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Marvell Technology Group Ltd. Reports Fourth Fiscal Quarter and Fiscal Year 2012 Financial Results
Revenue: F4Q12, $743 Million; FY2012, $3.39 Billion
GAAP Net Income: F4Q12, $81 Million; FY2012, $615 Million
Non GAAP Net Income: F4Q12, $127 Million; FY2012, $795 Million
Free Cash Flow: F4Q12, $38 Million; FY2012, $669 Million

SANTA CLARA, Calif., Feb. 23, 2012 /PRNewswire/ -- Marvell Technology Group Ltd. (NASDAQ: MRVL), a global leader in integrated silicon solutions, today reported financial results for the fourth fiscal quarter and fiscal year 2012, ended January 28, 2012.

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

Revenue for the fourth quarter of fiscal 2012 was $743 million, a 22 percent sequential decrease from $950 million in the third quarter of fiscal 2012, ended October 29, 2011, and down 18 percent from $901 million in the fourth quarter of fiscal 2011, ended January 29, 2011.  

For the fiscal year ended January 28, 2012, revenue was $3.39 billion, a decrease of 6 percent from revenue of $3.61 billion for the fiscal year ended January 29, 2011.

GAAP net income for the fourth quarter of fiscal 2012 was $81 million, or $0.13 per share (diluted), compared with GAAP net income of $195 million, or $0.32 per share (diluted) in the third quarter of fiscal 2012, and $223 million, or $0.33 per share (diluted), for the fourth quarter of fiscal 2011.  

For the year ended January 28, 2012, GAAP net income was $615 million, or $0.99 per share (diluted), compared with GAAP net income of $904 million, or $1.34 per share (diluted), for the year ended January 29, 2011.

Non-GAAP net income was $127 million, or $0.21 per share (diluted), for the fourth quarter of fiscal 2012, compared with non-GAAP net income of $244 million, or $0.40 per share (diluted) for the third quarter of fiscal 2012 and $273 million, or $0.40 per share (diluted), for the fourth quarter of fiscal 2011.

For the fiscal year ended January 28, 2012, non-GAAP net income was $795 million, or $1.27 per share (diluted), as compared with non-GAAP net income of $1.11 billion, or $1.64 per share (diluted) for the fiscal year ended January 29, 2011.

"Fiscal year 2012 was a challenging year for Marvell in which we endured not only a choppy macro-economic environment but also the effects of an earthquake, massive floods, and product transitions at one of our largest customers. In spite of these challenges, Marvell delivered excellent profitability and free cash flow margins while simultaneously increasing our investments for several new initiatives," said Dr. Sehat Sutardja, Marvell's Chairman and Chief Executive Officer. "During fiscal 2012, Marvell was successful in several new products and initiatives. Our China TD business is now producing tangible results, our SSD revenue has exceeded expectations and our networking business is growing due to new products and share gains. As a result of these new initiatives and the recovery in the hard disk drive industry, we expect to see steady improvement in each of our end markets in the new fiscal 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 January 28, 2012, October 29, 2011 and January 29, 2011, and for the year ended January 28, 2012 and January 29, 2011, appear in the financial statements below. Non-GAAP net income, where applicable, excludes the effect of stock-based compensation, amortization of acquired intangible assets, acquisition-related costs, restructuring costs, and certain one-time expenses or benefits.  

GAAP gross margin for the fourth quarter of fiscal 2012 was 54.1 percent, compared to 56.6 percent for the third quarter of fiscal 2012 and 58.7 percent for the fourth quarter of fiscal 2011.  GAAP gross margin for fiscal year 2012 was 56.8 percent compared to 59.2 percent for fiscal year 2011.

Non-GAAP gross margin for the fourth quarter of fiscal 2012 was 54.5 percent, compared to 56.8 percent for the third quarter of fiscal 2012 and 59.4 percent for the fourth quarter of fiscal 2011. Non-GAAP gross margin for fiscal year 2012 was 57 percent compared to 59.7 percent for fiscal year 2011.

Shares used to compute GAAP net income per diluted share for the fourth quarter of fiscal 2012 were 599 million shares, compared with 613 million shares in the third quarter of fiscal 2012 and 679 million shares in the fourth quarter of fiscal 2011. Shares used to compute GAAP net income per diluted share for fiscal year 2012 were 623 million shares as compared with 677 million shares for fiscal year 2011.

Shares used to compute non-GAAP net income per diluted share for the fourth quarter of fiscal 2012 were 606 million shares, compared with 615 million shares for the third quarter of fiscal 2012 and 685 million shares for the fourth quarter of fiscal 2011. Shares used to compute non-GAAP net income per diluted share for fiscal year 2012 were 627 million shares as compared with 681 million shares for fiscal year 2011. The decrease in shares used to compute both Marvell's GAAP and non-GAAP net income per diluted share was primarily due to Marvell's share repurchase program.

Cash flow from operations for the fourth quarter of fiscal 2012 was $69 million, down from the $262 million reported in the third quarter of fiscal 2012 and down from the $251 million in the fourth quarter of fiscal 2011. Free cash flow for the fourth quarter of fiscal 2012 was $38 million, down from the $239 million reported in the third quarter of fiscal 2012 and down from the $213 million in fourth quarter of fiscal 2011. Free cash flow for fiscal year 2012 was $669 million as compared to $1.08 billion in fiscal year 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 13.5 million shares for a total of $186 million in the fourth quarter of fiscal 2012. Over the past six quarters, Marvell has repurchased and retired approximately 93 million, or about 14 percent, of its outstanding shares demonstrating its commitment to returning shareholder value.

Conference Call

Marvell will be conducting a conference call on February 23, 2012 at 1:45 p.m. Pacific Time to discuss results for the fourth fiscal quarter and fiscal year 2012. Interested parties may join the conference call by dialing 1-866-510-0711 or 1-617-597-5379, pass-code 29835186. 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 March 23, 2012.  

Discussion of Non-GAAP Financial Measures

Non-GAAP financial measures exclude the effect of stock-based compensation expense, amortization of acquired intangible assets, acquisition-related costs, restructuring costs, and certain one-time expenses and benefits that are driven primarily by discrete events that management does not consider to be directly related to Marvell's core operating performance. Non-GAAP net income per share is calculated by dividing non-GAAP net income by non-GAAP weighted average shares outstanding (diluted). For purposes of calculating non-GAAP net income per share (diluted), the GAAP weighted average shares outstanding (diluted) is adjusted to exclude the benefits of stock compensation costs attributable to future services and 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/anti-dilutive 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 under the Private Securities Litigation Reform Act of 1995

This press release contains forward-looking statements that involve risks and uncertainties, including statements regarding Marvell's TD business continuing to provide tangible results; growth in Marvell's networking business; expectations of steady improvement in each of Marvell's end markets in the new fiscal 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 a few customers for a significant portion of its revenue; Marvell's ability to develop and introduce new and enhanced products in a timely and cost effective manner; the impact of the flooding in Thailand; uncertainty in the worldwide economic environment; seasonality in sales of consumer devices in which our products are incorporated; Marvell's ability to compete in products and prices in an intensely competitive industry; Marvell's ability to recruit and retain skilled personnel; substantial costs of current and any future litigation; and other risks detailed in Marvell's SEC filings from time to time. When Marvell files its Form 10-K for the year ended January 28, 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. For other factors that could cause Marvell's results to vary from expectations, please see the risk factors identified in the Marvell's latest Quarterly Report on Form 10-Q for the quarter ended October 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

Daniel Yoo

Investor Relations

Media Relations

408-222-8373

408-222-2187

sukhi@marvell.com

yoo@marvell.com



Marvell Technology Group Ltd.

Condensed Consolidated Statements of Operations

(Unaudited)

(In thousands, except per share amounts)
















Three Months Ended


Year Ended




January 28,


October 29,


January 29,


January 28,


January 29,




2012


2011


2011


2012


2011













Net revenue

$    742,701


$    950,417


$    900,513


$ 3,393,040


$ 3,611,893

Cost of goods sold

341,113


412,100


371,799


1,465,805


1,473,274

Gross profit

401,588


538,317


528,714


1,927,235


2,138,619

Operating expenses:











Research and development

255,282


266,255


231,836


1,013,678


897,578


Selling and marketing

40,392


40,500


40,444


159,434


155,481


General and administrative

23,184


29,021


26,706


100,620


104,830


Amortization of acquired intangible assets

12,723


11,155


14,005


49,357


79,538



Total operating expenses

331,581


346,931


312,991


1,323,089


1,237,427

Operating income

70,007


191,386


215,723


604,146


901,192

Interest and other income, net

5,338


7,729


10,475


14,913


9,270

Income before income taxes

75,345


199,115


226,198


619,059


910,462

Provision (benefit) for income taxes

(5,372)


3,994


3,345


3,968


6,333

Net income

$      80,717


$    195,121


$    222,853


$    615,091


$    904,129













Basic net income per share

$          0.14


$          0.32


$          0.34


$          1.01


$          1.39

Diluted net income per share

$          0.13


$          0.32


$          0.33


$          0.99


$          1.34













Shares used in computing basic earnings per share

583,466


600,504


654,650


607,857


648,347

Shares used in computing diluted earnings per share

599,300


613,499


679,445


623,268


676,878



Marvell Technology Group Ltd.

Reconciliations from GAAP to Non-GAAP

(Unaudited)

(In thousands, except per share amounts)














Three Months Ended


Year Ended



January 28,


October 29,


January 29,


January 28,


January 29,



2012


2011


2011


2012


2011












GAAP net income

$      80,717


$    195,121


$    222,853


$    615,091


$    904,129

Stock-based compensation

31,417


30,611


31,279


119,863


118,405

Amortization of acquired intangible assets

12,723


11,155


14,005


49,357


79,538

Acquisition related costs (a)

1,961


-


-


1,961


-

Restructuring

565


105


679


1,856


3,183

Legal/Tax related matters (b)

(750)


7,459


4,062


6,709


8,435

Non-GAAP net income

$    126,633


$    244,451


$    272,878


$    794,837


$ 1,113,690












GAAP weighted average shares - diluted

599,300


613,499


679,445


623,268


676,878


Non-GAAP adjustment

6,397


1,558


5,760


3,852


3,728

Non-GAAP weighted average shares diluted (c)

605,697


615,057


685,205


627,120


680,606












GAAP diluted net income per share

$          0.13


$          0.32


$          0.33


$          0.99


$          1.34

Non-GAAP diluted net income per share

$          0.21


$          0.40


$          0.40


$          1.27


$          1.64












GAAP gross profit:

$    401,588


$    538,317


$    528,714


$ 1,927,235


$ 2,138,619


Stock-based compensation

1,444


1,940


1,776


6,995


7,522


Acquisition-related costs (a)

1,457


-


-


1,457


-


Legal/Tax related matters (b)

-


-


4,062


-


8,435

Non-GAAP gross profit

$    404,489


$    540,257


$    534,552


$ 1,935,687


$ 2,154,576












GAAP gross margin

54.1%


56.6%


58.7%


56.8%


59.2%


Stock-based compensation

0.2%


0.2%


0.2%


0.2%


0.2%


Acquisition-related costs (a)

0.2%


-


-


0.0%


-


Legal/Tax related matters (b)

-


-


0.5%


-


0.3%

Non-GAAP gross margin

54.5%


56.8%


59.4%


57.0%


59.7%












GAAP research and development:

$    255,282


$    266,255


$    231,836


$ 1,013,678


$    897,578


Stock-based compensation

(22,298)


(21,905)


(21,789)


(85,924)


(82,524)


Acquisition-related costs (a)

(279)


-


-


(279)


-


Restructuring

(420)


(1)


(280)


(728)


(1,966)


Legal/Tax related matters (b)

-


(3,137)


-


(3,137)


-

Non-GAAP research and development

$    232,285


$    241,212


$    209,767


$    923,610


$    813,088












GAAP selling and marketing:

$      40,392


$      40,500


$      40,444


$    159,434


$    155,481


Stock-based compensation

(3,657)


(3,402)


(2,991)


(12,920)


(11,769)


Acquisition-related costs (a)

(40)


-


-


(40)


-


Restructuring

(8)


-


-


(8)


-

Non-GAAP selling and marketing

$      36,687


$      37,098


$      37,453


$    146,466


$    143,712












GAAP general and administrative:

$      23,184


$      29,021


$      26,706


$    100,620


$    104,830


Stock-based compensation

(4,018)


(3,364)


(4,723)


(14,024)


(16,590)


Acquisition-related costs (a)

(185)


-


-


(185)


-


Restructuring

(137)


(104)


(399)


(1,120)


(1,217)


Legal/Tax related matters (b)

750


(4,322)


-


(3,572)


-

Non-GAAP general and administrative

$      19,594


$      21,231


$      21,584


$      81,719


$      87,023












(a)   Acquisition-related costs include the step-up in fair value of acquired inventory that was sold during the period, and the amortization of retention bonuses required by the terms of the acquisition. Restructuring costs related to recently completed acquisitions are included within "Restructuring" in the table above.    


(b)   The years ended January 28, 2012 and January 29, 2011 include portions of settlements related to previous periods.  

 The year ended January 28, 2012 and the three months ended October 29, 2011 include assessments of payroll taxes on employee benefits in certain jurisdictions. The three months and year ended January 28, 2012 include proceeds related to a concluded legal matter.


(c)   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)






















January 28,


January 29,

Assets

2012


2011

Current assets:





Cash, cash equivalents, and short-term investments

$ 2,246,498


$ 2,930,030


Accounts receivable, net

407,263


459,406


Inventories

354,119


245,448


Prepaid expenses and other current assets

71,081


77,763



Total current assets

3,078,961


3,712,647

Property and equipment, net

383,801


358,440

Long-term investments

23,215


26,226

Goodwill and acquired intangible assets, net

2,173,496


2,129,464

Other non-current assets

108,146


111,380



Total assets

$ 5,767,619


$ 6,338,157







Liabilities and Shareholders' Equity




Current liabilities:





Accounts payable

$    304,695


$    332,007


Accrued liabilities

224,900


232,518


Deferred income

59,959


76,161



Total current liabilities

589,554


640,686

Other long-term liabilities

164,047


175,602



Total liabilities

753,601


816,288







Shareholders' equity:





Common stock

1,162


1,317


Additional paid-in capital

3,683,117


4,805,588


Accumulated other comprehensive income

776


1,092


Retained earnings

1,328,963


713,872



Total shareholders' equity

5,014,018


5,521,869



Total liabilities and shareholders' equity

$ 5,767,619


$ 6,338,157



Marvell Technology Group Ltd.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

(in thousands)
















Three Months Ended


Year Ended





January 28,


January 29,


January 28,


January 29,





2012


2011


2012


2011

Cash flows from operating activities:








Net income

$      80,717


$    222,853


$    615,091


$    904,129

Adjustments to reconcile net income to net cash provided








 by operating activities:









Depreciation and amortization

21,801


24,199


88,454


93,190


Stock-based compensation

31,416


31,279


119,862


118,405


Amortization of acquired intangible assets

12,723


14,005


49,357


79,538


Other (income) expense, net

3,779


(1,987)


15,190


7,581


Facilities impairment




1,140


Excess tax benefits from stock-based compensation

(65)


(230)


(164)


(899)


Changes in assets and liabilities:










Accounts receivable

46,252


8,569


54,550


(102,610)



Inventories

(37,142)


(17,120)


(101,109)


(3,655)



Prepaid expenses and other assets

(6,738)


64,553


27,491


54,349



Accounts payable

(51,288)


(21,471)


(47,095)


42,464



Accrued liabilities and other

(3,583)


(56,007)


(21,613)


(38,059)



Accrued employee compensation

(19,489)


(5,755)


(12,565)


21,210



Deferred income

(9,285)


(12,055)


(16,202)


16,765




Net cash provided by operating activities

69,098


250,833


771,247


1,193,548

Cash flows from investing activities:









Purchases of marketable securities

(268,804)


(240,817)


(1,851,696)


(1,262,767)


Purchases of strategic investments

(500)



(4,003)


(1,750)


Sales and maturities of investments

378,950


190,021


1,462,164


868,759


Cash paid for acquisitions, net

(75,156)


(8,767)


(93,916)


(29,446)


Proceeds from sale of equity investments


9,192



9,192


Purchases of technology licenses

(4,230)


(10,495)


(13,823)


(23,144)


Purchases of property and equipment

(26,449)


(26,906)


(88,779)


(90,173)




Net cash (used in) provided by investing activities

3,811


(87,772)


(590,053)


(529,329)

Cash flows from financing activities:




















Repurchase of common stock

(186,480)


(26,892)


(1,340,876)


(87,486)


Proceeds from employee stock plans

47,464


68,281


97,857


165,954


Principal payments on capital lease and term loan obligations


(500)


(511)


(1,940)


Excess tax benefits from stock-based compensation

65


230


164


899




Net cash (used in) provided by financing activities

(138,951)


41,119


(1,243,366)


77,427

Net increase (decrease) in cash and cash equivalents

(66,042)


204,180


(1,062,172)


741,646

Cash and cash equivalents at beginning of period

850,944


1,642,894


1,847,074


1,105,428

Cash and cash equivalents at end of period

$    784,902


$ 1,847,074


$    784,902


$ 1,847,074



SOURCE Marvell Semiconductor, Inc.

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