Marvell Technology Reports Fiscal First Quarter Results
Revenue: $521.4 Million, Up 2 Percent Sequentially
Free Cash Flow: $131.8 Million, 25 Percent of Revenues
SANTA CLARA, Calif., May 28 /PRNewswire-FirstCall/ -- Marvell Technology Group Ltd. (Nasdaq: MRVL), a world leader in storage, communications and consumer silicon solutions, today reported financial results for the first quarter of fiscal 2010, ended May 2, 2009.
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Net revenue for the first quarter of fiscal 2010 was $521.4 million, a 2 percent sequential increase from $512.9 million in the fourth quarter of fiscal 2009, ended January 31, 2009 and a 35 percent decrease from $804.1 million in the first quarter of fiscal 2009, ended May 3, 2008.
GAAP net loss was $39.5 million, or $0.06 per share (diluted), for the first quarter of fiscal 2010, as compared to a GAAP net loss of $65.0 million, or $0.11 per share (diluted), for the fourth quarter of fiscal 2009. For the first quarter of fiscal 2009 GAAP net income was $69.9 million, or $0.11 per share (diluted).
Non-GAAP net income was $31.9 million, or $0.05 per share (diluted), for the first quarter of fiscal 2010, a decrease of 2 percent from non-GAAP net income of $32.4 million, or $0.05 per share (diluted), for the fourth quarter of fiscal 2009, and a 79 percent decrease compared with non-GAAP net income of $150.4 million, or $0.24 per share (diluted), for the first quarter of fiscal 2009.
"We are pleased with the sequential improvement in revenue during our first fiscal quarter of 2010," said Dr. Sehat Sutardja, Marvell Chairman and Chief Executive Officer. "We also delivered improved profitability and cash flow during the first quarter, a positive reflection of the actions we undertook in recent quarters to control costs and expenses as well as tightly managing our working capital. We are continuing to monitor the changing economic environment and will manage our business accordingly. However, recent trends indicate an improvement in near term order patterns."
Marvell reports net income (loss), basic and diluted net income (loss) 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 (loss) to non-GAAP net income for the three months ended May 2, 2009, January 31, 2009 and May 3, 2008, respectively, 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 2010 was 50.6 percent, compared to 50.7 percent for the fourth quarter of fiscal 2009 and 51.6 percent for the first quarter of fiscal 2009. GAAP gross margin for the first quarter of fiscal 2010 included costs of $1.0 million associated with the ramp-down of the test operations in Malaysia.
Non-GAAP gross margin for the first quarter of fiscal 2010 increased to 51.6 percent, compared to 51.3 percent for the fourth quarter of fiscal 2009 and 52.0 percent for the first quarter of fiscal 2009.
Shares used to compute GAAP net loss per diluted share, for the first quarter of fiscal 2010 were 619 million shares, compared with 615 million shares in the fourth quarter of fiscal 2009 and 624 million shares in the first quarter of fiscal 2009. Shares used to compute non-GAAP net income per diluted share for the first quarter of fiscal 2010 were 637 million shares, compared with 629 million shares for the fourth quarter of fiscal 2009 and 624 million shares for the first quarter of fiscal 2009.
Cash flow from operations for the first quarter of fiscal 2010 was $144.5 million, up 32 percent sequentially from $109.1 million reported in the fourth quarter of fiscal 2009 and up 11 percent from $130.2 million in the first quarter of fiscal 2009. Free cash flow, defined as cash flow from operations less capital expenditures and purchases of IP licenses, was $131.8 million, up 42 percent sequentially from $92.7 million in the fourth quarter of fiscal 2009 and up 32 percent from $99.7 million in the first quarter of fiscal 2009.
Conference Call
Marvell will be conducting a conference call on May 28, 2009 at 1:45 p.m. PDT to discuss results for the first quarter ended May 2, 2009. Interested parties may dial-in to the conference call at 1-866-272-9941, pass-code 21507569. The call is being webcast by ThomsonReuters and can be accessed at Marvell's website under the Investor Events section of the Investor Relations page at http://www.marvell.com/investors/events.jsp. Replay on the internet will be available following the call until June 28, 2009.
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 Technology (NASDAQ: MRVL) 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 terms "Company" and "Marvell" refer to Marvell Technology Group Ltd. and its subsidiaries. For more information visit www.marvell.com
Forward-Looking Statements
This press release contains forward-looking statements that involve risks and uncertainties, including statements regarding the Company's expectations about managing our business; the Company's expectations about near term order patterns; and statements concerning the Company's use of non-GAAP gross margin, 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, the Company's reliance on major customers and suppliers; market acceptance of new products; uncertainty in the worldwide economic environment; successful execution of the Company's restructuring plan and other risks detailed in Marvell's SEC filings. When Marvell files its Form 10-Q for the first quarter of fiscal year 2010, 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. The Company's results also remain subject to review by the Company'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 the year end January 31, 2009 and Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, 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.
For further information, contact:
Jeff Palmer Tom Hayes
Investor Relations Corporate Communications
408-222-8373 408-222-2815
jpalmer@marvell.com tom@marvell.com
Marvell Technology Group Ltd.
Condensed Consolidated Statements of Operations
(Unaudited)
(In thousands, except per share amounts)
Three Months Ended
May 2, January 31, May 3,
2009 2009 2008
Net revenue $521,434 $512,867 $804,075
Cost of goods sold 257,630 252,732 388,842
Gross profit 263,804 260,135 415,233
Operating expenses:
Research and development 200,249 207,579 238,475
Selling and marketing 32,646 31,893 46,088
General and administrative 29,496 31,979 12,951
Amortization and write-off of
acquired intangible assets 30,356 48,274 35,247
Restructuring 8,336 9,689 -
Total operating expenses 301,083 329,414 332,761
Operating income (loss) (37,279) (69,279) 82,472
Interest and other income (expense), net (160) (440) (4,692)
Income (loss) before income taxes (37,439) (69,719) 77,780
Provision (benefit) for income taxes 2,018 (4,709) 7,841
Net income (loss) $(39,457) $(65,010) $69,939
Basic net income (loss) per share $ (0.06) $(0.11) $ 0.12
Diluted net income (loss) per share $ (0.06) $(0.11) $ 0.11
Shares used in computing basic
earnings per share 618,677 614,960 601,222
Shares used in computing diluted
earnings per share 618,677 614,960 624,351
Marvell Technology Group Ltd.
Reconciliation of Non-GAAP Adjustments
(Unaudited)
(In thousands, except per share amounts)
Reconciliation of GAAP net income (loss) to non-GAAP net income:
Three Months Ended
May 2, January 31, May 3,
2009 2009 2008
GAAP net income (loss) $(39,457) $(65,010) $69,939
Stock-based compensation 31,648 44,701 45,226
Amortization and write-off of acquired
intangible assets 30,356 48,274 35,247
Restructuring 8,336 9,689 -
Other (a) 990 (5,292) -
Non-GAAP net income $31,873 $32,362 $150,412
GAAP weighted average shares
- diluted 618,677 614,960 624,351
Non-GAAP adjustment 17,928 14,032 91
Non-GAAP weighted average shares
diluted (b) 636,605 628,992 624,442
GAAP diluted net income (loss) per share $(0.06) $(0.11) $ 0.11
Non-GAAP diluted net income per share $0.05 $ 0.05 $ 0.24
GAAP gross profit: $263,804 $260,135 $415,233
Stock-based compensation 4,116 3,021 3,073
Other (a) 990 - -
Non-GAAP gross profit $268,910 $263,156 $418,306
GAAP gross profit as a % of revenue 50.6% 50.7% 51.6%
Stock-based compensation 0.8% 0.6% 0.4%
Other (a) 0.2% - -
Non-GAAP gross profit 51.6% 51.3% 52.0%
GAAP research and development: $200,249 $207,579 $238,475
Stock-based compensation (21,737) (33,358) (29,932)
Other (a) - 3,652 -
Non-GAAP research and development $178,512 $177,873 $208,543
GAAP selling and marketing: $32,646 $31,893 $46,088
Stock-based compensation (3,711) (4,677) (7,348)
Other (a) - 1,323 -
Non-GAAP selling and marketing $28,935 $28,539 $38,740
GAAP general and administrative: $29,496 $31,979 $12,951
Stock-based compensation (2,084) (3,645) (4,837)
Other (a) - 317 -
Non-GAAP general and administrative $27,412 $28,651 $8,114
(a) For fiscal quarter ended May 2, 2009 consists of underutilization
charges recorded in connection with the rampdown of the Malaysia test
operations. For fiscal quarter ended January 31, 2009 charges
consists of the reversal of the remaining payroll related tax
liabilities initially recorded in prior years in connection with
Marvell's historic stock option granting practices.
(b) For purposes of calculating non-GAAP net income per share, the GAAP
diluted weighted average shares outstanding is adjusted to exclude
the benefits of SFAS 123R compensation costs attributable to future
services and not yet recognized in the financial statements that are
treated as proceeds assumed to be used to repurchase shares under
the GAAP treasury method and also includes the dilutive/antidilutive
effects of warrants, common stock options and restricted stock.
Marvell Technology Group Ltd.
Condensed Consolidated Balance Sheets
(Unaudited)
(In thousands)
May 2, January 31,
Assets 2009 2009
Current assets:
Cash, cash equivalents, and short-term
investments $1,083,705 $ 951,909
Accounts receivable, net 285,367 222,101
Inventories 203,590 310,654
Prepaid expenses, deferred income taxes
and other current assets 67,038 75,651
Total current assets 1,639,700 1,560,315
Property and equipment, net 371,229 390,853
Long-term investments 39,655 40,541
Goodwill and acquired intangible assets, net 2,253,854 2,284,164
Other non-current assets 136,773 138,327
Total assets $4,441,211 $4,414,200
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable $ 166,988 $ 139,028
Accrued liabilities 196,326 175,135
Income taxes payable 47,257 35,803
Deferred income 47,800 57,895
Current portion of capital lease obligations 1,824 1,787
Total current liabilities 460,195 409,648
Capital lease obligations, net of current portion 1,981 2,451
Other long-term liabilities 161,480 173,034
Total liabilities 623,656 585,133
Shareholders' equity:
Common stock 1,238 1,233
Additional paid-in capital 4,402,167 4,372,265
Accumulated other comprehensive income (loss) (2,680) (718)
Accumulated deficit (583,170) (543,713)
Total shareholders' equity 3,817,555 3,829,067
Total liabilities and shareholders' equity $4,441,211 $4,414,200
Marvell Technology Group Ltd.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(in thousands)
Three Months Ended
May 2, January 31, May 3,
2009 2009 2008
Cash flows from operating activities:
Net income (loss) $(39,457) $(65,010) $69,939
Adjustments to reconcile net income
(loss) to net cash provided
by operating activities:
Depreciation and amortization 25,375 27,038 28,618
Stock-based compensation 31,648 44,701 45,226
Amortization and write-off of acquired
intangible assets 30,356 48,274 35,247
Fair market value adjustment to
Intel inventory sold (1,343) (1,196) (6,383)
Realized loss on derivative contract 475 - -
Deferred tax (provision) benefit - (17,467) -
Excess tax benefits from stock-based
compensation (29) (9) (169)
Changes in assets and liabilities, net
of assets acquired and liabilities
assumed in acquisitions:
Restricted cash - - (24,500)
Accounts receivable (63,266) 175,735 (38,152)
Inventories 106,281 31,088 55,918
Prepaid expenses and other assets 14,330 1,629 32,466
Accounts payable 30,738 (82,791) (63,076)
Accrued liabilities and other (9,020) (13,016) (18,807)
Accrued employee compensation 13,033 (44,615) 16,963
Income taxes payable 1,343 11,607 6,656
Deferred income 4,065 (6,825) (9,753)
Net cash provided by operating
activities 144,529 109,143 130,193
Cash flows from investing activities:
Cash paid in acquisitions, net - (5,287) -
Purchases of investments - - (10,126)
Sales and maturities of short-term and
long-term investments - - 23,793
Purchases of technology licenses (9,300) (2,550) -
Purchases of property and equipment (3,414) (13,931) (30,522)
Net cash used in investing
Activities (12,714) (21,768) (16,855)
Cash flows from financing activities:
Proceeds from the issuance of
common shares 385 12,192 17,054
Principal payments on capital lease and
debt obligations (433) (192,174) (2,125)
Excess tax benefits from stock-based
compensation 29 9 169
Net cash provided by (used in)
financing activities (19) (179,973) 15,098
Net increase (decrease) in cash and
cash equivalents 131,796 (92,598) 128,436
Cash and cash equivalents at beginning
of period 927,409 1,020,007 615,648
Cash and cash equivalents at end of
period $1,059,205 $927,409 $744,084
SOURCE Marvell Technology
Released May 28, 2009
