SANTA CLARA, Calif.,
Sept. 6, 2018 /PRNewswire/
-- Marvell Technology Group Ltd. (NASDAQ: MRVL), a leader in
infrastructure semiconductor solutions, today reported financial
results for the second fiscal quarter of fiscal year 2019.
Marvell completed the acquisition of Cavium Inc. ("Cavium") on
July 6, 2018 ("the acquisition
date"), approximately four weeks before the end of the second
quarter of fiscal year 2019. Marvell's results for the second
quarter of fiscal 2019 include the results of Cavium from the
acquisition date, while the prior periods presented do not.
Financial highlights presented below are for the combined
company and Marvell stand-alone (excluding Cavium results) for the
second quarter of fiscal year 2019 (in thousands, except
percentages and per share amounts). We are providing the Marvell
stand-alone non-GAAP results on a one time basis this quarter in
light of the fact that our previously provided financial outlook
for the second quarter excluded any impact of the Cavium
acquisition.
|
Three Months
Ended
August 4, 2018
|
|
Combined
GAAP
|
|
Combined
Non-GAAP
|
|
Marvell
Stand-alone
Non-GAAP
|
Net
revenue
|
$
|
665,310
|
|
|
$
|
665,310
|
|
|
$
|
623,963
|
|
|
|
|
|
|
|
Gross
margin
|
56.7
|
%
|
|
63.7
|
%
|
|
63.5
|
%
|
|
|
|
|
|
|
Operating
margin
|
(1.2)
|
%
|
|
26.7
|
%
|
|
30.1
|
%
|
|
|
|
|
|
|
Net income
|
$
|
6,759
|
|
|
$
|
161,961
|
|
|
$
|
183,349
|
|
|
|
|
|
|
|
Diluted net income
per share
|
$
|
0.01
|
|
|
$
|
0.28
|
|
|
$
|
0.35
|
|
The financial outlook for the third quarter of fiscal year 2019
includes expected results of Cavium for the full quarter.
Revenue for the second quarter of fiscal 2019 was $665 million.
GAAP net income from continuing operations for the second
quarter of fiscal 2019 was $7
million, or $0.01 per diluted
share. Non-GAAP net income from continuing operations for the
second quarter of fiscal 2019 was $162
million, or $0.28 per diluted
share. Cash flow from operations for the second quarter was
$62 million.
"Marvell standalone delivered strong second-quarter financial
results. We achieved our operating margin target 18 months ahead of
plan," said Matt Murphy, Marvell's
President and Chief Executive Officer. "During the quarter, we also
took another major step in our transformation by closing the
acquisition of Cavium, on schedule with our original plan. Our
combined talent and portfolio now positions Marvell to lead some of
the most exciting trends driving growth in the infrastructure
market, including Cloud and Edge computing, 5G and automotive."
Third Quarter of Fiscal 2019 Financial Outlook
- Revenue is expected to be $825
million to $865 million.
- GAAP gross margin is expected to be in the range of 44% to
45%.
- Non-GAAP gross margin is expected to be in the range of 64% to
65%.
- GAAP operating expenses are expected to be $390 million to $400
million.
- Non-GAAP operating expenses are expected to be $300 million to $305
million.
- GAAP diluted EPS from continuing operations is expected to be
in the range of $(0.08) to
$(0.04) per share.
- Non-GAAP diluted EPS from continuing operations is expected to
be in the range of $0.30 to
$0.34 per share.
Conference Call
Marvell will conduct a conference call on Thursday, September 6, 2018 at 1:45 p.m. Pacific Time to discuss results for the
second quarter of fiscal 2019. Interested parties may join the
conference call by dialing 1-844-647-5488 or 1-615-247-0258,
pass-code 5196554. 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 Friday, September 14,
2018.
Discussion of Non-GAAP Financial Measures
Non-GAAP financial measures exclude the effect of share-based
compensation expense, amortization of the inventory fair value step
up, amortization and write-off of acquired intangible assets,
acquisition-related costs, restructuring and other related charges,
litigation settlement, and certain expenses and benefits that are
driven primarily by discrete events that management does not
consider to be directly related to Marvell's core business.
Marvell uses a non-GAAP tax rate to compute the non-GAAP tax
provision. This non-GAAP tax rate is based on Marvell's estimated
annual GAAP income tax forecast, adjusted to account for items
excluded from GAAP income in calculating Marvell's non-GAAP income,
as well as the effects of significant non-recurring and period
specific tax items which vary in size and frequency. Marvell's
non-GAAP tax rate is determined on an annual basis and may be
adjusted during the year to take into account events that may
materially affect the non-GAAP tax rate such as tax law changes;
significant changes in Marvell's geographic mix of revenue and
expenses; or changes to Marvell's corporate structure. For the
second quarter of fiscal 2019, a non-GAAP tax rate of 4% has been
applied to the non-GAAP financial results.
Non-GAAP diluted net income per share from continuing operations
is calculated by dividing non-GAAP net income from continuing
operations by non-GAAP weighted average shares outstanding
(diluted). For purposes of calculating non-GAAP diluted 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 additional proceeds assumed to be used to
repurchase shares under the GAAP treasury stock method.
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, financial measures calculated in accordance with GAAP.
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.
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 evaluation of Marvell's operating
performance;
- Management's establishment of internal operating budgets;
- Management's performance comparisons with internal forecasts
and targeted business models; and
- Management's determination of the achievement and measurement
of certain performance-based equity awards (adjustments may vary
from award to award).
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.
Marvell stand-alone non-GAAP results represent combined non-GAAP
results after excluding Cavium results for the portion of the
second quarter falling after the acquisition date. We are
providing the Marvell stand-alone non-GAAP results on a one time
basis for the second quarter of fiscal 2019 in light of the fact
that our previously provided financial outlook for the second
quarter excluded any impact of the Cavium acquisition.
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: the impact on future performance of
Marvell's newly announced products; Marvell's expectations
regarding its second quarter of fiscal 2019 financial outlook; and
Marvell's use of non-GAAP financial measures as important
supplemental information. Words such as "anticipates," "expects,"
"intends," "plans," "projects," "believes," "seeks," "estimates,"
"can," "may," "will," "would" 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, but not limited to:
the effect of the announcement or pendency of the consummation of
our acquisition of Cavium on the combined company's business
relationships, operating results, and business generally; potential
difficulties in Cavium employee retention as a result of the
transaction; the ability of Marvell to successfully integrate
Cavium's operations and product lines; the ability of Marvell to
implement its plans, forecasts, and other expectations with respect
to Cavium's business and realize the anticipated synergies and cost
savings in the time frame anticipated or at all, and identify and
realize additional opportunities; the risk of downturns in the
highly cyclical semiconductor industry; Marvell's dependence upon
the storage and networking markets, which are highly cyclical and
intensely competitive; the outcome of pending or future litigation
and legal and regulatory proceedings; Marvell's dependence on a
small number of customers; severe financial hardship or bankruptcy
of one or more of Marvell's major customers; Marvell's ability and
the ability of its customers to successfully compete in the markets
in which it serves; Marvell's reliance on independent foundries and
subcontractors for the manufacture, assembly and testing of its
products; Marvell's ability and its customers' ability to develop
new and enhanced products and the adoption of those products in the
market; decreases in gross margin and results of operations in the
future due to a number of factors; Marvell's ability to estimate
customer demand and future sales accurately; Marvell's ability to
scale its operations in response to changes in demand for existing
or new products and services; the impact of international conflict
and continued economic volatility in either domestic or foreign
markets; the effects of transitioning to smaller geometry process
technologies; the risks associated with manufacturing and selling a
majority of products and customers' products outside of
the United States; risks
associated with acquisition and consolidation activity in the
semiconductor industry; the impact of any change in the income tax
laws in jurisdictions where Marvell operates and the loss of any
beneficial tax treatment that Marvell currently enjoys; the effects
of any potential acquisitions or investments; Marvell's ability to
protect its intellectual property; the impact and costs associated
with changes in international financial and regulatory conditions;
Marvell's maintenance of an effective system of internal controls;
and other risks detailed in Marvell's SEC filings from time to
time. For other factors that could cause Marvell's results to vary
from expectations, please see the risk factors identified in
Marvell's Annual Report on Form 10-K for the fiscal year ended
February 3, 2018 as filed with the
SEC on March 29, 2018, 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 first revolutionized the digital storage industry by
moving information at speeds never thought possible. Today, that
same breakthrough innovation remains at the heart of the Company's
storage, networking and connectivity solutions. With leading
intellectual property and deep system-level knowledge, Marvell's
semiconductor solutions continue to transform the enterprise,
cloud, automotive, industrial, and consumer markets. To learn more,
visit: www.marvell.com.
Marvell® and the Marvell logo are
registered trademarks of Marvell and/or its affiliates.
Marvell Technology
Group Ltd.
|
Condensed
Consolidated Statements of Operations (Unaudited)
|
(In thousands,
except per share amounts)
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
August 4,
2018
|
|
May
5, 2018
|
|
July 29,
2017
|
|
August 4,
2018
|
|
July
29, 2017
|
Net
revenue
|
$
|
665,310
|
|
|
$
|
604,631
|
|
|
$
|
604,750
|
|
|
$
|
1,269,941
|
|
|
$
|
1,177,459
|
|
Cost of goods
sold
|
288,200
|
|
|
228,938
|
|
|
239,572
|
|
|
517,138
|
|
|
466,770
|
|
Gross
profit
|
377,110
|
|
|
375,693
|
|
|
365,178
|
|
|
752,803
|
|
|
710,689
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
|
Research and
development
|
216,285
|
|
|
176,734
|
|
|
180,871
|
|
|
393,019
|
|
|
368,967
|
|
Selling, general and
administrative
|
133,701
|
|
|
72,313
|
|
|
55,659
|
|
|
206,014
|
|
|
110,763
|
|
Restructuring related
charges
|
35,415
|
|
|
1,567
|
|
|
4,285
|
|
|
36,982
|
|
|
5,171
|
|
Total operating
expenses
|
385,401
|
|
|
250,614
|
|
|
240,815
|
|
|
636,015
|
|
|
484,901
|
|
Operating income from
continuing operations
|
(8,291)
|
|
|
125,079
|
|
|
124,363
|
|
|
116,788
|
|
|
225,788
|
|
Interest
income
|
3,575
|
|
|
6,069
|
|
|
3,830
|
|
|
9,644
|
|
|
7,342
|
|
Interest
expense
|
(15,795)
|
|
|
(244)
|
|
|
(80)
|
|
|
(16,039)
|
|
|
(131)
|
|
Other income (loss),
net
|
(2,701)
|
|
|
1,471
|
|
|
3,438
|
|
|
(1,230)
|
|
|
3,310
|
|
Interest and other
income (loss), net
|
(14,921)
|
|
|
7,296
|
|
|
7,188
|
|
|
(7,625)
|
|
|
10,521
|
|
Income from
continuing operations before income taxes
|
(23,212)
|
|
|
132,375
|
|
|
131,551
|
|
|
109,163
|
|
|
236,309
|
|
Provision (benefit)
for income taxes
|
(29,971)
|
|
|
3,763
|
|
|
(3,899)
|
|
|
(26,208)
|
|
|
1,267
|
|
Income from
continuing operations, net of tax
|
6,759
|
|
|
128,612
|
|
|
135,450
|
|
|
135,371
|
|
|
235,042
|
|
Income from
discontinued operations, net of tax
|
—
|
|
|
—
|
|
|
29,809
|
|
|
—
|
|
|
36,838
|
|
Net income
|
$
|
6,759
|
|
|
$
|
128,612
|
|
|
$
|
165,259
|
|
|
$
|
135,371
|
|
|
$
|
271,880
|
|
|
|
|
|
|
|
|
|
|
|
Net income per share
— Basic:
|
|
|
|
|
|
|
|
|
|
Continuing
operations
|
$
|
0.01
|
|
|
$
|
0.26
|
|
|
$
|
0.27
|
|
|
$
|
0.26
|
|
|
$
|
0.47
|
|
Discontinued
operations
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
0.06
|
|
|
$
|
—
|
|
|
$
|
0.07
|
|
Net income per share
- Basic
|
$
|
0.01
|
|
|
$
|
0.26
|
|
|
$
|
0.33
|
|
|
$
|
0.26
|
|
|
$
|
0.54
|
|
|
|
|
|
|
|
|
|
|
|
Net income per share
— Diluted:
|
|
|
|
|
|
|
|
|
|
Continuing
operations
|
$
|
0.01
|
|
|
$
|
0.25
|
|
|
$
|
0.26
|
|
|
$
|
0.25
|
|
|
$
|
0.46
|
|
Discontinued
operations
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
0.06
|
|
|
$
|
—
|
|
|
$
|
0.07
|
|
Net income per share
- Diluted
|
$
|
0.01
|
|
|
$
|
0.25
|
|
|
$
|
0.32
|
|
|
$
|
0.25
|
|
|
$
|
0.53
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
shares:
|
|
|
|
|
|
|
|
|
|
Basic
|
552,238
|
|
|
497,335
|
|
500,817
|
|
|
524,787
|
|
502,303
|
|
Diluted
|
562,149
|
|
|
508,716
|
|
510,309
|
|
|
535,433
|
|
513,951
|
|
Marvell Technology
Group Ltd.
|
Condensed
Consolidated Balance Sheets (Unaudited)
|
(In
thousands)
|
|
|
August
4, 2018
|
|
February
3, 2018
|
Assets
|
|
|
|
Current
assets:
|
|
|
|
Cash and cash
equivalents
|
$
|
498,659
|
|
$
|
888,482
|
Short-term
investments
|
25,000
|
|
952,790
|
Accounts receivable,
net
|
443,276
|
|
280,395
|
Inventories
|
473,429
|
|
170,039
|
Prepaid expenses and
other current assets
|
72,388
|
|
41,482
|
Assets held for
sale
|
31,182
|
|
30,767
|
Total current
assets
|
1,543,934
|
|
2,363,955
|
Property and
equipment, net
|
327,645
|
|
202,222
|
Goodwill
|
5,497,608
|
|
1,993,310
|
Acquired intangible
assets, net
|
2,718,061
|
|
—
|
Other non-current
assets
|
275,598
|
|
148,800
|
Total
assets
|
$
|
10,362,846
|
|
$
|
4,708,287
|
|
|
|
|
Liabilities and
Shareholders' Equity
|
|
|
|
Current
liabilities:
|
|
|
|
Accounts
payable
|
$
|
196,297
|
|
$
|
145,236
|
Accrued
liabilities
|
277,098
|
|
86,958
|
Accrued employee
compensation
|
127,381
|
|
127,711
|
Deferred
income
|
3,511
|
|
61,237
|
Liabilities held for
sale
|
3,935
|
|
—
|
Total current
liabilities
|
608,222
|
|
421,142
|
Long-term
debt
|
1,878,617
|
|
—
|
Non-current income
taxes payable
|
52,438
|
|
56,976
|
Deferred tax
liabilities
|
114,312
|
|
52,204
|
Other non-current
liabilities
|
44,191
|
|
36,552
|
Total
liabilities
|
2,697,780
|
|
566,874
|
|
|
|
|
Shareholders'
equity:
|
|
|
|
Common
stock
|
1,316
|
|
991
|
Additional paid-in
capital
|
6,153,890
|
|
2,733,292
|
Accumulated other
comprehensive loss
|
—
|
|
(2,322)
|
Retained
earnings
|
1,509,860
|
|
1,409,452
|
Total shareholders'
equity
|
7,665,066
|
|
4,141,413
|
Total liabilities and
shareholders' equity
|
$
|
10,362,846
|
|
$
|
4,708,287
|
Marvell Technology
Group Ltd.
|
Condensed
Consolidated Statements of Cash Flows (Unaudited)
|
(In
thousands)
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
August 4,
2018
|
|
July
29, 2017
|
|
August 4,
2018
|
|
July
29, 2017
|
Cash flows from
operating activities:
|
|
|
|
|
|
|
|
Net income
|
$
|
6,759
|
|
|
$
|
165,259
|
|
|
$
|
135,371
|
|
|
$
|
271,880
|
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
26,754
|
|
|
20,444
|
|
|
47,097
|
|
|
41,186
|
|
Share-based
compensation
|
59,392
|
|
|
22,422
|
|
|
83,244
|
|
|
46,439
|
|
Amortization and
write-off of acquired intangible assets
|
25,939
|
|
|
1,065
|
|
|
25,939
|
|
|
2,136
|
|
Amortization of
inventory fair value adjustment associated with acquisition of
Cavium
|
22,933
|
|
|
—
|
|
|
22,933
|
|
|
—
|
|
Amortization of
deferred debt issuance costs and debt discounts
|
7,073
|
|
|
—
|
|
|
7,073
|
|
|
—
|
|
Restructuring related
impairment charges (gain)
|
1,993
|
|
|
70
|
|
|
1,993
|
|
|
(446)
|
|
Gain from investment
in privately-held company
|
—
|
|
|
(750)
|
|
|
(1,100)
|
|
|
(750)
|
|
Amortization of
premium /discount on available-for-sale securities
|
(537)
|
|
|
597
|
|
|
624
|
|
|
803
|
|
Other non-cash expense
(income), net
|
3,414
|
|
|
(1,398)
|
|
|
4,227
|
|
|
(1,423)
|
|
Deferred income
taxes
|
(22,238)
|
|
|
2,008
|
|
|
(21,414)
|
|
|
2,791
|
|
Gain on sale of
property and equipment
|
(137)
|
|
|
(341)
|
|
|
(120)
|
|
|
(283)
|
|
Gain on sale of
discontinued operations
|
—
|
|
|
(34,032)
|
|
|
—
|
|
|
(42,187)
|
|
Gain on sale of
business
|
—
|
|
|
(5,254)
|
|
|
—
|
|
|
(5,254)
|
|
Changes in assets and
liabilities:
|
|
|
|
|
|
|
|
Accounts
receivable
|
(1,356)
|
|
|
(14,550)
|
|
|
(48,749)
|
|
|
(36,313)
|
|
Inventories
|
4,186
|
|
|
(3,170)
|
|
|
6,866
|
|
|
(14,712)
|
|
Prepaid expenses and
other assets
|
(5,396)
|
|
|
2,460
|
|
|
(19,504)
|
|
|
7,854
|
|
Accounts
payable
|
(15,015)
|
|
|
(27,455)
|
|
|
(271)
|
|
|
3,968
|
|
Accrued liabilities
and other non-current liabilities
|
(32,468)
|
|
|
(21,793)
|
|
|
(11,232)
|
|
|
(33,418)
|
|
Accrued employee
compensation
|
(19,429)
|
|
|
(846)
|
|
|
(41,539)
|
|
|
(8,375)
|
|
Deferred
income
|
68
|
|
|
(3,732)
|
|
|
(729)
|
|
|
1,284
|
|
Net cash provided by
operating activities
|
61,935
|
|
|
101,004
|
|
|
190,709
|
|
|
235,180
|
|
Cash flows from
investing activities:
|
|
|
|
|
|
|
|
Purchases of
available-for-sale securities
|
(1,499)
|
|
|
(177,811)
|
|
|
(14,956)
|
|
|
(376,227)
|
|
Sales of
available-for-sale securities
|
553,623
|
|
|
37,936
|
|
|
623,896
|
|
|
116,700
|
|
Maturities of
available-for-sale securities
|
59,165
|
|
|
87,377
|
|
|
187,985
|
|
|
169,612
|
|
Return of investment
from privately-held companies
|
—
|
|
|
2,388
|
|
|
—
|
|
|
2,388
|
|
Purchases of time
deposits
|
—
|
|
|
(75,000)
|
|
|
(25,000)
|
|
|
(150,000)
|
|
Maturities of time
deposits
|
75,000
|
|
|
75,000
|
|
|
150,000
|
|
|
150,000
|
|
Purchases of
technology licenses
|
(903)
|
|
|
(608)
|
|
|
(1,263)
|
|
|
(1,701)
|
|
Purchases of property
and equipment
|
(20,801)
|
|
|
(4,803)
|
|
|
(34,389)
|
|
|
(14,544)
|
|
Proceeds from sales of
property and equipment
|
212
|
|
|
1,054
|
|
|
223
|
|
|
1,739
|
|
Cash payment for
acquisition of Cavium, net of cash and cash equivalents
acquired
|
(2,649,465)
|
|
|
—
|
|
|
(2,649,465)
|
|
|
—
|
|
Net proceeds from sale
of discontinued operations
|
—
|
|
|
41,976
|
|
|
—
|
|
|
72,205
|
|
Net proceeds from sale
of business
|
1,250
|
|
|
—
|
|
|
1,250
|
|
|
—
|
|
Other
|
—
|
|
|
—
|
|
|
(5,000)
|
|
|
—
|
|
Net cash used in
investing activities
|
(1,983,418)
|
|
|
(12,491)
|
|
|
(1,766,719)
|
|
|
(29,828)
|
|
Cash flows from
financing activities:
|
|
|
|
|
|
|
|
Repurchases of common
stock
|
—
|
|
|
(221,265)
|
|
|
—
|
|
|
(387,558)
|
|
Proceeds from employee
stock plans
|
33,525
|
|
|
77,872
|
|
|
44,580
|
|
|
97,811
|
|
Minimum tax
withholding paid on behalf of employees for net share
settlement
|
(12,883)
|
|
|
(3,005)
|
|
|
(36,776)
|
|
|
(24,814)
|
|
Dividend payments to
shareholders
|
(39,383)
|
|
|
(30,095)
|
|
|
(69,181)
|
|
|
(60,086)
|
|
Payments on technology
license obligations
|
(9,017)
|
|
|
(7,481)
|
|
|
(29,478)
|
|
|
(14,296)
|
|
Proceeds from
issuance of debt
|
1,892,605
|
|
|
—
|
|
|
1,892,605
|
|
|
—
|
|
Principal payments of
debt
|
(606,128)
|
|
|
—
|
|
|
(606,128)
|
|
|
—
|
|
Payment of equity and
debt financing costs
|
(5,835)
|
|
|
—
|
|
|
(9,435)
|
|
|
—
|
|
Net cash provided by
(used in) financing activities
|
1,252,884
|
|
|
(183,974)
|
|
|
1,186,187
|
|
|
(388,943)
|
|
Net decrease in cash
and cash equivalents
|
(668,599)
|
|
|
(95,461)
|
|
|
(389,823)
|
|
|
(183,591)
|
|
Cash and cash
equivalents at beginning of period
|
1,167,258
|
|
|
725,962
|
|
|
888,482
|
|
|
814,092
|
|
Cash and cash
equivalents at end of period
|
$
|
498,659
|
|
|
$
|
630,501
|
|
|
$
|
498,659
|
|
|
$
|
630,501
|
|
Marvell Technology
Group Ltd.
|
Reconciliations
from GAAP to Non-GAAP (Unaudited)
|
(In thousands,
except per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
August 4,
2018
|
|
May
5, 2018
|
|
July 29,
2017
|
|
August 4,
2018
|
|
July 29,
2017
|
GAAP gross
profit:
|
$
|
377,110
|
|
|
$
|
375,693
|
|
|
$
|
365,178
|
|
|
$
|
752,803
|
|
|
$
|
710,689
|
|
Special
items:
|
|
|
|
|
|
|
|
|
|
Share-based
compensation
|
4,748
|
|
|
1,905
|
|
|
1,810
|
|
|
6,653
|
|
|
3,236
|
|
Amortization of and
write-off acquired intangible assets
|
18,984
|
|
|
—
|
|
|
—
|
|
|
18,984
|
|
|
—
|
|
Other cost of goods
sold (a)
|
22,933
|
|
|
—
|
|
|
3,000
|
|
|
22,933
|
|
|
3,000
|
|
Total special
items
|
46,665
|
|
|
1,905
|
|
|
4,810
|
|
|
48,570
|
|
|
6,236
|
|
Non-GAAP gross
profit
|
$
|
423,775
|
|
|
$
|
377,598
|
|
|
$
|
369,988
|
|
|
$
|
801,373
|
|
|
$
|
716,925
|
|
|
|
|
|
|
|
|
|
|
|
GAAP gross
margin
|
56.7
|
%
|
|
62.1
|
%
|
|
60.4
|
%
|
|
59.3
|
%
|
|
60.4
|
%
|
Non-GAAP gross
margin
|
63.7
|
%
|
|
62.5
|
%
|
|
61.2
|
%
|
|
63.1
|
%
|
|
60.9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total GAAP operating
expenses
|
$
|
385,401
|
|
|
$
|
250,614
|
|
|
$
|
240,815
|
|
|
$
|
636,015
|
|
|
$
|
484,901
|
|
Special
items:
|
|
|
|
|
|
|
|
|
|
Share-based
compensation
|
(68,675)
|
|
|
(21,947)
|
|
|
(19,557)
|
|
|
(90,622)
|
|
|
(39,870)
|
|
Restructuring related
charges (b)
|
(35,415)
|
|
|
(1,567)
|
|
|
(4,285)
|
|
|
(36,982)
|
|
|
(5,171)
|
|
Amortization of and
write-off acquired intangible assets
|
(6,955)
|
|
|
—
|
|
|
(1,065)
|
|
|
(6,955)
|
|
|
(2,136)
|
|
Other operating
expenses (c)
|
(28,229)
|
|
|
(15,252)
|
|
|
(1,687)
|
|
|
(43,481)
|
|
|
(3,990)
|
|
Total special
items
|
(139,274)
|
|
|
(38,766)
|
|
|
(26,594)
|
|
|
(178,040)
|
|
|
(51,167)
|
|
Total non-GAAP
operating expenses
|
$
|
246,127
|
|
|
$
|
211,848
|
|
|
$
|
214,221
|
|
|
$
|
457,975
|
|
|
$
|
433,734
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP operating
margin
|
(1.2)
|
%
|
|
20.7
|
%
|
|
20.6
|
%
|
|
9.2
|
%
|
|
19.2
|
%
|
Other cost of goods
sold (a)
|
3.5
|
%
|
|
—
|
%
|
|
0.5
|
%
|
|
1.9
|
%
|
|
0.3
|
%
|
Share-based
compensation
|
11.0
|
%
|
|
3.9
|
%
|
|
3.5
|
%
|
|
7.7
|
%
|
|
3.7
|
%
|
Restructuring related
charges (b)
|
5.3
|
%
|
|
0.3
|
%
|
|
0.7
|
%
|
|
2.9
|
%
|
|
0.4
|
%
|
Amortization and
write-off of acquired intangible assets
|
3.9
|
%
|
|
—
|
%
|
|
0.2
|
%
|
|
2.0
|
%
|
|
0.2
|
%
|
Other operating
expenses (c)
|
4.2
|
%
|
|
2.5
|
%
|
|
0.3
|
%
|
|
3.3
|
%
|
|
0.3
|
%
|
Non-GAAP operating
margin
|
26.7
|
%
|
|
27.4
|
%
|
|
25.8
|
%
|
|
27.0
|
%
|
|
24.1
|
%
|
GAAP interest and
other income (loss), net
|
$
|
(14,921)
|
|
|
$
|
7,296
|
|
|
$
|
7,188
|
|
|
$
|
(7,625)
|
|
|
$
|
10,521
|
|
Special
items:
|
|
|
|
|
|
|
|
|
|
Restructuring related
items (d)
|
(121)
|
|
|
(1,512)
|
|
|
(3,085)
|
|
|
(1,633)
|
|
|
(3,085)
|
|
Issuance cost related
to terminated standby loan
|
6,104
|
|
|
—
|
|
|
—
|
|
|
6,104
|
|
|
—
|
|
Total special
items
|
5,983
|
|
|
(1,512)
|
|
|
(3,085)
|
|
|
4,471
|
|
|
(3,085)
|
|
Total non-GAAP
interest and other income (loss), net
|
$
|
(8,938)
|
|
|
$
|
5,784
|
|
|
$
|
4,103
|
|
|
$
|
(3,154)
|
|
|
$
|
7,436
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP net
income
|
$
|
6,759
|
|
|
$
|
128,612
|
|
|
$
|
165,259
|
|
|
$
|
135,371
|
|
|
$
|
271,880
|
|
Less: Income from
discontinued operations, net of tax
|
—
|
|
|
—
|
|
|
29,809
|
|
|
—
|
|
|
36,838
|
|
GAAP net income from
continuing operations
|
6,759
|
|
|
128,612
|
|
|
135,450
|
|
|
135,371
|
|
|
235,042
|
|
Special
items:
|
|
|
|
|
|
|
|
|
|
Other cost of goods
sold (a)
|
22,933
|
|
|
—
|
|
|
3,000
|
|
|
22,933
|
|
|
3,000
|
|
Share-based
compensation
|
73,423
|
|
|
23,852
|
|
|
21,367
|
|
|
97,275
|
|
|
43,106
|
|
Restructuring related
charges in operating expenses (b)
|
35,415
|
|
|
1,567
|
|
|
4,285
|
|
|
36,982
|
|
|
5,171
|
|
Restructuring related
items in interest and other income, net (d)
|
(121)
|
|
|
(1,512)
|
|
|
(3,085)
|
|
|
(1,633)
|
|
|
(3,085)
|
|
Amortization of and
write-off acquired intangible assets
|
25,939
|
|
|
—
|
|
|
1,065
|
|
|
25,939
|
|
|
2,136
|
|
Issuance cost related
to terminated standby loan
|
6,104
|
|
|
—
|
|
|
—
|
|
|
6,104
|
|
|
—
|
|
Other operating
expenses (c)
|
28,229
|
|
|
15,252
|
|
|
1,687
|
|
|
43,481
|
|
|
3,990
|
|
Pre-tax total special
items
|
191,922
|
|
|
39,159
|
|
|
28,319
|
|
|
231,081
|
|
|
54,318
|
|
Other income tax
effects and adjustments (e)
|
(36,720)
|
|
|
(3,098)
|
|
|
(10,298)
|
|
|
(39,818)
|
|
|
(10,362)
|
|
Non-GAAP net income
from continuing operations
|
$
|
161,961
|
|
|
$
|
164,673
|
|
|
$
|
153,471
|
|
|
$
|
326,634
|
|
|
$
|
278,998
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
shares — basic
|
552,238
|
|
|
497,335
|
|
|
500,817
|
|
|
524,787
|
|
|
502,303
|
|
Weighted average
shares — diluted
|
562,149
|
|
|
508,716
|
|
|
510,309
|
|
|
535,433
|
|
|
513,951
|
|
Non-GAAP
adjustment
|
13,123
|
|
|
6,871
|
|
|
9,129
|
|
|
9,997
|
|
|
7,345
|
|
Non-GAAP weighted
average shares — diluted (f)
|
575,272
|
|
|
515,587
|
|
|
519,438
|
|
|
545,430
|
|
|
521,296
|
|
|
|
|
|
|
|
|
|
|
|
GAAP diluted net
income per share from continuing operations
|
$
|
0.01
|
|
|
$
|
0.25
|
|
|
$
|
0.26
|
|
|
$
|
0.25
|
|
|
$
|
0.46
|
|
Non-GAAP diluted net
income per share from continuing operations
|
$
|
0.28
|
|
|
$
|
0.32
|
|
|
$
|
0.30
|
|
|
$
|
0.60
|
|
|
$
|
0.54
|
|
|
|
(a)
|
Other costs of goods
sold in the three and six months ended August 4, 2018 include
amortization of the Cavium inventory fair value step up.
Other cost of goods sold in the three and six months ended July 29,
2017 include charges for past intellectual property licensing
matters.
|
|
|
(b)
|
Restructuring related
charges include employee severance, facilities related costs, and
impairment of equipment.
|
|
|
(c)
|
Other operating
expenses primarily include Cavium merger costs and costs of
retention bonuses offered to employees who remained through the
ramp down of certain operations due to restructuring
actions.
|
|
|
(d)
|
Interest and other
income, net includes restructuring related items such as foreign
currency remeasurement associated with restructuring related
accruals.
|
|
|
(e)
|
Other income tax
effects and adjustments relate to tax provision based on a non-GAAP
income tax rate of 4%.
|
|
|
(f)
|
Non-GAAP diluted
share count excludes the impact of share-based compensation expense
expected to be incurred in future periods and not yet recognized in
the Company's financial statements, which would otherwise be
assumed to be used to repurchase shares under the GAAP treasury
stock method.
|
Marvell Technology
Group Ltd.
|
Reconciliations
from Combined Non-GAAP to Marvell Stand-alone Non-GAAP
(Unaudited)
|
(In thousands,
except per share amounts)
|
|
|
Three Months
Ended
August 4,
2018
|
|
Combined
Non-GAAP*
|
|
Less: non-
GAAP
Results
Attributable
to Cavium
Acquisition
|
|
Marvell
Stand-alone
Non-GAAP*
|
Net
revenue
|
$
|
665,310
|
|
|
$
|
41,347
|
|
|
$
|
623,963
|
|
Gross
profit
|
$
|
423,775
|
|
|
$
|
27,808
|
|
|
$
|
395,967
|
|
Total operating
expenses
|
$
|
246,127
|
|
|
$
|
38,251
|
|
|
$
|
207,876
|
|
Interest and other
income (loss), net
|
$
|
(8,938)
|
|
|
$
|
(11,836)
|
|
|
$
|
2,898
|
|
Net income
(loss)
|
$
|
161,961
|
|
|
$
|
(21,388)
|
|
|
$
|
183,349
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted net income
(loss) per share
|
$
|
0.28
|
|
|
$
|
(0.07)
|
|
|
$
|
0.35
|
|
|
|
|
|
|
|
Diluted weighted
average shares
|
575,272
|
|
|
55,636
|
|
|
519,636
|
|
|
*Combined Non-GAAP
net revenue is equal to GAAP net revenue. See
"Reconciliations from GAAP to Non-GAAP (Unaudited)" for a
reconciliation of other Combined Non-GAAP results to GAAP results
for the period.
|
Quarterly Revenue
Trend (Unaudited)
|
(In
thousands)
|
|
|
Three Months
Ended
|
|
%
Change
|
|
August
4, 2018*
|
|
May
5, 2018
|
|
July
29, 2017
|
|
YoY
|
|
QoQ
|
Storage
(1)
|
$
|
335,764
|
|
|
$
|
317,069
|
|
|
$
|
311,501
|
|
|
8
|
%
|
|
6
|
%
|
Networking
(2)
|
283,330
|
|
|
244,228
|
|
|
245,821
|
|
|
15
|
%
|
|
16
|
%
|
Total
Core
|
619,094
|
|
|
561,297
|
|
|
557,322
|
|
|
11
|
%
|
|
10
|
%
|
Other
(3)
|
46,216
|
|
|
43,334
|
|
|
47,428
|
|
|
(3)
|
%
|
|
7
|
%
|
Total
Revenue
|
$
|
665,310
|
|
|
$
|
604,631
|
|
|
$
|
604,750
|
|
|
10
|
%
|
|
10
|
%
|
|
* Results for the
three months ended August 4, 2018 include total Cavium revenue from
the period July 6, 2018 to August 4, 2018.
|
|
Three Months
Ended
|
% of
Total
|
August
4, 2018
|
|
May
5, 2018
|
|
July
29, 2017
|
Storage
(1)
|
50
|
%
|
|
52
|
%
|
|
52
|
%
|
Networking
(2)
|
43
|
%
|
|
40
|
%
|
|
41
|
%
|
Total
Core
|
93
|
%
|
|
92
|
%
|
|
93
|
%
|
Other
(3)
|
7
|
%
|
|
8
|
%
|
|
7
|
%
|
Total
Revenue
|
100
|
%
|
|
100
|
%
|
|
100
|
%
|
|
(1) Storage
products are comprised primarily of HDD and SSD Controllers, Fibre
Channel Adapters and Data Center Storage Solutions.
|
(2) Networking
products are comprised primarily of Ethernet Switches, Ethernet
Transceivers, Ethernet NICs, Embedded Communication Processors,
Automotive Ethernet, Security Adapters and Processors as well as
WiFi solutions including WiFi only, WiFi/Bluetooth combos and WiFi
Microcontroller combos. In addition, this grouping includes a
few legacy product lines in which we no longer invest, but will
generate revenue for several years.
|
(3) Other
products are comprised primarily of Printer Solutions, Application
Processors and others.
|
For further information, contact:
Ashish Saran
Vice President, Investor Relations
408-222-0777
ir@marvell.com
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SOURCE Marvell Technology Group Ltd.