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Marvell Technology Reports Fiscal Third Quarter Results

- F3Q09 Revenue: $791 Million, up 4% Year-on-Year

- F3Q09 Net Income: $71 Million (GAAP), $145 Million (non-GAAP)

- F3Q09 EPS: $0.11 (GAAP), $0.23 (non-GAAP)

- F3Q09 Free Cash Flow: $246 Million

Marvell Technology Reports Fiscal Third Quarter Results

SANTA CLARA, Calif., Dec. 2 /PRNewswire-FirstCall/ -- Marvell Technology Group Ltd. (Nasdaq: MRVL), a leader in storage, communications and consumer silicon solutions, today reported financial results for the third quarter of fiscal year 2009, ended November 1, 2008.

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

Net revenue for the third quarter of fiscal 2009 was $791.0 million, an increase of 4 percent over $758.2 million in the third quarter of fiscal 2008, ended October 27, 2007, and a 6 percent sequential decrease from $842.6 million in the second quarter of fiscal 2009, ended August 2, 2008.

"The results for our third quarter were in-line with our revised expectations, however we continue to experience limited visibility into the near-term demand for our products," said Dr. Sehat Sutardja, Marvell Chairman and Chief Executive Officer. "We are taking the appropriate steps to better align our operating expenses to reflect the challenging business environment we face. Our results in our third quarter demonstrate initial progress toward these goals."

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 nine months ended November 1, 2008 and October 27, 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 $70.9 million, or $0.11 per share (diluted), for the third quarter of fiscal 2009, compared with a GAAP net loss of $6.4 million, or a loss of $0.01 per share for the third quarter of fiscal 2008. In the second quarter of fiscal 2009 GAAP net income was $71.4 million, or $0.11 per share (diluted).

Non-GAAP net income increased to $145.3 million, or $0.23 per share (diluted) for the third quarter of fiscal 2009, a 69 percent increase compared with non-GAAP net income of $86.2 million, or $0.14 per share (diluted) for the third quarter of fiscal 2008 and a decrease of 6 percent from non-GAAP net income of $154.0 million, or $0.24 per share (diluted) for the second quarter of fiscal 2009.

Non-GAAP gross margin for the third quarter of fiscal 2009 was 52.3 percent, compared to non-GAAP gross margin of 52.3 percent for the second quarter of fiscal 2009 and non-GAAP gross margin of 48.3 percent for the third quarter of fiscal 2008.

Shares used to compute GAAP net income per diluted share, for the third quarter of fiscal 2009 were 631 million shares, compared with 591 million shares in the third quarter of fiscal 2008 and 638 million shares in the second quarter of fiscal 2009. Shares used to compute non-GAAP net income per diluted share for the third quarter of fiscal 2009 were 633 million shares compared with 631 million shares for the third quarter of fiscal 2008 and 640 million shares for the second quarter of fiscal 2009.

Cash flow from operations for the third quarter of fiscal 2009 was $258.5 million, up 41 percent sequentially from the $182.9 million reported in the second quarter of fiscal 2009. Free cash flow, defined as cash flow from operations, less investments in property, plant and equipment, was $245.7 million, up 47 percent sequentially from the $166.9 million reported in the second quarter of fiscal 2009.

Conference Call

Marvell will be conducting a conference call on December 2, 2008 at 1:45 p.m. PST to discuss results for the third quarter of fiscal 2009. Interested parties may dial-in to the conference call at 1-866-700-7173, pass-code 97916114. 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 of the call can be accessed by dialing 1-888-286-8010, and referring to conference code 42768501 until midnight December 9, 2008.

Discussion of Non-GAAP Financial Measures

Non-GAAP financial measures exclude 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 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 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 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 http://www.marvell.com

Forward-Looking Statements

This press release contains forward-looking statements that involve risks and uncertainties, including statements regarding the near-term demand for our products and our expected progress toward aligning our operating expenses to the business environment we face 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; and other risks detailed in Marvell's SEC filings. When Marvell files its Form 10-Q for the third 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 Quarterly Report on Form 10-Q for the quarter ended August 2, 2008 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

     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            Nine Months Ended
                   November 1,  August 2, October 27,  November 1, October 27,
                       2008        2008        2007        2008        2007

    Net revenue      $791,046   $842,575    $758,246   $2,437,696  $2,050,007
    Cost of goods
     sold             379,137    405,913     396,209    1,173,892   1,059,156
    Gross profit      411,909    436,662     362,037    1,263,804     990,851
    Operating
     expenses:
      Research and
       development    234,222    249,714     252,205      722,411     722,532
      Selling and
       marketing       41,158     41,834      46,423      129,080     150,757
      General and
       administrative  28,869     30,989      32,537       72,809      90,300
      Amortization
       of acquired
       intangible
       assets          34,814     34,988      37,311      105,049     111,924
         Total
          operating
          expenses    339,063    357,525     368,476    1,029,349   1,075,513
    Operating income
     (loss)            72,846     79,137      (6,439)     234,455     (84,662)
    Interest and
     other income
     (expense), net    11,543       (754)     (9,409)       6,097     (27,308)
    Income (loss)
     before income
     taxes             84,389     78,383     (15,848)     240,552    (111,970)
    Provision
     (benefit) for
     income taxes      13,443      7,016      (9,412)      28,300       3,750
    Net income
     (loss)           $70,946    $71,367     $(6,436)     212,252   $(115,720)

    Basic net
     income (loss)
     per share          $0.12      $0.12      $(0.01)       $0.35      $(0.20)
    Diluted net
     income (loss)
     per share          $0.11      $0.11      $(0.01)       $0.34      $(0.20)

    Shares used in
     computing basic
     earnings per
     share            611,945    606,860     590,759      606,676     588,573
    Shares used in
     computing
     diluted earnings
     per share        630,810    637,832     590,759      630,997     588,573



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

                                                  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 of acquired
        intangible assets                  34,814   34,814 (b)          -
          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
                                                   October 27, 2007
                                            GAAP    Adjustments    Non-GAAP

    Net revenue                          $758,246     $-           $758,246
    Cost of goods sold                    396,209    4,326 (a)(b)   391,883
    Gross profit                          362,037    4,326          366,363
       Gross margin                         47.7%                     48.3%
    Operating expenses:
       Research and development           252,205   39,989 (a)      212,216
       Selling and marketing               46,423    6,949 (a)       39,474
       General and administrative          32,537    4,092 (a)       28,445
       Amortization of acquired
        intangible assets                  37,311   37,311 (b)          -
          Total operating expenses        368,476   88,341          280,135
    Operating income (loss)                (6,439)  92,667           86,228
    Interest and other income (expense),
     net                                   (9,409)     -             (9,409)
    Income (loss) before income taxes     (15,848)  92,667           76,819
    Provision for income taxes             (9,412)     -             (9,412)
    Net income (loss)                     $(6,436) $92,667          $86,231

    Basic net income (loss) per share      $(0.01)                    $0.15
    Diluted net income (loss) per share    $(0.01)                    $0.14

    Shares used in computing basic
     earnings per share                   590,759                   590,759
    Shares used in computing diluted
     earnings per share                   590,759                   630,613

    (a) Consists of
      For three months ending November 1, 2008, employee stock-based
      compensation expense of $1,795 for cost of goods sold, $30,607 for
      research and development, $6,896 for selling and marketing and $280 for
      general and administrative.

      For three months ending October 27, 2007, employee stock-based
      compensation expense of $4,326 for cost of goods sold, $39,989 for
      research and development, $6,949 for selling and marketing and $4,092
      for general and administrative.

    (b) Consists of
      For three months ending November 1, 2008, amortization of intangible
      assets related to previous acquisitions.

      For three months ending October 27, 2007, amortization of intangible
      assets related to previous acquisitions.



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

                                                   Nine Months Ended
                                                   November 1, 2008
                                              GAAP     Adjustments   Non-GAAP

    Net revenue                           $2,437,696      $-       $2,437,696
    Cost of goods sold                     1,173,892     8,623 (a)  1,165,269
    Gross profit                           1,263,804     8,623      1,272,427
       Gross margin                            51.8%                    52.2%
    Operating expenses:
       Research and development              722,411    93,537 (a)    628,874
       Selling and marketing                 129,080    20,403 (a)    108,677
       General and administrative             72,809     9,868 (a)     62,941
       Amortization of acquired
        intangible assets                    105,049   105,049 (b)        -
          Total operating expenses         1,029,349   228,857        800,492
    Operating income (loss)                  234,455   237,480        471,935
    Interest and other income (expense),
     net                                       6,097       -            6,097
    Income (loss) before income taxes        240,552   237,480        478,032
    Provision for income taxes                28,300       -           28,300
    Net income (loss)                       $212,252  $237,480       $449,732

    Basic net income (loss) per share          $0.35                    $0.74
    Diluted net income (loss) per share        $0.34                    $0.71

    Shares used in computing basic
     earnings per share                      606,676                  606,676
    Shares used in computing diluted
     earnings per share                      630,997                  631,165


                                                   Nine Months Ended
                                                   October 27, 2007
                                              GAAP     Adjustments   Non-GAAP

    Net revenue                           $2,050,007      $-       $2,050,007
    Cost of goods sold                     1,059,156    10,619 (a)  1,048,537
    Gross profit                             990,851    10,619      1,001,470
       Gross margin                            48.3%                    48.9%
    Operating expenses:
       Research and development              722,532   106,622 (a)    615,910
       Selling and marketing                 150,757    25,097 (a)    125,660
       General and administrative             90,300    18,682 (a)     71,618
       Amortization of acquired
        intangible assets                    111,924   111,924 (b)        -
           Total operating expenses        1,075,513   262,325        813,188
    Operating income (loss)                  (84,662)  272,944        188,282
    Interest and other income (expense),
     net                                     (27,308)      -          (27,308)
    Income (loss) before income taxes       (111,970)  272,944        160,974
    Provision for income taxes                 3,750       -            3,750
    Net income (loss)                      $(115,720) $272,944       $157,224

    Basic net income (loss) per share         $(0.20)                   $0.27
    Diluted net income (loss) per share       $(0.20)                   $0.25

    Shares used in computing basic
     earnings per share                      588,573                  588,573
    Shares used in computing diluted
     earnings per share                      588,573                  631,544

    (a) Consists of
      For nine months ending November 1, 2008, employee stock-based
      compensation expense of $8,623 for cost of goods sold, $93,537 for
      research and development, $20,403 for selling and marketing and $9,868
      for general and administrative

      For nine months ending October 27, 2007, employee stock-based
      compensation expense of $10,619 for cost of goods sold, $106,622 for
      research and development, $25,097 for selling and marketing and $18,682
      for general and administrative

    (b) Consists of
      For nine months ending November 1, 2008, amortization of intangible
      assets related to previous acquisitions.

      For nine months ending October 27, 2007, amortization of intangible
      assets related to previous acquisitions.



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

                                                  November 1,    February 2,
    Assets                                            2008           2008
    Current assets:
      Cash, cash equivalents, restricted cash
       and short-term investments                 $1,044,507       $630,902
      Accounts receivable, net                       397,836        332,020
      Inventories                                    339,533        419,494
      Prepaid expenses, deferred income taxes and
       other current assets                           79,352        121,325
        Total current assets                       1,861,228      1,503,741
    Property and equipment, net                      401,521        416,241
    Long-term investments                             40,310         45,628
    Goodwill and acquired intangible assets, net   2,323,855      2,427,877
    Other non-current assets                         123,591        157,107
        Total assets                              $4,750,505     $4,550,594

    Liabilities and Shareholders' Equity
    Current liabilities:
      Accounts payable                              $224,119       $231,135
      Accrued liabilities                            240,202        241,062
      Income taxes payable                            37,513         39,132
      Deferred income                                 64,720         69,420
      Current portion of capital lease obligations     1,751          2,463
        Total current liabilities                    568,305        583,212
    Capital lease obligations, net of current
     portion                                           2,911          4,238
    Term loan obligations, long-term portion         187,750        390,750
    Other long-term liabilities                      160,452        160,875
        Total liabilities                            919,418      1,139,075

    Shareholders' equity:
      Common stock                                     1,226          1,200
      Additional paid-in capital                   4,309,512      4,100,659
      Accumulated other comprehensive income
       (loss)                                           (948)           615
      Accumulated deficit                           (478,703)      (690,955)
        Total shareholders' equity                 3,831,087      3,411,519
        Total liabilities and shareholders'
         equity                                   $4,750,505     $4,550,594



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

                                   Three Months Ended     Nine Months Ended
                               November 1, October 27, November 1, October 27,
                                     2008       2007        2008       2007
    Cash flows from operating
     activities:
    Net income (loss)              $70,946    $(6,436)   $212,252  $(115,720)
    Adjustments to reconcile net
     income (loss) to net cash
     provided by operating
     activities:
       Depreciation and
        amortization                29,136     26,384      85,786     78,804
       Stock-based compensation     39,578     55,356     132,431    161,020
       Amortization of acquired
        intangible assets           34,814     37,311     105,049    111,924
       Gain from sale of asset
        under construction             -          -           -       (5,122)
       Fair market value adjustment
        to Intel inventory sold     (3,406)   (26,273)    (14,163)  (103,914)
       Interest expense related to
        supply contract                -        1,645         -        4,668
       Excess tax benefits from
        stock-based compensation       138        (65)       (356)      (300)
       Changes in assets and
        liabilities, net of assets
        acquired and liabilities
        assumed in acquisitions:
         Restricted cash               -          -       (24,500)       -
         Accounts receivable        72,810    (28,230)    (65,816)   (56,932)
         Inventories                (7,477)   (70,086)     95,850   (158,834)
         Prepaid expenses and
          other assets              19,037     45,531      61,847     99,523
         Accounts payable          (11,882)   (53,441)     (6,004)   (31,107)
         Accrued liabilities and
          other                     10,306     19,945     (23,693)    (6,254)
         Accrued employee
          compensation               7,664      9,642      17,659     10,497
         Income taxes payable       (5,914)    (8,120)       (100)    (4,192)
         Deferred income             2,715     21,515      (4,700)    29,833
           Net cash provided by
            operating activities   258,465     24,678     571,542     13,894
    Cash flows from investing
     activities:
       Cash paid in acquisitions,
        net                            -          -           -       (7,141)
       Purchases of investments        -      (52,579)    (10,172)  (166,230)
       Sales and maturities of
        short-term and long-term
        investments                  5,388     70,495      29,181    120,516
       Acquisition costs               -          (70)        -       (1,208)
       Purchases of technology
        licenses                    (1,400)    (2,675)     (2,650)   (19,525)
       Purchases of property and
        equipment                  (12,780)   (16,622)    (59,312)   (81,135)
       Proceeds from sale of
        assets under construction      -          -           -        5,122
           Net cash used in
            investing activities    (8,792)    (1,451)    (42,953)  (149,601)
    Cash flows from financing
     activities:
       Proceeds from the issuance
        of common shares            12,797     29,608      80,453     32,289
       Principal payments on
        capital lease and debt
        obligations               (101,634)    (1,778)   (205,039)    (9,589)
       Excess tax benefits from
        stock-based compensation      (138)        65         356        300
           Net cash provided by
            (used in) financing
            activities             (88,975)    27,895    (124,230)    23,000
    Net increase (decrease) in
     cash and cash equivalents     160,698     51,122     404,359   (112,707)
    Cash and cash equivalents at
     beginning of period           859,309    404,179     615,648    568,008
    Cash and cash equivalents at
     end of period              $1,020,007   $455,301  $1,020,007   $455,301

SOURCE  Marvell Technology Group Ltd.
    -0-                             12/02/2008
    /CONTACT:  Jeff Palmer, Investor Relations of Marvell, +1-408-222-8373,
jpalmer@marvell.com; or Louise Kehoe of Ogilvy PR, +1-650-544-5070,
louise.kehoe@ogilvypr.com, for Marvell/
    /Photo:  NewsCom:  http://www.newscom.com/cgi-bin/prnh/20070411/SFW034LOGO
              AP Archive:  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 HRD NET STW
SU:  ERN CCA

JR-CD
-- AQTU112 --
4834 12/02/2008 16:06 EST http://www.prnewswire.com