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

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

Revenue: $781 Million, a 4 percent sequential decrease

GAAP Net Income: $69 Million, EPS of $0.12

Non-GAAP Net Income: $113 Million, EPS of $0.20

Free Cash Flow: $113 Million, 14 Percent of Revenue

PR Newswire

SANTA CLARA, Calif., Nov. 15, 2012

SANTA CLARA, Calif., Nov. 15, 2012 /PRNewswire/ --Marvell Technology Group
Ltd. (NASDAQ: MRVL), a global leader in integrated silicon solutions, today
reported financial results for the third quarter of fiscal 2013, ended October
27, 2012.

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

Revenue for the third quarter of fiscal 2013 was $781 million, a 4 percent
sequential decrease from $816 million in the second quarter of fiscal 2013,
ended July 28, 2012, and a decrease of 18 percent from $950 million in the
third quarter of fiscal 2012, ended October 29, 2011.

GAAP net income for the third quarter of fiscal 2013 was $69 million, or $0.12
per share (diluted), compared with GAAP net income of $93 million, or $0.16
per share (diluted), for the second quarter of fiscal 2013, and $195 million,
or $0.32 per share (diluted), for the third quarter of fiscal 2012. 

Non-GAAP net income was $113 million, or $0.20 per share (diluted), for the
third quarter of fiscal 2013, compared with non-GAAP net income of $142
million, or $0.24 per share (diluted), for the second quarter of fiscal 2013
and $244 million, or $0.40 per share (diluted), for the third quarter of
fiscal 2012.

"Our results in the third quarter were affected primarily by the slowdown in
PC demand. Despite the near-term softness in PCs, we are focused on growing
our overall storage business through share gains in HDDs and growth in SSDs,"
said Dr. Sehat Sutardja, Marvell's Chairman and Chief Executive Officer. "We
remain confident in our investments and multiple long-term growth
opportunities. We also remain committed to returning cash to our shareholders
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 October 27, 2012, July 28, 2012
and October 29, 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 third quarter of fiscal 2013 was 52 percent,
compared to 53.2 percent for the second quarter of fiscal 2013 and 56.6
percent for the third quarter of fiscal 2012.

Non-GAAP gross margin for the third quarter of fiscal 2013 was 52.3 percent,
compared to 53.6 percent for the second quarter of fiscal 2013 and 56.8
percent for the third quarter of fiscal 2012.

Shares used to compute GAAP net income per diluted share for the third quarter
of fiscal 2013 were 559 million shares, compared with 570 million shares in
the second quarter of fiscal 2013 and 613 million shares in the third quarter
of fiscal 2012. Shares used to compute non-GAAP net income per diluted share
for the third quarter of fiscal 2013 were 578 million shares, compared with
587 million shares for the second quarter of fiscal 2013 and 615 million
shares for the third quarter of fiscal 2012.

Cash flow from operations for the third quarter of fiscal 2013 was $137
million, compared to the $189 million reported in the second quarter of fiscal
2013 and the $262 million reported in the third quarter of fiscal 2012. Free
cash flow for the third quarter of fiscal 2013 was $113 million, compared to
the $174 million reported in the second quarter of fiscal 2013 and the $239
million reported in the third 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 23
million shares for a total of $203 million in the third quarter of fiscal
2013. Over the past nine quarters, Marvell has repurchased and retired
approximately 150 million shares, or about 22 percent, of its outstanding
shares.

Marvell also paid a 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
its next quarterly dividend of $0.06 per share on December 21, 2012 to all
shareholders of record as of December 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 November 15, 2012 at 1:45 p.m.
Pacific Time to discuss results for the third quarter of fiscal 2013.
Interested parties may join the conference call by dialing 1- 866-578-5771 or
1-617-213-8055, pass-code 32388248. 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
December 14, 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, the GAAP weighted average shares outstanding
(diluted) is adjusted to exclude the potential benefits of stock-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.

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 investments and
long-term growth opportunities; share repurchase and dividend programs;
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; any costs relating to current and
future litigation; Marvell's ability to develop and introduce new and enhanced
products in a timely and cost effective manner; uncertainty in the worldwide
economic conditions; 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; and other risks detailed in
Marvell's SEC filings from time to time. When Marvell files its Form 10-Q for
the quarter ended October 27, 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 July 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             Nine Months Ended
                       October    July 28,  October   October 27,  October 29,
                       27,                  29,
                       2012       2012      2011      2012         2011
Net revenue            $        $         $       $            $
                       780,881    816,104   950,417   2,393,336   2,650,339
Cost of goods sold     374,503    381,839   412,100   1,122,664    1,124,692
Gross profit           406,378    434,265   538,317   1,270,672    1,525,647
Operating expenses:
  Research and         263,615    264,175   266,255   783,760      758,396
  development
  Selling and          38,398     41,034    40,500    119,498      119,042
  marketing
  General and          24,514     25,718    29,021    75,937       77,436
  administrative
  Amortization of
  acquired intangible  13,054     13,023    11,155    40,432       36,634
  assets
         Total
         operating     339,581    343,950   346,931   1,019,627    991,508
         expenses
Operating income       66,797     90,315    191,386   251,045      534,139
Interest and other     2,387      5,864     7,729     9,308        9,575
income, net
Income before income   69,184     96,179    199,115   260,353      543,714
taxes
Provision for income   368        3,105     3,994     3,920        9,340
taxes
Net income             $       $        $       $          $  
                       68,816     93,074    195,121   256,433      534,374
Basic net income per   $      $      $      $       $     
share                   0.12     0.17        0.32  0.45         0.87
Diluted net income per $      $      $      $       $     
share                   0.12     0.16        0.32  0.45         0.85
Shares used in
computing basic        553,049    562,362   600,504   565,145      615,987
earnings per share
Shares used in
computing diluted      559,348    570,325   613,499   574,804      631,257
earnings per share



Marvell Technology Group Ltd.
Reconciliations from GAAP to Non-GAAP
(Unaudited)
(In thousands, except per share amounts)
                          Three Months Ended            Nine Months Ended
                          October   July 28,  October   October     October
                          27,                 29,       27,         29,
                          2012      2012      2011      2012        2011
GAAP net income           $       $        $       $         $  
                          68,816   93,074    195,121  256,433     534,374
Stock-based compensation  30,374    33,228    30,611    90,794      88,446
Amortization of acquired  13,054    13,023    11,155    40,432      36,634
intangible assets
Acquisition-related costs 523       1,577     -         4,556       -
(a)
Restructuring             129       859       105       1,103       1,291
Legal/Tax related matters -         250       7,459     250         7,459
Non-GAAP net income       $        $         $       $         $  
                          112,896  142,011   244,451  393,568     668,204
GAAP weighted average     559,348   570,325   613,499   574,804     631,257
shares - diluted
      Non-GAAP adjustment 18,452    16,302    1,558     15,190      2,983
Non-GAAP weighted average 577,800   586,627   615,057   589,994     634,240
shares diluted (b)
GAAP diluted net income   $      $      $      $       $    
per share                  0.12   0.16               0.45       0.85
                                              0.32
Non-GAAP diluted net      $      $      $      $       $    
income per share          0.20   0.24               0.67       1.05
                                              0.40
GAAP gross profit:        $        $         $       $           $
                          406,378  434,265   538,317  1,270,672  1,525,647
      Stock-based         1,944     1,775     1,940     5,842       5,551
      compensation
      Acquisition-related -         1,054     -         2,983       -
      costs (a)
Non-GAAP gross profit     $        $         $       $           $
                          408,322  437,094   540,257  1,279,497  1,531,198
GAAP gross margin         52.0%     53.2%     56.6%     53.1%       57.6%
      Stock-based         0.3%      0.2%      0.2%      0.2%        0.2%
      compensation
      Acquisition-related -         0.2%      -         0.2%        -
      costs (a)
Non-GAAP gross margin     52.3%     53.6%     56.8%     53.5%       57.8%
GAAP research and         $        $         $       $         $  
development:              263,615  264,175   266,255  783,760     758,396
      Stock-based         (22,565)  (22,413)  (21,905)  (62,152)    (63,626)
      compensation
      Acquisition-related (458)     (466)               (1,366)     -
      costs (a)
      Restructuring       (2)       (42)      (1)       (46)        (308)
      Legal/Tax related   -         -         (3,137)   -           (3,137)
      matters
Non-GAAP research and     $        $         $       $         $  
development               240,590  241,254   241,212  720,196     691,325
GAAP selling and          $       $        $      $         $  
marketing:                38,398   41,034    40,500   119,498     119,042
      Stock-based         (3,101)   (3,458)   (3,402)   (9,595)     (9,263)
      compensation
      Acquisition-related (57)      (50)      -         (153)       -
      costs (a)
      Restructuring       3         (7)       -         3           -
Non-GAAP selling and      $       $        $      $         $  
marketing                 35,243   37,519    37,098   109,753     109,779
GAAP general and          $       $        $      $        $   
administrative:           24,514   25,718    29,021   75,937      77,436
      Stock-based         (2,764)   (5,582)   (3,364)   (13,205)    (10,006)
      compensation
      Acquisition-related (8)       (7)       -         (54)        -
      costs (a)
      Restructuring       (130)     (810)     (104)     (1,060)     (983)
      Legal/Tax related   -         (250)     (4,322)   (250)       (4,322)
      matters
Non-GAAP general and      $       $        $      $        $   
administrative            21,612   19,069    21,231   61,368      62,125
      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
      GAAP diluted weighted average shares outstanding is adjusted to exclude
(b)  the potential benefits of stock-based compensation costs expected to be
      incurred in future periods but not yet recognized in the financial
      statements.



Marvell Technology Group Ltd.
Condensed Consolidated Balance Sheets
(Unaudited)
(In thousands)
                                                  October 27,    January 28,
Assets                                            2012           2012
Current assets:
 Cash, cash equivalents, and short-term           $ 2,016,799   $ 2,246,498
 investments
 Accounts receivable, net                         374,770        407,263
 Inventories                                      323,997        354,119
 Prepaid expenses and other current assets        62,264         71,081
      Total current assets                        2,777,830      3,078,961
Property and equipment, net                       376,437        383,801
Long-term investments                             18,103         23,215
Goodwill and acquired intangible assets, net      2,134,061      2,173,496
Other non-current assets                          119,523        108,146
      Total assets                                $ 5,425,954   $ 5,767,619
Liabilities and Shareholders' Equity
Current liabilities:
 Accounts payable                                 $   291,366  $   304,695
 Accrued liabilities                              249,645        224,900
 Deferred income                                  59,458         59,959
      Total current liabilities                   600,469        589,554
Other long-term liabilities                       149,191        164,047
      Total liabilities                           749,660        753,601
Shareholders' equity:
 Common stock                                     1,073          1,167
 Additional paid-in capital                       3,153,463      3,683,112
 Accumulated other comprehensive income           3,375          776
 Retained earnings                                1,518,383      1,328,963
      Total shareholders' equity                  4,676,294      5,014,018
      Total liabilities and shareholders' equity  $ 5,425,954   $ 5,767,619





Marvell Technology Group Ltd.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(in thousands)
                        Three Months Ended        Nine Months Ended
                        October 27,  October 29,  October 27,    October 29,
                        2012         2011         2012           2011
Cash flows from
operating activities:
Net income              $         $          $   256,433  $   534,374
                        68,816       195,121
Adjustments to
reconcile net income to
net cash provided
 by operating
activities:
  Depreciation and      22,317       20,179       64,801         66,653
  amortization
  Stock-based           30,374       30,611       90,794         88,446
  compensation
  Amortization of
  acquired intangible   13,054       11,155       40,432         36,634
  assets
  Other expense, net    1,260        4,266        6,435          11,411
  Excess tax benefits
  from stock-based      (5)          (85)         (49)           (99)
  compensation
  Changes in assets and
  liabilities:
   Accounts           16,002       (45,351)     32,493         8,298
  receivable
   Inventories        21,601       12,037       29,634         (63,967)
   Prepaid expenses
  and                   358          16,791       15,993         34,229
   other assets
   Accounts payable   (54,674)     (2,806)      (27,137)       4,193
   Accrued
  liabilities and       (3,653)      (17,939)     10,286         (18,030)
   other
   Accrued employee   29,509       36,191       4,828          6,924
   compensation
   Deferred income    (8,382)      1,417        (501)          (6,917)
   Net cash
  provided by           136,577      261,587      524,442        702,149
   operating
  activities
Cash flows from
investing activities:
  Purchases of          (558,457)    (443,008)    (1,205,364)    (1,582,892)
  marketable securities
  Purchases of          —            (1,250)      (5,750)        (3,503)
  strategic investments
  Sales and maturities  436,435      402,145      1,317,744      1,083,214
  of investments
  Cash paid for         (1,000)      (2,000)      (1,000)        (18,760)
  acquisitions, net
  Purchases of          (4,235)      (2,978)      (10,687)       (9,593)
  technology licenses
  Purchases of property (19,356)     (20,085)     (49,090)       (62,330)
  and equipment
  Net cash
  provided by
   (used in)       (146,613)    (67,176)     45,853         (593,864)
  investing
   activities
Cash flows from
financing activities:
  Repurchase of common  (202,987)    (215,155)    (676,471)      (1,154,396)
  stock
  Proceeds from         8,915        8,942        66,244         55,565
  employee stock plans
  Minimum tax
  withholding paid on
  behalf of employees
  for net share        (345)        (304)        (9,822)        (5,172)
  settlement
  Dividend payment to   (33,476)     —            (67,013)       —
  shareholders
  Principal payments on
  capital lease         —            —            —              (511)
  obligations
  Excess tax benefits
  from stock-based      5            85           49             99
  compensation
   Net cash used
  in                    (227,888)    (206,432)    (687,013)      (1,104,415)
   financing
  activities
Net decrease in cash    (237,924)    (12,021)     (116,718)      (996,130)
and cash equivalents
Cash and cash
equivalents at          906,108      862,965      784,902        1,847,074
beginning of period
Cash and cash           $          $  
equivalents at end of   668,184      850,944      $   668,184  $   850,944
period







SOURCE Marvell Technology Group Ltd.

Website: http://www.marvell.com
Website: http://investor.marvell.com