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Form 8-K MARVELL TECHNOLOGY GROUP For: Feb 19

February 19, 2015 4:13 PM EST

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): February 19, 2015

 

 

MARVELL TECHNOLOGY GROUP LTD.

(Exact name of registrant as specified in its charter)

 

 

 

Bermuda   000-30877   77-0481679

(State or other jurisdiction

of incorporation)

 

(Commission

File Number)

 

(I.R.S. Employer

Identification No.)

Canon’s Court

22 Victoria Street

Hamilton HM 12

Bermuda

(Address of principal executive offices)

(441) 296-6395

(Registrant’s telephone number, including area code)

N/A

(Former name or former address, if changed since last report.)

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligations of the registrant under any of the following provisions (see General Instruction A.2. below):

 

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

 


Item 2.02 Results of Operations and Financial Condition.

The information in Item 2.02 of this Current Report, including the accompanying Exhibit 99.1, is being furnished and shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of Section 18. The information in Item 2.02 of this Current Report shall not be incorporated by reference into any registration statement or other document filed pursuant to the Securities Act of 1933, as amended, or the Exchange Act, regardless of any general incorporation language contained in such filing.

On February 19, 2015, Marvell Technology Group Ltd. (“Marvell”) issued a press release regarding its financial results for its fourth fiscal quarter and fiscal year ended January 31, 2015. A copy of the press release is furnished herewith as Exhibit 99.1 and is incorporated by reference herein.

Discussion of Non-GAAP Financial Measures

In addition to disclosing financial results calculated in accordance with U.S. generally accepted accounting principles (“GAAP”), Marvell also reports non-GAAP financial measures. Pursuant to the requirements of Regulation G, Marvell has provided reconciliations with the press release of the non-GAAP financial measures to the most directly comparable GAAP financial measures included in the press release. Non-GAAP financial measures exclude the effect of share-based compensation expense, amortization and write-off of acquired intangible assets, acquisition-related costs, restructuring and other exit-related costs, litigation settlement 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.

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. Marvell has chosen to provide this information to investors to enable them to perform comparisons of operating results in a manner similar to how Marvell analyzes its operating results internally. Management also believes that these non-GAAP financial measures may be used to facilitate comparisons of Marvell’s results with that of other companies in its industry.

Externally, management believes that investors may find Marvell’s non-GAAP financial measures useful in their assessment of Marvell’s operating performance and the valuation of Marvell. Internally, Marvell’s non-GAAP financial measures are used in the following areas:

 

    Management’s determination of the achievement and measurement of certain performance-based equity awards (adjustments may vary from award to award);

 

    Management’s evaluation of Marvell’s operating performance;

 

    Management’s establishment of internal operating budgets; and

 

    Management’s performance comparisons with internal forecasts and analysis of operating results.

Non-GAAP financial measures are adjusted by the exclusion of the following items:

 

    Share-based compensation expense. Share-based compensation expense relates primarily to employee stock options, restricted stock units and the employee stock purchase plan. Share-based compensation expense is a non-cash expense that is affected by changes in market forces, such as the price of Marvell’s common shares, which is not within the control of management. In addition, the valuation of share-based compensation is highly subjective, and the expense recognized by Marvell may be significantly different than the expense recognized by other companies for similar equity awards, which makes it difficult to assess Marvell’s results compared to its competitors. Accordingly, management excludes this item from its internal operating forecasts and analysis of operating results.

 

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    Amortization and write-off of acquired intangible assets. Purchased intangible assets relate primarily to existing and core technology, and customer relationships of acquired businesses. Management considers these charges non-cash in nature and unrelated to Marvell’s core operating performance.

 

    Acquisition-related costs. Acquisition-related costs primarily include the amortization of retention bonuses required by the terms of the acquisition. Management believes these charges are unrelated to the core operating activities for Marvell, and the frequency and variability in the nature of the charges can vary significantly from period to period. Excluding this data provides investors with a basis to compare Marvell’s performance against the performance of other companies without this variability.

 

    Restructuring and other exit-related costs. Restructuring and other exit-related costs include costs that qualify under U.S. GAAP as restructuring costs, as well as operating expenses related to a product line classified as held-for-sale that did not qualify as discontinued operations. These charges are not directly related to Marvell’s ongoing or core business results. Management regularly excludes such items from internal operating forecasts and analysis of operating results because they are not considered a core operating activity for Marvell and because the frequency and variability in the nature of the charges can vary significantly from period to period. Excluding this data provides investors with a basis to compare Marvell’s performance against the performance of other companies without this variability.

 

    Litigation Settlement. Consistent with U.S. GAAP, the total cost of a litigation settlement is apportioned between past sales and anticipated future sales of the allegedly infringing products. The amount apportioned to past sales is expensed in the current period and the amount apportioned to future sales is expensed over the useful life of the license. Since the amount charged in the current period may relate to several years of past product sales, management regularly excludes such charge from its internal operating forecasts and analysis of its operating results. These charges do not relate to current business activity for Marvell. The frequency and variability in the nature of the charges can fluctuate significantly from period to period. Excluding this data provides investors with a basis to compare Marvell’s current performance against the performance of other companies without this variability

 

    Other. From time to time, Marvell has other costs/benefits that are not directly related to Marvell’s ongoing or core business results. For example, in the quarter ended January 31, 2015, Marvell recorded an expense of $3.8 million for costs associated with the surety bond to appeal the Carnegie Mellon University judgment and other costs. Excluding this data provides investors with a basis to compare Marvell’s performance against the performance of other companies without this variability.

The calculation of non-GAAP net income per share is adjusted for the following item:

 

    Non-GAAP net income per share is calculated by dividing non-GAAP net income by non-GAAP weighted average shares (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 share-based compensation expected to be incurred in future periods but not yet recognized in the financial statements. For GAAP purposes under the treasury stock method, this future share-based compensation is treated as proceeds assumed to be used to repurchase shares. Since Marvell’s non-GAAP net income does not include share-based compensation, management believes the share-based compensation effect on diluted shares outstanding using the treasury stock method should similarly not be included in the calculation of non-GAAP diluted shares outstanding.

 

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Non-GAAP financial measures should be considered supplemental to, and not as a substitute for, or superior to, financial measures calculated in accordance with GAAP. Non-GAAP financial measures have limitations in that they do not reflect all of the costs associated with the operations of Marvell’s business as determined in accordance with GAAP. As a result, you should not consider these measures in isolation or as a substitute for analysis of Marvell’s results as reported under GAAP. Marvell expects to continue to incur expenses similar to the non-GAAP adjustments described above, and exclusion of these items from Marvell’s non-GAAP net income should not be construed as an inference that these costs are unusual, infrequent or non-recurring.

 

Item 8.01 Other Events.

Marvell today announced that it had declared the payment of its quarterly dividend of $0.06 per share to be paid on April 2, 2015 to all shareholders of record as of March 12, 2015. The payment of future quarterly cash dividends is subject to, among other things, the best interests of its shareholders, its results of operations, cash balances and future cash requirements, financial condition, developments in ongoing litigation, statutory requirements of Bermuda law, and other factors that the board of directors may deem relevant.

 

Item 9.01 Financial Statements and Exhibits.

 

  (d) Exhibits.

 

99.1 Press Release dated February 19, 2015

 

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Dated: February 19, 2015

 

MARVELL TECHNOLOGY GROUP LTD.

By:

/s/ Michael Rashkin

Michael Rashkin
Chief Financial Officer

 

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EXHIBIT INDEX

 

Exhibit
No.
   Description
99.1    Press Release dated February 19, 2015

Exhibit 99.1

 

LOGO

For further information, contact:

 

John Spencer Ahn

Investor Relations

408-222-7544

[email protected]

Sue Kim

Media Relations

408-222-1942

[email protected]

Marvell Technology Group Ltd. Reports Fourth Fiscal Quarter and Fiscal Year 2015 Financial Results

Santa Clara, Calif. (February 19, 2015) — Marvell Technology Group Ltd. (NASDAQ: MRVL), a global leader in integrated silicon solutions, today reported financial results for the fourth fiscal quarter and fiscal year 2015, ended January 31, 2015.

Key Fourth Quarter of Fiscal 2015 and Fiscal Year 2015 Financial Highlights

 

  ¡   Revenue: Q4 FY 2015, $857 Million; FY 2015, $3.7 Billion

 

  ¡   GAAP Net Income: Q4 FY 2015, $82 Million; FY 2015, $435 Million

 

  ¡   GAAP Diluted EPS: Q4 FY 2015, $0.16; FY 2015, $0.84

 

  ¡   Non-GAAP Net Income: Q4 FY 2015, $131 Million; FY 2015, $611 Million

 

  ¡   Non-GAAP Diluted EPS: Q4 FY 2015, $0.25; FY2015, $1.15

 

  ¡   Free Cash Flow: Q4 FY 2015, $135 Million; FY 2015, $650 Million

First Quarter of Fiscal 2016 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 February 18, 2015.

 

  ¡   Revenue is expected to be in the range of $810 Million to $830 Million.

 

  ¡   GAAP Gross Margin is expected to be in the range of 50.1% +/- 100 bps. Non-GAAP Gross Margin is expected to be in the range of 50.5% +/- 100 bps.

 

  ¡   GAAP Operating Expenses are expected to be in the range of $360 Million +/- $10 Million. Non-GAAP Operating Expenses to be in the range of $320 Million +/- $10 Million.

 

  ¡   GAAP Diluted EPS expected to be in the range of $0.09 +/- $0.01. Non-GAAP Diluted EPS expected to be in the range of $0.18 +/- $0.01.


Fourth Quarter of Fiscal 2015 and Fiscal Year 2015 Summary

Revenue for the fourth quarter of fiscal 2015 was $857 million, down approximately 8 percent from $930 million in the third quarter of fiscal 2015, ended November 1, 2014, and down approximately 8 percent from $932 million in the fourth quarter of fiscal 2014, ended February 1, 2014.

For the fiscal year ended January 31, 2015, revenue was $3.7 billion, an increase of 9 percent from revenue of $3.4 billion for the fiscal year ended February 1, 2014.

GAAP net income for the fourth quarter of fiscal 2015 was $82 million, or $0.16 per share (diluted), compared with GAAP net income of $115 million, or $0.22 per share (diluted), for the third quarter of fiscal 2015, and $97 million, or $0.19 per share (diluted), for the fourth quarter of fiscal 2014.

For the fiscal year ended January 31, 2015, GAAP net income was $435 million, or $0.84 per share (diluted), compared with GAAP net income of $315 million, or $0.63 per share (diluted), for the fiscal year ended February 1, 2014.

Non-GAAP net income was $131 million, or $0.25 per share (diluted), for the fourth quarter of fiscal 2015, compared with non-GAAP net income of $155 million, or $0.29 per share (diluted), for the third quarter of fiscal 2015 and $151 million, or $0.29 per share (diluted), for the fourth quarter of fiscal 2014.

For the fiscal year ended January 31, 2015, non-GAAP net income was $611 million, or $1.15 per share (diluted), compared with non-GAAP net income of $530 million, or $1.02 per share (diluted) for the fiscal year ended February 1, 2014.

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 January 31, 2015, November 1, 2014 and February 1, 2014 appear in the financial statements below. Non-GAAP net income, where applicable, excludes the effect of share-based compensation, amortization and write-off of acquired intangible assets, acquisition-

 

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related costs, restructuring and other exit related costs, litigation settlement, and certain one-time expenses and benefits.

GAAP gross margin for the fourth quarter of fiscal 2015 was 51.4 percent, compared to 51.1 percent for the third quarter of fiscal 2015 and 48.8 percent for the fourth quarter of fiscal 2014. GAAP gross margin for fiscal year 2015 was 50.3 percent as compared to 51.1 percent in fiscal year 2014.

Non-GAAP gross margin for the fourth quarter of fiscal 2015 was 51.8 percent, compared to 51.0 percent for the third quarter of fiscal 2015 and 50.1 percent for the fourth quarter of fiscal 2014. Non-GAAP gross margin for fiscal year 2015 was as 50.5 percent compared to 51.8 percent in fiscal year 2014.

Shares used to compute GAAP net income per diluted share for the fourth quarter of fiscal 2015 were 522 million shares, compared with 520 million shares in the third quarter of fiscal 2015 and 510 million shares in the fourth quarter of fiscal 2014. Shares used to compute GAAP net income per diluted share for fiscal year 2015 were 521 million shares as compared to 504 million shares for fiscal year 2014.

Shares used to compute non-GAAP net income per diluted share for the fourth quarter of fiscal 2015 were 533 million shares, compared with 533 million shares for the third quarter of fiscal 2015 and 523 million shares for the fourth quarter of fiscal 2014. Shares used to compute non-GAAP net income per share diluted share for fiscal year 2015 was 532 million shares as compared with 519 million shares for fiscal year 2014.

Cash flow from operations for the fourth quarter of fiscal 2015 was $155 million, compared to the $195 million reported in the third quarter of fiscal 2015 and the $100 million reported in the fourth quarter of fiscal 2014. Cash flow from operations for fiscal year 2015 was $742 million, compared to $448 million in fiscal year 2014. Free cash flow for the fourth quarter of fiscal 2015 was $135 million, compared to the $167 million reported in the third quarter of fiscal 2015 and the $82 million reported in the fourth quarter of fiscal 2014. Free cash flow for fiscal year 2015 was $650 million, compared to $356 million in fiscal year 2014. 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.

 

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Under the company’s authorized share repurchase program, Marvell repurchased approximately 1.4 million shares for a total of $20 million in the fourth quarter of fiscal 2015. Marvell paid a quarterly dividend of $0.06 per share on December 29, 2014 to all shareholders of record as of December 11, 2014. Marvell intends to pay its next quarterly dividend of $0.06 per share on April 2, 2015 to all shareholders of record as of March 12, 2015.

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, developments in ongoing litigation, statutory requirements of Bermuda law, and other factors that the board of directors may deem relevant.

Key Fourth Quarter of Fiscal 2015 Product Announcements

 

  ¡   Marvell Launches Octa-Core 64-bit 5-Mode 4G LTE ARMADA Mobile PXA1936 System-on-Chip for High Performance Smartphones and Tablets Globally

 

  ¡   Marvell Launches Highly Integrated Quad-Core 64-bit ARMADA Mobile PXA1908 Platform for the Fast Growing 5-Mode 4G LTE Worldwide Mass Market

 

  ¡   Meizu Launches its Flagship MX4 Pro Premium 4G LTE Smartphone for China Mobile and China Unicom Powered by Marvell’s ARMADA Mobile 5-mode 4G LTE Solution

 

  ¡   Marvell Extends SSD Leadership by Delivering the World’s First DRAM-less NVMe SSD Controller for Mass Market Mobile Computing Solutions with Industry-Leading NANDEdge LDPC Technology Supporting TLC and 3D NAND

 

  ¡   Marvell Launches the World’s First Highly Integrated and Scalable Smart Home Cloud Center for Mobile Internet and Internet of Things

 

  ¡   Skyworth and China Telecom Launch the World’s First Smart TV with Embedded G.hn Powerline Connectivity Powered by Marvell

 

  ¡   Marvell Launches Industry’s First 802.11ac Wave-2 4x4 Processor Featuring 160 MHz Mode and MU-MIMO Extending Its Leadership in Carrier, Enterprise and Residential Wi-Fi Solutions

 

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Conference Call

Marvell will be conducting a conference call on Thursday, February 19, 2015 at 1:45 p.m. Pacific Time to discuss results for the fourth fiscal quarter and fiscal year 2015. Interested parties may join the conference call by dialing 1- 866-318-8614 or 1-617-399-5133, pass-code 39424623. 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 March 19, 2015.

Discussion of Non-GAAP Financial Measures

Non-GAAP financial measures exclude the effect of share-based compensation expense, amortization and write-off of acquired intangible assets, acquisition-related costs, restructuring and other exit-related costs, litigation settlement, 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 share-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 provides 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

 

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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.

Forward-Looking Statements under the Private Securities Litigation Reform Act of 1995

This press release contains forward-looking statements within the meaning of the federal securities laws that involve risks and uncertainties, including: Marvell’s expectations and statements regarding its financial outlook for the first quarter of fiscal 2016; its dividend program including the declaration of, timing of, funding of, payment of and quarterly amount of dividends; and its use of non-GAAP financial measures as important supplemental information. Words such as “anticipates,” “expects,” “intends,” “plans,” “believes,” “seeks,” “estimates,” “can,” “will” and similar expressions identify such forward-looking statements. 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 ability to compete in products and prices in an intensely competitive industry; Marvell’s reliance on the hard disk drive and mobile and wireless markets, which are highly cyclical and intensely competitive; costs and liabilities relating to current and future litigation; 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 and the adoption of those products in the market; seasonality in sales of consumer devices in which Marvell’s products are incorporated; uncertainty in the worldwide economic conditions; risks associated with manufacturing and selling a majority of Marvell’s products and Marvell’s customers’ products outside of the United States; and other risks detailed in Marvell’s SEC filings from time to time. When Marvell files its Annual Report on Form 10-K for the fiscal year ended January 31, 2015, 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 November 1, 2014 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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About Marvell

Marvell (NASDAQ: MRVL) is a global leader in providing complete silicon solutions and Kinoma® software enabling the “Smart Life and Smart Lifestyle.” From mobile communications to storage, Internet of Things (IoT), 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.

 

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Marvell Technology Group Ltd.

Condensed Consolidated Statements of Operations

(Unaudited)

(In thousands, except per share amounts)

 

     Three Months Ended      Year Ended  
     January 31,
2015
     November 1,
2014
     February 1,
2014
     January 31,
2015
    February 1,
2014
 

Net revenue

   $ 857,452       $ 930,136       $ 931,749       $ 3,706,963      $ 3,404,400   

Cost of goods sold

     417,131         454,974         477,252         1,843,706        1,663,730   
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Gross profit

  440,321      475,162      454,497      1,863,257      1,740,670   

Operating expenses:

Research and development

  285,497      288,435      288,900      1,164,059      1,156,885   

Selling and marketing

  37,235      34,410      36,665      143,952      152,698   

General and administrative

  34,651      33,473      26,367      130,030      106,471   

Amortization and write-off of acquired intangible assets

  3,100      3,304      11,956      16,397      43,925   
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Total operating expenses

  360,483      359,622      363,888      1,454,438      1,459,979   
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Operating income

  79,838      115,540      90,609      408,819      280,691   

Interest and other income, net

  4,382      4,764      12,617      23,334      25,566   
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Income before income taxes

  84,220      120,304      103,226      432,153      306,257   

Provision (benefit) for income taxes

  2,527      5,000      6,097      (3,193   (9,063
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Net income

$ 81,693    $ 115,304    $ 97,129    $ 435,346    $ 315,320   
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Basic net income per share

$ 0.16    $ 0.22    $ 0.20    $ 0.85    $ 0.64   
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Diluted net income per share

$ 0.16    $ 0.22    $ 0.19    $ 0.84    $ 0.63   
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Shares used in computing basic earnings per share

  513,574      513,859      497,620      511,089      496,518   

Shares used in computing diluted earnings per share

  522,112      519,907      510,449      520,760      504,413   


Marvell Technology Group Ltd.

Condensed Consolidated Balance Sheets

(Unaudited)

(In thousands)

 

     January 31,
2015
     February 1,
2014
 

Assets

     

Current assets:

     

Cash, cash equivalents and short-term investments

   $ 2,529,555       $ 1,969,405   

Accounts receivable, net

     420,955         453,496   

Inventories

     308,162         347,861   

Prepaid expenses and other current assets

     85,368         68,458   
  

 

 

    

 

 

 

Total current assets

  3,344,040      2,839,220   

Property and equipment, net

  340,639      356,165   

Long-term investments

  10,226      16,279   

Goodwill and acquired intangible assets, net

  2,060,643      2,078,980   

Other non-current assets

  128,839      160,366   
  

 

 

    

 

 

 

Total assets

$ 5,884,387    $ 5,451,010   
  

 

 

    

 

 

 

Liabilities and Shareholders’ Equity

Current liabilities:

Accounts payable

$ 282,899    $ 316,389   

Accrued liabilities

  286,357      273,170   

Deferred income

  68,120      61,747   
  

 

 

    

 

 

 

Total current liabilities

  637,376      651,306   

Other non-current liabilities

  100,922      123,794   
  

 

 

    

 

 

 

Total liabilities

  738,298      775,100   
  

 

 

    

 

 

 

Shareholders’ equity:

Common stock

  1,030      1,005   

Additional paid-in capital

  3,099,548      2,941,650   

Accumulated other comprehensive income

  308      597   

Retained earnings

  2,045,203      1,732,658   
  

 

 

    

 

 

 

Total shareholders’ equity

  5,146,089      4,675,910   
  

 

 

    

 

 

 

Total liabilities and shareholders’ equity

$ 5,884,387    $ 5,451,010   
  

 

 

    

 

 

 


Marvell Technology Group Ltd.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

(in thousands)

 

     Three Months Ended     Year Ended  
     January 31,
2015
    February 1,
2014
    January 31,
2015
    February 1,
2014
 

Cash flows from operating activities:

        

Net income

   $ 81,693     $ 97,129      $ 435,346      $ 315,320   

Adjustments to reconcile net income to net cash provided by operating activities:

        

Depreciation and amortization

     26,464       26,176        106,248        102,752   

Share-based compensation

     37,963       38,068        137,246        155,873   

Amortization and write-off of acquired intangible assets

     3,585       12,037        18,337        44,006   

Other expense (income), net

     (1,699 )     2,184        (13,859     8,178   

Gain from sale of equity investment

     —         (6,975     —         (6,975

Restructuring and exit-related cost

     3,230       —         3,230        —    

Excess tax benefits from share-based compensation

     (67 )     22        (145     (20

Changes in assets and liabilities:

        

Accounts receivable

     25,719       13,233        48,994        (123,258

Inventories

     48,247       32,262        39,454        (97,188

Prepaid expenses and other assets

     4,087       8,365        (4,534     23,377   

Accounts payable

     (60,808 )     (88,520     (43,871     39,791   

Accrued liabilities and other non-current liabilities

     (12,189 )     10,883        (34,224     (9,627

Accrued employee compensation

     1,910       (19,752     43,561        (5,787

Deferred income

     (2,714 )     (24,623     6,373        1,597   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net cash provided by operating activities

  155,421     100,489      742,156      448,039   

Cash flows from investing activities:

Purchases of available-for-sale securities

  (344,023 )   (146,143   (1,128,319   (837,892

Sales and maturities of available-for-sale securities

  248,215     149,533      826,310      995,039   

Net proceeds from sale of a product line

  —       6,306      —       6,306   

Investments in privately-held companies

  —       —       (701   (1,869

Cash paid for acquisitions, net

  —       —       —       (2,551

Purchases of technology licenses

  (1,910 )   (3,654   (16,424   (17,647

Purchases of property and equipment

  (14,415 )   (13,310   (63,030   (66,593
  

 

 

   

 

 

   

 

 

   

 

 

 

Net cash provided by (used in) investing activities

  (112,133 )   (7,268   (382,164   74,793   

Cash flows from financing activities:

Repurchase of common stock (a)

  (21,188 )   —       (64,962   (376,285

Proceeds from employee stock plans

  41,049     107,686      112,357      204,962   

Minimum tax withholding paid on behalf of employees for net share settlement

  (908 )   (466   (26,494   (10,872

Dividend payments to shareholders

  (30,942 )   (29,889   (122,801   (119,449

Payments on technology license obligations

  (4,382 )   (1,110   (13,010   (7,411

Excess tax benefits from share-based compensation

  67     (22   145      20   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net cash provided by (used in) financing activities

  (16,304 )   76,199      (114,765   (309,035
  

 

 

   

 

 

   

 

 

   

 

 

 

Net increase (decrease) in cash and cash equivalents

  26,984     169,420      245,227      213,797   
  

 

 

   

 

 

   

 

 

   

 

 

 

Cash and cash equivalents at beginning of period

  1,183,993     796,330      965,750      751,953   
  

 

 

   

 

 

   

 

 

   

 

 

 

Cash and cash equivalents at end of period

$ 1,210,977   $ 965,750    $ 1,210,977    $ 965,750   
  

 

 

   

 

 

   

 

 

   

 

 

 

 

(a) 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 1.4 million shares repurchased for $20.0 million in the fourth quarter of fiscal 2015, adjusted for the difference in repurchases made in 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     Year Ended  
     January 31,
2015
    November 1,
2014
    February 1,
2014
    January 31,
2015
    February 1,
2014
 

GAAP net income

   $ 81,693      $ 115,304      $ 97,129      $ 435,346      $ 315,320   

Share-based compensation

     37,963        34,294        38,068        137,246        155,873   

Amortization and write-off of acquired intangible assets

     4,025        4,229        12,184        20,097        44,153   

Acquisition-related costs (a)

     —          —          121        —          (62

Restructuring and other exit-related costs (b)

     3,412        1,203        947        10,438        7,288   

Litigation settlement (c)

     —          (2,398     9,500        77        14,728   

Other (d)

     3,764        2,318        (6,975     8,237        (6,975
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP net income

$ 130,857    $ 154,950    $ 150,974    $ 611,441    $ 530,325   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

GAAP weighted average shares - diluted

  522,112      519,907      510,449      520,760      504,413   

Non-GAAP adjustment

  10,688      12,905      12,932      11,604      14,515   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP weighted average shares diluted (e)

  532,800      532,812      523,381      532,364      518,928   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

GAAP diluted net income per share

$ 0.16    $ 0.22    $ 0.19    $ 0.84    $ 0.63   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP diluted net income per share

$ 0.25    $ 0.29    $ 0.29    $ 1.15    $ 1.02   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

GAAP gross profit:

$ 440,321    $ 475,162    $ 454,497    $ 1,863,257    $ 1,740,670   

Share-based compensation

  2,006      1,934      2,597      7,972      8,863   

Amortization of acquired intangible assets

  925      925      228      3,700      228   

Litigation settlement (c)

  —        (3,998   9,500      (3,998   14,228   

Other (d)

  1,000      —        —        1,000      —     
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP gross profit

$ 444,252    $ 474,023    $ 466,822    $ 1,871,931    $ 1,763,989   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

GAAP gross margin

  51.4   51.1   48.8   50.3   51.1

Share-based compensation

  0.2   0.2   0.3   0.2   0.3

Amortization of acquired intangible assets

  0.1   0.1   —        0.1   —     

Litigation settlement (c)

  0.0   -0.4   1.0   -0.1   0.4

Other (d)

  0.1   —        —        —        —     
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP gross margin

  51.8   51.0   50.1   50.5   51.8
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

GAAP research and development:

$ 285,497    $ 288,435    $ 288,900    $ 1,164,059    $ 1,156,885   

Share-based compensation

  (25,590   (24,198   (27,087   (94,432   (109,432

Acquisition-related costs (a)

  —        —        (116   —        205   

Restructuring and other exit-related costs (b)

  (67   (88   (829   (5,249   (5,442
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP research and development

$ 259,840    $ 264,149    $ 260,868    $ 1,064,378    $ 1,042,216   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

GAAP selling and marketing:

$ 37,235    $ 34,410    $ 36,665    $ 143,952    $ 152,698   

Share-based compensation

  (3,069   (2,855   (3,162   (11,469   (13,940

Acquisition-related costs (a)

  —        —        —        —        (79

Restructuring and other exit-related costs (b)

  —        —        —        —        (795

Litigation settlement (c)

  —        (1,600   —        (1,600   —     
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP selling and marketing

$ 34,166    $ 29,955    $ 33,503    $ 130,883    $ 137,884   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

GAAP general and administrative:

$ 34,651    $ 33,473    $ 26,367    $ 130,030    $ 106,471   

Share-based compensation

  (7,298   (5,307   (5,222   (23,373   (23,638

Acquisition-related costs (a)

  —        —        (5   —        (64

Restructuring and other exit-related costs (b)

  (3,345   (1,115   (118   (5,189   (1,051

Litigation settlement (c)

  —        —        —        (2,475   (500

Other (d)

  (2,764   (2,318   —        (7,237   —     
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP general and administrative

$ 21,244    $ 24,733    $ 21,022    $ 91,756    $ 81,218   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

(a) Acquisition-related costs include the amortization of retention bonuses required by the terms of an acquisition.
(b) Restructuring and other exit-related costs include costs that qualify under U.S. GAAP as restructuring costs, as well as operating expenses related to assets classified as held-for-sale that did not qualify as discontinued operations.
(c) The amounts recorded do not relate to Marvell’s litigation with Carnegie Mellon University.
(d) Other includes costs associated with the surety bond to appeal the Carnegie Mellon University judgment and other costs.
(e) For purposes of calculating non-GAAP diluted net income per share, the GAAP diluted weighted average shares outstanding is adjusted to exclude the potential benefits of share-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)

 

     Q1 FY2016
Outlook
 

Note: Amounts represent the midpoint of the expected range

  

GAAP gross margin

     50.1

Share-based compensation, amortization of intangible assets and other

     0.4
  

 

 

 

Non-GAAP gross margin

  50.5
  

 

 

 
     Q1 FY2016
Outlook
 

GAAP operating expenses

   $ 360   

Share-based compensation, restructuring, amortization of intangible assets and other

     (40
  

 

 

 

Non-GAAP operating expenses

$ 320   
  

 

 

 
     Q1 FY2016
Outlook
 

GAAP diluted earnings per share

   $ 0.09   

Share-based compensation, restructuring, amortization of intangible assets and other

     0.09   
  

 

 

 

Non-GAAP diluted earnings per share

$ 0.18   
  

 

 

 


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