Marvell Technology Reports Fiscal Fourth Quarter and Fiscal 2009 Results
Free Cash Flow:
Announces Significant Operating Expense Reduction Actions
Marvell Technology Reports Fiscal Fourth Quarter and Fiscal 2009 Results
SANTA CLARA, Calif.,
(Logo: http://www.newscom.com/cgi-bin/prnh/20070411/SFW034LOGO)
Net revenue for the fourth quarter of fiscal 2009 was
Net revenue for the fiscal year ended
GAAP net loss was
GAAP net income was
Non-GAAP net income declined to
Non-GAAP net income was
"The results for our fourth quarter reflect the challenging business environment our company, and the world, currently faces," said Dr. Sehat Sutardja, Marvell Chairman and Chief Executive Officer. "Notwithstanding the challenges we encountered during our fourth quarter, we were able to sustain gross margins, act quickly to lower our operating expenses and generate a healthy free cash flow. However, we believe the current economic climate will not substantially improve over the short term. Consequently, we are taking actions to re-align our business to reflect the realities of the current economic environment. We are focused on improving the operating efficiency of our business and lowering the expenses under our control, while reinforcing the long-term financial strength of Marvell. Our results in our fourth quarter demonstrate initial progress toward these goals."
Marvell is implementing plans to lower the overall costs and expenses of
the company in response to the deteriorating economic environment. As a
result of this plan and combined with certain cost reduction measures taken in
the fourth quarter of fiscal 2009, Marvell plans to reduce its global
workforce by approximately 15 percent, or approximately 850 employees.
Marvell estimates that the restructuring charges associated with the reduction
in force and consolidation of facilities taken to date will be approximately
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
GAAP gross margin for the fourth quarter of fiscal 2009 was 50.7 percent, compared to 48.1 percent for the fourth quarter of fiscal 2008, and 52.1 percent for the third quarter of fiscal 2009. GAAP gross margin for fiscal 2009 was 51.6% compared to 48.3% for fiscal 2008.
Non-GAAP gross margin for the fourth quarter of fiscal 2009 was 51.3 percent, compared to 48.7 percent for the fourth quarter of fiscal 2008 and 52.3 percent for the third quarter of fiscal 2009. Non-GAAP gross margin for fiscal 2009 was 52 percent compared to 48.8 percent for fiscal 2008.
Shares used to compute GAAP net loss per diluted share, for the fourth quarter of fiscal 2009 were 615 million shares, compared with 627 million shares in the fourth quarter of fiscal 2008 and 631 million shares in the third quarter of fiscal 2009. Shares used to compute non-GAAP net income per diluted share for the fourth quarter of fiscal 2009 were 629 million shares compared with 627 million shares for the fourth quarter of fiscal 2008 and 633 million shares for the third quarter of fiscal 2009.
Shares used to compute GAAP net income per diluted share, for the fiscal
year ended
Cash flow from operations for the fourth quarter of fiscal 2009 was
Conference Call
Marvell will be conducting a conference call on
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
Forward-Looking Statements
This press release contains forward-looking statements that involve risks
and uncertainties, including statements regarding our expectations about when
the current economic climate may change; our ability to re-align our business
to the current economic environment; the magnitude and financial impact of the
reduction in force; 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 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 Quarterly Report on Form 10-Q for the
quarter ended
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 31, November 1, February 2, January 31, February 2, 2009 2008 2008 2009 2008 Net revenue $512,867 $791,046 $844,686 $2,950,563 $2,894,693 Cost of goods sold 252,732 379,137 438,640 1,426,624 1,497,796 Gross profit 260,135 411,909 406,046 1,523,939 1,396,897 Operating expenses: Research and development 207,579 234,222 266,464 929,990 988,996 Selling and marketing 31,893 41,158 60,504 160,973 211,261 General and administrative 31,979 28,869 48,340 104,788 138,640 Amortization and write-off of acquired intangible assets 48,274 34,814 43,810 153,323 155,734 Restructuring 9,689 - 7,856 9,689 7,856 Total operating expenses 329,414 339,063 426,974 1,358,763 1,502,487 Operating income (loss) (69,279) 72,846 (20,928) 165,176 (105,590) Interest and other income (expense), net (440) 11,543 14,910 5,657 (12,398) Income (loss) before income taxes (69,719) 84,389 (6,018) 170,833 (117,988) Provision (benefit) for income taxes (4,709) 13,443 (7,311) 23,591 (3,561) Net income (loss) $(65,010) $70,946 $1,293 $147,242 $(114,427) Basic net income (loss) per share $(0.11) $0.12 $0.00 $0.24 $(0.19) Diluted net income (loss) per share $(0.11) $0.11 $0.00 $0.23 $(0.19) Shares used in computing basic earnings per share 614,960 611,945 595,512 608,747 590,308 Shares used in computing diluted earnings per share 614,960 630,810 626,699 630,328 590,308 Marvell Technology Group Ltd. Reconciliation of Non-GAAP Adjustments (Unaudited) (In thousands, except per share amounts) Three Months Ended January 31, 2009 GAAP Adjustments Non-GAAP Net revenue $512,867 $- $512,867 Cost of goods sold 252,732 3,021 (a) 249,711 Gross profit 260,135 3,021 263,156 Gross margin 50.7% 51.3% Operating expenses: Research and development 207,579 33,358 (a) 177,873 (3,652)(b) Selling and marketing 31,893 4,677 (a) 28,539 (1,323)(b) General and administrative 31,979 3,645 (a) 28,651 (317)(b) Amortization and write-off of acquired intangible assets 48,274 48,274 (c) - Restructuring 9,689 9,689 (d) - Total operating expenses 329,414 94,351 235,063 Operating income (loss) (69,279) 97,372 28,093 Interest and other income (expense), net (440) - (440) Income (loss) before income taxes (69,719) 97,372 27,653 Provision for income taxes (4,709) - (4,709) Net income (loss) $(65,010) $97,372 $32,362 Basic net income (loss) per share $(0.11) $0.05 Diluted net income (loss) per share $(0.11) $0.05 Shares used in computing basic earnings per share 614,960 614,960 Shares used in computing diluted earnings per share 614,960 628,992 Three Months Ended November 1, 2008 GAAP Adjustments Non-GAAP Net revenue $791,046 $- $791,046 Cost of goods sold 379,137 1,795 (a) 377,342 Gross profit 411,909 1,795 413,704 Gross margin 52.1% 52.3% Operating expenses: Research and development 234,222 30,607 (a) 203,615 - Selling and marketing 41,158 6,896 (a) 34,262 - - General and administrative 28,869 280 (a) 28,589 - Amortization and write-off of acquired intangible assets 34,814 34,814 (c) - Restructuring - - Total operating expenses 339,063 72,597 266,466 Operating income (loss) 72,846 74,392 147,238 Interest and other income (expense), net 11,543 - 11,543 Income (loss) before income taxes 84,389 74,392 158,781 Provision for income taxes 13,443 - 13,443 Net income (loss) $70,946 $74,392 $145,338 Basic net income (loss) per share $0.12 $0.24 Diluted net income (loss) per share $0.11 $0.23 Shares used in computing basic earnings per share 611,945 611,945 Shares used in computing diluted earnings per share 630,810 632,550 Three Months Ended February 2, 2008 GAAP Adjustments Non-GAAP Net revenue $844,686 $- $844,686 Cost of goods sold 438,640 4,911 (a) 433,729 Gross profit 406,046 4,911 410,957 Gross margin 48.1% 48.7% Operating expenses: Research and development 266,464 45,627 (a) 220,837 Selling and marketing 60,504 13,925 (a) 46,579 General and administrative 48,340 5,497 (a) 42,843 Amortization and write-off of acquired intangible assets 43,810 43,810 (c) - Restructuring 7,856 7,856 (d) - Total operating expenses 426,974 116,715 310,259 Operating income (loss) (20,928) 121,626 100,698 Interest and other income (expense), net 14,910 - 14,910 Income (loss) before income taxes (6,018) 121,626 115,608 Provision for income taxes (7,311) - (7,311) Net income (loss) $1,293 $121,626 $122,919 Basic net income (loss) per share $0.00 $0.21 Diluted net income (loss) per share $0.00 $0.20 Shares used in computing basic earnings per share 595,512 595,912 Shares used in computing diluted earnings per share 626,699 627,241 (a) Consists of employee stock-based compensation expense (b) Consists of reversal of remaining payroll related tax liabilities initially recorded in prior years in connection with the stock option backdating. (c) Consists of amortization and write-off of intangible assets (d) Consists of For three months endingJanuary 31, 2009 , severance and facilities related restructuring charges. For three months endingFebruary 2, 2008 , severance related restructuring charges. Marvell Technology Group Ltd. Reconciliation of Non-GAAP Adjustments (Unaudited) (In thousands, except per share amounts) Year Ended January 31, 2009 GAAP Adjustments Non-GAAP Net revenue $2,950,563 $- $2,950,563 Cost of goods sold 1,426,624 11,644 (a) 1,414,980 Gross profit 1,523,939 11,644 1,535,583 Gross margin 51.6% 52.0% Operating expenses: Research and development 929,990 126,895 (a) 806,747 (3,652)(b) Selling and marketing 160,973 25,080 (a) 137,216 (1,323)(b) General and administrative 104,788 13,513 (a) 91,592 (317)(b) Amortization and write-off of acquired intangible assets 153,323 153,323 (c) - Restructuring 9,689 9,689 (d) - Total operating expenses 1,358,763 323,208 1,035,555 Operating income (loss) 165,176 334,852 500,028 Interest and other income (expense), net 5,657 - 5,657 Income (loss) before income taxes 170,833 334,852 505,685 Provision for income taxes 23,591 - 23,591 Net income (loss) $147,242 $334,852 $482,094 Basic net income (loss) per share $0.24 $0.79 Diluted net income (loss) per share $0.23 $0.76 Shares used in computing basic earnings per share 608,747 608,747 Shares used in computing diluted earnings per share 630,328 630,456 Year Ended February 2, 2008 GAAP Adjustments Non-GAAP Net revenue $2,894,693 $- $2,894,693 Cost of goods sold 1,497,796 15,530 (a) 1,482,266 Gross profit 1,396,897 15,530 1,412,427 Gross margin 48.3% 48.8% Operating expenses: Research and development 988,996 152,249 (a) 836,747 Selling and marketing 211,261 39,022 (a) 172,239 General and administrative 138,640 24,179 (a) 114,461 Amortization and write-off of acquired intangible assets 155,734 155,734 (c) - Restructuring 7,856 7,856 (d) - Total operating expenses 1,502,487 379,040 1,123,447 Operating income (loss) (105,590) 394,570 288,980 Interest and other income (expense), net (12,398) - (12,398) Income (loss) before income taxes (117,988) 394,570 276,582 Provision for income taxes (3,561) - (3,561) Net income (loss) $(114,427) $394,570 $280,143 Basic net income (loss) per share $(0.19) $0.47 Diluted net income (loss) per share $(0.19) $0.44 Shares used in computing basic earnings per share 590,308 590,308 Shares used in computing diluted earnings per share 590,308 630,468 (a) Consists of employee stock-based compensation expense. (b) Consists of reversal of remaining payroll related tax liabilities initially recorded in prior years in connection with the stock option backdating. (c) Consists of amortization and write-off of intangible assets. (d) Consists of For year endingJanuary 31, 2009 , severance and facilities related restructuring charges. For year endingFebruary 2, 2008 , severance related restructuring charges. Marvell Technology Group Ltd. Condensed Consolidated Balance Sheets (Unaudited) (In thousands) January 31, February 2, Assets 2009 2008 Current assets: Cash, cash equivalents, and short-term investments $951,909 $630,902 Accounts receivable, net 222,101 332,020 Inventories 310,654 419,494 Prepaid expenses, deferred income taxes and other current assets 75,651 121,325 Total current assets 1,560,315 1,503,741 Property and equipment, net 390,853 416,241 Long-term investments 40,541 45,628 Goodwill and acquired intangible assets, net 2,284,164 2,427,877 Other non-current assets 138,327 157,107 Total assets $4,414,200 $4,550,594 Liabilities and Shareholders' Equity Current liabilities: Accounts payable $139,028 $231,135 Accrued liabilities 175,135 241,062 Income taxes payable 35,803 39,132 Deferred income 57,895 69,420 Current portion of capital lease obligations 1,787 2,463 Total current liabilities 409,648 583,212 Capital lease obligations, net of current portion 2,451 4,238 Term loan obligations, long-term portion - 390,750 Other long-term liabilities 173,034 160,875 Total liabilities 585,133 1,139,075 Shareholders' equity: Common stock 1,233 1,200 Additional paid-in capital 4,372,265 4,100,659 Accumulated other comprehensive income (loss) (718) 615 Accumulated deficit (543,713) (690,955) Total shareholders' equity 3,829,067 3,411,519 Total liabilities and shareholders' equity $4,414,200 $4,550,594 Marvell Technology Group Ltd. Condensed Consolidated Statements of Cash Flows (Unaudited) (in thousands) Three Months Ended Year Ended January 31, February 2, January 31, February 2, 2009 2008 2009 2008 Cash flows from operating activities: Net income (loss) $(65,010) $1,293 $147,242 $(114,427) Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation and amortization 27,038 27,008 112,824 105,812 Stock-based compensation 44,701 69,960 177,132 230,980 Amortization and write-off of acquired intangible assets 48,274 43,810 153,323 155,734 Gain (loss) from disposal of assets - 3,300 - (1,822) Fair market value adjustment to Intel inventory sold (1,196) (5,348) (15,359) (109,262) Termination of supply contract - (22,069) - (22,069) Interest expense related to supply contract - 1,165 - 5,833 Deferred tax (provision) benefit (17,467) (13,783) (17,467) (13,783) Excess tax benefits from stock-based compensation (9) 22 (365) (278) Changes in assets and liabilities, net of assets acquired and liabilities assumed in acquisitions: Restricted cash - - (24,500) - Accounts receivable 175,735 55,169 109,919 (1,763) Inventories 31,088 (43,441) 126,938 (202,275) Prepaid expenses and other assets 1,629 8,798 63,476 108,321 Accounts payable (82,791) 22,920 (88,795) (8,187) Accrued liabilities and other (13,016) 17,134 (36,709) 10,880 Accrued employee compensation (44,615) (1,645) (26,956) 8,852 Income taxes payable 11,607 6,037 11,507 1,845 Deferred income (6,825) (6,872) (11,525) 22,961 Net cash provided by operating activities 109,143 163,458 680,685 177,352 Cash flows from investing activities: Cash paid in acquisitions, net (5,287) (12,846) (5,287) (19,987) Purchases of investments - (96,979) (10,172) (263,209) Sales and maturities of short- term and long-term investments - 110,390 29,181 230,906 Acquisition costs - (132) - (1,340) Purchases of technology licenses (2,550) (3,650) (5,200) (23,175) Purchases of property and equipment (13,931) (32,327) (73,243) (113,462) Proceeds from sale of assets under construction - - - 5,122 Net cash used in investing activities (21,768) (35,544) (64,721) (185,145) Cash flows from financing activities: Proceeds from the issuance of common shares 12,192 33,614 92,645 65,903 Principal payments on capital lease and debt obligations (192,174) (1,159) (397,213) (10,748) Excess tax benefits from stock-based compensation 9 (22) 365 278 Net cash provided by (used in) financing activities (179,973) 32,433 (304,203) 55,433 Net increase (decrease) in cash and cash equivalents (92,598) 160,347 311,761 47,640 Cash and cash equivalents at beginning of period 1,020,007 455,301 615,648 568,008 Cash and cash equivalents at end of period $927,409 $615,648 $927,409 $615,648
SOURCEMarvell Technology Group Ltd. -0-03/05/2009 /CONTACT:Jeff Palmer , Investor Relations, +1-408-222-8373, jpalmer@marvell.com, orTom Hayes , Corporate Communications, +1-408-222-2815, tom@marvell.com, both ofMarvell Technology Group Ltd. / /Photo: http://www.newscom.com/cgi-bin/prnh/20070411/SFW034LOGO http://photoarchive.ap.org PRN Photo Desk, photodesk@prnewswire.com/ /Web Site: http://www.marvell.com / (MRVL) CO:Marvell Technology Group Ltd. ST:California IN: CPR STW NET TLS SU: ERN CCA PR -- SF79626 -- 122603/05/2009 16:15 EST http://www.prnewswire.com