MARVELL TECHNOLOGY GROUP LTD 
By SANTA CLARA, Calif., May 22, 2014 /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 2015, ended May 3, 2014.
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Key First Quarter of Fiscal 2015 Financial Highlights
-- Revenue: Q1 FY 2015, $958 Million
-- GAAP Net Income: Q1 FY 2015, $99 Million
-- GAAP Diluted EPS: Q1 FY 2015, $0.19
-- Non-GAAP Net Income: Q1 FY 2015, $144 Million
-- Non-GAAP Diluted EPS: Q1 FY 2015, $0.27
-- Free Cash Flow: Q1 FY 2015, $211 Million
Second Quarter of Fiscal 2015 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 3, 2014.
-- Revenue is expected to be in the range of $940 to $980 Million.
-- GAAP Gross Margin is expected to be in the range of 49.7% +/- 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 $365 Million
+/- $10 Million. Non-GAAP Operating Expenses to be in the range of $330
Million +/- $10 Million.
-- GAAP Diluted EPS expected to be in the range of $0.21 +/- $0.02.
Non-GAAP Diluted EPS expected to be in the range of $0.28 +/- $0.02.
First Quarter of Fiscal 2015 Summary
Revenue for the first quarter of fiscal 2015 was $958 million, an increase of 3 percent from $932 million in the fourth quarter of fiscal 2014, ended February 1, 2014, and a 30 percent increase from revenue of $734 million in the first quarter of fiscal 2014, ended May 4, 2013.
GAAP net income for the first quarter of fiscal 2015 was $99 million, or $0.19 per share (diluted), compared with GAAP net income of $97 million, or $0.19 per share (diluted), for the fourth quarter of fiscal 2014, and $53 million, or $0.11 per share (diluted), for the first quarter of fiscal 2014.
Non-GAAP net income was $144 million, or $0.27 per share (diluted), for the first quarter of fiscal 2015, compared with non-GAAP net income of $151 million, or $0.29 per share (diluted), for the fourth quarter of fiscal 2014 and $98 million, or $0.19 per share (diluted), for the first quarter of fiscal 2014.
"We delivered solid first quarter results, driven by better than expected demand for our LTE solutions," said Dr. Sehat Sutardja, Marvell's Chairman and Chief Executive Officer. "Looking forward, we continue to focus on increasing our share across all our end markets and are investing appropriately in advanced technologies that will drive our success."
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 3, 2014, February 1, 2014 and May 4, 2013 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, and certain one-time expenses and benefits.
GAAP gross margin for the first quarter of fiscal 2015 was 48.4 percent, compared to 48.8 percent for the fourth quarter of fiscal 2014 and 54.3 percent for the first quarter of fiscal 2014.
Non-GAAP gross margin for the first quarter of fiscal 2015 was 48.8 percent, compared to 50.1 percent for the fourth quarter of fiscal 2014 and 54.6 percent for the first quarter of fiscal 2014.
Shares used to compute GAAP net income per diluted share for the first quarter of fiscal 2015 were 521 million shares, compared with 510 million shares in the fourth quarter of fiscal 2014 and 505 million shares in the first quarter of fiscal 2014.
Shares used to compute non-GAAP net income per diluted share for the first quarter of fiscal 2015 were 530 million shares, compared with 523 million shares for the fourth quarter of fiscal 2014 and 522 million shares for the first quarter of fiscal 2014.
Cash flow from operations for the first quarter of fiscal 2015 was $235 million, compared to the $100 million reported in the fourth quarter of fiscal 2014 and the $84 million reported in the first quarter of fiscal 2014. Free cash flow for the first quarter of fiscal 2015 was $211 million, compared to the $82 million reported in the fourth quarter of fiscal 2014 and the $53 million reported in the first quarter of fiscal 2014. 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.
Marvell paid a quarterly dividend of $0.06 per share on March 27, 2014 to all shareholders of record as of March 13, 2014. Marvell intends to pay its next quarterly dividend of $0.06 per share on July 2, 2014 to all shareholders of record as of June 12, 2014.
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.
Conference Call
Marvell will be conducting a conference call on Thursday, May 22, 2014 at 1:45 p.m. Pacific Time to discuss results for the first quarter of fiscal year 2015. Interested parties may join the conference call by dialing 1- 877-415-3184 or 1-857-244-7327, pass-code 48465186. 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, 2014.
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, 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 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.
Forward-Looking Statements under the Private Securities Litigation Reform Act of 1995
This press release contains forward-looking statements that involve risks and uncertainties, including Marvell's expectations and statements regarding: its financial outlook for the second quarter of fiscal 2015; its level of investment in advanced technologies and the ability of such investment to drive Marvell's success; 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. 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 reliance on a few customers for a significant portion of its revenue; costs and liabilities relating to current and future litigation; 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 our products are incorporated; Marvell's ability to compete in products and prices in an intensely competitive industry; uncertainty in the worldwide economic conditions; Marvell's ability to recruit and retain skilled personnel; Marvell's ability to generate cash flows; 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 2015, 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 February 1, 2014 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 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.
For further information, contact:
Sukhi Nagesh Sue Kim
Investor Relations Media Relations
408-222-8373 408-222-1942
sukhi@marvell.com suekim@marvell.com
Marvell Technology Group Ltd.
Condensed Consolidated Statements of Operations
(Unaudited)
(In thousands, except per share amounts)
Three Months Ended
------------------
May 3, February 1, May 4,
2014 2014 2013
---- ---- ----
Net
revenue $957,830 $931,749 $734,369
Cost
of
goods
sold 493,860 477,252 335,438
------- ------- -------
Gross
profit 463,970 454,497 398,931
Operating
expenses:
Research
and
development 295,363 288,900 279,052
Selling and
marketing 38,358 36,665 39,989
General and
administrative 30,573 26,367 26,323
Amortization
and write-
off of
acquired
intangible
assets 6,689 11,956 10,686
Total
operating
expenses 370,983 363,888 356,050
------- ------- -------
Operating
income 92,987 90,609 42,881
Interest
and
other
income,
net 1,925 12,617 3,160
----- ------ -----
Income
before
income
taxes 94,912 103,226 46,041
Provision
(benefit)
for
income
taxes (4,567) 6,097 (7,168)
------ ----- ------
Net
income $99,479 $97,129 $53,209
======= ======= =======
Basic
net
income
per
share $0.20 $0.20 $0.11
===== ===== =====
Diluted
net
income
per
share $0.19 $0.19 $0.11
===== ===== =====
Shares
used
in
computing
basic
earnings
per
share 505,105 497,620 502,180
Shares
used
in
computing
diluted
earnings
per
share 520,751 510,449 505,387
Marvell Technology Group Ltd.
Condensed Consolidated Balance Sheets
(Unaudited)
(In thousands)
May 3, February 1,
Assets 2014 2014
---- ----
Current assets:
Cash, cash
equivalents
and short-
term
investments $2,146,445 $1,969,405
Accounts
receivable,
net 517,074 453,496
Inventories 350,649 347,861
Prepaid
expenses and
other
current
assets 72,815 68,458
------ ------
Total current assets 3,086,983 2,839,220
Property and equipment,
net 349,321 356,165
Long-term investments 13,456 16,279
Goodwill and acquired
intangible assets, net 2,071,806 2,078,980
Other non-current assets 161,406 160,366
------- -------
Total assets $5,682,972 $5,451,010
======== ========
Liabilities and
Shareholders' Equity
Current liabilities:
Accounts
payable $409,005 $316,389
Accrued
liabilities 288,076 273,170
Deferred
income 92,679 61,747
------ ------
Total current liabilities 789,760 651,306
Other non-current
liabilities 123,725 123,794
------- -------
Total liabilities 913,485 775,100
------- -------
Shareholders' equity:
Common stock 1,016 1,005
Additional
paid-in
capital 2,966,097 2,941,650
Accumulated
other
comprehensive
income 409 597
Retained
earnings 1,801,965 1,732,658
--------- ---------
Total shareholders'
equity 4,769,487 4,675,910
Total liabilities and
shareholders' equity $5,682,972 $5,451,010
======== ========
Marvell Technology Group Ltd.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(in thousands)
Three Months
Ended
-------------
May 3, May 4,
2014 2013
---- ----
Cash flows from
operating
activities:
Net income $99,479 $53,209
Adjustments to
reconcile net
income to net cash
provided
by operating
activities:
Depreciation
and
amortization 27,006 24,966
Share-
based
compensation 29,969 33,513
Amortization
and write-
off of
acquired
intangible
assets 7,174 10,686
Other
expense,
net 1,470 2,523
Excess tax
benefits
from
share-
based
compensation (44) (7)
Changes in
assets and
liabilities:
Accounts
receivable (63,578) (40,112)
Inventories (3,105) (20,123)
Prepaid
expenses
and other
assets (2,161) 6,802
Accounts
payable 85,128 28,936
Accrued
liabilities
and other
non-
current
liabilities (7,134) (20,081)
Accrued
employee
compensation 30,001 4,423
Deferred
income 30,932 (880)
------ ----
Net cash provided
by operating
activities 235,137 83,855
Cash flows from
investing
activities:
Purchases
of
available-
for-sale
securities (181,889) (306,838)
Sales and
maturities
of
available-
for-sale
securities 182,311 335,771
Investments
in
privately-
held
companies (441) -
Cash paid
for
acquisitions,
net - (2,551)
Purchases
of
technology
licenses (8,111) (5,860)
Purchases
of
property
and
equipment (16,131) (20,080)
------- -------
Net cash (used in)
provided by
investing
activities (24,261) 442
Cash flows from
financing
activities:
Repurchase
of common
stock (a) - (216,694)
Proceeds
from
employee
stock
plans 19,092 19,805
Minimum tax
withholding
paid on
behalf of
employees
for net
share
settlement (24,286) (9,378)
Dividend
payments
to
shareholders (30,172) (30,253)
Payments on
technology
license
obligations - (5,317)
Excess tax
benefits
from
share-
based
compensation 44 7
--- ---
Net cash used in
financing
activities (35,322) (241,830)
------- --------
Net increase
(decrease) in cash
and cash
equivalents 175,554 (157,533)
Cash and cash
equivalents at
beginning of
period 965,750 751,953
------- -------
Cash and cash
equivalents at end
of period $1,141,304 $594,420
======== ========
(a) Marvell
records
all
repurchases
as well
as
investment
purchases
and
sales,
based on
trade
date in
accordance
with
U.S.
GAAP.
There
were no
repurchases
of
common
stock in
the
three
months
ended
May 3,
2014.
Marvell Technology Group Ltd
Reconciliations from GAAP to Non-GAAP
(Unaudited)
(In thousands, except per share amounts)
Three Months Ended
------------------
May 3, February 1, May 4,
2014 2014 2013
---- ---- ----
GAAP
net
income $99,479 $97,129 $53,209
Share-
based
compensation 29,969 38,068 33,513
Amortization
and
write-
off
of
acquired
intangible
assets 7,614 12,184 10,686
Acquisition-
related
costs(a) - 121 465
Restructuring
and
other
exit-
related
costs(b) 5,088 947 228
Legal/
Tax
related
matters(c) 2,000 9,500 -
Gain
on
sale - (6,975) -
Non-
GAAP
net
income $144,150 $150,974 $98,101
======== ======== =======
GAAP
weighted
average
shares
-
diluted 520,751 510,449 505,387
Non-
GAAP
adjustment 9,625 12,932 17,094
----- ------ ------
Non-
GAAP
weighted
average
shares
diluted(d) 530,376 523,381 522,481
======= ======= =======
GAAP
diluted
net
income
per
share $0.19 $0.19 $0.11
===== ===== =====
Non-
GAAP
diluted
net
income
per
share $0.27 $0.29 $0.19
===== ===== =====
GAAP
gross
profit: $463,970 $454,497 $398,931
Share-
based
compensation 2,299 2,597 1,867
Amortization
of
acquired
intangible
assets 925 228 -
Legal/
Tax
related
matters(c) - 9,500 -
Non-
GAAP
gross
profit $467,194 $466,822 $400,798
======== ======== ========
GAAP
gross
margin 48.4% 48.8% 54.3%
Share-
based
compensation 0.3% 0.3% 0.3%
Amortization
of
acquired
intangible
assets 0.1% 0.0% -
Legal/
Tax
related
matters(c) - 1.0% -
Non-
GAAP
gross
margin 48.8% 50.1% 54.6%
==== ==== ====
GAAP
research
and
development: $295,363 $288,900 $279,052
Share-
based
compensation (20,368) (27,087) (23,279)
Acquisition-
related
costs(a) - (116) (400)
Restructuring
and
other
exit-
related
costs(b) (4,682) (829) -
Non-
GAAP
research
and
development $270,313 $260,868 $255,373
======== ======== ========
GAAP
selling
and
marketing: $38,358 $36,665 $39,989
Share-
based
compensation (2,928) (3,162) (3,392)
Acquisition-
related
costs(a) - - (45)
Restructuring
and
other
exit-
related
costs(b) (48) - -
Non-
GAAP
selling
and
marketing $35,382 $33,503 $36,552
======= ======= =======
GAAP
general
and
administrative: $30,573 $26,367 $26,323
Share-
based
compensation (4,374) (5,222) (4,975)
Acquisition-
related
costs(a) - (5) (20)
Restructuring
and
other
exit-
related
costs(b) (358) (118) (228)
Legal/
Tax
related
matters(c) (2,000) - -
Non-
GAAP
general
and
administrative $23,841 $21,022 $21,100
======= ======= =======
(a) Acquisition-
related
costs
include
the
amortization
of
retention
bonuses
required
by the
terms of
an
acquisition.
(b) Restructuring
and other
exit-
related
costs
include
costs that
qualify
under U.S.
GAAP as
restructuring
costs, as
well as
operating
expenses
related to
assets
classified
as held-
for-sale
that did
not
qualify as
discontinued
operations.
(c) Legal/Tax
related
matters
include
settlement
fees
related to
litigation
matters.
The
amounts
recorded
do not
relate to
Marvell's
litigation
with
Carnegie
Mellon
University.
(d) 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)
Q2 FY2015
Note: Amounts represent the
midpoint of the expected
range Outlook
-------
GAAP gross margin 49.7%
Share-based compensation,
acquisition related costs,
and other 0.3%
Non-GAAP gross margin 50.0%
====
Q2 FY2015
Outlook
-------
GAAP operating expenses $365
Share-based compensation,
acquisition-related costs,
restructuring,
amortization of intangible
assets and other (35)
Non-GAAP operating expenses $330
====
Q2 FY2015
Outlook
-------
GAAP diluted earnings per
share $0.21
Share-based compensation,
acquisition-related costs,
restructuring,
amortization of intangible
assets and other 0.07
Non-GAAP diluted earnings
per share $0.28
=====
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SOURCE Marvell Technology Group Ltd.
