Marvell Technology Reports Fiscal Fourth Quarter and Fiscal 2010 Results
Revenue: $843 Million, FQ410; $2.81 Billion, FY2010
GAAP Net Income: $205 Million, FQ410; $353 Million, FY2010
Free Cash Flow: $253 Million, FQ410; $756 Million, FY2010
SANTA CLARA, Calif., March 4 /PRNewswire-FirstCall/ -- Marvell Technology Group Ltd. (Nasdaq: MRVL), a world leader in storage, communications and consumer silicon solutions, today reported financial results for the fourth quarter and fiscal year 2010, ended January 30, 2010.
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Net revenue for the fourth quarter of fiscal 2010 was $843 million, a 64 percent increase from $513 million in the fourth quarter of fiscal 2009, ended January 31, 2009, and a 5 percent sequential increase from $803 million in the third quarter of fiscal 2010, ended October 31, 2009.
Net revenue for the fiscal year ended January 30, 2010 was $2.81 billion, a decrease of 5 percent over reported net revenue of $2.95 billion for the fiscal year ended January 31, 2009.
GAAP net income was $205 million, or $0.31 per share (diluted), for the fourth quarter of fiscal 2010, compared with a GAAP net loss of $65 million, or $0.11 per share (diluted), for the fourth quarter of fiscal 2009. GAAP net income in the third quarter of fiscal 2010 was $202 million, or $0.31 per share (diluted).
GAAP net income was $353 million, or $0.54 per share (diluted), for the year ended January 30, 2010, compared with a GAAP net income of $147 million, or $0.23 per share (diluted), for the year ended January 31, 2009.
Non-GAAP net income increased to $266 million, or $0.40 per share (diluted), for the fourth quarter of fiscal 2010, as compared with non-GAAP net income of $32 million, or $0.05 per share (diluted), for the fourth quarter of fiscal 2009. Non-GAAP net income for the third quarter of fiscal 2010 was $232 million, or $0.35 per share (diluted).
For the fiscal year ended January 30, 2010, non-GAAP net income was $648 million, or $0.99 per share (diluted), as compared with non-GAAP net income of $482 million, or $0.76 per share (diluted), for the fiscal year ended January 31, 2009.
"The results for our fourth quarter and fiscal year bring to a close one of the most challenging but successful years for Marvell," said Dr. Sehat Sutardja, Marvell's Chairman and Chief Executive Officer. "I am very pleased with the progress we have made over the previous 12 months, in the face of a turbulent global economy. During the past year, we have transformed our organization to improve the efficiency of product development, we have refined our business model to deliver world-class financial performance and we have laid the groundwork to accelerate our growth in the coming years. While I am proud of the progress we have made, we continue to be mindful of the challenging economic environment we operate within and the effect macro-economic events could potentially have on our business. Consequently, we will continue to focus on the aspects of our business we can control and influence. We believe it is important to aggressively invest in our employees and product development to allow Marvell to continue to deliver solutions that enable our customer's success."
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 January 30, 2010, October 31, 2009 and January 31, 2009 and fiscal years ended January 30, 2010 and January 31, 2009, 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 2010 was 59.7 percent, compared to 50.7 percent for the fourth quarter of fiscal 2009, and 57.5 percent for the third quarter of fiscal 2010. GAAP gross margin for fiscal 2010 was 56.3 percent compared to 51.6 percent for fiscal 2009.
Non-GAAP gross margin for the fourth quarter of fiscal 2010 was 60.0 percent, compared to 51.3 percent for the fourth quarter of fiscal 2009 and 57.8 percent for the third quarter of fiscal 2010. Non-GAAP gross margin for fiscal 2010 was 56.7 percent compared to 52.0 percent for fiscal 2009.
Shares used to compute GAAP net income per diluted share for the fourth quarter of fiscal 2010 were 669 million shares, compared with 615 million shares in the fourth quarter of fiscal 2009 and 660 million shares in the third quarter of fiscal 2010. Shares used to compute non-GAAP net income per diluted share for the fourth quarter of fiscal 2010 were 672 million shares compared with 629 million shares for the fourth quarter of fiscal 2009 and 664 million shares for the third quarter of fiscal 2010.
Shares used to compute GAAP net income per diluted share for the fiscal year ended January 30, 2010 were 654 million shares, compared with 630 million shares used to compute GAAP net income per diluted share for the fiscal year ended January 31, 2009. Shares used to compute non-GAAP net income per diluted share for the fiscal year ended January 30, 2010 were 657 million shares compared with 630 million shares for the fiscal year ended January 31, 2009.
Cash flow from operations for the fourth quarter of fiscal 2010 was $281 million, up from the $109 million in the fourth quarter of fiscal 2009 and up from the $204 million reported in the third quarter of fiscal 2010. Cash flow from operations for fiscal 2010 was $812 million, compared to $681 million for fiscal 2009. Free cash flow for the fourth quarter of fiscal 2010, was $253 million, up from the $93 million in the fourth quarter of fiscal 2009 and up from the $196 million reported in the third quarter of fiscal 2010. Free cash flow for fiscal 2010 was $756 million, compared to $602 million in fiscal 2009. Free cash flow as presented above is defined as cash flow from operations, less capital expenditures and purchases of IP licenses.
Conference Call
Marvell will be conducting a conference call on March 4, 2010 at 1:45 p.m. Pacific Time to discuss results for the fourth fiscal quarter and fiscal year 2010. Interested parties may join the conference call by dialing 1-866-770-7120, pass-code 57220826. 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 4, 2010.
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 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 operate in a challenging economic environment; our ability to aggressively invest in our people and product development; 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; successful execution of the Company's restructuring plan and other risks detailed in Marvell's SEC filings. When Marvell files its Form 10-K for 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 Quarterly Report on Form 10-Q for the quarter ended October 31, 2009 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 Year Ended
------------------ ----------
January October January January January
30, 31, 31, 30, 31,
2010 2009 2009 2010 2009
---- ---- ---- ---- ----
Net revenue $842,535 $803,098 $512,867 $2,807,687 $2,950,563
Cost of goods sold 339,790 341,617 252,732 1,227,096 1,426,624
------- ------- ------- --------- ---------
Gross profit 502,745 461,481 260,135 1,580,591 1,523,939
Operating expenses:
Research and
development 213,024 212,873 212,861 828,176 935,272
Selling and
marketing 37,144 35,442 32,623 139,404 161,703
General and
administrative 22,506 16,660 35,656 171,362 108,465
Amortization and
write-off of
acquired intangible
assets 24,282 26,450 48,274 107,534 153,323
------ ------ ------ ------- -------
Total operating
expenses 296,956 291,425 329,414 1,246,476 1,358,763
------- ------- ------- --------- ---------
Operating income
(loss) 205,789 170,056 (69,279) 334,115 165,176
Interest and other
income (expense), net 10,249 (1,373) (440) 8,995 5,657
------ ------ ---- ----- -----
Income (loss) before
income taxes 216,038 168,683 (69,719) 343,110 170,833
Provision (benefit)
for income taxes 11,217 (32,916) (4,709) (10,346) 23,591
------ ------- ------ ------- ------
Net income (loss) $204,821 $201,599 $(65,010) 353,456 147,242
======== ======== ======== ======= =======
Basic net income
(loss) per share $0.32 $0.32 $(0.11) $0.57 $0.24
===== ===== ====== ===== =====
Diluted net income
(loss) per share $0.31 $0.31 $(0.11) $0.54 $0.23
===== ===== ====== ===== =====
Shares used in
computing basic
earnings (loss)
per share 631,118 623,613 614,960 623,934 608,747
Shares used in
computing diluted
earnings (loss) per
share 668,623 659,739 614,960 653,741 630,328
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 January January January
30, 31, 31, 30, 31,
2010 2009 2009 2010 2009
---- ---- ---- ---- ----
GAAP net income
(loss) $204,821 $201,599 $(65,010) $353,456 $147,242
Stock-based
compensation 30,559 34,377 44,701 126,599 177,132
Amortization and
write-off of
acquired intangible
assets 24,282 26,450 48,274 107,534 153,323
Restructuring (b) 6,452 1,919 9,689 21,663 9,689
Legal/Tax related
matters (a) - (32,569) (5,292) 38,229 (5,292)
Other (b) - - - 990 -
--- --- --- --- ---
Non-GAAP net income $266,114 $231,776 $32,362 $648,471 $482,094
======== ======== ======= ======== ========
GAAP weighted
average shares -
diluted 668,623 659,739 614,960 653,741 630,328
Non-GAAP adjustment 3,598 4,297 14,032 3,126 128
----- ----- ------ ----- ---
Non-GAAP weighted
average shares
diluted (c) 672,221 664,036 628,992 656,867 630,456
======= ======= ======= ======= =======
GAAP diluted net
income (loss) per
share $0.31 $0.31 $(0.11) $0.54 $0.23
===== ===== ====== ===== =====
Non-GAAP diluted
net income per
share $0.40 $0.35 $0.05 $0.99 $0.76
===== ===== ===== ===== =====
GAAP gross profit: $502,745 $461,481 $260,135 $1,580,591 $1,523,939
Stock-based
compensation 2,375 2,389 3,021 10,690 11,644
Other - - - 990 -
--- --- --- --- ---
Non-GAAP gross
profit $505,120 $463,870 $263,156 $1,592,271 $1,535,583
======== ======== ======== ========== ==========
GAAP gross profit
as a % of revenue 59.7% 57.5% 50.7% 56.3% 51.6%
Stock-based
compensation 0.3% 0.3% 0.6% 0.4% 0.4%
Other - - - - -
--- --- --- --- ---
Non-GAAP gross profit 60.0% 57.8% 51.3% 56.7% 52.0%
==== ==== ==== ==== ====
GAAP research and
development: $213,024 $212,873 $212,861 $828,176 $935,272
Stock-based
compensation (21,702) (24,134) (33,358) (89,766) (126,895)
Restructuring (4,342) (1,338) (5,282) (15,046) (5,282)
Legal/Tax
settlement - - 3,652 1,820 3,652
--- --- ----- ----- -----
Non-GAAP research
and development $186,980 $187,401 $177,873 $725,184 $806,747
======== ======== ======== ======== ========
GAAP selling and
marketing: $37,144 $35,442 $32,623 $139,404 $161,703
Stock-based
compensation (3,841) (4,087) (4,677) (15,298) (25,080)
Restructuring 1 (51) (730) (1,838) (730)
Legal/Tax
settlement - - 1,323 659 1,323
--- --- ----- --- -----
Non-GAAP selling
and marketing $33,304 $31,304 $28,539 $122,927 $137,216
======= ======= ======= ======== ========
GAAP general and
administrative: $22,506 $16,660 $35,656 $171,362 $108,465
Stock-based
compensation (2,641) (3,767) (3,645) (10,845) (13,513)
Restructuring (2,111) (530) (3,677) (4,779) (3,677)
Legal/Tax
settlement - - 317 (71,842) 317
--- --- --- ------- ---
Non-GAAP general
and administrative $17,754 $12,363 $28,651 $83,896 $91,592
======= ======= ======= ======= =======
GAAP provision
(benefit) for
income taxes: $11,217 $(32,916) $(4,709) $(10,346) $23,591
Tax reserve
reversal - 27,317 - 27,317 -
Income tax
payable
adjustment - 5,252 - 5,252 -
--- ----- --- ----- ---
Non-GAAP provision
(benefit) for
income taxes $11,217 $(347) $(4,709) $22,223 $23,591
======= ===== ======= ======= =======
(a) Fiscal quarter ended October 31, 2009 includes a $27.3 million
benefit as a result of the expiration of the statute of limitations
related to a tax contingency reserve. In addition, a $5.3 million
income tax benefit was recorded relating to the true-up of a prior
year deferred tax asset. Fiscal quarter ended January 31, 2009
includes the reversal of remaining payroll related tax liabilities
initially recorded in prior years in connection with the Company's
historic stock option granting practices. The year ended January 30,
2010 includes the $72 million charge taken in fiscal Q1'10 in
connection with the settlement of the class action litigation and the
net impact from Q2'10 of our payroll related settlement with IRS
related to our historical stock option granting practices.
(b) Amount represents restructuring related costs including severance
costs from reductions in force, asset impairment charges and
facilities consolidation charges.
(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 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.
Marvell Technology Group Ltd.
Condensed Consolidated Balance Sheets
(Unaudited)
(In thousands)
January 30, January 31,
Assets 2010 2009
---- ----
Current assets:
Cash, cash equivalents, and short-term
investments $1,796,717 $951,909
Accounts receivable, net 356,796 222,101
Inventories 241,541 310,654
Prepaid expenses and other current assets 70,491 75,651
------ ------
Total current assets 2,465,545 1,560,315
Property and equipment, net 342,497 390,853
Long-term investments 34,281 40,541
Goodwill and acquired intangible assets, net 2,176,763 2,284,164
Other non-current assets 151,854 138,327
------- -------
Total assets $5,170,940 $4,414,200
========== ==========
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable $277,405 $139,028
Accrued liabilities 207,877 175,135
Income taxes payable 19,992 35,803
Deferred income 59,396 57,895
Current portion of capital lease obligations 1,940 1,787
----- -----
Total current liabilities 566,610 409,648
Capital lease obligations, net of current portion 511 2,451
Other long-term liabilities 185,840 173,034
------- -------
Total liabilities 752,961 585,133
------- -------
Shareholders' equity:
Common stock 1,277 1,233
Additional paid-in capital 4,607,844 4,372,265
Accumulated other comprehensive loss (885) (718)
Accumulated deficit (190,257) (543,713)
-------- --------
Total shareholders' equity 4,417,979 3,829,067
--------- ---------
Total liabilities and shareholders' equity $5,170,940 $4,414,200
========== ==========
Marvell Technology Group Ltd.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(in thousands)
Three Months Ended Year Ended
------------------ ----------
January January January January
30, 31, 30, 31,
2010 2009 2010 2009
---- ---- ---- ----
Cash flows from operating
activities:
Net income (loss) $204,821 $(65,010) $353,456 $147,242
Adjustments to reconcile
net income (loss) to
net cash provided
by operating activities:
Depreciation and
amortization 24,238 27,038 99,214 112,824
Stock-based compensation 30,559 44,701 126,599 177,132
Amortization and write-
off of acquired
intangible assets 24,282 48,274 107,534 153,323
Gain from sale of
equity investment (4,938) - (4,938) -
Loss from write-off and
disposition of assets 3,986 - 3,986 -
Fair market value
adjustment to Intel
inventory sold (1,626) (1,196) (15,509) (15,359)
Excess tax benefits
from stock-based
compensation (472) (9) (677) (365)
Deferred income taxes 7,225 (17,468) 13,356 (17,468)
Other non-cash expense 1,667 - 1,667 -
Changes in assets and
liabilities, net of
assets acquired and
liabilities assumed
in acquisitions:
Restricted cash - - 24,500 (24,500)
Accounts receivable 37,523 175,735 (134,695) 109,919
Inventories (889) 31,088 82,659 126,938
Prepaid expenses and
other assets (11,885) 1,629 (4,326) 63,476
Accounts payable (36,017) (82,791) 136,045 (88,795)
Accrued liabilities
and other 9,429 (13,015) (4,199) (36,708)
Accrued employee
compensation (1,857) (44,615) 33,292 (26,956)
Income taxes payable 6,948 11,607 (22,112) 11,507
Deferred income (11,877) (6,825) 15,661 (11,525)
------- ------ ------ -------
Net cash provided
by operating
activities 281,117 109,143 811,513 680,685
Cash flows from investing
activities:
Cash paid for acquisitions,
net of cash acquired - (5,287) - (5,287)
Purchases of investments (379,981) - (806,979) (10,172)
Sales and maturities of
short-term, long-term
and equity investments 108,044 - 118,362 29,181
Purchases of technology
licenses (3,048) (2,550) (15,598) (5,200)
Purchases of property
and equipment (25,006) (13,931) (39,814) (73,243)
------- ------- ------- -------
Net cash used in
investing activities (299,991) (21,768) (744,029) (64,721)
Cash flows from financing
activities:
Proceeds from the issuance
of common shares 76,896 12,192 111,645 92,645
Principal payments on
capital lease and term
loan obligations (461) (192,174) (1,787) (397,213)
Excess tax benefits from
stock-based compensation 472 9 677 365
--- --- --- ---
Net cash provided
by (used in) financing
activities 76,907 (179,973) 110,535 (304,203)
------ -------- ------- --------
Net increase in cash
and cash equivalents 58,033 (92,598) 178,019 311,761
------ ------- ------- -------
Cash and cash equivalents
at beginning of period 1,047,395 1,020,007 927,409 615,648
--------- --------- ------- -------
Cash and cash equivalents
at end of period $1,105,428 $927,409 $1,105,428 $927,409
========== ======== ========== ========
SOURCE Marvell Technology Group Ltd.
Released March 4, 2010
