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

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

PR Newswire

SANTA CLARA, Calif., Aug. 22, 2013

SANTA CLARA, Calif., Aug. 22, 2013 /PRNewswire/ -- Marvell (NASDAQ: MRVL), a
global leader in integrated silicon solutions, today reported financial
results for the second quarter of fiscal year 2014, ended August 3, 2013.

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

Key 2Q FY2014 Financial Highlights

  oRevenue: $807 Million
  oGAAP Net Income: $62 Million
  oGAAP EPS: $0.12
  oNon-GAAP Net Income: $118 Million
  oNon-GAAP EPS: $0.23
  oFree Cash Flow: $65 Million

3Q 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 August 21, 2013.

  oRevenue is expected to be in the range of $850 to $890 Million.
  oGAAP Gross Margin is expected to be in the range of 50.7% +/- 100 bps.
    Non-GAAP Gross Margin is expected to be in the range of 51% +/- 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 $0.15 +/- $0.02. Non-GAAP EPS
    expected to be in the range of $0.25 +/- $0.02.

2Q FY2014 Summary

Revenue for the second quarter of fiscal 2014 was $807 million, a 10 percent
sequential increase from $734 million in the first quarter of fiscal 2014,
ended May 4, 2013, and a 1 percent decrease from revenue of $816 million in
the second quarter of fiscal 2013, ended July 28, 2012.

GAAP net income for the second quarter of fiscal 2014 was $62 million, or
$0.12 per share (diluted), compared with GAAP net income of $53 million, or
$0.11 per share (diluted), for the first quarter of fiscal 2014, and $93
million, or $0.16 per share (diluted), for the second quarter of fiscal 2013.


Non-GAAP net income was $118 million, or $0.23 per share (diluted), for the
second quarter of fiscal 2014, compared with non-GAAP net income of $98
million, or $0.19 per share (diluted), for the first quarter of fiscal 2014,
and $142 million, or $0.24 per share (diluted), for the second quarter of
fiscal 2013.

"Our results in the second quarter were at the high-end of our guidance mainly
due to better demand and share gains in our storage end market and strong
double digit growth in our mobile and wireless end markets," said Dr. Sehat
Sutardja, Marvell's Chairman and Chief Executive Officer. "Many of our
customers are introducing new devices using our innovative solutions, which
should drive continued success across all of our end markets. We expect growth
to be driven by increased traction in areas such as mobile handsets, tablets,
connectivity, smart home devices 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 August 3, 2013, May 4, 2013 and
July 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 second quarter of fiscal 2014 was 52.2 percent,
compared to 54.3 percent for the first quarter of fiscal 2014 and 53.2 percent
for the second quarter of fiscal 2013.

Non-GAAP gross margin for the second quarter of fiscal 2014 was 53.0 percent,
compared to 54.6 percent for the first quarter of fiscal 2014 and 53.6 percent
for the second quarter of fiscal 2013.

Shares used to compute GAAP net income per diluted share for the second
quarter of fiscal 2014 were 501 million shares, compared with 505 million
shares in the first quarter of fiscal 2014 and 570 million shares in the
second quarter of fiscal 2013. Shares used to compute non-GAAP net income per
diluted share for the second quarter of fiscal 2014 were 516 million shares,
compared with 522 million shares for the first quarter of fiscal 2014 and 587
million shares for the second 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 second quarter of fiscal 2014 was $86
million, compared to the $84 million reported in the first quarter of fiscal
2014 and the $189 million reported in the second quarter of fiscal 2013. Free
cash flow for the second quarter of fiscal 2014 was $65 million, compared to
the $53 million reported in the first quarter of fiscal 2014 and the $174
million reported in the second 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 7.2
million shares for a total of $83 million in the second quarter of fiscal
2014. Over the past 12 quarters, Marvell has repurchased and retired
approximately 211 million shares, or about 30 percent of its outstanding
shares.

Marvell also paid a quarterly dividend of $0.06 per share on July 3, 2013 to
all shareholders of record as of June 13, 2013. Marvell intends to pay its
next quarterly dividend of $0.06 per share on October 3, 2013 to all
shareholders of record as of September 12, 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, August 22, 2013 at
1:45 p.m. Pacific Time to discuss results for the second quarter of fiscal
2014. Interested parties may join the conference call by dialing
1-866-700-6293 or 1-617-213-8835, pass-code 40320337. 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 22, 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.govas 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 third quarter of fiscal 2014; its innovative
solutions driving continued success across all of our end markets; increased
traction in areas such as mobile handsets, tablets, connectivity, smart home
devices and SSDs; its dividend program including the declaration of, timing
of, funding 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; 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 August 3, 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 Quarterly Report on Form 10-Q for the quarter ended May 4,
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.

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 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                      Holly Zheng
Investor Relations                Media Relations
408-222-8373                      408-222-9202
sukhi@marvell.com                hollyz@marvell.com





Marvell Technology Group Ltd.
Condensed Consolidated Statements of Operations
(Unaudited)
(In thousands, except per share amounts)
                            Three Months Ended            Six Months Ended
                            August 3,  May 4,   July 28,  August 3,  July 28,
                            2013       2013     2012      2013       2012
Net revenue                 $ 807,056  $        $         $          $
                                       734,369  816,104   1,541,425  1,612,455
Cost of goods sold          386,059    335,438  381,839   721,497    748,161
Gross profit                420,997    398,931  434,265   819,928    864,294
Operating expenses:
  Research and development  292,642    279,052  264,175   571,694    520,145
  Selling and marketing     38,548     39,989   41,034    78,537     81,100
  General and               27,192     26,323   25,718    53,515     51,423
  administrative
  Amortization and
  write-off of acquired     10,638     10,686   13,023    21,324     27,378
  intangible assets
     Total operating        369,020    356,050  343,950   725,070    680,046
     expenses
Operating income            51,977     42,881   90,315    94,858     184,248
Interest and other income,  8,253      3,160    5,864     11,413     6,921
net
Income before income taxes  60,230     46,041   96,179    106,271    191,169
Provision (benefit) for     (1,596)    (7,168)  3,105     (8,764)    3,552
income taxes
Net income                  $         $       $        $         $ 
                            61,826     53,209   93,074    115,035   187,617
Basic net income per share  $       $     $      $      $    
                            0.13       0.11     0.17      0.23      0.33
Diluted net income per      $       $     $      $      $    
share                       0.12       0.11     0.16      0.23      0.32
Shares used in computing    494,293    502,180  562,362   498,237    571,193
basic earnings per share
Shares used in computing    500,625    505,387  570,325   503,006    582,532
diluted earnings per share





Marvell Technology Group Ltd.
Condensed Consolidated Balance Sheets
(Unaudited)
(In thousands)
                                                   August 3,     February 2,
Assets                                             2013          2013
Current assets:
 Cash, cash equivalents, and short-term            $ 1,726,198   $ 1,918,990
 investments
 Accounts receivable, net                          430,874       330,238
 Inventories                                       335,320       250,420
 Prepaid expenses and other current assets         66,238        85,698
           Total current assets                    2,558,630     2,585,346
Property and equipment, net                        363,486       372,971
Long-term investments                              16,299        16,769
Goodwill and acquired intangible assets, net       2,104,255     2,121,793
Other non-current assets                           161,574       164,885
           Total assets                            $ 5,204,244   $ 5,261,764
Liabilities and Shareholders' Equity
Current liabilities:
 Accounts payable                                  $  355,164  $   286,552
 Accrued liabilities                               242,953       261,186
 Deferred income                                   75,465        60,150
           Total current liabilities               673,582       607,888
Other non-current liabilities                      138,152       169,281
           Total liabilities                       811,734       777,169
Shareholders' equity:
 Common stock                                      988           1,017
 Additional paid-in capital                        2,801,316     2,945,643
 Accumulated other comprehensive income            (1,572)       1,148
 Retained earnings                                 1,591,778     1,536,787
           Total shareholders' equity              4,392,510     4,484,595
           Total liabilities and shareholders'     $ 5,204,244   $ 5,261,764
           equity





Marvell Technology Group Ltd.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(in thousands)
                                  Three Months Ended      Six Months Ended
                                  August 3,   July 28,    August 3,  July 28,
                                  2013        2012        2013       2012
Cash flows from operating
activities:
Net income                        $  61,826  $  93,074  $ 115,035  $ 187,617
Adjustments to reconcile net
income to net cash provided by
operating activities:
  Depreciation and amortization   25,697      21,285      50,663     42,484
  Stock-based compensation        41,091      33,228      74,604     60,420
  Amortization of acquired        10,638      13,023      21,324     27,378
  intangible assets
  Other expense, net              1,816       2,272       4,339      5,175
  Excess tax benefits from        (25)        (3)         (32)       (44)
  stock-based compensation
  Changes in assets and
  liabilities:
     Accounts receivable          (60,524)    26,610      (100,636)  16,491
     Inventories                  (64,170)    7,832       (84,293)   8,033
     Prepaid expenses and other   12,503      11,393      19,305     15,635
     assets
     Accounts payable             54,933      6,288       83,869     27,537
     Accrued liabilities and
     other non-current            (13,013)    (4,204)     (33,094)   13,939
     liabilities
     Accrued employee             (471)       (24,033)    3,952      (24,681)
     compensation
     Deferred income              16,195      2,427       15,315     7,881
        Net cash provided by      86,496      189,192     170,351    387,865
        operating activities
Cash flows from investing
activities:
  Purchases of                    (164,631)   (225,255)   (471,469)  (646,907)
  available-for-sale securities
  Sales and maturities of         162,909     322,532     498,680    881,309
  available-for-sale securities
  Investments in privately-held   (750)       (750)       (750)      (5,750)
  companies
  Cash paid for acquisitions,     —           —           (2,551)    —
  net
  Purchases of technology         (1,750)     (4,407)     (7,610)    (6,452)
  licenses
  Purchases of property and       (18,981)    (10,830)    (39,061)   (29,734)
  equipment
        Net cash (used in)
        provided by investing     (23,203)    81,290      (22,761)   192,466
        activities
Cash flows from financing
activities:
  Repurchase of common stock (a)  (88,114)    (250,327)   (304,808)  (473,484)
  Proceeds from employee stock    53,316      39,526      73,121     57,329
  plans
  Minimum tax withholding paid
  on behalf of employeesfor net  (510)       (598)       (9,888)    (9,477)
  share settlement
  Dividend payment to             (29,791)    (33,537)    (60,044)   (33,537)
  shareholders
  Payment on technology license   (984)       —           (6,301)    —
  obligations
  Excess tax benefits from        25          3           32         44
  stock-based compensation
        Net cash used in          (66,058)    (244,933)   (307,888)  (459,125)
        financing activities
Net (decrease) increase in cash   (2,765)     25,549      (160,298)  121,206
and cash equivalents
Cash and cash equivalents at      594,420     880,559     751,953    784,902
beginning of period
Cash and cash equivalents at end  $ 591,655   $ 906,108   $ 591,655  $ 906,108
of period

      Marvell records all repurchases as well as investment purchases and
 (a) sales, based on trade date in accordance with U.S. GAAP. Cash paid for
      repurchase of Marvell common shares includes a total of 7.1 million
      shares repurchased for $82.6 million in the second quarter of fiscal
      2014, adjusted for repurchases made within the final three days of
      the current and previous quarters that are accrued but not yet paid due
      to the standard settlement period that normally takes up to three days.





Marvell Technology Group Ltd.
Reconciliations from GAAP to Non-GAAP
(Unaudited)
(In thousands, except per share amounts)
                           Three Months Ended               Six Months Ended
                           August 3,  May 4,     July 28,   August 3, July 28,
                           2013       2013       2012       2013      2012
GAAP net income            $         $         $         $ 115,035 $
                           61,826     53,209     93,074               187,617
Stock-based compensation   41,091     33,513     33,228     74,604    60,420
Amortization of acquired   10,638     10,686     13,023     21,324    27,378
intangible assets
Acquisition-related costs  (1,081)    465        1,577      (616)     4,033
(a)
Restructuring              178        228        859        406       974
Legal/Tax related          5,228      -          250        5,228     250
matters(b)
Non-GAAP net income        $ 117,880  $         $ 142,011  $ 215,981 $
                                      98,101                          280,672
GAAP weighted average      500,625    505,387    570,325    503,006   582,532
shares - diluted
   Non-GAAP adjustment     15,021     17,094     16,302     16,058    13,558
Non-GAAP weighted average  515,646    522,481    586,627    519,064   596,090
shares diluted (c)
GAAP diluted net income    $       $       $       $      $   
per share                  0.12       0.11       0.16       0.23      0.32
Non-GAAP diluted net       $       $       $       $      $   
income per share          0.23       0.19       0.24       0.42      0.47
GAAP gross profit:         $ 420,997  $ 398,931  $ 434,265  $ 819,928 $
                                                                      864,294
   Stock-based             1,868      1,867      1,775      3,735     3,898
   compensation
   Acquisition-related     -          -          1,054      -         2,983
   costs (a)
   Legal/Tax related       4,728      -          -          4,728     -
   matters(b)
Non-GAAP gross profit      $ 427,593  $ 400,798  $ 437,094  $ 828,391 $
                                                                      871,175
GAAP gross margin          52.2%      54.3%      53.2%      53.2%     53.6%
   Stock-based             0.2%       0.3%       0.2%       0.2%      0.2%
   compensation
   Acquisition-related     -          -          0.2%       -         0.2%
   costs (a)
   Legal/Tax related       0.6%       -          -          0.3%      -
   matters(b)
Non-GAAP gross margin      53.0%      54.6%      53.6%      53.7%     54.0%
GAAP research and          $ 292,642  $ 279,052  $ 264,175  $ 571,694 $
development:                                                          520,145
   Stock-based             (28,982)   (23,279)   (22,413)   (52,261)  (39,587)
   compensation
   Acquisition-related     1,135      (400)      (466)      735       (908)
   costs (a)
   Restructuring           -          -          (42)       -         (44)
Non-GAAP research and      $ 264,795  $ 255,373  $ 241,254  $ 520,168 $
development                                                           479,606
GAAP selling and           $         $         $         $        $ 
marketing:                 38,548     39,989     41,034     78,537    81,100
   Stock-based             (3,648)    (3,392)    (3,458)    (7,040)   (6,494)
   compensation
   Acquisition-related     (34)       (45)       (50)       (79)      (96)
   costs (a)
   Restructuring           -          -          (7)        -         -
Non-GAAP selling and       $         $         $         $        $ 
marketing                  34,866     36,552     37,519     71,418    74,510
GAAP general and           $         $         $         $        $ 
administrative:            27,192     26,323     25,718     53,515    51,423
   Stock-based             (6,593)    (4,975)    (5,582)    (11,568)  (10,441)
   compensation
   Acquisition-related     (20)       (20)       (7)        (40)      (46)
   costs (a)
   Restructuring           (178)      (228)      (810)      (406)     (930)
   Legal/Tax related       (500)      -          (250)      (500)     (250)
   matters(b)
Non-GAAP general and       $         $         $         $        $ 
administrative             19,901     21,100     19,069     41,001    39,756

     Acquisition-related costs include the step-up in fair value of acquired
(a) inventory that was sold during the period, the amortization of retention
     bonuses required by the terms of the acquisition and an adjustment for a
     contingent milestone which is not expected to be met.
     Legal/Tax related matters during the three and six months ended August 3,
(b) 2013 includes estimated settlement fees related to ongoing litigation
     matters. The amounts recorded do 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 exclude
(c) 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)
                                                                Q3 FY2014
Note : Amounts represent the midpoint of the expected range     Outlook
GAAP gross margin                                               50.7%
 Stock-based compensation, acquisition related costs, and       0.3%
 other
Non-GAAP gross margin                                           51.0%
                                                                Q3 FY2014
                                                                Outlook
GAAP operating expenses                                         $     370
 Stock-based compensation, acquisition-related costs,
 restructuring,
 amortization of intangible assets and other                    (55)
Non-GAAP operating expenses                                     $     315
                                                                Q3 FY2014
                                                                Outlook
GAAP diluted earnings per share                                 $     0.15
 Stock-based compensation, acquisition-related costs,
 restructuring,
 amortization of intangible assets and other                    0.10
Non-GAAP earnings per share                                     $     0.25

SOURCE Marvell

Website: http://www.marvell.com