Marvell Technology Reports Fiscal Second Quarter Results
- F2Q09 Revenue: $843 Million, up 28% Year-on-Year
- F2Q09 Net Income: $71 Million (GAAP), $154 Million (non-GAAP)
- F2Q09 EPS: $0.11 (GAAP), $0.24 (non-GAAP)
- F2Q09 Free Cash Flow: $167 Million
SANTA CLARA, Calif., Aug. 28 /PRNewswire-FirstCall/ -- Marvell Technology Group Ltd. (Nasdaq: MRVL), a leader in storage, communications and consumer silicon solutions, today reported financial results for the second quarter of fiscal year 2009, ended August 2, 2008.
(Logo: http://www.newscom.com/cgi-bin/prnh/20070411/SFW034LOGO)
Net revenue for the second quarter of fiscal 2009 was $842.6 million, an increase of 28 percent over $656.7 million in the second quarter of fiscal 2008, ended July 28, 2007, and a 4.8 percent sequential increase from $804 million in the first quarter of fiscal 2009, ended May 3, 2008.
"The results for our second quarter were better than we had anticipated. We demonstrated significant year over year revenue growth, sustained profitability and excellent free cash flow generation," said Dr. Sehat Sutardja, Marvell Chairman and Chief Executive Officer. "We also continued to realize recurring benefits from our improved efficiency which combined with our revenue performance enabled us to achieve increased sequential growth in gross and operating margins."
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 and six months ended August 2, 2008 and July 28, 2007 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 and restructuring costs.
GAAP net income was $71.4 million, or $0.11 per share (diluted), for the second quarter of fiscal 2009, compared with a GAAP net loss of $56.5 million, or a loss of $0.10 per share for the second quarter of fiscal 2008. In the first quarter of fiscal 2009 GAAP net income was $69.9 million, or $0.11 per share (diluted).
Non-GAAP net income increased to $154 million, or $0.24 per share (diluted) for the second quarter of fiscal 2009, a 288 percent increase compared with non-GAAP net income of $39.7 million, or $0.06 per share (diluted) for the second quarter of fiscal 2008 and an increase of 2 percent from non-GAAP net income of $150.4 million, or $0.24 per share (diluted) for the first quarter of fiscal 2009. Results for the first fiscal quarter of 2009 included one time benefits of $14.5 million, or approximately $0.02 per share.
Non-GAAP gross margin for the second quarter of fiscal 2009 was 52.3 percent, compared to non-GAAP gross margin of 52.0 percent for the first
quarter of fiscal 2009 and non-GAAP gross margin of 49.4 percent for the second quarter of fiscal 2008.
Shares used to compute GAAP net income per share, for the second quarter of fiscal 2009 were 638 million shares (diluted), compared with 588 million shares in the second quarter of fiscal 2008 and 624 million shares (diluted) in the first quarter of fiscal 2009. Shares used to compute non-GAAP net income per diluted share for the second quarter of fiscal 2009 were 640 million shares compared with 630 million shares for the second quarter of fiscal 2008 and 624 million shares for the first quarter of fiscal 2009.
Cash flow from operations for the second quarter of fiscal 2009 was $183 million, up 40% sequentially from the $130 million reported in the first quarter of fiscal 2009. Free cash, defined as cash flow from operations, less investments in property, plant and equipment, was $167 million, up 67% sequentially from the $100 million reported in the first quarter of fiscal 2009.
Conference Call
Marvell will be conducting a conference call on August 28, 2008 at 1:45 p.m. PDT to discuss its second quarter of fiscal 2009 financial performance. The call is being webcast by Thomson/CCBN and can be accessed at Marvell's web site at http://www.marvell.com. The conference call will also be available via the web at http://www.marvell.com. Please visit Marvell's website, under the Investor Events section of the Investor Relations page. Replay on the Internet will be available until September 4, 2009.
Discussion of Non-GAAP Financial Measures
Non-GAAP net income consists of net income excluding stock-based compensation expense as well as charges related to acquisitions and other charges and gains 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 warrants, common stock options and restricted stock.
Marvell believes that the presentation of non-GAAP net income and non-GAAP net income per share provides important supplemental information to management and investors regarding financial and business trends relating to the company'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 http://www.sec.gov as well as on the Marvell website in the Investor Relations section at http://www.marvell.com.
About Marvell
Marvell Technology (Nasdaq: MRVL) is a 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 http://www.marvell.com
Forward-Looking Statements
This press release contains forward-looking statements that involve risks and uncertainties concerning the Company's use of non-GAAP net income and net income per share as important supplemental information. Actual events or results may differ materially from those described in this document due to a number of risks and uncertainties. These statements are not guarantees of results and are subject to risks and uncertainties that could cause actual results to differ materially from those anticipated in the forward-looking statements, including the Company's reliance on major customers and suppliers; market acceptance of new products; and other risks detailed in Marvell's SEC filings. When Marvell files its Form 10-Q for the second quarter of fiscal 2009, 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, 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 Louise Kehoe
Investor Relations Ogilvy PR/ Marvell
408-222-8373 650-544-5070
jpalmer@marvell.com louise.kehoe@ogilvypr.com
Marvell Technology Group Ltd.
Condensed Consolidated Statements of Operations
(Unaudited)
(In thousands, except per share amounts)
Three Months Ended Six Months Ended
August 2, May 3, July 28, August 2, July 28,
2008 2008 2007 2008 2007
Net revenue $842,575 $804,075 $656,711 $1,646,650 $1,291,761
Cost of goods sold 405,913 388,842 335,530 794,755 662,947
Gross profit 436,662 415,233 321,181 851,895 628,814
Operating expenses:
Research and
development and
other 249,714 238,475 236,194 488,189 470,327
Selling and
marketing 41,834 46,088 53,942 87,922 104,334
General and
administrative 30,989 12,951 33,775 43,940 57,763
Amortization of
acquired intangible
assets 34,988 35,247 37,293 70,235 74,613
Total operating
expenses 357,525 332,761 361,204 690,286 707,037
Operating income
(loss) 79,137 82,472 (40,023) 161,609 (78,223)
Interest and other
income (expense), net (2,690) (3,959) (6,814) (6,649) (15,470)
Income (loss) before
income taxes 76,447 78,513 (46,837) 154,960 (93,693)
Provision for income
taxes 5,080 8,574 9,619 13,654 15,591
Net income (loss) $71,367 $69,939 $(56,456) 141,306 (109,284)
Basic net income
(loss) per share $0.12 $0.12 $(0.10) $0.23 $(0.19)
Diluted net income
(loss) per share $0.11 $0.11 $(0.10) $0.22 $(0.19)
Shares used in
computing basic
earnings per share 606,860 601,222 587,534 604,041 587,480
Shares used in
computing diluted
earnings per share 637,832 624,351 587,534 631,091 587,480
Marvell Technology Group Ltd.
Reconciliation of Non-GAAP Adjustments
(Unaudited)
(In thousands, except per share amounts)
Three Months Ended Three Months Ended
August 2, 2008 July 28, 2007
Adjust- Adjust-
GAAP ments Non-GAAP GAAP ments Non-GAAP
Net revenue $842,575 $- $842,575 $656,711 $- $656,711
Cost of goods
sold 405,913 3,755(a) 402,158 335,530 3,275(a) 332,255
Gross profit 436,662 3,755 440,417 321,181 3,275 324,456
Gross margin 51.8% 52.3% 48.9% 49.4%
Operating expenses:
Research and
development
and other 249,714 32,998(a) 216,716 236,194 34,591(a) 201,603
Selling and
marketing 41,834 6,159(a) 35,675 53,942 10,977(a) 42,965
General and
administrative 30,989 4,715(a) 26,274 33,775 10,033(a) 23,742
Amortization of
acquired
intangible
assets 34,988 34,988(b) - 37,293 37,293(b) -
Total operating
expenses 357,525 78,860 278,665 361,204 92,894 268,310
Operating income
(loss) 79,137 82,615 161,752 (40,023)96,169 56,146
Interest and
other income
(expense), net (2,690) - (2,690) (6,814) - (6,814)
Income (loss)
before income
taxes 76,447 82,615 159,062 (46,837) 96,169 49,332
Provision for
income taxes 5,080 - 5,080 9,619 - 9,619
Net income (loss) $71,367 $82,615 $153,982 $(56,456)$96,169 $39,713
Basic net income
(loss) per share $0.12 $0.25 $(0.10) $0.07
Diluted net income
(loss) per share $0.11 $0.24 $(0.10) $0.06
Shares used in
computing basic
earnings per
share 606,860 606,860 587,534 587,534
Shares used in
computing diluted
earnings per
share 637,832 640,147 587,534 630,258
(a) Consists of
For three months ending August 2, 2008, employee stock-based
compensation expense of $3,755 cost of goods sold, $32,998 research
and development, $6,159 selling and marketing and $4,715 general and
administrative
For three months ending July 28, 2007, employee stock-based
compensation expense of $3,275 cost of goods sold, $34,591 research
and development, $10,977 selling and marketing and $10,033 general and
administrative
(b) Consists of
For three months ending August 2, 2008, amortization of intangible
assets of $34,988 resulting from prior acquisitions
For three months ending July 28, 2007, amortization of intangible
assets of $37,293 resulting from prior acquisitions
Marvell Technology Group Ltd.
Reconciliation of Non-GAAP Adjustments
(Unaudited)
(In thousands, except per share amounts)
Six Months Ended Six Months Ended
August 2, 2008 July 28, 2007
Adjust- Adjust-
GAAP ments Non-GAAP GAAP ments Non-GAAP
Net revenue $1,646,650 $- $1,646,650 $1,291,761 $- $1,291,761
Cost of goods
sold 794,755 6,828(a) 787,927 662,947 6,293(a) 656,654
Gross profit 851,895 6,828 858,723 628,814 6,293 635,107
Gross margin 51.7% 52.1% 48.7% 49.2%
Operating
expenses:
Research and
development
and other 488,189 62,930(a) 425,259 470,327 66,633(a) 403,694
Selling and
marketing 87,922 13,507(a) 74,415 104,334 18,148(a) 86,186
General and
admini-
strative 43,940 9,588(a) 34,352 57,763 14,590(a) 43,173
Amortization
of acquired
intangible
assets 70,235 70,235(b) - 74,613 74,613(b) -
Total
operating
expenses 690,286 156,260 534,026 707,037 173,984 533,053
Operating
income
(loss) 161,609 163,088 324,697 (78,223) 180,277 102,054
Interest and
other income
(expense), net (6,649) - (6,649) (15,470) - (15,470)
Income (loss)
before income
taxes 154,960 163,088 318,048 (93,693) 180,277 86,584
Provision for
income taxes 13,654 - 13,654 15,591 - 15,591
Net income
(loss) $141,306 $163,088 $304,394 $(109,284)$180,277 $70,993
Basic net
income
(loss) per
share $0.23 $0.50 $(0.19) $0.12
Diluted net
income (loss)
per share $0.22 $0.48 $(0.19) $0.11
Shares used in
computing basic
earnings per
share 604,041 604,041 587,480 587,480
Shares used in
computing
diluted
earnings per
share 631,091 632,294 587,480 632,010
(a) Consists of
For six months ending August 2, 2008, employee stock-based
compensation expense of $6,828 cost of goods sold, $62,930 research
and development, $13,507 selling and marketing and $9,588 general and
administrative
For six months ending July 28, 2007, employee stock-based compensation
expense of $6,293 cost of goods sold, $66,633 research and
development, $18,148 selling and marketing and $14,590 general and
administrative
(b) Consists of
For six months ending August 2, 2008, amortization of intangible
assets of $70,235 resulting from prior acquisitions
For six months ending July 28, 2007, amortization of intangible assets
of $74,613 resulting from prior acquisitions
Marvell Technology Group Ltd.
Condensed Consolidated Balance Sheets
(Unaudited)
(In thousands)
August 2, February 2,
Assets 2008 2008
Current assets:
Cash, cash equivalents
and short-term investments $888,898 $630,903
Accounts receivable, net 470,646 332,020
Inventory 326,924 419,493
Prepaid expenses and other current assets 94,103 121,325
Total current assets 1,780,571 1,503,741
Property and equipment, net 412,988 416,241
Long-term investments 40,293 45,628
Goodwill and acquired intangible assets 2,357,606 2,427,877
Other non-current assets 132,627 157,107
Total assets $4,724,085 $4,550,594
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable $237,039 $231,135
Accrued liabilities 217,629 241,062
Income taxes payable 37,008 39,132
Deferred income 62,005 69,420
Current portion of capital lease
obligations 1,933 2,463
Total current liabilities 555,614 583,212
Capital lease obligations 3,363 4,238
Term loan obligations 288,750 390,750
Other long-term liabilities 169,666 160,875
Total liabilities 1,017,393 1,139,075
Shareholders' equity:
Common stock 1,221 1,200
Additional paid-in capital 4,256,384 4,100,659
Accumulated other comprehensive
income (loss) (1,264) 615
Accumulated deficit (549,649) (690,955)
Total shareholders' equity 3,706,692 3,411,519
Total liabilities and shareholders'
equity $4,724,085 $4,550,594
Marvell Technology Group Ltd.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(in thousands)
Six Months Ended
August 2, July 28,
2008 2007
Cash flows from operating
activities:
Net income (loss) $141,306 $(109,284)
Adjustments to reconcile net income
(loss) to net cash provided
by operating activities:
Depreciation and amortization 56,650 52,420
Stock-based compensation 92,853 105,664
Amortization of acquired
intangible assets 70,235 74,613
Loss from disposal of assets - (5,122)
Fair market value adjustment to
Intel inventory sold (10,757) (77,641)
Interest expense related to
supply contract - 3,023
Excess tax benefits from stock-
based compensation (494) (235)
Changes in assets and
liabilities, net of
acquisitions:
Restricted cash (24,500) -
Accounts receivable (138,626) (28,702)
Inventories 103,327 (88,748)
Prepaid expenses and other
assets 42,810 53,992
Accounts payable 5,878 22,334
Accrued liabilities and other (33,999) (26,199)
Accrued employee compensation 9,995 855
Income taxes payable 5,814 3,928
Deferred income (7,415) 8,318
Net cash provided by (used
in) operating activities 313,077 (10,784)
Cash flows from investing
activities:
Cash paid in acquisitions, net - (7,141)
Purchases of short-term and long-
term investments (10,172) (113,651)
Sales and maturities of short-
term and long-term investments 23,793 50,021
Acquisition costs - (1,138)
Purchases of property and
equipment (46,532) (64,513)
Purchases of technology licenses (1,250) (16,850)
Proceeds from sale of assets
under construction - 5,122
Net cash used in investing
activities (34,161) (148,150)
Cash flows from financing
activities:
Proceeds from the issuance of
common stock and other 67,656 2,681
Principal payments on capital
lease and debt obligations (103,405) (7,811)
Excess tax benefits from stock-
based compensation 494 235
Net cash used in financing
activities (35,255) (4,895)
Net increase (decrease) in cash and
cash equivalents 243,661 (163,829)
Cash and cash equivalents at
beginning of period 615,648 568,008
Cash and cash equivalents at end of
period $859,309 $404,179
SOURCE Marvell Technology Group Ltd.
Released August 28, 2008
