, Broadband Communications Group General Counsel and Secretary Robert A. Rango Broadband Enterprise Mobile & Dianne Dyer-Bruggeman Senior Vice President & General Manager, Communications Networking Wireless Senior Vice President, Global Human Resources Wireless Connectivity Group Edward H. Frank, Ph.D. Ford G. Tamer, Ph.D. Vice President, Research & Development Senior Vice President & General Manager, Enterprise Networking Group ABOUT BROADCOM Bruce E. Kiddoo Vice President, Corporate Controller and Kenneth E. Venner Acting Chief Financial Officer Senior Vice President and Chief Information Officer Broadcom Corporation is a major technology innovator and global leader in semiconductors for wired and wireless communications. Broadcom® products Corporate Headquarters Independent Registered Public Accounting Firm Broadcom Corporation Ernst & Young LLP enable the delivery of voice, video, data and multimedia to and throughout the 5300 California Avenue Orange County, California home, the office and the mobile environment. We provide the industry’s broad- Irvine, California 92617-3038 Tel: 949.926.5000 Investor Relations est portfolio of state-of-the-art, system-on-a-chip and software solutions to manu- Fax: 949.926.5203 For further information on Broadcom, additional copies facturers of computing and networking equipment, digital entertainment and © 2007 Broadcom Corporation. All rights reserved. All papers used in this annual report are recyclable. of this Report, our SEC filings or other financial informa- Annual Meeting of Shareholders tion (available free of charge), please contact: broadband access products, and mobile devices. These solutions support our Wednesday, May 2, 2007 core mission: Connecting everything®. Broadcom Corporate Headquarters Investor Relations Irvine, California Broadcom Corporation P.O. Box 57013 Broadcom is one of the world’s largest fabless semiconductor companies, with Transfer Agent and Registrar Irvine, California 92619-7013 2006 revenue of $3.67 billion, and holds over 1,950 U.S. and 750 foreign U.S. Stock Transfer Corporation Tel: 949.926.5663 patents, more than 5,900 additional pending patent applications, and one of 1745 Gardena Avenue Fax: 949.926.9254 Glendale, California 91204-2991 the broadest intellectual property portfolios addressing both wired and wireless Tel: 818.502.1404 or 800.835.8778 You may also contact us by email at transmission of voice, video and data. Fax: 818.502.0674 [email protected] or by visiting our website at www.broadcom.com. Broadcom is headquartered in Irvine, California, and has offices and research Broadcom®, the pulse logo, Connecting everything®, the Connecting everything logo, StrataXGS® and CellAirity™ are among the trademarks of facilities in North America, Asia and Europe. Broadcom Class A shares trade 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 on the Nasdaq Global Select MarketSM under the symbol BRCM. Alliance. Bluetooth® is a trademark of the Bluetooth SIG. Blu-ray Disc™ is a trademark of the Blu-ray Disc Association. Nintendo® and Wii™ are trademarks of Nintendo. Nasdaq Global Select MarketSM is a service mark of The Nasdaq Stock Market, Inc. Any other trademarks or trade names mentioned are the property of their respective owners. Information as of March 2007. TO OUR SHAREHOLDERS The year 2006 exemplified the ever-changing nature We also continued to build a reputation as a major of the semiconductor industry, as strength in the first technology innovator in the global communications half of the year was followed by a slowdown in the industry. Of our more than 5,200 employees at year’s second half. Nonetheless, it was a strong year for end, 73 percent were engaged in R&D. The majority of Broadcom, as we increased net revenue by nearly those hold advanced degrees, including 439 Ph.D.s. $1billion to a record $3.67 billion, up 37 percent Broadcom has over 2,700 issued patents and one of the from the prior year. Our revenue growth outpaced the broadest intellectual property portfolios addressing wired growth rate of the overall semiconductor industry four- and wireless transmission of voice, video and data. fold, as measured by the Semiconductor Industry Association (SIA). We also attained record net income and increased cash, cash equivalents and marketable securities by over $900 million, finishing 2006 with a record balance of $2.8 billion. Our overall performance in 2006 points to the large, long-term opportunities that lie ahead of us as Broadcom helps drive the conver- gence of voice, video and data into an ever-growing array of communications and entertainment products for the home, the workplace and mobile environments. The trends that Broadcom facilitates are happening all around us. They include the convergence of voice and Wi-Fi® capabilities into broadband modems, the contin- ued migration to faster and more secure switches and controllers in the enterprise, and the adoption of personal video recording and high definition digital video in Scott McGregor Henry Samueli cable, satellite and Internet Protocol set-top boxes. Add to that the convergence of video and audio in portable Following are some highlights of the year in our three devices, the transition of analog television to digital TV, target markets: and the adoption of Bluetooth® into cell phones, head- Broadband Communications Products sets and PCs, and one begins to appreciate the opportu- We continued to build upon our strong position as a nities at hand for Broadcom. leader in broadband communications markets – To capitalize on these communications and convergence enabling the delivery of digital entertainment and opportunities, in 2006 we continued to draw upon our information into and throughout the connected home – world-class engineering talent and superior engineering by applying our breakthrough broadband transmission execution, our strong relationships with the world’s lead- technology to existing and emerging high-growth markets, ing semiconductor foundries, our broad portfolio of including those for high definition television, personal innovative products, and our strategic relationships with video recording, cable and satellite set-top boxes, and leading wired and wireless equipment makers. We DSL and cable modems. Broadcom introduced several undertook a corporate-wide initiative to migrate new new products designed to facilitate the next generation products to the industry-leading 65 nanometer geometry of broadband communication devices, providing signifi- process manufacturing technology. Most of our new cant advantages to makers of consumer video equipment products for 2007 are being designed in 65 nanometer as well as cable, satellite and DSL service providers. For technology. This effort is enabling Broadcom to offer example, we brought to market the industry’s first single- products that consume less power and extend battery chip high definition digital TV solution that supports full life, while also allowing us to leverage one of our 1080p display resolution and that will help bring greatest competitive advantages – the integration of affordable high definition television to a broad spectrum additional features and functions into a single chip. of consumers. We continue our aggressive efforts in this area, and Additionally, by combining
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