Marvell Technology Group Ltd. Reports First Quarter of Fiscal Year 2014 Financial Results

   Marvell Technology Group Ltd. Reports First Quarter of Fiscal Year 2014
                              Financial Results

PR Newswire

SANTA CLARA, Calif., May 23, 2013

SANTA CLARA, Calif., May 23, 2013 /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 2014, ended
May 4, 2013.

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

Key 1Q FY2014 Financial Highlights

  oRevenue: $734 Million
  oGAAP Net Income: $53 Million
  oGAAP EPS: $0.11
  oNon-GAAP Net Income: $98 Million
  oNon-GAAP EPS: $0.19
  oFree Cash Flow: $53 Million

2Q FY2014 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 4, 2013.

  oRevenue is expected to be in the range of $770 to $810 Million.
  oGAAP Gross Margin is expected to be in the range of 52.2% +/- 100 bps.
    Non-GAAP Gross Margin is expected to be in the range of 52.5% +/- 100 bps.
  oGAAP Operating Expenses are expected to be in the range of $370 Million
    +/- $10 Million. Non-GAAP Operating Expenses to be in the range of $315
    Million +/- $10 Million.
  oGAAP EPS expected to be in the range of $0.09 +/- $0.02. Non-GAAP EPS
    expected to be in the range of $0.19 +/- $0.02.

1Q FY2014 Summary

Revenue for the first quarter of fiscal 2014 was $734 million, a 5 percent
sequential decrease from $775 million in the fourth quarter of fiscal 2013,
ended February 2, 2013, and a 8 percent decrease from revenue of $796 million
in the first quarter of fiscal 2013, ended April 28, 2012.

GAAP net income for the first quarter of fiscal 2014 was $53 million, or $0.11
per share (diluted), compared with GAAP net income of $50 million, or $0.09
per share (diluted), for the fourth quarter of fiscal 2013, and $95 million,
or $0.16 per share (diluted), for the first quarter of fiscal 2013. 

Non-GAAP net income was $98 million, or $0.19 per share (diluted), for the
first quarter of fiscal 2014, compared with non-GAAP net income of $104
million, or $0.19 per share (diluted), for the fourth quarter of fiscal 2013,
and $139 million, or $0.23 per share (diluted), for the first quarter of
fiscal 2013.

"Our results in the first quarter were at the high-end of our guidance mainly
due to better than normal seasonal demand and share gains in our storage and
networking end markets," said Dr. Sehat Sutardja, Marvell's Chairman and Chief
Executive Officer. "Starting in the second quarter of fiscal 2014, we expect
many of our investments and key initiatives across all of our end markets to
produce tangible results. More specifically, we expect growth to be driven by
increased traction in areas such as mobile handsets, tablets, connectivity and
SSDs."

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 4, 2013, February 2, 2013,
and April 28, 2012 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 first quarter of fiscal 2014 was 54.3 percent,
compared to 52.2 percent for the fourth quarter of fiscal 2013 and 54.0
percent for the first quarter of fiscal 2013.

Non-GAAP gross margin for the first quarter of fiscal 2014 was 54.6 percent,
compared to 53.2 percent for the fourth quarter of fiscal 2013 and 54.5
percent for the first quarter of fiscal 2013.

Shares used to compute GAAP net income per diluted share for the first quarter
of fiscal 2014 were 505 million shares, compared with 528 million shares in
the fourth quarter of fiscal 2013 and 595 million shares in the first quarter
of fiscal 2013. Shares used to compute non-GAAP net income per diluted share
for the first quarter of fiscal 2014 were 522 million shares, compared with
544 million shares for the fourth quarter of fiscal 2013 and 606 million
shares for the first quarter of fiscal 2013. The decrease in shares used to
compute both Marvell's GAAP and non-GAAP net income per diluted share was
primarily due to Marvell's share repurchase program.

Cash flow from operations for the first quarter of fiscal 2014 was $84
million, compared to the $205 million reported in the fourth quarter of fiscal
2013 and the $199 million reported in the first quarter of fiscal 2013. Free
cash flow for the first quarter of fiscal 2014 was $53 million, compared to
the $161 million reported in the fourth quarter of fiscal 2013 and the $178
million reported in the first quarter of fiscal 2013. 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 share repurchase program, Marvell repurchased approximately 20
million shares for a total of $200 million in the first quarter of fiscal
2014. Over the past eleven quarters, Marvell has repurchased and retired
approximately 204 million shares, or about 29 percent, of its outstanding
shares.

Marvell also paid a quarterly dividend of $0.06 per share on April 4, 2013 to
all shareholders of record as of March 14, 2013. Marvell intends to pay its
next quarterly dividend of $0.06 per share on July 3, 2013 to all shareholders
of record as of June 13, 2013.

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, 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 23, 2013 at 1:45
p.m. Pacific Time to discuss results for the first quarter of fiscal 2014.
Interested parties may join the conference call by dialing 1-866-318-8611 or
1-617-399-5130, pass-code 64582267. 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 23, 2013. 

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 providing complete silicon solutions enabling
the digital connected lifestyle. From mobile communications to storage, 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 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.

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 regarding investments and key
initiatives across its end markets producing tangible results starting in the
second quarter; expectations regarding increased traction in areas such as
mobile handsets, tablets, connectivity and SSDs; statements regarding its
dividend program including the declaration of, timing of, funding of and
quarterly amount of dividends; statements concerning Marvell's use of non-GAAP
financial measures as important supplemental information; and statements
relating to its financial outlook for the second quarter of fiscal 2014. 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; 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;
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; 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 quarter
ended May 4, 2013, 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 2, 2013 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
                                          May 4,      February 2,   April 28,
                                          2013        2013          2012
Net revenue                               $ 734,369   $  775,294   $ 796,351
Cost of goods sold                        335,438     370,833       366,322
Gross profit                              398,931     404,461       430,029
Operating expenses:
       Research and development           279,052     273,685       255,970
       Selling and marketing              39,989      42,319        40,066
       General and administrative         26,323      32,577        25,705
       Amortization and write-off of      10,686      12,268        14,355
       acquired intangible assets
        Total operating expenses      356,050     360,849       336,096
Operating income                          42,881      43,612        93,933
Interest and other income, net            3,160       6,225         1,057
Income before income taxes                46,041      49,837        94,990
Provision (benefit) for income taxes      (7,168)     (315)         447
Net income                                $  53,209  $   50,152  $  94,543
Basic net income per share                $        $         $   
                                          0.11        0.10          0.16
Diluted net income per share              $        $         $   
                                          0.11        0.09          0.16
Shares used in computing basic earnings   502,180     525,804       580,024
per share
Shares used in computing diluted earnings 505,387     528,082       594,739
per share







Marvell Technology Group Ltd.
Condensed Consolidated Balance Sheets
(Unaudited)
(In thousands)
                                                    May 4,        February 2,
Assets                                              2013          2013
Current assets:
    Cash, cash equivalents, and short-term          $ 1,732,643   $ 1,918,990
    investments
    Accounts receivable, net                        370,350       330,238
    Inventories                                     270,652       250,420
    Prepaid expenses and other current assets       79,269        85,698
     Total current assets                       2,452,914     2,585,346
Property and equipment, net                         384,612       387,027
Long-term investments                               16,550        16,769
Goodwill and acquired intangible assets, net        2,114,893     2,121,793
Other non-current assets                            152,198       150,829
     Total assets                               $ 5,121,167   $ 5,261,764
Liabilities and Shareholders' Equity
Current liabilities:
    Accounts payable                                $  307,393  $  286,552
    Accrued expenses                                246,432       261,186
    Deferred income                                 59,270        60,150
     Total current liabilities                  613,095       607,888
Other non-current liabilities                       155,631       169,281
     Total liabilities                          768,726       777,169
Shareholders' equity:
    Common stock                                    988           1,017
    Additional paid-in capital                      2,789,534     2,945,643
    Accumulated other comprehensive income          2,176         1,148
    Retained earnings                               1,559,743     1,536,787
     Total shareholders' equity                 4,352,441     4,484,595
     Total liabilities and shareholders'        $ 5,121,167   $ 5,261,764
    equity



Marvell Technology Group Ltd.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(in thousands)
                                                        Three Months Ended
                                                        May 4,      April 28,
                                                        2013        2012
Cash flows from operating activities:
Net income                                              $  53,209  $  94,543
Adjustments to reconcile net income to net cash
provided
 by operating activities:
  Depreciation and amortization                         24,966      21,199
  Stock-based compensation                              33,513      27,192
  Amortization of acquired intangible assets            10,686      14,355
  Other expense, net                                    2,523       2,903
  Excess tax benefits from stock-based compensation     (7)         (41)
  Changes in assets and liabilities:
   Accounts receivable                                (40,112)    (10,119)
   Inventories                                        (20,123)    201
   Prepaid expenses and other assets                  6,802       4,242
   Accounts payable                                   28,936      21,249
   Accrued expenses and other liabilities             (20,081)    18,143
   Accrued employee compensation                      4,423       (648)
   Deferred income                                    (880)       5,454
   Net cash provided by operating activities      83,855      198,673
Cash flows from investing activities:
  Purchases of available-for-sale securities            (306,838)   (421,652)
  Sales and maturities of available-for-sale            335,771     558,777
  securities
  Purchases of strategic investments                    —           (5,000)
  Cash paid for acquisitions, net                       (2,551)     —
  Purchases of technology licenses                      (5,860)     (2,045)
  Purchases of property and equipment                   (20,080)    (18,904)
   Net cash provided by investing activities      442         111,176
Cash flows from financing activities:
  Repurchase of common stock (a)                        (216,694)   (223,157)
  Proceeds from employee stock plans                    19,805      17,803
  Minimum tax withholding paid on behalf of employees
  for net share settlement                             (9,378)     (8,879)
  Dividend payment to shareholders                      (30,253)    —
  Payment on technology license obligations             (5,317)     —
  Excess tax benefits from stock-based compensation     7           41
   Net cash used in financing activities          (241,830)   (214,192)
Net decrease in cash and cash equivalents               (157,533)   95,657
Cash and cash equivalents at beginning of period        751,953     784,902
Cash and cash equivalents at end of period              $ 594,420   $ 880,559

     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 19.9 million
(a) shares repurchased for $200.2 million in the first quarter of fiscal
     2014, adjusted for repurchases made in the final three days of the
     current and previous quarters that are accrued but not yet paid due to
     the standard three-day settlement period.



Marvell Technology Group Ltd.
Reconciliations from GAAP to Non-GAAP
(Unaudited)
(In thousands, except per share amounts)
                                             Three Months Ended
                                             May 4,      February   April 28,
                                                         2,
                                             2013        2013       2012
GAAP net income                              $  53,209  $        $  94,543
                                                         50,152
Stock-based compensation                     33,513      36,486     27,192
Amortization of acquired intangible assets   10,686      12,268     14,355
Acquisition-related costs (a)                465         295        2,456
Restructuring                                228         154        115
Legal/Tax related matters(b)                 -           5,008      -
Non-GAAP net income                          $  98,101  $         $ 138,661
                                                         104,363
GAAP weighted average shares - diluted       505,387     528,082    594,739
          Non-GAAP adjustment                17,094      16,196     10,814
Non-GAAP weighted average shares diluted (c) 522,481     544,278    605,553
GAAP diluted net income per share            $        $      $   
                                             0.11        0.09       0.16
Non-GAAP diluted net income per share       $        $      $   
                                             0.19        0.19       0.23
GAAP gross profit:                           $ 398,931   $         $ 430,029
                                                         404,461
          Stock-based compensation           1,867       2,300      2,123
          Acquisition-related costs (a)      -           -          1,929
          Legal/Tax related matters(b)       -           5,698      -
Non-GAAP gross profit                        $ 400,798   $         $ 434,081
                                                         412,459
GAAP gross margin                            54.3%       52.2%      54.0%
          Stock-based compensation           0.3%        0.3%       0.3%
          Acquisition-related costs (a)      -           -          0.2%
          Legal/Tax related matters(b)       -           0.7%       -
Non-GAAP gross margin                        54.6%       53.2%      54.5%
GAAP research and development:               $ 279,052   $         $ 255,970
                                                         273,685
          Stock-based compensation           (23,279)    (24,997)   (17,174)
          Acquisition-related costs (a)      (400)       (262)      (442)
          Restructuring                      -           (1)        (2)
          Legal/Tax related matters(b)       -           690        -
Non-GAAP research and development            $ 255,373   $         $ 238,352
                                                         249,115
GAAP selling and marketing:                  $  39,989  $        $  40,066
                                                         42,319
          Stock-based compensation           (3,392)     (3,683)    (3,036)
          Acquisition-related costs (a)      (45)        (14)       (46)
          Restructuring                      -           -          7
Non-GAAP selling and marketing               $  36,552  $        $  36,991
                                                         38,622
GAAP general and administrative:             $  26,323  $        $  25,705
                                                         32,577
          Stock-based compensation           (4,975)     (5,506)    (4,859)
          Acquisition-related costs (a)      (20)        (19)       (39)
          Restructuring                      (228)       (153)      (120)
Non-GAAP general and administrative          $  21,100  $        $  20,687
                                                         26,899
          Acquisition-related costs include the step-up in fair value of
(a)      acquired inventory that was sold during the period, and the
          amortization of retention bonuses required by the terms of the
          acquisition.
          Legal/Tax related matters during the three months ended February 2,
(b)      2013 includes an expense of $5.7 million related to an ongoing
          litigation matter. The amount recorded does not relate to Marvell's
          litigation with Carnegie Mellon University (CMU).
          For purposes of calculating non-GAAP diluted net income per share,
          the GAAP diluted weighted average shares outstanding is adjusted to
(c)      exclude 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.
Reconciliations from GAAP to Non-GAAP Outlook
(Unaudited)
(In millions, except per share amounts)
                                                           Q2 FY2014
Note : Amounts represent the midpoint of the expected      Outlook
range
GAAP gross margin                                          52.2%
 Stock-based compensation, acquisition related costs,  0.3%
and other
Non-GAAP gross margin                                      52.5%
                                                           Q2 FY2014
                                                           Outlook
GAAP operating expenses                                    $        
                                                           370
 Stock-based compensation, acquisition-related costs,
restructuring,                                             (55)
 amortization of intangible assets and other
Non-GAAP operating expenses                                $        
                                                           315
                                                           Q2 FY2014
                                                           Outlook
GAAP diluted earnings per share                            $       
                                                           0.09
 Stock-based compensation, acquisition-related costs,
restructuring,
                                                           0.10
 amortization of intangible assets and other
Non-GAAP earnings per share                                $       
                                                           0.19

SOURCE Marvell Technology Group Ltd.

Website: http://www.marvell.com