2014

Marvell Technology Group Ltd. Reports First Quarter of Fiscal 2012 Financial Results Revenue: $802 Million

GAAP Net Income: $147 Million, EPS of $0.22

Non GAAP Net Income: $189 Million, EPS of $0.29

Free Cash Flow: $157 Million, 20 Percent of Revenue

SANTA CLARA, Calif., May 26, 2011 /PRNewswire/ -- Marvell Technology Group Ltd. (NASDAQ: MRVL), a global leader in integrated silicon solutions, today reported financial results for the first quarter of fiscal 2012, ended April 30, 2011.

(Logo: http://photos.prnewswire.com/prnh/20100719/SF36559LOGO-b)

Revenue for the first quarter of fiscal 2012 was $802 million, a 6 percent decrease from $856 million in the first quarter of fiscal 2011, ended May 1, 2010, and a 11 percent sequential decrease from $901 million in the fourth quarter of fiscal 2011, ended January 29, 2011.  

GAAP net income was $147 million, or $0.22 per share (diluted), for the first quarter of fiscal 2012, compared with GAAP net income of $206 million, or $0.30 per share (diluted), for the first quarter of fiscal 2011. GAAP net income in the fourth quarter of fiscal 2011 was $223 million, or $0.33 per share (diluted).  

Non-GAAP net income was $189 million, or $0.29 per share (diluted), for the first quarter of fiscal 2012, compared with non-GAAP net income of $260 million, or $0.38 per share (diluted), for the first quarter of fiscal 2011. Non-GAAP net income for the fourth quarter of fiscal 2011 was $273 million, or $0.40 per share (diluted).  

"The results for our first quarter reflected the typical seasonality of our consumer centric end markets," said Dr. Sehat Sutardja, Marvell's Chairman and Chief Executive Officer. "Even at this low point in the revenue cycle, we were an industry leader in profitability for both operating and cash flow margins, demonstrating the strength of our long-term business model. We remain confident that the investments we are making such as in TD-SCDMA and SSD will result in improved results throughout the year."

Marvell reports net income, basic and diluted net income per share in accordance with U.S. generally accepted accounting principles (GAAP) and on a non-GAAP basis as outlined below. Reconciliations of GAAP net income to non-GAAP net income for the three months ended April 30, 2011, January 29, 2011 and May 1, 2010 appear in the financial statements below. Non-GAAP net income, where applicable, excludes the effect of stock-based compensation, amortization and write-offs of acquired intangible assets, restructuring costs and certain one-time expenses or benefits.  

GAAP gross margin for the first quarter of fiscal 2012 was 58.3 percent, compared to 59.8 percent for the first quarter of fiscal 2011 and 58.7 percent for the fourth quarter of fiscal 2011.  

Non-GAAP gross margin for the first quarter of fiscal 2012 was 58.5 percent, compared to 60.6 percent for the first quarter of fiscal 2011 and 59.4 percent for the fourth quarter of fiscal 2011.  

Shares used to compute GAAP net income per diluted share for the first quarter of fiscal 2012 were 657 million shares, compared with 678 million shares in the first quarter of fiscal 2011 and 679 million shares in the fourth quarter of fiscal 2011. Shares used to compute non-GAAP net income per diluted share for the first quarter of fiscal 2012 were 663 million shares, compared with 681 million shares for the first quarter of fiscal 2011 and 685 million shares for the fourth quarter of fiscal 2011.  

Cash flow from operations for the first quarter of fiscal 2012 was $177 million, down from the $256 million in the first quarter of fiscal 2011 and down from the $251 million reported in the fourth quarter of fiscal 2011. Free cash flow for the first quarter of fiscal 2012 was $157 million, down from the $237 million in first quarter of fiscal 2011 and down from the $213 million reported in the fourth quarter of fiscal 2011. Free cash flow as presented above is defined as cash flow from operations, less capital expenditures and purchases of IP licenses.  

Under the share repurchase program, Marvell repurchased approximately 50 million shares for a total of $800 million in first quarter of fiscal 2012 demonstrating a commitment to returning shareholder value.

Conference Call

Marvell will be conducting a conference call on May 26, 2011 at 1:45 p.m. Pacific Time to discuss results for the first quarter of fiscal 2012. Interested parties may join the conference call by dialing 1-866-700-7173 or 1-617-213-8838, pass-code 96722601. The call will be webcast by Thomson Reuters and can be accessed at the Marvell Investor Relations website at http://investor.marvell.com/ with a replay available following the call until June 26, 2011.  

Discussion of Non-GAAP Financial Measures

Non-GAAP financial measures exclude stock-based compensation expense as well as charges related to acquisitions, restructuring, gains and other charges that are driven primarily by discrete events that management does not consider to be directly related to Marvell's core operating performance. Non-GAAP earnings per share is calculated by dividing non-GAAP net income by non-GAAP weighted average shares outstanding (diluted). For purposes of calculating non-GAAP earnings per share, the GAAP weighted average shares outstanding (diluted) is adjusted to exclude the potential benefits of compensation costs expected to be incurred in future periods, but not yet recognized in the financial statements. The expected compensation costs are treated as proceeds assumed to be used to repurchase shares under the GAAP treasury stock method and also include the dilutive/antidilutive effects of common stock options and restricted stock.  

Marvell believes that the presentation of non-GAAP financial measures provide important supplemental information to management and investors regarding financial and business trends relating to Marvell's financial condition and results of operations. While Marvell uses non-GAAP financial measures as a tool to enhance its understanding of certain aspects of its financial performance, Marvell does not consider these measures to be a substitute for, or superior to, the information provided by GAAP financial measures. Consistent with this approach, Marvell believes that disclosing non-GAAP financial measures to the readers of its financial statements provides such readers with useful supplemental data that, while not a substitute for GAAP financial measures, allows for greater transparency in the review of its financial and operational performance. For further information regarding why Marvell believes that these non-GAAP measures provide useful information to investors, the specific manner in which management uses these measures, and some of the limitations associated with the use of these measures, please refer to Marvell's Current Report on Form 8-K filed today with the SEC. The Form 8-K is available on the SEC's website at www.sec.gov as well as on the Marvell website in the Investor Relations section at www.marvell.com.  

About Marvell  

Marvell is a global leader in the development of storage, communications and consumer silicon solutions. Marvell's diverse product portfolio includes switching, transceiver, communications controller, wireless and storage solutions that power the entire communications infrastructure, including enterprise, metro, home and storage networking. As used in this release, the term "Marvell" refers to Marvell Technology Group Ltd. and its subsidiaries. For more information please visit www.marvell.com.    

Forward-Looking Statements

This press release contains forward-looking statements that involve risks and uncertainties, including statements regarding the strength of Marvell's long-term business model; the ability of Marvell's investments to result in improved results throughout the year; and statements concerning Marvell's use of non-GAAP net income and net income per share as important supplemental information. These statements are not guarantees of results and should not be considered as an indication of future performance. Actual events or results may differ materially from those described in this document due to a number of risks and uncertainties, including, among others, Marvell's reliance on major customers and suppliers; market acceptance of new products; uncertainty in the worldwide economic environment and other risks detailed in Marvell's SEC filings. When Marvell files its Form 10-Q for the first quarter of fiscal 2012, the financial statements may differ from the results disclosed in this press release because judgments and estimates that management used in preparing the financial results reported in this press release may need to be updated to the date of the filing. Marvell's results also remain subject to review by Marvell's independent registered public accounting firm. For other factors that could cause Marvell's results to vary from expectations, please see the risk factors identified in the Marvell's latest Annual Report on Form 10-K for fiscal year 2011, ended January 29, 2011, as filed with the SEC and other factors detailed from time to time in Marvell's filings with the SEC. Marvell undertakes no obligation to revise or update publicly any forward-looking statements.  

Marvell® and the Marvell logo are registered trademarks of Marvell and/or its affiliates.

For further information, contact:

Sukhi Nagesh

Tom Hayes

Investor Relations

Corporate Communications

408-222-8373

408-222-2815

sukhi@marvell.com

tom@marvell.com



Marvell Technology Group Ltd.

Condensed Consolidated Statements of Operations

(Unaudited)

(In thousands, except per share amounts)












Three Months Ended




April 30,


January 29,


May 1,




2011


2011


2010









Net revenue

$ 802,402


$    900,513


$ 855,579

Cost of goods sold

334,475


371,799


343,985

Gross profit

467,927


528,714


511,594

Operating expenses:







Research and development

242,537


231,836


219,111


Selling and marketing

38,152


40,444


38,423


General and administrative

24,784


26,706


23,108


Amortization of acquired intangible assets

14,341


14,005


22,549



Total operating expenses

319,814


312,991


303,191

Operating income

148,113


215,723


208,403

Interest and other income (expense), net

(218)


10,475


(3,752)

Income before income taxes

147,895


226,198


204,651

Provision (benefit) for income taxes

1,034


3,345


(1,116)

Net income

$ 146,861


$    222,853


$ 205,767









Basic net income per share

$       0.23


$          0.34


$       0.32

Diluted net income per share

$       0.22


$          0.33


$       0.30









Shares used in computing basic earnings per share

638,946


654,650


640,926

Shares used in computing diluted earnings per share

657,140


679,445


678,059



Marvell Technology Group Ltd.

Reconciliation of GAAP Net Income to Non-GAAP Net Income

(Unaudited)

(In thousands, except per share amounts)










Three Months Ended



April 30,


January 29,


May 1,



2011


2011


2010








GAAP net income

$ 146,861


$    222,853


$ 205,767

Stock-based compensation

27,480


31,279


26,896

Amortization of acquired intangible assets

14,341


14,005


22,549

Restructuring

619


679


586

Legal/Tax related matters (a)

-


4,062


4,373

Non-GAAP net income

$ 189,301


$    272,878


$ 260,171








GAAP weighted average shares - diluted

657,140


679,445


678,059


Non-GAAP adjustment

5,808


5,760


3,310

Non-GAAP weighted average shares diluted (b)

662,948


685,205


681,369








GAAP diluted net income per share

$       0.22


$          0.33


$       0.30

Non-GAAP diluted net income per share

$       0.29


$          0.40


$       0.38








GAAP gross profit:

$ 467,927


$    528,714


$ 511,594


Stock-based compensation

1,695


1,776


2,236


Other

-


4,062


4,373

Non-GAAP gross profit

$ 469,622


$    534,552


$ 518,203








GAAP gross profit as a % of revenue

58.3%


58.7%


59.8%


Stock-based compensation

0.2%


0.2%


0.3%


Other

0.0%


0.5%


0.5%

Non-GAAP gross profit

58.5%


59.4%


60.6%








GAAP research and development:

$ 242,537


$    231,836


$ 219,111


Stock-based compensation

(19,593)


(21,789)


(18,851)


Restructuring

(168)


(280)


(129)

Non-GAAP research and development

$ 222,776


$    209,767


$ 200,131








GAAP selling and marketing:

$   38,152


$      40,444


$   38,423


Stock-based compensation

(2,654)


(2,991)


(3,173)


Restructuring

-


-


-

Non-GAAP selling and marketing

$   35,498


$      37,453


$   35,250








GAAP general and administrative:

$   24,784


$      26,706


$   23,108


Stock-based compensation

(3,538)


(4,723)


(2,636)


Restructuring

(451)


(399)


(457)

Non-GAAP general and administrative

$   20,795


$      21,584


$   20,015










(a)

The three months ended January 29, 2011 and the three months ended May 1, 2010 include portions of litigation settlements related to previous periods.  



(b)

For purposes of calculating non-GAAP diluted net income per share, the GAAP diluted weighted average shares outstanding is adjusted to exclude the benefits of stock compensation costs attributable to future services and not yet recognized in the financial statements.  



Marvell Technology Group Ltd.

Condensed Consolidated Balance Sheets

(Unaudited)

(In thousands)










April 30,


January 29,

Assets

2011


2011

Current assets:





Cash, cash equivalents, and short-term investments

$ 2,267,839


$ 2,930,030


Accounts receivable, net

425,468


459,406


Inventories

299,108


245,448


Prepaid expenses and other current assets

80,154


77,763



Total current assets

3,072,569


3,712,647

Property and equipment, net

354,483


358,440

Long-term investments

26,070


26,226

Goodwill and acquired intangible assets, net

2,130,342


2,129,464

Other non-current assets

109,143


111,380



Total assets

$ 5,692,607


$ 6,338,157







Liabilities and Shareholders' Equity




Current liabilities:





Accounts payable

$    321,687


$    332,007


Accrued liabilities

210,837


232,518


Deferred income

80,890


76,161



Total current liabilities

613,414


640,686

Other long-term liabilities

175,789


175,602



Total liabilities

789,203


816,288







Shareholders' equity:





Common stock

1,218


1,317


Additional paid-in capital

4,034,873


4,805,588


Accumulated other comprehensive income

6,580


1,092


Retained earnings

860,733


713,872



Total shareholders' equity

4,903,404


5,521,869



Total liabilities and shareholders' equity

$ 5,692,607


$ 6,338,157



Marvell Technology Group Ltd.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

(in thousands)












Three Months Ended





April 30,


May 1,





2011


2010

Cash flows from operating activities:




Net income

$   146,861


$    205,767

Adjustments to reconcile net income to net cash provided




 by operating activities:





Depreciation and amortization

24,037


23,078


Stock-based compensation

27,480


26,896


Amortization of acquired intangible assets

14,341


22,549


Other (income) expense, net

3,854


2,035


Fair market value adjustment to acquired inventory sold

-


(942)


Excess tax benefits from stock-based compensation

(3)


(185)


Changes in assets and liabilities:






Accounts receivable

33,938


(91,897)



Inventories

(53,107)


35,417



Prepaid expenses and other assets

644


10,381



Accounts payable

(5,295)


6,703



Accrued liabilities and other

(5,450)


2,362



Accrued employee compensation

(14,880)


(10,506)



Deferred income

4,729


23,933




Net cash provided by operating activities

177,149


255,591

Cash flows from investing activities:





Purchases of marketable securities

(677,179)


(186,878)


Purchases of strategic investments

(1,750)


(1,000)


Sales and maturities of investments

272,547


149,440


Cash paid for acquisitions, net

(16,330)


-


Purchases of technology licenses

(3,290)


(2,250)


Purchases of property and equipment

(17,018)


(16,395)




Net cash used in investing activities

(443,020)


(57,083)

Cash flows from financing activities:












Repurchase of common stock

(803,501)


-


Proceeds from employee stock plans

5,207


48,688


Principal payments on capital lease and term loan obligations

(511)


(470)


Excess tax benefits from stock-based compensation

3


185




Net cash (used in) provided by financing activities

(798,802)


48,403

Net increase (decrease) in cash and cash equivalents

(1,064,673)


246,911

Cash and cash equivalents at beginning of period

1,847,074


1,105,428

Cash and cash equivalents at end of period

$   782,401


$ 1,352,339



SOURCE Marvell Technology Group Ltd.



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