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Marvell Technology Reports Fiscal First Quarter Results

--Revenue: $521.4 Million, Up 2 Percent Sequentially

--Free Cash Flow: $131.8 Million, 25 Percent of Revenues

Marvell Technology Reports Fiscal First Quarter Results

SANTA CLARA, Calif., May 28, 2009 /PRNewswire-FirstCall via COMTEX/ -- Marvell Technology Group Ltd. (Nasdaq: MRVL), a world leader in storage, communications and consumer silicon solutions, today reported financial results for the first quarter of fiscal 2010, ended May 2, 2009.

(Logo: http://www.newscom.com/cgi-bin/prnh/20070411/SFW034LOGO)

Net revenue for the first quarter of fiscal 2010 was $521.4 million, a 2 percent sequential increase from $512.9 million in the fourth quarter of fiscal 2009, ended January 31, 2009 and a 35 percent decrease from $804.1 million in the first quarter of fiscal 2009, ended May 3, 2008.

GAAP net loss was $39.5 million, or $0.06 per share (diluted), for the first quarter of fiscal 2010, as compared to a GAAP net loss of $65.0 million, or $0.11 per share (diluted), for the fourth quarter of fiscal 2009. For the first quarter of fiscal 2009 GAAP net income was $69.9 million, or $0.11 per share (diluted).

Non-GAAP net income was $31.9 million, or $0.05 per share (diluted), for the first quarter of fiscal 2010, a decrease of 2 percent from non-GAAP net income of $32.4 million, or $0.05 per share (diluted), for the fourth quarter of fiscal 2009, and a 79 percent decrease compared with non-GAAP net income of $150.4 million, or $0.24 per share (diluted), for the first quarter of fiscal 2009.

"We are pleased with the sequential improvement in revenue during our first fiscal quarter of 2010," said Dr. Sehat Sutardja, Marvell Chairman and Chief Executive Officer. "We also delivered improved profitability and cash flow during the first quarter, a positive reflection of the actions we undertook in recent quarters to control costs and expenses as well as tightly managing our working capital. We are continuing to monitor the changing economic environment and will manage our business accordingly. However, recent trends indicate an improvement in near term order patterns."

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 May 2, 2009, January 31, 2009 and May 3, 2008, 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 first quarter of fiscal 2010 was 50.6 percent, compared to 50.7 percent for the fourth quarter of fiscal 2009 and 51.6 percent for the first quarter of fiscal 2009. GAAP gross margin for the first quarter of fiscal 2010 included costs of $1.0 million associated with the ramp-down of the test operations in Malaysia.

Non-GAAP gross margin for the first quarter of fiscal 2010 increased to 51.6 percent, compared to 51.3 percent for the fourth quarter of fiscal 2009 and 52.0 percent for the first quarter of fiscal 2009.

Shares used to compute GAAP net loss per diluted share, for the first quarter of fiscal 2010 were 619 million shares, compared with 615 million shares in the fourth quarter of fiscal 2009 and 624 million shares in the first quarter of fiscal 2009. Shares used to compute non-GAAP net income per diluted share for the first quarter of fiscal 2010 were 637 million shares, compared with 629 million shares for the fourth quarter of fiscal 2009 and 624 million shares for the first quarter of fiscal 2009.

Cash flow from operations for the first quarter of fiscal 2010 was $144.5 million, up 32 percent sequentially from $109.1 million reported in the fourth quarter of fiscal 2009 and up 11 percent from $130.2 million in the first quarter of fiscal 2009. Free cash flow, defined as cash flow from operations less capital expenditures and purchases of IP licenses, was $131.8 million, up 42 percent sequentially from $92.7 million in the fourth quarter of fiscal 2009 and up 32 percent from $99.7 million in the first quarter of fiscal 2009.

Conference Call

Marvell will be conducting a conference call on May 28, 2009 at 1:45 p.m. PDT to discuss results for the first quarter ended May 2, 2009. Interested parties may dial-in to the conference call at 1-866-272-9941, pass-code 21507569. The call is being webcast by ThomsonReuters and can be accessed at Marvell's website under the Investor Events section of the Investor Relations page at http://www.marvell.com/investors/events.jsp. Replay on the internet will be available following the call until June 28, 2009.

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 (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 terms "Company" and "Marvell" refer to Marvell Technology Group Ltd. and its subsidiaries. For more information visit www.marvell.com

Forward-Looking Statements

This press release contains forward-looking statements that involve risks and uncertainties, including statements regarding the Company's expectations about managing our business; the Company's expectations about near term order patterns; and statements concerning the Company's use of non-GAAP gross margin, 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-Q for the first quarter of 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 Annual Report on Form 10-K for the year end January 31, 2009 and 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               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
                                              May 2,    January 31,   May 3,
                                               2009        2009        2008

    Net revenue                              $521,434    $512,867    $804,075
    Cost of goods sold                        257,630     252,732     388,842
    Gross profit                              263,804     260,135     415,233
    Operating expenses:
      Research and development                200,249     207,579     238,475
      Selling and marketing                    32,646      31,893      46,088
      General and administrative               29,496      31,979      12,951
      Amortization and write-off of
       acquired intangible assets              30,356      48,274      35,247
      Restructuring                             8,336       9,689           -
        Total operating expenses              301,083     329,414     332,761
    Operating income (loss)                   (37,279)    (69,279)     82,472
    Interest and other income (expense), net     (160)       (440)     (4,692)
    Income (loss) before income taxes         (37,439)    (69,719)     77,780
    Provision (benefit) for income taxes        2,018      (4,709)      7,841
    Net income (loss)                        $(39,457)   $(65,010)    $69,939

    Basic net income (loss) per share         $ (0.06)     $(0.11)     $ 0.12
    Diluted net income (loss) per share       $ (0.06)     $(0.11)     $ 0.11

    Shares used in computing basic
     earnings per share                       618,677     614,960     601,222
    Shares used in computing diluted
     earnings per share                       618,677     614,960     624,351



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

    Reconciliation of GAAP net income (loss) to non-GAAP net income:

                                                   Three Months Ended
                                             May 2,   January 31,     May 3,
                                              2009        2009         2008

    GAAP net income (loss)                  $(39,457)   $(65,010)    $69,939
    Stock-based compensation                  31,648      44,701      45,226
    Amortization and write-off of acquired
     intangible assets                        30,356      48,274      35,247
    Restructuring                              8,336       9,689           -
    Other (a)                                    990      (5,292)          -
    Non-GAAP net income                      $31,873     $32,362    $150,412

    GAAP weighted average shares
     - diluted                               618,677     614,960     624,351
        Non-GAAP adjustment                   17,928      14,032          91
    Non-GAAP weighted average shares
     diluted (b)                             636,605     628,992     624,442

    GAAP diluted net income (loss) per share  $(0.06)     $(0.11)     $ 0.11
    Non-GAAP diluted net income per share      $0.05      $ 0.05      $ 0.24

    GAAP gross profit:                      $263,804    $260,135    $415,233
        Stock-based compensation               4,116       3,021       3,073
        Other (a)                                990           -           -
    Non-GAAP gross profit                   $268,910    $263,156    $418,306

    GAAP gross profit as a % of revenue        50.6%       50.7%       51.6%
        Stock-based compensation                0.8%        0.6%        0.4%
        Other (a)                               0.2%           -           -
    Non-GAAP gross profit                      51.6%       51.3%       52.0%

    GAAP research and development:          $200,249    $207,579    $238,475
        Stock-based compensation             (21,737)    (33,358)    (29,932)
        Other (a)                                  -       3,652           -
    Non-GAAP research and development       $178,512    $177,873    $208,543

    GAAP selling and marketing:              $32,646     $31,893     $46,088
        Stock-based compensation              (3,711)     (4,677)     (7,348)
        Other (a)                                  -       1,323           -
    Non-GAAP selling and marketing           $28,935     $28,539     $38,740

    GAAP general and administrative:         $29,496     $31,979     $12,951
        Stock-based compensation              (2,084)     (3,645)     (4,837)
        Other (a)                                  -         317           -
    Non-GAAP general and administrative      $27,412     $28,651      $8,114

    (a) For fiscal quarter ended May 2, 2009 consists of underutilization
        charges recorded in connection with the rampdown of the Malaysia test
        operations. For fiscal quarter ended January 31, 2009 charges
        consists of the reversal of the remaining payroll related tax
        liabilities initially recorded in prior years in connection with
        Marvell's historic stock option granting practices.
    (b) For purposes of calculating non-GAAP 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 and also includes the dilutive/antidilutive
        effects of warrants, common stock options and restricted stock.



                             Marvell Technology Group Ltd.
                       Condensed Consolidated Balance Sheets
                                     (Unaudited)
                                   (In thousands)

                                                       May 2,      January 31,
    Assets                                              2009          2009
    Current assets:
      Cash, cash equivalents, and short-term
       investments                                  $1,083,705     $ 951,909
      Accounts receivable, net                         285,367       222,101
      Inventories                                      203,590       310,654
      Prepaid expenses, deferred income taxes
       and other current assets                         67,038        75,651
        Total current assets                         1,639,700     1,560,315
    Property and equipment, net                        371,229       390,853
    Long-term investments                               39,655        40,541
    Goodwill and acquired intangible assets, net     2,253,854     2,284,164
    Other non-current assets                           136,773       138,327
        Total assets                                $4,441,211    $4,414,200

    Liabilities and Shareholders' Equity
    Current liabilities:
      Accounts payable                               $ 166,988     $ 139,028
      Accrued liabilities                              196,326       175,135
      Income taxes payable                              47,257        35,803
      Deferred income                                   47,800        57,895
      Current portion of capital lease obligations       1,824         1,787
        Total current liabilities                      460,195       409,648
    Capital lease obligations, net of current portion    1,981         2,451
    Other long-term liabilities                        161,480       173,034
        Total liabilities                              623,656       585,133

    Shareholders' equity:
      Common stock                                       1,238         1,233
      Additional paid-in capital                     4,402,167     4,372,265
      Accumulated other comprehensive income (loss)     (2,680)         (718)
      Accumulated deficit                             (583,170)     (543,713)
        Total shareholders' equity                   3,817,555     3,829,067
        Total liabilities and shareholders' equity  $4,441,211    $4,414,200



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

                                                      Three Months Ended
                                                  May 2,  January 31,  May 3,
                                                   2009       2009      2008
    Cash flows from operating activities:
    Net income (loss)                           $(39,457)  $(65,010)  $69,939
    Adjustments to reconcile net income
     (loss) to net cash provided
     by operating activities:
      Depreciation and amortization               25,375     27,038    28,618
      Stock-based compensation                    31,648     44,701    45,226
      Amortization and write-off of acquired
       intangible assets                          30,356     48,274    35,247
      Fair market value adjustment to
       Intel inventory sold                       (1,343)    (1,196)   (6,383)
      Realized loss on derivative contract           475          -         -
      Deferred tax (provision) benefit                 -    (17,467)        -
      Excess tax benefits from stock-based
       compensation                                  (29)        (9)     (169)
      Changes in assets and liabilities, net
       of assets acquired and liabilities
       assumed in acquisitions:
      Restricted cash                                  -          -   (24,500)
        Accounts receivable                      (63,266)   175,735   (38,152)
        Inventories                              106,281     31,088    55,918
        Prepaid expenses and other assets         14,330      1,629    32,466
        Accounts payable                          30,738    (82,791)  (63,076)
        Accrued liabilities and other             (9,020)   (13,016)  (18,807)
        Accrued employee compensation             13,033    (44,615)   16,963
        Income taxes payable                       1,343     11,607     6,656
        Deferred income                            4,065     (6,825)   (9,753)
          Net cash provided by operating
           activities                            144,529    109,143   130,193
    Cash flows from investing activities:
      Cash paid in acquisitions, net                   -     (5,287)        -
      Purchases of investments                         -          -   (10,126)
      Sales and maturities of short-term and
       long-term investments                           -          -    23,793
      Purchases of technology licenses            (9,300)    (2,550)        -
      Purchases of property and equipment         (3,414)   (13,931)  (30,522)
          Net cash used in investing
           Activities                            (12,714)   (21,768)  (16,855)
    Cash flows from financing activities:
      Proceeds from the issuance of
       common shares                                 385     12,192    17,054
      Principal payments on capital lease and
       debt obligations                             (433)  (192,174)   (2,125)
      Excess tax benefits from stock-based
       compensation                                   29          9       169
          Net cash provided by (used in)
           financing activities                      (19)  (179,973)   15,098
    Net increase (decrease) in cash and
     cash equivalents                            131,796    (92,598)  128,436
    Cash and cash equivalents at beginning
     of period                                   927,409  1,020,007   615,648
    Cash and cash equivalents at end of
     period                                   $1,059,205   $927,409  $744,084



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