Broadcom Announces Preliminary Settlement Reached in Stock Options Derivative Lawsuit

Broadcom Corporation

today announced that the remaining defendants in the federal consolidated shareholder derivative action relating to the company's historical stock option accounting practices have entered into a settlement. Federal shareholder derivative actions were filed in 2006 by certain named shareholder plaintiffs against each of the then members of Broadcom's Board of Directors and certain current and former officers. The actions, which were later consolidated, sought recovery for the company's benefit. If the Court accepts the parties' proposed schedule for approving the settlement, it is expected that a final approval hearing will occur before the end of the second quarter, ending June 30, 2011. In connection with the proposed settlement, Broadcom currently expects to report a one-time gain of approximately $50 million during the quarter in which Broadcom receives the cash payment from Dr. Nicholas and Dr. Samueli's stock options are cancelled. Broadcom has agreed to pay plaintiffs' counsel $25 million of the settlement proceeds for attorneys' fees, expenses, and costs, subject to Court approval. In addition, upon final Court approval and receipt of the settlement consideration, Broadcom expects to contribute $25 million to the Broadcom Foundation. Accordingly, it is expected that the settlement will have a neutral effect on Broadcom's consolidated statement of income in the quarter in which such settlement occurs.