Marvell Technology Group Ltd. Reports Second Fiscal Quarter 2013 Financial Results

  Marvell Technology Group Ltd. Reports Second Fiscal Quarter 2013 Financial
                                   Results

Revenue: $816 Million, a 2 percent sequential increase

GAAP Net Income: $93 Million, EPS of $0.16

Non-GAAP Net Income: $142 Million, EPS of $0.24

Free Cash Flow: $174 Million, 21 Percent of Revenue

PR Newswire

SANTA CLARA, Calif., Aug. 16, 2012

SANTA CLARA, Calif., Aug. 16, 2012 /PRNewswire/ -- Marvell Technology Group
Ltd. (NASDAQ: MRVL), a global leader in integrated silicon solutions, today
reported financial results for the second quarter of fiscal 2013, ended July
28, 2012.

(Logo: http://photos.prnewswire.com/prnh/20100719/SF36559LOGO-b)

Revenue for the second quarter of fiscal 2013 was $816 million, a 2 percent
sequential increase from $796 million in the first quarter of fiscal 2013,
ended April 28, 2012, and a decrease of 9 percent from $898 million in the
second quarter of fiscal 2012, ended July 30, 2011.

GAAP net income for the second quarter of fiscal 2013 was $93 million, or
$0.16 per share (diluted), compared with GAAP net income of $95 million, or
$0.16 per share (diluted), for the first quarter of fiscal 2013, and $192
million, or $0.31 per share (diluted), for the second quarter of fiscal 2012.


Non-GAAP net income was $142 million, or $0.24 per share (diluted), for the
second quarter of fiscal 2013, compared with non-GAAP net income of $139
million, or $0.23 per share (diluted) for the first quarter of fiscal 2013 and
$234 million, or $0.38 per share (diluted) for the second quarter of fiscal
2012.

"Our results in the second quarter were affected primarily by the slowdown in
the macro-economic environment that impacted our storage and mobile end
markets. However, our SSD, 500 gigabyte per platter HDD and wireless
connectivity products grew double digits sequentially and our networking end
market continued to outperform on the strength of new products and share
gains," said Dr. Sehat Sutardja, Marvell's Chairman and Chief Executive
Officer. "Despite the soft near-term demand environment, we are maintaining
good profitability and continue to deliver shareholder value through our share
repurchase and dividend programs."

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 July 28, 2012, April 28, 2012
and July 30, 2011 appear in the financial statements below. Non-GAAP net
income, where applicable, excludes the effect of stock-based compensation,
amortization of acquired intangible assets, acquisition-related costs,
restructuring costs, and certain one-time expenses and benefits.

GAAP gross margin for the second quarter of fiscal 2013 was 53.2 percent,
compared to 54.0 percent for the first quarter of fiscal 2013 and 57.9 percent
for the second quarter of fiscal 2012.

Non-GAAP gross margin for the second quarter of fiscal 2013 was 53.6 percent,
compared to 54.5 percent for the first quarter of fiscal 2013 and 58.1 percent
for the second quarter of fiscal 2012.

Shares used to compute GAAP net income per diluted share for the second
quarter of fiscal 2013 were 570 million shares, compared with 595 million
shares in the first quarter of fiscal 2013 and 623 million shares in the
second quarter of fiscal 2012. Shares used to compute non-GAAP net income per
diluted share for the second quarter of fiscal 2013 were 587 million shares,
compared with 606 million shares for the first quarter of fiscal 2013 and 625
million shares for the second quarter of fiscal 2012.

Cash flow from operations for the second quarter of fiscal 2013 was $189
million, compared to the $199 million reported in the first quarter of fiscal
2013 and down from the $263 million in the second quarter of fiscal 2012. Free
cash flow for the second quarter of fiscal 2013 was $174 million, compared to
the $178 million reported in the first quarter of fiscal 2013 and down from
the $235 million in the second quarter of fiscal 2012. Free cash flow as
presented above is defined as cash flow from operations, less capital
expenditures and purchases of IP licenses. 

Under the share repurchase program, Marvell repurchased approximately 20
million shares for a total of $250 million in the second quarter of fiscal
2013. Over the past eight quarters, Marvell has repurchased and retired
approximately 127 million shares, or about 19 percent, of its outstanding
shares demonstrating its commitment to returning shareholder value.

Marvell also paid its first quarterly dividend of $0.06 per share on July 11,
2012 to all shareholders of record as of June 21, 2012. Marvell will pay its
next quarterly dividend of $0.06 per share on October 4, 2012 to all
shareholders of record as of September 13, 2012.

Marvell intends to pay a regular quarterly cash dividend on its common shares
subject to, among other things, the best interests of its shareholders, its
results of operations, cash balances and future cash requirements, financial
condition, 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 August 16, 2012 at 1:45 p.m.
Pacific Time to discuss results for the second quarter of fiscal 2013.
Interested parties may join the conference call by dialing 1- 800-901-5248 or
1-617-786-4512, pass-code 95854864. 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
September 13, 2012.

Discussion of Non-GAAP Financial Measures
Non-GAAP financial measures exclude the effect of stock-based compensation
expense, amortization of acquired intangible assets, acquisition-related
costs, restructuring 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 (diluted), the GAAP weighted average shares
outstanding (diluted) is adjusted to exclude the benefits of stock
compensation costs attributable to future services and 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.

About Marvell
Marvell 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
term "Marvell" refers to Marvell Technology Group Ltd. and its subsidiaries.
For more information please visit 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 statements regarding Marvell's ability to maintain
profitability and deliver shareholder value; relating to the declaration of,
timing of, funding of and quarterly amount of dividends; and statements
concerning Marvell'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 activity or
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, 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; uncertainty
in the worldwide economic environment; 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; Marvell's ability
to recruit and retain skilled personnel; ability to generate cash flows;
substantial costs of current and any future litigation; and other risks
detailed in Marvell's SEC filings from time to time. When Marvell files its
Form 10-Q for the quarter ended July 28, 2012, 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 Quarterly Report on
Form 10-Q for the quarter ended April 28, 2012, 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.

Marvell® and the Marvell logo are registered trademarks of Marvell and/or its
affiliates.



For further information, contact:
Sukhi Nagesh       Daniel Yoo
Investor Relations Media Relations
408-222-8373       408-222-2187
sukhi@marvell.com yoo@marvell.com





Marvell Technology Group Ltd.
Condensed Consolidated Statements of Operations
(Unaudited)
(In thousands, except per share amounts)
                         Three Months Ended           Six Months Ended
                         July 28,  April    July 30,  July 28,       July 30,
                                   28,
                         2012      2012     2011      2012           2011
Net revenue              $         $        $         $ 1,612,455    $
                         816,104   796,351  897,520                  1,699,922
Cost of goods sold       381,839   366,322  378,117   748,161        712,592
Gross profit             434,265   430,029  519,403   864,294        987,330
Operating expenses:
  Research and           264,175   255,970  249,604   520,145        492,141
  development
  Selling and marketing  41,034    40,066   40,390    81,100         78,542
  General and            25,718    25,705   23,631    51,423         48,415
  administrative
  Amortization of
  acquired intangible    13,023    14,355   11,138    27,378         25,479
  assets
  Total operating        343,950   336,096  324,763   680,046        644,577
  expenses
Operating income         90,315    93,933   194,640   184,248        342,753
Interest and other       5,864     1,057    2,064     6,921          1,846
income, net
Income before income     96,179    94,990   196,704   191,169        344,599
taxes
Provision for income     3,105     447      4,312     3,552          5,346
taxes
Net income               $        $       $         $  187,617   $ 
                         93,074    94,543   192,392                  339,253
Basic net income per     $      $     $      $          $    
share                    0.17      0.16     0.32      0.33          0.54
Diluted net income per   $      $     $      $          $    
share                    0.16      0.16     0.31      0.32          0.53
Shares used in computing 562,362   580,024  608,511   571,193        623,728
basic earnings per share
Shares used in computing
diluted earnings per     570,325   594,739  623,132   582,532        640,136
share





Marvell Technology Group Ltd.
Reconciliations from GAAP to Non-GAAP
(Unaudited)
(In thousands, except per share amounts)
                          Three Months Ended               Six Months Ended
                          July 28,   April 28,  July 30,   July 28,   July 30,
                          2012       2012       2011       2012       2011
GAAP net income           $         $         $ 192,392  $ 187,617  $
                          93,074     94,543                           339,253
Stock-based compensation  33,228     27,192     30,355     60,420     57,835
Amortization of acquired  13,023     14,355     11,138     27,378     25,479
intangible assets
Acquisition-related       1,577      2,456      -          4,033      -
costs (a)
Restructuring             859        115        567        974        1,186
Legal/Tax related         250        -          -          250        -
matters
Non-GAAP net income       $ 142,011  $ 138,661  $ 234,452  $ 280,672  $
                                                                      423,753
GAAP weighted average     570,325    594,739    623,132    582,532    640,136
shares - diluted
 Non-GAAP adjustment  16,302     10,814     1,645      13,558     3,726
Non-GAAP weighted
average shares diluted    586,627    605,553    624,777    596,090    643,862
(b)
GAAP diluted net income   $       $       $       $       $   
per share                 0.16       0.16       0.31       0.32       0.53
Non-GAAP diluted net      $       $       $       $       $   
income per share         0.24       0.23       0.38       0.47       0.66
GAAP gross profit:        $ 434,265  $ 430,029  $ 519,403  $ 864,294  $
                                                                      987,330
 Stock-based          1,775      2,123      1,916      3,898      3,611
compensation
 Acquisition-related  1,054      1,929      -          2,983      -
costs (a)
Non-GAAP gross profit     $ 437,094  $ 434,081  $ 521,319  $ 871,175  $
                                                                      990,941
GAAP gross margin         53.2%      54.0%      57.9%      53.6%      58.1%
 Stock-based          0.2%       0.3%       0.2%       0.2%       0.2%
compensation
 Acquisition-related  0.2%       0.2%       -          0.2%       -
costs (a)
Non-GAAP gross margin     53.6%      54.5%      58.1%      54.0%      58.3%
GAAP research and         $ 264,175  $ 255,970  $ 249,604  $ 520,145  $
development:                                                          492,141
 Stock-based          (22,413)   (17,174)   (22,128)   (39,587)   (41,721)
compensation
 Acquisition-related  (466)      (442)      -          (908)      -
costs (a)
 Restructuring        (42)       (2)        (139)      (44)       (307)
Non-GAAP research and     $ 241,254  $ 238,352  $ 227,337  $ 479,606  $
development                                                           450,113
GAAP selling and          $         $         $         $         $ 
marketing:                41,034     40,066     40,390     81,100     78,542
 Stock-based          (3,458)    (3,036)    (3,207)    (6,494)    (5,861)
compensation
 Acquisition-related  (50)       (46)       -          (96)       -
costs (a)
 Restructuring        (7)        7          -          -          -
Non-GAAP selling and      $         $         $         $         $ 
marketing                 37,519     36,991     37,183     74,510     72,681
GAAP general and          $         $         $         $         $ 
administrative:           25,718     25,705     23,631     51,423     48,415
 Stock-based          (5,582)    (4,859)    (3,104)    (10,441)   (6,642)
compensation
 Acquisition-related  (7)        (39)       -          (46)       -
costs (a)
 Restructuring        (810)      (120)      (428)      (930)      (879)
 Legal/Tax related    (250)      -          -          (250)      -
matters
Non-GAAP general and      $         $         $         $         $ 
administrative            19,069     20,687     20,099     39,756     40,894

     Acquisition-related costs include the step-up in fair value of acquired
     inventory that was sold during the period, and the amortization of
(a) retention bonuses required by the terms of the acquisition. Restructuring
     costs related to recently completed acquisitions are included within
     "Restructuring" in the table above.
     For purposes of calculating non-GAAP diluted net income per share, the
(b) GAAP diluted weighted average shares outstanding is adjusted to exclude
     the benefits of stock compensation costs attributable to future services
     and not yet recognized in the financial statements.



Marvell Technology Group Ltd.
Condensed Consolidated Balance Sheets
(Unaudited)
(In thousands)
                                                   July 28,      January 28,
Assets                                             2012          2012
Current assets:
 Cash, cash equivalents, and short-term            $ 2,134,193   $ 2,246,498
 investments
 Accounts receivable, net                          390,772       407,263
 Inventories                                       345,712       354,119
 Prepaid expenses and other current assets         58,904        71,081
 Total current assets                         2,929,581     3,078,961
Property and equipment, net                        381,154       383,801
Long-term investments                              18,103        23,215
Goodwill and acquired intangible assets, net       2,146,118     2,173,496
Other non-current assets                           109,596       108,146
  Total assets                                 $ 5,584,552   $ 5,767,619
Liabilities and Shareholders' Equity
Current liabilities:
 Accounts payable                                  $  335,100  $   304,695
 Accrued liabilities                               223,508       224,900
 Deferred income                                   67,840        59,959
 Total current liabilities                         626,448       589,554
Other long-term liabilities                        154,990       164,047
  Total liabilities                            781,438       753,601
Shareholders' equity:
 Common stock                                      1,115         1,167
 Additional paid-in capital                        3,317,578     3,683,112
 Accumulated other comprehensive income            1,378         776
 Retained earnings                                 1,483,043     1,328,963
  Total shareholders' equity                   4,803,114     5,014,018
  Total liabilities and shareholders' equity   $ 5,584,552   $ 5,767,619



Marvell Technology Group Ltd.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(in thousands)
                                 Three Months Ended     Six Months Ended
                                 July 28,    July 30,   July 28,   July 30,
                                 2012        2011       2012       2011
Cash flows from operating
activities:
Net income                       $  93,074  $ 192,392  $ 187,617  $  339,253
Adjustments to reconcile net
income to net cash provided

 by operating activities:
 Depreciation and amortization   21,285      22,437     42,484     46,474
 Stock-based compensation        33,228      30,355     60,420     57,835
 Amortization of acquired        13,023      11,138     27,378     25,479
 intangible assets
 Other expense, net              2,272       3,291      5,175      7,145
 Excess tax benefits from        (3)         (11)       (44)       (14)
 stock-based compensation
 Changes in assets and
 liabilities:
  Accounts receivable            26,610      19,711     16,491     53,649
  Inventories                    7,832       (22,897)   8,033      (76,004)
  Prepaid expenses and other     11,393      16,794     15,635     17,438
  assets
  Accounts payable               6,288       12,294     27,537     6,999
  Accrued liabilities and other  (4,204)     5,359      13,939     (91)
  Accrued employee compensation  (24,033)    (14,387)   (24,681)   (29,267)
  Deferred income                2,427       (13,063)   7,881      (8,334)
        Net cash provided by     189,192     263,413    387,865    440,562
        operating activities
Cash flows from investing
activities:
 Purchases of marketable         (225,255)   (462,705)  (646,907)  (1,139,884)
 securities
 Purchases of strategic          (750)       (503)      (5,750)    (2,253)
 investments
 Sales and maturities of         322,532     408,522    881,309    681,069
 investments
 Cash paid for acquisitions,     —           (430)                 (16,760)
 net
 Purchases of technology         (4,407)     (3,325)    (6,452)    (6,615)
 licenses
 Purchases of property and       (10,830)    (25,227)   (29,734)   (42,245)
 equipment
        Net cash provided by
        (used in) investing      81,290      (83,668)   192,466    (526,688)
        activities
Cash flows from financing
activities:
 Repurchase of common stock      (250,327)   (135,740)  (473,484)  (939,241)
 Proceeds from employee stock    39,526      36,782     57,329     46,623
 plans
 Minimum tax withholding paid
 on behalf of employees
 for net share settlement       (598)       (234)      (9,477)    (4,868)
 Dividend payment to             (33,537)    —          (33,537)   —
 shareholders
 Principal payments on capital   —           —          —          (511)
 lease obligations
 Excess tax benefits from        3           11         44         14
 stock-based compensation
        Net cash used in         (244,933)   (99,181)   (459,125)  (897,983)
        financing activities
Net increase (decrease) in cash  25,549      80,564     121,206    (984,109)
and cash equivalents
Cash and cash equivalents at     880,559     782,401    784,902    1,847,074
beginning of period
Cash and cash equivalents at     $ 906,108   $ 862,965  $ 906,108  $  862,965
end of period



SOURCE Marvell Technology Group Ltd.

Website: http://www.marvell.com