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Marvell Technology Group Ltd. Reports Second Quarter of Fiscal 2011 Results

Revenue: $896 Million, Up 5 Percent Sequentially
GAAP Net Income: $220 Million, $0.33 per share EPS
Free Cash Flow: $292 Million, 33 Percent of Revenue
Announces $500 Million Share Repurchase Plan

SANTA CLARA, Calif., Aug 19, 2010 /PRNewswire via COMTEX/ --

Marvell Technology Group Ltd. (Nasdaq: MRVL), a global leader in integrated silicon solutions today reported financial results for the second quarter of fiscal 2011, ended July 31, 2010.

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Net revenue for the second quarter of fiscal 2011 was $896 million, a 40 percent increase from $641 million in the second quarter of fiscal 2010, ended August 1, 2009, and a 5 percent sequential increase from $856 million in the first quarter of fiscal 2011, ended May 1, 2010.

GAAP net income was $220 million, or $0.33 per share (diluted), for the second quarter of fiscal 2011, compared with a GAAP net income of $58 million, or $0.09 per share (diluted), for the second quarter of fiscal 2010. GAAP net income in the first quarter of fiscal 2011 was $206 million, or $0.30 per share (diluted).

Non-GAAP net income was $273 million, or $0.40 per share (diluted), for the second quarter of fiscal 2011, as compared with non-GAAP net income of $119 million, or $0.18 per share (diluted), for the second quarter of fiscal 2010. Non-GAAP net income for the first quarter of fiscal 2011 was $260 million, or $0.38 per share (diluted).

"We delivered excellent results for the second quarter," said Dr. Sehat Sutardja, Marvell's Chairman and Chief Executive Officer. "We experienced significant revenue growth in our mobile and wireless end market which increased over 50 percent sequentially, and over 140 percent year over year, while revenue from our networking end market grew 4 percent sequentially, and over 30 percent year over year. Despite the challenges of a softening macroeconomic environment for PCs, we continue to deliver best in class profitability on both operating and cash flow margins, demonstrating the robustness of our long-term business model driven by the transformation of our revenues to the mobile and wireless semiconductor end market. Given the long-term confidence we have in our business model, we are pleased to announce the Board of Directors has authorized a share repurchase program of $500 million."

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 July 31, 2010, May 1, 2010 and August 1, 2009 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 other expenses or benefits.

GAAP gross margin for the second quarter of fiscal 2011 was 59.1 percent, compared to 55.0 percent for the second quarter of fiscal 2010 and 59.8 percent for the first quarter of fiscal 2011.

Non-GAAP gross margin for the second quarter of fiscal 2011 was 59.3 percent, compared to 55.3 percent for the second quarter of fiscal 2010 and 60.6 percent for the first quarter of fiscal 2011.

Shares used to compute GAAP net income per diluted share for the second quarter of fiscal 2011 were 675 million shares, compared with 648 million shares in the second quarter of fiscal 2010 and 678 million shares in the first quarter of fiscal 2011. Shares used to compute non-GAAP net income per diluted share for the second quarter of fiscal 2011 were 678 million shares, compared with 652 million shares for the second quarter of fiscal 2010 and 681 million shares for the first quarter of fiscal 2011.

Cash flow from operations for the second quarter of fiscal 2011 was $319 million, up from the $182 million in the second quarter of fiscal 2010 and up from the $256 million reported in the first quarter of fiscal 2011. Free cash flow for the second quarter of fiscal 2011 was $292 million, up from the $175 million reported in second quarter of fiscal 2010, and up from the $237 million reported in the first quarter of fiscal 2011. Free cash flow as presented above is defined as cash flow from operations, less capital expenditures and purchases of technology licenses.

Share Repurchase Program

Marvell also announced today that its Board of Directors has authorized a program to repurchase up to $500 million of its outstanding common shares, depending on market conditions and other factors.

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 position of over $2.3 billion, may occur in open market, privately negotiated or block transactions. As of July 31, 2010, Marvell had approximately 650 million common shares outstanding.

Conference Call

Marvell will be conducting a conference call on August 19, 2010 at 1:45 p.m. Pacific Time to discuss results for the second quarter of fiscal 2011. Interested parties may join the conference call by dialing 1-866-314-5050, pass-code 24135453. 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 September 19, 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 the sustainability of the Company's long term business model to deliver best in class profitability on both operating and cash flow margins; 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 financial measures 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 financial condition and results of operations may vary from quarter to quarter; the impact of global economic conditions on the Company's business; significant dependence on the hard disk drive industry; highly competitive nature of the markets in which the Company competes; reliance on a few customers; market acceptance of the Company's products; and the impact of current or future intellectual property litigation and claims for indemnification. For other factors that could cause Marvell's results to vary from expectations, please see the risk factors identified in Marvell's latest Annual Report on Form 10-K for the year ended January 30, 2010, subsequent Quarterly Reports on Form 10-Q and Current Reports on Form 8-K as filed with the SEC. When Marvell files its Form 10-Q for the second quarter of fiscal 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. Marvell undertakes no obligation to revise or update publicly any forward-looking statements.

                                    Marvell Technology Group Ltd.
                           Condensed Consolidated Statements of Operations
                                             (Unaudited)
                              (In thousands, except per share amounts)


                            Three Months Ended           Six Months Ended
                            ------------------           ----------------
                                          August
                           July 31,  May 1,       1,   July 31,   August 1,
                               2010     2010      2009       2010       2009
                               ----     ----      ----       ----       ----

    Net revenue            $896,474 $855,579  $640,620 $1,752,053 $1,162,054
    Cost of goods sold      366,682  343,985   288,059    710,667    545,689
                            -------  -------   -------    -------    -------
    Gross profit            529,792  511,594   352,561  1,041,386    616,365
    Operating expenses:
      Research and
       development          228,211  219,111   196,190    447,322    402,279
      Selling and
       marketing             36,863   38,423    32,908     75,286     66,818
      General and
       administrative        25,440   23,108    29,468     48,548    132,196
      Amortization and
       write-off of
       acquired intangible
       assets                21,214   22,549    26,446     43,763     56,802
                             ------   ------    ------     ------     ------
        Total operating
         expenses           311,728  303,191   285,012    614,919    658,095
                            -------  -------   -------    -------    -------
    Operating income
     (loss)                 218,064  208,403    67,549    426,467    (41,730)
    Interest and other
     income (expense),
     net                      4,212   (3,752)      279        460        119
                              -----   ------       ---        ---        ---
    Income (loss) before
     income taxes           222,276  204,651    67,828    426,927    (41,611)
    Provision (benefit)
     for income taxes         2,499   (1,116)    9,335      1,383     11,353
                              -----   ------     -----      -----     ------
    Net income (loss)      $219,777 $205,767   $58,493   $425,544    (52,964)
                           ======== ========   =======   ========    =======

    Basic net income
     (loss) per share         $0.34    $0.32     $0.09      $0.66     $(0.09)
                              =====    =====     =====      =====     ======
    Diluted net income
     (loss) per share         $0.33    $0.30     $0.09      $0.63     $(0.09)
                              =====    =====     =====      =====     ======

    Shares used in
     computing basic
     earnings (loss) per
     share                  648,028  640,926   620,881    644,477    619,779
    Shares used in
     computing diluted
     earnings (loss) per
     share                  675,220  678,059   648,110    676,639    619,779


                  Marvell Technology Group Ltd.
     Reconciliation of GAAP Net Income to Non-GAAP Net Income
                           (Unaudited)
             (In thousands, except per share amounts)


                                                    Three Months Ended
                                                    ------------------
                                                                      August
                                                 July 31,   May 1,       1,
                                                     2010      2010      2009
                                                     ----      ----      ----

    GAAP net income (loss)                       $219,777  $205,767   $58,493
    Stock-based compensation                       30,689    26,896    30,015
    Amortization and write-off of acquired
     intangible assets                             21,214    22,549    26,446
    Restructuring (a)                               1,660       586     4,956
    Legal/Tax related matters (b)                       -     4,373    (1,202)
    Other (c)                                           -         -         -
    Non-GAAP net income                          $273,340  $260,171  $118,708
                                                 ========  ========  ========

    GAAP weighted average shares - diluted        675,220   678,059   648,110
      Non-GAAP adjustment                           3,131     3,310     3,651
                                                    -----     -----     -----
    Non-GAAP weighted average shares diluted (d)  678,351   681,369   651,761
                                                  =======   =======   =======

    GAAP diluted net income (loss) per share        $0.33     $0.30     $0.09
                                                    =====     =====     =====
    Non-GAAP diluted net income per share           $0.40     $0.38     $0.18
                                                    =====     =====     =====

    GAAP gross profit:                           $529,792  $511,594  $352,561
      Stock-based compensation                      1,692     2,236     1,810
      Other                                             -     4,373         -
                                                      ---     -----       ---
    Non-GAAP gross profit                        $531,484  $518,203  $354,371
                                                 ========  ========  ========

    GAAP gross profit as a % of revenue              59.1%     59.8%     55.0%
      Stock-based compensation                        0.2%      0.3%      0.3%
      Other                                             -       0.5%        -
                                                      ---       ---       ---
    Non-GAAP gross profit                            59.3%     60.6%     55.3%
                                                     ====      ====      ====

    GAAP research and development:               $228,211  $219,111  $196,190
      Stock-based compensation                   (22,089)  (18,851)  (22,193)
      Restructuring                                (1,370)     (129)   (3,526)
      Legal/Tax settlement                              -         -     1,820
                                                      ---       ---     -----
    Non-GAAP research and development            $204,752  $200,131  $172,291
                                                 ========  ========  ========

    GAAP selling and marketing:                   $36,863   $38,423   $32,908
      Stock-based compensation                     (2,397)   (3,173)   (3,659)
      Restructuring                                     -         -      (524)
      Legal/Tax settlement                              -         -       659
                                                      ---       ---       ---
    Non-GAAP selling and marketing                $34,466   $35,250   $29,384
                                                  =======   =======   =======

    GAAP general and administrative:              $25,440   $23,108   $29,468
      Stock-based compensation                     (4,511)   (2,636)   (2,353)
      Restructuring                                  (290)     (457)     (906)
      Legal/Tax settlement                                        -       158
                                                                ---       ---
    Non-GAAP general and administrative           $20,639   $20,015   $26,367
                                                  =======   =======   =======





                                                    Six Months Ended
                                                    ----------------
                                                                 August
                                                 July 31,            1,
                                                       2010          2009
                                                       ----          ----

    GAAP net income (loss)                         $425,544      $(52,964)
    Stock-based compensation                         57,585        61,663
    Amortization and write-off of acquired
     intangible assets                               43,763        56,802
    Restructuring (a)                                 2,246        13,292
    Legal/Tax related matters (b)                     4,373        70,798
    Other (c)                                             -           990
    Non-GAAP net income                            $533,511      $150,581
                                                   ========      ========

    GAAP weighted average shares - diluted          676,639       619,779
      Non-GAAP adjustment                             3,273        24,404
                                                      -----        ------
    Non-GAAP weighted average shares diluted (d)    679,912       644,183
                                                    =======       =======

    GAAP diluted net income (loss) per share          $0.63        $(0.09)
                                                      =====        ======
    Non-GAAP diluted net income per share             $0.78         $0.23
                                                      =====         =====

    GAAP gross profit:                           $1,041,386      $616,365
      Stock-based compensation                        3,928         5,926
      Other                                           4,373           990
                                                      -----           ---
    Non-GAAP gross profit                        $1,049,687      $623,281
                                                 ==========      ========

    GAAP gross profit as a % of revenue                59.4%         53.0%
      Stock-based compensation                          0.2%          0.5%
      Other                                             0.3%          0.1%
                                                        ---           ---
    Non-GAAP gross profit                              59.9%         53.6%
                                                       ====          ====

    GAAP research and development:                 $447,322      $402,279
      Stock-based compensation                      (40,940)      (43,930)
      Restructuring                                  (1,499)       (9,366)
      Legal/Tax settlement                                -         1,820
                                                        ---         -----
    Non-GAAP research and development              $404,883      $350,803
                                                   ========      ========

    GAAP selling and marketing:                     $75,286       $66,818
      Stock-based compensation                       (5,570)       (7,370)
      Restructuring                                       -        (1,788)
      Legal/Tax settlement                                -           659
                                                        ---           ---
    Non-GAAP selling and marketing                  $69,716       $58,319
                                                    =======       =======

    GAAP general and administrative:                $48,548      $132,196
      Stock-based compensation                       (7,147)       (4,437)
      Restructuring                                    (747)       (2,138)
      Legal/Tax settlement                                -       (71,842)
                                                        ---       -------
    Non-GAAP general and administrative             $40,654       $53,779
                                                    =======       =======




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

    (b)   Fiscal quarter ended May 1, 2010 includes an amount
    representing the portion of an IP litigation settlement related to
    previous fiscal years from 2003 through 2010.  The six months ended
    August 1, 2009 includes a $72.0 million charge in connection with
    the settlement of the class action litigation.  Fiscal quarter ended
    August 1, 2009 includes the net impact of our settlement with the
    IRS related to our historical stock option practices.  As the
    composition of the settlement was different than the initial
    reserve, the net benefit includes a $2.6 million benefit to
    operating expense with an offset of $1.4 million of interest
    expense.

    (c The six months ended August 1, 2009 includes underutilization
    charges recorded in connection with the rampdown of the Malaysia
    test operations.

    (d)   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
                                                  July 31,            30,
    Assets                                              2010            2010
                                                        ----            ----
    Current assets:
      Cash, cash equivalents, and short-term
       investments                                $2,379,951      $1,796,717
      Accounts receivable, net                       490,755         356,796
      Inventories                                    239,320         241,541
      Prepaid expenses and other current assets       72,045          70,491
                                                      ------          ------
        Total current assets                       3,182,071       2,465,545
    Property and equipment, net                      343,445         342,497
    Long-term investments                             34,184          34,281
    Goodwill and acquired intangible assets,
     net                                           2,153,424       2,176,763
    Other non-current assets                         154,153         151,854
                                                     -------         -------
        Total assets                              $5,867,277      $5,170,940
                                                  ==========      ==========

    Liabilities and Shareholders' Equity
    Current liabilities:
      Accounts payable                              $385,509        $277,405
      Accrued liabilities                            201,787         207,877
      Income taxes payable                            19,204          19,992
      Deferred income                                 86,019          59,396
      Current portion of capital lease
       obligations                                     1,501           1,940
                                                       -----           -----
        Total current liabilities                    694,020         566,610
    Capital lease obligations, net of current
     portion                                               -             511
    Other long-term liabilities                      190,352         185,840
                                                     -------         -------
        Total liabilities                            884,372         752,961
                                                     -------         -------

    Shareholders' equity:
      Common stock                                     1,300           1,277
      Additional paid-in capital                   4,745,787       4,607,844
      Accumulated other comprehensive gain
       (loss)                                            531            (885)
      Retained earnings (accumulated deficit)        235,287        (190,257)
                                                     -------        --------
        Total shareholders' equity                 4,982,905       4,417,979
                                                   ---------       ---------
        Total liabilities and shareholders'
         equity                                   $5,867,277      $5,170,940
                                                  ==========      ==========


                                   Marvell Technology Group Ltd.
                          Condensed Consolidated Statements of Cash Flows
                                            (Unaudited)
                                          (in thousands)


                            Three Months Ended     Six Months Ended
                            ------------------     ----------------
                            July 31,     August 1,   July 31,    August 1,
                                  2010         2009        2010        2009
                                  ----         ----        ----        ----
    Cash flows from
     operating
     activities:
    Net income (loss)         $219,777      $58,493    $425,544    $(52,964)
    Adjustments to
     reconcile net
     income (loss) to
     net cash provided
      by operating
       activities:
      Depreciation and
       amortization             22,773       25,030      45,851      50,405
      Stock-based
       compensation             30,689       30,015      57,585      61,663
      Amortization and
       write-off of
       acquired
       intangible assets        21,214       26,446      43,763      56,802
      Amortization of
       marketable
       securities premium        2,777            -       4,812           -
      Facilities
       impairment                1,140            -       1,140           -
      Fair market value
       adjustment to
       Intel inventory
       sold                     (1,048)      (1,733)     (1,990)     (3,076)
      Excess tax benefits
       from stock-based
       compensation                (44)         (40)       (229)        (69)
      Deferred income
       taxes                    (1,457)       5,868      (1,457)      5,868
      Changes in assets
       and liabilities:
        Accounts receivable    (42,062)     (43,095)   (133,959)   (106,361)
        Inventories            (31,501)      (5,694)      3,916     100,587
        Prepaid expenses
         and other assets       (3,927)      (5,409)      6,454       8,921
        Accounts payable        93,949      103,043      98,775     133,781
        Accrued liabilities
         and other                 (50)       5,604       2,248      69,059
        Accrued employee
         compensation            4,406      (14,007)     (6,100)       (974)
        Income taxes
         payable                   (88)       3,585       1,853       4,928
        Deferred income          2,690       (5,773)     26,623      (1,708)
                                 -----       ------      ------      ------
          Net cash provided
           by operating
           activities          319,238      182,333     574,829     326,862
    Cash flows from
     investing
     activities:
      Purchases of
       investments            (522,932)           -    (710,810)          -
      Sales and
       maturities of
       securities              198,305           50     347,745          50
      Cash paid for
       acquisitions, net       (20,679)           -     (20,679)          -
      Purchases of
       technology
       licenses                 (4,569)      (3,250)     (6,819)    (12,550)
      Purchases of
       property and
       equipment               (22,903)      (3,765)    (39,298)     (7,179)
                               -------       ------     -------      ------
          Net cash used in
           investing
           activities         (372,778)      (6,965)   (429,861)    (19,679)
    Cash flows from
     financing
     activities:
      Proceeds from the
       issuance of common
       shares                   31,789       20,636      80,477      21,021
      Principal payments
       on capital lease
       obligations                (480)        (442)       (950)       (875)
      Excess tax benefits
       from stock-based
       compensation                 44           40         229          69
                                   ---          ---         ---         ---
          Net cash provided
           by financing
           activities           31,353       20,234      79,756      20,215
                                ------       ------      ------      ------
    Net increase
     (decrease) in cash
     and cash
     equivalents               (22,187)     195,602     224,724     327,398
                               -------      -------     -------     -------
    Cash and cash
     equivalents at
     beginning of
     period                  1,352,339    1,059,205   1,105,428     927,409
                             ---------    ---------   ---------     -------
    Cash and cash
     equivalents at end
     of period              $1,330,152   $1,254,807  $1,330,152  $1,254,807
                            ==========   ==========  ==========  ==========



    For further information, contact:
    Jeff Palmer                               Tom Hayes
    Investor Relations                        Corporate Marketing
    408-222-8373                              408-222-2815
    jpalmer@marvell.com                       tom@marvell.com


SOURCE Marvell Technology Group Ltd.