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June 24, 2005
IRVINE, Calif. -- Broadcom Corporation (Nasdaq: BRCM) today announced that it has reached an agreement in principle to settle the securities class action litigation currently pending against the company and certain of its current and former officers and directors.
The class action was brought on behalf of persons and entities who bought or acquired shares of Broadcom's common stock, or options on such shares, between July 31, 2000 and February 26, 2001. The proposed settlement remains subject to the satisfaction of various conditions, including negotiation and execution of a final stipulation of settlement, approval by the U.S. District Court for the Central District of California following notice to members of the class, and a commitment by the company's insurance carriers to fund a portion of the settlement payments.
Under the proposed settlement, the class action litigation will be dismissed in exchange for an aggregate cash payment of $150 million. Broadcom expects that approximately $40 million of that amount will be paid by its insurance carriers, with the balance of approximately $110 million to be paid by the company. The company expects to record its estimated portion of the settlement payment as a one-time charge in its statement of operations for the second quarter of 2005 and to pay that amount in cash into escrow in the third quarter of 2005.
Terms for distribution of the settlement fund to class members after final court approval of the settlement, and other terms of settlement, will be disclosed in a notice to be sent to class members after preliminary court approval. The court's preliminary approval hearing is scheduled for June 27, 2005.
The company and the other defendants have steadfastly maintained that the claims raised in the class action litigation were without merit, and have vigorously contested those claims. As part of the settlement, the company and other defendants continue to deny any liability or wrongdoing.
"We have agreed to settle this lawsuit so that we may put this longstanding matter behind us and focus Broadcom's energies and resources on our business objectives and the many market opportunities before us," said David A. Dull, Broadcom's Senior Vice President and General Counsel. "We have vigorously fought these charges for over four years, and we were fully prepared to take this matter to a trial on the merits. We believe we would have prevailed at trial. But, given the strength of our balance sheet and our future prospects, we concluded that this settlement provides a reasonable opportunity to avoid the continuing costs and distraction of this litigation, and eliminates the chance, however slight, of a substantially greater financial exposure that is inherent in a jury trial."
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