MARVELL TECHNOLOGY GROUP LTD SANTA CLARA, Calif., May 21, 2015 /PRNewswire/ -- Marvell Technology Group Ltd. (NASDAQ: MRVL), a global leader in integrated silicon solutions, today reported financial results for the first quarter of fiscal year 2016, ended May 2, 2015.
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Key First Quarter of Fiscal 2016 Financial Highlights
-- Revenue: Q1 FY 2016, $724 Million
-- GAAP Net Income: Q1 FY 2016, $14 Million
-- GAAP Diluted EPS: Q1 FY 2016, $0.03
-- Non-GAAP Net Income: Q1 FY 2016, $71 Million
-- Non-GAAP Diluted EPS: Q1 FY 2016, $0.13
-- Free Cash Flow: Q1 FY 2016, $44 Million
Second Quarter of Fiscal 2016 Financial Outlook
Marvell's financial outlook does not include the potential impact of future share repurchases, pending litigation matters, business combinations, asset acquisitions or other investments that may be completed after May 20, 2015.
-- Revenue is expected to be in the range of $710 Million to $740 Million.
-- GAAP Gross Margin is expected to be in the range of 49.5% +/- 100 bps.
Non-GAAP Gross Margin is expected to be in the range of 50.0% +/- 100
bps.
-- GAAP Operating Expenses are expected to be in the range of $350 Million
+/- $10 Million. Non-GAAP Operating Expenses to be in the range of $305
Million +/- $10 Million.
-- GAAP Diluted EPS expected to be in the range of $0.02 +/- $0.01.
Non-GAAP Diluted EPS expected to be in the range of $0.11 +/- $0.01.
First Quarter of Fiscal 2016
Revenue for the first quarter of fiscal 2016 was $724 million, down approximately 16 percent from $857 million in the fourth quarter of fiscal 2015, ended January 31, 2015, and down approximately 24 percent from $958 million in the first quarter of fiscal 2015, ended May 3, 2014.
GAAP net income for the first quarter of fiscal 2016 was $14 million, or $0.03 per share (diluted), compared with GAAP net income of $82 million, or $0.16 per share (diluted), for the fourth quarter of fiscal 2015, and $99 million, or $0.19 per share (diluted), for the first quarter of fiscal 2015.
Non-GAAP net income was $71 million, or $0.13 per share (diluted), for the first quarter of fiscal 2016, compared with non-GAAP net income of $131 million, or $0.25 per share (diluted), for the fourth quarter of fiscal 2015 and $144 million, or $0.27 per share (diluted), for the first quarter of fiscal 2015.
Marvell reports net income, basic and diluted net income 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 to non-GAAP net income for the three months ended May 2, 2015, January 31, 2015, and May 3, 2014 appear in the financial statements below. Non-GAAP net income, where applicable, excludes the effect of share-based compensation, amortization and write-off of acquired intangible assets, acquisition-related costs, restructuring and other exit related costs, litigation settlement, and certain one-time expenses and benefits.
GAAP gross margin for the first quarter of fiscal 2016 was 51.5 percent, compared to 51.4 percent for the fourth quarter of fiscal 2015 and 48.4 percent for the first quarter of fiscal 2015.
Non-GAAP gross margin for the first quarter of fiscal 2016 was 51.6 percent, compared to 51.8 percent for the fourth quarter of fiscal 2015 and 48.8 percent for the first quarter of fiscal 2015.
Shares used to compute GAAP net income per diluted share for the first quarter of fiscal 2016 were 527 million shares, compared with 522 million shares in the fourth quarter of fiscal 2015 and 521 million shares in the first quarter of fiscal 2015.
Shares used to compute non-GAAP net income per diluted share for the first quarter of fiscal 2016 were 535 million shares, compared with 533 million shares for the fourth quarter of fiscal 2015 and 530 million shares for the first quarter of fiscal 2015.
Cash flow from operations for the first quarter of fiscal 2016 was $59 million, compared to the $142 million reported in the fourth quarter of fiscal 2015 and the $235 million reported in the first quarter of fiscal 2015. Free cash flow for the first quarter of fiscal 2016 was $44 million, compared to the $121 million reported in the fourth quarter of fiscal 2015 and the $211 million reported in the first quarter of fiscal 2015. Free cash flow as presented above is defined as cash flow from operations, less capital expenditures and purchases of technology licenses reported under investing and financing activities in the consolidated statement of cash flows.
Under the company's authorized share repurchase program, Marvell repurchased approximately 1.4 million shares for a total of $22 million in the first quarter of fiscal 2016. Marvell paid a quarterly dividend of $0.06 per share on April 2, 2015 to all shareholders of record as of March 12, 2015. Marvell intends to pay its next quarterly dividend of $0.06 per share on July 1, 2015 to all shareholders of record as of June 11, 2015.
The payment of future quarterly cash dividends on Marvell's common shares is subject to, among other things, the best interests of its shareholders, its results of operations, cash balances and future cash requirements, financial condition, developments in ongoing litigation, statutory requirements of Bermuda law, and other factors that the board of directors may deem relevant.
Key First Quarter of Fiscal 2016 Product Announcements
-- Xiaomi Launches New Series of Smart Home Products Powered by Marvell's
Best-In-Class End-to-End Internet of Things Platforms
-- Samsung Launches New Global Mass Market Galaxy J1 LTE Smartphone Powered
by Marvell's Industry-Leading ARMADA Mobile PXA1908 Platform
-- Marvell's Advanced Avastar Connectivity Solution Supports New Social
Wi-Fi and Indoor Location Technologies
-- Marvell Partners with Google's Advanced Technology and Products (ATAP)
Group to Support Project Ara
-- Marvell Enhances Its LTE Broadcast Capabilities for Global Operators and
OEMs with eMBMS Technology
-- Marvell Open Sources KinomaJS to Accelerate Growth of the Internet of
Things Industry
-- Marvell Unveils ARMADA Mobile PXA1826 5-Mode 4G LTE Release 10 Modem
Supporting Carrier Aggregation
-- Marvell's IoT Platform is Industry's First to Offer Full HomeKit Support
to Hardware Manufacturers
-- Marvell Extends Lead in Android Set-top Box Segment with Launch of
ARMADA 1500 Ultra Platform for 4K Entertainment
-- SendTek Announces G.hn Coaxial and Phoneline Gigabit Ethernet Bridge
Powered by Marvell's G.hn Technology to Support Market Migration from
HPNA to G.hn Installations for Home Networking
-- Marvell Unveils Industry-Leading ZigBee Wireless Microcontroller SoC to
Advance Smart Home and IoT Innovations
-- China Unicom Launches World's First 399RMB 5" 4G LTE XiaoLaJiao
Smartphone Powered by Marvell's ARMADA Mobile SoC
Conference Call
Marvell will be conducting a conference call on Thursday, May 21, 2015 at 1:45 p.m. Pacific Time to discuss results for the first quarter of fiscal year 2016. Interested parties may join the conference call by dialing 1- 877-703-6102 or 1-857-244-7301, pass-code 47211925. 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 June 21, 2015.
Discussion of Non-GAAP Financial Measures
Non-GAAP financial measures exclude the effect of share-based compensation expense, amortization and write-off of acquired intangible assets, acquisition-related costs, restructuring and other exit-related costs, litigation settlement, and certain one-time expenses and benefits that are driven primarily by discrete events that management does not consider to be directly related to Marvell's core operating performance. Non-GAAP net income per share is calculated by dividing non-GAAP net income by non-GAAP weighted average shares outstanding (diluted). For purposes of calculating non-GAAP net income per share, the GAAP weighted average shares outstanding (diluted) is adjusted to exclude the potential benefits of share-based compensation 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/anti-dilutive effects of common stock options and restricted stock units.
Marvell believes that the presentation of non-GAAP financial measures provides 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.
Forward-Looking Statements under the Private Securities Litigation Reform Act of 1995
This press release contains forward-looking statements within the meaning of the federal securities laws that involve risks and uncertainties, including: Marvell's expectations and statements regarding its financial outlook for the second quarter of fiscal 2016; its dividend program including the declaration of, timing of, funding of, payment of and quarterly amount of dividends; and its use of non-GAAP financial measures as important supplemental information. Words such as "anticipates," "expects," "intends," "plans," "believes," "seeks," "estimates," "can," "will" and similar expressions identify such forward-looking statements. These statements are not guarantees of results and should not be considered as an indication of future activity or future performance. Actual events or results may differ materially from those described in this press release due to a number of risks and uncertainties, including, among others: Marvell's ability to compete in products and prices in an intensely competitive industry; Marvell's reliance on the hard disk drive and mobile and wireless markets, which are highly cyclical and intensely competitive; costs and liabilities relating to current and future litigation; Marvell's reliance on a few customers for a significant portion of its revenue; Marvell's ability to develop and introduce new and enhanced products in a timely and cost effective manner and the adoption of those products in the market; seasonality in sales of consumer devices in which Marvell's products are incorporated; uncertainty in the worldwide economic conditions; risks associated with manufacturing and selling a majority of Marvell's products and Marvell's customers' products outside of the United States; and other risks detailed in Marvell's SEC filings from time to time. When Marvell files its Quarterly Report on Form 10-Q for the first quarter of fiscal 2016, 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. 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 ended January 31, 2015 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.
About Marvell
Marvell (NASDAQ: MRVL) is a global leader in providing complete silicon solutions and Kinoma® software enabling the "Smart Life and Smart Lifestyle." From mobile communications to storage, Internet of Things (IoT), cloud infrastructure, digital entertainment and in-home content delivery, Marvell's diverse product portfolio aligns complete platform designs with industry-leading performance, security, reliability and efficiency. At the core of the world's most powerful consumer, network and enterprise systems, Marvell empowers partners and their customers to always stand at the forefront of innovation, performance and mass appeal. By providing people around the world with mobility and ease of access to services adding value to their social, private and work lives, Marvell is committed to enhancing the human experience.
As used in this release, the term "Marvell" refers to Marvell Technology Group Ltd. and its subsidiaries. For more information, please visit www.Marvell.com.
Marvell® and the Marvell logo are registered trademarks of Marvell and/or its affiliates.
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,
2015 2015 2014
---- ---- ----
Net revenue $724,288 $857,452 $957,830
Cost of goods sold 351,153 417,131 493,860
------- ------- -------
Gross profit 373,135 440,321 463,970
Operating expenses:
Research and
development 280,114 285,497 295,363
Selling
and
marketing 36,174 37,235 38,358
General and
administrative 41,027 34,651 30,573
Amortization and
write-off of
acquired
intangible
assets 2,568 3,100 6,689
Total
operating
expenses 359,883 360,483 370,983
------- ------- -------
Operating income 13,252 79,838 92,987
Interest and other income, net 5,167 4,382 1,925
----- ----- -----
Income before income taxes 18,419 84,220 94,912
Provision (benefit) for income taxes 4,329 2,527 (4,567)
----- ----- ------
Net income $14,090 $81,693 $99,479
======= ======= =======
Basic net income per share $0.03 $0.16 $0.20
===== ===== =====
Diluted net income per share $0.03 $0.16 $0.19
===== ===== =====
Shares used in computing basic
earnings per share 516,228 513,574 505,105
Shares used in computing diluted
earnings per share 527,167 522,112 520,751
Marvell Technology Group Ltd.
Condensed Consolidated Balance Sheets
(Unaudited)
(In thousands)
May 2, January 31,
Assets 2015 2015
---- ----
Current assets:
Cash, cash equivalents
and short-term
investments $2,500,915 $2,529,555
Accounts
receivable, net 393,814 420,955
Inventories 339,859 308,162
Prepaid expenses and
other current assets 91,151 85,368
Total
current
assets 3,325,739 3,344,040
Property and equipment, net 325,754 340,639
Long-term investments 10,111 10,226
Goodwill and acquired intangible assets, net 2,057,590 2,060,643
Other non-current assets 122,855 128,839
------- -------
Total
assets $5,842,049 $5,884,387
========== ==========
Liabilities and Shareholders' Equity
Current liabilities:
Accounts
payable $297,050 $282,899
Accrued
liabilities 258,345 286,357
Deferred income 61,093 68,120
Total
current
liabilities 616,488 637,376
Other non-current liabilities 94,289 100,922
------ -------
Total
liabilities 710,777 738,298
------- -------
Shareholders' equity:
Common stock 1,036 1,030
Additional paid-
in capital 3,101,773 3,099,548
Accumulated other
comprehensive income 80 308
Retained
earnings 2,028,383 2,045,203
Total
shareholders'
equity 5,131,272 5,146,089
Total liabilities
and
shareholders'
equity $5,842,049 $5,884,387
========== ==========
Marvell Technology Group Ltd.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(in thousands)
Three Months Ended
------------------
May 2, May 3,
2015 2014
---- ----
Cash flows from operating activities:
Net income $14,090 $99,479
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation and
amortization 26,620 27,006
Share-based
compensation 33,221 29,969
Amortization and
write-off of
acquired intangible
assets 3,053 7,174
Other expense, net 916 1,470
Excess tax benefits
from share-based
compensation (18) (44)
Changes in assets and
liabilities:
Accounts receivable 27,141 (63,578)
Inventories (31,318) (3,105)
Prepaid expenses
and other assets 1,065 (2,161)
Accounts payable 17,125 85,128
Accrued liabilities
and other non-
current
liabilities (11,576) (7,134)
Accrued employee
compensation (14,424) 30,001
Deferred income (7,027) 30,932
------ ------
Net cash
provided by
operating
activities 58,868 235,137
Cash flows from investing activities:
Purchases of
available-for-sale
securities (392,900) (181,889)
Sales and maturities
of available-for-
sale securities 247,495 182,311
Investments in
privately-held
companies - (441)
Purchases of
technology licenses (3,606) (8,111)
Purchases of property
and equipment (7,334) (16,131)
Purchase of equipment
previously leased (10,240) -
Net cash used
in investing
activities (166,585) (24,261)
Cash flows from financing activities:
Repurchase of common
stock (a) (20,273) -
Proceeds from employee
stock plans 13,013 19,092
Minimum tax
withholding paid on
behalf of employees
for net share
settlement
(22,310) (24,286)
Dividend payments to
shareholders (30,910) (30,172)
Payments on technology
license obligations (4,067) -
Excess tax benefits
from share-based
compensation 18 44
Net cash used
in financing
activities (64,529) (35,322)
------- -------
Net increase (decrease) in cash and cash
equivalents (172,246) 175,554
Cash and cash equivalents at beginning of period 1,210,977 965,750
--------- -------
Cash and cash equivalents at end of period $1,038,731 $1,141,304
========== ==========
(a) Marvell
records all
repurchases
as well as
investment
purchases
and sales,
based on
trade date
in
accordance
with U.S.
GAAP. Cash
paid for
repurchase
of Marvell
common
shares
includes a
total of 1.4
million
shares
repurchased
for $22.1
million in
the first
quarter of
fiscal 2016,
adjusted for
repurchases
of $1.8
million made
within the
final three
days of the
quarter that
are accrued
but not yet
paid due to
the standard
settlement
period that
normally
takes up to
three days.
Marvell Technology Group Ltd.
Reconciliations from GAAP to Non-GAAP
(Unaudited)
(In thousands, except per share amounts)
Three Months Ended
------------------
May 2, January 31, May 3,
2015 2015 2014
---- ---- ----
GAAP net income $14,090 $81,693 $99,479
Share-based compensation 33,221 37,963 29,969
Amortization and write-off of acquired intangible assets 3,493 4,025 7,614
Restructuring and other exit-related costs 592 3,412 5,088
Litigation matters (a) (1,700) - 2,000
Other (b) 21,382 3,764 -
Non-GAAP net income $71,078 $130,857 $144,150
======= ======== ========
GAAP weighted average shares - diluted 527,167 522,112 520,751
Non-GAAP adjustment 7,993 10,688 9,625
Non-GAAP weighted average shares diluted (c) 535,160 532,800 530,376
======= ======= =======
GAAP diluted net income per share $0.03 $0.16 $0.19
===== ===== =====
Non-GAAP diluted net income per share $0.13 $0.25 $0.27
===== ===== =====
GAAP gross profit: $373,135 $440,321 $463,970
Share-based
compensation 1,547 2,006 2,299
Amortization of
acquired intangible
assets 925 925 925
Litigation matters
(a) (1,700) - -
Other (b) - 1,000 -
Non-GAAP gross profit $373,907 $444,252 $467,194
======== ======== ========
GAAP gross margin 51.5% 51.4% 48.4%
Share-based
compensation 0.2% 0.2% 0.3%
Amortization of
acquired intangible
assets 0.1% 0.1% 0.1%
Litigation matters
(a) -0.2% - -
Other (b) - 0.1% -
Non-GAAP gross margin 51.6% 51.8% 48.8%
==== ==== ====
GAAP research and development: $280,114 $285,497 $295,363
Share-based
compensation (24,781) (25,590) (20,368)
Restructuring and other exit-
related costs - (67) (4,682)
Non-GAAP research and development $255,333 $259,840 $270,313
======== ======== ========
GAAP selling and marketing: $36,174 $37,235 $38,358
Share-based
compensation (2,577) (3,069) (2,928)
Restructuring and other exit-
related costs - - (48)
Non-GAAP selling and marketing $33,597 $34,166 $35,382
======= ======= =======
GAAP general and administrative: $41,027 $34,651 $30,573
Share-based
compensation (4,316) (7,298) (4,374)
Restructuring and other exit-
related costs (592) (3,345) (358)
Litigation matters
(a) - - (2,000)
Other (b) (18,302) (2,764) -
Non-GAAP general and administrative $17,817 $21,244 $23,841
======= ======= =======
GAAP provision (benefit) for income taxes $4,329 $2,527 $(4,567)
Other (b) (3,080) - -
Non-GAAP provision (benefit) for income taxes $1,249 $2,527 $(4,567)
====== ====== =======
The amounts
recorded do
not relate
to Marvell's
litigation
with
Carnegie
Mellon
(a) University.
(b) Other costs
included in
general and
administrative
expenses for
the three
months ended
May 2, 2015
includes a
cash payment
of $15.4
million to
Dr. Sehat
Sutardja,
the
Company's
Chief
Executive
Officer (See
"Note 15 -
Subsequent
Events" in
the Notes to
the
Consolidated
Financial
Statements
set forth in
Part II,
Item 8 of
the
Company's
Annual
Report on
Form 10-K
for fiscal
2015). Other
costs
included in
the
provision
for income
taxes for
the three
months ended
May 2, 2015
includes the
corporate
income tax
effect of
the $15.4
million cash
payment.
Other costs
for all
periods
presented
also
includes
costs
associated
with the
surety bond
to appeal
the Carnegie
Mellon
University
judgment.
(c) For purposes
of
calculating
non-GAAP
diluted net
income per
share, the
GAAP diluted
weighted
average
shares
outstanding
is adjusted
to exclude
the
potential
benefits of
share-based
compensation
costs
expected to
be incurred
in future
periods but
not yet
recognized
in the
financial
statements.
Marvell Technology Group Ltd.
Reconciliations from GAAP to Non-GAAP Outlook
(Unaudited)
(In millions, except per share amounts)
Second Quarter
Note : Amounts represent the midpoint of the
expected range Fiscal 2016
-----------
GAAP gross margin 49.5%
Share-based compensation,
acquisition related costs, and
other 0.5%
Non-GAAP gross margin 50.0%
====
Second Quarter
Fiscal 2016
-----------
GAAP operating expenses $350
Share-based compensation,
acquisition-related costs,
restructuring,
amortization of intangible assets
and other (45)
Non-GAAP operating expenses $305
====
Second Quarter
Fiscal 2016
-----------
GAAP diluted earnings per share $0.02
Share-based compensation,
acquisition-related costs,
restructuring,
amortization of intangible assets
and other 0.09
Non-GAAP diluted earnings per share $0.11
=====
For further information, contact:
John Spencer Ahn Sue Kim
Investor Relations Media Relations
408-222-7544 408-222-1942
johnahn@marvell.com suekim@marvell.com
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SOURCE Marvell Technology Group Ltd.
