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: https://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.
Released May 26, 2011
