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
Santa Clara, California (November 15, 2012) – 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.
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 June 21, 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.
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.
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.
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