Form: 8-K

Current report

February 23, 2006

Documents

Exhibit 99.1

 

NEWS RELEASE

 

 

Marvell® Technology Group Ltd. Reports

Record Fourth Quarter Fiscal 2006 Results

 

Marvell’s Board Approves a 2 for 1 Stock Split

 

Santa Clara, CA. (February 23, 2006) — Marvell® Technology Group Ltd. (NASDAQ: MRVL), the leader in development of storage, communications, and consumer silicon solutions, today reported financial results for its fourth fiscal quarter and year ended January 28, 2006.

 

Net revenue for the fourth quarter of fiscal 2006 was a record $489.0 million, an increase of 43.7% over net revenue of $340.3 million for the fourth quarter of fiscal 2005 and a 14.8% sequential increase from net revenue of $426.0 million for the third quarter of fiscal 2006.  Net income under generally accepted accounting principles (GAAP) was $97.5 million, or $0.30 per share (diluted), for the fourth quarter of fiscal 2006, compared with a net income under GAAP of $54.9 million, or $0.18 per share (diluted), for the fourth quarter of fiscal 2005.

 

Net revenue for the year ended January 28, 2006 was $1,670.3 million, an increase of 36.4% over net revenue of $1,224.6 million for the year ended January 29, 2005. Net income under GAAP was $331.4 million, or $1.05 per share (diluted), for the year ended January 28, 2006, compared with a net income under GAAP of $141.7 million, or $0.47 per share (diluted), for the year ended January 29, 2005.

 

Marvell reports net income and basic and diluted net income per share in accordance with GAAP and additionally on a non-GAAP basis, referred to as pro forma non-GAAP.  Pro forma non-GAAP net income, where applicable, excludes the effect of amortization and write-off of acquired intangible assets and other, acquisition related charges and amortization of stock-based compensation.  Pro forma non-GAAP net income was $134.6 million, or $0.42 per share (diluted), for the fourth quarter of fiscal 2006, compared with pro forma non-GAAP net income of $75.2 million, or $0.24 per share (diluted), for the fourth quarter of fiscal 2005.  Shares used to compute GAAP and pro forma non-GAAP net income per share for the fourth quarter ended January 28, 2006 increased to 322.6 million, compared with 308.3 million for the fourth quarter ended January 29, 2005.

 

Pro forma non-GAAP net income was $429.6 million, or $1.36 per share (diluted), for the year ended January 28, 2006, compared with pro forma non-GAAP net income of $250.6 million, or $0.84 per share (diluted), for the year ended January 29, 2005.  Shares used in computing GAAP and pro forma non-GAAP net income per share for the year ended January 28, 2006 increased to 315.7 million, compared with 299.5 million for the year ended January 29, 2005.

 

These non-GAAP measures should be considered in addition to, and not as a substitute for, the results prepared in accordance with GAAP.  A reconciliation of GAAP net income to pro forma non-GAAP net income is included in the financial statements portion of this release as well as on our website in the Investors section at www.marvell.com.

 

Marvell’s management believes the non-GAAP information is useful because it can enhance the understanding of the Company’s ongoing economic performance and Marvell therefore uses pro forma reporting internally to evaluate and manage the Company’s operations.  Marvell has chosen to provide this information to investors to enable them to perform comparisons of operating results in a manner similar to how the Company analyzes its operating results.

 


 

“We are pleased to report the results of another outstanding year and fourth quarter for Marvell” stated Dr. Sehat Sutardja, Marvell’s President and CEO. “As we begin fiscal 2007, we have positioned the company to enjoy continued strong growth and success alongside our customers.   We also remain very focused on continuing to expand upon our leadership position as we broaden our world class technology and solutions for both the enterprise and consumer markets.”

 

Revenue for the fourth quarter and fiscal 2006 were both records for Marvell and the quarterly revenue increase represented the 33rd consecutive quarter of sequential revenue growth.  During the quarter, Marvell continued to generate strong positive cash flows and reported its highest level of cash, cash equivalents and short-term investments with a balance of $921.0 million.  The following is a review of some of the recent highlights that occurred since last quarter’s earnings release:

 

·         In January at the Consumer Electronics Show (CES) in Las Vegas, Marvell demonstrated its latest high performance wireless local area networking (WLAN) chipset which is fully compliant to the IEEE 802.11n draft specification.  The Marvell 88W836X family leverages the Marvell Total System Solution for the industry’s highest TCP/IP and layer 3 throughput with special optimizations for high reliability video and media transport.  This first to market family allows scaleable gateway and access point solutions delivering data rates between 300 to 600 Mbps and incorporates Marvell’s proprietary Feroceon™ ARM CPU architecture to maximize performance and minimize power usage.

 

·         Also at CES in January, Marvell announced the Marvell Orion product family which powers a range of media vault platforms, each capable of delivering simultaneous streams of rich, multimedia content seamlessly across wired and wireless networks.  Orion based media vault platforms allow users to instantly access rich multimedia and data content throughout the home including multiple streams of HDTV.  With an outstanding price/performance advantage, the scalable storage, networking and smart media processing architecture of Orion is targeted at standalone home storage appliances, integrated storage appliances such as access points and digital video recorders and also next generation broadband service provider applications.

 

·         In December, Marvell was honored to be recognized at the Fabless Semiconductor Association’s annual awards dinner with three prestigious awards, including the Most Respected Public Fabless Company award.

 

Marvell’s Board Approves a 2 for 1 Stock Split


Additionally, Marvell’s Board of Directors has approved a 2 for 1 stock split of the Company’s common stock, to be effected pursuant to the issuance of additional shares.  The stock split is subject to shareholder approval of an increase in the Company’s authorized share capital at the Company’s 2006 Annual General Meeting tentatively scheduled for June 2006.  If approved by Marvell’s shareholders, Marvell expects the declaration and payment of the additional shares to occur within 30 days following the Annual General Meeting.

 

Marvell will be conducting a conference call today at 1:45 p.m. PST to discuss its fourth quarter financial results.  To listen to the conference call, investors can dial (706) 679-0800 approximately ten minutes prior to the initiation of the teleconference and refer to conference code 4145587.  Replay of the conference call will be available until March 2, 2006 at midnight PST by dialing (706) 645-9291.  The conference call will also be available via the web at www.marvell.com. Please visit the Investor Events section.  Replay on the Internet will be available until February 23, 2007.

 


About Marvell
Marvell (NASDAQ: MRVL) is the leader in storage, communications and consumer silicon solutions.  The Company’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, including Marvell Semiconductor, Inc. (MSI), Marvell Asia Pte Ltd (MAPL), Marvell Japan K.K., Marvell Taiwan Ltd., Marvell International Ltd. (MIL), Marvell U.K. Limited, Marvell Semiconductor Israel Ltd. (MSIL), RADLAN Computer Communications Ltd., and SysKonnect GmbH.  MSI is headquartered in Santa Clara, Calif., and designs, develops and markets products on behalf of MIL and MAPL.  MSI may be contacted at (408) 222-2500 or at www.marvell.com.

Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995:

This release contains forward-looking statements based on projections and assumptions about our products and our markets.  Words such as “anticipates,” “expects,” “intends,” “plans,” “believes,” “seeks,” “estimates,” “may,” “will,” “should,” and their variations identify forward-looking statements.   These statements include those relating to our continued growth and success, our leadership position, continued growth and expansion of our solutions for enterprise and consumer markets and the anticipated stock split in the form of a stock dividend.  Statements that refer to, or are based on projections, uncertain events or assumptions also identify forward-looking statements.  These statements are not guarantees of results and are subject to risks and uncertainties that could cause actual results to differ materially from those anticipated in the forward-looking statements.  These risks and uncertainties include, but are not limited to, the timing, cost and successful completion of development and volume production of the Company’s products, end-customer qualification and adoption, the timing, pricing, rescheduling, or cancellation of orders, the Company’s ability to complete, integrate effectively and obtain the expected benefits of its recent and pending acquisitions, and the approval of shareholders of the increase in authorized share capital.  For other factors that could cause Marvell’s results to vary from expectations, please see the sections titled “Additional Factors That May Affect Future Results” in Marvell’s quarterly report on Form 10-Q for the fiscal quarter ended October 29, 2005 and other factors detailed from time to time in Marvell’s filings with the Securities and Exchange Commission.  We undertake no obligation to revise or update publicly any forward-looking statements.

 

Marvell® and the Marvell logo are trademarks of Marvell.  All other trademarks are the property of their respective owners.

 


 

Marvell Technology Group Ltd.

Condensed Consolidated Statements of Income

(Unaudited)

(In thousands, except per share amounts)

 

 

 

Three Months Ended

 

Year Ended

 

 

 

January 28,

 

January 29,

 

January 28,

 

January 29,

 

 

 

2006

 

2005

 

2006

 

2005

 

 

 

 

 

 

 

 

 

 

 

Net revenue

 

$

489,016

 

$

340,266

 

$

1,670,266

 

$

1,224,580

 

Cost of goods sold

 

220,666

 

162,756

 

776,633

 

581,757

 

Gross profit

 

268,350

 

177,510

 

893,633

 

642,823

 

Operating expenses:

 

 

 

 

 

 

 

 

 

Research and development

 

88,747

 

69,575

 

311,498

 

263,261

 

Selling and marketing

 

24,924

 

18,604

 

88,822

 

76,570

 

General and administrative

 

11,290

 

8,391

 

35,397

 

32,220

 

Amortization of stock-based compensation

 

303

 

480

 

2,156

 

3,977

 

Amortization/write-off of acquired intangible assets and other

 

32,480

 

19,759

 

91,738

 

102,534

 

Acquired in-process research and development

 

4,300

 

—

 

4,300

 

—

 

Facilities consolidation charge

 

—

 

—

 

—

 

2,414

 

Total operating expenses

 

162,044

 

116,809

 

533,911

 

480,976

 

Operating income

 

106,306

 

60,701

 

359,722

 

161,847

 

Interest and other income, net

 

6,129

 

2,599

 

19,369

 

7,657

 

Income before income taxes

 

112,435

 

63,300

 

379,091

 

169,504

 

Provision for income taxes

 

14,952

 

8,355

 

47,728

 

27,843

 

Net income

 

$

97,483

 

$

54,945

 

$

331,363

 

$

141,661

 

 

 

 

 

 

 

 

 

 

 

Basic net income per share

 

$

0.34

 

$

0.20

 

$

1.17

 

$

0.53

 

Diluted net income per share

 

$

0.30

 

$

0.18

 

$

1.05

 

$

0.47

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares — basic

 

288,376

 

275,555

 

282,935

 

269,687

 

Weighted average shares — diluted

 

322,573

 

308,325

 

315,658

 

299,543

 

 


Marvell Technology Group Ltd.

Pro Forma Non-GAAP Condensed Consolidated Statements of Income

(Unaudited)

(In thousands, except per share amounts)

 

 

 

Three Months Ended

 

Year Ended

 

 

 

January 28,

 

January 29,

 

January 28,

 

January 29,

 

 

 

2006

 

2005

 

2006

 

2005

 

 

 

 

 

 

 

 

 

 

 

Net revenue

 

$

489,016

 

$

340,266

 

$

1,670,266

 

$

1,224,580

 

Cost of goods sold

 

220,666

 

162,756

 

776,633

 

581,757

 

Gross profit

 

268,350

 

177,510

 

893,633

 

642,823

 

Operating expenses:

 

 

 

 

 

 

 

 

 

Research and development

 

88,747

 

69,575

 

311,498

 

263,261

 

Selling and marketing

 

24,924

 

18,604

 

88,822

 

76,570

 

General and administrative

 

11,290

 

8,391

 

35,397

 

32,220

 

Total operating expenses

 

124,961

 

96,570

 

435,717

 

372,051

 

Operating income

 

143,389

 

80,940

 

457,916

 

270,772

 

Interest and other income, net

 

6,129

 

2,599

 

19,369

 

7,657

 

Income before income taxes

 

149,518

 

83,539

 

477,285

 

278,429

 

Provision for income taxes

 

14,952

 

8,355

 

47,728

 

27,843

 

Pro forma non-GAAP net income

 

$

134,566

 

$

75,184

 

$

429,557

 

$

250,586

 

 

 

 

 

 

 

 

 

 

 

Basic pro forma non-GAAP net income per share

 

$

0.47

 

$

0.27

 

$

1.52

 

$

0.93

 

Diluted pro forma non-GAAP net income per share

 

$

0.42

 

$

0.24

 

$

1.36

 

$

0.84

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares — basic

 

288,376

 

275,555

 

282,935

 

269,687

 

Weighted average shares — diluted

 

322,573

 

308,325

 

315,658

 

299,543

 

 

 

 

 

 

 

 

 

 

 

Reconciliation of GAAP net income to pro forma non-GAAP net income:

 

 

 

 

 

 

 

 

 

GAAP net income

 

$

97,483

 

$

54,945

 

$

331,363

 

$

141,661

 

Amortization of stock-based compensation

 

303

 

480

 

2,156

 

3,977

 

Amortization/write-off of acquired intangible assets and other

 

32,480

 

19,759

 

91,738

 

102,534

 

Acquired in-process research and development

 

4,300

 

—

 

4,300

 

—

 

Facilities consolidation charge

 

—

 

—

 

—

 

2,414

 

Pro forma non-GAAP net income

 

$

134,566

 

$

75,184

 

$

429,557

 

$

250,586

 

 

 

 

 

 

 

 

 

 

 

The above pro forma non-GAAP statements of income are for informational purposes only and are provided for understanding our operating results. The pro forma non-GAAP statements of income have not been prepared in accordance with GAAP, should not be considered a substitute for our historical financial information prepared in accordance with GAAP and may be different from pro forma measures used by other companies. The pro forma non-GAAP income has been derived by adjusting the net income under generally accepted accounting principles for the impact of non cash stock-based compensation charges, non-cash charges associated with purchase accounting and other write-off related expenses.

 

 

 


Marvell Technology Group Ltd.

Condensed Consolidated Balance Sheets

(Unaudited)

(In thousands)

 

 

 

January 28,

 

January 29,

 

 

 

2006

 

2005

 

Assets

 

 

 

 

 

Current assets:

 

 

 

 

 

Cash, cash equivalents and short-term investments

 

$

921,022

 

$

660,014

 

Accounts receivable, net

 

245,164

 

200,954

 

Inventory, net

 

211,374

 

128,889

 

Prepaid expenses and other current assets

 

122,314

 

27,937

 

Total current assets

 

1,499,874

 

1,017,794

 

Property and equipment, net

 

260,921

 

161,770

 

Goodwill and acquired intangible assets

 

1,670,182

 

1,560,636

 

Other noncurrent assets

 

82,312

 

48,762

 

Total assets

 

$

3,513,289

 

$

2,788,962

 

 

 

 

 

 

 

Liabilities and Shareholders’ Equity

 

 

 

 

 

Current liabilities:

 

 

 

 

 

Accounts payable

 

$

196,606

 

$

129,728

 

Accrued liabilities

 

86,454

 

52,740

 

Income taxes payable

 

3,352

 

3,195

 

Deferred income

 

29,773

 

15,938

 

Current portion of capital lease obligations

 

16,563

 

13,204

 

Total current liabilities

 

332,748

 

214,805

 

Capital lease obligations

 

24,447

 

11,590

 

Other long-term liabilities

 

109,997

 

65,137

 

Total liabilities

 

467,192

 

291,532

 

 

 

 

 

 

 

Shareholders’ equity:

 

 

 

 

 

Common stock

 

583

 

555

 

Additional paid-in capital

 

3,250,169

 

3,035,200

 

Deferred stock-based compensation

 

(1,141

)

(3,400

)

Accumulated other comprehensive loss

 

(1,759

)

(1,807

)

Accumulated deficit

 

(201,755

)

(533,118

)

Total shareholders’ equity

 

3,046,097

 

2,497,430

 

Total liabilities and shareholders’ equity

 

$

3,513,289

 

$

2,788,962