Marvell Technology Reports Fourth Fiscal Quarter and Fiscal Year 2011 Financial Results

Revenue: FQ411, $901 Million; FY2011, $3.61 Billion

GAAP Net Income: FQ411, $223 Million; FY2011, $904 Million

Free Cash Flow: FQ411, $213 Million; FY2011, $1.08 Billion

Increases the Authorized Share Repurchase Program from $500 Million to $1 Billion

SANTA CLARA, Calif., March 3, 2011 /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 2011, ended January 29, 2011.

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

Revenue for the fourth quarter of fiscal 2011 was $901 million, a 7 percent increase from $843 million in the fourth quarter of fiscal 2010, ended January 30, 2010, and a 6 percent sequential decrease from $959 million in the third quarter of fiscal 2011, ended October 30, 2010.

For the fiscal year ended January 29, 2011, revenue was $3.61 billion, an increase of 29 percent over revenue of $2.81 billion for the fiscal year ended January 30, 2010.

GAAP net income for the fourth quarter of fiscal 2011 was $223 million, or $0.33 per share (diluted), compared with GAAP net income of $205 million, or $0.31 per share (diluted) for the fourth quarter of fiscal 2010. GAAP net income in the third quarter of fiscal 2011 was $256 million, or $0.38 per share (diluted).

For the year ended January 29, 2011, GAAP net income was $904 million, or $1.34 per share (diluted), compared with GAAP net income of $353 million, or $0.54 per share (diluted), for the year ended January 30, 2010.

Non-GAAP net income for the fourth quarter of fiscal 2011 increased to $273 million, or $0.40 per share (diluted), as compared with non-GAAP net income of $266 million, or $0.40 per share (diluted) for the fourth quarter of fiscal 2010.  Non-GAAP net income for the third quarter of fiscal 2011 was $307 million, or $0.45 per share (diluted).

For the fiscal year ended January 29, 2011, non-GAAP net income was $1.11 billion, or $1.64 per share (diluted), as compared with non-GAAP net income of $648 million, or $0.99 per share (diluted) for the fiscal year ended January 30, 2010.

"We had a strong fiscal year for 2011 with revenues up 29% from the previous year, and free cash flow of nearly $1.1 billion or $1.60 per share. This is amongst the best in our industry and the highest free cash flow generation in the history of Marvell," said Dr. Sehat Sutardja, Marvell's Chairman and Chief Executive Officer.  "While the results for our fourth quarter continue to be affected by seasonal declines in our mobile and wireless end markets, we are well positioned with competitive products to take advantage of the trends in the coming years."

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 29, 2011, October 30, 2010 and January 30, 2010 and fiscal years ended January 29, 2011 and January 30, 2010, 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 fourth quarter of fiscal 2011 was 58.7 percent, compared to 59.7 percent for the fourth quarter of fiscal 2010 and 59.3 percent for the third quarter of fiscal 2011.  GAAP gross margin for fiscal 2011 was 59.2 percent compared to 56.3 percent for fiscal 2010.

Non-GAAP gross margin for the fourth quarter of fiscal 2011 was 59.4 percent, compared to 60.0 percent for the fourth quarter of fiscal 2010 and 59.5 percent for the third quarter of fiscal 2011.  Non-GAAP gross margin for fiscal 2011 was 59.7 percent compared to 56.7 percent for fiscal 2010.

Shares used to compute GAAP net income per diluted share for the fourth quarter of fiscal 2011 were 679 million shares, compared with 669 million shares in the fourth quarter of fiscal 2010 and 675 million shares in the third quarter of fiscal 2011.  Shares used to compute non-GAAP net income per diluted share for the fourth quarter of fiscal 2011 were 685 million shares, compared with 672 million shares for the fourth quarter of fiscal 2010 and 677 million shares for the third quarter of fiscal 2011.

Shares used to compute GAAP net income per diluted share for the fiscal year ended January 29, 2011 were 677 million shares as compared with 654 million shares used to compute GAAP net income per diluted share for the fiscal year ended January 30, 2010.  Shares used to compute non-GAAP net income per diluted share for the fiscal year ended January 29, 2011 were 681 million shares as compared with 657 million shares for the fiscal year ended January 30, 2010.

Cash flow from operations for the fourth quarter of fiscal 2011 was $251 million, compared to the $281 million in the fourth quarter of fiscal 2010 and the $368 million reported in the third quarter of fiscal 2011.  Cash flow from operations for fiscal 2011 was $1.19 billion as compared to $812 million for fiscal 2010.  Free cash flow for the fourth quarter of fiscal 2011 was $213 million, down from the $253 million in the fourth quarter of fiscal 2010 and down from the $338 million reported in the third quarter of fiscal 2011.  Free cash flow for fiscal 2011 was $1.08 billion as compared to $756 million in fiscal 2010.  Free cash flow as presented above is defined as cash flow from operations, less capital expenditures and purchases of IP licenses.

Share Repurchase Program

Marvell also announced today that its Board of Directors has authorized the Company to repurchase up to an additional $500 million, for a total of $1 billion, of its outstanding common shares.

Marvell intends to effect the repurchase program in accordance with the conditions of Rule 10b-18 under the Securities Exchange Act of 1934, as amended.  The repurchase program will be subject to market conditions and other factors and does not obligate Marvell to repurchase any dollar amount or number of its common shares.  The program may be extended, modified, suspended or discontinued at any time.  The repurchases, which are expected to be funded from Marvell's current cash and short-term investments position of over $2.9 billion, may occur in open market, privately negotiated or block transactions.  As of February 28, 2011, Marvell has purchased approximately $150 million under the existing repurchase authorization bringing the total available under the repurchase program up to approximately $850 million.

Conference Call

Marvell will be conducting a conference call on March 3, 2011 at 1:45 p.m. Pacific Time to discuss results for the fourth fiscal quarter and fiscal year 2011.  Interested parties may join the conference call by dialing 1-866-314-5050, pass-code 63344300.  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 April 3, 2011.

Discussion of Non-GAAP Financial Measures

Non-GAAP financial measures exclude stock-based compensation expense as well as charges related to acquisitions, restructuring 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 Group Ltd. (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 term the "Company" and "Marvell" refer 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 our ability to deliver competitive products; the Company's ability to fund common share purchases out of the Company's current cash position; the types of transactions pursuant to which repurchases will be made under the share repurchase program; and statements concerning the Company'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, the Company's reliance on major customers and suppliers; market acceptance of new products; uncertainty in the worldwide economic environment; competition in the hard disk drive industry and in mobile and wireless end markets; and other risks detailed in Marvell's SEC filings. For other factors that could cause Marvell's results to vary from expectations, please see the risk factors identified in Marvell's latest Quarterly Report on Form 10-Q for the quarter ended October 30, 2010 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.  When Marvell files its Form 10-K for fiscal year 2011, 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 further information, contact:

Gina DeBoutez                     Tom Hayes

Investor Relations                Corporate Communications

408-222-8373                      408-222-2815

ir@marvell.com                    tom@marvell.com






Marvell Technology Group Ltd.

Condensed Consolidated Statements of Operations

(Unaudited)

(In thousands, except per share amounts)



                              Three Months Ended           Year Ended

                              January  October  January    January    January
                              29,      30,      30,        29,        30,

                              2011     2010     2010       2011       2010



                              $        $                   $          $
Net revenue                   900,513  959,327  $ 842,535  3,611,893  2,807,687

Cost of goods
sold                          371,799  390,808  339,790    1,473,274  1,227,096

Gross profit                  528,714  568,519  502,745    2,138,619  1,580,591

Operating
expenses:

 Research and
 development                  231,836  218,420  213,024    897,578    828,176

 Selling and
 marketing                    40,444   39,751   37,144     155,481    139,404

 General and
 administrative               26,706   29,576   22,506     104,830    171,362

 Amortization and writeoff of
 acquired intangible assets   14,005   21,770   24,282     79,538     107,534

  Total
  operating
  expenses                    312,991  309,517  296,956    1,237,427  1,246,476

Operating
income                        215,723  259,002  205,789    901,192    334,115

Interest and other
income (expense), net         10,475   (1,665)  10,249     9,270      8,995

Income before
income taxes                  226,198  257,337  216,038    910,462    343,110

Provision
(benefit) for
income taxes                  3,345    1,605    11,217     6,333      (10,346)

                              $        $
Net income                    222,853  255,732  $ 204,821  $ 904,129  $ 353,456



Basic net
income per
share                         $ 0.34   $ 0.39   $ 0.32     $ 1.39     $ 0.57

Diluted net
income per
share                         $ 0.33   $ 0.38   $ 0.31     $ 1.34     $ 0.54



Shares used in computing
basic earnings per share      654,650  649,782  631,118    648,347    623,934

Shares used in computing
diluted earnings per
share                         679,445  674,789  668,623    676,878    653,741






Marvell Technology Group Ltd.

Reconciliation of GAAP Net Income to Non-GAAP Net Income

(Unaudited)

(In thousands, except per share amounts)



                   Three Months Ended                 Year Ended

                   January    October
                   29,        30,        January 30,  January 29,  January 30,

                   2011       2010       2010         2011         2010



GAAP net income    $ 222,853  $ 255,732  $ 204,821    $ 904,129    $ 353,456

Stock-based
compensation       31,279     29,541     30,559       118,405      126,599

Amortization and
writeoff of
acquired
intangible assets  14,005     21,770     24,282       79,538       107,534

Restructuring (a)  679        259        6,452        3,183        21,663

Legal/Tax related
matters (b)        4,062      -          -            8,435        38,229

Other              -          -          -            -            990

Non-GAAP net
income             $ 272,878  $ 307,302  $ 266,114    $ 1,113,690  $ 648,471



GAAP weighted
average shares -
diluted            679,445    674,789    668,623      676,878      653,741

    Non-GAAP
    adjustment     5,760      2,710      3,598        3,728        3,126

Non-GAAP weighted
average shares
diluted (c)        685,205    677,499    672,221      680,606      656,867



GAAP diluted net
income per share   $ 0.33     $ 0.38     $ 0.31       $ 1.34       $ 0.54

Non-GAAP diluted
net income per
share              $ 0.40     $ 0.45     $ 0.40       $ 1.64       $ 0.99



GAAP gross profit: $ 528,714  $ 568,519  $ 502,745    $ 2,138,619  $ 1,580,591

    Stock-based
    compensation   1,776      1,818      2,375        7,522        10,690

    Other          4,062      -          -            8,435        990

Non-GAAP gross
profit             $ 534,552  $ 570,337  $ 505,120    $ 2,154,576  $ 1,592,271



GAAP gross profit
as a % of revenue  58.7%      59.3%      59.7%        59.2%        56.3%

    Stock-based
    compensation   0.2%       0.2%       0.3%         0.2%         0.4%

    Other          0.5%       -          -            0.3%         0.0%

Non-GAAP gross
profit             59.4%      59.5%      60.0%        59.7%        56.7%



GAAP research and
development:       $ 231,836  $ 218,420  $ 213,024    $ 897,578    $ 828,176

    Stock-based
    compensation   (21,789)   (19,795)   (21,702)     (82,524)     (89,766)

    Restructuring  (280)      (187)      (4,342)      (1,966)      (15,046)

    Legal/Tax
    settlement     -          -          -            -            1,820

Non-GAAP research
and development    $ 209,767  $ 198,438  $ 186,980    $ 813,088    $ 725,184



GAAP selling and
marketing:         $ 40,444   $ 39,751   $ 37,144     $ 155,481    $ 139,404

    Stock-based
    compensation   (2,991)    (3,208)    (3,841)      (11,769)     (15,298)

    Restructuring  -          -          1            -            (1,838)

    Legal/Tax
    settlement     -          -          -            -            659

Non-GAAP selling
and marketing      $ 37,453   $ 36,543   $ 33,304     $ 143,712    $ 122,927



GAAP general and
administrative:    $ 26,706   $ 29,576   $ 22,506     $ 104,830    $ 171,362

    Stock-based
    compensation   (4,723)    (4,720)    (2,641)      (16,590)     (10,845)

    Restructuring  (399)      (72)       (2,111)      (1,217)      (4,779)

    Legal/Tax
    settlement     -          -          -            -            (71,842)

Non-GAAP general
and administrative $ 21,584   $ 24,784   $ 17,754     $ 87,023     $ 83,896





(a) Amounts represent restructuring-related charges, including severance costs
    from reductions in force and asset impairment, as well as a charge related
    to facilities impairment.



(b) The three months ended January 29, 2011 includes the portion of a
    litigation settlement related to the previous periods. The year ended
    January 29, 2011 include an amount representing the portion of IP
    litigation settlements related to previous fiscal years from 2003 through
    2010. The year ended January 30, 2010 includes a $72.0 million charge in
    connection with the settlement of a class action litigation. This is
    offset by a $27.3 million benefit in fiscal 2010 resulting from the
    expiration of the statute of limitations related to a tax contingency
    reserve, in addition to a $5.3 million income tax benefit related to the
    adjustment of a prior year deferred tax asset.



(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 29,  January 30,

Assets                                              2011         2010

Current assets:

 Cash, cash equivalents, and short-term investments $ 2,930,030  $ 1,796,717

 Accounts receivable, net                           459,406      356,796

 Inventories                                        245,448      241,541

 Prepaid expenses and other current assets          77,763       70,491

  Total current assets                              3,712,647    2,465,545

Property and equipment, net                         358,440      342,497

Long-term investments                               26,226       34,281

Goodwill and acquired intangible assets, net        2,129,464    2,176,763

Other non-current assets                            111,380      151,854

  Total assets                                      $ 6,338,157  $ 5,170,940



Liabilities and Shareholders' Equity

Current liabilities:

 Accounts payable                                   $ 332,007    $ 283,362

 Accrued liabilities                                232,007      207,189

 Deferred income                                    76,161       59,396

 Current portion of capital lease obligations       511          1,940

  Total current liabilities                         640,686      551,887

Capital lease obligations, net of current portion   -            511

Other long-term liabilities                         175,602      200,563

  Total liabilities                                 816,288      752,961



Shareholders' equity:

 Common stock                                       1,317        1,277

 Additional paid-in capital                         4,805,588    4,607,844

 Accumulated other comprehensive income (loss)      1,092        (885)

 Retained earnings (accumulated deficit)            713,872      (190,257)

  Total shareholders' equity                        5,521,869    4,417,979

  Total liabilities and shareholders' equity        $ 6,338,157  $ 5,170,940






Marvell Technology Group Ltd.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

(in thousands)



                             Three Months Ended        Year Ended

                             January 29,  January 30,  January 29,  January 30,

                             2011         2010         2011         2010

Cash flows from operating
activities:

Net income                   $ 222,853    $ 204,821    $ 904,129    $ 353,456

Adjustments to reconcile net
income to net cash provided

by operating activities:

 Depreciation and
 amortization                24,199       24,238       93,190       99,214

 Stock-based compensation    31,279       30,559       118,405      126,599

 Amortization and writeoff
 of acquired intangible
 assets                      14,005       24,282       79,538       107,534

 Facilities impairment       -            3,986        1,140        3,986

 (Gain) loss on investments  3,940        1,667        13,508       1,667

 Fair market value
 adjustment to acquired
 inventory sold              -            (1,626)      (2,391)      (15,509)

 Excess tax benefits from
 stock-based compensation    (230)        (472)        (899)        (677)

 Deferred income taxes       10,599       7,225        4,113        13,356

 Gain on sale of equity
 investment                  (5,927)      (4,938)      (5,927)      (4,938)

 Changes in assets and
 liabilities:

  Restricted cash            -            -            -            24,500

  Accounts receivable        8,569        37,523       (102,610)    (134,695)

  Inventories                (17,120)     (889)        (1,264)      82,659

  Prepaid expenses and other
  assets                     53,954       (11,885)     50,236       (4,326)

  Accounts payable           (21,471)     (30,060)     42,464       142,002

  Accrued liabilities and
  other                      (56,007)     10,420       (38,059)     (32,268)

  Accrued employee
  compensation               (5,755)      (1,857)      21,210       33,292

  Deferred income            (12,055)     (11,877)     16,765       15,661

   Net cash provided by
   operating activities      250,833      281,117      1,193,548    811,513

Cash flows from investing
activities:

 Purchases of investments    (240,817)    (379,981)    (1,264,517)  (806,979)

 Sales and maturities of
 investments                 190,021      108,044      868,759      118,362

 Cash paid for acquisitions,
 net                         (8,767)      -            (29,446)     -

 Proceeds from sales of
 equity investments          9,192        -            9,192        -

 Purchases of technology
 licenses                    (10,495)     (3,048)      (23,144)     (15,598)

 Purchases of property and
 equipment                   (26,906)     (25,006)     (90,173)     (39,814)

   Net cash used in
   investing activities      (87,772)     (299,991)    (529,329)    (744,029)

Cash flows from financing
activities:

 Repurchase of common stock  (26,892)     -            (87,486)     -

 Proceeds from employee
 stock plans                 68,281       76,896       165,954      111,645

 Principal payments on
 capital lease obligations   (500)        (461)        (1,940)      (1,787)

 Excess tax benefits from
 stock-based compensation    230          472          899          677

   Net cash (used in)
   provided by financing
   activities                41,119       76,907       77,427       110,535

Net increase (decrease) in
cash and cash equivalents    204,180      58,033       741,646      178,019

Cash and cash equivalents at
beginning of period          1,642,894    1,047,395    1,105,428    927,409

Cash and cash equivalents at
end of period                $ 1,847,074  $ 1,105,428  $ 1,847,074  $ 1,105,428





SOURCE Marvell Technology Group Ltd.